#6886 - Jones V. Churcher - Restitution of Unjust Enrichment BCL

Jones v. Churcher

Facts

The claimant, Stephen Jones, is a car dealer trading under the name of The Chelsea Car Company from office premises in Battersea. At the time of the CHAPS transfer to Miss Churcher he employed two people, a mechanic, and a secretary, Miss Annabel Loveday.

Jones and Sharky established contact: Mr Jones began acquiring his cars through Mr Sharkey rather than through Mr Warnock. Mr Sharkey's source of supply was a VW dealer in Dublin.

Jones Started ordering cars through Sharky: The import price of a new VW Golf GT-TDI in 2005 and early 2006 was about 14,300 inclusive of VAT. This was a significant discount on the showroom price of an authorised UK dealer. Mr Sharkey told Mr Jones in 2005 that he could supply through Murway as many as 100 cars. Mr Jones did not commit The Chelsea Car Company to so large a number: but he placed a number of orders with Murway which were successfully delivered.

Money Transfers made to Sharky: It was Mr Sharkey who gave Mr Jones details of the bank account to which payment to Murway should be made. Until October 2005 it was an account with Barclays. Then it was switched to an account with NatWest. Payments addressed to Murway were made to both accounts without a problem and the cars were duly delivered. Then, in February 2006, Mr Sharkey told Mr Jones that Murway was experiencing banking difficulties and he provided Mr Jones with details of a different bank account.

First payment to Churcher’s account (not a mistake this time): The cost was 14,300. When the order was relayed to Mr Sharkey, he sent a text message to Mr Jones asking for payment to be made to an account number 94270991 at Abbey National, The Bridge, Walsall in the name of K. Churcher. This was Miss Churcher's personal bank account, details of which Mr Sharkey had obtained in circumstances I will mention presently.

Second Transfer: Intended for a car company but made by mistake to Churcher’s Account:

Within days of this order, Mr Jones told Mr Sharkey that he wanted another 5 VW Golfs from Murway. Mr Sharkey replied that, owing to continuing banking difficulties being experienced by Murway, payment for the cars should be made to an account number 06165821 with the Bank of Scotland in the name of Lophius Trading Ltd. Mr Jones assumed that Lophius was in some way connected with Murway.

Miss Loveday prepared a CHAPS transfer form for payment of a sum of 42,300. Since Mr Jones was out of the office, and she was not an authorised signatory for The Chelsea Car Company, she had to resort to subterfuge to get his signature on the form. She went to the previous forms on the file and looked for one with a signature bearing a similar date. She found a CHAPS form signed by Mr Jones on 7th February 2006 on which (as was his custom) he had added the date immediately under his signature as “7/2/06”. She photocopied the form, cut out the signature and date, and pasted it onto the new form. All would or might have been well if she had correctly completed the beneficiary's details: but she did not. In error she did not take the beneficiary details from what should have been the immediately preceding CHAPS form in her CHAPS file i.e. the form for the transfer to Lophius on 24th February. She took the beneficiary details from the CHAPS form for the transfer on 21st February which were the details for Miss Churcher's account. In consequence the 42,300 was sent to Miss Churcher's account on the afternoon of 7th March, not to the account of Lophius.

Jones realized the mistaken payment

Mr Jones realised that a mistake had been made when Mr Sharkey phoned him the next day to complain that no payment for the 3 cars had been received. He checked his firm's CHAPS records and saw that the money had been sent to Miss Churcher rather than to Lophius. Mr Jones immediately set about trying to rectify the mistake.

Either later the same day or on the following day (10th March) Mr Jones made contact with Mr Sharkey by phone and explained what had happened to the first payment of 42,300 and how he had just replaced it with a second payment. He asked Mr Sharkey to get in touch with Miss Churcher and get her to send the first payment back. Mr Sharkey replied that he would try to contact Miss Churcher and get the money back somehow.

Sharky took the money from Jones’ account

Mr Sharkey did indeed contact Miss Churcher: but not in order to persuade her to repay The Chelsea Car Company. He rang her on Sunday, 12th March and began by saying that she had money in her bank account which he wanted. She was cross with him because she thought he had deliberately used her account a second time without permission. I accept Miss Churcher's evidence that Mr Sharkey told her that the money was needed for another car transaction and that it had been paid into her account by mistake. He asked for the money back, starting with an immediate 500 in cash.

Churcher explained to Jones that the money had been paid to Sharky

Mr Jones turned his attention to Miss Churcher. He got his solicitors to write to her c/o Abbey National's Clearing Centre. The letter demanded return of the 42,300 by 14th April or proceedings would be issued. Following receipt of the letter, Miss Churcher somehow found Mr Jones' telephone number and rang him. She explained that all of the money had gone to Mr Sharkey (this was not quite correct: by my calculation she retained about 1,850). Mr Jones said he would get back to her: but there were no further communications between the two of them until these proceedings were issued.

Holding

Churcher’s change of position claim

Miss Churcher was the first to recognise in her oral evidence that, with hindsight, she had been unwise ever to have allowed Mr Sharkey to use her bank account on the basis of so slender an acquaintance. Quite literally, he was a man she had met in the pub on only a few occasions. When the second, much larger sum, arrived in her account on 7th March without prior warning, she was admittedly shocked, and angry. It is significant that her first reaction was to ring Abbey's Customer Services helpline to ask whether the bank could return the money. When that did not work, and all the bank could tell her was that the money had come from The Chelsea Car Company, she said she tried (unsuccessfully) to find the company's details through directory inquiries and in Autotrader magazine. She did nothing else until Mr Sharkey contacted her. She then began handing over the money to him.

Churcher had good grounds to believe and was aware of the suspicious circumstances, but still made made no enquiry and paid the money to Sharky

It also makes little difference because I am satisfied that Miss Churcher knew enough, without having to read the bank's letters, to realise that the second payment into her account might have been a mistake and that the money might not be money to which Mr Sharkey was entitled.

All the circumstances were suspicious and Miss Churcher's conduct demonstrates that she was aware of that fact. First, the money arrived without explanation. On the first occasion Mr Sharkey's explanation (that the money was to be used to buy a car of his own) had been just about plausible. There was no obvious reason why a further sum of 42,300 should need to be routed through Miss Churcher's account. Indeed, her reaction at the outset was that the payment was a mistake and the money ought to be returned. Yet she made no very serious attempt to track down The Chelsea Car Company. The company had a listed telephone number in Battersea (0207 738 0594). It is surprising that Miss Churcher's limited inquiries did not discover it.

Having decided to keep quiet about the money, Miss Churcher had no one...