Overview

This briefing from Wragge & Co covers the latest and issues affecting the lending industry, including: tracing claims, ratification of actions, pre-action disclosure application and economic interest in bankruptcy application required.

Tracing claims:
Where property is obtained by fraud, equity imposes a constructive trust on the recipient so that the property is recoverable and traceable in equity.
In Governor and Company of the Bank of Ireland v Pexxnet Ltd and others, the bank credited cheques to the value of €2,400,000 to the first defendant's bank account before the cheques had cleared. €116,000 was then transferred to the first defendant's director's personal account and €2,225,000 was transferred to the fourth defendant's Swiss bank account.

The money allegedly related to funds to buy 750,000 tonnes of scrap metal sourced from railway tracks in the Congo. The bank quickly discovered that the cheques were forged and sought to recover the monies from the defendants alleging conspiracy to defraud. The bank alleged that the first defendant had held the monies received as constructive trustee.

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