Hilliard v Westpac Banking Corporation
[2009] VSCA 211
•18 September 2009
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No 2127 of 2000
| ROY CHARLES HILLIARD | |
| Appellant | |
| v | |
| WESTPAC BANKING CORPORATION (ARBN 007 457 141) | Respondent |
---
JUDGES: | MAXWELL P, DODDS-STREETON JA and OSBORN AJA | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 12 May 2008 | |
DATE OF JUDGMENT: | 18 September 2009 | |
MEDIUM NEUTRAL CITATION: | [2009] VSCA 211 | |
JUDGMENTS APPEALED FROM: | Westpac Banking Corporation v Hilliard [2006] VSC 470 (Hansen J) Westpac Banking Corporation v Hilliard(No 2) [2006] VSC 489 (Hansen J) Westpac Banking Corporation v Hilliard (No 3) [2007] VSC 58 (Hansen J) | |
---
RESTITUTION – Moneys paid under mistake – Bank paid cheques in ignorance of fact that proceeds not for benefit of account-holders – Proceeds received by account-holders’ bookkeeper – Whether mistake was causative – Whether bank ought to have enquired as to purpose – Whether bank voluntarily assumed risk of improper purpose – Whether enrichment of bookkeeper ‘at the expense of’ bank – Appeal dismissed.
PRACTICE AND PROCEDURE – Stay – Witness refused to answer questions on ground of self-incrimination – Whether curtailment of cross-examination rendered trial unfair – Trial judge refused stay application – No discretionary error – Stay application not renewed – Whether appeal court should intervene – No unfairness shown.
---
| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr D Masel | Rudstein Kron Lawyers |
| For the Respondent | Mr C M Scerri QC Mr R D Strong | Mallesons Stephen Jaques |
---
MAXWELL P
OSBORN AJA:
Introduction[1]
[1]Paragraphs 1–5 are adapted from the trial judge’s reasons [1]–[4]. See Westpac Banking Corporation v Hilliard [2006] VSCA 470.
Westpac Banking Corporation (‘Westpac’) had two customers in its Private Bank section, Stephen Vizard and his wife and their companies (collectively referred to as the ‘PAS Group’), and Roy Hilliard (‘Hilliard’). Mr Hilliard worked as a bookkeeper for Mr Vizard and his companies between 29 July 1991 and about 12 October 2000. Following the cessation of his employment, apparent financial irregularities were discovered in PAS Group companies. Ultimately, Westpac accepted a claim by Mr Vizard and the PAS Group that it had met PAS Group cheques drawn by Mr Hilliard for amounts in excess of its relevant customer mandate and which were for the benefit of Mr Hilliard rather than for the benefit of the relevant PAS Group customer.
On 19 December 2000 Westpac entered into a settlement agreement with the PAS Group pursuant to which, following investigation, it compensated the PAS Group amounts which (including interest) totalled $3,067,274.92. Westpac claimed that sum from Mr Hilliard on the basis of money had and received, unjust enrichment, or damages. Mr Hilliard denied liability.
Initially there was a second defendant, Information Age Travel Pty Ltd (‘IAT’). Mr Hilliard and Christopher Graham Wood were the directors and shareholders of IAT, which conducted a specialised travel agency business. In 1991, due to declining fortunes of the business as the result of the first Gulf War, it was necessary for Mr Hilliard to find other employment, which he did with Mr Vizard and the PAS Group. He continued his bookkeeping, banking and financial statement functions for IAT. He thus retained a cheque book and controlled IAT’s bank account.
Westpac’s case was that a number of the cheques drawn by Mr Hilliard on PAS Group accounts were payable to IAT and cleared to its bank account with the Australia and New Zealand Banking Group Limited (‘ANZ’), but that the proceeds were not paid for, or applied to, the purposes of the PAS Group, or in the interest of the PAS Group account-holder. The case was, in short, that Mr Hilliard turned the money paid to IAT to his benefit. Westpac alleged that, in the period of his employment, Mr Hilliard stole just over $3 million from the PAS Group – as to just over $2.5 million by way of payments to IAT, and the balance by payments to other parties for the benefit of Mr Hilliard. The claim itself was confined to 61 cheques of a lesser aggregate amount.
On 14 August 2001 it was ordered by consent that IAT pay Westpac $1,686,036.29, and that there be no order as to costs. These orders were made pursuant to a Deed of Settlement dated 1 June 2001 between Westpac, Mr and Mrs Vizard and PAS Group companies, IAT, Mr Wood, and Dennis Turner (an investigating accountant appointed by Westpac). In consequence of the Deed and these orders, IAT took no further part in the proceeding.
After a trial lasting 15 sitting days, Hansen J gave judgment for Westpac.[2] After further hearings over another six days, his Honour ordered Mr Hilliard to pay Westpac the sum of $2.59 million, together with the costs of the proceeding.[3] Mr Hilliard appeals from that judgment and those orders.
[2]Westpac Banking Corporation v Hilliard [2006] VSC 470. See also Westpac Banking Corporation v Hilliard(No 2) [2006] VSC 489.
[3]Westpac Banking Corporation v Hilliard(No 3) [2007] VSC 58.
For reasons which follow, we would dismiss the appeal.
Summary of proceedings and issues[4]
[4]Paragraphs 8–17 are based on the summary prepared for the Court on Mr Hilliard’s behalf.
The bank alleged that:
(a) between 1 July 1993 and 31 January 1996, it paid certain cheques signed by Mr Hilliard drawn on accounts of the PAS Group for amounts greater than $10,000, and debited the amount paid to the account of the relevant account-holder;
(b) between 2 February 1996 and 17 October 2000, it paid certain further cheques signed by Mr Hilliard drawn on an account of the PAS Group for amounts between $10,000 and $50,000 and debited the amount paid to the account of the relevant account-holder;
(c) it was not authorised by the account-holder to pay any of the cheques;
(d) the proceeds of each of the cheques
(i) were not paid to or at the direction of or applied for the benefit of the relevant account-holder;
(ii) were received by Mr Hilliard or applied for his benefit by being paid either to him, to a bank account (which he effectively controlled) in the name of IAT or were paid to third parties to satisfy debts owing by Mr Hilliard or for goods and services supplied to him;
(e) the bank paid each of the cheques by reason of a mistake or mistakes, namely:
(i) in relation to the cheques referred to in paragraph (a), it overlooked the fact that its authority to pay cheques signed by Mr Hilliard was limited to cheques below $10,000;
(ii) in relation to the cheques referred to in paragraph (b), it believed that a facsimile authority apparently signed by Mr Vizard and sent to it by Mr Hilliard on about 2 February 1996 by which it was authorised to pay cheques signed by Mr Hilliard up to $50,000 (‘the 1996 authority’) was genuine, whereas in fact it was a forgery;
(iii) in relation to all of the cheques, ignorance of the facts set out in paragraph (d) above; and
(f) Mr Hilliard was liable to pay to the bank an amount equal to the proceeds of each cheque as money had and received, further or alternatively that it was unconscionable for Mr Hilliard to retain the proceeds of each of the cheques and he was unjustly enriched in doing so.
