Ideas Plus Investments Ltd v National Australia Bank Ltd

[2006] WASCA 215

IDEAS PLUS INVESTMENTS LTD -v- NATIONAL AUSTRALIA BANK LTD [2006] WASCA 215

Reported Decision:	(2006) 32 WAR 467
Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2006] WASCA 215
Court:	THE COURT OF APPEAL (WA)
Case No:	CACV:43/2005	Heard:	21 JUNE 2006
Coram:	STEYTLER P McLURE JA BUSS JA	Delivered:	26/10/06
No of pages:	48	Judgment Part:	1 of 1
Result:	Appeal dismissed
Category:	A
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Parties:	IDEAS PLUS INVESTMENTS LTD NATIONAL AUSTRALIA BANK LTD
Catchwords:	Appeal Construction of terms of irrevocable standby letter of credit Appeal dismissed Letters of credit General principles Contracts Whether support contract arose between account party and beneficiary of letter of credit Undertaking to arrange for letter of credit given to beneficiary by third party Beneficiary indifferent as to identity of account party No support contract Misleading or deceptive conduct Beneficiary issued certificate required by letter of credit to claim payment Whether misleading conduct if assertions in certificate untrue Where beneficiary acted in good faith and reasonably In absence of support contract, beneficiary entitled to claim under letter of credit if it had bona fide belief that conditions satisfied Certificate cannot amount to more than representation of beneficiary's bona fide belief and, perhaps, of existence of reasonable grounds for holding belief Conduct not misleading or deceptive Restitution and unjust enrichment General principles Failure of consideration or failure of basis Whether account party entitled to restitution of money paid by issuing bank to beneficiary under letter of credit if assertions in beneficiary's certificate untrue Where no underlying contract, transaction or relationship between account party and beneficiary Beneficiary's entitlement to access credit not dependent on truth of statements in certificate Beneficiary entitled to make claim if acting in good faith No scope for restitutionary claim as argued
Legislation:	Fair Trading Act 1987 (WA), s 10(1) Trade Practices Act 1974 (Cth), s 52
Case References:	Agip (Africa) Ltd v Jackson [1991] Ch 547 Austal Ships Pty Ltd v National Australia Bank Ltd, unreported; SCt of WA (Templeman J); Library No 970037; 13 February 1997 Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) (1978) 141 CLR 335 Australia & New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 Bachmann Pty Ltd v BHP Power New Zealand Ltd [1999] 1 VR 420 Baltic Shipping Co v Dillon (1993) 176 CLR 344 Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221 Black v S Freedman & Co (1910) 12 CLR 105 Bush v National Australia Bank Ltd (1992) 35 NSWLR 390 Cargill International SA Antigua Geneva Branch v Bangladesh Sugar & Food Industries Corporation [1996] 2 Lloyd's Rep 524 Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd [2003] NSWSC 1072 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Comdel Commodities Ltd v Siporex Trade SA [1997] 1 Lloyd's Rep 424 Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 Contronic Distributors Pty Ltd v Bank of New South Wales [1984] 3 NSWLR 110 Cowern v Nield [1912] 2 KB 419 Cruickshank v Westpac Banking Corporation [1989] 1 NZLR 114 David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 Deutsche Rückversicherung AG v Walbrook Insurance Co Ltd [1995] 1 WLR 1017 Dowdle v Coppel [1987] VR 1024 Edward Owen Engineering Ltd v Barclays Bank International Ltd [1978] QB 159 Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812 Group Josi Re v Walbrook Insurance Co Ltd [1996] 1 WLR 1152 (CA) Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1985) 1 NSWLR 545 Ian Stach Ltd v Baker Bosley Ltd [1958] 2 QB 130 Inflatable Toy Company Pty Ltd v State Bank of New South Wales (1994) 34 NSWLR 243 Intraco Ltd v Notis Shipping Corporation (The "Bhoja Trader") [1981] 2 Lloyd's Rep 256 Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526 Khan v Permayer [2001] BPIR 95 Kiriri Cotton Co Ltd v Dewani [1960] AC 192 Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 Mason v The State of New South Wales (1959) 102 CLR 108 McDonald v Coys of Kensington [2004] EWCA Civ 47 Niru Battery Manufacturing Co v Milestone Trading Ltd (No 2) [2004] 2 Lloyd's Rep 319 Niru Battery Manufacturing Co v Milestone Trading Ltd [2002] EWHC 1425 (Comm) Niru Battery Manufacturing Co v Milestone Trading Ltd [2004] QB 985 Nissan v Attorney-General [1970] AC 179 Olex Focas Pty Ltd v Skodaexport Co Ltd [1998] 3 VR 380 O'Sullivan v National Australia Bank Ltd [1998] NSWSC 303 Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 RD Harbottle (Mercantile) Ltd v National Westminster Bank Ltd [1978] QB 146 Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 Spangaro v Corporate Investment Australia Funds Management Ltd (2003) 21 ACLC 1,948 United Australia Ltd v Barclays Bank Ltd [1941] AC 1 United City Merchants (Investments) Ltd v Royal Bank of Canada [1983] 1 AC 168 Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 Westpac Banking Corporation v South Carolina National Bank [1986] 1 Lloyd's Rep 311 Wood Hall Ltd v The Pipeline Authority (1979) 141 CLR 443 Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424 Barclays Bank Ltd v WJ Simms Son & Cooke (Southern) Ltd [1980] QB 677 Bateman Project Engineering Pty Ltd v Resolute Ltd (2000) 23 WAR 493 Cargill International SA v Bangladesh Sugar & Food Industries Corporation [1998] 1 WLR 461 Fountain v Bank of America National Trust & Savings Association (1992) 5 BPR 11,817 Ginger Development Enterprises Pty Ltd v Crown Developments Australia Pty Ltd (2003) 12 BPR 22,607 Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 Park v Brothers (2005) 80 ALJR 317 Punjab National Bank v de Boinville [1992] 1 WLR 1138 Tenore Pty Ltd v Roleystone Pty Ltd, unreported; SCt of NSW (Giles J); 14 September 1990

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : IDEAS PLUS INVESTMENTS LTD -v- NATIONAL AUSTRALIA BANK LTD [2006] WASCA 215 CORAM : STEYTLER P

McLURE JA
BUSS JA

HEARD : 21 JUNE 2006 DELIVERED : 26 OCTOBER 2006 FILE NO/S : CACV 43 of 2005 BETWEEN : IDEAS PLUS INVESTMENTS LTD

Appellant

AND

NATIONAL AUSTRALIA BANK LTD
Respondent

ON APPEAL FROM:

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Coram : COMMISSIONER SIOPIS SC

Citation : IDEAS PLUS INVESTMENTS LTD -v- NATIONAL AUSTRALIA BANK LTD [2005] WASC 51

File No : CIV 1615 of 1999

(Page 2)

Catchwords:

Appeal - Construction of terms of irrevocable standby letter of credit - Appeal dismissed

Letters of credit - General principles

Contracts - Whether support contract arose between account party and beneficiary of letter of credit - Undertaking to arrange for letter of credit given to beneficiary by third party - Beneficiary indifferent as to identity of account party - No support contract

Misleading or deceptive conduct - Beneficiary issued certificate required by letter of credit to claim payment - Whether misleading conduct if assertions in certificate untrue - Where beneficiary acted in good faith and reasonably - In absence of support contract, beneficiary entitled to claim under letter of credit if it had bona fide belief that conditions satisfied - Certificate cannot amount to more than representation of beneficiary's bona fide belief and, perhaps, of existence of reasonable grounds for holding belief - Conduct not misleading or deceptive

Restitution and unjust enrichment - General principles - Failure of consideration or failure of basis - Whether account party entitled to restitution of money paid by issuing bank to beneficiary under letter of credit if assertions in beneficiary's certificate untrue - Where no underlying contract, transaction or relationship between account party and beneficiary - Beneficiary's entitlement to access credit not dependent on truth of statements in certificate - Beneficiary entitled to make claim if acting in good faith - No scope for restitutionary claim as argued

Legislation:

Fair Trading Act 1987 (WA), s 10(1)

Trade Practices Act 1974 (Cth), s 52

Result:

Appeal dismissed

(Page 3)

Category: A

Representation:

Counsel:

Appellant : Mr M J McCusker QC & Mr J A Thomson
Respondent : Mr K J Martin QC & Mr C S Gough

Solicitors:

Appellant : Cullen Babington Hughes
Respondent : Minter Ellison

Case(s) referred to in judgment(s):

Agip (Africa) Ltd v Jackson [1991] Ch 547
Austal Ships Pty Ltd v National Australia Bank Ltd, unreported; SCt of WA (Templeman J); Library No 970037; 13 February 1997
Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) (1978) 141 CLR 335
Australia & New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99
Bachmann Pty Ltd v BHP Power New Zealand Ltd [1999] 1 VR 420
Baltic Shipping Co v Dillon (1993) 176 CLR 344
Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221
Black v S Freedman & Co (1910) 12 CLR 105
Bush v National Australia Bank Ltd (1992) 35 NSWLR 390
Cargill International SA Antigua Geneva Branch v Bangladesh Sugar & Food Industries Corporation [1996] 2 Lloyd's Rep 524
Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd [2003] NSWSC 1072
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Comdel Commodities Ltd v Siporex Trade SA [1997] 1 Lloyd's Rep 424
Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51

(Page 4)

Contronic Distributors Pty Ltd v Bank of New South Wales [1984] 3 NSWLR 110
Cowern v Nield [1912] 2 KB 419
Cruickshank v Westpac Banking Corporation [1989] 1 NZLR 114
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
Deutsche Rückversicherung AG v Walbrook Insurance Co Ltd [1995] 1 WLR 1017
Dowdle v Coppel [1987] VR 1024
Edward Owen Engineering Ltd v Barclays Bank International Ltd [1978] QB 159
Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32
Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812
Group Josi Re v Walbrook Insurance Co Ltd [1996] 1 WLR 1152 (CA)
Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1985) 1 NSWLR 545
Ian Stach Ltd v Baker Bosley Ltd [1958] 2 QB 130
Inflatable Toy Company Pty Ltd v State Bank of New South Wales (1994) 34 NSWLR 243
Intraco Ltd v Notis Shipping Corporation (The "Bhoja Trader") [1981] 2 Lloyd's Rep 256
Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526
Khan v Permayer [2001] BPIR 95
Kiriri Cotton Co Ltd v Dewani [1960] AC 192
Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548
Mason v The State of New South Wales (1959) 102 CLR 108
McDonald v Coys of Kensington [2004] EWCA Civ 47
Niru Battery Manufacturing Co v Milestone Trading Ltd (No 2) [2004] 2 Lloyd's Rep 319
Niru Battery Manufacturing Co v Milestone Trading Ltd [2002] EWHC 1425 (Comm)
Niru Battery Manufacturing Co v Milestone Trading Ltd [2004] QB 985
Nissan v Attorney-General [1970] AC 179
Olex Focas Pty Ltd v Skodaexport Co Ltd [1998] 3 VR 380
O'Sullivan v National Australia Bank Ltd [1998] NSWSC 303
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221
RD Harbottle (Mercantile) Ltd v National Westminster Bank Ltd [1978] QB 146
Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516
Spangaro v Corporate Investment Australia Funds Management Ltd (2003) 21 ACLC 1,948
United Australia Ltd v Barclays Bank Ltd [1941] AC 1

(Page 5)

United City Merchants (Investments) Ltd v Royal Bank of Canada [1983] 1 AC 168
Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669
Westpac Banking Corporation v South Carolina National Bank [1986] 1 Lloyd's Rep 311
Wood Hall Ltd v The Pipeline Authority (1979) 141 CLR 443
Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70

Case(s) also cited:

Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424
Barclays Bank Ltd v WJ Simms Son & Cooke (Southern) Ltd [1980] QB 677
Bateman Project Engineering Pty Ltd v Resolute Ltd (2000) 23 WAR 493
Cargill International SA v Bangladesh Sugar & Food Industries Corporation [1998] 1 WLR 461
Fountain v Bank of America National Trust & Savings Association (1992) 5 BPR 11,817
Ginger Development Enterprises Pty Ltd v Crown Developments Australia Pty Ltd (2003) 12 BPR 22,607
Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564
Park v Brothers (2005) 80 ALJR 317
Punjab National Bank v de Boinville [1992] 1 WLR 1138
Tenore Pty Ltd v Roleystone Pty Ltd, unreported; SCt of NSW (Giles J); 14 September 1990

(Page 6)

1 STEYTLER P: This appeal raises questions concerning the proper construction of a letter of credit, other contractual issues, questions concerning the operation of restitutionary principles and questions concerning the application of s 52 of the Trade Practices Act 1974 (Cth) and s 10(1) of the Fair Trading Act 1987 (WA) to a certificate provided pursuant to the terms of an irrevocable standby letter of credit.

