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Spencer Day has appealed against a previous order of Mr Justice Sales on the 6th September last year. In line with this order a summary judgement was granted in favour of Tiuta, on the basis that Mr Day had “no real prospect” of defending the firm’s counterclaim. He is also appealing whether the charger has an unliquidated cross-claim for damages.
It all started in 2008 when Mr Day acquired the freehold of a residential property with eight acres of adjacent land in Dorking, Surrey. £3 million was borrowed from Standard Chartered (Jersey) Limited secured as a charge. He got planning permission to demolish the existing house and redevelop it as a new “high-quality” property. However, he needed more funding for the redevelopment.
So he entered into a loan facility agreement with Tiuta in 2011where £6.6 million was lent in order for him to refinance his existing borrowings in respect of the property, and a further £6 million was to be drawn down in tranches for the property’s development.
Mr Day secured a first legal charge in favour of Tiuta in June 2011. He then received the first tranche of the loan. Roughly £3 million of that sum was used to repay Standard Chartered and to remove its charge. £7,866,782.70 in total was paid to Mr Day together with the original tranche.
Evidence from Mr Day declared that Tiuta made payments “persistently and systematically late” which resulted in delays in the development works. Mr Day claimed that “various contractors ceased working”.
However, on the 5th July, 2012, Tiuta was put into administration and therefore no further funds were given to Mr Day to continue the property’s development. This resulted in the property being left in a half-built and incapable of completion as Mr Day had no other funds for the development.
According to terms on his agreement, Mr Day’s debt was to be paid on the 9th November 2012, however he failed to pay it. Therefore, joint receivers, Joseph Anthony Pitt and Benedict James Nicholas Moon were appointed, who then appointed Savills to market the property.
In April last year, Mr Day issued proceedings against the lender and the administrators to “invalidate” the appointment of receivers and sought for all marketing of the property to be ceased.
It was stated that Mr Day had “arguable claims” for unliquidated damages for breach of the agreement in the loan amount that was outstanding. A summary judgement of the outstanding loan was therefore not sought after.
Mr Day alleged that while he was agreeing to the loan, Tiuta made “ misrepresentations” in regards to their financial statues and whether they would keep to the terms of the agreement. Tiuta responded that they paid £3 million to discharge the Standard Chartered loan and argued there was no evidence of fraud.
The judge however concluded that “Mr Day had not demonstrated that he had any good arguable defence” to Tiuta’s application and granted summary judgement in favour of Tiuta in respect of their counterclaims made.
In the most recent appeal by Mr Day, it was stated that “Mr Day was not the victim of the alleged fraud on TIL's investors; on the contrary, he benefited from it, since approximately £3,000,000 of the sum which he received was paid to Standard Chartered – with his consent and to his knowledge.”
Lady Justice Gloster stated: “I conclude that there are no equitable defences available to Mr Day to defeat TIL's claim”, and dismissed his appeal on all grounds.
Lord Justice Vos stated: “I agree with Gloster LJ's judgment and with the result she proposes, except in relation to the final point raised by TIL as to counter-restitution.”
He stated that Mr Day would never have obtained the property without paying off the loan and therefore would be “unjustly enriched” unless there is an arguable claim for fraudulent misrepresentation, which he added: “I do not think it is.”
He also dismissed the developer’s appeal.
Lord Justice Moses agreed with both judgements.
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