THE COURT
On 7 December 1989 the records of the Swiss Bank Zurich appeared to show that it had received $20 million (dollar amounts in United States currency unless otherwise stated) from the State Bank of New South Wales on overnight deposit the day before. Accordingly that day Swiss Bank paid $20,004,538.33 to State Bank of New South Wales (New York). No such deposit had been made with Swiss Bank but Mr Singh, a trusted senior employee, had inserted a false document to that effect into its system. State Bank of New South Wales thought that the funds were the proceeds of a loan to Essington Ltd one of its customers and it paid out practically all the money on Essington Ltd’s instructions.
On 14 December, Swiss Bank asked State Bank of New South Wales to refund the payment but State Bank of New South Wales denied liability except for the small balance then in Essington Ltd’s account. Swiss Bank commenced proceedings in the Commercial Division against State Bank of New South Wales and other defendants. The principal issues were decided by Rogers CJ Comm D but issues concerning interest were decided by Giles J after Rogers J had retired. Judgment was entered against State Bank of New South Wales for $12,698,119.80 plus interest, credit being given for other recoveries by Swiss Bank. State Bank of New South Wales appealed, its principal contention being that it was entitled to succeed on its change of position defence. Swiss Bank on the other hand claimed that State Bank of New South Wales had not acted on the faith of the receipt and knew or should have known that the funds were paid to it as principal.
The transfer of funds was made in New York by Swiss Bank’s New York branch to State Bank of New South Wales (New York). Both banks were parties to the agreement which governed the system for electronic transmissions of money between New York banks (Clearing House Inter Bank Payment System). State Bank of New South Wales claimed that the effect of this agreement was that, as between the banks, any loss fell on Swiss Bank.
What has come to be recognised as the law of restitution dominated a great part of the hearing before this Court. In modern times attempts have been made to find a unifying theory for restitution which would provide a sound basis for dealing with future cases. This has to some extent been achieved in Australia by the decision in David Securities Pty Ltd v. Commonwealth Bank of Australia (1992) 175 CLR 353 which drew on the principles in Lipkin Gorman v. Karpnale Ltd [1991] 2 AC 548. Along with recognition of unjust enrichment as a unifying theme in the law of restitution, the correlative defence of change of position has also been recognised: see Lipkin Gorman (at 579-58 I), per Lord Goff. In David Securities, the High Court held that restitution was available to a plaintiff who had paid money because of a mistake of law. In its joint judgment the Court said there were strong grounds for accepting the defence of change of position in Australia and acceptance of mistake of law as a ground of recovery required recognition of the defence. The Court said (at 385):
"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." (Italicised in original.)
Background
From early in 1989, Essington Ltd had been seeking to refinance its businesses by obtaining a loan of $500 million. The person in charge of these efforts was Essington Ltd’s managing director, Mr Edwards. He met a Mr Sothirasan who said he could arrange such a loan subject to payment of a substantial commission. In hindsight it is obvious that the conduct of Mr Sothirasan was fraudulent throughout. It also seems evident, again in hindsight, that he was working in concert with Mr Singh. However the case turns not on the nature of Swiss Bank’s mistake or how it was made but on the circumstances in which State Bank of New South Wales came to receive and deal with the funds.
On 12 July 1988, State Bank of New South Wales approved a loan to the Essington Ltd group of $A46,000,000 for five years incorporating an equity investment in Essington Ltd of $A20,000,000. Mr West, a senior bank officer at State Bank of New South Wales initiated this facility and was responsible for supervising it. On 13 June 1989, the group defaulted in an interest payment of $A2,099,034.25. It remained in default until the mistaken payment was received and in the meantime there was a further default. The facility was nevertheless rolled over. Mr Edwards was regularly in touch with Mr West during 1989, particularly in the latter months, and kept him informed of the negotiations with Mr Sothirasan. Rogers J found that by 15 November Mr West had reasonably formed suspicions that if the loan arrangement came to fruition it would either be a money laundering operation or would involve ‘‘black’’ funds. On 21 November, Mr Edwards told Mr West that the first drawdown of $30 million was coming through. By FAX that day Mr Lillis, an assistant of Mr West notified State Bank of New South Wales (New York) to expect $30,013,750 in favour of State Bank of New South Wales Account Number 137-327 held by Essington Ltd. The FAX in part read:
"Would you please ensure the funds are correctly transferred to the Sydney account and confirm the transaction when complete.
If you require further information or clarification please do not contact the transferor or source bank but instead you can telephone Chris West …"
Mr West denied telling Mr Lillis to include this instruction but the judge found otherwise. The funds were not received.
