SHERIFFDOM OF SOUTH STRATHCLYDE DUMFRIES AND GALLOWAY

 

A5/04

	JUDGMENT OF SHERIFF PRINCIPAL B A LOCKHART
	in the cause
	MARGARET McKENZIE
	Pursuer and Appellant Assisted Person
	against
	DAVID NUTTER
	Defender and Respondent Assisted Person

 

Act: Mundy, Advocate, instructed by, Messrs Drummond Miller

Alt: Hawkes, Advocate, instructed by Messrs Doyle & Co

 

 

LANARK: 21 November 2006

 

The Sheriff Principal, having resumed consideration of the appeal, refuses the appeal and adheres to the Sheriff's interlocutor of 9 December 2005 complained of; finds the pursuer and appellant liable to the defender and respondent in the expenses of the appeal and allows an account thereof to be given in and remits same when lodged to the Auditor of Court to tax and to report; certifies the cause as suitable for the employment of counsel.

 

NOTE:

 

Background to the appeal

 

1.             The Sheriff found that the parties were formerly involved in a long term relationship which came to an end in about spring 2001. In or about late summer 2000 the parties decided to submit an offer for the dwellinghouse known as Eldamar, Comiston Road, Quothquan (hereinafter referred to as "Eldamar"). Both parties owned separate houses and, in order to purchase Eldamar, they agreed to sell their present homes and apply the proceeds towards the purchase price of Eldamar. It was their intention to live together as a couple in the property. The respondent's property sold quickly. The free proceeds of the sale of £76,000 were insufficient to meet the purchase price of £105,000. Parties agreed to take out a mortgage for the balancing amount of £29,000 and the appellant would apply the free proceeds of the sale of her house, when sold, to paying off the outstanding mortgage. On that basis, title to Eldamar was taken in the joint names of the parties, as was the mortgage. In her note the Sheriff records that she preferred the respondent's account that there was a clearly expressed understanding between the parties that should things not work out and the house required to be sold, each would recover proportionately what they put in. Entry was taken on or about 9 November 2000 and the respondent moved in permanently. The appellant continued to reside in her own house which she did not sell. The Sheriff found in fact that the appellant did not act in good faith in the marketing of her property for sale.

 

2.             The Sheriff found that at no time did the appellant contribute financially to the purchase or the maintenance of Eldamar. The respondent was solely responsible for the meeting of the deposit, all mortgage payments, council tax and legal and estate agency bills. He had also been responsible for all costs associated with maintaining and improving the property. The Sheriff further found the title to the property was taken in joint names in contemplation of the appellant redeeming the mortgage over Eldamar upon the sale of her own property and moving in to the said property. The appellant did not redeem the mortgage and had no intention of doing so. She did not attempt to sell her property and acted in bad faith in connection therewith. She did not move in.

 

3.             The appellant sought and has obtained decree for division and sale of Eldamar and it is currently exposed for sale.

 

4.             Crucially, the Sheriff found in fact and law that the appellant had been unjustly enriched by the taking of a pro indiviso share in the property known as Eldamar in contemplation of her contributing financially by applying the free proceeds of the sale of her house, when sold, to paying off the outstanding mortgage on the property and, that basis having failed to materialise, the appellant having obtained decree for division and sale in respect of Eldamar and having exposed for sale, the respondent was entitled to payment from the appellant of her one half share of the net proceeds of the sale of Eldamar.

 

5.             Against that decision this appeal is taken.

 

Submissions for the pursuer and appellant

 

