A similar mode of proprietary recovery has recently appeared or been confirmed (although I don't think it solves the mystery alluded to by Charles). In Jyske Bank (Gibraltar) Ltd v Spjeldnaes (29 July 1999) the CA, interpreting the Rolled Steel case [1986] Ch 246, considered the effect of a disposition by a company brought about by its managing director in breach of fiduciary duty (assuming that the disposition is not ultra vires). It was held (as I understand it) that such a transaction cannot be voidable. It may be valid if the outsider can rely on ostensible authority, or if the company ratified the excess of authority. But it was said that in a case where the outsider knew of the want of authority in the md, not only was the transaction void but the property transferred under it was held in trust for the company by the outsider. So a fortiori where (as in Charles' case) the outsider transferee and the insider director were the same person. (It still does not solve Charles' mystery because the Jyske claim benefits the company.)

Of course the voidness of the contract does not logically entail the voidness of the conveyance (Westdeutsche), but if (quite unlike Westdeutsche) the voidness of the contract arises through the combination of (a) lack of authority in the agent to make it and (b) knowledge by the other party of that lack, then it kind of makes sense that the conveyance should be void as well, since the same features apply to it (assuming of course what is almost certainly true, that there is as much lack of authority for the conveyance as for the contract). If this is correct then (at least as to the asset initially transferred, rather than its proceeds) we are not in the realm of unjust enrichment but of the retention by the company of its pre-existing rights. Personally I would want to ask whether, if the conveyance is to be void, the original asset transferred might actually be held at law by the company; but in most cases the transfer will be converted into proceeds, which would then be held in trust. In payments of money via banks this will happen in the initial transfer itself.

Both Twinsectra and Jyske Bank consider whether one can sue to enforce an agreement (or security given thereunder) while still maintaining against another party that the transaction is void (and not ratified) or voidable. Both seem to say it is possible, taking a strong view of the power of election between remedies. In Jyske Bank, enforcing security for transactions in the form of loans was said not to amount to ratifying them as loans, so that the plaintiff could still sue in knowing receipt and knowing assistance, and could claim the traceable proceeds as trust money. In Twinsectra it was said (para 99)

"the distinction of importance here is that between non-consensual transfers and transfers pursuant to contracts which are voidable for misrepresentation. In the latter case, the transferor may elect whether to avoid or affirm the transaction and, until he elects to avoid it, there is no constructive (resulting) trust; in the former case, the constructive trust arises upon the moment of transfer. The result, so far as third parties are concerned, is that, before rescission, the owner has no proprietary interest in the original property; all he has is the "mere equity" of his right to set aside the voidable contract."

but then at para 113 it was said, as I read it, that you can keep open your election as to avoidance even after you have sued to judgment in contract on the transaction.

Finally the judgment in Jyske Bank can be seen as supporting Simon Gardner's argument ((1996) 112 L.Q.R. 56) that despite the attempt along these lines in Royal Brunei, it is impossible to decide whether a defendant has been dishonest without considering the defendant's knowledge. Less certain on this point was the CA in Three Rivers DC v Bank of England (1999) 11 Admin LR 281, applying Royal Brunei to the dishonesty element of one way of committing the tort of misfeasance in public office. There it was said that dishonesty and knowledge are in a relationship like unto chicken and egg. But surely while you need knowledge for dishonesty, you do not need dishonesty to have knowledge ...

Lionel