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I agree with Steve that it seems like the wrong outcome to allow me to recover £1000 from him in the event that he tricks me out of £1000 and then gets a friend to pay me £100 in order to make me think that everything is OK - or indeed pays me £100 back himself with this end in mind. But this only seems like the wrong outcome if I am allowed to keep the £100 as well as recovering the £1000.

As a matter of English law I see no possibility of a change of position defence on the hypothetical facts because Steve has not acted in good faith; nor can he say that I have passed on my loss as passing on is not a defence to a claim in UE at common law. I suspect therefore that the only way to bring the £100 into account would be for the friend to claim back the £100 or for Steve to counter-claim this amount and set it off against my claim for the original £1000 - and the question would then arise whether the court would allow such a claim or counter-claim as a matter of policy, in light of the fact that Steve (and/or his friend) has participated in an illegal scheme to defraud me of my money. Granted, the court would be unhappy about my receiving a windfall, but as we know from various illegality cases, this does not necessarily clinch the matter, and other considerations such as the wish to punish or deter the poor behaviour of steve and/or his friend might also come into play.

Charles

At 17:42 26/03/02 +0000, you wrote:

Many thanks to Charles for bringing this to the list's attention.

At 09:55 26/03/02, Charles Mitchell wrote:

This decision does not quite say that because Finchill was disenriched when it endorsed the cheque to Alpha it had changed its position ...

Indeed not. In fact, the opinion specifically denies it: 'This is not a case where Finchill changed its position on the faith of the cheques' (para 30).

However, I doubt whether that can really be correct in principle ....

Which principle is that?

The simplest explanation of the result seems to be that Sanwa can't recover sums which they have not, in the event, lost.

Should any doctrinal significance be given to the statement that 'there was a loose circle of moneys flowing from [Sanwa] to Finchill to Alpha and back to [Sanwa]'? I hope not, for two reasons. Firstly, I cannot see why a failure to establish a 'loose circle' should justify over-compensation of Sanwa. Secondly, I dread the prospect of cases distinguishing 'loose but sufficiently tight circles' from 'over-loose circles'. The 'loose circle' is surely just a mildly colourful turn of phrase, not a legal test.

Is change of position relevant? That would turn the spotlight on Finchill's conduct, which was regarded as wrongful, though possibly nonetheless in good faith (see para 29). Yet however bad Finchill's behaviour, why should Sanwa recover what they have not, in the event, lost? It seems to me that the result should be the same even if Finchill had been party to Alpha's illegal scheme. If I trick you out of £1000, but to help hide the fraud I induce a crony to give you £100 back, then it seems to me that you can only sue me for £900, however the matter is dressed up doctrinally.