In the alternative, the bank alleged that by sending the 1996 authority Mr Hilliard had engaged in misleading or deceptive conduct and/or had made a fraudulent misrepresentation. The bank alleged that it had come under a liability to repay the respective relevant account-holders the amounts which it had paid and debited to their accounts without their authority and, acting reasonably, it had admitted liability to the PAS Group. It alleged that it had suffered loss and damage in the amount of that liability.
By his defence, Mr Hilliard admitted that each of the cheques had been drawn on the accounts of the PAS Group, signed by him and paid by the bank, and that the amount so paid had been debited to the account of the relevant account-holder. He denied that:
(a) the bank had paid the cheques without the authority of its customers; and
(b) the proceeds of any cheque were not paid to or at the direction of or applied for the benefit of the relevant account-holder.
Mr Hilliard pleaded that all of the cheques were signed with the consent, knowledge, alternatively acquiescence, of Mr Vizard, the PAS Group and the bank. He pleaded that they were drawn, signed and applied with the knowledge, authority and consent of Mr Vizard and the PAS Group. He pleaded that:
(a) some of the cheques were applied to repayment to IAT of sums paid by it to Mr Vizard;
(b) the remaining cheques were, with the knowledge, authority and consent of Mr Vizard and the PAS Group, applied to his (Mr Hilliard’s) benefit.
Mr Hilliard admitted that he had forwarded the 1996 authority by facsimile to the bank, but denied that it was a forgery.
The major issues dealt with at the trial were therefore as follows:
(a) was the 1996 authority a forgery?
(b) was the bank authorised by its customers to pay cheques signed by Mr Hilliard for amounts exceeding $10,000:
(i) before 2 February 1996, under the terms of its mandates from the customers?
(ii) after 2 February 1996, by reason of the 1996 authority?
(c) if the bank was not authorised to pay some or any of the cheques, did it do so under the pleaded mistakes concerning its authority?
(d) were the proceeds of each of the cheques paid to or at the direction of or applied for the benefit of the relevant account-holder?
(e) if in any case the proceeds were not so paid, did the bank pay the cheque by reason of a mistake, namely its ignorance of that fact?
(f) were the proceeds of those of the cheques that were paid into the bank account of IAT received by Mr Hilliard or applied for his benefit?
(g) if in any case the proceeds were so received or applied, did the bank pay the cheque by reason of a mistake, namely its ignorance of that fact?
Mr Vizard gave evidence at the trial. In the course of his cross-examination, on approximately 55 occasions he objected to answer questions on the ground of self-incrimination. The trial judge upheld a substantial number of those objections. At the conclusion of Mr Vizard’s evidence, Mr Hilliard made an application that the proceeding be permanently stayed. This application was refused.
The trial judge found that the bank had not established that the 1996 authority was a forgery nor that its authority to pay cheques signed by Mr Hilliard was limited to amounts under $10,000. Accordingly, his Honour rejected the bank’s case that it had paid the cheques under a mistake as to its authority. The bank’s claims for misleading and deceptive conduct and fraudulent misrepresentation arising from the 1996 authority also failed. The disposition of those issues at the trial was not challenged on the appeal.
The trial judge rejected Mr Hilliard’s case that the proceeds of the cheques were either returned by Mr Hilliard to Mr Vizard in cash, or paid directly to Mr Hilliard as a reward, pursuant to the arrangement which Mr Hilliard alleged existed between himself and Mr Vizard. His Honour found that Mr Hilliard received the benefit of each of the cheques. He held that, in consequence, the bank had established its case that it had paid the 61 cheques under a mistake that they were for the benefit of or paid with the authority of the relevant account-holder, and that Mr Hilliard had had the benefit of the payments.
The trial judge held that the bank was entitled to 75% of the face value of the cheques (being the extent to which it had reimbursed the account-holders). He gave judgment for this amount together with interest from the date of issue of the writ.
By this appeal, Mr Hilliard challenges:
(a) the ruling by which his Honour declined to stay the proceedings (Ground 2);
(b) the findings that the proceeds of the relevant cheques were not paid with the authority of the account-holder and/or were not paid for the benefit of the account-holder (Grounds 3–5);
(c) the finding that the bank paid the cheques by reason of the found mistake (causation) (Ground 6);
(d) the finding that Mr Hilliard was enriched at the bank’s expense (Ground 7).[5]
[5]Ground 1, which related to the upholding of Mr Vizard’s claims of privilege against self-incrimination, was abandoned.
Whether the proceeds of the cheques were paid for a proper purpose (Grounds 3–5)
The submission for Westpac at trial was that Mr Hilliard drew and signed the cheques in perpetration of a fraud upon the relevant PAS Group account-holders and that Westpac’s ignorance of that fraud caused it to pay the cheques. Mr Hilliard’s answer to the allegation of fraud was that he drew and signed the cheques under arrangements he said he had made with Mr Vizard, that is, with Mr Vizard’s actual or ostensible authority.
The submission for Mr Hilliard was that he had authority to sign cheques over $10,000, by reason of written authorities and practice, and that the $50,000 authority was authentic. As noted earlier, the trial judge in substance upheld this submission. His Honour concluded that Westpac had failed to establish on the balance of probabilities that the 1996 authority was not authentic. His Honour specifically held that the evidence of Mr Vizard in relation to the authority was ‘not to be acted on’.[6]
[6]Westpac Banking Corporation v Hilliard [2006] VSC 470, [243].
