The Supreme Court has today allowed Lowick Rose’s appeal against a majority decision of the Court of Appeal and of the judge at first instance and held that a lender did have to give credit for sums received from a borrower following a refinancing of the borrower’s debt by the ultimate owner of both the borrower and lender. The effect of today’s decision will be to reduce the original judgment sum of approximately £18.5m (including interest) to less than £3.5m.
In reaching its decision, the Supreme Court has stressed the importance of giving effect to the actual transactions undertaken by the parties and respecting the separate legal personalities involved in those transactions. The decision will provide welcome clarity as to the principles to be applied when following the House of Lords’ decision in Parry v. Cleaver  AC 1 to determine whether a receipt by a claimant is to be treated as res inter alios acta on the grounds that it constitutes a collateral benefit.
The Supreme Court also rejected the Respondents’ alternative arguments based on (1) “transferred loss” and (2) equitable subrogation on the grounds of unjust enrichment. Its decision with respect to the limits of the “transferred loss” principle will be of general importance including, in particular, construction claims, in which the principle is more commonly invoked. Its reasoning with respect to equitable subrogation borrows heavily from its decision, also handed down today, in Commissioners for HM Revenue and Customs v Investment Trust Companies (In Liquidation)  UKSC 29 and confirms that the Supreme Court is resistant to allowing the boundaries of unjust enrichment claims to be expanded into new areas.
David Turner QC and Nicole Sandells of 4 New Square were instructed by Tim Bull of RPC to act for Lowick Rose LLP in both the Court of Appeal and, led by Mark Howard QC of Brick Court Chambers, the Supreme Court.
A full analysis of the decision will follow shortly.