Australia and New Zealand Banking Group Limited v Londish

The Proposed Pleading 19ANZ's proposed FASC pleads the restitution claim against the Perpetual Parties at [26]-[27] as follows: Alternatively, if it is held that the plaintiff is not entitled to be subrogated to the rights of Perpetual under the [Perpetual] mortgage and/or the [Perpetual] mortgage is held to be void and/or unenforceable then the plaintiff claims the following: (a) on or about 21 December 2009, the plaintiff paid the sum of $3,270,827.76 to Perpetual as custodian for the Challenger Howard Mortgage Fund; (b) the said monies advanced by the plaintiff to Perpetual was had and received by Perpetual for the use of Perpetual; and/or (c) in the alternative to paragraph (b) above the said money paid by the plaintiff and received by Perpetual was had and received for and behalf of [Fidante] as responsible entity of the Howard Mortgage Trust; and (d) the plaintiff advanced the said monies to Perpetual in reliance upon a mistaken belief that: (i) the [Perpetual] mortgage was enforceable and not liable to be found void or voidable under the Contracts Review Act or otherwise; and/or (ii) [Mrs Londish] authorised $3,270,827.76 of the funds advanced pursuant to the [ANZ loan] and the [ANZ mortgage] to be paid to Perpetual; and/or (iii) the [Perpetual] mortgage was valid and good security for the monies advanced to [Mrs Londish] which were secured by the [Perpetual] mortgage The plaintiff seeks the return of the monies paid to Perpetual by the plaintiff from Perpetual, or in the alternative, [Fidante].

Restitution: Unjust Enrichment 20The concept of unjust enrichment has most recently been considered by the High Court in Equuscorp Pty Ltd v Haxton (2012) 286 ALR 12 (Equuscorp). In that decision, French CJ, Crennan and Kiefel JJ summarised the principles expounded by the High Court in David Securities Pty Limited v Commonwealth Bank of Australia (1992) 175 CLR 353 (David Securities) as follows at [30]: "In summary: Recovery depends upon the enrichment of the defendant by reason of one or more recognised classes of "qualifying or vitiating" factors; The category of case must involve a qualifying or vitiating factor such as mistake, duress, illegality or failure of consideration, by reason of which the enrichment of the defendant is treated by the law as unjust; Unjust enrichment so identified gives rise to a prima facie obligation to make restitution; The prima facie liability can be displaced by circumstances which the law recognises would make an order for restitution unjust." 21In David Securities, Mason CJ, Deane, Toohey, Gaudron and McHugh JJ referred to earlier authority in rejecting the notion that unjust enrichment was a definitive legal principle according to its own terms and not just a concept (at 378-79): "In Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221, Deane J stated (at 256-257): '...[Unjust enrichment] constitutes a unifying legal concept which explains why the law recognises, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of the plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case.' Accordingly, it is not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair and unconscionable. Instead, recovery depends upon the existence of a qualifying or vitiating factor such as mistake, duress or illegality." 22ANZ's relies on mistake as a qualifying or vitiating factor said to give rise to a prima facie liability in restitution as outlined at [26(d)] of its proposed FASC. In David Securities, it was noted: "mistake not only signifies a positive belief in the existence of something which does not exist but also may include 'sheer ignorance of something relevant to the transaction in hand.'" (at 369) (citations omitted). 23The Perpetual Parties, however, contended that the way ANZ's restitution claim is framed "leads one to think of it as a total failure of consideration claim" (Written submissions for the Perpetual Parties at [73]). ANZ, in response, submitted that the qualifying or vitiating factors giving rise to a claim in restitution were not exhaustive and that there could be some overlap between the factors. 24Failure of consideration was considered at [31]-[32] in Equuscorp: "[31] Failure of consideration is one of the factors that makes retention of a benefit prima facie unjust... This Court has, on more than one occasion, described failure of consideration in terms set out by the late Professor Birks: Failure of consideration for a payment... means that the state of affairs contemplated as the basis or reason for the payment has failed to materialise or, if it did exist, has failed to sustain itself [32] As Gummow J pointed out in Roxborough v Rothmans of Pall Mall Australia Ltd, failure of consideration for the purpose of a claim for money had and received is not confined by contractual principles." (Citations omitted) 25David Securities also makes clear, citing with approval Rover International Ltd Cannon Film Ltd [1989] 3 All ER 423 at 433 (Rover International), in some cases it may not be necessary to show a total failure of consideration for restitution to operate particularly where consideration can be apportioned or where counter-restitution is relatively simple: at 383. In Rover International, the plaintiff succeeded in its claim for restitution of payment made to the defendant even though the defendant had performed some of its obligations under the contract. 26Good consideration and change of position were, in effect, two closely related defences to unjust enrichment raised as being applicable in the present proceedings by the Perpetual Parties. These defences were discussed in Barclays Bank Ltd v WJ Simms Son & Cooke (Southern) Ltd [1980] QB 677 where Goff J observed: "(1) if a person pays money to another under a mistake of fact which causes him to make the payment, he is prima facie entitled to recovery it as money paid under a mistake of fact. (2) His claim however may fail if (a) the payer intends that the payee shall have the money at all events, whether the fact be true or false, or is deemed in law so to intend; or (b) the payment is made for good consideration, in particular the money is paid to discharge, and does discharge, a debt owed to the payee (or a principal on whose behalf he is authorised to receive the payment) by the payer or by a third party by whom he is authorised to discharge the debt; or (c) the payee has changed his position in good faith, or is deemed in law to have done so." (at 695) 27The High Court in David Securities at 379-380 approved the passage above subject to the Court's determination in that case that the principle also applies in relation to a mistake of law.

