Queensland Judgments
Authorised Reports & Unreported Judgments
  • sclq logo
  1. Caselaw
  2. QDC
  3. 2011
  4. BOQ Equipment Finance Ltd v Visposin Pty Ltd - [2011] QDC 266

Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment

BOQ Equipment Finance Ltd v Visposin Pty Ltd[2011] QDC 266

BOQ Equipment Finance Ltd v Visposin Pty Ltd[2011] QDC 266

DISTRICT COURT OF QUEENSLAND

CITATION:

BOQ Equipment Finance Ltd v Visposin Pty Ltd & Ors [2011] QDC 266

PARTIES:

BOQ EQUIPMENT FINANCE LTD

(Plaintiff)

AND

VISPOSIN PTY LTD

(First Defendant)

AND

PAUL JOSEPH NORRIS

(Second Defendant)

AND

QUEENSLAND PACIFIC FINANCE PTY LTD

(Third Party)

FILE NO/S:

D2391/08

DIVISION:

PROCEEDING:

Trial

ORIGINATING COURT:

District Court, Brisbane

DELIVERED ON:

20 May 2011

DELIVERED AT:

Brisbane

HEARING DATE:

17, 18 March 2011

JUDGE:

McGill DCJ

ORDER:

Judgment that the first defendant pay the plaintiff $51,247.  Plaintiff’s claim against second defendant, and first defendant’s third party claim, dismissed.

CATCHWORDS:

RESTITUTION – Money paid by mistake – elements of cause of action – what amount recoverable.

RESTITUTION – Defences – change of position – whether position changed – whether reliance in good faith on the payment – whether more needs to be shown.

PRINCIPAL AND AGENT – Liability of agent – payment by mistake to agent of undisclosed principal – accounting to principal not a defence.

TRUSTS AND TRUSTEES – liability of third party – rule in Barnes v Addy – whether knowledge shown.

Abou-Rahmah v Abacha [2006] EWCA Civ 1492, [2007] 1 Lloyd’s Rep 115 – considered.

ANZ Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 – applied.

Australian Conference Association Ltd v Mainline Constructions Pty Ltd (1979) 141 CLR 335 – cited.

Baden v SGFDCIF SA [1993] 1 WLR 509 – cited.

Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 – cited.

Barlow Clowes International Ltd v Eurotrust International Ltd [2006] 1 WLR 1476 – cited.

Barnes v Addy (1874) 9 Ch App 244 – cited.

Barros Mattos Junior v MacDaniels Ltd [2005] 1 WLR 247 – considered.

Baylis v Bishop of London [1913] 1 Ch 127 – applied.

Black v Freeman & Co (1910) 12 CLR 105 – cited.

Commerzbank AG v Price Jones [2003] EWCA Civ 1663 – considered.

Commissioner of State Revenue v Royal Insurance Australia Ltd (1994) 182 CLR 51 – considered.

Consul Developments Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 – cited.

David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 – applied.

Derby v Scottish Equitable Plc [2001] EWCA Civ 369, [2001] 3 All ER 818 – considered.

Dextra Bank and Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193 – cited.

Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 – applied.

Fortuna Seafoods Pty Ltd v The Ship “Eternal Wind” [2005] QCA 405 – cited.

Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 – cited.

Kleinwort Sons & Co v Dunlop Rubber Co (1907) 97 LT 263 – applied.

Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 – considered.

Nawall v Tomlinson (1871) LR 6 CP 405 – followed.

NIML Ltd v MAN Financial Australia Ltd (2004) 1 BFRA 204 – considered.

Niru Battery Manufacturing Co v Milestone Trading Ltd [2004] QB 985 – considered.

Orix Australia Corporation Ltd v M Wright Hotel Refrigeration Pty Ltd (2000) 155 FLR 267 – considered.

Ovidio Carrideo Nominees Pty Ltd v The Dog Depo Pty Ltd [2006] VSCA 6 – cited.

Pavey and Matthews Pty Ltd v Paul (1987) 162 CLR 221 – cited.

Port of Brisbane Corporation v ANZ Securities Ltd [2003] 2 Qd R 661 – considered.

Quince v Varga [2008] QCA 376 – applied.

Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 – cited.

Royal Brunei Airlines SDN BHD v Tan [1995] 2 AC 378 – cited.

Starglade Properties Ltd v Nash [2010] EWCA Civ 1314 – cited.

State Bank of New South Wales Ltd v Swiss Bank Corporation (1995) 39 NSWLR 350 – not followed.

Twinsectra Ltd v Yardley [2002] 2 AC 164 – cited.

COUNSEL:

N.M. Cooke for the plaintiff

M.E. Pope for the defendants

A.P.J. Collins for the third party

SOLICITORS:

MacGillivrays Solicitors for the plaintiff

Derek Geddes Lawyers for the defendants

Carter Newell Solicitors for the third party

  1. [1]
    The third party is a finance broker. On 12 March 2007 it sent to the plaintiff, a financier associated with a bank, a proposal to lend $113,500 to a client to finance the purchase of two motor vehicles.[1]  That application was approved and on 3 April 2007 the necessary documentation to finalise the transaction, including tax invoices dated 26 March 2007 for the sale of two vehicles by “Commodore 2000” to the client of the finance broker, which had been sent by fax to the finance broker, were in turn sent by a fax to the plaintiff.[2]  At the relevant time, the first defendant carried on business as a motor dealer under that business name:  p 82.  The transaction proceeded, and two payments were made by the plaintiff directly into the bank account specified in those tax invoices, the account of the first defendant, one for $50,000 on 4 April 2007 and one for $68,008.95 the following day.[3]  It has since emerged that the vehicles referred to in those documents did not exist, and the plaintiff is seeking to recover from the first and second defendants the amounts so paid.  The first defendant has brought third party proceedings seeking contribution or indemnity under s 6(c) of the Law Reform Act 1995.
  1. [2]
    The statement of claim, even in the form into which it was put by amendment at the beginning of the trial, is primarily based on the proposition that each of the invoices was given by the defendants to the plaintiff. The defendants deny that either of them had anything to do with those documents, and there is no evidence to the contrary, and ultimately counsel for the plaintiff conceded that he could not advance any case based on the proposition that those documents came from the defendants. It follows that much of the plaintiff’s pleading, and the consequential pleading, have become essentially irrelevant. Further, counsel for the defendant conceded that the only basis upon which the third party proceeding was advanced was for contribution if the claim for fraudulent misrepresentation was made out, so that if that failed the third party proceedings necessarily also failed. In these circumstances it is scarcely necessary for me to say anything very much about the third party proceedings, though I will make some precautionary findings. In view of this, and because in my view that part of the plaintiff’s pleading which remains relevant is not conspicuous for its clarity, it is probably better if I approach the resolution of the matter by setting out the facts as they appear from the evidence before me.

Background

  1. [3]
    According to the second defendant, he had prior to about the end of 2002 been involved in the vehicle wrecking business for many years, through the first defendant: p 52, p 62.  He obtained a motor dealer’s licence in late 2002, and was still doing that until 2008, though he said the first defendant had subsequently changed back to the car wrecking business.  He has a son who was at the time about 24 (p 58), who had previously to his knowledge been involved in fraudulent activity:  p 59.  He was trying to help his son set up in business, although he was very vague about the exact nature of the business that the son was setting up.  He said the son had his own company, but the son was also going into business with other individuals:  p 52.  One of the individuals with whom he was supposed to be in business was a Mark Watson.
  1. [4]
    The business was at one point spoken of as a motor dealership,[4] and that it was occupying part of the premises occupied by the first defendant’s business, but at other times the business was spoken of as that of finance broker,[5] or as a moneylender.[6]  There was no independent reliable evidence as to just what it was that the son was doing.  In any case, according to the second defendant, he allowed his son to use some premises of the first defendant, and also allowed him to use its bank account in order to receive payments until he had a bank account for his own company.[7]
  1. [5]
    Mark Watson was known to the third party finance broker, which had previously arranged for other transactions for him to be financed: p 9.  On 9 March 2007 Mr Watson made contact with an employee of the third party to seek finance for the purchase of two motor vehicles by his company, Platinum Store Pty Ltd:  Document 9.  Total finance sought was a little over $110,000.  At this stage the supplier of the vehicles was not advised.  Details of assets and liabilities of Mr Watson and his company, and some trade references, were provided.  The material was forwarded to the plaintiff on 12 March 2007:  Document 9.  A credit manager approved the proposal on behalf of the plaintiff, subject to various conditions, the following day.[8]  The conditions included one that the equipment was “to be readily identifiable with all serial numbers and components itemised” but there was no specific requirement for the finance broker to inspect the vehicle concerned.  The practice as between the plaintiff and the third party, and no doubt other finance brokers, was that when a vehicle was being purchased from a dealer no visual inspection of the vehicle was required, at least unless the vehicle was of very substantial value.[9]
  1. [6]
    The third party proceeded with the documentation of the transaction, and at some point the third party received by fax two documents dated 26 March 2007 each purporting to be a tax invoice issued by the first defendant trading as Commodore 2000, one in respect of a used 2005 Holden vehicle where the total amount owing was said to be $50,000 (Document 13, p 51) and one in respect of a used 2006 Holden vehicle where the total amount owing was said to be $68,008.05:  Document 14.  These tax invoices were made out to Platinum Store Pty Ltd, but the representative of the third party could not recall whether they were received by fax from Mr Watson or his company, or from someone else, and if so from whom:  p 8‑9.  It appears that this material was forwarded on to the plaintiff on 26 March 2010, together with signed documentation for a chattel mortgage over the vehicle in favour of the plaintiff by Platinum Store Pty Ltd, and a signed guarantee by Mr Watson:  Document 30.  The plaintiff’s settlements people processed the transaction, and paid the total owing for each vehicle into the first defendant’s bank account, which was the bank account nominated on the invoices.  The payment of $50,000 was made on 4 April 2007, and the payment of $68,008.95 was made on the following day:  Document 5, p 18.
  1. [7]
    The documentation provided to the plaintiff did not include a registration number for either vehicle. The plaintiff’s witnesses said that this was not unusual and did not give rise to any concern on their part; there were a number of routine explanations for this, including that the vehicle was to be reregistered and the dealer would do this after payment for the vehicle was made.[10]  There was nothing about either invoice in this case which gave rise to any concern on the part of the plaintiff’s employees.[11]  The plaintiff undertook searches with the vehicle security register, an REV search, which was possible because the invoices provided vehicle identification numbers and engine numbers, and those searches did not reveal any security registered against a vehicle so identified:  Documents 28, 29.[12]  Such a search, however, will not reveal that a vehicle does not exist:  p 17.  Obviously enough, if they had known the vehicles did not exist, then the payments would not have been made:  p 18.  The REVS indicated that there was no current registration record, but that would be consistent with the absence of a registered number and the notion that the vehicle was to be reregistered upon payment.  This search does not identify if the engine number is a plausible match for the vehicle identification number:  p 21.
  1. [8]
    So the money arrived in the first defendant’s bank account. This did not come as a surprise to the second defendant, because he had arranged a few days earlier for the first defendant’s account to be used by the son for some transactions involving his business: p 52, p 82.  He said that these were not the first payments into his account in connection with the business:  a statement for the account from 25 March to 24 April 2007 is Document 5, and he identified deposits of $13,500 and $12,990 on 26 March as also relating to the son’s business:  p 128.  The following day he drew and signed three cheques, 203 made payable to “Brisbane Motor Auctions”, 204 made payable to “The Motor Auction Belmore” and 205 originally made payable to “National Money Lenders”:  Exhibits 7, 8, 10; p 53-4.  This cheque, however, he amended later that day by writing “Please pay cash” and by signing his name, and it was cashed that day at the Southport branch of the bank:  p 65, p 74.
  1. [9]
    Then on 4 April the $50,000 payment arrived from the plaintiff, and another payment of $23,100 from another financier which he also attributed to the son:  p 128.  The following day there was a cash withdrawal of $20,000, and two cheques were cashed:  Document 5.  Cheque 214 for $10,000 was cashed at the Southport branch of the bank, and cheque 215 for $8,000 was cashed at the Ashmore branch of the bank:  Exhibits 11, 12; p 65, p 75.  Later that day the further payment from the plaintiff of $68,008.95 was deposited:  Document 5.
  1. [10]
    On 10 April 2007 the second defendant drew and cashed a cheque for $15,000 at the Southport branch at the Bank of Queensland:  No. 216:  Exhibit 13; p 66.  The same day he cashed a cheque for $7,000 at the Ashmore branch of that bank, cheque 217:  Exhibit 14; p 66.  On 11 April 2007 he cashed cheque 218 for $30,000 at the Southport branch of that bank:  Exhibit 15; p 66.  On 12 April 2007 he cashed cheque no. 219 for $10,000 at the Southport branch of the Bank of Queensland:  Exhibit 16; p 66.  The same day he drew cheque 220 for $72,150 payable to Pickles Auctions, an auction house in Sydney:  Exhibit 17; p 66.  This cheque was cleared the same day:  Document 5; p 18.  As a result the account went from credit into overdraft; according to Document 5, p 19; on 5 April 2007 an overdraft with a limit of $60,000 was allowed on this account.  On 13 April 2007 he drew and signed cheque No. 222 payable to Mr M. Watson for $11,269.17:  Exhibit 5; p 67.  This cheque was cleared the same day:  Document 5; p 19.  On the same day he cashed cheque No. 221 for $10,000 at the Southport branch of the Bank of Queensland:  Exhibit 19; p 67.  On 17 April 2007 the second defendant cashed cheque No. 225 for $5,000 at the Southport branch of the bank:  Exhibit 18; p 67.

