Bank of Cyprus UK Ltd v Menelaou

JurisdictionEngland & Wales
JudgeLord Clarke,Lord Kerr,Lord Wilson,Lord Neuberger,Lord Carnwath
Judgment Date04 November 2015
Neutral Citation[2015] UKSC 66
Date04 November 2015
CourtSupreme Court
Bank of Cyprus UK Limited

[2015] UKSC 66


Lord Neuberger, President

Lord Kerr

Lord Clarke

Lord Wilson

Lord Carnwath


Michaelmas Term

On appeal from: [2013] EWCA Civ 814 and 1960


Mark Warwick QC

Joseph England

(Instructed by Jeffrey Green Russell Limited)


Philip Rainey QC

Timothy Polli

(Instructed by Matthew Arnold & Baldwin LLP)

Heard on 17 and 18 June 2015

Lord Clarke

This appeal is concerned with the law of unjust enrichment and subrogation. The original parties to the action were Melissa Menelaou as claimant ("Melissa"), the Bank of Cyprus UK Ltd as defendant ("the Bank") and a firm of solicitors, Boulter & Co, as third party ("Boulters"). The trial of the action came before David Donaldson QC, sitting as an additional judge of the Chancery Division ("the judge"): [2012] EWHC 1991 (Ch). The trial began on 16 May 2012 and lasted three days. By the end of the trial only the Bank's counterclaim against Melissa was live. On 19 July 2012 the judge handed down a judgment dismissing the counterclaim. The Bank appealed to the Court of Appeal (Moses, Tomlinson and Floyd LJJ), which allowed the appeal on 4 July 2013: [2013] EWCA Civ 1960, [2014] 1 WLR 854. Melissa appeals to this court.

The background facts

The facts can largely be taken from the agreed statement of facts and issues. Melissa, who was born on 27 January 1990, is the second of the four children of Mr Parris and Mrs Donna Menelaou ("the Menelaou parents"). The other children were Danielle, born on 9 August 1986, Max, born on 24 June 1991 and Ella-Mae, born on 6 February 2002. In mid-2008, the Menelaou parents and their three youngest children lived at Rush Green Hall, Great Amwell, Hertfordshire ("Rush Green Hall"), which was a property owned by the Menelaou parents jointly. Melissa was 18 and a student at a nearby college. Rush Green Hall was subject to two charges in favour of the Bank. The Menelaou parents directly owed the Bank about £2.2m, and had personally guaranteed loans made by the Bank to their companies.


The Menelaou parents decided to sell Rush Green Hall, to apply some of the proceeds to buy a smaller property as the family home, to provide funds for Danielle to pay the deposit on a house which she wanted to buy with her future husband and to free up capital to invest in a further development project. The Menelaou parents instructed Boulters to act for them in the conveyancing transaction. The senior partner of Boulters was Mr Menelaou's sister. They used Mr Paul Cacciatore, who was employed by Boulters as a legal executive and who was also one of Mr Menelaou's brothers-in-law. On 15 July 2008 contracts were exchanged for the sale of Rush Green Hall for the price of £1.9m. The contractual purchasers of Rush Green Hall paid a deposit of £190,000 to Boulters for the account of the Menelaou parents.


About a week later, Mr Menelaou informed Mr Cacciatore that he had found a new property to serve as the family home at 2 Great Oak Court, Hunsdon, Hertfordshire ("Great Oak Court"). On 24 July 2008 contracts were exchanged for the purchase of Great Oak Court for the price of £875,000. On Mr Menelaou's instructions, the purchaser of Great Oak Court was to be Melissa. The deposit payable was £87,500. This deposit was paid from the £190,000 held by Boulters as the deposit for the sale of Rush Green Hall. Mr Menelaou told Melissa that Great Oak Court was being bought in her name as a gift to her, on the basis that she would hold the property for the benefit of herself and her two younger siblings. She agreed to the arrangement.


