The Court of Appeal has heard a second appeal arising from activities of fraudsters (X) that led to Mr and Mrs H paying monies into a payment account held by a company (RND, a company set up by X) with Moorwand, an e-money provider.
We reported the original appeal in FIN here.
The original judgment found that Mr and Mrs H were entitled to bring a derivative action in RND’s name, but that Moorwand had not been put on enquiry that the person giving transfer instructions was acting without RND’s authority. Mr and Mrs H, appealing, said the trial judge had not adequately addressed the defects in Moorwand’s onboarding process when making that assessment. The appeal was allowed on a number of grounds, including that the trial judge had wrongly equated RND’s agent with RND itself, instead of seeing the issues from the point of view of the victim of fraud that RND was, and had not taken account of the fact that the fraudsters were not an agent of RND. So the judge on appeal had ordered funds to be recredited to RND’s account, and Mr and Mrs H would have to try to get their money back via RND.
Moorland appealed, on seven grounds, including that:
- the judge erred in saying that only the “real” owner of RND was authorised to give instructions on its behalf, and should have held that X was the sole member and director of RND and therefore authorised to give instructions;
- the judge should have held that Mr and Mrs H could claim based only on the argument that only the real individual named as director of RND was authorised to give instructions on its behalf; and
- the judge was wrong to overturn the original decision that Moorwand was not put on enquiry that the transfer instructions were given without authority.
On second appeal, the court assessed each ground, but overall found that the requisite thresholds for revisiting the original decision were not met, so allowed the appeal.