Knowledge Counsel London
"…what was left was the familiar case of two innocent parties who have each been the victim of a fraud committed by a third person."
The Court of Appeal has rejected a trade finance fund’s (the “Fund”) claim for US$22m dollars against a commodities trader (the “Trader”). The Fund claimed restitution of the sum that it had paid to the Trader through F, in the belief that it was providing finance for coal trading contracts. In fact, the contracts were forged by F and the money was being used to pay off F’s debts to the Trader (after F provided forged authorisations from the Fund to the Trader). The Court of Appeal upheld the lower court’s conclusion that the Trader had been unjustly enriched at the Fund’s expense but that the Trader had had a valid defence of change of position. The Trader believed in good faith that the sums were authorised to clear F’s debts, based on the signed agreements that it had seen. There was no reason to suspect or know that the agreements were invalid. There was a sufficient causal connection from the Trader’s belief in the validity of the payments made to it and it using the money as its own. This resulted in substantial detriment because the Trader continued to trade with F as the payments meant that F was no longer over its credit limit. It was therefore inequitable to require the Trader to repay the Fund.
Rasmala Trade Finance Fund v Trafigura Pte Ltd [2026] EWCA Civ 1259, 7 October 2026
INFRASTRUCTURE – BUILDING SAFETY
The Technology and Construction Court has rejected an argument that Taylor Wimpey UK (“TWUK”) was abusing the court process by bringing a claim against Taylor Woodrow. An earlier claim against Taylor Woodrow was brought by a related company to TWUK in arbitration and dismissed as being out of time. The law then changed to extend the relevant limitation periods for such claims. Had the claim not already been determined, it would not have been time barred. The court dismissed the application to strike the claim out on various bases including that the two claims were independent, that a builder who carries out defective work is liable not just to the employer but all those who acquire an interest in the property and whilst there was some overlap in the claims, the earlier claim was dismissed as time barred, not on the merits.
INSURANCE
The Commercial Court has confirmed that excess layer insurers under a directors’ and officers’ policy were not entitled to refuse cover on the grounds of fraudulent misrepresentation or non-disclosure where that fraud had not been admitted by the insureds or established by court, tribunal or regulator decision. The relevant insureds were facing criminal charges for alleged bribery offences and needed coverage under this policy for their defence costs. Further, there was no public policy reason for avoiding cover where there are allegations of wrongdoing and the widespread use of such policies to cover defence costs supports that position. The court confirmed that the insurers were obliged to cover the defence costs.
SANCTIONS
The Chancery Division has confirmed that consent could be given by the liquidators to an assignment of rights against Petro, a company in liquidation, to Denali, a Dubai company, from Atlas, a Russian company and designated person under the sanctions legislation. The liquidators of Petro needed to consent to the assignment but were worried about doing so if it would breach sanctions legislation. The relevant rights were under a share sale deed and amounted to a right to prove in the liquidation for an uncertain sum. Those rights were an economic resource which can be used to obtain funds, rather than a fund. As a result, the liquidators giving consent to the assignment will not breach the sanctions legislation.
CONSTRUCTION
Harding Estates agreed to sell a plot of land that had outline planning permission for 297 dwellings to Persimmon Homes. Under the sale and purchase agreement, Persimmon would procure that infrastructure and drainage work would be carried out within two years. A delay occurred and Persimmon asserted that it was entitled to an extension of time because Harding Estates had, allegedly, unreasonably withheld approval for certain matters. Following review of various email exchanges between the parties, including some with updated drawings, the court concluded that they were not requests for approval and that Harding Estates had not unreasonably withheld its approval. The delays resulted from the highway agency’s approval process, so Persimmon were liable for breach of the agreement.
Persimmon Homes Ltd v Harding Estates (East Anglia) Ltd [2026] EWHC 2481 (Ch), 30 September 2026
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