By Professor Elise Bant
Hills Industries Case Page
What is the change of position defence and why is it important?
The change of position defence provides nuanced protection to good faith defendants who irreversibly change their position in reliance on receipt of an impugned benefit (such as a mistaken payment) from a plaintiff. Since its recognition a little over two decades ago by the High Court of Australia in David Securities Pty Ltd v Commonwealth Bank of Australia  HCA 48, the change of position defence has assumed a position of great importance within the Australian law of unjust enrichment. Its recognition has enabled courts to take a more principled approach to the operation of unjust factors such as mistake, obviating the need for fine and ultimately insupportable distinctions between different types of mistake that traditionally operated to restrict defendants’ restitutionary liability at the expense of legitimate claims by plaintiffs. Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd  HCA 14 provides a stark illustration of why a change of position defence may be important, as the respondents received mistaken payments from the appellant as a result of the involvement of a third party fraudster. In reliance on those payments, they changed their position in various important ways. Unless they were successful in their pleaded defence, they would be placed in a worse position than they occupied prior to their receipt. In finding in favour of the respondents, the High Court has considered the rationale of the defence, whether it applies to non-reliance based changes of position, whether changes of position must always be valued in terms of specific monetary sums and the interplay between change of position and other defences such estoppel and the agent’s defence of payment over.
How did change of position become relevant in this case?
AFSL (a financier) was induced by a fraudster (S) to make payments to a number of businesses, including Hills and Bosch, for the purchase of non-existent equipment. S advised Hills and Bosch that the payments were for the discharge of debts owed to them by his companies (the ‘company debts’). In reliance on their receipts, Hills and Bosch treated the company debts as discharged, continued to trade with the companies and gave up the opportunity to pursue remedies in enforcement proceedings against the companies or their directors. Both recipients also gave up the opportunity of taking other steps to better their position, such as by seeking security from third parties. Continue reading
By Professor Elise Bant
Verve Energy Case Page
Some may regard the recent High Court of Australian decision in Electricity Generation Corporation v Woodside Energy Limited  HCA 7 (Verve Energy) as a missed opportunity to clarify the doctrine of duress. The basic elements of duress are straightforward: the plaintiff must have been (1) subjected to illegitimate pressure which (2) caused the plaintiff to confer a benefit on the defendant (see Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40, 45–6 (McHugh JA)). However, the boundaries of the doctrine are highly controversial. Verve Energy seemed to provide the opportunity to examine some of these controversies, in particular the operation and boundaries of so-called ‘economic duress’ and whether ‘lawful act duress’ is anything other than a legal oxymoron.
Why did the High Court not consider duress?
As it was, Verve Energy was decided on contractual principles. Specifically, a majority of the High Court held that the respondent Woodside had not breached any contractual duties to Verve in the light of the Court’s interpretation of key contractual provisions. It was conceded by the parties that this rendered consideration of the duress case unnecessary (at ). This narrow approach to deciding the case, however, leaves the door open for the Court to consider the duress issues afresh, and on the basis of full and proper argument, in due course. In the meantime, the Court of Appeal decision insofar as it relates to duress remains a valuable addition to the body of authority on this important area. Furthermore, certain characterisations of duress made in argument before the High Court that, if accepted, would have substantially altered the nature of duress in Australia, and for the worse, have for the time being been shelved. This again leaves it open to the High Court on another occasion, and in the light of full argument on the points, to reinforce the core nature and operation of duress in Australia. Continue reading
By Associate Professor Elise Bant
Gillespie-Jones Case Page
The elusive nature of the Quistclose trust has spawned much comment, analysis and speculation, by judges and scholars in equal measure, since its genesis in Barclays Bank Ltd v Quistclose Investments Ltd  UKHL 4;  AC 567. A Quistclose trust is a trust which may arise when a loan is made for a specific purpose (and is often asserted by a lender when the purpose of the loan fails) but its precise nature is highly debatable. In that context, those of us who had hoped for a definitive clarification, or even some in-depth discussion, of the doctrine in the much-awaited High Court decision of Legal Services Board v Gillespie-Jones  HCA 35 may be forgiven for feeling slightly disappointed. However, the Court’s circumvention of that debate (explicable in the light of its reasoning, discussed below) is offset by some very interesting observations about the interaction of judge-made law and statute, and in particular about the need for ‘coherence’ across the two sources of law, that merit attention in their own right.
How did the case arise? Lawyers stealing from other lawyers
A client facing criminal proceedings paid monies to his solicitor on to cover legal costs associated with his defence. A barrister was retained and performed a variety of services for the solicitor on the client’s behalf, but was not yet paid for those services. Pursuant to s 3.3.2 of the Legal Profession Act 2004 (Vic) (LPA) the monies constituted ‘trust money’ and were to be held for the benefit of the client. Under s 3.3.14, those monies could only be dealt with by the solicitor pursuant to and in accordance with the client’s direction. However, the solicitor stole most of the trust money, leaving the respondent barrister seriously out of pocket. The barrister made a claim for compensation for ‘pecuniary loss’ caused by the solicitor’s default under the Legal Practitioners Fidelity Fund, a fund maintained by the Legal Services Board (the appellant) under the LPA. A key question was whether the barrister had to show a proprietary interest to successful establish his claim, and if he did, whether he could make out a proprietary interest in the funds held by the solicitor. The appellant at first instance rejected his claim. The respondent successfully appealed to the County Court of Victoria, and won again on appeal to the Court of Appeal of the Supreme Court of Victoria. This run of success ended, however, before the High Court, which unanimously allowed the appellant Board’s appeal. Continue reading