Delroy Chuck, Contributor
OVERPAYMENT IS not unusual in commercial transactions. Where the recipients know of the error at the time of the transaction, if the overpayment is not returned, the law deems it a criminal offence - larceny by mistake. The law rarely, if ever, allows persons to take advantage of others' errors. Where the recipient is not aware of the error, however, different considerations apply. If the error is discovered and brought to the recipient's attention within a reasonable time, the overpayment can be lawfully recovered. Where the error is discovered after a prolonged period of time, as is the case with the Ministry of Education and teachers, what is the position?
RESULT OF MISTAKES
Overpayment results mainly from mistakes of fact. The complex paperwork, inefficiency and incompetence of pay clerks, wrong classification, the frequent changes in staff salaries, fringe benefits and entitlements, and the burdensome administrative machinery are the main reasons which cause mistakes of one kind or another. Was it systemic failure, erroneous classification or pure negligence that caused the government to overpay teachers for a period extending to eight years? The error was not discovered until some of the teachers retired and their pensions were being calculated. Of 29 categories, the Ministry of Education admitted that errors were made in 28 and affected over 100 teachers.
From the facts detailed in the media, I feel strongly that the government cannot recover the overpayment, as the law is on the side of the teachers. The teachers can rely on the equitable doctrine of estoppel that has been applied in several similar cases as theirs. Some 20 years ago, as a law lecturer at UWI, I had to advise on a similar case. A staff member was promoted by the UWI, the terms of his new contract were spelt out indicating the new benefits that he would enjoy, but not stating whether any old benefits lapsed. In his old job he was entitled to a marriage allowance, but unknown to him in his new job he was not eligible for a marriage allowance. He continued to receive a marriage allowance for over six years, from 1976 to 1982, when the bursary, in effecting a regrading of staff salaries, discovered the error. The UWI sought to recover the overpayment but, on my advice, later relented.
I was lucky then to have at my disposal a recently decided case, Avon County Council v. Howlett (1983) 1 All E. R. 1073, on which the teachers can certainly rely. In that case, the defendant in the action was injured in the course of his employment with the plaintiffs and as a consequence was absent from work. Under his conditions of service, he was entitled to six months full pay and six months half pay, thereafter to no pay so long as he was not working. In fact the plaintiffs continued to pay him at the rate well beyond the first six months and at the half rate beyond the second six months; the net result was the overpayment to the defendant of 1,007 pounds. Subsequently, when the plaintiffs discovered the overpayment they sought to recover it from the defendant.
COMMON GROUND
It was common ground that the overpayment by the plaintiffs to the defendant must be taken as having represented to the defendant that he was entitled to treat the whole of the money as his own. The defendant had positively relied on the representation; he spent some of the money on ordinary living expenses, bought a new car on hire purchase, refrained from claiming social security to which he would have been entitled if his salary was less, bought a new suit, and governed his expenditure based entirely on the salary that was represented as his true entitlement.
The defendant in Howlett in reliance on the plaintiff's representation had clearly changed his circumstances and it was even pleaded that he had telephoned to query his salary cheque only to be assured that it was correct. The mistake was evidently not the defendant's fault and no information was available to him to determine that the plaintiff was in error. Indeed, he was assured that everything was in order. But, even if he had not inquired, the court was quite clear that the plaintiffs were under a duty to represent to him his true entitlement. "The terms of the defendant's contract of employment and the manner in which the plaintiffs controlled the assessment of the defendant's pay show that they were under a duty to him to determine his entitlement and not to misrepresent it" - Eveleigh, L.J.
It seems to me that it would be unconscionable, inequitable and unjust for the Ministry of Education to deduct the overpayment. The government is advised to forego the overpayment.
Delroy Chuck is an attorney-at-law and Opposition Member of Parliament. He can be contacted by e-mail at delchuck@hotmail.