Joining Parties to Proceedings 28Rule 6.19 of the Uniform Civil Procedure Rules 2005 (UCPR) provides: 6.19 Proceedings involving common questions of law or fact (1) Two or more persons may be joined as plaintiffs or defendants in any originating process if: (a) separate proceedings by or against each of them would give rise to a common question of law or fact, and (b) all rights of relief claimed in the originating process are in respect of, or arise out of, the same transaction or series of transactions, or if the court gives leave for them to be joined. (2) Leave under subrule (1) may be granted before or after the originating process is filed. 29The power given by UCPR 6.19(1) to join a plaintiff or defendant to proceedings is available not only when the conditions stated in r 6.19(1)(a) and (b) are satisfied. There is no reason why the Court's discretion to grant leave for the joinder of defendants should be limited when the power granted to the Court is expressed in unqualified terms by the words "or if the court gives leave for them to be joined": CGU Insurance Ltd v Bazem Pty Ltd [2011] NSWCA 81 at [27]. 30In order to be able to join more than one plaintiff or defendant pursuant to UCPR r 6.19, it is not necessary that each proposed party was involved in all of the transactions or that each cause of action involve all of the transactions: Stroud v Lawson [1898] 2 QB 44 at 54-5; Payne v Young (1980) 145 CLR 609 at 618 cited with approval in Bracks v Smyth-Kirk [2009] NSWCA 401 at [101]. 31In the decision of Davies J in the Bank of Western Australia Ltd v Tannous [2010] NSWSC 1319 (Tannous), an application was made to strike out a Cross-Claim. The principle claim was brought by the lender to recover monies paid to the borrowers under a mortgage with the monies primarily advanced to pay out an existing lender, FMA. The borrowers cross-claimed against FMA alleging that the mortgage with FMA had been obtained by fraud, or in the alternative, that it be set aside under the Contracts Review Act. In the relief claimed, the borrowers sought that FMA indemnify them for the amount received by FMA from the lender (that amount was adjusted for reasons not presently relevant). 32Davies J noted that this approach seemed to be a pre-emptive strike by the borrowers to minimise the effect of the principle in Collier v Morlend Finance Corporation (Victoria) Pty Ltd (1989) 6 BPR 13,337; (1989) NSW ConvR 55-473, that is, that generally, a borrower seeking relief under the Contracts Review Act will need to give credit for any monies paid to discharge an existing obligation. 33In considering the question of joining FMA to those proceedings, Davies J noted at [43]: "Where there is an issue about the unjustness of a contract or mortgage paid out by an incoming mortgagee who is the Plaintiff in proceedings, the issue is not determined by joining that prior mortgagee as a party to the proceedings. Rather, the issue is determined in the context of the discretionary order at the second stage of the Contracts Review Act proceedings. That is so, because the issue forms part of the controversy between the Plaintiff and the Defendants. The justiciable issue is what order should be made in circumstances where the contract made between the Plaintiff and the Defendants is held to be unjust. There is no justiciable issue between the Defendants and the mortgagee/lender whose contract has been completed and whose mortgage has been discharged."

Summary Dismissal 34If ANZ is denied leave to file and serve its proposed FASC, the Perpetual Parties would be, in effect, successful at running a summary dismissal or strike out or equivalent application against ANZ's cause of action in restitution against them. 35As observed by Davies J in Trust Co Fiduciary Services Limited v Hassarati (No 2) [2011] NSWSC 1396 at [35] (Hassarati), the doctrine of subrogation, but particularly restitution, appears to be the next logical step in the adjustment of rights between borrower/guarantor and both present and past lenders. Hassarati concerned three successive lenders. In that case, the loan from the plaintiff to the defendants refinanced a loan the defendants had with CKM (Mortgages) Ltd (CKM) made in November 2003. That loan in turn was a refinance of two earlier loans from the National Australia Bank Limited (NAB) made in February and November 2002. 36One of the defendants brought a Cross-Claim against the plaintiff claiming, inter alia, that the loan contracts were unjust and unconscionable and sought relief under the Contracts Review Act. In her Defence and Cross-Claim she also asserted that the earlier contract with CKM was unjust, and in her Cross-Claim but not her Defence she asserted that the earlier contract with NAB was unjust. 37That led the plaintiff to file a Further Amended Statement of Claim naming CKM as a defendant and claimed an entitlement to be subrogated to the rights of CKM and in the alternative, seeking restitution from CKM for the amount paid to CKM pursuant to the loan agreement between the plaintiff and the defendants. 38CKM then filed a Cross-Claim against NAB seeking a declaration that CKM was entitled to be subrogated to the rights of NAB under its mortgage with the defendants, and in the alternative, seeking restitution from NAB for the amount paid to NAB by CKM when CKM entered into its loan agreement with the defendants. 39The decision concerned two Notices of Motion; one brought by NAB against CKM to dismiss its Cross-Claim (NAB Motion) and one brought by CKM to strike out the part of the Further Amended Statement of Claim that pleaded a case against CKM in the event that NAB was successful on its Motion against CKM (CKM Motion). 40Davies J noted at [35], that the consideration of arguments in relation to claims in restitution (and subrogation) appear to be novel in the context of claims for possession being defended in reliance on standard defences involving the Contracts Review Act and unconscionability. His Honour then stated further at [35]: "That this moves into unchartered waters suggests that a summary determination of the claims made would be unwise or inappropriate or both. Nevertheless, if... the application of existing doctrines and principles unarguably points in one direction (using the test in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125) that is the path which ought to be followed. 