//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2001] SASC 191
respondent. Appeal dismissed. The magistrate's judgment against Jaffer for $11,200 inclusive of interest and dismissal of Jaffer's third-party proceedings against CBA remained undisturbed [1], [57], [78].
Jaffer intended to pay a finance company for a car but, because he gave his father incomplete payment information, the money went to the bank and was credited to the car owner's personal loan account. The bank later closed that account before anyone demanded repayment. Perry J held that the bank did not have to repay Jaffer because it had changed its position in good faith and in reliance on the money, and reversing the transaction would require recovering funds from the account holder. The court rejected the other appeal arguments and dismissed the appeal.
AI-generated legal information, not legal advice. Zoe can make mistakes. Check the cited source, and for advice about your situation consult a qualified Australian lawyer.
2,224 words · generated 02/10/2026
The dispute began with a financed vehicle. In June 1997, Nicholas Lee Trask bought a new Holden VS Commodore utility with finance from CBFC Ltd. CBFC lent him $28,821.60, repayable over 60 monthly instalments, and took a Goods Mortgage over the vehicle as security [3]-[4]. The parties accepted that the mortgage was a security interest under the Goods Security Act 1986. CBFC registered it in South Australia on 21 March 1999 [5]-[6].
2 cited instruments linked from this judgment.
Trask frequently fell behind in repayments [7]-[9]. In September 1999, intending to move to Melbourne and sell the vehicle, he sought a payout figure. Pickles Auctioneers valued the vehicle at $14,500, and CBFC authorised a sale for that amount. Its fax to Jaffer, a used-car dealer trading as Costner Motors, said that CBFC had accepted his offer to buy the vehicle for $14,500 and asked for a remittance to CBFC [10]-[14].
The payment destination became disputed. Jaffer intended to discharge the finance but sent his father to a CBA branch with a business card containing limited details: Trask's name, vehicle registration, what was apparently a driving licence number, and the words “loan account for car” [30]-[34]. The father did not provide the CBFC fax or identify CBFC as the intended recipient. The bank officer, Ms Dunn, located a personal loan account and a savings account in Trask's name. She said that she asked Jaffer's father to confirm the account and that he made a phone call before confirming it [40]-[47].
Between October and December 1999, four payments totalling $9,500 were made to CBA, which credited them to Trask's personal loan account [16], [49]. The account had been in debit by $5,951.03 immediately before the first payment. By 20 December 1999, it stood in credit by $1,665.03, and was then closed. The evidence did not establish whether that remaining credit was paid to Trask or transferred elsewhere. Perry J considered it reasonable to infer that Trask probably received the benefit [49]-[50].
Jaffer later paid CBFC $5,000 directly [17]. CBFC sued him for compensation for its loss after the sale extinguished its security interest. The Magistrates Court entered judgment for CBFC for $11,200 inclusive of interest and dismissed Jaffer's third-party proceedings against CBA [19]-[24], [57]. Perry J dismissed Jaffer's appeal [78].
The central issue was restitution: whether CBA had to repay money that Jaffer had mistakenly paid to it. Perry J accepted the principle, drawn from ANZ Banking Group Ltd v Westpac Banking Corporation, that money paid under a fundamental mistake may create a prima facie obligation to make restitution, but that obligation can be displaced where the circumstances make repayment unjust [54], [59]-[61].
A key distinction was between a reversible bookkeeping entry and a transaction whose substance had changed the recipient's position. The court accepted that a mere entry, not communicated to the third party or reversible without affecting the substance of the transaction, would ordinarily not be enough to defeat repayment [59]-[61]. But that was not the situation Perry J found here. The account had been closed on 20 December 1999, before any repayment demand [62]. The likely benefit of the account balance had passed to Trask. CBA could not reverse the account closure without recovering the money from him [62]-[64].
Perry J therefore concluded that CBA had displaced any prima facie restitutionary obligation by proving what had happened to the money [64]. The key basis was a good-faith adverse change of position in reliance on the payment, not the magistrate's conclusion that the payment was supported by “good consideration” because it discharged an existing debt [65]-[67]. Although Trask owed money to CBA, Perry J noted that no consideration had passed between Jaffer and CBA [66]. The difference matters to the reasoning: the appeal succeeded or failed on the recipient's change of position, not on treating Jaffer's payment as a transaction supported by consideration between him and the bank.
