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[1964] HCA 49
High Court of Australia
1964-07-01
Owen JJ
Original judgment source is linked above.
High Court of Australia Barwick C.J. Kitto, Taylor, Windeyer and Owen JJ. Porter v Latec Finance (Qld) Pty Ltd [1964] HCA 49
ORDER Appeal allowed with costs. Order of the Supreme Court of Queensland set aside and in lieu thereof order that the questions submitted in the case stated be answered as follows: (1) No. (2) By the plaintiff.
The respondent, Latec Finance (Qld) Pty. Limited, sued the appellant, William Henry Porter, in the Supreme Court of Queensland for the sum of £1,592 2s. 10d. as money had and received by the appellant to the respondent's use. The respondent claimed that it had paid this sum to the appellant under a mistake of fact.
The parties agreed to a special case which was stated for the opinion of the Full Court of the Supreme Court pursuant to O. 38, r. 1, of the Rules of the Supreme Court, a course which allows the Full Court to draw any necessary inferences from the facts stated in the special case. The question submitted for the opinion of the Court was whether the respondent was entitled to recover from the appellant the sum of £1,592 2s. 10d.
The Full Court of the Supreme Court answered this question in the affirmative and from that decision the appellant appeals to this Court.
It appears that Herbert Henry Gill of 14 Palmer Street, Greenslopes, was at relevant times the registered proprietor of a parcel of land, more particularly described in the proceedings. He had a son, Lionel Herbert Gill, who apparently resided at the same address. At the inception of the events which led to the suit in this case, the land was mortgaged to the National Bank of Australasia Ltd. About 7th March 1960, Lionel Herbert Gill, the son, borrowed from the appellant £1,000, and later, on 24th March 1960, a further £500. In obtaining these loans he represented himself as Herbert Henry Gill and executed in his father's name, without any authority from and without the knowledge of his father, the necessary documents to secure the loans upon the land of which his father was the registered proprietor. At Lionel Herbert Gill's request, no doubt given in the name of his father, part of the loan by the appellant was paid to the National Bank to discharge its mortgage, whereupon the documents of title to the land were handed by the Bank to the appellant. Thereupon the appellant lodged both the discharge of the National Bank's security and his own mortgage with the Titles Office for registration.
Upon the terms of the appellant's loans not being met he addressed and posted to Herbert Henry Gill at the address in Greenslopes a notice calling up the loans. Lionel Herbert Gill then appears to have approached the respondent for a loan of £3,000 on the security of the same land, posing as Herbert Henry Gill. The respondent decided to make the loan, believing of course that it was lending to a person named Herbert Henry Gill who was the owner of the land. Apparently Lionel Herbert Gill had disclosed to the respondent that the appellant was owed a sum of money and represented that this was secured on the same land. Whether or not any express arrangements were made in that respect, it is clear that both Lionel Herbert Gill and the respondent contemplated that the title to the land would be cleared by the payment of the sum claimed by the appellant as due to him by Herbert Henry Gill.
On 20th May 1960 Lionel Herbert Gill executed in the name of Herbert Henry Gill a bill of mortgage of the land and a bill of sale over some chattels in favour of the respondent to secure £3,000 which, to use the precise language of the special case, "had been advanced by plaintiff to Lionel Herbert Gill". He also signed in the name of Herbert Henry Gill and gave to the respondent's solicitors a written authority to pay on his behalf out of the advance of £3,000 by the respondent the sum of £1,852 2s. 10d. to the appellant, £34 12s. 6d. to the respondent and the balance to himself (H. H. Gill).
On the same day the appellant gave to the same solicitors a letter stating that the amount owing to him by Herbert Henry Gill was £1,592 2s. 10d., and added that in consideration of the payment of this sum to him, he undertook to hand over to the solicitors the relevant certificate of title and the bill of mortgage over the land in his favour should the Titles Office hand them to him. Apparently the solicitors had been put in funds by the respondent for on the same day the solicitors by cheque paid the appellant.
The special case says that the solicitors paid the sum of £1,592 2s. 10d. to the appellant in accordance with the respondent's instructions and in compliance with the request and direction of Lionel Herbert Gill, and that the sum comprises amounts which Lionel Herbert Gill justly and truly owed the appellant at the date of the payment. It is further said that the solicitors at all relevant times acted as the solicitors for the respondent, as the appellant at all times well knew, but acted for Lionel Herbert Gill as between himself and the appellant to the extent of the authority given by Lionel Herbert Gill on 20th May. The case concedes that at that date Herbert Henry Gill was not indebted to the appellant in any amount.
Apparently the registered bill of mortgage over the said land in favour of the plaintiff had not been released from the Titles Office at the date of the payment of the £1,592 2s. 10d., and the respondent desired possession of the documents mentioned in the appellant's undertaking in his letter of 20th May in order to be in a position to effect registration of its own bill of mortgage over the said land.
In due course the appellant performed his undertaking and the respondent obtained from him possession of the documents.
In the fullness of time the fraud and the forgery of Lionel Herbert Gill were discovered and duly visited with punishment. There is no prospect of recovery from him as he is said in the special case to be a man of straw.
The Supreme Court held that the respondent, rather than Lionel Herbert Gill, had paid the sum of £1,592 2s. 10d. to the appellant and that that payment was made by the respondent under a mistake of fact, commonly made by the respondent and the appellant, as to the identity of Lionel Herbert Gill, each believing that he was Herbert Henry Gill and therefore the owner of the said land, and that but for this mistake, the respondent would not have paid the sum to the appellant.
The special case takes the view, and, if it matters, as I think rightly, that the borrower in each instance, both from the appellant and from the respondent was Lionel Herbert Gill and that in each case a liability upon him to repay the sums obtained as money lent was created. That the borrower should have given a false identity and signed by another name, even in the case of a specialty, would not prevent the writing or the deed from being operative against the borrower personally: see Fung Ping Shan v. Tong Shun [1] . The borrower's identity and the fact of his actual execution of the documents could of course be proved by extrinsic evidence. If there had been what purported to be an agreement to lend, as distinct from a loan, no doubt the agreement would have been void, for the identity of the borrower was basic to the consensus: or if before the specific money of the lender had been disbursed by or on behalf of the borrower whilst it remained identifiable, it might in some circumstances have been intercepted by appropriate process by the lender as still its money. But after the money has been passed over as a loan, the borrower, if sued by the lender, could not escape liability for money lent and for performance of the terms of the loan by asserting he did not agree to repay and on the agreed terms.
Thus, as of the time of the payment of the sum of £1,592 2s. 10d. to the appellant, Lionel Herbert Gill was indebted to the appellant in that amount for money lent and interest thereon as the special case asserts. And as of that time, Lionel Herbert Gill was indebted to the respondent for the amount advanced by it. Indeed, the special case goes so far as to state that the respondent had lent Lionel Herbert Gill £3,000. There might be some question as to whether this statement was fully justified. But we must answer the questions on the facts stated, together with any inescapable inferences which we may draw. And in any case fully to explore all the legal consequences of the effect of the mistaken identity upon the respondent's relationship to Lionel Herbert Gill would not, in my opinion, alter the conclusions which should be arrived at in this case which is a contest between the appellant and the respondent.