6.             Counsel for the appellant made the following motion:

"(1) To delete the Sheriff's finding in fact 9 that the pursuer had been unjustly enriched by the taking of title to Eldamar jointly with the defender without having provided funds in repayment of mortgage as she undertook to do. The extent of that enrichment is her one half share of the net free proceeds of sale of that property which sum is still to be ascertained. (2) To add at the end of finding in fact 6 the following "The defender paid the deposit of £76,000, associated legal and registration fees of £1,714.25, council tax payments of £1,822.18 to the date of proof and mortgage repayments totalling £9,664.60 to the date of the proof. The defender was jointly and severally liable along with the pursuer to the lenders in respect of the mortgage". (3) To vary the Sheriff's finding in fact and law by (a) deleting the words "taking of a pro indiviso share in" in line 2 and substituting "financial contributions paid by the defender in respect of the deposit, associated legal and registration fees, council tax payments and mortgage payments in respect of" and (b) by deleting "her one half share of" on the penultimate line and substituting "a sum representing the payments made by the defender in respect of the deposit for the purchase of the property, the associated legal and registration fees, council tax payments and mortgage payments to the date of realisation, all from". (4) To allow the pursuer to amend (at the bar) the pursuer's third plea in law in the counterclaim by inserting after "deposit" the following "associated legal and registration fees, council tax". (5) To pronounce an interlocutor sustaining that plea in law and finding the defender entitled to payment in respect of his said financial contributions from the net free proceeds of sale; finding the pursuer entitled to the expenses of the action insofar as not already been dealt with; and to that extent varying the Sheriff's interlocutor and allowing the appeal."

 

7.             It was noted that the Sheriff had found that the respondent was entitled to payment from the appellant of her one half share of the free proceeds of the sale of the property in question (finding in fact and law at page 4 of the judgment), the necessary consequence being that the respondent obtained the whole net free proceeds of the sale of the property.

 

8.             The central premise upon which the Sheriff based her judgment was that the appellant had been unjustly enriched by the taking of a pro indiviso share of the heritable property in question. The context was the submission on behalf of the respondent that the unjust enrichment consisted of the appellant's pro indiviso share of the property (page 12 of the judgment). It was further observed that the Sheriff was invited to take the view that, while there was no transfer of property from the respondent to the appellant, the case involved the transfer of a beneficial interest, there being no difference in the legal consequences of the two. It was the taking of title which constituted the enrichment. The Sheriff stated at page 13 of her judgment:

"Mr Hawkes invited me to view the present case as one involving a transfer of a beneficial interest in property rather than a transfer of property but submitted that there was no difference in the legal consequences of the two. It was, he submitted, the taking of title which constituted the enrichment. Had it not been for his understanding that the pursuer was going to contribute all of her capital, that is the sale proceeds of the "West Linton" property, to the purchase of "Eldamar" then the defender would have taken title in his sole name. He could have obtained a mortgage in his own name. He had no need to include the pursuer on the title or the standard security. He permitted the pursuer the taking of a pro indiviso share because she had undertaken to pay off mortgage. It is this transfer of a beneficial interest to her which constitutes the unjust enrichment. Had he not allowed her to do so, she would have no entitlement to any part of the free proceeds of sale of the property."

 

9.             It was submitted on behalf of the appellant that this premise was unsound in law. It was a matter of agreement that the title to the property in question was taken in joint names of the parties, each holding a one half pro indiviso share, the disposition from third parties conveying the property to them and to the survivor. There was no basis for the suggestion that there was a transfer of a beneficial interest in the property from the defender to the pursuer at the time the title was taken. The respondent had not, until he acquired title along with the appellant, anything to give. The "taking of title", which was said to constitute the enrichment, could only have significance in the context of a remedy sought by the respondent if he had been the person conferring the benefit of the title. It was suggested he was not in a position to confer the benefit of the title.

 

10.         It was the appellant's case that the enrichment arose from the financial contributions the respondent made in relation to the deposit of the purchase, associated legal and registration fees, council tax payments and mortgage payments as set out in page 6 of the judgment. That being so, the nature of the enrichment, as representing the value of the benefit conferred, was the amount contributed by the respondent to the appellant's share of such payments. It was submitted that this was consistent with the opinion expressed by Lord Morrison in Grieve v Morrison 1993 SLT 852. In that case it was held:

