Dhir v Flutter Entertainment Plc (Rev 2)

A loan governed by onshore Dubai law does not become a trust or fiduciary arrangement merely because the agreement refers to a breach of trust. The court must examine the parties’ substantive rights and obligations. A fixed-return loan, secured by property and post-dated cheques, ordinarily creates a debtor–creditor relationship where the borrower may use the money for personal purposes.

A proprietary tracing claim requires an enforceable proprietary interest in the original money, identification of the money or its proceeds, and an enforceable claim against the recipient. A knowing-receipt claim also requires a disposal in breach of fiduciary duty and traceable beneficial receipt. Unjust enrichment requires enrichment at the claimant’s expense, so tracing may be necessary to establish that element.

The claimant lent money in Dubai to a businessman under a written agreement providing for repayment with a fixed return, security over specified properties and post-dated cheques. The borrower used money obtained from several sources to gamble with the defendant’s Paddy Power business.

The claimant sought to recover money received by the defendant, alleging that the borrower had held the advances on trust or subject to fiduciary duties, that the money could be traced into the defendant’s hands, and that the defendant was liable for knowing or unconscionable receipt and unjust enrichment. The central issues were the governing law, the contractual terms, the existence of proprietary or fiduciary rights, tracing, agency and knowledge, and the resulting claims.

1. Governing law. The words “the laws of Dubai” in the agreement were ambiguous in isolation. Applying article 3(1) of Rome I, the court held that both the wording and the circumstances pointed to onshore Dubai law. The agreement was signed and performed outside the DIFC; both parties lived and worked outside it; the identified security properties were onshore; and the transaction concerned business activities in Dubai generally.
2. Contractual terms. The written October 2015 agreement contained the parties’ entire agreement. The alleged oral restrictions on use of the money, alleged entitlement to property acquired with it and alleged retention of ownership were not agreed. The entire-agreement clause was also effective under onshore Dubai law, consistently with Civil Code articles 258, 259, 260 and 265.
3. No trust or fiduciary relationship. The agreement was a straightforward loan. Clause 6’s reference to a “breach of trust” did not create a trust or fiduciary duties. Applying the characteristics identified in Bristol and West Building Society v Mothew [1998] 1 Ch 1, the agreement contained no obligation of loyalty, no no-profit rule and no no-conflict rule. The borrower was using the money for his own purposes, subject only to repayment and the agreed security.
4. Dubai law and Article 404. The transaction did not fall within the relevant categories in article 404 of the Penal Code, including agency, proxy, bailment, loan for use or deposit. In any event, the penal provision did not impose an English-law fiduciary duty. The borrower was not the claimant’s agent under Civil Code article 924.
5. Quistclose trust and tracing. The alleged purpose restriction was not proved. The claim therefore failed on the principles summarised in First City Monument Bank plc v Zumax Nigeria Ltd [2019] EWCA Civ 294 and explained in Twinsectra Ltd v Yardley [2002] 2 AC 164. A purpose for which money is lent does not, without more, place it on trust. The tracing claim also failed at the first of three hurdles: the claimant had no proprietary interest after making the loan. In any event, the evidence was too incomplete and speculative to establish what money had reached the defendant.
6. Receipt and unjust enrichment. The knowing or unconscionable receipt claim failed because there was no disposal in breach of fiduciary duty and no traceable beneficial receipt. The unjust enrichment claim also failed. Although the four questions identified in Menelaou v Bank of Cyprus [2016] AC 176 and Benedetti v Sawiris [2014] AC 938 are broad headings rather than rigid statutory requirements, tracing was necessary to show enrichment at the claimant’s expense.
7. There was judgment for the defendant.