Relfo Ltd v Varsani
A defendant who received money which could be traced back through a series of transactions to the claimant was enriched at the claimant's expense, even though the money did not pass directly from the claimant to him.
Facts
Mr Gorecia, a director of Relfo, caused it to pay a large sum to a company called Mirren, in breach of his fiduciary duties, at a time when Relfo was insolvent. On the same day, an equivalent sum was paid by another company, through accounts in Latvia and Singapore, to Mr Varsani, a business associate of Mr Gorecia. It was not possible to trace the money in the usual way through the bank accounts, but the judge found that the payments were linked as part of a scheme. Relfo's liquidator sued Mr Varsani in unjust enrichment.
Legal principle
The Court of Appeal held that Mr Varsani had been enriched at Relfo's expense. Arden LJ said that, although the general rule is that the enrichment must be a direct transfer from the claimant to the defendant, there is an exception where the defendant receives money which represents the claimant's money, by a series of transactions which can be followed or traced, and that it was not necessary to show that the money passed through each account in the usual way, if the payments were coordinated as part of a scheme to pass the money from the claimant to the defendant. The approach was later qualified by the Supreme Court in Investment Trust Companies v HMRC.
Related cases on public authorities, defences and remedies
- BCCI (Overseas) Ltd v Akindele [2001] Ch 437
- Re Diplock [1948] Ch 465
- Ministry of Health v Simpson [1951] AC 251
- Patel v Mirza [2016] UKSC 42, [2017] AC 467
- Philip Collins Ltd v Davis [2000] 3 All ER 808
- Pitt v Holt [2013] UKSC 26, [2013] 2 AC 108
- Prudential Assurance Co Ltd v Revenue and Customs Commissioners [2018] UKSC 39, [2019] AC 929
- Sempra Metals Ltd v Inland Revenue Commissioners [2007] UKHL 34, [2008] 1 AC 561
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