How these questions arose

2 Mr K H Wong and Mr Michael Wong were directors of the appellant ("Ideas Plus"). Mr K H Wong was also the managing director of another company, Whittakers Ltd ("Whittakers").

3 In April 1997 Whittakers banked with the HSBC Bank Australia Ltd ("HSBC Australia"). However, Mr Michael Wong had some dealings with Mr Steve McLaren, an employee of the respondent ("NAB"), and Mr McLaren suggested to him that Whittakers might like to transfer its banking operations to NAB. Between April 1997 and September 1997 a number of discussions took place between Mr K H Wong, Mr Michael Wong and Mr McLaren in respect of this suggestion. In the course of those discussions Mr K H Wong told Mr McLaren that Whittakers' existing banking arrangements included an irrevocable letter of credit in favour of HSBC Australia, which operated as a standby security. He said that a similar letter of credit could be arranged in favour of NAB, although he preferred that that not be done. However, NAB ultimately insisted on being provided with an irrevocable letter of credit in terms similar to that which currently existed in favour of HSBC Australia. By a letter dated 22 August 1997 addressed to Whittakers, NAB repeated this requirement (the letter of credit was to be for $5 million) and said, also, that Whittakers would be required to enter into a registered mortgage debenture over its assets and undertaking.

4 An issue arose at the trial whether Mr McLaren was told that the letter of credit would be arranged by Ideas Plus. Mr Michael Wong's recollection was that Mr K H Wong had said that it would be. Mr K H Wong's recollection was that he said only that he would arrange for the issue of an irrevocable letter of credit, without saying who would be the applicant for it. The Commissioner preferred the evidence of Mr K H Wong because, he said, Mr Michael Wong's memory had been adversely affected by an accident he had suffered.

5 During September 1997 Mr K H Wong, acting on behalf of Ideas Plus, signed an application for an irrevocable letter of credit, in an amount of A$5 million, to be issued by HongKong and Shanghai Banking

(Page 7)

Corporation Ltd in Singapore ("HSBC") in favour of NAB. On 23 September 1997 Ideas Plus and HSBC entered into a deed whereby Ideas Plus undertook, in consideration of HSBC providing the letter of credit, to indemnify HSBC in respect of any loss arising from its issue.

6 On 24 September 1997 the letter of credit was issued by HSBC in favour of NAB. The form of the documentary credit was described as "irrevocable", the date of expiry was 30 September 1998, the applicant was shown as Ideas Plus, the beneficiary was shown as NAB and the maximum credit amount was $5 million. The letter of credit contained the following "Additional conditions":

"At the request of Ideas Plus … we hereby issue this irrevocable standby letter of credit … in your favour to secure general banking facilities extended by yourselves to Whittakers Limited.

This credit is available upon presentation of your drafts at sight drawn on the Hongkong and Shanghai Banking Corporation Limited, Singapore bearing the clause: 'Drawn under the Hongkong and Shanghai Banking Corporation Limited, Singapore Standby Letter of Credit No. SDCOCB709676 dated 24Sep97' up to an aggregate amount of AUD5,000,000.00 … accompanied by your signed statment [sic] stating amount claimed and certifying that:

(A) The amount drawn hereunder represents and covers the unpaid indebtedness and interest thereon due to you arising out of your extending general banking facilities to Whittakers Ltd …

(B) You have demanded payment of the amount owed by Whittakers Ltd and payment has not been made as demanded.

… "

7 On 25 September 1997 Whittakers entered into a debenture deed by which it granted in favour of NAB a fixed and floating charge over its land and other assets. The deed was executed as security for the repayment of the facilities provided by NAB to Whittakers.

8 On 9 September 1998, shortly before the letter of credit was due to expire, Ideas Plus made an application to HSBC to amend it. In turn,

(Page 8)

HSBC proposed the changes to NAB. These were to extend the expiry date for 12 months and to delete pars (A) and (B) of the existing additional conditions and to insert, in lieu, the following:

"(A) You have taken necessary steps to enforce your rights under the debenture(s) executed by Whittakers Limited in your favour.

(B) The amount drawn hereunder represents and covers the unpaid indebtedness due to you arising out of your extending general banking facilities to Whittakers Limited …

(C) You have demanded payment of the amount owed by Whittakers Limited and the shortfall in payment after your claim on the debentures as stipulated above has not been made as demanded."

9 NAB accepted these amendments and the letter of credit was extended for a further period of 12 months on this basis. However, on 30 September 1998, NAB received from HSBC a request to make further amendments to it. These were to the effect that pars (A), (B) and (C) of the amended additional conditions should be deleted and replaced with the following:

"(A) You have taken all necessary and available steps including the issuing and proper prosecution of proceedings in the appropriate courts in Western Australia and elsewhere to enforce your rights under the debenture or debentures executed by Whittakers Limited in your favour up to and including the liquidation of that company.

(B) The amount drawn hereunder represents and covers the unpaid indebtedness due to you arising out of your extending general banking facilities to Whittakers Limited … following the conclusion or finalisation of the liquidation of that company.

(C) You have demanded payment of the amount owed by Whittakers Limited or of any duly appointed receiver or liquidator thereof and the shortfall in payment after your claim on the debentures as stipulated above has not been made as demanded.

(Page 9)

(D) There is no change in the present management of Whittakers Ltd, Perth since 01July1998.

… "

10 NAB rejected these proposed amendments.

11 By March 1999 it had become apparent that Whittakers was in financial difficulty. NAB appointed a firm of accountants ("KPMG") to investigate and report on its security position in relation to Whittakers. The report was pessimistic, suggesting that even after the letter of credit had been called upon there would be a deficit of over $2 million. At the time, an NAB officer, Mr David Watts, was considering whether or not to call upon the letter of credit. He sought legal advice on its construction from an in-house counsel. Her advice was that there were two possible ways of construing the letter of credit. One was that par (A) should be interpreted as requiring that, before it could call upon the letter of credit, NAB must have appointed a receiver and manager under the debenture and that the receiver and manager must have concluded the process of realisation of assets pursuant to its terms. The other was that the paragraph required only that, before making a call, NAB must have made a demand under the debenture.

12 On 11 May 1999 receivers and managers were appointed over the property of Whittakers pursuant to the charge. Not long afterwards, Mr Watts obtained advice from external lawyers as regards the construction of the conditions in the letter of credit. The advice was to the effect that, while the letter of credit was possibly ambiguous, the better construction of it was that the receivers did not have to realise the property of Whittakers before NAB could call upon the letter of credit.

13 On 21 May 1999 NAB, having previously issued demands to Whittakers, issued a further demand for payment of $11,063,836.97, informing Whittakers that it had failed to meet the earlier demands, that NAB had taken steps to enforce its rights under its securities and that NAB had appointed receivers and managers to Whittakers. Whittakers made no response to this demand.

14 On 28 May 1999 NAB issued a certificate to HSBC certifying, in effect, that the conditions of the letter of credit had been met. It called upon HSBC to honour the letter of credit. HSBC did so and paid NAB $5 million. In turn, HSBC debited an account held by Ideas Plus with it in that amount.

(Page 10)

15 Ideas Plus commenced proceedings in the Supreme Court seeking recovery, from NAB, of the sum of $5 million. It initially relied upon three causes of action.

16 The first was for breach of a contract (referred to by counsel for Ideas Plus as "the support contract") which is alleged to have arisen out of conversations between the two Mr Wongs and Mr McLaren concluding on 11 September 1997 and the writing of a letter from Ideas Plus to Whittakers dated 22 August 1997. The contract (which, counsel for Ideas Plus contended, is to be inferred) is said to have been to the effect that Ideas Plus, at the request of NAB, undertook to procure the letter of credit in consideration of NAB providing financial accommodation to Whittakers. The contract is said to have contained two implied terms. The first is that NAB would not demand payment from HSBC under the letter of credit unless any conditions which it was required by the letter of credit to certify as having been met had in fact been met. The second is that NAB would not exercise its right to demand payment from HSBC under the letter of credit other than in good faith and reasonably, having regard to the interests of the parties.

17 Ideas Plus pleaded that, on the proper construction of the letter of credit as amended, NAB was not entitled to draw down on it unless:

"(a) it had made a demand upon Whittakers for repayment of the unpaid loans made by the defendant to Whittakers,

(b) it had taken all steps necessary under the charge to sell the charged property,

(c) the amount drawn down under the letter of credit represented the shortfall between the amount so demanded and the amount recovered after exercise of its rights under the charge, including the sum realised after a sale of the charged property in exercise of such rights."

18 Next, Ideas Plus alleged that the conditions justifying payment under the letter of credit had not been met because NAB had done no more than appoint receivers and managers and that, by issuing the certificate in these circumstances, NAB breached the first of the implied terms to which I have referred. Ideas Plus also alleged that NAB breached the second of the implied terms because the only legal advice that had been obtained by it was to the effect that the conditions of the letter of credit were susceptible to two constructions, one of these being that advanced on behalf of Ideas Plus. Ideas Plus contended that, before making a call upon
(Page 11)

the letter of credit, NAB should have obtained a Queens Counsel's opinion as to its proper construction, having been advised to do so by its solicitors.

19 The second cause of action was one for damages for misleading or deceptive conduct in breach of s 52 of the Trade Practices Act. This rested upon the assumption that the construction advanced by Ideas Plus was the correct construction of the letter of credit. Because the conditions, as so construed, had not been met, the certificate issued by NAB is said to have been misleading or deceptive. HSBC is said to have relied upon that misleading or deceptive conduct in making payment to NAB and this, in turn, is said to have caused loss to Ideas Plus.

20 The third cause of action was founded upon what was said to have been unconscionable conduct on the part of NAB. Because there is no appeal against the finding made by the Commissioner that this cause of action was not made out, it is unnecessary to set out the basis upon which the cause of action was pleaded.

21 At the trial, Ideas Plus amended its statement of claim so as to introduce two further causes of action. The first of these was that, by reason of the pleaded facts, NAB had been unjustly enriched at the expense of Ideas Plus. The second was a cause of action for damages for misleading and deceptive conduct in breach of s 10(1) of the Fair Trading Act. This cause of action mirrored that under the Trade Practices Act.

The judgment of the Commissioner

22 The Commissioner found that none of these causes of action had been made out. He favoured the construction put upon the letter of credit by NAB over that put upon it by Ideas Plus. That, of itself, was fatal to each of the causes of action. However, he went on to deal briefly with each of the remaining arguments that had been advanced on behalf of Ideas Plus.

23 He found, firstly, that there was no "support contract" in the terms pleaded by Ideas Plus. He repeated his finding that Mr K H Wong had not told Mr McLaren that Ideas Plus would procure the letter of credit. He said also that there was no stipulation by Mr K H Wong that Ideas Plus would require any special undertakings from NAB as to how it would exercise its rights under the letter of credit. He said that, in those circumstances, if the contention advanced on behalf of Ideas Plus was right, on every occasion in which a lender/beneficiary required the procurement of a letter of credit, there would arise by implication a contract between the lender/beneficiary and the person who happened to

(Page 12)

procure the issue of the letter of credit, affecting the way that the lender/beneficiary would exercise its rights under the letter of credit. He considered that that position would be inimical to the preservation of certainty in the law in relation to commercial letters of credit.

