Woman’s ‘unjustified enrichment’ appeal against former partner over half-share of house dismissed
A woman who sued her former partner for more than £40,000 following the sale of their jointly owned home, claiming that he had agreed not to take his share of the property if their relationship ended, has had her “unjustified enrichment” action rejected by appeal judges.
A sheriff had originally dismissed the action for recompense on the basis that the remedy was not available because the woman had failed to raise an action for financial provision in the form of a capital sum following the end of the cohabitation.
However, a five-judge bench in the First Division of the Court of Session ruled that the statutory remedy available under section 28 of the Family Law (Scotland) Act 2006 was not an alternative remedy but an additional remedy to those available at common law, but in any event the pursuer’s claim had “prescribed”.
The Lord President, Lord Carloway, sitting with the Lord Justice Clerk, Lady Dorrian, Lady Paton, Lord Menzies and Lord Brodie, heard that the pursuer Christine Pert and defender John McCaffrey began living together in 2004 at a flat owned by the pursuer in Mosspark Boulevard, Glasgow.
In 2005 the defender sold a flat which he had owned in Canal Street, Paisley, realising net proceeds of £21,206, some of which he used to build a workshop at the Mosspark Boulevard flat.
According to the pursuer, the defender did not make any other contribution to the income or capital of the household, having stopped working in July 2004, but the defender maintained that the proceeds from the sale of his flat and his own time and effort were applied to the benefit of the pursuer.
He claimed he paid £5,000 towards the pursuer’s council tax arrears in order to avoid her sequestration, and that he extensively renovated and upgraded the flat, with the effect that its value increased by £40,000.
In 2008 the parties bought a house in Trident Way, Renfrew, from the defender’s mother, with the price of £125,000 funded entirely from the proceeds of sale of the Mosspark Boulevard flat, which had realised over £137,500.
The pursuer averred that she had received legal advice regarding in whose named title to the property was to be taken, and that title was duly taken in joint names because of the ongoing nature of their relationship which was anticipated to continue and an undertaking by the defender that in the event the relationship ended he would “walk away with nothing” in view of the source of funds that facilitated the purchase of the house” and “not claim any value from the property”.
The parties continued to live in the house as cohabitants for the next four years and the defender maintained that he contributed to the household expenditure.
The court was told that a joint loan of £15,000, which was secured over the property, was taken out in 2009 and the defender said that he paid the monthly instalments, but the pursuer claimed £11,000 of the loan was used to repay the defender’s gambling debts.
The parties’ relationship ended in 2012 and the defender left the house.
On 1 April 2015, the pursuer was sequestrated and in January 2017 the pursuer’s trustee in bankruptcy sold the house and realised £85,590 net.
He used one half of that sum to pay the pursuer’s creditors and paid the other half to the defender.
But the pursuer sued for that sum on the basis of “unjustified enrichment”, claiming that the defender’s receipt of the money was “contrary to the undertaking” he gave to her at the time of the purchase.
She argued that her ability to sue only arose when the defender failed to act in accordance with his undertaking on receipt of the sum from the pursuer’s trustee in January 2017.
The pursuer did not apply for of a capital sum under section 28 of the 2006 Act on the basis that the defender had derived some economic advantage from the pursuer’s contributions or that the pursuer had suffered economic disadvantage in the interests of the defender.
She could have done so only within 12 months from the date on which the parties separated, but she did not do so because she had no reason to believe, either when the parties separated or when the flat was sold, that the defender would not honour his undertaking.
Before the sheriff, the defender submitted that the pursuer’s “only remedy” had been under section 28 of the 2006 Act, but it was now “time barred”.
He argued that the pursuer could not succeed in an action for unjustified enrichment, having elected not to pursue an alternative statutory remedy, adding that if an action based upon unjustified enrichment was available, it had prescribed.
The sheriff at Paisley dismissed that action as “irrelevant” after ruling that an action for unjustified enrichment was an equitable remedy which could not be enforced if the pursuer had elected not to exercise her statutory right, but he did not determine the issue of prescription.
The pursuer appealed, and the matter was remitted by the Sheriff Appeal Court to the Court of Session, which granted decree of absolvitor.
The Lord President’s opinion, with which the other judge agreed, stated: “Section 28 of the Family Law (Scotland) 2006 empowers the court to award, inter alia, a capital sum to a former cohabitant having regard to whether: the defender has derived economic advantage from contributions made by the pursuer; or the pursuer has suffered economic disadvantage in the interests of the defender.
“The power of the court is one of weighing up the various economic advantages and disadvantages and making a judgment, essentially of a discretionary nature, on whether a capital sum ought to be awarded.
“In making that assessment, it must be assumed that the ordinary legal remedies open to the parties, such as to secure particular property which is owned by them, have been, or can be, exercised. Put another way, the court must presuppose that the pursuer cannot obtain payment from the defender other than by utilising the statutory provisions of the 2006 Act.
“Seen in that light, section 28 is not a remedy which is alternative to an action for recompense but one which is additional to any common law remedy otherwise available. The failure to exercise the right to make an application under section 28 timeously does not bar the use of such remedies.
He added: “That is not, however, an end of the matter. The fundamental problem for the pursuer is not the existence of a remedy under the 2006 Act, but the availability of what is (or rather was) an alternative remedy at common law. The pursuer avers that the parties ‘agreed that title would be taken in joint names because… the Defender undertook that in the event the relationship ended he would walk away with nothing’.
“Since the property was already in joint names, this must be taken to mean that the parties had agreed that, in the event of the breakdown of the relationship, the defender would convey his share to the pursuer.
“On the basis of these averments (ie assuming that they can be proved), the pursuer’s most obvious remedy, albeit not one which forms a basis for the action, was to seek specific implement of the agreement or, given that the house had been sold by her trustee, to seek damages as a consequence of the defender’s breach of the agreement.”
It was this alternative remedy that was “fatal” to the pursuer’s claim upon the basis.
Lord Carloway concluded: “Whether the pursuer’s remedy is one for a breach of her agreement with the defender or recompense, her claim has prescribed in terms of section 6(1) of the Prescription and Limitation (Scotland) Act 1973.
“The prescriptive period did not start to run only when the pursuer elected to ask the defender to account to her for the sum, which he had been paid by her trustee, or when the defender was paid that sum, but when the pursuer was entitled to enforce her right against the defender either to a conveyance or to recompense. That was when the parties separated in April 2012.
“At that point, the defender had left the relationship along with a half share in the house, which he was then contractually bound (on the pursuer’s averments) to convey to the pursuer or at least to account for its value. Since the action was not served until June 2017, any claim has prescribed.”
© Scottish Legal News Ltd 2021