Jules v Robertson

A debt extinguished by completion of an individual voluntary arrangement cannot thereafter be recovered as a debt. A proprietary estoppel remedy gives effect to an equity in property; it does not ordinarily create an unconstrained personal liability. Save in exceptional circumstances, a monetary award cannot exceed the value of the property in the defendant’s hands, subject to existing charges. Nor can a restitutionary claim for an earlier loan exceed the defendant’s actual enrichment from a later payment. A pleading defect should not prevent reliance on an IVA where its possible effect was clearly in issue and exclusion would be merely technical and unjust.

Mr Robertson sued his son-in-law and daughter to recover sums made available in connection with a wine bar acquisition, their property and their debts. The Central London County Court awarded him £75,000 against Mr Jules, treated £40,000 as a gift to Mrs Jules, and awarded £100,000 against both defendants jointly.

Mr Jules appealed against the £75,000 award. He relied on his completed individual voluntary arrangement, entered into after the £75,000 loan. Mr Robertson sought permission to amend his respondent’s notice so as to rely on proprietary estoppel or another equitable basis for recovering that sum. The issues were whether Mr Jules could rely on the IVA and whether an equitable or restitutionary claim could sustain the award.

1. Appeal allowed. The court discharged paragraph 1 of the County Court order, which awarded Mr Robertson £75,000 against Mr Jules. Permission to amend the respondent’s notice to assert a proprietary estoppel or other equitable claim for that sum was refused.
2. Mr Jules was entitled to rely on the IVA point. The amended defence referred to the IVA, and its possible effect was plainly raised in the strike-out application, the statement of issues and the trial submissions. Once the loan and the IVA were established, the IVA’s legal effect was a matter of law. Preventing reliance on the point would have been a merely technical defect and contrary to the overriding objective.
3. Where proprietary estoppel is established, the court has discretion as to the form of relief. Possible relief includes an interest in the property, a lease or licence, a charge, or, in an appropriate case, a personal monetary award. Save perhaps in the most exceptional circumstances, a monetary award cannot exceed the value of the property in the defendant’s hands, subject to subsisting charges. The court cannot use proprietary estoppel to create a novel restitutionary remedy or impose a personal liability greater than an award of the whole property could produce.
4. The £75,000 was a debt which, absent the IVA, would have been recoverable. After completion of the IVA, the debt claim could no longer be asserted. The proprietary estoppel and constructive trust analyses could not support recovery because the relevant property had no equity value. Any unjust enrichment arising from the later £100,000 payment could not exceed the amount actually received. The parties’ intention that that payment should reflect the earlier loan did not enrich the defendants by £175,000. Mr Robertson therefore had no claim to the £75,000. The existing £100,000 judgment was not challenged and the court did not decide whether a restitutionary claim for that sum existed.

• Court of Appeal (Civil Division): allowed Mr Jules’s appeal concerning the £75,000 and discharged paragraph 1 of the order.
• Central London County Court: HH Judge Collins CBE awarded £75,000 against Mr Jules and £100,000 against Mr and Mrs Jules jointly, treating a further £40,000 as a gift to Mrs Jules.