Westpac succeeded, however, in establishing that the proceeds of the cheques were not paid for the benefit of the relevant account-holders. His Honour commented on the case advanced by Mr Hilliard in these terms:
what [Mr Hilliard] seeks to establish as justification is the carrying out of a scheme for the secret removal of funds from the relevant account-holders, with no consideration or benefit for those account-holders and for the improper purpose of secretly enriching Mr Vizard and Mr Hilliard. It is to be noted that three of the 61 cheques, for an aggregate amount of $144,756.45, were drawn on the joint account of Mr and Mrs Vizard. In the case of the other 58 cheques the account-holder was a company in the PAS Group. While doubtless Mr Vizard could do with his own funds what he would, although his wife was a joint holder of their account and there is no evidence that she authorised the withdrawals under and for the purpose of the alleged arrangements or received any consideration therefor, the position is different with the corporate account-holders. For, being entities in their own right separate from Mr Vizard, Mr Hilliard’s case must meet the difficulty that the arrangement involved a secret removal of the funds of the corporate entity for the personal advantage of Mr Vizard and himself and not for the purpose of the account-holder which received no consideration …[7]
[7]Ibid [248].
His Honour here identified a central problem in the defence which Mr Hilliard had mounted. That is, even if Mr Hilliard’s account of the arrangements had been accepted, this would not have established that the proceeds of the cheques were paid for a proper purpose
because … the arrangements were for the secret removal of funds from the subject bank accounts not for the purposes of the account-holders but for the private purposes of Mr Vizard and Mr Hilliard.[8]
[8]Ibid [253].
According to his Honour, the submission advanced on behalf of Mr Hilliard at trial ‘did not grapple with these difficulties’:
It seemed to be assumed [on behalf of Mr Hilliard] that it was sufficient to establish that the cheques were drawn under the arrangements with Mr Vizard and to rely on Mr Vizard having an actual or ostensible authority in that regard. Even if Mr Vizard was a director of each company, and the position as to directors is not clear …, that is not sufficient to have the consequence in law that each corporate account-holder was bound by and to the arrangement alleged by Mr Hilliard for Mr Vizard’s (and Mr Hilliard’s) private purposes.[9]
[9]Ibid [248].
On the appeal, it was argued – evidently for the first time – that the arrangements between Hilliard and Vizard were for a proper purpose of the PAS account-holders.[10] First, however, we must deal with the challenge to his Honour’s conclusion that the alleged arrangements did not exist.
[10]See [51]-[53] below.
The alleged arrangements
In his particulars of defence, Mr Hilliard said that in 1992 Mr Vizard had informed him that ‘he wished to examine the possibility of establishing a fund overseas in a recognised tax haven’. At Mr Vizard’s request Mr Hilliard engaged a solicitor to provide advice. This was done, but Vizard rejected the advice. Mr Vizard said that he still wished to establish a ‘nest egg’ or an ‘emergency fund’ which he could keep confidential, and asked Hilliard to suggest how this might be done.
Hilliard advised Vizard that he could use IAT (of which Hilliard was director and shareholder) to obtain cash on cheques ‘which need not be explained’. According to the particulars
[Hilliard] said that [IAT] could give Vizard cash from [IAT’s] cashed cheques provided it was reimbursed by the PAS Group, reasonably quickly. Vizard said [he] thought the idea was “a good one” as he described it and said “give it a go”. [Hilliard] said that he would draw cheques from [IAT] for small amounts, cash them and give the cash to Vizard and from time to time, draw cheques on the PAS Group accounts to repay [IAT]. [Hilliard] said he would journalise the cheques in the PAS Group accounts to Vizard’s personal account in the PAS Group.[11]
[11]Emphasis added.
Mr Hilliard’s evidence-in-chief was substantially to this effect. When asked whether he included in Mr Vizard’s loan account the moneys which he drew from PAS in favour of IAT, he said:
Because the moneys … were going to Mr Vizard personally it was, in effect, a withdrawal from his companies and a payment to him. So it properly belonged in the loan account and that’s where I put it, most of it anyway.
He ‘reported on, month by month, the amounts of money that [he] had taken out of PAS.’ His evidence was that he had drawn cash cheques on IAT’s account and had given the cash to Mr Vizard in envelopes. (His evidence at trial was that, in accordance with Mr Vizard’s instructions, the cash had been paid ‘most times’ in lots of exactly $20,000. As he acknowledged under cross-examination, however, this was inconsistent with the evidence he had given at his committal hearing four years earlier, that payments were usually between $10,000 and $15,000.) He had then drawn cheques from PAS to repay IAT. By mid–1993, the amounts paid in cash to Mr Vizard ‘would have been hundreds of thousands of dollars’.
Mr Hilliard gave evidence that, at about that time, Vizard had told him that he was ‘quite satisfied’ with the arrangement for the flow of funds through IAT. Vizard had then said to Hilliard, ‘But you can’t do all this without getting something for your trouble.’ Hilliard proposed, and Vizard agreed, that Hilliard could make use of the arrangements already in place to pay some of his own bills, to purchase some shares and to pay for some holidays.
The loan account
Mr Hilliard said that, throughout his employment, one of his duties was to make entries in a loan account which Mr Vizard maintained with companies in the PAS Group, being PAS in the first instance and then Performing Arts Holdings after 1996. Mr Hilliard said that in 1991/1992 Mr Vizard’s declared income was only $35,000 per annum, whereas his personal expenses far exceeded that. Rather than transfer money to Mr Vizard’s bank account, Mr Hilliard was instructed to arrange the payment of all of Mr Vizard’s personal expenses through the relevant company, and to have the expenses debited to the loan account.
The level of Mr Vizard’s loan account during the relevant period was as follows:[12]
[12]See Westpac Banking Corporation v Hilliard [2006] VSC 470, [170].
Mr Vizard’s debt to PAS
Mr Vizard’s debt to Performing Arts Holdings Family Trust
1991
Nil
Nil
1992
$791,904
Nil
1993
$3,823,893
Nil
1994
$4,902,092
Nil
1995
$5,299,599
Nil
1996
$126,539
$27,207
1997
$1.00
$809,343
1998
Nil
$2,083,700 CR
1999
Nil
$1,972,825 CR
2000
Nil
$4,234,900 CR
2001
Nil
$3,908,263 CR
After summarising the accounts given respectively by Mr Hilliard and Mr Vizard, about the function of the loan account and about the level of communication between them on that subject,[13] his Honour concluded as follows:
In all the circumstances, and having regard to all that counsel said, I do not accept that Mr Vizard knew that the proceeds of cheques being drawn on the PAS Group accounts were recorded as being in the loan account. I find that Mr Hilliard exaggerated the extent to which he explained the loan account to Mr Vizard for the purpose of bolstering his case. There was a lack of specificity in Mr Hilliard’s evidence as to which payments were recorded in the loan account, apart from his saying “most payments” were so recorded. Ultimately, I accept Mr Vizard’s explanation that he was not concerned about the detail of the loan account, that he treated that as an intercompany loan, and what concerned him was the PAS Group’s overall position. This may reflect a somewhat lax approach by Mr Vizard to the scrutiny of the PAS Group’s financial statements, but that is a different matter. In my view, the issue of the loan account is, at best, equivocal. It does not assist Mr Hilliard’s case.[14]
[13]Ibid [169]–[177].
