Chong v Wu - [2010] NSWCA 10

New South Wales

Court of Appeal

CITATION: Chong v Wu [2010] NSWCA 10
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 9 February 2010

JUDGMENT DATE:
2 March 2010

JUDGMENT OF: Macfarlan JA at 1; Young JA at 24; Handley AJA at 36

DECISION: The appeal is dismissed with costs.

CATCHWORDS: RESTITUTION - moneys had and received - innocent, third party recipient of funds - defence of change of position - Lipkin Gorman (a firm) v Karpnale Ltd - funds lost in gambling or returned to initial recipient from plaintiff

CATEGORY: Principal judgment

CASES CITED: Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
Heperu Pty Ltd v Belle [2009] NSWCA 252; (2009) 258 ALR 727
Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548
State Bank of New South Wales v Swiss Bank Corporation (1995) 39 NSWLR 350

PARTIES: Qingyi Chong (Appellant)
Hong Wei Wu (Respondent)

FILE NUMBER(S): CA 40198/09

COUNSEL: M R Aldridge SC/R W Tregenza (Appellant)
T J Morahan (Respondent)

SOLICITORS: Austin Haworth & Lexon Legal (Appellant)
Zhang Shijing Lawyers (Respondent)

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): SC 2509/07

LOWER COURT JUDICIAL OFFICER: Brereton J

LOWER COURT DATE OF DECISION: 25 May 2009

LOWER COURT MEDIUM NEUTRAL CITATION: Chong v Channell [2009] NSWSC 765

CA 298311/09
SC 2509/07

MACFARLAN JA
YOUNG JA
HANDLEY AJA
Tuesday 2 March 2010

CHONG v WU

Judgment

1 MACFARLAN JA: These proceedings arose out of the payment of in excess of A$5,000,000 by the appellant to his sister who was the first defendant in the proceedings but is not a party to this appeal. The funds were transferred in the period 2001 to 2005 from China, where the appellant was resident, to Sydney, where the first defendant was resident. The appellant alleged that the first defendant did not deal with the funds in accordance with his directions and successfully sought various personal and proprietary remedies against her. It was common ground between the parties to the proceedings that the funds were not transferred to the first defendant beneficially and that she therefore held them on trust for the appellant. There is no appeal from the orders made at first instance in relation to the first defendant and her property.

2 A substantial portion of the funds received by the first defendant from the appellant was paid by her during the period 2002 to 2004 to her now estranged husband, the respondent. She gave evidence that she believed that the respondent was engaged in a steel import/export business, that the appellant was in some way supporting or assisting the respondent in this business and that the payments by her to the respondent accorded with the appellant’s instructions. The appellant denied giving any authority for funds to be paid to the respondent and sought personal and proprietary remedies against the respondent in respect of the funds paid to him. The…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Chong v Wu

Details

AGLC: Chong v Wu [2010] NSWCA 10
Case: [2010] NSWCA 10
Decision Date: 2 March 2010

CaseChat Overview and Summary

Chong (the plaintiff) sought to recover moneys paid to Wu (the defendant) under the common law action of money had and received. The plaintiff alleged that the moneys were paid to the defendant by mistake. The defendant, an innocent third party, had received the funds and subsequently lost them through gambling or returned them to the initial recipient. The case was heard on appeal in the Court of Appeal of New South Wales.

The central legal issue before the Court of Appeal was whether the defendant, as an innocent third party recipient of funds paid by mistake, could rely on the defence of change of position to resist the plaintiff's claim for restitution. This defence, as established in *Lipkin Gorman (a firm) v Karpnale Ltd*, allows a recipient who has changed their position in good faith in reliance on the mistaken payment to resist a claim for restitution.

The Court of Appeal considered the application of the *Lipkin Gorman* defence in the context of the present facts. It was held that the defence of change of position is available to an innocent third party recipient of moneys paid by mistake, provided that the recipient acted in good faith and demonstrably changed their position to their detriment in reliance on the mistaken payment. The Court found that the defendant had established the elements of this defence, as the funds had been lost in gambling, which constituted a change of position to his detriment, and he had received the funds innocently.

The appeal was dismissed with costs.

Orders

Orders of the court

The appeal is dismissed with costs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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CITATION:	Chong v Wu [2010] NSWCA 10 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	9 February 2010
JUDGMENT DATE:	2 March 2010
JUDGMENT OF:	Macfarlan JA at 1; Young JA at 24; Handley AJA at 36
DECISION:	The appeal is dismissed with costs.
CATCHWORDS:	RESTITUTION - moneys had and received - innocent, third party recipient of funds - defence of change of position - Lipkin Gorman (a firm) v Karpnale Ltd - funds lost in gambling or returned to initial recipient from plaintiff
CATEGORY:	Principal judgment
CASES CITED:	Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 Heperu Pty Ltd v Belle [2009] NSWCA 252; (2009) 258 ALR 727 Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 State Bank of New South Wales v Swiss Bank Corporation (1995) 39 NSWLR 350
PARTIES:	Qingyi Chong (Appellant) Hong Wei Wu (Respondent)
FILE NUMBER(S):	CA 40198/09
COUNSEL:	M R Aldridge SC/R W Tregenza (Appellant) T J Morahan (Respondent)
SOLICITORS:	Austin Haworth & Lexon Legal (Appellant) Zhang Shijing Lawyers (Respondent)
LOWER COURT JURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	SC 2509/07
LOWER COURT JUDICIAL OFFICER:	Brereton J
LOWER COURT DATE OF DECISION:	25 May 2009
LOWER COURT MEDIUM NEUTRAL CITATION:	Chong v Channell [2009] NSWSC 765