The first question is whether or not the respondent paid on its own behalf to the appellant the sum in question. The special case, as I have related, says that the person physically making the payment, the solicitor, did so at a time when he was acting as solicitor for the respondent and as solicitor for Lionel Herbert Gill to make the payment to the appellant, and that the solicitor in making the payment did so in accordance with the respondent's instructions and in compliance with the request and direction of Lionel Herbert Gill.
The case does not speak in any other place of the respondent's instructions to the solicitor with respect to the payment of money to the appellant. I think I should infer that the respondent, with knowledge of the existence of the registered mortgage in favour of the appellant, must have instructed its solicitor, expressly or impliedly, to ensure that so much of the money which it was advancing as was necessary to obtain a discharge of the encumbrance was paid to the appellant. This necessitated ascertaining the amount claimed by the appellant and obtaining the concurrence of the borrower in the appellant's demand. The instructions might be carried out in either of two ways, first, the solicitors might obtain the concurrence of the borrower to the payment being made on the respondent's behalf to obtain the discharge of the encumbrance and possession of the certificate of title, or second, the solicitors might seek the borrower's authority that they pay the appellant's demand on the borrower's behalf, thus clearing the way for the respondent to obtain from the appellant the documents when available to be passed over.
It seems to me that the special case means that the solicitors chose the second course. They obtained a statement from the appellant of his claim, they obtained an authority to pay the amount of that claim on the borrower's behalf out of the total sum lent: and they secured an undertaking from the appellant that when paid his claim he would hand over the documents if they came to his hand. That the special case specifically states that the solicitors acted as such for the borrower in making the payment to the appellant strongly confirms this view. Had there been no question of mistaken identity and forgery in this case, I do not think this analysis would have been challenged. Clearly, on this analysis, the payment would have been made on behalf of the borrower, who would be indebted to the lender for the full sum advanced, out of which the payment to the appellant had been made.
The question, for the purposes of the respondent's action, is not whose money was it that was used for the payment, but on whose behalf the money was paid.
Does the fact that the respondent, or for that matter, the appellant, was under a mistake as to the identity and substance of the borrower alter this analysis? As far as the appellant is concerned, he did have a claim against Lionel Herbert Gill for the amount he was paid. He had a registrable mortgage in existence and possession of the certificate of title, temporarily lodged with the Registrar of Titles to permit of registration of that mortgage instrument. Payment to him did extinguish the claim he had and did procure both the removal from the title of the registered instrument in his favour and the handing over of the certificate of title.
Why should the money paid to the appellant be regarded as paid on behalf of the respondent and not on behalf of the borrower merely because of the false belief of the respondent that the borrower was the person whom he represented himself to be? I cannot find any reason why that circumstance affects the analysis of the transaction which I have made. But even if the instructions to the solicitors had been carried out in the manner firstly described by me, it does not follow that the money for relevant purposes would have been paid on behalf of the respondent. Pollock C.B. in Aiken v. Short [1] said that the amount paid by the bank in that case to the supposed encumbrancer - and undoubtedly out of its own funds but because its borrowing client had referred the encumbrancer to it for payment - was paid as agent for the debtor and was not a payment of their own money: [2] .
The Supreme Court was not prepared to accept the view that the money was paid to the appellant on behalf of the borrower, because the authority to the solicitors to pay the appellant was a forgery, i.e. it was signed in the name of Herbert Henry Gill and purported to authorize the payment of the amount due by Herbert Henry Gill to the appellant. For this reason the Court felt that it could disregard the authority, with the consequence that the payment was not made on behalf of Lionel Herbert Gill. But, with respect, I cannot accept this view. Whilst Lionel Herbert Gill was using a false name, which circumstance had of course important results in law, it does not mean that his signature had no consequence in these transactions. As I have pointed out, and as the special case conceded, he did owe money to the appellant: and, by reason of the transactions of 20th May he did become indebted to the respondent. The payment by the solicitors to the appellant did free him of an actual liability and the signature of the authority, albeit in a false name, would have been an answer by the solicitors had Lionel Herbert Gill asserted their lack of authority on his behalf to pay the appellant; and this would be so even after the fraud was fully disclosed. Nor can I accept the Supreme Court's ground for distinguishing this case from that of Aiken v. Short [1] which it so much resembles. The Court said that whereas in Aiken v. Short [1] a debt was due to the payee, here there was none. I have already indicated my reasons for thinking there was and have pointed out that the special case is based on that assumption.
The conclusion that the money was not paid on behalf of the respondent and therefore that it cannot recover from the appellant is sufficient to dispose of the case.
However, I should wish to add that even if I thought the payment to the appellant had been made on behalf of the respondent, I would be unable to agree that the respondent should recover.
If the payment was made on behalf of the respondent, it was made to secure itself against what it believed to be a good security in favour of the appellant. Believing itself to have obtained a valid signature by Herbert Henry Gill to an instrument of mortgage, it desired, as the special case says, to obtain possession of the appellant's bill of mortgage, duly discharged, and of the certificate of title in order to effect the registration of the instrument it had in its own favour. But, on the assumption that its belief as to the identity of Lionel Herbert Gill was valid, it was a matter purely of convenience and advantage that it should on its own behalf pay the appellant rather than secure that the borrower did so on his own behalf. It was not in any sense a matter of obligation. For its own protection, on the assumption that it made the payment on its own behalf, it decided that it would pay the borrower's debt, believing itself, of course, to be able to recover the amount so paid from him as part of the total loan. This was not a payment to which the identity of the borrower was fundamental in the sense of the case law. True it is that behind the respondent's decision to have this transaction with the appellant was the respondent's belief that the appellant had a good security over the land and that, freed of it, the instrument of mortgage which the respondent had could be effectively registered as a valid first mortgage of the land. That belief was induced by its mistake as to the identity of the borrower. But that mistake did not enter into the transaction with the appellant, though it would be a motivating fact in the respondent's decision to make the payment to the appellant.
Another approach to the matter is that the respondent obtained by the payment what it sought to obtain, although due to the mistaken identity, what it got was not of the significance which it thought it had, an analysis which makes the decision in Aiken v. Short [1] very pertinent.
The Supreme Court held the payment by the respondent to the appellant was not a voluntary one because of the terms of the undertaking given by the appellant to the solicitors. The Court thought that because the undertaking by the appellant to hand over the documents was supported by a consideration, namely the payment of money which the respondent was not obliged to pay the appellant, that payment could not be regarded as a voluntary payment by the respondent but must be one made for a good consideration.
There is some possibility of confusion when dealing with the subject matter of the recovery of payments said to have been made under mistake in speaking, as some of the cases do, of the payments being "voluntary", as if a voluntary payment made to the wrong person could never be recovered. It is preferable in my opinion to test the matter by determining whether the mistake is fundamental to the transaction, properly identifying the transaction and the relationship of the mistake to it. Such a course is, I think, universally valid although as yet the subject of money paid under mistake is not fully exhausted by decision.
But in any case, in my opinion, it does not follow that, because the appellant's promise was given in consideration of a payment of money by the respondent, the respondent's payment was made in pursuance of an obligation to make it or of a supposed obligation to make it. Nor could it in any sense for that reason be said to be a payment for a good consideration.
In my opinion, the proper view of the matter is that the payment of £1,592 2s. 10d. to the appellant which was made by the solicitors on 20th May 1960 was a payment on behalf of Lionel Herbert Gill under the name of Herbert Henry Gill: it was paid in discharge and did discharge a debt actually owing to the appellant by Lionel Herbert Gill under the name of Herbert Henry Gill and is not recoverable by the respondent.