Mr Singh worked in the investigation group of Swiss Bank’s Zurich Foreign Exchange Department. The investigation group comprised four people and its function was to deal with inquiries relating to foreign exchange and money market transactions including inquiries from outside Swiss Bank. It was part of Mr Singh’s duties to deal with inquiries arising from attempted frauds. He was required to roam the whole of the department and could handle documents in the dealing room and the back office. He had no authority to initiate transactions or to transmit SWIFT messages (Society for World Wide Inter Bank Transfer System). He had not previously shown any sign of unreliability.
The fraud was initiated at 9.45 am on Tuesday, 5 December when a money market deposit ticket was inserted into the processing system in the dealing room at Swiss Bank Zurich purporting to record that State Bank of New South Wales had agreed to deposit $20 million on Wednesday, 6 December to be repaid in New York on 7 December with interest at 8.25 per cent. The ticket specified the account to which repayment was to be made as "State Bk of New South Wales. NYork Acct 137-327". According to the ticket, instructions had been received by Swiss Bank by telex. As required by Swiss Bank procedures a dealer’s initial appeared in a box on the ticket. Another box had been marked in such a way as to cause an instruction to be keyed into the computer system to suppress the usual SWIFT confirmation to State Bank of New South Wales. The placing of this ticket in the processing system set in train steps within Swiss Bank which, assisted by further steps presumably taken by Mr Singh, led to the crediting to State Bank of New South Wales of the receipt of the $20 million and the later transmissions of that sum with interest to State Bank of New South Wales.
At 6.57 am New York time on 7 December State Bank’s New York branch received from Swiss Bank Zurich a SWIFT message directing it to make the payment to State Bank of New South Wales (New York) for the credit of account 137-327. The instruction was executed by a Clearing House Inter Bank Payment System message. As sent this did not include any reference to the account number but the judge found that State Bank’s New York branch acted reasonably in deleting this.
That day State Bank of New South Wales (New York) received a facsimile message from Mr West stating that Essington Ltd had advised $20,004.583.33 "value today to be received by you for credit of their account 137-327 Sydney". At 11.11 am local time State Bank of New South Wales (New York) received the Clearing House Inter Bank Payment System message. It was standard practice at State Bank of New South Wales (New York) for the Clearing House Inter Bank Payment System receipt clerk to compare an incoming Clearing House Inter Bank Payment System message with the relevant receipts advice which in this case was the FAX from Mr West. On the basis of this comparison State Bank of New South Wales (New York) concluded that the payment was the money for Essington Ltd. and accepted the funds. The text of the Clearing House Inter Bank Payment System message was of crucial significance in the case. The judge’s findings, so far as relevant, were:
"The Clearing House Inter Bank Payment System message did not contain any reference to Essington, or to account number 137-327, or anything else, to indicate that the money was Essington’s. On its face, it was a payment from Swiss Bank to State Bank of New South Wales, a bank to bank transaction. It informed a competent banker that, in substance, the intention of the sending bank was for the amount to be paid to State Bank of New South Wales and the flow of funds was to stop there.
It is common ground among all the experts and practitioner bankers who gave evidence ... that the payment message could have specified, and should have been expected to specify Essington as the beneficiary. It did not. The only beneficiary specified in the payment message was State Bank of New South Wales and the payment message in its own terms did not suggest that there was any other beneficiary.
The message did not authorise any movement of funds beyond State Bank of New South Wales."
The relevant officer at State Bank of New South Wales (New York) concluded that the Clearing House Inter Bank Payment System payment was the payment referred to in Mr West’s FAX having regard to the identity or the amount which was extraordinarily large, the value date and the account (TOS) to be credited. The TOS account was used by State Bank of New South Wales principally for the transmission and receipt of funds for the Bank’s customers. State Bank of New South Wales’ Forex account was used principally for the transmission and receipt of funds for the Bank’s own transactions. Mr West was advised by telephone of the receipt of the funds and on the night of 7 December Sydney time he phoned Mr Edwards in London and told him the Funds had been received. The following day an executive of Essington Ltd met with Mr West and another officer of State Bank of New South Wales in Sydney and gave instructions for the disbursement of the money which were sent to State Bank of New South Wales (New York) and acted on. On 14 December, Swiss Bank notified Mr West by FAX that the payment of 7 December had been made in error and requested repayment. Mr West replied that the funds had been credited to the account of the Bank’s customer.
