Intended security after the event (Menelaou v Bank of Cyprus)

Intended security after the event (Menelaou v Bank of Cyprus)

Gateley Plc Finance litigation associate John Williams and partner Rob Payne explain the litigious actions between the Menelaou family and the Bank of Cyprus UK, taking into consideration the judicial action taken and the subsequent influence on this area of the law.

Original news

Menelaou v Bank of Cyprus UK Ltd [2016] EWHC 2656 (Ch), [2016] All ER (D) 21 (Nov)

The Chancery Division held, further to earlier proceedings in which the defendant bank had successfully counterclaimed for a declaration that it was entitled to be subrogated to an unpaid vendor’s lien over the claimant’s family home, that the bank was entitled to an order for sale of the property. The court held, among other things, that an unpaid vendor’s lien was an equitable charge and that the power to realise equitable charges contained in section 90 of the Law of Property Act 1925 (LPA 1925) applied.

What was the background to this case?

In Menelaou v Bank of Cyprus UK Ltd, the Supreme Court upheld the Court of Appeal’s ruling that Bank of Cyprus (the Lender), whose intended security over a property was void, was entitled to be subrogated to an unpaid vendor’s lien over the property. It was held that Ms Menelaou (the Buyer) had been unjustly enriched at the Lender’s expense. While the Lender had not advanced the monies for the purchase of the property, it had released security over a property owned by the Buyer’s parents to free up monies to fund the purchase price. The court concluded there was a sufficiently close causal connection between the Lender’s agreement to release its security and the Buyer’s enrichment to find that there had been a transfer of value from the Lender to the Buyer. It was accepted by the Lender that the Buyer held the property on trust for herself and her siblings (the Trust).

What were the legal

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About the author:

Meet Kate:

1. Banking & finance lawyer with experience in syndicated lending and project finance in London, Paris and Sydney

2. Likes yoga, DIY (although the output doesn’t generally reflect the input) and sunny climes

3. Thinks the law is very unlike how LA Law made it look

Kate is a solicitor specialising in banking and finance with particular emphasis on syndicated lending and project finance. She has acted for both borrowers and lenders on a wide range of finance transactions, often involving multiple jurisdictions.

Kate trained and qualified in the Debt and Derivative Securities team at Allen & Overy LLP. She later joined the Banking and Finance team at Freehills (now Herbert Smith Freehills) in Sydney. Most recently, she was in the Projects and Infrastructure team at Norton Rose LLP before joining LexisNexis. Kate is dual-qualified in England and Wales and New South Wales, Australia.