Credibility

  1. [11]
    The only witness whose credibility was seriously put in issue was the second defendant. There was a good deal about his evidence which struck me as unsatisfactory. I have already referred to some conflict between his evidence at different times as to the nature of the business that was supposedly being carried on by his son. I had the distinct impression that he was being deliberately vague about this. He finally settled on the business of finance broker, but seemed to accept that ordinarily large sums of money would not be paid to a finance broker to be passed on to the client: p 130.  Yet he said that the money which passed through his bank account in this way was “going to the people he (i.e. the son) had got loans for”:  p 53.  He also said at another point that his son had clients waiting to get the money, “I’ve seen the file” and there were lots of individuals on his business roll, as he put it:  p 63.  It was as if the money coming from the plaintiff (and other financiers) was being re-lent by his son’s business to people who wanted to borrow money for various reasons.
  1. [12]
    The cheque butt number 203 contains the notation “less fee $220” but the cheque which was for $9,200 was made payable to Brisbane Motor Auctions (Exhibit 7) and was cleared for the full amount:  Document 5, p 17.  His explanation for this transaction was initially that the $220 was for rent of premises which was deducted and the balance was given to his son:  p 53.  He conceded later, however, that the cheque was paid to the payee:  p 70, where he conceded that this payment was not deducted from the amount referred to in this cheque, though he claimed to have written this on the cheque butt the same day, and he asserted that the cheque butt was a true reflection of what the cheque was for:  p 71 line 13.  When pressed for an explanation, all that emerged was that “it kept me in contact with moneys that they owed me, the cheque butt”:  p 80.  An alternative explanation is that the cheque butts were fabricated later and that this was a mistake, he having forgotten when he filled in the butt that this cheque had been made payable to someone and not simply cashed, but this was not squarely put in cross-examination.  He said that the cheque was for the purchase of vehicles which he owned:  p 80.
  1. [13]
    There was a similar discrepancy with cheque number 204 payable to “the Motor Auction Belmore” for $9,000: Exhibit 8.  The butt, Document 19, refers to “less fee $200 and electricity $150”, but these amounts did not come out of this cheque payment despite the statement at p 54 that “he received $9,000 less $370.”  Cheque 205 was also curious.  Originally this was made payable to “National Money Lenders”, although he acknowledged that he knew at the time that that company, which was his son’s company, did not have a bank account, and accepted that making a cheque payable to them in those circumstances was not a sensible thing to do:  p 65.  At p 89 he said that knowledge that they did not have a bank account was not the reason why he crossed out National Money Lenders, but did not say what the real reason was, though he said that the same day he drew the cheque he changed it to “please pay cash” and that the $370 was paid out of this amount before the balance was handed over to the son:  p 55.  The butt, Document 20, says “less electricity and fees”.  The explanation that the “fee” is a reference to rent strikes me as inherently implausible:  most people would write “rent” in relation to a payment received for rent, and it seems curious that there was an amount of $220 for rent on 27 March, and further amounts of $550 as “fee” (Documents 50, 52), also said to be rent, (p 56) on 11 and 12 April 2007.  He said that the son was sharing a shed with an air-conditioned office, but there was no evidence as to what amount was charged for rent and in respect of what period.
  1. [14]
    He spoke about writing the cheques and cheque butts at the same time, but then qualified this with the statement that some cheques were presented to him having been taken out of the cheque book by his son: p 64.  However, he did not identify which cheques this related to, and when taken through a large number of cheques in detail he claimed to have written and signed almost all of them.  The only two exceptions were Exhibit 5, cheque 222 payable to “Mr M. Watson” for $11,269.17, said on the butt, Document 58, to be paid to Money Lenders Pty Ltd “final payment $68,000 finance deal”.  He could not recall what he had done with this particular cheque:  p 67.  He also said that he did not write out or sign cheque number 236, Exhibit 6:  p 67.
  1. [15]
    In evidence-in-chief he identified a series of cheques as being referable to the amounts from the plaintiff: cheques 203, $9,200 27 March 2007; 204, $9,000 27 March 2007; 205, $7,700 27 March 2007; 214, 5 April 2007 $10,000 to cash; 215, 5 April 2007 $8,000 to cash; 216, 10 April 2007 $15,000 to cash; 217, 10 April 2007 $7,000 to cash; 218, 11 April 2007 $30,000 to cash; 219, 12 April 207 $10,000 to cash; 220, 12 April 2007 to Pickles Auctions $72,150, of which $8,550 was said to be for two cars for the son; 221, 13 April 2007 $10,000 to cash; and 222, 13 April 2007 $11,269.17, which was said to represent the final payment of the $68,008.95 loan:  pp 53-57.
  1. [16]
    The amounts of these cheques total $135,719.17, allowing only $8,550 for 220. The second defendant attributed cheques 214-218, which total $70,000, to the “first money that came into our account”, $50,000, and cheques 219-222, which total $39,819.17, to the second amount, $68,008.17. Cheque 203 ($9,200) was attributed to “one of the loans” (p 53) and 204, 205 ($16,700) to “another payment to my son” (p 54).  The cheque butts had notes attributing cheques 214, 215, 216, 217 and part of 218 to the $50,000 “loan”, and the balance of 218, 219, 220, 221 and 222 to the $68,008.95 “loan”.  These total $109,829.17 (counting 220 as $8,560), $8,179.28 short of the total paid by the plaintiff.
  1. [17]
    During cross-examination, however, it was pointed out that some of these cheques had been drawn and indeed cleared prior to the time when the first payment from the plaintiff was received. In re-examination it was disclosed that other payments had been received into the bank account from other financiers, prior to the time when the first of these payments was made: on 26 March 2007 there was a sum of $13,500 received from Secure Funding Pty Ltd, and a sum of $12,990 received from AMF Ltd, both of which related to the son:  p 128.  In addition, on 4 April there was a deposit of $23,100 from Secure Funding Pty Ltd which also related to the son.
  1. [18]
    Apart from the fact that there was nothing from the second defendant during the cross-examination to suggest that this could be the explanation, even though he was pressed hard about this point, this disclosure somewhat undermines the logic of the proposition coming from the evidence-in-chief about the identified payments being the process by which the money received from the plaintiff was passed on to his son. There was also the difficulty that at one point during cross-examination he conceded that the cars which were the subject of payment in cheque 203 ($9,200 to Brisbane Motor Auctions) were to purchase vehicles which he owned: p 80.  On the face of it that was quite inconsistent with his earlier evidence.
  1. [19]
    Overall therefore, there were a number of features about his evidence which struck me as unsatisfactory. There is the further consideration that when he was initially queried by some bank officers about these transactions, on 19 May 2008, he said at one stage that he received $2,000 as a fee for making his account available in this way:  p 33, and see Exhibit 2, a note taken by one of the officers during the meeting:  p 33.  A different version put to these officers was denied:  p 30.  If things had been as innocent as the second defendant claimed, a fee of $2,000 simply to enable these payments to pass through his bank account was ridiculously generous.  The notion that there was some sort of “fee” involved is consistent with the use of that term on the cheque butts, although the amounts attributed to “fee” on the cheque butts do not add up to $2,000; it may be that this was the result of some imprecision on his part at the time, or it may be that the balance of the “fee” was not recorded on the cheque butts.  The second defendant did not actually give evidence about this conversation, though the evidence of it was led as part of the plaintiff’s case, and a different version was put to the bank officers in cross-examination, and rejected by them.  Given that I have reservations about the second defendant’s credibility anyway, I accept the evidence of the bank officers as to what was said by the second defendant in this conversation.
  1. [20]
    Overall, therefore, I was not impressed by the second defendant as a witness and am very wary about his evidence. Nevertheless, it would be consistent with any view of what was going on in these circumstances for the defendants to have disposed of the money they received in this way fairly promptly, and it was not suggested that the proceeds of cheques made to cash, for example, had in fact been retained by the defendants. I should add that Exhibit 1 includes a statement apparently made by the second defendant to the police on 3 February 2008, Document 66, and what may be a draft statement by him which has not been signed or dated, Document 67.  They were part of an agreed bundle of documents, and there was no discussion of their evidentiary effect at the time of the tender, or subsequently.  The second defendant was at one point cross-examined about one matter in the statement, but otherwise they were not touched in cross-examination.  In these circumstances, I have not taken into account any discrepancy between what was said in those statements (or the statement and draft statement; there is no evidence the second defendant actually adopted the contents of Document 67) when making my assessment of credibility.

