Ignorance is Bliss when you want your money back!

Ignorance is Bliss when you want your money back!

By
Philip Sorsensen

"Ignorance of the law is no defence" is a rule so deeply entrenched in the law, that it has passed into everyday usage. Now this cherished maxim has been undermined following Klienwort Benson Limited -v- Lincoln City Council. In this landmark decision heard by the House of Lords just before Christmas the House found by a majority of three to two that:

1 on an application of the principle of unjust enrichment, money paid under a mistake of law can be recovered;

2 the principle applies even if the money is paid under a settled understanding of the law which is subsequently changed by judicial decision;

3 it is no defence for the recipient of the money to claim that when the money was paid he honestly believed he was entitled to retain it;