Jules v Robertson

The Court of Appeal allowed the appellant's challenge in part. The key legal principles were that an Individual Voluntary Arrangement (IVA) can extinguish a pre-existing personal debt and that proprietary estoppel and constructive trust are equitable remedies concerned with interests in property rather than creating personal liabilities in excess of the propertys value. The court held that the £75,000 found by the trial judge to be a loan had been extinguished by the completed IVA and so could not be recovered as a debt; further, the judges reliance on proprietary estoppel could not properly support a monetary award for that sum because an equitable remedy cannot impose a personal liability exceeding the value of the property or the proprietary interest obtainable.

The court therefore discharged the trial judges paragraph ordering repayment of £75,000, while leaving intact the money judgment for the separate £100,000 advance against both defendants.

Background and parties: The claimant (Respondent) was the father-in-law of the appellant (first defendant). He sought repayment of sums advanced to the defendants relating to the acquisition and later financial distress connected with a wine bar. The trial judge found that £75,000 was a loan to the appellant, £40,000 was a gift to the daughter, and £100,000 was recoverable from both defendants.

Procedural posture: Appeal from Central London County Court (His Honour Judge Collins CBE). The appellant appealed paragraph 1 of the county court order (judgment dated 27 April 2010) which ordered repayment of £75,000 by the appellant. The appeal was heard in the Court of Appeal on 20 October 2011, judgment handed down 17 November 2011.

Nature of the claim / relief sought: The respondent sought monetary recovery of advances said to have been made to the defendants. The appellant contended on appeal that the £75,000 loan had been extinguished by his completed Individual Voluntary Arrangement under the Insolvency Act 1986 and so no cause of action remained.

Issues framed: (i) Whether the appellant could rely on the IVA as extinguishing the £75,000 debt given the state of the pleadings and case management; (ii) whether the trial judges proprietary estoppel or constructive trust analysis could support a monetary award for the sums in question, in particular the £75,000; and (iii) whether any equitable remedy could give rise to a personal monetary liability exceeding the value of the defendants property interest.

Court's reasoning: The Court of Appeal: (a) held that the IVA point was properly in issue and that the appellant could rely on it (permission to amend pleadings would be given if necessary), because the IVA had been put in the frame and the matter had been litigated at trial; (b) accepted the respondents concession that the IVA, if open as a defence, would preclude recovery of the £75,000 as a debt; (c) analysed the trial judges equitable reasoning and held that proprietary estoppel and constructive trust are remedies aimed at establishing or protecting interests in property and cannot, save in exceptional circumstances, justify a personal money judgment exceeding the value of the proprietary interest; (d) concluded that any unjust enrichment arising in 2004 related only to the £100,000 actually received in that year, so there was no equitable basis to recover the earlier £75,000 once the debt had been extinguished by the IVA. The consequence was that paragraph 1 of the trial judges order (the £75,000) was discharged, while the £100,000 judgment remained.

Appeal allowed in part. The Court of Appeal held that the appellant could rely on his completed Individual Voluntary Arrangement to show that the £75,000 debt had been extinguished and that the trial judges proprietary estoppel analysis could not properly sustain a personal money judgment for that sum because equitable remedies relating to property cannot produce a personal liability exceeding the value of the property or the proprietary interest obtainable; paragraph 1 of the county court order was discharged while the £100,000 judgment was left intact.

Appeal from Central London County Court (His Honour Judge Collins CBE), Claim No CHY09408; trial judgment and order dated 27 April 2010. Appeal heard in the Court of Appeal (Civil Division) on 20 October 2011; judgment handed down 17 November 2011 ([2011] EWCA Civ 1322).