England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		26/11/2013

Mr Justice Bean :

1. On 10^th November 1993 the Defendant Colin Harley ("Mr Harley"), then aged 18, was seriously injured while playing rugby for the John Ruskin College team. In 1995 he brought a personal injury claim against the College in this court. He was represented by solicitors, Stewarts Law LLP. Berrymans Lace Mawer ("Berrymans") were instructed on behalf of the College's insurers. A payment into court of £25,000 was made on 12^th March 1997. The notice of payment into court said that it was made in satisfaction of all causes of action in respect of which the claim was made and that it included a sum of £19,612.16 payable to the Compensation Recovery Unit. This would have left Mr Harley with less than £6,000 in compensation, and unsurprisingly it was not accepted.
2. On 8th August 2000 an interim payment on account of damages of £50,000 was made. On 26 February 2001 the College's insurers made a further payment into court of £250,000. By notice of acceptance under Part 36 of the CPR dated 7^th March 2001 Stewarts, on behalf of Mr Harley, gave notice of acceptance of the payment into court received on 26^th February 2001, "together with interim payment of £50,000 already received", in settlement of the whole of the claim. On 15^th March 2001 Stewarts received the £250,000 from the court pursuant to the Notice of Acceptance.
3. On 20^th March 2001 Stewarts paid £209,980.02 to Mr Harley. On 28^th March 2001 they paid him a further £15,000. In their letter of that date they wrote as follows:-

"I now enclose our cheque in the sum of £15,000 representing the balance of the damages less £25,000 being the amount we are holding against any potential shortfall in the recovery of our costs."

4. Thus by the end of March 2001 Mr Harley had received just under £275,000 in settlement of his claim. There was £25,000 still due to him. On 12^th December 2001 Stewarts paid him £20,000 of this, and on 14^th March 2002 they paid him £5,548.23. This last payment from Stewarts brought the total he had received to £300,508.27, which included a small amount of interest.
5. In May 2002 Berrymans, realising that the original £25,000 remained in court, wrote to Stewarts enclosing a draft consent order which would enable the money to be paid out of court and refunded to the College's insurers. There is a copy in the bundle of the draft consent order with space for the signatures of both firms of solicitors, but not signed by either.
6. Nothing then happened for six years until the Court Funds Office ("CFO") wrote to Berrymans on 11^th March 2008. After giving the title and case number of the claim the letter stated:-

"I am writing from the Court Funds Office in regard to a lodgement paid into court in the mid 1990s as a result of the above legal dispute. When lodged with the court the sum totalled £25,000. Due to interest accrued the sum now stands at £40,886.54. I am trying to trace the relevant parties involved as a sum of money remains unclaimed at this office. Ideally we would like to pay out this money to its rightful owner. … If you could be of any assistance in this investigation please contact me as soon as possible."

Correspondence then passed between Berrymans and Stewarts with a view to getting the money out of court and paid to Berrymans.

7. A letter was also written by the CFO to the College itself. Its vice-principal replied saying that:-

"The managers involved in this dispute are no longer at the college. However, documentation shows that a claim was made by a student at the college called Colin Harley against the college and it appears that the sum of £25,000 was paid to the court by the college. We have no written evidence to confirm the result of any court action and as such have some difficulty with providing the evidence to justify this claim. In the absence of any other justified claim I would argue that the funds are returned to the college where they can be used to further the education of young people studying here."

8. This letter was placed before Senior Master Whitaker who wrote:- "Refused. The college must have some record of Mr Colin Harley's address which they must supply to us. Efforts must be made to trace him." This led to the college providing the last known address of Mr Harley from correspondence dated 1993: this was in fact the address of his parents. On the direction of the Senior Master the CFO checked the address, found that the occupiers were Christopher and Sandra Harley (the defendant's parents) and on 23rd July 2008 wrote to them:-

"I am writing from the Court Funds Office in regard to a lodgement paid into court in the late 1990s as a result of a legal dispute. Our records indicate an Individual by the name of Colin Harley was involved in this matter.

