30 September 2021

What exactly are you buying? – learnings from Dargamo Holdings Ltd v Avonwick Holdings Ltd

A recent Court of Appeal case (Dargamo Holdings Ltd and another v Avonwick Holdings Ltd and others [2021] EWCA Civ 1149) which examined the laws of restitution and unjust enrichment has reinforced the need for contracts to include a clear description of what is being acquired and the apportionment of the purchase price.

Restitution and unjust enrichment

The law of restitution addresses the reclaiming by the claimant of a benefit or enrichment unjustly received by the defendant at the claimant’s expense. Unlike claims in contract or tort, which focus on the damage suffered by the claimant rather than the enrichment of the defendant, restitution is a remedy rather than a course of action.

A claimant seeking restitution for unjust enrichment must be able to satisfy the following criteria:

  • the defendant must have been enriched or have received a benefit;
  • the enrichment or receipt of the benefit must have been unjust; and
  • the enrichment or receipt of the benefit must have been at the claimant’s expense.


These complex proceedings arose from the termination of a partnership between three Ukrainian businessmen, Mr Gaiduk, Mr Taruta and Mr Mkrtchan.

As part of the termination process, Mr Gaiduk’s company, Avonwick Holdings Ltd (“Avonwick”) entered into a share purchase agreement to sell its shareholding in Castlerose Ltd (“Castlerose”) to Mr Taruta’s and Mr Mkrtchan’s companies, Dargamo Holdings Ltd (“Dargamo”) and Azitio Holdings Ltd (“Azitio”) respectively. The purchase price for the shares was stated to be US$950 million although it had been agreed between the parties that a part of this sum would form the consideration for additional assets to be sold by Avonwick to Dargamo and Azitio. These assets were never transferred to Dargamo and as a result, Mr Taruta and Dargamo (the “Taruta Parties”) brought proceedings against Mr Gaiduk, his wife and Avonwick (the “Gaiduk Parties”) for the restitution of US$82.5 million.

Although the parties were in agreement that the US$950 million included the purchase price for the additional assets and that the intention was to sell these assets to Dargamo and Azitio, there was no mention of the additional assets or the apportionment of the purchase price in the share purchase agreement and although there were other documents referring to the sale of these assets, these had never been agreed or signed.

The Taruta Parties alleged that the Gaiduk Parties had been unjustly enriched at the expense of the Taruta Parties, as the events contemplated by the US$82.5 million payment – the transfer of the additional assets – did not materialise.

The judge rejected the proceedings at first instance, finding that there was no unjust factor on which the unjust enrichment claim could succeed.

Court of Appeal findings

The Court of Appeal dismissed the appeal made by the Taruta Parties. Although the parties were not in dispute about the intention to transfer the additional assets or that the purchase price for such transfer was included in the US$950 million, the share purchase agreement specifically stated that the sum of US$950 million was consideration for the sale of the shares in Castlerose and made no mention of the additional assets at all. The Court of Appeal held that a claim for unjust enrichment cannot override the express contractual terms:

“where the basis of the consideration is expressly and unconditionally spelt out on the face of a valid and subsisting contract, as here, there is no proper scope for inquiring into an alternative basis that is plainly contrary to the express basis freely agreed between the parties.”

According to the share purchase agreement, the parties had simply agreed that Avonwick was obliged to transfer the shares in Castlerose in exchange for the payment of $950 million, and the parties had fulfilled their respective contractual obligations.

Practical lesson

This case serves as a salutary reminder that the parties to a purchase agreement of any kind should not only carefully agree upon the consideration to be paid for each interest where several are to be transferred but should also ensure that such agreement is expressly set out in writing and that the contract is validly executed. In addition, where interests are to be transferred at a later date, i.e. post-completion, due thought should be given to the parties’ respective positions if the transfer does not go ahead and these too, should be documented.

Parties should take legal advice and work closely with their legal advisors to ensure that the full arrangement is expressly set out in writing and that the various possible eventualities are considered in order to reduce the risk of potential subsequent disputes.


This note reflects our opinion and views as of 29 September 2021 and is a general summary of the legal position in England and Wales. It does not constitute legal advice.

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