TECNIMONT ARABIA LIMITED v NATIONAL WESTMINSTER BANK PLC

Claim dismissed. In an unjust enrichment claim arising from an international bank transfer, “at the expense of” requires a legally recognised transfer of value, not merely an economic connection between the claimant’s loss and the defendant’s gain. A standard inter-bank transfer through correspondent banks, with funds mixed in inter-bank accounts, is not ordinarily a direct or single coordinated transaction. Absent agency, assignment, sham, traceable property or debt discharge, common-law tracing through the mixed funds is impermissible. The change-of-position defence depends on whether restitution would be inequitable or unconscionable in all the circumstances. Actual knowledge, internal procedural failure, carelessness or delay does not automatically defeat the defence. Knowing receipt also requires trust property received for the recipient’s own use.

The claimant, a Saudi Arabian company, paid US$5 million to an account at the defendant bank after a fraudster sent a fraudulent payment instruction. Most of the money was rapidly transferred to third parties. The claimant sought restitution for unjust enrichment and knowing receipt.

The defendant accepted that it owed no duty of care to the claimant. It denied liability and relied on change of position and ministerial receipt. The central issues were whether the international inter-bank payment constituted enrichment at the claimant’s expense, whether the enrichment was unjust, whether the funds were trust property, and whether the defendant’s fraud alerts, systems, knowledge and delay prevented reliance on its defences.

Claim dismissed. The judge rejected the knowing receipt claim and held that the unjust enrichment claim failed because the enrichment was not at the claimant’s expense. In any event, the defendant had a complete change-of-position defence.

1. Knowing receipt. The claim required trust property and receipt for the defendant’s own use. The transferred funds were not trust property when received, and the bank received the money for its customer rather than for itself. The authorities included Byers v Samba Financial Group [2021] EWHC 60 (Ch) and Twinsectra v Yardley [2002] UKHL 12.
2. Transfer of value. Applying Investment Trust Companies v HMRC [2017] UKSC 275, the four unjust-enrichment headings were treated as signposts rather than self-contained legal tests. The “at the expense of” requirement focused on a transfer of value and recognised direct dealings, legally equivalent dealings, dealings with property and tracing into third-party property.
3. International payment. The payment involved adjustments between SABB, Citibank and the defendant. It was a standard transaction, not a sham or contrived scheme, and involved several providers of funds. It could not be treated as a single direct transaction by reference to economic reality. The agency and other recognised exceptions did not apply. Following Agip (Africa) Limited v Jackson [1991] Ch 547, common-law tracing through the mixed funds was impermissible.
4. Change of position. The governing question, explained in Lipkin Gorman [1991] 2 AC 548 and Niru Battery Manufacturing Co v Milestone Trading (No.1) [2004] QB 985, was whether it would be inequitable, unconscionable and therefore unjust to deny restitution. Knowledge did not create an automatic rule defeating the defence.
5. The defendant’s separate AML and third-party fraud systems were adequate. The use of the BDM process, failure to follow internal procedures and delay in freezing the account did not amount to unconscionable conduct. Although the bank knew of the fraud before the final automated transfer, the delay was insufficient, in the circumstances, to defeat the defence.