41CKM's subrogation claim against NAB was disposed of once CKM accepted that it would not pursue it against NAB given that such a claim ought to be directed at the party bound by such a declaration, in that case, being the defendant. 42Consideration of CKM's restitution claim against NAB in the context of the orders sought was more difficult to resolve. NAB and CKM were both able to argue that the prima facie liability to repay money that would amount to an unjust enrichment would be displaced if good consideration was provided such as a discharge of debt or an adverse change of position shown such as the release of debt. Change of position and the provision of good consideration were observed to be closely factually related matters and indeed, as Davies J noted at [56], if NAB never had valid and enforceable mortgages and loans with the defendant then NAB did not provide good consideration for CKM's payment nor would the release and discharge of the defendant's debt by NAB amount to a change of position. 43His Honour then concluded at [59]-[60]: "Whether, and to what extent, restitution will be ordered in this case will be determined by an enquiry into the unjustness not only of the plaintiff's contracts but also those of CKM and NAB. Without such a factual determination it cannot be said that the matter is so clear that either or both of the plaintiff and CKM cannot succeed in obtaining restitution in whole or in part for the moneys they have paid. A result that enabled NAB and CKM to retain moneys paid to them only as a result of contracts they made with [the defendant], that were held to be unjust in whole or in part, would be surprising... Any answer that the indefeasibility principle, arising from the registration of the mortgages, is sufficient must be rejected" 44Accordingly, his Honour made orders striking out the parts of CKM's Cross-Claim against NAB that related to subrogation but otherwise dismissed NAB's motion. The CKM Motion was also dismissed.

(1) The restitution Claim 45ANZ submitted that joining the Perpetual Parties to the proceedings is necessitated by Mrs Londish's Further Amended Defence which introduces the allegation that the Perpetual loan and mortgage were unjust. It was noted that the application had been brought promptly and was sought at an early stage in proceedings given that no hearing date had been set and the evidence was not yet complete. 46In relation to the requirements of UCPR r 6.19, it was submitted that separate proceedings against Mrs Londish and the Perpetual Parties would give rise to common questions of fact and law such as whether Mrs Londish: "....was under the influence of her husband; had relevant business or commercial experience; was able to, and did, give fully informed consent to execute loan or related documents; received any benefit under the various loans entered into by her, including the [Perpetual] loan and the ANZ loan; and was involved in the carrying on of, or received benefit from, the family business..." (Written submissions for ANZ at [17(a)]) 47In the alternative, it was further submitted that all rights of relief claimed in the proposed FASC are in respect of, or arise out of, the same series of transactions. 48The Perpetual Parties oppose ANZ's motion on two broad bases, first, that ANZ does not have standing to bring a restitution claim against them and second, the restitution claim is hopeless by reference ANZ's own proposed pleading.

(a) ANZ's Standing to Bring the Restitution Claim 49As to the first basis, the submission was that ANZ was not the proper plaintiff in respect of any such restitution claim against the Perpetual Parties. It was on this basis that it was contended ANZ had no standing to bring the proposed claims against the Perpetual Parties. 50It was submitted that the fundamental component of any restitution claim is detriment suffered on the part of the plaintiff in circumstances where the defendant has received a benefit, being the unjust enrichment. This component was said to be absent because ANZ, as the party asserting restitution, had not actually suffered any detriment in paying funds to the Perpetual Parties at the direction of Mrs Londish because those funds had already been advanced by ANZ to her. According to the submission, the funds were, in effect, no longer ANZ's monies but rather monies paid by ANZ as trustees or agents for Mrs Londish. Any claim in restitution was said to only be available by ANZ against Mrs Londish or by Mrs Londish against the Perpetual Parties. 51Attention was drawn by the Perpetual Parties to the decision in Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 at 673-674 (ANZ v Westpac), where it was submitted that Mason CJ, Wilson, Deane, Toohey and Gaudron JJ confirmed that the liability to make restitution is imposed upon the party unjustly enriched and that, if a party receives money as a mere "conduit" and passes that money on to their principal, they bear no liability for restitution because they received no benefit. The argument was that the application of the same principle to this case would mean that ANZ would only have a restitutionary claim against the Perpetual Parties if it had paid funds to them that were actually ANZ's funds and not funds held as trustee or agent for Mrs Londish. 52The decision in Equuscorp, supra, was said to further illustrate this point by finding that where there is a proposed claim in restitution arising because of an unenforceable agreement, the claim is brought against the other party to the unenforceable agreement, being Mrs Londish rather than the Perpetual Parties. 53The submission was also said to be confirmed by the decision in Ideas Plus Investments Ltd v National Australia Bank Ltd (2006) 32 WAR 467; [2006] WASCA 215 (Ideas Plus v NAB). The facts of that case are summarised by the Perpetual Parties in their written submissions at [68]-[72] and are relevantly reproduced below. 