24 As to the misleading or deceptive conduct claim, the Commissioner said that, if he had preferred the construction of the letter of credit advanced on behalf of Ideas Plus, he would, nevertheless have declined to find that NAB's conduct had been misleading or deceptive. He said that, because of the need for NAB first to construe the meaning of the letter of credit, the proper characterisation of the representation implicit in the issue of the certificate by it was an implied representation that it had reasonable grounds for issuing the certificate. He considered that the legal advice taken by NAB, and the advice on its security position received from KPMG, were sufficient to constitute reasonable grounds.

25 As to the unjust enrichment argument, he declined to accept a contention that there is an entitlement to restitution solely upon the basis of a general principle of unjust enrichment. He relied, in that respect, on what had been said by Gummow J in Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 544 and 545 to the effect that unjust enrichment is "a concept rather than a definitive legal principle" and that it was still necessary to bring a claim for money had and received within traditional categories. He also rejected a contention that Ideas Plus had an entitlement to restitution upon the basis of a total failure of consideration. He said, in this respect, that the payment made to NAB was one by HSBC and not Ideas Plus, that HSBC had not challenged the making of the payment or sought restitution from NAB and that the payment which was made by Ideas Plus was made to HSBC and not to NAB. He considered that, in these circumstances, and having regard for what had been said in Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 75, it would not have been open to him to uphold the restitutionary claim. That reference was one to the judgment of Mason CJ, who said that restitutionary relief did not seek to provide compensation for loss but operated to restore to the plaintiff what had been transferred from the plaintiff to the defendant whereby the defendant had been unjustly enriched. Mason CJ also said (at 75) that the subtraction from the plaintiff's wealth enabled one to say that the defendant's unjust enrichment had been at the expense of the plaintiff.

(Page 13)

26 Finally, the Commissioner rejected the cause of action based upon unconscionable conduct. Because there is no appeal against his finding in this respect, it is unnecessary for me to say anything more concerning it.

Grounds of appeal

27 There are five grounds of appeal.

28 Grounds 1 and 2 challenge the Commissioner's construction of the amended letter of credit. Ideas Plus contends, in effect, that the construction advanced by it should have been accepted and that the Commissioner erred in:

"(a) failing to give due or any significance to the phrase 'shortfall in payment after your claim on the debentures as stipulated above', in paragraph (C) of the Amendments, which did not appear in the original Letter of Credit and which in its ordinary and natural meaning referred to paragraph (A) of the Amendments, requiring the Respondent to take 'necessary steps to enforce (its) rights under the (Whittakers) debenture', and meant that the Respondent had to realise the securities comprised in the Whittaker debenture so as to produce a 'shortfall', before it could draw down the Letter of Credit;

(b) concluding that the construction for which the Appellant contended required the insertion of the word 'all', before 'rights', and a 'notional modification of the language in order to accommodate the notion of an exhaustion of rights so as to produce a shortfall', when the construction for which the Appellant contended was the ordinary and natural meaning of the Amendments;

(c) holding that the Respondent's construction gave meaning to the Amendments when, on a proper analysis, it rendered them pointless and of no commercial utility to the Appellant;

(d) failing to give sufficient weight, as a result, to the significant fact that the Amendments were patently intended to effect a change of commercial substance to the terms of the original Letter of Credit."

(Page 14)

29 Ground 3 challenges the Commissioner's finding that there was no "support contract" in circumstances in which:

"(a) in fact (as his Honour found) the Appellant procured the Letter of Credit for the Respondent, and the Commissioner should therefore have held that it did not matter whether, in the discussion between the Appellant's representatives, Messrs Wong, and the Respondent's representative, Mr McLaren, it was expressly disclosed that the Appellant would procure the Letter of Credit;

(b) contrary to the finding of the learned Commissioner, the evidence of K H Wong was that he could not remember whether Mr McLaren was told that the Appellant would arrange for the issue of the Letter of Credit (not, as the Commissioner said in his Reasons, that he was not told) whereas Michael Wong's evidence was that K H Wong had told Mr McLaren that the Appellant would do so, and the Respondent did not call Mr McLaren or any witness to give evidence to the contrary;

(c) the uncontested evidence was that the original Letter of Credit had been arranged by the Appellant, which was shown as 'the Applicant' in all documentation held by the Respondent, and the new Letter of Credit, with the Amendments, also showed the Appellant as the Applicant, from which the Respondent was at all material times aware that the Appellant had arranged the Letter of Credit and the new Letter of Credit with the Amendments."

30 Ground 4 challenges the Commissioner's finding that NAB's certificate to HSBC that the conditions of drawdown had been met was no more than an implied representation that NAB had reasonable grounds for issuing the certificate. It contends that this is not the plain meaning of the certificate and that NAB made no plea to that effect in its defence.

31 Ground 5 contends that the Commissioner erred in law in holding that, even if the conditions of drawdown were not met, Ideas Plus would not be entitled to restitution against NAB, because the payment to NAB was not made directly by Ideas Plus, but by HSBC, which then debited the account of Ideas Plus. The Commissioner's finding is said to be contrary to settled authority in Australia and in England and Ideas Plus contends

(Page 15)

that the Commissioner should have held that NAB had been unjustly enriched at the expense of Ideas Plus.

Nature of an irrevocable letter of credit

32 Before dealing with these grounds, it is important to place them in some additional context by commenting on the nature of an irrevocable letter of credit.

33 Letters of credit have been described as the "crankshaft of modern trade"; the "life-blood of international commerce": RD Harbottle (Mercantile) Ltd v National Westminster Bank Ltd [1978] QB 146 at 155 per Kerr J; and "the life blood of commerce": Intraco Ltd v Notis Shipping Corporation (The "Bhoja Trader") [1981] 2 Lloyd's Rep 256 at 257 per Donaldson LJ (who said that "Thrombosis will occur if, unless fraud is involved, the Courts intervene and thereby disturb the mercantile practice of treating rights thereunder as being the equivalent of cash in hand"); and see A Mugasha The Law of Letters of Credit and Bank Guarantees (2003) at 2 - 4. In Cruickshank v Westpac Banking Corporation [1989] 1 NZLR 114 at 121, Sinclair J said that letters of credit are regarded by the commercial and business world as "sacrosanct". Commercial letters of credit or, as they are sometimes called, banker's credits are commonly used in international commerce. In Ian Stach Ltd v Baker Bosley Ltd [1958] 2 QB 130 at 139, Diplock J said that this kind of letter of credit is more than "a mere method of payment" and "creates a direct liability upon the banker independent of the contract of sale, and is an undertaking by the banker that if the seller presents the required documents in the required time he will receive payment of the contract price". In United City Merchants (Investments) Ltd v Royal Bank of Canada [1983] 1 AC 168 (HL), Lord Diplock said at 183:

"The whole commercial purpose for which the system of confirmed irrevocable documentary credits has been developed in international trade is to give to the seller an assured right to be paid before he parts with control of the goods that does not permit of any dispute with the buyer as to the performance of the contract of sale being used as a ground for non-payment or reduction or deferment of payment."

(For other, similar, comments see Mugasha at 3 - 4).

34 Standby letters of credit which operate in a non-sale setting, such as that which issued in the present case, involve similar considerations. Typically they are issued as a security device in the nature of a guarantee
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to reduce the risk of non-performance of an obligation (see Mugasha at 59). Their purpose is to provide the beneficiary with an unfettered, immediate remedy upon the triggering event on the letter of credit, pending resolution of any dispute on the underlying contract: Bachmann Pty Ltd v BHP Power New Zealand Ltd [1999] 1 VR 420 at 436.

Grounds 1 and 2

35 The submissions advanced on behalf of Ideas Plus concerning the proper construction of the amended letter of credit in this case rest upon seven propositions, as follows:

(1) The words "taken necessary steps to enforce your rights under the debenture(s)" in additional condition ( A) are suggestive of something more than merely the making of demand under the debenture and the appointment of a receiver and manager, more especially given the use of the plural "rights".

(2) This is re-enforced by additional condition (C), which requires that NAB should have demanded payment of the amount owed by Whittakers "and the shortfall in payment after your claim on the debentures as stipulated above has not been made [sic 'met'] as demanded". The notion of a shortfall comprehends the realisation of assets rather than merely the appointment of a receiver and manager and the reference to "claim on the debentures as stipulated above" suggests that this is what is contemplated by (A).

(3) The Commissioner erred in concluding that this construction required the insertion of the word "all" before the words "your rights" in (A), or any other modification of the words used.

(4) The Commissioner erred in concluding that NAB's construction gave meaning to the amendments when, in fact, it rendered them pointless.

(5) The Commissioner failed to give sufficient weight to the fact that the amendments were intended to effect a change of commercial substance.

(6) The debenture did not independently create any indebtedness of Whittakers to NAB. All it did was to secure amounts due under other transactions. Hence, a demand for unpaid indebtedness secured by the debenture

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could not be said to be "a claim on the debenture" or an enforcement of any rights under the debenture.

(7) The letter of credit was only a "secondary" security given by Ideas Plus in support of Whittakers' primary liability to NAB, making it more likely that the parties to the letter of credit would have intended that recourse would be had to it only after all other avenues had been exhausted.

36 As the Commissioner recognised, the letter of credit must be construed by ascertaining the meaning of the words used, looked at in their context and having regard to the objective framework of facts within which it came into existence: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352 per Mason J. This objective framework seems to me (as it did to the Commissioner) to encompass the fact that the letter of credit differed from its original form as a result of amendments proposed by HSBC, at the request of Ideas Plus, and accepted by NAB. However, it also seems to me that the fact that the final form of the additional conditions appearing in the letter of credit was a product of amendments is neutral, so far as the construction issue is concerned.

37 On any view, the amendments added something of substance to what had previously been agreed. That is plainly so on the construction advanced on behalf of Ideas Plus. However, even on the construction advanced on behalf of NAB, there was an additional requirement that, before making a call on the letter of credit, NAB must not merely have made an unsatisfied demand for payment of the amount owed by Whittakers, but must also have taken necessary steps to enforce its rights under the debenture before making demand. On the construction advanced on behalf of NAB, these steps might be (as they were) the making of demand under the debenture and the appointment of a receiver and manager pursuant to its terms. As the Commissioner pointed out at [74], NAB's construction "provides for a middle road between the position under the 1997 letter of credit (where there is no requirement to first resort to the debenture) and the position under the … construction [advanced by Ideas Plus]". I agree, also, with the Commissioner's comment (also at [74]) to the effect that, under the construction contended for by NAB, there is resort to the debenture, with the prospect that the debt may, as a consequence, be paid or reduced, and the commercial utility of the letter of credit as a readily realisable security is maintained, whereas, under the position contended for by Ideas Plus, there is resort to the debenture but the commercial characteristic of a letter of credit as a readily realisable security is substantially undermined.

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38 Next, I agree with the Commissioner that the request for further amendments made on 30 September 1998 is irrelevant to the issue of construction, agreement by then having already been reached in respect of the existing amendments.

39 The Commissioner also declined (at [67]) to take into account, as part of the surrounding circumstances, the fact that, in Australia, the time taken to complete a receivership might often exceed the 12 month life of the letter of credit. He did so because there was no evidence that HSBC in Singapore had been familiar with Australian experience in this respect. While this may be so, it must have been obvious to both parties, in my respectful opinion, at least that the time so expended would necessarily be significant, having the potential to defeat the security, perhaps depending upon when the need to resort to it arose, and that an agreement of the kind contended for by Ideas Plus would consequently undermine the purpose of the security. However, there is no notice of contention in this respect and I will consequently set that consideration to one side.

