Samsoondar v Capital Insurance and Surrey Co Co v NHS Lincolnshire CCG – Part 6 – Defences: Voluntariness, and Assumption of Risk

This is the sixth post (in a series of seven; see also parts I, II, III, IV, V and VII) discussing Samsoondar v Capital Insurance Company Ltd (Trinidad and Tobago) [2020] UKPC 33 (14 December 2020) (Samsoondar) and Surrey County Council v NHS Lincolnshire Clinical Commissioning Group [2020] EWHC 3550 (QB) (21 December 2020) (Surrey). In my first post, I introduced the cases and issues. In my second post, I examined whether the defendants were enriched at the expense of the plaintiffs. In my third post, I considered whether compulsory discharge of the debt of another could have provided a cause of action in Samsoondar and Surrey, and whether Surrey could rely upon a policy-motivated cause of action, consisting in the unlawful obtaining or conferral of a benefit by a public authority. In my fourth post, I considered whether the mistaken discharge of the debt of another might have been available on the facts of both cases. In my previous post, I considered some of the effects of voluntariness in the discharge cases. In this post, I want to put this issue of voluntariness in a larger context.

In Samsoondar, if mistake had been properly pleaded and argued, Lord Burrows (at [24]) identifed a point that may have been

a central question at issue: was the claimant making a mistake of law that caused the payment or was it paying in a situation where it had significant doubts or suspicion as to what the correct view of the law was and chose to settle the claim in any event? In other words, the defendant might have sought to argue that the claimant was not entitled to restitution for mistake because it had taken the risk of being mistaken. …

The same point could have arisen in Surrey. It can be expressed in various ways. For example, the plaintiff could have paid, consenting to the payment, whatever the true circumstances; as Goff J put it in Barclays Bank v Simms [1980] QB 677, a plaintiff’s claim would fail if he “intends that the payee shall have the money at all events, whether the fact be true or false, or is deemed in law so to intend” (ibid, 695; see also National Bank v O’Connor (1969) 103 ILTR 73 (Budd J); Leslie v Farrar Construction Ltd [2016] EWCA Civ 1041 (01 November 2016) [33], [52] (Jackson LJ)). Or the plaintiff could have paid “with full knowledge of all of the facts” (Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349, 370, [1998] UKHL 38 (29 October 1998) (Lord Goff; discussing Brisbane v Dacres (1813) 5 Taunt 143)). Or the plaintiff could have waived all inquiry into the true facts (Kelly v Solari (1841) 9 M & W 54, 59, 152 ER 24, 26 [1841] EngR 1087 (18 November 1841) (pdf) (Parke B)). Or the plaintiff could have voluntarily submitted to the plaintiff’s honest claim to the enrichment (David Securities v Commonwealth Bank of Australia (1992) 175 CLR 353, [1992] HCA 48 (7 October 1992) [31], [36]-[37] (Mason CJ, and Deane, Toohey, Gaudron and McHugh JJ in a joint judgment; discussing Brisbane v Dacres)). Or the plaintiff could have acted voluntarily (Aiken v Short (1856) 1 H & N 210, 215, 156 ER 1180, 1182 [1856] EngR 621 (7 June 1856) (pdf) (Platt B)), to close a transaction (Maskell v Horner [1915] 3 KB 106, 118 (Lord Reading CJ)). Or the plaintiff could have acted “officiously” (which is simply pejorative synonym for “voluntarily”) in conferring the benefit (see the discussion of Owen v Tate [1976] QB 402 (CA) and Hackett v Smith [1917] 2 IR 508 in my previous post). Or the plaintiff could have paid, with doubts about liability, but nevertheless effectively consenting to the payment; as Lord Hope put it in Kleinwort Benson (at 410), a “state of doubt is different from that of mistake” (he made the same point in Deutsche Morgan Grenfell v Inland Revenue [2007] 1 AC 558, 583, [2006] UKHL 49 (25 October 2006) [64]). Or the plaintiff may simply have paid on foot of a supposition or belief that turned out to be a misprediction: “a mistake must be distinguished from mere ignorance or inadvertence, and also from … misprediction” (Futter v Revenue and Customs; Pitt v Revenue and Customs [2013] 2 AC 108, [2013] UKSC 26 (9 May 2013) [104] (Lord Walker; Lords Neuberger, Mance, Clarke, Sumption and Carnwath, and Lady Hale, concurring) (hereafter: Futter & Pitt)). This is illustrated by Royal Bank of Ireland v Pentony [1941] IR 523 (SC). The bank sought to recover £82 as money paid to the defendant under a mistake of fact. The bank believed that they were to receive £1,132 in Land Bonds, and estimated that, as a consequence, £160 13s 5d would remain to the credit of the defendant on his current account. The bank permitted the defendant to draw a cheque for that amount. However, the bank only received £1,050 in Land Bonds, which was £82 less than they expected, and they claimed that the cheque for £160 13s 5d included the £82 which they would not have paid if they had known that the full amount of Land Bonds would not be forthcoming. The bank’s claim failed. In the High Court, Maguire J held that the bank had not made a mistake. The Supreme Court upheld. Murnaghan J (Sullivan CJ, and Meredith, Geoghegan and O’Byrne JJ concurring) held that, as a matter of authority relating to Land Bonds, the bank had to be treated as having received the full £1,132. Meredith J agreed, but gave as an additional reason that the bank’s payment was made on foot of a misprediction and not a mistake:

