Kelly v Solari
Money paid under a mistake of fact can be recovered even if the payer was careless and had the means of discovering the truth, provided that he did not intend to pay whether or not the fact was true.
Facts
An insurance company paid out on a life policy to the widow of the insured, forgetting that the policy had lapsed because the premium had not been paid, although the company's records showed this. It sought to recover the money. The widow argued that the company could not recover, because it had the means of knowing that the policy had lapsed.
Legal principle
The Court of Exchequer held that the company could recover the money, if it had in fact forgotten that the policy had lapsed, and ordered a new trial. Parke B said that where money is paid to another under the influence of a mistake, that is, upon the supposition that a specific fact is true, which would entitle the other to the money, but which fact is untrue, and the money would not have been paid if it had been known to the payer that the fact was untrue, an action will lie to recover it back, and it is against conscience to retain it. The fact that the payer was careless, or had the means of knowledge, did not bar recovery, although if he waived inquiry and intended to pay in any event, he could not recover.
Related cases on mistake, failure of basis, duress and services
- Barclays Bank Ltd v WJ Simms Son & Cooke (Southern) Ltd [1980] QB 677
- BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783
- Craven-Ellis v Canons Ltd [1936] 2 KB 403
- Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2006] UKHL 49, [2007] 1 AC 558
- Dextra Bank & Trust Co Ltd v Bank of Jamaica [2001] UKPC 50
- Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) [1992] 2 AC 152
- Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32
- Goss v Chilcott [1996] AC 788
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This summary is for study and revision and is not legal advice. Although our case summaries are checked for accuracy, we do not guarantee that they are free from errors or omissions. Always read the full judgment for the court's reasoning.