The judge found that there was no reason for Mr West to suspect the validity of the payment by Swiss Bank and that State Bank of New South Wales (New York) had not been negligent in accepting the payment. He held however that the Clearing House Inter Bank Payment System message itself did not entitle State Bank of New South Wales (New York) to treat the funds as available for Essington Ltd as it did no more than effect a payment to State Bank of New South Wales. He held that moneys transmitted electronically must be handled by the recipient strictly in accordance with the terms of the message. If the recipient of such funds dealt with them "in reliance upon, or taking account of, information" not in the message, it did so at its own risk. He held therefore that when State Bank of New South Wales paid away the funds "it was not acting on the faith of the receipt". It followed that Swiss Bank was entitled to recover the mistaken payment from State Bank of New South Wales after allowing for other recoveries.
Restitution: unjust enrichment
State Bank of New South Wales submitted that the central issue in the case was whether State Bank of New South Wales adversely changed its position by paying away the funds believing in good faith that they belonged to Essington Ltd so that it would be unjust to require repayment to Swiss Bank, or whether it paid them away unreasonably, in contravention of proper banking practice and in disregard of the Clearing House Inter Bank Payment System rules so that the change of position defence was not available.
State Bank of New South Wales recognised that a finding of belief in good faith depended on its having, at the time of the receipt, information additional to that in the Clearing House Inter Bank Payment System message which led it to conclude that the money was for Essington Ltd’s account. State Bank of New South Wales did not shirk this element in its case. The judge found that the Clearing House Inter Bank Payment System message showed that the payment was bank to bank, to State Bank of New South Wales as principal. State Bank of New South Wales challenged this conclusion on the ground that the message showed that the payment was to be credited to the TOS account which was mainly used for transactions for customers. We are content, without deciding upon this contention, to deal with State Bank of New South Wales’ submissions on the basis that the payment it received was for the benefit of a customer.
State Bank of New South Wales submitted that it had paid away the funds believing in good faith that Essington Ltd was entitled to them. That "good faith’ must, in our opinion, be linked to the payee acting on the faith of the receipt (repeating the emphasis in David Securities Pty Ltd (at 385)). This is inherent in the passage where the italicised words appear. The court held that the critical moment for the payer is when payment is made, for it is then the unjust enrichment occurs. The critical moment for the payee is the moment of the change of position but that, in order to be relevant, must be on the faith of the receipt.
It seems to us that knowledge derived otherwise than from the payer cannot be relevant in deciding whether a change of position by the payee occurred on the faith of the receipt. This view is supported by the following considerations. If the funds had been transmitted to State Bank of New South Wales without explanation it could not possibly have treated itself as entitled to use them for any purpose without further inquiry from Swiss Bank. Similarly if the amount had been transmitted with a message saying "This is repayment of your overnight loan with interest", State Bank of New South Wales could only have sent the money back for it knew it had made no such loan. In either case State Bank of New South Wales could not have been acting on the faith of the receipt if it disbursed the funds to third parties. A bank which receives a mistaken payment and disburses it can only bring itself within the change of position defence if it shows that at the time of disbursement it knew or thought it knew more than the fact of receipt standing alone. This must be information which, if true, would entitle the payee to deal with the receipt as it did and that information must have come from the payer.
State Bank of New South Wales seeks to rely on information derived from Essington Ltd on whose instructions it paid the money away. Putting it slightly differently, State Bank of New South Wales’ case is that the Clearing House Inter Bank Payment System message told it the money was for its TOS account, it took that to mean for a customer, and for reasons which had not come from Swiss Bank and were extraneous to the Clearing House Inter Bank Payment System message, it decided that Essington Ltd was the customer. This was a mistake brought about by the fraud of Messrs Sothirasan and Singh. The disbursement of Swiss Bank’s money by State Bank of New South Wales was not on the faith of the receipt from Swiss Bank but on the faith of what Mr Edwards had told Mr West. It may be granted that State Bank of New South Wales was acting in good faith in the sense that it was not intending to defraud anyone, but the good faith it had to show was that it had "acted to its detriment on the faith of the receipt" and in our opinion its own case shows that it did not do this.
Looked at on its own terms State Bank of New South Wales’ submission has an element of the fantastic about it. It says that it received this very large payment with a message from Swiss Bank saying: "Credit this to the account you keep for customers". Nothing more than that. State Bank of New South Wales’ case involves the propositions: (a) that it was for it to decide which customer should be credited: and (b) that it credited Essington Ltd because Essington Ltd asked it to do so. On the judge’s findings what State Bank of New South Wales did was not dishonest but on anybody’s view it was not sensible and in our opinion it was not done on the faith of the receipt.
