The Solicitors' Trust v Garrisons Pty Ltd

The Solicitors' Trust (the appellant) sought to recover from Garrisons Pty Ltd (the respondent) the sum of $100,000 which had been paid by the appellant to the respondent on 16 March 2001. The appellant contended that this payment was made under a mistake of fact, specifically that the appellant believed it was indebted to the respondent for that amount, when in fact no such debt was owed. The appellant sought to recover the money pursuant to the common law action for money had and received. The case proceeded to the High Court of Australia.

The central legal issue before the High Court was whether the appellant could recover the $100,000 paid to the respondent under a mistake of fact, notwithstanding that the respondent had, in good faith and without notice of the mistake, paid out the entire sum to a third party. The court was required to consider the application of the defence of change of position in the context of a claim for money had and received based on a mistake of fact.

Gummow and Callinan JJ, in a joint judgment, held that the defence of change of position was available to the respondent. Their Honours reasoned that the common law action for money had and received is founded on equitable principles, and that it would be unjust to require the respondent to repay the money when it had, in good faith, altered its position in reliance on the payment. The court affirmed that where a defendant has, in good faith and without notice of the mistake, so altered their position in reliance on the receipt of money that it would be inequitable to require repayment, the defence of change of position may be raised to defeat the claim. The appeal was dismissed.