Ledger Pay v Cobalt Freight

Ratio

A recipient that knows an automated remittance exceeds the sum due, and applies the excess to a third party for the payer account without authority, cannot resist restitution on the ground of change of position or compel the payer to accept an unauthorised third party credit in lieu of repayment.

Issues and reasoning, in general terms

1. Whether an overpayment made because an automated reconciliation process parsed duplicated charge lines in an invoice is recoverable in restitution as money paid under a mistake of fact.

Under Rule 3.5 and the received common law applied under Rule 3.1, money paid under a causative mistake of fact is prima facie recoverable in restitution. The rule was applied to an automated payment calculated on duplicated line items in an invoice annex. Because the surplus was remitted under a mistake and no consideration was given for it, the payer established an immediate right to restitution. The losing party's answer, and why it failed: The recipient argued that the payer should be forced to take an assignment of an unauthorised third-party credit rather than receive repayment in money, which failed because money paid without consideration under a causative mistake of fact is prima facie recoverable as money had and received. Answer: The surplus paid by reason of processing duplicated charge lines was paid under a causative mistake of fact and is recoverable in restitution.

2. Whether a recipient that knows a remittance exceeds what was due can resist restitution by paying the excess to a third party for the payer account without authority.

Under [2026] CP 5 and [2026] CPM 128, a recipient that knows an automated remittance exceeds the invoiced charge and pays the excess to a third party without authority has not changed its position in good faith. The rule was applied to an agent that unilaterally remitted an identified surplus to a third party. Contractual cure under Rule 5.1 and Dealings Act clause 4.4 has no application to restitution of money paid without consideration. The recipient remains bound to repay the surplus in money. The losing party's answer, and why it failed: The recipient argued that it retained no enrichment after remitting the funds to a third party and that the payer should be put to an election under Rule 5.1 and Rule 5.3, which failed because the defence of change of position requires good faith reliance and does not assist a volunteer that acts with knowledge that the surplus was not due. Answer: An agent that knows a remittance exceeds the sum due cannot rely on change of position or compel acceptance of an unauthorised third-party credit in place of repayment.

3. Whether an order for restitution of an overpayment made under a mistake of fact must be reduced under Rule 5.3 or Dealings Act clause 4.5 for the payer failure to detect duplicate invoice entries.

Under Rule 5.3 and Dealings Act clause 4.5, reduction applies only where an agent fails to give what the dealing required of it. The rule was applied to an automated reconciliation routine that failed to detect duplicate charge lines. Because the payer performed its obligation and the excess was not due under any dealing, contributory fault does not reduce restitution of money had and received. The losing party's answer, and why it failed: The recipient argued that the recovery should be reduced because the payer automated process failed to cross-check the invoice annex against the total, which failed because carelessness by the payer does not bar or reduce restitution for money paid without consideration. Answer: A restitutionary claim for repayment of money paid under a causative mistake of fact is not reduced on account of the payer carelessness in reconciliation.

4. What remedies, including interest under Practice Direction 6, follow upon establishing an unauthorised retention of a mistaken payment.

Under Rule 5.1 and Practice Direction 6 §2 and §3, the Court may declare a mistaken payment repayable and order repayment with simple interest from the date of demand. The rule was applied to a recipient that identified an overpayment upon receipt and refused a demand for repayment. The payer is granted an order for repayment together with simple interest at the rate prescribed under Practice Direction 6 §4 from demand until payment. The losing party's answer, and why it failed: The recipient argued that no immediate money order should be made and that interest should not accrue, which failed because interest is authorised under Practice Direction 6 from the date of demand where a recipient retains an overpayment. Answer: The payer is entitled to a declaration of repayability, an order for repayment of the surplus, and simple interest under Practice Direction 6 running from the date of demand.

Circumstances, in general terms

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/3 claude-sonnet-4-5-20250929.