During the hearing of the appeal State Bank of New South Wales produced, in answer to a notice to produce which operated as a subpoena, the original Clearing House Inter Bank Payment System message annotated in the handwriting of Mr Nardella the officer at State Bank of New South Wales (New York) who authorised the acceptance of the funds. State Bank of New South Wales had not previously been able to locate this document. Swiss Bank tendered this document which became exhibit I in the appeal. Mr Nardella wrote on the Clearing House Inter Bank Payment System message "Credit: Regular A/C F/O Essington Ltd A/C No 137-327 per Chris West 12/7/89", (meaning 7 December 1989). This notation demonstrates that the Clearing House Inter Bank Payment System message did not authorise the payment of the funds to Essington Ltd, and that State Bank of New South Wales was not acting on the faith of the message when it made that payment.
This conclusion means that State Bank of New South Wales fails on its main ground of appeal and makes it unnecessary to consider the challenge raised by State Bank of New South Wales to the judge’s conclusion that the Clearing House Inter Bank Payment System message informed State Bank of New South Wales (New York) that the money was being paid to State Bank of New South Wales as a principal.
What we have said also shows why we do not accept the contention by State Bank of New South Wales that the relevant question was: "Did State Bank of New South Wales suspect that there was anything wrong with the Clearing House Inter Bank Payment System from Swiss Bank and refrain from making inquiry of Swiss Bank lest it discover that Swiss Bank did not intend to make that payment?" Certain authorities were cited in support of that submission but the short answer is supplied by the passage from David Securities Pty Ltd upon which this judgment is founded. That makes it clear that the question this Court must ask is whether State Bank of New South Wales changed its position on the faith of the receipt. If the answer to the question proposed by State Bank of New South Wales was yes, this would mean that the answer to what we regard as the correct question should be no. However, it does not follow that if the answer to the question posed by State Bank of New South Wales were no that it would have disbursed the moneys on the faith of the receipt. That is the question which David Securities Pty Ltd obliges this Court to consider.
State Bank of New South Wales also raised an estoppel argument which asserted that the Clearing House Inter Bank Payment System message was a representation by Swiss Bank that the payment was valid. The simple answer is that State Bank of New South Wales did not establish that it acted on the basis of the Clearing House Inter Bank Payment System message.
Clearing House Inter Bank Payment System, r 16a
A further argument relied on by State Bank of New South Wales depended on Clearing House Inter Bank Payment System, r 16a, which bound both banks. Its submission was that as between the banks the rule required Swiss Bank to hear any loss consequent upon the transmission of the Clearing House Inter Bank Payment System message.
The rules commence with a statement that the system was designed to facilitate payments among its participants who would receive and transmit payment messages in accordance with the rules. Rule 1 defined "participant" as an entity which may transmit and receive messages through the system. "Payment message" was defined as an electronic message of payment in an approved form to be settled in accordance with r 13. This prescribed how daily settlements were to be made, the final daily balances of each participant determined and settlement effected.
Rule 6 imposed requirements concerning participants’ connections to the system and r 7 dealt with the computer interface which each participant must provide to the system. Rule 8 provided for the Clearing House to furnish systems documents to participants, r 9 required participants to supply specified information to the Clearing House and r 10 required sending and receiving banks to identify beneficiary accounts in particular ways in order to expedite payment messages through the system. Rule 12 provided for each participant to receive a daily trial balance showing its nett position with each other participant. Rule 13 provided for the mechanics of settlement of daily balances, and r 14 set out the consequences for the Clearing House and participants of a settlement agreement between the Clearing House and the Federal Reserve Bank of New York.
Rule 15 was an exemption clause for the protection of the Clearing House. Its principal provision, contained in the opening lines, was as follows:
"Except as provided in rule 16, the Clearing House shall have no liability whatsoever to any participant or any other person or any loss, liability or expense suffered by such participant or person arising from the Clearing House’s acts or omissions in connection with the system…"
The clause continued ("without limitation’’) by attempting to exempt the Clearing House from losses arising from particular causes. The participants agreed to indemnify the Clearing House against losses not covered by these exemptions and the costs of any proceedings brought against the Clearing House to recover any loss.
Rule 16 was as follows:
"FRAUDULENT TRANSFERS
(a) Bank Origin. Any loss incurred due to a fraudulent transfer originating at a participant shall be borne by such participant.