54Ideas Plus Investments Ltd (Ideas Plus) requested from HSBC and was granted an irrevocable letter of credit in favour of NAB for an amount up to $5 million. Ideas Plus was required and did provide to HSBC an indemnity in relation to any loss arising from the issue of that letter of credit. NAB called upon HSBC to honour the letter of credit, which HSBC did, and HSBC then debited an amount held by Ideas Plus with it for that same amount. Ideas Plus then commenced proceedings seeking recovery from NAB on the basis, inter alia, that NAB had been unjustly enriched. 55The Court below had declined to accept the contention that there is an entitlement to restitution solely upon the basis of a general principle of unjust enrichment and also rejected the contention that Ideas Plus had an entitlement to restitution upon the basis of a total failure of consideration. 56It was submitted by the Perpetual Parties that the reasoning at [75]-[76] by Steytler P in Ideas Plus v NAB supports the proposition that in the context of a restitution claim based upon an alleged total failure of consideration, the only party able to make a claim in restitution is the party who paid its own money out pursuant to a contractual relationship between it and the recipient of the funds, in this case that was said to be by ANZ against Mrs Londish. 57It was submitted that this proposition by the Perpetual Parties could not be drawn from the paragraphs identified in Ideas Plus v NAB. Mr Stoljar noted that in those proceedings Ideas Plus had sought to argue that there had been some misleading or deceptive conduct that vitiated the letter of credit granted by HSBC in favour of NAB or, alternatively, the letter of credit had not been enlivened, that is, the conditions for a call to be made on the letter of credit were not met and therefore the basis for the payment made by HSBC to NAB, at the ultimate expense of Ideas Plus, had failed (at [75]). 58In that case the basis for the payment made by HSBC pursuant to the independent obligation it owed to NAB under the letter of credit was the provision by NAB of a certificate in the required terms. That certificate was provided and there was no dispute that HSBC was therefore obliged to make the payment, whether or not the certificate was accurate, at least in the absence of fraud. Steytler P then determined at [76]: "...Consequently, HSBC must be taken to have satisfied the obligation which it owed to Ideas Plus, being only that it would pay on presentation of a certificate in the required terms. There having been no underlying contract, or even transaction or relationship, between Ideas Plus and NAB, and NAB having been entitled to make its claim, so long as it did so in good faith, it is difficult to see how there could be said to have been a failure of performance, or of any basis for a payment, as between Ideas Plus and NAB. Consequently, it is difficult to see how a restitutionary claim could be said, in these circumstances, to fall within the category of unjust enrichment arising as a consequence of failure of consideration, even in its expanded meaning..." 59Mr Stoljar submitted that there was no rigid or determinative proposition of law of the kind being contended by the Perpetual Parties and that in any event, such a proposition to be drawn from Ideas Plus v NAB, was not a matter that would be dealt with on an interlocutory basis. 60Also in response to the submissions about ANZ's standing, Mr Stoljar referred to Hill Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 (Hill Industries) at [115] where Allsop P (as his Honour then was) noted that discharge of a payment, such as in ANZ v Westpac, is to be examined as a matter of substance and not form. In that case, his Honour quoted Mason CJ, Wilson, Deane, Toohey and Gaudron JJ in ANZ v Westpac: "...a mere book entry which has not been communicated to the third party or which can be reversed without affecting the substance of transactions or relationships will ordinarily not suffice... It must appear that the third party has effectively received the benefit of the payment with the consequence that the prima facie liability to make restitution has become his." (at CLR 680-4; ALR 167-70) 61It was submitted that the benefit of the transaction was received by the Perpetual Parties because the funds loaned to Mrs Londish under the Perpetual loan were returned. This conclusion was said to be reached once the substance of all the dealings in the context of all the evidence was examined. It was submitted that this examination necessarily required a factual analysis of the kind that could only be conducted at trial and not at an interlocutory basis. The submission was supported by further analysis of restitution by their Honours in ANZ v Westpac at 673-674: "The prima facie liability to make restitution is imposed by the law on the person who has been unjustly enriched. In the ordinary case of a payment of money, that person will be the payee. However, when the person to whom the payment is directly made receives it as an intermediary (eg. as agent for a designated principal), there may be uncertainty about the identity of the actual recipient of the benefit at the moment of payment. If the circumstances are such that the intermediary is to be seen as being himself the initial recipient of the benefit, his prima facie liability will ordinarily be for whom received. In such a case he has, in the event, not retained "the benefit of the windfall" but been "a mere conduit-pipe". 62It was submitted that the facts in this matter do not give rise to the agency or intermediary situation as submitted by the Perpetual Parties. In this case, there was a direct payment from ANZ to the Perpetual Parties. ANZ could not be said to be a mere conduit or intermediary. The argument by the Perpetual Parties that ANZ paid them pursuant to a loan contract it had with Mrs Londish as trustee or agent for her was said to focus on the form of the transaction to the exclusion of the substance. 63It was contended that if the pleaded facts at [26(d)] of the proposed FASC were established at a final hearing, then a vitiating factor in terms of either mistake or total failure of consideration for the purposes of a restitution claim would be made out. The submission was that this was plainly a case where the recipients of the money, the Perpetual Parties, enjoyed the benefit of something paid pursuant to a vitiating factor and are therefore prima facie liable to pay it back.