The Bank was not approached about the proposed arrangement prior to the exchanges of contracts. The Bank sanctioned the proposed arrangements with some reluctance given the overall indebtedness of the Menelaou parents and their companies. On 5 September 2008 Boulters wrote to the Bank saying that it understood that the Bank was to take a charge over Great Oak Court from Melissa, which Boulters understood would be a third party charge. Completion was to be on 12 September. On 9 September 2008 the Bank wrote to Boulters in these terms:

"Thank you for your letter dated 5 September 2008. We confirm that upon receipt of £750,000 we will release our charges over [Rush Green Hall] subject to a third party legal charge over [Great Oak Court] which is registered in the name of Melissa Menelaou."

Melissa was not aware of the Bank's intention to take any charge over Great Oak Court.


The Bank also instructed Boulters to act as its solicitors to deal with the discharge of its charges over Rush Green Hall and to obtain a charge in favour of the Bank over Great Oak Court. On 10 September 2008 Boulters replied to the Bank's letter of 9 September enclosing a certificate of title undertaking to obtain an executed mortgage in Melissa's name over Great Oak Court and to confirm that they had complied or would comply with the Bank's instructions. On 11 September 2008 Boulters sent the Bank a form of legal charge over Great Oak Court, purportedly signed by Melissa and identifying her as "the customer". It was (and is) Melissa's case, supported by her brother and by handwriting evidence, that the signature on the charge was not hers. Indeed, she was unaware of the existence of the charge until 2010. On the same day, 11 September 2008, the Bank telephoned Boulters and pointed out that the identity of the customer in the charge should be the Menelaou parents and not Melissa. Boulters did not contact Melissa. Instead, an employee of Boulters simply changed the name of the customer in manuscript on the charge from that of Melissa to those of the Menelaou parents.


On 12 September 2008 completion of the sale of Rush Green Hall by the Menelaou parents and the purchase of Great Oak Court by Melissa both took place. As part of the completion process, Boulters received the balance of the price of Rush Green Hall from its purchasers. They remitted £750,000 to the Bank and sent a further £785,000 to the vendors of Great Oak Court to meet the remaining 90% of the purchase price for Great Oak Court. Boulters also sent the Bank two deeds to be sealed by the Bank authorising the cancellation of the entries in respect of the two registered charges over Rush Green Hall. The discharge of mortgage forms were not returned by the Bank until 13 October 2008. After a considerable delay, Melissa was registered as the proprietor of Great Oak Court. The Bank was also registered as the purported chargee. Following completion, the Menelaou parents, Melissa, and her two younger siblings moved into Great Oak Court and occupied it as their family home.


In the spring of 2010 Melissa was told by her parents that their business was experiencing difficulties. It was proposed that Great Oak Court would be sold and a smaller property purchased. It was at this point that Melissa discovered the existence of the charge dated 12 September 2008 over Great Oak Court. Melissa's conveyancing solicitors then corresponded with Boulters. The Bank was made aware of the challenge to the validity of its charge and, through its solicitors, intimated a claim against Boulters. Many allegations of breach of duty (fiduciary and otherwise) were made by the Bank against Boulters.

The procedural history

On 2 November 2010 Melissa issued a Part 7 claim in the Chancery Division seeking orders that all references to the charge, as appearing in the Charges Register for Great Oak Court, be removed. The main basis for this claim was that, not having been signed by Melissa, the Bank's charge was void. The Bank defended the claim but also counterclaimed for a declaration that the Bank was entitled to be subrogated to an unpaid vendor's lien over Great Oak Court.


On 14 January 2011 the Bank issued a Part 20 claim against Boulters for damages for breach of trust and/or fiduciary duty, and an indemnity against all costs and expenses that it might incur in the main claim. After the exchange of witness statements, it became clear to Melissa and her advisers that Boulters had altered the charge without consulting her. By consent of the parties, pursuant to Melissa's application dated 13 April 2012, the particulars of claim were amended to rely upon this alteration as a further ground for rendering the charge void. The Bank's response was to continue to challenge the invalidity of the charge.


As stated above, the trial of the case began on 16 May 2012. At the commencement of the trial all issues were live. Melissa was called to give evidence and was duly cross-examined. Thereafter, following an interchange between counsel and the judge, Boulters conceded in the Part 20 claim that the charge was void and that Melissa was entitled to the relief sought in her claim and, as it is put in the statement of facts and issues, reflexively, the Bank conceded the same in the main claim. The issue of liability in the Bank's claims against Boulters was then compromised and a written agreement was entered into between the Bank and Boulters whereby Boulters accepted that it was in breach of its duties in both contract and tort and was liable to indemnify the Bank for its losses as a result of an invalid charge being entered against Great Oak Court. As a result of that agreement, the only remaining live issue for determination at the trial was the Bank's counterclaim against Melissa.


