Citigroup Pty Limited v National Australia Bank Limited

v London County Council [1949] 2 KB 683 Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 Lumbers v W Cook Builders Pty Ltd [2008] HCA 27; (2008) 232 CLR 635 Moritz v Horsman (1943) 9 NW 2d 868 National Bank of New Zealand Ltd. v. Waitaki International Processing (NI) Ltd [1999] 2 NZLR 211 National Westminster Bank plc v Somer International (UK) Ltd [2002] QB 1286 Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221 Perpetual Trustees Australia Ltd v Heperu Pty Ltd [2009] NSWCA 84; 76 NSWLR 195 Port of Brisbane Corporation v ANZ Securities Ltd (No 2) [2002] QCA 158; [2003] 2 Qd R 661 Prasad v Sangha [2012] NSWCA 92 R E Jones, Ltd v Waring and Gillow, Ltd [1926] AC 670 Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516 Rural Municipality of Storthoaks v Mobil Oil Canada Ltd (1975) 55 DLR (3d) 1 Scottish Equitable plc v Derby [2001] 3 All ER 818 Skyring v Greenwood (1825) 4 B&C 281; 107 ER 1064 State Bank of New South Wales v Swiss Bank Corporation (1995) 39 NSWLR 350 Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] AC 80 The Deutsche Bank (London Agency) v Beriro (1895) 1 Com Cas 123; on appeal (1895) 1 Com Cas 255 Texts Cited: E Bant, The Change of Position Defence (2009) P Birks, An Introduction to the Law of Restitution (1989) P Birks, "Change of Position and Surviving Enrichment" in W Swadling (ed), The Limits of Restitutionary Claims: A Comparative Analysis (1997) P Birks, Unjust Enrichment, 2nd ed (2005) A S Burrows, "Change of Position: The View from England" (2003) 36 Loyola of Los Angeles Law Review 803 A S Burrows, The Law of Restitution, 3rd ed (2011) J Edelman and E Bant, Unjust Enrichment in Australia (2006) W M C Gummow, "Moses v Macferlan: 250 years on", (2010) 84 Australian Law Journal 756 P Key: "Excising Estoppel by Representation as a Defence to Restitution" (1995) 54 Cambridge Law Journal 525 P Key, "Estoppel by Representation as a Defence to Restitution: The Exception Proves the Rule?" (2001) 60 Cambridge Law Journal 465 Kwai-Lian Liew, "Mistaken Payments - The Right of Recovery and the Defences" (1995) 7 Bond Law Review 95 K Mason, J W Carter and G Tolhurst, "Mason and Carter's Restitution Law in Australia", 2nd ed, (2008) Restatement of the Law of Restitution: Quasi Contracts and Constructive Trusts (1937) Category: Principal judgment Parties: Citigroup Pty Limited - Appellant National Australia Bank Limited - Respondent Representation: B A J Coles QC/P T Newton - Appellant B W Walker SC/P D Reynolds - Respondent Mills Oakley Lawyers - Appellant NAB Group Governance & Legal - Respondent File Number(s): 2011/171676 Decision under appeal Citation: Co-Buchong v Citigroup Pty Ltd [2011] NSWSC 1199 Date of Decision: 2011-10-12 00:00:00 Before: Hammerschlag J File Number(s): 2011/171676

[HEADNOTE] [This headnote is not to be read as part of the judgment] Customers maintained a joint account with each of two banks, Citibank and NAB. Upon receipt of an instruction that was later found to be a forgery, Citibank transferred A$500,590.72 from the customers' Citibank account to NAB with a direction to credit their NAB account. NAB, having received the funds, acted on an instruction (also later found to be a forgery) to transfer a total of A$465,090 from the customers' NAB account to an overseas bank for payment to named persons. That transfer was made and the money became dissipated and lost. In proceedings brought by the customers, each bank brought a cross claim against the other on the basis that that other should bear the whole loss. It was accepted that neither bank had been negligent or failed to meet any relevant standard of banking practice. Citibank's claim for restitution failed. Applying Perpetual Trustees Australia Ltd v Heperu Pty Ltd [2009] NSWCA 84; (2009) 76 NSWLR 195 on the basis that that case superseded the earlier decision in State Bank of New South Wales Ltd v Swiss Bank Corporation (1995) 39 NSWLR 350, the primary judge held that NAB had established the change of position defence to defeat Citibank's prima facie right of restitution founded on mistake. Citibank appealed. NAB filed a notice of contention raising the alternative defences of payment over and estoppel. The main issue for determination on appeal was whether NAB had established the change of position defence. Held (dismissing the appeal) (1) The primary judge was correct in deciding that NAB had established the change of position defence. NAB acted in a manner that was consistent with the basis on which it received the money from Citibank. Citibank instructed NAB to apply the proceeds in the ordinary course of dealing with the customers' account; implicit in this instruction was a direction to do all things incidental to the administration of the account in accordance with reasonably prudent banking operations. Payment out in accordance with the transfer instruction was consistent with that implied direction, even though the instruction was later found to be a forgery. (2) The recipient must prove that he or she acted in "detrimental reliance" on the receipt "in good faith" to displace the prima facie right of recovery: Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation [1988] HCA 17; (1988) 164 CLR 662, David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353 applied. (3) In determining whether that necessary causal connection is present, the court must look beyond the bare fact of receipt and have regard to the whole context in which the money was paid and received. A recipient pays out "in reliance on" the receipt if its actions are based on the fact of receipt, coloured by information obtained in connection with the receipt which, taken in the whole of the surrounding context, supports the recipient's belief of entitlement to act on the faith of the receipt. (4) The approach of the primary judge in construing the decision in State Bank of New South Wales Ltd v Swiss Bank Corporation as limiting the determination of "reliance" to consideration of information received from the payer results in too narrow a formulation and is in that regard wrong. Attendant circumstances, including information already known to the recipient, may be relevant in determining reliance. (5) It is not necessary to regard State Bank of New South Wales Ltd v Swiss Bank Corporation as having been superseded by Perpetual Trustees Australia Ltd v Heperu Pty Ltd on the approach to causation. (6) The necessary causal link was present in this case. The message NAB received from Citibank with the funds justified its belief that the money should be dealt with in the ordinary course of banking operations. Payment out by NAB to the foreign bank would not have been made but for the receipt. (7) (Per Barrett JA, Macfarlan JA agreeing, Bathurst CJ, Allsop P and Meagher JA not deciding): NAB failed to establish the defence that it had paid over to its principals the money received as their agent from Citibank. It did not pay the money over to its principals, the real customers. Gowers v Lloyds and National Provincial Foreign Bank Ltd [1938] 1 All ER 766 distinguished. (8) (Per Barrett JA, Macfarlan JA disagreeing, Bathurst CJ, Allsop P and Meagher JA not deciding): NAB failed to establish the defence of estoppel by representation. The payment by Citibank to NAB and the SWIFT message by which it was effected did not amount to any representation; query, in any event, whether estoppel is available where the conditions necessary for the change of position defence are satisfied. (9) (Per Macfarlan JA): NAB established estoppel by representation. Citibank's payment over the SWIFT system was a representation to NAB that it could treat the holders of the Hong Kong Bank account as entitled to the funds. NAB acted to its detriment on the faith of that representation so that Citigroup is estopped from resiling from the representation and claiming restitution. (10) (Per Bathurst CJ, Allsop P and Meagher JA): It is not necessary to decide if the alternative defences of "payment over" and "estoppel by representation" are available. Neither would be available in the circumstances of the case if the change of position defence was not available.