(b) ANZ's Restitution Claim is Hopeless 64As to the second basis, in written submissions for the Perpetual Parties it was contended that ANZ's proposed restitution claim was incapable of success based on the established facts. There were four aspects to this submission: (i) it is necessary for ANZ to establish that the alleged mistake was causative of its payment of the funds to the Perpetual Parties; (ii) there could have been no mistaken belief by ANZ regarding the enforceability of the Perpetual mortgage because the Perpetual Parties' mortgage was during its life an indefeasible interest over the land; (iii) as a matter of fact, Mrs Londish did authorise ANZ to advance funds to the Perpetual Parties, therefore there could be no mistake as to ANZ's belief at the relevant time; and (iv) that the Perpetual Parties would have a 'change of position' and estoppel defence in answer to ANZ's proposed restitution claim. 65In oral submissions, Mr Bedrossian referred to the factual and legal assertions already made by ANZ and Mrs Londish in their pleadings and contended that even if the Court were to accept those assertions, ANZ's restitution claim could still not be made out. The first relevant assertion in those pleadings was identified as Mrs Londish's evidence that she does not dispute that she authorised ANZ to pay the funds to the Perpetual Parties. The import of that was said to be two-fold. First, it was said to confirm that Mrs Londish received the benefit of having her debt paid off and therefore the claim in restitution should be against Mrs Londish. Second, it was submitted that where such a payment is because of a contractual relationship between ANZ and Mrs Londish wherein ANZ is contractually obliged as part of its consideration to pay funds to a third party, such payment is treated as being by Mrs Londish rather than by ANZ. Mr Bedrossian referred to a passage in Re Emanuel (No 14) Pty Ltd (in liq) (1997) 24 ACSR 292 (Re Emanuel) at 298 as supporting this proposition. That decision was concerned with preferences under the Corporations Law (Cth). 66It was also submitted by the Perpetual Parties that for ANZ to support its contention that it had a mistaken belief as to the enforceability of the Perpetual mortgage and loan, ANZ would have had to have given instructions that as a matter of fact it would not have advanced the funds to Mrs Londish if it knew that the Perpetual loan and mortgage were unenforceable. This was said to be an "outlandish, strange factual assertion" (T 36.44) and that there should have been evidence to support the basis for the proposed pleading. 67The preferred view, it was contended, was that the question of whether the Perpetual mortgage was enforceable could not have had a material impact upon ANZ's decision to advance funds to Mrs Londish pursuant to the ANZ loan and mortgage contracts. ANZ's primary concern in the transaction was said to be lending money, secured by a first ranking, registered mortgage, in order to earn interest. The Perpetual Parties' conduct and the enforceability of the loan and mortgage arrangements they entered into with Mrs Londish in 2003, it was submitted, were legally and factually disconnected from the question of whether ANZ, by its conduct in obtaining the mortgage from Mrs Londish in 2009, complied with the standard obligations of lenders relevant to such transactions. 68In answer to the whole of the Perpetual Parties' submission as to the hopelessness of the restitution claim, ANZ contended that it would not be appropriate to deal with these arguments at this interlocutory stage given that an analysis of all facts would be required to resolve the disputed issues. 69As to the first aspect referred to at [64(i)], ANZ submitted that rather than the requirement that the mistaken belief as to the enforceability of the Perpetual mortgage and loan be causative of ANZ advancing the monies to the Perpetual Parties, David Securities v CBA at 369 establishes that mistake can occur for the purpose of giving rise to a prima facie liability to make restitution where there is ignorance of the fact that the loan could be vitiated in some way or that there are equitable remedies. 70In relation to the second aspect referred to at [64(ii)], it was contended by ANZ that the Perpetual Parties' submission that the Perpetual mortgage must be presumed to have been enforceable and valid and good security was a conclusion that simply begs the question. It was submitted that such a conclusion was based on the assumption that the Perpetual mortgage is in of itself enforceable without any consideration of the arguments that the Perpetual mortgage is liable to be vitiated under the Contracts Review Act or in equity. Reference was made to Hassarati at [40], where it was noted that it was difficult to resolve at an interlocutory stage the question of whether the doctrine of indefeasibility can be affected (if at all) by a claim for money had and received. 71ANZ addressed the third aspect referred to at [64(iii)] by submitting that a Court determining in this application, that as a matter of fact that Mrs Londish did authorise ANZ to advance the funds to the Perpetual Parties as contended by Mr Bedrossian in his written submissions, would entail making final factual findings about evidence that would, ordinarily, need to be considered and tested at trial. 72Finally, as to the fourth aspect referred to at [64(iv)], ANZ submitted that any defences relied upon by the Perpetual Parties should be ventilated in due course and, if the Perpetual Parties are joined to the proceedings, through their pleadings on those matters.

