Menelaou v Bank of Cyprus UK Ltd

On consequential matters after an appeal, the court may frame a declaration to reflect the present position where an order for sale has not yet been made. The declaration may recognise subrogation to an equitable charge by way of an unpaid vendor’s lien, with recovery from net sale proceeds. Success on one appeal issue does not necessarily displace a costs order made on separate issues below. A without-prejudice save-as-to-costs offer does not alter that position where the opposing parties should have conceded before trial. Payments on account may be repaid when the basis for them has fallen away.

This was a consequential judgment following the Court of Appeal’s determination of an appeal from the Chancery Division judgment of Mr David Donaldson QC, sitting as a deputy High Court judge, [2012] EWHC 1991 (Ch). Melissa Menelaou and Bank of Cyprus UK Ltd disagreed about the form of declaration, costs, payments on account, and the allocation of costs between the appellant and a third party. The central issues were how to record the appellant’s equitable remedy before any order for sale, whether the respondent’s costs order below should be disturbed, and what further costs directions were appropriate.

Declaration

The court declared that the appellant was entitled to be subrogated to an equitable charge by way of an unpaid vendor’s lien over the property. Because an order for sale had not yet been made, the declaration was framed to operate if the property were sold pursuant to the counterclaim. From the net proceeds, the appellant was to receive £875,000 plus interest at the lesser of the rate payable under the contract of sale for late completion and the rate applicable to the debts owed by Mr and Mrs Menelaou which would have been secured by the purported first legal charge. That charge had been declared void and of no effect by the order below.

Costs and further orders

1. The costs order in favour of the respondent on her main claim was left undisturbed. She had succeeded on separate issues, including rectification of the register, and there had been no appeal from that part of the decision. The without-prejudice save-as-to-costs offer did not alter the position because the appellant and third party should have conceded the claim before trial. The equitable charge established on appeal was not equivalent in all respects to the void legal charge.
2. The sum paid on account of the respondent’s costs was to be repaid. No payment on account was ordered in respect of the appellant’s costs of the appeal or the counterclaim below.
3. No variation was made to the costs arrangements between the appellant and the third party. Permission to appeal to the Supreme Court was refused.

• Court of Appeal (Civil Division): On 4 July 2013, the court determined consequential issues following its appeal judgment, formulated the declaration, made further costs directions, and refused permission to appeal to the Supreme Court.
• High Court of Justice, Chancery Division: Mr David Donaldson QC, sitting as a deputy High Court judge, gave the judgment appealed from, [2012] EWHC 1991 (Ch). The purported first legal charge was declared void and of no effect.