Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd; Australian Financial Services and Leasing Pty Ltd v Bosch Security Systems Pty Ltd [2012] NSWCA 380 Hearing dates: 10 and 11 May 2012 Decision date: 04 December 2012 Before: Bathurst CJ at [1] Allsop P at [4] Meagher JA at [173] Decision: 1. As to the appeal of Australian Financial Services and Leasing Pty Ltd (AFSL) against Bosch Security Systems Pty Ltd (Bosch), appeal dismissed with costs. 2. As to the appeal of Hills Industries Ltd (Hills) against AFSL: (a) appeal allowed; (b) set aside orders (1)(a) and (b) made by the Supreme Court on 23 June 2011 and in lieu thereof order judgment for the first defendant against the plaintiff, the plaintiff to pay the first defendant's costs. (c) AFSL pay Hills' costs of the appeal. (d) Cross-appeal of AFSL dismissed. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: RESTITUTION - recovery of money paid under mistake - general principles - defences - change of position - discharge of debt - fraudster concocted false invoices for purchase of equipment - financier paid seller of non-existent goods and entered leaseback arrangement with fraudster - seller applied funds received in discharge of pre-existing debts owed by fraudster's companies - unjust to require restitution Cases Cited: Aiken v Short (1856) 1 H & N 210; 156 ER 1180 Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Co Ltd [2008] WASCA 119; 66 ACSR 594 Atlantic Coast Line Railroad Co v Florida 295 US 301 (1935) Australia & New Zealand Banking Group Ltd v Westpac Banking Corporation [1988] HCA 17; 164 CLR 662 Baltic Shipping Company v Dillon [1993] HCA 4; 176 CLR 344 Banque Worms v BankAmerica International 77 NY 2d 362; 570 NE 2d 189 (1991) Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] QB 677 Barnes v Addy (1874) LR 9 Ch App 244 Baylis v Bishop of London [1913] 1 Ch 127 BMP Global Distribution Inc v Bank of Nova Scotia [2009] SCC 15; [2009] 1 SCR 504 Buller v Harrison (1777) 2 Cowp 565; 98 ER 1243 Clarke v Abou-Samra [2010] SASC 205 Cocks v Masterman (1829) 9 B & C 902; 109 ER 335 Commerzbank AG v Price-Jones [2003] EWCA Civ 1663 Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd [1994] HCA 61; 182 CLR 51 Continental Caoutchouc and Gutta Percha Co v Kleinwort, Sons & Co (1904) 9 Com Cas 240 Cook v Cook [1986] HCA 73; 162 CLR 376 Cox v Prentice (1815) 3 M & S 344; 105 ER 641 David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; 175 CLR 353 Delaforce v Simpson-Cook [2010] NSWCA 84; 78 NSWLR 483 Dextra Bank & Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193 (PC) Durrant v Ecclesiastical Commissioners for England and Wales (1880) 6 QBD 234 Equuscorp Pty Ltd v Haxton [2012] HCA 7; 286 ALR 12; 86 ALJR 296 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89 Gaffner v American Finance Co 120 Wash 76; 206 P 916 (1922) Goss v Chilcott [1996] AC 788 (PC) Gowers v Lloyds and National Provincial Foreign Bank Ltd [1938] 1 All ER 766 Grand Lodge of the Ancient Order of United Workmen of the State of Minnesota v Towne 136 Minn 72; 161 NW 403 (1917) Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; 59 CLR 641 Haugesund Kommune v Depfa ACS Bank [2010] EWCA Civ 579 Holland v Russell (1861) 1 B & S 424; 121 ER 773 Imperial Bank of Canada v Bank of Hamilton [1903] AC 49 K & S Corp Ltd v Sportingbet Australia Pty Ltd [2003] SASC 96; 86 SASR 312 Kerrison v Glyn, Mills, Currie & Co (1912) 81 LJKB 465 Kingstreet Investments Ltd v New Brunswick (Dept of Finance) [2007] 1 SCR 3 Kleinwort Benson Ltd v Birmingham CC [1997] QB 380 Kleinwort Benson Ltd v Lincoln CC [1999] 2 AC 349 Kleinwort, Sons & Co v Dunlop Rubber Co (1907) 97 LT 263 Lipkin Gorman (a firm) v Karpnale [1991] 2 AC 548 Lloyds Bank Plc v Independent Insurance Co Ltd [2000] QB 110 London and River Plate Bank Ltd v Bank of Liverpool Ltd [1896] 1 QB 7 Lumbers v W Cook Builders Pty Ltd (In Liq) [2008] HCA 27; 232 CLR 635 Merchants Insurance Co v Abbott 131 Mass 397 (1881) Moore v National Mutual Life Association [2011] NSWSC 416 Morison v London County and Westminster Bank Ltd [1914] 3 KB 356 National Commercial Banking Corporation of Australia Ltd v Batty [1986] HCA 21; 160 CLR 251 National Shawmut Bank of Boston v Fidelity Mutual Life Insurance Co 318 Mass 142; 61 NE 2d 18 (1945) Newall v Tomlinson (1871) LR 6 CP 405 Niru Battery Manufacturing Co v Milestone Trading Ltd [2004] QB 985 Palmer v Blue Circle Southern Cement Ltd [1999] NSWSC 697; 48 NSWLR 318 Pan Ocean Shipping Co Ltd v Creditcorp Ltd [1994] 1 WLR 161 Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; 162 CLR 221 Perpetual Trustees Australia Ltd v Heperu Pty Ltd [2009] NSWCA 84; 76 NSWLR 195 Port of Brisbane Corporation v ANZ Securities Ltd (No 2) [2002] QCA 158; [2003] 2 Qd R 661 Porter v Latec Finance (Qld) Pty Ltd [1964] HCA 49; 111 CLR 177 Prasad v Sangha [2012] NSWCA 92 R E Jones Ltd v Waring and Gillow Ltd [1926] AC 670 R E Jones Ltd v Waring and Gillow Ltd [1925] 2 KB 612 Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; 208 CLR 516 Scottish Equitable plc v Derby [2001] 3 All ER 818 Smith v Knapp 297 Mass 466; 9 NE 2d 399 (1937) South Australian Cold Stores Ltd v Electricity Trust of South Australia [1957] HCA 69; 98 CLR 65 Spaulding v Kendrick 172 Mass 71; 51 NE 453 (1898) State Bank of NSW Ltd v Swiss Bank Corporation (1995) 39 NSWLR 350 Steele v Tardiani [1946] HCA 21; 72 CLR 386 Stephens v Board of Education of City of Brooklyn 79 NY 183 (1879) Strauss v Hensey 9 App DC 541 (1896) Sydney City Council v Burns Philp Trustee Company (Supreme Court of NSW, Rogers CJ Comm D, 13 November 1992, unreported) Takahashi v Shu [2011] HKCFA 15 Taylor v Blakelock (1886) LR 32 Ch D 560 Thorndike v Hunt (1859) 3 De G & J 563; 44 ER 1386 Toronto Dominion Bank v Bank of Montreal (1995) 22 OR (3d) 362 Union Central Life Insurance Co v Glasscock 270 Ky 750; 110 SW 2d 681 (1937) Walker v Conant 69 Mich 321; 37 NW 292 (1888) Watson v Russell (1862) 3 B & S 34; 122 ER 14; (1864) 5 B & S 968; 122 ER 1090 Weiner v Roof 19 Cal 2d 748 (1942) Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] 4 All ER 890 Texts Cited: Birks, P, Unjust Enrichment, 2nd ed (Oxford UP, 2005) Burrows, A, The Law of Restitution, 2nd ed (Butterworths, 2002) Edelman and Bant, Unjust Enrichment in Australia (Oxford UP, 2006) Fratcher, W F, Scott on Trusts, 4th ed (Little Brown, 1987) Goff and Jones, The Law of Restitution, 2nd ed (Sweet and Maxwell, 1978) Gummow, W M C, "Moses and Macferlan: 250 years on" (2010) 84 Australian Law Journal 756 Keener, W A, "Recovery of Money Paid Under Mistake of Fact" (1887) 1 Harvard Law Review 211 Kull, A, "Defenses to Restitution: The Bona Fide Creditor" (2001) 81 Boston University Law Review 919 Maitland, F W, Equity (Cambridge UP, 1936) Mason, Carter and Tolhurst, Restitution Law in Australia, 2nd ed (LexisNexis, 2008) Meagher, Heydon and Leeming, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies, 4th ed (Butterworths LexisNexis, 2002) Megarry and Wade, The Law of Real Property, 5th ed (Sweet and Maxwell, 1984) Mitchell, Mitchell and Watterson, Goff and Jones: Law of Unjust Enrichment, 8th ed (Sweet and Maxwell, 2011) Palmer, G E, The Law of Restitution (Little Brown, 1978) Symons, S W, Pomeroy's Equity Jurisprudence, 5th ed (Bancroft-Whitney, 1941) Young, Croft and Smith, On Equity (Thomson Reuters, 2009) Restatement of the Law: Restitution, Quasi-Contracts and Constructive Trusts (American Law Institute, 1937) Restatement of the Law Second: Trusts (American Law Institute, 1959) Restatement of the Law Third: Restitution and Unjust Enrichment (American Law Institute, 2011) Category: Principal judgment Parties: Hills Industries Ltd (First Appellant/Cross-Respondent) Australian Financial Services and Leasing Pty Ltd (First Respondent/Cross-Appellant/Second Appellant) Bosch Security Systems Pty Ltd (Second Respondent) Representation: T M Thawley (First Appellant/Cross-Respondent - Hills Industries Ltd) A R Moses SC and M P Cleary (First Respondent/Cross-Appellant/Second Appellant - Australian Financial Services and Leasing Pty Ltd) L Gor (Second Respondent - Bosch Security Systems Pty Ltd) Cosoff Cudmore Knox (First Appellant/Cross-Respondent - Hills Industries Ltd) Berry Buddle Wilkins (First Respondent/Cross-Appellant/Second Appellant - Australian Financial Services and Leasing Pty Ltd) HWL Ebsworth (Second Respondent - Bosch Security Systems Pty Ltd) File Number(s): 2010/133256 Decision under appeal Jurisdiction: 9111 Citation: [2011] NSWSC 267 [2011] NSWSC 595 Before: Einstein J File Number(s): 2010/133256 HEADNOTE [This headnote is not to be read as part of the judgment] The parties to the litigation were all victims of a fraud. The perpetrator, a Mr Skarzynski, concocted invoices for the purchase of equipment from Hills Industries Ltd ("Hills") and Bosch Security Systems Pty Ltd ("Bosch"). These were then presented to a financier, Australian Financial Services and Leasing Pty Ltd ("AFSL"), which paid for the purchases and entered leaseback agreements with Mr Skarzynski's companies in respect of the non-existent goods. AFSL believed it was purchasing equipment that it would own. The purchase moneys were paid to Hills and Bosch by electronic funds transfer and credited to accounts for companies related to Mr Skarzynski, which accounts stood in considerable arrears. Mr Skarzynski had advised Hills and Bosch, his trade creditors, that the payments were being made at his direction in order to repay debts owed by his companies. The payments were received by Hills and Bosch in good faith and in the ordinary course of business as moneys owed to them by Mr Skarzynski's companies. Hills and Bosch had been pursuing the repayment of those debts and applied the funds received in discharge of them. Having received the moneys, Hills refrained from taking proceedings that it would otherwise have taken against Mr Skarzynski and his companies. It also continued to trade with those companies, albeit at a lower credit limit. Bosch, when it received funds, consented to the setting aside of default judgments that it had already obtained against Mr Skarzynski's companies and abandoned other proceedings that were then on foot. It refunded certain overpayments to Mr Skarzynski's companies and continued to trade with them on a COD basis. Upon discovery of the fraud some six months later, AFSL sought recovery of the moneys as being paid under a mistake of fact, namely that goods existed to which it was obtaining title by the payments. Hills and Bosch resisted making restitution on grounds including the giving of good consideration, discharge of the debtor's debts and change of position. At trial AFSL succeeded against Hills and failed against Bosch. In relation to Hills, the trial judge found that despite the debt owing to it, Hills was enriched by the payment and had not made out any defence of change of position or good consideration. Any change of position was held to be speculative and not actual. His Honour ordered repayment of the moneys, less the value of GST input tax credits that had accrued to AFSL by virtue of its "purchase" of the fictitious equipment and less the sums repaid by Mr Skarzynski's companies pursuant to the leaseback arrangement. As against Bosch, his Honour found a change of position to be made out by virtue of the real detriment it incurred when it extinguished the valid legal claim represented by its default judgments against Skarzynski companies. Hills appealed against the order of restitution and AFSL cross-appealed against the reduction in the sum ordered. AFSL also appealed against the refusal to order restitution against Bosch. It having been established that the moneys were paid under a mistake of fact, the question on appeal was whether the recipients of the funds, Hills and Bosch, had any defence capable of denying AFSL its prima facie right to restitution. Held: per Allsop P (Bathurst CJ and Meagher JA agreeing): (1) A change of position defence was made out because the recipients of the payments, Hills and Bosch, gave up, on the faith of the receipt, both the debts owed by Skarzynski companies and a real and potentially valuable opportunity to enforce or secure payment from those companies. These circumstances were such as to make it unjust to order restitution. per Allsop P: (2) It would also be unjust to require restitution in circumstances where the recipients of the payments arranged honestly and in good faith to discharge the debts of the Skarzynski companies. This arrangement gave rise to a defence of bona fide discharge. (3) It would also be unjust to require restitution based on a change of position from the payment away of the funds and receipt back by way of discharge of debts. Per Meagher JA: (1) A defence of discharge for value or of payment for good consideration is not available here because the payer, AFSL, did not pay to Hills or Bosch as agent for Mr Skarzynski's companies in order to discharge debts owing by them to Hills or Bosch. Nor did it pay to Hills or Bosch on the basis that they received as agents of Mr Skarzynski's companies able to apply the moneys as directed by their principals. (2) However, the payees' application of the funds to discharge the debts of Mr Skarzynski's companies was equivalent to paying the funds away for no consideration on the faith of their receipt and receiving them back in consideration for the discharge of debts. Because Hills and Bosch did so in good faith they are to be treated as having given value in the form of the discharges equivalent to the value they received so that overall they suffered detriment in paying funds away on the faith of their receipt. Judgment 1BATHURST CJ: I agree with the orders proposed by Allsop P for the reasons given in pars [148]-[166] of his Honour's judgment. I also agree with the additional observation made by Meagher JA in par [216] of his judgment. 2Each of Allsop P and Meagher JA has suggested alternative ways in which the same conclusion can be reached. It is unnecessary for me to consider those alternatives having regard to the conclusion I have reached based on what Allsop P has described as "Change of position based on a wider view of the facts". 3I also agree with the reasons of Allsop P in pars [167]-[171] of his judgment under the headings "Other issues" and "The Hills Appeal". 4ALLSOP P: This appeal raises important questions as to the scope of "defences" to restitutionary claims, in particular whether the defence of consideration by discharge of another's debt is restricted to circumstances where the payer intends to discharge the debt of another and the nature of the prejudice and its extent sufficient for the defence of change of position to be made out. After completion of an earlier draft of these reasons, I have had the advantage of reading the reasons of Meagher JA. I do not disagree in any substantial way with his analysis. This reflects, to a degree, the taxonomical flexibility that underpins the subject in its legal development. I have been, if I may respectfully say so, significantly assisted by his Honour's analysis in the reconciliation and expression of parts of my reasons. I have, however, resisted the temptation to re-express other parts of these reasons to incorporate, any more than is necessary, matters dealt with by him. Background and introduction 5Australian Financial Services and Leasing Pty Ltd ("AFSL") carried on business as a financier of commercial and industrial equipment. In the last quarter of 2009, Mr Richard Skarzynski, in an apparent and ultimately futile attempt to prop up the finances of a business carried on through related companies, committed frauds upon AFSL. The frauds involved Mr Skarzynski fabricating false invoices for non-existent goods apparently from a number of suppliers of goods for sale to AFSL, such goods thereafter to be the subject of lease agreements between AFSL and a company nominated by Mr Skarzynski. The suppliers did not know of the invoices made out in their names. AFSL accepted and relied on all the invoices, believing that the goods existed and that it would become their owner. AFSL paid suppliers the apparent cost of the goods nominated in the relevant fake invoices, plus GST. The suppliers each received the amounts in good faith and in the ordinary course of business as payments owed to Mr Skarzynski or his companies by third parties. At Mr Skarzynski's direction the suppliers credited his companies' accounts, thereby relieving immediate and acute financial pressure that those companies were apparently under at the time. 6Lease payments were made for a period of about five months. In late March or early April 2010 the fraud was discovered. AFSL demanded the payments back from the suppliers. For the purposes of this appeal, focus need only be made on one basis which was maintained: restitutionary recovery based on the payments having been made under relevant mistakes, being that the goods existed and that AFSL would by the payments obtain title to them. 7There was no issue in this Court as to the fact that the payments were made by AFSL under these relevant mistakes of fact. The issues for disposition on appeal were the respective entitlements of two of the suppliers, Hills Industries Limited ("Hills") and Bosch Security Systems Pty Ltd ("Bosch"), to refuse repayment in whole or in part by reference to relevant principles attending the question of restitutionary recovery, in particular the giving of good consideration, discharge, the existence of an inconsistent contractual framework, affirmation of inconsistent rights, recoupment and change of position. 8The proceedings were decided in the Commercial List. The primary judge concluded that AFSL was entitled to recover against Hills in the amount of the mistaken payment ($308,000), but subject to a reduction in recovery by reference to the amount AFSL received by way of lease payments under the contracts for the non-existent goods ($55,314.66) and by way of GST refunds ($28,000). The primary judge rejected the arguments of Hills that it was not enriched and that it had a complete defence based on good consideration, discharge and change of position. Hills appeals against the finding of its liability and the rejection of its defences, and also seeks to maintain a partial defence based on change of position referable to the continued trading on credit after the payments. AFSL cross-appeals against the reduction in recovery by reference to the payments under the lease and GST refunds. The primary judge also rejected AFSL's claim for recovery based on the first limb of Barnes v Addy (1874) LR 9 Ch App 244. A cross-appeal on this issue was abandoned by AFSL the day before the hearing of the appeal. 9The primary judge concluded that Bosch was entitled to rely on a complete defence based on change of position. AFSL appeals against that finding. Bosch seeks to support the primary judge's conclusions by reference to various other principles, including but not limited to the giving of good consideration, and, if necessary, to maintain a partial defence based on change of position referable to payments of $52,000 made by Bosch on the faith of the receipt of the payments. 10The primary judge concluded that AFSL was entitled to recover against the third supplier, Jetobravo Pty Limited ("Jetobravo"), in the amount of the mistaken payment ($192,445) less the amount received by AFSL by way of rental payments ($37,510). Neither Jetobravo nor AFSL appealed from these orders. Facts 11Before considering the principles underlying the disposition of the appeal, it is necessary to examine the factual circumstances with some care. The operation of the principles of restitution giving rise to the right to recovery and to defences will always depend upon the relevant circumstances. The following comes both from the primary judge's reasons and the evidence. Whilst there is little dispute about the underlying facts, it is necessary to recognise that the claims were heard together in one proceeding. The evidence about the conduct of, and the position concerning, each defendant is not only relevant for that party's liability, but also forms part of the whole factual matrix in which each defendant's position is to be assessed. This is particularly important in respect of the assessment of the change of position defence. It is necessary to examine the evidence in relation to other instances of the same fraud by Mr Skarzynski during the same period that did not involve Hills, Bosch or Jetobravo. It is necessary to set out the facts in some detail in order to appreciate the nature and complexity of the task of unravelling for the purposes of any change of position defence the hypothetical state of affairs from late August 2009 when the relevant frauds began up to March and April 2010 when they were uncovered. 12Mr Skarzynski controlled various companies, including Total Concept Projects (Australia) Pty Ltd ("TCP"), Total Concept Productions (Australia) Pty Ltd ("TCP2"), Total Concept Projects (Victoria) Pty Ltd ( "TCP (Vic)"), Total Concept Projects (Qld) Pty Ltd ("TCP (Qld)") and 3D World Entertainment Services Pty Ltd ("3D World"). Mr Anthony Musico was also a director and shareholder of the relevant companies. There was no evidence, and no claim was made, that Mr Musico (or Mrs Skarzynski, whose participation becomes relevant) had any involvement in, or knowledge of (prior to its discovery), the fraud of Mr Skarzynski. 13Bosch is a supplier of electronic audio and visual equipment. From May 2008, Bosch supplied goods to TCP, TCP (Vic) and TCP (Qld) under a rebate arrangement. The rebate depended upon volume of purchases and adherence to trading terms. By May 2009, the TCP companies were in arrears in the sum of just under $193,000. From this time, supply was made on a COD basis only. Thereafter, Bosch commenced recovery proceedings against the TCP companies and Messrs Skarzynski and Musico. 14Default judgments were obtained by Bosch on 8 July 2009 in the District Court of New South Wales in the sum of $81,712.69 against TCP (Vic), Mr Musico and Mr Skarzynski; on 5 August 2009 in the Local Court at Campbelltown in the sum of $37,853.04 against TCP (Qld), Mr Musico and Mr Skarzynski; and on 5 August 2009 in the Local Court at Campbelltown in the sum of $55,335.96 against TCP, Mr Musico and Mr Skarzynski. On 19 August 2009, notices of motion for the issue of writs for the levy of property were filed in the District and Local Courts at Campbelltown. These writs were placed in the hands of the Sheriff to be served. On the same date, Examination Notices to Mr Musico and Mr Skarzynski were prepared. The evidence did not disclose with any precision what was done with the Examination Notices, although the primary judge found (at [120] of his reasons) that they were "issued to Messrs Skarzynski and Musico" on 19 August 2009. On 28 August 2009, Garnishee Orders were issued by the District and Local Courts at Campbelltown to the Commonwealth Bank of Australia (the "CBA") and the National Australia Bank (the "NAB") in respect of the default judgment debts. The debt of $83,318.81 of TCP (Vic) and the two directors was directed to the CBA as garnishee; and the debts of $38,356.12 and $56,014.13 in respect of TCP (Qld), TCP and the two directors were directed to the NAB as garnishee. (The amounts had increased with interest.) 