Judgment 1BATHURST CJ, ALLSOP P and MEAGHER JA: NAB received payment from Citigroup for its named customers, Mr CoBuchong and Ms LiCo. It credited the payment to their account. In doing so it acted in accordance with Citigroup's instructions. It then paid the money away and debited that account at the direction of someone who forged the signatures of those customers. If it had not received the payment from Citigroup and believed that it was authorised by its customers to do so, it would not have paid the money away. In paying away NAB was not negligent and acted in accordance with good banking practice. It is unable to recover the payment away and was not entitled to debit its customers' account with the amount of the payment. 2We have read in draft the reasons of Barrett JA to be published. We agree with the conclusion that in these circumstances NAB has a change of position defence to Citigroup's claim for the reasons his Honour gives (esp at [95] -[105]). NAB has not been enriched as a result of receipt of the payment. On the contrary, it acted to its detriment on the faith of its receipt. We also agree with the orders proposed by his Honour. 3In Hills Industries Ltd v Australian Financial Services & Leasing Pty Ltd [2012] NSWCA 380, the change of position "defence" is discussed in a context in which it was not disputed that what each of the payees did was on the faith of the receipt. There was therefore no call to consider the content of "on the faith of the receipt", beyond it being an indication that helped to identify at least one of the purposes of the "defence": the security of payments. 4In this appeal, it is necessary to say something about State Bank of New South Wales v Swiss Bank Corporation (1995) 39 NSWLR 350. First, another way of explaining that decision is, as McPherson JA did in Port of Brisbane Corporation v ANZ Securities Ltd (No 2) [2002] QCA 158; [2003] 2 Qd R 661 at [15]. Secondly, if the decisions in State Bank and Perpetual Trustees Australia Ltd v Heperu Pty Ltd [2009] NSWCA 84; 76 NSWLR 195 are being viewed as directly inconsistent by trial judges and the profession, that confusion should be clarified. If, as the primary judge took it, State Bank is to be understood as limiting the permissible object of the payee's consideration about the receipt to information it receives from the payer, that should be said to be too narrow a formulation of the circumstances to which regard may be had and, in that respect wrong. The facts of Hills Industries illustrate the point. The concession by AFSL that Hills and Bosch each acted on the faith of the receipt was correctly made. The rogue told a lie to the payer, a different lie to each payee, and each payee, receiving the electronic funds transfer from the payer in the ordinary course of business and without qualification as to how it might be used, acted on the faith of the legitimacy and security of the payment in the way it thereafter dealt with the rogue's companies. 5To limit a consideration of "on the faith of the receipt" to knowledge derived from the payer would be to transform the change of position defence into an estoppel by representation defence. There is no warrant for such a limitation upon the assessment of the matters which would make it unjust to order repayment. The prima facie right to recovery for mistake is not narrowly circumscribed, and it is appropriate to permit the "defence" of change of position to operate conformably with the broad underlying principle enunciated in David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; 175 CLR 353 (at 379) and Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 (at 580). 6The circumstances in which the payee acts on the faith of, or in reliance on, the receipt will be many. It will be a factual question in each case. The acts and omissions will occur in the context of a certain body of knowledge which will include knowledge of the receipt and of facts that support reliance upon the stability of the receipt and an entitlement to treat the receipt as able to be dealt with. In many cases it will be a matter of fact and degree as to whether there was any such reliance. This introduces both some degree of mental advertence to the existence of the receipt, and a causal element to the analysis of the relationship between the payment and the change of position; the ascription of the latter to the former: see Perpetual Trustees v Heperu at [133]; and J Edelman and E Bant, Unjust Enrichment in Australia (2006) Oxford at 326-331. The nature and degree of the causal connection may vary from case to case. It is unnecessary to discuss what questions of approach as to causation may intrude at this point: see the discussion in E Bant, The Change of Position Defence (2009) Hart at 30-41. It is sufficient for the resolution of this case to express our agreement with what Barrett JA has said on this subject at [84] - [86]. 7NAB, by its notice of contention, also relied on the agent's "payment over" defence and a defence of estoppel by representation. In view of our conclusion as to the availability of a change of position defence, it is not necessary to decide whether these alternative defences are available. Furthermore, there is no useful purpose in doing so because neither would be available in the circumstances of this case if the more general change of position defence was not available. There are, however, some observations which should be made about these defences in the context of this appeal. 8The agent's defence is available to a payee who has received as an agent and, before hearing of the mistake, has paid away or done "something equivalent": Buller v Harrison (1777) 2 Cowp 565; 98 ER 1243; Cox v Prentice (1815) 3 M&S 344; 105 ER 641; Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation [1988] HCA 17; 164 CLR 662 at 674, 681-682. That defence has been extended to banking intermediaries. In this context, doing something equivalent refers to doing something equivalent to paying away to the principal. It includes payment in satisfaction of a debt due from the principal to the payee: Holland v Russell (1861) 1 B&S 424; 121 ER 773; Cox v Prentice; and payment at the direction of the principal to a third party, who may or may not have been a creditor of the principal: ANZ Banking Group v Westpac Banking Corporation at 684. In each case, the benefit of the payment is received by the principal who remains prima facie liable to the payer to make restitution. At the same time it is not necessary for the agent or intermediary, in order to make out the defence, to establish detriment or overall prejudice by reason of the payment away: ANZ Banking Group v Westpac Banking Corporation at 682-683. 9In Gowers v Lloyds and National Provincial Foreign Bank, Ltd [1938] 1 All ER 766, the agent bank paid away to someone impersonating the person believed by the bank to be its principal. It was argued (at 773) by the payer that the bank did not have the benefit of the agent's defence because it did not pay the money away to its principal. It was said that its principal was the person being impersonated (and for whom it purported to act) whereas it paid the money away to the fraudster. That argument was rejected on the basis that the bank's principal was the fraudster, albeit impersonating someone else, and that it had paid away to its principal. Accordingly, the case was within the relevant principle as stated by Lord Atkinson in Kleinwort, Sons, & Co v Dunlop Rubber Company (1907) 97 LT 263 at 265: "Whether he would be liable if he dealt as agent with such a person will depend upon this, whether, before the mistake was discovered, he had paid over the money which he received to the principal, or settled such an account with the principal as amounts to payment, or did something which so prejudiced his position that it would be inequitable to require him to refund." 10Sir Wilfrid Greene MR (with whom Scott and Mackinnon LJJ agreed) decided the appeal on the basis that the money had been "paid over ... to the principal" within the first of the three cases referred to by Lord Atkinson. The Master of the Rolls did not explore the implications of the third of those cases. However, in ANZ Banking Group v Westpac Banking Corporation, that case was regarded by the High Court (at 684) as at least including payment away "at the direction of" the principal. 11In our view, NAB does not fit within the first of the three cases referred to by Lord Atkinson. Mr CoBuchong and Ms LiCo were real customers of NAB and it received and debited the funds to their account. At that point, Citigroup could have maintained an action against NAB on the basis that it retained the funds which had been paid under a mistake. If NAB had accounted to its customers, as it was liable to do without notice of Citigroup's claim, Citigroup could have brought an action against the customers as the payee's principals. On this analysis, at no stage is the fraudster NAB's principal. It tricked NAB into paying away money to which, as between NAB and its customers, the latter were entitled. It did that by representing that NAB had instructions from its customers to pay away. In doing so, it did not become NAB's principal. The position in Gowers v Lloyds and National Provincial Foreign Bank was different. There Gibson, who was entitled to pension payments, had died and the fraudster, impersonating Gibson, requested the bank to collect the payments on his behalf. It did so and credited an account operated by the fraudster, albeit in the name of Gibson. The bank's dealings were with the fraudster, impersonating Gibson. Whereas in that case it could be said that the person for whom the bank received the money as agent was the person masquerading as Gibson (773), in the present case the money was paid to NAB and received as agent for its customers. That was what happened and what the fraudster intended should happen. 12The question remains whether NAB falls within the third of Lord Atkinson's cases (ie that the payee "did something which so prejudiced his position that it would be inequitable to require him to refund"). That depends upon whether that case is limited to circumstances the legal effect of which is that the money has in fact been paid away to the principal. Examples would be a payment to a third party at the direction of the principal or the discharge of a debt due from the principal to the agent: see Holland v Russell at 435-436; 777. If it is so limited, NAB does not have this defence. If it is not so limited, it would provide NAB with a defence in circumstances where Citigroup would not retain any claim against NAB's principal. There would remain a question as to whether NAB need establish prejudice beyond the fact of payment away: cf ANZ Banking Group v Westpac Banking Corporation at 683. If this defence extends to a payment away, the legal effect of which is not that the money has in fact been paid to the principal, as formulated by Lord Atkinson the circumstances which would result in the defence being available are the same as those which would engage the general change of position "defence" so that if the latter is not available, the former would not be available. 13As we have noted, the circumstances to which regard may be had when assessing whether there is a change of position "defence" are not limited to knowledge derived from or assumptions made on the basis of conduct of the payer. In some cases those circumstances may also give rise to an estoppel against the payer, whether based on an express statement, or conduct consisting of silence in the face of a duty to speak: see Skyring v Greenwood (1825) 4 B&C 281; 107 ER 1064; The Deutsche Bank (London Agency) v Beriro (1895) 1 Com Cas 123; on appeal (1895) 1 Com Cas 255; Holt v Markham [1923] 1 KB 504. In others there may not have been any representation sufficient to found an estoppel: for example, R E Jones, Ltd v Waring and Gillow, Ltd [1926] AC 670; Larner v London County Council [1949] 2 KB 683. 14It is not suggested in this appeal that if the change of position "defence" was not available, NAB would nevertheless be entitled to rely upon an estoppel by representation. Nor is this a case in which the 'all or nothing' nature of that defence would provide any additional advantage to NAB: cf Lipkin Gorman at 579; David Securities at 385; Gordon Derby v Scottish Equitable PLC [2001] EWCA Civ 369; [2001] 3 All ER 818 at [26]-[27]. In these circumstances, there is no need to resolve the difference between Barrett JA and Macfarlan JA as to whether an unqualified representation was made by the SWIFT message that NAB could treat the holders of the account into which the funds were to be paid as entitled to those funds. We observe, however, that the SWIFT message contains no express statement in those terms. In those circumstances, whether there was a representation to that effect must depend on the context in which the message was sent and transfer made. That context is likely to include any arrangements in relation to the making and clearance of any inter-bank electronic funds transfers to which Citigroup and NAB were parties. 15MACFARLAN JA: I agree with the orders proposed by Barrett JA and, subject to the following observations, with his Honour's reasons. 16First, I note that Citigroup contended on the appeal that an intermediary to whom money was mistakenly paid was limited to a defence of payment to its principal and could not rely upon the change of position defence available to other innocent recipients. I do not accept that this is so, there being no good reason or authority requiring that conclusion. 17In support of its argument, Citigroup relied upon Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation [1988] HCA 17; 164 CLR 662 at 682 and 684 where the defence of payment to a principal was discussed. However, two points should be noted about that discussion. One is that it pre-dated the High Court's acceptance in David Securities v Commonwealth Bank of Australia that a change of position defence is available to innocent recipients. The other is that it is consistent with an intermediary being able to rely upon a broadly based change of position defence because it cited authority for a defence being available to an intermediary where he or she has "paid it to the principal or done something equivalent" (at 682, emphasis added) or "something which so prejudiced his position that it would be inequitable to require him to refund" (at 684). 18Secondly, contrary to Barrett JA's view (see [127] - [136]), I consider that, by its payment to NAB, Citigroup impliedly represented to NAB that it could treat the holders of the account into which the funds were to be paid as entitled to those funds. Citigroup submitted that "the information communicated in the SWIFT message [amounted] to no more than a mere statement to the effect that the sum of USD 500,000 was to be credited to the account [in] the names of the Customers" (Outline of Submissions in Reply [25]) but did not submit that it expressly or impliedly told NAB that it should regard its ordinary right and duty to deal with the funds in this account on the customers' instructions as in some fashion qualified in relation to the funds remitted to it by Citigroup. In the absence of such a qualification to the communication, NAB was in my view entitled to act as it did. As NAB acted to its detriment on the faith of the representation, Citigroup is estopped from resiling from the representation and claiming the money back. 19In this case at least, analysis of the parties' rights by reference to the change of position defence and estoppel produces the same result. 20BARRETT JA: The question in this appeal is which of two banks must bear the loss occasioned by fraudulent conduct by an unknown person or persons that caused both banks to outlay substantial sums of money. Each bank acted under the misapprehension that the payment it made was directed and authorised by its customers in accordance with the applicable mandate.