"(1) That the consideration for which the 1983 property was jointly purchased was receipt of the price from both parties, the major part of that price being provided by a joint loan, and accordingly the defender had made no gift of heritable property to the pursuer and the condictio had no application to the pursuer's ownership of his pro indiviso share of the property. (2) That neither the defender's defences nor her counterclaim relevantly related to an entitlement to part of the free proceeds of any sale as distinct from the whole. (3) That in any event in order that the condictio could apply to any transfer of assets the transfer had to be subject to a mutually agreed understanding, either express or to be implied from the circumstances, that it was made for the consideration which later failed and on the evidence no such agreement could be applied. Lord Morrison stated at page 855: "The nature of the condictio is set out in the speeches reported in the leading case of Cantiere San Rocco v Clyde Shipbuilding and Engineering Company. It rests generally on the liability to make restitution of a thing which has been transferred on a consideration which has failed. A well recognised example of the application of the doctrine is a gift made, for example to a bridegroom, in consideration of marriage. If the marriage does not take place, the gift must be returned. ... in the present case the defender made no gift of heritable property to the pursuer. The consideration for which the property was jointly purchased, as the disposition bears, was receipt of the price from both parties. The major part of that price was provided by a loan for which both parties took equal responsibility. All that the defender did was to provide towards the price a contribution of £9,000 which she had obtained as the free proceeds of the sale of the parties' former home. In respect of the pursuer's pro indiviso share, the maximum extent of her generosity was therefore a contribution of £4,500 which, having regard to the circumstances in which the sum became available to her is nothing out in the ordinary, and in any event cannot found a claim for a whole of the pursuer's heritable interest. ..."

 

11.         It was submitted that such an approach was consistent with the doctrine which both parties agreed was applicable in this case - condictio causa data causa non secuta - a claim for something given on a basis which has failed. I was referred to Gloag and Henderson eleventh edition para 20.04.

 

12.         It was suggested that the Sheriff's reasoning in not following Grieve was unsound. She stated at page 19:

"Lord Morrison was not persuaded in that case that the condictio applied, but opined that, if it had, the most that the defender would have been entitled to would be the amount which she had contributed to the pursuer's share of the price of their home. This is the position the pursuer has adopted in the present case. ... The circumstances of the present case are very different. There is no element of mutual contribution as existed in Grieve. There is no attempt in the present case, as there was in Grieve, to have one party's share conveyed to the other. The pursuer's liability in respect of the mortgage will cease on redemption on sale ... The defender is the sole contributor financially to the subjects. There is no history of cohabitation and contribution. The house is to be sold." It was submitted that while the circumstances of Grieve were different, the approach adopted by Lord Morrison was derived from principle and in particular what he understood to be the nature of the condictio. The Sheriff had observed that there was no element of mutual contribution in the present case as there was in Grieve and that the appellant's liability in respect of the mortgage would cease on redemption on sale. In Grieve the first defender sought to have the pursuer's interest conveyed to her on the basis of the condictio.

 

13.         It was submitted the Sheriff's approach overlooked the way in which the purchase of the property was funded in this case. There was a mortgage of £29,000 to fund the purchase on top of the deposit. While the appellant had made no payments in respect of the mortgage, she was and remained jointly and severally liable to the lenders in respect of the obligation to repay. In the event of failure to pay, she could have been called upon to meet the obligation. The respondent could have called upon her to make payment to him in respect of payments made on her behalf and could do so following the redemption of the mortgage upon sale.

 

14.         It was submitted there was no basis for suggesting that the extent of the enrichment was the appellant's one half share of the net free proceeds of the sale and the Sheriff was wrong to come to that view. It was suggested that Shilliday v Smith 1998 SC 725, on which the Sheriff relied, did not provide authority for such a proposition. It was suggested that such an approach could only be justified if the respondent were able to demonstrate that he had conferred the benefit of an interest in the heritable property upon the appellant, one of the situations postulated by the Lord President at page 728 in Shilliday. Then it would be necessary to raise an action of reduction of the disposition. That had not been done here and it was now too late to do so, standing the order of sale which had been pronounced.