(2) Separate determination of Restitution Claim 73Mr Bedrossian's submissions in relation to ANZ's motion were also said to be relevant to prayers 4 and 5 of the Perpetual Parties' motion which seek, in the event that they are joined as parties to the proceedings, that the restitution claim be the subject of a separate trial after the conduct of ANZ's claim against Mrs Londish. While, as noted above at [17], I was not minded to deal with the Perpetual Parties' motion at this stage given that they sought affirmative action despite not being parties in the proceedings, it is nevertheless prudent to refer to the submissions here for completeness. 74In written submissions for the Perpetual Parties, it was contended that there were aspects to the claims between ANZ and Mrs Londish which were capable of giving rise to a superficial assessment that ANZ has real prospects of succeeding against Mrs Londish. Mr Bedrossian noted that ANZ has conceded that the restitution claim only arises if the Perpetual mortgage and loan are unenforceable or void. It was submitted that the Court could not accept ANZ's contention that there are common issues that need to be resolved given the fact that the Perpetual loan and mortgage arose out of events that occurred approximately six years before the events that lead up ANZ obtaining its mortgage from Mrs Londish. The transactions were said to relate to two entirely separate sets of documents that had different purposes and distributions of funds. 75In written submissions for ANZ, reference was also made to the general rule that all issues be heard together: Tepko Pty Limited v Water Board (2001) CLR 1 at [186]-[170]. It was argued that there was no basis for departure from that general rule in the present case. Factual and legal issues were said to overlap. For example, common questions of fact relating to the circumstances surrounding Mrs Londish entering into the ANZ loan and mortgage were said to arise in the context of the restitution claim as well as during the stage at which the Court decides whether, and if so, how to exercise its discretion to set aside the ANZ loan and mortgage (assuming that the Court decides that the loan and mortgage are unjust under s 9 of the Contracts Review Act). 76Mr Stoljar also noted that a concern in any consideration of separating issues for determination was that ANZ would be disadvantaged if it became a litigant in proceedings that were unnecessarily fragmented, for example, by aspects of the matter going on appeal and therefore remaining outstanding. Another concern was that quarantining issues that arise from the two transactions may not be as straightforward as suggested by the Perpetual Parties. It was submitted that Mrs Londish's understanding during the two relevant times may not be separately examined so easily given that, for example as she pleads in her Further Amended Defence, the benefit of both the loans went to the same business and/or Mr Londish and she acted in reliance on Mr Londish in executing the relevant documents in both transactions. 77It was also contended that there was a risk of inconsistent credit findings, and of the same witnesses being called and cross-examined twice. The submission was that a better position would arise in order to consider whether the restitution claim could be separately determined, in the event the Perpetual Parties are joined, once the Perpetual Parties put on their pleadings and evidence.

Consideration 78Rule 6.19 of the UCPR provides a broad power for the Court to join a party to proceedings. As the High Court stated in Owners of the Ship "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 at 421: "[i]t is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words". 79Separate proceedings involving ANZ as against Mrs Londish, and ANZ as against the Perpetual Parties plainly give rise to common questions of fact and law. The possibility that the Perpetual Parties never had a valid and enforceable mortgage is a live issue in dispute by reason of both ANZ and Mrs Londish's pleadings already on foot. As already noted, ANZ raises in its ASC that it is entitled to be subrogated to the rights of Perpetual under the Perpetual mortgage. In response Mrs Londish's Further Amended Defence pleads that subrogation is not available, and more significantly, that if it is available, ANZ cannot by way of subrogation enforce either the Perpetual loan or mortgage against Mrs Londish because she entered into agreements with the Perpetual Parties in what are alleged to have been unjust circumstances. 80ANZ now seeks to bring a restitution claim against the Perpetual Parties. Therefore the question of whether the Perpetual Parties' loan and mortgage is enforceable, which raises both factual and legal questions, arise in different ways in respect of both causes of action sought to be pleaded by ANZ. The nature of Perpetual Parties' conduct in or around May 2003 in obtaining the mortgage from Mrs Londish will be examined in order to make determinations as to whether ANZ should be subrogated to the rights of the Perpetual Parties under the Perpetual mortgage as against Mrs Londish as well as whether ANZ has a prima facie case in restitution against the Perpetual Parties. 81Furthermore, in the event Mrs Londish is able to demonstrate that the ANZ loan and mortgage were unjust under s 9 of the Contracts Review Act as pleaded in her Further Amended Defence against ANZ, then as Davies J makes clear in Tannous at [43] (extracted above at [33]), the nature of the Perpetual Parties' loan and mortgage will also be considered in the context of whether a discretionary order to set aside the contracts or any other relief under the Contracts Review Act should be made. It should be made clear that this principle only goes to demonstrate how the factual questions surrounding the Perpetual loan and mortgage arise in the context of ANZ's claim against Mrs Londish, not that it in of itself justifies joining the Perpetual Parties to the proceedings. This is also a factor relevant to determining whether ANZ's restitution claim should be heard subsequent to ANZ's claim against Mrs Londish. 