The plaintiff, through its computerised system for the payment of wages, had overpaid the defendant to the extent of pounds 1,007. He had suffered an injury and been absent from work. The Council sought to recover the overpayment on the grounds that it had been paid by mistake.
Held: Since the plaintiff had discharged the onus of proving that the overpayment had occurred due to a mistake of fact, it was prima facie entitled to recover the full amount of the overpayment but because the plaintiff had represented to the defendant that he was entitled to the sum of money paid, the plaintiff were estopped from seeking recovery of the overpayment. Slade LJ said: ‘However, this point causes no difficulty for the defendant in the present case since the plaintiffs, as the defendant’s employers, in my opinion clearly owed him a duty not to misrepresent the amount of the pay to which he was entitled from time to time, unless the misrepresentations were caused by incorrect information given to them by the defendant.’
Estoppel cannot operate pro tanto. Therefore if a defendant has innocently changed his position by disposing of part of the money, a defence of estoppel would provide him with a defence to the whole of the claim.
The ordinary rule is that the detriment is not the measure of the representee’s relief, and need not be commensurate with the loss that he would suffer if the representor did resile.
Slade LJ continued: ‘Employers who pay their employees under a computerized system should not in my opinion assume from the decision of this court in the present case that, if they overpay their employees through some kind of mistake, they are entitled to recover it simply for the asking, provided only that they are not barred by estoppel or some other special defence. The borderline between mistakes of law and mistakes of fact is not clearly defined in the cases . . The learned authors of Goff and Jones’s Law of Restitution (2nd edn, 1978) p. 91 express the view that the principle in Bilbie v. Lumley (1802) 2 East 469, [1775-1802] All ER Rep. 425 should not preclude recovery of money which was paid in settlement of an honest claim and that any other payment made under a mistake of law should be recoverable, if it would have been recoverable had the mistake been one of fact. Nevertheless the distinction still exists in English law. I think the burden will still fall on an employer who seeks to recover an overpayment from an overpaid employee to satisfy the court that, on the balance of probabilities in all the circumstances of the case, it was a mistake of fact which gave rise to the overpayment.’
Judges:
Slade LJ
Citations:
[1983] 1 WLR 605, [1983] 1 All ER 1073
Jurisdiction:
England and Wales
Cited by:
Cited – Lipkin Gorman (a Firm) v Karpnale Ltd HL 6-Jun-1991
The plaintiff firm of solicitors sought to recover money which had been stolen from them by a partner, and then gambled away with the defendant. He had purchased their gaming chips, and the plaintiff argued that these, being gambling debts, were . .
Cited – Scottish Equitable v Derby 16-Mar-2001
The claimant company sought repayment of a sum paid in error to the defendant. She replied that she had changed her position as a result of and relying upon the payment.
Held: The court gave as ‘the most obvious example’ of the kind of . .
Lists of cited by and citing cases may be incomplete.
Estoppel
Updated: 31 July 2022; Ref: scu.259532