Neutral Citation Number: [2009] EWCA Civ 752
Case No: A3/2008/1653
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
MANCHESTER DISTRICT REGISTRY
His Honour Judge Hodge QC 
Case No: 6MA30009 
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 23/07/2009
Before :

THE CHANCELLOR OF THE HIGH COURT
(SIR ANDREW MORRITT)
LORD JUSTICE RIMER 
and
LORD JUSTICE GOLDRING 
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Between :

	LANCORE SERVICES LIMITED	Appellant	
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	BARCLAYS BANK PLC	Respondent	

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Mr Stephen Cogley and Mr Peter Ferrer (instructed by Pannone LLP) for the Appellant
Mr Andrew Sutcliffe QC and Mr Jonathan Davies-Jones (instructed by DLA Piper UK LLP) for the Respondent

Hearing date: 28 April 2009
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Judgment

Lord Justice Rimer :
Introduction
1.	This appeal is against an order dated 25 June 2008 made by His Honour Judge Hodge QC, sitting as a judge of the High Court, by which (save for a payment order in paragraph 1 to which no further reference is necessary) the judge dismissed the claimant’s claim. The claimant/appellant, Lancore Services Limited (‘Lancore’), seeks by its appeal to make good its dismissed claim to recover judgment against the defendant/respondent Barclays Bank Plc (‘Barclays’) for some £1.9m. 
2.	The trial occupied ten days and raised many issues of disputed fact. In a judgment of meticulous comprehensiveness the judge made clear findings on them. They were for the most part adverse to Lancore but did not prevent it from advancing an argument that it was still entitled to recover the claimed money, its argument turning primarily on the construction of a set of conditions governing its contractual relationship with Barclays. The judge, however, found against Lancore on that as well. 
3.	On this appeal, brought with the Chancellor’s permission, Lancore does not question the judge’s findings of fact. It repeats, however, that as a matter of law its claim is anyway good. At the conclusion of the argument, the court dismissed the appeal for reasons to be given later. These are my reasons for agreeing to that. Whilst the argument before us turned primarily on the terms of the relevant contractual conditions, it is necessary to set the scene against which the issues arose and also to summarise the relevant findings of fact made by the judge.
Credit card transactions
4.	 The case arises out of the operation of the system for processing credit card payments, of which an understanding is necessary. The judge provided a full explanation in his judgment, upon which in what follows I have gratefully drawn, in part verbatim. 
5.	The relevant personnel in a credit card transaction are the cardholder, who uses his card to buy goods and services from the merchant, who supplies them. In doing so the cardholder enters into a contract with the merchant but the use of his card is governed by a separate contract between the cardholder and the card issuer. The merchant’s ability to accept card payments is governed by the terms of his agreement (in the proceedings referred to as a merchant services agreement, or ‘MSA’) with his merchant acquirer, who supplies the facilities which enable the merchant to accept card payments. In addition to being bound to the merchant by the MSA, the merchant acquirer is bound by the Visa and MasterCard Scheme Rules (‘the rules’) which, amongst other things, govern the rights and obligations between the merchant acquirer and the card issuer; and Visa and MasterCard operate their card schemes and process the payment data and the payments in respect of any particular transaction. Within the United Kingdom, there are only six merchant acquirers; and under the rules a merchant acquirer must also be a card issuer. The card issuer is, like the merchant acquirer, also bound by the rules.
6.	In the present case, Lancore was the merchant and Barclaycard Business (a trading name of Barclays) the merchant acquirer. The contractual relationship between them was governed by an MSA. It was the effect of the conditions of the MSA that was in issue before us. Barclays’ card issuing arm (which, as a merchant acquirer, it must have) is Barclaycard, a separate part of the bank.  