[14]Ibid [178].
No payments to Mr Vizard
The judge rejected Mr Hilliard’s evidence that he had given Mr Vizard quantities of cash drawn from IAT’s account, which withdrawals were covered by subsequent payments to IAT from the PAS Group.
Apart from that evidence of Mr Hilliard there is no evidence on which it could be concluded on the balance of probabilities that Mr Vizard received amounts withdrawn from the IAT account or the PAS Group accounts by means of cheques signed by Mr Hilliard. Nor is there evidence from which an inference to that effect could reasonably be drawn.[15]
[15]Ibid [254].
His Honour found that:
·the evidence of Mr Wood did not establish – and, because of his limited knowledge of dealings between Hilliard and Vizard, could not establish – that the cheques drawn on the PAS Group in favour of IAT represented a reimbursement for amounts paid to Mr Vizard from IAT accounts;[16]
·the records maintained by Mr Hilliard did not ‘truly and accurately reflect’ the transactions purportedly recorded;[17]
·without authority from IAT, Mr Hilliard withdrew money from IAT’s account for his own purposes;[18]
·there was no correspondence between the amounts withdrawn from IAT’s account and the amounts received into that account under cheques from the PAS Group;[19]
·the funds received into the IAT account under cheques received from the PAS Group were not applied for the benefit of IAT.[20]
[16]Ibid [255].
[17]Ibid [256].
[18]Ibid [256].
[19]Ibid [256].
[20]Ibid [258]–[259].
His Honour then referred to the financial position of Mr Hilliard and his partner.
It is no understatement to say that the financial position Mr Hilliard had attained by that time represented a remarkable achievement given his employment and income history. I have earlier referred to Mr Hilliard’s evidence as to his sources of income apart from his employment with PAS and to assets held prior to commencement of that employment. Even if there was no element of over‑statement in the level of his income from IAT or any source other than PAS, Mr Hilliard’s evidence did not satisfactorily establish how in the period of his employment with PAS his resources, whether considered alone or in conjunction with those of Ms McCready, enabled the acquisition of assets to the level disclosed in the evidence. I might add that a similar observation might be made as to the lifestyle he enjoyed exemplified by the overseas travel.[21]
[21]Ibid [260].
His Honour then moved to his conclusion:
These seem to me to be factors properly to be taken into account in the context of the evidence generally in deciding whether Mr Hilliard received the benefit of the balance of 52 cheques. That is to be determined on the balance of probabilities assessed in light of the underlying seriousness of the issue. Yet I am concerned only with a conclusion on the balance of probabilities and not with the establishment of a criminal offence.
In my view, regarding the matter overall, the likelihood or probability is that Mr Hilliard received the benefit of the cheques in question via the medium of IAT, and I am satisfied and find that that was the case. I conclude that it is established on the balance of probabilities that Mr Hilliard received the benefit of the 61 cheques, none of which were written or paid for the benefit of the relevant account-holder, and that … Mr Hilliard was unjustly enriched thereby.[22]
[22]Ibid [261]–[262].
One of the primary complaints on the appeal was that his Honour’s findings on these critical issues gave inappropriate credence to Mr Vizard’s uncorroborated evidence. This was said to be in conflict with his Honour’s conclusion that Mr Vizard was an unreliable witness. It will be apparent from the preceding paragraphs, however, that his Honour’s conclusions did not rely on Mr Vizard’s evidence at all.
The absence of records
It was contended on behalf of Mr Hilliard that the judge placed undue significance on the absence of documentary records or other corroborating material to confirm the making of the payments to Mr Vizard. Since this was ‘a secret transaction’, so the argument went, it was hardly surprising that there was an absence of documentary records.
We disagree. We have already referred[23] to the particulars of Mr Hilliard’s defence, and to his evidence, both of which described the making of entries in Mr Vizard’s loan account as integral to the agreed (secret) arrangements.
[23]Paragraphs 25 and 26 above.
Not only was Mr Hilliard the keeper of the relevant accounts but he went so far as to remove – unlawfully – a series of the PAS Group’s records on his departure from it. It is significant in our view that the records do not contain entries which corroborate Mr Hilliard’s claims as to purpose, in circumstances where he was responsible for the records and hence was in a position to make and to remove records which confirmed the probity of his actions.[24]
[24]Westpac Banking Corporation v Hilliard [2006] VSC 470, [192].
Mr Hilliard’s evidence was that Mr Vizard had ordered him to destroy all records of the arrangements when he left the PAS Group in 2000. Assuming that to have been so, there was nevertheless real force in the proposition advanced by Westpac, at trial and again on the appeal, that if such records had existed Mr Hilliard would have surely wished to keep his own copies, for his own protection.
Furthermore, as Westpac’s submission pointed out, the moneys which Mr Hilliard paid to IAT did not match the movements in the loan account. Westpac’s submission included the following table:
YE 30 June
Payments to IAT
Net movement in Loan Account
1994
$416,764
DR $1,618,199
1995
$268,269
DR $397,507
1996
$522,988
CR $5,398,931
1997
$509,789
DR $908,676
1998
$245,695
CR $2,893,044
1999
$320,779
DR $110,875
2000
$292,754
CR $2,262,075
It was further submitted for Mr Hilliard that his Honour’s conclusions were partly founded on a view that the alleged arrangement was inherently unlikely. This was also said to be the erroneous reason given that, having regard to the evidence shown about Mr Vizard’s commercial dishonesty, it was wrong ‘to judge a case involving him by ordinary commercial standards and expectations’.
In our view, his Honour’s conclusions are unimpeachable. Mr Hilliard was the person who effected the transactions and was responsible for the record-keeping. His defence was that the payments were for a proper purpose, and he had to make good that defence.
We agree with the Westpac submission that the objective facts (disregarding Mr Vizard’s evidence) put Hilliard in the position where he had to provide an explanation. He had drawn the cheques; they had been made out to a company he controlled; he had received at least some of the money; and there was the unexplained betterment of his financial position. In these circumstances, it was for Hilliard to make good the innocent explanation he advanced. That he failed to do.
