Clarke v Abou-Samra

[2010] SASC 205

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

CLARKE & ANOR v ABOU-SAMRA & ORS

[2010] SASC 205

Judgment of The Honourable Justice Kourakis

20 July 2010

CONTRACTS - PARTICULAR PARTIES - PRINCIPAL AND AGENT - RELATIONS BETWEEN PRINCIPAL AND THIRD PERSONS - RIGHTS AND LIABILITIES OF PRINCIPAL IN RESPECT OF CONTRACTS OF AGENT - FRAUD AND MISREPRESENTATION - OF AGENT

EQUITY - GENERAL PRINCIPLES - EQUITABLE CHARGES AND LIENS - MONEY EXPENDED OR BENEFIT CONFERRED ON PROPERTY OF ANOTHER

EQUITY - GENERAL PRINCIPLES - UNJUST ENRICHMENT

RESTITUTION - MISTAKE: RESTITUTION ARISING FROM A PLAINTIFF'S MISTAKEN ACTIONS - RECOVERY OF MONEY PAID UNDER MISTAKE - DEFENCES AND LIMITATIONS ON RECOVERY

Third defendant was principal of company (ALC) which borrowed large sums of money from clients at high interest rates – plaintiffs delivered bank cheque for $207,518.20 to ALC believing they were loaning that amount to first and second defendants to purchase property – third defendant had arranged first and second defendant’s finance to purchase that property – first and second defendants believed bank cheque for $207,518.20 was to discharge an existing debt of $140,000 owed to them by ALC – ALC now in liquidation and third defendant a bankrupt – plaintiffs claim from first and second defendants sum of $207,518.20 plus interest – whether third defendant was authorised agent of first and second defendants for the purpose of negotiating loan – whether plaintiffs paid $207,518.20 to ALC by reason of mistaken belief that third defendant was authorised agent of first and second defendants and that payment would be made to them by way of loan – whether plaintiffs have proprietary interest in first and second defendant’s property – whether first and second defendants hold property on remedial constructive trust for benefit of plaintiffs.

Held: Third defendant not actually or ostensibly authorised by first and second defendants to borrow full $207,518.20 from plaintiffs – third defendant only authorised to borrow $67,518.20 from plaintiffs – plaintiffs did pay $207,518.20 to ALC on mistaken belief that third defendant was authorised agent of first and second defendants and that payment would be made to them by way of loan – however, first and second defendants have good defence to mistake claim to the extent that the payment discharged ALC’s pre-existing $140,000 debt to them – plaintiffs do not have proprietary interest in first and second defendant’s property reflecting the proportion that the value of the bank cheque bears to the purchase price – plaintiffs entitled to and hold an equitable charge over the property for the $67,518.20 – plaintiffs entitled to declarations of entitlement to $67,518.20.

Cheques Act 1986 (Cth) s 5, s 36, s 37, s 71, referred to.
Barclays Bank Ltd v W J Sims Son & Cooke (Southern) Ltd [1980] QB 677; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548; Black v S Freedman & Co (1910) 12 CLR 105; Aiken v Short