The law

  1. [21]
    Apart from any question of fraudulent misrepresentation, the plaintiff relies on the proposition that the payment was made to the first defendant under a mistake of fact, and is therefore a prima facie recoverable.[13]  The defendants rely in particular on the principle that an agent will acquit himself of liability to a third party in respect of a payment by having passed it on to his principal.[14]  This defence, like the defence of change of position, invokes the notion that the circumstances are such that it would be unjust to order repayment, undermining the plaintiff’s claim based on the notion that the defendant has otherwise been unjustly enriched.
  1. [22]
    The application of these principles was discussed by the Court of Appeal in Port of Brisbane Corporation v ANZ Securities Ltd [2003] 2 Qd R 661.  A fraudulent employee of the plaintiff had procured a cheque drawn on the plaintiff’s account which came to be paid into the trust account of a stockbroker associated with a bank.  The money was then used for some share trading before being transmitted in a series of payments to a bank in Hong Kong.  After the fraud was discovered and the employee arrested, about half of the money was recovered from the bank in Hong Kong and elsewhere.  The plaintiff sued the stockbroker as the recipient of the proceeds of the cheque, on the basis of unjust enrichment, but the stockbroker defended on the basis that prior to the action being brought, and indeed prior to notice of any claim, the money had been paid out and no money was held in its account representing the amount collected.
  1. [23]
    At [8] McPherson JA, with whom the other members of the court agreed, referred to passages in the judgment in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 as showing that the basis of the restitutionary claim was not just that the defendant had been unjustly enriched by the payment, but that the defendant retained the money and so remained unjustly enriched:  [9].  Counsel for the defendants sought to rely on this passage as establishing that the onus was on the plaintiff to show that the first defendant retained some or all of the proceeds of the payment in its bank account.  The difficulty with this argument is that, as his Honour explained in paragraph [10], these passages cannot be applied literally.  Apart from anything else, they cannot be applied literally in Australia because, as shown by a passage cited at [12], the High Court in David Securities (supra) has spoken of a change of position as a defence.  The High Court in David Securities made the point that the cause of action arises at the moment of enrichment, and the issue then becomes whether circumstances which have occurred subsequently give rise to a defence of change of position.[15]  Hence the defence by reference to whether the defendant has acted to his or her detriment on the faith of the receipt.
  1. [24]
    Ultimately in Port Corporation his Honour held that the defendant was not liable to the plaintiff, for three separate reasons:  first, that from the point of view of the defendant the payer of the money it received was not the plaintiff but the company set up in a foreign tax haven by the fraudulent employee, on whose behalf the cheque was deposited:  [17].  The money having been deposited by that entity, the defendant acted in good faith in paying out the money on that entity’s instructions:  [21].  Second, that the information to the defendant from the payer, that is the foreign corporation, if true would have justified the defendant in acting the way it did:  [23].  Third, what his Honour described as “settled law that where money has been paid under a mistake of fact to an agent it may be recovered from that agent unless he has in the meantime paid to his principal or done something equivalent to payment to him in which case the recourse of the party who has paid the money is against the principal only”:  [24].[16]
  1. [25]
    His Honour went on at [25] to cite a passage from ANZ Banking Group Ltd (supra) at 673-4, which included the following:

“If the circumstances are such that the intermediary is to be seen as being himself the initial recipient of the benefit, his prima facie liability will ordinarily be displaced when he has handed the money received on to the person for whom he received it.  In such a case he has, in the event, not retained the benefit of the windfall but been a mere conduit part … and the only remedy is to go against the principal.”

  1. [26]
    This only applies if the agent receives the payment in his capacity as such and without notice of any mistake or irregularity. His Honour went on to cite another passage from that case, which included the proposition:

“If the matter needs to be expressed in terms of detriment or change of position, the payment by the agent to the principal of the money which he has received on the principal’s behalf of itself constitutes the relevant detriment or change of position.  In that regard no relevant distinction can be drawn between payment to the principal or payment to another or others on behalf of the principal.”

  1. [27]
    One issue which arises in relation to this statement is whether the person who receives as an intermediary has to receive in that capacity from the point of view of the payer, or whether it is sufficient that the person is in fact an intermediary. So far as the plaintiff was concerned, the payment to the first defendant was made to it beneficially and as principal; it had no notice of the involvement of the second defendant’s son. Does that make a difference? In ANZ v Westpac (supra) the payment was made by telegraphic transfer to a bank for credit to the account of a particular customer, so the payment as made to the bank as agent of the customer, to the knowledge of the payer.  At p 682 the court said:

“If money is paid to an agent on behalf of a principal and the agent receives it in his capacity as such and, without notice of any mistake or irregularity in the payment, applies the money for the purpose for which it was paid to him, he has applied it in accordance with the mandate of the payer who must look to the principal for recovery.”

  1. [28]
    The significant feature here is the reference to the mandate of the payer. In the present case, there was nothing in the way of a mandate from the plaintiff to the first defendant to pay the money to the second defendant’s son; the plaintiff knew nothing about the son. On the face of it therefore the situation discussed by the High Court in ANZ v Westpac, and applied by McPherson JA in Port of Brisbane Authority case, is distinguishable because in the present case the payment was not made by the plaintiff to the first defendant as agent.
  1. [29]
    The position is analogous to the case of a person who is dealing with the agent of an undisclosed principal, where so far as that person is concerned he is dealing with the agent as principal. If by mistake the agent is overpaid, there is authority for the proposition that an action for money had and received will lie against the agent even if the agent has given the principal credit for the overpayment: Nawall v Tomlinson (1871) LR 6 CP 405.  In that matter the decision in Holland v Russell (1861) 1 B&S 424; 121 ER 773, one of the cases discussed by McPherson JA in Port of Brisbane Authority at [24], was distinguished, on the basis that in that case the judgment of the court had included the statement that “we are of opinion that the plaintiff was aware that the defendant was acting as agent for the foreign owners, and as such made to him the payment of the money he now seeks to recover back.”
  1. [30]
    Nawall was complicated by the fact that the defendant in that case applied the money for the benefit of the undisclosed principal by giving the principal credit for that sum against money the principal owed the agent, which left a large balance in favour of the agent, and the fact that in this way the payment accrued to the benefit of the defendant was taken into account as well.  It appears, however, that each of these was regarded as a sufficient ground to deny relief.  Brett J at p 410-11 said:

“The defendants were originally liable because under a mistake they received money which they were not entitled to.  They cannot get rid of that liability, unless they bring themselves within the rule as to an agent who has received money on account of his principal and has paid it over to him.  It seems to me that they have failed to bring themselves within that rule.  They did not receive this money for their principals.  They stood with regard to the plaintiffs as original contractors.  I should be sorry, however, to decide the case on that ground alone.  The money in question was received by the defendants, not only as between the plaintiffs and themselves, but also as between [the undisclosed principal] and themselves, on their own account, and not on account of [the undisclosed principal]. …  I will only add that I found my judgment entirely upon that view, and do not rely on the ground that the money was received by the defendants through a mistake of their own.”

  1. [31]
    That is consistent with the position adopted by Lord Atkinson in Kleinwort Sons & Co v Dunlop Rubber Co (1907) 97 LT 263 at 265:

“Whatever may in fact be the true position of the defendant in an action brought to recover money paid to him under a mistake of fact, he will be liable to refund it if it be established that he dealt as a principal with the person who paid it to him.  Whether he would be liable if he dealt as agent with such a person will depend upon this, whether, before the mistake was discovered, he had paid over the money which he received to the principal, or settled such an account with the principal as amounts to payment, or did something which so prejudiced his position that it would be inequitable to require him to refund.”

  1. [32]
    That in turn was applied by the Court of Appeal in Baylis v Bishop of London [1913] 1 Ch 127, another decision referred to by McPherson JA.  In that case Cozens-Hardy MR said at p 132-3:

“It has long been held that money paid under a mistake of fact can be recovered from the recipient, but an exception has been engrafted upon the rule that, where the money was paid to a person known to be an agent for a principal and known to be receiving as such, the agent cannot be sued if he has before notice of the mistake paid it over to his principal.”

  1. [33]
    Accordingly, the principle stated by McPherson JA has a recognised exception in this situation.  In Goff and Jones “The Law of Restitution” (7th ed. 2007) at p 879 it is said that the defence has no application where the agent has been dealing as a principal in the transaction with the plaintiff; there the fact that he may have accounted for the money he received from the plaintiff or passed it on to another will not provide him with a defence.  The explanation for this exception is that a payment made to X as agent for Y involves the authority of the payer for X to account to Y for the payment, whether or not it has been paid by mistake.  Hence the reference to “a known agent”.  Accordingly, this particular principle does not operate so as to assist the first defendant, since so far as the plaintiff was concerned the payment to it was not as agent for anybody.
  1. [34]
    Neither of the other defences held to be established in the Port of Brisbane Authority case apply here.  The money was deposited directly by the plaintiff into the first defendant’s bank account, so there can be no dispute that from the point of view of the first defendant the payer of these payments was the plaintiff.  Nothing other than the fact of the payment came to the first defendant from the payer, that is from the plaintiff, which would provide a basis upon which the first defendant knew or thought it knew information entitling it to deal with the payment coming from the payer.  Accordingly, it seems to me that none of the defences which were successful in the Port of Brisbane Corporation case is available to the first defendant.

Change of position

  1. [35]
    In David Securities Pty Ltd (supra) the majority of the High Court at p 385 held that a defence of change of position was available in circumstances where a payment had been made under a mistake of law as well as a mistake of fact.  The Court stated on that page that the central element of the defence was that the defendant had acted to his or her detriment on the faith of the receipt, but there was no discussion of the application of that principle to the facts in that case because the issue had not been litigated.  The High Court remitted the matter to the trial judge for determination of three issues which had not been determined, including whether the bank had changed its position on the faith of receipt of the payments by the appellant.
  1. [36]
    The principles in David Securities were applied by the High Court in Commissioner of State Revenue v Royal Insurance Australia Ltd (1994) 182 CLR 51, although there was no specific consideration of the defence of change of position.  The only real significance of the decision is that it establishes that relief is granted by reference to the defendant’s unjust enrichment, not by reference to the actual loss which the plaintiff has sustained:  see Mason CJ at p 74, Brennan J at p 90.  The former pointed out at p 75 that the defendant’s unjust enrichment can be at the expense of the plaintiff notwithstanding that the plaintiff may recoup the outgoing by means of transactions with third parties.  In these circumstances it is irrelevant that Mr Watson, or perhaps his company, appears to have made some of the payments under the chattel mortgage agreement with the plaintiff after the transaction was put in place.[17]  That approach was confirmed by the High Court in Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516.
  1. [37]
    In Port of Brisbane Corporation McPherson JA at [13] said that to show a defence of change of position the defendant must have acted to its detriment in reliance on its having received the money.  His Honour went on to consider a decision of the Court of Appeal of New South Wales in State Bank of New South Wales Ltd v Swiss Bank Corporation (1995) 39 NSWLR 350, where the defence of change of position failed notwithstanding that the defendant bank received an electronic transfer of funds and paid the money over to the company it honestly believed was entitled to it before being notified that there was something wrong with the transaction.  That court held that “knowledge derived otherwise than from the payer cannot be relevant in deciding whether a change of position by the payee occurred on the faith of the receipt.”  This qualification was described by McPherson JA as a slight gross on the crucial phrase in David Securities:  [14].  My impression from his Honour’s comments at [15] is that he was wary about the approach adopted by the New South Wales Court of Appeal, but his Honour went on to distinguish that decision:  [17].[18]
  1. [38]
    If the decision in State Bank v Swiss Bank is correct, it means that the defence of change of position is not available to the first defendant in this case.  The court there said at p 356:

“A bank which receives a mistaken payment and disburses it can only bring itself within the change of position defence if it shows that at the time of disbursement it knew or thought it knew more than the fact of receipt standing alone.  This must be information which, if true, would entitle the payee to deal with the receipt as it did and that information must have come from the payer.”

