Summary
An EUA is property at common law and a form of intangible property. Its statutory framework, transferability, unique identification, permanence and market value support that characterisation. A proprietary restitutionary claim is distinct from unjust enrichment and may vindicate legal title to a chose in action or other intangible property, whether by following the original asset or tracing a substitute. Bona fide purchase for value without notice is a defence, but notice may arise from actual knowledge or wilful and reckless disregard of a possible impropriety. In commercial transactions, constructive notice requires facts indicating probable impropriety or calling for inquiries that would reveal it. Knowing receipt turns on whether retention is unconscionable.
Factual background
Armstrong claimed against Winnington for the value of 21,000 European Union Allowances transferred from Armstrong’s German registry account following a phishing fraud. Winnington received the allowances, sold them on, and paid the purchase price to the fraudster’s purported company. Armstrong pursued alternative claims based on proprietary restitution, unjust enrichment and unconscionable receipt of trust property. Winnington denied knowledge and relied on bona fide purchase and change of position. The court had to determine the legal nature of an EUA, the available causes of action and the relevant knowledge and defences, together with whether Armstrong retained title or the fraudster became a constructive trustee.
Held
- Nature of the allowances. An EUA was property at common law and intangible property. Applying National Provincial Bank v Ainsworth [1965] AC 1175 and the threefold approach in In re Celtic Extraction [2001] Ch 487, it was identifiable, transferable, permanent and valuable. Its electronic form did not prevent it being property or capable of being held on trust.
- Proprietary restitution. The court accepted the distinction in Foskett v McKeown [2001] 1 AC 102 between proprietary restitution and unjust enrichment. A claimant may enforce subsisting legal title to an asset in the defendant’s hands, including a chose in action or other intangible property. The claim may involve following the original asset or tracing a substitute. The absence of a claim in conversion did not bar this remedy. Bona fide purchase for value without notice was available as a defence.
- Knowledge and unconscionable receipt. The fraudster became a constructive trustee when he obtained control of the allowances, leaving Armstrong with the beneficial interest. Winnington therefore received pre-existing trust property. Under Bank of Credit and Commerce International (Overseas) Ltd v Akindele [2001] Ch 437, the relevant question was whether its knowledge made retention unconscionable. In a commercial context, Baden types (1) to (3) sufficed where the defendant appreciated the possibility of impropriety. Types (4) and (5) sufficed only on the modified basis that the known facts indicated probable impropriety or required inquiries likely to reveal it.
- Application. Winnington knew little about Zen, had requested proof of registry-account ownership, and authorised the transaction without receiving it. It transferred the allowances onward despite uncertainty about entitlement. It then requested confirmation that Zen owned the transferring account but paid without awaiting an answer. That conduct amounted to wilful and reckless closing of the eyes to a possible lack of title or authority. Receipt was unconscionable and any bona fide purchaser defence failed. The proprietary restitutionary claim would also have succeeded in the alternative.
- Armstrong’s claim succeeded in principle. A money judgment was ordered to follow, with the amount, interest and consequential matters to be determined after further submissions.
The court’s approach to earlier authorities
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Key cases cited
16 authorities cited.
- OBG Limited and others (Appellants) v. Allan and others (Respondents) Douglas and another and others (Appellants) v. Hello! Limited and others (Respondents) Mainstream Properties Limited (Appellants) v. Young and others and another (Respondents) [2007] UKHL 21
- Foskett v McKeown [2001] 1 AC 102
- Westdeutsche Landesbank Girozentrale v Islington London Borough Council (Kleinwort Benson Ltd v Sandwell Borough Council) [1996] AC 669
- Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548
- National Provincial Bank Ltd v Hastings Car Mart Ltd (National Provincial Bank Ltd v Ainsworth) [1965] AC 1175
- Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd [2011] EWCA Civ 347
- Niru Battery Manufacturing Company & Anor v Milestone Trading Ltd & Ors [2003] EWCA Civ 1446
- Bank of Credit and Commerce International (Overseas) Ltd v Akindele [2001] Ch 437
- Trustee of the Property of FC Jones & Sons v Jones [1997] Ch 159
- Letang v Cooper [1965] 1 QB 232
- Jones v Churcher [2009] EWHC 722 (QB)
- Macmillan Inc v Bishopsgate Investment Trust plc (No 3) [1995] 1 WLR 978
- Re Rae [1995] BCC 102
- El Ajou v Dollar Land Holdings Plc [1994] 1 All ER 685
- Cowan de Groff Properties v Eagle Trust plc [1992] 4 All ER 700
- Attorney-General of Hong Kong v Nai-Keung [1987] 1 WLR 1339
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Cases citing this case
10 later cases · 5 positive · 1 neutral · 2 caution · 2 negative
Most senior citing decisions:
- Ping Fai Yuen v Fun Yung Li & Anor [2026] EWHC 532 (KB) explained
- Argyle UAE Limited (in liquidation) v Robert McKellar & Anor [2025] EWHC 1258 (Ch) applied
- James Howells v Newport City Council [2025] EWHC 22 (Ch) not applied
- LMN v Bitflyer Holdings Inc & Ors [2022] EWHC 2954 (Comm)
- TECNIMONT ARABIA LIMITED v NATIONAL WESTMINSTER BANK PLC [2022] EWHC 1172 (Comm)
- Skatteforvaltningen (The Danish Customs And Tax Administration) v Solo Capital Partners LLP & Ors [2020] EWHC 1624 (Comm)
- First National Trustco (UK) Ltd & Anor v Page & Ors [2019] EWHC 1187 (Ch)
- Richmond v Selecta Systems Ltd [2018] EWHC 1446 (Ch)
- Group Seven Ltd & Anor v Nasir & Ors [2017] EWHC 2466 (Ch)
- Deutsche Bank Ag v Total Global Steel Ltd [2012] EWHC 1201 (Comm)
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