[extract] Suppose ABC Bank wrongly followed instructions of customer A. Instead of paying recipient Bank X where A had an account, ABC Bank paid Bank Y where A also happened to have an account. Can ABC Bank recover the payment from Bank Y? Consider another scenario: customer B had instructed ABC Bank to pay $50,000 to recipient Z. By virtue of a computer error, Z was credited with $500,000. Is ABC Bank able to seek restitution from Z?
In 1987, the High Court in ANZ Group Ltd v Westpac Banking Corporation clarified two very important questions about the right of recovery for money paid under mistake of fact. It said that the plaintiffs did not have to show that they paid under a supposed liability to pay nor did they have to show that the mistake was one that had to be shared by the payee. Furthermore, the High Court recognised that the basis for recovery should no longer be regarded as lying in implied contracts but rather, on the basis of restitution or unjust enrichment.
"Mistaken Payments - The Right of Recovery and the Defences,"
Bond Law Review:
1, Article 7.
Available at: http://epublications.bond.edu.au/blr/vol7/iss1/7