Factual background 21The circumstances that gave rise to the litigation are not in dispute. The following is a summary of the facts as found by the primary judge, Hammerschlag J: see Co-Buchong v Citigroup Pty Ltd [2011] NSWSC 1199. 22William Co-Buchong and Rosa Li-Co were customers of both Citigroup Pty Limited ("Citibank") and National Australia Bank Limited ("NAB"). They maintained a joint account with each bank, apparently on the basis that the account could be operated by the signature of either of them. 23On 15 November 2010, Citibank received a faxed instruction, apparently signed by Mr Co-Buchong, to transfer US$500,000 from the account of Mr Co-Buchong and Ms Li-Co with Citibank to their account with NAB. The following day, 16 November 2010, Citibank transferred the Australian dollar equivalent of US$500,000 (A$500,590.72) to NAB via the SWIFT system which facilitates inter-bank transfers. The remittance was accompanied by a coded message which included the amount transferred, the name of the Citibank account holders, details of the Citibank account from which the funds were being drawn and details of the NAB account to which they were to be credited, being the joint account of Mr Co-Buchong and Ms Li-Co with NAB. 24The workings of the SWIFT system were not in issue in the proceedings. It was accepted that the SWIFT system provides a method of secure messaging enabling one participating bank to make payments to another, in the sense of accepting an irrevocable payment obligation in favour of that other, to be satisfied through inter-bank settlement channels. The effect of the SWIFT message of 16 November 2010, in the context in which it was sent and received, was accepted as the equivalent of an immediate transfer of money by Citibank to NAB. 25In consequence of that transfer of money, Citibank debited the account of Mr Co-Buchong and Ms Li-Co with Citibank to the extent of the sum transferred. NAB, in turn, credited an equivalent sum to the account of Mr Co-Buchong and Ms Li-Co with NAB. 26A few days after the transfer was made (specifically, on 19 November 2010), Ms Leung, an officer of NAB employed at a branch in Sydney, presented to Mr Alvarez, the assistant manager of the branch, three international telegraphic transfer application forms, apparently signed by Mr Co-Buchong and faxed by him to NAB. 27Each form requested transfer of a stated amount to an account with HSBC Hong Kong Limited, Hong Kong, for the benefit of a named person. An address in the Philippines was given for each such person. The total of the three amounts was A$465,090. 28The unchallenged evidence of Mr Alvarez, the NAB assistant branch manager, was that he checked the signature on the three application forms against a specimen signature of Mr Co-Buchong recorded in NAB's signature verification system and then checked for cleared funds in the account maintained by Mr Co-Buchong and Ms Li-Co with NAB. Having taken these precautionary steps, he proceeded to approve the transactions and they were effected by NAB. The result was that A$465,090 was transferred by NAB to the Hong Kong bank on 19 November 2010 and the account of Mr Co-Buchong and Ms Li-Co with NAB was debited accordingly. 29Both the faxed instruction of 15 November 2010 to Citibank which resulted in the transfer by it to NAB and the three international telegraphic transfer application forms faxed to NAB on 19 November 2010 which brought about the transfer of funds by NAB to the Hong Kong bank were false and fraudulent documents. Neither Mr Co-Buchong nor Ms Li-Co had signed or authorised them.

The proceedings before the primary judge 30In May 2011, Mr Co-Buchong and Ms Li-Co brought proceedings in the Commercial List of the Equity Division against both Citibank and NAB. They sued for damages on the basis that their bank accounts were debited without their knowledge or authority. Those claims of Mr Co-Buchong and Ms Li-Co were settled. The banks made them whole. There remained on foot, however, cross-claims between the banks. Each claimed relief against the other on the basis that that other should bear the whole loss. 31Citibank's claim at trial was put exclusively as one for restitution. Its case was that it paid money to NAB on the fundamentally mistaken belief that it had been given a genuine and valid instruction of its customer to make the payment. It was accepted that Citibank acted under such a mistake. Citibank maintained that, in the absence of restitution to it by NAB, NAB would be unjustly enriched. 32NAB's defence was that it changed its position to its detriment by paying away funds to the Hong Kong bank on the faith of the receipt from Citibank. 33It was accepted by the banks at trial that neither, in acting on a fraudulent instruction, acted negligently or failed to meet any relevant standard of banking practice. In addition, the case was conducted on the footing that the money paid by NAB to the Hong Kong bank had been lost and could not be recovered.

The decision of the primary judge 34The central issue at trial was the ability of NAB to resist the claim of Citibank on the basis of a "change of position defence". 35The primary judge referred in detail to the decisions of this Court in State Bank of New South Wales Ltd v Swiss Bank Corporation (1995) 39 NSWLR 350 and Perpetual Trustees Australia Ltd v Heperu Pty Ltd [2009] NSWCA 84; (2009) 76 NSWLR 195 where the change of position defence was considered. As his Honour acknowledged, both decisions were binding on him. On the basis of an analysis to be examined presently, he formed an opinion that the decisions could not be reconciled and that it was necessary for him to accept one and reject the other. He said (at [40] - [41]): "This demonstrates that at the level of principle and as applied to the facts of this case, Heperu is irreconcilable with State Bank. To use terminology apt to the present case, the later decision is a change of position. In these circumstances, I am bound to follow the later decision. Applying Heperu, Citibank must fail and NAB must succeed." 36His Honour then referred to the following observation of Justice Gummow (W M C Gummow, "Moses v Macferlan: 250 years on", (2010) 84 Australian Law Journal 756 at 762): "Over-definition and dissection of the phrase 'change of position' may only serve to divert attention from what is the central question, whether it would be an inequitable result for the claimant to require repayment". 37The primary judge said (at [42] - [43]): "I consider that on this approach the result would be the same. Both parties were duped. However, Citibank paid out first without the customers' authority as a result of which NAB credited the customers' account rendering it vulnerable to the fraud to which it succumbed. In these circumstances and where neither party criticises the other for falling for the fraud, it would lead to an inequitable result were Citibank to be made whole at the expense of NAB."

Issues on appeal 38Citibank relies on several grounds of appeal which, on analysis, entail one central proposition, namely, that, in the circumstances as found by the primary judge, a "change of position defence" was not available to NAB in response to Citibank's claim to recover the moneys paid over on 16 November 2010. 39One of the grounds of appeal is to the effect that the judge should have held that NAB paid out money without its customers' authority; but as counsel for NAB correctly pointed out, that is the very basis on which his Honour proceeded. 40NAB says that the judge's decision was correct for the reasons his Honour gave. It has also filed a notice of contention to the effect that the decision should be upheld on any of the following grounds: (a) NAB was not liable to Citibank because NAB had paid over as agent the funds that it had received from Citibank or NAB was a mere intermediary or conduit in respect of those funds; (b) Citibank was or ought to have been estopped from asserting any right of recovery against NAB; (c) the judge's decision was correct having regard to the decision in Heperu; and State Bank of New South Wales Ltd v Swiss Bank Corporation was distinguishable.

Banker and customer 41The accepted analysis of the banker-customer relationship where the account is in credit casts the bank in the role of the customer's debtor. Money notionally "in" the customer's account is in truth money owned by the bank which is owed by it to the customer and payable on demand made by the customer by way of "withdrawal": see, for example, Carr v Carr (1811) 1 Mer 541n; 35 ER 799; Devaynes v Noble (1816) 1 Mer 529; 35 ER 767; Foley v Hill (1848) 2 HL Cas 28; 9 ER 1002. On this basis, the money paid by Citibank to NAB on 16 November 2010 was the property of Citibank and the money paid by NAB to the Hong Kong bank on 19 November 2010 was the property of NAB. The question arising between each bank and its customers was whether the payment by the bank justified a commensurate reduction in the debt owed by the bank to those customers. Because, on the facts as they are now accepted, each bank gave effect to a forged and false instruction and therefore acted outside the bank's mandate and in breach of contract, no such reduction was warranted. 42In the result therefore, each bank continued to be indebted to its customers in the sum that represented the customers' credit balance before any debiting referable to the events in question. 43There is, however, another aspect of the relationship of banker and customer that is relevant to this case. It was referred to in Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation [1988] HCA 17; (1988) 164 CLR 662. In that case, one bank (ANZ) had transferred funds to another (Westpac) for credit of the account of a customer of the second bank (Jakes). Mason CJ, Wilson, Deane, Toohey and Gaudron JJ said (at 674-5): "In the present case, the transfer of funds was expressly made by ANZ to the credit of Jakes' account at Westpac's St. Albans branch. The funds were received by Westpac solely in the capacity of intermediary for Jakes. . . .There is nothing at all in the evidence, in banking practice or in common sense to suggest that Westpac's authority, as between Jakes and itself, to receive payment to the credit of Jakes' account was limited to amounts which it could somehow ascertain in advance were in fact due and owing to Jakes. . . . [T]he funds were received by it [ie, Westpac] not on its own behalf as principal but as an intermediary; they were paid to it and received by it as Jakes' banker on the express basis that they were to be credited to Jakes' account and they were in fact so credited. Indeed, ANZ did not contend to the contrary. 44It is thus clear that a bank receiving from another party funds for crediting to its customer's account acts as "an intermediary for" the customer and that the funds, when received and pending accounting to the customer, are held by the bank "not on its own behalf as principal but as an intermediary". It is at the point where the bank has "passed on the benefit of" the payment to its principal that the "intermediary" role comes to an end: Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation at 676. 45The circumstances of this case engage two views about the moneys received by NAB from Citibank: first, that, by virtue of the receipt, the moneys became the property of NAB which thereby became correspondingly indebted to Mr Co-Buchong and Ms Li-Co who were entitled to demand payment at any time; second, that the moneys were held by NAB as an intermediary obliged to account for them to its principal. 46The primary judge approached the matter on the first of these bases only. In light of the noticed of contention, however, both require consideration upon appeal.

