National Australia Bank Ltd v Rusu

National Australia Bank Ltd sued Rusu, its former clerk, over moneys she stole from the bank's safe. The bank had already obtained a judgment against Rusu for the stolen amount. The bank also sued Rusu's de facto, aiming to recover amounts he received from her knowing the money was stolen. These included repayments he made to a financier on a loan secured by a mortgage over his parents' house. Subsequently, the bank sued Rusu's parents, seeking restitution for the advantage they derived from the reduction in their mortgage. The bank argued it was subrogated to the de facto's rights and that Rusu's parents were dishonest recipients. The parents countered that they were not dishonest and that the financier was not their agent to receive funds on their behalf.

The court examined whether the parents were liable for the advantage they gained from the mortgage reduction. It held that for a claim for restitution to succeed, the recipients must have been dishonest. The parents were not found to be dishonest, and thus, the bank's claim failed. The court further held that the financier was not an agent for the parents to receive funds on their behalf. Therefore, the bank's claim based on subrogation and the Barnes v. Addy principles was also unsuccessful.

The court's reasoning was grounded in the principles of restitution, specifically focusing on the requirement for dishonesty on the part of the recipients. Given that the parents were not found to be dishonest and the financier was not their agent, the bank's claim for restitution against them was dismissed. The court's decision emphasised the need for a clear demonstration of dishonesty or agency in claims for restitution, particularly in the context of subrogation.

The court ordered that the claim against Rusu's parents be dismissed, and they were not liable for the reduction in their mortgage. The bank's appeal was also dismissed, reinforcing the necessity for stringent criteria to be met in claims for restitution involving third parties.