I am trying to trace the relevant parties involved, as a sum of money remains unclaimed at this office. Ideally we would like to pay out this money to its rightful owner. Unfortunately, most of the paperwork has been destroyed and I have used the electoral roll to identify people called Harley in order to try and trace the correct person. If you could be of any assistance in this investigation please contact me as soon as possible on any of the contact details listed above.

If you are certain that you know the person involved please explain ask them to contact us as soon as possible.

If you do not know anyone by this name or are certain that it does not relate to anyone you know, it would still be appreciated if you could contact me so I can eliminate your names from our records."

9. Mr Harley senior says in his witness statement:

"As a result of receiving the letter I rang the Court Funds Office the following day and spoke to a colleague of Bharat called Peter; I told him that I was sure that the person referred to in the letter was Colin. He asked if I knew about any monies remaining in Court and I told him that I thought that Colin had had all of the money due to him. I told him that I still had some of the paper-work relating to the case in the loft. He informed me that the amount in question was £25,000 and he asked me to check any papers I had for mention of such a sum. I checked as I was asked and I only found one mention of this sum; it related to the holding back of £25,000 in case the costs of the case could not be recovered from the other party.

I phoned the Court Funds Office the following day and again spoke to Peter and told him what I had found; he asked for copies of the following: (a) Notice of acceptance of payment into Court; and (b) Letter to Colin from his solicitor regarding the £25,000.

10. On 29th July 2008 Mr Harley senior wrote to the CFO as follows:-

"I write in reply to a letter from Bharat Bhudiya, to my wife Sandra and myself, dated 23^rd July 2008 asking if we know an individual by the name of Colin Harley and also conversations I had with a person called Peter in your office on 28^th and 29^th July 2008.

We do know Colin Harley; he is our youngest son.

Colin was a pupil at John Ruskin College; on the 10^th November 1993 during the course of a rugby football match between the College team and a team from North East Surrey Technical College Colin sustained serious personal injury.

Colin sued the College under its own name at the invitation of the College's insurers. Colin was represented by Michael Morrow of Stewart's Solicitors, 63 Lincoln's Inn Fields, London WC2A 3LW – their ref : 625/MM/1318/1.

During April 2000 the parties agreed that judgment be entered for Colin for damages. (High Court of Justice Queen's Bench Division Claim No. H9900332 refers).

Following discussions the Defendant (John Ruskin College) paid into Court the sum of £250,000; this plus an earlier interim payment of £50,000 brought the total amount on offer to Colin at £300,000.

On advice of Counsel on 7^th March 2001 Colin accepted the offer.

This then raised an entitlement for the Defendant to be liable for the Claimant's costs of the action.

On the 28^th March 2001 Colin received a letter from his solicitors that stated that £25,000 had been held back against any potential shortfall in the recovery of their costs.

As requested I am enclosing photocopies of –

(1) Notice of acceptance of payment into court dated 07/03/2001

(2) Letter to Colin from his solicitor regarding the £25,000.

Please contact Colin direct should you require any further information or copies of any other documentation regarding this matter.

In this instance I have spoken to Colin and he has given me permission to supply you with the photocopies you require."

He gave his son's address and telephone numbers at the end of the letter.