15On 2 September 2009, a solicitor acting for TCP asked for a stay of the garnishee orders for 48 hours on the basis that $198,000 would be paid within 48 hours. 16The evidence disclosed that TCP had granted a fixed and floating charge to the CBA on 14 December 2006 (which had replaced earlier fixed and floating charges to the NAB and St George Bank Limited); that TCP (Vic) had granted fixed and floating charges to the NAB on 29 August 2000 and to the CBA on 14 December 2006; and that TCP (Qld) had granted a fixed and floating charge to the CBA on 14 December 2006. 17On or about 28 August 2009, Mr Musico and Mr Skarzynski complained to Ms Blake, the National Credit Manager for Bosch, that the garnishee notices had frozen TCP's payroll. From this it can be inferred that the CBA and the NAB accounts were the working accounts for the relevant businesses. 18Meanwhile, Hills had been experiencing similar difficulties in payment. TCP had done business with Hills since early 1999. In May 2008, the relationship was such as to enable TCP to have its credit with Hills raised to $180,000. By 14 July 2009, TCP's account was in arrears and Hills' credit manager, Ms McLeod, directed that TCP no longer be supplied. There were discussions in July and August 2009 between representatives of Hills and each of Mr Musico and Mr Skarzynski in which promises of payment were made and in which Mr Musico and Mr Skarzynski predicted improved trading by TCP. During this period, until 21 August, some consideration was given by Hills to legal action, but the focus of the consideration by Hills and of the discussions with officers of TCP was ascertaining precise balances of indebtedness and putting in place a plan for repayment. 19On 21 August 2009, Mr Skarzynski assured Mr Muir, Hills' General Manager - Finance, that TCP would arrange payment of $308,000 on 25 August. The sum of $313,000 was owing by TCP. He indicated that he would advise the following week when other amounts owed by TCP (Vic) and TCP (Qld) would be paid. Mr Muir instructed Ms McLeod that if the $308,000 was not received, she should cause a letter of demand to be sent and recovery proceedings should be begun. 20On 24 August 2009, Mr Skarzynski promised Mr Muir that the $308,000 would be paid the following day. 21The primary judge's reasons concerning the third creditor of TCP, Jetobravo, from [179] onwards reveal that prior to 8 October 2009, TCP owed Jetobravo in the order of $450,000. Mr Skarzynski had promised the money to Mr Christowski of Jetobravo (who was a personal friend of Mr Skarzynski) some weeks before. One can infer that TCP owed Jetobravo these moneys in late August or early September. There was some evidence that some or all of this money had been used to pay out earlier lease agreements. There is no evidence as to whether such earlier agreements, or the transactions underlying them, were false or not. 22TCP companies owed these two trade creditors (Hills and Bosch) and this unsecured lender (Jetobravo) sums totalling almost $1m in the period late August to early October before Mr Skarzynski perpetrated the frauds. The funds that were released by AFSL were paid to Hills on 25 August 2009 ($308,000), to Bosch on 3 September 2009 ($198,000) and to Jetobravo on 9 October 2009 ($192,445). These funds were all paid by AFSL to purchase goods on the faith of false invoices concocted by Mr Skarzynski. It is unnecessary to describe the precise details of his dealings with Mr Sofi of AFSL. The documentation raised by AFSL in each case identified an invoice or order number and a purchase by AFSL. In no case were the reference numbers on documentation raised by AFSL picked up by the recipients - Hills, Bosch or Jetobravo - which may have alerted them to some documentary inconsistency. AFSL did not seek to correspond with the vendors of the goods before releasing these sums of money, or to have the goods inspected. In respect of any possible departure from perspicacious business practice (by the purchaser, AFSL or by the recipients of the funds, Hills, Bosch and Jetobravo) that may have led to the detection of the fraud, the primary judge made findings that the parties had not acted inappropriately (at [33] as to AFSL), or were not seriously negligent or reckless and that their conduct was not material (at [41] and [52] as to Hills) or that any break down in processes was understandable in the light of commercial reality (at [114] as to Bosch). No challenge was made to these conclusions. 23To the extent relevant, the Hills "invoice" concocted by Mr Skarzynski had an order number and an account number included on its face. None of these numbers designated any account for TCP companies. The funds were remitted to Hills by electronic funds transfer and a remittance advice was sent to Hills with an invoice number, a purchase number and a remittance number. The Bosch "invoice" had invoice, order and account numbers. Once again, the transfer was by electronic funds transfer followed by a remittance advice which included, as well as the remittance, invoice and purchase numbers and the account number. The account number was in fact the account number of TCP (Qld). None of AFSL's documentation, however, objectively manifested a payment to discharge a debtor of Hills or Bosch. The remittance advices were brief and uninformative other than carrying numbers and references as described above. 24On 25 August 2009, AFSL entered a lease agreement with TCP for the goods listed on the concocted Hills invoice dated 20 August 2009 for 48 months at $9,219.10 per month, including GST, in advance. 25On 3 September 2009, AFSL entered another lease agreement with TCP for the goods listed on a concocted Bosch invoice dated 28 August 2009 for 48 months at $5,929.00 per month, including GST, in advance. 26On 8 October 2009, AFSL entered another lease agreement with TCP for goods listed on a concocted Ironmark Engineering invoice dated 14 September for 36 months at $7,502.00 per month, including GST, in advance. 27Before examining further extractions of funds from AFSL by Mr Skarzynski later in the year that did not concern Hills or Bosch (or Jetobravo), it is necessary to understand what Hills and Bosch thereafter did and did not do. Such conduct, or lack of conduct, is central to their change of position defences which in Hills' case was rejected by the primary judge (against which rejection Hills appeals) and which in Bosch's case was accepted by the primary judge (against which AFSL appeals). 28The $308,000 received by Hills was taken off TCP's New South Wales account. The debt was treated in the accounts as discharged. Mr Skarzynski requested Mr Muir to reopen the trading account. Mr Muir, in consultation with Ms McLeod and Mr Craig, was prepared to reopen the trading account with a lower credit limit ($350,000 reduced to $200,000) for all accounts in Australia, on the basis of the receipt of $308,000, but subject to the account being stopped if a promised further $30,000 was not paid promptly. Mr Muir's evidence makes clear that he relied on the payment of $308,000 having been received to allow further credit (up to the new limit of $200,000). The balance of account of TCP with Hills when the fraud was discovered in 2010 from this renewed trading was $21,739.03. 29The primary judge found at [74] of his reasons that it was "not altogether clear that recovery actions would have immediately commenced in August 2009 if payment of the $308,000 had not been made." (His Honour made other findings at [74] as to likely conduct of Mr Skarzynski to which it will be necessary to return.) With respect to the primary judge, the evidence of Mr Muir, which was not the subject of challenge, makes it tolerably clear that had the $308,000 not been received, Hills would have requested its legal advisers "to demand payment [and] to commence legal proceedings". Hills challenges the finding in [74] as to likelihood of challenge, and justifiably so. The finding should have been made that had the payment not been received when it was, Hills would have requested its legal advisers to demand payment of the balance of the stopped account and would have begun legal proceedings in a reasonably short time. These legal actions would have been against any debtor company and the guarantors, Mr Skarzynski and Mr Musico. Mr Muir also said in his affidavit that he would have instructed Ms McLeod to instruct the lawyers to seek security or alternate payment arrangements, inferentially if such possibilities were available. This evidence was not challenged and should be accepted. 30On 1 September 2009, Bosch received a payment of $20,000 from Coles Group Limited ("Coles") at the direction of TCP, which was allocated to TCP (Qld) at the request of TCP. There was nothing suggested to be irregular about this payment or this direction. 31On 3 September 2009, Bosch received $198,000 by electronic transfer from AFSL. On the following day, Ms Blake, Bosch's National Credit Manager, printed out a transaction report from "CitiDirect Online Banking" showing the receipt of $198,000 from AFSL. The document referred to a Bosch account numbered C07100 which was the TCP (Qld) account. Ms Blake then allocated the payment to the three accounts in debit in respect of which the default judgments and garnishee orders had been taken out and issued: TCP, TCP (Qld) and TCP (Vic), totalling $177,689.06. She made a credit balance of $20,310.94 to the TCP account. On that day, the remittance advice arrived from AFSL. Ms Blake said in her evidence that she did "not know if [she] looked at the remittance advice because [she] knew that Bosch was expecting funds on behalf of TCP to clear the TCP debt in full ...". Attention to the remittance advice would have revealed that it was an invoice for a purchase of something. The primary judge found (at [126] of his reasons) that Bosch became aware of receipt before the remittance advice arrived (which was clearly correct). It is not so clear that the allocation was done before then, but it matters not. Notwithstanding the comments in this paragraph, the appeal was conducted without challenge to the primary judge's findings that neither AFSL nor Hills nor Bosch should be criticised for their business procedures and practices. 32On 4 September 2009, TCP asked for a refund of the overpayment that had been made. 33On 15 September 2009, after requests by TCP, consent orders were signed by Bosch and filed with the District and Local Courts setting aside the default judgments and discontinuing proceedings against TCP, TCP (Vic), TCP (Qld), Mr Skarzynski and Mr Musico. 34On or about 18 September Ms Blake calculated the amount apparently owing by Bosch to the TCP companies, on the implicit assumption of the discharge of all debts previously owed by the TCP companies. She made a calculation taking into account the AFSL payment, the payment from Coles, the total debt in the garnishee orders, the net balance of COD orders, a restocking fee and a sales rebate. Taking all these matters into account, on 18 September 2009, Bosch transferred $21,000 to TCP's bank account and on 22 September 2009 transferred $31,326.35 to TCP's bank account. Ms Blake gave evidence in her affidavit that each of these transfers was "on the faith of the receipt of $198,000". That evidence was accepted by the primary judge, and correctly so. Such payments by way of refund obviously would not have been made had Bosch not believed that it had received $198,000 and that it was entitled to keep it. 35From September 2009 to March 2010, Bosch supplied TCP accounts only on COD for new orders. 36From 25 August 2009 and 3 September 2009, TCP began to make payments to AFSL, under the contracts of lease supporting the two payments of $308,000 and $198,000 to Hills and Bosch. Payments of $9,219.10 were made on 25 August 2009, 25 September 2009, 25 October 2009, 4 December 2009, 28 January 2010 and 10 February 2010 (totalling $55,314.60); and payments of $5,929.00 were made on 3 September 2009, 3 October 2009, 3 November 2009, 3 December 2009, 3 January 2010 and 23 February 2010 (totalling $35,574.00). 37On 9 October 2009, 9 November 2009, 30 December 2009, 28 January 2010 and 23 February 2010 TCP made payments of $7,502.00 (totalling $37,510) to AFSL under the contract of lease supporting the payment of $192,445 to Jetobravo. 38AFSL's payments caused by the fraud of Mr Skarzynski were not limited to these transactions. On or about 26 October 2009, Mr Skarzynski proposed another financing of goods. On that day he provided another false invoice from Ironmark Engineering. Upon Mr Sofi asking Mr Skarzynski why Ironmark's bank account details had changed (AFSL previously having been given those of Jetobravo) Mr Skarzynski told Mr Sofi that it was another account of Ironmark Engineering. That was a lie. It was the account of another company controlled by Mr Skarzynski, R & G Skarzynski Investments Pty Ltd ("R & G"). AFSL agreed to fund this purchase with a secured guarantee. On or about 3 November 2009, AFSL made an electronic transfer of $73,755 to the account that was, unknown to AFSL, in the name of R & G. The payment was for purported goods which also did not exist. A rental agreement was entered between AFSL and TCP2. Payments were made on 3 November 2009, 3 December 2009, 28 January 2010 and 23 February 2010 of $3,054.70 (totalling $12,218.80) by TCP to AFSL in respect of this fourth lease agreement. 39On 30 October 2009, secured guarantees for the four agreements (referable to the Hills, Bosch, Jetobravo and R & G lease agreements) had been sent to Mr Skarzynski, Mr Musico and 3D World guaranteeing the obligations of the TCP group under all existing rental agreements. An executed copy of the secured guarantee and indemnity was received by AFSL shortly thereafter on 3 November 2009. 40During November 2009, there were further discussions between Mr Sofi and Mr Skarzynski concerning further lease arrangements involving the transfer of large sums of money in respect of goods. One aspect of those discussions was the possibility, raised by Mr Skarzynski, of the first two lease agreements (in relation to the Hills and Bosch transactions) being paid out in 2010. On the basis of assurances by Mr Skarzynski as to this, AFSL entered another financing arrangement. This time it transferred $160,600 on or about 1 December 2009 to bank account details noted at the bottom of a tax invoice provided by Mr Skarzynski, again concocted as being from Ironmark Engineering for the purpose of purchase of items listed in that invoice. In fact, the bank account to which this further sum was paid was once again that of R & G. On 1 December 2009, 28 January 2010 and 3 February 2010 payments of $6,651.44 (totalling $19,854.32) were made by TCP under a lease agreement referable to this payment. The lease agreement was entered into by TCP2. 41In early December 2009, Mr Skarzynski arranged yet another lease. There was a proposal discussed between Mr Sofi and Mr Skarzynski for the possible supply of plasma display panels at the Australian Open golfing tournament. Thereafter, Mr Sofi, relying on representations as to the payout of the first two rental agreements in the future, decided to approve an agreement whereby TCP2 would enter a three month agreement with three payments of $5,500 and a final payment of $117,920. A secured guarantee and indemnity, including from 3D World to secure arrangements to date, was executed. This rental agreement, thus structured, was to support payment made by AFSL on 15 December 2009 of $117,920 to an account with bank account details at the bottom of a concocted tax invoice from Ironmark Engineering supplied by Mr Skarzynski. On 22 December 2009 and 19 January 2010 TCP2 paid sums of $5,500 (totalling $11,000) under this final arrangement. 42Mr Sofi described the payments being made by the TCP group from late December 2009, through until February 2010, as "irregular". 43Mr Sofi said that in early February 2010 the number of defaults of the TCP group increased. He met with Mr Skarzynski who made promises of paying out the leases and also referred to the sale of the TCP business. Mr Sofi also became concerned after reviewing an equipment list sent by Mr Skarzynski to him referable to the goods said to have been purchased by AFSL and rented because it did not coincide with what his records revealed. 44On 17 February 2010, Mr Sofi and his father met with Mr Musico. At this meeting, Mr Musico indicated that he had not signed a number of the rental agreements and he said the following: "The company is fucked. We have money owing to the tax office, the bank has frozen all of our facilities making it impossible to do anything and we are in the hole for about 10 million bucks." 45After some discussion on 17 and 18 February 2010 with Mr Skarzynski and someone apparently on behalf of Mr Musico, Mr Sofi instructed AFSL's solicitors to lodge caveats on the properties held by 3D World and the directors and instructed the solicitors to commence drafting a mortgage and guarantee to be signed by Mrs Skarzynski. By this time, Mr Sofi was aware that the family home of Mr and Mrs Skarzynski (at Strathfield) was in the name of the latter. 46Shortly thereafter, Mr Skarzynski indicated that he wanted to pay out all the agreements. Figures were given for the totality of the agreements. The totality of the payouts of the outstanding six agreements was $1,215,012.90. On the day of the sending of the email identifying the payout figures for the existing leases, a mortgage and guarantee were given by Mrs Skarzynski in favour of AFSL to secure all payments payable by TCP and TCP2 under the six rental agreements. 47By March 2010, when letters of demand began to be served upon TCP, TCP2, 3D World, Mr Musico and Mr and Mrs Skarzynski by AFSL, enquiries began to be made about the existence and whereabouts of the goods supposed to be leased under the six agreements. In mid-March, it became evident that Mr Musico was denying ever having executed guarantees. On 19 March 2010, letters were sent on behalf of AFSL to TCP and related parties terminating the rental agreements and demanding sums under the rental agreements consequent upon termination. 48By late March or the first week of April 2010, it became apparent to AFSL that there had been no goods purchased by it in consideration of the payments made and that it had been the victim of a fraud by Mr Skarzynski. 49On or about 6 April 2010, AFSL's solicitors wrote to each of Hills and Bosch stating amongst other things: "We are instructed that our client paid an amount of [specifying the amount] by an EFT payment to your bank account on [specifying the relevant date] in payment of an invoice dated [identifying the relevant invoice] and that a remittance advice was sent by our client to you on the next day. We are further instructed that you have recently advised our client that you have received this payment into your bank account, but that you have no record of the existence of such an invoice on your system. We are instructed that you have nevertheless applied such payment against the amounts owing to another entity to you, contrary to our client's remittance advice and without our client's authorisation. Our client requires the immediate repayment of the amount of [amount identified]. ..." 50On 12 April 2010, the CBA appointed receivers and managers to TCP, TCP (Vic) and TCP (Qld) pursuant to its charges. 51On 14 April 2010, AFSL's solicitors made demand on Mr Skarzynski, Mr Musico, Mrs Skarzynski, 3D World and TCP on the basis of the rental agreements and the obligations said to be owing thereunder. 52On 18 May 2010, AFSL commenced possession and enforcement proceedings in Queensland against 3D World for certain land owned by it the subject of secured guarantees of the lease agreements. This action was pursued, but was found to be valueless because of prior registered mortgages. It was not disputed on appeal that, irrespective of the date of any relevant mortgage, any action that might have been taken by any of the parties to these proceedings against 3D World from late August or early September 2009 onwards would have equally been valueless. 53On 24 May 2010, AFSL commenced proceedings against Mr and Mrs Skarzynski and Mr Musico for payment under the relevant guarantees and also for possession and sale of the Strathfield property. There were and are said to be prior mortgages on the Strathfield property. The property has been sold and as at the date of hearing this appeal a sum of $512,000 lay in Court awaiting resolution of the dispute, which was due to be heard in August 2012. In relation to this claim, which is one made by AFSL in enforcement of its rights under the lease agreements, Mrs Skarzynski denies responsibility for the debt personally. There are other purported mortgagees, apparently financiers of some description. Mrs Skarzynski claims in those proceedings that her signature on those other mortgages has been forged. She accepts her signature on the AFSL mortgage, but not her personal liability. 54On 5 July 2010, a liquidator was appointed to TCP. 55On 22 July 2010, a sequestration order was made in relation to the estate of Mr Skarzynski. 56On 1 September 2010, a sequestration order was made in relation to the estate of Mr Musico. 57On 18 October 2010, AFSL obtained monetary judgment against 3D World in the proceedings brought in Queensland. The appeal was not conducted on any basis other than that the monetary judgment against 3D World is of no value. 58The above is the broad chronological landscape of the facts against which the defences must be judged. Before turning to a discussion of the defences, something should be said as to what the evidence reveals about the financial position of the TCP companies, beyond that which is evident, or can be inferred, from the above. 59On 13 November 2009, Mr Skarzynski sent a set of financial statements for the year ended 30 June 2008 (showing comparative figures for 2007) for TCP2 to AFSL. This was in response to a request from a prospective funder. These accounts, signed by Mr Skarzynski and Mr Musico, showed total equity, largely by way of retained profits, of $19,093.25 as at 30 June 2008. No particular analysis need be undertaken in the light of the conduct of Mr Skarzynski and the lack of reliance placed on these accounts by the parties. It is to be noted, however, that the company had no cash and its current assets were substantially trade receivables and pre-payments. 