Focus Metals Pty Ltd v Babicci - [2014] VSC 380

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 5117 of 2011

FOCUS METALS PTY LTD
(ACN 007 788 150)

Plaintiff

KRIS BABICCI
(ALSO KNOWN AS CHRIS BABICCI)

and

BRUCE TRAVERS McNAB

First Defendant

Second Defendant

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JUDGE:	SLOSS J
WHERE HELD:	Melbourne
DATES OF HEARING:	17, 18 and 20 February 2014 (Further written submissions filed by defendants on 2 April, responding submission filed by plaintiff on 7 May and reply submission filed by defendants on 13 May 2014)
DATE OF JUDGMENT:	15 August 2014
CASE MAY BE CITED AS:	Focus Metals Pty Ltd v Babicci & anor
MEDIUM NEUTRAL CITATION:	[2014] VSC 380

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Restitution – Money paid under mistake – Mistake of fact – Right to recover – Unjust enrichment – Money had and received – Constructive trust – Requisite knowledge required of a payee who is paid by mistake – Defences of “No Mistake” and “Change of position”.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N J O’Bryan AM SC with Mr C H Truong	Alan Sheppet & Associates
For the First Defendant	Mr T G Moloney	Business Support Services (Legal)
For the Second Defendant	Mr T G Moloney	Bruce McNab Solicitor

HER HONOUR:

Introduction

The plaintiff, Focus Metals Pty Ltd (“Focus Metals”), a company located in Richmond, Victoria, operates a business of buying, smelting, assaying and refining gold and other precious metals. Focus Metals seeks to recover from the first defendant, Mr Kris Babicci (“Mr Babicci”), the sum of $166,688.33 which it says it paid to him by mistake by four electronic funds transfers to his account with the National Australia Bank (“NAB”) (BSB 082-401 Account No. 752036778) (“Mr Babicci’s NAB account”) on 9 September 2011. In the alternative, Focus Metals seeks to recover the sum of $133,859.93 from Mr Babicci and the balance of $32,828.40 from the second defendant, Mr Bruce McNab (“Mr McNab”), the latter sum having been transferred by Mr Babicci to an account with the NAB in the name of Mr McNab by two internet transfers, made on 14 and 15 September 2011.

The alleged mistaken payment to Mr Babicci, and his subsequent payment of the sum of $32,828.40 to Mr McNab, arose in the context of a gold refining and purchasing transaction undertaken by Focus Metals in September 2011.

Between 2007 and 2011, Focus Metals refined and assayed several consignments of ore containing gold and other precious metals that were exported from Papua New Guinea by Exara Limited, under instructions from its managing director Mr Aristotelis (Telly) Nicolaou (“Mr Nicolaou”).

From time to time, Mr Nicolaou involved different investors in funding the gold transactions. Generally, the ore was exported from Papua New Guinea using Exara Limited’s export licence, and consigned to Focus Metals for refining and assaying. Upon completion, the gold and other precious metals were usually purchased by Focus Metals whereupon the proceeds would be remitted according to instructions given by Mr Nicolaou.

In February 2010, Mr Babicci and Mr McNab, together…

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.

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Details

Case: [2014] VSC 380
Decision Date: 15 August 2014

CaseChat Overview and Summary

Focus Metals Pty Ltd brought an action against Babicci, seeking the recovery of payments made under a mistake of fact. The matter was heard in the Supreme Court of Victoria. The central issue in the case was whether the defendant, Babicci, was required to return the mistaken payments. The plaintiff argued that the defendant's knowledge of the mistake should be a factor in determining whether restitution was due. Additionally, the court had to consider whether the defences of "No Mistake" and "Change of position" could be invoked by the defendant.

The court considered the principles of unjust enrichment and the doctrine of money had and received. It held that the defendant was not required to have actual knowledge of the mistake for the plaintiff to recover the payments. Instead, the court found that the requisite knowledge was whether the defendant was aware that the payments were made under a mistake. The court rejected the defendant's defence of "No Mistake," as there was clear evidence that the payments were made erroneously. Regarding the "Change of position" defence, the court determined that it was not available to the defendant as the payments were not used to make any significant changes to the defendant's financial position.

Ultimately, the court ruled in favour of the plaintiff, ordering the defendant to repay the mistaken payments. The court emphasised the importance of the defendant's awareness of the mistake and the lack of a significant change in position as critical factors in its decision. The court made an order for the defendant to repay the sum of the mistaken payments to the plaintiff, along with interest.

Orders