As a result of an authorised push payment fraud, the claimant instructed its bank in Serbia to transfer €700,000 to a fraudster’s account held with the defendant, an electronic money institution governed by the Electronic Money Regulations 2011. The funds were made available as a result of adjustments to interbank balances first between the claimant’s bank and its correspondent bank in Italy, and then the Italian correspondent bank with its English correspondent bank, which subsequently credited the defendant’s account held with it. The funds were dissipated completely from the fraudster’s account within a day of receipt. The claimant, contending that the defendant had been unjustly enriched, brought a claim for restitution against it to recover the funds. The defendant applied for reverse summary judgment, alternatively for an order to strike out the claim, on the grounds, inter alia, that (1) it had not been enriched for the purposes of the doctrine of unjust enrichment, because, unlike a bank, it was required to hold customer funds in a segregated account, they were therefore not available for its own use or to lend to others, and (2) if it had been enriched, it was not at the claimant’s expense because the monies had been transferred to it indirectly.
On the application—
Held, application refused. An electronic money institution account was not a trust account nor did the Electronic Money Regulations 2011 create a trust for the benefit of customers holding electronic money. The fact that the defendant, as the legal and beneficial owner of the monies placed within the segregated account, was required to safeguard the monies under the 2011 Regulations did not mean that the money ceased to be the defendant’s own money or that it had not been enriched. As a result of the payment, the defendant had more beneficially owned assets than it had before. Moreover, the defendant could properly profit from holding the money in several ways subject to the 2011 Regulations. The defendant was “enriched”, in the relevant sense, by a benefit which it gained as a result of the instruction given by the claimant to its own bank, and which instruction caused the claimant a loss of the same value. Although there was no direct transfer of value from the claimant to the defendant, the fact that the claimant instructed its own bank to make a transfer to a specific account with the defendant was a classic case of agency. The number of agents involved along the way made no difference. Alternatively, the circumstances constituted a set of co-ordinated transactions. Either way, the funds were, for the purposes of the doctrine of unjust enrichment, to be treated as having been directly transferred to the defendant. The unjustness of the defendant’s enrichment and the availability of any defences were questions that would have to be determined at trial (paras 66–71, 88–90, 92, 94, 97–98).
Anthony Pavlovich (instructed by DLA Piper UK LLP) for the applicant.
Daniel Burgess (instructed by Payne Hicks Beach LLP) for the respondent.