Murray & Unjust Enrichment: Supreme Court Narrows the Defences

Commentary on Bank of Ireland Mortgage Bank v Murray & anor (Approved) [2025] IESC 24

1. Introduction

In Bank of Ireland Mortgage Bank v Murray & anor the Supreme Court of Ireland, by a 3-2 majority, delivered a landmark ruling on the scope of restitutionary relief where a bank advances a housing loan under a fundamental mistake. Collins J (concurring with Dunne J) clarified that:

• Negligence or internal procedural lapses by the lender do not, without more, bar a claim in unjust enrichment.
• Part IX of the Consumer Credit Act 1995 (“CCA 1995”) – which governs housing loans – does not contain the statutory penalty of unenforceability that applies to consumer credit agreements under Part III. Consequently, public-policy objections drawn from consumer-protection norms will rarely defeat a restitutionary claim on a housing loan.
• The change-of-position defence requires proof of “extraordinary” irreversible expenditure causally linked to the mistaken enrichment; ordinary spending or repayment of pre-existing debts will not suffice.

These findings substantially recalibrate the risk allocation between lenders and passive recipients of misapplied housing-loan funds, and constitute the most authoritative Irish guidance on the defences to unjust enrichment since Corporation of Dublin v BATU (1996).

2. Background to the Case

Parties

• Plaintiff/Respondent: Bank of Ireland Mortgage Bank U.C. (“the Bank”).
• Defendant/Appellant: Brian Murray, a fisherman.
• Second Defendant (not an appellant): Attracta Murray, Mr Murray’s wife.

Key Facts

1. 2003: The Bank advanced a loan secured on the family home, apparently to both spouses. In fact, Mrs Murray forged her husband’s signature.
2. 2007: A larger “top-up” housing loan was advanced on the same (mistaken) premise that both spouses were co-borrowers and that the existing security covered the new advance.
3. Funds were paid into a joint account and used to clear tax liabilities, purchase land, discharge the 2003 loan balance, fund children’s expenses, and support social-welfare contributions – all benefiting Mr Murray.
4. Years later the Bank discovered the forgeries. It sued Mrs Murray in contract (undisputed) and Mr Murray in unjust enrichment. Baker J in the High Court awarded restitution (€594,000). The Court of Appeal upheld the order.
5. Mr Murray appealed, contending (i) Bank misconduct, (ii) breach of consumer-credit public policy, and (iii) change of position.

Supreme Court Composition

Dunne J (majority), Collins J (concurring), Murray J formed the majority; Woulfe & Hogan JJ dissented jointly.

3. Summary of the Judgment

Collins J’s concurring opinion – the focus of this commentary – adopts Dunne J’s factual findings and adds a detailed doctrinal roadmap:

1. All three elements of unjust enrichment were satisfied: (a) enrichment (receipt of loan proceeds), (b) at the Bank’s expense, (c) unjust factor (causative mistake as to the borrower’s identity and security).
2. No defence displaced the prima facie restitutionary entitlement:
   • Illegality / claimant wrongdoing: The branch manager’s mis-attestation was, at worst, a negligent internal breach; the Bank itself was the victim of the deception and was not a “party” to any fraud.
   • Public Policy: Part IX of the CCA 1995 lacks an unenforceability sanction; allowing restitution does not “stultify” the statutory purpose. Cases such as Wilson v First County Trust (HL, 2003) are distinguishable because they dealt with Part III–type agreements where Parliament expressly barred enforcement.
   • Change of Position: Mr Murray neither pleaded nor proved extraordinary reliance. Routine expenditure, repayment of debts, and acquisition of assets do not amount to an irreversible detriment.
3. The appeal was dismissed; the Court of Appeal’s decision to order restitution was affirmed.

