Outer House case relating to an alleged fraud. Ms McVicar was the owner of a house in Fernieside in Edinburgh which she had purchased with the aid of a loan from GMAC-RFC which held a standard security over the property. Mr Currie was a former cohabitant of Ms McVicar who she claimed had embarked on a fraudulent scheme under which the house was sold to GED for £110k with the aid of a loan of £80.5k from Nationwide. Ms McVicar’s signature was forged on a disposition of the house to GED and some of the funds (circa £45.5k) from Nationwide were used to pay off the loan in favour of GMAC-RFC. The disposition in favour GED and a standard security over the house in favour of Nationwide were recorded in the Land Register.
Ms McVicar sought: (1) reduction of the disposition in favour of GED and declarator that the entry in the Land Register recording the transfer of the title to GED was inaccurate (2) declarator that the entry in the Land Register recording the security granted by GED in favour of Nationwide was inaccurate and of no effect between Ms McVicar and Nationwide and (3) an order requiring the Keeper to rectify the register so as to delete entries relating to the title transfer and standard security.
Nationwide defended the action. Whilst they did not oppose the orders relating to the disposition and security and rectification of the register, they counterclaimed seeking payment (from Ms McVicar) of the £45.5k which had been used to pay off Ms McVicar’s loan to GMAC-RFC, arguing that Ms McVicar had been unjustifiably enriched by the payment.
Ms McVicar sought dismissal of the counterclaim. She argued amongst other things that Nationwide had a contractual right to recover from GED (Nationwide took the view that there was no reasonable prospect of recovering from GED) and that, if there had been an unjust enrichment of Ms McVicar at Nationwide’s expense, that enrichment was indirect and there was a general rule against recovery in cases of indirect enrichment. On the other hand Nationwide argued that, whilst there was a general rule against recovery in cases of indirect enrichment, there was no absolute bar. There was, they argued, a recognised exception to the general rule which allowed recovery where money/property was obtained by fraud and used to discharge the obligations of another.
Lord Doherty found that Nationwide’s arguments were not bound to fail and allowed a proof before answer.
The full judgement is available here.
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