Spaul v Spaul & Anor

A transfer made on the basis of a failed bargain may support restitution, even without a contract, but there must be a joint understanding or endeavour making the recipient’s retention conditional. A unilateral act does not acquire such a basis from a general hope of dividing assets. An appellate court will not decide a new failure-of-basis or mistake case, or make factual findings not made below. In a voluntary-disposition mistake case, the court must consider the mistake, its centrality and consequences, and whether leaving it uncorrected would be unconscionable or unjust. Remission is inappropriate where the evidence does not identify the alleged mistake and would merely enable a new case.

The appellant and the first respondent were brothers involved in a property company, A&M. After their relationship deteriorated, they discussed dividing the company’s properties. The appellant transferred one property to a company he controlled, and later transferred all 100 shares in A&M to the first respondent. In earlier Chancery Division proceedings, the property transfer was declared void and the appellant accepted liability for breach of trust and fiduciary duty: [2009] EWHC 3275 (Ch).

The appellant then claimed the return of 50 shares, alleging failure of consideration or, alternatively, a mistake. The County Court found no concluded agreement for the property and share transfers and treated the share transfer as a voluntary disposition. The central issues on appeal were whether the transfer was supported by a failed basis or joint endeavour, and whether the case should be remitted for reconsideration under the broader mistake guidance in the Supreme Court’s decision in Pitt v Holt.

The appeal was dismissed.

1. The Court of Appeal could allow the appeal only if satisfied that the decision below was wrong under CPR Part 52.11(3)(a). The alleged failure-of-basis case had not been advanced before the County Court, and the judge had made no findings on it. The appeal could not succeed on that new case.
2. In any event, failure of basis in unjust enrichment may arise without a contract, but the benefit must at least result from a joint understanding or endeavour which makes retention conditional. The general agreement found by the judge was merely an expression of hope that the properties might be divided, subject to financial adjustments. It said nothing about transferring shares or about the method of implementation. It therefore provided no basis for the appellant’s unilateral transfer of the shares.
3. The appellant’s reliance on the first respondent’s later knowledge or acceptance of the shares was also a new case. The appellate court could not make findings on matters that had not been ventilated below.
4. The County Court had directed itself by reference to the Court of Appeal’s formulation in Pitt v Holt [2012] Ch 132. The applicable inquiry had since been broadened by the Supreme Court in Pitt v Holt [2013] 2 AC 108. The appellant, however, had neither pleaded nor proved any specific mistake. Remission would have permitted a new case and retrial. The transfer therefore remained a voluntary disposition, and the claim for return of the shares failed.

• Court of Appeal (Civil Division): On 21 May 2014, dismissed the appeal against paragraph 2 of the County Court order: [2014] EWCA Civ 679.
• Central London County Court: On 25 April 2013, Her Honour Judge Walden-Smith dismissed the claim for re-transfer of 50 shares, finding no concluded agreement and treating the transfer as a voluntary disposition.
• Earlier Chancery Division proceedings: The earlier proceedings addressed the transfer of the property and related trust and fiduciary-duty claims. The judgment is reported at [2009] EWHC 3275 (Ch); the present share issue was not decided there.