The other arguments did not alter the result. On negligence, Perry J agreed that, given the information Ms Dunn received, she acted reasonably and did not need to make further inquiries [68]-[69]. The court's assessment was tied to the facts found at trial: the payment instructions did not identify CBFC, and the bank officer was given the name Trask and the description “car loan” [40]-[47], [53].
On fiduciary duty, Perry J stated that CBA may have owed a duty to its customer, Trask, but did not owe one to Jaffer in the circumstances. He added that, even if such a duty existed, he would not find it breached in light of his view of the negligence claim [70]. On agency, the CBFC fax's description of CBFC as a “Member Commonwealth Bank Group” did not represent that CBA was CBFC's agent [71]-[73].
Finally, the reasons challenge did not affect the appeal. Perry J said the magistrate was not required to deal with every point, and that he had independently reviewed the evidence and reached the same conclusions [75]-[77].
The judgment does not announce a new general restitution regime. It applies the principles Perry J took from ANZ v Westpac to a particular banking transaction. As presented in the judgment, the relevant starting point is that a mistaken payment may give rise to prima facie restitution, but the prima facie liability can be displaced by circumstances that would make an order for repayment unjust [54].
The judgment also describes an established distinction between an entry in an intermediary's books and an effective transfer of the payment's benefit. The substance of what occurred matters. An entry may be reversible without real prejudice, in which case the recipient may have to correct it. But where the third party has effectively received the benefit and reversal would require the intermediary to recover the money from that person, the case is different [59]-[64].
The judgment's application clarifies the distinction between two possible explanations for why repayment might not be required. The magistrate relied on “good consideration” because the credit reduced Trask's existing debt. Perry J did not accept that explanation as between Jaffer and CBA: Jaffer gave the money, and no consideration passed between him and the bank [65]-[66]. Instead, Perry J treated CBA's position as having changed adversely in good faith and in reliance on the payments [67]. On the facts of this case, the result was that CBA was not required to make restitution.
The judgment also confirms, as a matter of the appeal before Perry J, that an appeal from a magistrate was a rehearing in the sense explained in Taylor v Hayes. Perry J reviewed the evidence independently and considered the legal arguments himself [76]. The source does not set out a broader account of the scope of such rehearings.
At [61], Perry J says that where the situation can be corrected by a “mere book entry”, the recipient must correct it and refund the money. In plain English, an institution cannot necessarily keep a mistaken payment just because it has recorded it in its accounts. If the entry can be undone without real consequences, the entry alone does not show that the recipient has suffered a relevant change in position.
At [63], Perry J says a bookkeeping correction was “untenable” because the account had been closed and CBA could not reverse the entries without getting the money back from Trask. In plain English, the transaction had moved beyond a simple internal correction. Restoring the account would not, by itself, restore CBA's position if the funds had already gone to the account holder.
At [64], Perry J says CBA displaced the “prima facie restitutionary obligation” by proving what had happened to the money. The point is not that every payment into a debtor's account is automatically protected from recovery. The court relied on the evidence of the closed account, the timing before a repayment demand, and the reasonable inference that Trask had received the benefit [49]-[50], [62]-[64].
At [67], Perry J distinguishes the magistrate's reasoning from his own. He says the payment was not supported by “good consideration” between Jaffer and CBA; instead, CBA had adversely changed its position in good faith and in reliance on the payment. In plain English, the court upheld the dismissal of the claim for a different reason from the magistrate's central restitution explanation.
At [69], Perry J says Ms Dunn acted reasonably and had no duty to make further inquiries, even assuming a duty of care existed. In plain English, the court assessed the bank officer's conduct against the information she was actually given, rather than information available elsewhere in the transaction, such as the CBFC fax that Jaffer had not provided at the branch [38]-[47], [53].
The judgment is most directly relevant to disputes involving money paid by mistake to an intermediary, which then credits the payment to another person's account. The specific questions highlighted by the court include whether the intermediary merely made a reversible book entry, whether the entry was communicated or acted upon, whether the account was later closed, whether the third party received the benefit, and whether the intermediary can reverse the transaction without first recovering money from that third party [59]-[64].
The timing of a demand was also relevant here. Perry J noted that the account was closed before any demand for repayment [62]. The judgment does not state that this timing alone determines the issue, but it formed part of the factual basis for finding that CBA's position had changed before it was asked to repay the mistaken payments.
The case also illustrates why the payment instructions and information provided to the intermediary may matter to related negligence arguments. Jaffer had a fax naming CBFC, but his father did not present it or mention CBFC when making the payments. The magistrate found that the bank was given information pointing to Trask and his personal account, and Perry J agreed that Ms Dunn was not required to inquire further on those facts [38]-[47], [53], [69].