If the payment had been by the respondent, the result would be the same. The mistake in identity was not fundamental to the transaction of the respondent's payment to the appellant to discharge his claim and secure possession of the documents of title free of the registered instrument in favour of the appellant. If the facts had been as supposed the respondent would have been under no obligation to pay the appellant, and in any case, the respondent did obtain from the appellant that for which it paid the money.
In my opinion this appeal should be allowed and the questions in the special case answered:
This appeal depends very much upon analysis of the facts, and the task of forming a conclusion upon it is not made any easier by ambiguities of expression which occur in several places in the special case. It is particularly necessary, I think, to be sure what is intended by expressions such as "lend", "loan", "moneys advanced", "authorized", which, if strictly construed, import conclusions as to the legal effect of things done in fact. The conduct referred to by each of these expressions was brought about by fraudulent impersonation, and it seems obvious that in the drafting of the special case there has been no intention to preclude such questions as whether, for example, payments which were loans in form were, in law, loans, or were payments obtained under void contracts. I use the expression "void contracts" deliberately. As Devlin L.J. observed in Ingram v. Little [1] , the expression, though self-contradictory, is useful in order to describe a contract (perhaps his Lordship might have said to describe something which on the surface seems to amount to a contract) that is perfect in form but void of substance; and its use illustrates how easy, and indeed how natural, it is, even for lawyers, to describe something that has happened in fact by using words which assume that it has a legal efficacy corresponding with its appearance, notwithstanding that the very question whether it has that legal efficacy is in dispute. Here, the facts as to the making and performance of what were in form loan contracts, and as to a purported authorization which was a forgery, are before us, and it seems to me that we ought to give the whole of the facts their true effect and not hesitate to hold that what are spoken of as loans and as an authority were such in form only, and not in reality, if that is the proper conclusion from the special case considered in its entirety.
The respondent by its solicitors paid the appellant an amount of £1,592 2s. 10d. on 20th May 1960 and sues in this action to recover an equal amount as money payable by the appellant to the respondent for money received by the appellant for the respondent's use. It is, I think, a correct conclusion from the special case that from the respondent's point of view it was of the essence of the payment that it should free a certain house property and certain chattels from the burden of a mortgage and bill of sale in favour of the appellant to which the respondent believed they were subject, and that therefore two assumptions of fact were basic to the payment: (a) that the house property and chattels were in truth subject to the burden of the mortgage and bill of sale respectively, and (b) that the respondent had the authority of the owner to pay what was required to free the property from that burden. Behind this is another proposition which I take to be correct, namely that it was fundamental to the respondent's decision to part with its money that repayment by the person who was the registered proprietor of the house property and the owner of the chattels (I shall call him the owner of the property) should be secured by a first mortgage of the house property and a bill of sale of the chattels. The respondent was never asked to part with its money otherwise than upon that security, and obviously it never intended to do so. The obtaining of that security was therefore an essential condition of each of the payments it made, including the payment to the appellant. But the security could not be obtained while any existing encumbrance on the property remained. In short, the facts (a) that the appellant's mortgage and bill of sale were forgeries and void and (b) that the letter of authority which the respondent relied upon as giving it authority from the owner of the property to pay off those securities on his behalf was likewise a forgery and void, go to the very foundation of the payment which the respondent made to the appellant. They spell the complete frustration of the purpose which the payment was intended to effectuate.
In these circumstances it seems to me that the appellant is liable to repay the amount which, as he now knows, the respondent would never have paid him if it had known the facts. The appellant, however, refuses repayment, content with the turn of events by which a person who defrauded him has, by further fraud, enabled him to pass on his loss to the equally innocent respondent. He relies upon several grounds. First he says that Lionel Herbert Gill was indebted to him and that the respondent's payment discharged the liability. It seems to me a simple but sufficient answer that a debt of Lionel Herbert Gill, not secured upon the house property or the chattels, was not what the respondent tendered its money to pay. It offered the appellant its money to satisfy a debt which they both believed to be owing by one Herbert Henry Gill, the owner of the property, and to be secured by the mortgage and bill of sale which the appellant held. A person who accepts money which is offered to him for the purpose of discharging a debt owed by one person and secured upon that person's property has no legal right, when he finds that there is no such debt but that there is another debt of equal amount owing to him by another person and unsecured, to retain the money as payment of that other debt. I may add that the payment was made to discharge a debt for money lent, and in my opinion Lionel Herbert Gill did not owe the appellant anything for money lent, though undoubtedly he owed him the amount Gill had got out of him by false pretences. In my opinion the fraud which Lionel Herbert Gill practised upon the appellant was so fundamental to the transaction between them that no contract of loan ever came into existence between them. I do not elaborate this point here, because the reasons for it are generally similar to those which I shall state later in respect of the transaction between Lionel Herbert Gill and the respondent.
Then the appellant submits that what the respondent paid him it paid him voluntarily though under a mistake of fact, and that money so paid is irrecoverable unless the payer would have been liable to pay it to the payee if the fact had been as he supposed. The doctrine asserted has its main support though perhaps not its origin in a dictum of Bramwell B. in Aiken v. Short [1] ; but at least since Morgan v. Ashcroft [2] and Larner v. London County Council [3] the view must, I think, be accepted that a mistake of fact enables a payer of money to recover it if the mistake was fundamental to the payment, even though the payer would not have been liable to pay it if the supposed fact had existed: see Sir Percy Winfield's article on Mistake of Law (1943) 59 L.Q.R. 327, at p. 338. The condition was satisfied in the present case, for the respondent's mistake in thinking that Herbert Henry Gill owed the appellant a debt for money lent and that the debt was secured by the documents which the appellant held was so clearly fundamental that because it was a mistake the consideration for the payment failed completely. It seems to me nothing to the point that upon payment of the money the respondent was given possession of the certificate of title and of the appellant's bill of mortgage duly released. The documents were in fact worthless to the respondent. The release of the supposed mortgage meant nothing at all for there was no valid mortgage to be released. The respondent did get possession of the certificate of title, but not with any right to retain it or to derive any advantage from it. The respondent therefore got nothing of value for its money.
The appellant's argument sought to find an analogy between this case and Aiken v. Short [1] . I do not see any analogy. In Aiken v. Short [1] a person owed a debt, and he gave as security for it an equitable mortgage of an interest which he thought he owned in the estate of a deceased person. He then assigned his supposed interest in the estate to a bank, subject to the equitable charge. The bank, having agreed with the debtor to pay the debt, and desiring to sell the assigned interest, paid the amount of the debt to the creditor. Then it turned out that the debtor's supposed interest in the deceased estate did not exist, for the will which bequeathed it had been revoked by a later will under which the debtor took nothing. The bank, discovering this, sued the creditor to recover the amount it had paid, but the Court held that the bank's mistaken belief that by making the payment it was getting rid of a charge upon property in which it had an interest was not such a mistake as entitled it to succeed. It did not get by the payment the advantage it thought it was getting, but that only meant that a belief was proved erroneous which had afforded an inducement to make the payment, but was not essential to it. As Bramwell B. observed, the mistake was that the bank thought that if it paid the debt it could sell the property for a better price. The only facts that were fundamental to the payment were that the debt was owing and that the bank had the debtor's authority to pay it on his behalf, so that the payment effected exactly what it was intended to effect, namely the discharge of the debt. As to these facts there was no mistake. The present case is exactly the reverse. The supposed debt did not exist, and the supposed debtor had not authorized the respondent to pay anything on his behalf. Consequently the payment completely failed of its purpose.
