Terna Energy Trading doo v Revolut Ltd

For unjust enrichment, a bank or electronic money institution may be enriched by receiving a mistaken payment even though it assumes a corresponding liability to its customer. That liability may engage a defence, but it does not necessarily negate enrichment at the outset. An electronic money institution is not equivalent to a trustee merely because regulations require customer funds to be safeguarded.

An indirect transfer may satisfy the “at the expense of” requirement where the payer’s bank acts as agent, or where coordinated intermediate transactions form a single payment scheme. The question is assessed by legal analysis of the transactions, not by an unstructured appeal to economic reality.

Terna Energy Trading doo claimed restitution of €700,000 paid following an authorised push payment fraud into an electronic money account held with Revolut Ltd for a third party. Terna alleged that Revolut was enriched by receiving the payment and that the enrichment was at Terna’s expense through a direct or coordinated series of transactions involving correspondent banks.

Revolut applied for reverse summary judgment under CPR rule 24.3, alternatively to strike out the claim under CPR 3.4(2). It argued that it had not been enriched because the receipt was matched by its liability to its customer, and that any enrichment was not at Terna’s expense. The central questions were whether those arguments could dispose of the claim summarily.

1. The application was dismissed. The claim should proceed to trial because the pleaded case had at least a real prospect of success and the disputed legal issues should be determined on complete facts.

2. On enrichment, the court was bound by the older English authorities, including Continental Caoutchouc and Gutta Percha Co v Kleinwort, Sons & Co, Kleinwort, Sons & Co v Dunlop Rubber Co and Kerrison v Glyn, Mills, Currie & Co. Those cases establish that a bank receiving a mistaken payment is not absolved merely because it becomes debtor to its customer. The relevant question is tied to whether the bank has accounted or paid away the money without notice, which may provide a defence.

3. Recent first-instance observations, including Jeremy D Stone Consultants Ltd v National Westminster Bank plc, and observations in later Supreme Court authority, were obiter or did not engage with the binding older authorities. To that extent, they were not followed.

4. Revolut’s status as an electronic money institution did not alter the result. The Electronic Money Regulations 2011 required safeguarding but did not create a trust. Revolut remained the legal and beneficial owner of the safeguarded funds and could obtain benefits such as interest or fees. The case was therefore not materially different from one involving an ordinary bank.

5. The “at the expense of” requirement was governed by the principles in Investment Trust Companies v HMRC. A merely economic or “but for” connection is insufficient, but agency and coordinated transactions may amount in law to a transfer of value between payer and recipient.

6. On the assumed facts, UniCredit Serbia acted as Terna’s agent in arranging payment to a specified account. The correspondent-bank debits and credits were also coordinated transactions directed to that single end. It was immaterial that no cash or particular chattel moved, or that several correspondent banks were used. Either analysis could establish an indirect transfer at Terna’s expense.

7. The court was not bound by Tecnimont Arabia Ltd v National Westminster Bank plc, a decision of a judge of coordinate jurisdiction, but would ordinarily follow it as a matter of judicial comity. The judge was convinced it was wrong and declined to follow it.

First-instance decision on an application for reverse summary judgment, alternatively strike out. No earlier appellate decision in the same proceedings was stated.