Chong v Wu

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.