Next the appellant says that the money he received from the respondent was Lionel Herbert Gill's money and not the respondent's. Aiken v. Short [1] would support a proposition that a payment of money by A. to B. on behalf of C., made with C.'s authority either antecedently given or created retrospectively by ratification, amounts to two payments, one by A. to C. and the other by C. to B.; so that even though A. made the payment under a mistake of fact he cannot recover it back from B., because the money was received by B. not as A.'s money but as C.'s money. But, where C. has neither authorized the payment beforehand nor made it his own by ratification, it is impossible to say that the money is received by C. otherwise than as A.'s and, that being so, the recoverability of the money by A. on the ground of mistake of fact must depend only upon the question whether it was fundamental to the payment by A. that a fact should have existed which A. believed to exist but which in truth did not exist.
In the present case C. in the illustration above given was Herbert Henry Gill, and the supposed fact was that Herbert Henry Gill was indebted to the appellant and authorized the payment. But the appellant's argument treats C. as Lionel Herbert Gill. This, as I see the matter, cannot be right. The respondent in dealing with the appellant relied upon a purported written authority from Herbert Henry Gill. The document could not, I think, be considered as making the respondent the agent of Lionel Herbert Gill to discharge an indebtedness of his to the appellant. The whole sense of it is that the respondent is authorized to pay off what is owing to the appellant by that same Herbert Henry Gill who is the owner of the land comprised in the appellant's mortgage; that is to say to pay off a debt which is assumed to stand in the way of an unencumbered title in Herbert Henry Gill.
But in any case it seems to me an erroneous conclusion from the agreed facts as a whole that the respondent's payment to the appellant was a payment authorized by Lionel Herbert Gill as a payment on his behalf. I do not regard the transaction between the respondent and Lionel Herbert Gill as in the category exemplified by Phillips v. Brooks Ltd. [1] . Perhaps it is worthwhile on this point to go over the relevant facts in some detail.
Lionel Herbert Gill, calling himself Herbert Henry Gill, submitted to the respondent a form headed "Personal Loan Application" which he had signed with the name of Herbert Henry Gill. Although a note on the form said that the application would not be considered until all questions were fully answered, the only information inserted in it, apart from the name, was the address (which was correct, apparently, in respect of both the Gills), the amount of the advance required, £3,000, the occupation of "owner truck driver", and the details of the security offered, namely "house and furniture". At the foot, a reference to the title of the land was given. The form invited information of a personal character, but none was supplied. It asked, inter alia, the applicant's employment, the weekly family income, the name of his current bank, the amount owing on hire purchase or credit accounts, his previous hire purchase transactions, the rental (if any) of his home and the name and address of his landlord, whether he owned his own home or was buying it on terms or on mortgage and if so what were the particulars, and what was the maximum he could safely offer to repay per calendar month. None of these inquiries, relevant as they were to the applicant's personal creditworthiness, was answered on the form. References were invited, but so far as appears none was given.
Lionel Herbert Gill also submitted to the respondent a valuation which described the property as offered as security by "Mr. Gill". It gave the value as £3,959, and the valuer added that in his opinion the property was suitable security for an advance of £3,000. At the foot of this document there was a statement reading, "I warrant that I am the owner of the goods shown hereon and that there is no existing encumbrance on any of the goods described". To this statement Lionel Herbert Gill appended the signature "H. H. Gill". The respondent, believing Lionel Herbert Gill to be Herbert Henry Gill and the owner of the property, was willing to lend him £3,000 upon the security of a first mortgage and a bill of sale. A bill of mortgage and a bill of sale were made out accordingly. They were in the name of Herbert Henry Gill as mortgagor and grantor respectively, each to secure the sum of £3,000, and describing that sum as lent to the mortgagor in the one case and the grantor in the other. Lionel Herbert Gill signed each instrument "H. H. Gill". At the same time he gave to the respondent's solicitors a letter, signed "Herbert Henry Gill", purporting to authorize them to pay £1,592 2s. 10d. on his behalf, "due to the advance of £3,000 paid to me by" the respondent. After the signature there was added: "Out of balance of £1,338 0s. 2d. pay (the respondent) £34 12s. 6d. due by me the balance £1,303 7s. 8d. to me by cheque"; and this Lionel Herbert Gill signed "H. H. Gill". The solicitors, who held in their trust account sufficient moneys of the respondent for the purpose, made the disbursements which this document would have authorized if Lionel Herbert Gill had in fact been Herbert Henry Gill. In particular, they paid £1,592 2s. 10d. to the appellant, and he handed over his bill of mortgage duly released, together with the certificate of title to the land.
I am willing to assume that Lionel Herbert Gill appeared in person before the respondent's officers, and that in consequence of his fraudulent statements to them they, when they read "Herbert Henry Gill" and "H. H. Gill" in the relevant documents, had a mental picture of Lionel Herbert Gill. But it seems to me a necessary inference from the nature of the transaction that they were concerned, not with him as the person who presented himself to them, but with the man who had the security to offer.
The case was not like that which occurs when a money-lender makes a loan over the counter to a person who offers a camera as a pledge and says that it is his. No doubt in many a case of that description the transaction is one of a personal loan to the individual who is present. There is no impersonation. But where a loan is applied for on the security of land, the title is proved to be in a particular person and it is basic to the negotiations that they are being conducted between that person and the proposed lender. So here, it seems to me the proper inference that the respondent's officers dealt with Lionel Herbert Gill solely on the footing that he was in truth the Herbert Henry Gill whose land was offered as their principal security. The grant of the loan, as I see it, was implicitly if not expressly on the condition precedent that the recipient was identical with the registered proprietor of the land. In the circumstances it is hardly conceivable that the authority the respondent received to pay money to the appellant was of interest to the respondent save as an authority to discharge a debt of the registered proprietor secured by the appellant's purported mortgage. When it parted with its money on the faith of the letter of authority signed with the registered proprietor's name the payment, in my opinion, was not a payment made on behalf of the impersonator: it was an unauthorized payment on behalf of the real Herbert Henry Gill. In the language of Lord Shaw in R. E. Jones Ltd. v. Waring and Gillow Ltd. [1] , the respondent's mind did not go with a transaction of paying the debt of someone other than the owner of the property, not secured on the property and not referred to in the purported written authority; it went with another transaction, and the respondent meant only to give effect to that other transaction.
