Restitution Discussion Group Archives
| Sender: |
Peter Birks |
| Date: |
Fri, 6 Dec 1996 10:38:21 +0000 |
| Re: |
Conflicts/proprietary claims |
Re Polly Peck International Plc
In the Ch.D. on 29 November Rattee
J decided not to strike out, but on the contrary to give leave for,
a proprietary claim against Polly Peck by former owners of real property
in N. Cyprus, expropriated after the invasion by the Turkish army,
in respect of enrichment received by the sale of shares in its allegedly
trespassing subsidiaries, whose title to the properties depended solely
on the law of the unrecognised Northern govt. The administrators of
PP intended to distribute to unsecured creditors; the plaintiffs seek
to come in ahead by virtue of their proprietary claim. As well as raising issues of the conflict of laws and
of proprietary claims, this case seems to raise a general issue in respect
of unjust enrichment and corporate law. If a corporation is enriched with
the result of raising the market value of its issued shares, are the shareholders
enriched? I would have thought not, at least not in the subtractive sense.
Corporate identity aside, it seems hard to get two subtractive enrichments
out of one. (A claim based on the disgorgement of the profits of a wrong
would be different I think, but of course that would require a wrong by
the shareholder.) My only authority is a holding that this is right at
least in an action for "reception de l'indu" (payment of a thing not due)
under the Civil Code of Lower Canada: Pearl [1996] RLR §100. I have temporarily parted with my copy of the
Rattee, J., judgment, but, as I recall from a first read of it, the
case for the expropriated owners rests in effect in unjust enrichment
by wrongdoing (though these words are not used). By trespass (piercing
the veil) or by inducing and encouraging trespass by the subsidiaries
(and therefore becoming a joint tortfeasor with them) PP has reaped profits
consisting in the money paid for the trespassing businesses, the money
being formally paid for the shares in the trespassing subsidiaries.
I am told that there will almost certainly be an appeal
by PP against the permission for the claim to be brought. We might one
day reach the nub of the question, which is whether AG for HK v. Reid
can cross over to Edwards v. Lee's Adm. And then, if it can,
whether it makes any difference that the profit was taken in this particular
way.
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Peter B.H.Birks Q.C., D.C.L., F.B.A.,
Regius Professor of Civil Law, University of Oxford
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