Rasmala Trade Finance Fund v Trafigura Pte Ltd

The change of position defence requires good faith, a sufficient connection with the payment and detriment making restitution inequitable. Mere negligence does not defeat the defence. Good faith principally concerns the recipient’s actual knowledge or suspicion, rather than what reasonable inquiries might have revealed.

For a voluntary change of position in circumstances of this kind, acting in the bona fide belief that the payment is valid and the money belongs to the recipient supplies a sufficient causal connection. Confirmations obtained to establish entitlement reinforce that reliance. Risk allocation is not a separate requirement.

Detriment compares the recipient’s position after restitution with its position had the payment never occurred. A substantial, irreversible loss of a recovery opportunity can justify a complete defence despite difficulty in valuation. An elaborate assessment resembling damages valuation is unnecessary.

Rasmala Trade Finance Fund provided financing to Farlin Energy & Commodities FZE, a coal trader. Farlin acted as Rasmala’s undisclosed agent for purchases from Trafigura Pte Ltd, its commodities supplier. Farlin fraudulently induced Rasmala to make five payments exceeding $22.6 million against forged or manipulated coal contracts.

Trafigura believed that Rasmala was financing Farlin and had authorised the payments to discharge Farlin’s existing debts. Farlin supplied third-party agreements bearing forged Rasmala signatures for four payments. No agreement was supplied for the fifth payment. Treating the payments as reducing Farlin’s indebtedness, Trafigura continued supplying coal within its credit arrangements.

Rajah J dismissed Rasmala’s restitution claim in [2025] EWHC 1569 (Ch). Although the payments were mistaken and enriched Trafigura at Rasmala’s expense, Trafigura had changed its position in good faith through continued trading and the loss of an earlier opportunity to recover Farlin’s debts.

Rasmala appealed against the findings on good faith, causation, risk allocation and the fifth payment. It also sought permission to add a ground challenging detriment. Repayments received from Farlin meant that the appeal concerned only the final three payments, totalling approximately $11 million. The central issue was whether Trafigura had established a complete change of position defence.

Appeal dismissed unanimously. Permission to add the detriment ground was granted, but that ground also failed. Nugee LJ gave the substantive judgment, with which Falk and Baker LJJ agreed.

1. Mere negligence was insufficient to defeat a change of position defence. The inquiry principally concerned what the recipient actually knew, understood or suspected. Neither the requirement of good faith nor the alternative language of inequitability introduced an assessment of the parties’ relative fault. Dishonesty was not the sole basis for excluding the defence. A recipient who appreciated that a payment might be mistaken and chose to forgo a simple inquiry could be prevented from relying on it ([58]–[60]).

2. Trafigura neither knew nor suspected that the payments were repayable or the agreements forged. It had obtained an apparently signed remittance letter and apparently executed deeds, exceeding normal market practice. Commercial acceptability depended on the circumstances and could be informed by evidence. The court left open whether commercially unacceptable conduct distinct from sharp practice could independently defeat the defence; Trafigura’s conduct was acceptable on either approach ([63]–[74]).

3. A simple but-for test did not invariably establish the necessary causal connection for a voluntary change of position. In circumstances of this kind, acting on the faith of the payment, meaning in the bona fide belief that it was valid and the money was the recipient’s, was sufficient. The court did not prescribe a universal test or decide whether that connection was always necessary. Seeking confirmations of entitlement reinforced reliance rather than breaking the causal connection ([79]–[81], [108]).

4. Risk allocation was not a separate requirement. Particular risks could inform good faith, causation or the overall assessment of inequity. The theoretical possibility of fraud or mistake did not itself defeat the defence. Assuming a valid third-party payment on a debtor’s behalf, an effective stipulation by the payer governed its use; otherwise allocation belonged first to the debtor and then to the creditor. The agreements were therefore unnecessary to Trafigura’s entitlement to allocate valid payments. Their invalidity, or absence for the fifth payment, did not defeat its defence ([118]–[127]).

5. Detriment compared the position after restitution with the position had no payment been received. Outstanding indebtedness before receipt could not fairly be compared with a later net loss after recoveries. A substantial and irreversible opportunity to recover debts could support a complete defence without precise valuation. The approach in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14 applied. Trafigura’s lost recovery opportunity justified retaining the payments; an elaborate damages-style assessment was unnecessary ([140]–[147]).

6. The additional ground arose from the existing material, could be accommodated within the hearing and caused no substantial prejudice. Permission to amend was appropriate despite unexplained lateness. The dismissal of the claim was upheld ([149]–[151]).

• Court of Appeal (Civil Division): In [2026] EWCA Civ 1259 , the court unanimously dismissed the appeal and upheld the dismissal of the claim. Permission to add a ground challenging detriment was granted, but that ground was dismissed.
• High Court, Business and Property Courts, Business List (ChD): Rajah J dismissed the restitution and alternative constructive trust claims in [2025] EWHC 1569 (Ch) . Trafigura established a complete change of position defence. The dismissal order was dated 23 June 2025.