  1. [39]
    In the present case, the first defendant is in the position of the bank spoken of there, but subject to that everything in that passage is satisfied by the first defendant except for the fact that the information relied on, which was more than the fact of receipt standing alone, did not come from the payer: on the evidence of the second defendant, it came from his son. It seems to me that if the approach adopted in that case is the law in Queensland, it is fatal to the defence of change of position.  Ordinarily as a decision of an intermediate appellate court, albeit from another state, I would follow the decision, but I am wary about doing so because of the way in which the decision was discussed in the Port of Brisbane Corporation case, which suggests that McPherson JA had at least some doubts about it.  His comments at [15] imply that the decision survived an application for special leave only because it was justifiable on a different basis.
  1. [40]
    There have been two later cases in other states which have looked at the question of whether a defence of change of position has been made out. Each involved the issue which arises here, as to which of two people is to suffer loss as a result of the fraud of a third. In Orix Australia Corporation Ltd v M Wright Hotel Refrigeration Pty Ltd (2000) 155 FLR 267 the plaintiff finance company had issued a cheque payable to the defendant after being provided by a third party with a forged invoice purporting to come from the defendant for the sale by the defendant to the third party of a piece of equipment.  In fact no such sale had occurred.  The cheque was provided to the third party who then delivered it in an envelope to the defendant.  The defendant knew from the envelope it had come from the third party, assumed that it was part payment of money the third party owed the defendant, and so banked the cheque.  However, the third party later told the defendant that the money was for purchasing the piece of equipment, and because the equipment was no longer available for sale the defendant provided to the third party its own cheque for effectively the full amount.
  1. [41]
    The third party made some payments under the agreement with the finance company but after he went into default the finance company discovered what had happened and sued the defendant. That claim failed on the basis that the defendant had a defence of change of position. Bleby J referred to the passage from the decision of the New South Wales Court of Appeal in State Bank v Swiss Bank (supra) but concluded that that requirement had been satisfied because the belief in the mind of the person controlling the defendant company that it was the third party who was entitled to the money was one which was induced by the circumstances of the payment, in which circumstances the plaintiff had played a material part:  p 227.  The circumstances were identified as the fact that the cheque made payable to the defendant had been provided to the third party, which led him to think that it was not for the purchase of equipment from the defendant, because in previous circumstances where finance companies had taken security over equipment he had supplied there had been contact with the finance company seeking particular information on the invoice, which had not happened in this case:  p 277.  It is not clear, however, that there had been a previous example of such behaviour involving this plaintiff, and if that is the case it is difficult to see how the facts in this case satisfied the requirement of the New South Wales Court of Appeal.
  1. [42]
    The matter that was relied on as leading the defendant to think that the third party was entitled to the cheque (as against the defendant) was the assumption that the cheque had been provided to the third party by the plaintiff because it was a personal loan obtained by the third party to reduce his indebtedness to the defendant. After the defendant discovered that the payment had been made for the machine he realised it was inappropriate, but responded by repaying the money to the third party rather than to the plaintiff, because he believed that it was money the third party had borrowed from the plaintiff, so that it was the third party’s responsibility to discharge the debt to the plaintiff, as indeed it was. The conclusion at p 278 was:

“What is important in this case is not that (the person controlling the defendant) believed that his company was no longer entitled to the cheque, but his belief that (the third party) was.  That belief had to a large extent been induced by circumstances created by Orix.”

  1. [43]
    Characterising the facts in this way made the result consistent with the decision of the New South Wales Court of Appeal, but it seems with respect an artificial way to do so. In fact, all that happened was that a cheque payable to the defendant was made available, through a finance broker, to the third party and hence came to the defendant from the third party rather than directly from the plaintiff. That circumstance serves to distinguish that case from this; if that was the vital factor, it is not present in this case, but with respect it is difficult to see how or why that feature is vital to the ultimate question of whether the defendant has so changed its position that it would be inequitable in all the circumstances to require it to make restitution, in terms of the test of Lord Goff in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548.  That was quoted by his Honour in Orix, including the following passage at p 579:

“If the plaintiff pays money to the defendant under a mistake of fact, and the defendant then, acting in good faith, pays the money or part of it to charity, it is unjust to require the defendant to make restitution to the extent that he has so changed his position.  Likewise, on facts such as those in the present case, if a thief steals my money and pays it to a third party who gives it away to charity, that third party should have a good defence to an action for money had and received.”

  1. [44]
    It may be noted that his Lordship at p 580 commented that the defence is likely to be available only on comparatively rare occasions.  It is certainly the case that, at least so far, decisions in Australia where the defence has succeeded have been few.  Another was NIML Ltd v MAN Financial Australia Ltd (2004) 1 BFRA 204, another case involving a fraudulent employee of a plaintiff who caused payments to be made to an innocent defendant which were then subsequently paid out by that defendant to the benefit of the employee.  Harper J referred to the decision in Port of Brisbane Corporation v ANZ Securities (supra).  In that matter counsel for the plaintiff criticised the Queensland decision, relying on the Swiss Bank case.    Harper J at [98] disagreed with McPherson JA as to the point of distinction between the Port of Brisbane Corporation case and the Swiss Bank case, on the basis that the defendant in the former case “succeeded primarily because the money it received from Windermere was never received otherwise than as agent and trustee of that company.  ANZ Securities therefore was never itself enriched by that receipt, … and if ANZ Securities was never enriched, then it could not be said to have been unjustly enriched.”  The situation was the same in that case in that the defendant futures broker did not treat the proceeds of the cheques as its own but as money held on behalf of the fraudulent employee, which it dealt with in accordance with the regulatory regime under the Corporations Law.  In terms of the approach in the Port of Brisbane Corporation case, this was simply another case where money was received by an agent and paid over to or at the direction of the principal.  Harper J did not comment on the additional requirement introduced by the Swiss Bank case.

English authority

  1. [45]
    Any discussion of the English cases must begin with the decision of the House of Lords in Lipkin Gorman v Karpnale Ltd (supra).  In that case a majority of the law Lords acknowledged that a defence of change of position in good faith was available to a claim to restitution based on unjust enrichment of the defendant, but did not attempt to define its scope in abstract terms, allowing the law on the subject to develop on a case by case basis:  see in particular Lord Bridge at p 558.  Lord Goff at p 580 provided some views as to the circumstances in which change of position would be available:

“It is plain that the defence is not open to one who has changed his position in bad faith, as where the defendant has paid away the money with knowledge of the facts entitling the plaintiff to restitution; and it is commonly accepted that the defence should not be open to a wrongdoer.”

  1. [46]
    His Honour noted that the defence should in principle be available to the situation in that case, which was not one seeking recovery for money paid under a mistake, but where stolen money had been paid by the thief to an innocent donee.  The position was stated broadly at p 580:

“The defence is available to a person whose position has so changed that it would be inequitable in all the circumstances to require him to make restitution, or alternatively to make restitution in full.  I wish to stress however that the mere fact that the defendant has spent the money, in whole or in part, does not of itself render it inequitable that he should be called upon to repay, because the expenditure might in any event have been incurred by him in the ordinary course of things.”

  1. [47]
    His Lordship then went on to conclude that no change in position defence was available in that case in relation to the net amount received from the thief by the defendant: p 581.  The next step in England came in Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349, when the House of Lords effectively followed the decision in David Securities and extended the recovery of money from mistake at fact to include mistake at law.  That decision, however, made only passing reference to the defence of change of position.
  1. [48]
    The Court of Appeal in England considered that defence in Derby v Scottish Equitable Plc [2001] EWCA Civ 369, [2001] 3 All ER 818.  The appellant had received a large payout from an insurance company with which he had a pension policy, the bulk of which was paid by mistake, the insurance company having failed to take into account the fact that a partial claim had occurred some years earlier.  An action to recover the money paid was largely successful, and the appeal was concerned with the question of whether various forms of expenditure amounted to change of position; it was accepted at the trial and not disputed on appeal that the appellant had been acting at all times in good faith.  Part of the money had been spent on “modest improvements in the family’s style of life” between the time when the payment was made and the time when notice was given that it had been paid by mistake, and an allowance of £9,662 was made for that expenditure.  The court held the defence was not limited to specific identifiable items of expenditure, and that it should not apply too demanding a standard of proof when an honest defendant says he has spent an overpayment by improving his lifestyle but cannot produce detailed accounting:  [33].
  1. [49]
    The bulk of the money had been spent on purchasing a pension from a different insurer, which that insurer was prepared to unwind to the extent necessary, so no change of position was found in relation to that. Part of the money had been spent paying off a mortgage, but it was held that, at least in the case of an ordinary loan, paying off a debt which would have to be paid off sooner or later did not involve a change of position: [35]. The court expressed a preference for a wide version of the defence of change of position rather than a narrow version, which treated the defence as “the same as estoppel minus the representation”; the wide view looking to a change of position causally linked to the mistaken receipt which made it inequitable to make restitution: [30]. It was noted that the wider view would extend protection to for instance an innocent recipient of a payment which was later stolen from him. There remains, however, a need for a causal link to the receipt for change of position to operate. The court noted that there may be a change of position not involving any expenditure, such as voluntarily giving up a job at an age when it would not be easy to get new employment: [32].
  1. [50]
    In Dextra Bank and Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193 the Privy Council rejected considerations of relative fault in relation to a defence of change of position, and held that all that was required on the part of the payee was good faith.  It is not a question of whether there was negligence on the part of the payer in making the mistake which led to the payment, nor a question of whether there was negligence on the part of the recipient in taking the steps which otherwise amounted to a change of position.  It was also said that in principle the relevant change in position could occur in anticipation of the relevant payment.
  1. [51]
    The Court of Appeal considered the defence of change of position again in Niru Battery Manufacturing Co v Milestone Trading Ltd [2004] QB 985.  The facts in that case were complex but involved international trade in lead and a false bill of lading presented in good faith by one bank to another on which it then paid.  On the mistake being discovered restitution was sought and the issue was whether the payee had a defence of change of position.  In that case the focus was on the question of what was required by way of good faith.  Clarke LJ commented at [160] that no-one suggested in that matter that it was sufficient to show that the defendant was negligent in order to defeat a defence of change of position.  The trial judge had found that the defendant was not acting dishonestly, but that approach was criticised on appeal where it was held that it was insufficient to prove an absence of dishonesty:  [152].  The question of whether the payee had acted in good faith was said to depend on the circumstances, but his Lordship endorsed the proposition that an absence of good faith extended to a person who has or thinks he has good reason to believe that the payment was made by mistake, and does not make enquiries, as well as a person who knows that the payment has been made by mistake:  [164].
  1. [52]
    Sedley LJ also gave an extended meaning to an absence of good faith at [185] where he spoke of the defendant’s bank employee as:

“not merely negligent in checking the documentation:  he let a very large sum of money for which [the bank] had accepted responsibility be paid away when he had in his hands ample information to put [the bank] on its guard against doing so.  ‘Inequitable’ is the right word for the idea that [the bank] should be protected by its own casualness from the ordinary consequences for what it did.  If more – for example, improper motive – is needed, there was such a motive here:  Mr Mahdavi was a profitable customer of [the bank] whose business Mr Francis was keen to keep, and who was now threatening a lawsuit.  It is an almost irresistible inference that this was why the documents which revealed the critical gaps were treated with Mr Francis with an insouciance that no ordinary customer would encounter.”

