The first plaintiff is a firm of solicitors. Hall Chadwick is a firm of chartered accountants.
Hall Chadwick retained the first plaintiff to do legal work in respect of one of its clients, the second plaintiff (John Gervase Shanahan in his capacity as Trustee in the Bankrupt Estate of Rex Henry Morgan).
When the legal work was completed the first plaintiff, on 31 July 2023, sent Hall Chadwick an email attaching an invoice requesting payment of the sum of $145,282.20. The invoice stipulated the destination for the payment by providing a BSB and an account number. The due date for payment was 14 August 2023.
Hall Chadwick obtained the above sum from the second plaintiff. Before this sum was transferred to the first plaintiff, Hall Chadwick received, on 3 August 2023, an email, apparently from the first plaintiff, notifying Hall Chadwick that the bank details had been changed and providing fresh bank account details.
Hall Chadwick accepted the veracity of the email and transferred the money to the stipulated bank account. In fact, the email had not emanated from the first plaintiff but was a fraudulent impersonation giving details of a fraudulent bank account.
Following the arrival of the money in the fraudulent account, a large portion of it ($101,000) was transferred, on 21 August 2023, to a separate fraudulent account held at the same bank. Both fraudulent accounts were held with the first defendant (the Commonwealth Bank of Australia).
The initial fraudulent account was in the name of the second defendant. The other fraudulent account (which received the transferred $101,000) was in the name of the third defendant.
As at 21 August 2023, and immediately before the deposit of the $145,282.20, the initial fraudulent account held a positive balance of $124.76. The other fraudulent account, until the transfer of the $101,000, had a negative balance of -$117.64.
The possibility of fraudulent interference came to the attention of the plaintiffs on 21 August 2023. They immediately (after hours) filed a summons and obtained orders from Robb J which included the freezing of the two fraudulent accounts. At that time, the initial fraudulent account had a balance of $26,374.46 and the second fraudulent account had a balance of $97,876.05. The total of the frozen monies was $124,250.51.
The purpose of the hearing before me is to obtain orders compelling the second and third defendants to return the $145,282.20 to the second plaintiff and directing the first defendant to release to the second plaintiff the $124,250.51 held in the two fraudulent accounts. Interest is also claimed.
The second and third defendants have taken no part in the proceedings. I am satisfied that service upon them has been effected in accordance with the orders made on 31 August 2023 and 7 September 2023. These defendants were called outside the Court at the commencement of the hearing and there was no appearance.
The first defendant, which has done no wrong, is only a party to facilitate an order that the monies held in the two fraudulent accounts be paid to the second plaintiff. The first defendant did not appear at the hearing but, by an email dated 26 October 2023, indicated its consent to orders directing it to pay the contents of the fraudulent accounts as stipulated.
The cause of action relied upon by the plaintiffs is one of monies had and received. In Shaw Building Group Pty Ltd v Narayan (No 2) [2015] FCA 585, Foster J said the following:
"37. Money that has been stolen may be recovered from the thief in an action for money had and received. The claim against the thief is an independent restitutionary claim based upon unjust enrichment by subtraction because the defendant's receipt of an obviously unjust enrichment has resulted from the defendant's deception of the plaintiff or commission of a wrong against the plaintiff. In Lipkin Gorman (A Firm) v Karpnale Ltd [1991] 2 AC 548 (Lipkin Gorman) at 559E-G, Lord Templeman said:
Conversion does not lie for money, taken and received as currency: see Orton v. Butler (1822) 5 B. & Aid. 652 and Foster v. Green (1862) 7 H. & N. 881. But the law imposes an obligation on the recipient of stolen money to pay an equivalent sum to the victim if the recipient has been "unjustly enriched" at the expense of the true owner. In Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd. [1943] A.C. 32, 61, Lord Wright said:
'It is clear that any civilised system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is to prevent a man from retaining the money of or some benefit derived from another which it is against conscience that he should keep.'
The conduct of the defendant imposes a primary restitutionary obligation upon him or her to repay the money which he or she has stolen.
38. A victim of theft may also sue for money had and received a third party who has received the stolen money from the thief without giving valuable and adequate consideration therefor. In the academic writings, such a claim is called a dependent claim. It relies upon the wrong to the plaintiff's property done by the thief.
39. Being a restitutionary claim, a successful action for money had and received sounds in an order requiring the defendant to repay the amount received by him or her (that is to say, the amount "subtracted" from the plaintiff)."
Applying the principles set out by Foster J there is a clear entitlement to the second plaintiff having the monies it paid into the fraudulent accounts returned to it. This includes the monies held by the first defendant but with this reservation.
As noted above, the initial fraudulent account had an existing balance of $124.76. This amount was not received from the second plaintiff. The plaintiffs suggested it could be set off against the negative balance (of $117.64) in the other fraudulent account. This is certainly a fair and common-sense suggestion, but despite the small amounts involved I do not think it satisfies the principles of monies had and received. I will therefore reduce the amount that I will direct the first defendant to pay by $124.76.
I think the first plaintiff is also entitled to an Order in its favour, being the party to whom the monies were ostensibly paid and therefore being the entity from which the money was stolen.
I make the following orders:
1. Judgment for the first plaintiff and the second plaintiff against the second and third defendants in the sum of $145,282.20.
2. The second and third defendants are to pay pre-judgment interest in the sum of $2,256.85, calculated in accordance with s 100 of the Civil Procedure Act 2005 from 19 August 2023 to 27 October 2023.
3. The second and third defendants are to pay the costs of the first plaintiff and the second plaintiff.
4. Subject to order (5), within seven days, the first defendant is to transfer to the second plaintiff the whole of the amounts presently existing in the following accounts of the second and third defendant:
1. Account in the name of Karlin Julian Buxton-Bennett, BSB xxxxxx, Account No xxxxxxxx.
2. Account in the name of Karlin Julian Buxton-Bennett TA Gemstone Pumps International, BSB xxxxxx Account No xxxxxxxx.
1. The amount transferred from the account described in order (4)(a) above is to be reduced by $124.76.
2. Compliance with orders (4) and (5) will be satisfied by the transfers being made to the following account: Account name: xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx.
3. For the avoidance of doubt, the freezing orders made by Robb J on 21 August 2023 and by Slattery J on 31 August 2023 are released to the extent necessary to enable the first defendant to comply with orders (4), (5) and (6) above.
4. These orders be entered forthwith.
5. Liberty to apply on three days' notice to the Associate to the Duty Judge in Equity.
[2]
Amendments
27 October 2023 - Para 16 Being changed to being
15 November 2023 - Jurisdiction amended to Equity
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Decision last updated: 15 November 2023