40 Next, as regards the proposition that the letter of credit was only to be a "secondary" security, there is nothing in the available matrix evidence to suggest that this was so. Nor, given the almost "cash" nature of an irrevocable letter of credit, is there any basis for inferring, merely because other security was provided, that this was the intention of the parties.

41 More importantly, it seems to me that the construction advanced on behalf of NAB accords more with the natural and ordinary meaning of the words used (as to which see Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 105) than does that advanced on behalf of Ideas Plus. As the Commissioner said (at [72]), NAB's construction produces a workable result which requires no modification of the language used. The use of the words "take necessary steps to enforce" seem to me to mean just that, namely that whatever steps are necessary to enforce NAB's rights under the debenture (the making of demand under it and, perhaps, the appointment of a receiver and manager, which crystallised that part of the debenture which consisted of a floating charge) must be taken, and not that all rights of recovery under the debenture must be exhausted before there can be a call on the letter of credit. If the latter construction had been intended, one would have expected that additional condition (A) would have read "have enforced", rather than "taken necessary steps to enforce". The fact that the word "rights", rather than "right", has been used seems to me not to assist Ideas Plus in its construction. As with

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debentures generally, in this case a number of rights became exercisable by NAB once the debenture became enforceable.

42 As to additional condition (C), it seems to me that this was intended to do no more than to require that NAB must have demanded payment of the amount owed by Whittakers (this is the ordinary meaning of the opening words of that condition) and that, after taking the steps necessary to enforce the debenture, a further demand (comprehended by the words "claim on the debenture") made in respect of the then existing shortfall in payment (there may have been some payment made as a result of the taking of steps to enforce the debenture) has not been satisfied. The fact that the debenture was given as security for an existing indebtedness does not mean (contrary to the contention advanced by Ideas Plus in proposition (6) above) that a demand under it cannot be said to be a "claim on the debenture". In my opinion a demand of that kind is undoubtedly capable of being described in that way. The words "as stipulated above" seem to me to do no more than refer to the fact that the further demand is that made after taking necessary steps to enforce rights under the debenture.

43 I would accordingly dismiss grounds 1 and 2.

44 This conclusion has the consequence that each of grounds 3, 4 and 5 fail. It is not in dispute that success on the construction issue is a necessary ingredient for success on each of those grounds. However, because they have been fully addressed in argument, I will deal with them.

Ground 3

45 In contending that the support contract came into being between Ideas Plus and NAB, counsel for Ideas Plus relied, in his submissions, upon the following circumstances:

(1) NAB, in the course of the discussions which preceded the issue of the first letter of credit, insisted upon the provision of a letter of credit before it would provide the financial accommodation sought by Whittakers.

(2) What was said by Mr K H Wong to Mr McLaren during those discussions was to the effect that he would arrange for the provision of a letter of credit (this is apparent from the transcript of his evidence).

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(3) This was said in a context in which, according to Mr K H Wong, NAB had previously asked for a copy of the letter of credit which had been provided in favour of Whittakers' previous financier, being one which, Mr Wong said, "Ideas Plus have [sic] established to them earlier".

(4) The letter of credit issued on 24 September 1997 showed that Ideas Plus had been the applicant and it would consequently have been apparent to NAB that Mr K H Wong had given the undertaking to arrange for its issue on behalf of Ideas Plus.

46 I am not persuaded that these few facts were enough to give rise to a contract of any kind between Ideas Plus and NAB. It seems to me, firstly, that during the discussions Mr K H Wong was representing Whittakers, and not Ideas Plus. Consequently, the "undertaking" to arrange for a letter of credit was given on behalf of Whittakers and not on behalf of Ideas Plus. Next, it seems to me that NAB must necessarily have been indifferent as to the identity of the person who would be the applicant for the letter of credit. It did not require an undertaking from any particular person to apply for it. All Mr McLaren said was that NAB would not provide the financial accommodation that Whittakers wanted in the absence of an irrevocable letter of credit. Given the nature of an irrevocable letter of credit, the identity of the applicant for it was irrelevant to NAB and there was no need for it to contract with anyone other than Whittakers in that respect. As the Commissioner pointed out (at [76]), if these facts were sufficient to give rise to a contract between Ideas Plus and NAB, then, on every occasion in which a lender/beneficiary required the procurement of a letter of credit there would arise by implication a contract between the lender/beneficiary and the person who happened to procure the issue of the letter of credit, affecting the way that the lender/beneficiary could exercise its rights under the letter of credit. There is, so far as I am aware, no authority to support that proposition, which seems to me to be unsustainable on ordinary contractual principles.

47 Counsel for Ideas Plus relied, in this respect, upon what was said by Morison J in Cargill International SA Antigua Geneva Branch v Bangladesh Sugar & Food Industries Corporation [1996] 2 Lloyd's Rep 524. In that case the plaintiffs agreed to sell to the defendant 12,500 tonnes of sugar. The sellers' obligation was supported by a performance bond given to the buyer in the form of a bank guarantee equivalent to 10 per cent of the value of the sugar. The bond was liable to be forfeited if the sellers failed to fulfil any of the terms and conditions of the contract

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and if any loss or damage occurred to the buyer due to any fault of the sellers. A dispute arose between the parties as regards performance of the contract. The buyer said that the contract had been breached by the sellers and that it was entitled to forfeit the performance bond. The sellers denied this. The issues for decision were, on the assumption that the sellers were in breach of contract, whether the buyer was entitled to make a call for the full amount of the performance bond if the breaches of contract had caused it: (a) no loss; or (b) some loss less than the amount of the performance bond; or (c) some loss equal to or greater than the amount of the performance bond; and whether, in the event that the buyer obtained payment under the performance bond, it was entitled to retain all of the moneys received by it, or only such moneys as were equal to the amount of the loss suffered by it or some other and if so what amount. Morison J held that it was implicit in the nature of a bond and in the approach of the Court to injunction applications (which this was) that, in the absence of clear words to a different effect, when the bond was called there would at some stage in the future be an "accounting" between the parties in the sense that their rights and obligations would be finally determined. At 530, he said:

"As a matter of general principle … in the light of the commercial purpose of such bonds, the authorities to which I have referred and the textbook comments, I take the view that if there has been a call on a bond which turns out to exceed the true loss sustained, then the party who provided the bond is entitled to recover the overpayment. It seems to me that the account party may hold the amount recovered in trust for the bank, (where, for example, the bank had not been paid by him) but that does not affect his right to bring the claim in his own name. In the normal course of events, the bank will have required its customer to provide it with appropriate security for the giving of the bond, which would be called upon as soon as the bank was required to pay. On the facts of this case, no question of a trust or agency will arise. In principle, I take the view that the account party is always entitled to receive the overpayment since his entitlement is founded upon the contract between himself and the beneficiary."

48 As is apparent from the concluding words of this extract, the decision depended upon the fact that there was an underlying contract between the account party and the beneficiary, being the contract for the sale of the sugar. There is nothing in the judgment of Morison J, or in the authorities upon which he relied (these included Australasian Conference
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Association Ltd v Mainline Constructions Pty Ltd (in liq) (1978) 141 CLR 335 and Wood Hall Ltd v The Pipeline Authority (1979) 141 CLR 443, both of which depended upon the existence of an underlying contract between the account party and the beneficiary) to support the proposition that, in every case in which a performance bond or irrevocable letter of credit is given, a contract will come into being between the account party and the beneficiary.

49 Counsel for Ideas Plus also relied upon an unreported decision of Young J, in the New South Wales Supreme Court, in O'Sullivan v National Australia Bank Ltd [1998] NSWSC 303. That case involved a lease of property taken by a company, Frogs for Fitness Pty Ltd ("company"), controlled by the plaintiff. The plaintiff was required by the lessor to give a guarantee for the rent and arranged with the defendant ("bank") to provide that guarantee. The company fell into arrears with the rent and the assignee of the lessor called up the guarantee. The bank paid to the assignee an amount, pursuant to the guarantee, that was very much greater than the arrears of rent. The bank made it clear that it intended to proceed against the plaintiff to reimburse it for the amount paid by it under the guarantee. The plaintiff commenced proceedings for a negative declaration "to head that action off". The bank put in receivers over the company. The company then lodged a cross-claim against the assignee to recover the overpayment that had been made by the bank. The proceedings before Young J involved an application to strike out the cross-claim. For that purpose, he decided no more than that "the contractual obligation of a person to furnish a security entitles that person in its own name to sue for an overpayment under the guarantee". However, as that quotation makes plain, the obligation in question was contractual, in the sense that the company had itself contracted with the lessor to furnish the bond, entitling it to seek to recover the overpayment notwithstanding that the plaintiff might have been able to make a claim against the company in contract, trust or otherwise in order to ensure that it, as the "real owner" of the funds, could recover them. There is nothing in the judgment to suggest that, in a case in which a third party (in that case, the plaintiff) arranges for the provision of the performance bond (or a letter of credit) a contract will automatically come into being between the third party and the beneficiary, regardless of whether or not the beneficiary knows that the performance bond or letter of credit has been or will be procured by the third party.

50 It follows from these conclusions that ground 3 has not been made out.

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Ground 4

51 I have said that ground 4 challenges the finding that NAB's certificate that the conditions of drawdown had been met amounted to no more than an implied representation that it had reasonable grounds for issuing the certificate. I have also said that Ideas Plus contends that this was neither the plain meaning of the certificate nor NAB's pleaded case.

52 So far as the pleadings are concerned, Ideas Plus pleaded, in par 9 of the statement of claim, that the provision of the certificate by NAB to HSBC amounted to a representation that the conditions to which I have earlier referred had been met. Then, in par 12(1), it pleaded that the representation was misleading and deceptive because, at the time it was made, NAB had not "taken all steps necessary under the … [debenture] to sell the charged property so as to arrive at a shortfall between the unpaid loans and the amount realised by such sale and had taken no steps to enforce its rights under the charge other than to appoint receivers and managers". NAB, in par 10(1) of its defence, denies par 9 of the statement of claim save to admit that it provided a certificate to HSBC "correctly certifying as to those matters" dealt with in the conditions. In par 13(1) of the defence, NAB denies par 12 of the statement of claim and further denies that any person was misled or deceived as to any fact or matter as a consequence of its conduct or that Ideas Plus suffered any loss or damage by reason of any such person being misled or deceived.

53 It is consequently true that there is no plea to the effect that the provision of the certificate by NAB amounted to a representation that it had reasonable grounds for issuing it. However, it seems to me that NAB's pleading was wide enough to encompass a defence of that character, NAB having denied that the provision of the certificate amounted to a representation that the conditions in question had been met (although, NAB pleaded, in par 10(2) of its defence, that the certificate, as given, "made no representations to HSBC, or to any party"). It was unnecessary for NAB to plead some alternative representation, not giving rise to any cause of action, that might have been conveyed by the provision of the certificate. I should add that, at the hearing of the appeal, no submissions were advanced on behalf of Ideas Plus, in respect of this aspect of ground 4.

54 As to the content of the representation conveyed by the provision of the certificate, counsel for Ideas Plus contended that the certificate stated, unequivocally, that the conditions of the letter of credit had been satisfied and not that there were reasonable grounds for believing this. He

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contends that this of itself, is sufficient to make it misleading in fact and that, in the light of authority to the effect that an applicant may claim compensation in cases of misleading or deceptive conduct when the contravener's conduct caused other persons to act in a way that led to loss or damage to the applicant (see, for example, Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526 at 529, 530 - 531), this was enough to give Ideas Plus a cause of action against NAB.

55 It is common cause that, if there was no support contract containing terms of the kind contended for by Ideas Plus, NAB was, pursuant to the terms of the letter of credit, entitled to claim under it so long as it had a bona fide belief that the conditions were satisfied. Because a claim could only be made under the letter of credit by way of a certificate certifying that the conditions had in fact been satisfied, it is difficult to see how the certificate could have amounted to a representation of anything other than a bona fide belief that the conditions had been satisfied and, perhaps, as the Commissioner found, that there were reasonable grounds for holding that belief.