11. Meanwhile the correspondence between Berrymans and Stewarts had progressed to the extent that on 8^th August 2008 Berrymans wrote to the Queen's Bench Division at the Royal Courts of Justice enclosing a consent order signed by both firms providing for the sum of £25,000 paid into court on behalf of the College in March 1997 plus interest to be paid out to Berrymans. On 15^th August 2008 the Judgment and Orders section at the Royal Courts of Justice replied asking that the application be resubmitted with a Form CF200. No action was taken.
12. It appears that on 1^st December 2008 the letter from Mr Harley senior with enclosures was placed before the Senior Master with a draft form of order for payment out of the money to the defendant. The Senior Master wrote that "this needs to be sent back to the CFO to deal directly with Colin Harley, not his parents (unless he is a protected party). He will then have to go through the new Witness Statement Procedure."
13. On 7^th January 2009 the Enforcement Section wrote to Colin Harley as follows:-

"Please find enclosed your papers relating to the above case. Your papers were referred to the Senior Master who has that the application ought to be made by yourself (instead of your parents). In the circumstances, please provide the items prescribed below (you may supply additional documents or information as well).

Please therefore provide answers to the above as well as to provide a witness statement in the precedent enclosed. Note that you must fill in the witness statement which can be found online on the Court Funds Office Website at www.courtfunds.gov.uk. Please look "Forms" and then scroll down to "Miscellaneous Forms" to find the witness statement. You may of course submit additional material to support your witness statement. A copy of the witness statement and notes are also enclosed."

14. The online form to which this letter provided the links was then and remains (with almost identical wording) a standard form of witness statement intended to be easy for applicants to complete with insertions at various points. When the form is completed the applicant must then print it out, sign it with a statement of truth and return it by hand or by post. Mr Harley did this on 9^th January 2009. (I will put in bold type the words which appear to me to come from the computer generated form and in ordinary type the words inserted by Mr Harley.) After giving his name, address and occupation, as the form required, he continued:-

"I submit that I am entitled to receive all of the funds standing to the credit of the above claim, together with interest thereon because:

I was the claimant in this matter, which was settled by way of acceptance dated 28/03/01 which is enclosed. However, I did not receive the full sum due to the amount being held against any potential shortfall in the recovery of costs after my claim was settled out of court.

I agree to answer any inquiries which the court may make or direct relating to the application of the monies or securities.

STATEMENT OF TRUTH

I believe that the facts stated in this witness statement are true." {He then signed and dated it.)

15. The enclosure dated 28^th March 2001 was not a Notice of Acceptance. It was Stewarts' letter to him of that date, enclosing their cheque for £15,000 "representing the balance of the damages less £25,000 being the amount we are holding against any potential shortfall in the recovery of our costs".
16. On 16^th March 2009 Senior Master Whitaker made the following order:-

"The Senior Master having read the papers submitted by Colin Harley who is making a claim in respect of these monies. "

IT IS ORDERED

That all the monies held in the appropriate account relating to the above action be paid together with any interest to Colin Michael Harley for the reasons given below based on the evidence given in the above mentioned papers: that the matter was settled but the funds were not paid out from court. The remaining monies are part of the payment into court which made the total accepted of £300,000."

17. In April 2009 the money in court together with interest was paid out to the defendant.
18. Four months later, unaware of these developments, Berrymans wrote again to the court on 24^th August 2009 enclosing a signed consent order for payment out to their firm, this time enclosing form CF200. In November 2009 they learned that the monies had been paid out in April. They did not know at that stage to whom, nor pursuant to what order. Throughout the first half of 2010 they made efforts to find out from the CFO, the Action Department and the Enforcement Department of the Queen's Bench Division what had happened to the money in court. They also contacted Stewarts.
19. In December 2010 Stewarts agreed to ask their former client Mr Harley whether he had received the money. They learned from his father that he had, and told Berrymans. Letters before action were sent on behalf of the College on 17^th October and 4^th December 2012, and on 19^th February 2013 these proceedings for unjust enrichment were issued. Stewarts took the view that they could not represent Mr Harley because of a conflict of interests. Berrymans continued to act for the College's insurers.

