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HEB Enterprises Ltd and another v Bernice Richards (Cayman Islands)

21 February 2023
[2023] UKPC 7
Privy Council
A buyer made payments for land over 20 years, including interest, and got to live/work there. He stopped paying and tried to get all his money back, including the interest. The court said no, because he got to use the land for years, so it wasn't a total loss for him.

Key Facts

  • Long-term agreements for the sale of two lots of land in a commercial development.
  • Agreements provided for a deposit and balance payment over 20 years with interest, commencing upon buyer's possession.
  • Buyer took possession, used lots for commercial purposes, then repudiated agreements.
  • Sellers treated themselves as discharged from further obligations.
  • Dispute concerns the buyer's entitlement to recover interest payments made while in possession.

Legal Principles

Restitutionary principles: A buyer who has enjoyed possession should not recover more than eliminates unjust enrichment of the seller.

Court of Appeal judgment

Total failure of consideration: Money had and received to the claimant’s use can be recovered where the basis (consideration) has wholly failed.

Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32

Partial failure of consideration: A partial failure of consideration for a particular payment gives rise to no claim for recovery of part of what has been paid.

Barnes v Eastenders Cash & Carry plc [2015] AC 1

Interpretation of entire agreements: The entire agreement must be considered to understand the basis of the payments.

Privy Council judgment

Repudiation and discharge: Acceptance of repudiation discharges primary obligations and substitutes secondary obligations to compensate for losses, subject to contractual limitations on remedies.

Privy Council judgment

Contractual allocation of risk: Contractual terms govern the parties' entitlements upon termination, unless the basis for the payment has totally failed.

Privy Council judgment

Mayson v Clouet [1924] AC 980: The repayability of instalments depends on the contract's terms and circumstances. Possession before final payment is a key differentiator.

Mayson v Clouet [1924] AC 980

Outcomes

Appeal dismissed.

Buyer was not entitled to recover interest payments because possession of the lots formed a material part of the basis for those payments. The total failure of consideration argument failed because the buyer enjoyed a significant benefit (rent-free possession) under the agreements.

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