  1. [53]
    Does this mean that it is sufficient to show that the circumstances are such that a reasonable person in the position of the payee ought to have known or have at least suspected that the payment was made by mistake, which introduces an objective test, or does it depend entirely on the subjective view of the recipient? Here, I have the advantage of the guidance of the Court of Appeal in the Port of Brisbane Corporation case, where McPherson JA extended the concept of lack of good faith to include “cases at the extreme where a person deliberately shuts his eyes to matters that he realises will invest him with actual knowledge of fraud or impropriety.” [22]  That requires, however, an actual suspicion in the mind of the payee, and hence also includes a subjective element.  It follows that it is not enough to show that a reasonable person in the position of the defendant (here the second defendant) ought to have realised that there was or may have been something wrong with this transaction, and that the payment to the first defendant by the plaintiff was or might have been because it was acting under some mistake.  If Niru Battery goes further than this, then it does not represent the law in Queensland.
  1. [54]
    A relevant extract from the decision in Swiss Bank was cited by Sedley LJ at [186], it seems essentially as an example of a case where a defence of change of position failed on the basis that its success would have been “inequitable”.[19]  His Lordship did note that the analysis in Swiss Bank was without reference to authority, and after the quote commented at [187]:

“This is an approach which rolls up the defence and the rebuttal.  It requires the donee to show that it acted on real or reasonably supposed facts justifying payment away.  Lord Goff’s concept of a ‘bona fide change of position’ is similarly unitary. … It is clear … that it is not only dishonest payment away which forfeits the defence.”

  1. [55]
    His Lordship then went on to quote the passage in Kleinwort Benson (supra) at pp 384-5 where Lord Goff rejected the defence of honest receipt proposed by Brennan J (as he then was) in David Securities (supra).
  1. [56]
    In Commerzbank AG v Price Jones [2003] EWCA Civ 1663 the Court of Appeal again considered a defence of change of position.  It was found that there had been a mistaken payment of £250,000 to an employee whose entitlements to remuneration were both complex and generous.  The court said the defence of change of position was slowly taking shape, with the decided cases steering a cautious course avoiding the dangers of a diffuse discretion and the restrictions of rigid rules:  [32].  The court acknowledged that in principle the defence will be available even if the change of position occurs in good faith in the expectation of receiving a future benefit which is then received.[20]  In that case, however, what was relied on was not that the money had been spent or otherwise lost, but that respondent had failed to obtain alternative employment in a timely way, which would have been likely to have been beneficial to him.  In the event, he did not seek that employment because of an expectation of a large additional bonus, but this was held not to amount to a relevant change of position.
  1. [57]
    Mummery LJ said at [39]:

“It was for [the defendant] to establish that, in all the circumstances, it would be inequitable to require him to make restitution.  The obvious cases occur where there has been a reduction in the assets of the recipient of the overpayment.  In those cases he must prove that there has been a reduction of assets, although it is unnecessary for him to produce precise financial calculations quantifying the amount of the reduction.  Lord Goff did not, however, restrict the scope of the defence to cases in which there has been a reduction of assets.  The defence would also be available, in my view, in various employment situations in which the recipient has made a relevant change of position as a result of the mistaken payment to him:  for example, by giving up his current job to lead a life of leisure in circumstances where it will be difficult to find another job, or by turning down a firm offer of a better paid job.”

  1. [58]
    On the issue of causation, his Lordship added at [43] that the need for a sufficient causal link should not be narrowly applied, and that the important point was that there should be a relevant connection between the change of position and the actual or anticipated payment. Sedley LJ agreed with Mummery LJ; Munby LJ arrived at the same conclusion but added an interesting discussion of the defence.  At [54] his Lordship referred to the acceptance in the Scottish Equitable case of the wide view of the defence, with which he agreed, and continued:

“The consequence is that, as a matter of law, the defence of change of position is not dependent upon proof of some representation by the payer, nor is it dependent upon proof of any detrimental reliance on the part of the payee.  There will, no doubt, be certain factual circumstances where absent proof of detriment or reliance it will be unlikely, or perhaps even impossible, for the defence to be made out.  But that is a long way from saying, and there is in law no warrant at all for saying, that proof of detrimental reliance is a prerequisite to making good a defence of change of position.”[21]

  1. [59]
    It seems to me that that proposition is inconsistent with the approach of the New South Wales Court of Appeal in the Swiss Bank case, that there must be something more than the fact of the payment upon which the recipient relied.  His Lordship did not refer to that case, but he did refer to the judgment of the court in Niru Battery, where the relevant passage of that decision was quoted, and that did not lead to any change in his Lordship’s remarks.
  1. [60]
    A qualification was introduced to the defence of change of position in Barros Mattos Junior v MacDaniels Ltd [2005] 1 WLR 247.  In that case the plaintiff was defrauded of a large sum of money part of which had at the instance of the fraudster passed through the defendant bank, in the process being changed from dollars into Nigerian currency.  It was subsequently dealt with on the instructions of the fraudster.  When the fraud was discovered an action was brought to recover the monies, and a summary judgment application proceeded on the basis that the relevant monies had been stolen from the plaintiff and deposited to the defendant so that prima facie they were recoverable unless the defence of change of position was available.  It was accepted for the purposes of the application that there was an arguable case that the defendants were innocent and in reliance on the payment dealt with the funds as the fraudster directed so that they were no longer in its hands:  p 253.  Nevertheless it was submitted for the plaintiff, and accepted, that the defence was not available in circumstances where the defendant was not entitled under Nigerian law to convert the American dollars into Nigerian currency.
  1. [61]
    Lord Goff in Lipkin Gorman (supra) at p 580 had held that the defence should not be open to a wrongdoer, and the substantial issue was whether that was limited to someone who was involved in the original wrongdoing which led to the payment being made, or whether any wrongdoing was sufficient.  The court held in favour of the latter, subject only to the possibility of a case where the illegality was so minor as to be ignored on a de minimis principle, so that here the fact that the transaction was in breach of Nigerian law in relation to foreign exchange transactions meant that the defence of change of position was not available.  Accordingly there was judgment for the claimants.
  1. [62]
    A similar issue came before the Court of Appeal in Abou-Rahmah v Abacha [2006] EWCA Civ 1492, [2007] 1 Lloyd’s Rep 115.  That was another matter where the plaintiffs had been victims of fraud, and had sought to recover from a bank, to which some money had been paid in connection with the fraud, money which had in fact been paid out to some of those involved in it.  A defence of change of position was upheld at trial and on appeal.  Arden LJ noted that fault was not a part of relying on change of position [79], and that the issue was whether the defendant had acted in good faith, something which was incapable of definition [80].  The question could not be answered simply by looking at the circumstances of the particular transaction without reference to any of the surrounding circumstances, but there must be circumstance which would indicate that the instructions (that is, the payer’s instructions) should not be complied with:  [81].
  1. [63]
    In that case the plaintiffs, before discovering the fraud, had deposited money with the bank to the credit of the parties to the fraud, and it was paid out to those parties. The basis for the argument that the bank had not acted in good faith was that it had emerged during cross-examination of the bank officers that they suspected that the party opening the account into which the money was paid may have been engaged in money laundering, at least on occasions. The two payments in question, however, did not involve money laundering and the bank had no particular suspicions about them. Her Ladyship held that the lack of good faith must be related to the change of position, that is to say it must relate to the circumstances in which monies were received or in which they have been discharged thus giving rise to the defence: [84]. Accordingly, the bank could not be criticised for making these two payments, so that the defence was available: [82].
  1. [64]
    Her Ladyship also noted, almost in passing, that “it is a relevant consideration that the bank did not receive any funds beneficially as its enrichment by the payments made to the appellants was of a lesser degree than where a bank received funds for its own use and benefit”: [84]. This seems to me to have raised the third ground which was upheld by the Court of Appeal in Queensland in the Port of Brisbane Corporation case, although it seems that that issue was not the subject of particular submission in that case.  Pill LJ agreed, adding the comment that the limits of good faith may be exceeded by a failure to act in a commercially acceptable way as well as by sharp practice of a kind that falls short of dishonesty:  [99].
  1. [65]
    Rix LJ disagreed,[22] on the basis that the suspicion of illegal conduct in relation to money lending was sufficient to prevent the transaction being made in good faith.  Rix LJ would have characterised the bank’s conduct as not commercially acceptable and hence not in good faith:  [52].  He noted that prima facie liability in restitution for money paid under a mistake is strict and occurs even where the payer claimant has been negligent:  [46].  He also noted that it was common ground that mere negligence on the part of the bank would not be enough to destroy its defence:  [42].  He said that if the fact that the payment had been made by mistake had been suspected, the defence would not have been available, since the case of suspected mistake is not that much more difficult than the case of known mistake:  [49].  Interestingly, the question of whether the bank could be said to have been enriched at all by a payment which it did not receive beneficially was also mentioned in passing in paragraph [57] but not considered by his Lordship even though he otherwise thought the defence of change of position was not available.
  1. [66]
    In these circumstances, I am troubled about whether the “slight gloss” of the Swiss Bank case does reflect the law in relation to a change of position.  There is no authority to similar effect in England that I have been able to locate, and there is at least one passage in one English judgment which seems to me to be inconsistent with such a proposition.[23]  Although Swiss Bank was cited in an English case,[24] there was no discussion of this aspect of that decision.  It does appear clear, however, from the English cases that there is a distinction between the defence of change of position and a defence of estoppel, and that the former may be available in circumstances where the latter is not.  It seems to me that, if there has been something coming from the payer other than the mere fact of the payment which is said to justify a belief on the part of the recipient that the money has been properly paid, it is not obvious why this would not amount to a representation which could give rise to an estoppel if acted on and if the recipient would suffer a detriment if the payer sought to withdraw from that representation, for example, by suing to recover money paid under a mistake.  In effect, the decision in Swiss Bank would confine the defence of change of position to a situation where a defence of estoppel would be available anyway.  Yet one of the justifications given by Lord Goff for the defence of change of position was that estoppel may be inadequate to meet the justice of the case if there was nothing from the payer except the payment:  Lipkin Gorman (supra) at p 579.
  1. [67]
    It is I think of some significance that there is no support for that gloss in the leading cases in this area, Lipkin Gorman, Dextra Bank, ANZ Bank v Westpac, and David Securities.  The references in the first of these cases to the availability of the defence in circumstances where the recipient acting on the faith of the receipt gives the money to charity, would appear to be contrary to it, as would the situation where the change of position is not deliberate, but one suffered by the recipient by having the money stolen, where the Court of Appeal at least has held that a defence of change of position is available.[25]  Rather, later development has focused on whether the defendant’s position has actually changed, or on whether there was an absence of good faith, and just what would qualify as an absence of good faith.
  1. [68]
    The one later Australian case I have found which actually purported to apply Swiss Bank did so on what strikes me as an artificial basis.  There was certainly no unequivocal endorsement of the slight gloss by McPherson JA in the Port of Brisbane Corporation case; indeed, it seems to me that what was said of the decision in that case is sufficient to leave it open to me not to follow it if I consider that it is wrongly decided in this respect, as I do.  Accordingly, I am not prepared to decide the case on the basis that the additional requirement in Swiss Bank has not been satisfied.

