Blue Station Ltd v Kamyab

A company recovering money paid to a director need only establish, on the balance of probabilities, that the payment was not one to which he was entitled. The claim remains restitutionary even if the circumstances might involve fraud or breach of fiduciary duty; no heightened civil standard or finding of dishonesty is required unless fraud is actually alleged and relevant. Once the company establishes the absence of entitlement, the recipient must show why he was entitled to retain the money. An appellate court will be slow to interfere with factual findings firmly based on contemporaneous documents, particularly where contrary witness evidence and peripheral matters do not undermine the central analysis.

Blue Station Ltd obtained judgment for £103,000 in the Chancery Division after recovering a cheque payment made to its director, Mr Kamyab. He argued that he had paid £100,000 to the company’s builder and was entitled to reimbursement. The deputy High Court judge found that the payments could not have discharged any liability of Blue Station to the builder. Mr Kamyab appealed, challenging that factual finding and arguing that the claim involved fraud and required a heightened civil standard of proof. The central issues were whether the payment was unauthorised or otherwise unjustified, what burden and standard of proof applied, and whether the factual findings could be disturbed on appeal.

The appeal was unanimously dismissed.

1. Nature of the claim and burden of proof. Blue Station’s claim was a simple claim in restitution. It was sufficient for the company to establish, on the balance of probabilities, that the cheque payment was one to which Mr Kamyab was not entitled. As director and signatory of the cheque, he then had to show that he was entitled to retain its proceeds.
2. No heightened standard. The claim was not put in fraud. Although the circumstances might have involved fraud or breach of fiduciary duty, neither was necessarily involved. The judge therefore did not need to make findings of dishonesty or apply any heightened civil standard of proof.
3. Factual findings. The trial judge was entitled to place substantial weight on the contemporaneous financial records, quantity surveyors’ valuations, company documents and the builder’s documents. Those materials were inconsistent with the alleged £100,000 payments having discharged Blue Station’s liability. Criticisms of witnesses and peripheral matters did not provide a sufficient basis for appellate interference.
4. Reimbursement. The court observed that, if the payments had discharged sums for which Blue Station was liable, Mr Kamyab might have been entitled to reimbursement even without express authorisation. The alleged agreement could not, however, justify reimbursement of sums which were not due from the company.
5. Order. The judgment for £103,000 was upheld and the appeal was dismissed.

1. Court of Appeal (Civil Division): In Blue Station Ltd v Kamyab [2007] EWCA Civ 1073, the appeal was dismissed.
2. Chancery Division: Mr David Donaldson QC, sitting as a deputy High Court judge, gave judgment for Blue Station Ltd for £103,000.