 

15.         It was suggested that the nature of the claim was one of repetition. First there was the sum of money paid in respect of the deposit which was due by both. The respondent effectively paid the appellant's half share. The same applied to the mortgage payments which he had made and he continued to make. He was paying the whole liability and therefore meeting her half. He would be entitled to pursue the appellant for any sum which he had paid on her behalf. He had paid on behalf of both himself and the appellant £76,000 in respect of the deposit, £1,714 for legal and registration fees, £1,822 for council tax payments and £9,664 for mortgage payments to date. The respondent had paid a total of some £89,200. It was submitted that half of that figure, namely £44,600, would represent the extent of his claim against the appellant. He could raise proceedings to recover £44,600. That would effectively be a claim for repetition of money - to recover what the appellant had in effect given to the respondent to pay her half of these liabilities. It was suggested that the appropriate approach was that the appellant should be called upon to pay back what she had been given. It was suggested that there was no authority for the proposition that the appellant could claim the whole proceeds of sale as there had been no transfer of property. It was suggested that repetition was the true nature of the claim. The exception was that work carried out on the property. There was a passage at pages 7 and 8 of her opinion where the Sheriff referred to work involved in installing a new central heating system and other work of a remedial and improvement work. She concluded at page 8:

"I regard the defender as entitled to repayment of these sums which were expended for the benefit of the pursuer." It was said that the maximum figures for improvements were £7,084, half of which namely £3,542 the respondent had expended on the appellant's behalf. It was suggested that any enrichment should be restricted to the one half share of £3,542. It was accepted that the respondent should be entitled to be paid that sum from the appellant with in addition the sum of £44,600.

 

16.         Counsel for the appellant stated that he relied on the figures in the joint minute. As I understood him the claim for repetition would amount to £44,600 and there would be a further claim for recompense in respect of half of the remedial and improvement work carried out by the respondent at the house of £3,542. Accordingly, it was accepted that what the respondent was entitled to was repayment of the sum of £44,600 paid on behalf of the appellant and £3,542 to recompense the respondent for improvements which he had made to the house on behalf of the appellant.

 

17.         It was submitted that to succeed in a claim based on unjust enrichment generally, it was necessary to show that the defender in a claim had been enriched at the expense of the pursuer, that there was no legal justification for the enrichment and that it would be equitable to compel the defender to redress the enrichment (Dollar Land Limited v CIN Properties Limited 1998 SC (HL) 90). In this case the pursuer had, by virtue of the title, taken jointly with the defender, a right in law to a one half share of the property and on sale to a one half share in the net free proceeds of sale. That right carried with it the consequence of sharing in the benefit of any increase in the value of the property. The defender had the same legal right. That right was subject only to any valid claim that either party may have against the other in relation to the subjects and which could be presented as a free standing claim in a separate action or alternatively, on equitable principles, dealt with in the division of the proceeds of sale in an action for sale. In the present case it was a matter of concession on the part of the appellant that the respondent's claim - properly regarded as one repayment from the proceeds of sale in respect of the respondent's payment on behalf of the appellant - could be dealt with in this alternative way.

 

18.         It was submitted that any benefit which accrued to the appellant, beyond the extent of the conceded claim based on repetition and recompense, was one which she was legally entitled to retain and could not be regarded as unjust.

 

19.         It was submitted that the Sheriff had erred in law in finding that the appellant had been unjustly enriched by taking a pro indiviso share in the property known as Eldamar and that the appellant was entitled to her one half share of the net proceeds of sale. The Sheriff ought to have found that the appellant's enrichment arose, and was properly measured, by the financial contribution the respondent had made. This amounted to one half of (1) the respondent's contribution of £89,201.12 paid by the respondent in respect of the deposit, associated legal and registration fees, council tax payments to date and mortgage payments to date and (ii) his expenditure in respect of improvements to the house of £7,084.

 

20.         It was submitted that the Sheriff's interlocutor should be varied to provide for an equal division of the net proceeds of sale after payment to the respondent of a sum representing the financial contributions he had made to date. This was equivalent to reimbursing the respondent for payment of the appellant's one half share of these items and was consistent with the proper application of the condictio.