4. Analysis

4.1 Precedents Cited

• Corporation of Dublin v Building and Allied Trade Union [1996] 1 IR 468 – set out the tripartite test for unjust enrichment and warned against “palm-tree justice”.
• Kelly v Solari (1841) 9 M&W 54 – classic authority that even a careless payer may recover money paid under mistake.
• Barclays Bank v W.J. Simms & Cooke [1980] QB 677; Scottish Equitable v Derby [2001] – negligence versus deliberate risk-taking; carelessness does not preclude recovery.
• Investment Trust Companies v HMRC [2017] UKSC 29 – emphasised the need for ascertainable rules and rejection of open-ended fairness.
• Patel v Mirza [2016] UKSC 42 – proportionality when illegality is alleged.
• Wilson v First County Trust [2003] UKHL 40 – restitution barred where Parliament expressly deemed the underlying agreement unenforceable.
• Lipkin Gorman v Karpnale [1991] 2 AC 548 – formulated the modern change-of-position defence.
• Dextra Bank v Bank of Jamaica [2002] 1 All ER (Comm) 193 – reiterated that relative fault is irrelevant to change-of-position unless negligence amounts to conscious risk-taking.

4.2 Court’s Legal Reasoning

1. Unjust Factor – Mistake: The Bank’s belief that Mr Murray was a co-borrower and that security existed was both causative and fundamental. Modern law treats any causative mistake of fact or law as sufficient.
2. Claimant Wrongdoing? The alleged misconduct (branch manager signing as witness) was internal, unconnected to the deception, and devoid of bad faith. The Bank’s negligence, while undeniable, is irrelevant under the settled line from Kelly v Solari.
3. Statutory/Public-Policy Bar?
   • Part IX housing loans differ from Part III credit agreements: there is no equivalent of s.38 unenforceability.
   • Therefore, restitution does not undermine the legislative scheme; Wilson cannot be transplanted wholesale.
4. Change of Position:
   • The burden is on the defendant; evidence must show irreversible detriment not otherwise incurred.
   • Mr Murray’s spending (tax payments, land purchase, social-welfare contribution) either increased his net wealth or discharged existing liabilities; no qualifying detriment.
5. Role of Proportionality: Although not decisive here, Collins J endorsed Patel v Mirza as the modern framework should illegality arise.

4.3 Potential Impact

The decision will likely:

• Make it easier for lenders to use unjust-enrichment claims where formal loan instruments are void or forged.
• Limit the change-of-position defence in Ireland by insisting on strict proof of extraordinary reliance.
• Send a signal that courts will not graft consumer-credit sanctions from Part III onto housing loans governed by Part IX absent explicit legislative language.
• Encourage financial institutions to maintain – but also critically to document – internal controls, knowing that negligence alone will not forfeit restitution.
• Influence cross-border litigation: UK and Commonwealth courts frequently cite Irish unjust-enrichment jurisprudence; the judgment may be persuasive authority on the interaction between statutory consumer protection and restitution.

5. Complex Concepts Simplified

Unjust Enrichment

A legal claim to force someone who has been unfairly benefited at another’s expense to give that benefit back.

Unjust Factor – “Mistake”

The specific reason the benefit is considered unjust. Here, the Bank’s fundamental factual error about who the borrower was.

Change of Position Defence

A shield for the defendant: if they spent or relied on the money in a way they cannot reverse, it may be inequitable to force full repayment.

Part III vs Part IX (CCA 1995)

Part III deals with standard consumer credit (e.g., personal loans, hire-purchase) and imposes strict formality; Part IX governs housing loans (mortgages) and is less draconian – it lacks the automatic “unenforceability” sanction.

“Stultification”

Legal shorthand for defeating or undermining (“making useless”) a statute’s purpose; courts avoid rulings that would do this.

6. Conclusion

Bank of Ireland Mortgage Bank v Murray re-anchors Irish restitution law in firm principle:

• The tripartite test of unjust enrichment remains robust; negligence by the payer does not dilute the right to recover.
• Consumer-protection policy, vital though it is, will not be stretched beyond the text of the CCA 1995 to extinguish claims that Parliament did not intend to bar.
• Defences – wrongdoing, public policy, change of position – must be pleaded and proved with precision; broad appeals to fairness are insufficient.

For lenders, the judgment is reassuring: if duped into advancing a mortgage under a causative mistake, restitution is still within reach. For borrowers (or unintended recipients), the case is a cautionary tale: mere expenditure of misapplied funds, or the lender’s sloppiness, will rarely excuse repayment. Legislators may now face pressure to revisit Part IX should they wish to create consumer sanctions equivalent to those in Part III.