If you have paid out monies by mistake and the recipient has
been unjustly enriched, you can get your money back.
I have had two chattel leasing cases recently in which the
funders did get their money back.
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In the first case, the new funder paid the supplier (which
included upgrading goods and settling the existing finance) and the
customer subsequently claimed its employee who signed the rental
agreement was not authorised to do so (nor to agree to the
settlement of its existing finance).
Authorisation
In the absence of any evidence that the customer, a limited
company, had in fact authorised the employee to sign the rental
agreement or held him out to the new funder as having the authority
to do so, the customer was not, in law, bound to honour the rental
agreement.
The new funder had paid the supplier in the mistaken belief the
supplier had procured the customer to (i) sign a binding rental
agreement for new goods and (ii) authorise the new funder to settle
the customer’s existing finance leases.
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By GlobalDataIn the second case, the funder paid the purchase price for the
goods into an account that was in the name of the supplier’s old
company, not the account in the name of the supplier’s new company,
as had been intended. The old account was overdrawn.
Unsurprisingly, the recipient bank refused to account to the
supplier’s new company for the money.
Mistaken payment
In each of these cases, the recipient of the mistaken payment
accepted the funder was entitled to the return of its money.The
funder’s claim is under the law of restitution, which is based upon
the principle of unjust enrichment, i.e. that the recipient of the
mistaken payment has been unjustly enriched. The funder’s mistake
can be about the factual or legal basis upon which the payment was
made.
In the first case, who was unjustly enriched: the supplier, the
customer or the existing funders?
Under English law, a debt cannot be discharged by a third person
without the debtor’s consent or ratification. Even though the new
funder had paid the amount required by the existing funders to
discharge the customer’s liability under the existing leases, the
customer was still liable to the existing funders as the customer
had neither consented to nor ratified the new funder paying the
customer’s debt. In law, therefore, the existing funders had been
unjustly enriched by the new funder, not the customer.
Having been paid by the new funder, the existing funder had no
intention of pursuing the customer. The customer, despite
benefitting from the new funder’s mistake, had no intention of
repaying the settlement monies.
Demands
Consequently, the new funder made demand upon the existing
funders for repayment of the settlement monies. The existing
funders, in turn, made demand upon the customer for repayment of
the monies due under the existing leases. The customer then repaid
the settlement monies to the new funder to avoid a dispute with the
existing funders.