It was significant, as the judge said, that the PAS Group had, over a period of years, made numerous payments by cheque to IAT in the absence of any commercial or other relationship between the PAS Group (and the relevant account-holders) on the one hand and IAT on the other. The only link was Mr Hilliard, as an employee of PAS and a director of IAT, but that was coincidental.[25]
[25]Ibid [251].
Contrary to the appeal submission advanced on Mr Hilliard’s behalf, his whole case was that the ‘secret scheme’ involved the making of appropriate entries in Mr Vizard’s loan accounts. Leaving aside the inherent improbability of an arrangement whereby supposedly secret payments were to be routinely documented, the absence of corroborative documentation was obviously of great forensic significance.
Conclusion
In our respectful view, the analysis undertaken by the trial judge was exemplary. He analysed the case before him within a logical and sequential framework. In a 129 page judgment, delivered a little over two months after the completion of the trial, he dealt in turn with the introductory facts;[26] the pleadings;[27] the categories of evidence before him;[28] background matters relating to the honesty of Mr Vizard and Mr Hilliard and the reliability of their evidence;[29] the course of the trial, including the refusal of Mr Vizard to answer questions on the ground of self‑incrimination and the subsequent stay application; background facts[30] (in the course of which he rejected Mr Vizard’s characterisation of Mr Hilliard’s role);[31] banking arrangements for the PAS Group;[32] cheques signed by Mr Hilliard[33] (in the course of which he rejected Mr Vizard’s evidence as to the extent to which Mr Hilliard was authorised to pay cheques);[34] the acquisition and false recording of art in the Vizard Foundation;[35] Mr Vizard’s loan account;[36] the sequence of events in 1999 and 2000;[37] Mr Hilliard’s evidence as to the arrangements with Mr Vizard;[38] how each side’s case was put;[39] the evidence and conduct of Mr Vizard[40] (concluding that Mr Vizard was an unreliable witness, whose evidence should not be accepted on contentious matters unless it was supported by cogent independent evidence or otherwise established on the balance of probabilities);[41] the evidence and conduct of Mr Hilliard[42] (concluding also that Mr Hilliard was an unreliable witness, whose evidence should not be accepted on contentious matters unless supported by evidence of a cogent nature or otherwise independently established).[43]
[26]Ibid [1].
[27]Ibid [20].
[28]Ibid [52].
[29]Ibid [82].
[30]Ibid [102].
[31]Ibid [123].
[32]Ibid [124].
[33]Ibid [147].
[34]Ibid [156].
[35]Ibid [158].
[36]Ibid [169].
[37]Ibid [129].
[38]Ibid [182].
[39]Ibid [207].
[40]Ibid [223].
[41]Ibid [230].
[42]Ibid [281].
[43]Ibid [239].
The ultimate basis of the trial judge’s decision was as follows. Given his Honour’s conclusion that the evidence of neither Mr Vizard nor Mr Hilliard could be relied on as to contentious matters, the case fell to be decided on the basis of the combined force of the evidence as a whole. The classic statement of the relevant principle is that of the High Court in Bradshaw v McEwans Pty Ltd,[44] in a passage since repeatedly adopted: [45]
Of course as far as logical consistency goes many hypotheses may be put which the evidence does not exclude positively. But this is a civil and not a criminal case. We are concerned with probabilities, not with possibilities. The difference between the criminal standard of proof in its application to circumstantial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistent with innocence while the latter you need only circumstances raising a more probable inference in favour of what is alleged. In questions of this sort where direct proof is not available it is enough if the circumstances appearing in the evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture. … But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then though the conclusion may fall short of certainty it is not to be regarded as a mere conjecture or surmise …
[44](1951) 217 ALR 1, 5.
[45]See Transport Industries v Longmuir [1997] 1 VR 125, 141 and the cases there cited.
Approaching the matter in this way, his Honour was in our view entitled to conclude on the evidence that:
·Mr Hilliard received the benefit of the cheques in issue;
·there was no commercial relationship between the PAS Group and IAT;
·the only link between the PAS Group and IAT was Mr Hilliard;
·Mr Hilliard wrote the cheques and disbursed the proceeds;
·Mr Hilliard applied a substantial sum to his own personal expenses ($438,000);
·Mr Hilliard kept no records of the manner in which the relevant funds were disbursed;
·the only evidence of payment to Mr Vizard was that of Mr Hilliard, who was not a reliable witness;
·the PAS Group accounts did not record the alleged loans to Mr Vizard;
·Mr Hilliard took records (36 documents) from the PAS Group but none which corroborated his story concerning these highly contentious dealings;
·Mr Hilliard and his partner were shown to have enjoyed significant unexplained financial betterment during the period in issue;
·there was evidence of Mr Hilliard’s dishonesty otherwise, in particular in respect of his dealings with the PAS Group (most obviously the unlawful removal of documents).
The trial judge’s decision was arrived at on the weight of the evidence as a whole. It is not to the point to submit that individual aspects of the evidence, such as the betterment evidence, could not by themselves have justified the ultimate conclusion. His Honour considered each piece of evidence in the context of all of the other evidence. Each of the matters we have identified assisted in the drawing of inferences from the evidence as a whole.[46]
[46]Chamberlain v The Queen (No 2) (1984) 153 CLR 521, 535 (Gibbs CJ and Mason J).
In our view, his Honour’s conclusions as to the probable receipt by Mr Hilliard of the benefit of the cheques in issue accorded with the weight of the evidence, appropriate regard having been paid to the seriousness of the allegations in issue.
Proper purpose?
The alternative submission for Mr Hilliard on the appeal was that the judge could not have been satisfied on the balance of probabilities that there was no consideration for the moneys disbursed or that they were disbursed for other than a proper purpose of the account-holder companies. This submission rested on the proposition that, although the cheques had been made out to IAT, the amounts disbursed had been debited against Mr Vizard’s loan account, as amounts owing to the relevant account-holder company.
Counsel for Mr Hilliard argued that the creation of the debit in the company’s favour constituted consideration, and that the making of a loan to a director was a proper purpose. According to the appeal submission, the group of companies acted effectively as banker to Mr Vizard. The making of loans to Mr Vizard
was a proper purpose because the whole arrangement of the company structure was that it acted for the overall benefit of Mr Vizard by providing a means for his lifestyle through inter-company loans and the such.