60At the time the security over the Skarzynskis' home at Strathfield was being sought, Mr Skarzynski and Mr Musico provided statements of personal worth of $24.27m and $28.47m respectively. Little reliance can be placed on these in the light of their bankruptcies later in 2010. 61Company tax returns for R & G for the tax years 2006 and 2007 were sent to AFSL in November 2009. They contain little useful information. 62From searches in evidence of the records of the Australian Securities and Investments Commission ("ASIC"), it is apparent that 3D World had only two shareholders, Mr Skarzynski (with 1 fully paid share) and Mr Musico (with two fully paid shares). It is not clear what issued capital was represented by those three shares. 3D World had also granted a fixed and floating charge to the CBA on 12 January 2007. 63From searches of ASIC records in evidence it is apparent that the shareholding of TCP comprised two classes of shares, ordinary and "A" Redeemable. The evidence did not disclose the respective rights attaching to each. There were 100 ordinary shares of $1 each issued, 50 to Mr Skarzynski and 50 to Mr Musico. One "A" Redeemable share of $1 had been issued to Arena Vision.TV Pty Ltd. 64From searches of ASIC records in evidence it is apparent that the shareholding of TCP2 comprised the same two classes of shares, with 100 ordinary shares of $1 each, all issued to Mr Skarzynski, and one "A" Redeemable of $1 issued to Arena Vision.TV Pty Ltd. 65From searches of ASIC records in evidence it is apparent that the shareholding of each of TCP (Vic) and TCP (Qld) comprised 100 ordinary shares of $1 each issued to Mr Skarzynski and Mr Musico, each as to 50 shares. Introduction to relevant principles of restitution 66There was no dispute on appeal that AFSL made a mistake fundamental to and causative of its decision to transmit funds to Hills and Bosch (and the other recipients) which was of such a character as to be a relevant vitiating factor sufficient to support a claim in restitution for their return. The legitimacy of a claim for restitution for moneys paid under a relevant mistake is conclusively established in this country by Australia & New Zealand Banking Group Ltd v Westpac Banking Corporation [1988] HCA 17; 164 CLR 662; David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; 175 CLR 353; and see generally Prasad v Sangha [2012] NSWCA 92 at [12]. 67The clarity of the adversion by AFSL to the expressly represented existence of specific goods in respect of each payment (and subsequent lease agreement) makes it unnecessary to analyse the nature of the mistake in question: cf David Securities at 367-368. Nor can there be any doubt that the mistake is sufficiently important to be causal: cf David Securities at 377-378. 68As was made clear by Deane J in Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; 162 CLR 221 at 256-257 (cited by Mason CJ, Wilson, Deane, Toohey and Gaudron JJ in ANZ v Westpac at 673), unjust enrichment is: "a unifying legal concept which explains why the law recognises, in a variety of distinct categories of case, an obligation on the part of the defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case." 69The assistance of the unifying concept referred to by Deane J also extends to the recognition, by the ordinary processes of legal reasoning, of the existence, and proper boundaries, of defences to restitutionary claims. 70Later cases have also emphasised the character of unjust enrichment as a unifying legal concept and not as a principle acting as a premise for recovery: Lumbers v W Cook Builders Pty Ltd (In Liq) [2008] HCA 27; 232 CLR 635 at 665 [85]; David Securities at 378-379; Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; 208 CLR 516 at 543-545 [70]-[74]; Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89 at 156 [151]; and Equuscorp Pty Ltd v Haxton [2012] HCA 7; 286 ALR 12 at [29]-[30]. The importance of this character of unjust enrichment can be seen from what was said by Mason CJ, Deane, Toohey, Gaudron and McHugh JJ in David Securities at 378-379, namely that the plaintiff does not need to prove a lack of "justness" by reference to a general evaluation of the circumstances of what is fair or not or conscionable or not. It is the existence of the qualifying or vitiating factor and the receipt which gives rise to the prima facie liability in restitution. The receipt in those circumstances and the retention (the relationship between receipt and retention being as discussed by Mason CJ in Baltic Shipping Company v Dillon [1993] HCA 4; 176 CLR 344 at 359, there in a context of consideration, by Cardozo J in Atlantic Coast Line Railroad Co v Florida 295 US 301 at 309 (1935), by Dixon CJ, McTiernan, Williams, Webb and Taylor JJ in South Australian Cold Stores Ltd v Electricity Trust of South Australia [1957] HCA 69; 98 CLR 65 at 75, and by Gummow J in Roxborough at [86]-[89]) will be seen to be unjust enrichment, unless there are circumstances which the law recognises would make an order for restitution unjust. The "moment of enrichment" is that of receipt: David Securities at 385; but it is the retention that is to be regarded as unjust for an order to be made. 71The defences available to the prima facie liability were expressed (not exhaustively) in ANZ v Westpac at 673 as: "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". I have used the word "defences". See the usage of the word in inverted commas by the majority in David Securities at 379. No harm is done by calling the circumstances necessary to deny recovery "defences" as long as it is recognised that they are circumstances sufficient to displace the prima facie liability "which the law recognises would make an order for restitution unjust": David Securities at 379. In David Securities, Mason CJ, Deane, Toohey, Gaudron and McHugh JJ stated at 379: "Before that prima facie liability is displaced, the respondent must point to circumstances which the law recognizes would make an order for restitution unjust. There can be no restitution in such circumstances because the law will not provide for recovery except when the enrichment is unjust. It follows that the recipient of a payment, which is sought to be recovered on the ground of unjust enrichment, is entitled to raise by way of answer any matter or circumstance which shows that his or her receipt (or retention) of the payment is not unjust." (footnotes omitted; emphasis in original) 72The last sentence of that quoted passage is not to be understood as making the enquiry as to unjustness into the kind of "subjective evaluation of what is fair or unconscionable" that was rejected in the previous paragraph. The enquiry will be into "circumstances which the law recognises" as making an order unjust. That said, a degree of Protean character of the action for restitution, owed in part to its equitable sources, is to be recognised: Roxborough at 525 [15]-[16], 539-540 [62]-[63], 543 [71] and 548-555 [83]-[100]; Farah Constructions at 158 [154]; and Equuscorp v Haxton at [30] and [114]; Baylis v Bishop of London [1913] 1 Ch 127 at 140 (Hamilton LJ); and W A Keener, "Recovery of Money Paid Under Mistake of Fact" (1887) 1 Harv LR 211 at 213. 73The above is sufficient to deal with the distinction at times made in the argument before us between the denial of the claim of restitution because of a lack of enrichment and the operation of a relevant defence. The extent to which such a distinction may usefully add to the discourse in this area need not be discussed. It suffices for present purposes to recognise that where, as here, there is payment under an operative and causative mistake of fact, restitutionary recovery will be ordered unless there are circumstances which the law recognises as making an order unjust. 74In that context, the contractual regime or milieu in which the payment was made will be important, in particular if the making of an order for restitution will disturb an existing and bargained-for allocation of risk or liability: Lumbers at 654-655 [45]-[49] and 662-663 [77]-[79]; Pan Ocean Shipping Co Ltd v Creditcorp Ltd [1994] 1 WLR 161 at 166; and the Hong Kong Court of Final Appeal in Takahashi v Shu [2011] HKCFA 15 at [32]. 75The application of those kinds of considerations can be seen in Lumbers. There, a sub-contractor, who had not been paid for the work it had done pursuant to its contractual relations with the builder, sought recovery from the principals by reference to the benefit conferred from the work, which, in a broad sense, had been requested by the principals by their seeking to have the work done (through their contract with the builder). To paraphrase the words of Lord Goff of Chieveley in Pan Ocean Shipping at 166, cited in Lumbers at 655 [47] and 663 [79], the parties had distributed their risks by applicable contracts and the application of restitutionary principles (there of benefit and acceptance) in any altering of that redistribution raised serious difficulties. Circumstances recognised by the law that would make an order for restitution unjust, or, defences 76In David Securities at 379-380, Mason CJ, Deane, Toohey, Gaudron and McHugh JJ set out what their Honours referred to as the "well known" formulation of Robert Goff J (later Lord Goff of Chieveley) in Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] QB 677 at 695, where his Lordship said: "[C]ertain simple principles can, in my judgment, be deduced: (1) If a person pays money to another under a mistake of fact which causes him to make the payment, he is prima facie entitled to recover it as money paid under a mistake of fact. (2) His claim may however fail if (a) the payer intends that the payee shall have the money at all events, whether the fact be true or false, or is deemed in law so to intend; or (b) the payment is made for good consideration, in particular if the money is paid to discharge, and does discharge, a debt owed to the payee (or a principal on whose behalf he is authorised to receive the payment) by the payer or by a third party by whom he is authorised to discharge the debt; or (c) the payee has changed his position in good faith, or is deemed in law to have done so." See also the reference to this passage by Dawson J in David Securities at 405. 77The "defences" of valuable consideration and change of position were expressly recognised in David Securities: the former at 380 and the latter at 385. Both defences were recognised by the House of Lords in Lipkin Gorman (a firm) v Karpnale [1991] 2 AC 548. 78It was not necessary for the Court to explore the limits of either defence in David Securities. The question of valuable consideration arose in a different manner to the circumstances here. In David Securities the respondent Bank argued that the appellant, having accepted the benefit of performance by the respondent, now sought to recover part of the consideration promised for that performance. For reasons it is unnecessary to discuss, that defence was rejected. The question of change of position had not been litigated at the trial. 79It is necessary to consider a number of aspects of both defences. Valuable consideration, bona fide purchase, discharge of debt and change of position 80Each of the above phrases, at varying degrees of generality, is apt to encompass one aspect of what has been recognised to be a defence. Whether they should be separated and what each covers need not be the subject of theoretical analysis in any detail, though, to a degree, it is a relevant matter to consider. Bona fide purchase is more easily recognised in bilateral or two-party circumstances where questions of title to property intrude. Consideration or good consideration is more easily recognised in an exchange relationship, whether contractual or not, in which some sense of transactional bargain can be perceived. Discharge of debt may focus on the existence or not of the extinguishment of rights against a party. Some (such as the authors of the latest (8th) edition of Goff & Jones, The Law of Unjust Enrichment (Sweet & Maxwell, 2011) at 721-722 [29-19]-[29-22]) would prefer to see good consideration or bona fide purchase not treated as a distinct defence or distinct defences, but as reflective of more thematic principles: as part of the facts that would deny the unjustness of the enrichment, or, as an aspect of the defence of change of position, or as part of a bona fide purchaser defence. 81The defences of good consideration and change of position were seen as separate in Lipkin Gorman. The expression of principle of Goff J in Barclays Bank at 695 has been either directly utilised or approved by the High Court in David Securities, by the Court of Appeal in Lloyds Bank Plc v Independent Insurance Co Ltd [2000] QB 110 at 125-127, by the Hong Kong Court of Final Appeal in Takahashi v Shu at [37]-[41] and by the Supreme Court of Canada in BMP Global Distribution Inc v Bank of Nova Scotia [2009] SCC 15; [2009] 1 SCR 504 at [21]-[22]. 82One particular question for consideration here is the importance of the phrase "to discharge" in (2)(b) of Goff J's statement of principle in Barclays Bank: "if the money is paid to discharge, and does discharge, a debt owed to the payee ... by a third party by whom he is authorised to discharge the debt". The relevance of the question for present purposes is revealed by the facts here. AFSL did not, either subjectively or objectively (it is unnecessary to decide which basis should govern), intend to discharge any debt of TCP or Mr Skarzynski. AFSL paid the money to buy goods it thought to exist to discharge what it thought (mistakenly) to be its debt by way of purchase price to Hills or Bosch. But as between Hills or Bosch and the TCP company, they (Hills and TCP or Bosch and TCP) intended to discharge existing debts. I do not say here "did discharge" for the purposes of principle (2)(b) in Barclays Bank; but I will examine this later. 83The significance of the question was adverted to by Lord Goff in Lipkin Gorman at 580-581 when comparing "bona fide purchase" with "change of position". The former may be invoked without enquiry (in most cases, his Lordship said) into the adequacy of the consideration. Thus, here, if (2)(b) applies because the debt of the relevant TCP company has been discharged, no enquiry will be made as to the worth of the debt that was discharged - that is whether the TCP company was ever likely to be in a position to repay it at any relevant time or, put another way, whether its position was materially changed. The difference can be seen to be rooted in different underlying legal policies to which it will be necessary to refer in some more detail later: transactional security in exchanges in respect of consideration and the remedying of injustice in change of position. 84It is tolerably clear that in circumstances where the payer intends that the third party's debt to the payee be discharged, and the third party authorised the payment and discharge, and discharge has occurred, the payer cannot recover from the payee: Aiken v Short (1856) 1 H & N 210; 156 ER 1180; Barclays Bank at 695; and Porter v Latec Finance (Qld) Pty Ltd [1964] HCA 49; 111 CLR 177; Restatement of the Law: Restitution, Quasi-Contracts and Constructive Trusts (American Law Institute, 1937) sec 14(1) and comments thereon (by Professors Seavey and Scott) at 55-59; Palmer, The Law of Restitution (Little Brown, 1978) Vol III sec 16.5-16.6 at 480-505 and the 2000 Cumulative Supplement at 629-638; and Restatement of the Law Third: Restitution and Unjust Enrichment (American Law Institute, 2011) sec 67 and comments thereon (by Professor Kull) at 561-564 and 578-579. 85Aiken v Short was discussed by Goff J in Barclays Bank at 687-688. The plaintiffs paid money to the defendant payee in discharge of a debt which one Carter had incurred to the defendant. The plaintiffs did so to secure the removal of an equitable mortgage on the property of Carter (an inheritance it was thought he had) held by the defendant/payee. When the lack of inheritance in Carter was discovered the plaintiffs sought recovery from the payee. The case is also important as to the nature of the relevant mistake, which it is unnecessary to discuss here. The precise bases of decision of Pollock CB, Platt B and Bramwell B (Martin B being present at the argument but absent when judgment was given) are less than clear. I do not repeat what Goff J said in Barclays Bank at 687-688 about the analysis of the reasons in Aiken v Short. One can see in the passages quoted by Goff J from the reasons of both Pollock CB and Platt B (set out in Barclays Bank at 688) the seeds of the distinction discussed in Porter v Latec: whether it is a payment by the payer to the debtor who pays the creditor/payee, or whether it is a payment by the payer to the creditor/payee with the debtor's authority. In the former case, the lack of remedy in the payer against the creditor is clearer - the payer can be viewed as not having paid the creditor, but as having paid the debtor, who then paid the creditor. This distinction was important for the reasoning of some of the justices in Porter v Latec. 86Before turning to Porter v Latec, it is helpful to bear in mind the fact that we are not concerned with title to chattels where the principle of nemo dat quod non habet will or may govern to lessen the effect of notions of bona fide purchase or consideration. Nor are we dealing with tracing in equity, where the notion of bona fide purchase for value without notice would take its place in an analysis of property rights. The subject here is cash or its equivalent by electronic funds transfer. There was no argument but that Hills and Bosch, as payees, obtained title to the moneys they received. The claims against them by AFSL are personal, and not dependent on any analysis of title or its defeasance. 87In Porter v Latec one LH Gill perpetrated a fraud on Porter and Latec of a kind that was simple (and for a time effective) and that is reflected in the facts of similar frauds in other places (to which I will later refer). LH Gill fraudulently impersonated HH Gill, the registered proprietor of certain land, and obtained £1,500 from Porter, part of which was paid to an existing mortgagee bank to obtain a discharge of mortgage. LH Gill forged the signature of HH Gill on a document purporting to be a bill of mortgage in favour of Porter. Later, again impersonating HH Gill, LH Gill requested Latec to lend him £3,000, again forging HH Gill's signature on the loan application and second purported bill of mortgage. The £3,000 was received by Latec's solicitors to pay, in accordance with the written authority of LH Gill (forged as HH Gill), to Porter £1,592 2s 10d and to LH Gill the balance (thinking him to be HH Gill). The money owing to Porter was given to him by the solicitors in exchange for the certificate of title and bill of mortgage held by him. The Full Court of the Supreme Court of Queensland on a stated case ordered Porter to refund the £1,592 2s 10d to Latec. It reasoned that the payment to Porter was by Latec, not LH Gill, the authority to the solicitors having been forged; and the payment was made under a mistake of fact. The High Court, by majority (Barwick CJ, Taylor and Owen JJ, over the dissent of Kitto and Windeyer JJ) reversed the Full Court. 88The ratio of the decision of Barwick CJ was that the payment to Porter was by or on behalf of the rogue LH Gill, not Latec (it having lent him £3,000). As Barwick CJ said at 185: "The question ... is not whose money was it that was used for the payment, but on whose behalf the money was paid." The answer to this was the same as that given by Pollock CB in Aiken v Short - the amount paid, undoubtedly out of the payer's funds, was paid because its borrowing client had referred the payee/encumbrancee to it for payment. The payer was paying as agent for the debtor. Barwick CJ disagreed with the Full Court's distinguishing of Aiken v Short on the ground that in that case, unlike here, there was a real underlying debt owed to the payee. Barwick CJ said that there was a claim against LH Gill by Porter for the amount he had borrowed even though LH Gill had acted fraudulently. Payment to him with the (albeit fraudulent) authority of LH Gill (to Latec and its solicitors) extinguished Porter's claim against LH Gill, and procured the release of the forged security. 89By way of obiter dicta, Barwick CJ at 186-187 reasoned that even if the payment is to be seen as having been made on behalf of Latec it was not recoverable. The first reason for this conclusion was a matter of convenience (and prudence) only, namely that it paid itself rather than through its borrower. Thus it paid its borrower's debt believing it would be able to recover from him. This was a payment to which the identity of the borrower (being the relevant mistake) was not fundamental, though it "would be a motivating fact". This distinction need not be discussed. The second reason for this conclusion was that Latec obtained by the payment what it sought to obtain, as did the payer in Aiken v Short, though what it got was not of the significance that it thought. From what appears at 187, the central consideration in this part of Barwick CJ's reasoning was the lack of the fundamental character of the mistake, not the notion of payment for good consideration. 90Taylor J at 198-199 decided the matter on the basis that the moneys were paid for and on behalf of the borrower LH Gill, thus giving no "title to relief" to Latec. His Honour found it thus unnecessary to consider whether the matters of mistake were fundamental to the transaction. 91Owen J likewise (at 208-209) decided the case on the basis that it was a payment made on behalf of the payer's debtor, LH Gill. 92Thus, the majority's reasons in Porter v Latec can be seen to be consistent with, but not in terms to dictate, the expression of principle by Goff J in paragraph (2)(b) in Barclays Bank at 695. Porter v Latec was a case where the intention (objective and subjective) of the "payer" was to discharge the debt owed the payee. This was clear as the debt was known and the payment was made directed to its discharge on behalf of the debtor, albeit out of moneys of the "payer". 93In dissent, Kitto J reasoned that Latec's mistakes were fundamental: that the property was subject to the burden of the securities entered on the register, that Porter had the authority of the owner to free the property from that burden and that repayment by the person who was the registered proprietor would be secured by a first mortgage of the land and a bill of sale of the chattels. The voidness of Porter's security (that was being released) and of the letter of authority apparently from the owner of the property to pay off the securities went to "the very foundation of the payment" and "spell[ed] the complete frustration of the purpose which the payment was intended to effectuate" (189). The defence of discharge was dealt with by refusing any operation to it for a payment to discharge the apparent debt of HH Gill when there was no such debt, nor a debt by loan to LH Gill, albeit that LH Gill was liable for his false pretences. Kitto J was of the view that no contract of loan ever came into existence between Porter and LH Gill. Kitto J distinguished Aiken v Short on the basis that there the mistake had not been fundamental and the debt intended to be discharged did exist. 