56 My opinion in this respect is fortified by what was said in Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812 at 830. That case involved standby letters of credit given by a builder to the owner of a house to be built pursuant to the terms of a building contract. The letters of credit were given in order to secure performance under the contract. When the builder failed to complete the house by the date specified in the contract, the owner demanded payment of damages provided for by the contract and gave notice of its intention to draw on the letters of credit. A draw of that kind was required to be supported, under the terms of the letters of credit, by a statutory declaration stating, amongst other things, that the amount claimed represented an amount or amounts remaining unpaid to the owner. The builder sought an injunction restraining the owner from drawing on the letters of credit. It contended that, on a proper construction of the building contract, resort to the letters of credit could only be had if the owner's entitlement to damages was undisputed, and there were serious issues to be tried concerning its entitlement. The primary Judge found that there were serious issues to be tried in that respect but refused to grant the injunction sought. The builder appealed. The appeal was dismissed upon the basis, amongst others, that the contract showed that the commercial purpose of the letters of credit was to allocate the risk of a party being out of pocket pending the resolution of any dispute and that the owner was accordingly entitled to call on the securities even though a genuine dispute existed concerning its entitlement to damages. However, in his judgment, one of the judges in

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the Victorian Court of Appeal, Callaway JA, went on to mention, (at 830) that no reliance had been placed by the builder upon s 52 of the Trade Practices Act but, "if recourse to the security may be had where there is a bona fide claim, even if that claim is mistaken, it is not immediately apparent that presentation of the statutory declarations would be misleading or deceptive or likely to mislead or deceive".

57 There is no challenge to the Commissioner's finding that NAB had reasonable grounds for forming the belief which it held in good faith. In my opinion, there is consequently no basis for the contention that NAB's conduct was misleading or deceptive, even if it could be said that HSBC had relied upon the representation conveyed, bearing in mind that the truth, or otherwise, of the certificate was irrelevant to it under the terms of the letter of credit.

58 It follows that ground 4 has not been made out.

Ground 5

59 Ground 5, being that which contends that Ideas Plus was entitled to a restitutionary remedy because NAB had been unjustly enriched at its expense, raises difficult issues.

60 Although this amendment does not appear in the appeal books, the judgment of the Commissioner records (at [50]), as I have mentioned, that during the trial Ideas Plus amended its statement of claim to include a paragraph contending that, by reason of the facts pleaded, NAB had been unjustly enriched at the expense of the plaintiff. No particulars appear to have been given, or sought, in respect of that amendment. However, it seems from the judgment of the Commissioner (at [79]) that the argument advanced at the trial was that there was a general principle of unjust enrichment that was sufficient to entitle Ideas Plus to a restitutionary remedy and that the circumstances of the case fell, in any event, within the traditional category of total failure of consideration. As I have earlier mentioned the Commissioner concluded, in these respects, that it is still necessary to bring a claim for money had and received within traditional categories ([81] of the judgment) and that an argument based upon a total failure of consideration failed because the payment to NAB was made by HSBC and not Ideas Plus, HSBC had not challenged the making of the payment or sought restitution from NAB and the payment made by Ideas Plus was made to HSBC and not NAB.

61 The only challenge to these findings raised by ground 5 is (as I have also mentioned above) that the Commissioner erred in holding that, even

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if the conditions of drawdown were not met on the proper construction of the letter of credit, a restitutionary claim was not open because the payment to NAB was made by HSBC and not Ideas Plus. Ideas Plus contends that, in circumstances in which HSBC had, after making the payment, debited its account with the amount of the payment, the Commissioner should have held that NAB had been unjustly enriched at its expense. There is no challenge to his conclusion that it is still necessary to bring a claim for money had and received within traditional categories.

The concept of unjust enrichment

62 Before turning to consider the issue of failure of consideration, I will, by way of context, make some comments as regards the concept of unjust enrichment.

63 Goff & Jones The Law of Restitution 6th ed (2002) at [3], describe the law of restitution as the law relating to all claims, quasi-contractual or otherwise, which are founded upon the principle of unjust enrichment. The authors go on to say (also at [3]) that they understand quasi-contract to be "that part of restitution which stems from the common indebitatus counts for money had and received and for money paid, and from quantum meruit and quantum valebat claims". They add (at [3]):

"The action also lay to recover money which the defendant had acquired from the plaintiff by a tortious act; and, in the rare cases, where the defendant had received money which the plaintiff could identify as his own … at the time of the receipt and for which the defendant had not given consideration, the plaintiff could assert his claim by means of this action."

64 Quasi-contractual claims were traditionally regarded as resting upon the basis of implied contracts. However, that basis became increasingly regarded as unworkable: United Australia Ltd v Barclays Bank Ltd [1941] AC 1 at 28 - 29; Cowern v Nield [1912] 2 KB 419; Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 at 63; Kiriri Cotton Co Ltd v Dewani [1960] AC 192 at 204; Nissan v Attorney-General [1970] AC 179 at 228 and Mason v The State of New South Wales (1959) 102 CLR 108 at 146; and it has now effectively been abandoned, with the courts accepting that claims for money had and received should be recognised as lying, not in implied contract, but in restitution or unjust enrichment: Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; Australia & New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 at 673;
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Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 710 and Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 540.

65 Goff & Jones, at [17], point out that the principle of unjust enrichment presupposes three closely interrelated things: first, the defendant must have been enriched by the receipt of a benefit; second, that benefit must have been gained at the plaintiff's expense; and, third, it would be unjust to allow the defendant to retain that benefit. (There has sometimes been a reference in the cases to a fourth factor, being that of whether there is any specific defence available to the defendant: see, for example Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221 at 227; McDonald v Coys of Kensington [2004] EWCA Civ 47 at [22] and Niru Battery Manufacturing Co v Milestone Trading Ltd (No 2) [2004] 2 Lloyd's Rep 319 at 327.) However, in Australia, courts have declined to accept the notion that unjust enrichment is a definitive legal principle according to its own terms and not just a concept. This was made plain by the High Court in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 378 - 379, where Mason CJ, Deane, Toohey, Gaudron and McHugh JJ referred to two cases rejecting that notion, as follows:

"In Pavey&Matthews, Deane J stated (… at pp. 256 - 257):

'To identify the basis of such actions as restitution and not genuine agreement is not to assert a judicial discretion to do whatever idiosyncratic notions of what is fair and just might dictate. … That is not to deny the importance of the concept of unjust enrichment in the law of this country. It constitutes a unifying legal concept which explains why the law recognizes, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognize such an obligation in a new or developing category of case.'

Accordingly, it is not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable. Instead, recovery depends upon the existence of a qualifying or vitiating factor such as

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mistake, duress or illegality. As this Court stated in Westpac Banking Corporation (… at p. 673):

'In other words, receipt of a payment which has been made under a fundamental mistake is one of the categories of case in which the facts give rise to a prima facie obligation to make restitution, in the sense of compensation for the benefit of unjust enrichment, to the person who has sustained the countervailing detriment.'"

66 Similarly, in Roxborough Gummow J said (at 544):

"Considerations such as these, together with practical experience, suggest caution in judicial acceptance of any all-embracing theory of restitutionary rights and remedies founded upon a notion of 'unjust enrichment'. To the lawyer whose mind has been moulded by civilian influences, the theory may come first, and the source of the theory may be the writing of jurists not the decisions of judges. However, that is not the way in which a system based on case law develops; over time, general principle is derived from judicial decisions upon particular instances, not the other way around."

67 Because the claim in this case was said, for the purposes of the appeal, to rely upon a failure of consideration, and because the Commissioner's judgment is challenged only in respect of his rejection of that basis for the claim, it is unnecessary to give further attention to the question whether there is, or should be, an all-embracing principle of restitutionary rights and remedies founded solely upon an open ended notion of unjust enrichment (as to which see, in addition to the authorities mentioned above, Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 at 196 - 197; Goff & Jones at [16]; P Birks Unjust Enrichment 2nd ed (2005) at 39, 116; S Hedley & M Halliwell The Law of Restitution (2002) at [1.28]) and, consequently, to the question whether, if there is, Ideas Plus could bring itself within that principle. It is also unnecessary to consider whether Ideas Plus could bring a claim upon some other basis.

Failure of consideration generally

68 In Baltic Shipping Co v Dillon (1993) 176 CLR 344 the High Court discussed the basis for a restitutionary claim in a case of failure of consideration. Deane and Dawson JJ said, at 375 (citations omitted):

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"The basis of … [the present] claim is the obligation of restitution which the law prima facie imposes upon the recipient of a payment made under a contract which has become 'abortive for any reason not involving fault on the part of the plaintiff', in a case 'where the consideration, if entire, has entirely failed, or where, if it is severable, it has entirely failed as to the severable residue'. Such a claim is not a claim on the contract. Its historical antecedent in terms of forms of action is the old indebitatus count for money had and received to the use of the plaintiff. Its modern substantive categorization is as an action in unjust enrichment. In other words, the receipt of a payment of money for a consideration which wholly fails 'is one of the categories of case in which the facts give rise to a prima facie obligation to make restitution ... to the person who has sustained the countervailing detriment'."

69 In considering restitutionary claims arising in the context of failure of consideration, it is important, as counsel for Ideas Plus pointed out, to bear in mind that consideration, in this context, ordinarily comprehends the performance of a promise, rather than the promise itself. In Fibrosa, at 48, Viscount Simon LC said:

" … in the law relating to the formation of contract, the promise to do a thing may often be the consideration, but when one is considering the law of failure of consideration and of the quasi-contractual right to recover money on that ground, it is, generally speaking, not the promise which is referred to as the consideration, but the performance of the promise. The money was paid to secure performance and, if performance fails, the inducement which brought about the payment is not fulfilled."

(See also Baltic Shipping at 350 - 351 per Mason CJ (Toohey J agreeing), 367 per Brennan J, 376 per Deane and Dawson JJ and 389 per McHugh J.)

70 However, in Roxborough, the High Court gave to the notion of failure of consideration an expansive meaning in the context of an action for money had and received. At 525, Gleeson CJ, Gaudron and Hayne JJ said:

"Failure of consideration is not limited to non-performance of a contractual obligation, although it may include that. The authorities referred to by Deane J, in his discussion of the common law count for money had and received in Muschinski v

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Dodds ((1985) 160 CLR 583 at 619 - 620), show that the concept embraces payment for a purpose which has failed as, for example, where a condition has not been fulfilled, or a contemplated state of affairs has disappeared (see Birks, An Introduction to the Law of Restitution (1985), p 223). Deane J, referring to 'the general equitable notions which find expression in the common law count', gave as an example 'a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it' (Muschinski v Dodds … at 619 - 620). In the case of money paid pursuant to a contract, it would involve too narrow a view of those 'general equitable notions' to limit failure of consideration to failure of contractual performance."

71 Roxborough (and in particular the judgment of Gummow J at 557) has been favourably commented upon by P Birks, "Failure of consideration and its place on the Map" (2002) 2 Oxford University Commonwealth Law Journal 1 at 3 as follows:

"The case makes an important contribution to the understanding of failure of consideration in this restitutionary context. At the beginning of the nineteenth century Sir William Evans showed that Lord Mansfield had employed the phrase as the English translation of 'causa data causa non secuta', which the Romans used to denote one cause of non-contractual indebtedness … Gummow J now says, 'Here "failure of consideration" identifies the failure to sustain itself of the state of affairs contemplated as a basis for the payments the appellants seek to recover' … That captures very well the sense of the almost untranslatable Latin, 'Things given on a basis, that basis not following'."

72 The rationale behind an award of restitution in claims based upon a failure of consideration is that it is justified essentially because the payer did not intend the defendant to have the enrichment in the circumstances which occurred: A Burrows The Law of Restitution 2nd ed (2002) at 324 - 325; G Virgo The Principles of the Law of Restitution (1999) at 323. In Fibrosa, at 64 - 65, Lord Wright said:
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"The defendant has the plaintiff's money. There was no intention to enrich him in the events which happened … The payment was originally conditional. The condition of retaining it is eventual performance. Accordingly, when that condition fails, the right to retain the money must simultaneously fail."