(b) System Origin. A loss incurred by a participant due to a fraudulent transfer which was initiated at the Clearing House shall be covered by insurance ... If the amount of such loss exceeds the limit of insurance coverage, the uncovered amount shall be borne pro rata by all participants …"
Rule 17 dealt with emergencies in communication between the Clearing House computer and participants. Rule 18 provided for Clearing House hours, and r 19 dealt with participating membership. Rule 21 provided for Clearing House Inter Bank Payment System administrative procedures to be part of the rules. Rule 22 and r 23 dealt with payment limits and debit caps.
The rules as a whole dealt with the operation of the Clearing House and the relationship of participants to the Clearing House and to each other as that affected their relationships with the Clearing House. State Bank of New South Wales’ submission concerning the construction of r 16a must he considered against this background. This was that the rule provided that any loss incurred by a participant due to a fraudulent transfer originating at another participant was to be borne by the latter. Swiss Bank, on the other hand, submitted that the clause referred to losses incurred by the Clearing House. It based its submission on the construction of the rules and also upon opinion evidence from New York experts on that question and the way the rules were treated in practice. State Bank of New South Wales contended that this evidence was inadmissible and irrelevant.
It was common ground that New York law governed the construction of the Clearing House Inter Bank Payment System rules but it was also common ground, as it had been before Rogers, that this Court could construe the rules itself. On this approach the Court need not concern itself with New York law.
There was an issue between the parties as to the admissibility of the opinion evidence concerning the meaning of r 16a. However, as we think Swiss Bank’s construction is the preferable one both if we confine ourselves to the rules themselves and if we also take the opinion evidence into account, we can look to the rules alone, without unfairness to State Bank of New South Wales, and need not rule upon the admissibility of the extrinsic material.
Our reasons for preferring the construction contended for by Swiss Bank are based on the Clearing House Inter Bank Payment System rules as a whole. In our view they do not deal with the relationship of participants between themselves for purposes other than the operation of the Clearing House system and the daily settlement of nett balances. The construction proposed by State Bank of New South Wales would give r 16a, alone among the Clearing House Inter Bank Payment System rules, a wider operation. Rule 15 and r 16 are linked, as indicated by the opening words of r 15. Rule 15 is designed to ensure that the Clearing House is not to be liable to any participant for losses arising from the operation of the Clearing House. It is also designed to ensure that if it is liable it will be indemnified by all participants.
The opening words of r 15 exempt the Clearing House from any liability to a participant except as provided in r 16. Rule 16 deals with fraudulent transfers originating within the system either at a participant or at the Clearing House. Rule 16b provides a mechanism for compensating a participant incurring a loss due to fraudulent transfers originating at the Clearing House and r 16a deals with fraudulent transfers originating at a participant. This subrule requires a participant incurring a loss due to a fraudulent transfer originating within itself to bear that loss. Read with r 15 to which it is an exception r 16 can thus be seen as directly exempting the Clearing House from liability for losses caused by fraudulent transfers originating at a participant, and as limiting its liability for fraudulent transfers originating with itself subject to limited insurance cover.
State Bank of New South Wales argued that r 16a must have a wider operation because otherwise it would not add anything to r 15. Although this argument has some force we do not think it overcomes the strength of the argument based on the Clearing House Inter Bank Payment System rules as a whole. Moreover r 15 recognises that despite the width of its language the Clearing House may still be liable for some losses. The drafters of a document with such a realistic grasp of the possibilities of litigation would see no harm in a back-up provision. They may have feared that a fraudulent transfer originating at a participant could, through some action or inaction by the Clearing House, cause loss to that participant which was not within r 15. The drafters may also have considered that the general language of r 15 may not have covered fraud, particularly fraud within the Clearing House itself. Rule 16a thus can be explained as an attempt to guard against the possibility that the exemption in the first sentence of r 15 might not, if tested in litigation, be held to be as comprehensive as the drafters wished.
Another reason for not accepting Stare Bank of New South Wales’ construction is that if it were adopted, a participant receiving a fraudulent transfer might have no obligation to repay even if it retained the funds. State Bank of New South Wales submitted that courts would be astute to prevent such a result but there was no convincing answer to the argument on construction.
The construction supported by Swiss Bank fits into the overall scheme of the rules and in our opinion sits more easily with the words of r 16a than State Bank of New South Wales’ construction which is difficult to reconcile with the rules as a whole and has other difficulties. In Our opinion State Bank of New South Wales is not protected by r 16a against Swiss Bank’s claim in restitution.