Bad faith

20. The College's Particulars of Claim drafted by their solicitors included, under the heading "Mistake of Fact and Deceit", the allegation that in making his application to the CFO for payment out of the £25,000 plus accrued interest Mr Harley "had represented that he was entitled to the sum in court but knew or ought to have known that this was not the case" [emphasis added]. "Knew" is an allegation of dishonesty; "ought to have known" is an allegation of negligence. Negligence is not a bar to the defence of change of position, of which more later.
21. In his witness statement Mr Harley wrote:

"The settlement figure was £300,000. This was not however paid in one lump, and I had not kept any record of what I had received when. This was why, although I thought I had received everything I had been due before my father received the letter from the Court Funds Office dated 23 July 2008, I came to believe that money that remained in court must have been missed. I believed that the Court and the Court Funds Office had investigated the matter and had determined that the money was properly due to me."

22. In cross-examination Mr Harley was repeatedly asked about whether he believed he had the right to the money at the time he made his witness statement. He said, "I really did not know…….I didn't know whose money it was…….If it was mine, great. If it wasn't, then I hadn't lost anything……….I trusted that there would be an investigation and if the money did belong to me, it would be paid to me; if not, it would not."
23. Mr Harley came across as a transparently honest and decent witness. I accept entirely that this was his state of mind when he made the witness statement. I find that both he and his father had thought, prior to the CFO making contact in July 2008, that he had been paid all that was due to him. They were surprised to receive the CFO's letter. But they had a recollection of a sum of £25,000 having been held back at one stage. When the CFO officer mentioned the same figure and asked them to supply any relevant documents, Mr Harley senior discovered the letter from Stewarts and sent it to the CFO accordingly. Neither he nor his son remembered that Stewarts had subsequently paid over (in two instalments) the final tranche of the money due after costs had been dealt with.
24. It was suggested to Colin Harley that he should have sought advice from Stewarts. He said, and I accept, that he thought that part of the process would be for the CFO to contact the firm. He had had no dealings with Stewarts for several years and the last of the three solicitors who had acted for him had left.
25. It is common ground that if dishonesty is proved against Mr Harley he has no defence to the claim for unjust enrichment. If authority is needed for this obvious proposition it is to be found in Duke de Cadaval v Collins (1836) 4 Ad & El 858. More specifically, "the defence of change of position is not open to one who has changed his position in bad faith, as where the defendant has paid away the money with knowledge of the facts entitling the plaintiff to restitution" (per Lord Goff of Chieveley in Lipkin Gorman v Karpnale Ltd [1991] AC 548 at 580C).
26. It will be apparent from what I have said so far that I reject the allegation of dishonesty, namely that Mr Harley applied for and receiving the money knowing that he was not entitled to it. The allegation of fraud should in my judgment never have been made. Even looking at the case on the original documents, in particular the letter from the CFO of 23 July 2008, Mr Harley senior's reply of 29 July 2008 and the Defendant's witness statement of January 2009 with the enclosed letter from Stewarts, and without the benefit of the Harleys' witness statements in this claim, there was no prima facie case of fraud which could have justified including the allegation in the pleadings. I regret to conclude that the vehemence with which this unfounded allegation of fraud has been made and pursued appears to me to have been motivated by Berrymans' desire to make amends to their insurance clients for the firm's own negligence in forgetting about the money in court.
27. For the Claimants Mr Houghton, however, sought to put the case more widely than outright dishonesty. He relied on the well-known passage from the speech of Lord Herschell in Derry v Peek (1889) 14 App Cas 337 at 374:

"I think the authorities establish the following propositions: First, in order to sustain an action of deceit, there must be proof of fraud, and nothing short of that will suffice. Secondly, fraud is proved when it is shewn that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false. Although I have treated the second and third as distinct cases, I think the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in the truth of what he states. To prevent a false statement being fraudulent, there must, I think, always be an honest belief in its truth. And this probably covers the whole ground, for one who knowingly alleges that which is false, has obviously no such honest belief. Thirdly, if fraud be proved, the motive of the person guilty of it is immaterial. It matters not that there was no intention to cheat or injure the person to whom the statement was made."

