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Sender:
Andrew Tettenborn
Date:
Tue, 22 Jul 2003 11:46:00 +0100
Re:
Niru 2: contribution, etc

 

Niru v Milestone, familiar to restitutionists for what Moore-Bick J says about change of position, now has a follow-up in Niru 2.

To recap. Niru paid out by l/c against falsified bills of lading. CAI, the bankers to the (bankrupt) beneficiary, passed the money on to associated companies of that beneficiary, and it duly vanished. CAI all but knew what was going on, and was held liable to return Niru's money mistakenly paid, without the benefit of any change of position defence (Niru 1).

In fact, in Niru 1, Niru also got judgment jointly in tort against SGS, who had negligently certified (in effect) that the bills of lading were in order.

In Niru 2, SGS come back, saying "once we've satisfied the judgment against us, can we please have contribution / subrogation / recoupment against CAI?" Moore-Bick J again:

(1) Contribution under the 1978 Act: No. Not liable for the same (or for that matter any) damage, since CAI were liable in unjust enrichment alone - obvious since Royal Brompton.

(2) Contribution as a concurrent debtor (i.e. a common judgment debt): No. The underlying circumstances (whatever they are) mean that the prima facie right doesn't apply, and there's no wider right here than under the 1978 Act. But SGS could apparently have contribution under this head for the costs jointly ordered against them and CAI.

(3) Recoupment: No. This is rather more controversial. True, SGS were compellable to pay a judgment debt for which CAI were also liable: to that extent every $ they paid got CAI proportionately off the hook. But this wasn't enough. The liabilities on which the judgment had been based mattered here, not the judgment debt itself. But for the judgment, payment by SGS wouldn't have discharged CAI's liability to repay Niru: hence no recoupment situation arose. If SGS had paid voluntarily it would have been (?simply) subrogated to Niru's rights against CAI. This latter point, I think, is new.

(4) Subrogation. Yes. BFC v Parc fell to be expansively interpreted. As between CAI and SGS, CAI ought to pay even though SGS were wrongdoers and CAI weren't. SGS by paying discharged CAI's liability, and if SGS didn't get subrogation CAI would be unjustly enriched. Here, in a slightly odd contrast to the recoupment situation, the liabilities under the judgment debts were what mattered.

More details: [2003] EWHC 1032 (Comm), on Casetrack and (no doubt) elsewhere.

Happy holidays

Andrew

Andrew Tettenborn MA LLB
Bracton Professor of Law

Tel: 01392-263189 / +44-392-263189 (international)
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