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Citigroup v Brigade Capital Management: Difference between revisions
Citigroup v Brigade Capital Management (view source)
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''Ouch''. This is the “[[discharge-for-value defense]]” — criticised by some US authorities,<ref>A Schall, ''Three-Party Situations in Unjust Enrichment Epitomised by Mistaken Bank Transfers'' [2004] RLR 110.</ref> but still the law there. The English courts have come to an opposite conclusion: {{cite|Barclays Bank Ltd|WJ Simms|1980|QB|677}} | ''Ouch''. This is the “[[discharge-for-value defense]]” — criticised by some US authorities,<ref>A Schall, ''Three-Party Situations in Unjust Enrichment Epitomised by Mistaken Bank Transfers'' [2004] RLR 110.</ref> but still the law there. The English courts have come to an opposite conclusion: {{cite|Barclays Bank Ltd|WJ Simms|1980|QB|677}} | ||
This was the crux of the decision: the payment, though mistaken discharged a debt, was received without inducement or notice of the mistake. It is not at all clear that prepaying a loan when the loan is not due ''does'' discharge the debt, nor that the lenders can have been labouring under the slightest hint of an misapprehension that the payment was intentional and not mistaken — but the Judge was not prepared to play the [[Anus matronae parvae malas leges faciunt|little old lady]] card in favour of Citi. To the contrary, Citi got the [[durum caseum per magnos canibus]]'' treatment: the court considered itself bound rather literally by ''Banque Worms'', and I dare say that precedent will get a good testing on appeal. | This was the crux of the decision: the payment, though mistaken discharged a debt, was received without inducement or notice of the mistake. It is not at all clear that prepaying a loan when the loan is not due ''does'' discharge the debt, nor that the lenders can have been labouring under the slightest hint of an misapprehension that the payment was intentional and not mistaken — but the Judge was not prepared to play the [[Anus matronae parvae malas leges faciunt|little old lady]] card in favour of Citi. To the contrary, Citi got the ''[[durum caseum per magnos canibus]]'' treatment: the court considered itself bound rather literally by ''{{casenote|Banque Worms|Bank America}}'', and I dare say that [[precedent]] will get a good testing on appeal. | ||
===Must the debt be “due”?=== | ===Must the debt be “due”?=== | ||
A way out occurred to Citi: at the time of the payment, Revlon’s debt to the lenders was not, ''then'', due and payable. It would not mature for another three years. | A way out occurred to Citi: at the time of the payment, Revlon’s debt to the lenders was not, ''then'', due and payable. It would not mature for another three years. This seems strikingly sensible, but the Judge could find nothing in the restatement on which {{casenote|Banque Worms|Bank of America}} relied, or any of the [[common law]] precedents, that required a “present entitlement”. One might take the court to task for being a little too literal there. | ||
==Citi and Revlon== | ==Citi and Revlon== | ||