Court of Appeal Upholds $22.6million Change of Position Defence in Rasmala–Trafigura Fraud Case

What did the Court of Appeal decide?

In Rasmala Trade Finance Fund v Trafigura Pte Ltd [2026] EWCA Civ 1259, dated 7 October 2026, the Court of Appeal, comprising Lord Justice Baker, Lord Justice Nugee and Lady Justice Falk, dismissed the appeal against the judgment of Mr Justice Rajah concerning Rasmala’s claim for restitution of payments made to Trafigura following a fraud by Farlin Energy & Commodities FZE.

Rasmala sought restitution of payments made to Trafigura after Farlin deceived it into believing that it was financing genuine coal trading contracts. The first-instance judge accepted that Rasmala had paid the money because of a mistake and that Trafigura had been enriched at Rasmala’s expense. The claim nevertheless failed because Trafigura established a defence of change of position.

Lord Justice Nugee agreed with that conclusion. Lady Justice Falk and Lord Justice Baker also agreed, so the appeal was dismissed unanimously.

What was the underlying fraud?

Trafigura had traded with Farlin since 2015 and had extended Farlin a credit limit that was increased to about $11 million in December 2016. By mid-2017 Farlin was struggling to remain within that limit and was seeking external financing.

Rasmala entered into a one-year Murabaha Facility Agreement with Farlin in July 2017, under which financing could be provided for specific coal transactions. Rasmala was told that the payments were funding purchases of coal from Trafigura. In reality, the supposed contracts were forged or manipulated.

1. 21 August 2017 Rasmala makes Payment 1 of $6.84 million to Trafigura.
2. 18 September 2017 Payment 2 of $4,362,880 follows another forged contract.
3. 5 February 2018 Payment 3 of $2,788,000 is made.
4. 8 March 2018 Payment 4 of $4,245,750 is made after Rasmala receives repayments from Farlin.
5. 21 March 2018 Payment 5 of $4,386,000 is made, but no third-party agreement is ultimately supplied.

The five payments totalled $22,622,630. Rasmala later received $10.56 million from Farlin towards Payments 1 and 2. The Court of Appeal therefore noted that the live appeal concerned Payments 3 to 5.

Why did the change of position defence apply?

The central issue was whether Trafigura had, in good faith, changed its position because of the payments in a way that made repayment inequitable. The Court of Appeal described the case as a classic example of a recipient changing its position to its detriment while believing it was entitled to the money.

Trafigura believed the payments were valid payments made on Farlin’s behalf and that they could be applied against Farlin’s outstanding liabilities. The payments brought Farlin back within its credit limit, allowing Trafigura to continue trading. After Payment 1, Trafigura entered into 15 further contracts with Farlin between September 2017 and May 2018, with an invoice value of just under $60 million.

The Court held that this provided the necessary causal connection. The relevant change of position was Trafigura’s continued trading with Farlin because it believed the payments were valid and reduced Farlin’s exposure. The third-party agreements, or TPAs, were part of Trafigura’s internal protection and processing practice; they were not the source of the validity of the payments.

The court also rejected the argument that Trafigura had acted in bad faith. Its enquiries had led it to obtain documents apparently executed by Rasmala confirming the proposed treatment of the money. On the findings below, Trafigura had no reason to suspect that the TPAs were invalid or that the payments were repayable.

What about the fifth payment?

Payment 5 presented a particular issue because Trafigura never received the TPA it had requested. Rasmala argued that, without that agreement, Trafigura could not establish the necessary causal connection, had assumed the risk that its allocation was unauthorised, and had not acted in good faith.

The Court of Appeal rejected each point. The absence of a TPA did not invalidate the payment itself. On the findings, Trafigura believed that Payment 5 was a valid payment on Farlin’s behalf and that it reduced Farlin’s indebtedness. The continued trading that followed was therefore still sufficiently connected to the payment.

The court also emphasised that TPAs were not legally necessary or standard industry practice. They were something Trafigura required for its own protection. The absence of a TPA for Payment 5 therefore did not make its conduct commercially unacceptable or prevent it from relying on change of position.

What does the ruling mean for restitution claims?

The judgment reinforces the practical importance of the change of position defence in unjust enrichment claims. The court’s analysis focused not simply on the fact that money had been paid by mistake, but on what the recipient did in reliance on the payment and whether it would be inequitable to require repayment.

Trafigura’s position had materially changed because it continued trading with Farlin when, without the payments, it would have stopped further deliveries once Farlin exceeded its credit limit. By the time the relationship ended, Trafigura was owed about $15 million, including demurrage. Its eventual net loss was estimated at about $7 million to $7.5 million after recoveries and credit insurance.

The Court of Appeal also accepted that a lost opportunity can amount to relevant detriment even where it cannot be precisely quantified, provided it is substantial and irreversible. Trafigura had lost the opportunity to stop trading earlier and pursue recovery while Farlin still had access to other sources of financing.

For commercial parties, the decision illustrates the importance of examining the recipient’s state of mind, the causal link between a mistaken payment and subsequent conduct, and the practical detriment caused by reliance on the payment. The Court ultimately concluded that Trafigura had acted in good faith and that requiring it to repay Rasmala would be inequitable.