7.	The stages in a typical credit card transaction are as follows, the basic principles being essentially the same whether the transaction takes place face to face, over the telephone, by mail order or via the internet. When a cardholder purchases goods from the merchant, the merchant captures the card number and the amount of the transaction. The data so captured does not include a description of the goods being purchased or the name and address of the cardholder. The merchant electronically submits the captured data to the merchant acquirer, which passes them to Visa or MasterCard, which passes them to the card issuer. This exercise takes but a few seconds. The card issuer verifies that the card has not been reported lost or stolen and has sufficient credit on it to meet the transaction. Subject to that, it authorises the transaction. The authorisation is communicated back electronically by the card issuer to Visa or MasterCard, by Visa or MasterCard to the merchant acquirer, and by the merchant acquirer to the merchant. 
8.	At that point the merchant acquirer will be obliged to pay the merchant for a valid transaction. The MSA will specify how the amount payable is to be calculated and it will usually be the amount of the underlying transaction less transaction costs. Subject to the applicability of any deferred payment terms that may have been expressly agreed with the merchant (where, for example, the merchant is a new customer), Barclaycard Business normally originates a BACS payment to the merchant’s designated bank account on the same or following day. At that point, the money is debited from Barclaycard Business’s account and the debit is irrevocable. There is, however, a time interval (in Lancore’s case it was two working days) before the money is credited to the merchant’s account. Once the transaction has been processed, the card issuer incurs a debit liability under the Visa or MasterCard rules, which results in a sum equal to the value of the transaction being paid via Visa or MasterCard to the merchant acquirer. Because of the daily volume of transactions, a reconciliation is conducted each evening by Visa and MasterCard. That exercise reconciles payments made by the card issuer to the merchant acquirer (new transactions) and by the merchant acquirer to the card issuer (chargebacks, see below). Typically, the merchant acquirer will receive payment from the card issuer a few days after the transaction, and normally two or three days after Barclaycard Business has originated the BACS payment to the merchant.  If Barclaycard Business does not receive a payment in respect of a valid card transaction, that does not affect its obligation under the MSA to pay the merchant: that is one of the risks run by a merchant acquirer. Finally, the card issuer sends a statement to the cardholder, who discharges his liabilities to the card issuer when he pays the balance due on his card account.
9.	‘Chargebacks’ can arise when, for example, the cardholder has not received the goods or services and wants a refund. If that can be passed back to the merchant acquirer under the Visa or MasterCard rules, the refund is referred to as a ‘chargeback’. The cardholder’s entitlement to a refund, and the consequential obligations as between card issuer and merchant acquirer, are governed by complex provisions in the rules. In broad terms, where a chargeback occurs Barclaycard Business (as a merchant acquirer) has a contractual obligation to refund the card issuer through the reconciliation process; and under the MSA, Barclaycard Business is entitled to claim a refund from the merchant. But if the merchant does not repay Barclaycard Business (perhaps because it has become insolvent), the latter still has an obligation under the rules to pay the refund to the card issuer. This is another of a merchant acquirer’s risks.
10.	The Visa and MasterCard rules provide the framework under which Barclaycard Business must conduct itself as a merchant acquirer. Failure to comply with them can lead to Barclaycard Business being subjected by Visa or MasterCard to serious disciplinary action, ultimately suspension or termination of membership. The rules lay down onerous obligations in respect of the taking on of new merchants and their monitoring. In particular, they prohibit ‘aggregation’, sometimes referred to as ‘laundering’. This occurs when a merchant who has entered into an MSA processes card transactions for the supply of goods or services by a third party who has not entered into an MSA. If a merchant does so aggregate, there will be nothing in the data submitted to the merchant acquirer or card issuer to alert them to that fact. In such a case, goods and services are being supplied by an entity which has not been scrutinised by the merchant acquirer: and often this will be precisely because the supplier does not want to be subject to scrutiny. Aggregation can be a cloak for transactions which are illegal and with which the merchant acquirer would not wish to be associated if it knew of them: it would not enter into an MSA with such a supplier. As the judge explained:
‘Because the merchant acquirer does not know the true nature of the transactions being entered into, it is not in a position to assess the extent of, or to mitigate, the chargeback risk, the risk of sanction under the [rules], reputational risk, or regulatory risk. Because a UK card issuer has a potential liability to card holders arising out of section 75 of the Consumer Credit Act 1974 in relation to each transaction, aggregation means that the card issuer may be potentially exposed to claims in respect of transactions with suppliers who choose not to be the subject of scrutiny or due diligence by a merchant acquirer, and with whom the merchant acquirer might not have been prepared, or allowed to deal at all. Because aggregation is regarded as a risk to the integrity of the system as a whole, it was, and is, a fundamental obligation on a merchant acquirer that, for each merchant, there should be a separate and distinct merchant number, and that the transactions processed by that merchant should be settled by the merchant acquirer into a bank account in that merchant’s name. The [rules] also prohibit, and prohibited, the processing of payment data in respect of illegal transactions.’