28. Mr Houghton argued that even if I did not find that the Defendant had knowingly made a false representation to obtain payment out of the money in court ("Derry v Peek 1"), I should find that he had done so without belief in its truth ("Derry v Peek 2"), or recklessly, careless whether it was true or false ("Derry v Peek 3"). He relied on the Defendant's evidence that he did not know whether the money was his or not.
29. Perhaps because Derry v Peek was only cited at the hearing and had not featured in the Claimant's skeleton argument, neither Mr Devereux-Cooke for the Defendant nor I noticed that alternatives 2 and 3 did not feature in the Particulars of Claim. In any event, I do not think they assist. The section of Lord Herschell's speech cited by Mr Houghton must be read together with the equally well-known passage on the following page (p 375):

"In my opinion making a false statement through want of care falls far short of, and is a very different thing from, fraud, and the same may be said of a false representation honestly believed though on insufficient grounds. Indeed Cotton LJ. himself indicated, in the words I have already quoted, that he should not call it fraud. But the whole current of authorities, with which I have so long detained your Lordships, shews to my mind conclusively that fraud is essential to found an action of deceit, and that it cannot be maintained where the acts proved cannot properly be so termed."

30. I accept Mr Harley's evidence that he made the witness statement honestly, trusting that there would be an investigation; and if the money did belong to him, it would be paid to him, and if not, not. This is not the same as either making the statement without belief in its truth or making it recklessly, careless as to whether it was true or not. If it were the same thing, the wording of the standard form of witness statement for applications to the CFO would require quite radical revision.
31. Mr Houghton also referred me to a case which he had cited in his skeleton argument, Niru Battery Manufacturing Co v Milestone Trading Ltd [2004] QB 985, in which Clarke LJ approved the following observations of Moore-Bick J (as they then respectively were) at first instance which I regard as clearly good law:

"I do not think that it is desirable to attempt to define the limits of good faith; it is a broad concept, the definition of which, in so far as it is capable of definition at all, will have to be worked out through the cases. In my view it is capable of embracing a failure to act in a commercially acceptable way and sharp practice of a kind that falls short of outright dishonesty as well as dishonesty itself. … Where he knows that the payment he has received was made by mistake, the position is quite straightforward: he must return it. … Greater difficulty may arise, however, in cases where the payee has grounds for believing that the payment may have been made by mistake, but cannot be sure. In such cases good faith may well dictate that an inquiry be made of the payer. The nature and extent of the inquiry called for will, of course, depend on the circumstances of the case, but I do not think that person who has, or thinks he was, good reason to believe that the payment was made by mistake will often be found to have acted in good faith if he pays the money away first making inquiries of the person from whom he received it."

32. Following the exchange of letters in late July 2008 and the telephone conversations of his father with the CFO, Mr Harley submitted the witness statement. I find that he believed, understandably and indeed correctly, that it was for the Court to make its inquiries and reach its decision. He could not be expected, when the money was paid out to him, to write back to the Court to ask whether the Senior Master was sure that he had made the right decision.
33. Finally, there is the pleaded allegation that Mr Harley "ought to have known" that he had no right to the money. I have already made findings as to both Harleys' recollection of the history. The only remaining basis on which it could be argued that the Defendant ought to have known that he had no right to the money is the fact that Stewarts' letter of 28 March 2001 is not, in fact, a Notice of Acceptance. Since this was something which the Senior Master, with his great experience of the litigation process, did not observe, I do not see how the Harleys, with knowledge confined to a single case, could have been expected to spot it either.
34. I reject the allegation of fraud, recklessness, commercially sharp practice and all the other variations on those themes.

