The legal principle of “money had and received” allows you to recover money that someone has unfairly received or is holding. This principle, which comes from English common law, ensures that individuals or businesses cannot keep money they are not entitled to. In Australia, it is a key tool for addressing situations where the consideration for the payment has failed.
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
What happened:
David Securities and other companies entered into loan agreements with the Commonwealth Bank that involved foreign currency loans. Due to a misunderstanding of tax law, the borrowers made payments to cover the bank’s withholding tax liability. It was later revealed that these payments were unnecessary under the law. David Securities sought to recover these mistaken payments, arguing that they were made under a legal error.
Ruling:
The High Court ruled that payments made under a mistake of law could be recovered unless the recipient could point to reasons why keeping the money would be fair. This decision set an important precedent for claims of unjust enrichment in Australia, confirming that mistaken payments are recoverable unless a legitimate basis for retention exists.
Key Considerations
The action for “money had and received” is grounded in the broader legal concept of unjust enrichment. Several key considerations govern its application, including:
- Right to Recovery: The plaintiff must show that the defendant has received money that, in fairness, belongs to the plaintiff. This is common where money was transferred by mistake or where the basis for the payment has failed
- No Legal Basis for Retention: The defendant must not have a lawful justification for keeping the money, such as an enforceable contract. If there is no legal reason for the recipient to keep the funds, they are obligated to return them
- Mistake or Failure of Consideration: Claims often arise from mistakes, such as overpayments, or from failures of consideration, where the defendant fails to deliver goods or services for which payment was made
Next Steps
If you believe you have mistakenly paid someone or if another party is unjustly holding your money, you may have a claim. Our legal team at MCLP can help you assess your situation and guide you through the process of recovering your funds.
If you are interested in discussing your options, please contact our office for a free consultation at (02) 9262 5495 or contact Mr Murdock at dmurdock@mclp.com.au, or subscribe to our newsletter by visiting https://mclp.com.au/publications/