Tuesday 12 January 2016

UK: England and Wales: the principle in Ex Parte James

A few days ago judgment was given by Mr Justice Hildyard in TOC Investments Corporation v Beppler & Jacobson Ltd [2016] EWHC 20 (Ch). The decision is interesting for several reasons, one of which is the endorsement provided for the expansive view taken by Mr Justice David Richards (as he then was), in Lomas v Burlington Loan Management Ltd [2015] EWHC 2270 (Ch), of what is known as the principle in Ex parte James. Mr Justice Richards observed (at para. [174]):

The principle in Ex parte James has been described as anomalous but it is a well-established principle providing a means by which the court can control the conduct of its officers. Administrators, liquidators in a compulsory winding-up and trustees in bankruptcy are all officers of the court and subject to this jurisdiction. The case to which the principle owes its name, like a number of cases immediately following it, concerned the retention by a liquidator or trustee in bankruptcy of money paid under a mistake of law. At that time, money paid under a mistake of law was not recoverable, but the court directed that its officer should not stand on his strict legal rights but should return the funds, notwithstanding that the effect was to deprive the creditors of funds which would otherwise be available for distribution among them. The rationale for the principle was that, although irrecoverable at law, the officer of the court could not in all conscience retain the money, given the circumstances in which it had been paid. It would amount to an unjust enrichment of the estate. Although the principle was first developed and exercised in these circumstances, subsequent cases applied it in other circumstances and it cannot now be said to be confined to particular categories of case".

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