Carolyn Gibbs v Lakeside Developments Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice David Richards,Lord Justice Coulson,Lord Justice Lewison |
| Judgment Date | 21 December 2018 |
| Neutral Citation | [2018] EWCA Civ 2874 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: B5/2017/0223 |
| Date | 21 December 2018 |
[2018] EWCA Civ 2874
Lord Justice Lewison
Lord Justice David Richards
and
Lord Justice Coulson
Case No: B5/2017/0223
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COUNTY COURT AT CENTRAL LONDON
HH Judge Walden-Smith
A10CL143
Royal Courts of Justice
Strand, London, WC2A 2LL
Rupert Higgins (instructed by direct access) for the Appellant
Gary Blaker QC (instructed by LSGA Solicitors) for the Respondent
Hearing dates: 26 July 2018
Judgment Approved
This second appeal raises one point of principle. If a possession order was liable to be set aside for non-service of the proceedings, can the tenant recover the proceeds of sale of the property on the basis of unjust enrichment without the possession order first being set aside? Both courts below – District Judge Parfitt (as he then was) and, on a first appeal, Judge Walden-Smith, both sitting in the County Court at Central London – held that the order must first be set aside and dismissed the appellant's claim. Permission for a second appeal was given by Patten LJ who said that it raised a point of principle in a developing area of the law that was suitable for determination by this court on a second appeal.
The salient facts are as follows.
By a lease dated 14 November 1986, a studio flat at Coopers Close, Whitechapel, London E1 (the property) was let to the appellant for a term of 999 years at a commencing yearly rent of £50. Under the terms of the lease, the tenant was also liable for insurance premiums. In 1990, the appellant went to live and work in Hong Kong and for the great majority of the time from 1990 the flat was unoccupied. She gave the managing agents the address of her parents' house (Dellwood) for correspondence. From 1990 to 2006, they corresponded with her there and she duly paid the amounts due by way of rent and insurance premiums. She returned to the UK in 1999 and lived, first, at Dellwood and from late 2008 in Dorset. She last visited the property in 2003.
In 1990 the respondent acquired the freehold reversion. The managing agents continued, as the trial judge found, to send demands and other communications to Dellwood and also to the property, but from 2006 no payment of rent or insurance premiums was made, except for one payment of £630.14 in August 2007. The trial judge found that by reason of other commitments the appellant overlooked the communications sent to Dellwood, and never saw those sent to the property which remained unoccupied.
In September 2009, the respondent issued a claim for arrears of rent and insurance premiums amounting to £1410.62. The respondent purported to serve the claim form by sending it to the property, but this was not good service because it was not her usual or last known residence. Judgment in default of appearance was entered for the sum claimed on 24 September 2009. No application has at any time been made to set aside this judgment.
On 20 November 2009, the respondent issued possession proceedings, which again were incorrectly served by being sent to the property. A copy was sent to Dellwood but it did not come to the attention of the appellant. A possession order was made on 24 February 2010 and the respondent took possession of the property on 28 April 2010. The respondent's agents started marketing the property in June 2011.
The appellant first became aware of the possession proceedings and order in July 2011 when she learnt that the property was being offered for sale. She immediately wrote to the solicitors who had acted for the respondent in the possession proceedings and to the estate agents marketing the property. On the respondent's instructions, the estate agents did not reply and the solicitors replied only to say that they were no longer instructed. The property remained on the market. The appellant instructed solicitors in October 2011. They applied to register a caution against the title of the property but, while the fee cheque was cashed, no notice was entered. On 21 October 2011, the solicitors issued an application for relief against forfeiture and to set aside the possession order. They requested an undertaking from the respondent not to sell an interest in the property but none was offered. No application was made for an interim injunction pending the hearing of the appellant's application. If an injunction had been applied for and granted, the appellant would of course have been required to give an undertaking in damages to make good any losses suffered by the respondent if the application for relief against forfeiture failed.
On 15 December 2011, the respondent granted a new long lease of the property at a premium to a third party who had no knowledge or notice of the appellant's claim.
The appellant's application was adjourned at the first hearing on 6 January 2012 in the light of the sale of the property. In March 2012, the appellant amended her application notice “to make the claim one of unjust enrichment and to add a claim for damages for conversion of [the appellant's] possessions in the Property”, as it is put in the appellant's skeleton argument on this appeal. A significant part of the trial judge's judgment is taken up with a consideration of whether the appellant had, by the time of the trial, abandoned the claim for relief against forfeiture and to set aside the possession order. Having carefully considered the tortuous procedural history of the application, the trial judge held that it had been abandoned, and this decision was upheld by Judge Walden-Smith on appeal.
For the purposes of the point of principle justifying a second appeal, the appellant's case is that it was not necessary to set aside the possession order.
