Transferred funds without justification? Forget about their return!

If a person has made a payment of money knowing that he/she has no obligation to pay it, and subsequently demands a refund of the money paid, such person behaves contradictory and the unjustifiably acquired money is not subject to refund under Article 1212 of the Civil Code of Ukraine.

This conclusion was made by the Supreme Court as part of the panel of judges of the First Judicial Chamber of the Civil Court of Cassation in a case on a claim for the recovery of unjustly acquired funds.

The plaintiff stated that he and the defendant had orally agreed to create and finance a joint business project. To ensure the fulfillment of the agreement, the plaintiff made several money transfers to the defendant's bank card account. The defendant failed to fulfill its obligations to set up the business and avoided communication.

The plaintiff believed that the funds transferred to the defendant were acquired by the latter without any basis and should be returned.

The court of first instance, whose decision was upheld by the court of appeal, granted the claim and recovered the unjustly acquired funds from the defendant in favor of the plaintiff.

The CCC of the Supreme Court overturned the previous decisions and dismissed the claim, making the following legal conclusions.

The SC noted that the courts had erroneously concluded that the funds belonging to the plaintiff had been acquired by the defendant without a sufficient legal basis, and therefore there were grounds for applying the provisions of Article 1212 of the Civil Code of Ukraine to the disputed legal relations.

The general principles of civil law are, in particular, fairness, good faith and reasonableness (Article 3(6) of the Civil Code of Ukraine).

Interpretation of Articles 1212 and 1215 of the Civil Code of Ukraine indicates that in determining whether unjustly acquired funds are due to the injured person, it should be taken into account that acts of civil law must comply with the content of general principles, in particular good faith.

The doctrine of venire contra factum proprium is based on the principle of good faith. Behavior that is contrary to good faith and fair business practice is, in particular, behavior that is inconsistent with a party's previous statements or behavior, provided that the other party acting to its detriment reasonably relies on them.

The courts did not pay attention to the fact that unjustifiably acquired funds are not subject to return if the injured person knows that he or she has no obligation to pay the funds, but makes such payment because the said person behaves contradictory if he or she subsequently demands the return of the paid funds.

In the case under review, the plaintiff voluntarily transferred funds to the defendant's card account, knowing that there was no obligation (no duty) to return the funds, and therefore the plaintiff's behavior was contradictory (i.e., the injured person freely and without mistake agreed to the occurrence of unfavorable consequences). At the same time, the plaintiff transferred funds to the defendant for a long time, namely six months, regularly, in different amounts (37 payments in total), stating that the purpose of the payment was to replenish the defendant's card account. Since the plaintiff was not obliged to transfer the funds in view of the absence of contractual relations with the defendant regarding the establishment of a joint business, as well as any other obligations, but made these payments for a long time, regularly, his behavior in demanding the return of these funds is clearly contradictory and in bad faith.

Therefore, there are no grounds to satisfy the claim for recovery of unjustly acquired funds.

Resolution of the Supreme Court of April 17, 2024 in case No. 127/12240/22 (proceedings No. 61-18405св23).