47The question before this Court concerns Citibank's right of recovery against NAB. 48When Citibank paid money to NAB on 16 November 2010, it did so under a mistake of both fact and law. It believed that the faxed instruction of 15 November 2010 was a genuine instruction of its customers. That was a mistake of fact. It also believed that its contract with its customers required it to make the payment demanded by the faxed instruction and that the payment would bring about a reduction in the amount of the debt it owed its customers. That was a mistake of law. 49It may readily be accepted that there arose in Citibank, when it made the payment to NAB on the basis of these misapprehensions, a prima facie right of recovery against NAB. It is unnecessary to canvass the nature of the restitutionary right in cases of payment made by mistake. It is sufficient to note that, as recognised by the High Court in Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (above) at 673 and confirmed in Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516, Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 86 ALJR 296 and Lumbers v W Cook Builders Pty Ltd [2008] HCA 27; (2008) 232 CLR 635, the development of a remedy in restitution out of the action for money had and received became complete in Australia with the High Court's rejection in Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221 of the implied (or fictitious) contract basis of the common money count and the recognition of unjust enrichment as what Deane J there described (at 256 - 257) as: "a unifying legal concept which explains why the law recognizes, 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 a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognize such an obligation in a new or developing category of case". 50That development is explored by this Court in Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd [2012] NSWCA 380. 51One of the categories to which Deane J referred consists of cases in which a payment is made under some operative mistake. David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353 was a case of mistake of law. Customers of the respondent bank had made payments to that bank under a mistaken belief that they were legally obliged to do so. Mason CJ, Deane, Toohey, Gaudron and McHugh JJ said at 379: The fact that the payment has been caused by a mistake is sufficient to give rise to a prima facie obligation on the part of the respondent to make restitution. Before that prima facie liability is displaced, the respondent must point to circumstances which the law recognizes would make an order for restitution unjust [Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR, at p 673]. There can be no restitution in such circumstances because the law will not provide for recovery except when the enrichment is unjust. It follows that the recipient of a payment, which is sought to be recovered on the ground of unjust enrichment, is entitled to raise by way of answer any matter or circumstance which shows that his or her receipt (or retention) of the payment is not unjust." 52Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation was a case of payment under mistake of fact. The particular passage in the judgment of the court (Mason CJ, Wilson, Deane, Toohey and Gaudron JJ) at 673 to which attention is directed is: "Before that prima facie liability will be displaced, there must be circumstances (e.g. that the payment was made for good consideration such as the discharge of an existing debt or, arguably, that there has been some adverse change of position by the recipient in good faith and in reliance on the payment) which the law recognizes would make an order for restitution unjust." 53The right of recovery recognised in David Securities Pty Ltd v Commonwealth Bank of Australia and its susceptibility to displacement were summarised by French CJ, Crennan and Kiefel JJ as follows in Equuscorp Pty Ltd v Haxton (above) at [30]: " recovery depends upon 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." 54The existence of the prima facie restitutionary right where mistake "caused" the making of a payment can now be said to be uncontroversial: Prasad v Sangha [2012] NSWCA 92 at [12]; Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (above). It is the susceptibility of the right to displacement by "some adverse change of position by the recipient in good faith and in reliance on the payment" that arises for consideration upon the present appeal.

The "change of position defence" 55In Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation, the High Court, by using the word "arguably", expressed some reservation about the capacity of a recipient's detrimental change of position to displace the right of recovery by the payer. Subsequently, in David Securities Pty Ltd v Commonwealth Bank of Australia, the plurality, after referring to first instance decisions in Australia and appellate decisions in England (including "most importantly the recent decision of the House of Lords in Lipkin Gorman v Karpnale Ltd"), as well as Canadian and the United States authority, said at 385: "If we accept the principle that payments made under a mistake of law should be prima facie recoverable, in the same way as payments made under a mistake of fact, a defence of change of position is necessary to ensure that enrichment of the recipient of the payment is prevented only in circumstances where it would be unjust. This does not mean that the concept of unjust enrichment needs to shift the primary focus of its attention from the moment of enrichment. From the point of view of the person making the payment, what happens after he or she has mistakenly paid over the money is irrelevant, for it is at that moment that the defendant is unjustly enriched. However, the defence of change of position is relevant to the enrichment of the defendant precisely because its central element is that the defendant has acted to his or her detriment on the faith of the receipt" [original emphasis]. 56In Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd [1994] HCA 61; (1994) 182 CLR 51, the High Court considered the recoverability of stamp duty overpaid by a taxpayer under a self-assessment system where the taxpayer remained unaware for some two years of a change in the law that had the effect of reducing its liability. The case turned upon the effect of statutory provisions but Mason CJ made the following observation (at 65) by way of summary of the principle in David Securities Pty Ltd v Commonwealth Bank of Australia: "Assume the State has in good faith changed its position for the worse acting in reliance on the fact that the payment was made and received for duty apparently due and payable under the Act, the regime of monthly returns and payments being one ofself-assessment, it could scarcely be suggested that a refusal to make a refund in such a situation could be an erroneous exercise of discretion. In David Securities Pty. Ltd. v. Commonwealth Bank of Australia [[1992] HCA 48; (1992) 175 CLR 353 at 384-386], it was recognized that, according to the principles of the law of restitution, such a change of position would constitute a good 'defence' to an action for recovery of money paid under a mistake of fact or law." 57It may be accepted, therefore, that the High Court has confirmed detrimental change of position by the recipient, in good faith and in reliance on the receipt, as a "defence" to a restitutionary claim in respect of a payment made under a mistake, whether of fact or law - or, perhaps more accurately, as a matter that displaces the prima facie right of recovery under the restitutionary claim because it rendered the enrichment resulting from receipt of the payment (and its retention) not "unjust". 58In submissions to this Court, both parties relied on the decision of the House of Lords in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548. Counsel on both sides quoted this part of the speech of Lord Goff of Chieveley (at 579): "[W]here an innocent defendant's position is so changed that he will suffer an injustice if called upon to repay or repay in full, the injustice of requiring him so to repay outweighs the injustice of denying the plaintiff restitution." 59Lord Goff also said (at 580): "The defence is available to a person whose position has so changed that it would be inequitable in all the circumstances to require him to make restitution, or alternatively to make restitution in full": 60The treatment afforded to Lipkin Gorman v Karpnale Ltd in the High Court of Australia was reviewed by the Court of Appeal of Victoria (Weinberg JA and Ross AJA) in EA Negri Pty Ltd v Technip Oceania Pty Ltd [2010] VSCA 44; (2010) 27 VR 31. Their Honours noted at [30] that the authors of Mason, Carter and Tolhurst, "Mason and Carter's Restitution Law in Australia", 2nd ed, (2008), at [306] described Lipkin Gorman v Karpnale Ltd as "a controversial statement" of restitution law in an "unjust enrichment" framework; that, in Roxborough v Rothmans of Pall Mall Australia Ltd (above), Lipkin Gorman v Karpnale Ltd was cited (at [66]) without apparent disapproval; and that, in Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 at [141], the High Court distinguished Lipkin Gorman v Karpnale Ltd without suggesting that it was wrongly decided. 61The fact remains that observations in Lipkin Gorman v Karpnale Ltd (and subsequently by the Privy Council in Dextra Bank & Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193 and the New Zealand Court of Appeal in National Bank of New Zealand Ltd. v. Waitaki International Processing (NI) Ltd [1999] 2 NZLR 211) indicate the existence of a broader "change of position defence" than the High Court has, to this point, recognised. The broader view is concerned only with whether the recipient has changed his or her position in such a way that it would be inequitable in all the circumstances to require restitution - or, as it was put in the Privy Council decision, inequitable according to a balancing of the respective faults of the two parties, with the relevant question (stated at [38]) going to "the justice or injustice of enforcing a restitutionary claim in respect of a benefit conferred". 62In Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Co Ltd [2008] WASCA 119; (2008) 66 ACSR 594, Buss JA (with the concurrence of Steytler P) noted that two versions of the defence have emerged. A need for the recipient to prove detrimental reliance "on the faith of" or "in reliance on the validity of" the payment is, his Honour said, part of the "narrow version". He described the statement of Mason CJ, Deane, Toohey, Gaudron and McHugh JJ in David Securities Pty Ltd v Commonwealth Bank of Australia quoted at [55] above as "consistent with" the narrow version. The "wide version", as described by Buss JA, is framed in terms of the statement of Lord Goff set out at [59] above which, on its face, is cast more generally and does not put the defendant to the task of proving detrimental reliance "on the faith of" or "in reliance on the validity of" the payment. In the end, Buss JA did not need to choose between the two versions because the defence was not made out according to either of them. 63Buss JA began his discussion of the topic with this observation: "An area of some uncertainty concerns detrimental reliance; that is, whether the recipient must prove that he or she has not only received the payment in good faith, but has acted to his or her detriment "on the faith of" or "in reliance on the validity of" the payment." 64It is, in my opinion, not open to this Court to regard that matter as uncertain or to adopt any "wide version". In Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation, the High Court referred to "some adverse change of position by the recipient in good faith and in reliance on the payment ... which the law recognizes would make an order for restitution unjust" [emphasis added]. In David Securities Pty Ltd v Commonwealth Bank of Australia, Mason CJ, Deane, Toohey, Gaudron and McHugh JJ said that the defence of change of position is relevant to the enrichment of the defendant "precisely because its central element is that the defendant has acted to his or her detriment on the faith of the receipt" [original emphasis]. In Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd, Mason CJ postulated a defendant which "has in good faith changed its position for the worse acting in reliance on the fact that the payment was made" [emphasis added]. 65In all of these considered statements made by members of the High Court, the elements of detrimental reliance on the making of the payment (and therefore its receipt) and good faith change of position accordingly are components of the case a defendant must make out in order to displace the plaintiff's prima facie right of recovery. Thus, while "change of position" may, in a loose sense, be described as one example of circumstances recognised by the law as making an order for restitution unjust, it is only a change of position that is accompanied by the additional element of detrimental reliance on the receipt in good faith that, under our law, may properly be regarded in that way. 66I should add that, although in Lipkin Gorman v Karpnale Ltd Lord Templeman considered the question of change of position in evaluating the plaintiff's right of recovery, its status as an exonerating factor to be raised and proved by the defendant recipient (and thus a "defence") is more consonant with the reality that the relevant facts will be at the disposal of that defendant and that the plaintiff should not be required to prove more than is necessary to establish the prima facie right of recovery. In Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (above), the "defence" approach was approved.

