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Members of the list have already been referred to the recently-reported decision of Aikens J in Bank of America v Arnell [1999] Lloyd's Reports Banking 399. I have only just obtained access to that report, and have therefore held off commenting until now.

Aikens J discussed the state of mind necessary to invoke liability for "knowing receipt". At para 15, page 406, he held:

"The latest consideration of the point by the Court of Appeal is in Twinsectra Ltd v Yardley & Ors (Potter LJ; Sir Iain Glidewell and Sir David Hirst: 28 April 1999). I think that it is clear from the judgment of Potter LJ in that case (see particularly at paras 105-108) that the fundamental question that the court has to ask now is: was the recipient acting *honestly* when he received the funds."

Potter LJ's judgment is, in many ways, excellent. But one thing his Lordship did not do was to decide that dishonesty was a necessary element of the "knowing receipt" cause of action.

It is true that the paragraphs referred to by Aikens J contain a detailed discussion of dishonesty, and that those paragraphs come under the heading " 'Knowing' Receipt or Assistance" (before para 101). But it is abundantly clear that Potter LJ was discussing dishonesty only in relation to dishonest assistance under Royal Brunei v Tan. Thus, at para 107, Potter LJ says:

"That being so, and because the judge found that Mr Leach did close his eyes to the effect of the Sims' Undertaking, it seems to me that the findings made by the judge and the evidence to which we have been referred put this court in a position to proceed to effect the exercise which the judge declined to perform, namely to consider whether or not Mr Leach's state of mind was such as to establish accessory liability on the basis stated in Royal Brunei Airlines."

It is also clear that, in relation to "knowing receipt", the most one can say about Twinsectra is that Potter LJ was content to assume that *notice* was required. Thus, at para 114:

" In relation to the receipt-based claim, it is plain that Mr Leach received the trust property for his own benefit with notice of the trust, took subject to it and is liable personally to account for it to Twinsectra."

The one failing of Potter LJ's judgment in Twinsectra (understandable in light of the facts) was that it passed up the opportunity to consider Lord Nicholls' extra-judicial view that "knowing receipt" (or at least one version of it) is actually a strict liability claim in unjust enrichment.

But it would be a huge mistake for judges to go to the other extreme by wrongly assuming that Potter LJ required dishonesty as an element of the cause of action.

Jonathon Moore