Counsel for the Applicant, The Canadian Imperial Bank of Commerce:  P. Daniel Le Dressay.
   Counsel for the Respondent Mandate Mortgage Investment Corporation:   Gordon M. Elliott.

   McCOLL J.:— This is an application for an order that the respondent pay a sum in excess of $20,000.00 to the applicant, the sum being an amount paid by the applicant to the respondent by reason of a mistake of fact. The application arises out of a foreclosure action commenced by the petitioner. The foreclosure proceedings were brought with respect to certain lands and premises located in Langley, B.C. During the course of that action the priorities were established as the petitioner being first, the respondent Mandate Mortgage Investment Corporation ("Mandate") second, and the applicant Canadian Imperial Bank of Commerce ("CIBC") third.

   An order nisi of foreclosure was obtained by the petitioner on November 25th, 1988. On May 5th, 1989 CIBC obtained an order from The Honourable Judge Skipp, as he then was, approving the sale of the lands and premises. That order provided that the purchase price was to be paid to its solicitors to be disbursed in the following manner:

In due course the solicitors for CIBC received the proceeds from the sale. The solicitors then proceeded to distribute the funds in accordance with the terms of the order, having determined the amount of arrears in taxes and the amount payable to each of the prior creditors. Ultimately, Mandate was paid out the sum of $194,689.60. That satisfied the whole of its claim.

   As a result of the distribution of the proceeds, CIBC in fact did not benefit from the sale, there being no residue for it to retain pursuant to the provisions of the order.

   After the distribution had been made to Mandate, the solicitors for CIBC discovered that they had made an error in the calculation of the arrears in taxes and that a further sum of $14,276.64 plus penalties and interest remained outstanding. As of August 1st, 1990, the amount due was $20,844.80.

   CIBC has demanded that Mandate return to it a sufficient portion of the $194,689.60 to permit it to meet the prior obligation named in the order of Judge Skipp.

   The issue to be determined is whether Mandate was paid under a mistake of fact and, if so, whether that money is recoverable by CIBC against Mandate.

   The applicant has argued that the moneys were paid out under a mistake of fact and that moneys so paid are recoverable from the payee. Reliance is placed upon the author's statement in Chitty on Contracts, 24th ed., paragraphs 1796 and 1797:

   It was argued that the mere forgetfulness or negligence on the part of the payor is no bar to recovery of funds where the funds are paid out under a mistaken belief. Reliance is placed on a statement in Halsbury's Laws of England Fourth Edition, Volume 32, paragraphs 64 and 65:

   Finally, reliance is placed upon the decision in Weld-Blundell and Others v. Synott, [1940] 2 K.B. 107 and Chimo Structures Ltd. v. Canadian Pacific Ltd., 78 D.L.R. (3d), 210, both of which stand for the principle that a mortgagee who pays a mistaken amount to a prior mortgagee can recover that mistaken amount as moneys had and received and the prior mortgagee cannot rely on a defence of estoppel to keep the mistaken proceeds.

   It is clear that if the facts which have already been recited were all that were before the Court in this application, CIBC would be entitled to judgment. But that is not the case. In an unanswered affidavit in answer to the applicant's motion, an officer of Mandate has sworn to the facts surrounding its consent to the order of Judge Skipp in the first instance.

   It is here worthwhile noting the background of Mandate's own parallel action with respect to the subject property. On April 20th, 1989 it filed an application in its own foreclosure proceedings in this Court for a final order of foreclosure. Then, on April 27th, 1989, CIBC filed an application for an order to approve the sale of the property for the amount of $910,000.00. This resulted in a discussion between counsel for Mandate and counsel for CIBC. On May 5th, 1989, Mandate instructed its counsel not to oppose the application to approve the sale upon the basis that counsel for CIBC confirm to counsel for Mandate that upon the terms of the sale being approved Mandate would receive its principle, interest and costs in full out of the proceeds. CIBC through it solicitors confirmed this arrangement. A further term of this agreement between counsel was that if the sale sought to be approved by CIBC did not proceed, Mandate would obtain an order for the conduct of the sale (Mandate received an offer for the purchase of the property on May 12th, 1989 in the amount of $930,000.00).