 

21.         I was invited to uphold the appeal and vary the interlocutor as proposed.

 

Submissions for the defender and respondent

 

22.         Counsel for the respondent submitted that the Sheriff had made the following formal and informal findings in fact, which underpinned the respondent's legal arguments on unjust enrichment:

1.             In order to purchase the said property both parties agreed to sell their present homes and apply the free proceeds thereof towards the purchase price of the said property. It was their intention to live together as a couple at "Eldamar" (finding in fact 2). 2.             Parties agreed therefore that they would obtain a mortgage for the balancing amount of £29,000 and that the pursuer would apply the free proceeds of sale of her house, when sold, to paying off the outstanding mortgage on the said property. On that basis, title to the said property was taken in the joint names of the parties, as was the mortgage. (finding in fact 3) 3.             The pursuer did not act in good faith in the marketing of her property for sale. (Finding in fact 5) 4.             At no time has the pursuer contributed financially to the purchase of or maintenance of the said property. The defender has been solely responsible for the meeting of the deposit, all mortgage payments, council tax and legal and estate agency bills. He has been solely responsible for all costs associated with maintaining and improving the property. (finding in fact 6) 5.             Title to said house was taken in joint names in contemplation of the pursuer redeeming the mortgage held over said property upon the sale of her West Linton property and moving into "Eldamar". The pursuer did not redeem said mortgage and has no intention of doing so. She did not move in. The defender would have taken title to said house in his own name only had he been aware that the pursuer would not be contributing financially to its purchase. (finding in fact 7) 6.             The pursuer has been unjustly enriched by the taking of title to Eldamar jointly with the defender without having provided funds in repayment of mortgage as she undertook to do. The extent of that enrichment is her one half share of the net free proceeds of sale of that property which sum is still to be ascertained. (finding in fact 9) 7.             I was not impressed by the pursuer's contention that she contributed in any meaningful way to improvements to the house. In this, as in all points where her evidence contradicted that led by the defender, I preferred his account. (page 8) 8.             I heard evidence from the defender that it was his expressed intention that their shares in the property would be proportionate to the amount of money each invested in it. ... I prefer the defender's account that there was a clearly expressed understanding between the parties that should things not work out and the house required to be sold, each would recover proportionately what they put in. ... The pursuer (sic) thought it was fair that each take out of the house what they put in. It was discussed prior to taking title in joint names. (pages 9//10/11) 9.             Interestingly, (the pursuer) could not speak to any discussion after the parties split up either. She denied the defender's assertion that she had agreed to transfer title to him in the immediate aftermath of the split. That conversation did not happen. I regret that I found this unconvincing as I did her stance in this regard. ... Given the clear attachment (the defender) has to "Eldamar" I find it difficult indeed to accept that in the aftermath of the breakdown of the parties' relationship he would not, as he says he did, try to arrange a future transfer of the pursuer's title. (page 10) 10.         In my view ... it was not the defender's intention to give the pursuer a share in the property in his lifetime, beyond that to which she would be entitled by reason of her financial contribution. (page 11) Against that background it was submitted the learned Sheriff was correct in law to find that the pursuer had been unjustly enriched by the taking of a pro indiviso share in that property in contemplation of her contributing financially thereto in the agreed manner, and, that basis having failed to materialise, that the defender was entitled to payment of the pursuer's one half share of the net free proceeds of sale.

 

23.         The appellant's enrichment was her pro indiviso share in the property and was not restricted to the expenditure notionally made on her behalf by the respondent by way of meeting costs and paying for improvements. If nothing else, the evidence was that that expenditure was, to a large extent, made after it became clear to the respondent that the appellant was not intending to contribute in the manner anticipated and so was accordingly not incurred in contemplation of that contribution. On one view (though it is certainly not conceded), it could be said that such expenditure, being incurred after that pivotal point in time, might be characterised as being in suo (the contrary argument being that it was nevertheless to the equal benefit of the appellant's half share).

 

24.         More fundamentally, if there was benefit to the appellant from the expenditure/improvements, then that was simply a practical and logically consistent consequence of the true source of her enrichment, viz her having acquired a share in the property. That acquisition was unjust because it was in contemplation of a capital payment (redemption of the loan) which failed to materialise. All the benefits which flowed from that enrichment (for example, the capital appreciation of the appellant's interest through improvements and a rising market; mortgage payments; council tax payments; and the other miscellaneous benefits which the appellant accepts she has enjoyed) could be traced back to it.