Apart from its need to comply with the rules, Barclaycard Business had its own policies and procedures directed at protecting its reputation and goodwill. They prohibited the recruitment of merchants engaged in the sale or supply of prescription drugs, of which Viagra was a specific example.
The facts
11.	Lancore was incorporated in 2005, its directors being Mr and Mrs Lankry (who hold all its shares) and Mrs Ellis. For a time in 2005 Lancore made use of its banking facilities with Barclays to carry on a business providing payment processing facilities in respect of low value cheques drawn in favour of mail order companies. It then resolved to move into the selling of kitchenware through mail or telephone order and advertisement, to which end in August 2005 it approached Barclaycard Business to obtain (and it was granted) a merchant service facility to process credit and debit card payments from mail and telephone order sales in five currencies. Lancore executed Barclaycard Business’s MSA, by which it is accepted that it became bound and on 21 November 2005 Barclaycard Business welcomed it as a customer and provided a merchant number for it.
12.	Within less than three months, on 15 February 2006, Barclaycard Business suspended payments to Lancore and also suspended its merchant facility. It had by then processed almost 67,000 payments totalling some $4.9m and €1.156m on which it had earned substantial commission. The reason Barclaycard Business suspended the payments was because on 13 February it had received a tip-off that Lancore was engaging in aggregation. At that point Barclaycard Business was holding the equivalent in dollars and euros of some £1.39m for onward payment to Lancore. An investigation by Barclaycard Business’s Special Investigations Section led it to conclude that Lancore had been engaged in unauthorised third party transactions, in particular that it had been processing payments for third parties for the sale of pharmaceutical products (in particular Viagra) and pornographic downloads. Barclaycard later terminated Lancore’s MSA by a letter dated 7 March 2006.
13.	Contrary to Lancore’s case, the judge found that Barclaycard Business had never agreed to Lancore acting as a payment processor for third parties, let alone one involving the sale of pharmaceutical or adult products. He rejected the case that, by 30 November 2005 at the latest, Barclaycard Business was or ought to have been aware that Lancore’s application for a merchant account was to enable it to act as a third party processor for merchants selling such products. It had made clear that Lancore would have to own the goods or provide the services in question before it could act as its merchant acquirer. The judge also found that, from 8 December 2005 when Lancore started to submit payment data to Barclaycard Business, all three Lancore directors knew that virtually all the payment data related to the sale of prescription medicines by third parties to cardholders. He further found that they knew that Barclaycard Business had not given its approval to the processing of card payments otherwise than pursuant to its merchant facility, which was for the sale of kitchenware by mail and telephone order only; and that they knew also that it was a requirement that Lancore should own such goods at the point of sale. He further found that until the tip-off on 13 February 2006, no-one at Barclaycard Business knew that Lancore was processing payments for third parties or that the goods sold included prescription medicines such as Viagra and other men’s health-care products. He rejected Lancore’s case that there had been any agreed variations of the MSA or that Barclaycard Business was estopped from relying upon its terms. The judge said:
‘[78] I find that, between August 2005 and February 2006, Lancore repeatedly represented to Barclays … until Mr Lankry finally conceded the true position … that its business was the sale of kitchenware by mail and telephone order. In reality, what it was actually doing was third-party processing in respect of sales of prescription drugs. It was because of this that, whereas Lancore’s predicted level of card turnover had been reported to be in the order of £142,000 per month, the actual volume of Lancore’s card business in the months of January and February 2006 was in the order of some £1.47m and £1.75m respectively’. 
