Focus Metals Pty Ltd v Babicci

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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
v

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

  1. 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.  

  1. 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. 

  1. 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”). 

  1. 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.

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

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Details
Case
[2014] VSC 380
Decision Date

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

Orders of the court

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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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