This judgment does not establish that an intermediary always has a defence merely because money is credited to an existing debt, nor that a bank can always rely on an account holder's receipt of funds. Perry J expressly rejected “good consideration” as the explanation on these facts [65]-[67]. Its reasoning turns on the particular evidence of reliance, account closure, and the likely transfer of the benefit.
The supplied judgment contains no account of later courts considering or applying Jaffer. It would therefore be unsupported to describe a later line of treatment, or to say that the decision has been followed, distinguished, or criticised in later cases.
The judgment itself refers to ANZ v Westpac for the restitution and book-entry principles [54], [59]-[61]. It also cites Colonial Bank v Exchange Bank of Yarmouth, Nova Scotia, Continental Caoutchouc, Buller v Harrison, and Cox v Prentice as part of the discussion of whether an intermediary has effectively passed on the benefit [59]-[61]. Those are authorities considered in the reasoning, not later treatment of Jaffer.
For the appeal procedure, Perry J referred to Taylor v Hayes and Rowland v Police when explaining the rehearing point [76]. Neither reference is presented as a later court's treatment of the restitution decision in Jaffer. Any assessment of subsequent treatment would require sources beyond the judgment provided here.
The judgment leaves some fact-sensitive questions unresolved. First, the account statement did not show whether the remaining credit was paid directly to Trask or transferred to another account. Perry J regarded it as a reasonable inference that Trask received the benefit, but did not identify the exact destination of the funds [49]-[50]. The decision does not explain how the result would differ if the evidence did not support that inference.
Second, Perry J accepted that an intermediary may have to reverse a mere book entry, but this case involved an account that had been closed and a likely payment or transfer to the account holder. The judgment does not specify how to assess more complicated intermediate situations, such as partial use of funds, a partly reversible credit, or uncertainty about whether an entry was acted upon. Its stated method is to look at substance rather than form [59]-[64].
Third, the court's finding depended on the sequence of events: the account was closed before a repayment demand [62]. The judgment does not explore what significance a demand would have had if made before the account closure, or whether other conduct by an intermediary could affect the change-of-position analysis.
Fourth, the negligence and agency arguments were resolved on the particular evidence and the wording of the letterhead [69], [71]-[73]. The court did not give a general test for the scope of a bank's inquiries in all mistaken-payment situations, or for when group membership language could amount to a representation of agency. Its conclusions are confined to the material before it.
Finally, the judgment does not report later judicial treatment or address how its reasoning interacts with legal developments after 2001. Those issues cannot be answered from the judgment alone.
This is general legal information, not legal advice. Zoe can make mistakes. Before acting on this, relying on it, or using any draft, have a qualified Australian lawyer check it.
Judgment No. [2001] SASC 191
On Appeal from MAGISTRATES COURT (MR R H KLEINIG SM)
PERRY J. The appellant, Mr Jaffer, appeals against the judgment pronounced against him following a trial in the Magistrates Court of an action brought against him by the respondent CBFC Ltd ("CBFC"). The judgment was for $11,200 inclusive of interest. Third party proceedings brought by Mr Jaffer against the respondent Commonwealth Bank of Australia Ltd ("CBA") were dismissed.
At all relevant times Mr Jaffer was a used car dealer trading as "Costner Motors" from premises in Pulteney Street, Adelaide. The claim against him which resulted in the judgment under appeal arose out of transactions concerning a Holden VS Commodore utility ("the utility").
In June 1997 Nicholas Lee Trask ("Mr Trask") contracted to buy the utility, then a new vehicle, from a firm trading as Nundah Mitsubishi at Nundah, Queensland. CBFC agreed to lend to Mr Trask the amount necessary to finance the purchase, namely, $28,821.60. Mr Trask agreed to repay the loan plus interest to CBFC by 60 monthly instalments.
To secure repayment of the loan, Mr Trask executed in favour of CBFC a document described as a "Goods Mortgage". Put shortly, the effect of the Goods Mortgage was to confer on CBFC the right to repossess the utility after giving due notice, in the event of default in repayment of the loan.
It was common ground between the parties at the trial that the Goods Mortgage constituted a "security interest" within the meaning of the Goods Security Act 1986 ("the Act").
On 21 March 1999, pursuant to the Act, CBFC registered the Goods Mortgage in South Australia.
From the start, Mr Trask performed badly in maintaining repayments to CBFC. He was frequently in default of monthly payments, and a number of demand notices were issued by CBFC.
