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Andrew Tettenborn
Wed, 3 Jan 2007 13:20:32
2 holiday cases


A couple of instructive, and I think entirely unexceptionable, unjust enrichment cases over the holiday period.

(1) The first is actually very sad. A company, Farepak, runs a Christmas club. You pay so much per month to Farepak's agents (who duly pay Farepak) and you get a hamper of goodies etc on the big day. But then Farepak goes belly-up in October, owing the Revenue a tidy sum.

Britain's third world banking bureaucracy is such that it can't stop its agents paying something like £1 million received from customers into its accounts over the next few days. But it does its best by issuing an immediate "trust deed" declaring trusts over future receipts in favour of the customers.

Now, clearly the customers can't have a Christmas hamper: but can they perhaps get their money instead? They argue (1) a Quistclose trust; (2) unconscionability under Neste Oy v Barclays; (3) the trust deed; and (4) ex parte James. But not with much success. Quistclose won't run for lack of an obligation of segregated accounting. Neste Oy is approved for the sake of argument, but doesn't help because here the agents were Farepak's agents and hence the money was received when the agents themselves got it, ie when company was a going concern. The trust deed is probably an unlawful preference; and there is nothing dishonourable under ex p James in an unsecured creditor getting what the law gives him, even unfairly.

See Farepak Foods and Gifts Ltd & Ors v Revenue and Customs & Anor Rev 1 [2006] EWHC 3272 (Ch) (18 December 2006).

(2) Does an underwriter suing a wrongdoer under its subrogation rights have to take steps which it, but not the assured himself, could have taken to mitigate its loss? No, and very rightly so. See Bee v Jenson [2006] EWHC 3359 (Comm) (21 December 2006). I couldn't have put it better myself.

Happy New Year


Andrew Tettenborn MA LLB
Bracton Professor of Law
University of Exeter, England

Tel: 01392-263189 / +44-392-263189 (outside UK)
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LAWYER, n. One skilled in circumvention of the law (Ambrose Bierce, 1906).

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