94Kitto J, at 191-192, also expressed the matter from Aiken v Short that conforms entirely with principle (2)(b) in Barclays Bank in a way that is apposite here: "Aiken v. Short 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." (footnotes omitted) (The last reference to "C" in that passage should, I think, be to "B".) The proposition did not permit Porter's defence because here, Kitto J said, C was HH Gill, not the rogue, LH Gill. In any event, on the facts, Kitto J did not consider the payment to have been made on behalf of LH Gill. 95Also in dissent, Windeyer J, like Kitto J, saw the fraudulent impersonation as crucial. There were no contracts of loan; both were void for mistake. Porter's claims, at the time of his lending, were against LH Gill for moneys had and received or for damages for fraud and a charge by way of equitable lien against HH Gill's land equivalent to the amount paid off under the existing bank mortgage. Windeyer J was of the view that Porter was paid by Latec, not on behalf of LH Gill, nor HH Gill. 96Porter v Latec does not dictate the result of this appeal. What was said about the character of the relevant mistake must now be understood as overtaken by David Securities at 376-377, 395-396 and 402 and the notion of causative mistake. The payment by AFSL was not on behalf of any TCP company; it was not made to discharge any debt of AFSL actually owed (of which there was none) or of a TCP company actually owed (of which there were some). Kitto J's analysis of the principle reducible from Aiken v Short conforms with Goff J's expression of principle in Barclays Bank. 97The nature of the fraud in Porter v Latec was not original. A rogue telling lies (and possibly different lies) to more than one lender in succession occurs from time to time. The responses of courts has often reflected the division in Porter v Latec. In Walker v Conant 69 Mich 321; 37 NW 292 (1888) the Supreme Court of Michigan (by majority) denied a claim of a second lender who, being prepared to lend to one V and desiring to take what he thought to be a first mortgage from a first lender to V (which mortgage was forged), paid out of the loan funds to V enough to pay off the first lender. The majority expressed the matter in terms of receipt in good faith, in the ordinary course of business and for good consideration. The latter could only have been the discharge of the debt that was intended to be discharged. The majority called in aid the policy of certainty of receipts; the minority emphasised the lack of substantive change of position of the payee. 98In Strauss v Hensey 9 App DC 541 (1896) the Court of Appeals of the District of Columbia, faced with a similar fraud, permitted recovery by the second defrauded lender from the first whom he had paid out. The fraud involved impersonation of a man of substance. The payment for a void note of security was held to be no consideration or value and there was no change of position of the payee. 99Likewise in Grand Lodge of the Ancient Order of United Workmen of the State of Minnesota v Towne 136 Minn 72; 161 NW 403 (1917) the Supreme Court of Minnesota permitted recovery by the second lender obtaining the forged security by paying out the first lender; the analysis, as in Strauss v Hensey, was that there was no valuable consideration and no change of position. 100An important decision in the United States is Gaffner v American Finance Co 120 Wash 76; 206 P 916 (1922) of the Supreme Court of Washington. The facts were somewhat different. The thief stole a motor car; mortgaged the car by a note that was signed by him; and then purported to sell the car to an innocent purchaser. There was a loan to the thief, Hughes, though the mortgage was invalid. The purchaser paid the lender to discharge a real debt. There was therefore, it was held, consideration, although the security released was not valid. The point of distinction for the Court of the cases where the later payer had recovered from the earlier paid out creditor, such as Grand Lodge and Strauss v Hensey, is not clear but appears to have been on the basis that the debt discharged here was real and not made by reason of the impersonation of the identity or forgery of the signature of the person thought to be the borrower, such that both the debt and security were tainted with fraud. Here, there was no mistake as to the indebtedness that was paid. 101Another influential American decision is that of the Supreme Judicial Court of Massachusetts in National Shawmut Bank of Boston v Fidelity Mutual Life Insurance Co 318 Mass 142; 61 NE 2d 18 (1945). A dishonest insurance broker forged the insured's signature to obtain a loan from the insurance company on the security of the insured's life policy. Later, by another forgery, a loan was obtained from a bank which took the policy as security, paying out the insurance company. The Court, having referred to Gaffner and like cases, accepted that as a general principle "[o]ne receiving money or negotiable securities in payment of, or as security for, an existing debt, is not bound to enquire where the money or securities were obtained" (147; 21); and further said that "[i]t has often been decided in this commonwealth that a pre-existing debt is a valuable consideration for a payment made, or a security given, on account of it" (147; 21). The cases cited for this last proposition included two earlier decisions of the Supreme Judicial Court of Massachusetts: Spaulding v Kendrick 172 Mass 71; 51 NE 453 (1898) and Smith v Knapp 297 Mass 466; 9 NE 2d 399 (1937); and one of the Court of Appeals of Kentucky: Union Central Life Insurance Co v Glasscock 270 Ky 750; 110 SW 2d 681 (1937). Nevertheless, in Shawmut the bank recovered because the insurance company was held to have no valid claim against its supposed debtor, the insured. Rather, it only had a claim in fraud against the agent in respect of which claim the money was not paid. Further, there was no injurious change of position: no rights were lost against the agent; the claim against him for fraud was maintainable. 102It is helpful to examine the cases cited in Shawmut as to consideration. In Spaulding, one Hobbs misappropriated $5,000 of a bank's money. The money was transferred to Kendrick who was a surety of Hobbs. Receiving it in good faith as security for a larger sum, Kendrick forbore to prosecute his petition for relief as a surety on the bond in question. The principle expressed by Knowlton J on behalf of the Court (at 72; 454) in rejecting the claim against him was as follows: "If a thief gives stolen money, or negotiable securities before their maturity, in payment of his debt, or as security for it, to one who in good faith receives the money or securities as belonging to him, the creditor can hold the property as against the true owner. As between the payor and the payee there is no mistake which affects the validity of the transaction. One receiving money or negotiable securities in payment of, or as security for, an existing debt, is not bound to inquire where the money or securities were obtained." Though dealing with title to stolen funds (not being the case here where there was no question but that Hills and Bosch received title to the funds, albeit mistakenly thinking it was Mr Skarzynski's to direct application of) the case is clear authority for the operation of a good faith consideration defence. 103Smith v Knapp was also a case framed by reference to the tracing of property. One Helen Tripp fraudulently induced the plaintiff to give her $2,000 to invest for the plaintiff in securities. The defendant and Ms Tripp had lived together as friends, sharing living expenses, Ms Tripp paying board without any amount being fixed. The defendant had a mortgage over the premises. On occasions, Ms Tripp paid the mortgage instalments as a contribution to the living expenses account between her and the defendant. During the period 1927 to 1932 Ms Tripp fell well behind in contributions to common expenses. In 1931 the mortgage was in arrears. Ms Tripp made up a story to the defendant about coming into an inheritance. The defendant did not know the plaintiff. The $2,000 turned over to Ms Tripp by the plaintiff was to invest on the latter's behalf. Ms Tripp used $1,400 to pay off the defendant's mortgage which was discharged. On the defendant hearing of the fraud (she being found innocent of any complicity) members of her family made restitution to the plaintiff in the sum of $1,250. The Supreme Court (per the Chief Justice) found (at 469; 401) that it was to be inferred that there was an implied contractual obligation of Ms Tripp to pay for her living expenses, and that there was at least as much owing to the defendant under this obligation as was used by Ms Tripp to discharge the mortgage. This pre-existing debt (and its discharge by the payment of the mortgage) was enough to make the defendant a purchaser for value of the discharge of mortgage. This conclusion was founded on the discharge of Ms Tripp's debt to the defendant. It was necessary for the defendant to ratify and adopt the payment made to the bank on her behalf and this was done. Rugg CJ concluded at (470-471; 401): "The payment of the mortgage by Miss Tripp, subsequently accepted and ratified by the defendant in satisfaction of her claim against Miss Tripp, was in effect equivalent to direct payment to the defendant by Miss Tripp in discharge of her obligation to the defendant. The defendant was a transferee for value of the discharge which Miss Tripp had purchased from the bank. In these circumstances there is no imputation of knowledge of fraud based upon any principle of agency, or an imposition of the burden of fraud upon one who accepts the benefit. In the absence of imputed or constructive knowledge by the defendant of the fraud of Miss Tripp, the plaintiff has no right to follow the money into the hands of the defendant." 104Both cases reveal a clear basis of a lack of liability in the receiver or payee of funds where (irrespective of the intention of the owner of the funds) a recipient in good faith and without relevant notice gives value or consideration. The discharge of a real and existing liability (even if owed by the wrongdoer, as in Smith v Knapp) will suffice. There, without that discharge of Ms Tripp's debt, the defendant would have been a volunteer and the plaintiff would have succeeded under an equitable lien to the bank mortgage that had been discharged. 105The third case cited in Shawmut was Union Central Life v Glasscock. Glasscock purchased land from one Beard for $1,900 mistakenly believing that the land was clear of encumbrance. The $1,900 was paid over by Beard to Union Central as mortgagee for a discharge of mortgage. There was in fact (only discovered some three years after the sale and payment out of Union Central) a mortgage on the land, which was prior ranking to the Union Central mortgage. Glasscock sought to set aside the sale and recover from Union Central the $1,900 that he had paid to Beard the vendor, who paid it over to Union Central. The claim was a personal one for restitution of moneys paid under mistake. The Court stated that there was no doubt about the rule (described as equitable) requiring restitution of money or property paid under mistake that has resulted in unjust enrichment of one at the expense of another making it against conscience to retain that received, and on that basis the vendor must repay the purchase price, there being an entire failure of consideration. The claim against Union Central was rejected by the Court on the basis that it had received the payment in good faith and applied it to a debt then owing. No particular point was made by the Court that the vendor paid Union Central rather than Glasscock directly. It was the bona fide discharge of debt that was critical. In so deciding, the Court relied on an earlier decision of the Supreme Judicial Court of Massachusetts delivered by Chief Justice Gray (later appointed to the Supreme Court) in Merchants Insurance Co v Abbott 131 Mass 397 (1881) where an arsonist assigned his fire claim to a creditor who received payment from the insurer, neither knowing that the insured/debtor deliberately lit the fire. The insurer's claim against the creditor in restitution was rejected. 106Before continuing, it is appropriate to recognise at this point that to the extent that one were to be concerned with tracing of property in equity or the priorities involving equitable and later legal interests or title, value, for the doctrine of bona fide purchaser for value without notice, may be seen to extend to the satisfaction of an existing debt: Thorndike v Hunt (1859) 3 De G & J 563; 44 ER 1386; Taylor v Blakelock (1886) LR 32 Ch D 560 at 570; Maitland, Equity (Cambridge UP, 1936) at 134; Young, Croft and Smith, On Equity (Thomson Reuters, 2009) at 136; and Megarry and Wade, The Law of Real Property, 5th ed (Sweet and Maxwell, 1984) at 143; cf Pomeroy's Equity Jurisprudence, 5th ed (Bancroft-Whitney, 1941) Vol 3 sec 749 at 29-33 and Fratcher, Scott on Trusts, 4th ed (Little Brown, 1987) Vol 4 secs 304 and 305. To the extent that there may be a divergence of view in the American cases on this question reflected in cases described in Pomeroy and Scott, it seems accepted that where the trust property transferred is a negotiable instrument or money, discharge of a pre-existing debt or other obligation is value: The Restatement of the Law Second: Trusts (American Law Institute, 1959), Vol 2 sec 304 at 93 and Scott on Trusts (4th ed) Vol 4 at 172-174. 107In support of this rule as to the discharge of past indebtedness being value sufficient to protect the taker of a negotiable instrument or cash, Scott on Trusts quotes at length from the decision of Andrews J writing for a unanimous New York Court of Appeals in 1879 in Stephens v Board of Education of Brooklyn 79 NY 183. The case was concerned with following money or negotiable instruments and the defence of giving value. In a highly influential and powerful passage, the Court stated at 186-188: "The money having been obtained by Gill from the plaintiff by fraud and felony the former acquired no title thereto and the plaintiff could recover it from Gill if found in his possession, or he could follow it into the hands of any person who received it from Gill without consideration or with notice of the fraud by which he obtained it. The money when deposited by Gill in the bank, was still the money of the plaintiff. The bank was a mere depository and while it so remained, the plaintiff could have compelled the bank to restore the money to him as the rightful owner. ... The plaintiff, however, passing by the bank to whose possession the money first came from Gill, claims to recover of the defendant on the ground that the defendant, having received it from Gill in payment of an antecedent debt, cannot be permitted to retain it as against the plaintiff. No authority has been cited which sustains this position. The rule has been settled by a long line of cases, that money obtained by fraud or felony cannot be followed by the true owner into the hands of one who has received it bona fide and for a valuable consideration in due course of business. This, said Lord Holt in 1 Salk., 126, is 'by reason of the course of trade which creates a property in the assignee or bearer'-and in Miller v. Race (4 Burr., 452), Lord Mansfield said: 'The true reason is upon account of the currency of it; it cannot be recovered after it has passed into currency.' ... It is said that the case is to be governed by the doctrine established in this State that an antecedent debt is not such a consideration as will cut off the equities of third parties in respect of negotiable securities obtained by fraud. But no case has been referred to where this doctrine has been applied to money received in good faith in payment of a debt. It is absolutely necessary for practical business transactions that the payee of money in due course of business shall not be put upon inquiry at his peril as to the title of the payor. Money has no ear-mark. The purchaser of a chattel or a chose in action may, by inquiry, in most cases, ascertain the right of the person from whom he takes the title. But it is generally impracticable to trace the source from which the possessor of money has derived it. It would introduce great confusion into commercial dealings if the creditor who receives money in payment of a debt is subject to the risk of accounting therefor to a third person who may be able to show that the debtor obtained it from him by felony or fraud. The law wisely, from considerations of public policy and convenience, and to give security and certainty to business transactions, adjudges that the possession of money vests the title in the holder as to third persons dealing with him and receiving it in due course of business and in good faith upon a valid consideration. If the consideration is good as between the parties, it is good as to all the world. 'Money,' said Lord Mansfield, in Miller v. Race, before cited; 'shall never be followed into the hands of a person who bona fide took it in the course of currency and in the way of his business.' The question involved in this case was considered by Johnson, J., in Justh v. Bank of Commonwealth (56 N. Y., 478), and he says: 'In the absence of trust or agency I take the rule to be that it is only to the extent of the interest remaining in the party committing the fraud that money can be followed as against an innocent party having a lawful title founded upon consideration; and that if it has been paid in the ordinary course of business, either upon a new consideration or for an existing debt, the right of the party to follow the money is gone.' The case perhaps did not call for a decision upon the point whether an existing debt was a sufficient consideration to uphold a title to money fraudulently obtained by a debtor, and by him paid to his creditor, as against the defrauded party; but we think it correctly declares the rule of law upon the subject." (emphasis added) 108In substance, the issue for consideration is whether the same rule should obtain in respect of an in personam claim in restitution, as here. 109Professor Palmer in The Law of Restitution (Little Brown, 1978) Vol 3 secs 16.5 and 16.6 at 480-505 discusses the defence of bona fide purchase and what he extracts as a separate defence of bona fide discharge. Central to his discussion was the then existing Restatement on Restitution, Quasi-Contracts and Constructive Trusts (1937) with reporters' notes by Professors Seavey and Scott. Palmer refers to many cases, to some of which I have referred. Some involve the payer intentionally paying off the known debt of the debtor (eg Union Central v Glasscock), others do not (eg Smith v Knapp). Essential to the defence in Palmer's view (see Vol 3 at 495) is the receipt of the payment in discharge of a known claim which was valid. Palmer discusses the legal policy behind any such defence of discharge, even where the antecedent debt is valueless, being the same policy as expressed by the New York Court of Appeals in Stephens: finality of payment in business transactions. See also the discussion by W A Keener in "Recovery of Money Paid Under Mistake of Fact" (1887) 1 Harv LR 212 at 220-221. 110A more recent decision vindicating Palmer's position is Banque Worms v BankAmerica International 77 NY 2d 362; 570 NE 2d 189 (1991). The Court of Appeals for the Second Circuit certified a question on New York law for the New York Court of Appeals. The question was whether the "discharge for value" rule would apply to mistaken transfers of funds by electronic means or whether money could be recovered unless a change of position had been caused that would make repayment unjust. The Court, unanimously, applied the discharge for value rule. The facts were that Spedley Securities, an Australian company, instructed its agent bank in New York, Security Pacific International, to send by electronic transfer almost $2m into the account of Banque Worms at BankAmerica which was also in New York. Banque Worms was a creditor of Spedley. Spedley countermanded its direction and replaced it with an order to Security Pacific to pay the same sum to National Westminster USA. Overlooking the countermand, Security Pacific made both transfers by EFT and debited Spedley's account. When the mistake was discovered, it re-credited Spedley's amount with one of the payments and requested repayment by BankAmerica and Banque Worms. BankAmerica returned the funds under an indemnity from Security Pacific. Banque Worms refused to return the funds and disputed BankAmerica's debiting of its account upon that refusal. Eventually the litigation was reduced to Security Pacific and Banque Worms. The Court examined various decisions, some apparently adopting a discharge for value rule, some relying on change of position or detrimental reliance. After considering the nature of electronic funds transfer and the terms of the Uniform Commercial Code (UCC) provision which incorporated the law of restitution, the Court, in reliance on cases that included Stephens, said at 372-373; 195-196: "This concern for finality in business transactions has long been a significant policy consideration in this State. In a different but pertinent context, we observed in Hatch v Fourth Natl. Bank 147 NY 184, 192 that 'to permit in every case of the payment of a debt an inquiry as to the source from which the debtor derived the money, and a recovery if shown to have been dishonestly acquired, would disorganize all business operations and entail an amount of risk and uncertainty which no enterprise could bear'. A consequence of this concern has been the adoption of a rule which precludes recovery from a third person, who as the result of the mistake of one or both of the parties to an original transaction receives payment by one of them in good faith in the ordinary course of business and for a valuable consideration (see, Ball v Shepard, 202 NY 247, supra). This rule is grounded in 'considerations of public policy and convenience for the protection and encouragement of trade and commerce by guarding the security and certainty of business transactions, since to hold otherwise would obviously introduce confusion and danger into all commercial dealings' (44 NY Jur, Payment, § 107; see also, Southwick v First Natl. Bank, 84 NY 420). We have previously held that from these considerations, '[t]he law wisely ... adjudges that the possession of money vests the title in the holder as to third persons dealing with him and receiving it in due course of business and in good faith upon a valid consideration.' (Stephens v Board of Educ., 79 NY 183, 187-188.) The 'discharge for value' rule is consistent with and furthers the policy goal of finality in business transactions and may appropriately be applied in respect to electronic funds transfers. When a beneficiary receives money to which it is entitled and has no knowledge that the money was erroneously wired, the beneficiary should not have to wonder whether it may retain the funds; rather, such a beneficiary should be able to consider the transfer of funds as a final and complete transaction, not subject to revocation." The Court then had recourse to the relevant article of the UCC, but this does not detract from or qualify the general statements of principle. 