Counsel for the respondent objected that no such proposition was advanced at trial, nor was it articulated in the grounds of appeal. It was submitted that the argument could not therefore be entertained on the appeal. We need say no more about those matters, since we have upheld the judge’s conclusion that the moneys were not advanced to Mr Vizard at all.
Limits on cross-examination (Ground 2)
As noted earlier, Mr Hilliard applied for a stay of the proceeding on the ground that Mr Vizard’s successful claims of privilege meant that Mr Hilliard would not have a fair trial. The judge refused the application. Ground 2 attacked that refusal as an exercise of discretion. In the course of argument, however, counsel for Mr Hilliard agreed that this Court should approach the matter by asking whether, in the events which happened, Mr Hilliard was denied a fair trial.
Counsel for Mr Hilliard argued that there was a close similarity between the kind of covert dealing by which Mr Vizard engaged in insider trading in 2000[47] and the secret scheme which Hilliard said had been set up in this case. On that basis, so it was argued, the refusal of Vizard to answer questions about the insider trading (on the basis of self-incrimination) denied Hilliard the opportunity to put the similar fact evidence to full use. Had he been able to do that, he would have been better able to prove the existence of the secret scheme.
[47]See Australian Securities and Investments Commission v Vizard (2005) 145 FCR 57.
Counsel relied on the decision of Northrop J in Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd.[48] In that case, the applicant company claimed that it had been induced to take up a tenancy in Centrepoint’s shopping mall by misleading representations about the commercial potential of the mall. Northrop J permitted the applicant to call witnesses associated with tenants of other shops in the mall, to give evidence that identical representations had been made to them on behalf of Centrepoint. His Honour[49] cited the judgment of Dixon J in Martin v Osborne,[50] which included the following passage:
the acts of a party are admissible against him whenever they form a component in a combination of circumstances which is unlikely to occur without the fact in issue also occurring. The repetition of acts or occurrences is often the very thing which makes it probable that they are accompanied by some further fact. The frequency with which a set of circumstances recurs or the regularity with which a course of conduct is pursued may exclude, as unreasonable, any other explanation or hypothesis than the truth of the fact to be proved.
[48](1981) 36 ALR 23.
[49]Ibid 28–29.
[50](1936) 55 CLR 367, 375-6.
In our view, there was no relevant similarity of that kind in the present case. In Mister Figgins Pty Ltd v Centrepoint Pty Ltd,[51] as we have pointed out, there was repetition of identical conduct on numerous occasions over a relatively confined period. Here the alleged similarities in conduct were at such a level of generality, and the two sets of events were so many years apart, that the insider trading activities which Mr Vizard had admitted in the Federal Court had no probative value in relation to any fact in issue in this proceeding.
[51](1981) 36 ALR 23.
In any case, the statement of agreed facts filed in the Federal Court was correctly treated by the judge as an admission by Mr Vizard that he had engaged in dishonest conduct. Unsurprisingly, counsel for Hilliard wanted to use that statement as a basis for further attacks on Vizard but, as the reasons make clear, the judge accepted that Vizard had been dishonest, both in the proceeding and elsewhere, and was therefore not to be believed on anything. Indeed, the adverse findings about Mr Vizard’s character and credibility could hardly have been expressed more strongly.[52]
[52]Westpac Banking Corporation v Hilliard [2006] VSC 470, [227]–[230].
For these reasons, the limitation of the cross-examination did not affect the fairness of the trial. For completeness, however, we wish to make clear that the direct attack on the judge’s exercise of discretion would also have failed, for the following reasons.
No error in the exercise of discretion
As his Honour’s ruling records,[53] senior counsel for Mr Hilliard submitted in support of the stay application that there was a two‑fold purpose to the proposed cross‑examination, which was said to have been impeded by the successful claim of privilege. First, it was put as to Mr Vizard’s credit. Secondly, it was advanced in support of Mr Hilliard’s claim to have had authority to sign the relevant cheques
[53](Unreported, Supreme Court of Victoria, Justice Hansen, 8 September 2006). See Westpac Banking Corporation v Hilliard [2006] VSC 470, [99]–[101].
In rejecting the stay application, the trial judge correctly identified the relevant principles by reference to authority,[54] and applied them to the circumstances before him. He recorded that the application ‘…seems not without merit’, but concluded:
I do not consider that as at present it is demonstrated that the unfairness to Mr Hilliard as a consequence of the refusal of Mr Vizard to answer questions is such as to warrant the proceeding being stayed on the application of the principles earlier referred to.[55]
[54]Walton v Gardiner (1992) 177 CLR 378; Batistatos v Roads and Traffic Authority NSW (2006) 226 CLR 256.
[55](Unreported, Supreme Court of Victoria, Justice Hansen, 8 September 2006).
It can be seen the ruling implicitly left open the possibility of a further stay application as the trial proceeded and, more particularly, at the conclusion of the evidence. In fact no further application for stay was made. If application had been renewed at the conclusion of Mr Hilliard’s case, it would then have fallen to be considered in the context of the evidence as a whole – including that called both from Mr Hilliard himself and on his behalf – so far as it bore upon matters in respect of which it had been desired to cross‑examine Mr Vizard. In the event, the judge did not have to decide the question whether, having regard to the evidence as a whole, the restriction on the cross‑examination of Mr Vizard resulted in a trial of such unfairness that it should have been stayed.
There was, in our view, no arguable basis for any suggestion that the trial judge’s exercise of discretion miscarried. There was no error which could have attracted the application of the principles stated in House v The King.[56] As already noted, his Honour squarely addressed the question of whether fairness required the trial to be stayed. He was, as he recognised, required to balance competing considerations.[57]
[56](1936) 55 CLR 499, 504–5.
[57]Victoria Aircraft Leasing Ltd v United States (2005) 12 VR 340, 349–50.
It would be a very serious thing for a court to shut a party out from making an otherwise legitimate claim, because of a claim to privilege made by a witness called by it. His Honour was required to consider whether to continue the hearing would, in the words of Lord Diplock in Hunter v Chief Constable of the West Midlands Police,[58]
be manifestly unfair to a party to litigation before [him], or would otherwise bring the administration of justice into disrepute among right-thinking people.
It was plainly open to his Honour to conclude as he did, that he was not satisfied that the point had been reached where the trial was so substantially unfair as to amount to an abuse of process.
[58][1982] AC 529, 536. It has been referred to with approval by Mason CJ in Rogers v The Queen (1994) 181 CLR 251, 256, and by the majority in D’Orta Ekenaike v Victoria Legal Aid (2005) 223 CLR 1, 28.
