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In Port of Brisbane Corporation v ANZ Securities Limited [2001] QSC 466 the Queensland Supreme Court considered the change of position defence to a restitutionary claim.

The plaintiff was a Port Authority whose employee, H, altered the plaintiff¹s cheque to make it payable to the defendant stockbroker, ANZ Securities. ANZ Securities' name was similar to the name of a bank where the Port Authority invested money. H's company, W, had opened an account with ANZ Securities through a Hong Kong trustee company and deposited the cheque to the stockbroker's account. His Honour found that ANZ Securities could not deal with the monies reasonably without first identifying the drawer of the cheque and the intended payee. His reasons included the large amount of the cheque (A$4.5m.), the fact that this was the first occasion on which ANZ Securities had had any involvement with W and the lack of difficulty associated with identifying the drawer of the cheque which was, itself, a statutory corporation unlikely to be trading in shares in the manner proposed by W.

Chesterman J found, applying the ratio in State Bank of New South Wales Limited v. Swiss Bank Corporation (1995) 39 NSWLR 350, that the defence was not available because the defendant did not act on the faith of the receipt because it did not inquire of the payer, the plaintiff, how the money should be disbursed. He also seemed inclined to limit the defence to circumstances where the recipient of the money had acted reasonably in spending the money paid to it. In those circumstances he did not allow the defence of change of position simply where it could be shown that ANZ Securities acted in good faith and incurred a detriment after it had received the payment by paying out a large part of the proceeds on W's instructions.

There were other interesting issues that arose. His Honour dismissed an argument that the defendant had not been enriched because it received the money merely as a trustee. He recognised that if a trustee parts with money in these circumstances it does so to benefit someone else and obtains no advantage for itself but said that "the consequence is not, in my opinion, that payment has not been made to the trustee so that it has not been 'enriched'". In doing so he did not refer explicitly to the view expressed by Lord Millett in Foskett v McKeown [2001] 1 AC 102, 129E-F that: "A plaintiff who brings an action in unjust enrichment must show that the defendant has been enriched at the plaintiff's expense, for he cannot have been unjustly enriched if he has not been enriched at all" although he used language redolent of that proposition at [28]. He took the view at [32] that "The law would be odd indeed if in equity the defendant must pay the money over but at law be entitled to retain it because the money was held on a trust, and one for the plaintiff at that". With respect that approach appears to confuse the existence of the remedy of a constructive trust with the issue whether there has been an unjust enrichment.

His Honour also found that there was a resulting trust even in circumstances where the money had been paid on innocently by the defendant trustee. ANZ Securities sought to characterise the situation as creating a constructive trust that would arise only if it had sufficient knowledge of the facts to make it inequitable or unconscionable for it not to regard the money as belonging to the plaintiff. His Honour found that the absence of a constructive trust did not mean that there was not a resulting trust of the money in favour of the plaintiff subject to the applicability of the statutory defence to a breach of trust where the trustee acted honestly and reasonably and ought fairly to be excused for the breach.

The consequence then is that, in circumstances such as these, where a trustee has received stolen money in good faith and acted honestly but unreasonably in failing to verify with the payer of the cheque its (the trustee's) authority to deal with the funds, then it will be unable to resist a claim in restitution even where it has changed its position.

The full reasons may be found in PDF format at:
http://www.courts.qld.gov.au/qjudgment/sc01_451.htm

It will be interesting to see whether the case goes on appeal and how any subsequent courts deal with these issues.

JAMES DOUGLAS QC