Ledger Pay v Cobalt Freight

Ratio

A recipient that knows a payment exceeds the invoiced amount and applies the excess to a third-party prepayment without the payer's authority cannot resist restitution of the excess on the ground of change of position.

Circumstances, in general terms

Issues and reasoning, in general terms

1. Whether a recipient that knows a payment exceeds the invoiced amount and applies the surplus to a third-party prepayment without the payer's authority is liable to return the excess

The objects of the law include that no agent be enriched unjustly at another's expense, and the restitution of a payment made by mistake is a well-established category. The Court has held that a recipient which knows a payment exceeds the invoiced amount and applies the excess without the payer's authority cannot resist restitution, because knowledge of the excess and lack of authority defeat the good faith element of the change of position defence. The received law confirms that the defence requires the recipient to have acted in good faith on the faith of the receipt. The sources that answered this were the Dealings Act objects, the Court's own decisions, and the received law on change of position. The losing party's answer, and why it failed: The respondent argued that it changed its position by transferring the surplus to a third party and no longer holds the funds, so restitution would leave it out of pocket for a lost discount and a reversal fee, and that the claimant's own error caused the overpayment. This failed because the change of position defence requires good faith, and a recipient that knows of the excess and applies it without the payer's authority, contrary to its own declared practice, has not acted in good faith on the faith of the receipt. Answer: The recipient is liable to return the excess.

2. Whether interest is awarded and from what date

Practice Direction 6 allows the Court to award simple interest on a sum it orders to be paid. For restitution of a payment made by mistake, the sum falls due on the date of the demand for its return, or on the date of receipt where the recipient knew of the mistake when it received the payment. The recipient knew the payment exceeded the invoice but did not necessarily know it was a mistake until the demand was made, so interest runs from the date of the demand at the rate the Direction fixes. The losing party's answer, and why it failed: The claimant sought interest from the date of payment, on the basis that the recipient knew of the excess at receipt. This failed because knowledge of the excess is not the same as knowledge of the mistake; the recipient may have believed the excess was an intentional prepayment until the demand clarified the error. Answer: Interest is awarded from the date of the demand at the rate Practice Direction 6 fixes.

3. Whether court costs are awarded

The matter was heard within the daily free list, and no court fee arises on the judgment. There is nothing to order as costs. The losing party's answer, and why it failed: The claimant sought an order that the respondent cover court costs. This failed because no fee was charged for the hearing and there is nothing to shift. Answer: No costs order is made.

Authorities

Orders

Published in the form Judicature Act clause 2.9 provides (Practice Direction 17 version 2). The reasons are on the record of the matter and are not cited. Checked by pd17-check/2 claude-sonnet-4-5-20250929.