School Facility Management Ltd v Governing Body of Christ the King College

JurisdictionEngland & Wales
JudgeMr Justice Foxton
Judgment Date10 June 2020
Neutral Citation[2020] EWHC 1477 (Comm)
CourtQueen's Bench Division (Commercial Court)
Docket NumberCase No: CL-2018-000732
Date10 June 2020

[2020] EWHC 1477 (Comm)





Royal Courts of Justice

Strand, London, WC2A 2LL


Mr Justice Foxton

Case No: CL-2018-000732

(1) School Facility Management Limited
(2) Boshire Limited
(3) GCP Asset 1 Finance Limited
(1) Governing Body of Christ the King College
(2) Isle of Wight Council

Timothy Straker QC and Pia Dutton (instructed by Stephenson Harwood LLP) for the Claimants

Peter Oldham QC and Christopher Knight (instructed by Stone King LLP) for the First Defendant

Daniel Stilitz QC and Rupert Paines (instructed by DAC Beachcroft LLP) for the Second Defendant


I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Mr Justice Foxton

This judgment (“the Consequentials Judgment”) addresses the various issues which have arisen following my judgment reported at [2020] EWHC 1118 (Comm) (“the Judgment”).


The issues for determination are as follows:

i) Issues as to the final relief which should be ordered:

a) In what amount is SFM is entitled to judgment against the College?

b) Is the College entitled to a declaration that the Contract is ultra vires and void?

c) Are the Claimants entitled to any relief now in respect of the use of the Building in the period after Judgment?

d) What orders should be made on the Part 20 Claims between the College and the Council?

ii) Issues of costs:

a) What costs orders should be made?

b) Should any orders be made for payment on account of any costs ordered?

c) Should the court make any orders for the payment of interest on any costs ordered?

iii) Issues relating to permission to appeal:

a) The Claimants' application for permission to appeal.

b) The College's application for permission to appeal.

c) The College's application for a stay of execution.

d) The College's application to retain the benefit of the security for costs provided by the Claimants pending any appeal.


While the resolution of the majority of these issues is likely to be only of interest to the parties, the College's application for permission to appeal raises an issue of law which received very limited attention at the trial, and which is of potentially wider interest, as is one aspect of the College's application for a stay of execution pending any appeal and the issue relating to security for costs. For that reason, I have decided to deal with the requests for permission to appeal first, and with the College's application for permission to appeal before the Claimants' application.


The parties made their submissions on these issues in writing. I am very grateful to the legal teams for the considerable work which went into those documents.



The test for granting permission to appeal is whether:

i) the Court considers that the appeal would have a real prospect of success; or

ii) there is some other compelling reason for the appeal to be heard.

( CPR 52.6(1)).

The College's application for permission to appeal The issue raised


The College's application for permission to appeal arises out of the last three substantive paragraphs of the Judgment: [502] to [504]. These provide:

“[502] In relation to the period from September 2013 to September 2017, SFM can make no further recovery beyond the amounts which the College has already paid and which I have held it cannot recover. This result can be rationalised in a number of ways. It might be said that SFM has received the anticipated counter-performance in circumstances in which the College cannot recover it (because of SFM's change of position defence), and so there has been no failure of condition. Alternatively, it might be said that any enrichment has not come at SFM's expense because SFM had been paid for it. In the further alternative, it might be said that in circumstances in which the College cannot recover back the amounts paid by way of rent for this period because of SFM's change of position, the College has its own change of position defence to any claim in unjust enrichment by SFM for that period.

[503] In respect of the period from September 2017 to trial, I have concluded that SFM can recover in unjust enrichment at the market rate I have set out above. It is no answer to such a claim that, in respect of the preceding three years, the College will have paid in excess of the market rate. In circumstances in which the College cannot recover the rent paid during the preceding period because SFM has changed its position, it would not be appropriate to allow the College nonetheless to rely upon those payments as, in effect, creating a credit which can be used to answer SFM's claim in unjust enrichment in respect of later years for which no payment has been made.

[504] It will be apparent that my analysis treats the unjust enrichment claim for each year's hire as, in effect, severable for the purposes of analysing the claims and defences to claims in unjust enrichment. In my view, this analysis best represents the nature of the benefit transferred – the possession or use of property over a period of time – and the market valuation of that benefit (which involved a period-dependent payment). It is for this reason that the amounts paid by the College for the period from September 2013 to September 2017, and which I have found to be irrecoverable, do not provide a complete answer to SFM's claim in unjust enrichment for the entire period of use of the Building (cf. the rule that a failure of basis must be total unless the benefit conferred is severable analysed in Goff and Jones paras. 12–26 to 12–28).”


The College fairly acknowledges that the submissions developed in support of the application for permission to appeal “were not directly advanced before the Court” at the trial. The entirety of the College's submissions on its proposed ground of appeal was set out at paragraph 228 of its closing submissions:

“Accordingly, the total market rental value of the benefit received by the College from 5 September 2013 to the date of trial (six and a half years) is £1,625,000. The College has paid £3,205,636.80. Just as in Benedetti, the Claimants have received substantially more than is owed to them applying the principles of unjust enrichment; nothing further is owed”.

It will be apparent that this submission does not address the effect of the Claimants succeeding on their change of position defence, and at what point that defence is to be brought into consideration in a case in which both parties raise claims in unjust enrichment arising from an ongoing course of dealings. Nor was the issue raised in the College's post-trial response to the further submission I allowed from the Claimants on the change of position defence.


However, in fairness to the College, the Claimants' case on unjust enrichment and change of position was largely under-developed at trial. The Claimants have not raised any objection to this issue being raised by the College now. In any event, it would ill-behove the Claimants to complain about the late development of this point, when their own case on unjust enrichment was largely developed only after trial and in response to requests by the Court. In a case with so many issues and inter-connected parts, the issue is likely to have been one which was only brought into focus for the parties by the Judgment (just as it has been brought into sharper focus for the Court by the post-Judgment submissions). In these circumstances, I am satisfied that the issue is one which it is open to the College to raise.

Counter-restitution in exchange transaction cases


There are a number of cases which have considered the position where payments have been made back and forth between two parties on the basis of a void contract, raising the issue of whether the Court should proceed on the basis that each individual payment gives rise to a claim in unjust enrichment, or only consider the net position and, if the latter, what the justification for adopting this approach is. In Kleinwort Benson Ltd v Sandwell BC [1994] 4 All ER 890, Hobhouse J considered restitutionary claims in respect of payments made under a void swap transaction, some of which had been made more than 6 years before proceedings were commenced (and which might, therefore, be subject to a defence under the Limitation Act 1980 if considered in their own right). At p.929, Hobhouse J observed:

“In my judgment, the correct analysis is that any payments made under a contract which is void ab initio, in the way that an ultra vires contract is void, are not contractual payments at all. They are payments in which the legal property in the money passes to the recipient, but in equity the property in the money remains with the payer. The recipient holds the money as a fiduciary for the payer and is bound to recognise his equity and repay the money to him. This relationship and the consequent obligation have been recognised both by courts applying the common law and by Chancery courts. The principle is the same in both cases: it is unconscionable that the recipient should retain the money. Neither mistake nor the contractual principle of total failure of consideration are the basis for the right of recovery.

Where payments both ways have been made the correct view is to treat the later payment as, pro tanto, a repayment of the earlier sum paid by the other party. The character of the remedy, both in law and equity, is restitution, that is to say putting the...

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