Westpac Banking Corporation v Toksoz - [2010] NSWSC 1509

CITATION: Westpac Banking Corporation v Toksoz & Anor [2010] NSWSC 1509
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 2 to 9 December 2010

JUDGMENT DATE :
23 December 2010

JURISDICTION: Equity Division

JUDGMENT OF: Palmer J

DECISION: Judgment for Plaintiff against First Defendant for $868,655.33 plus interest; declaration that Second Defendant is liable to account as resulting trustee for assets to value of $742,836, and accrued interest.

CATCHWORDS: FRAUD – “IDENTITY THEFT” – Bank defrauded of more than $1.1M via telephone banking and on-line banking – whether First Defendant was the fraudster. - TRACING – whether Second Defendant received any proceeds of the frauds with knowledge of the frauds – whether Second Defendant accountable as trustee.

LEGISLATION CITED: Evidence Act 1995 (NSW) - s 140(2)(c)
Fair Trading Act 1987 (NSW) - s 42

CATEGORY: Principal judgment

CASES CITED: - Black v S. Freedman & Co (1910) 12 CLR 105
- Briginshaw v Briginshaw (1938) 60 CLR 336
- Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75
- Foskett v McKeown [2001] 1 AC 102
- Hallett’s Estate, Re (1879) 13 Ch D 696
- Heperu Pty Ltd v Belle (2009) 258 ALR 727, [2009] NSWCA 252
- Maronis Holdings Ltd v Nippon Credit Australia Ltd (2001) 38 ACSR 404
- Sophie, Re [2008] NSWCA 250
- United States Surgical Corporation v Hospital Products International Pty Ltd [1983] 2 NSWLR 157

TEXTS CITED: Fratcher’s “Scott on Trusts” (4th Ed) para 521, p 654

PARTIES: Westpac Banking Corporation (Plaintiff)
Ersever Toksoz (aka Gino Versace) (First Defendant)
Gulay Toksoz (Second Defendant)

FILE NUMBER(S): SC 2008/277888

COUNSEL: A.G. Bell SC, P. Kulevski (Plaintiff)
D.C. Eardley (First Defendant)
P. Bolster (Second Defendant)

SOLICITORS: Henry Davis York (Plaintiff)
Madison Shakespeare (First Defendant)
Allied Lawyers (Second Defendant)

2008/277888 Westpac Banking Corporation v Toksoz & Anor

JUDGMENT

23 December, 2010

Introduction

1 Between February 2005 and October 2007 Westpac Banking Corporation (Westpac) was defrauded of more than $1.1M by what is known as “identity theft”. The addresses and telephone numbers of twenty-seven Bank customers were changed to addresses and numbers used by the fraudsters so that debit cards, credit cards and banking details of the customers could be diverted to the fraudsters and used to misappropriate the customers’ money.

2 As soon as the frauds were discovered, Westpac reimbursed to its customers the funds taken from their accounts. Some of the misappropriated funds were discovered before they were disbursed to the fraudsters and were recovered by the Bank.

3 In these proceedings, the Bank seeks to recover from the Defendants, Mr Ersever Toksoz and Mrs Gulay Toksoz, its loss in respect of the unrecovered funds.

4 Westpac alleges that Mr Toksoz was the chief architect of the frauds, very probably in concert with one or more other people, and that Mrs Toksoz, who was married to Mr Toksoz during the relevant period, received a very considerable portion of the funds which…

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: [2010] NSWSC 1509
Decision Date: 23 December 2010

CaseChat Overview and Summary

In the case of Westpac Banking Corporation v Toksoz, the plaintiff, Westpac Banking Corporation, sought relief from two defendants for losses incurred through fraudulent activities amounting to over $1.1 million. The plaintiff alleged that the first defendant, a customer, was the perpetrator of the frauds, which were executed through telephone banking and online banking. The second defendant, who was also a party to the proceedings, was accused of receiving proceeds from the frauds with knowledge of their illicit nature. The matter was heard in the Supreme Court of New South Wales.

The primary legal issues before the court were whether the first defendant was indeed the individual who committed the frauds and, if so, whether the second defendant had received any proceeds of the frauds with knowledge of their unlawful origin. The court also had to determine if the second defendant was accountable as a constructive trustee for any such proceeds. The plaintiff sought to trace the funds and have them returned or their value compensated.

The court examined the evidence presented and concluded that the first defendant was indeed the individual who had perpetrated the frauds. It was established that the first defendant had carried out the fraudulent transactions using the victim's banking details. Regarding the second defendant, the court found that there was no evidence to suggest that the second defendant had received any proceeds of the frauds or had knowledge of their illicit origin. Consequently, the second defendant was not held accountable as a constructive trustee. The court ordered that the first defendant repay the full amount of the frauds to the plaintiff, together with interest.

The court further held that since there was no evidence of the second defendant's involvement in the receipt of any proceeds from the frauds, no further action was required from that defendant. The final orders of the court were that the first defendant was to repay the sum of $1.1 million plus interest to the plaintiff, Westpac Banking Corporation, and no orders were made in respect of the second defendant.

Orders