Judgment was reserved and (as stated above) was handed down on 19 July 2012 dismissing the counterclaim. No formal order was made on that day but a further hearing took place on 23 October 2012, when the judge made an order that the Bank's charge be removed from the Register (reflecting the Bank's and Boulters' concession that the Bank's charge was void) and formally dismissed the Bank's counterclaim with costs. The judge...

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3 firm's commentaries
  • Judgments - February 9, 2016
    • United Kingdom
    • Mondaq UK
    • 12 February 2016
    ...wish to be cautious about this issue. Claims for unjust enrichment and unpaid vendor's liens Bank of Cyprus UK Limited v. Menelaou [2015] UKSC 66 The Supreme Court considered a claim for unjust enrichment made by Bank of Cyprus (the Bank) against Melissa Menelaou (referred to in the judgmen......
  • Financial Markets Disputes and Regulatory Update - Winter 2015/Spring 2016
    • United Kingdom
    • JD Supra United Kingdom
    • 9 February 2016
    ...wish to be cautious about this issue. Claims for unjust enrichment and unpaid vendor’s liens Bank of Cyprus UK Limited v. Menelaou [2015] UKSC 66 The Supreme Court considered a claim for unjust enrichment made by Bank of Cyprus (the Bank) against Melissa Menelaou (referred to in the judgmen......
  • Supreme Court Decision Aids Mitigation Of Lender Claims Against Solicitors
    • United Kingdom
    • Mondaq UK
    • 18 November 2015
    ...Supreme Court last week handed down judgment in the case of Bank of Cyprus UK Limited v Menelaou [2015] UKSC66. The judgment confirms the 2013 decision of the Court of Appeal that a lender may take a subrogated interest in a property by way of a vendor's lien, where the owner has been other......
8 books & journal articles
    • Singapore
    • Singapore Academy of Law Journal No. 2016, December 2016
    • 1 December 2016
    ...643 . 2Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221 at 231, per Lord Hoffmann. 3Bank of Cyprus UK Ltd v Menelaou[2015] UKSC 66 at [42], per Lord Clarke, and [112], per Lord Carnwath; Falcke v Scottish Imperial Insurance (1886) 34 Ch D 234 at 248, per Bowen LJ; Charl......
    • Australia
    • Melbourne University Law Review Vol. 43 No. 3, April 2020
    • 1 April 2020
    ...Ltd [1999] 1 AC 221, 231-7 (Lord Hoffmann, Lord Griffiths agreeing at 228) ('Banque Financiere'); Menelaou v Bank of Cyprus UK Ltd [2016] AC 176 ('Menelaou'); Swynson Ltd v Lowick Rose Up (in liq) [2018] AC 313, 325 [19] (Lord Sumption JSC, Lord Neuberger PSC and Lords Clarke and Hodge JJSC......
  • Change and continuity in the law of unjust enrichment
    • South Africa
    • Juta Acta Juridica No. , December 2019
    • 24 December 2019 is taken from Stevens (n 4) 578. See also Burrows (n 12) 172; Smith (n 3) 99–100.20 Go & Jones (n 4) 6-13.21 [2014] EWCA Civ 360.22 [2016] AC 176. 23 [2014] 1 WLR 2006. Note that this decision was overruled in Investment Trust Companies v HMRC para 57. © Juta and Company (Pty) 474 PRI......
  • Enrichment ‘at the expense of another’ and incidental benefits in German law
    • South Africa
    • Juta Acta Juridica No. , December 2019
    • 24 December 2019
    ...(n 1) 105–16; J Edelman & E Bant Unjust Enrichment 2 ed (2016) 92–105.3 Investment Trust Companies v HMRC [2017] UKSC 29, [2017] 2 WLR 1200 (UKSC) paras 37–74.4 However, this assumption has recently been doubted by A Burrows ‘“At the expense of the claimant”: A fresh look’ (2017) 25 Restitu......
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