Niru contracted to buy lead from Milestone, to be paid for in a letter of credit, against certifying documents produced for the purpose. Mr Mahdavi, the individual behind Milestone, procured CAI to finance the acquisition of warrants to be retained by them as security for repayment of their loan by, ultimately, the purchase price payable by Niru. False documents were issued by a forwarding agent, at the behest of Mr Mahdavi, such as to induce Bank Sepah to pay the price for the lead to CAI but CAI had already sold the warrants and, pursuant to instructions from Mr Mahdavi, had credited another of his companies with the proceeds. Thus Niru was liable to Bank Sepah for the purchase price under its counter-indemnity, Bank Sepah had paid the purchase price but neither of them had received any lead. The defendants appealed findings that Mr Mahdavi was liable in deceit and as an accessory to a breach of trust, CAI was liable in restitution and was SGS liable in negligence. The defendants were declared to be jointly and severally liable for the overall loss of Niru and Bank Sepah.
Held: The court dismissed the appeal of CAI in respect of the subrogation claim and allowed the appeal of SGS on the recoupment claim.
Auld LJ: ‘. . . the strict position appears to be that we remain bound by the decision in Friends’ Provident.
In these circumstances, although both parties made detailed submissions on the question whether a claim for restitution is a claim for ‘compensation’, I do not think it would be appropriate for me to express my own view on the point, at any rate unless it were necessary to do so in order to resolve the issues on this appeal. In the light of the conclusions which I expressed earlier it is not necessary to express such an opinion. I have already expressed my conclusion that if the 1978 Act applies the just result would be to order CAI to pay a contribution of 1000%, as was done in the Coys Case, and for similar reasons. No question of any possible conflict between the effects of subrogation, recoupment and contribution therefore arises. On the other hand, if the Act does not apply, the result is the same, namely that SGS is entitled to recover in full from CAI by way of subrogation or recoupment. In these circumstances, it is not necessary or appropriate for me to lengthen this judgment by my own analysis of the meaning of compensation in s.6(1) of the 1978 Act.’
Judges:
Lord Justice Clarke Lord Justice Sedley
Citations:
[2004] 2 Lloyd’s Rep 319, [2004] 2 All ER (Comm) 289, [2004] EWCA Civ 487, [2004] 2 Ll LR 319, [2004] 1 CLC 882
Links:
Statutes:
Civil Liability (Contribution) Act 1978
Jurisdiction:
England and Wales
Cited by:
Cited – Charter Plc and Another v City Index Ltd and others ChD 12-Oct-2006
An employee of the claimant had fraudulently spent several million pounds of the claimant’s money on personal bets through the defendant company. The claimant said that the defendants knew the origin of the funds and were liable to repay them. . .
Cited – Jeremy D Stone Consultants Ltd and Another v National Westminster Bank Plc and Another ChD 11-Feb-2013
The claimants asserted an equitable claim against funds held by the defendant bank in the name of a company owned by another defendant who they said defrauded them through a Ponzi investment scheme.
Held: The claim failed. On the evidence, the . .
Lists of cited by and citing cases may be incomplete.
Damages
Updated: 10 June 2022; Ref: scu.196059