Portman Building Society v Hamlyn Taylor Neck (a firm)
Defendant acting for plaintiff and purchaser of property – Plaintiff making loan under mistaken belief that property in private occupation – Defendant releasing money to vendor – Plaintiff suffering loss – Defendant seeking to strike out plaintiff’s claim for money had and received – Plaintiff’s appeal dismissed
In January 1989 AB wished to purchase a property in Torquay for £98,000. AB instructed a solicitor in the defendant firm to act for him and applied to the plaintiff for an advance of £93,000, to be secured by a mortgage on the property. On the application form to the plaintiff, AB stated that the use of the property was to be residential only. The plaintiff made an offer to lend AB £93,000 with an express condition that the property was to be used solely for private occupation. In February 1989 AB accepted the offer. The plaintiff then instructed the defendant firm to act on its behalf. The property, which had eight bedrooms, had previously been used as a guest house and, it was susequently asserted, AB intended to continue that use.
The defendant negotiated an apportionment of the purchase price between the property, the goodwill and the fixtures and fittings. The amount attributed to the property was £87,250. The report on title completed by the defendant stated that the special conditions as to occupancy imposed by the plaintiff had been complied with, and that there were no other matters about which the plaintiff should be advised. However, to the defendant’s knowledge AB was not intent upon sole occupancy and moreover, the apportionment of £87,250 was a matter about which the plaintiff ought to have been advised by the defendant. As a result, the plaintiff believed that the special condition had been complied with and that the purchase price of the property was £98,000. Having received the report on title the plaintiff released £92,100 to the defendant, the balance being retained for a guarantee indemnity policy. The transaction was completed on March 21 1989 and the defendant paid £92,100 to the vendor.
Defendant acting for plaintiff and purchaser of property – Plaintiff making loan under mistaken belief that property in private occupation – Defendant releasing money to vendor – Plaintiff suffering loss – Defendant seeking to strike out plaintiff’s claim for money had and received – Plaintiff’s appeal dismissed In January 1989 AB wished to purchase a property in Torquay for £98,000. AB instructed a solicitor in the defendant firm to act for him and applied to the plaintiff for an advance of £93,000, to be secured by a mortgage on the property. On the application form to the plaintiff, AB stated that the use of the property was to be residential only. The plaintiff made an offer to lend AB £93,000 with an express condition that the property was to be used solely for private occupation. In February 1989 AB accepted the offer. The plaintiff then instructed the defendant firm to act on its behalf. The property, which had eight bedrooms, had previously been used as a guest house and, it was susequently asserted, AB intended to continue that use.
The defendant negotiated an apportionment of the purchase price between the property, the goodwill and the fixtures and fittings. The amount attributed to the property was £87,250. The report on title completed by the defendant stated that the special conditions as to occupancy imposed by the plaintiff had been complied with, and that there were no other matters about which the plaintiff should be advised. However, to the defendant’s knowledge AB was not intent upon sole occupancy and moreover, the apportionment of £87,250 was a matter about which the plaintiff ought to have been advised by the defendant. As a result, the plaintiff believed that the special condition had been complied with and that the purchase price of the property was £98,000. Having received the report on title the plaintiff released £92,100 to the defendant, the balance being retained for a guarantee indemnity policy. The transaction was completed on March 21 1989 and the defendant paid £92,100 to the vendor.
When the plaintiff subsequently discovered that AB was running a guest house business, it successfully took proceedings for the possession of the property which it sold, but recovered less than the secured debt. By writ dated January 19 1996 the plaintiff brought an action against the defendant claiming damages for breach of contract, negligence, breach of trust, a claim for money had and received and breach of fiduciary duty. The defendant applied to have the action struck out. The claims for breach of contract, negligence and breach of trust were struck out as being statute barred. The claim for money had and received was struck out as disclosing no reasonable cause of action and the plaintiff appealed from that order contending, inter alia , that, had it not been for the mistaken belief it would not have paid over the money, and that a claim for money had and received existed from the moment the defendant received the fund.
Held The appeal was dismissed.
As a matter of law, an action for money had and received did not lie at the suit of a principal against an agent where the agent, having received money from its principal, disposed of the money in accordance with the principal’s instructions. In such a case, money had and received could not be recovered where the recipient of the money had not, and could not be said to have been, unjustly enriched.
Simon Berry QC and Mark West (instructed by Clarke Willmott & Clarke, of Yeovil) appeared for the appellant; David Halpern (instructed by Bond Pearce, of Southampton) appeared for the respondent.