Conclusion on change of position

  1. [69]
    The two relevant requirements for a defence of change of position are that the defendant has in fact changed its position on the faith of the payment, and the defendant was acting in good faith at the time that occurred. As to the former, the matter is complicated by the evidence that there were a number of payments made but the first defendant received payments on account of the son other than from the plaintiff. On the basis of the second defendant’s evidence, the total amount received which he treated as money received on behalf of his son was $167,598.95.[26]  I have already referred to the cheques which the defendant claimed were payments made to or on behalf of the son; I do not accept that cheque 203 falls into this category, in view of his concession at p 80.  Disregarding that, and limiting cheque 220 to the $8,550 said to be for two cars for the son, the total amount paid out to or on behalf of the son comes to $126,519.17.[27]  There was no evidence of any other receipts of money on behalf of the son, nor was there any evidence of any other payments to or for the benefit of the son.  On the face of it therefore, the first defendant retains the difference between these two amounts, $41,079.78.  I accept that any money paid to or for the benefit of the son has gone, producing a reduction in the assets of the first defendant.
  1. [70]
    Any money retained by the defendant in discharge of obligations owed to it by the son is not to be taken into account for a defence of change of position: Nawall (supra).  There was no evidence that the money from other financiers on behalf of the son was repayable to them, or had been repaid to them by the first defendant, and I consider that when assessing these matters for the purposes of a defence of change of position what matters is the overall effect of the payments, not the result that would be achieved by the application strictly of the rule in Clayton’s case.  On the face of it therefore the first defendant has failed to prove that it has changed its position in respect of this balance of $41,079.78, so this amount is recoverable.
  1. [71]
    As to the balance of the amounts paid by the plaintiff, whether they are recoverable depends on whether the first defendant, which means for practical purposes the second defendant, was acting in good faith at the time the payments were made by him. The onus is on him to show that he was acting in good faith, not on the plaintiff to show the contrary, and I appreciate that my wariness about his credibility causes difficulties in this respect. Nevertheless, the proposition that a man would trust his own son, and be willing to provide assistance to him, is plausible enough. He may well have believed that there would be difficulties in opening a bank account for the new business. There are certainly situations these days where the process of opening a new bank account is complicated.
  1. [72]
    The fact that at some time in the past the son had been involved in some fraudulent behaviour would not necessarily give rise to an assumption or suspicion that this particular transaction was fraudulent. Notwithstanding vigorous cross-examination, the second defendant did not make any relevant concessions in relation to the issue of good faith. There is also the point mentioned by the second defendant during cross-examination, and not found to be false, that he was the one who went to the police when his suspicions about his son’s conduct were aroused. That is supported by the fact that apparently he stopped making payments to the son before all of the money he received on behalf of the son had been paid out. Presumably it would have been easy for him to say that he had no suspicions until the whole of the money had been paid out. He claimed to have been distracted to some extent by other family difficulties: p 52.
  1. [73]
    I should say that I regard the test for the purposes of Australian law as simply one of good faith, subject to the small qualification in the Port of Brisbane case at [22] referred to earlier.  For practical purposes the issue is whether the second defendant in fact knew or suspected that the payment to the first defendant had been made by mistake or that the son was not entitled to the money.  It is clear from the Port of Brisbane case that negligence on the part of the second defendant, and hence the first defendant, is not sufficient to deprive it of the defence, nor is it a question of what ought to have been known or suspected by ordinary, reasonably honest men in the second defendant’s position; that follows from the rejection of any question of constructive notice by McPherson JA.  Insofar as the English cases go further and permit a finding of absence of good faith on the basis of a failure to act in a commercially acceptable way, I consider that that does not represent the law in Queensland, and in any case would not be an appropriate test in circumstances where the relevant relationship was essentially a family relationship between the second defendant and his son, not a commercial relationship.
  1. [74]
    Notwithstanding my wariness about the credibility of the second defendant, bearing in mind all of the matters to which I have referred, and all of his evidence, I do find on the balance of probabilities that he was acting in good faith at the times when the various payments to which I have referred as payments to or on behalf of his son were made. It follows that the payments totalling $126,519.17, insofar as they included money which had come from the plaintiff, were made in good faith. In respect of the balance of the plaintiff’s claim therefore the defence of change of position is made out.

