06 April 1999 Deposit (Oceania) $250,000.00
13 April 1999 Deposit (Oceania) $43,000.00
13 May 1999 Deposit (Oceania) $43,000.00
10 Jan. 2000 Deposit from sales-
Lot 49 Sancrox Rd $126,036.77
Lot 27 Bushland Dr $143,946.44
Lot 53 Bushland Dr $421,553.06
14 Jan. 2000 Deposit re deposits
on above sales $36,433.83
251 There is no dispute that the first three payments referred to in the particulars were credited to the account of GCC with the CBA: ($250,000 on 6 April 1999, $43,000 on 13 April 1999 and $43,000 on 13 May 1999).
252 As to the three payments alleged to have been made on 10 January 2000 in the particulars, the last two amounts referred to are incorrect. The proceeds of sale of Lot 27 Bushland Drive were in fact $134,946.44 and the proceeds of sale of Lot 53 Bushland Drive were in fact $241,553.06.
253 The three amounts (126,036.77, $134,946.44 and $241,553.06) were credited to the account of GCC with the CBA on 10 January 2000 (this is confirmed by the account statement which is annexure "B" to Mr Watson's affidavit of 2 October 2002).
254 The deposit in relation to the above sales of $36,433.83 was credited to the account of GCC with the CBA on 14 January 2000, this being the last payment referred to in the particulars. The fact that this amount was credited on that date is confirmed by bank statement which is annexure "B" to Mr Watson's affidavit of 2 October 2002.
255 Mr Watson's undisputed evidence was that amounts credited on 10 and 14 January 2000 were mistakenly credited to GCC's account with CBA because he had overlooked the priority arrangement between CBA and CDB. The mistakes were:
· An application of certain funds to the CBA loan when the CDB loan had priority;
· Application of certain funds to the CDB loan derived from a property over which only the CBA had taken security.
256 The priority arrangement is set out in annexure "A" to Mr Watson's affidavit sworn 2 October 2002. It reflects the arrangement about which GCC had been notified as part of the facility agreement between GCC and CBA: [see the approval letter dated 2 April 1997 at PX Vol 1 pp 151-156, and specifically at 156 under paragraph numbered (Q) and Mr Watson's evidence at Transcript 8.37-51.] This arrangement also reflected the priorities arising as a matter of law in any case, as a result of CDB being the first registered mortgagee of the land in question.
257 When Mr Watson realised that the CDB had priority he reversed the credits on 27 January 2000 (as is confirmed by the bank statement which is annexure "B" to his affidavit sworn 2 October 2002).
258 In July 2000 it came to Mr Watson's attention that Lot 53 Bushland Drive secured only the CBA loan and not the CDB loan. Accordingly, on 10 July 2000 he arranged for $260,679.31, being the total proceeds (ie by now including the deposit which had come in) of the sale of Lot 53, to be debited against GCC's account with the CDB and credited to GCC's account with CBA. This is also confirmed by the bank statement which is annexure "B" to Mr Watson's affidavit.
259 Hence in each case the mistake was corrected by debiting the amount incorrectly paid and by crediting the account to which the money should have been paid.
260 There is simply no substance in the allegation by the Cassegrain parties that in these circumstances the CBA debt was discharged and the Guarantee which had been given by Mr Cassegrain, accordingly discharged.
261 In David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, the following propositions were clearly enunciated:
· A rule precluding recovery of moneys paid under a mistake of law does not form part of the law in Australia
· A payer is prima facie entitled to recover moneys paid under a mistake if it appears that the moneys were paid in the mistaken belief by the payer that he was under a legal obligation to pay them or that the payee was legally entitled to payment
· In order to recover, a payer does not have to prove "unjustness" over and above the mistake
· It is a defence to a claim to recover money paid under a mistake that the payee has adversely changed his position in reliance on the payment
262 There is no pleaded allegation in either suit that the banks are estopped from correcting these mistakes. No evidence was adduced from any of the Cassegrain parties that they were either misled or relied upon the mistakes or changed their position.
263 The submission advanced by the Cassegrain parties was that the priority agreement, which is annexure "A" to Mr Watson's affidavit, was ineffective because the CBA was both "the Bank" and "the Mortgagee" in the priority letter. This is clearly a typographical error which would be cured by the insertion of the word "Development" between the words "Commonwealth" and "Bank" in the first line of the letter. The letter was written to the CDB and with that typographical correction the document makes perfect sense. If the assertion of ineffectiveness had been raised at an appropriate time by the Cassegrain parties then an application could plainly have been made to rectify the document.
264 More importantly, this submission by the Cassegrain parties overlooks the fact that even if the letter of priority did not exist, the priority position would be identical. The CDB was the first registered mortgagee in respect of the relevant security properties. As first registered mortgagee it was entitled to priority to the extent of its advance plus interest and other charges even if there had been no express priority arrangement.
265 In these circumstances, it was correct as a matter of law, even disregarding the letter of priority, to credit the amounts obtained on realisation of the securities other than Lot 53 to the CDB and to credit the realisation on Lot 53 to the CBA. This was the ultimate position after the original errors had been corrected.
266 In all of those circumstances there is no substance in the claim that the CBA debt was discharged following these payments and the identified initial accounting entries and later reversals.
Short minutes of order
267 The proceedings will be stood over for the purpose of the parties bringing in short minutes of order and for submissions as to costs to be taken.