The Court of Appeal (Carr and Asplin LJJ, Sir Timothy Lloyd) today handed down judgment in Dargamo Holdings Limited and Sergiy Taruta v Avonwick Holdings Limited, Vitali Gaiduk and Olena Gaiduk, dismissing the appeal against Mr Justice Picken’s rejection of the Taruta Parties’ claim in unjust enrichment.
The appeal concerned the payment of over $80 million by the Taruta Parties to the Gaiduk Parties pursuant to the “Castlerose SPA” for the sale of the shares in Castlerose Ltd. The Taruta Parties maintained that there had been a ‘failure of basis’ in respect of that payment because the parties had understood the payment to be referrable to the transfer of other assets, which had never taken place.
The question on appeal was whether the Taruta Parties could maintain this claim for unjust enrichment in circumstances where the Castlerose SPA expressly identified the basis of the payment as consideration for the transfer of the shares in Castlerose and that transfer had taken place.
The Court of Appeal analysed the law of unjust enrichment and what it labelled the “Obligation Rule” (pursuant to which an unjust factor will not override a valid and subsisting legal obligation). The Court concluded that there was no claim for unjust enrichment.