Citigroup Pty Ltd v National Australia Bank Ltd

Citigroup Pty Ltd (Citigroup) appealed a decision concerning a mistaken payment made by Citigroup to National Australia Bank Ltd (NAB). The dispute arose from a fraudulent instruction that led Citigroup to transfer funds to NAB. Both banks acted without negligence, but the instruction was later revealed to be fraudulent. Citigroup sought to recover the funds from NAB, arguing that NAB had been unjustly enriched. The appeal was heard by Bathurst CJ, Allsop P, Meagher, Macfarlan and Barrett JJA of the Court of Appeal of New South Wales.

The central legal issues before the Court of Appeal were whether NAB had established a defence of change of position, whether the defence of payment over was available, and whether NAB could rely on an estoppel defence. These issues revolved around whether NAB had acted on the faith of the mistaken receipt of funds from Citigroup in making subsequent disbursements, and whether the conditions for the alternative defences were met. The court also considered the significance and application of the decision in *State Bank of New South Wales Ltd v Swiss Bank Corporation* (1995) 39 NSWLR 350.

The Court of Appeal ultimately dismissed Citigroup's appeal. The majority of the court found that NAB had successfully established the defence of change of position, reasoning that NAB had altered its position to its detriment in reliance on the mistaken payment. The court discussed and distinguished the *State Bank of New South Wales Ltd v Swiss Bank Corporation* decision, finding it not to be followed in one respect. The court also considered and rejected the alternative defences of payment over and estoppel. Consequently, Citigroup was ordered to pay NAB's costs of the appeal.