Westpac Banking Corporation v Hilliard - [2006] VSC 470

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 2127 of 2000

WESTPAC BANKING CORPORATION	Plaintiff
v
ROY CHARLES HILLIARD & ANOR	Defendants

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JUDGE:	HANSEN J
WHERE HELD:	Melbourne
DATE OF HEARING:	30 August, 1, 4-8, 11-14, 18, 26-28 September 2006
DATE OF JUDGMENT:	6 December 2006
CASE MAY BE CITED AS:	Westpac Banking Corporation v Hilliard
MEDIUM NEUTRAL CITATION:	[2006] VSC 470

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Restitution – Money paid under a mistake – Bank paid cheques in ignorance of fact that proceeds were not for the benefit of account holders – Account holders’ bookkeeper received benefit of moneys - Bank subsequently compensated account holders pursuant to deed of settlement – Bank sued bookkeeper to recover money paid to account holders pursuant to deed of settlement – Right to recover – Unjust enrichment.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M A Dreyfus QC and Mr R D Strong	Mallesons Stephen Jaques
For the First Defendant	Mr P R Hayes QC and Mr D Masel	Rudstein Kron

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Deed of Settlement............................................................................................................................. 3

The pleadings..................................................................................................................................... 9

Statement of Claim..................................................................................................................... 9
Defence..................................................................................................................................... 16
Reply........................................................................................................................................ 19

Evidence............................................................................................................................................. 19

Some background matters - Mr Hilliard’s criminal proceedings and Mr Vizard’s

insider trading................................................................................................................................... 33

The trial.............................................................................................................................................. 37

Refusal of Mr Vizard to answer questions on the ground of self incrimination........................ 37
Mr Hilliard’s application for a permanent stay of the proceeding............................................. 39

The facts............................................................................................................................................. 40

Banking arrangements for the PAS Group.............................................................................. 53
Cheques signed by Mr Hilliard................................................................................................. 65
The acquisition and false recording of art in the Vizard Foundation........................................ 73
The loan account...................................................................................................................... 81
The facts, continued................................................................................................................. 86

Mr Hilliard’s evidence as to his arrangements with Mr Vizard.............................................. 88

How the case was put.................................................................................................................... 101

Mr Vizard......................................................................................................................................... 109

Mr Hilliard....................................................................................................................................... 117

Decision............................................................................................................................................ 118

HIS HONOUR:

Introduction

The plaintiff, Westpac Banking Corporation (“Westpac”) had two customers in its Private Bank section, Stephen William Vizard and his wife and their companies (collectively referred to as the “PAS Group”), and Roy Charles Hilliard (“the first defendant”) who worked as a bookkeeper for Mr Vizard and his companies between 29 July 1991 and about 12 October 2000. Following the cessation of his employment apparent financial irregularities were discovered in PAS Group companies which ultimately led Westpac to accept a claim by Mr Vizard and the PAS Group that it had met PAS Group cheques drawn by Mr Hilliard for amounts in excess of its relevant customer mandate and which were for the benefit of Mr Hilliard rather than for the benefit of the relevant PAS Group customer. In the result, on 19 December 2000 Westpac entered into a settlement agreement with the PAS Group pursuant to which, following investigation, it compensated the PAS Group amounts which including interest totalled $3,067,274.92. Westpac claims that sum from Mr Hilliard on the basis of money had and received, unjust enrichment, or damages. Mr Hilliard denies liability. As I refer below, the amount of $3,067,274.92 was calculated on a basis that differs from…

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: [2006] VSC 470
Decision Date: 6 December 2006

CaseChat Overview and Summary

Westpac Banking Corporation brought an action against Hilliard, the bookkeeper of two account holders, seeking to recover funds previously paid to the account holders. The dispute arose from the bank’s payment of cheques drawn on the account holders’ accounts, which the bank was later informed were not for the benefit of the account holders but instead for the benefit of the bookkeeper. Upon learning of this, the bank compensated the account holders in accordance with a deed of settlement and sought to recover the amounts paid to the account holders from the bookkeeper on the basis of unjust enrichment.

The central legal issue before the court was whether the bank could recover the money paid to the account holders from the bookkeeper, who had received the benefit of those payments. This involved determining if the bank’s payment to the account holders constituted an unjust enrichment of the bookkeeper, given that the funds ultimately benefited him rather than the account holders.

The court found in favour of the bank, holding that the bookkeeper was unjustly enriched by the payments made by the bank to the account holders. The court reasoned that the bank’s payments to the account holders, made under a mistake, were essentially payments made to the bookkeeper indirectly. As the bank had not received any benefit from these payments, and the bookkeeper had received a benefit, the bank had a claim in restitution against the bookkeeper for unjust enrichment. The court emphasised that the bank’s subsequent compensation to the account holders did not affect the unjust enrichment claim against the bookkeeper.

The court ordered that the bookkeeper pay the bank the amount of the payments made to the account holders, along with interest. The decision underscored the principle that a party who makes a payment under a mistake can seek restitution from the person who received the benefit of that payment, provided the payment did not confer a benefit on the payee.

Orders