There have emerged in judicial pronouncements since the time of Phillips v. Brooks Ltd. [2] two competing theories as to the test to apply in deciding whether impersonation by one party to a purported contract makes the contract void or only voidable. Either test would lead to the conclusion in the present case that the dealings between the respondent and Lionel Herbert Gill were void from beginning to end. One theory, adopted by Pearce and Sellers L.JJ. in Ingram v. Little [1] may be expressed in terms of the present case by saying that the decisive question is whether Lionel Herbert Gill ought to have understood the respondent as meaning to lend its money to the man who presented himself and said he was the registered owner of the land, or to the man who in truth was the registered proprietor of the land. I should think the answer should undoubtedly be: to the latter. The other theory, adopted by Devlin L.J. in Ingram v. Little [1] may be expressed by saying that even if it be true that the respondent offered to lend its money to the person who came and asserted that he was Herbert Henry Gill, the crucial question remains: should that person's identity with the registered proprietor of the land be considered by the court to be an essential ingredient in the supposed contract, as distinguished from a mere inducement to the respondent to enter into it. I should think the answer ought to be that it was an essential ingredient in the transaction that the borrower was indeed the Herbert Henry Gill who was the registered proprietor of the land, and none other. Accordingly I am of opinion that the proper conclusion from the agreed facts is that the "loan" by the respondent to Lionel Herbert Gill was in law no loan at all, and that the respondent was not acting as agent for Lionel Herbert Gill when it made the payment to the appellant.
I have not overlooked a statement at the end of the special case, that the respondent's solicitors were not only acting for it but were also acting, as between Lionel Herbert Gill and the appellant, on behalf of Lionel Herbert Gill "to the extent authorized by the said Lionel Herbert Gill in the authority" above referred to. This I regard as immaterial. For the reasons I have given, I treat the statement as a muddled way of saying that the solicitors in making the payment to the appellant intended the payment to be an exercise of the purported authority which Lionel Herbert Gill, posing as Herbert Henry Gill, had given them.
In my opinion the decision of the learned Judges of the Supreme Court was correct and the appeal should be dismissed.
In the action out of which this appeal arises the respondent sued the appellant for the recovery of £1,592 2s. 10d. which it alleged had been paid by it to the appellant under a mistake of fact. The unusual circumstances in which the payment was made are set out in the special case which stated questions for the opinion of the Supreme Court of Queensland. Paragraph 19 of the special case in some measure particularizes the mistake or mistakes which led the respondent to make the payment in question but, stated more precisely, it seems that the payment was made by the respondent in the supposed belief - (1) that it was engaged in a money-lending transaction with one H. H. Gill who was the registered proprietor of certain land comprised in Certificate of Title No. 363810, Volume 1927, Folio 150; (2) that the appellant was the holder of a bill of mortgage over the said land given by the said H. H. Gill under which the amount in question was owing; and (3) that in making the payment to the respondent it was doing so at the direction of the said H. H. Gill.
The truth of the matter is, of course, that neither the appellant nor the respondent had any dealings with H. H. Gill. They successively dealt with L. H. Gill in the belief that he was H. H. Gill and the documents which he executed were forgeries. In the result the Full Court thought that the respondent was entitled to recover holding that the payment was one which had been made by the respondent and that it had been made "under a mistake of fact fundamental to the transaction".
The first of these propositions rested upon the fact that the so-called authority was signed "H. H. Gill" and that it purported, somewhat cryptically, to authorize the respondent's solicitors
to pay the following amounts on my behalf due to the advance of £3,000 paid to me by Latec Finance (Qld) Pty. Limited -
The amount due under Mortgage to Porter and Murphy £1,576 15 0 Release of Mortgage Porter and Murphy 13 2 6 Insurance adjustments 2 5 4 £1,592 2 10 .
The authority also stipulated that out of the balance due, £1,338 0s. 2d. the sum of £34 12s. 6d. which was said to be due to the respondent, should be paid to it and the ultimate balance - £1,303 7s. 8d - should be paid to the signatory by cheque. There was, it was said, no amount due by H. H. Gill to the respondent and the authority could not be construed so as to authorize any payment whatever on behalf of L. H. Gill in respect of his admitted indebtedness to the appellant. Accordingly, it was held that the payment was made by the respondent on its own behalf.
This process of reasoning, it seems to me with respect, is productive of some confusion in the case. It assumes, of course, that if the borrower from the respondent had, in fact, been H. H. Gill the payment to the appellant would have been made on his behalf but, because the respondent was mistaken as to the identity of the borrower and mistakenly believed that the authority had been given by H. H. Gill, it asserts that the respondent made the payment on its own account. But the validity of this conclusion must, it seems to me, depend upon whether, notwithstanding the fraud of L. H. Gill, the respondent agreed to and did, in fact, make a loan of £3,000 to him, or whether, if all the relevant circumstances were known, no agreement of any kind was made between them. This question might have been resolved by an appropriate finding after consideration of all the relevant facts in the light of such cases as Phillips v. Brooks Ltd. [1] ; Fawcett v. Star Car Sales Ltd. [2] ; and Ingram v. Little [3] . But the parties have chosen to state a special case for the opinion of the Full Court and the only question for us to decide is whether upon the facts therein appearing the respondent is, as a matter of law, entitled to recover the amount which was paid to the appellant.
Now in what circumstances were the moneys in question paid to the appellant? It appears from the special case that the same firm of solicitors acted for both the respondent and L. H. Gill in connexion with the making of a loan by the former. In the case of the latter it was said that they so acted "to the extent authorized by L. H. Gill" in the authority already referred to. The solicitors were provided by the respondent with sufficient moneys to complete the loan transaction and they disbursed these moneys by making, first of all, a payment to the appellant of the amount in question and then by payment of the balance of the loan sought, less a small amount said to be due to the respondent, to L. H. Gill. The former payment was said to have been made in accordance with an authority executed by L. H. Gill "by signature forged as the signature of the said H. H. Gill". It is, of course, clear that the payment made to the appellant was not made by or with the authority of H. H. Gill and for the moment the question may be left open whether as a result of the two payments L. H. Gill became indebted to the respondent in the sum of £3,000 for money lent to him or partly for money lent and partly for moneys paid at his request. Of course, if the transaction with the respondent had taken the form of paying to L. H. Gill the amount of £3,000 upon his undertaking to discharge the appellant's mortgage no part of the sum paid pursuant to that undertaking would have been recoverable by the respondent. But for its own protection the respondent did not do business in this manner; it took the authority in question and then, purporting to act upon it, and without any legal liability so to do, the solicitors paid the sum in question to the appellant and in no sense was it then intended as a payment on the respondent's behalf or on its account. In return the respondent received from the appellant in accordance with the arrangement made between them, "the duly registered and released" bill of mortgage to the appellant and the relevant certificate of title.
The critical question which arises on these facts is whether the payment made to the appellant was, in truth, a payment made by the respondent on its own account or whether it was a payment made for and on behalf of L. H. Gill out of moneys which the respondent had been fraudulently induced to lend to him. For if it was of the latter character it is difficult to see how the appellant could have any title to relief in respect of the payment. In other words, if the position was that the payment represented merely an application of part of moneys advanced to L. H. Gill then, although the loan was obtained by fraud, the applicant must look to him for repayment and has no title to relief against the appellant.
At this stage I return to the special case for the purposes of determining whether upon the facts stated it is possible to conclude whether the dealings between L. H. Gill and the respondent resulted in a loan of £3,000 to the former for if they did, then, in my view, the payment to the appellant must be regarded as having been made out of the loan moneys and entirely on his account. I find that in par. (9) of the special case it is stated that: "Early in the month of May 1960 the said Lionel Herbert Gill requested the plaintiff to lend him the sum of £3,000" and that "In order to induce and procure the plaintiff to lend him the said sum of £3,000 the said Lionel Herbert Gill" made certain fraudulent and false representations. Further, par. (11) speaks of "the moneys advanced by the plaintiff (respondent) to the said Lionel Herbert Gill" and of the documents executed by him as security therefor. To my mind what might otherwise have been a critical question of fact in the case is concluded by the admitted fact that a loan of £3,000 was made by the respondent to L. H. Gill and it follows, I think, that in making the payment in question to the appellant the solicitors for both parties did so out of the moneys so lent and on behalf of L. H. Gill alone. It may be unfortunate for the respondent that what otherwise might have been a critical question of fact in the case is concluded by the terms of the special case but, in the circumstances, the first question raised by the case must, I think, be answered in the negative.