67The statements in the High Court quoted at [64] above reflect slight differences of wording: "in reliance on the payment", "on the faith of the receipt", "in reliance on the fact that the payment was made". The concept is, however, clear. In order to make good the defence, the recipient must show that he or she acted in reliance on the fact that he or she received the money paid by the payer. 68It is necessary to consider the nature of the necessary causative or consequential link between the receipt and the recipient's change of position. 69In the search for the necessary connection, the court will look beyond the bare facts of payment and receipt and have regard to the context in which they occurred. If a stranger approaches me in the street, thrusts money into my hand and runs, the fact of my receipt is clear to me. But I am otherwise uninformed: who was the person who gave me the money, where did the money come from, why was it given to me, what, if anything, am I expected to do with it? In real-life situations, surrounding circumstances provide answers to those questions and necessarily form part of the factual matrix to which regard is to be had in ascertaining the quality of subsequent action by the recipient and, in particular, whether that subsequent action was taken in reliance on the receipt. 70It is at this point that I should refer to the decision of this Court in State Bank of New South Wales Ltd v Swiss Bank Corporation. The facts were briefly these: fraudulent employees of Swiss Bank recorded in its books an overnight loan of some $20 million by State Bank to Swiss Bank thus indicating a liability, in fact non-existent, of Swiss Bank to State Bank; Swiss Bank paid $20,004,538.33 to State Bank the next day, believing on the faith of the fraudulent entry that it was obliged to do so; the communication by Swiss Bank to State Bank accompanying the payment did not specify any person or customer account to which the moneys were to be credited (there was merely a direction to credit "to the account you keep for customers" - which was, as the trial judge found, consistent with a message that the flow of funds was to stop at State Bank, there being no other beneficiary); on the day on which the funds were transferred, a State Bank customer, Essington, acting through its officer Edwards, notified State Bank that $20,004,538.33 was to be received by State Bank for credit to Essington's account 137-327 with State Bank in Sydney; the funds received by State Bank from Swiss Bank were credited by State Bank to the Essington account; and those funds were later paid out in accordance with instructions given to State Bank by Essington and thereby dissipated and lost. Swiss Bank sued State Bank for an unrecovered balance of the remitted funds. The issue at first instance and on appeal was whether State Bank could successfully rely on a change of position in the form of the payment it made out of the Essington account in accordance with Essington's instructions. 71This Court held that a change of position defence was not available to State Bank. In their joint judgment, Priestley, Handley and Sheller JJA began with the following observation (at 355): "State Bank of New South Wales submitted that it had paid away the funds believing in good faith that Essington Ltd was entitled to them. That 'good faith' must, in our opinion, be linked to the payee acting on the faith of the receipt (repeating the emphasis in David Securities Pty Ltd (at 385). This is inherent in the passage where the italicised words appear. The court held that the critical moment for the payer is when payment is made, for it is then the unjust enrichment occurs. The critical moment for the payee is the moment of the change of position but that, in order to be relevant, must be on the faith of the receipt. It seems to us that knowledge derived otherwise than from the payer cannot be relevant in deciding whether a change of position by the payee occurred onthe faith of the receipt. This view is supported by the following considerations." 72Then followed (at 356) reference to the significance of the fact that the communication from Swiss Bank to State Bank did not name any beneficiary or contemplate any application of the transferred moneys by State Bank: "If the funds had been transmitted to State Bank of New South Wales without explanation it could not possibly have treated itself as entitled to use them for any purpose without further inquiry from Swiss Bank. Similarly if the amount had been transmitted with a message saying "This is repayment of your overnight loan with interest", State Bank of New South Wales could only havesent the money back for it knew it had made no such loan. In either case State Bank of New South Wales could not have been acting on the faith of the receipt if it disbursed the funds to third parties. A bank which receives a mistaken payment and disburses it can only bring itself within the change of position defence if it shows that at the time of disbursement it knew or thoughtit knew more than the fact of receipt standing alone." 73This reflects the reality to which I have already referred: that identification of the pretext on which the recipient subsequently pays - the rationale for the recipient's changing, by payment away, the position established by the fact of receipt - cannot come from that simple fact of receipt alone; and resort must be had to matters of context. 74Priestley, Handley and Sheller JJA continued: "This must be information which, if true, would entitle the payee to deal with the receipt as it did and that information must have come from the payer. State Bank of New South Wales seeks to rely on information derived from Essington Ltd on whose instructions it paid the money away." 75The conclusion was then stated: "The disbursement of Swiss Bank's money by State Bank of New South Wales was not on the faith of the receipt from Swiss Bank but on the faith of what Mr Edwards had told Mr West. It may be granted that State Bank of New South Wales was acting in good faith in the sense that it was not intending to defraud anyone, but the good faith it had to show was that it had 'acted to its detriment on the faith of the receipt' and in our opinion its own case shows that it did not do this." 76State Bank of New South Wales Ltd v Swiss Bank Corporation thus shows that a recipient will properly be regarded as having paid out "in reliance on" or "on the faith of" its own receipt if its actions are based on the fact of receipt as coloured by certain information related to the receipt. Information from the payer will obviously be information of this kind. So too may certain information already known to the recipient. 77The joint judgment in State Bank of New South Wales Ltd v Swiss Bank Corporation notes that the requirement of "good faith" is linked to the recipient acting on the "faith of the receipt". The good faith element also forms part of the High Court formulations. As Buss JA pointed out in Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Co Ltd (above) at [202], a recipient will not act in good faith if the recipient knows that he or she does not have a valid claim or suspects that he or she may not have a valid claim to the amount in question. In Port of Brisbane Corporation v ANZ Securities Ltd [2002] QCA 158; [2003] 2 Qd R 661 at [22], McPherson JA (with the concurrence of Davies JA and Mullins J) suggested that good faith would be absent in a case "at the extreme where a person deliberately shuts his eyes to matters he realises will invest him with actual knowledge of fraud or impropriety". While questions of the relevance of constructive notice remain to be explored, the general approach should be that a genuine belief on the recipient's part of entitlement to the receipt is something to be proved by a defendant seeking to establish that he or she acted in good faith an in reliance on the receipt: see also the joint judgment of Street CJ, Gordon and Campbell JJ in Bunge (Australia) Pty Ltd v Ying Sing (1928) 28 SR (NSW) 265 at 273. It is this factor that would in general deny the defence to, for example, a person who discovered that money had been deposited into his or her bank account by a stranger for no known reason. 78In Perpetual Trustees Australia Ltd v Heperu Pty Ltd (above), Allsop P and Handley AJA (with the concurrence of Campbell JA) explained the relevant aspect of State Bank of New South Wales Ltd v Swiss Bank Corporation in the following passage (at [139]): "On the facts, the State Bank simply did not act on the faith of the legitimacy of the receipt, but on what Essington (not the payer) told it. True it is that a payee must know more than the fact of mere receipt. It must have information that entitles it (on the basis of the information) to deal with the receipt. The requirement that the information came from the "payer" can be seen as no more than a requirement that the change of position be on the faith of the receipt and its attendant circumstances. The point in the case was that the change of position arose from reliance upon the statements of Essington, not upon the faith of the receipt and its validity. We do not view what was said by the Court as narrowly constraining the notion of acting on the faith of the receipt. There needs to be a foundation of information obtained in connection with the receipt to justify acting on the basis of the receipt. That was absent in State Bank of New South Wales v Swiss Bank Corporation." 79The point made here is that "attendant circumstances" may supplement information received from the payer in defining the factual basis which, if acted upon by the recipient, will warrant a finding of reliance on the receipt. In short, it is to the receipt, viewed in the whole of the context in which it occurs, that regard is to be had in judging whether the recipient acted on the faith of or in reliance on that receipt. 80In Port of Brisbane Corporation v ANZ Securities Ltd (above) at [15], McPherson JA offered the following explanation of the rationale for the decision in State Bank of New South Wales Ltd v Swiss Bank Corporation: "It is difficult to escape the impression that, in the end, the decision in State Bank v Swiss Bank rested on the straightforward proposition that, in paying out the $20 million, State Bank had simply exceeded the terms on which that sum had been received, and that a recipient of money may not claim the benefit of the defence if it has exceeded its instructions." 81This, to my mind, is the true basis of the decision in State Bank of New South Wales Ltd v Swiss Bank Corporation. The moneys remitted by Swiss Bank were received by State Bank from a known source with no intimation as to what the receiving bank was to do with them or how it was to treat them - beyond the direction that they be credited "to the account you keep for customers". In the face of what was otherwise silence on those matters from the remitting bank, the receiving bank could not properly do anything but await further instructions from the remitting bank. Such further instructions would have created and defined some context to which it was appropriate and necessary for the receiving bank to have regard in deciding what was to be done on the faith of the receipt. The further instructions might, as in the present case, have required crediting to a particular customer or account to which an established mandate and standing instructions applied. Once the context was set in that way, the scope of the steps that the receiving bank could take on the faith of the receipt would be defined. 82The instruction in fact given to State Bank by Essington through Edwards was a foreign and extraneous factor. It did not accompany the receipt; nor did it reflect anything conveyed by the remitting bank or already known to the receiving bank. Edwards' instruction therefore did not form part of the factual matrix to which the receiving bank was entitled to have regard in determing what it could properly do on the faith of the receipt. In paying out the funds received from Swiss Bank, State Bank acted not on the faith of the receipt itself but on the faith of what it was told by Edwards. 83Information provided by the payer and the circumstances of the receipt will be such as to induce in the recipient a particular state of mind as to the status of the moneys and the consequences that should properly flow from the receipt. The information, the circumstances and the state of mind (provided that it is rationally formed, having regard to the other elements) will combine to constitute the basis of the receipt or the basis on which it came to the recipient. It will be by reference to that basis of receipt that the subsequent change of position and its relationship to the receipt fall to be judged. 84Reference has been made more than once to the emphasis placed, by means of italics, upon the words "on the faith of the receipt" in the passage in David Securities Pty Ltd v Commonwealth Bank of Australia that refers to "the defence of change of position". The court went on (at 385) to refer to ways in which the requirement reflected by those words had been interpreted in other countries: "In the jurisdictions in which it has been accepted (Canada and the United States), the defence operates in different ways but the common element in all cases is the requirement that the defendant point to expenditure or financial commitment which can be ascribed to the mistaken payment (Rural Municipality of Storthoaks v Mobil Oil Canada Ltd (1975) 55 DLR (3d), at p 13; Grand Lodge, AOUW of Minnesota v Towne (1917) 161 NW 403, at p 407). In Canada and in some United States decisions, the defendant has been required to point to specific expenditure being incurred because of the payment. Other cases in the United States (eg, Moritz v Horsman (1943) 9 NW 2d 868) allow a wider scope to the defence, such that a defendant can rely upon it even though he or she cannot precisely identify the expenditure caused by the mistaken payments. In no jurisdiction, however, can a defendant resort to the defence of change of position where he or she has simply spent the money received on ordinary living expenses." 85Moritz v Horsman (1943) 9 NW 2d 868 offers limited guidance only. It was a case under the American "Restatement of the Law of Restitution: Quasi Contracts and Constructive Trusts" (in its original 1937 form), s 69 of which authorised resort to general notions of fairness by stating that a right to restitution was terminated or diminished if circumstances had so changed that it would be inequitable to require the other person to make full restitution. The other two cases are of greater relevance to the matter at hand. In Grand Lodge, AOUW of Minnesota v Towne (1917) 161 NW 403, it was said that, for the defence to operate, the defendant's change of position "must be caused by the payment, and must be a material and irrevocable change". The decision of the Supreme Court of Canada in Rural Municipality of Storthoaks v Mobil Oil Canada Ltd (1975) 55 DLR (3d) 1 proceeded on the basis that the recipient could avoid the obligation to repay "if it can be established that it had materially changed its circumstances as a result of the receipt of the money". In a later case (Garland v. Consumers' Gas Co (2004) 237 DLR (4th) 385), the Supreme Court of Canada saw as the essence of the defence that "defendant demonstrates that it has materially changed its position as a result of an enrichment". 86The reference in David Securities Pty Ltd v Commonwealth Bank of Australia to expenditure or financial commitment "which can be ascribed to the mistaken payment" therefore contemplates a cause and effect relationship between receipt of the mistaken payment and the subsequent expenditure or financial commitment. If it is found that the subsequent action would not have been taken "but for" the receipt, the causal link will be established. I do not say that it might not also be established by proof of some less clear-cut connection; but, given the facts of the present case, that is a question that need not be pursued.

