The Court of Appeal in Re Diplock held that, where money is wrongly paid out in the administration of an estate, a personal action is available against those who received the money. This was affirmed by the House of Lords on appeal where the case became [ case ]. As a result, the next of kin were able to use the personal action to recover the balance of the Diplock money (£203,000 less £15,000 paid by the executors from their own pockets) from the charities even where proprietary claims were not possible. The Court of Appeal stated that this remedy is subject to two limitations:
- The unpaid beneficiaries should firstly sue the personal representative who has acted wrongly, the beneficiaries’ personal claim against those overpaid, or wrongly paid, being limited to the amount which cannot be recovered from the personal representative.
- The entitlement is to claim the principal sum only, not the interest on it. In Re Diplock, which was affirmed by Ministry of Health v Simpson, no defence was allowed to the personal claim.
However since then the House of Lords has developed the defence of change of position in Lipkin Gorman v Karpnale and it is generally accepted that this defence would be applicable to such a claim.