Laws3111 Lecture9 2011

Week 9 – Restitution and Property: Unjust Enrichment

  • Money – general rule: not derivative, title passes on intention

Ilich v R

  • Ilich obtained additional money, either fraudulently or via an overpayment. Argued that if overpayment AND he obtained title, it couldn’t be stealing
  • Held that only a truly fundamental mistake will prevent property from passing
    • Mistaken identity of recipient
    • Mistaken identity of goods delivered
    • Mistaken quantity of goods delivered IF goods not money
  • Note: Overpayment still subject to civil claims/equitable trusts, but not stealing

Unjust Enrichment

  • A general category, not a cause of action
  • Rooted in equitable obligations (eg. Money had and Received)
  • Remedies generally personal, but CAN be proprietary

Elements

1. Enrichment of the Defendant
2. That Enrichment Must be Unjust
3. It must be at the Expense of the Plaintiff
4. No valid Defences

Enrichment of the Defendant

  • Must be an actual benefit – eg. Money, Services, Contractual Rights, Right to use/exchange property, actual use of property
  • Must enrich the defendant personally (not merely an agent)
  • Money is an incontrovertible benefit.
  • Services more difficult to identify as beneficial/restore
  • Defendant may not actually place any value on the service or right (eg. Beauty Parlours for pets) – only enriched if actual value.
  • Services must generally be requested to be considered enriching (Falcke v Scottish Imperial Insurance) or freely and knowingly accepted (Pavey & Matthews v Paul) if not an incontrovertible benefit (such as salvage) (Monks v Poynice)
  • Free acceptance dubious (held insufficient in Lumbers v Cook Builders, due to lack of request from the actual defendant – only dealing with third party)
  • Current approach may well require a request

Enrichment must be Unjust

  • Must be a legally recognised form of injustice, not just ‘unfairness’
  • Defective intention – mistake or compulsion (eg. An extra $100k transferred by mistake in ANZ v Westpac – fundamental mistake does not depend on trusts or tracing, only the value of enrichment. Can only be made just by good consideration for the funds)
  • Qualified intention to benefit (eg. Due to total failure of consideration as per Roxborough v Rothmans)
  • No intention to benefit (eg. Ignorance – money was misappropriated or transfer was not made for a beneficial purpose, as per Lipkin Gorman v Karpnale)

At the Expense of the Plaintiff

  • Will generally be reciprocal (Plaintiff loses the amount defendant gains - eg. Money lost in Lipkin Gorman)
  • Plaintiff can also pass loss onto 3rd parties (Roxborough v Rothmans)
  • Can include opportunity cost – inability to sell/use the enriching property

Defendant has no valid defence

  • Includes good faith purchase for value (BFPV w/ N)
  • Estoppel (Waltons)
  • Change of Position

Change of Position

  • Accepted in Aus (David Securities v CBA)
  • Must have acted in good faith (RBC Dominion v Dawson)
  • Requires a change beyond everyday expenses/payment of debts – must actually modify spending pattern (RBC Dominion v Dawson)
  • Any money paid out can constitute a change (Lipkin Gorman v Karpnale)
  • Only liable to the extent PERSONALLY enriched (Ford v Perpetual Trustees)
  • Current focus is on reliance, rather than hardship (see the abrupt repayment of debts far from due in RBC Dominion not being held to be a change of position)

Lipkin Gorman v Karpnale

  • Solicitor misappropriate large sums from Lipkin Gorman ($200k+)
  • Gambled away – firm attempted to recover from casino/playboy club
  • Sued for ‘money had and received’ – not based on a ‘wrong’ but the equitable ‘conscience’ of keeping the money (value, not specific property)
  • Had to demonstrate money was paid from their accounts, by the fraudster, and that the Casino/Club were actually enriched.
  • Held Casino did not provide goods or services for the money, as no consideration (due to statutory prohibition) – ergo, only voluntary gifts
  • As such, defence was successful. No BFPV w/ N defence was available, and they were required to restore the extent of the loss paid from the firms account (less the amount that could have come from the solicitors account)
  • The ‘unjust’ factor was ultimately ignorance as to source/nature of the money

Ford v Perpetual Trustees

  • Ford suffered from a congenital mental impairment and took out a 200k loan to help his son. Son’s business failed, defaulted on the loan
  • Loan contract was held void due to non est factum, bank sued for unjust enrichment via money had an received
  • Court held the focus of the injustice was the RETENTION of the money/benefit. As he had only personally retained $20k, that was all that equity obligated him to return.
  • In effect, non est factum became a partial defence to restitution
  • In theory, change of position could also have applied here – but it would have required reliance on the change, not mere hardship to apply as it currently stands.