Abraham Lincoln: Law Assignment Sample Hunter!

IntroductionThe objective of the given report is to present the case analysis of the Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltdcase. The scope of this analysis of this would not be limited to highlighting the key facts, legal issues and the decision taken. Instead the case analysis would focus on the key legal principles which were relevant to the discussion and analysis of the chosen case so that the underlying implications or significance of the decision can be brought out in the broad remedial manner. Further, reference to other cases would be drawn along with positions taken in common law in UK so as to highlight the similarity and difference in interpretation which effectively act as precedent for decisions in the future involving similar legal issues.

Case Details

In the given case, a director of Total Concept Projects (TCP) approached the defendant AFSL (i.e. Australian Financial Services and Leasing Pty Ltd) in order to seek finance for acquisition of goods. However, this request was fraud as TCP already owed money to the two suppliers namely Hills Industries Ltd (acting as the plaintiff) and Bosch Security Systems Pty Ltd TCP produced false invoices to as to pay money to the above mentioned two suppliers for the non-existent goods. TCP engaged in this so as to discharge the debt payable to the suppliers highlighted above and hence avoid liquidation. The suppliers acted in good faith as they were conveyed that the outstanding debts are being paid through funds obtained from another party. However, when AFSL came to know about the fraud it demanded the payments from the two suppliers citing unjust enrichment and no loss of opportunity for the suppliers. The suppliers (acting as defendant) cited the change of position defense which eventually was accepted by the higher court even though during the Court of Appeal initially, relief was not provided to Hill Industries. The key legal principles which were highlighted and interpreted in the given case have been highlighted below.

Law of Unjust Enrichment

According to the law of unjust enrichment, if a particular party procures a benefit due to misfortune of another party, mistake or chance, then it would be immoral and unethical to keep the benefit as the recipient of the benefit has not worked for the same. In legal parlance, the above law implies that the recipient of the benefit must return the benefit or money and hence should not be unfairly enriched. Restitution is the remedy which seeks to rectify the injustice created by mistake leading to unjust enrichment. This is because through restitution, the claimant gets restored of the benefit gained by the respondent. It is apparent that the underlying intention of this practice in the common law is to ensure justice and equity.

Restitution claim derived from unjust enrichment requires the fulfillment of the following four conditions.

• Enrichment must be received by the defendant
• The enrichment must arise at the expense of plaintiff
• There must be presence of unjust or vitiating factor which must be present which lead to the restitution obligation
• Restitution order must not be unjust or the same may be displaced

It is noteworthy that in the Australian context, even though unjust enrichment acts as a unifying legal concept but it is not capable of direct application as a legal principle Also, unjust enrichment cannot serve to modify or remove the legal principles that have already been established. Also, the scope of unjust enrichment as a means of providing restitutionary relief is applicable to only limited situations. This position has been reiterated in the given case whereby it is clearly stated that restitutionary relief under the aegis of Australian law cannot be driven on the unjust enrichment concept. This position is somewhat contrary to the position endorsed in UK.

Change of position defense

A common defense which is deployed by the defendant to prevent restitution of moneys obtained through mistake is known as change of position. This also formed the central argument of the defense in the chosen case. A key aspect of change of position is that the defendant should have given something of value (consideration). Further, the loss of opportunity on the part of the defendant is also considered as highlighted in this case whereby the plaintiff advocated that considered the debts could not be paid, hence there was no loss of opportunity involved.

For application of this defense in Australian Financial Services v Hills Industries Ltdcase, the honorable court reiterated the stance highlighted in the David Securities Pty Ltdcase. According to this stance, the key element of change of position is that based on the faith highlighted in the receipt of the benefit, the defendant has acted in a manner resulting in his or her detriment. However, while considering the detriment, the court highlighted that the focus should not be limited only to the monetary expenditure but should include both quantifiable and non-quantifiable aspects of pecuniary harm. This position which stated in the given case has also been reiterated in the Commonwealth v Verwayencase where Deane J highlighted the following.

“[e]quity has never adopted the approach that relief should be framed on the basis that the only relevant detriment … is that which is compensable by an award of monetary damages”.