At one stage Mr Trask moved to Adelaide to play football for West Adelaide Football Club. His response to some of the demands for him to pay off instalments in arrears was that he had an arrangement with the club whereby it had assumed liability to meet the repayments. Be that as it may, while there were times when the account was paid up, that situation never lasted for long and it regularly fell into arrears.
Eventually, on 19 May 1999 the utility was repossessed. But shortly afterwards, the accumulated arrears were repaid and possession of the utility was given back to Mr Trask.
According to CBFC records relating to the account, which were tendered in evidence, in September 1999 Mr Trask asked CBFC to advise the amount of a pay-out figure as he intended to move to Melbourne and wished to sell the vehicle. CBFC suggested that he take the car to an auction house and obtain a valuation which CBFC would then consider.
In the result, Pickles Auctioneers suggested a value of $14,500. CBFC authorised Mr Trask to sell the car for that amount. In doing so, it is not entirely clear from their records whether or not CBFC intended to release Mr Trask from the balance due on the account if the $14,500 was paid to them.
On 9 September 1999, Mr Trask attended with the car at Mr Jaffer's car yard. Mr Jaffer made contact with CBFC's office at Spring Hill, Queensland, from which the account was still being administered. CBFC sent a fax to Mr Jaffer.
When the proceedings were instituted, CBFC was unable to locate the original of the fax. Mr Jaffer had the top part of it, the bottom part of the sheet having been torn off. The part which he had retained contained the first paragraph which read:
"We advise that CBFC has accepted your offer to purchase the abovementioned vehicle for $14,500."
There was correspondence between the solicitors for the parties as to what might have been in the remaining paragraphs of the fax. In a letter tendered at the hearing from Mr Burdett, solicitor for CBFC, to Corsers, solicitors for Mr Jaffer, dated 4 July 2000, Mr Burdett states, inter alia:
"My client was unable to locate the original of the facsimile to your client of 9 September 1999. Nevertheless, I am instructed that the facsimile appears to be one of a standard form used by my client consisting of three paragraphs. ..."
In a subsequent letter dated 24 July 2000 to Corsers, Mr Burdett said:
"It is admitted that the second and third paragraphs of the facsimile of 9 September 1999 read as follows:
Please forward you remittance of $14,5000.00 in clear funds to the writer no later than ... (not known - see below)
Please note that the sale is on an 'as is where is' basis and all express or implied warranties or conditions as to the quality, fitness or safety of the goods, to the extent they may be lawfully excluded, shall be deemed to have been expressly negatived.
The deadline for payment of the sum of $14,500.00 referred to in the original facsimile is not known, although my client's normal practice would have been to specify a period of 7 days from the date of the letter.
The word 'you' in that paragraph (as it appears in your copy of the facsimile) is a typographical error and should in fact be "your".
In the absence of a complete copy of the facsimile my client is unable to state categorically that there were no additional paragraphs, but the strong likelihood is that there would not have been given by (sic) my client's usual practice.
The identity of the writer is not known, although it is clear from your copy that the correspondence emanated from my client's Spring Hill, Queensland office."
It is from the time of Mr Jaffer's receipt of the fax from CBFC that the problems giving rise to the litigation began.
Although he acquired the vehicle from Mr Trask, Mr Jaffer did not pay the $14,500 to CBFC. Instead, by mistake, in circumstances which I will in due course explain, he paid $9,500 in four instalments to CBC at its Hutt Street branch. The dates and amounts of the payments are as follows:
Later, apparently after the mistake had been pointed out to him, he paid $5,000 direct to CBFC.
In the meantime, Mr Jaffer had sold the vehicle to a third party, Mr Stott. The precise date of the sale was not established in the evidence, but it is likely to have been early in the year 2000.
Pursuant to s 11(2a) of the Act, the sale was effective to pass title in the utility to the purchaser, but pursuant to s 11(3) of the Act, subject to the arguments raised by him by way of defence to the claim, Mr Jaffer was liable to compensate CBFC for its loss.
The extinction of its security interest by reason of the sale left CBFC with its rights of action against Mr Jaffer and Mr Trask.
By a Claim filed in the Civil Division of the Magistrates Court on 25 May 2000, CBFC claimed from Mr Jaffer an amount of $15,599.63, together with interest accruing at the rate of $5.43 per day, asserting that that amount represented its loss. It did not trouble to sue Mr Trask.