14.	The judge found that virtually all the transactions that Lancore was processing on behalf of others were illegal transactions in prescription drugs of 14 types. Lancore itself admitted that ‘virtually all’ the products being sold were pharmaceutical products, with only a small amount of kitchenware being sold (valued in the evidence at only about £2,000). He further found that both at the time when Barclaycard Business suspended payments to Lancore’s account on 15 February 2006 and when it terminated Lancore’s MSA on 7 March 2006 Barclaycard Business ‘reasonably suspected’ (within the meaning of condition 3.12(c) of the MSA) that the payment details that Lancore had been submitting were both for ‘illegal transactions’ and for card payments by cardholders to third parties, that is that they represented payments by cardholders to third party merchants who were engaged in selling prescription drugs over the internet without prescription. He found that any chargeback periods had long since expired and that there was no real prospect that Visa or MasterCard would seek to pursue Barclaycard Business for chargebacks; and that all legitimate chargebacks had already worked their way through the system.
The appeal
15.	The sum of about £1.39m I referred to as being held by Barclaycard Business as at 13 February 2006, being money that (subject to Barclaycard’s claimed right of retention) would otherwise have been payable to Lancore under the MSA, had increased to some £1.9m by the time of Lancore’s claim in these proceedings. The judge rejected Lancore’s claim for payment.
16.	Lancore’s case for payment turns on the provisions of the MSA between Barclaycard Business and Lancore. The judge had held that they entitled Barclaycard Business to retain the money and that there was no other basis on which Lancore had any claim for its payment. I must set out the material conditions of the MSA.
The MSA
17.	The material conditions are as follows:
‘1. DEFINITIONS
1.1 In this document, the schedule or schedules and any Additional Service Conditions, the words and phrases below have the meanings shown next to them unless stated otherwise:
“this Agreement” the schedules, these Merchant Terms and Conditions, the Operating instructions and Procedure Guides and any Additional Service Conditions you agree to. …
“Card Payment” a payment for goods or services provided by you or supply of cash by you which the Cardholder has authorised you to charge to his or her Card account. The Cardholder may authorise you by using a Card or Card number or in some other way. (Emphasis supplied) …
“Payment Details” details of a Card Payment. These must be in a form which we have approved….
2. OUR RESPONSIBILITIES
2.1 We will pay you the amount of all Card Payments (less any Refunds) included in Payment Details which you send to us as set out in this Agreement. We will do this each Banking Day as set out in the Payment Schedule. Unless we agree otherwise payments under this Agreement will be made in sterling. …
3. YOUR RESPONSIBILITIES 
3.5 Card Payment details
(a) You must send us Payment Details and Refund Details according to the Operating instructions and Procedure Guides. If we ask you to, you must send these details to another person we have approved instead. When you send us Payment Details, this is your confirmation that you have provided goods and services to the Cardholder and that you have not broken any obligations you may have to the Cardholder. If you have broken any of your obligations, you will also have broken this Agreement. (Emphasis supplied)
(b) Payment will reach your bank account two to four Banking Days after we send payment according to the Payment Schedule instructions. The actual number of days will depend on how you send your Payment Details to us for processing and whether or not your bank account is held with us. …
3.12 Illegal and third party transactions
(a) You must only send us Payment Details for payments by Cardholders to you for goods or services provided by you or the supply of cash by you to Cardholders.
