Interim payment means interim payment, you might say. A final account should produce the exact total figure payable and identify any balancing payment needed. And money paid under a mistake of fact, or law, can be recovered, subject to certain defences. But what if a developer makes a payment to a builder, knowing that it may be more than they owe, but choosing not to ascertain the correct amount. Can any overpayment be recovered?
A developer and builder carried out a number of developments under an oral “Framework Agreement”. The builder was to receive its “build costs” (although these were never identified) and, on completion, there was to be a sharing of the profits. A costs budget was agreed for each site and, as works proceeded, the builder requested interim payments, which were round sums unsupported by any details or evidence of costs incurred. The developer made the payments because they were within budget and appeared reasonable and he trusted the builder. On completion of each project the parties agreed what sum was due to the builder in respect of the “build costs” and profit share but the developer did not require, and the builder did not provide, any schedule of the “build costs”. They proceeded on the basis that these were the same as the budget costs and the developer was content with this arrangement. After the parties’ collaboration came to an end, however, the developer claimed repayment of sums overpaid.
The claim failed. The Court of Appeal noted the important principle that, where someone voluntarily makes a payment, knowing that it may be more than they owe, but choosing not to ascertain the correct amount due, they cannot ordinarily recover that overpayment, unless, for instance, there has been fraud or misrepresentation.