Cheese v Thomas [1994]

Cheese v Thomas [1994] 1 WLR 129 revolved around the plaintiff, Cheese, seeking to rescind a contract with his nephew, Thomas, and claim restitution for the £43,000 he had contributed towards the purchase of a house valued at £83,000. The agreement included the stipulation that Cheese would reside in the house until his death. Subsequently, Cheese discovered that Thomas had failed to make several payments, prompting Cheese to seek the voiding of the agreement and the recovery of his £43,000.

The Court of Appeal held that the transaction should be set aside due to presumptive undue influence and manifest disadvantage. While restitution was granted, the court determined that the losses incurred in the sale of the house should be equally shared between Cheese and Thomas.

Sir Donald Nicholls V-C emphasised the fundamental objective of the court in restitution, which is to restore the parties to their original positions to the extent possible after nullifying a legally impermissible transaction. This objective necessitates a thorough examination of all relevant circumstances while keeping the restoration goal firmly in mind.

The court's decision to apportion losses equally between the parties was grounded in their shared intention for joint enjoyment of the house. Sir Donald Nicholls V-C expressed the principle that just as parties share in profits, they should also share in losses, aligning with their mutual intent for joint benefits and responsibilities regarding the property.

In essence, this case highlights the equitable nature of restitution, aiming to rectify imbalances resulting from transactions tainted by factors such as undue influence. The decision underscores the importance of considering the parties' intentions and circumstances in determining the appropriate apportionment of losses when ordering restitution.
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