#6871 - Philip Collins V. Davis - Restitution of Unjust Enrichment BCL

Philip Collins v. Davis

Facts

The claimant company, Philip Collins Ltd, is and has at all material times been entitled to the services of the well-known popular musician, Mr Phil Collins. The defendants, Mr Rahmlee Davis and Mr Louis Satterfield, are professional musicians who accompanied Mr Collins on a highly successful world tour in 1990. The defendants, with two others, formed the horn section of the group, which consisted of 13 musicians in all. It was contemplated by the claimant that on completion of the tour an album would be released containing recordings of live performances taking place during the tour, and by their contracts of engagement for the tour each of the musicians (including the defendants) granted the claimant the right to exploit such recordings. The musicians' contracts of engagement also included an entitlement to royalties on such recordings.

In the event, recordings were made of a number of live performances during the tour, and in November 1990 (the tour having ended the previous month) 15 of such recordings were released as an album under the title 'Serious Hits Live'. I will refer to this album hereinafter as 'the live album'. The horn section (including the defendants) performed on only 5 of those 15 tracks; the remaining musicians performed on all 15 tracks.

Throughout the period of more than six years from the release of the album in November 1990 until March 1997 the claimant accounted to the defendants for royalties on the live album without applying any discount or deduction to reflect the fact that the defendants had performed on only 5 out of the 15 tracks. However, by letters dated 26 March 1997 from its chief accountant the claimant informed the defendants that royalties had been mistakenly paid to them in respect of tracks on which they had not performed, and that in consequence they had been overpaid by a total of $US345,151·4323 in respect of worldwide sales of the live album outside the United Kingdom.

In contesting this claim, the defendants inter alia relies on the defence of change of position arguing that they had spent the relevant mistaken payment made to them so that they can no longer be recovered.

Holding

Estoppel

The defendants' case on this issue is that the mere making of each royalty payment represented that the payment was due; that the defendants relied on such representations to their detriment; and accordingly that the claimant is estopped from seeking repayment.

In my judgment, however, the mere tendering of a payment under a contract does not, without more, amount to a representation that the payment is due (see Lipkin Gorman (a firm) v Karpnale Ltd [1992] 4 All ER 512 at 533, [1991] 2 AC 548 at 579 per Lord Goff of Chieveley). No reasonable person will assume that mistakes may not be made. The tender may well amount to a representation that the tenderer believes the sum tendered to be due, but that is a representation as to the tenderer's current state of mind and not as to the parties' rights under the contract.

In any event, as I read the relevant authorities, the law has now developed to the point where a defence of estoppel by representation is no longer apt in restitutionary claims where the most flexible defence of change of position is in principle available (see the Lipkin Gorman case [1992] 4 All ER 512 at 534, [1991] 2 AC 548 at 580, Goff and Jones, The Law of Restitution (5th edn, 1998) pp 828–829, Scottish Equitable plc v Derby [2000] 3 All ER 793 and Avon CC v Howlett [1983] 1 All ER 1073, [1983] 1 WLR 605).

Change of Position

General principles: In the first place, the evidential burden is on the defendant to make good the defence of change of position. However, in applying this principle it seems to me that the court should beware of applying too strict a standard. Depending on the circumstances, it may well be unrealistic to expect a defendant to produce conclusive evidence of change of position, given that when he changed his position he can have had no expectation that he might thereafter have to prove that he did so, and the reason why he did so, in a court of law. In the second place, as Lord Goff stressed in the passage from his speech in the Lipkin Gorman case quoted above, to amount to a change of position there must be something more than mere expenditure of the money sought to be recovered, 'because the expenditure might in any event have been incurred º in the ordinary course of things'. In the third place, there must be a causal link between the change of position and the overpayment. In South Tyneside Metropolitan BC v Svenska International plc [1995] 1 All ER 545, Clarke J, following Hobhouse J in Kleinwort Benson Ltd v South Tyneside Metropolitan BC [1994] 4 All ER 972, held that, as a general principle, the change of position must have occurred after receipt of the overpayment, although in Goff & Jones the correctness of this decision is doubted (see pp 822–3). But whether or not a change of position may be anticipatory, it must (as I see it) have been made as a consequence of the receipt of, or (it may be) the prospect of receiving, the money sought to be recovered: in other words it must, on the evidence, be referable in some way to the payment of that money. In the fourth place, as Lord Goff also made clear in his speech in the Lipkin Gorman case, in contrast to the defence of estoppel the defence of change of position is not an 'all or nothing' defence: it is available only to the extent that the change of position renders recovery unjust.

General hardship is not sufficient: In the second place, the fact that the defendants are currently in financial difficulties is not in itself indicative of a relevant change of position on their part. Although that fact might have been relevant in considering...