Claim for breach of trust

  1. [75]
    The plaintiff’s pleadings also refer, somewhat obliquely, to the proposition that the monies paid by the plaintiff to the first defendant were held by it as trust monies, and were therefore recoverable by the plaintiff. The argument advanced in support of this claim was based on the proposition that the payments were held by the first defendant on some kind of Quistclose trust,[28] so that the money was held by the first defendant to be used for the purchase of the two vehicles referred to in the forged invoices, and if that purpose failed there was a resulting trust to the plaintiff.  A Quistclose trust can arise if a payment is made to a payee for the payee to use it for a specific and limited purpose, and only for that purpose, so that if that purpose fails the money can be treated as held by the payee on trust for the payer.  Its significance arises where the payee was or has become insolvent.  It plainly does not apply here, where the payment, that were made to the first defendant were not made on the basis that the first defendant would use the money exclusively for a particular purpose.[29]  As far as the plaintiff was concerned the payments were the consideration for the transfer of title to the two vehicles, so the money was to be the first defendant’s to do with as it wished.  In these circumstances there is no question of a Quistclose trust, and the plaintiff cannot recover on that basis.
  1. [76]
    There is a principle that a constructive trust is available as a remedy against a person who steals or defrauds money from someone.[30]  In some circumstances property which has passed to a third party will be recoverable from that party, or that party will be liable to compensate the victim of the fraud, although the issue remains whether the first and second defendants were knowingly involved in the fraudulent activity of the son.[31]  The advantage for a plaintiff in this cause of action is that it does not matter that the defendant does not retain the proceeds of any money that came into its hands; the disadvantage is that for this cause of action the onus is on the plaintiff to prove that the defendant had the requisite knowledge, not on the defendant to prove that he was acting in good faith.  In England the recent cases treat the degree of knowledge required for a party to be knowingly concerned in the breach of trust, in this context the fraud by the son, as at least as high as the degree of knowledge which would be inconsistent with the existence of good faith for the purposes of the change of position defence.[32]
  1. [77]
    A number of the cases to which I have referred deal with a claim of knowing receipt of trust property or of being knowingly concerned in a breach of trust, in the alternative to a claim for money had and received, and the requirements of the former cause of action are discussed in them. A leading case in this area is the decision of the Privy Council in Royal Brunei Airlines SDN BHD v Tan [1995] 2 AC 378.  There has been in England a good deal of subsequent debate as to just what is required by way of knowledge in order to be knowingly concerned.  In Twinsectra Ltd v Yardley [2002] 2 AC 164 a majority of the House of Lords held that what was required was a dishonest state of mind, that is consciousness that one was transgressing ordinary standards of honest behaviour.  The matter was considered further by the Privy Council in Barlow Clowes International Ltd v Eurotrust International Ltd [2006] 1 WLR 1476 where some things were said which were subsequently regarded by the Court of Appeal in Abou-Rahmah (supra) as indicating a different test for dishonesty, or perhaps a different way of applying the test of dishonesty, from that laid down in Twinsectra.[33]  Whatever refinement is ultimately achieved from this process of assessing dishonesty, it seems that there the standard is  more demanding than that required for a failure to act in good faith.
  1. [78]
    Liability of third parties involved in breaches of trust, sometimes referred to as the first and second limbs of the rule in Barnes v Addy,[34] was considered in some detail by the High Court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89.  The court noted that it has become common to refer to the first of the rules in Barnes v Addy as “knowing receipt” and the second as “knowing assistance”, though the first limb is more accurately described as receipt of trust property with notice of the trust.  The High Court rejected an attempt by the Court of Appeal of New South Wales to treat the first limb as essentially a restitution-based remedy.  The court then went on to consider the second limb, and said that an analysis of the High Court decision in Consul Developments Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 by reference to the five categories of knowledge identified in Baden v SGFDCIF SA [1993] 1 WLR 509[35] showed that the first four categories were sufficient knowledge to attract liability under the second limb, but the fifth category, knowledge of circumstances which would put an honest and reasonable man on enquiry, was not.
  1. [79]
    That decision was considered by the Court of Appeal in Queensland in Quince v Varga [2008] QCA 376.  The facts in that case were quite different from the present, but there was a helpful analysis of liability under each limb in Barnes v Addy, and the effect of the decision of the High Court in Farah Constructions.  It was confirmed that the test in Queensland for the first limb of Barnes v Addy was any of the first four categories of knowledge in Baden (supra), but not the fifth category.[36]  The effect of these two decisions therefore is that there will be liability if there was actual knowledge, or if there was knowledge of circumstances which would indicate the facts to an honest and reasonable man, but not liability if there was merely knowledge of circumstances which would put an honest and reasonable man on enquiry.
  1. [80]
    It seems to have been confirmed in Farah Constructions[37] that the first three categories in the Baden analysis represent forms of actual knowledge, while the fourth and fifth represent constructive knowledge.  In Port of Brisbane Corporation McPherson JA rejected constructive knowledge as being sufficient for the restitutionary remedy:  [22].  It follows that in Australia (or at least in Queensland) the degree of knowledge required to establish liability in restitution (that is to say, a degree of knowledge which is inconsistent with the defence of change of position) is higher than the degree of knowledge under either limb of the rule in Barnes v Addy, which is equitable relief.
  1. [81]
    It follows from my earlier finding that there was no actual knowledge. It is certainly the case that the plaintiff failed to prove actual knowledge on the part of the second defendant, and ultimately I did not understand that counsel for the plaintiff was contending to the contrary. The fourth category overcomes a situation where it is only moral obtuseness which prevents the facts from generating actual knowledge, where an honest and reasonable man would conclude that there had been a breach of trust.[38]  (Relevantly in this context that the money which had been received was the proceeds of a fraud.)  It is not enough that it might give rise to a suspicion of fraud, that is, would put an honest and reasonable man on enquiry; this follows from the exclusion of the fifth category.
  1. [82]
    All that the second defendant knew was that his son, who had some years ago been involved in some fraud, was going into business with a couple of other people, one of whom had an established customer base, that this to some extent involved lending money, and that he had been asked by the son to make his bank account available to assist in the process by receipt of payment from finance companies, because the new business did not yet have its own bank account. He may well have thought that there was some complexity involved in obtaining a bank account. The knowledge of these facts and the fact that the money turned up in his bank account when the son said it would be coming are not in my view circumstances which would indicate the fact that the relevant receipts were the product of fraud to an honest and reasonable man. It follows that the plaintiff cannot rely on either limb of the rule in Barnes v Addy, even if such a case had been properly pleaded and advanced in argument.
  1. [83]
    I should say something about a couple of the submissions advanced on behalf of the plaintiff. It was submitted that there was a cause of action available for unjust enrichment separate from the claim for money had and received based on the fact that the payment was made by mistake. However, the High Court has rejected unjust enrichment as a definitive legal principle according to its own terms;[39] it is no more than a unifying legal concept which provides a justification for a number of specific legal remedies arising in particular circumstances, and with their own specific defences.[40]  It follows that approaches such as those in Spangaro v Corporate Investment Australia Funds Management Ltd [2003] FCA 1025 need to be treated with a degree of caution.  It is not sufficient just to say that the first and second defendants gave no consideration for the payments, nor to appeal to generalised notions of fairness and justness in relation to the question of whether their retention of the payments is inequitable.  It is quite clear that the change of position defence is an alternative to the good consideration defence.  In any case, it is by no means clear to me that there is anything inequitable in the first and second defendants’ escaping liability if they were no more than innocent conduits through which the proceeds of the fraud passed.
  1. [84]
    It was also submitted that the second defendant had allowed his son to operate a motor vehicle business under the dealers licence which he held, and that the first and second defendants were obliged to monitor and supervise the use of their licence and any personnel in their employ. There is, however, no evidence that he son and his business colleagues were in the employ of the first or the second defendant, and even if they were engaging in motor dealing, there is nothing to indicate that they were doing so, as far as the first or second defendant was concerned, under their dealers licences. The fact that the forged invoices purporting to come from the first defendant referred to the first defendant’s dealers licence is of no consequence; the whole point about the forged invoice was that it was supposed to look as though it was coming from the first defendant. I am not persuaded that there has been any breach of the Property Agents and Motor Dealers Act 2000, or the Code of Conduct Regulation 2001 made under it, by the first or second defendant in this matter.
  1. [85]
    It was submitted that the second defendant knew that his son was using the motor dealers licence for the purpose of purchasing cars, but that was not shown; all that was shown was that the first defendant had purchased cars which were for the son’s use. The mere fact that the son’s business was conducted in premises owned by the first defendant and rented to the son and his partners does not mean that the second defendant knew anything about the details of the business they were carrying on. It was submitted that the defendants knew that the money was coming from a finance company, that it was being paid to the account of the first defendant for a purpose, and that if money was being paid into an account for finance the finance company would require repayment of the funds. No doubt that is all true; but that does not in itself mean that the plaintiff is entitled to recover; the same could have been said of the defendant in Orix Australia (supra), but there the change of position defence was upheld.
  1. [86]
    Some of the other arguments advanced on behalf of the plaintiff seem to have been directed to establishing that the first or second defendant was negligent, or was put on enquiry by the circumstances; but the authorities show clearly that negligence is not sufficient to ground liability in these circumstances (just as negligence by the plaintiff does not provide a defence if the money was in fact paid by mistake), and I have dealt I hope sufficiently with the question of what knowledge needs to be shown, or what degree of absence of knowledge, to establish good faith for the purposes of the defence of change of position.
  1. [87]
    Finally, it was submitted that the plaintiff could recover on the basis of conversion, relying on Grantham Homes Pty Ltd v ANZ Banking Group Ltd (1979) 26 ACTR 1, a case involving conversion of a cheque.  The short answer to this argument is that there was no conversion here.  Conversion is a remedy in relation to the wrongful taking or use of a chattel.  A cheque is a chattel, but an action for conversion of a cheque is useful because, as a bill of exchange, it is treated as having value by reference to the money it represents, rather than its market value as a used piece of paper.  Extending proprietary remedies to the case of a payment of money by a cheque is in my view somewhat anomalous anyway, but it is well established; I do not consider that there is any justification for extending them further into a transaction which takes place by electronic means (as occurred here), where there was nothing in the way of a chattel involved.  I reject this argument simply on the basis that an action for conversion does not lie in these circumstances.
  1. [88]
    It follows that the plaintiff is entitled to recover from the first defendant that amount which remains in its hands. The cause of action arose as soon as the payment was made, but I think that interest should not run until the mistake had been discovered, the bank had demanded repayment[41] and the first defendant had a reasonable time to consider its position.  The interest rate on money borrowed on an overdraft account by the first defendant from the plaintiff in the middle of 2007 was 9.5%; interest rates have generally come down a little since then.  Interest for 2 years 9 months at 9% is $10,167.24, which allows the first defendant a reasonable time to consider its position.  There will be judgment that the first defendant pay the plaintiff $51,247. 
  1. [89]
    There is no basis for any judgment against the second defendant, and the plaintiff’s claim against him is dismissed.

Third Party Proceedings

  1. [90]
    Ultimately it seems to me that the third party proceedings were not pressed by the defendant, so I will not say too much. I do not accept that the third party owed the duty alleged in paragraph 8 of the version of the statement of claim against the third party filed on 27 July 2010, which appears to be the final version of a much amended document.  In that the first defendant claimed contribution or indemnity pursuant to 6(c) of the Law Reform Act 1995.  That is a provision for contribution between tortfeasors, and of course does not apply here on the basis of the first defendant’s liability was for money had and received rather than in tort.  But on the hypothesis that the first defendant was liable in tort, the claim seeks contribution on the basis that the third party is also liable to the plaintiff in tort.  The allegation in short is that the third party was negligent, and that as a result of that negligence the plaintiff entered into the agreement and advanced the money.
  1. [91]
    As to the extent of the duty, the relationship between the parties may well have been close enough to justify a duty to take reasonable care in the provision of information to the plaintiff,[42] but that would have been all; it was not a duty to ensure that the information provided was accurate.  There is no basis for the imposition of the duty of an insurer in such circumstances.  There was, as it happens, a contract between the plaintiff and the third party,[43] although ordinarily the third party would have been acting as broker on behalf of, and hence as agent for, its client, the person who was seeking finance.  The contract between the parties does not impose the duty of an insurer on the third party.[44]
  1. [92]
    It was also alleged in the third party statement of claim that the third party owed a duty to the plaintiff to make reasonable enquiries to ensure that the motor vehicles existed. However, the evidence from the third party, and from the plaintiff, was that the plaintiff’s practice, in relation to the third party and other finance brokers, was not to require inspection or otherwise to make any particular enquiries to ensure that the vehicles existed in circumstances where the vehicles were being purchased from a licensed dealer. Since what was presented to the third party was that that was the case here, ultimately on the basis of the forged invoices, the third party on the information available to it had no reason to be concerned to make further enquiries as to the existence of the vehicles. It would have been open in any particular case for the plaintiff to have required the third party to confirm the existence of the vehicles, or to have done that itself. In circumstances where the established practice of the plaintiff was not to require such inspection, there was plainly no duty owed to the plaintiff to undertake it, or otherwise to take steps to confirm the existence of the vehicles. I therefore reject the allegation in paragraph 15 of the statement of claim against the third party.  In my view there was no proper basis shown for the third party claim even on the hypothesis that the first defendant was liable to the plaintiff in tort.

Conclusion

  1. [93]
    There will be judgment that the first defendant pay the plaintiff $51,247. The claim against the second defendant, and the third party claim of the first defendant, are dismissed. I will hear submissions as to costs when I have published these reasons.

Footnotes

[1]  Exhibit 1, Document 9; O'Rourke p 5.  Exhibit 1 is a bundle of documents tendered by consent, and I shall refer to them as Document X.

[2]  O'Rourke p 9, p 11.  The invoices are Documents 13 and 14.

[3]  Documents 32, 38; Document 5, a statement of the account, a better copy of which is Exhibit 9.

[4]  The son was said to be applying for a motor dealer’s licence:  p 53.  See also second defendant p 86.  He said he bought cars for the son’s business:  p 57, p 69-70, p 87.

[5]  Defendant p 52, p 62.  His attempt to clarify at p 129 was itself incomprehensible, but at p 130 he seemed to settle on finance broker.

[6]  To the bank officers: Exhibit 2; p 63.  There is also the name of his company, National Money Lenders Pty Ltd: Document 3.

[7]  The second defendant spoke of this as if it were difficult to achieve:  p 89.  In fact, it is not:  Brady p 28.

[8]  Bridge p 48; O'Rourke p 6; Document 10.

[9]  Donovan p 15; Bridge p 48-9; O'Rourke p 7; Crain pp 144-5.  As well, the third party did not routinely do REV searches, which the financiers did themselves:  Crain p 146.

[10]  Donovan p 14; Finch p 24-5; Bridge p 48.  See also O'Rourke p 12. Mr Watson offered the reason that he had organised personalised number plates: Exhibit 21.

[11]  Finch p 24-5; Bridge p 48.

[12]  The main function of this search is to detect any security, and no doubt that is why it was done:  Donovan p 14-15.  Another search which was available, at a cost, would identify the history of any registration of the vehicle:  Harris p 137-8.  That was not done.

[13]David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353.

[14]ANZ Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 at 673.

[15]David Securities (supra) at p 384: the defendant “bears the onus”.  See also ANZ Banking Group Ltd v Westpac Banking Corporation (supra) at p 673; Ovidio Carrideo Nominees Pty Ltd v The Dog Depo Pty Ltd [2006] VSCA 6 at [20].

[16]  Citing Pollard v Bank of England (1871) LR 6 QB 623 at 630-1.

[17]  Adam p 35-41.

[18]  What I referred to earlier as the second reason why the defendant in that case was not liable to the plaintiff.

[19]  This approach seems to be inconsistent with the approach adopted by the High court:  see Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [150].

[20]  [38] and [64], following the Privy Council in Dextra Bank (supra).

[21]  Emphasis in original.

[22]  Although curiously he said he would not press his disagreement to the point of a dissent.

[23]Commerzbank (supra) at [54].

[24]Niru Battery (supra) at [186].

[25]Scottish Equitable (supra).

[26]  Deposits of $13,500 and $12,990 on 26 March, $50,000 and $23,100 on 4 April, and $68,008.95 on 5 April.

