TFL Management Services Ltd v Lloyds Bank Plc

An alleged incidental benefit is not an autonomous bar to restitution. Where a claimant has conferred a benefit while acting in its own interest but under a mistake, the claim must be assessed through the established questions of enrichment, whether it was at the claimant’s expense, whether it was unjust, and any defence.

Self-interest, and the absence of inducement or knowing inaction by the recipient, do not by themselves defeat a mistaken-services claim. Questions concerning indirect enrichment, causation, contractual context, risk and value are fact-sensitive. They should not ordinarily be resolved by summary judgment where the claim has a realistic prospect of success.

TFL, as assignee of Explora’s rights, claimed restitution from Lloyds Bank. Explora had unsuccessfully litigated against Hesco for commission that the Court of Appeal later held was retained by TTF’s receivers as book debts. The receivers subsequently recovered the debt from Hesco, and the Bank received the proceeds under its security.

TFL alleged that Explora and the Bank had acted under a mutual mistake as to the assignment, and that Explora’s litigation had saved the Bank costs by removing obstacles to recovery. HHJ Pelling QC summarily dismissed the unjust-enrichment claim as founded only on an incidental benefit: [2013] EWHC 772 (Ch). TFL appealed. The central issue was whether that claim had a real prospect of success or was inevitably barred at the summary stage.

1. Appeal allowed by a majority. Floyd LJ, with whose reasoning Beatson LJ agreed, held that the unjust-enrichment claim was not bound to fail and should not have been summarily dismissed. Sir Stanley Burnton dissented.
2. There was no secure English-law basis for a free-standing “incidental benefit” exception that automatically excluded restitution. The four questions identified in Banque Financiere de la Cite v Parc (Battersea) Limited, [1999] 1 AC 221, remained the appropriate analytical framework: enrichment, whether it was at the claimant’s expense, whether it was unjust, and defences. Those questions are broad headings, not rigid statutory rules.
3. The first-instance judge had been wrong to treat a mistake as relevant only where the recipient induced it or knowingly stood by. Greenwood v Bennett, [1973] 1 QB 195, showed that a claimant acting in its own commercial interest may nevertheless have a restitutionary claim where it mistakenly confers a benefit on another. The absence of encouragement by the Bank and Explora’s self-interest were not conclusive.
4. It was commercially realistic to regard the prior judgment as capable of benefiting TTF and the Bank by enabling a simpler and less costly recovery from Hesco. Whether any benefit was sufficiently connected with Explora’s expenditure, and whether contractual arrangements, alternative remedies, risk or valuation defeated the claim, required evidence. The relevant considerations for indirect enrichment were guides rather than inflexible conditions.
5. The claim therefore had a realistic prospect of success on the assumed facts. Developing and fact-sensitive restitution issues should be determined at trial rather than through a summary application. The order granting summary judgment on the unjust-enrichment claim was set aside.

Sir Stanley Burnton would have dismissed the appeal. In his view, the claim impermissibly sought to circumvent the earlier costs jurisdiction, and the Bank’s entitlement to the commissions arose from the unrectified contractual allocation rather than from any enrichment conferred by the prior judgment.

1. Court of Appeal (Civil Division): By a majority, allowed TFL’s appeal and set aside the summary dismissal of its unjust-enrichment claim: [2013] EWCA Civ 1415.
2. High Court, Chancery Division: HHJ Pelling QC entered summary judgment for the Bank, holding that the alleged benefit was merely incidental and could not support restitution: [2013] EWHC 772 (Ch).