111This approach equiparates the position of a person who receives negotiable instruments or cash which is stolen or the property of another and a person who receives good title to negotiable instruments or cash but in a transaction vitiated by a factor open to give rise to a right of restitution. If the recipient in good faith and without notice gives consideration or value by discharging a debt in exchange for the payment, he will take title to the funds if stolen or otherwise owned by another and will defeat a restitutionary claim. The relevance to the analysis of title and the need for the discharge for value rule to equate to the position of good faith purchase of title for consideration can be seen in the relationship between secs 13 and 14 of the Restatement (1937) and the Reporters' Notes thereon at pp 7-9. 112The topic of the defences to restitution and of discharge for value are lucidly discussed by Professor Kull (the reporter for the Restatement Third: Restitution and Unjust Enrichment) in "Defenses to Restitution: The Bona Fide Creditor" (2001) 81 Boston University Law Review 919 and in Restatement of the Law Third: Restitution and Unjust Enrichment in sec 67, at Vol 2 pp 558ff. There the principle is stated relevantly as follows: A payee without notice takes payment free of a restitutionary claim to which it would otherwise be subject, but only to the extent that the payee accepts the funds in satisfaction or reduction of the payee's valid claim as creditor of the payer or of another person. 113The question arises whether the defence, to the extent it should be recognised in Australia, is limited to the circumstance where the payer intends to make the payment to the payee on account of the debt of the third party (leaving to one side the distinction that may be made as to whether the debt is real or void: compare the majority and minority in Porter v Latec, or compare Gaffner with Shawmut Bank). The expression of the matter in proposition (2)(b) in Barclays Bank appears to require the intention of the payer to pay off a debt for there to be "good consideration". Further, the third party's authority or ratification is required for there to be a discharge, by the payment. So much can be accepted as an expression of how a payer's payment, of itself, can discharge the debt of another. Barclays Bank, Porter v Latec, Aiken v Short, Gaffner, and Shawmut itself (as long as the underlying debt is real) can be taken as authority for this proposition. Implicit in all these cases is the proposition that discharge of the debt of the third party debtor, achieved by the payment, so intended and so received and with authority, makes restitution to the payer unjust or retention by the payee not unjust. No additional act of prejudice, such as giving up security, or other change of position is required. These cases can be rationalised in a way that makes the payer's intention relevant as reflecting the bargain or exchange that it was making and what it intended to achieve. But what is essential for there to be consideration or value is the question of discharge of the third party's debt. If that has occurred, by the payment, the law will consider repayment unjust. One way that the discharge of debt is brought about (by the payment itself) is by the circumstances underlying Barclays Bank principle (2)(b) being present. 114Here, plainly, AFSL was not intending to pay TCP's debts. It was buying "goods", or so it thought. It intended Hills and Bosch to receive the funds for that purpose. They did receive them, as their own. They did not receive qualified title to the moneys so received. The funds were theirs to keep, subject to restitutionary claims by AFSL. Because of mistakes different to the mistake made by AFSL, Hills and Bosch (because of different lies of Mr Skarzynski) each thought that the funds that it had received came directed by TCP or Mr Skarzynski and were available to discharge TCP debt. That arrangement to discharge TCP's debt was made honestly and in good faith by Hills and Bosch with their debtors. There is no reason in law why, as between those parties, that discharge was other than final. It occurred between parties capable of contracting, concerned valid debts and saw the creditor apply funds which they had received. The payment of itself did not discharge the debts, the arrangement and agreement (to discharge existing debts) between debtor and creditor did. There could be no doubt that as between Hills and Bosch and the relevant TCP company the latter's debt was discharged. 115Discharge in this circumstance, like payment to the customer in ANZ v Westpac at 674, is to be examined as a matter of substance and not form. There, Mason CJ, Wilson, Deane, Toohey and Gaudron JJ said: "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, e.g., Buller v Harrison (1777) 2 Cowp 565; 98 ER 1243; Cox v Prentice (1813) 3 M & S 344; 105 ER 641; The Colonial Bank v The Exchange Bank of Yarmouth, Nova Scotia (1886) 11 App Cas 84). 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." See also ANZ v Westpac at 680-684. 116It is necessary to return to Barclays Bank. It is first to be noted that the payment referred to in the expression of principle (2)(b) is not in terms said to be exhaustive of payment for good consideration: see the words "in particular". Following the expression of principle, his Lordship said at 695 about proposition (2)(b): "This is founded upon the decision in Aiken v. Short, 1 H. & N. 210, and upon dicta in Kerrison v. Glyn, Mills, Currie & Co., 81 L.J.K.B. 465. However, even if the payee has given consideration for the payment, for example by accepting the payment in discharge of a debt owed to him by a third party on whose behalf the payer is authorised to discharge it, that transaction may itself be set aside (and so provide no defence to the claim) if the payer's mistake was induced by the payee, or possibly even where the payee, being aware of the payer's mistake, did not receive the money in good faith: cf. Ward & Co. v. Wallis [1900] 1 Q.B. 675, 678-679, per Kennedy J." 117Undoubtedly Aiken v Short supports the proposition; but there is nothing in Aiken v Short to deny the validity of a wider proposition of discharge for value as reflected in the Restatement, Palmer and cases such as Knapp v Smith and Banque Worms. 118Nor does the decision in Kerrison v Glyn, Mills, Currie & Co deny the validity of a wider proposition of discharge for value. The difference between Hamilton J and the House of Lords (on the one hand) and the Court of Appeal (on the other) was principally factual as to whether the payment was conditional or not. Lord Atkinson, who gave the leading speech in the House of Lords, recognised at 468 that if a payment made under a mistake discharged an existing debt of a principal on whose behalf the payee was authorised to receive payment, the payment was not recoverable. 119Here, AFSL intended Hills and Bosch to have the funds as their own to use (albeit under a mistake as to the existence of the goods). The funds were then used to appropriate and discharge a debt of TCP, influenced by another mistake. 120Two decisions of the House of Lords are relevant to the question of the scope of any defence of discharge for value, beyond the words of proposition (2)(b) in Barclays Bank: Kleinwort, Sons & Co v Dunlop Rubber Co (1907) 97 LT 263 and R E Jones Ltd v Waring and Gillow Ltd [1926] AC 670. 121In Kleinwort, Kramrisch, rubber merchants, sold rubber to Dunlop with a direction to pay one of its bankers, Brandts, who had security over the rubber. Dunlop mistakenly paid Kleinwort, another banker of Kramrisch. Kramrisch failed. Dunlop was required to pay Brandts. Dunlop sought to recover against Kleinwort. The trial was before a jury. There were three questions asked of the jury that were answered as follows: "1. 'Was the money paid to Kleinwort and Co. as principals or as agents?' - Answer: 'It was paid as agents for Kramrisch.' 2. 'Did Kleinwort and Co. receive the money as principals or as agents?' - Answer: 'As principals, and in their own right.' 3. 'Were the defendants led by the plaintiffs' mistake to alter their position to Kramrisch to their own disadvantage?' - Answer: 'No'." 122The facts otherwise set out in the speech of Lord Loreburn LC indicate that Kramrisch owed Kleinwort a sum in the order of the mistaken payment. His Lordship said at 264: "They placed the money so received to the credit of the account, and continued the account for some little time longer, making further advances." 123Lord Loreburn LC then went on (at 264) to express the principle very broadly in a way that would deny discharge for value, separately from change of position: "The appellants contended that this sum had been paid to them as agents, and that they had accounted for it to their principals in a way equivalent to payment. The respondents asserted that in receiving this money Messrs. Kleinwort, Sons, and Co. were really principals, and therefore liable to repay it, whether they had paid it over to others or not. In the view which I take of the case this is immaterial; for it is indisputable that, if money is paid under a mistake of fact and is redemanded from the person who received it before his position must be altered to his disadvantage, the money must be repaid in whatever character it was received." 124One should note, however, the significance of the jury's finding in this regard set out at 264: "Channel, J. put the question very plainly to the jury, and explained to them the contention of the appellants (which I need not examine in detail) that they would not have continued, as they did continue, to make advances to Kramrisch and Co. if it had not been for this payment of 3263l. 16s. 4d. by the Dunlop Company. This contention the jury refused to accept." 125Lord Atkinson at 265 explained with clarity the issue litigated as to whether the funds were received as principal or as agent: "Many authorities were cited to your Lordships, the decisions in which are little more than applications of the broad principle laid down by Lord Mansfield, C.J. in Butler v Harrison (2 Cowp. 565). They seem to establish that, whatever may in fact be the true position of the defendant in an action brought to recover money paid to him under a mistake of fact, he will be liable to refund it if it be established that he dealt as a principal with the person who paid it to him. Whether he would be liable if he dealt as agent with such a person will depend upon this, whether, before the mistake was discovered, he had paid over the money which he received to the principal, or settled such an account with the principal as amounts to payment, or did something which so prejudiced his position that it would be inequitable to require him to refund." 126ANZ v Westpac was, of course, an illustration of the circumstances of receipt as agent, there agent bank. Further, Lord Atkinson thought that the finding by the jury as to the third question was fatal to any argument based on settlement of accounts with Kramrisch. Thus, for Lord Atkinson, if money was received as principal only a change of position would suffice. 127Kleinwort is thus consistent with a party receiving funds by mistake as a principal being required to repay unless it has detrimentally changed its position. What is not clear is what part in the factual consideration of detrimental change of position the discharge of an existing debt would play. In this regard, the comments of Lord Atkinson on counsel's arguments at 265-266 are apposite: "And, secondly, because I do not think that what took place between Kramrisch and Co. and Kleinwort and Co., as appears from the correspondence from the 19th to the 21st Jan. 1903, was of such a convincing character that the jury were not justified in finding, as they apparently did find, in answer to the third question, that no settlement of account equivalent to payment had taken place then at all. On the second issue covered by the third question left to the jury - namely, the issue whether Kleinwort and Co. had, by reason of the receipt of the amount of this cheque prejudiced their position by making further advances to Kramrisch and Co., or giving them extended credit - the jury had the evidence before them. I think that Channel, J. directed their attention to it fairly, and instructed them properly as to how they should deal with it. He said nothing which amounted to a misdirection, and though possibly the conclusion to which the jury came is not that at which one would be disposed to arrive, still I do not think that their finding can be disturbed as being against the evidence, or the weight of evidence. It was quite competent for them, after having heard the evidence, to come to the conclusion that if this money had never been received by Kleinwort and Co. at all, they would have made the further advance, and given further credit to Kramrisch and Co. as in fact they did." (emphasis added) 128One can see in this discussion of the questions put to the jury the view that some change of position consequent upon receipt is required for there to be a defence. The payment on by an agent to its principal can be seen as a separately recognisable category of defence - hence the questions (in particular the second) that were asked of the jury. 129Jones v Waring and Gillow is the English case closest to the essential factual structure here. A rogue, Bodenham, had obtained valuable furniture from Waring and Gillow (the innocent payee of the impugned payment). After default under the hire purchase agreement (by the cheque for a £5,000 deposit not being met), Waring and Gillow had repossessed the furniture. Bodenham went to Jones and told them a concocted story about an international car company setting up business in England and if Jones wanted to be a distribution agent then that could be arranged, but it would require a cheque for £5,000 made out to Waring and Gillow, who, he said, were principals behind the venture. There were defects in the first cheques given to Waring and Gillow, which they raised. They were given another cheque which they cashed, restoring the furniture to Bodenham and giving him some more. After the fraud came to light Waring and Gillow retook possession of the furniture. The Court of Appeal overturned the primary judge's order for restitution. Pollock MR did so ([1925] 2 KB 612 at 630-632) on the question of mistake - that it was not a mistake as between the payer and payee. That approach was the focus of Goff J's concern in Barclays Bank and need not be the subject of discussion here. The judgment of Scrutton LJ in the Court of Appeal is of particular relevance to the question of defences. At [1925] 2 KB at 639-640, Scrutton LJ articulated what was in effect a defence of consideration by discharge for value. Waring and Gillow, having a valid contract with Bodenham under which they were owed money, acting bona fide did not have to refund moneys paid under mistake. Scrutton LJ said: "The law in regard to money had and received appears to be this, that where the defendant has no legal relationship with the plaintiff but receives money which has in fact come from the plaintiff bona fide and for valuable consideration from a third party with whom he has a legal relationship, he can keep the money so obtained from the plaintiff under a mistake of fact if he, the defendant, was not a party to that mistake and did not contribute to it." 130The House of Lords, however, reversed the Court of Appeal. To the extent that it had been argued that Waring and Gillow was a holder in due course of the cheque, that was rejected on the ground that the payee cannot be a holder in due course. As to restitutionary principle, the decision is principally important for a wider view of relevant mistake than dealt with by the Court of Appeal. The majority (Lord Shaw of Dunfermline, Lord Sumner and Lord Carson) upheld the appeal and ordered restitution. Viscount Cave LC (with the concurrence of Lord Atkinson) would have remitted the matter to arbitration to ascertain the extent of Waring and Gillow's change of position. 131The majority distinguished Watson v Russell (1862) 3 B & S 34; 122 ER 14; (1864) 5 B & S 968; 122 ER 1090 (a case where money had been paid to the payee/creditor of a third party with a condition as to future events which was not communicated to the payee/creditor) and rejected the proposition that because Waring and Gillow was owed a sum equivalent, it gave good consideration. Lord Sumner (at 692-693) examined the position by reference to an asserted estoppel against Jones, which he rejected, saying: "I am unable to take the view, on the admissions made, that, by the production of the two cheques by Bodenham, Waring & Gillow, Ld, were led to believe (what was not the fact) that Jones, Ld, were their debtors, or that they were brought to them by him on the part of Jones, Ld, for such purposes as Bodenham on his part might happen to state. How the case would have stood had all this been proved in fact, I need not, therefore, discuss. I only add that the Kramrisch cases (Continental Caoutchouc Co v Kleinwort and Kleinwort v Dunlop Rubber Co), particularly Lord Loreburn's proposition in 97 LT, at p 264, and Kerrison's case, all refer to the defence to a claim for money paid under a mistake of fact, which an agent may set up, if, before discovery of the mistake, he has paid it over to the principal for whom he received it, but, as at present advised, I do not think they go further on the question of estoppel. The direct communications between Jones, Ld, and Waring & Gillow, Ld, by telephone or letter, did not constitute representations by Jones, Ld, nor was it on the faith of anything so said or written that Waring & Gillow, Ld, changed their position towards Bodenham." (footnotes omitted) Lord Carson, also, at 701-702, dealt with the matter on the basis of estoppel. Estoppel and change of position were not distinguished. 132The reasoning of the majority and the minority is, however, inconsistent with a defence (by someone who received money as a principal) of bona fide discharge of an existing debt. The reasoning of the minority is consistent with a defence of change of position on the faith of the receipt; that of the majority with the need to show an estoppel, unless the payee is an agent who has paid over to its principal. 133It should be noted that at 684 Viscount Cave LC referred to authorities that to a degree support an approach to deal with change of position stringently when one has (as there) bills of exchange or (as here) effectively cash payments. His Lordship referred to the rule in Cocks v Masterman (1829) 9 B & C 902; 109 ER 335 that dishonour of a bill must be made on the day of presentation, to the judgment of Mathew J in London and River Plate Bank Ltd v Bank of Liverpool Ltd [1896] 1 QB 7 at 11-12, and the judgment of Buckley LJ in Morison v London County and Westminster Bank Ltd [1914] 3 KB 356 at 378. The reasons stated by Mathew J in London and River Plate Bank for the rule in Cocks v Masterman were based on the necessity for those in business to be able to rely upon the certainty and stability of bills of exchange not dishonoured on the day. Such considerations may permit a principle, conformable with the statements of legal policy by the New York Court of Appeals in Stephens, that the exigencies of payment in business require a stringency to any operation of the change of position defence in appropriate circumstances. In this respect, however, the comments of the Privy Council in Imperial Bank of Canada v Bank of Hamilton [1903] AC 49 are to be noted. 134Before turning to change of position, reference should be made to two further cases that were heavily relied on by Hills and Bosch: Lloyds Bank Plc v Independent Insurance Co Ltd [2000] 1 QB 110 and Clarke v Abou-Samra [2010] SASC 205. 135In Lloyds Bank, the plaintiff bank paid moneys to an insurer to which the bank's customer, an insurance agent, owed money. The mistake of the payer bank concerned the lack of clearance of funds to support the payment. The Court of Appeal disagreed with the trial judge that the payment was not authorised by the customer/debtor. The proposition in (2)(b) in Barclays Bank was approved and applied. Whilst there are expressions of the matter (see 125 D-F) that may, loosely read, support a wider principle than that stated in proposition (2)(b), their Lordships in Lloyds Bank were dealing with an attack on the validity of what Robert Goff J had said in Barclays Bank. Lloyds Bank should be so understood. Waller LJ, who gave the leading judgment, appears, at 123-127, to discuss discharge and the operation of proposition (2)(b) in Barclays Bank as an illustration of the change of position defence. 