Similarly, in Baltic Shipping, McHugh J said at 389:

"When a contractual payment is made conditionally upon the performance of a promise by the payee, the right to retain the moneys after discharge of the contract is dependent upon whether the promise has been performed. If the promise has not been performed, there has been a total failure of consideration by reason of the nonfulfilment of the condition, and the money is recoverable as money had and received to the use of the payer …

Furthermore, where the condition upon which the money was paid has failed, the payer is entitled to the return of the money advanced, even though that person has obtained some benefit from the contract. Work done or expense incurred by the payee or benefit enjoyed by the payer will not constitute consideration unless it constitutes a partial performance of the condition upon which the money was paid."

73 Burrows, at 326, says:

" … while still conforming to an underlying idea of 'failure of basis' or 'qualification of the will', there is another main meaning of failure of consideration extending beyond the promissory realm. A claimant may transfer a benefit to a defendant on the basis of a future event without the defendant promising that that event will occur: that is, the basis may be a non-promissory contingent condition … If that event does not happen (whether partially or totally) one can describe there as being a failure of consideration. For example, the claimant may pay £100 to the defendant because he is about to be married or the claimant may pay £100 to the defendant 'subject to contract' as an indication of good faith. If the defendant does not marry, or no contract is concluded between the parties, the defendant breaks no contract or promise but one can say, and the courts have said … that the consideration for the claimant's payment has totally failed."

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(See also Virgo at 323 - 326.)

74 Although failure of consideration usually arises in the context of a failed contract or intended agreement, the cases emphasise that the obligation to make restitution in such cases is not based on the contract: Fibrosa at 65. Therefore there appears to be no reason, in principle, why restitution for failure of consideration (in this wide sense) cannot be granted in cases not involving contractual obligations. Goff & Jones at [46], say:

"Historically, these principles [relating to failure of consideration] were formulated in the context of claims for money had and received between contracting parties. But there is no reason why claims should be so limited, and they are not … There is a total failure of consideration when money has been paid on the basis of any assumption which is or becomes falsified. In Martin v. Andrews ((1856) 7 El. & Bl. 1, 4, per Lord Campbell C.J. …) money tendered with a subpoena ad test was recovered when the case was settled before trial. Similarly, money may be paid in anticipation of the parties entering into a contract which in fact never materialises … under an arrangement which was never intended to create legal relations and where the payer did not get his expected returns … or on the footing that there is a legal demand but where it transpires that the legal demand is a nullity … The payment may then be recoverable, the consideration for that payment having failed … "

This case

75 There is no doubt that there was, in this case, no failure of consideration in the traditional meaning of that phrase in a contractual context. The only contract to which Ideas Plus was shown to have been a party was that between it and HSBC whereby HSBC undertook to issue the letter of credit in consideration of Ideas Plus's undertaking to indemnify it against a call on the letter of credit. There was, as regards that contract, no failure of consideration, the letter of credit having been issued in the terms requested. There was, as I have said, no contractual relationship between Ideas Plus and NAB and hence no question of any contractual consideration having been provided by Ideas Plus to NAB. In any event, the letter of credit could only be said to have been provided to NAB in consideration of the provision, by it, of financial accommodation to Whittakers and that, too, was done. However, counsel for Ideas Plus contends that, if the construction of the letter of credit for which he

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contends is accepted, the conditions for a call to be made on the letter of credit were not met and it is in that sense that the basis for the payment made by HSBC to NAB, at the ultimate expense of Ideas Plus, failed.

76 The difficulty with this analysis is that, when the nature and operation of the letter of credit are properly understood, the basis for the payment made by HSBC, pursuant to the independent obligation owed by it to NAB under the letter of credit, was the provision, by NAB, of a certificate in the required terms. That certificate was provided and there can consequently be no doubt (and it was not disputed) that HSBC was obliged to make the payment whether or not the certificate was accurate, at least in the absence of fraud. It was the presentation of the certificate, and not the truth of the facts certified, that conditioned HSBC's obligation to pay. Consequently, HSBC must be taken to have satisfied the obligation which it owed to Ideas Plus, being only that it would pay on presentation of a certificate in the required terms. There having been no underlying contract, or even transaction or relationship, between Ideas Plus and NAB, and NAB having been entitled to make its claim, so long as it did so in good faith, it is difficult to see how there could be said to have been a failure of performance, or of any basis for a payment, as between Ideas Plus and NAB. Consequently, it is difficult to see how a restitutionary claim could be said, in these circumstances, to fall within the category of unjust enrichment arising as a consequence of failure of consideration, even in its expanded meaning. Whether the payment might be recovered by Ideas Plus from NAB (or, indeed, from Whittakers, assuming that it was in a position to repay Ideas Plus) upon some other basis is not a question that is required to be answered in this case.

Cases relied upon by Ideas Plus

77 Counsel for Ideas Plus relied upon a number of cases in support of his contentions, but each of these seems to me to be readily distinguishable.

78 He referred, first, to Spangaro v Corporate Investment Australia Funds Management Ltd (2003) 21 ACLC 1,948. In that case the plaintiff, Mr Spangaro, sought to recover an amount paid by way of subscription for interests in a project. He said that this amount was to be held by a company, Cardinal Financial Securities Ltd (in liq) ("Cardinal") on trust for the participants until the minimum subscription for interests was reached and, if the minimum subscription was not reached by 30 June 1999, Cardinal was obliged to refund the money. Mr Spangaro alleged that the minimum subscription was not reached by that date but that

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Cardinal had not refunded his money and had instead paid it to the first defendant ("CIAFM") in breach of trust. Mr Spangaro's principal claim against CIAFM was one for money had and received, or restitution for unjust enrichment. At [50] and [51] Finkelstein J said:

"The requirement that the defendant's enrichment be at the plaintiff's expense gives rise to an interesting legal issue. A plaintiff will usually bring a claim for money had and received against the person to whom he made the payment. Here, CIAFM received the Application Money from Cardinal, not Mr Spangaro. Is Mr Spangaro still entitled to maintain the claim? Clearly, the answer is in the affirmative. Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 is authority for this view. There a partner of a law firm had, without the firm's consent, drawn on the firm's account and spent the money at a gambling club. The firm brought a claim for money had and received against the club. Because the claim was not proprietary in nature, it was not alleged that money remaining in the hands of the club belonged to the firm. The issue before the House of Lords was whether the club was enriched at the expense of the rogue partner or at the expense of the firm. The House of Lords held that the club was enriched at the expense of the firm because it had received property belonging to the firm for no consideration. According to early authority, some of which was referred to in the speeches of Lord Templeman and Lord Goff, who delivered the leading judgments, this was sufficient to found an action for money had and received against a third party. One of the cases to which reference was made was the decision of the High Court in Black v Freedman & Co (1910) 12 CLR 105, 110 where O'Connor J said:

'Where money has been stolen, it is trust money in the hands of the thief, and he cannot divest it of that character. If he pays it over to another person, then it may be followed into that other person's hands. If, of course, that other person shows that it has come to him bonâ fide for valuable consideration, and without notice, it then may lose its character as trust money and cannot be recovered. But if it is handed over merely as a gift, it does not matter whether there is notice or not.'

As Lord Templeman noted (at 566), that decision was based in trust but 'the reasoning applies equally to a claim for money had

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and received.' Another important case referred to by the Law Lords was Banque Belge pour l'Etranger v Hambrouck [1921] 1 KB 321 where (at 335-336) Atkin LJ said: '[a]s the money paid into the [appellant] bank can be identified as the product of the original money, the plaintiffs have the common law right to claim it, and can sue for money had and received.'

The question whether CIAFM's enrichment was unjust, is not to be determined "by reference to some subjective evaluation of what is fair or unconscionable": David Securities Pty Ltd v Commonwealth Bank of Australia … (1992) 175 CLR at 379. Instead, one must turn to the recognised categories of unjust enrichment to identify the basis for the obligation to make restitution. A common basis is when money has been paid for a consideration which has failed: Moses v Macferlan (1760) 2 Burr 1005, 1012 [97 ER 676, 680-681]; Royal Bank of Canada v The King [1913] AC 283, 296; Roxborough v Rothmans of Pall MallAustralia Ltd (2001) 208 CLR 516. In this context, 'consideration' can be distinguished from consideration sufficient to form a contract and 'it is, generally speaking, not the promise which is referred to as the consideration, but the performance of the promise': Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32, 48. There will be a "failure of consideration" where a payment has been made for a certain condition or purpose that is not fulfilled (including an unpromised future event), or in contemplation of a state of affairs which does not materialise: Martin v Andrews (1856) 7 El & Bl 1 at 4 [119 ER 1148, 1149]; Chillingworth v Esche [1924] 1 Ch 97; David Securities Pty Ltd v Commonwealth Bank of Australia … (1992) 175 CLR at 382; Baltic Shipping Co v Dillon (1993) 176 CLR 344, 389; Roxborough v Rothmans 208 CLR at 525, 557. As Professor Burrows points out in The Law of Restitution, 2^nd edn, (2002) at 407, the distinction between a promised event and an unpromised event is immaterial because in both cases "the defendant's enrichment is the same in that, where the future event does not occur, the basis for the claimant's conferral of the benefit is undermined". Here, the unpromised event is the establishment of the project. It did not eventuate because minimum subscription was not reached."

79 In my opinion this case does not assist the argument advanced on behalf of Ideas Plus. It is plain from what I have said that the money paid
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to CIAFM by Cardinal was money held on trust for Mr Spangaro. It was, as Finkelstein J recognised, consequently Mr Spangaro's money and the condition upon which he paid it had plainly not been satisfied. It was on that basis that a restitutionary claim lay. In each of Lipkin Gorman (a firm)v Karpnale Ltd [1991] 2 AC 548 and Black v S Freedman & Co (1910) 12 CLR 105 the person enriched had received, for no consideration, property stolen from the person who asserted the restitutionary claim. In this case, as I have said, the money that was paid to NAB belonged to HSBC, and not to Ideas Plus, and there was no failure of consideration or basis as between HSBC and NAB or between Ideas Plus and HSBC.

80 Next, counsel for Ideas Plus relied upon Contronic Distributors Pty Ltd v Bank of New South Wales [1984] 3 NSWLR 110. In that case a buyer and seller of goods agreed that the buyer would arrange for a letter of credit to issue in favour of the seller in respect of a proposed sale of goods but in an amount which, unknown to the issuer, would cover not only the cost of the goods to be supplied but also past indebtedness of the buyer to the seller. The buyer instructed its financier (not the issuing bank) to arrange for the letter of credit. It did so and, as a result of the fraudulent scheme, the letter of credit which issued substantially overstated the goods which were in fact to be delivered to the buyer by the seller. The financier learned of the scheme before the seller demanded payment and applied for an injunction restraining the bank from paying pursuant to the letter of credit and the seller from demanding payment under it.

81 This was not a case that was decided upon the basis of failure of consideration. Helsham J canvassed only two grounds for enjoining payment. The first was, of course, fraud on the part of the beneficiary (see at 114) enabling the Court to restrain the bank from paying the money to the vendor and thereby enabling it to benefit from its deceit. The second (discussed at 116) was that "a seller can be restrained from presenting a letter of credit for payment or having payment made against it in the event that the documents which are needed to require payment to be made are false to the knowledge of the seller". However, the deliberate submission of a false document of claim is necessarily fraudulent and it seems that, in the end, the decision was based upon the existence of a fraud (see at 116). The facts of that case, and the basis for the decision, have consequently no bearing on the issue that falls for consideration in this case.