   The material before me contains a letter dated May 30th, 1989 from Mandate's counsel to the counsel for CIBC, setting out the terms upon which Mandate was prepared to release its lis pendens on the subject property. That letter contains the following:

Further are added the cautionary words:

   On June 1st, 1989, in compliance with the terms of the agreement between counsel, the solicitors for CIBC provided the solicitors for Mandate with a cheque in the amount of $194,689.67.

   In these proceedings Mandate does not dispute the assertion that the moneys were paid out by CIBC under a mistake of fact. It concedes that upon inquiry it could have independently learned of the true amount due the prior creditor. It does not recoil from the general principles of law relied upon by CIBC. Instead it says that the contractual arrangement between CIBC and Mandate created between them a duty of care on the part of CIBC so that Mandate was entitled to rely upon representations made by CIBC in determining not to pursue its own action against the principal debtor.

   In relying upon the representations made to it by CIBC, Mandate argues it acted to its detriment to the knowledge of CIBC and withdrew from its own foreclosure proceedings. In so acting, Mandate argues, it relied upon an enforceable assurance from CIBC that it would be paid in full.

   In response to this argument, CIBC asserts that the defence of estoppel is not maintainable in defence to an action for the return of moneys paid out under a mistake of fact. That is the principle, argues counsel, established in the Weld-Blundell case.

   The facts in that case upon which this principle is said to emerge are quite distinguishable from those in the present case. In that case the plaintiff was the first mortgagor. It was, by an order of the Court, entitled to its unpaid principal and interest. The defendants, as second mortgagor, were entitled to the balance. The plaintiffs, by a mistake, failed to retain sufficient funds to satisfy its claim and paid to the defendant the balance. The balance paid to the defendant did not satisfy its claim. In making the payment the plaintiffs had merely miscalculated the amount to which they were entitled under the provisions of their own mortgage.

   In deciding upon the facts that estoppel did not arise, Asquith, J. held that there was no duty of care arising between the plaintiffs and the defendant, the sole relationship being one of accounting by the plaintiffs for moneys had and received. It was held that since there was no other duty arising, the defendant could not have been said to have acted in reliance on the plaintiffs' representations to its own detriment; circumstances which are required in order to establish estoppel.

   I can find nothing inherently troubling with that decision, nor with the principle that emerges from it. In the present case, had the only duty that arose between CIBC and Mandate been to account for the proceeds once in the hands of CIBC, it would have simply been in the position of a trustee of moneys had and received and would be entitled to reimbursement for any moneys paid out by mistake. But that is not the case. The circumstances in which Mandate sought and obtained assurances from CIBC put CIBC in a position of something other than a mere trustee. Through its solicitors it, in effect, acted as a guarantor to Mandate in respect of the amount for which Mandate said it would be prepared to release the lis pendens on the subject property. Without the release of the lis pendens the proposed sale could not have been effected. pI do not find any assistance on this point in the decision of this Court in Chimo Structures Ltd. That case stands for the proposition that a debt paid in ignorance can be recovered, a principle not in doubt in these proceedings. Here I think the headnote is of some assistance:

The establishment of a contractual relationship between CIBC and Mandate places their relationship on a higher level than that of a mere trustee/beneficiary. The result would be otherwise if the only undertaking by CIBC to Mandate was to pay out the funds in the manner established by the order. That, however, was not the nature of the undertaking given to Mandate in order to secure its co-operation in effecting the sale. The result of CIBC's representation to Mandate, upon which it relied, was to preclude Mandate itself from participating in the sale except to the extent agreed to by CIBC. The requirement of CIBC to have Mandate abandon its claims against the subject property then enabled it to effect the sale. In the circumstances Mandate was entitled to rely upon the representations made by CIBC at the time the consent of Mandate was sought to the terms of the order. Having relied upon those representations, CIBC is not now entitled to an order directing Mandate to repay the amount of the unpaid taxes.

   The application is dismissed. The respondent is entitled to costs.

McCOLL J.