136Peter Gibson LJ at 130 recognised the separateness of defences of good consideration and change of position in propositions (2)(b) and (2)(c) of Barclays Bank. At 132 he recognised the development of the English law of restitution and the possible preference for an analysis based on change of position rather than bona fide purchase or discharge of a debt. 137In Clarke v Abou-Samra, Mr Samra was the principal of a company, ALC. ALC borrowed money from clients at high rates of interest on the representation of on-lending to property developers in need of funds. Both Mr and Mrs Clarke and Mr and Mrs Abou-Samra were clients of ALC. The Clarkes delivered to ALC a bank cheque for $207,518.20 in the belief that the money was to be a loan to the Abou-Samras. The cheque was delivered by ALC to the conveyancing agent of the Abou-Samras to put towards the purchase of a house. The Abou-Samras thought it was a repayment by ALC of their prior loan to it and a small additional borrowing. ALC collapsed. The Clarkes claimed the $207,518.20 from the Abou-Samras. One basis of recovery was mistake of fact: that it was a loan to the Abou-Samras. Kourakis J (as the Chief Justice then was) stated at [5]: "However, by delivering the bank cheque to Samra who, through an employee of ALC, deposited it into the trust account of Eckermann Steinert, Mr and Mrs Clarke allowed ALC to effectively discharge its indebtedness to Mr and Mrs Abou-Samra. Their debt was discharged because, objectively viewed, ALC's depositing the bank cheque with Eckermann Steinert on account of Mr and Mrs Abou-Samra was performance by ALC of its obligation to repay them the balance of their investment in accordance with Samra's representation to them that he would cause ALC to do so. To the extent that the payment discharged the pre-existing debt of ALC to Mr and Mrs Abou-Samra, they have a good defence to the claim for payment made under mistake. As to any excess, Mr and Mrs Abou-Samra can have no claim to retain the money against Mr and Mrs Clarke. They had authorised Samra to obtain a loan for the shortfall in accumulating the purchase price and they are therefore bound by his conduct even though he exceeded their authority by purporting to borrow more than that amount. Mr and Mrs Abou-Samra have had the benefit of the shortfall procured by their agent and cannot in equity be allowed to retain a windfall benefit by appropriating to their use money obtained for and on their behalf by Samra merely because they were ignorant of the identity of the lender. They are estopped for [sic: from] denying his agency by their conduct in taking the use of that part of the proceeds of the bank cheque which funded the shortfall." 138His Honour elucidated these conclusions at [57] and following. He concluded that the Clarkes did not pay the Abou-Samras by delivering the cheque to ALC's office: [78]. Samra and ALC were not the agents of the Abou-Samras. Kourakis J at [83] said the intention of the Clarkes was not critical; rather, what was critical was whether there was in fact a discharge of the indebtedness of ALC to the Abou-Samras: "In this case, there was at the relevant time a debt owed by ALC to Mr and Mrs Abou-Samra. The amount of the indebtedness is disputed, but the difficulties presented in cases of forgery, which were discussed in Porter, are not present in this case. True it is that Mr and Mrs Clarke did not intend to allow the bank cheque to be used to discharge the ALC debt, but the effect of the payment by ALC must be considered from the perspective of Mr and Mrs Abou-Samra and ALC. In my view, it cannot be said that a payment was made by A to B unless A knows that he is making a payment to B, and B knows that he is receiving a payment from A. When Samra caused the bank cheque to be delivered to Eckermann Steinert by ALC's employee, he did so with the intention of discharging ALC's debt. He did not intend to leave Mr and Mrs Abou-Samra responsible for the repayment of the money to Mr and Mrs Clarke. He had promised them that he would repay ALC's indebtedness and that he would obtain a loan only for the balance of the settlement funds. From Mr and Mrs Abou-Samra's perspective, the payment into their conveyancer's trust account was made by ALC in accordance with Samra's promise to discharge ALC's indebtedness to them." His Honour's reasoning can be explained by recognising that the Clarkes lent to ALC in order for it to on-lend to the Abou-Samras and thus that the claim of the Clarkes for repayment lay with their payee (ALC) and not the on-borrower. His Honour does, however, express the matter from the point of view of the discharge of the third party debt, though the actual intentions of the Abou-Samras and ALC (through Mr Samra) appear to have been relevant in this regard. The decision is consistent with the defence of discharge or consideration by discharge operating in Australia. 139Thus far I have dealt with the matter otherwise than as a matter of change of position. It may equally be the case that, at least in the circumstances here, the matter can be analysed by reference to change of position. I deal with change of position more fully below by reference to a wider context of the events up to April 2010. Nevertheless, the reality of the receipt of Hills and Bosch was that they both thought (through the lies practised on them) that they were receiving the moneys of or owed to their debtor. The agreement to use the funds to discharge the debt was in substance to pay the funds to the debtor and to receive back the funds in payment and discharge. This is the analysis referred to by Rugg CJ in Smith v Knapp at 470-471, by Keener at 221 and at the other references to which Meagher JA refers at [187]. If one views the matter thus, Hills and Bosch each paid away the funds on the faith of the receipt (on the faith of the receipt being conceded). If the facts had stopped there and the debtor company had decamped, it could be concluded that Hills or Bosch had changed its position by paying away the funds: Lipkin Gorman at 579. It did not decamp, but repaid its debt and received a discharge. 140The question of the payment away alone in those circumstances (given the obvious operative effect of Mr Skarzynski's lies to Hills and Bosch) would raise questions of whether it was paid on the faith of the receipt. That question was not the subject of debate. It is unnecessary to say anything in detail here, save to say that on the evidence here there can be no doubt that the concession that each of Hills and Bosch acted on the faith of the receipt was rightly made. Each may have also laboured under the influence of Mr Skarzinski's lies, but neither would have acted without believing in the validity of the receipt. It was the central causal element to the action each took. 141Looking at the matter thus, the discharge that occurred could be seen to be consequential upon the change of position by payment away to the debtor and receipt back and discharge. In the circumstances it is more realistic to view the notional payment away, payment back and discharge as one commercial exchange. 142The legitimate refusal, at this point, to enquire into the value of the consideration given by the discharge comes in part from its relationship to the payment away of moneys not thought to be beneficially held by the payee on the faith of the receipt and what should be the refusal to enquire into the value of the discharge consonant with equity's refusal to do so in like circumstances, in cases such as Taylor v Blakelock at 570 (see [106] above). 143In this way the analysis of the matter from the point of view of change of position reaches the same position as the expression of the matter by an application of a defence of discharge expressed in a manner as by Palmer and for similar underlying legal policy reasons. 144It is unnecessary to explore the extent of any defence of discharge of a third party debt any further. In the absence of binding High Court authority in an area requiring case by case development of principle, "courts of this country will continue to obtain assistance and guidance from the learning and reasoning of United Kingdom courts... [and] of other great common law courts": Cook v Cook [1986] HCA 73; 162 CLR 376 at 390. The persuasiveness of the reasoning of the American cases and texts to which I have referred is conformable with the principles otherwise applicable to the analysis of tracing and priorities to which I have referred at [106] above in respect of cash, negotiable instruments and electronic funds transfers. This approach is, in my respectful view, to be preferred to Kleinwort and Jones v Waring and Gillow, being decisions given when restitutionary recovery and defences to restitutionary claims were not recognised in England in the more coherent way they are now, in both Australia and England (even if there be an incipient difference of approach between the laws of the two countries). In this respect I would respectfully adopt what was said by McPherson JA in Port of Brisbane Corporation v ANZ Securities Ltd (No 2) [2003] 2 Qd R 661 at 676 [25]. 145Both analyses reach the same result. It may be that the former, based on the American cases, may need more precise formulation by reference to specific facts. It suffices to say that in circumstances such as the present, the conduct of Hills and Bosch in acting as they did provides a defence, irrespective of the assessment of the then commercial worth of the TCP debt, either because of a bona fide discharge or because such, with the payment away, can be seen as a change of position. 146This approach to the matter would see the legal rights of the parties conform with closely analogous circumstances. If, for instance, Mr Skarzynski had stolen the funds (or otherwise obtained them in breach of a trust or fiduciary relationship) and paid Hills or Bosch with them, a claim based on equitable tracing would be defeated by a defence of bona fide purchase, the consideration being the discharge of his past debt: see [106] above. Equally, if Mr Skarzynski had practised a slightly different fraud on AFSL, borrowing money directly from it on the basis of a chattel mortgage over non-existent goods, and then using the proceeds to pay Hills and Bosch, there would be no claim against either of them because they were not payees of AFSL, and tracing would be defeated for the above reason. 147Further, at least on the facts here, the principle conforms with the operation of the change of position defence based on payment away and receipt in full discharge. Change of position based on a wider view of the facts 148If I be wrong in the above analysis, an analysis of the whole context and facts up to April 2010 reveals that both Hills and Bosch changed their positions such that it would be inequitable to order any repayment. 149The authoritative acceptance of the change of position defence is to be found in ANZ v Westpac at 673 and in David Securities at 385-386. 150The passage in ANZ v Westpac is referred to at [71] above. In David Securities, Mason CJ, Deane, Toohey, Gaudron and McHugh JJ said the following at 385-386: "If we accept the principle that payments made under a mistake of law should be prima facie recoverable, in the same way as payments made under a mistake of fact, a defence of change of position is necessary to ensure that enrichment of the recipient of the payment is prevented only in circumstances where it would be unjust. This does not mean that the concept of unjust enrichment needs to shift the primary focus of its attention from the moment of enrichment. From the point of view of the person making the payment, what happens after he or she has mistakenly paid over the money is irrelevant, for it is at that moment that the defendant is unjustly enriched. However, the defence of change of position is relevant to the enrichment of the defendant precisely because its central element is that the defendant has acted to his or her detriment on the faith of the receipt (Birks, An Introduction to the Law of Restitution, 1990, p 410). In the jurisdictions in which it has been accepted (Canada and the United States), the defence operates in different ways but the common element in all cases is the requirement that the defendant point to expenditure or financial commitment which can be ascribed to the mistaken payment (Rural Municipality of Storthoaks v. Mobil Oil Canada Ltd. (1975) 55 DLR (3d) 1, at p 13; Grand Lodge, A.O.U.W. of Minnesota v. Towne (1917) 161 NW 403, at p 407). In Canada and in some United States decisions, the defendant has been required to point to specific expenditure being incurred because of the payment. Other cases in the United States (e.g., Moritz v. Horsman (1943) 9 NW 2d 868) allow a wider scope to the defence, such that a defendant can rely upon it even though he or she cannot precisely identify the expenditure caused by the mistaken payments. In no jurisdiction, however, can a defendant resort to the defence of change of position where he or she has simply spent the money received on ordinary living expenses." (emphasis in original) 151The choice adverted to by their Honours between a more precise and specific requirement for identified expenditure and a more flexible and broad consideration of the matter is informed by the legal considerations and rationale underpinning the claim in restitution and the defence. As discussed in Roxborough and Equuscorp v Haxton, the action for restitution and thus necessarily the "defences" that attend it, or more accurately, the consideration of the appropriate factors that would make it unjust to order restitution, is and are affected by the equitable notions and influences that gave rise to the action: Roxborough at [15]-[16], [62]-[63], [71], [76]-[100]; Equuscorp v Haxton at [30] and [114]; and National Commercial Banking Corporation of Australia Ltd v Batty [1986] HCA 21; 160 CLR 251 at 268. 152If I may say, a helpful statement of the principles governing change of position (at least in the context of the Law of Property Act 1969 (WA), s 125) was expressed by Buss JA (with whom Steytler P agreed) in Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Co Ltd [2008] WASCA 119; 66 ACSR 594. As Buss JA pointed out, the requirement in Australia for any change to be "on the faith of the receipt" dictated by David Securities at 385-86 may be the foundation for a perception of a narrower or at least differently structured approach in Australia compared to England: see in particular the discussion in Alpha Wealth at [202]-[203]. 153No narrow view has been taken about what qualifies as a vitiating factor based on mistake: David Securities at 370-385. One aspect of the underpinning consideration for that can be seen to be the countervailing defence that takes account of the protection of the legitimate interest of the payee in the security of its receipt: David Securities at 385. This legal rationale can be seen to inform the reach and application of the "defence". It can be accepted that enrichment and "disenrichment" calling for some precision in monetary values has its part to play: P Birks, Unjust Enrichment, 2nd ed (Oxford UP, 2005) at 208-212; A Burrows, The Law of Restitution, 2nd ed (Butterworths, 2002) at 510; K Mason, J Carter and G Tolhurst, Restitution Law in Australia, 2nd ed (LexisNexis, 2008) at 865; and see Dextra Bank & Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193 (PC). There are difficulties, however, in using purely monetary and expenditure based considerations to decide upon change of position. Given the broad range of acts or omissions that may legitimately be done or not done on the faith of a receipt, to require the measurement of the payee's position in terms only of the currency of the payer's mistake may unfairly or mechanically restrict the just reconciliation of the competing rights. This may be especially so where, as here, the payer can be seen to be responsible to some real degree for its own predicament, both in the making of the mistake and in the time it has taken to retrieve the effects of the mistake: see Lipkin Gorman at 581. In this regard, consideration of the question whether to take account of the respective fault of the parties is to adopt a position that is "hopelessly unstable": Dextra Bank at 207 can be left to another occasion. 154The nature of restitution and its informing equitable roots also tend against overly constricting the operation of the defence by requiring in all circumstances proof of sums certain as irreversibly lost on the faith of the receipt. 155It can be accepted on the authority of David Securities at 385 that the detriment must be on the faith of receipt. No argument was put here that Hills and Bosch did not act on the faith of the receipt. Once it can be concluded that the payee has acted on the faith of the receipt, the question of what has been done must be assessed. Lord Goff's view in Lipkin Gorman v Karpnale at 580 was that the defence was available to someone whose position has so changed as to make it inequitable in all the circumstances to require restitution. This broad view accords with the Restatement at sec 142(1) and the Restatement Third at sec 65. As Buss JA said in Alpha Wealth, to the extent that such an expression of approach makes it unnecessary that the change should be on the faith of the receipt, it must give way to David Securities. Accepting that, the expression of the matter by Lord Goff conforms with the equitable roots of the restitutionary action and with what was said in David Securities at 379: see [70]-[72] above. 156Here, the wider context in which one examines the actions (and inactions) on the faith of the receipt involves the bona fide behaviour of a commercial creditor after the receipt of a payment in the effective form of cash in a modern commercial payment system. The TCP companies, one can infer, were some only of numerous trade creditors of Hills and Bosch. The payment system involved was the electronic transfer of funds. On the faith of the receipts, the creditors dealt in good faith with their commercial debtors. They discharged debts as existed between them and their debtors; they gave up or did not take steps to seek recovery of debts; they advanced further credit or continued to do business with the debtor. Up to six months went by during which commercial relationships were continued on the hypothesis of the validity of receipt and of the discharge of previously existing debts. It can be accepted (for the purposes of argument) that an order for restitution would create a right in Hills and Bosch to reclaim from the TCP companies the moneys paid to AFSL. But that would not be to set aside a discharge of a debt that has already taken place; rather, it would be the creation of a right conformable with the obligation to give restitutionary repayment to AFSL. 157The assessment whether an order for repayment in whole or in part would be unjust as between payer and payee should be made in the circumstances of the parties and against the context or milieu in which they operate or conduct themselves. Here, the parties were active in commerce and utilised a payment system which involved the effective payments in cash by electronic mechanisms. The need for certainty and stability in payment systems in commerce referred to by the New York Court of Appeals in Stephens, by Mathew J in London and River Plate Bank and by Buckley LJ in Morison v London County and Westminster is an essential feature of commerce and of the context in which one assesses the positions of Hills and Bosch here. It informs the character of the security of receipt that the payee was entitled to expect. A party receiving payment in good faith and in the ordinary course of business of the trade debts of customers cannot be expected to keep open its arrangements pending certainty or confirmation of the legitimacy of apparently valid payment. Discharge of legal claims will be given and commerce resume or continue on an apparently certain hypothesis. 158The relevant change of position will depend upon the circumstances. Usually, however, it involves an assessment of what was done (or not done, as the case may be) on the faith of the receipt judged at the time the payer seeks restitution. Just as in estoppel, the protection the law will give to a party seeking to require adherence to the assumption will be based on the detriment or harm that would flow from the other party resiling from the assumption: Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; 59 CLR 641 at 674-675. 159The change of position can be seen as a defence to a money claim or as a reason for not ordering a return of money on the basis that such an order would be unjust. It may operate pro tanto: Lipkin Gorman v Karpnale; David Securities at 385; and Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] 4 All ER 890 at 946-948. 160In David Securities at 385 the majority described the common element in the Canadian and United States cases as the requirement to point to expenditure or financial commitment which can be ascribed to the mistaken payment, the degree of specificity of that expenditure or commitment being a matter of difference in the cases. Subject of course to the change being on the faith of the receipt, I do not read the majority in David Securities at 385, however, as rejecting the statement of broad principle by Lord Goff in Lipman Gorman at 580 (see [150] above); indeed, what they said at 379 was in conformity with it, as is Equuscorp at [30]. That said, the focus of the assessment is upon the avoidance of injustice by ordering or not ordering a specific monetary payment, absent any question of promise or promissory representation, but giving proper weight to an important purpose of the defence - to protect the legitimate interest in the security of payments. 161Conformably with the statements of underlying principle in David Securities at 379 and 385 and Lord Goff in Lipman Gorman at 580, foregone opportunities or steps that could realistically have benefited the payee that were not taken on the faith of the receipt should be capable of amounting to such a change of position as would make it unjust to order repayment: see Goff and Jones, The Law of Unjust Enrichment, 8th ed (Sweet and Maxwell, 2011) at 688 and cases there cited, and in particular Commerzbank AG v Price-Jones [2003] EWCA Civ 1663; Toronto Dominion Bank v Bank of Montreal (1995) 22 OR (3d) 362; Sydney City Council v Burns Philp Trustee Company (Supreme Court of NSW, Rogers CJ Comm D, 13 November 1992, unreported); Palmer v Blue Circle Southern Cement [1999] NSWSC 697; 48 NSWLR 318; and Moore v National Mutual Life Association [2011] NSWSC 416. 162The question of irreversibility of the change of position is also important: Alpha Wealth at [202]; K & S Corp Ltd v Sportingbet Australia Pty Ltd [2003] SASC 96; 86 SASR 312 at 348; and see J Edelman and E Bant, Unjust Enrichment in Australia (Oxford UP, 2006) at 323 and cases there cited. Change and reversibility of change (or at least creation of a situation of equivalence) as well as the question of who must prove what in respect thereof will be highly context specific. Depending upon the nature of the change of position, precise evidence may not be possible. Reasonable approximations may be required: Scottish Equitable plc v Derby [2001] 3 All ER 818 at 827 (Robert Walker LJ). 163Here, AFSL argued, with some force, that neither Bosch nor Hills could prove, the onus being said to be on them, that if they had not received and accepted the payments from AFSL, then it would have been any better off in monetary terms. A number of considerations were said to be particularly relevant in this regard: The financial position of Mr Skarzynski and his companies could be seen as perilous. The banks which had charges over the assets of the companies were likely to appoint receivers before the time for compliance with garnishee orders. The companies lacked substantial assets, and their trading position was colourfully described by Mr Musico in February. It was said to be a matter of speculation that the future (from early September) held any tangible financial benefit for Hills or Bosch. 