In his defence, Mr Jaffer claimed that CBFC had advised him that the amount payable to them was $14,500 and that he had paid moneys to an account "notified by the Commonwealth Bank as being the account for receipt of moneys in discharge of the security being the account of the owner of the vehicle, one Nicholas Lee Trask", and that in those circumstances, CBFC had no claim against him. Alternatively, he asserted in his defence that, given that CBFC was a subsidiary of CBA, CBA had been "unjustly enriched" by the wrongful payment and CBFC was estopped from pursuing its claim.
Mr Jaffer's assertion that CBA had been unjustly enriched was pursued in a third party claim against CBA which was filed in the proceedings. Mr Trask was also joined as a third party by Mr Jaffer, but did not file an appearance and did not appear at the trial. In the third party claim against CBA, Mr Jaffer also alleged that it was liable to Mr Jaffer in damages for negligence and "breach of fiduciary duty".
CBA, while admitting that it received the payments totalling $9,500 from Mr Jaffer, denied liability on the third party claim. In particular, it denied that it had been unjustly enriched by the payments, which were credited to Mr Trask's account, and further asserted that the bank had been given incorrect information which failed to identify the interest of CBFC.
There were three witnesses: Mr Jaffer and his father, Donald Jaffer ("Mr Jaffer senior"), and for the plaintiff, Ms Dunn, a bank officer.
Mr Jaffer gave evidence that Mr Trask, who was previously unknown to him, came in "off the street" with the utility, offering it for sale. When Mr Jaffer asked Mr Trask whether he owed money on the vehicle, according to Mr Jaffer, Mr Trask said that he owed money "to the bank". During the course of conversation with Mr Trask, the latter indicated that Pickles Auctioneers had put a value of $14,500 on the utility.
While he was with Mr Trask, Mr Jaffer remembers receiving the fax to which I have referred. His evidence was that the fax was sent to Mr Trask at Mr Jaffer's office, but that seems unlikely, given that it was addressed to "The Manager, Costner Motor Co".
At all events, after receiving the fax, he came to an arrangement with Mr Trask whereby Mr Trask, who had indicated that he was returning to Melbourne, would leave the utility with him. Mr Jaffer said that he would have it re-registered in South Australia, as he would not be able to sell it until it had local registration.
Mr Jaffer's evidence as to his dealings with Mr Trask was surprisingly vague. At one stage, he suggested that the transaction was more in the nature of a placement of the utility with him on consignment. It is clear, however, that he purchased the vehicle, and eventually he conceded that this was so.
When asked how he went about "discharging the finance" on the vehicle, he said that he had sent his father to the CBA. He said that using the information transmitted in the fax, he wrote on the back of a business card the details which he thought equipped his father to identify the account into which the money was to be paid. But clearly he did not give his father sufficient information for that exercise to be carried out. All that was written by him on the back of the card was the registered number of the vehicle and the name "Nick Trask" and what presumably was Mr Trask's driving licence number. At his insistence, his father wrote on the card "loan account for car".
His evidence was that he emphasised to his father that the money was to be paid into the "loan account" for the car.
In fact the amount which he gave his father to pay over was a cheque for the first of the four payments, that is, $4,000. The cheque was made payable to Mr Trask. Why he did not make the cheque payable to CBFC is both unexplained and commercially inexplicable.
The idea that he could pay the moneys owed to CBFC by instalments was completely irregular. It was not authorised by any arrangement made with CBFC. The reason why he chose to do so emerged during the course of his cross-examination:
"Q. Why did you make the payments with four separate payments.
A. Because I didn't have the money to start with."
Mr Jaffer gave no satisfactory explanation in cross-examination as to why he sent his father to the CBA, or more particularly why he did not tell his father, or write on the card which he gave to his father, anything to indicate that it was a CBFC account into which the money was to be paid.
The fax was on the letterhead of CBFC. In bold type at the top of the fax was "CBFC Ltd". Underneath that, in smaller lettering, appear the words "CBFC Leasing Pty Ltd" and then the words "Member Commonwealth Bank Group".
Part of Mr Jaffer's cross-examination was as follows:
"Q. When he went to the bank you did not clearly identify for your father that he was paying a CBFC loan did you.
Q. If it wasn't clear in your mind then you could not have made that clear to your father.
A. A car loan and from the fax ... - I looked at the bank symbols. The symbols are the same and you're right, I should have read CBFC and [not] Commonwealth Bank." (emphasis added)
While in the course of his cross-examination Mr Jaffer said that he had previously paid out a CBFC loan at the Commonwealth Bank, it is plain from the evidence that he had no clear understanding that on the occasion in question the destination of the money should have been CBFC.