The above position adopted by the honorable court is apparent from the argument put forward that detriment did not require putting a value on the opportunity lost but merely involves change of affairs. Thus, even though the debtor (TCP) was in no situation to clear the debt owed to Bosch and Hills but the loss of right to pursue TCP in case of non-clearance of debt essentially establishes detriment of the defendant. Thus, the payments received by the defendants were not only book entries but had consequences which adversely impacted their legal rights.

Also, while considering the application of this defense, the judges typically consider the overall circumstances particularly the intention of the recipient and also the principles of equity so that the verdict of restitution is not unjust for the defendant. In the given case also, the honorable court rather than limiting their focus on the value of lost opportunity instead also focused on the underlying unconscionability in retention of the unjust enrichment. This required taking into cognizance the broader facts and circumstances of the cases instead of limiting the verdict solely on law of unjust enrichment. This is in line with the origins of this defense as highlighted in the Moses v Macferlancase where it was clearly stated that restitution should not be provided as a remedy if the same is inequitable. Hence, this case brings out the key approach in Australian law whereby disenrichment is essentially not done as a thumb rule but considers restitution under the broad framework where the question of bearing the losses needs to be viewed through the lens of being fair to both the parties involved.

Significance & Implications

A significant takeaway from the given case is the difference in approach taken by the English Courts and Australian Courts with regards to “disenrichment”. This clearly stems from the lack of importance which is given to unjust enrichment acting as the dominant guiding force for restitution in case involving payments made due to mistake. Hence, for a plaintiff involved in such a case, enrichment should not been considered too important and more emphasis should be given to the broader facts and circumstances of the case. This is also reiterated from the experience of the plaintiff (AFSL) that found it exceptionally onerous to establish the direct application of unjust enrichment.

As a result, in deciding the potential outcome of future cases involving unjust enrichment, a wider interpretation of change of position needs to be undertaken which is not limited only to the monetary value along with underlying fairness of the restitution remedy particularly keeping the interest of the original recipient in consideration. Thus, unlike the UK approach, the Australian approach would not be based on mathematical assessment on the position of each party but rather the underlying intention, conduct and fairness of the eventual decision of restitution towards defendant. Hence, the given case tends to provide some clarity towards the broad approach that would be undertaken in such cases although uncertainty in this area still continues to remain.

Also, another key take away from the given case is the fact that there was no discussion on the underlying conduct of the recipients (i.e. Hills and Bosch) which highlights that in commercial transactions, the recipient owes no responsibility with regards to verification of funds forwarded by the debtor. Hence, the underlying circumstances in which the debts are served are not to be considered by the receiving parties. While at first instance, this may seem to violate the principle of fairness and justice on account of being biased towards the defendant but considering the practical hassles involved in tracing the payment source, this seems a fair stance on the part of the Australian law.

Thus, while the broad interpretation of the change of position defense does seem to enhance the overall fairness towards defendant in such cases but simultaneous the position of the plaintiff in such a regime seems vulnerable. In such a scenario as highlighted by the given case, the plaintiff is left at loss for apparently no fault. This is primarily because the defendant gains legal protection on the basis of benign intention along with a broad interpretation of change of position doctrine. But the plaintiff is not left with much legal recourse as recovering money from the fraudster is usually not an option primarily because of absence of payment capacity. As a result, wider deliberation is required within the judiciary so as a more equitable stance could emerge which could provide more certainty and fairness in this regards considering the growing incidence of such cases.

Conclusion

Based on the above discussion, it is apparent that concept of unjust enrichment has limited application with regards to restitution in the Australian context. This is because a significant emphasis is given on the underlying intention of the receiver of the benefit/money along with the fairness of the act of restitution. Clearly, this seems to tilt the balance towards the receiving party as the application of change of position defense in Australian context seems to be quite wide and does not limit lost opportunity to only monetary value. However, this seems to weaken the position of the plaintiff that remains the victim of the fraud with limited options. Clearly, this has far reaching implications for the future decisions considering this would act as a precedent. Thus, it is imperative that attempts should be made to bring more clarity in this sphere of law while ensuring greater objectivity, equity and fairness.