That being so I find it unnecessary to consider whether any of the matters as to which the respondent was mistaken at the time when the payment, which was a voluntary payment in any event, were "fundamental to the transaction" between the respondent and the appellant (See Morgan v. Ashcroft [1] ; Ayres v. Moore [2] ; and Chambers v. Miller [3] ; and Barclay and Co. Ltd. v. Malcolm and Co. [4] ). In my view the appeal should be allowed, the order of the Full Court set aside and the questions raised by the case answered: (1) No; and (2) By the plaintiff.
When a swindler pretends to be someone else a question can arise whether a transaction with him is void of legal effect or is a contract voidable because induced by fraud. The answer may be said to depend upon the facts in each case: but more often perhaps it depends upon the light in which those facts are regarded; for differing conclusions have been reached on facts not in dispute and when the basic legal principles were not in question. This was demonstrated in the famous case of Cundy v. Lindsay [5] . There a Divisional Court, consisting of Blackburn, Mellor and Lush JJ., had reached a conclusion different from that which was ultimately established by the judgments in the House of Lords. Mellor J., contrasting the case with Hardman v. Booth [6] , said: "It is very clear that there the plaintiffs never intended to contract with Edward Gandell; but here the plaintiffs did intend to contract with the individual who had his premises at 37 Wood Street, and the goods were sent there. They undoubtedly negligently allowed themselves to be led to suppose he was a person other than he was; but the contract was with him, and it was their intention to contract with that individual" [7] . In the House of Lords the opposite view was taken. Lord Hatherley and Lord Penzance thought the case was in principle the same as Hardman v. Booth [6] . Lord Cairns in a well-known passage said: " I ask the question, how is it possible to imagine that in that state of things any contract could have arisen between the respondents and Blenkarn, the dishonest man? Of him they knew nothing, and of him they never thought. With him they never intended to deal. Their minds never, even for an instant of time rested upon him, and as between him and them there was no consensus of mind which could lead to any agreement or any contract whatever" [1] . In the present case it is said that the mind of the respondent did rest upon Lionel Herbert Gill: that he was the only person present to the eyes of those who conducted the business for the respondent: he was the person whom they took to be Herbert Henry Gill. Thus it is said this case is to be governed by the, now somewhat shaky, authority of Phillips v. Brooks Ltd. [2] . In aid of this view reliance is placed upon some passages in the stated case which, read literally, mean that what occurred between the parties and Lionel Herbert Gill amounted to loans of money by them to him. But if those passages be thus understood they beg the very question that it was intended that the stated case should raise - the question that was argued before us. It seems unfortunate that in a case of this kind the parties adopted the medium of a special case and stated the facts not as primary facts but in language that describes their dealings with Lionel Herbert Gill in terms of legal relationships, whereas the respondent's case is that those dealings were so grounded in mistake as to be devoid of legal consequence. I think that the decision must depend upon what happened rather than upon any legal complexion in the language by which the happenings have been described.
In his dealings with both the appellant and the respondent, Lionel Herbert Gill was an impostor pretending to be another person, Herbert Henry Gill, the registered proprietor of the land comprised in certificate of title No. 363810 Volume 1927 Folio 150. The case is not like one in which A induces B to enter into a contract with him by a false pretence that he, A, is a man of means. Nor is it like a case where A makes a contract calling himself B, a mere alias, not the name of some other particular person: the decision in King's Norton Metal Co. Ltd. v. Edridge, Merrett & Co. Ltd. [3] is an example. This is a case where A offered to lend money to be secured by a mortgage on B's land. C, by representing himself to be B, had procured A to make the offer, but it was meant for B not for him, as he well knew.
I do not think it necessary to enter into the questions of philosophy and legal theory that surround the real or supposed distinction between a unilateral mistake as to the identity of a person and a unilateral mistake as to his attributes. They lie at the root of the matter. It is a matter that has been the subject of much discussion, learned and helpful, in recent textbooks on the law of contract and in many articles in legal periodicals. I refer in particular to the articles by Professor Goodhart in the Law Quarterly Review, vol. 57 (1941) at p. 228; and by Professor Glanville Williams in the Canadian Bar Review, vol. 23 (1945) at pp. 271, 380. The earlier English decisions concerning mistaken identity of parties to contracts were reviewed in Ingram v. Little [1] . That case shows again how readily the same facts may in this field be susceptible of more than one interpretation. I would add to the authorities commonly cited a specific reference, for its citation of American cases, to Professor Corbin's work on Contracts (1960), vol. 3, s. 602. Lord Devlin referred to this in his judgment in Ingram v. Little [1] ; but as has been pointed out, the sentence that his Lordship quotes is best read in the context in which the author placed it.
When the appellant and respondent in the present case made their offers to lend money they clearly meant them for Herbert Henry Gill, the landowner, and for no one else. Only with him could the contract proposed, a loan on mortgage of his land, have been made. A man cannot bind another in contract by accepting an offer which he knows is not meant for him but for someone else; and that was the position of Lionel Herbert Gill. On this aspect I agree in the conclusion of my brother Kitto, whose judgment I have had the advantage of reading. The transactions between Lionel Herbert Gill and the appellant and the respondent were, as purported contracts, void for mistake. And in so far as they resulted in instruments purporting to be mortgages by Herbert Henry Gill, these were forgeries to each of which Herbert Henry Gill could have said non est factum. But that does not conclude the matter.
When the story begins, Herbert Henry Gill was indebted to the National Bank of Australasia Limited in an amount which is not stated in the papers before us but which I shall call £x. That sum was secured by a registered mortgage that Herbert Henry Gill had given of his land. That this was a valid legal mortgage is not in question. As a result of the mistake produced by the fraud of Lionel Herbert Gill, the appellant provided moneys which were paid to the bank to discharge Herbert Henry Gill's liability under the mortgage. It has been assumed throughout the argument that Herbert Henry Gill was not at any stage a participant in this or the later fraud of Lionel Herbert Gill and that he was ignorant of them. There is nothing in the case to suggest the contrary. The bank having been paid out, it handed the appellant the duplicate of its bill of mortgage from Herbert Henry Gill with a release endorsed thereon and the certificate of title of the land. Stopping there, the position was that Herbert Henry Gill's mortgage had been paid off. And, whatever were the conveyancing details, it was paid off with money provided by the appellant with a view to his taking a fresh mortgage from Herbert Henry Gill whom he mistakenly supposed Lionel Herbert Gill to be. Now if a person pays off a mortgage, not intending to make a gift to the mortgagor, he keeps the charge alive for his own benefit and thus has a corresponding equitable lien. This result does not depend upon the concurrence of the mortgagor: that is not required: Butler v. Rice [1] . What had happened was therefore that the appellant, instead of the bank, had become the creditor of Herbert Henry Gill in the sum of £x secured by a charge on the debtor's land. Had the purported bill of mortgage forged by Lionel Herbert Gill been a valid instrument, this equitable charge would have merged in the higher security. But it was a forgery; and a good charge does not merge in an ineffectual security: Chetwynd v. Allen [2] ; Re Emery; Ex parte Harvey [3] .