To my mind this case is sufficiently clear on the main facts. It does not appear that there was any mistake as to the funds available, but the anticipation that the Land Bonds would be transferred in a few days was disappointed. The £1,050 was not received for some months, and, owing to the retainer, the balance has not yet been received. Consequently the plaintiffs have lost patience, and brought this action. In my opinion they did not honour the cheque on a mutual mistake of fact, as they allege, but because they relied, with a certain want of that business-like caution which, as a rule, characterises bank action, on the supposition and belief that the whole £1,132 Land Bonds would be received in a few days. They knew there would be some delay, but they underestimated its probable duration. That is not the sort of mistake of fact that will support an action of this kind. Whatever claim the Bank may have in the future the precise claim they now make is premature.

As Lord Walker put it in Futter & Pitt, a “misprediction relates to some possible future event, whereas a legally significant mistake normally relates to some past or present matter of fact or law” ([2013] UKSC 26 [109]). In these terms, in Pentony, Maguire and Meredith JJ found that the Bank had made a misprediction as to the value of the bonds to be received in the future, rather than a mistake as to some past or present matter of fact or law relating to the bonds.

There is a common point underlying all of these different ways of addressing the issue: the “real point is whether the person who made the payment took the risk that he might be wrong. If he did, then he cannot recover the money” (Deutsche Morgan Grenfell v Inland Revenue [2007] 1 AC 558, 570-571, [2006] UKHL 49 (25 October 2006) [26] (Lord Hoffmann); cp 583, 585 [64]-[65], [70] (Lord Hope), 618, [175] (Lord Brown)). Hence, in Pentony, it can be said that Murnaghan J in the High Court and Maguire J in the Supreme Court effectively held that the bank took the risk that the full payment of Land Bonds would not be made. The same point arose in the High Court in Webb v Ireland [1988] IR 353. The plaintiffs had found the Derrynaflan Hoard of 8th and 9th century liturgical vessels, including the Derrynaflan Chalice (pictured left). They had delivered the hoard to the custody of the National Museum, which had done work restoring the chalice. Blayney J in the High Court held that the plaintiffs had title to the hoard, but he allowed a counter-claim by the State for the value of some of the restoration work done by the Museum. In particular, he held that the defendants were entitled to restitution for the work that was done on the chalice while the Museum laboured under the mistaken belief that the State was the owner of the hoard; but he held that the defendants were not entitled to restitution for the work that was done after the Museum became aware of the plaintiffs’ claim to the chalice. When they were doing the latter work, the defendants were no longer mistaken; and, though they continued to work on the chalice, they “accepted the risk” that the plaintiff’s claim was valid ([1988] IR 353, 370). On appeal, the Supreme Court held that the defendants had title, so the restitution issue did not arise. In these cases, if the plaintiff took the risk that the money was not due, then “there is not the requisite causative link between any mistake about liability and the payment” (BP Oil International Ltd v Target Shipping Ltd [2012] EWHC 1590 (Comm) (14 June 2012) [232] (Smith J)).

Given that all of these defences are effectively different ways of saying the same thing, Occam’s Razor suggests that they all ought to be rationalised on the single, simple, basis that the plaintiff voluntarily assumed the risk that the enrichment may be irrecoverable. It also crucial to understand the limits of this defence of voluntary enrichment. We have seen in a previous post that voluntariness provides an answer to an element of intention-based causes of the action, and thus constitutes a defence to a claim arising from an intention-based unjust factor, such as mistake or compulsion. On this view, however, voluntariness does not constitute a defence to causes of action arising for reasons unrelated the plaintiff’s intention, such as those that respond to the circumstances of the defendant, or to some strong policy requiring restitution.

