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Nurdin Peacock V. Ramsden Notes

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NURDIN & PEACOCK V. RAMSDEN FACTS The plaintiff was the assignee of a lease granted by the defendant in November 1990 for a term of 25 years. The annual rent was
PS207,683 payable quarterly, but in the fourth and fifth years of the term the tenant was required to pay an additional PS59,338. Although there was provision for an upwards only rent review on 17 November 1995, no such review took place. Accordingly, from that date the plaintiff's annual liability under the lease reverted to the initial figure of PS207,683. Despite that, the defendant continued to demand payment on the basis of the higher amount due in the fourth and fifth years of the term. Between November 1995 and February 1997 the plaintiff paid all the sums demanded without demur, but in April 1997, after reading the terms of the lease, it informed the defendant that it would only pay the lower amount and that it intended to set-off the overpayments against future rent. Subsequently, the plaintiff's solicitors advised it to continue paying the higher sum without set-off until the dispute had been resolved through arbitration or court proceedings, and further advised that the plaintiff would be entitled to a full refund if those proceedings were successful. Acting on that advice, the plaintiff paid the higher amount purportedly due on 1 May 1997 (the May overpayment). In fact, the plaintiff had no legal right to recover that overpayment since it was aware that it might not have been due. The solicitor's advice when the matter was brought to their notice was this: "[Nurdin] should not set-off the possible overpaid rent against future rent as forfeiture of the lease may allow the landlord, a competitor, into occupation. Legal advice from [Nurdin's solicitors] is that we should continue therefore to pay the rent at the higher level and seek to resolve the dispute by negotiation or through arbitration/court proceedings." Evidence shows that overpayments in respect of the rent due on 1 May, 1 August and 1 November 1996, were paid by Nurdin without any of its employees, solicitors or agents having looked at (or even having considered looking at) the lease, at least with a view to seeing what the level of rent should be, since the execution of the share sale agreement.... So far as the rent due on 1 February 1997 is concerned, it appears that it was paid on or about the date it was due, and by then Nurdin had at least woken up to the fact that it would be sensible to look at the lease. However, I am satisfied on the evidence that Nurdin paid the rent due on 1 February 1997 on the same basis as the immediately preceding four instalment. Mistake as to the first five payments: Mr Lamb stated that the rent was paid by Nurdin on an automated payment system: this involved payment being made automatically, if and when the invoice, was

passed to Nurdin's accounts department, unless that department received a positive instruction not to pay. "I should have noticed that the payments had been made in error as it was my responsibility to check and sign off invoices, but for the reasons set out above I failed to notice that the rent was being overpaid." HOLDING First Five Payments Nurdin's mistake can be characterised in one of two ways, or, possibly more accurately, in two cumulative ways. First, when putting the automated payment arrangements into effect in 1994, Nurdin failed to ensure that the arrangements were such that the level of payment was to be the subject of, at the least, reconsideration, and, at the most, automatic reduction, once the instalment due on 1 November 1995 had been paid. Further or alternatively, in November 1995, Nurdin forgot that the extra
PS59,338 pa ceased to be payable under the lease, and therefore failed to instruct the accounts department not to pay DBR quarterly payments at the rate of more than PS207,683 pa unless and until the rent was reviewed above that figure. In my judgment, each of Nurdin's oversights was, as a matter of ordinary language, a mistake of fact, not a mistake of law. Given that I have accepted Mr Lamb's evidence as accurate, his mistake was to fail to give proper instructions to the accounts department in 1994 and/or to forget that the terms of the lease required him to give fresh instructions to the accounts department in 1995/96. To put it another way, by 1995/96, he had forgotten what the lease provided. I suppose that one could characterise that as a mistake of law, in the sense that he assumed that the terms of the lease provided that the amount payable to DBR under the lease continued at the previous rate, but I consider that would be an artificial way of explaining what happened. Hence, it was held that the first five installments were clearly recoverable - this is regardless of the characterization into mistake of law or fact because after Kleinwort Benson, even if they had been characterized as mistakes of law, they would still have been recoverable. In these circumstances, I conclude that the first five overpayments are repayable, on the basis that they were paid pursuant to a mistake of fact (although it would now make no difference to my conclusion if the mistake were one of law) and that there is no special defence open to DBR. Succeeding installments The May 1997 overpayment was made by Nurdin to DBR on the basis of a belief on the part of Nurdin that, if DBR failed in its

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