Osborn J of the Victorian Supreme Court recently made a decision concerning the change of position defence in TRA Global Pty Ltd v Kebakoska [2011] VSC 480 (http://www.austlii.edu.au/au/cases/vic/VSC/2011/480.html)

The case arose when Ms Kebakoska was made redundant by her employer, TRA Global. The company advised her that she was entitled to a redundancy payment equivalent to 12 weeks’ pay under the Federal Award, and paid her $27,318.48. However, it later became evident that she was not entitled to that money (meaning that it was paid by mistake).

Ms Kebakoska tried to argue that it was a voluntary submission of an honest claim pursuant to David Securities, but she failed in that regard because there was no evidence that there was a conscious choice on the part of the company to pay the money regardless of what might be a mistake of law.

However, she succeeded in her claim for good faith change of position. Essentially, Ms Kebakoska had attempted to get unemployment benefits when she did not get a new job soon after being redundant, but Centrelink advised her that she was not entitled to unemployment benefits because she had the 12 week redundancy payment. She then spent the redundancy payments on living expenses. At [31] - [32], Osborn J said:

"In my view, the evidence clearly established a change of position on the part of the employee. That change was relevantly comprised of three interrelated elements:

(a) the disclosure of the redundancy payments to Centrelink;

(b) the consequential denial of unemployment benefits to the employee; and

(c) the expenditure of redundancy payments on living expenses in these circumstances.

The appellant submits that this is a case where no relevant change of position occurred because the money received was spent on living expenses. In my view, this is not a case where the employee ‘simply spent the money received on ordinary living expenses.’ The employee disclosed receipt of the redundancy payment when she applied for unemployment benefits and suffered a refusal of her application as a result. The employee changed her position as a result of the mistaken redundancy payment and thereby suffered a direct financial loss. Each of grounds 1 to 3 contained in the notice of appeal fails on the facts..."

Osborn J also considered whether estoppel had been displaced in this area by COP. The judge found that potentially, estoppel still persisted as a separate defence to a claim in unjust enrichment. Thus the magistrate at first instance had been entitled to find in the alternative that the employer was estopped from recovering the mistaken payment because Ms Kebakoska had relied to her detriment on the representation that she was entitled to the money.

Kind regards,

Katy Barnett