The result of Lionel Herbert Gill's dealings with the appellant was, as I see the facts stated, that (1) the appellant had a charge enforceable in equity over Herbert Henry Gill's land to secure the sum of £x and interest thereon: (2) the appellant had the certificate of title of Herbert Henry Gill's land which he might hold to enable him to enforce his charge: (3) the appellant had a right of action for money had and received against Lionel Herbert Gill: the amount which he could recover and retain in such an action at law would, it seems, depend in equity upon whether or not he retained his charge upon the land. Alternatively he had a right of action against Lionel Herbert Gill for damages for fraud, the amount of the damages being £1,500 less the value of his charge. He had no right of action against Lionel Herbert Gill for money lent, for there was no contract of loan with him, the transaction with him being a "void contract": (4) the appellant had a bogus mortgage instrument which, being a forgery, could confer no rights on him. It could, if it had become registered, have been expunged at the instance of Herbert Henry Gill; but only, I think, on terms of his executing a bill of mortgage for £x in favour of the appellant. It is not necessary to consider here what, under the Torrens system, would have been the position of anyone contracting to take a transfer of the purported mortgage if it had ever become registered.
Passing now to the next phase: In it we are not directly concerned with the rights of the appellant and the respondent as between themselves and Lionel Herbert Gill. The question is as to their rights as against one another. It arises in an action brought by the respondent against the appellant for money had and received. This form of action lies between a payer and payee. Its foundation in this case is the assumption that the moneys, £1,592 2s. 10d., that the appellant received were paid to him by the respondent. And I agree with Lucas J. that this was what occurred. Lionel Herbert Gill, by representing himself to be Herbert Henry Gill, had induced the respondent to promise to lend to Herbert Henry Gill £3,000 on a first mortgage of his land. This sum the respondent had paid to its solicitors to be disbursed by them on its behalf on the settlement of the supposed contract, which involved paying off the prior legal encumbrance for £1,500 and interest supposedly existing in favour of the appellant and paying the balance to Herbert Henry Gill or as he should direct. The solicitors are said to have been acting supposedly for both the respondent and Herbert Henry Gill. But they never had any instructions from Herbert Henry Gill. He was never their client. They had only a forged document purporting to be his authority. I cannot accept the proposition advanced for the appellant that the payment to the respondent was a payment by Lionel Herbert Gill. What had happened, shortly stated, was that the appellant had said in a letter to the solicitors: "The amount owing to me by Herbert Henry Gill is £1,592 2s. 10d., made up as follows - Mortgage debt and interest £1,576 15s. 0d." - then followed particulars of certain charges in relation to the supposed mortgage and the letter continued - "In consideration of the payment to me of the settlement figure, I undertake to hand over to you forthwith Certificate of Title No. 363810 Volume 1927 Folio 150 and Bill of Mortgage No. B 723233, should they be handed to me by the Titles Office". The last words refer, we were told, to the fact that the appellant had lodged the forged bill of mortgage for £1,500 at the Titles Office. It had been numbered there; but, if it had not actually been registered on the title, the person lodging it would be permitted to lift it for the purpose of endorsing a release on it. In fact that happened: the appellant received the money, £1,592 2s. 10d., and in exchange the respondent received the appellant's supposed bill of mortgage for £1,500 endorsed as discharged and also the certificate of title to the land.
After the fraudulent activities of Lionel Herbert Gill had been discovered, the respondent brought this action against the appellant in the Supreme Court of Queensland. The claim as endorsed on the writ reads: "The Plaintiff's claim is for £1,592 2s. 10d., money had and received by the Defendant to the use of the Plaintiff, such sum having been paid by the Plaintiff to the Defendant on or about the Twentieth day of May, 1960 under a mistake of fact". The question that arises at this stage is, what is the mistake that is relied upon? As the argument was presented it seemed that it was the mistake as to the identity of Lionel Herbert Gill arising from his fraudulent representation of himself as Herbert Henry Gill. But to recover in an action for money had and received the plaintiff must establish a mistake operative as between himself, the payer, and the defendant, the payee: cf. Weld-Blundell v. Synott [1] . And the peculiarity of the present case, distinguishing it from some others that were referred to, is that, as between the parties, it is not a case of unilateral mistake as to the party to a supposed contract: it is a case of a common and fundamental mistake as to the existence of a subject-matter. The mistake arose because the appellant and the respondent had each earlier been mistaken as to the identity of Lionel Herbert Gill. But now the operative mistake as between them was their common belief that the appellant was a creditor of Herbert Henry Gill in an amount of £1,592 2s. 10d., secured by a valid legal mortgage. In reality the appellant was a creditor of Herbert Henry Gill for some lesser sum secured by an equitable charge. The respondent can succeed in its action for money had and received if, using words used by Dixon and Fullagar JJ. in McRae v. Commonwealth Disposals Commission [2] , it is "a case in which the parties can be seen to have proceeded on the basis of a common assumption of fact so as to justify the conclusion that the correctness of the assumption was intended by both parties to be a condition precedent to the creation of contractual obligations" [3] . In my view it is such a case. It is true that the respondent got something for its money, namely possession of the certificate of title to the land of Herbert Henry Gill, and that the appellant had been entitled to hold this in connexion with his equitable charge. But I do not think that what occurred gave the benefit of that charge to the respondent. And therefore, as the case arises in a jurisdiction where equity and law are administered together, I consider that the respondent is entitled to recover in an action for money had and received the amount claimed, conditionally on returning to the appellant the certificate of title.
I do not overlook that it is said in the stated case that at the date when the sum of £1,592 2s. 10d. was paid to the appellant "Herbert Henry Gill was not indebted to the appellant in any amount". But this seems to be one of the many equivocal statements in the case. I take it to mean that, apart from the sum which he had formerly owed to the National Bank of Australasia and interest on that sum, he was not indebted to the appellant in any amount. I say this because it seems to me that nothing that is said to have occurred could have conferred a benefit on Herbert Henry Gill. The appellant and the respondent were cheated by Lionel Herbert Gill into thinking that Herbert Henry Gill was increasing the amount of his indebtedness as a mortgagor. So far as appears in the facts stated, nothing done by the appellant or the respondent or Lionel Herbert Gill could have the result of relieving him, Herbert Henry Gill, of any liability. But whether or not the appellant could now enforce the charge which it appears on the facts stated that he has cannot be determined in these proceedings. Herbert Henry Gill is not a party to them and is not bound by any decision in them.
I would dismiss the appeal but answer the questions as follows: (1) Yes, subject to the respondent returning to the appellant the certificate of title No. 363810 Volume 1927 Folio 150 and disclaiming in favour of the appellant any charge against the land the subject of the said certificate of title arising out of the matters narrated in the special case; (2) By the defendant.
This is an appeal from the Full Court of the Supreme Court of Queensland on a special case stated by the parties in which the question asked was whether the plaintiff was entitled to recover the sum of £1,592 2s. 10d. alleged to have been paid by it to the defendant under a mistake of fact. The Full Court held that the plaintiff was entitled to succeed and from that decision this appeal is brought.