It would have been an easy matter for Mr Jaffer to have given his father the fax, or a copy of it. That not only identified CBFC Ltd as the appropriate recipient of the money, but also contained precise details of the utility, including engine number, chassis number and registration number.
Instead of taking that simple course, he chose to arm his father with inadequate information, lacking any indication that the money was to be paid to CBFC.
Mr Jaffer senior said in evidence that he remembered his son asking him to pay off "a car loan". On his son's instructions, he went to CBA and said to a bank officer, who clearly was Ms Dunn, that he wanted to pay off a car loan. According to him, he gave Ms Dunn the business card which his son had given him with the details written on it.
After operating her computer, she told him that there was a savings account and a personal account. Mr Jaffer senior's evidence was:
"I said, 'It's got to go into a car account' and she said it must be the personal, and with that she gave me a receipt."
He denied that Ms Dunn had asked him to confirm what account the money was to be paid into, or that he had made a phone call at her request to obtain confirmation. The effect of his evidence was that it was Ms Dunn who made the decision as to the account into which the money was to be paid, and that he looked to her for assistance to identify the correct account.
Ms Dunn, who is a very experienced bank officer, having commenced with the Savings Bank of South Australia in the 1970s, remembers a person whom she described as a "elderly gentleman" coming into the Hutt Street branch of CBA where she was working at the time and saying to her that he "wanted to pay some money off .... a car loan". The only information he was able to give her was the name, Nicholas Lee Trask, and the fact that it was a car loan.
She ascertained from the bank's computer that there was a savings account and personal loan account in that name, whereupon she asked Mr Jaffer senior "whether the personal loan would have been for the car". She asked him if there was anyone he could phone to verify where the money was to go, following which she observed him make a phone call on a mobile phone. She says that he "confirmed that that was where the money was to go". She then filled out a deposit slip which he took to a teller.
Ms Dunn's evidence was that her contact on that occasion with Mr Jaffer senior was "quite lengthy" and it took sometime to ascertain the account into which the payment was to be made.
Ms Dunn gave evidence that she was not able to access information concerning a CBFC account from the bank's computer, but that if she had been asked to process a CBFC loan payment, she would ring the bank's loan processing centre where she would be connected to a section of it dealing with CBFC loans.
Furthermore, the details of a personal loan which she was able to obtain on the terminal to which she had access at the bank did not indicate any item that the personal loan might relate to, for example, purchase of a car or the like.
Ms Dunn recognised her handwriting on the second payment slip, that is, the slip dated 11 November 1999 relating to the payment of $1,500, but it appears that the other two pay-in slips relating to the remaining two payments made in December were not in her handwriting.
A copy of the bank statement relating to Mr Trask's personal loan account with the bank was tendered in evidence. This indicates that the account was in debit to the extent of $5,951.03 immediately before the receipt by the bank of the first payment made on 15 October 1999. As a result of the other payments into the account and some other movements in it, as of 20 December 1999 the account stood in credit in an amount of $1,665.03. On that date there was a corresponding debit of the same amount extinguishing the credit, with the notation in the account being "closed account". The details in the account do not make it clear whether or not the closure of the account was effected by payment of the outstanding credit balance to Mr Trask himself or by transfer to some other account.
It is a reasonable inference, however, that more likely than not, Mr Trask received the benefit of the moneys which were paid into the account, leading down to the date upon which it was closed.
After referring to the circumstances leading up to the payments made to CBA, the learned trial magistrate concluded:
"It is abundantly clear on the evidence before me that Dunn was never asked about a CBFC account in the name of Trask. It is clear to me that Donald (Jaffer) never said to her the name of any other organization besides CBA. ..... When one looks at the document with which Donald was furnished by Jaffer and what was said in the Hutt Street branch on the first day, it is overwhelmingly clear that CBFC and the account for Trask in its name was never mentioned. It was therefore an understandable error made by Dunn in depositing the moneys into the wrong account but she did so on the clear instruction of Donald, who was acting upon incomplete and insufficient information as the agent of his son."
The learned trial magistrate then referred to the fact that, given that the appellant was in possession of the fax from CBFC dated 9 September 1999, it was surprising that the appellant did not give "... a specific or proper instruction to his father and therefore no information regarding the proper destination of the initial payment was ever made known to Dunn".