So, the question in Samsoondar and Surrey would be whether Capital and Surrey had made their payments to their respective third parties accepting the risk that it was not due to them and so could not be recovered from Samsoondar and Lincs. This may be plausible on the facts of Samsoondar, though it is far less so on the facts of Surrey. Other defences also arose on the facts of these cases, and I will consider them in my next (and final) post in this series.

I say in the above post that, had a claim based on mistake arisen in either or both of Samsoondar and Surrey, then the question would have whether Capital and Surrey had made their payments to their respective third parties accepting the risk that it was not due to them and so could not be recovered from Samsoondar and Lincs; and I regarded the argument that, in Samsoondar, Capital had taken such a risk to be a plausible one. In a recent note on that case, Steve Hedley makes the point with his customary polish (see Steve Hedley “Restitution and Car Crashes. A Simple Case of Mistake” (2021) 80(1) Cambridge Law Journal 36 (sub req’d); already noted on this blog) (emphasis added):

Were Capital really mistaken at all? They understood their position precisely. Nonetheless, if they straightforwardly believed they had to pay, then they are by legal fiction treated as mistaken (even though they made no error); but if they knew that the effect of the statute was an open legal question, they might perhaps be regarded as taking on themselves the risk that the law might be reinterpreted. Resolving this would have required minute and careful questioning of Capital’s decision maker, which was never done ([[2020] UKPC 33] at [24]). …

It is interesting to imagine how the Trinidadian courts might have approached these issues, had they realised that they were expected to address them. To say that Capital were mistaken at all was regarded by Narine J.A. as “artificial” (T.T.C.A., 5 May 2017, at [9]); understandably so. It is a legal fiction, required by the Kleinwort Benson case ([1999] 2 A.C. 349), which demands that we view the decision to pay through the prism of the law as it was subsequently established to be. No doubt Capital were aware both of the requirements of the statute and of the risk that its interpretation might change – but whether they should be regarded as naively “mistaken” (simply assuming that the correct interpretation would not change) or as conscious risk-takers (deliberately taking a chance that nothing would change) might be difficult to answer.

Indeed.

8 Reply to “Samsoondar v Capital Insurance and Surrey Co Co v NHS Lincolnshire CCG – Part 6 – Defences: Voluntariness, and Assumption of Risk”

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Eoin says:

14 June, 2021 at 11:49 am

I say in the above post that, had a claim based on mistake arisen in either or both of Samsoondar and Surrey, then the question would have whether Capital and Surrey had made their payments to their respective third parties accepting the risk that it was not due to them and so could not be recovered from Samsoondar and Lincs; and I regarded the argument that, in Samsoondar, Capital had taken such a risk to be a plausible one. In a recent note on that case, Steve Hedley makes the point with his customary polish (see Steve Hedley “Restitution and Car Crashes. A Simple Case of Mistake” (2021) 80(1) Cambridge Law Journal 36 (sub req’d); already noted on this blog) (emphasis added):

Were Capital really mistaken at all? They understood their position precisely. Nonetheless, if they straightforwardly believed they had to pay, then they are by legal fiction treated as mistaken (even though they made no error); but if they knew that the effect of the statute was an open legal question, they might perhaps be regarded as taking on themselves the risk that the law might be reinterpreted. Resolving this would have required minute and careful questioning of Capital’s decision maker, which was never done ([[2020] UKPC 33] at [24]). …

It is interesting to imagine how the Trinidadian courts might have approached these issues, had they realised that they were expected to address them. To say that Capital were mistaken at all was regarded by Narine J.A. as “artificial” (T.T.C.A., 5 May 2017, at [9]); understandably so. It is a legal fiction, required by the Kleinwort Benson case ([1999] 2 A.C. 349), which demands that we view the decision to pay through the prism of the law as it was subsequently established to be. No doubt Capital were aware both of the requirements of the statute and of the risk that its interpretation might change – but whether they should be regarded as naively “mistaken” (simply assuming that the correct interpretation would not change) or as conscious risk-takers (deliberately taking a chance that nothing would change) might be difficult to answer.

Indeed.