The primary judge's approach to change of position 87The primary judge proceeded on the footing that NAB had changed its position to its detriment by making the payments to the Hong Kong bank on the instruction of the impostor out of the account of Mr Co-Buchong and Ms Li-Co. That conclusion may be taken to be uncontroversial. Because NAB made the payments without the authority of Mr Co-Buchong or Ms Li-Co, NAB was not entitled to debit their account and therefore had to bear the loss from its own resources. The central question is whether the payments to the Hong Kong bank which produced that detriment to NAB were made "in reliance on" or "on the faith of" NAB's receipt from Citibank. 88The primary judge discussed State Bank of New South Wales Ltd v Swiss Bank Corporation and Perpetual Trustees Australia Ltd v Heperu Pty Ltd in some detail. After quoting the final sentence of the passage from State Bank of New South Wales Ltd v Swiss Bank Corporation set out at [71] above, his Honour said (at [27] - [31]): "The quoted passage identifies three requirements which NAB must establish for the payment away to have been on the faith of the receipt, namely: (a) it must have known or thought it knew more than the fact of the receipt standing alone; (b) the information must have come from Citibank; and (c) the information must be information which, if true, would have entitled NAB to deal with the receipt as it did. Were I to follow State Bank, Citibank would succeed because the NAB meets only two of the three requirements. It meets the requirements that it knew or thought it knew more than the fact of the receipt standing alone and that the information came from Citibank. . . . However, NAB does not meet the requirement that the information, if true, would have entitled it to deal with the receipt as it did. The information it received from Citibank did not entitle it to deal with the receipt by paying it over not in accordance with the customers' instructions, but to an imposter." 89The judge next referred to Perpetual Trustees Australia Ltd v Heperu Pty Ltd. He quoted passages, including the following (adding emphasis as shown): Of course, communication with Mr Cincotta and his dishonesty was the occasion for withdrawal; but, the payments are to be taken as on the faith of the receipts because they would not have been made unless the receipts had been recognised as valid. These were not loans to him; they were withdrawals or redemption of units credited by reference to the value of receipts. The payments would not otherwise have been made, the change of position being thereby causally linked to the receipt. (emphasis added)" 90His Honour then said (at [38] - [39]): "In the present case, although the occasion for the withdrawal was the fraud of the impostor, NAB nevertheless undoubtedly recognised the receipt as valid. It did so because the receipt was credited to the plaintiffs' account as a consequence of the information in the SWIFT communication. Had it not recognised this validity, it would have not paid away the money. Significantly, as referred to above, there is no assertion of any negligence or failure by NAB to meet banking practice. Accordingly, the necessary causal link as articulated in Heperu is met, although the requirement as articulated in State Bank that the information conveyed to NAB must, if true, have entitled NAB to deal with the receipt as it did, is not." 91The matter the judge considered crucial was thus identified: did the information conveyed by Citibank to NAB "entitle" NAB to deal with the receipt as it did, that is, by paying out on the fraudulent instruction, ostensibly from Mr Co-Buchong but in fact from a fraudulent impostor, to transfer funds to the Hong Kong bank for the benefit of the three named persons in the Philippines? 92His Honour's opinion was that, according to the analysis in State Bank of New South Wales Ltd v Swiss Bank Corporation, there was no such "entitlement" of NAB since the information received from Citibank in no sense contemplated payment at the direction of the impostor. It followed, as the primary judge saw it, that the payment made at the impostor's direction was not made "in reliance on" or "on the faith of" NAB's receipt from Citibank according to the criteria enunciated in State Bank of New South Wales Ltd v Swiss Bank Corporation. 93His Honour then paid attention to what he regarded as the less comprehensive or less demanding criteria emerging from Perpetual Trustees Australia Ltd v Heperu Pty Ltd in which the recipient's "entitlement" to act is not explicitly prescribed by information received from the payer. On that basis, the payment was seen as made "in reliance on" or "on the faith of" the receipt from Citibank. It would not have been made unless the receipt from Citibank had been regarded as valid. 94On the footing that he should follow the later decision of the Court of Appeal rather than the earlier, the primary judge concluded that the analysis in Perpetual Trustees Australia Ltd v Heperu Pty Ltd led to a conclusion that NAB had acted in good faith in reliance on or on the faith of the receipt from Citibank, with the result that NAB had established the change of position defence.

