#6763 - Ministry Of Health V. Simpson - Restitution of Unjust Enrichment BCL

Ministry of Health v. Simpson

Facts

Caleb Diplock died intestate as to his residuary estate, which amounted to over 250,000l. He had by his will dated November 3, 1919, purported to dispose of it by directing his executors to apply it "for such charitable institution or institutions or other charitable or benevolent object or objects in England" as his acting executors or executor might in their or his absolute discretion select. The invalidity of this disposition was finally established by the House of Lords in the year 1944.

An action was commenced in the same Division by the first three respondents (legal representatives of the deceased) to the present appeal, together with another person, claiming to be four of the next of kin of the testator, against the executors or their personal representatives, certain selected charitable institutions, which had received donations from the executors, and the Attorney-General, claiming administration of the testator's estate. In this action an order was made on April 5, 1944, by which the court approved a compromise of the claims of the plaintiffs against the executor and directed that such compromise should be binding on all persons beneficially entitled to the property of the testator. Under this order (inter alia) a sum of 15,000l. was to be paid by the executors to the fourth respondent to this appeal, who had been appointed judicial trustee of the testator's estate. This order was relevant to the present appeal because its admitted effect was that by it the first three respondents and all other next of kin must be deemed to have exhausted whatever remedy they had against the executors in respect of the wrongful distribution of the estate.

On July 28, 1945, the respondents issued the writ in the action in which this appeal arose. The original defendants were the President, Vice-Presidents, Treasurer and Governors of Westminster Hospital, a corporation incorporated by private Act of Parliament. By their action the respondents claimed a declaration of the liability of the defendants to refund to the estate of the testator the sum of 4,000l. which they had received out of that estate from the executors with interest thereon and an order for payment accordingly.

Holding

Acting under a mistake the personal representatives of a testator whose residuary disposition is invalid distribute his residuary estate upon the footing that it is valid. Have the next of kin a direct claim in equity against the persons to whom it has been wrongfully distributed? I think that the authorities clearly establish that, subject to certain qualifications which I shall state, they have such a claim.

But I should in passing mention Orr v. Kaines (96) in which it was clearly established that the right of an underpaid legatee to claim directly against the overpaid legatee is subject to this qualification, that he must first exhaust his remedy against the executor who has made the wrongful payment. It was for this reason that I mentioned at an earlier stage of this opinion that the next of kin must be deemed to have recovered from the executors all that they could recover. They had then no other way to recover the balance that was due to them than by proceeding directly against the appellant and other institutions amongst which the executors had distributed the estate.

My Lords, I find little help in such generalities. Upon the propriety of a legatee refusing to repay to the true owner the money that he has wrongly received I do not think it necessary to express any judgment. It is a matter on which opinions may well differ. The broad fact remains that the Court of Chancery, in order to mitigate the rigour of the common law or to supply its deficiencies, established the rule of equity which I have described and this rule did not excuse the wrongly paid...