#6773 - Morgan V. Ashcroft I - Restitution of Unjust Enrichment BCL

Morgan v. Ashcroft

Facts

The plaintiff is a bookmaker and he claims to recover from the defendant, a licensed victualler who had been in the habit of making bets with him, a sum of 24l. 2s. 1d., being the amount of an alleged overpayment made by the plaintiff to the defendant in settling bets.

The learned county court judge found as a fact that the defendant had been overpaid to the extent of 24l. 2s. 1d. and that the overpayment was made under a mistake of fact - namely, the mistake of the plaintiff's clerk in not noticing that the 24l. 2s. 1d. due on the first day's transactions had been credited twice, and he gave judgment for the plaintiff for this amount. He entertained doubts as to the maintainability of the counterclaim, but he found as a fact that the defendant did not make the additional bets in question, with the result that the counterclaim in any event failed.

Issue

Whether or not the learned county court judge was right in holding that the plaintiff is entitled to recover the 24l.2s.1d.which upon the account must be taken to have been an unintentional overpayment.

Holding

Wilfrid Greene MR

Court cannot take account of Gambling Transactions

It was necessary for the Court to examine the state of the account between the parties. Now this, in my opinion, is a thing which the Court is not entitled to do, since by merely taking the account the Court would necessarily be recognizing wagering transactions as producing legal obligations and therefore doing the very thing which the Gaming Act, 1845, does not permit to be done. In truth, a claim such as the present to recover an overpayment in respect of wagering transactions must, in my view, inevitably be founded upon an account between the parties. It would plainly not be possible for a bookmaker to bring an action for an account of the wagering transactions between himself and a client and repayment of any amount found upon the taking of the account to have been overpaid… In other words, the Court could not examine the state of account between the parties; and as the plaintiff's claim could not be dealt with in the absence of an examination of the whole account it must of necessity fall.

Implied Contract Reasoning

The plaintiff's claim is for money had and received, and it is based upon what the learned county court judge found to be a mistake of fact. The question which arises is, can such a claim succeed in the circumstances of this case? In my opinion it cannot. The nature of the claim to recover money paid under a mistake, and the limits within which it can be made, have been the subject of much controversy and the difficulties involved in providing a comprehensive solution to these problems have not as yet been overcome. Two propositions can, I think, be put forward with certainty. The first is that the claim cannot now be said to be based on some rule of aequum et bonum by virtue of which a man must not be allowed to enrich himself unjustly at the expense of another. Lord Mansfield's views upon those matters, attractive though they be, cannot now be accepted as laying the true foundation of the claim. The second proposition is that the claim is based upon an imputed promise to repay. "All these causes of action are common species of the genus assumpsit," said Lord Sumner in Sinclair v. Brougham. (1) "All now rest, and long have rested, upon a notional or imputed promise to repay."

When can a Promise to pay be implied?

That it will not do so in all circumstances is manifest. In general, no such promise can be imputed where the payment is made under a mistake of law. Nor can a promise to repay be imputed which, to quote again Lord Sumner's words in Sinclair v. Brougham (1), "if made de facto" the law "would inexorably avoid."

It is said that the sum overpaid was within the meaning of this section a sum paid by the plaintiff in respect of a wagering transaction and that the promise to repay which it is desired to impute is an implied promise to pay the plaintiff that sum. I cannot accept this argument…. In the first place, the section is concerned with promises to "pay" - this appears to me to contemplate an initial payment to be made in the future by the promisor, not a repayment under a promise imputed by law of money already paid to the promisor to which he had no claim… It was further held: In my opinion these words are not apt to include the case where the payment, although connected historically with a gaming contract, is in fact an overpayment made in the mistaken belief that it was due under such a contract.

Recovery of a mistaken payment – Fundamental Mistake test

The view of the law developed in the judgments to which I have just referred affords an additional guide. It is, I think, instructive to consider the words of Bramwell B. referred to above in the light of these authorities. In the first case which he mentions, namely, that where the supposed fact if true would have made the person paying liable to pay the money, the mistake is a mistake as to the nature of the transaction… The payer thinks that he is discharging a legal obligation whereas in truth and in fact he is making a purely voluntary payment. Such a mistake is to my mind unquestionably fundamental or basic and may be compared, at least by way of analogy, with the class of case in which mistake as to the nature of the transaction negatives intention in the case of contract. But the second case which he mentions, namely, that where the supposed fact would, if true, merely make the payment desirable from the point of view of the payer, is very different. In that case the payment is intended to be a voluntary one and a voluntary payment it is whether the supposed fact be true or not. It appears to me that a person who intends to make a voluntary payment and thinks that he is making one kind of voluntary payment whereas upon the true facts he is making another kind of voluntary payment, does not make the payment under a mistake of fact which can be described as fundamental or basic. The essential quality of the payment, namely its voluntary character, is the same in each case.

Mistakes of identity recognised as an exception

I do not agree, although I am disposed to think that they cannot be taken as an exhaustive statement of the law but must be confined to cases where the only mistake is as to the nature of the transaction. For example, if A makes a voluntary payment of money to B under the mistaken belief that he is C, it may well be that A can recover it.

In making the payment the respondent was, it is true, under a mistake as to the nature of the transaction. He thought that a wagering debt was due from himself to the appellant, whereas in fact it was not. But if the supposed fact had been true, the respondent would have been under no liability to make the payment which therefore was intended to be a voluntary payment. Upon the true facts the payment was still a voluntary payment; and there is in my opinion no such fundamental or basic distinction between the one voluntary payment and the other that the law can for present purposes differentiate between them and say that there was no intention to make the one because the intention was to make the other.

Scott LJ

Statutory Prohibition on considering gambling debts

Where the mistake relates to the amount of an honour credit for bets, the statutory veto upon the reception of evidence about gaming transactions, which I have discussed upon the first argument for the appellant, creates a special impediment, and in effect constitutes a special defence to the action for money had and received, by making it impossible to prove the mistake upon which the plaintiff is basing his claim.

Supposed Legal Liability

The well known passage in Bramwell B.'s judgment in Aiken v. Short) is perhaps the strongest statement of the proposition upon which he relied, but I agree with the Master of the Rolls that the facts of that case were not such as to make what the learned Baron there said the necessary basis of decision in that case. Indeed I do not think that this limiting proposition of the law about mistake of fact as one basis of the action for money had and...