82ANZ accepts that the rationale for joining the Perpetual Parties cannot be based on its claim in subrogation; Mrs Londish is the correct party to be named in such a claim as she would be the party bound by any declaration that ANZ be subrogated to any rights under the Perpetual mortgage. ANZ argues that it seeks to join the Perpetual Parties because it is claiming restitution from them. 83The next consideration is whether the Perpetual Parties are the correct defendants in such a claim in restitution. The Perpetual Parties' first contention is that the only party able to make the claim is the party who paid its own money out pursuant to a contractual relationship between it and the recipient of the funds. The Perpetual Parties accepted that there was no contractual obligation for ANZ to pay a specific amount to a nominated entity, being the Perpetual Parties. At its highest, the contractual obligation of ANZ to pay the Perpetual Parties was contained in ANZ's letter of offer (Exhibit MC-1 at p 4) which noted that the purpose of the ANZ loan was to refinance the Perpetual loan and in the conditions of the ANZ loan agreement (Exhibit MC-1 at p 39) which provided that Mrs Londish could not use the loan funds for any purpose other than the one designated and that ANZ would pay the funds to Mrs Londish or in accordance with her directions. Therefore, so the submission went, ANZ merely acted as trustee or agent for Mrs Londish and cannot claim restitution from the Perpetual Parties. 84There is, in my opinion, a difficulty that lies in the path of the Perpetual Parties' attempt on this application to invoke or call in aid the proposition that the monies paid by ANZ to the Perpetual Parties were paid by ANZ as the agent or intermediary of the defendant, Mrs Londish. 85In ANZ v Westpac, ANZ sought to recover money paid to the current account which the customer "Jakes" held with Westpac, upon the principles of restitution or unjust enrichment to recover monies paid under a fundamental mistake. The recipient of the monies, Westpac, received them as the intermediary or the agent of Jakes. 86In the present case the factual position differs from Westpac's position in the above case. ANZ was the payer of the monies received by the Perpetual Parties. An analysis of the facts at trial may establish that it was not either a recipient as intermediary or agent of Mrs Londish. More to the point, even accepting that ANZ paid the monies to the Perpetual Parties under a direction from the defendant (Mrs Londish), ANZ's case on its proposed Further Amended Statement of Claim is that it paid the monies Mrs Londish owed the Perpetual Parties on the basis of a fundamental mistake. As to the enforceability of the Perpetual loan and mortgage, Mrs Londish's Further Amended Defence pleads that the security held by the Perpetual Parties was unenforceable because of the circumstances in which those transactions were made many of which, at least on the pleading, were alleged to have been known both to Mrs Londish and to the Perpetual Parties (that she was acting under the direction of her husband, did not have knowledge or appreciation of the terms of the loan/mortgage explained to her, did not have the benefit of legal advice etc). In those circumstances, it is at least implied that both she and the Perpetual Parties secured a mutual benefit from ANZ, ANZ not having been aware of the above alleged circumstances now said to have made the loan and security unenforceable as at the time of the ANZ loan/mortgage. 87The receipt of a payment which has been made under a fundamental mistake is, as earlier noted, one of the categories of case in which the facts give rise to a prima facie obligation to make restitution, in the sense of compensation for the benefit of unjust enrichment, to the person who has sustained the countervailing detriment: ANZ v Westpac at 673. 88In ANZ v Westpac there was an issue as to the actual identity of the recipient - the uncertainty of identity arising from the fact that Westpac, it was said, received the money paid under a fundamental mistake as an agent or intermediary for a designated principal (Jakes). The High Court stated that the transfer of funds was expressly made by ANZ to the credit of Jakes' account at Westpac - the funds were received by Westpac solely in the capacity of intermediary for Jakes: at 674. 89That, of course, is a different circumstance to those in the present case. Here, no question arises as to the identity of the person who was the recipient, that is the person who effectively received the benefit. 90In cases where such questions arise, the Courts will "pay regard to the substance rather than to the form of what loss occurred": ANZ v Westpac at 674. 91The ANZ "Consumer Lending Terms and Conditions" refer to the loan purpose as: "Specific Conditions (A) 1 ... 2. Loan purpose You must not use the loan funds for any purpose other than that set out in the covering Letter of Offer without ANZ's prior written consent": Exhibit MC-1 to the Affidavit of Melinda Chapman, 17 December 2012 at p 39 (p 30 of the Conditions). 92The Letter of Offer to the first defendant specified the "Loan Purpose" to be: "Refinance Challenger Home Loan": Exhibit MC-1 (above) p4. 93The substantive issue arising from the defendant's Further Amended Defence and the proposed Further Amended Statement of Claim is whether or not monies were paid to the Perpetual Parties under a direction from the plaintiff and if so, whether ANZ could be said to have done so as an agent or intermediary. In that regard the facts as to the basis and the purpose of the ANZ loan (to refinance the Perpetual or "Challenger home loan" may require examination in a trial of the proceedings. These may include the terms and conditions of and the purpose for which the loan was made. 94The Perpetual Parties relied upon the decision in Ideas Plus v NAB, supra, as supporting the rejection in the present case of the unjust enrichment claim. 