Longley v PPB Entertainment: the test for unilateral mistake

The claimant, Mr James Longley, was an experienced gambler who liked to bet on horses. He wanted to place a £1,300 each way bet on Redemptive at odds of 16/1 in the 19.20 at Wolverhampton and telephoned Paddy Power's Dial-a-Bet line to do so. Given the size of the wager, the Paddy Power operator sought senior approval to place the bet. The operator erroneously sought approval for a £13,000 bet, however, which was subsequently placed. Redemptive won the race and £286,000 was credited to Mr Longley's online account. Paddy Power discovered the issue later the same evening, and the following day Mr Longley's winnings were recalibrated to £28,600 in line with his original request for a £1,300 each way bet.

Mr Longley issued proceedings for breach of contract claiming the difference between the winnings payable for a £13,000 versus a £1,300 bet, plus interest.

The central issue that the court was asked to determine was whether there was a valid contract for a bet of £13,000.

Counsel for Mr Longley argued that regardless of his original intention, the agreed bet which he placed was for £13,000 each way because i) Paddy Power made a counter-offer to enter into a £13,000 each way bet when the operator informed Mr Longley that £26,000 was being taken from his account (so that's going to be twenty-six thousand coming from Jameslongley1); and ii) Mr Longley accepted that counter-offer by confirming that £26,000 was the correct amount (that's it, yeah).

In the alternative, counsel for Mr Longley sought to argue that the words so that's going to be twenty-six thousand coming from Jameslongley1 constituted an invitation to treat, on the basis of which Mr Longley had made an offer of £13,000 (that's it, yeah) which Paddy Power subsequently accepted (Set for clearance… And your bet is on fine).

Mr Longley also asked the court to consider whether the terms and conditions which entitled Paddy Power to recalibrate his winnings were unenforceable as being unfair and whether Paddy Power's exercise of its discretion under the terms and conditions was irrational, capricious or perverse.

Paddy Power's position is that there was no contract for an each way bet of £13,000 because:

• the objective construction of the second conversation between the Paddy Power operator and Mr Longley did not fulfil the formalities for offer and acceptance; or
  
  
• either there had been a contract for a bet of £1,300 each way, by reason of Paddy Power's unilateral mistake, or there had been no contract, by reason of the parties' mutual mistake; or
  
  
• if there had been a concluded contract for an each way bet of £13,000, Paddy Power's terms and conditions (pursuant to which Mr Longley held an account) meant that i) Paddy Power was not liable to pay any winnings awarded as a result of any human error or mistake and ii) Mr Longley was liable to refund any such winnings.

The judge considered the objective construction of the conversation between Mr Longley and the Paddy Power operator and held that nothing in the conversation could sensibly be construed as i) a counter-offer of a bet of £13,000; or ii) an invitation to treat followed by offer and acceptance. Further, Mr Longley understood that Paddy Power did not intend to do anything other than to accept Mr Longley's £1,300 bet. Accordingly, there was no contract for an each way bet of £13,000 and there could be no breach of the same.

Mr Longley's case therefore failed at the first hurdle. Whilst the issues of mistake and unfair terms did not fall to be decided, the parties nonetheless invited Mrs Justice Ellenbogen to adjudicate the remaining issues in the event of an appeal by either party, which led to an obiter discussion on the test for unilateral mistake.

English law prevents a party "snapping up" an offer in circumstances where that party knows their counterparty has made a mistake as to the terms of the offer. There is an unresolved question as to whether a party needs to have actual knowledge of the mistake, or whether constructive knowledge is sufficient (ie. they ought to have appreciated a mistake had been made). Indeed, one of the leading practitioner texts acknowledges that English law gives no clear answer on the point.

In the judge's view, on these facts Mr Longley had appreciated that there had been no intention on the part of any relevant employee of Paddy Power to offer or accept a bet at a stake other than that which Mr Longley had requested. He therefore had actual knowledge of Paddy Power's mistake, and had there been a contract for an each way bet of £13,000, it would have been unenforceable.

Mrs Justice Ellenbogen acknowledged the "dearth of authority in England and Wales, within the ratio of the decision, as to the relevance of constructive knowledge". She nevertheless reviewed the relevant case law, including a Singapore Court of Appeal authority, and determined that references in the pre-existing case law to what a party "must have known" or what the reasonable observer might have understood were evidentiary tools rather than indicia that constructive knowledge is a requirement for the defence of unilateral mistake.

The judge briefly considered Paddy Power's alternative defence of common mistake, whereby Paddy Power contended that each party had understood that approval had been sought and given for the correspondingly opposite bet bet (Mr Longley for £1,300 and Paddy Power for £13,000). On the basis of the earlier findings of fact, however, common mistake could not be established: neither party was at cross-purposes to the other in terms of the size of the wager.

Finally, Mrs Justice Ellenbogen considered the arguments advanced by counsel for Mr Longley that Paddy Power's terms of and conditions were unfair, and held that the impugned clause was not unfair under the statutory definition. Although the question was inevitably fact specific, it makes an interesting comparison to the 2021 Betfred case (the judgment is explored in more detail here) in which the court determined that the drafting of various key clauses was "opaque and difficult" and the meaning was not clear to an average or informed consumer. In addition, little attempt had been made to highlight key clauses which might be particularly important or "surprising" to consumers. Those factors taken together meant that the relevant clauses did not meet the statutory requirements of transparency and fairness and were therefore unenforceable.