[2025] EWHC 2477 (Ch)

The counterclaims are restitutionary claims alleging that the claimants were unjustly enriched by rent which the defendants paid by mistake when they were not required to pay it.

Per Lord Hope of Craighead in Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 407-408 (with emphasis added):

“Subject to any defences that may arise from the circumstances, a claim for restitution of money paid under a mistake raises three questions. (1) Was there a mistake? (2) Did the mistake cause the payment? And (3) did the payee have a right to receive the sum which was paid to him?

The first question arises because the mistake provides the cause of action for recovery of the money had and received by the payee. Unless the payer can prove that he acted under a mistake, he cannot maintain an action for money had and received on this ground. The second question arises because it will not be enough for the payer to prove that he made a mistake. He must prove that he would not have made the payment had he known of his mistake at the time when it was made. If the payer would have made the payment even if he had known of his mistake, the sum paid is not recoverable on the ground of that mistake. The third question arises because the payee cannot be said to have been unjustly enriched if he was entitled to receive the sum paid to him. The payer may have been mistaken as to the grounds on which the sum was due to the payee, but his mistake will not provide a ground for its recovery if the payee can show that he was entitled to it on some other ground.”

As to Lord Hope’s first question, there is in this case no dispute about the fact of the mistake (see paras ‎9 - ‎10 above). As to his third question, the parties agree that it follows from the First Judgment that the landlords were not entitled to the rent they received.

There is, however, a dispute about the answer to Lord Hope’s second question: Did the defendants’ mistake cause the rental payments? We heard evidence on this question and there are also some relevant and undisputed facts.