95As noted above, the substantive effect of denying ANZ leave to file and serve its FASC would effectively be the equivalent of summarily dismissing or striking out its claim in restitution against the Perpetual Parties. The applicable principles in such an application, variously expressed, in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 (General Steel) are well known: "[T]he jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion...The test has been variously expressed, including "so obviously untenable that it cannot possibly succeed", "manifestly groundless" (at 128-129). 96In my view, the Perpetual Parties' contentions are not so clearly determinative according to the authorities referred to above. The focus in a determination of a claim in restitution is, initially, on whether one party received a benefit at the expense of another by reason of a vitiating factor: Equuscorp at [30]. On one view, Mrs Londish, as the Perpetual Parties contend, received the benefit of having her prior mortgage discharged to the detriment of ANZ advancing funds to Mrs Londish under what is now alleged to be an unenforceable loan and mortgage. On the other, as ANZ contends, the benefit of the transaction was received by the Perpetual Parties because the funds loaned to Mrs Londish under the Perpetual loan were returned. A determination as to which party received the benefit and at whose detriment requires an identification and analysis of the relevant vitiating factors discussed in the authorities above. 97Where the vitiating factor is said to be failure of consideration, it is not necessarily confined to contractual principles: Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at [103]-[104]. As ANZ have submitted, the state of affairs that it contemplated as the basis for it paying out Mrs Londish's mortgage with the Perpetual Parties, namely the enforceability of that mortgage, may arguably fail to sustain itself if Mrs Londish is successful in defending ANZ's claim to be subrogated to the rights of the Perpetual Parties under that mortgage. As the pleadings currently stand, factual findings will no doubt be made about the conduct of the Perpetual Parties in obtaining the mortgage from Mrs Londish in 2003 at final hearing. Similarly, a determination about the legal effect of that conduct on the Perpetual mortgage will need to be made to dispose of ANZ's subrogation claim against Mrs Londish. 98Similarly, in relation to the alleged mistake, the Perpetual Parties' contention is that ANZ could not have had a mistaken belief as to the matters raised in [26(d)] of the FASC based on the pleadings already on foot for the reasons extracted above at [61]. The Perpetual Parties contend that the focus of ANZ's considerations when obtaining the mortgage from Mrs Londish could not as a matter of logic include the question of whether the Perpetual loan and mortgage were enforceable. In my view, that assertion cannot be so conclusively made at this stage of the proceedings. It is arguable that ANZ in obtaining the mortgage from Mrs Londish would have been concerned with whether Mrs Londish would be able to obtain a proper discharge of her Perpetual mortgage given that ANZ sought to have a first ranking security over the land. Causation of the detriment, if any, sustained by ANZ must ultimately be a matter of fact to be determined at the trial. 99In any event, as Mr Stoljar observed, the vitiating factor of mistake can occur where there is sheer ignorance of something relevant to the transaction in hand: David Securities at 369. Whether ANZ's ignorance about the unenforceability of the Perpetual loan and mortgage (in the event those contracts are found to be unenforceable) and similarly, ANZ's ignorance about whether Mrs Londish did in fact authorise payment to Perpetual, and the related question of whether her understanding of the transactions with ANZ was a full and proper one, is relevant to the transaction in the context of a restitutionary claim and are, again, not matters that ought to be determined at this stage. 100A determination as to whether the Perpetual Parties' are the correct defendants in a restitution claim by ANZ would require the findings of the kind described above to be finalised. It is only then that the nature of the alleged failure of consideration or mistake can be thoroughly examined to determine whether, and how, a prima facie liability to make restitution arises and by whom. 101The Perpetual Parties contend that ANZ would not be able to overcome any of the defences raised by them. It would be inappropriate to make an order preventing ANZ from making a claim in restitution upon the basis that the proposed defences by the defendant in that claim are conclusively available. There is an arguable case by both parties to the claim which ought to be fully explored and determined at final hearing. 102In my view, ANZ's restitution claim is not manifestly hopeless, nor does it satisfy the test in General Steel. As Davies J observed in Hassarati at [35], it appears that the kind of claims in restitution (and subrogation) being raised by ANZ are novel in possession matters such as the present one. A determination as to the correct and applicable legal principles in these circumstances cannot be determined at this interlocutory stage. The submissions ANZ and the Perpetual make as to the correct interpretation of restitutionary principles ought to be examined at final hearing where final findings of fact can also be made. To interpret and apply those principles at this stage would be to do so without proper evidentiary material as the basis for factual findings upon which those principles would need to be applied.

Orders 103Accordingly I make the following orders: (1) Leave granted to the plaintiff to join Perpetual Trustee Company Limited and Fidante Partners Limited to these proceedings. (2) Leave granted to the plaintiff to file the proposed Further Amended Statement of Claim in the form annexed to the plaintiff's Notice of Motion filed on 11 March 2013. (3) The Notice of Motion filed on behalf of Perpetual Trustee Company Limited and Fidante Partners Limited on 2 April 2013, insofar as the relief sought in prayers 4-7 inclusive, be listed for mention on the next directions hearing, namely at 9.15am on 2 October 2013. (4) The proceedings be listed for directions at 9.15am on 2 October 2013.

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