Dear Listmates,

 

Antipodean unjust enrichment enthusiasts may be interested by two recent state court decisions.

 

Focus Metals Pty Ltd v Babicci & Anor [2014] VSC 380 was handed down by Sloss J in the Supreme Court of Victoria on 15 August 2014 (http://scv2.webcentral.com.au/judgments/pdfs/T0380.pdf#page=1&navpanes=0&toolbar=1&scrollbar=1&pagemode=none). The case involved a mistaken payment in the context of a gold refining and purchasing transaction. By clerical error, the claimant company paid a sum of money into the wrong bank account, being an old account in the first defendant's name that had been used in previous transactions but which had subsequently been superseded (along with the first defendant's involvement with the claimant). The first defendant suspected that the payment to him was the result of a mistake, but then embarked on a strategy with the second defendant (his business partner and solicitor) to establish a basis for legitimising the payment. The first defendant then paid part of the money to the second defendant. Sloss J holds that the funds received by the first defendant were held on constructive trust from the moment he appropriated them as his own and transferred them across to his own line of credit, and that the second defendant was knowing recipient of the funds he received and therefore liable to account as a constructive trustee. Interestingly, Sloss J then goes on to consider the alternative claim that it was unjust for the defendant to retain the mistaken payment, and holds that such a claim would be successful against both defendants. The case thus provides some interesting fodder on the relationship between unjust enrichment claims based upon inequitable retention, and knowing receipt claims. It also does not appear to have been an issue that the second defendant was an indirect recipient of the money.

 

Russell Gould Pty Ltd v Ramangkura [2014] NSWCA 310 was handed down by the NSW Court of Appeal on 9 September 2014, with Barrett JA giving the judgment and Bathurst CJ and Ward JA agreeing. The case involved the transfer of funds by the elderly director of a claimant family investment company from the company's bank account to the defendant's home loan account. The defendant was a companion and carer of the elderly director and his wife (also a director of the company) and was considered a 'surrogate daughter' by them. The company sought to recover the money paid to the defendant on the common law basis of money had received. The claim failed, Barrett JA holding that the reality of what had gone on was that the elderly director had paid the defendant money from the company's account that the company owed the elderly director and which was payable at his demand. In essence, the elderly director had directed the repayment of that loan to the defendant rather than to him. I think the case is commendable for this substance over form approach. The case also seems to acknowledge that ignorance may be a basis of recovery. I am less convinced, however, by the Court's treatment of the defendant as a third party recipient, whose liability was said to depend upon common law tracing. The case also contains some interesting obiter comments on subrogation following equitable tracing, as well as the observation that "neither the common law nor equity allows money to be traced into a bank account which is overdrawn and remains so after".

 

Happy reading,

 

Eli.