 

25.         Essentially it was submitted on behalf of the respondent the issue was "what was the enrichment". Was it the taking by the appellant of a one half share of the property or was it the sums expended notionally on her behalf by the respondent. It was the appellant's case that the enrichment was the taking of the title to the one half share of the property. If payments were made, they clearly did form an enrichment, but the true enrichment was in the taking of the one half share of the property and everything else flowed from that. The court, when seeking to reverse the enrichment, ought to look at the true source of the enrichment and not at the inevitable factual consequences of that enrichment namely deposit, council tax, mortgage payments etc.

 

26.         In this case the appellant had taken title on a certain basis and that basis had not materialised. Unjust enrichment and remedies therefore should be determined on broad equitable principles. I was referred to Dollar Land Limited v CIN Properties Limited in the House of Lords Report 1998 SLT (HL) 90 at 98E to F where Lord Hope of Craighead, referring to his decision in Morgan Guaranty Trust Co of New York v Lothian Regional Council 1995 SC 151 said:

"I sought to make my position clear when I said in the Morgan Guaranty case at p 155E that the important point was that these actions were all means to the same end, which is to redress an unjustified enrichment upon the broad equitable principle nemo debet locupletari aliena jactura." Here what was challenged by way of enrichment was the taking of title by the appellant. It had arisen in contemplation of a certain state of affairs, namely payment by the appellant of the mortgage of £29,000 from the sale proceeds of her house. That did not materialise. I was referred to the Court of Session report of Dollar Land Limited v CIN Properties Limited 1996 SC 331 where Lord Cullen said at pp 348-349:

"A person may be said to be unjustly enriched at another's expense when he has obtained a benefit from the other's actings or expenditure, without there being a legal ground which would justify him in retaining that benefit. The significance of one person being unjustly enriched at the expense of another is that in general terms it constitutes an event which triggers a right in that other person to have the enrichment reversed.

 

27.         I was also referred to the case of Shilliday v Smith supra where Lord Caplan said at page 734:

"The governing equitable principle is that a party ought not to be permitted to remain enriched in respect of a benefit in property or money which he has no legal rights to retain against the party from whom it derived. There are many situations where the law has confirmed that unjust enrichment can arise and there has been a tendency to categorise them. However, this process should not deflect from the underlying equitable foundation of claims based on such categories. What makes it fair and reasonable that recompense, restitution or repetition should be made to the party who originated the enriching benefit is that it would be unjust that a party should be enriched at the expense of another when in the circumstances no such enrichment was intended ... The simple equitable formulation of the rules arising from unjust enrichment would perhaps be "is it right that the person should be entitled to retain a valuable benefit in circumstances when the person who conferred it had no intention that he should keep it."

 

28.         It was submitted that these dicta supported the position of the respondent and the benefit which the appellant had received - a one half share of the property - was made in contemplation of a certain state of affairs which did not materialise. The respondent would not have allowed the appellant to have had conveyed to her a one half share of the property if he had known the true state of affairs, namely that the appellant would contribute nothing to the venture.

 

29.         It was suggested that there was no difference in principle to the act of transfer or conveyance by the respondent of a one half share of the property, on the one hand, to the respondent allowing the appellant to take a one half share of the property when conveyed from the seller, on the other. There was no difference in principle in these two situations and there should be no difference in the remedy. In both situations the appellant received a pro indiviso half share of the property which would not otherwise have arisen had the respondent known that the appellant would not contribute to the purchase of Eldamar.

 

30.         As it was incorrect to characterise what took place as a "transfer of title" from the respondent to the appellant so it is equally misconceived to suggest that the respondent's remedy was limited to that of reduction. Rather, the appellant obtained a benefit from the respondent's actings, without there being a legal ground which would justify in her retaining that benefit (adopting the formulation of Lord Cullen in Dollar Land, supra).

 

31.         The trio of recent cases (Morgan Guaranty, Dollar Land and Shilliday) made it clear that Scots law would provide a remedy on the general ground of unjust enrichment and was more concerned with the reversal of the enrichment than with the imposition of a rigorous and inflexible taxonomy of remedies. The learned Sheriff had adhered to that approach and, having accurately identified the true nature of the enrichment, had granted a remedy which reversed it in an equitable manner.