164One needs to stand back and appreciate, first, what this approach is requiring of commercial parties and, secondly, what aspect of the defence this approach requires the payee to prove. The TCP companies were some of Hills' and Bosch's trade creditors. Hills and Bosch received, effectively, cash in the ordinary course of business. On the faith of its receipt, they desisted in legal remedies and agreed to discharge the relevant debts of the TCP companies. Six months later, the payer called into question its own effective cash payments to them. For a successful change of position defence, on AFSL's submissions, Hills and Bosch must disentangle the financial affairs of a number of related trade debtors over a period of six months, in circumstances of the kind of detail that the above-described facts reveal, in order to demonstrate what would have happened on a hypothesised financial basis (with the possible intervening acts of unrelated third parties, such as other creditors secured and unsecured), and that that proved hypothesised reality would have been more advantageous than the position now obtaining of repaying the cash payment in full and prosecuting a claim for a restitutionary claim against the relevant TCP company founded upon the obligation of Hills and Bosch to repay AFSL. 165There was undoubtedly a change of position by Hills and Bosch on the faith of the payment (the fact of "on the faith of this payment" not being disputed). The payment may not, of itself at the time of receipt, have discharged the debt of the TCP company or companies in question, without the intention of the payer to that effect. Nevertheless, within a very short period of time Hills and Bosch agreed with the TCP entities to discharge the existing indebtedness pro tanto. The funds were not owned by AFSL. They were available to be dealt with by Hills and Bosch. The change of position is irreversible, at least at one level of analysis. On the faith of that payment each discharged a debt with a third party, and thereafter ordered their commercial affairs on the basis of the discharge. Bosch further abandoned accrued rights to judgment and enforcement against relevant entities and Hills did not take recovery steps that were available. Meanwhile, such steps or opportunities as were or might have been available to creditors of the TCP companies, including the obtaining of security from third parties, such as from Mrs Skarzynski over the family home (though the relevant equity therein was unclear and the subject of litigation, $512,000 being paid into court) were arrogated to the benefit of AFSL. The events of the six months cannot be undone. Such steps of enforcement or securing of the debt cannot now be taken. Whilst it can be accepted that the ascription of a precise monetary value to the lost opportunities of non-discharge and enforcement of rights may be to a degree speculative, the difficulty in that regard stems from the timing and duration of AFSL's mistake. This length of time (inimical to the security of receipt of Bosch and Hills), and the difficulty of proof flowing from it, are relevant to the sufficiency of what has been proved in the assessment of injustice: cf Delaforce v Simpson-Cook [2010] NSWCA 84; 78 NSWLR 483 at 486 [5]. What can be accepted is that Hills and Bosch gave up, on the faith of the receipt, both the debts owed by the TCP companies by way of discharge and a real and potentially valuable commercial opportunity to enforce or secure payment from their trade debtors. It would, in my view, be unjust between these commercial parties in this commercial context to order repayment of the sums received. 166Putting to one side any incipient difference in approach from the requirement of "on the faith of the receipt", I do not see any of the leading cases in England on the change of position defence as contrary to anything in the above: Lipkin Gorman v Karpnale; Goss v Chilcott [1996] AC 788 (Privy Council on appeal from New Zealand); Kleinwort Benson Ltd v Lincoln CC [1999] 2 AC 349; Dextra Bank; Niru Battery Manufacturing Co v Milestone Trading Ltd [2004] QB 985; and Haugesund Kommune v Depfa ACS Bank [2010] EWCA Civ 579. I would particularly refer to Niru at [180]-[187] and Haugesund at [125]-[126]. Other issues 167This conclusion makes it unnecessary to deal with the question as to whether AFSL must give credit for the receipt of lease payments. Prima facie, the recovery of funds from the TCP companies can be seen to be a species of passing on or recoupment. On the authority of Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd [1994] HCA 61; 182 CLR 51 at 90-91 and Roxborough at [25]-[29], no such defence of passing on or recoupment exists. It is unnecessary, however, to express a final view on the question whether this is properly viewed as a defence of recoupment which would be denied by Royal Insurance. The benefit of the input tax credit (if properly received) can be viewed likewise. 168Hills and Bosch also denied AFSL's right of recovery on a number of other grounds. The first was a denial of circumstances giving rise to a prima facie right of recovery. This did not involve any denial of the mistake by AFSL or that such a mistake was of an importance as would usually entitle recovery, subject to any relevant defences. Rather, it was founded on the fact that the payments were part of the contractual regime set up: purchase and then lease of goods, which contractual arrangements have remained on foot. Reliance was placed on Lumbers and the High Court's emphasis there (at [45] and following per Gleeson CJ and [77] and following per Gummow, Hayne, Crennan and Kiefel JJ) of the relevant contractual milieu of the restitutionary claim and the rights, obligations and circumstances underlying it. See also Steele v Tardiani [1946] HCA 21; 72 CLR 386. 169Here, the lease agreements were not part of any redistribution of risk between AFSL, Mr Skarzynski and Hills and Bosch (other than the secret and fraudulent one of Mr Skarzynski). There is no reason why the existence of the lease agreements should detract from the operative effort of the mistake in this case. True it is that AFSL has affirmed the lease agreements in order no doubt to enforce such legal rights as it has. Any benefit from those attempts was treated by the primary judge as a source of recoupment for which Hills and Bosch should be given credit. 170There is no true inconsistency of right or remedies here. It is true that the enforcement of the lease agreements and the actions for restitution proceeded on inconsistent assumptions - the former as enforcing agreements for the lease of goods and the latter as to the mistakes of the existence of the goods. That inconsistency of assumption does not affect the correctness of the historical fact central to the mutual legal rights and obligations between AFSL and Hills and Bosch - payment of moneys received by the latter under a fundamental and operative mistake of fact by the former. The Hills Appeal 171On the second day of the hearing of the appeal Hills sought leave to amend its notice of appeal. Leave should be granted to add ground 7 because the matter is capable of being dealt with (and has been dealt with) without any prejudice to AFSL. Orders 172The orders that I would make are: 1. As to the appeal of Australian Financial Services and Leasing Pty Ltd (AFSL) against Bosch Security Systems Pty Ltd (Bosch), appeal dismissed with costs. 2. As to the appeal of Hills Industries Ltd (Hills) against AFSL: (a) appeal allowed; (b) set aside orders (1)(a) and (b) made by the Supreme Court on 23 June 2011 and in lieu thereof order judgment for the first defendant against the plaintiff, the plaintiff to pay the first defendant's costs. (c) AFSL pay Hills' costs of the appeal. (d) Cross-appeal of AFSL dismissed. 173MEAGHER JA: The circumstances in which Austalian Financial Services and Leasing Pty Ltd (AFSL) seeks to recover moneys transferred electronically to Hills Industries Ltd (Hills) and Bosch Security Systems Pty Ltd (Bosch), as paid under mistakes of fact, are set out in the judgment of Allsop P. 174Those payments were made for the purchase by AFSL of goods from Hills and Bosch. In fact those goods did not exist and the invoices which purported to evidence their sale, and upon which AFSL relied, were false. In each case the fraud was perpetrated by a Mr Skarzynski. That fraud also involved AFSL entering into lease agreements with various companies nominated by Mr Skarzynski in respect of the non-existent goods. 175At the same time Mr Skarzynski advised Hills and Bosch that each would receive payments in satisfaction of debts owed by companies with which he was associated. In relation to Hills, the debtor company was TCP. In relation to Bosch, the debtor companies were TCP, TCP (Vic), and TCP (Qld). In the face of those statements and the receipt of the payments, Hills and Bosch applied the payments in discharge of the debts due from the companies. 176Hills received $308,000 and applied it to discharge the indebtedness of TCP. It refrained from taking legal proceedings which it otherwise would have taken against TCP and its directors, including Mr Skarzynski. I agree with Allsop P that the challenge to the primary judge's finding to the contrary (at [74]) should be upheld. It continued to trade with TCP at a credit limit of $200,000, instead of $350,000, until early 2010 when it became aware of the frauds perpetrated by Mr Skarzynski. At that time there was $21,739.03 owing from TCP to Hills. 177The primary judge held that AFSL was entitled to recover from Hills the mistaken payment of $308,000 subject to deduction of payments received by AFSL under the lease agreements of the non-existent goods (totalling $55,314.60) and the value of the GST input tax credit claimed by AFSL in relation to the invoice value of those non-existent goods ($28,000). Hills appeals against that holding. It says that it has a complete defence to that claim and alternatively that it has a partial defence in these two amounts as well as the amount owed by TCP when they ceased trading ($21,739.03). AFSL cross-appeals against the holding that Hills was entitled to deductions for the lease payments received and the GST input tax credit. 178Bosch received $198,000. At that time it had already taken recovery proceedings against Mr Skarzynski and the TCP companies. On 15 September consent orders were filed setting aside default judgments and resolving the proceedings which had been brought. After allowing for an earlier payment made by Coles Group Ltd to Bosch on behalf of TCP and rebates due to TCP, there was money due from Bosch to TCP. Bosch paid TCP $21,000 on 18 September 2009 and $31,326.35 on 22 September 2009. After September 2009, Bosch continued to supply the TCP companies on a COD basis. 179The primary judge held that Bosch had a change of position defence to the whole of AFSL's claim. AFSL appeals against that holding. Bosch supports the primary judge's conclusion and alternatively argues that it has a partial defence in the amounts of the payments it made to TCP (totalling $52,326.35), the payments received by AFSL under the lease agreements of the non-existent goods (totalling $35,574) and the value of the GST input tax credit claimed by AFSL ($18,000). The appeal 180Hills and Bosch argue that they gave consideration for the payments received from AFSL in the form of the discharge of the debts owed by TCP companies. They say that provided a complete (or in the case of Bosch, almost complete) defence to AFSL's claims. Alternatively, each argues that it changed its position on the faith of the receipt of those payments and is entitled to a complete defence or alternatively a partial defence which takes account of moneys paid away by Hills or Bosch and benefits received by AFSL. I will deal first with the argument that the payment was made for "good consideration" and that this itself provided each with a complete defence. I will then address the change of position defences and the other matters in issue. Defence of payment made for good consideration 181I should say at the outset that I agree with the general observations made by Allsop P as to the relevant principles applicable to what are described as restitutionary claims: see his Honour's reasons at [66] to [75]. 182In English and Australian law the often cited statement of the principles in relation to the "defence" of payment for good consideration is that formulated by Goff J in Barclays Bank Ltd v WJ Simms Son & Cooke (Southern) Ltd [1980] QB 677 at 695: "(1) If a person pays money to another under a mistake of fact which causes him to make the payment, he is prima facie entitled to recover it as money paid under a mistake of fact. (2) His claim may however fail if (a) the payer intends that the payee shall have the money at all events, whether the fact be true or false, or is deemed in law so to intend; or (b) the payment is made for good consideration, in particular if the money is paid to discharge, and does discharge, a debt owed to the payee (or a principal on whose behalf he is authorised to receive the payment) by the payer or by a third party by whom he is authorised to discharge the debt; or (c) the payee has changed his position in good faith, or is deemed in law to have done so." 183That statement is, as the extract makes clear, directed to "defences" available to a claim to recover moneys paid under a mistake of fact. It is cited with apparent approval in David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; 175 CLR 353 at 380, 405. 184Propositions (2)(b) and (c) describe circumstances which, absent other factors, will be sufficient to displace the prima facie obligation of a payee to make restitution in the face of the relevant qualifying or vitiating factor, here mistake, which gives rise to that obligation: Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation [1988] HCA 17; 164 CLR 662 at 673; David Securities at 379; Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89 at [150]; Equuscorp Pty Ltd v Haxton [2012] HCA 7; 86 ALJR 296 at [30], [112]. Proposition (2)(b) is directed to the circumstances of the payment sought to be recovered whereas proposition (2)(c) is directed to conduct of the payee consequent upon receipt of that payment. Subsequent cases have held that such conduct may occur in anticipation of receipt: see, for example, Dextra Bank & Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193 at [38], [39]. 185Proposition (2)(b) is capable of applying in four different circumstances, each of which turns on the capacity in which, as between the payer and payee, the payment is made and received. The payer may purport to make the payment for itself or on behalf of a third party to a payee purporting to act for itself or on behalf of another party. I use the word "purport" to make clear that these questions of capacity are addressed by reference to the basis upon which the parties "deal" with each other as distinct from the position as it may in fact be between them and any third parties: Holland v Russell (1861) 1 B&S 424 at 432-433; 121 ER 773 at 776; Newall v Tomlinson (1871) LR 6 CP 405 at 408-409, 410; Kleinwort, Sons, & Co v Dunlop Rubber Company (1907) 97 LT 263 at 265. 186The defence of valuable consideration described in proposition (2)(b) was recognised in ANZ Banking Group Ltd v Westpac (at 673) and in David Securities (at 380). However, as formulated and recognised, that defence does not extend to the circumstances of Hills and Bosch. AFSL paid money to each of them intending to discharge what it believed to be debts due by it to them. It did not pay as agent for or on behalf of Mr Skarzynski or his companies intending that the payments be received in discharge of debts due from them to Hills or Bosch. AFSL also did not, as between itself and Hills or Bosch, purport to pay as agent for a third party owing money to either of them. Nor did AFSL pay to Hills or Bosch on the basis that they were agents for Mr Skarzynski or his companies and intending that they might pay or apply the moneys received as directed by them. 187AFSL paid the moneys to Hills and Bosch on the basis that they could apply them when received to their own use and benefit. Unbeknownst to AFSL, Hills and Bosch applied the moneys in discharge of third party debts. From the perspective of Hills and Bosch, neither treated the moneys as received to their own use and benefit. They believed that the funds were paid for the benefit of Mr Skarzynski's companies. The legal effect of what Hills and Bosch did was the same as if they had paid the amounts received to the TCP companies and then received them back in satisfaction of existing liabilities. For examples of similar analyses of the legal effect of payments made on behalf of others or moneys applied to discharge debt in the context of restitutionary claims such as these, see Holland v Russell at 435, 436; 777 (per Cockburn CJ); Continental Caoutchouc and Gutta Percha Co v Kleinwort, Sons & Co (1904) 9 Com Cas 240 at 248 (per Collins MR); Porter v Latec Finance (Qld) Pty Ltd [1964] HCA 49; 111 CLR 177 at 191-192 (per Kitto J); Smith v Knapp 297 Mass 466 at 470-471 (1937) (per Rugg CJ); Weiner v Roof 19 Cal.2d 748 at 753 (1942) (per Traynor J); W Keener, "Recovery of Money Paid Under Mistake of Fact" (1887) 1(5) Harvard Law Review 211 at 221. There are no doubt numerous others. 188Whilst there was a discharge of the TCP debts, that discharge did not occur simply as a result of the payments made by AFSL and their receipt by Hills and Bosch. The discharge happened because of the intervention of Mr Skarzynski, albeit fraudulent, and consensus between him and Hills and Bosch, on their part procured by Mr Skarzynski on a deliberately mistaken basis, as to how the receipts were to be treated and dealt with. 189As expressed, proposition (2)(b) does not purport to be exhaustive in its description of the circumstances in which a payment may be made for good consideration. Accordingly, the question remains whether the fact that consideration was given to the TCP companies for discharge of their debts is or should be a good "defence" to AFSL's action for money had and received. 190In considering this question, it is instructive to consider the position as it has developed under American law. In G Palmer, The Law of Restitution (1978) Little, Brown & Co, Vol III, sec 16.6, the defence of "discharge for value" is summarised as follows (at 490-491): "In considering the defense of discharge for value, courts are almost wholly committed to the view that the receipt of the plaintiff's funds in payment of or as security for the debt of a third person is value. In situations of endless variety, courts have denied restitution because money paid by one party was received in good faith by the other, in satisfaction of or as security for a valid claim against a third person." That formulation of the defence is not limited to claims to recover moneys paid under a mistake. In its terms it is capable of describing the facts of this case if the second sentence is not read as requiring that the payer have made the payment to discharge the debt. 191In Restatement of the Law Third, Restitution and Unjust Enrichment (2011) American Law Institute, sec 67, what was called the "discharge for value" rule in Restatement of the Law of Restitution, Quasi-Contracts and Constructive Trusts (1937) American Law Institute, sec 14 at 55-59, is reformulated (at 558) as the "bona fide payee" rule. The relevant part of that rule is that a "payee without notice takes payment free of a restitution claim to which it would otherwise be subject, but only to the extent that (a) the payee accepts the funds in satisfaction or reduction of the payee's valid claim as creditor of the payor or of another person". That rule protects a payee without the need for the payee also to demonstrate any adverse change of position on receipt of the funds (at 559). The position is the same under English and Australian law: Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 at 580-581. 192The "bona fide payee" rule as formulated refers to the discharge of a valid claim of the payee "as creditor of the payor or of another person". Nine illustrations are given with respect to the formulation of that part of the rule. Those illustrations, as the Reporter's Note reveals (at 577-579), are based on particular decisions. The Reporter for the Restatement Third is Professor Kull. In illustrations 1, 4, 5 and 9 the payer pays as agent for the payee's debtor (in one case an impersonator). In each of these illustrations, the payee accepts the funds in satisfaction of its valid claim as creditor of the payer's principal. In illustrations 2 and 3 the payer is a thief or person who has misappropriated funds and uses them to pay the payee's valid claims against the payer. In each case the payee accepts the funds in satisfaction of its valid claim as creditor of the payer. In illustrations 6 and 7 the payer pays to an agent (which includes for these purposes, a bank) of a creditor of the payer. In these cases the payee intermediary applies the funds (or part of them) in satisfaction of its separate and valid claim as creditor of its principal (the payer's creditor). Finally, in illustration 8, an insurer pays a banker who is co-insured with the debtor of the banker. The payee banker then applies the funds in satisfaction of its valid claim against its debtor, the co-insured. In illustrations 6, 7 and 8, unlike the others, the consideration from the payee is not given to the payer or to its principal. In illustrations 6 and 7 it is given to the payee's debtor principal. In illustration 8 it is given to the payee's debtor customer. 193A number of matters arise from this analysis. First, illustrations 1, 4, 5 and 9 are within proposition (2)(b) in Barclays Bank. The remaining illustrations are not. Illustrations 2 and 3 are not because they would not arise in relation to a claim to recover money paid under a mistake. They are nevertheless available defences to claims to recover money stolen by a thief and paid away in satisfaction of valid claims: see, generally, Goff & Jones, The Law of Unjust Enrichment, 8th ed (2011) Sweet & Maxwell at 29-09; and Lipkin Gorman at 579. Illustrations 6 and 7 are not within proposition (2)(b) because in relation to payments to a payee intermediary, the proposition applies only to payments which discharge valid claims of the payee's principal as distinct from valid claims of the payee against its principal. Illustration 8 is not within the proposition for the same reason. The valid claim which is discharged is not of the payer or his principal but of the payee against his debtor customer. 