In the case of Garwood v Bank of Scotland PLC, the English High Court found that a charge that had been mistakenly released should be re-registered over property in the estate of a bankrupt, although this meant that the estate available to unsecured creditors would decrease.

The Bank of Scotland (BoS) had been induced to lend twice to the bankrupt, Mr Fabumni-Stone on the basis of false declarations. It had taken a charge over a property which it thought was subject to long leases that the bankrupt was purchasing, but instead was owned by the bankrupt. BoS's charge was released on the basis that repayment had been made, although in fact only one of the loans was redeemed. The Bank therefore argued that the mistake would lead to unjust enrichment if the bankrupt's estate was allowed to retain the benefit of the property.

The Court found that BoS did not get the security for either loan that it expected and agreed that it would be unjust enrichment if the bankrupt's estate was allowed to retain the benefit of the mistaken release. It ordered that BoS was entitled to have its charge re-registered over the property.

See court decision here.