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Money Paid Under a Mistake of Law Not Recoverable Where the Payment Would Have Been Made in any Event

Philip Petchey

In an unusual and illuminating case on mistake, HHJ Worster sitting in the Birmingham County Court had to consider the guidance of the House of Lords in Kleinwort Benson v Lincoln City Council[1].

Mr Matthews owned a house which had until 1936 been a pub, and thereafter had been used in connection with a haulage business. Vehicular access to the house and pub was obtained by way of a track across a common and then across the field next to the pub.

In 1992 he obtained planning permission for a second house on the field next to the pub as part of a planning agreement whereby he gave up the haulage business.

After he had built the house, purchasers raised queries about whether the new house enjoyed vehicular rights across the common, and Mr Matthews lost several sales.

The policy of the owner of the common, Herefordshire Council, was not to charge for the grant of an easement if long use could be established, but to charge a "ransom" price in respect of new accesses. Mr Matthews thought that he did have a long established use in respect of access to the pub, but his legal advisers thought that there would be difficulty in establishing any legal right in the light of Hanning v Top Deck[2]. Against this background, in 1998 he paid £56,500 for the grant of easement, which the Council thought that he was paying in respect of a new access.

After Hanning v Top Deck was overruled by Bakewell Management v Brandwood[3], Mr Matthews claimed the return of the £56,500 as money paid under a mistake of law.

Judge Worster held that the house which was formerly a pub did enjoy a vehicular right of access based on long user, but that the new house did not, there being a radical change in the use of the dominant tenement.

He went on to hold that the £56,500 was paid on the basis of mistake of law. However following Lord Hope in Kleinwort Benson[4], he went on to consider whether the mistake had caused the payment. He held that Mr Matthews had not shown that but for Hanning v Top Deck[5] he would not have paid the ransom; that had Mr Matthews put to the Council the proposition that he enjoyed a long standing right, they would not have accepted this (because the long use did not demonstrate a separate right of access to the new house). Accordingly Mr Matthews would have had to have made the payment in order to sell the new house. In these circumstances the claim was dismissed.

Philip Petchey acted for Herefordshire Council.

 

[1] [1999] 2 AC 349.

[2] (1994) 68 P and CR 14.

[3] [2004] 2 AC 519.

[4] [1999] 2 AC 349.

[5] (1994) 68 P and CR 14.