Condictio indebiti

Question 1

Condictio indebiti

Answer 1

Claim to recover benefit that was undue conferred in error as to legal liability with the result that discharge fails

Question 2

Particular requirements of the Condictio Indebiti claim

Answer 2

1. P must prove that he conferred a benefit that was received by D
2. The purpose of the parties in making and receiving the conferral must have been to discharge a legally recognised debt/duty
3. The purpose for which the conferral was made must have failed. This requirement is usually expressed in the terms that the debt/duty which the parties intended to discharge must have been undue.
4. P must have been in error in his belief as to the existence of the debt/duty when he made the conferral. he must have acted in error as to legal liability. Error is to be understood as a lack of knowledge on P’s part that the debt/duty was undue
5. no general or particular defence must be available to D to defeat or reduce the level of the claim
6. The whole circumstances of the case must be such that it is equitable to compel the defenders to redress the unjustified enrichment.

Question 3

Deliberate conferral

Answer 3

Condictio claims require there to be a deliberate act which conveys the positive (transfer of ownership, transfer of property, or transfer of incorporeal rights) or negative (discharge of debt) enrichment - Ross v Mackenie

Question 4

Purpose

Answer 4

For a condictio claim to arise, the transfer must be for a purpose which subsequently failed. Often in an attempt to discharge a debt which turns out to be undue (non-existing)

Question 5

Morgan Guaranty Trust Co of New Yourk v Lothian Regional Council

Answer 5

it is the fact that the sum was not due that provides the ground for repetition on the principle of unjustified enrichment.
That undue payment or delivery made through error of fact or law (a mistaken impression of a necessity to pay/perform) must be restored, where there is no just case to support it.

Question 6

Agnew v Ferguson

Answer 6

without discharge there is no basis for retention of the enrichment

Question 7

Legal and natural obligation

Answer 7

A cautioner who pays a debt once his civil (legal) obligation is extinguished can recover the payment since he is not under a natural obligation to pay.the claim is also made avaliable where, in error, the wrong person is paid or where the extent of the natural duty is exeeded.

Question 8

Moore’s Exec v Mc Dermind

Answer 8

Agreement concluded between debtor and all creditors except D that some of his debt would be extinguished if he payed a small amount of it. Upon his death his wishes were to repay these debtors the remaining debt plus interest. This was by mistake also payed to D, which although it was a gift was recoverable as there was no “debt” to repay.
Money which is payed, although undue, cannot be recovered if it was part of a transaction (they got something in return)

Question 9

Knowlege

Answer 9

The basic idea is that P must not have known that the debt/duty that he intended to discharge was undue when he made the conferral.

Question 10

Relevant error

Answer 10

Error which induced P to make the conferral, must consist of belief that the performance was due.
Conferrals made in the knowledge it is not due are either gifts or construed as gifts and are irrecoverable (Balfour Melville v Duncan)
If a person knew at one time, but not at the time of payment (for example if they have forgotten) is not barred from recovery. (Brownlie v miller)
A person who knew the facts upon which it could be deduced that no discharge would result from performance, but had not made that deduction is not necessarily barred from recovery. (Dalmellingron iron co v Glasgow and south western railway co)
There is no obligation to prove that P’s error was “excusable”

Question 11

Operation of Error

Answer 11

Carrick v Carse - when payment is made sine causa it will be presumed to have proceeded from error and not donation unless the contrary can be proved.
To place the burden of proof of error on P conflicts with the presumption against gifts.

Question 12

Error which does not ground condictio indebiti

Answer 12

Cathcart v Moodie - the error did not consist in the belief of a duty that was undue but in the mistaken belief that the funds of the estate were sufficient to meet all debts.
McIver v Roy - the error was not in the belief the duty was undue, but rather that no person would appear to claim the money.
These were mis-predictions, not errors as to legal liability as necessary to found the cause of action.

Question 13

Motive

Answer 13

Conferrals made under an error as to motive, are irrecoverable.

Question 14

Excusable error (no longer relevant)

Answer 14

Kelly v Solari - if the money is payed under the impression of truth of fact which is untrue, ir may be recovered, however careless the party paying may have been in omitting to use due dilligence to inquire into the fact.
Wilson and Maclellan v Sinclair - if the party who has paid the money is under an unavoidable mistake, if the mistake is no fault of his, then he may have it back, but if he has himself to blame he shall by no means of the law have that repaid to him.
Youle v Cochrane and others - an error in fact arising from mere ignorance is not enough to sustain a plea, the ignorance must be excusable

Question 15

Equitable (the new excusable error)

Answer 15

The Scottish law never distinguished between error of law and error of fact.
English law did.
Scots law changed to be compatible with English law.
English law changed, and so made no sense for scots law to keep it as it was merely a flood gate for restoration cases.
Schanged the requirement of excusable error to the requirement that repayment must be equitable.

Question 16

Glasgow Corporation v Lord Advocate

Answer 16

• Recieved a demand for tax payment under the Finance Act 1946, which was disputed but never the less payed.
• Glasgow Corp claimed it back when it was later found inland revenue were mistaken in sending out the invoice.
• Court held that Glasgow Corp were mistaken in law and so was not due a refund as this was inexcusable.

Question 17

Morgan Guaranty Trust co of NY v Lothian Regional Council

Answer 17

• a claim was raised by an amreican bank to recover payments made under a swaps agreement that was held to be void on the ground that it was ultra vires for the council to enter such a transaction.
• At first instance authority of Glasgow Corp was held, no refund.
• On appeal followed precedence of English appeal case similar to Glasgow corp -> Woolwich building society v IRC - tax demand was mistaken yet Woolwich still payed due to fear of incurring penalties, found to be refundable because law was reformulated in England to provide a prima facie right to recover money payed to a public authority pursuant to an ultra vires demand. (mainly due to the perception that retention of undue tax by revenue contravened the constitutional principle of no taxation without parliamentary consent)
• This was essentially how Scots law was before conforming to english law pre reformulation
• Court declared that Glasgow Corp had been wrongly decided, and that there should be no distinction as to error of law and error of fact.