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82 Reliance was also placed upon Khan v Permayer [2001] BPIR 95. In that case a Mr Eaves agreed with the respondent, Mr Permayer, that he would pay to Mr Permayer a debt of £40,000 which he believed to be owed to Mr Permayer by the appellant, Mr Khan, and another man, Mr El-Mahdi. Mr Eaves had agreed with Mr Khan and Mr El-Mahdi that they would reimburse him that sum. Mr Eaves then paid the sum of £40,000 and Mr Khan and Mr El-Mahdi reimbursed him. Each of the three men was mistaken about the debt owed to Mr Permayer. In fact, nothing was owed to him by Mr Khan and Mr El-Mahdi. Mr Khan commenced an action against Mr Permayer seeking restitution of half the sum paid to Mr Permayer by Mr Eaves (having reimbursed to Mr Eaves half of the sum paid by him). The trial Judge gave judgment in favour of Mr Khan, finding, amongst other things, that "mistake vitiated the whole basis of the arrangement". Mr Permayer appealed, contending that Mr Khan had had no cause of action because the payment to him had been made by Mr Eaves, and not by Mr Khan, and that Mr Khan had been under no liability to either of Mr Eaves or Mr Permayer. It was not disputed that, if Mr Eaves had been a party, and if both Mr Khan and Mr Eaves had been labouring under a mistake, then the sums could have been recovered by Mr Khan from Mr Permayer.

83 Morritt LJ, after referring to the general rule mentioned by Goff & Jones 5th ed at [38] (6th ed at [41]) that, where the payment to the defendant was made by a third party, it cannot normally be recovered by the claimant, and after mentioning that none of the examples of exceptions to this rule that had been identified by Goff & Jones were applicable, went on to consider the case of Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221. He said that it appeared to him that that case established that a payment made by a third party under a mistaken belief which gives rise to unjust enrichment of the defendant may be recoverable by the person at whose ultimate expense it was paid, if that person is also acting under the same mistake as the third party. He dismissed the appeal, with the agreement of Staughton J.

84 Leaving to one side the question whether the principles in relation to the availability of subrogation as a restitutionary remedy in cases of unjust enrichment laid out in Parc (and I should mention that the judges were not uniform in their approach in that case) reflect the law in Australia (as to which see Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd [2003] NSWSC 1072 at [50] per Bryson J), there is no relevant similarity between Parc and this case. In Parc (so far as it is presently relevant), A had loaned money to B who had, in turn, loaned it to C (albeit on different terms) resulting, ultimately, in the enrichment of

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D (a company that was related to C). The loan was induced by A's mistaken belief that its loan was protected in respect of intra-group indebtedness. A would have loaned the money to C directly, were it not for its desire to avoid Swiss regulatory requirements, which led it to interpose B. The "reality" was consequently said to be that D was enriched by the money advanced by A "via" B to C (see, at 227, per Lord Steyn, who considered that to allow the interposition of B to alter the "substance" of the transaction would be "pure formalism"). In the present case (one of failure of consideration rather than mistake, the only mistake, on Ideas Plus's construction of the letter of credit, having been made by NAB), the "reality" or "substance" was that there were separate and distinct transactions between NAB and Whittakers, NAB and HSBC and HSBC and Ideas Plus. Ideas Plus could not itself have issued a letter of credit acceptable to NAB and the substance of the transactions was that the issue of the letter of credit by HSBC was necessarily an independent transaction, even though it was arranged by Ideas Plus and HSBC would not have issued it were it not for the indemnity provided by Ideas Plus.

85 In my opinion there is also no relevant similarity between Khan and this case. As I have said, Khan was a case of mistake and there was, in that case, no dispute as regards the proposition that, if Mr Eaves had been joined as a party and if both Mr Khan and Mr Eaves had been labouring under a mistake (as they were found to have been), the sum in question could be recovered from Mr Permayer. Consequently Mr Permayer's objection was, as Morritt LJ described it, "largely procedural". Moreover, Morritt LJ considered that Mr Khan, Mr El-Mahdi and Mr Eaves had been severally liable for the same debt and that they had "agreed between them" that the debt would be paid by Mr Eaves, but that the cost of it would be borne by Mr Khan and Mr El-Mahdi. As I have said, in this case the debt owed by Ideas Plus to HSBC, and that owed by HSBC to NAB, were separate and distinct.

86 Finally, counsel for Ideas Plus relied upon the case of Niru Battery. In that case, a company ("M"), which was a member of the "Woralco Group" of companies controlled by a Mr Mahdavi, contracted with another company ("Niru") to sell to Niru a quantity of lead. The contract provided for payment by letter of credit against presentation of (amongst other documents) FIATA multimodal transport bills of lading and an inspection certificate to be issued by a company ("SGS"). A letter of credit was subsequently opened by Bank Sepah ("bank") in favour of M. In order to buy the lead needed to perform its contract with Niru, M obtained financing from a financer ("CAI") against the deposit of warehouse warrants relating to the goods. These warrants, which gave

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CAI complete control of the goods, were to be released to M only on repayment of the advance. M had no access to funds other than by means of the letter of credit. It could not draw on the letter of credit without presenting the bills of lading and inspection certificate, which it could not obtain until release of the goods by CAI. M, through Mr Mahdavi, enlisted the aid of a company ("MFS") which was prepared to, and did, issue a FIATA bill of lading stating that it had taken the goods in charge for carriage to Iran (where Niru wanted them) notwithstanding that CAI still held the warrants and the lead was in the warehouse. Also, SGS negligently issued an inspection certificate which wrongly stated that they had been loaded for transport to Niru. The documents, including the bill of lading and the inspection certificate, were presented to the bank under the letter of credit by CAI, which presented them as a principal. They were accepted by the bank but, because it could not obtain Iranian currency, it was unable to pay. The price of lead began to fall and, becoming concerned about its security, CAI sold the lead to reimburse itself. Thereafter, the bank obtained the currency needed to effect payment under the letter of credit and remitted a sum of US$5.8 million to CAI for payment to M. The officer responsible at CAI was persuaded by Mr Mahdavi to release the funds to another company in the Woralco Group and the funds were subsequently lost. The bank had, in the meantime, debited Niru's account with the full amount of the payment pursuant to a counter-indemnity that Niru had given the bank. Niru and the bank ("claimants") brought an action against Mr Mahdavi, CAI and SGS.

87 The trial Judge, Moore-Bick J, held (Niru Battery Manufacturing Co v Milestone Trading Ltd [2002] EWHC 1425 (Comm)) that CAI had been unjustly enriched by the receipt of the funds from the bank, that it had no defence to a claim in restitution because it had failed to act in good faith when dealing with the funds and that the claimants were entitled to recover against it, notwithstanding that the funds had been remitted by the bank. He said that, because the bank had been joined as a claimant, the question whether Niru was entitled to maintain a claim against CAI in its own right assumed less significance. However, because it might be relevant to contribution proceedings between SGS and CAI, he thought it necessary to deal briefly with this issue. He said, in this respect (at [145]):

"In my view Niru can maintain a claim on two grounds. First, although Bank Sepah paid the money in performance of its own obligation under the letter of credit, it did so as agent for Niru to discharge its obligations under the contract of sale.

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Accordingly Niru can recover the funds mistakenly paid on its behalf. Secondly … by the time Bank Sepah remitted the funds to CAI it had reimbursed itself by debiting Niru's account. It follows that the only claimant to have suffered a loss in this case is Niru and that Bank Sepah would be obliged to hold any money recovered from CAI in trust for Niru. In these circumstances I think that Niru itself is entitled to make a claim against CAI in restitution, although it might have been necessary for it to join Bank Sepah as an additional defendant if it had not otherwise been a party to the proceedings."

88 SGS was also found to be liable to Niru on the ground that it was in breach of a duty of care owed to Niru and the bank. A judgment against SGS and CAI was entered upon the basis that they were jointly and severally liable to the claimants. The claimants looked only to SGS to satisfy the judgment and it did so. SGS brought contribution proceedings against CAI, claiming relief by way of subrogation, recoupment and contribution. The trial Judge held that SGS was entitled to be subrogated to Niru's claim against CAI and that it was entitled to recover the whole of the amount it had paid to Niru in respect of its liability for principal and interest.

89 CAI appealed on the issue of its liability to the claimants. No point seems to have been taken in the appeal as regards the right of both claimants to sue. CAI's appeal failed upon the ground that it knew that the lead which formed the basis of the transaction between Niru and M had been sold, that the transaction could not be completed and that the bank had paid by mistake, with the consequence that it had not acted in good faith in paying the money away on Mr Mahdavi's instructions, rendering it inequitable and thus unjust to deny the bank a right to restitution (Niru Battery Manufacturing Co v Milestone Trading Ltd [2004] QB 985).

90 CAI lodged a second appeal in respect of the judgment in the contribution proceedings (which had been decided after the decision in the principal proceedings). The English Court of Appeal dismissed the appeal (after reciting the basis of its judgment in the first appeal) and approved the trial Judge's reasoning to the effect that, if SGS was denied relief, CAI would be unjustly enriched at its expense (SGS having satisfied a judgment for which CAI was primarily liable) notwithstanding that it had parted with the money, because it had received a benefit which it was bound to restore and, hence, remained liable (NiruBattery

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Manufacturing Co v Milestone Trading Ltd (No 2) [2004] 2 Lloyd's Rep 319).

91 It seems to me that there is nothing in Niru that assists Ideas Plus in this case. As I have said, Niru's entitlement to claim was not canvassed in the appeal. Moreover, it seems to me that neither of the bases upon which Moore-Bick J found that entitlement to exist is present in this case. If Moore-Bick J was right to find that the bank acted as agent for Niru, notwithstanding that it had seemingly agreed to pay the money from its own funds and to recoup those funds from Niru, rather than to pay with Niru's funds (as to which see Agip (Africa) Ltd v Jackson [1991] Ch 547), it is difficult to see how there could be said to be any relevant agency in this case. Ideas Plus owed no obligation of its own to NAB and, in making payment to NAB, HSBC was discharging its own independent obligation. (I should mention, in this respect, that the total failure to perform the underlying contract in Niru Battery might possibly have constituted a defence to the payment obligation of the bank: Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1985) 1 NSWLR 545 at 551 - 552; Inflatable Toy Company Pty Ltd v State Bank of New South Wales (1994) 34 NSWLR 243 at 251 and Mugasha at 189 (fn 337).) HSBC was not discharging an obligation that could in any sense be said to have been owed by Ideas Plus. Nor, so far as the second basis is concerned, had HSBC reimbursed itself from Ideas Plus, in this case, before making payment to NAB.

92 Finally, so far as ground 5 is concerned, counsel for Ideas Plus contended (in his written submissions) that, by analogy with cases concerning fraud upon powers of appointment and fraud by mortgagees on powers of sale, an applicant for a letter of credit may restrain an issuing bank from complying with the demand upon a letter of credit if the demand is made fraudulently or, perhaps, unconscionably (see Hortico at 554 per Young J and cfOlex Focas Pty Ltd v Skodaexport Co Ltd [1998] 3 VR 380 at 400) and that there has, in this case (on Ideas Plus's construction of the letter of credit) been an express breach of the terms of the power within the concept of a "fraud" on a power. (See, for example, Dowdle v Coppel [1987] VR 1024 at 1031, where Ormiston J said that the essence of fraud upon a power is the exercise of that power for a purpose beyond its stated limitations, so as to benefit the appointor or any person who is not an object of the power.) He went on to contend that, if there is a right to restrain payment by the issuing bank for a "fraud on the power" by the beneficiary, then a person adversely affected by the exercise of the power is entitled to recover from the beneficiary, as constructive trustee,

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the amount by which the beneficiary has been enriched by the wrongful exercise of the power.