The learned trial magistrate went on to make the following factual findings:
(1) That in making the payments the person or persons acting on behalf of Jaffer did not advise CBA that the monies were to be paid towards the reduction of a loan from CBFC to Trask.
(2) That the person or persons making the payments gave CBA Trask's name and CBA's employee located the relevant account for Trask.
(3) That CBA's employee asked Donald if he was sure that account was the correct account and Donald made the payment on the basis that he had stated that it was and gave specific instructions that that was the destination for the monies.
(4) That the person or persons making payments on behalf of Jaffer did not present the facsimile of 9/9/99 forwarded by CBFC to Jaffer, not did any such person making payments mention the name of CBFC.
(5) CBA acted on the instructions of the person or persons making payments who did not provide the correct information to enable the interest of CBFC to be identified."
"The common law right of action [for money had and received for recovery of an amount paid under fundamental mistake of fact] may arise in circumstances which also give rise to a resulting trust of specific property or funds or which would lead a modern court to grant relief by way of constructive trust. ..... It is a common law action for recovery of the value of the unjust enrichment and the fact that specific money or property received can no longer be identified in the hands of the recipient or traced into other specific property which he holds does not of itself constitute an answer in a category of case in which the law imposes a prima facie liability to make restitution. Before that prima facie liability will be displaced, there must be circumstances (eg 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."
The learned trial magistrate went on to hold, having regard to his factual findings and from his statement of relevant legal principles drawn from ANZ v Westpac that the moneys received by the bank were "not moneys held and received by the bank but rather by Trask". He further found that CBA had "not been unjustly enriched" by the payment of the moneys into the Trask account". More particularly, he held:
"... there was payment made for good consideration in the discharge of an existing debt. In my view, further this disentitled Jaffer from recovery in accordance with the principles discussed and a prima facie liability, in my view, is displaced in favour of the CBA."
He further held that CBA was not in any "in breach of fiduciary duty to Jaffer", and further, that it was not negligent.
The learned trial magistrate went on to assess CBFC's loss in the sum of $14,500. After crediting the sum of $5,000 paid by Mr Jaffer direct to CBFC, but allowing for interest, he held that CBFC was entitled to judgment in the total sum of $11,200.
Through his counsel, Mr Heuzenroeder, the appellant first contended that although the learned trial magistrate correctly held that there was a "prima facie restitutionary obligation on CBA" to repay the amounts paid by mistake, he erred in finding that in the circumstances the prima facie liability was displaced. In support of that argument, he contended that a "mere book entry" was not sufficient to displace the prima facie liability, citing dicta in ANZ v Westpac (supra) and Colonial Bank v Exchange Bank of Yarmouth, Nova Scotia.[3]
In ANZ v Westpac, the following observation was made by the court:[4]
"If the circumstances are such that the intermediary is to be seen as being himself the initial recipient of the benefit, his prima facie liability will ordinarily be displaced when he has handed the money received on to the person for whom he received it. ......... A more difficult case arises 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. In such cases, the question will arise 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: Continental Caoutchouc.[5] 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: see eg Buller v Harrison;[6] Cox v Prentice [7] Colonial Bank v Exchange Bank of Yarmouth, Nova Scotia.[8] 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."
In Colonial Bank v Exchange Bank of Yarmouth (supra) moneys were wrongly remitted through the mistake of the plaintiff bank's agents to the defendant bank which had credited a customer's account with the amount. In the judgment of the Judicial Committee of the Privy Council, which was delivered by Lord Hobhouse,[9] appears the following passages:[10]
"That the money was received by the defendants, not to their own use, but by mistake is a matter not now disputed. ...... Now it was not true that the sum had been used and could not be recalled. 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. .......... when they (the defendant bank) knew exactly how the mistake was made, and how in the opinion of all parties to the transaction they could repair it, they were bound to repair it."
I must accept the dicta to which I have referred as establishing that if moneys are received pursuant to a payment made by a party labouring under a mistake of fact, and if the situation can be corrected by "a mere book entry", the recipient must do so and refund the moneys.
But that is not the case here. In this case, the bank statements relating to Mr Trask's personal loan account not only record the receipt of the moneys into the account, accompanied by the raising of corresponding credits, but record the eventual closure of the account of 20 December 1999. That date is before any demand for repayment had been made. Furthermore, closure of the account was effected by the payment out or transfer of the balance then standing to the credit of the account. I have already indicated that it is reasonable to infer that the benefit of that payment or transfer was received by Mr Trask.
