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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> TFL Management Services Ltd v Lloyds Bank Plc [2013] EWCA Civ 1415 (14 November 2013) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2013/1415.html Cite as: [2013] EWCA Civ 1415, [2014] WLR 2006, [2013] 2 CLC 810, [2013] WLR(D) 437, [2014] 1 WLR 2006 |
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
HIS HONOUR JUDGE PELLING QC
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE FLOYD
and
SIR STANLEY BURNTON
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TFL Management Services Ltd |
Appellant |
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- and - |
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Lloyds Bank PLC (Formerly known as Lloyds TSB Bank PLC) |
Respondent |
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WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
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Gerard McMeel and Neil Levy (instructed by CMS Cameron McKenna) for the Respondent
____________________
Crown Copyright ©
Lord Justice Floyd :
i) Throughout the Explora v Hesco proceedings Explora mistakenly believed that the benefit of the agreements with Hesco had been assigned to Explora;
ii) At all material times the Bank (and/or the receivers as agents for the Bank) mistakenly believed that the benefit of the agreements with Hesco had been assigned to Explora;
iii) Because of the "mutual mistake" Explora incurred the costs of the Explora v Hesco action in the sum of £550,000.
iv) Accordingly Explora conferred a valuable benefit on the Bank and the Bank was unjustly enriched at the expense of Explora.
The judgment
The arguments on the appeal
i) The claimant had embarked on an action or course of actions with some principal intended consequence in mind;
ii) The intended consequence of the action or course of actions was pursued in the claimant's self interest;
iii) A benefit accrues to the defendant which is not identical to the principal intended consequence.
The approach to summary judgment
" .. the court must be careful before giving summary judgment on a claim. The correct approach on applications by defendants is, in my judgment, as follows:
i) The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 1 All ER 91;
ii) A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8];
iii) In reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman;
iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10];
v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;
vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;
vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.
Incidental benefit
i) Has the defendant benefited or been enriched?
ii) Was the enrichment at the expense of the claimant?
iii) Was the enrichment unjust?
iv) Is there any specific defence available to the defendant such as change of position?
These are the questions posed by Lord Steyn in Banque Financiere de la Cite v Parc (Battersea) Limited [1999] 1 AC 221 at 227 A to B; see also per Lord Hoffmann at 234 C-D ("BFC"). However, as Henderson J pointed out in Investment Trust Companies v HMRC [2012] EWHC 458 (Ch):
"the four questions are no more than broad headings for ease of exposition. They should not be approached as if they have statutory force."
"No claim lies in unjust enrichment to recover the benefits which are incidentally conferred on a defendant by a claimant in the course of acting in his own interest".
"This rule does not deny that the defendant is enriched by the receipt of incidental benefits, but withholds restitution for other reasons. Some of the cases may be explained on the basis that the benefit received by the defendant was not one to which the claimant was exclusively entitled, so that the benefit was not received at his expense. Alternative explanations are either that the claimant abandoned the benefit received by the defendant, or that the defendant's enrichment is not unjust because a claimant who chooses to pursue a course of action for his own purposes that he knows must incidentally benefit the defendant, intends that outcome although it is not his primary motivation."
"Even if the benefit obtained by the defendant is directly from the claimant, the enrichment is generally not at the claimant's expense if the benefit is merely incidental to the furtherance by the claimant of an objective unconnected with the defendant's enrichment."
"I cannot understand how it can be asserted that it is part of the common law that where one party gets some advantage from the act of another a right of contribution towards the expense of that act arises on behalf of the person who has done it. Many cases might be put where the generality of such a proposition would be plainly contrary to any received principle, and to my mind the question now in debate – admitted to be absolutely novel – would not be covered by any principle known to the law, except such a general proposition as I have indicated above."
"As I have come to the conclusion of fact that the plaintiffs were not requested by Close Brothers to perform any service for them and their overwhelmingly dominant motivation was their own self-interest if not their sole motivation, then it is clear they cannot recover, as [counsel for the claimants] accepted would be the case if I made such a finding"
"Upon what principle is this to be done? [Counsel] has referred us to the familiar cases which say that a man is not entitled to compensation for work done on goods or property of another unless there is a contract express or implied, to pay for it. We all remember the saying of Pollock C.B.: "One cleans another's shoes; what can the other do but put them on?": Taylor v Laird (1856) 25 L.J. Ex. 329,332. That is undoubtedly the law when the person who does the work knows, or ought to known that the property does not belong to him. But it is very different when he honestly believes himself to be the owner of the property and does the work in that belief. …
Here we have an innocent purchaser who bought the car in good faith and without any notice of any defect in the title to it. He did work on it to the value of £226. The law is hard enough on him when it makes him give up the car itself. It would be most unjust if the company could not only take the car from him, but also the value of the improvements he has done to it - without paying for them. There is a principle at hand to meet the case. It derives from the law of restitution. The plaintiffs should not be allowed unjustly to enrich themselves at his expense. The court will order the plaintiffs, if they recover the car, to recompense the innocent purchaser for the work he has done on it."
Respondent's Notice
Has the Bank been enriched?
Was the enrichment of the Bank at Explora's expense?
"signifies that the claimant must have suffered a loss that was sufficiently closely linked to the defendant's gain for the law to hold that there was a transfer of value between the parties. This rule reflects the principle that the law of unjust enrichment is not concerned with the disgorgement of gains made by defendants, nor with the compensation of losses sustained by claimants, but with the reversal of transfers of value between claimants and defendants."
"The enrichment will be at the expense of the claimant if in reality it was the claimant's money which effected the improvement."
"I must now draw the threads together, and state my conclusions on this difficult question. In the first place, I agree with Mr Rabinowitz that there can be no room for a bright line requirement which would automatically rule out all restitutionary claims against indirect recipients. Indeed, Mr Swift accepted as much in his closing submissions. In my judgment the infinite variety of possible factual circumstances is such that an absolute rule of this nature would be unsustainable. Secondly, however, the limited guidance to be found in the English authorities, and above all the clear statements by all three members of the Court of Appeal in Kleinwort Benson Ltd v Birmingham City Council, suggest to me that it is preferable to think in terms of a general requirement of direct enrichment, to which there are limited exceptions, rather than to adopt Professor Birks' view that the rule and the exceptions should in effect swap places (see "At the expense of the claimant": direct and indirect enrichment in English law, loc.cit., at page 494). In my judgment the obiter dicta of May LJ in Filby, and the line of subrogation cases relied on by Professor Birks, provide too flimsy a foundation for such a reformulation, whatever its theoretical attractions may be, quite apart from the difficulty in framing the general rule in acceptable terms if it is not confined to direct recipients.
The real question, therefore, is whether claims of the present type should be treated as exceptions to the general rule. So far as I am aware, no exhaustive list of criteria for the recognition of exceptions has yet been put forward by proponents of the general rule, and I think it is safe to assume that the usual preference of English law for development in a pragmatic and step by step fashion will prevail. Nevertheless, in the search for principle a number of relevant considerations have been identified, including (in no particular order):
a) the need for a close causal connection between the payment by the claimant and the enrichment of the indirect recipient;
b) the need to avoid any risk of double recovery, often coupled with a suggested requirement that the claimant should first be required to exhaust his remedies against the direct recipient;
c) the need to avoid any conflict with contracts between the parties, and in particular to prevent "leapfrogging" over an immediate contractual counterparty in a way which would undermine the contract; and
d) the need to confine the remedy to disgorgement of undue enrichment, and not to allow it to encroach into the territory of compensation or damages."
Was the enrichment unjust?
Defences
Conclusion
Sir Stanley Burnton:
Lord Justice Beatson :