Avon County Council v Howlett
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE CUMMING-BRUCE,LORD JUSTICE EVELEIGH,LORD JUSTICE SLADE |
| Judgment Date | 21 December 1982 |
| Judgment citation (vLex) | [1982] EWCA Civ J1221-1 |
| Docket Number | 82/0484 QBF 249/81 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 December 1982 |
[1982] EWCA Civ J1221-1
Lord Justice Cumming-Bruce
Lord Justice Eveleigh
and
Lord Justice Slade
82/0484
1976 C No. 3574
QBF 249/81
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
BRISTOL DISTRICT REGISTRY
(Mr. Justice Sheldon)
Royal Courts of Justice
MR. D.H. FLETCHER (instructed by a solicitor to the County Council) appeared on behalf of the Respondents (Plaintiffs).
MR. J. BOWYER (instructed by Messrs Gilhams) appeared on behalf of the Appellant (Defendant).
The course which the case took at the hearing gives rise to difficulty in determining how far the decision of this court can be relied upon as establishing how the law of estoppel will be applied to other cases. The difficulty is the result of the fact that the learned judge admitted evidence which satisfied him that the defendant had spent all moneys overpaid but then decided the case on an artificial case pleaded in the defence. The defendant's counsel, on instructions, deliberately refused to apply to amend the defence in order to reconcile the detriment pleaded in paragraph 12 of the re-amended defence with the evidence of the defendant. So the judge found as a fact that the defendant had spent all the £1,107 which he had received as an overpayment due to the plaintiffs' mistake but decided the case on the basis of the pleaded case which alleged that he had only spent £546.61 and that there was no evidence about what had happened to the balance of £460.39. This was untrue. The judge solved the practical problem by making an order in the following terms:
"It is ordered that the plaintiff is entitled to recover from the defendant the sum of £460.39 the Plaintiff having undertaken not to execute this judgement without leave of the court and that the Defendant's counterclaim is dismissed. And there is no order for costs."
The judgment was, in my view, based on a hypothetical state of facts, without substance or reality, because the judge in the course of his judgment had found that the defendant had spent all the £1,107. I quote:
"At an early stage of the hearing, however, it also became clear that all the money so overpaid had long since been spent by the recipient, and indeed, that Mr. Howlett neither had nor would be likely in the future to have sufficient funds with which to meet any judgment that might be given against him. On my enquiring of the parties, however, whether there was any purpose in incurring further costs in this connection I was told that the local government reorganisation in question had resulted in a number of similar overpayments having been made to other individuals and that, accordingly, both the Council and the Union concerned (the Confederation of Health Service Employees) wished to use this as a test case, so far as possible, to establish the various rights and liabilities. I was also told that the Council, if they succeeded in their claim against Mr. Howlett, were prepared to undertake not, without leave of the court, to seek to enforce any such judgment against him."
In Adams -v- Naylor (1946) AC 543, the House of Lords disapproved a practice whereby the Crown authorities nominated a defendant in order to bring into court for judgment issues which were really issues between the plaintiff and the Crown, but for convenience disguised in the pleadings as issues between the plaintiff and the personal defendant. As Lord Uthwatt stated at p.555:
"It was not open to the parties to this suit by agreement to have the matter dealt with on the footing, proved to be false, that the defendant was in occupation of the land in question. The matter could not be dealt with on the basis wished by the Crown."