 

Decision

 

32.         This case involves the application, in the particular circumstances which I have outlined, of the doctrine condictio causa data causa non secuta - a claim for something given on a basis which has failed. I consider the law is set out in the following cases:

i.                Grieve v Morrison 1993 SLT 852 where Lord Morrison stated at page 855 "The nature of the condictio is set out in the speeches reported in the leading case of Cantiere San Rocco v Clyde Ship Building and Engineering Co. It rests generally on the liability to make restitution of a thing which has been transferred on a consideration which has failed." ii. Dollar Land Limited v CIN Properties Limited 1996 SC 331 where Lord Cullen stated at page 348-349: "A person may be said to be unjustly enriched at another's expense when he has obtained a benefit from the other's acting or expenditure, without there being a legal ground which would justify him in retaining that benefit. The significance of one person being unjustly enriched at the expense of another is that in general terms it constitutes an event which triggers a right in that other person to have the enrichment reversed. iii. Shilliday v Smith 1998 SC 725 where Lord Caplan stated at page 734: "The governing equitable principle is that a party ought not to be permitted to remain enriched in respect of a benefit in property or money which he has no legal right to retain against the party from whom it derived ... The simple equitable formulation of the rules arising from unjust enrichment would perhaps be "is it right that a person should be entitled to retain a valuable benefit in circumstances when the person who conferred it had no intention that he should keep it." iv. Dollar Land Limited v CIN Properties Limited 1998 SC (HL) 90 where Lord Hope of Craighead said at 98E-F: "I sought to make my position clear when I said in the Morgan Guaranty case at page 155E that the important point was that these action were all means to the same end, which is to redress an unjustified enrichment upon the broad equitable principle nemo debet locupletari aliena jactura."

 

33.         On the basis of the law which I have set out it is clear that the court may allow an equitable remedy in circumstances where one party has been unjustly enriched at the expense of another party. I propose to deal with this matter under four headings:

a. Has the appellant been enriched at the expense of the respondent and what is the nature of that enrichment? b. If so, was that enrichment unjust? c. If so, what remedy, in the particular circumstances of this case, is open to the respondent? d. Is that remedy equitable?   I deal with each heading in turn.

 

a. Has the appellant been enriched at the expense of the respondent and what is the nature of that enrichment?

 

34.         The Sheriff has found that both parties owned separate houses and, in order to purchase Eldamar, they agreed to sell their present homes and apply the proceeds towards the purchase price of Eldamar. It was their intention to live together as a couple in the property. The respondent's property sold quickly. The free proceeds of sale of £76,000 were used for the purchase, but were insufficient to meet the purchase price of £105,000. The parties agreed to take out a mortgage for the balancing amount of £29,000 and the appellant would apply the free proceeds of her house, when sold, to paying off the outstanding mortgage. On that basis, the title to Eldamar was taken in the joint names, as was the mortgage. The Sheriff found that this was on the understanding between the parties that should things not work out and the house required to be sold, each would recover proportionately what they put in. On that basis the title to the property was taken in joint names, with the appellant and respondent each entitled to a one half pro indiviso share of the property.

 

35.         Against that background at settlement the respondent contributed £76,000 to the sale proceeds and a loan in joint names was obtained for the balance of £29,000. The title was taken in joint names on the condition that the appellant would pay off the outstanding mortgage of £29,000 from the sale proceeds of her property.

 

36.         It is a corollary of that factual situation that the instructions given by the parties to their solicitor to have the title taken in joint names were on that basis. At that time the appellant had contributed nothing to the purchase price of the house. According, in my opinion, at the time of settlement she was enriched to the extent of her one half pro indiviso share of the property when settlement took place. The enrichment resulted from the respondent agreeing that the title of the property should be taken in joint names. This was on the understanding that the appellant would redeem the mortgage taken out to pay the balance of the purchase price from the sale proceeds of her property. I refer to the dicta of Lord Cullen in Dollar Land Limited supra:

"A person may be said to be unjustly enriched at another's expense when he has obtained a benefit from the other's acting or expenditure ..." In this case the appellant obtained a benefit when the title to the property was taken in joint names as a result of the respondent agreeing that this should be done. The Sheriff found that it was not the respondent's intention to give the appellant a share in the property in his lifetime beyond that to which she would be entitled by reason of her financial contribution. She further found that the respondent would have taken title to the house in his own name only had he been aware that the appellant would not be contributing financially to its purchase. Accordingly, in my opinion, at settlement the appellant was enriched at the expense of the respondent to the extent of a one half pro indiviso share of Eldamar.