194Secondly, in each of illustrations 6, 7 and 8, the discharge is not effected by reason only of the payment and its receipt. The discharge is effected by the action of the payee in applying the funds when received in satisfaction or reduction of a debt of the payee's principal or customer. In each illustration that action is consistent with the basis on which the money was received and in reliance upon the fact of its receipt. In illustrations 6 and 7 the money was received by the payee bank for the credit of its customer's account and the bank did something equivalent to paying the money over by applying it to reduce the customer's debt. In illustration 8 the payee bank's insurable interest in the subject matter of the insurance was that it was held as security for its customer's liability. It used the payment received to discharge that liability. 195Thirdly, illustrations 6 and 7 are examples of circumstances in which under English and Australian law the payee, who receives as an intermediary or agent, has a defence if he pays the money to his principal or does "something equivalent to it" before learning of any mistake: per Lord Ellenborough CJ in Cox v Prentice (1815) 3 M&S 344 at 348; 105 ER 641 at 642; Kleinwort v Dunlop Rubber Company at 265; ANZ Banking Group v Westpac Banking Corporation at 674, 681-682. Doing something equivalent includes applying the moneys in satisfaction of a debt due from the principal. However, a reversible book entry to that effect is not sufficient. The parties must do more. For example, a book entry followed by transactions conducted on the basis that the debt has been discharged is sufficient. In a trading relationship those transactions would include the extension of new credit or sale of further goods: Buller v Harrison (1777) 2 Cowp 565 at 568; 98 ER 1243 at 1245; ANZ Banking Group v Westpac Banking Corporation at 682-684. 196Holland v Russell is an early example of a case in which these principles were applied. An insurer sought to recover moneys paid to a broker in settlement of a claim. The broker had transmitted some of the funds to his principal and retained one amount to satisfy a debt due from the principal and another to meet the expenses of prosecuting his principal's action against the insurer. Cockburn CJ (in a decision subsequently affirmed by the Court of Exchequer Chamber (1863) 4 B&S 14; 122 ER 365) said of the agent's position in relation to the first amount retained (at 435; 777): "In the present case the defendant, having a claim against his principals, transmits to them an account made up to the end of the year, in which giving them credit for the amount received on this policy, he debits them with the amount of his claim, and strikes a balance which proves to be in their favour. With this balance he credits them in a further account for the ensuing year, which account was afterwards transmitted to them in due course. Both accounts were adopted and agreed to by the principals. The account thus became a settled account between the parties; and the transaction is in effect the same as though the agent has paid over the whole amount to the principals and had received back the amount of his claim." (emphasis added) As to the second amount retained to meet legal expenses, Cockburn CJ said (at 435-436; 777): "This sum, which it may be assumed would otherwise have been transmitted to the principals, was by their assent and desire retained for the purpose of its being applied to the carrying on of a suit bona fide instituted and prosecuted on their behalf. This expenditure having been made by the direction of the principals, is therefore, equivalent to a payment actually made to them; and the defendant must be considered in the same position as though he had handed over the amount." (emphasis added) 197Where the money received has been paid over or applied to discharge a debt of the principal, the payee has a defence to a claim for recovery: ANZ Banking Group v Westpac Banking Corporation at 683. It is the notional payment away to the principal involved in the discharge of the agent's debt that makes it inequitable that the agent be required to make restitution to the payer. It is unnecessary for the agent to invoke any "discharge of debt" or "bona fide payee" defence because there is no separate requirement that the agent prove "overall prejudice": ANZ Banking Group v Westpac Banking Corporation at 683. That is because if the agent has paid the money away to his principal, the benefit of the payment has passed to the principal who remains prima facie liable to make restitution: Buller v Harrison at 568; 1245; Gowers v Lloyds and National Provincial Foreign Bank, Ltd [1938] 1 All ER 766 at 773; ANZ Banking Group v Westpac Banking Corporation at 673-674, 682. As between the payer and the agent payee, the latter has paid the money away in accordance with the limited mandate of the payer and the payer is able to proceed against the principal: see also the Restatement Third, Vol 2 at 517. 198The general "change of position" defence was not recognised under English law until the decision in Lipkin Gorman: esp at 558, 568, 578-580. To that time the existence of that general defence had been rejected: Durrant v The Ecclesiastical Commissioners for England and Wales (1880) 6 QBD 234 at 236; Baylis v Bishop of London [1913] 1 Ch 127 at 133-134, 137-138, 139; Lipkin Gorman at 579. However, there were defences, such as the payee agent's defence, which rested on notions of change of position and detriment: Lipkin Gorman at 578; Goff & Jones, The Law of Restitution, 2nd ed (1978) Sweet & Maxwell at 549-550. This was recognised by the High Court in ANZ Banking Group v Westpac Banking Corporation where it is said of the agent's defence (at 682): "If the matter needs to be expressed in terms of detriment or change of position, the payment by the agent to the principal of the money which he has received on the principal's behalf, of itself constitutes the relevant detriment or change of position. In that regard, no relevant distinction can be drawn between payment to the principal or payment to another or others on behalf of the principal." In the Restatement Third in the treatment in sec 65 of the "change of position" defence it is noted (at 516) that the agent's "payment over" defence is a "specific application of the general defense [of change of position] differing from the ordinary rule only by its more generous definition of the acts by the agent/recipient that constitute a change of position". See also Port of Brisbane Corporation v ANZ Securities Ltd (No 2) [2002] QCA 158; [2003] 2 Qd R 661 at [24]-[26] per McPherson JA; and Gummow J writing extra-judicially in "Moses v Macferlan: 250 years on" (2010) 84 Australian Law Journal 756 at 761. 199It is necessary to draw these threads together. In relation to a claim for money paid under a mistake, of the relevant illustrations given for the application of the "bona fide payee" rule, the only ones which are not within proposition (2)(b) fall to be dealt with, at least under Australian law, under the general "change of position" defence or in accordance with the more specific principles which have been developed in relation to payments received as an agent or intermediary. 200The payments made to Hills and Bosch were not paid or received in the circumstances described in proposition (2)(b). There being no other basis on which a defence of payment for good consideration may arise by reason only of the fact of receipt of the payments, the arguments of Hills and Bosch that on that basis each had a complete (or almost complete) defence to AFSL's claims must be rejected. 201It remains to consider whether the circumstances of receipt and bona fide discharge gave rise to a complete or partial "change of position" defence. Defence of change of position 202The circumstances sufficient to displace the prima facie obligation to make restitution include "change of position": ANZ Banking Group v Westpac Banking Corporation at 673; David Securities at 385-386. That defence as recognised by the High Court, directs attention to whether the payee has acted to his detriment "on the faith of the receipt" such that it would be inequitable in all the circumstances to require restitution, or alternatively restitution in full: David Securities at 385-386; Lipkin Gorman at 580. In sec 65 of the Restatement Third the defence is formulated in essentially the same terms (Vol 2 at 514-515): "If receipt of a benefit has led a recipient without notice to change position in such manner that an obligation to make restitution of the original benefit would be inequitable to the recipient, the recipient's liability in restitution is to that extent reduced." 203I agree with McPherson JA that the words "on the faith of the receipt" are to be understood as referring to the act or process of receiving the money and that for there to have been a relevant adverse change of position the payee must "have acted to its detriment on the faith of (meaning in reliance on) its having received the money": Port of Melbourne Corporation at [13]. This understanding accords with the albeit tentative description of the defence in ANZ Banking Group v Westpac Banking Corporation at 673 ("some adverse change of position by the recipient in good faith and in reliance on the payment"). It also accords with the example as to the operation of the defence given by Mason CJ in Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd [1994] HCA 61; 182 CLR 51 at 65. 204That question of reliance is to be addressed having regard to the circumstances in which the payment is made and received; in other words, to matters of context. If those circumstances include instructions of the payer which limit what may be done by the payee with the moneys received and the payee acts contrary to those instructions, it is difficult to see how the payee's so acting could be said to be on the faith of the receipt. It does not follow, however, that when considering whether there has been a change of position on the faith of receipt of the funds, regard can only be had to information that came from the payer. The decision of this Court in Perpetual Trustees Australia Ltd v Heperu Pty Ltd [2009] NSWCA 84; 76 NSWLR 195 makes clear (at [137]-[139]) that regard may be had to the receipt and its "attendant circumstances" which include "information obtained in connection with the receipt". Information answering that description is not only information received from the payer. 205To the extent that there are statements of this Court in the earlier decision in State Bank of New South Wales Ltd v Swiss Bank Corporation (1995) 39 NSWLR 350 at 355, 356 which suggest otherwise, I do not consider that they correctly state the position; and they introduce an unnecessary qualification to the formulation of the relevant question. In saying this, I do not suggest that State Bank v Swiss Bank was wrongly decided. As McPherson JA points out in Port of Melbourne Corporation at [13] and [15], the decision is explained on the basis that notwithstanding that the payee received the payment with an instruction that it be credited "to the account you keep for customers" it paid the money away contrary to that instruction and therefore not in accordance with the receipt and its "attendant circumstances". 206In the present case it was not suggested that either of Hills or Bosch dealt with the receipts with knowledge of AFSL's mistake or in circumstances which raised questions as to their entitlement to retain and apply the payments in discharge of debts of TCP companies. At the hearing before the primary judge questions were raised as to inadequate checks and "sloppy procedures" on the part of Hills and Bosch. However, the primary judge dismissed those allegations and they were not pressed before this Court. On appeal it was accepted that the evidence justified the primary judge's conclusions that Hills and Bosch had acted in reliance on the receipt of the payments in applying them to discharge debts and thereafter by adjusting their dealings with the relevant debtors. The issues were whether they had established detriment or prejudice as a result of their doing so and whether that detriment or prejudice could be quantified sufficiently to provide a complete or partial change of position defence. 207In Hills' case, Mr Skarzynski provided a false invoice to AFSL on about 21 August 2009. AFSL agreed to finance the purchase of the goods in that invoice. Shortly afterwards Mr Skarzynski advised Hills that they would receive an electronic funds transfer of $308,000 from a third party on 25 August 2009. The funds were transferred on that day. On the same day Mr Skarzynski sent an email to Hills confirming the fact of transfer. On 26 August AFSL sent a remittance advice to Hills. That advice did not put Hills on notice that there was anything untoward about the payment which it had received or that it should not be applied, as Mr Skarzynski was maintaining, in reduction of TCP's debt. At no stage did AFSL have any communications with Hills about the invoice or request to sight the goods or to take delivery of them. In its accounts with TCP, Hills treated the payment as discharging its debt. It recommenced trading with TCP at a reduced credit limit and extended further credit. That trading continued until early 2010. 208In Bosch's case, on 31 August 2009 Mr Skarzynski advised that a payment in excess of $177,000 would be made in reduction of debts of the TCP companies. By that time garnishee orders had been issued and were being executed against those companies. On 2 September 2009, solicitors acting for the TCP companies advised Bosch that $198,000 would be paid by a third party by electronic transfer on the following day. On the same day, a false Bosch invoice was sent to AFSL. On 3 September, AFSL paid Bosch $198,000 by electronic funds transfer. On 4 September, Bosch received an AFSL remittance advice. That advice did not put Bosch on notice that it could not, as was being represented by Mr Skarzynski, apply those funds in reduction of debts of the TCP companies. There was no direct contact between Bosch and AFSL and the latter did not seek to sight the goods or to take delivery of them. Bosch allocated the payment in reduction of three outstanding accounts and agreed to the setting aside of default judgments and discontinuance of proceedings. Having settled its various accounts with the TCP companies, it made two payments to them totalling $52,326.35. It also resumed trading on a COD basis. 209In applying the received funds in discharge of debts, what each of Hills and Bosch did was equivalent to paying those funds away to the TCP companies for no consideration or value in return and to receiving them back in consideration for the discharge of the debts. Because, as between themselves and AFSL, they did not pay away as intermediaries to a principal, it is necessary to address whether by doing so they suffered detriment or "overall prejudice" so as to make it inequitable to require restitution: cf ANZ Banking Group v Westpac Banking Corporation at 683. That inquiry directs attention to their receipt of the funds in good faith in discharge of the debts. For the reasons earlier given, that discharge did not itself give rise to a defence of payment made for good consideration. However, the discharge remains relevant to the question of detriment or prejudice. If Hills and Bosch are to be regarded as having given value, in the form of the discharges, equivalent to the value they received, the position remains that overall they suffered detriment in paying the funds away on the faith of their receipt. 210This analysis exposes the essential question as being whether, where there has been such a bona fide discharge of debt, it is necessary for there to be any inquiry into the adequacy of the consideration given in the form of the discharges when assessing the question of detriment. That question arises in an inquiry as to whether it would be inequitable as between the claimant and the payee to require the latter to repay part or all of the amount received without notice of any circumstances entitling the claimant to recover payment. 211In my view, provided that the discharge is given for valuable consideration, it is not necessary for there to be an inquiry as to the adequacy or otherwise of the consideration to justify a conclusion that it would be inequitable to require restitution. This assumes that at the time of discharge the payee had no notice of circumstances entitling the payer to recover because if the position was otherwise there could be no defence of change of position on the faith of receipt: Lipkin Gorman at 580. Such an approach accords with equity's refusal to inquire into the adequacy of consideration where the doctrine of bona fide purchase for value without notice applies: see Meagher, Gummow & Lehane's Equity Doctrines & Remedies, 4th ed (2002) Butterworths LexisNexis at [8-240], [8-250]. The policy considerations which inform that doctrine are similar to those relied upon to justify the development of the "discharge for value" and "bona fide payee" defences as they are applied under American law. In Taylor v Blakelock (1886) 32 Ch D 560 Bowen LJ said (at 570) "in taking payment [a creditor who receives payment] relinquishes the right for the fruition of the right. In such a case the transaction is completed; and to invalidate that transaction would be to lull creditors into a false security, and to unsettle business". Those same considerations are said in cases such as Stephens v Board of Education of City of Brooklyn 79 NY 183 at 186-188 (1879) and Banque Worms v BankAmerica International 77 NY 2d 362 at 372-373 (1991) to provide justification for the "discharge for value" and "bona fide payee" defences. These passages are set out by Allsop P (at [107] and [110]). See also Palmer, Vol III at 497; and the Restatement Third, Vol 2 at 559. 212Adopting this approach produces an outcome consistent with that which would result in circumstances which are not materially different. If the payments fraudulently procured by Mr Skarzynski had been made by AFSL direct to the TCP companies and then paid to Hills and Bosch, the latter would have had a good defence to any restitutionary claim brought by AFSL: Lipkin Gorman at 579; the Restatement Third, Vol 2, at 561 (illustration 2); Goff & Jones, The Law of Unjust Enrichment, 8th ed at para 29-09. Furthermore, if as Hills and Bosch believed the position to be, the payments had been made and were received for the benefit of the TCP companies, their application of them in satisfaction of debts due from those companies would have been a "defence" to any restitutionary claim of AFSL, albeit on the basis that the discharge of their debts was a payment away by an intermediary. 213That this provides Hills and Bosch with defences to AFSL's claim is the outcome of the change in the law worked by the decisions in Lipkin Gorman and David Securities. Neither would have had a defence under the principles governing receipt and payment away by an agent or intermediary: see, for example, Newall v Tomlinson; Continental Caoutchouc v Kleinwort Sons & Co; and Kleinwort v Dunlop Rubber Company. Nor could either rely, in the absence of a clear representation, upon an estoppel by representation: R E Jones, Ltd v Waring and Gillow, Ltd [1926] AC 670. 214In the result, each of Hills and Bosch has a complete "defence" to the claims for recovery made by AFSL. Because what each did was equivalent to paying the funds away for no consideration and was done on the faith of their receipt, it would be inequitable to require that they make restitution to AFSL. In the case of Bosch, to the extent that the amount notionally paid for the discharge exceeded the amount of the debt, the balance was repaid. 215This conclusion makes it unnecessary for me to consider the alternative way in which it was argued that Hills and Bosch had a change of position defence to the whole of AFSL's claim. That argument is dealt with by Allsop P (at [148]-[166]). I agree with his Honour's conclusions subject to one further observation. 216In discharging the debts and resuming their commercial relations with the TCP companies, Hills and Bosch lost the opportunity to pursue remedies in enforcement proceedings against those companies. That is one aspect of the detriment which they suffered. They abandoned a course of conduct that could possibly have led to an outcome which was the full satisfaction of the debts owed to them. That outcome was possible including because of the apparent availability from Mrs Skarzynski of third party security having a value in excess of $500,000. The second aspect of the detriment which they suffered was being placed in the position of being unable to demonstrate what would or even may have happened had that opportunity been pursued. In Delaforce v Simpson-Cook [2010] NSWCA 84; 78 NSWLR 483 Allsop P (with whose additional comments Giles JA agreed) identified (at [5]) both of these aspects of detriment as relevant to determining what relief should be granted in a case of equitable proprietary estoppel. For the same reasons, an assessment as to whether it is inequitable to require restitution in the present case should take account of both of these aspects of detriment. Allsop P's reasons (esp at [165]) do so. Other issues 217My conclusion that the change of position defence provides a complete answer to AFSL's claims also makes it unnecessary to deal with the question whether the primary judge erred in concluding that the payments received by AFSL under the lease agreements of the non-existent goods and the value of the GST input tax credit claimed by AFSL provided partial defences to its claims. 218As Allsop P notes, these arguments raise issues as to the extent to which there is a defence of passing on or recoupment to claims such as those made by AFSL. It is not necessary to address these arguments. There are, however, significant difficulties in their way because the action for money had and received is not concerned with recovery of an amount as compensation for loss or damage suffered by the payer. For that reason, the action is not "defeated simply because the plaintiff has recouped the outgoing from others": Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd at 78; Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; 208 CLR 516 at [68]; Kleinwort Benson Ltd v Birmingham City Council [1997] QB 380 at 388-390, 394-395, 399; Kingstreet Investments Ltd v New Brunswick (Dept of Finance) [2007] 1 SCR 3 at [45]-[47]. 219I agree with Allsop P's observations (at [168]-[170]) in relation to the remaining arguments put on behalf of Hills and Bosch. 220The orders proposed by Allsop P should be made. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 December 2012