(b) You must not allow anyone else to use equipment which would allow them to carry out Card Payments under this Agreement.
(c) If we become aware, or reasonably suspect, that:
(i) the Card Payment was not genuine; or
(ii) the Card Payment was for an illegal transaction; or
(iii) the Card Payment was for a payment by a Cardholder to another person or for cash given to a Cardholder by another person; or 
(iv) the payment does not in some other way constitute a Card Payment then we may withhold or debit from your bank account the amount of that Card Payment. (Emphasis supplied)
4. CHARGEBACKS – OUR RIGHT TO REFUSE PAYMENT AND TO CHARGE PAYMENTS BACK TO YOU
4.1 In some circumstances we will have the right not to pay you for a Card Payment. If we have already paid you for it, you may have to pay that amount back to us. This is called “charging back”. We may charge a Card Payment back to you if you refuse to pay it even if it has been authorised. We may also do this if you send us information about a transaction which is not a Card Payment but which has been processed by us as a Card Payment. If we have the right to charge a Card Payment back that amount will be a debt from you to us which you will owe immediately. We will have the right not to pay you or to chargeback in the following circumstances:
(a) if the Card Payment or the way in which it was carried out has broken this Agreement or if the Payment Details or the way in which they have been sent to us have broken this Agreement; …
16. ENDING THIS AGREEMENT
16.1 Normally we will give you at least 30 days’ notice in writing if we want to end this Agreement. However, in certain circumstances such as those set out in Condition 4.1(h)(i) to (viii), or where we reasonably suspect fraud, or where you are in breach of Conditions 3.12(a) or 4.2, we may end this Agreement by giving you immediate written notice. …
16.6 If this Agreement ends, you will continue to be liable to us for all obligations which arose before the date the Agreement ends. Conditions 4, 7, 8, 9, 10, 12, 13, 14, 17, 24 and 25 will continue after this Agreement ends.’
The issues
18.	No ‘Payment Schedule’ as referred to in condition 2.1 was produced in evidence but the judge recorded that it was common ground that the parties had expressly agreed that payments into Lancore’s bank account should be deferred by 21 days. That had been agreed because Lancore was a new customer and it was the existence of that period that led to the build up of the money that Lancore claimed should have been paid to it and was the subject of its claim.
19.	Mr Cogley, for Lancore, submitted that, upon the true construction of the MSA, Barclaycard Business had no contractual right to retain the money the subject of the claim. He referred to the definitions of ‘Card Payment’ and ‘Payment Details’ in Condition 1.1, and to Barclaycard Business’s core payment obligation under Condition 2.1. He then referred to Condition 3.12, pointing out that the prohibition in paragraph (a) covers the case of third party processing or aggregating. He said that the correct construction of Condition 3.12(c)(iv) was that, if Barclaycard Business ‘becomes aware’ of or ‘reasonably suspects’ any breach of paragraph (a), it has the option of withholding payment but does not have to do so. He then referred to condition 16, pointing out that whereas certain specified conditions continued in force after termination, condition 3.12(c)(iv) was not one of them. 
20.	Mr Cogley submitted that it followed that a withholding of payment during the currency of the MSA pursuant to condition 3.12(c)(iv) could not justify a permanent withholding of payment following the termination of the MSA under condition 16. If, for example, the condition 3.12(c)(iv) right was exercised simply because of ‘reasonable suspicion’ on the part of Barclaycard Business of a relevant breach, it would be potentially unjust if, following a termination of the MSA under condition 16 on the ground of ‘reasonable suspicion’ of fraud, Barclaycard Business were entitled to retain the withheld money permanently. Suppose, for example, the ‘reasonable suspicion’ of the breach and the fraud were to be proved unfounded, it would be unjust if the merchant were to be permanently deprived of his right to payment of the withheld money.