Swiss Bank’s cross-appeal
Swiss Bank cross-appealed from that part of the judgment which awarded it interest on the principal amount recovered. This issue was decided by Giles J and his decision is now reported: Swiss Bank v. State Bank of New South Wales (1993) 33 NSWLR 63. He awarded $4,060,285.l4 as interest under s 94 of the Supreme Court Act 1970 based on interest rates in United States currency but Swiss Bank submitted that $9,987,331.97 should have been awarded based on interest rates relevant to obligations in Australian currency. It was common ground before Giles J and this Court that the purpose of an award of interest pursuant to s 94 was "to compensate the plaintiff for the detriment that he has suffered by being kept out of his money, and not to punish the defendant for having been dilatory in settling the plaintiff’s claim": Batchelor v. Burke (1981) 148 CLR 448 at 455, per Gibbs CJ. Giles J held that where judgment is given in a foreign currency interest should normally be calculated at rates relevant to that currency but the appropriate rates must depend on all the circumstances.
Swiss Bank argued that unless interest was awarded at Australian rates State Bank of New South Wales would be unjustly enriched because it did not have to outlay Australian dollars to repay the judgment debt for principal (the principal) until long after December 1989. It cited Bennett v. Jones [1977] 2 NSWLR 355 and Woolwich Equitable Building Society v. Inland Revenue Commissioners [1993] AC 70 for the proposition that the Court should take into account the benefit to the defendant of having had the use of the unjust enrichment until judgment. State Bank of New South Wales did not benefit from the funds except to the extent of the $A4.6 million retained to repay Essington Ltd’s debts under the Bank’s facility. He said that Swiss Bank’s submission that until judgment State Bank of New South Wales did not have to borrow to repay the principal or lose the earnings from that sum at Australian interest rates, assumed that State Bank of New South Wales’ position was to be judged on that basis. There was no evidence that the purchase of United States dollars to pay the principal would be at a cost measured in Australian interest rates and this could not be assumed because the Bank had international branches.
He also held that to require State Bank of New South Wales to pay interest at Australian rates would require it to account for notional profits made by use of the principal whereas Swiss Bank’s loss would have been measured in United States or Swiss interest rates. In his view an award of interest on the basis contended for by Swiss Bank would go beyond restitution of an enrichment received by State Bank of New South Wales. The remedy for the kind of unjust enrichment relied on by Swiss Bank was an account of profits which Swiss Bank had not claimed.
There was no evidence of the loss suffered by Swiss Bank as a result of being kept out of the principal. The judge held that if Swiss Bank had been paid the principal in December 1989 it would either have been unnecessary for it to borrow that sum or it would have had the earnings from it. He was not prepared to infer that Swiss Bank had suffered a detriment measured in Australian dollars or by reference to Australian interest rates. It was more likely that its loss would have been experienced in United States dollars.
We do not think that Swiss Bank’s submissions in its cross-appeal made any substantial impact on the judge’s reasoning. The main point in the cross-appeal became whether the Court should read s 94 as authorising the award of interest on principles which went beyond compensation. Swiss Bank submitted that the cases which had established that view of the section were not relevant where the benefits derived by a defendant from the use of money ordered to be repaid exceeded the losses of the plaintiff. It was submitted that the Court’s power under s 94(1) to order interest at such rate "as it thinks fit" authorised the fixing of a rate which would ensure that State Bank of New South Wales derived no benefit from its unjust enrichment. However Swiss Bank recognised that this submission was only relevant to the $A4.6 million State Bank of New South Wales had retained.
It became clear that the Court was being asked without evidence to infer that prior to judgment State Bank of New South Wales had been enriched by a figure calculated by application of Australian interest rates. No such inference should be drawn. There is an important distinction between interest awarded under s 94 and an account of profits. This interest claim was based on the section, judgment was entered in United States dollars and the Court can be moderately certain that if Swiss Bank had retained or been refunded the principal it would have been used in transactions to which United States interest rates were more relevant than Australian rates. In our opinion, Swiss Bank has failed to establish any error by Giles J in the exercise of his discretion and the cross-appeal should be dismissed.
Conclusion
The appeal and cross-appeal should each be dismissed with costs, such costs to be set off.
Appeal and cross-appeal dismissed.
Solicitors for the appellant: P W Kearns (State Bank).
Solicitors for the respondent: Blake Dawson Waldron.
Solicitors for the respondent (CE Heath Underwriting Agency Services Ltd and Brown): Minter Ellison.
Solicitors for the respondent (Alexander Stenhouse Ltd): Corrs Chambers Westgarth.