Kensington Mortgage Company Ltd.v Carr & Anor

Where a lender’s claimed entitlement to recover money depends on unjust enrichment, the factual basis for that claim must be established. If new evidence shows that the disputed payment did not confer the alleged benefit, and the lender accepts that it is not entitled to judgment for the sum, the appeal should be allowed and the order varied accordingly. A prior possession order and other grounds for appeal remain outside the scope of a second appeal where permission has been refused on those grounds. On costs, a successful appellant may recover costs up to the date on which the respondent conceded the substantive issue, with no order for costs thereafter where the appeal would then have been unnecessary.

Mortgage possession proceedings concerned a joint charge over property which Mr Carr alleged had been forged by his wife. The lender nevertheless claimed subrogation to the rights of secured creditors and recovery of other sums allegedly applied for Mr Carr’s benefit. The District Judge made orders for payment from the sale proceeds. On appeal, His Honour Judge Purle QC deleted two sums and substituted £7,500, finding that Mr Carr had been unjustly enriched because that sum had been paid to solicitors for divorce costs.

Permission for a second appeal was granted only on the £7,500 issue. Mr Carr then produced evidence that he had been legally aided with a nil contribution and had not used the sum to pay his legal costs. The lender accepted that it was not entitled to judgment for the disputed sum.

1. Appeal allowed. Permission for the second appeal had been granted on the single ground concerning the £7,500 said to represent unjust enrichment. The other grounds, including challenges to the original possession order, were outside the appeal. A renewed application for permission on those grounds had already been dismissed by Lloyd LJ.
2. The new evidence showed that Mr Carr was legally aided in the divorce proceedings with a nil contribution. He therefore had not used the £7,500 to pay his legal costs. Kensington accepted that it was not entitled to judgment for that sum. The order was consequently varied in the agreed form to remove the £7,500 and associated interest.
3. The correspondence established that the only contact between Kensington’s solicitors and District Judge George occurred after the hearing and concerned a query about the calculation of interest. The point did not assist Mr Carr.
4. As to costs, notwithstanding the unresolved question whether the evidence could or should have been produced at trial, Mr Carr was awarded his costs of the appeal up to 11 November 2010, when Kensington made its concession. Thereafter there was no order for costs because the appeal would then have been unnecessary.

• Court of Appeal (Civil Division): Kensington Mortgage Company Limited v Carr and another, [2011] EWCA Civ 1808. Appeal allowed on the permitted ground concerning the £7,500 sum; the order was varied in the agreed form.
• High Court, Birmingham: His Honour Judge Purle QC, 8 April 2010. Allowed Mr Carr’s appeal from the District Judge’s order, deleted sums of £6,108 and £21,681, and substituted £7,500 for the alleged unjust enrichment.
• District Judge: District Judge George, 21 September 2009. Gave judgment for the lender and ordered payment from the proceeds of sale, including sums claimed by subrogation and unjust enrichment.