City highflier forced to pay back bonus

A highflying dotcom analyst who was earning £1m by the age of 30 was ordered by the Court of Appeal to return a £250,000 bonus mistakenly paid to him by his former employer.

The appeal judges held that Gareth Price-Jones, now 33, was “unjustly enriched” after being hired by Commerzbank from Schroders in April 2000 to head its internet research team at the height of the dotcom boom. The dispute arose over a promise by Commerzbank to give Price-Jones a guaranteed bonus of £250,000 a year. In June 2000, he received a letter putting his bonus at £265,000. He believed this to be in addition to the guaranteed bonus, but Commerzbank argued that it meant to give only an additional £15,000. In the High Court, deputy judge David Phillips ruled that, even though Commerzbank had meant to pay him only an extra £15,000, Price-Jones was entitled to the total of £515,000 on the basis of contracts signed.

But the Court of Appeal ruled that, if the bank had intended to increase the guaranteed bonus to £515,000, it would have said so in the letter it sent to Price-Jones. “Mr Price-Jones was unjustly enriched. There can be no doubt about that,” ruled Lord Justice Mummery. “He received £250,000 to which he was not entitled. The payment was a mistake. He has still got the money. There is no obstacle to repaying it… A just man would recognise that it was unjust to keep it and that he ought to repay it.”

The judgment referred to the ruling of Lipkin Gorman v Karpnale Ltd [1991] 2 AC, in which Lord Goff said that where an innocent defendant’s position was “so changed” that he would “suffer an injustice if called upon to repay or to repay in full, the injustice of requiring him so to repay outweighs the injustice of denying the plaintiff restitution”. According to Lord Justice Mummery, Price-Jones had not been “disenriched”. “His position has not so changed as to make it inequitable in all the circumstances for him to repay the full amount of the overpayment,” he added.