Uren v First National Home Finance Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE MOORE-BICK,MR JUSTICE LAWRENCE COLLINS |
| Judgment Date | 22 February 2006 |
| Neutral Citation | [2006] EWCA Civ 1644 |
| Court | Court of Appeal (Civil Division) |
| Date | 22 February 2006 |
| Docket Number | A3/2005/2660 |
[2006] EWCA Civ 1644
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION
(MR JUSTICE MANN)
Royal Courts of Justice
Strand
London, WC2
Lord Justice Moore-Bick
Mr Justice Lawrence Collins
A3/2005/2660
MR D MATTHIAS (instructed by Messrs Follett Stock of Truro Business Park, Truro, Cornwall TR4 9NH) appeared on behalf of the Appellant.
MR WILLIAM HIBBERT (instructed by Messrs Eversheds of LONDON, EC4V 4JL) appeared on behalf of the Respondent.
This is an application for permission to appeal against an order of Mann J made on appeal from the order of District Judge Mitchell in the Truro District Registry. The applicant is the claimant in an action brought against the defendant bank arising out of an investment in a property development in Tenerife. The facts giving rise to the dispute can be summarised from the allegations set out in the Particulars of Claim, which for the purposes of this application must be assumed to be correct.
In 1988 the claimant, together with a number of others, became interested in the purchase of flats in a holiday development in Tenerife being constructed by a subsidiary of the bank called Arrish Ltd. The claimant agreed to buy two flats and for that purpose paid Arrish a deposit of £60,000. In July 1990, Arrish went into receivership, and as a result the site, which was still then under development, was sold at public auction to a company called Pitchcott Hill Ltd ("Pitchcott"). Between July 1990 and July 1992, the claimant and other investors set up what they called a fighting fund to provide the finance needed to complete the development. The claimant contributed the balance of the purchase money for his two flats, about £70,000, to that fund.
In July 1992, a new company, Santa Barbara Ltd., was formed and the fighting fund, which then stood at about £1,500,000, was made available to it. The bank indicated that it would advance the additional money required to complete the development. Santa Barbara acquired the whole of the share capital of Pitchcott and thus indirectly controlled the development. At the time of its acquisition, Pitchcott owed the bank about £3.7 million. That debt was paid in part by the money in the fighting fund and in part by a new loan from the bank to Pitchcott, which was secured by a mortgage over the development site. The bank also agreed to provide a further facility of £2.5 million to finance the remainder of the work, which was to be drawn down in stages as the work progressed. In the event the bank refused to make the draw down payments in accordance with the terms of the facility, and as a result Pitchcott fell into financial difficulties. Things came to a head in 1995 when the bank made a number of demands as to the way in which the project should be handled which were unacceptable to the investors. In March 1996 the bank appointed a receiver over both Santa Barbara and Pitchcott pursuant to its powers under the loan agreements. By that time the claimant himself had advanced about £150,000 in all. At the end of 1996 the receiver sold the development to another subsidiary of the bank, Agosta 96, through the procedure for public auction in Spain and the bank thereby obtained, albeit indirectly, control over the property. For present purposes it is necessary to assume that the bank engineered the failure of Pitchcott with a view to recovering control of the development on what was a forced sale.
Two years later, in June 1998, the investors learned that Agosta 96 had sold the development site to a company called LSI Global Marketing ("LSI"), a subsidiary of the Signature Group, which is said to be the world's largest timeshare operator, for a sum of about £7 million. It is said that the bank was persuaded to agree to that sale because LSI had promised to put a large amount of profitable business in its way over the ensuing three to five years. None of the investors had any proprietary rights in the development and the bank did not obtain any undertaking from LSI to honour any existing contractual obligations to them, although it had previously indicated that it would do so. As a result it is said that the investors lost all their money but the bank obtained a valuable benefit in the form of the lucrative business it could expect to obtain in the future from LSI. It is said that the profits from that business were expected to be £1 million each year.
On 28 May 2004 the claimant, Mr Uren, started proceedings against the bank in the Truro District Registry of the High Court claiming £150,000 in restitution. The substance of his claim was that the bank had been unjustly enriched at his expense. He claimed to recover £150,000 as being the amount of his loss. In his particulars of claim he did not identify the amount which he said the bank had received by way of unjust enrichment; presumably it was the relevant proportion of the profits it was going to derive from the business with LSI.
On 14 October 2004 the bank applied for summary judgment, or for an order that the claim be struck out, on the grounds that there was no real prospect of its succeeding at trial. On 19 February 2005, District Judge Mitchell dismissed the application. He was persuaded that the claimant might succeed at trial in persuading the court that he could sustain a claim in restitution. The case on his view was not hopeless. The bank appealed on two broad grounds. First, it...
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