BCCI (Overseas) Ltd v Akindele
A recipient of trust property is liable for knowing receipt if his state of knowledge makes it unconscionable for him to keep the benefit of the receipt.
Facts
Chief Akindele, a Nigerian businessman, entered into an agreement with BCCI, under which he invested $10 million and was guaranteed a return of 15 per cent a year. The agreement was part of a fraudulent scheme by BCCI's officers to conceal the bank's losses, but Chief Akindele said that he did not know that. He received about $16.7 million when the agreement ended. After BCCI collapsed, its liquidators sued him for knowing receipt of money paid in breach of fiduciary duty.
Legal principle
The Court of Appeal held that Chief Akindele was not liable. Nourse LJ said that dishonesty is not required for liability for knowing receipt, and that the test is whether the recipient's state of knowledge was such as to make it unconscionable for him to retain the benefit of the receipt. The categories of knowledge in Baden v Société Générale were not helpful in this context. Chief Akindele did not know enough about the fraud to make it unconscionable for him to keep the money, because the high return was not by itself enough to put him on inquiry.
Related cases on tracing and third party liability
- Agip (Africa) Ltd v Jackson [1991] Ch 547
- Baden v Société Générale pour Favoriser le Développement du Commerce et de l'Industrie en France SA [1993] 1 WLR 509
- Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37, [2006] 1 WLR 1476
- Barlow Clowes International Ltd v Vaughan [1992] 4 All ER 22
- Bishopsgate Investment Management Ltd v Homan [1995] Ch 211
- Devaynes v Noble (Clayton's Case) (1816) 1 Mer 572
- El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685
- Federal Republic of Brazil v Durant International Corp [2015] UKPC 35, [2016] AC 297
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