Note Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd & Ors

[2010] EWHC 1614 (Ch) (30 June 2010), on BAILII yesterday.

A nice discussion by Lewison J about whether a fiduciary who makes

illegitimate profits holds those profits on trust. Essentially, an

upscale Ponzi fraudster uses monies in one of his subsidiary companies

to operate his scheme, make profits and sell his shares in the main

fraud vehicle for a big gain. Question: who is entitled to that gain?

The banks who lent the fraudster money, or the investors who invested

the money in the subsidiary which the fraudster misused? Held: the

banks. At least in England, first instance judges are bound by Lister v

Stubbs, notwithstanding anything said in AG Hong Kong v Reid, to say

that the duty to account for profits is just that, and does not engender

a proprietary interest. Quite right too.

Andrew

--

Andrew M Tettenborn

Bracton Professor of Law, University of Exeter

Snailmail:

Law School

University of Exeter

Rennes Drive

Exeter EX4 4RJ

England

Phone:

Tel:             01392-263189 (int +44-1392-263189)

Fax:             01392-263196 (int +44-1392-263196)

Cellphone:       07870-130528 (int +44-7870-130528)

LAWYER, n.

One skilled in circumvention of the law. (Ambrose Bierce, 1906).

====

This message was delivered through the Restitution Discussion Group,

 an international internet LISTSERV devoted to all aspects of the law

 of unjust enrichment. To subscribe, send "subscribe enrichment" in

 the body of a message to <listserv@lists.mcgill.ca>. To unsubscribe,

 send "signoff enrichment" to the same address. To make a posting to

 all group members, send to <enrichment@lists.mcgill.ca>. The list is

 run by Lionel Smith of McGill University, <lionel.smith@mcgill.ca>.