Discussion 95On the approach I consider to be correct, the issue is whether, having regard to the whole of the context of the receipt from Citibank, including not only the message or instruction from Citibank but also relevant information already in NAB's possession and the state of mind reasonably engendered in NAB by all these matters, NAB acted in a manner that was consistent with the basis on which NAB received the moneys from Citibank. 96It is, of course, obvious that Citibank did not instruct or, in any express way, authorise payment away by NAB at the behest of a fraudulent impostor. What Citibank did was to instruct and authorise NAB to apply the proceeds of the transfer in the ordinary course of dealing with and administering the particularly nominated customer account, being the account of Mr Co-Buchong and Ms Li-Co. An express term of the instruction accompanying the remittance was that the funds should be credited to the particular NAB account identified in the SWIFT message by both the names of the customers and the account number. Implicit in the instruction was a direction to do in relation to the received moneys all such things as might be incidental to the administration of the identified account in the ordinary course of prudent banking operations. Payment out in accordance with genuine instructions of the customers would obviously have been consistent with that implied direction. 97NAB became the victim of fraud. The fraudulent impostor obviously knew all relevant details of the account of Mr Co-Buchong and Ms Li-Co with NAB. The fact that no suspicion was aroused when the false signatures on the three telegraphic transfer requests were checked by Mr Alvarez against a specimen of Mr Co-Buchong's genuine signature sufficiently establishes that those false signatures were plausible forgeries. In the light of that finding and the parties' acceptance that NAB did not act negligently or contrary to any relevant standard of banking practice, the action of NAB in giving effect to the instructions in the forged telegraphic transfer requests must be accepted as part of the ordinary course of banking operations and an incident of the administration of the joint account in accordance with reasonably prudent banking operations. 98As between banker and customer, the risk of loss through forgery of the customer's signature falls on the banker unless negligence or other disentitling conduct of the customer precludes the customer's claim. In Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] AC 80, the Privy Council said (at 106): "The business of banking is the business not of the customer but of the bank. They offer a service, which is to honour their customer's cheques when drawn upon an account in credit or within an agreed overdraft limit. If they pay out upon cheques which are not his, they are acting outside their mandate and cannot plead his authority in justification of their debit to his account. This is a risk of the service which it is their business to offer." 99In this case, however, the question of where relevant loss should fall does not arise between NAB and its customers. The bank paid out on a forged instruction and therefore in breach of mandate. But while that circumstance put the loss at the feet of NAB rather than its customers, it says nothing about how loss should be borne as between NAB and Citibank when, as in these proceedings, Citibank seeks recovery from NAB. 100As I have said, the primary judge saw three interconnected requirements as emerging from State Bank of New South Wales Ltd v Swiss Bank Corporation: the recipient must have had or thought it had information beyond the fact of the receipt standing alone; that information must have come from the payer; and the information must be information which, if true, would have entitled the recipient to deal with the receipt as it did. The three interconnected requirements come from the following passage in the joint judgment (at 356): "A bank which receives a mistaken payment and disburses it can only bring itself within the change of position defence if it shows that at the time of disbursement it knew or thought it knew more than the fact of receipt standing alone. This must be information which, if true, would entitle the payee to deal with the receipt as it did and that information must have come from the payer." 101If this formulation limits the legitimate object of the recipient's consideration to information it receives from the payer, the formulation is too narrow. A payer who instructs that the transferred funds be placed to the credit of a particular customer's account does not, in terms, sanction subsequent payment out to that customer. But such payment out is a natural corollary; and sanctioning of it comes from the context in which the transfer is made and the instruction is given, being a context that recognises that the customer will have resort to the funds in the customer's own account. 102This emphasises the point that matters of context already known to the recipient may properly be taken into account. As recognised in Port of Brisbane Corporation v ANZ Securities Ltd, action by the recipient that is inconsistent with the payer's instruction will not be action taken in reliance on or on the faith of the receipt. But as explained in Perpetual Trustees Australia Ltd v Heperu Pty Ltd, the causal link between the receipt and the subsequent action will exist if that action has a foundation of information obtained in connection with the receipt considered in the attendant circumstances. 103The causal link remained intact in this case. NAB received the funds from Citibank together with a message directing that they be credited to the particularly described account of Mr Co-Buchong and Ms Li-Co with NAB. That message, coupled with the circumstances of the receipt (including, for example, NAB's knowledge of the mandate related to the particular account of its customers) justified a state of mind on the part of NAB that the moneys should be credited to that account and then dealt with in the ordinary course of banking operations by way of administration of the account in accordance with reasonably prudent banking operations. That was the basis of the receipt. The payment by NAB to the Hong Kong bank was consistent with the basis of the receipt. It would not have been made but for the receipt. The payment had as its foundation funds and information received by NAB from Citibank (including information that directed the proceeds of the remittance to that account), coupled with circumstances attending the receipt which created in NAB a reasonable and legitimate state of mind under which the received moneys became subject to application in the ordinary course of banking operations by way of administration of that account in accordance with reasonably prudent banking operations. Application in that way entailed, in the particular circumstances, unwitting and unintentional payment in accordance with a false and fraudulent instruction. 104Although I do not think that it was necessary for the primary judge to regard the authority of State Bank of New South Wales Ltd v Swiss Bank Corporation as somehow superseded by Perpetual Trustees Australia Ltd v Heperu Pty Ltd, he was, in my opinion, correct in his conclusion that NAB had established the change of position defence recognised by the High Court. 105This conclusion is sufficient to require that the appeal be dismissed. I proceed nevertheless to consider the notice of contention.

The notice of contention - the bank as "intermediary"

106In its notice of contention, NAB relies on the aspect or characterisation of the banker-customer relationship described at [43] and [44] above and the second view of the received moneys referred to at [45]. As there stated, a bank receiving funds for crediting to its customer's account acts as an intermediary and is subject to an obligation to account to the customer for the money received. 107In Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation, the High Court dealt with the consequences of the bank's intermediary status. It referred (at 674) first to the case where "the circumstances are such that the intermediary is to be seen as being himself the initial recipient of the benefit". In that situation: ". . . his prima facie liability will ordinarily be displaced when he has handed the money received on to the person for whom he received it. In such a case he has, in the event, not retained 'the benefit of the windfall' but been 'a mere conduit-pipe' (see per Collins MR, Continental Caoutchouc & Gutta Percha Co v Kleinwort, Sons, and Co (1904) 9 Com Cas 240 at 248) and 'the only remedy is to go against the principal' (per Greene MR, Gowers v Lloyds and National Provincial Foreign Bank Ltd [1938] 1 All ER 766 at 773)." 108The alternative case was then considered, that is, "where the intermediary has not made a physical payment of money to, or on behalf of, the person for whom the payment was received but has made a credit entry in his books in favour of that person". That case gives rise to the question: "whether the benefit of the payment made under fundamental mistake has been wholly or partly retained by the intermediary or effectively passed on to the third person . . .. In answering that question, the courts will pay regard to the substance rather than to the form of what has occurred. Thus, the cases indicate that 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." 109It is here made clear that crediting to the customer's account alone is insufficient to constitute a passing of the benefit of the deposited funds to the customer. A crediting found to be the product of mistake can be reversed, at least until it has been communicated and even thereafter if no prejudice will accrue to the customer. The position is as described by the Privy Council in Colonial Bank v Exchange Bank of Yarmouth, Nova Scotia (1886) 11 App Cas 84 at 89: "The defendants had only got to run a pen through some private entries in their own books and the matter then would have stood in precisely the same position as it stood in before the mistake was made. They had not in any way altered their position. They would not, if they had cancelled the entries, have been in any way damnified by the mistaken payment made to them." 110In Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation itself, the circumstances were such that, by the time Westpac received notice of the mistake under which ANZ had made the payment to it, the crediting to the account of Westpac's customer (Jakes) had already had the effect of passing the benefit of the overpayment to Jakes. More precisely, the whole of the moneys received by Westpac from ANZ had been applied, in accordance with ordinary principles governing the appropriation of moneys in a single running current account, to the benefit of Jakes, either in extinguishing Jakes' indebtedness to Westpac or in paying cheques drawn by it upon Westpac. The High Court noted that if Jakes, acknowledging that it was not entitled to the money, had made a refund to Westpac, there would have been a liability of Westpac to make restitution to ANZ since "it would then hold the amount as a distinct fund upon precisely the same conditions upon which it would have held it at the moment of receipt if it had then known of the mistake". However, Westpac was under no obligation to ANZ to take active steps to pursue Jakes or anyone else for recovery of the amount once it had, in good faith and in accordance with the instructions given to it by ANZ, passed on the full benefit of it to Jakes. 111The members of the High Court described the position of the bank intermediary in terms of agency. They said (at 681-682): "[B]oth authority and principle support the conclusion that an agent who has received money on his principal's behalf will, without more, have a good defence if, before learning that the money was paid under fundamental mistake, he has "paid it to the principal or done something equivalent" thereto: see Rahimtoola v Nizam of Hyderabad [1958] AC 379 at 396, 406; Goff & Jones, Law of Restitution, p 707)". 112The reason was then stated (at 682): "The rationale of such a general rule can be identified in terms of the law of agency and of notions of unjust enrichment. If money is paid to an agent on behalf of a principal and the agent receives it in his capacity as such and, without notice of any mistake or irregularity in the payment, applies the money for the purpose for which it was paid to him, he has applied it in accordance with the mandate of the payer who must look to the principal for recovery: see per Palles CB, Fitzpatrick v M'Glone [1897] 2 IR 542 at 551 and per Cockburn CJ, Holland v Russell (1861) 1 B & S 424 at 434; 121 ER 773 at 777). In those circumstances, the benefit of the payment has been effectively passed on to the principal who will be prima facie liable to make restitution if the payment was made under a fundamental mistake of fact. If the matter needs to be expressed in terms of detriment or change of position, the payment by the agent to the principal of the money which he has received on the principal's behalf, of itself constitutes the relevant detriment or change of position. In that regard, no relevant distinction can be drawn between payment to the principal or payment to another or others on behalf of the principal: cf Gowers v Lloyds and National Provincial Foreign Bank Ltd [1938] 1 All ER at p 773).". 113The payer's claim to recover from the intermediary (bank) is lost if that intermediary has accounted to its principal (customer). As noted above, mere crediting the account of the customer is not "accounting" to the customer for this purpose. But even if the bank has "accounted" to the customer in the relevant sense, it must show that it has done this in good faith, believing that the customer was entitled to the funds. 114NAB, in making the payment to the Hong Kong bank on 19 November 2010 in consequence of the receipt from Citibank for the account of Mr Co-Buchong and Ms Li-Co, acted in good faith and in the belief that Mr Co-Buchong and Ms Li-Co were entitled to the funds in the account. That state of mind was induced in it by the SWIFT message from Citibank. The difficult question - remembering that mere crediting to the customer's account is insufficient - is whether that action of NAB entailed its "accounting" so as to deny the ability of Citibank to recover from NAB as intermediary. 115NAB obviously did not pay the money to its customers, Mr Co-Buchong and Ms Li-Co; nor did it pay on their instructions or to someone else on their behalf. The question is whether the payment by NAB to the Hong Kong bank for the account of the beneficiaries in the Philippines was, in the relevant sense, an "accounting". 116This leads to an examination of the decision of the English Court of Appeal in Gowers v Lloyds and National Provincial Foreign Bank Ltd [1938] 1 All ER 766, a case referred to with apparent approval in Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (at 682). 117Gowers v Lloyds and National Provincial Foreign Bank Ltd concerned the collection of a colonial service pension by a fraudster for a period of years after the pensioner (Gibson) had died. The system under which the pension was paid entailed periodic submission of a claim by the pensioner to his bank (Lloyds), transmission of the claim by Lloyds to the Crown Agents, an instruction by the Crown Agents to the Bank of England to transfer the necessary funds to Lloyds and crediting of those funds by Lloyds to the account maintained with it by the pensioner. The fraudster submitted claims which, as described by the Master of the Rolls, "contained a cleverly forged signature of Gibson's". After moneys had been received into Gibson's account in consequence of the making of such claims, the bank allowed them to be drawn by the fraudster believing in good faith that they were being drawn by Gibson or an attorney acting under a power of attorney given by Gibson. 118The characterisation adopted by the Court of Appeal (Sir Wilfrid Greene MR, Scott and Mackinnon LJJ concurring) was stated thus (at 773): "The bank was instructed by a person, whose identity has not been ascertained, who purported to be Mr Gibson, and the bank, acting for that person, and as the agent of that person, received the money. They supposed that their principal was Mr Gibson. In point of fact, he was not. But that does not, in my opinion, alter the fact that that person who actually sent the instructions was their principal. The fact that they thought he was somebody else does not alter the fact that it was that person for whom they were acting. It is to that person that they have paid away the money. In those circumstances, it appears to me that the fact that they were mistaken in thinking that their principal was Mr Gibson is quite irrelevant." 119The fraudster was thus seen as, in fact, the bank's principal, that is, the person for whom it collected moneys from the Crown Agents on the footing that those moneys would then be at the disposal of the principal through Gibson's account. The following principle was then stated (at 773): "The principle on which an agent can resist repayment may be stated in the words used in the House of Lords in Kleinwort, Sons & Co v Dunlop Rubber Co. [(1907) 97 LT 263]. I will read the statement from the opinion of Lord Atkinson, at p 265: 'Whether he would be liable if he dealt as agent with such a person will depend upon this, whether, before the mistake was discovered, he had paid over the money which he received to the principal, or settled such an account with the principal as amounts to payment, or did something which so prejudiced his position that it would be inequitable to require him to refund.'" 120The matter was approached without regard for any question of prejudicial action making it inequitable to require refunding. It was held that the case was one in which the bank had paid the money to its principal. The rationale was as follows: "[I]t appears to me that, upon the facts of this case, that is exactly what has been done, and that the principal was in fact the person who gave the instructions and sent the receipt asking for the money to be collected, and gave instructions as to how the money was to be dealt with. That person was the principal, and the fact that the bank was mistaken as to the identity of its principal appears to me not to affect the question at all." 121There has been criticism of Gowers v Lloyds and National Provincial Foreign Bank Ltd on the footing that the bank's principal was in truth Gibson (or, after his death, his legal personal representative) and that the fraudster to whom payment was made was not the principal: see Kwai Hung Realty Co Ltd v Kung Mo Ng [1998] 1 HKC 145. The criticism is, to my mind, misplaced, having regard to the particular facts of the case. The principal was the person, regardless of identity, who (albeit fraudulently) took over the operation of Gibson's bank account and set the relevant flow of funds in train in such a way as to cause the pension moneys to be received by Lloyds, credited by it to that account and ultimately paid out and debited to the account. 122The circumstances of the present case are, however, materially different. In Gowers v Lloyds and National Provincial Foreign Bank Ltd, the fraudulent impostor had, as I have said, taken over the operation of Gibson's account. Gibson himself had died. There was no suggestion that his legal personal representative had taken steps to take control of the account. Indeed, the fact that the impostor was able to use the account for several years in the furtherance of the fraudulent scheme showed that the account had been effectively abandoned. The true principal had, by inattention, created circumstances that allowed the impostor, using Gibson's name, to become the bank's de facto principal 123In the present case, by contrast, NAB had active, recognisable and living principals in the person of Mr Co-Buchong and Ms Li-Co. They had not abandoned the account; nor had they done anything that would have justified any conclusion that anyone other than themselves could properly be recognised by NAB as its principal. 124A key passage in the judgment of the Master of the Rolls in Gowers v Lloyds and National Provincial Foreign Bank Ltd is: "They [the bank] supposed that their principal was Mr Gibson. In point of fact, he was not." 125In this case, NAB supposed that its principals were Mr Co-Buchong and Ms Li-Co - which, in point of fact, they were; and nothing they had done or neglected to do formed any valid basis on which NAB could think otherwise. That fundamental difference makes the reasoning in Gowers v Lloyds and National Provincial Foreign Bank Ltd inapplicable to the present case. 126It follows that NAB has not made out the defence with which this part of its notice of contention is concerned.