The significance of the court order

35. The next issue is whether the fact that the money was paid to the defendant pursuant to the Senior Master's order of 16^th March 2009 is a conclusive answer to the claim. Paragraph 2 of the Defence drafted by Mr Harley's solicitors argued that "these proceedings represent an attempt by the Claimant to reverse an unappealed Order of the High Court in another proceeding, and as such they are an abuse of the Court's process and should be struck out".
36. In Marriott v Hampton [1775-1802] All ER Rep 631 the claimant had paid for goods bought from the defendant. The defendant then brought an action for payment of the price alleging that he had not been paid. The claimant could not find the receipt he had been given following the first payment, and was ordered by the court to pay again. He then found the receipt and brought an action for money had and received to recover the second payment. In the Court of Kings Bench, Lord Kenyon CJ presiding, held that "where money has been wrongly paid under the compulsion of legal process it cannot be recovered back in action for money had and received to the payer's use." Lord Kenyon said:-

"I am afraid of such a precedent. If this action could be maintained I know now that cause of action could ever be at rest. After a recovery by process of law there must be an end to litigation, otherwise there would be no security for any person."

37. In Wilson v Ray [1839] 10 Ad & El 82 Lord Denman CJ described the principle established in Marriott v Hampton as being:-

"…….that what a party recovers from another by legal process, without fraud, the loser shall never recover back by virtue of any facts which could have availed him in the former proceeding. Money so recovered was … received to the use of the successful party by authority of law. If any error was committed in the former proceeding, still the plaintiff is estopped from proving it after failing to do so at that time. If this were otherwise, the rights of parties could never be settled by the most solemn proceeding.…".

38. In his skeleton argument and closing speeches Mr Devereux-Cooke did not pursue this line of defence. I consider that he was right not to do so. Marriott v Hampton and the cases which follow it are directed to cases where a court has made a decision by consent, or in default, or following submissions from both sides. They do not apply to a case such as the present one where the Senior Master made an essentially administrative order after receiving an application from one party only of which the other party was unaware. It is therefore unnecessary to consider the conflict between Marriott v Hampton and the even older decision of the Court of Kings Bench (Lord Mansfield CJ presiding) in Moses v Macferlan (1760) 2 Burr 1005, which has vexed legal scholars for generations.
39. Accordingly the court order is not in itself a defence to the claim. Mr Harley thus has to fall back on the alternative defence of change of position.

Change of position

40. The principles of this defence as they stand after the leading case of Lipkin Gorman v Karpnale were largely uncontentious and were helpfully set out in Mr Houghton's skeleton argument. (1) The court does not have carte blanche to reject the claim simply out of sympathy for the defendant. (2) The mere fact that money has been spent (in whole or in part) does not establish the defence because the expenditure might have been incurred in any event in the ordinary course of things. (3) It is not a qualifying detriment which establishes the change of position defence if the defendant simply pays off debts. (4) The defendant must show that he incurred extraordinary expenditure, that is to say expenditure that he would not have incurred but for the enrichment. (5) Where the defendant buys an asset which remains in his hands, the defence is disallowed to the extent that he is still enriched.
41. Mr Houghton also relied on obiter dicta of Hazel Williamson QC (as she then was) in Fea v Roberts [2006] WTLR 255 that expenditure on matters such as home improvements "could not be regarded as a dissipation or true 'change of position'". But I do not think that the deputy judge in that case was laying down a special rule applicable to real property. It is simply an illustration of the fifth proposition in the last paragraph. If a defendant, on receiving the claimant's money by mistake, buys gold bars which he would not otherwise have done and still has them, then (subject to argument about any fall in the value of the gold since he bought it) he cannot rely on that expenditure to establish the defence of change of position to a claim for unjust enrichment. Similarly if he has spent £x of the money on an extension to his home which added £x to its value, and the house has been sold, he cannot rely on the defence to the extent of £x.
42. Mr Harley and his fiancée had bought the prospective matrimonial home in April 2008 for £408,000 and carried out works on the garden, the bathroom, double glazing and guttering in 2009-10. They were married in January 2009 and spent their honeymoon in Florida. In June 2009 they had a further holiday in Las Vegas: the flights cost them nothing (except taxes) because of Mr Harley's employment with an airline, but they incurred hotel and other expenses while in the USA. During this period Mr Harley bought a car as a present for his wife. His evidence was that before he heard from the CFO in July 2008 and then received the money out of court he had been spending everything he earned simply on day to day expenditure, and had lost a deposit on a previous house purchase: he could not, therefore, have afforded to pay for any of these items. Sadly the marriage broke down at the end of 2011 and the house was sold for £430,000.
43. I deal first with the items other than home improvements.

