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The HL have decided Criterion Properties plc v. Stratford UK Properties (http://www.publications.parliament.uk/ pa/ld200304/ldjudgmt/jd040617/critrn- 1.htm).

The CA and Hart J. at first instance had believed that they were dealing with a case of knowing receipt. If the HL had agreed, it would have provided the HL with an opportunity to consider whether the CA in Bank of Credit and Commerce International (Overseas) Ltd v Akindele had adopted the correct approach in requiring the claimant to show that the defendant's state of knowledge rendered it unconscionable for him to retain the money received.

The HL considered the case to be a simple one concerning whether directors had actual or ostensible authority to enter into an agreement, The applicable principles are summarised by Lord Nicholls at [4]

"If a company (A) enters into an agreement with B under which B acquires benefits from A, A's ability to recover these benefits from B depends essentially on whether the agreement is binding on A. If the directors of A were acting for an improper purpose when they entered into the agreement, A's ability to have the agreement set aside depends upon the application of familiar principles of agency and company law. If, applying these principles, the agreement is found to be valid and is therefore not set aside, questions of 'knowing receipt' by B do not arise. So far as B is concerned there can be no question of A's assets having been misapplied. B acquired the assets from A, the legal and beneficial owner of the assets, under a valid agreement made between him and A. If, however, the agreement is set aside, B will be accountable for any benefits he may have received from A under the agreement. A will have a proprietary claim, if B still has the assets. Additionally, and irrespective of whether B still has the assets in question, A will have a personal claim against B for unjust enrichment, subject always to a defence of change of position. B's personal accountability will not be dependent upon proof of fault or 'unconscionable' conduct on his part. B's accountability, in this regard, will be 'strict'."

It seems to me that Lord Nicholls approach of looking at the validity of the agreement as determinative of whether there is a personal or proprietary claim to the benefit conferred is the same as that suggested by Peter Birks in Unjust Enrichment (2003).

Robert Stevens
Barrister
Fellow and Tutor in Law
Lady Margaret Hall
Oxford University