Allsop P at 1; Campbell JA at 179; Handley AJA at 180
DECISION:
1. The appellants file and serve within 28 days submissions on relief in the light of the reasons. 2. The respondent file and serve within a further 28 days submissions on relief in the light of the reasons. 3. The appellants file and serve submissions in reply within a further 14 days.
CATCHWORDS:
BANKING AND FINANCE – bank account authority - authority given to agent to operate account – liability of principal for deposit and withdrawal of fraudulently obtained funds by the agent– scope of authority given to agent to operate account - whether scope of authority included authority to deposit funds misappropriated from third parties – no liability where acts were beyond the scope of the authority given to the agent - BANKING AND FINANCE – bank account authority – liability of principal for withdrawal of funds from account derived from the proceeds of misappropriated cheques – whether withdrawal of funds alone is having use and benefit of the funds – principal did not authorise to use the account to receive or deploy misappropriated funds – no liability of the principal in these circumstances - RESTITUTION – money had and received – receipt and benefit of funds in bank account by owner of the account – liability based on possession and control of funds – requirement that owner of account knew or ought to have known that they had possession of control of the funds – “ought to have known” requires some fault on the part of the recipient – owner of account had no knowledge and ought not to have known in the circumstances - RESTITUTION - money had and received – liability of volunteer recipient of misappropriated funds for the traceable proceeds held at the time of the trial – liability separate from liability in equity as a constructive trustee under Barnes v Addy – recognition at law of an equitable interest in property – personal remedy to value of equitable property interest in property in hands of another - liability for proceeds remaining not for amount received - EQUITY – trusts – constructive trust - liability as constructive trustee under first limb Barnes v Addy - no notice and no knowledge – liability as constructive as trustee under second limb of Barnes v Addy – no notice and no knowledge - TRACING – personal liability for value remaining of misappropriated funds that can be traced into real property – tracing of misappropriated cheques into mortgage repayments made on real property – tracing through mixed fund - REMEDIES – remedies at law and in equity – availability of a personal remedy to value of an interest in property where property in hands of another - GOODS – receiver of goods as finder…
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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AGLC
Heperu Pty Ltd v Belle [2009] NSWCA 252
Case
[2009] NSWCA 252
Decision Date
CaseChat Overview and Summary
Heperu Pty Ltd (the appellants) appealed a decision concerning their liability for funds deposited into and withdrawn from a bank account operated by an agent. The dispute arose from the agent's fraudulent activities, which involved misappropriating funds from third parties and depositing them into the appellants' account, and subsequently withdrawing those funds. The case was heard by the Court of Appeal of New South Wales.
The central legal issues before the court were whether the appellants were liable for the deposit of fraudulently obtained funds into their account, and whether they were liable for the withdrawal of funds derived from misappropriated cheques. The court also considered whether the appellants had received and benefited from the misappropriated funds in a manner that would ground a claim for money had and received, and whether they could be held liable as constructive trustees under the principles established in *Barnes v Addy*. Finally, the court examined the availability of personal remedies for the traceable proceeds of misappropriated funds, particularly where those proceeds had been used to reduce a mortgage on real property.
The Court of Appeal reasoned that the appellants were not liable for the deposit of misappropriated funds as these acts fell outside the scope of the authority granted to their agent. Similarly, the withdrawal of funds, even if derived from misappropriated cheques, did not render the appellants liable unless they had authorised the use of the account to receive or deploy such funds, which they had not. Regarding restitution, the court held that liability for money had and received required the owner of the account to have known, or to have been in a position where they ought to have known, that they possessed or controlled the misappropriated funds, a fault element not present on the facts. The court also found no liability under *Barnes v Addy* as the appellants lacked the requisite notice or knowledge to be considered constructive trustees. However, the court recognised a personal remedy available at law for the traceable proceeds of the misappropriated funds remaining in the appellants' hands, even if those proceeds had been used to reduce a mortgage, distinguishing this from the law of receivers of goods.
The court made no final orders regarding the ultimate relief, instead directing the parties to file and serve submissions on relief in light of the court's reasons, with provision for reply submissions.
Orders
Orders of the court
1. The appellants file and serve within 28 days submissions on relief in the light of the reasons. 2. The respondent file and serve within a further 28 days submissions on relief in the light of the reasons. 3. The appellants file and serve submissions in reply within a further 14 days.