In the instant case the appellant/defendant has no practical reason for objecting to the order against which he appeals. There is on the judge's finding quoted above no reason for thinking that he will ever have to pay anything back to the plaintiffs. The appeal is brought in order to obtain the decision of the court upon a purely hypothetical question of detriment in its relevance to the law of estoppel. The hypothetical question is of general importance, and is said to be of importance in other cases in which the local authority and the defendant's union are concerned. I have found the resolution of the hypothetical question difficult; it is not easy to determine whether and when the court will restrict the effect of an estoppel if to apply it with the full rigour will clearly produce injustice. Viscount Cave L.C. in Jones -v- Waring & Gillow Ltd. (1925) AC 670 at 685 evidently thought that the court should find a way of preventing a party so using estoppel as to make a profit, and Lord Denning M.R. thought that estoppel was a flexible doctrine: see Amalgamated Property Co. -v- Texas Bank (1981) 3 WLR 565 at 575. These cases afford strong reasons for refusing to give a judgment founded on estoppel on facts which exist only in the mind of the pleader. The law does not and should not develop by such a device, and the ratio of such a decision is liable to be seriously misleading. I do not consider that the decision of this court in the instant appeal is authority for the proposition that where on the facts it would be clearly inequitable to allow a party to make a profit by pleading estoppel, the court will necessarily be powerless to prevent it.
In argument before us upon this hypothetical question, it was contended on behalf of the defendant that where the defendant successfully proved that he had acted to his detriment upon a representation by the plaintiff which was inconsistent with the true facts, and that his detriment was proved to be substantial in the sense that it was not de minimis, he was entitled to keep all the money paid through the mistake which the plaintiff was estopped from alleging, even though the result was to leave him with a windfall profit. Alternatively it was contended that if he was liable to repay any sum on the ground that it was inequitable for him to retain it (a) the onus lay upon the plaintiff to prove that the facts that made such retention inequitable, and (b) on the pleadings the plaintiffs had alleged no such facts or resulting inequity.
Having regard to the facts actually found by the judge, the whole of this argument was fanciful. The money had never been paid as a single sum to the defendant. £1,007 represented the total arrived at by adding together a large number of small sums received over a period of many months and paid as the remuneration on which he relied for discharge of his ordinary living expenses. By the date of trial nothing was left, and the judge found that it would be inequitable to require the defendant to repay anything. It would, in my view, be quite wrong in those circumstances for the court to indulge in speculation about where the onus might lie having regard to pleadings that were accepted by both parties to be a fiction. In other cases it may be a nice question whether on the pleaded facts the plaintiffs have established prima facie that it would be inequitable to retain some of the money had and received by a mistake which the plaintiffs are estopped from denying. If the defendant by his defence has raised estoppel, the plaintiff may by reply contend that it is inequitable to allow the defendant to retain part or all of the benefit of the mistake; the defendant may plead by rebuttal facts repelling the charge that retention is inequitable. At trial the evidential burden may shift. But none of this arises in this case because the facts found by the judge demonstrate that the case raised in grounds 2, 3 and 3a of the grounds of appeal is a fiction.
My conclusion is that once the judge had held that it would not be inequitable to require the defendant to repay any part of the moneys overpaid, he should have refused to decide the case on a basis which was neither pleaded nor supported by evidence. If the plaintiffs wished to argue that it was inequitable that the defendant should retain some part of the £1,007, they should have pleaded the facts relied upon in support of that plea. It was submitted by Mr. Fletcher that only the defendant could know what had happened to the money, so to require the plaintiff to plead facts giving rise to an equity in their favour is to place upon them a burden impossible to discharge. I disagree. The solution of their procedural problem may in the appropriate case lie in an application for discovery of documents and answers to interrogatories. But before the judge there was no reply by the plaintiffs alleging that it was inequitable for the defendant to retain any part of the money, and the evidence which the judge admitted proved that it was not inequitable. So on the case as pleaded, and on the evidence before him, there was no material on which he could hold that the defendant was liable to pay back any part of the money paid to him by the proved mistake of fact.
For these reasons I would allow the appeal.
I have had the advantage of reading the judgment that Lord Justice Slade is about to deliver. I agree with it, though I go further than he does in my view that there is a fundamental objection to the approach of the judge in that he yielded to the persuasions of the parties, or perhaps more realistically to the persuasions of the union supporting the defendant and of the council to try a question which had become hypothetical once more of the facts had emerged in evidence before him. I have however myself been enticed into expressing my views obiter on the necessity...
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