Shields v Westpac Banking Corporation - [2008] NSWCA 268

New South Wales

Court of Appeal

CITATION: Shields v Westpac Banking Corporation [2008] NSWCA 268
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 17 October 2008

JUDGMENT DATE:
17 October 2008

JUDGMENT OF: Spigelman CJ at [1], [23], [25]; Hodgson JA at [2]; Macfarlan JA at [24]

EX TEMPORE JUDGMENT DATE: 17 October 2008

DECISION: Appeal dismissed with costs.

CATCHWORDS: BANKING AND FINANCIAL INSTITUTIONS – Banker and customer relationship – Money paid under mistake by banker to customer – Whether mistake fundamental – Whether mistake such as to vitiate intention of bank to make payment – knowledge of customer of bank’s mistake – Whether trust of money arose immediately.

CATEGORY: Principal judgment

CASES CITED: Evans v European Bank Limited [2004] NSWCA 82; (2004) 61 NSWLR 75
Ilich v The Queen (1987) 162 CLR 110
MBF Australia Limited v Malouf [2008] NSWCA 214
Shields v NSW Crime Commission [2007] NSWCA 309
Westpac Banking Corporation v Ollis [2007] NSWSC 956

PARTIES: Gail Anne SHIELDS (First Appellant)
KOALA DEVELOPMENT PTY LIMITED (Second Appellant)
WESTPAC BANKING CORPORATION (Respondent)

FILE NUMBER(S): CA 40662/07

COUNSEL: C J DIBB (Appellants)
J STEVENSON SC/ N KABILAFKAS (Respondent)

SOLICITORS: --- (Appellants)
Henry Davis York (Respondent)

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): SC 50045/06

LOWER COURT JUDICIAL OFFICER: Einstein J

LOWER COURT DATE OF DECISION: 31 August 2007

LOWER COURT MEDIUM NEUTRAL CITATION: Westpac Banking Corporation v Victor Warren Ollis & Ors [2007] NSWSC 956

CA 40662/07
SC 50045/06

SPIGELMAN CJ
HODGSON JA
MACFARLAN JA
FRIDAY 17 OCTOBER 2008

Gail Anne SHIELDS and one other v WESTPAC BANKING CORPORATION

Judgment

1 SPIGELMAN CJ: I invite Justice Hodgson to deliver the first judgment.

2 HODGSON JA: The proceedings giving rise to the judgment from which this appeal is brought arose out of transactions, occurring between June 2005 and January 2006, by which a Mr Ollis obtained just under $11 million from the respondent, Westpac. Westpac sued Mr Ollis and the two appellants, Ms Shields and Koala Development Pty Limited (“Koala”), claiming declarations that certain property of Mr Ollis and property of Ms Shields and property of Koala was held on trust for Westpac, and/or was subject to a charge in favour of Westpac for judgment against Mr Ollis for something over $11 million, and for other remedies.

3 In his judgment given on 31 August 2007, Einstein J held that Westpac was entitled to declarations that Mr Ollis held certain property on trust for Westpac; that certain property was subject to a charge in favour of Westpac in an amount in excess of $12 million; that Ms Shields held certain property on trust for Westpac; that certain further property was subject to a charge in favour of Westpac in the same amount; that certain further property was subject to a charge in favour of Westpac in an amount of something over $5 million; and that Koala held certain property subject to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] NSWCA 268
Decision Date: 17 October 2008

CaseChat Overview and Summary

Shields (the appellant) appealed to the Court of Appeal of New South Wales against a decision of the primary judge concerning a payment made by Westpac Banking Corporation (the respondent) to the appellant. The dispute arose from a mistaken payment by Westpac to the appellant's account, which the appellant subsequently withdrew.

The central legal issues before the Court of Appeal were whether the mistake made by Westpac in crediting the appellant's account was fundamental, and if so, whether this mistake vitiated Westpac's intention to make the payment. The Court also considered whether the appellant's knowledge of Westpac's mistake at the time of withdrawal gave rise to an immediate trust of the funds in favour of Westpac.

The Court of Appeal, in dismissing the appeal, applied established principles regarding mistaken payments. It was held that the mistake was indeed fundamental, as it concerned the very basis upon which the payment was made. The Court reasoned that where a payment is made under a fundamental mistake, and the recipient knows of the mistake, the payer retains an equitable interest in the funds. This equitable interest can be enforced as a trust, even if the recipient has withdrawn the money, provided the recipient had knowledge of the mistake. The Court found that the appellant had knowledge of the mistake and that the circumstances gave rise to an immediate equitable interest in the funds.

Consequently, the appeal was dismissed with costs, with the Court affirming the primary judge's decision.

Orders

Orders of the court

Appeal dismissed with costs. (per Hodgson JA, the remainder of the Court agreeing)

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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CITATION:	Shields v Westpac Banking Corporation [2008] NSWCA 268 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	17 October 2008
JUDGMENT DATE:	17 October 2008
JUDGMENT OF:	Spigelman CJ at [1], [23], [25]; Hodgson JA at [2]; Macfarlan JA at [24]
EX TEMPORE JUDGMENT DATE:	17 October 2008
DECISION:	Appeal dismissed with costs.
CATCHWORDS:	BANKING AND FINANCIAL INSTITUTIONS – Banker and customer relationship – Money paid under mistake by banker to customer – Whether mistake fundamental – Whether mistake such as to vitiate intention of bank to make payment – knowledge of customer of bank’s mistake – Whether trust of money arose immediately.
CATEGORY:	Principal judgment
CASES CITED:	Evans v European Bank Limited [2004] NSWCA 82; (2004) 61 NSWLR 75 Ilich v The Queen (1987) 162 CLR 110 MBF Australia Limited v Malouf [2008] NSWCA 214 Shields v NSW Crime Commission [2007] NSWCA 309 Westpac Banking Corporation v Ollis [2007] NSWSC 956
PARTIES:	Gail Anne SHIELDS (First Appellant) KOALA DEVELOPMENT PTY LIMITED (Second Appellant) WESTPAC BANKING CORPORATION (Respondent)
FILE NUMBER(S):	CA 40662/07
COUNSEL:	C J DIBB (Appellants) J STEVENSON SC/ N KABILAFKAS (Respondent)
SOLICITORS:	--- (Appellants) Henry Davis York (Respondent)
LOWER COURT JURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	SC 50045/06
LOWER COURT JUDICIAL OFFICER:	Einstein J
LOWER COURT DATE OF DECISION:	31 August 2007
LOWER COURT MEDIUM NEUTRAL CITATION:	Westpac Banking Corporation v Victor Warren Ollis & Ors [2007] NSWSC 956