In turn the question on appeal of whether the restriction of cross‑examination resulted in an unfair trial can in the first instance be answered by reference to the actual course of the subsequent proceedings. The trial judge’s ruling plainly left open the possibility of a further stay application. Mr Hilliard was represented by experienced counsel, yet no such further application was made.
This is not a case where the trial judge determined a stay application in finally disposing of the proceeding.[59] The application which had earlier been rejected was not renewed. It will be an exceptional civil case in which it is open to an appellant to successfully argue on appeal that, with the benefit of hindsight, the proceeding should have been stayed, when the decision actually made by the trial judge on the stay application was not itself attended with error.
[59]Cf Victoria Aircraft Leasing Ltd v United States (2005) 12 VR 340.
As the majority of the High Court observed in Coulton v Holcombe,[60]
It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish.
[60](1986) 162 CLR 1, 7.
Proof of causative mistake (Ground 6)
Applying the decision of the High Court in David Securities Pty Limited v Commonwealth Bank of Australia,[61] the judge proceeded on the basis that, for the purposes of a restitutionary claim, a mistake
may be constituted by a positive belief in the existence of something which does not exist but also may include sheer ignorance of something relevant to the transaction in hand.[62]
His Honour said of the case at hand:
It is axiomatic that where a cheque is drawn and paid in fraud on the customer there is no consideration for the payment. Hence, where a bank pays a cheque in ignorance of a fraud, and whether or not the cheque is within a monetary limit of the mandate, the bank has acted under a mistake as to the propriety of the cheque and the proceeds thereof may be recovered from the payee on the basis of unjust enrichment. Recovery may be at the instance of the bank or the customer depending on where the loss has fallen.
Westpac submits, with respect to all of the 61 cheques sued upon, and whether or not there were mandates as contended by Mr Hilliard, that Mr Hilliard signed the cheques in perpetration of a fraud upon the relevant account-holder in the PAS Group, and that Westpac paid the cheques in ignorance of the fraud. To put it another way, that ignorance or mistake as to the propriety of the cheques was causative of the payment.[63]
[61](1992) 175 CLR 353, 369 (Mason CJ, Deane, Toohey, Gaudron and McHugh JJ).
[62]Westpac Banking Corporation v Hilliard [2006] VSC 470, [211].
[63]Ibid [214]–[215] (emphasis added).
Mr Hilliard contended (Ground 6) that his Honour had here misdirected himself, as a matter of law, on the issue of causation. According to the written submission:[64]
The relevant alleged mistakes in the present case were of fact, not of law. The claimant was Westpac, not the entities in the PAS Group. The relevant enquiry was whether Westpac had established that its mistakes by ignorance of facts (as found) [were] in fact causative of it (not the entities in the PAS Group) making the payments.
The finding that sheer ignorance of the purpose of the payment was, in the circumstances, causative of Westpac making the payments ignores the reality that the cheques (contrary to Westpac’s pleaded case and to the evidence of Vizard, but as found by his Honour) were drawn in conformity with the account-holder’s mandate. Westpac as drawee was bound to make payment in accord with the mandate, at least to the extent of the customer’s credit. The finding ignores relevant fact, namely, that there was no evidence of any relevant enquiry made by Westpac as to the purpose of any cheque.
To find a causative mistake in these circumstances is to apply an erroneous “but for” test of causation. While it may be true to say that if Westpac knew of the relevant cheques were not drawn for a purpose of the account-holder it would not have paid them, it does not follow that ignorance of that fact is causative of a mistaken payment.
…
In the present case, applying common sense to the facts of the case, the payments were made because of a positive duty upon the bank to make them in the circumstances in which cheques were presented. The learned trial judge ought not have been satisfied that the bank has established that mistake, assuming it to be established, was causative of the payments.
[64]Paragraphs 23–25, 28 (emphasis added, references omitted).
In oral argument, counsel for Mr Hilliard developed this submission by contending that recovery was precluded because of Westpac’s ‘voluntary assumption of risk’. It was said that Westpac had assumed without inquiry that the cheques were drawn for a proper purpose. The bank had thus voluntarily assumed the risk that that might not be so, such that it could not then claim that the payments were caused by a mistake as to purpose. It was the lack of enquiry which was causative, because it resulted in Westpac acting in the mistaken belief that it was bound to pay the cheques.
Before proceeding to consider the submission, we should point out – as the trial judge did – that no such case was advanced at trial. His Honour said:
Senior counsel for Mr Hilliard concluded his final address by saying that the relevant inquiry is whether the bank acted on a relevant mistake and whether it acted reasonably in the circumstances. I should say that counsel referred to no authority that might indicate that in circumstances such as the present a bank in Westpac’s position should make inquiries of the nature submitted. Furthermore, counsel for Mr Hilliard did not call evidence from a person of appropriate experience as to how a reasonable banker would have acted in the circumstances of the case including as to any inquiry that such a banker would have made as to the purpose of or authority for the cheques. This is perhaps not surprising given that the defence did not plead that the circumstances were such that the bank was under a duty to make enquiries as to the purpose of the cheques, and that the bank had breached such a duty. If that case had been raised on the pleadings, appropriate evidence could have been called. But that was not the case run by Mr Hilliard’s counsel.[65]
[65]Westpac Banking Corporation v Hilliard [2006] VSC 470, [217].
On appeal, counsel sought to draw an analogy with the case of South Australian Cold Stores Limited v Electricity Trust of South Australia.[66] In that case, the Electricity Trust had made a demand on the company for payment for supply of electricity at increased rates. In fact, as was subsequently established, the instrument by which the rates had purportedly been increased was invalid. But the company
was prepared to make the payments without investigating what had been done under the prices legislation. The lawfulness of the demand made by the trust for the higher rates depended upon a legal conclusion or consequence which the manager and secretary of the company was prepared to assume without enquiry or examination. He simply supposed that in some way or other the trust was lawfully entitled to charge the higher rate.[67]
[66](1957) 98 CLR 65 (‘South Australian Cold Stores’).
[67]Ibid 73.
The High Court concluded that, in the circumstances, this was not a case of payment by mistake such as would enable the company to recover the amounts paid as moneys had and received. That action was only available
when the payee cannot justly retain the money paid to him because it would not have come to his hands if it had not been for a false supposition of fact on the part of the payer causing the latter to believe that he was compellable to make the payment or at all events that he ought to make it.[68]
In the case at hand, there was no false supposition of fact. ‘[T]here was nothing but an assumption that in some way or other the increased charge might lawfully be made and a readiness to comply with the payee’s demand without more …’.[69]
[68]Ibid 75.
