Shields v Westpac Banking Corporation

[2008] NSWCA 268

NSW Court of Appeal

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Interrogate

Catchwords

1. Banking and Finance
2. › Banker and customer relationship
3. › Money paid under mistake by banker to customer
4. › Whether mistake fundamental
5. › Whether mistake vitiated intention of bank to make payment
6. › Whether trust arose immediately over money paid
1. Equity
2. › Trusts
3. › Constructive and resulting trusts
4. › Money obtained by fraud or mistake
5. › Whether trust arises immediately upon payment
6. › Recipient with knowledge of breach of trust
1. Criminal Law
2. › Larceny
3. › Whether obtaining money by exploiting bank's computer error constitutes conduct substantially equivalent to theft
4. › Knowledge of payee that bank did not intend payment

Quick Take

A bank's failure to cancel an automated transfer facility and failure to detect its continued unauthorised operation constitute fundamental mistakes vitiating the bank's intention to transfer money, even though the errors are human rather than computer-based. The categories of fundamental mistake identified in [name withheld] v The Queen are not closed. A trust arises immediately over money paid under such a fundamental mistake, whether characterised as resulting or constructive. A possible intention by the recipient to repay at some future time does not preclude a finding of fraud.