The High Court is set to examine, for the first time since
1992, the change of position defence to restitution claims for
payments made under a mistake of fact.
In August the High Court granted special leave to an equipment
financier (AFSL), to appeal the 2012 decision of the NSW Court of
Appeal (Hills Industries v Australian Financial Services and
Leasing & Anor.
Earlier in the year we reported on two decisions of the NSW
Court of Appeal which addressed different aspects of claims for
restitution for payments made under a mistake of fact and the
defences to such claims. The Hills decision was one of those.
In Hills, AFSL had advanced money to a borrower by
making payments directly to two third parties, Hills and Bosch. The
money advanced was paid directly to Hills and Bosch on the basis of
hire purchase documents that had been forged by the borrower and
submitted to AFSL.
Having received the payments from AFSL, Hill Industries and
Bosch applied the funds to extinguish the pre-existing debts of the
When the fraud was uncovered AFSL commenced proceedings against
Hills and Bosch to recover the funds it had paid on the basis that
it did so under a mistake. Hills and Bosch defended the proceedings
claiming that even though the money was paid as a mistake the funds
were received in good faith and applied to the pre-existing debts.
Hills and Bosch raised the defence of change of position arguing
that it would be unfair to now require them to pay the funds
At trial, AFSL was successful in recovering the funds from Hills
but not Bosch.
Hills appealed the decision to the Court of Appeal and succeeded
in having the trial judgment reversed. AFSL also appealed the
decision of the trial judge allowing Bosch to retain the funds, but
that appeal was refused.
AFSL has now obtained special leave to appeal to the High Court
with the appeal date yet to be set. A High Court decision in this
area is overdue and will provide some much needed certainty on the
circumstances in which a payment received by mistake can be
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Kemp Strang has received acknowledgements for the quality of
our work in the most recent editions of Chambers & Partners,
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