This issue was addressed by the trial judge and by Judge Walden-Smith, who held on the basis of authorities to which I will refer that there can be no claim in unjust enrichment for money paid or property transferred or extinguished pursuant to an order of the court without first setting aside the order. On this appeal, Mr Higgins on behalf of the appellant does not challenge this as a general proposition but he submits that it is subject to an exception in a case where an order cannot be set aside by reason of intervening third party interests. In such a case, he submits, it should be sufficient to establish that the order would otherwise have been set aside.
The authorities establish that an order of the court has the force of law, and that a step taken in compliance with it is necessarily lawful. Such a step cannot therefore result in “unjust” enrichment unless the order is set aside.
The authorities in point are few and, for the most part, old. The textbook writers are unanimous in setting out the effect of a court order that has not been set aside, although there is some disagreement in the underlying explanation of why a claim for unjust enrichment can be maintained once an order is set aside. The general principle is well stated by Professor Virgo in The Principles of the Law of Restitution (3 rd ed. 2015) at p.147:
“When money has been paid by the claimant to the defendant as the result of a court judgment it cannot be recovered unless the judgment is set aside, for the judgment constitutes a basis for the payment. The judgment operates as a legally effective basis for the defendant's receipt, even if the judgment has been obtained by fraud. It is only where the judgment is subsequently set aside that restitution will be awarded. Similarly, where a judgment has been declared for too much money, the claimant is unable to recover the excess money paid to the defendant until the judgment has been rectified.”
In Moses v Macferlan (1760) 2 Burrow 1005, 97 ER 676, Lord Mansfield, giving the unanimous opinion of the court, said that:
“It is most clear, “that the merits of a judgment can never be over-haled by an original suit, either at law or in equity”. Till the judgment is set aside, or reversed, it is conclusive, as to the subject matter of it, to all intents and purposes.”
The claim in Moses v Macferlan was to recover as money had and received a sum paid by the plaintiff to the defendant pursuant to the order of an inferior court. The claim succeeded on the basis of a special factor that the inferior court did not have jurisdiction to entertain a defence in contract that would have been available to the defendant in a superior court. The claim for money had and received was not therefore inconsistent with the judgment of the inferior court.
In De Medina v Grove (1846) 10 QB 152, 116 ER 59, an action for money had and received was brought to recover sums paid in excess of a judgment debt in order to obtain the release of the judgment debtor from prison. The position then was that a judgment creditor was entitled at law to enforce the full amount of a judgment debt, even if part had already been paid, and the judgment debtor's remedy lay in an application to the equitable jurisdiction of the Court of Queen's Bench or to a Court of Equity. On this ground the action for money had and received was dismissed, a decision upheld by the Court of Exchequer Chamber. In giving the judgment of the Court of Queen's Bench, Lord Denman CJ said:
“If such an action as the present would lie, great inconsistency might follow. The Court might refuse, upon application, to interfere with the judgment or execution, and yet, if such an action could be brought, the defendant in the original action might recover the money levied, and so defeat both judgment and execution.
If there was any fraud in the case, that might be a ground for the interference of the Court to set aside the judgment or the execution: but, whilst both remain unreversed, it would be contrary to principle to reverse them in effect by an...
To continue reading
Request your trial
- Director of Public Prosecutions v Owain McFarlane
-
Navnit Savadas Keshwala v Sharda Bhalsod
... [1895] 2 Ch 581 (“ Howard”), Billson v Residential Apartments Ltd [1992] 1 AC 494 (“ Billson”), and Gibbs v Lakeside Developments [2018] EWCA Civ 2874 (“ Gibbs”)), he said this at [19]: “In my judgment, what these cases, and the other cases cited by Mr Din, show is that although an applic......
-
Navit Savadas Keshwala v Sharda Bhalsod
...a guide against which any issue as to delay should be weighed, again citing Pineport v Grangeglen and Gibbs v Lakeside Developments Ltd [2019] 4 WLR 6. In his oral submissions, Mr Din supplemented this by reference to further authorities dealing with delay: Billson v Residential Apartments......
-
Between: (1) Arnage Holdings Ltd (2) Brooklands Holdings Ltd (3) East Farthing Holdings Ltd (4) Ms Katia Rabello (5) Mr Fernando Toledo Plaintiffs v Walkers (A Firm) Defendant
...But, as already emphasised, there is no need for it to come to that.” 98 David Richards LJ in Gibbs v Lakeside Developments Limited [2018] EWCA Civ 2874 at paragraph 13 referred to authorities including textbook writers which “are unanimous in setting out the effect of an order that has be......
-
Relief From Forfeiture ' Delay Of Less Than Six Months Unlikely To Be Fatal To The Grant Of Relief From Forfeiture
...had been long recognised, for instance in Howard v Fanshawe [1895] 2 Ch 581 and more recently in Lakeside Developments Ltd v Gibbs [2018] EWCA Civ 2874. The court referred to Pineport Ltd v Grangeglen Ltd [2016] EWHC 1318 (Ch) where relief had been granted in respect of an application made ......