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List members may be interested to read Papamichael v National Westminster Bank plc [2003] EWHC 164 (Comm). The claimant won 2 billion drachmas in the Greek national lottery. The money was placed in the joint bank account she shared with her husband. Her husband then transferred the money to an account with the defendant bank and lost the lot in a series of foreign exchange dealings.

The evidence going to the question whether the husband did this with the claimant's knowledge and consent was murky, but in the end Judge Chambers QC sitting as a deputy High Ct judge concluded that the claimant had not authorised or knowingly consented to her husband's actions.

He also found that the employee of the defendant bank who opened the forex trading account for the husband had had constructive knowledge of the fact that the money belonged to the claimant and had been taken without her consent the judge made this finding on the basis that the employee turned a blind eye to facts which would have led a reasonable and honest person to ask who the money belonged to. It followed from this that the bank was not a bona fide purchaser of the money, and so could not rely on bona fide purchase as a defence to the claimant's various claims.

These were: (i) a common law claim to recover the money as money had and received; (ii) an equitable claim that the bank had held the money on constructive trust because it had received it with (constructive) knowledge of the fact that it was paid in circumstances entitling the claimant to a restitutionary remedy; (iii) an equitable claim in knowing receipt, founded on the assertion that the husband had breached the fiduciary duty he owed the claimant when he improperly transferred the money to the account. The claimant also threw in a claim for dishonest assistance in the husband's breach of fiduciary duty, which seems to have got slightly lost in amongst all the other claims. Judge Chambers QC found in the claimant's favour under all these heads.

Two things strike me about this decision. First, I believe that Jonathon Moore is right to argue that banks in situations of the kind in which the defendant bank found itself in this case should have a defence to restitutionary claims to recover money paid to them by breaching fiduciaries. This would be that they have acted in a ministerial capacity and so have never received the money beneficially for themselves - at the moment of receipt they come under an obligation to account for it to the wrongdoing fiduciary (the husband in this case). It is a great pity that Jonathon has not published his doctoral thesis in which he works through the cases on this point, but I attempt a brief summary of his arguments in my essay in Birks and Pretto Breach of Trust. The defendant bank did not take this point in the case, but in my view it should have been a good one.

Secondly, because this defence was not pleaded and so the restitutionary claims appeared to the judge to be good ones, he spent little time examining the dishonest assistance claim, but had he done so, then perhaps the exact state of mind of the bank's employee who opened the account would have assumed much greater significance, since as we now know following Twinsectra it is not enough to show that an assistant did something dishonest, but must also be shown that he knew that his actions were dishonest, something that does not appear to have been tested by the judge.

Charles