In those circumstances, in my view, the suggestion that the situation could be remedied by a "mere book entry" is untenable. While I suppose that in theory CBA could reinstate the account, it could not reverse the entries which led to the closure of the account without getting the moneys back from Mr Trask.
In my opinion, CBA successfully displaced the "prima facie restitutionary obligation" by proving what had eventually happened to the moneys.
I must say, however, that I do not agree with the conclusion of the learned trial magistrate that within the meaning of the statement of principle which he cited from ANZ v Westpac the payments into the account were made for "good consideration and the discharge of an existing debt".
While there was an existing debt owed by Mr Trask, in the sense that his account was overdrawn by an amount in excess of the $4,000 which was the first payment in, made on 15 October 1999, the payment was not supported by any consideration passing between CBA and Mr Jaffer.
Rather than being characterised as a payment for "good consideration", in my view this was a case in which the payee, CBA, had adversely changed its position "in good faith and in reliance on the payment".[11] It follows that the claim against them for money had and received was correctly dismissed.
Mr Heuzenroeder then argued that CBA was liable in negligence. That argument may be dismissed shortly.
Even assuming that a duty of care existed between CBA and Mr Jaffer, having regard to the information which she was given, the learned trial magistrate correctly held that Ms Dunn acted perfectly reasonably, and did not owe a duty to make any further inquiry beyond the steps which she took.
As for the claim for breach of fiduciary duty, while CBA may have owed a fiduciary duty to its customer, Mr Trask, in the circumstances, it did not owe such a duty to Mr Jaffer. Even if it did, I would not be prepared to find that it was in breach of any fiduciary duty, given the view which I take as to the claim in negligence.
The next argument put by Mr Heuzenroeder was that "Dunn acted as ostensible agent for CBFC because CBA was represented as being an agent by CBFC's letterhead".
In my view, it is reading too much into the letterhead to infer from it that there was any such representation.
The letterhead which is referred to is that which appears at the top of the faxed message of 9 September 1999. I have already referred to the fact that in bold type the first words appearing at the top of the letterhead are "CBFC Ltd". The fact that in smaller type in the third line beneath that heading appear the words "Member Commonwealth Bank Group" could in no way be understood as a representation that in some way CBA was an agent of CBFC.
Finally, Mr Heuzenroeder argued faintly that the learned trial magistrate had given insufficient reasons. In his written outline of argument he puts it this way:
"On any view the failure of the Magistrate to resolve the matters listed in the Ground of Appeal 5.11, dismissing the negligence argument with one sentence, and not even considering the agency arguments, amounted to the giving of insufficient reasons."
"The Magistrate erred in law in failing to provide any or any sufficient reasons for findings on the issues of:
5.11.1 Whether the witness Dunn was acting (or alternatively was held out by the first respondent or second respondent as acting) as an agent for the second respondent;
5.11.2 Whether the first respondent was negligent;
5.11.3 Whether funds were received by the first respondent or the second respondent;
5.11.4 The conflict of evidence between the witnesses Dunn and Donald Jaffer."
The learned trial magistrate gave relatively concise reasons and was not obliged to deal with every point which had been raised. He dealt with the main arguments which had been advanced. He was not obliged to do any more than that.
In any event, the suggestion that his reasons were inadequate could not result in the appeal being concluded in favour of the appellant. Irrespective of the perceived adequacy of the reasons given by the learned trial magistrate, an appeal from a magistrate to this Court is in the nature of a re-hearing in the sense explained by me in Taylor v Hayes.[12] I have reviewed the evidence and by my own independent assessment of it, I have reached the same conclusions as those reached by the learned trial magistrate. Furthermore, I have dealt with all of the legal arguments put on the hearing of the appeal.
In those circumstances, the arguments put on appeal do not gain any extra buoyancy by reason of the suggestion that the learned trial magistrate's reasons were inadequate.
[9] Present were Lord Monkswell, Lord Hobhouse, Sir Barnes Peacock and Sir Richard Couch.
[12] (1990) 53 SASR 282 and see Rowland v Police (unreported) Perry J, 1 June 2001, Judgment No [2001] SASC 179.
JAFFER
COMMONWEALTH BANK OF AUST LTD & ANOR No. SCCIV-01-538 [2001] SASC 191
(1988) 164 CLR 662
(1990) 53 SASR 282
Appeal dismissed. The magistrate's judgment against Jaffer for $11,200 inclusive of interest and dismissal of Jaffer's third-party proceedings against CBA remained undisturbed [1], [57], [78].