[69]Ibid.
This decision was considered by the High Court in David Securities Pty Ltd v Commonwealth Bank of Australia.[70] Referring also to Werrin v The Commonwealth[71] and J & S Holdings Pty Ltd v NRMA Insurance Limited,[72] the Court said in David Securities:[73]
An important feature of the relevant judgments in these three cases is the emphasis placed on voluntariness or election by the plaintiff. The payment is voluntary or there is an election if the plaintiff chooses to make the payment even though he or she believes a particular law or contractual provision requiring the payment is, or may be, invalid, or is not concerned to query whether payment is legally required; he or she is prepared to assume the validity of the obligation, or is prepared to make the payment irrespective of the validity or invalidity of the obligation, rather than contest the claim for payment.
[70](1992) 175 CLR 353 (‘David Securities’).
[71](1938) 59 CLR 150.
[72](1982) 61 FLR.
[73](1992) 175 CLR 353, 373-4.
In our view, there is no analogy between those cases and the present. There is no relevant parallel between the position of a person responding to a specific demand for payment – as in South Australian Cold Stores – and a bank paying customers’ cheques in the ordinary course of its banking business. As the submission for Westpac correctly pointed out:
The legal obligation of a bank to pay its customers’ cheques depends upon the instructions of the customer in that regard accepted by the bank – the mandate. If cheques are drawn in accordance with the mandate and funds are available (or the account is within agreed overdraft limits) the bank is bound to pay the cheque.[74] If circumstances appear where a reasonable and honest banker would consider that there was a serious possibility that the customer was being defrauded or that funds were being misappropriated a bank is under a duty to question the transaction. It is entitled to defer payment of the cheque until such enquiries are made and if it has knowledge of fraud on its customer is bound to refuse to pay.[75]
[Mr Hilliard] concedes that Westpac would not have paid the cheques if it knew that they were not drawn for a purpose of the account-holders. … [W]ithout that knowledge, Westpac had no reason to think that it was not bound to pay the cheques according to their tenor, whereas if it had known of the fraud it would have been bound not to pay the cheques.
[74]See Butterworths, Halsbury’s Laws of Australia, Vol 2 (17 September 2009) 45 Banking and Finance, 1 ‘Banker and Customer Relationship’ [45-730].
[75]Lipkin Gorman (a Firm) v Karpnale Ltd [1992] 4 All ER 409, 418-21.
In our view, Westpac’s submission must be upheld. The principles governing a banker’s duties with respect to the payment of cheques are clear and of long standing. They provide the framework – both legal and commercial – within which the transactions at issue here must be viewed. There was nothing to put the bank on inquiry as to the possibility of fraud. The judge was right to conclude that the bank’s ‘sheer ignorance of something relevant to the transaction in hand’ led to the mistaken belief that it was under a legal obligation to pay the moneys. That was the causative mistake.
In view of our conclusion on this ground, we do not need to deal with Westpac’s objection that this point should not have been entertained on the appeal, as it had not been raised at trial.
Enrichment not ‘at Westpac’s expense’ (Ground 7)
It was submitted for Mr Hilliard that, even if it were accepted that he had been unjustly enriched by reason of the mistaken payment of the cheques, he was not enriched at the expense of Westpac and, hence, Westpac could not sue for restitution. The written submission focused on the payment made by Westpac under the terms of settlement, and contended that
the requirement that the enrichment be at the plaintiff’s expense is not satisfied where the plaintiff, without legal obligation, voluntarily makes payment to the person at whose expense the enrichment arose. In such a case, the defendant is not by the payment enriched at the plaintiff’s expense.
The discussion in oral argument focused, however, on the payments which Westpac made when it honoured cheques drawn on the accounts of its PAS Group customers. Counsel for Mr Hilliard relied on what was said by McGarvie J in Ryan v Bank of New South Wales,[76] as follows:
One starts from the fact that the money paid on the cheques was in a commercial sense the [customers’] money. As a matter of law the money treated as paid was money owned by the [bank] which it paid on the order of the [customers]. It was however money put by the [bank] at the [customers’] disposal and the [customers] became obliged to reimburse the [bank] with corresponding amounts of money. For practical purposes the money paid may be treated as the [customers’] money.
[76][1978] VR 555, 580–1.
Consistently with this passage, counsel accepted that the money which Westpac paid out when it honoured a cheque was its own, and that the bank had a contractual right to reimburse itself by debiting the account of the relevant customer. Counsel argued, however, that ‘in a practical commercial sense’ it was the customer’s money which was in fact paid out. This was said to be so because the debiting of the customer’s account was an ‘effectively instantaneous transaction … on presentation of a cheque’.
Counsel relied on what was said by the High Court in Australia and New Zealand Banking Group Limited v Westpac Banking Corporation,[77] in relation to the identification of the true recipient of moneys paid by mistake. In the case of a payment made to an intermediary, the Court said, regard should be had to ‘the substance rather than to form of what has occurred’ in order to determine on whom the liability to repay should fall. The same approach, it was submitted, should apply in the present case, to determine who in fact bore the expense of making the relevant payment.
[77](1988) 164 CLR 662, 674.
Once again, in our view, there is no relevant analogy. Westpac was not acting as intermediary. It paid the cheques in its own right, and then exercised its contractual right of recoupment, by debiting the customers.[78] In paying the cheques,
Westpac suffered a diminution in its own resources and hence sustained the loss.
[78]See Banque Belge Pour L’Etranger v Hambrouck [1921] 1 KB 321, 325 (Bankes LJ), 328-9 (Scrutton LJ); Agip (Africa) Ltd v Jackson [1991] Ch 547, 561 F (Fox LJ).
It is irrelevant, in our view, that Westpac then recouped itself by debiting the relevant customer account. To adapt what Brennan J said in Commissioner of State Revenue (Victoria) v Royal Insurance Australia Limited,[79] ‘the passing on of the burden of the payments made does not affect the situation that, as between [Hilliard] and [Westpac], the former was enriched at the expense of the latter.’ It is likewise irrelevant that Westpac later ‘resumed’ the loss by reimbursing the account-holders under the terms of settlement.
[79](1994) 182 CLR 51, 90–91.
DODDS-STREETON JA:
I have had the advantage of reading in draft the reasons for judgment prepared by the President and Osborn AJA. I agree that the appeal should be dismissed, broadly for the reasons given by their Honours.
---
0
12
0