Banker cannot keep overpaid bonus

The fact that a City banker had remained in employment rather than moving to another bank was not a sufficient change of position to entitle him to retain an overpayment of £250,000 which his employer had paid him by mistake.

The Court of Appeal so held allowing an appeal by the defendant, Commerzbank AG, from a decision on December 17, 2002 of Mr David Phillips QC, sitting as a deputy Queen's Bench Division judge, requiring the bank to pay £250,000 to the claimant, Gareth Price-Jones.

Mr Charles Hollander, QC and Mr Andrew Henshaw for the bank; Mr Robert Englehart, QC and Mr Donald McCue for Mr Price-Jones.

Lord Justice Mummery said the claimant, an exceptional employee with a £120,000 annual salary, was entitled to an annual bonus of at least £250,000.

The bank had written to him increasing the bonus to £265,000. He had received that bonus, but had subsequently been made redundant and maintained that on a proper construction of the bank's letter, he was entitled to a total of £515,000.

The judge had found that he was contractually entitled to the whole sum, but had come to that conclusion without paying sufficient attention to the actual language of the bank's letter.

The claimant resisted the bank's claim for restitution on the basis that in anticipation of a total bonus of £515,000, he had stayed on in his job rather than seeking a post with a different bank.

On the authorities it was for the claimant to demonstrate a sufficient causal link between the change of position and the mistaken payment.

The court ought not to apply that requirement narrowly, since it was dealing with a broad defence to a claim based on a broad principle of unjust enrichment.

There had to be a relevant connection between the change of position and the actual or anticipated payment. On the facts there was no such connection.

Here the change of position resulted from the claimant's erroneous belief that the defendant would pay him £515,000.

The appeal would be allowed.

Lord Justice Sedley agreed and Mr Justice Munby delivered a concurring judgment.

"The Times": 26th November 2003