93 In my opinion the authorities stand firmly in the path of the contention that the reference to fraud in the cases dealing with payments made under letters of credit means anything other than the lack of an honest belief in entitlement to demand payment: Edward Owen Engineering Ltd v Barclays Bank International Ltd [1978] QB 159 at 169 and Deutsche Rückversicherung AG v Walbrook Insurance Co Ltd [1995] 1 WLR 1017 at 1030 - 1031 per Phillips J, affirmed Group Josi Re v Walbrook Insurance Co Ltd [1996] 1 WLR 1152 (CA). Consequently, there would only relevantly be fraud on the power given to the beneficiary by the letter of credit if it gave a certificate to the effect that payment was due with no belief in the truth of the certificate (Bush v National Australia Bank Ltd (1992) 35 NSWLR 390 at 402) or, perhaps, with reckless indifference as to its truth (Austal Ships Pty Ltd v National Australia Bank Ltd, unreported; SCt of WA (Templeman J); Library No 970037; 13 February 1997).

94 It consequently seems to me that the Commissioner was right in his conclusion that, in the circumstances to which he referred, there was no basis for a restitutionary claim based upon a failure of consideration. Because Ideas Plus confined ground 5 to this aspect of the Commissioner's decision, it is, as I have earlier said, unnecessary to consider whether or not any other basis of claim might have been made out.

Conclusion

95 It follows that in my opinion the appeal should be dismissed.

96 McLURE JA: I have had the advantage of reading the judgment of Steytler P. I agree that the appeal should be dismissed for the reasons he gives. However, I wish to make some additional observations primarily in relation to the claim in restitution. Even if the appellant's construction of the "conditions" of the irrevocable standby letter of credit ("Letter of Credit") is accepted, the restitutionary claim must fail. To grant relief in restitution, a court must find that:

(1) the defendant was enriched;

(2) the enrichment was at the plaintiff's expense;

(3) the enrichment was unjust according to defined categories developed in the cases; and

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(4) no restitutionary or other defences would preclude relief.

97 The contentious issues in this case are whether NAB's enrichment was at the expense of Ideas Plus and whether the enrichment was unjust by reason of there having been a total failure of consideration. These issues cannot be answered without reference to the law relating to letters of credit.

98 The Letter of Credit was expressly made subject to the Uniform Customs and Practice for Documentary Credits, ICC Publication No 500 (1993 Revision) ("UCP"). A letter of credit is any arrangement whereby a bank (the "issuing bank", in this case HSBC) acting at the request or on the instructions of an applicant (in this case Ideas Plus) is to make a payment to, or to the order of, a third party (the "beneficiary", in this case NAB) (UCP, Art 2). An irrevocable letter of credit constitutes a definite undertaking of the issuing bank to pay provided the terms and conditions of the credit are complied with (UCP, Art 9). The usual conditions of letters of credit are that the beneficiary present specified documents to the issuing bank before the obligation to pay arises. A letter of credit is the equivalent of or equal to cash (Wood Hall Ltd v The Pipeline Authority (1979) 141 CLR 443 at 457 per Stephen J). It is one of the most secure forms of obtaining payment.

99 Ordinarily, a letter of credit is given as security against an applicant's breach of an underlying contract with the beneficiary or is the means of performance of the payment obligation under such an underlying contract. Underlying contracts typically include contracts between the applicant and the beneficiary creating the transaction that calls for the issuance of a letter of credit such as contracts for the sale of goods and services. However, the obligations under a letter of credit are separate and independent from the underlying contract and are not subject to claims or defences of the parties to the underlying contract (UCP, Art 3). This is known as the "independence principle".

100 In this case there is no underlying contract between the beneficiary, NAB, and the applicant, Ideas Plus. The Letter of Credit was provided by a third party as security for the due performance by Whittakers of its obligations to NAB under the loan agreement and debenture. There are only two contracts relating to the Letter of Credit. The first contract is between the applicant and HSBC. In its application to HSBC for the Letter of Credit and the amendment thereto, Ideas Plus stipulated the conditions for the Letter of Credit. That is, the conditions in the Letter of Credit are in the same terms as those required by Ideas Plus. The applicant has a duty to give instructions that are complete and precise

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(UCP, Art 5) and the issuing bank owes a duty to the applicant to conform with and act on the applicant's instructions incorporated in the letter of credit.

101 The second contract is between the issuing bank, HSBC, and the beneficiary, NAB. The Letter of Credit materially provides:

"This credit is available upon presentation of your drafts at sight drawn on [HSBC] … accompanied by your signed statment [sic] stating amount claimed and certifying that:

(A) You have taken necessary steps to enforce your rights under the debenture(s) executed by Whittakers Limited in your favour.

(B) The amount drawn hereunder represents and covers the unpaid indebtedness due to you arising out of your extending general banking facilities to Whittakers Limited …

(C) You have demanded payment of the amount owed by Whittakers Limited and the shortfall in payment after your claim on the debentures as stipulated above has not been made as demanded."

102 Ideas Plus pleaded that on the proper construction of the letter of credit as amended, NAB was not entitled to draw down on it unless:

(a) it had made a demand upon Whittakers for repayment of the unpaid loans made by the defendant to Whittakers,

(a) it had taken all necessary steps under the charge to sell the charged property,

(c) the amount drawn down under letter of credit represented the shortfall between the amount so demanded and the amount recovered after exercise of its rights under the charge, including the sum realised after a sale of the charged property in exercise of such rights.

103 This pleading has two aspects. One relates to the construction of "conditions" A, B and C of the Letter of Credit and the second is the broader question of when the beneficiary can lawfully access the credit. Ideas Plus says NAB could not lawfully draw down the moneys unless conditions A, B and C had in fact been complied with. This second aspect
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is the central plank of the appellant's argument that there has been a total failure of consideration. The appellant's case for failure of consideration (or failure of basis) was that the basis on which the Letter of Credit should have been drawn down, and the basis which the appellant had stipulated through its bank, was actual compliance with conditions A, B and C (T 49). In my view that construction of the Letter of Credit is untenable.

104 It is apparent from the language in the Letter of Credit that HSBC's obligation is to pay the money upon receipt of the specified documents, being the draft and the signed certificate. That is consistent with the law relating to letters of credit. The issuing bank's concern is only with the form of the documents presented to it and not the truth of the facts stated therein: Westpac Banking Corporation v South Carolina National Bank [1986] 1 Lloyd's Rep 311 at 315. The issuing bank's obligation under a letter of credit is autonomous and not in the nature of a surety: Wood Hall Ltd v The Pipeline Authority (supra). An issuing bank has an absolute and independent obligation to pay the beneficiary irrespective of any dispute as to the truth of the statements made in the documents. An established exception to this principle is fraud perpetrated by the beneficiary. If the issuing bank has knowledge of the fraud, that justifies non­-payment even if the documents on their face comply with the letter of credit: Edward Owen Engineering Ltd v Barclays Bank International Ltd [1978] QB 159; Inflatable Toy Company Pty Ltd v State Bank of New South Wales (1994) 34 NSWLR 243.

105 It necessarily follows from the nature and scope of the issuing bank's obligation which results in a letter of credit being equivalent to cash that a beneficiary's entitlement to present the documentation and claim the credit is not dependent on the truth of the facts certified. In this case NAB honestly and reasonably believed in the truth of the statements made in the certificate and that in my view enlivened its entitlement to present the drawing documents to the issuing bank. Consequently, the truth of the statements in the certificate is irrelevant to the payment or receipt thereof under the Letter of Credit. The activating event giving rise to the issuing bank's obligation is the receipt of the documents that comply with the description in the Letter of Credit. Even if the certificate in terms contains a representation that the relevant external events had in fact occurred, that is of no moment because all parties, including the applicant (who framed the conditions), must have known or be taken to have known that the issuing bank's obligation to the beneficiary and the applicant is activated upon receipt of documents and not the truth of the statements in them. That is why a representation-based claim for damages must fail.

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106 There are cases where an applicant has recovered moneys paid pursuant to a letter of credit in circumstances where the facts in the relevant drawing documents misstate the actual position. However, those cases involve situations where the source of the entitlement to recover rests on the construction of the underlying contract (Cargill International SA Antigua Geneva Branch v Bangladesh Sugar & Food Industries Corporation [1996] 2 Lloyd's Rep 524, Comdel Commodities Ltd v Siporex Trade SA [1997] 1 Lloyd's Rep 424) or where the issuing bank paid in the mistaken belief it was obliged to do so under the letter of credit when it was not because the documents presented were forged or the beneficiary was otherwise fraudulent (Niru Battery Manufacturing Co v Milestone Trading Ltd [2002] EWHC 1425 (Comm); Edward Owen Engineering Ltd v Barclays Bank International Ltd (supra) at 170).

107 The United States experience is instructive. Article 5-110 of the United States Uniform Commercial Code (UCC) relating to letters of credit provides for warranties by the beneficiary. Article 5-110 materially provides:

"(a) If its presentation is honored, the beneficiary warrants:

(1) to the issuer, any other person to whom presentation is made, and the applicant that there is no fraud or forgery of the kind described in section 5-109(a); and

(2) to the applicant that the drawing does not violate any agreement between the applicant and beneficiary or any other agreement intended by them to be augmented by a letter of credit."

108 The history of the UCC's statutory warranty provisions is considered by R F Dole Jr, in "Warranties by Beneficiaries of Letters of Credit under Revised Article 5 of the UCC: The Truth and Nothing but the Truth" 39 Hous. L. Rev. 375. He notes that under traditional letter of credit principles, the truthfulness of representations of external facts is neither a necessary nor an appropriate condition of a letter of credit. Revised Art 5 contains no warranty as to the truth of external facts contained in the documents the presentation of which trigger the issuing bank's obligation to pay under a letter of credit. On that subject, Dole states:

" … for letters of credit to retain their commercial significance, finality of payment must be respected. The Revised Article 5 beneficiary's warranties strike a reasonable balance. The basic

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warranty is limited to the absence of forgery and material fraud. The problem of nonfraudulent but erroneous standby certifications is addressed by a special warranty, to applicants alone, that a draw does not violate underlying agreements. A warranty of the truthfulness of the representations made in the drawing documents properly was rejected. Issuers … are not allowed to consider the truthfulness of the documents presented in deciding whether to make payment. It would be unreasonable to allow recovery of a payment upon the basis of facts that were irrelevant in making it."

109 It is interesting that in Australia the general law (of contract and restitution) would respond to provide relief for overpayments in the same situations listed in UCC Art 5-110. The United States has made a decision that there should be no warranty as to the truthfulness of the representations in the drawing documents. The policy underlying that decision has not to my knowledge been considered or determined by Australian or English Courts in circumstances where there is a proven misstatement of fact but no relevant underlying contract between the applicant for a letter of credit and its beneficiary.

110 Against that background, I now turn to the appellant's claim that, assuming conditions A, B and C have not in fact been complied with, there has been a failure of consideration or a failure of basis. The appellant's focus was on the initial payment to NAB and depended on a construction of the Letter of Credit that I have concluded is erroneous. To the contrary, the payment to NAB was in accordance with the contract between HSBC and NAB and the contract between Ideas Plus and HSBC. Both contracts were effective and have been performed according to their terms. There is no failure of consideration or failure of basis in the drawing down of the credit. More fundamentally, a restitutionary claim in relation to the draw down is inconsistent with and undermines the application of the principles of the law of contract relating to letters of credit. Accordingly, there is no scope for restitution connected with the draw down of the payment: Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256 per Deane J.

111 The remaining question is whether NAB could continue to retain the payment in the face of a subsequent determination that an external fact was wrongly (but honestly) certified as having occurred (see Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516). That may depend on whether payment under a letter of credit is intended to be provisional pending the ascertainment of the truth of any

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non-documentary conditions and that question will require the Courts to address the policy considerations identified by Mr Dole. However, as this case was not advanced by the appellant and was not the subject of submissions, I do not propose to address it.

112 In view of my conclusion on the appellant's case on failure of consideration, it is unnecessary to determine whether NAB's enrichment was at the appellant's expense.

113 BUSS JA: I agree with the President, for the reasons he gives, that grounds 1 - 4 of the appeal are without merit. It is unnecessary, in the circumstances, to determine ground 5. I would dismiss the appeal.