21.	There is, I consider, force in the argument that, as the MSA has been terminated, the key to Barclaycard Business’s defence does not or may not repose in the pre-termination exercise of its right to withhold payment under condition 3.12. Mr Cogley’s submission was that, post-termination, the position is governed by condition 4.1. I agree that that is an important condition, although it must be read in the context of the MSA as a whole, having regard in particular to condition 2.1. 
22.	As for condition 4.1, Mr Cogley said that its opening six sentences provided no assistance in determining when such a right to withhold arises. They were no more than introductory to the prescribing of the circumstances in which that right will arise, namely those described in paragraphs (a) to (h). He submitted, in particular, that the fifth sentence: 
‘We may also do this [sc. chargeback or refuse to pay] if you send us information about a transaction which is not a Card Payment but which has been processed by us as a Card Payment’ 
did not confer upon Barclaycard Business any freestanding contractual right to withhold payment. His submission was that under condition 4.1 the only provision that might have entitled Barclaycard Business to withhold the claimed money was paragraph (a), namely ‘if the Card Payment or the way in which it was carried out has broken this Agreement or if the Payment Details or the way in which they have been sent to us have broken this Agreement.’ But he said that that paragraph (a) did not entitle Barclaycard Business to withhold the payments. Barclaycard Business was seeking to retain payments in relation to transactions which it had processed as Card Payments and in respect of which it had taken its profit or commission. He said that paragraph (a) only entitled a withholding in the case of a breach by Lancore of the MSA, but there could be no such right in this case. That was because Barclaycard Business had made all chargebacks available to it, had suffered no loss in consequence of the paragraph (a) breach – third party processing -- and so had no right of retention. The claimed retention was a windfall, as the judge recognised. 
23.	I would not accept that argument, which I regard as involving a misinterpretation of the MSA. Central to its interpretation is Barclaycard Business’s core obligation under condition 2.1, by which the only payment obligation it assumed was to pay Lancore ‘the amount of all Card Payments … included in Payment Details which you send to us ….’. A ‘Card Payment’ is defined as ‘a payment for goods or services provided by you ….’. The card transactions in respect of which Lancore sought payment from Barclaycard Business were not transactions in which Lancore provided the goods and so the claimed payments were not ‘Card Payments’ within the meaning of condition 2.1. Barclaycard Business therefore never assumed, and never became subject to, any obligation to make the claimed payments. 
24.	Condition 3.12, earlier discussed, warns the merchant that he must not engage in third party transactions and that if he seeks the processing of such a transaction, Barclaycard Business may withhold the amount of any ‘Card Payment’ that might otherwise have been due. Condition 3.12 is not there using the phrase ‘Card Payment’ in the strict sense of the definition in condition 1.1 because at least one of its permutations is a ‘Card Payment’ for goods or services provided by a third party. But the sense of condition 3.12 is clear and in so far as ‘Card Payment’ as there used requires an extended interpretation, it does not have the consequential requirement that it must bear a similarly extended interpretation in condition 2.1.
25.	As for condition 4.1, that too at times uses the phrase ‘Card Payment’ in a sense that extends beyond the condition 1.1 definition. Paragraph (a) does so because I consider it embraces the case in which, for example, the ‘Card Payment’ is in respect of a third party transaction. The sense of condition 4.1 is, however, clear. In agreement with the judge, I see no reason why its fifth sentence should not mean what it says and entitle Barclaycard Business to decline to make a payment to the merchant in a transaction which is not a ‘Card Payment’ at all but which has been processed by it as such. I also consider that Barclaycard Business was entitled to withhold the claimed payments under condition 4.1(a) as not being ‘Card Payments’. 
26.	In my judgment, Lancore’s claim that, upon the true construction of the MSA, it was entitled to payment of the retained moneys was mistaken, as the judge held. Barclaycard Business was entitled to say that it had a right of permanent retention of the money under condition 4.1. Its right in that respect was entirely consistent with, and ancillary to, its core right to say that the claimed payments were and are not ‘Card Payments’ within the meaning of condition 2.1: and its only obligation was make payments to Lancore that were such payments. In my judgment the judge was correct to reject Lancore’s claim to payment in reliance on the terms of the MSA. 