 

b. Was that enrichment unjust?

 

37.         I again refer to Lord Cullen in Dollar Land supra:

"A person may be said to be unjustly enriched at another's expense when he has obtained a benefit from the other's actings or expenditure, without there being a legal ground which would justify him in retaining that benefit ..." and Lord Caplan in Shilliday v Smith supra: "Is it right that a person should be entitled to retain a valuable benefit in circumstances when the person who conferred it had no intention that he should keep it."

 

38.         The Sheriff has found that the basis on which the title was taken in joint names was in contemplation of the appellant contributing financially to the purchase of the property by applying the free proceeds of the sale of her house, when sold, to paying off the outstanding mortgage on the property. The Sheriff further found that the appellant did not act in good faith in the marketing of her property for sale. She made no proper efforts to sell the property to allow the condition on which the property had been taken in joint names, namely that she apply the free proceeds of the sale of her property to the paying off of the mortgage on Eldamar, to take place. The appellant did not fulfil her side of the bargain. She obtained a benefit at the expense of the respondent and there are no legal grounds to justify her retaining that benefit. The enrichment is accordingly unjust.

 

c. If there is unjust enrichment, what remedy is open to the respondent?

 

39.         In this case the appellant has obtained decree for division and sale of the property which is currently on the market. The respondent seeks payment from the appellant of her one half share of the net proceeds of the sale of Eldamar. I take the view that this is a remedy which is open to the respondent to redress the appellant's unjust enrichment in obtaining a one half pro indiviso share of the property. As Lord Hope of Craighead in Dollar Land supra said:

"the important point was that these actions were all means to the same end, which is to redress an unjustified enrichment upon the broad equitable principle ..." The net result of this action, if the respondent is successful, will be that the appellant's unjustified enrichment will be redressed by the respondent retaining the whole net proceeds of sale.

 

d. Is that remedy sought an equitable remedy?

 

40.         The dicta to which I have referred above, and in particular the dicta of Lord Hope of Craighead and Lord Caplan emphasise that redress in respect of unjust enrichment requires to be on broad equitable principles. The question which arises in this case is whether it would be an equitable remedy to allow the respondent in this case to receive the whole net free proceeds of the sale of Eldamar. I have no doubt that equity in this case favours the respondent. The respondent alone paid the deposit of £76,000 in respect of the purchase price of £105,000. The respondent alone has paid to date the mortgage payment in respect of the mortgage arranged in respect of the balance of £29,000. The respondent alone has paid the associated legal and registration fees and the council tax payments. The respondent alone has spent money repairing and renovating the property.

 

41.         On the other hand, the appellant has contributed nothing. She has refused to market her property for sale in order that the condition on which title to the property in her name was taken can be purified. She has no intention of doing so and the Sheriff has found that she acted in bad faith. One searches in vain for any equitable ground on which it could be said that the appellant was entitled to anything in respect of this property.

 

42.         I am satisfied that the remedy sought is an equitable one and in accordance with the principles of the doctrine condictio causa data causa non secuta. On this basis, I reject the submission which was made on behalf of the appellant that the respondent's claim against the appellant should be restricted to one half of the sums he had expended on her behalf. The enrichment obtained by the appellant at the expense of the respondent was her one half pro indiviso share of the property. That enrichment was unjust in that the condition on which it was given and obtained did not materialise as the result of the appellant acting in bad faith in connection therewith. The remedy sought by the respondent is one which is open to him and is, in all the circumstances, an equitable one.

 

43.         The appeal fails and I adhere to the Sheriff's interlocutor of 9 December 2005. I award the expenses of the appeal to the respondent. I certify the cause as suitable for the employment of counsel.