Unjust enrichment claim fails over performance fees in Matrix Receivables v Musst Holdings

The High Court has delivered an extensive judgement examining when unjust enrichment claims accrue in the context of investment introductions, ultimately dismissing a claim for performance fees whilst allowing a limited recovery for management fees.

Matrix Receivables Limited (MRL), as assignee of Matrix Money Management Limited (MMM), sought restitution from Musst Holdings for commissions relating to client introductions that generated both management and performance fees. The claim arose after MMM entered administration in November 2012, having provided distribution services to introduce investors (The Observatory/2B and LGT/Crown) to a hedge fund managed by Octave/Astra.

Mr Justice Freedman held this was an "end-product" case rather than a "services" case. Following Gray v Smith, the Court found that enrichment occurred only when Musst received payment, not when services were provided or when Musst became entitled to sue Astra. This characterisation proved decisive on limitation and causation issues.

On management fees, the Court found Musst was unjustly enriched, awarding MRL 40% of receipts from The Observatory/2B and 20% from LGT/Crown, but only for amounts received after 4 September 2014. Earlier payments were statute-barred under the Limitation Act 1980.

However, the performance fees claim failed entirely on causation grounds. The Court found no benefit had been received "at the expense of" Matrix because the chain of causation had been broken. Musst had pursued extensive, risky litigation against Astra from 2016 onwards, incurring £2.2 million in funding costs, £475,000 in insurance premiums, and approximately £1.2 million in legal fees, with Mr Siddiqi and Ms Galligan investing months of preparation time.

Critically, Mr Reeves of MRL had provided evidence supporting Astra's defence in the earlier litigation, potentially undermining Musst's ability to recover anything. The Court found it "particularly fact sensitive" whether enrichment came about "because of the loss" (citing Banque Financière and Investment Trust Companies), concluding that Musst's sustained efforts and risks from 2016-2023 were the operative cause of recovering performance fees, not Matrix's truncated assistance in 2012.

The judgement rejected counter-restitution arguments regarding litigation costs, clarifying these were not reciprocal benefits conferred on Matrix but rather costs of obtaining the benefit itself, which would have reduced any net enrichment.

On preliminary issues, the Court confirmed MMM (not Matrix Alternative Asset Management) was the correct contracting party based on employment records and financial statements, and rejected arguments that rights had been transferred to LGBR Capital in late 2012.

This decision provides important guidance on characterising enrichment as services versus end-product, the application of causation principles in unjust enrichment, and when intervening events sever the requisite connection between a claimant's loss and defendant's gain.