27.	Lancore’s second ground of appeal was that, if wrong in its submission that the terms of the MSA did not entitle Barclaycard Business to retain the claimed payments, there must be implied into the MSA a term that it could only make such retentions for a reasonable time in respect of chargebacks or actual loss suffered by Barclaycard Business. The point was made that no officious bystander would regard the MSA as entitling Barclaycard Business to appropriate the gross value of the payments made in respect of the relevant transactions and to retain them permanently. The judge rejected this submission and so would I. 
28.	As Mr Sutcliffe QC submitted, it is not in fact a question of what an officious bystander might think, but how the parties would react if such a bystander raised with them the point that the MSA should provide expressly for the making of the payment to the merchant after the expiry of such reasonable time. Bearing in mind the risks to which Barclaycard Business might be subject if it were to become involved in making payments in respect of illegal or aggregated transactions, it by no means follows that it would have responded with a testy ‘Oh, of course’. It might well have responded ‘Certainly not’. If so, that points away from the implication of any such term. But the real difficulty with the argument is, in my judgment, that the suggested implied term is inconsistent with conditions 2.1 and 4.1. The latter conveys no indication that any withholding may only be temporary; and under the former, Barclaycard Business anyway only assumed an obligation to pay Lancore the amount of ‘Card Payments’. The payments claimed are not such payments. The court will not imply a term that is inconsistent with an express term. 
29.	 Lancore’s third ground of appeal was that the withholding provisions amount to an unenforceable penalty, since the retentions bear no relation to any loss suffered by Barclaycard Business by reason of Lancore’s breaches of the MSA. The judge rejected that argument. He discussed the point at some length and by reference to several authorities. We had virtually no oral argument on the submission, which I would reject for this short reason. That is, upon the construction of the MSA that I favour, that Barclaycard Business was not claiming to forfeit moneys otherwise due to Lancore in reliance upon or in consequence of a breach by Lancore of its obligations under the MSA. The moneys claimed are moneys which, upon the true construction of the MSA (in particular condition 2.1) and in the events that happened, never became payable to Lancore at all. There is no basis for regarding condition 2.1 as a penalty clause. 
30.	Finally, Lancore submitted that, if all its other arguments failed, Barclaycard Business must have become subject to an obligation to account to Lancore for the claimed money on the basis that it was under a fiduciary, agency or restitutionary obligation so to account. The proposition was that the payer cardholder, whilst intending that its own obligations would be discharged upon acceptance of its card, must also have intended the money that it was paying ultimately to find its way to Lancore. It intended Lancore to have the value of its payment, not Barclaycard Business. 
31.	In my judgment, these arguments are also mistaken and were rightly rejected by the judge. The only basis on which Barclaycard Business became involved with Lancore was as a merchant acquirer under the terms of the MSA.  Those terms gave rise to no agency or fiduciary relationship between Barclaycard Business and Lancore and they entitled Barclaycard Business to refuse to make the claimed payments. Nor can that conclusion be circumvented by an appeal by Lancore to restitutionary principles on the basis that Barclaycard Business has been unjustly enriched. Lancore signed up to the MSA, and agreed that it was only to be entitled to payment by Barclaycard Business for the amount of ‘Card Payments’.  It assumed the risk that, if it engaged in third party transactions, it would not get paid. As the judge put it, ‘it is not the function of the law of restitution to redistribute risks which the parties have, by contract, already allocated.’ I agree.
Conclusion
32.	As indicated at the outset of this judgment, the court has already dismissed Lancore’s appeal. These are my reasons for agreeing to that outcome.
Lord Justice Goldring :
33.	I agree.
The Chancellor :
34.	I also agree.