The facts, as stated, appear to be that one H. H. Gill was the registered proprietor of certain land in Brisbane over which he had given a bill of mortgage to the National Bank of Australasia to secure the repayment of certain moneys owing to it by him. The Bank held the certificate of title to the land and a duplicate of the registered bill of mortgage. On or about 7th March 1960 a man named L. H. Gill who was, we were told, a son of H. H. Gill, borrowed from the defendant the sum of £1,000 and, on or about 24th March 1960 borrowed a further sum of £500. To induce the defendant to make these loans L. H. Gill represented himself to be H. H. Gill and the registered proprietor and mortgagor to the Bank of the land comprised in H. H. Gill's certificate of title. Out of moneys agreed to be advanced to him by the defendant, the defendant at the request of L. H. Gill paid to the Bank the amount owing to it by H. H. Gill and the Bank handed over to the defendant the certificate of title and the duplicate bill of mortgage with a duly executed release endorsed thereon. The balance of the moneys agreed to be lent was paid to L. H. Gill by the defendant. To secure the repayment to the defendant of the moneys lent to him L. H. Gill, using the name of H. H. Gill, executed a bill of mortgage over the land comprised in the certificate of title in favour of the defendant and forged H. H. Gill's signature to it.
In May 1960 L. H. Gill repeated the operation - this time on the plaintiff. He represented himself to be H. H. Gill and to be the owner of and mortgagor to the defendant of H. H. Gill's land and sought a loan of £3,500 from the plaintiff. He made a "Personal Loan Application" in the name of H. H. Gill and forged the latter's signature to it. The plaintiff agreed to lend him £3,000 and to secure the repayment thereof he executed a bill of mortgage dated 20th May 1960 in favour of the plaintiff over H. H. Gill's land using the name of H. H. Gill and forging the latter's signature. By a letter of the same date, purporting to come from H. H. Gill and bearing a forged signature, he authorized Messrs. Leonard Power & Power, the plaintiff's solicitors,
to pay the following amounts on my behalf due to the advance of £3,000/-/-d. paid to me by Latec Finance (Qld) Pty. Limited.
The amount due under Mortgage to Porter and Murphy £1,576 15 0 Release of Mortgage Porter and Murphy 13 2 6 Insurance adjustments 2 5 4 £1,592 2 10
By letter of the same date addressed to the solicitors the defendant stated that the amount owing to him by "H. H. Gill" was £1,592 2s. 10d. and undertook, in consideration of the payment to him of that amount, to hand over to the solicitors the certificate of title to H. H. Gill's land and the bill of mortgage in his favour relating to that land. Messrs. Leonard Power & Power, who had been put in funds for that purpose by the plaintiff, thereupon paid the defendant the amount of £1,592 2s. 10d. "in accordance with the plaintiff's instructions and in compliance with the request and direction of the said L. H. Gill as contained in the said authority", the "said authority" being earlier described as "an authority executed by the said L. H. Gill by signature forged as the signature of the said H. H. Gill". The reference is, of course, to the letter of 20th May set out above. The amount so paid to the defendant was the sum "which the said L. H. Gill justly and truly owed the defendant at the date of payment". In due course the defendant handed over to the plaintiff H. H. Gill's certificate of title and the bill of mortgage which L. H. Gill, using the name of H. H. Gill, had executed in the defendant's favour, together with a release thereof. The balance of the £3,000 was dealt with by the solicitors in accordance with the letter of instructions of 20th May.
At all times the plaintiff and the defendant believed that L. H. Gill was H. H. Gill and believed that L. H. Gill was the registered proprietor of H. H. Gill's land and each of them was "mistaken as to the identity of the person who had signed the bills of mortgage and as to the identity of the person who was in fact indebted to the defendant. Each believed that that person's identity was H. H. Gill But for such mistaken beliefs the plaintiff would not have paid to the defendant the said sum of £1,592 2s 10d.". Each of them "believed that the defendant was entitled to receive and retain the same". The case states also that at all relevant times the solicitors "acted as the solicitors for the plaintiff in relation to the advance of moneys made by the plaintiff and were known by the defendant to be so acting and were also acting as between L. H. Gill and the defendant on behalf of the said L. H. Gill to the extent authorized by the said L. H. Gill in the letter of authority of 20th May".
In the Supreme Court the view was taken that the facts stated in the case showed that "the transaction consisted of a loan of £3,000 by the plaintiff to L. H. Gill; it was arranged that the money would be made available to L. H. Gill by the plaintiff depositing the amount with its solicitors, Leonard Power & Power". With that I agree. Lucas J., who delivered the judgment of the Court, went on to say: "That firm, in accordance with instructions given to it by the plaintiff, would disburse the amount first by paying out the mortgagee, the defendant, who would on receipt of payment deliver to them the released bill of mortgage and the Certificate of Title. To enable them to do this they would obtain an undertaking from the defendant and an authority from L. H. Gill. They of course thought that the authority was from H. H. Gill because he was the person with whom both the plaintiff and the defendant thought they were dealing. Then the solicitors would pay the balance of the loan to L. H. Gill on the execution by him of securities over the relevant land and chattels. Although it is not expressly stated, in my opinion it is necessarily to be inferred that the three parties concerned, the plaintiff, the defendant and L. H. Gill, knew beforehand that this was the way in which the transaction would be effected, and that this method of effecting the transaction was agreed beforehand between the plaintiff and the defendant. If the transaction is understood in this manner, it will be seen that it was only as a matter of form that it was L. H. Gill who authorized the payment to the defendant of his debt. The plaintiff was the party which had an interest in obtaining possession of the security documents and the Certificate of Title. The substance of the matter was that it was a transaction between the plaintiff and the defendant for the purpose of transferring to the plaintiff the securities held by the defendant; the payment was a payment in the course of that transaction; it was therefore a payment by the plaintiff, as is agreed between the parties."
This last statement that the payment was "a payment by the plaintiff, as is agreed between the parties", appears to refer to par. 15 of the statement of facts. But that paragraph states that "On or about 20th May 1960 the plaintiff pursuant to the said letter" - that is the letter of instructions signed by L. H. Gill in the name of H. H. Gill - "paid to the defendant the sum of £1,592 2s. 10d.". And it must be read in the light of the statements appearing elsewhere in the case that the payment was made "in accordance with the plaintiff's instructions and in compliance with the request and direction of L. H. Gill as contained" in that letter and that the solicitors "were also acting as between L. H. Gill and the defendant on behalf of the said L. H. Gill to the extent authorized by the said L. H. Gill in the letter".
With all respect to Lucas J., I cannot agree that it was only as a matter of form that it was L. H. Gill who authorized the payment to the defendant. L. H. Gill was the defendant's debtor and the loan by the plaintiff was made to him. No doubt it was part of the arrangement for the making of that loan that, out of the moneys advanced, the debt due by L. H. Gill to the defendant should be paid and that, to protect the plaintiff's interests, the payment of that debt should be made by the hand of the solicitors. But the payment was, as it seems to me, a payment made on behalf of the defendant's debtor, L. H. Gill, and in accordance with his instructions and was not a payment made by the plaintiff on its own behalf. In these circumstances the plaintiff is not entitled to recover from the defendant.
Porter
Latec Finance