(a) Transport and hotel rooms for wedding guests, £1,050: I find that this expenditure would have been incurred in any event, and it is therefore not allowable;

(b) Photo booth at wedding, £2,500: this was paid for initially by the Defendant's parents whom he reimbursed when he received the money out of court. I find that this was an extravagance which would not have been incurred if Mr Harley had not anticipated at least a good prospect, if not the certainty, of receiving £25,000 from the CFO;

(c) Honeymoon in Florida, £6,000; I make the same finding as for the photo booth;

(d) Holiday in Las Vegas, June 2009, £3,959.35; by this time Mr Harley had received the money. This holiday would not have been taken otherwise;

(e) Car bought for Mrs Harley, May/June 2009, £13,570. The Defendant could not have afforded this without the money from the CFO. Mr Houghton accepted that if I was against him on fraud this item was likely to be allowed.

The total of items (b) to (e) is £26,029.35. I find that Mr Harley has a defence to the claim for unjust enrichment to that extent.

44. I turn to the home improvements and consider first what sums were actually spent:

(f) Garden improvements: the claim is for expenditure "in the region of £6,000". However, no invoices for the work have been produced, and the only bank account entries to which Mr Harley could point were for £3,350 and £741.50, making a total of £4091.50.

(g) Renovation of bathroom: the claim is for £6,000. The bank account entries which Mr Harley identified as relevant to this claim were if anything for more than this, I allow this claim in full at £6,000;

(h) Windows: there is an invoice dated December 2010 for £9,650.00. Mr Houghton argues that by then the sum received from the CFO had been spent. But in my judgment the correct question is whether, if Mr Harley had not received the money from the CFO the previous year, he would nevertheless have been in a position to afford this expenditure. I accept that he would not. This item is therefore allowable in full;

(i) Guttering, Mr Harley's witness statement claims £2,500; but this item was not listed in the Particulars of the Defence ordered by the Master. I find that this expenditure would have been incurred in any event, and is not allowable.

45. The total of items (f) to (h) is a further £19,741.50; but this is subject to what may conveniently be called the betterment argument. Mr Houghton submits that the Defendant cannot rely on expenditure on these improvements because they must have been reflected in an increase in the sale price of the house. He points to the fact that the sale price of the house was £22,000 greater than the purchase price, and says that it is for the Defendant to prove that he has changed his position to his detriment.
46. It is a nice question whether on the issue of betterment the onus is on the Claimants or the Defendant. But whichever it is, the overriding objective requires that the claim be dealt with justly. I am faced with the difficulty that on 11 June Master Fontaine ordered that "no expert evidence being necessary, no party has permission to call or rely on expert evidence"; and accordingly there was no expert evidence before me. Yet without at least a short report from a surveyor or estate agent I do not see on what basis I can determine how much of the £19,741.50 should be treated as betterment, and thus disallowed by way of defence to the claim for unjust enrichment.
47. I therefore propose to direct that the parties jointly appoint an expert to report on the issue of betterment. It is very much to be hoped that even this fiercely fought litigation could then be settled. If not, there will have to be a further hearing to resolve the betterment issue and then to decide what, if any, sum is due to the Claimants in the light of this judgment. This could be before me, the Master, or a district judge in the county court. I am inclined to think that it should be the Master, but I will hear any submissions counsel wish to make on this topic on the handing down of this judgment.