[27]  Cheques 204, $9,000; 205, $7,700; 214, $10,000; 215, $8,000; 216, $15,000; 217, $7,000; 218, $30,000; 219, $10,000; 220, $8,550; 221, $10,000; and 222, $11,269.17.

[28]  Derived from Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567; and see Australian Conference Association Ltd v Mainline Constructions Pty Ltd (1979) 141 CLR 335.

[29]  See the analysis of Gibbs CJ in Australian Conference Association (supra) at p 353.

[30]Black v Freeman & Co (1910) 12 CLR 105.

[31]  It was assumed during the trial that the son was involved in the fraud, although strictly speaking that was not proved.

[32]  See for example Abou-Rahmah (supra) per Pill LJ, particularly [99].

[33]  See also Starglade Properties Ltd v Nash [2010] EWCA Civ 1314.

[34]  (1874) 9 Ch App 244 at 251-2.

[35]  These categories have had a somewhat mixed reception from later courts, but were used without criticism by the High Court on this occasion.

[36]  Para [41], citing Doneley v Doneley [1998] 1 Qd R 602.

[37]Farah Constructions (supra) at [174]; Quince (supra) at [42].

[38]Farah Constructions (supra) at [177].

[39]Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [151].

[40]Pavey and Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256-7.

[41]  Document 69, 19 June 2008.  There was also a meeting on 19 May 2008: Brady p 28.

[42]  This is not a question that I decide; it is a matter of some difficulty:  Fortuna Seafoods Pty Ltd v The Ship “Eternal Wind” [2005] QCA 405.

[43]  Document 8.

[44]  The only relevant provision is Clause 10.2 which required only disclosure to the plaintiff of all information of which the third party became aware that is reasonably expected to be relevant to a decision to continue with a facility, a much more limited obligation.

Close

Editorial Notes

  • Published Case Name:

    BOQ Equipment Finance Ltd v Visposin Pty Ltd & Ors

  • Shortened Case Name:

    BOQ Equipment Finance Ltd v Visposin Pty Ltd

  • MNC:

    [2011] QDC 266

  • Court:

    QDC

  • Judge(s):

    McGill DCJ

  • Date:

    20 May 2011

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Abou-Rahmah v Abacha [2006] EWCA Civ 1492
2 citations
Jump To
Cite 1 - [2006] EWCA Civ 1492
Cite 2 - [2006] EWCA Civ 1492
Abou-Rahmah v Abacha [2007] 1 Lloyd’s Rep 115
1 citation
Jump To
Cite 1 - [2007] 1 Lloyd’s Rep 115
Australia & New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662
2 citations
Jump To
Cite 1 - (1988) 164 CLR 662
Cite 2 - (1988) 164 CLR 662
Australian Conference Association Ltd v Mainline Constructions Pty Ltd (1979) 141 CLR 335
2 citations
Jump To
Cite 1 - (1979) 141 CLR 335
Cite 2 - (1979) 141 CLR 335
Baden v Societe Generale pour Favoriser le Development du Commerce et de l'Industrie en France SA (1993) 1 WLR 509
2 citations
Jump To
Cite 1 - (1993) 1 WLR 509
Cite 2 - (1993) 1 WLR 509
Barclays Bank Ltd. v Quistclose Investments Pty. Ltd. (1970) AC 567
2 citations
Jump To
Cite 1 - (1970) AC 567
Cite 2 - (1970) AC 567
Barlow Clowes Ltd v Eurotrust Ltd [2006] 1 WLR 1476
2 citations
Jump To
Cite 1 - [2006] 1 WLR 1476
Cite 2 - [2006] 1 WLR 1476
Barnes v Addy (1874) 9 Ch App 244
2 citations
Jump To
Cite 1 - (1874) 9 Ch App 244
Cite 2 - (1874) 9 Ch App 244
Barros Mattos Junior v MacDaniels Ltd [2005] 1 WLR 247
2 citations
Jump To
Cite 1 - [2005] 1 WLR 247
Cite 2 - [2005] 1 WLR 247
Baylis v Bishop of London [1913] 1 Ch 127
2 citations
Jump To
Cite 1 - [1913] 1 Ch 127
Cite 2 - [1913] 1 Ch 127
Black v Freedman (1910) 12 CLR 105
2 citations
Jump To
Cite 1 - (1910) 12 CLR 105
Cite 2 - (1910) 12 CLR 105
Commerzbank AG v Price Jones [2003] EWCA Civ 1663
2 citations
Jump To
Cite 1 - [2003] EWCA Civ 1663
Cite 2 - [2003] EWCA Civ 1663
Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51
2 citations
Jump To
Cite 1 - (1994) 182 CLR 51
Cite 2 - (1994) 182 CLR 51
Consul Development Pty Limited v DPC Estates Pty Ltd (1975) 132 CLR 373
2 citations
Jump To
Cite 1 - (1975) 132 CLR 373
Cite 2 - (1975) 132 CLR 373
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
2 citations
Jump To
Cite 1 - (1992) 175 CLR 353
Cite 2 - (1992) 175 CLR 353
Derby v Scottish Equitable Plc [2001] EWCA Civ 369
2 citations
Jump To
Cite 1 - [2001] EWCA Civ 369
Cite 2 - [2001] EWCA Civ 369
Derby v Scottish Equitable Plc [2001] 3 All ER 818
2 citations
Jump To
Cite 1 - [2001] 3 All ER 818
Cite 2 - [2001] 3 All ER 818
Dextra Bank and Trust Co Ltd v Bank of Jamaica (2002) 1 All ER Comm 193
2 citations
Jump To
Cite 1 - (2002) 1 All ER Comm 193
Cite 2 - (2002) 1 All ER Comm 193
Doneley v Doneley[1998] 1 Qd R 602; [1997] QSC 138
1 citation
Jump To
Cite 1 - [1998] 1 Qd R 602
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89
4 citations
Jump To
Cite 1 - (2007) 230 CLR 89
Cite 2 - (2007) 230 CLR 89
Cite 3 - (2007) 230 CLR 89
Cite 4 - (2007) 230 CLR 89
Fortuna Seafoods Pty Ltd v The Ship "Eternal Wind"[2008] 1 Qd R 429; [2005] QCA 405
2 citations
Jump To
Cite 1 - [2005] QCA 405
Cite 2 - [2005] QCA 405
Grantham Homes Pty Ltd v ANZ Banking Group Ltd (1979) 26 ACTR 1
1 citation
Jump To
Cite 1 - (1979) 26 ACTR 1
Holland v Russell (1861) 1 B & S 424
1 citation
Jump To
Cite 1 - (1861) 1 B & S 424
Holland v Russell (1861) 121 ER 773
1 citation
Jump To
Cite 1 - (1861) 121 ER 773
Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349
2 citations
Jump To
Cite 1 - [1999] 2 AC 349
Cite 2 - [1999] 2 AC 349
Kleinwort, Sons & Co. v Dunlop Rubber Company (1907) 97 LT 263
2 citations
Jump To
Cite 1 - (1907) 97 LT 263
Cite 2 - (1907) 97 LT 263
Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548
7 citations
Jump To
Cite 1 - [1991] 2 AC 548
Cite 2 - [1991] 2 AC 548
Cite 3 - [1991] 2 AC 548
Cite 4 - [1991] 2 AC 548
Cite 5 - [1991] 2 AC 548
Cite 6 - [1991] 2 AC 548
Cite 7 - [1991] 2 AC 548
Nawall v Tomlinson (1871) LR 6 CP 405
3 citations
Jump To
Cite 1 - (1871) LR 6 CP 405
Cite 2 - (1871) LR 6 CP 405
Cite 3 - (1871) LR 6 CP 405
NIML Ltd v MAN Financial Australia Ltd (2004) 1 BFRA 204
2 citations
Jump To
Cite 1 - (2004) 1 BFRA 204
Cite 2 - (2004) 1 BFRA 204
Niru Battery Manufacturing Co v Milestone Trading Ltd [2004] QB 985
2 citations
Jump To
Cite 1 - [2004] QB 985
Cite 2 - [2004] QB 985
Orix Australia Corporation Ltd v M. Wright Hotel Refrigeration Pty Ltd (2000) 155 FLR 267
3 citations
Jump To
Cite 1 - (2000) 155 FLR 267
Cite 2 - (2000) 155 FLR 267
Cite 3 - (2000) 155 FLR 267
Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 6
2 citations
Jump To
Cite 1 - [2006] VSCA 6
Cite 2 - [2006] VSCA 6
Pavey & Matthews Pty Ltd v Paul (1987) 162 C.L.R 221
2 citations
Jump To
Cite 1 - (1987) 162 C.L.R 221
Cite 2 - (1987) 162 C.L.R 221
Pollard v Bank of England (1871) LR 6 QB 623
1 citation
Jump To
Cite 1 - (1871) LR 6 QB 623
Port of Brisbane Corp v ANZ Securities[2003] 2 Qd R 661; [2002] QCA 158
7 citations
Jump To
Cite 1 - [2003] 2 Qd R 661
Cite 2 - [2003] 2 Qd R 661
Cite 3 - [2003] 2 Qd R 661
Cite 4 - [2003] 2 Qd R 661
Cite 5 - [2003] 2 Qd R 661
Cite 6 - [2003] 2 Qd R 661
Cite 7 - [2003] 2 Qd R 661
Quince v Varga[2009] 1 Qd R 359; [2008] QCA 376
2 citations
Jump To
Cite 1 - [2008] QCA 376
Cite 2 - [2008] QCA 376
Roxburgh v Rothmans of Pall Mall (2001) 208 CLR 516
2 citations
Jump To
Cite 1 - (2001) 208 CLR 516
Cite 2 - (2001) 208 CLR 516
Royal Brunei Airlines Sdn Bhd v Tan Kok Ming [1995] 2 AC 378
2 citations
Jump To
Cite 1 - [1995] 2 AC 378
Cite 2 - [1995] 2 AC 378
Spangaro v Corporate Investment Australia Funds Management Ltd [2003] FCA 1025
1 citation
Jump To
Cite 1 - [2003] FCA 1025
Starglade Properties Ltd v Nash [2010] EWCA Civ 1314
2 citations
Jump To
Cite 1 - [2010] EWCA Civ 1314
Cite 2 - [2010] EWCA Civ 1314
State Bank of New South Wales Ltd v Swiss Bank Corporation (1995) 39 NSWLR 350
3 citations
Jump To
Cite 1 - (1995) 39 NSWLR 350
Cite 2 - (1995) 39 NSWLR 350
Cite 3 - (1995) 39 NSWLR 350
Twinsectra Ltd v Yardley [2002] 2 AC 164
2 citations
Jump To
Cite 1 - [2002] 2 AC 164
Cite 2 - [2002] 2 AC 164

Cases Citing

Case NameFull CitationFrequency
Comgroup Supplies Pty Ltd v Products for Industry Pty Ltd [2014] QDC 2932 citations
1

Require Technical Assistance?

Message sent!

Thanks for reaching out! Someone from our team will get back to you soon.

Message not sent!

Something went wrong. Please try again.