127NAB seeks to uphold the judge's decision on an alternative basis of estoppel. Although the matter received only limited attention in submissions, the argument is that Citibank, in making the payment to NAB through the SWIFT message, represented to NAB that it was to credit the proceeds to the joint account of Mr Co-Buchong and Ms Li-Co and thereby induced NAB to alter its position to its detriment by acting on the basis that, when it made the later payment to the Hong Kong bank, that account held sufficient funds to cover that payment. 128Citibank makes, in response, the valid point that NAB does not appear to base its estoppel claim on any representation of fact or any promissory representation. There exists in this case a difficulty identified by Kwai-Lian Liew in "Mistaken Payments - The Right of Recovery and the Defences" (1995) 7 Bond Law Review 95 at 115: "The difficulty with estoppel is that the mere payment of money by mistake is not sufficient to amount to a representation which will estop the payer from asserting his or her right to receive the payment. The payer must have represented, whether expressly or by conduct that the defendant is entitled to treat the money as his or her own." 129The payment by Citibank to NAB and the SWIFT message by which it was effected cannot be seen as the source of any such representation. 130There is, in any event, good reason to think that, in the context under discussion, any defence of estoppel may have been subsumed in the defence of change of position on the faith of the receipt. Professor Andrew Burrows, in "Change of Position: The View from England" (2003) 36 Loyola of Los Angeles Law Review 803 at 805, described the "narrow version" of the defence accepted in Australia and Canada as "the same as estoppel minus the representation". He repeated that description in A S Burrows, The Law of Restitution, 3rd ed (2011) at 528. 131In his 2003 article, Burrows quoted the following observation of Professor Peter Birks (at page 410 of An Introduction to the Law of Restitution (1989)) concerning the "narrow version" of change of position: "This defence is like estoppel with the requirement of a representation struck out. In other words the enriched defendant succeeds if he can show that he acted to his detriment on the faith of the receipt." 132In Restitution - The Future (1992) - acknowledged five years later to be an "indubitably premature" attempt to deal with the subject of change of position (P Birks, "Change of Position and Surviving Enrichment" in W Swadling (ed), The Limits of Restitutionary Claims: A Comparative Analysis (1997) - Birks expressed the opinion (at 145) that "there cannot be a great deal of work for a reliance-based notion of change of position that is not already done by estoppel, supplemented in equity by acquiescence and laches". Subsequently, in Unjust Enrichment, 2nd ed (2005) published after his death, Birks wrote at 235 concerning a defence of "disenrichment" of which he thought the "wide version" of change of position had become part: "It cannot be right formally to exclude the application of estoppel, rarely as it may now be made out." 133Paul Key, in "Excising Estoppel by Representation as a Defence to Restitution" (1995) 54 Cambridge Law Journal 525 at 534, expressed an opinion that, in the context of an action for restitution, estoppel by representation "should be discarded on the ground of superfluity" because it fulfills the same role as change of position. The same author's later view was that estoppel by representation remains a defence but to a limited extent only: Paul Key, "Estoppel by Representation as a Defence to Restitution: The Exception Proves the Rule?" (2001) 60 Cambridge Law Journal 465. 134Associate Professor Elise Bant suggested in The Change of Position Defence (2009) at 25 that "estoppel by representation and the change of position defence may operate in the same kinds of circumstances and by reference to the same factual elements"; and that there is an "operational overlap" between the two. She went on to identify "lessons" that principles of estoppel offer those who seek to understand the change of position defence. 135English courts have recognized that even the "wide version" of the change of position defence (in which detrimental reliance on the receipt does not play any central role) may have supplanted estoppel as a response to restitutionary claims or, at least, be on the way to doing so. Reference may be made to the decisions of the English Court of Appeal in Scottish Equitable plc v Derby [2001] 3 All ER 818 and National Westminster Bank plc v Somer International (UK) Ltd [2002] QB 1286. 136It is not necessary to pursue these theories or the abstract question of the survival of an estoppel defence in cases of the present kind. For the reason stated at [129], I do not think that NAB has established any estoppel in this case.

137The other matters raised by NAB's notice of contention are concerned with State Bank of New South Wales Ltd v Swiss Bank Corporation and Perpetual Trustees Australia Ltd v Heperu Pty Ltd. They do not raise issues beyond those already discussed.

138Citibank's prima facie restitutionary right as against NAB is not in contest in this appeal. The question is whether the prima facie right was displaced. That question should be answered in the affirmative, on the ground related to the "change of position defence" upheld by the primary judge. 139I propose the following orders:

1. Appeal dismissed.
2. That the appellant pay the respondent's costs of the appeal.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 December 2012