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Key decisions

  • Miraki v Griffith [2021] NSWCA 263


Total failure of consideration – prepayment for goods never delivered – payment into account in son’s name– whether son obtained benefit of funds

Miraki v Griffith [2021] NSWCA 263

Background facts: The appellant, Mrs Miraki, purchased luxury Versace home furnishings from a business run by Mr Griffith with the assistance of his son. The total contract price of €99,061.94 (approximately 150,000 AUD) was made in four instalments by a company associated with Ms Miraki, Barton Contractors. Two of the payments were made into a bank account associated with Mr Griffith’s business. The final two payments were made into the son’s personal account. He was 17 years old at the time of the first three payments. The details of both the business and personal bank accounts were listed on the original invoice. The Versace home furnishings were never delivered.

The claim was initially pleaded in contract against both Mr Griffiths and his son. The son placed reliance on the Minors (Property and Contracts) Act 1970 (NSW) as part of his defence. A claim in restitution was subsequently pleaded against the son on the basis of a total failure of consideration.

The District Court entered judgment in favour of Mrs Miraki against Mr Griffiths in respect of the first three payments in the sum of $116,279.91. The claims against the son were dismissed.

The primary judge found Mr Griffiths controlled the bank account even though it was in the son’s name and, further, the son was acting under his father’s control and direction at all relevant times. The primary judge accepted the son had not received any benefit from the first three payments and was not liable to make restitution. The fourth payment was not the subject of determination as her Honour accepted that the claim had been abandoned given the way in which the case had been conducted.

Mrs Miraki appealed the finding with respect to the son’s liability in respect of all four payments.

The principal issues on appeal were: (1) whether the son obtained a benefit from any of the payments so as to be liable to make restitution; (2) whether the primary judge erred in not permitting the appellant to run her pleaded case concerning the fourth payment; and (3) by notice of contention filed by the son, whether the appellant was entitled to restitution of amounts paid by Barton Contractors and not from her own funds.

The decision: The appeal was dismissed with costs. The President and McCallum JA delivered separate judgments with Payne JA agreeing with the orders proposed by McCallum JA.

As to the first issue, both Bell P and McCallum JA found there had been a total failure of consideration given the goods had not been delivered. However, their Honours found no cogent basis to disturb the primary judge’s finding that the son had not received the payments or the benefit of them. In this respect, their Honours noted that if some evidence had been presented to the effect that the son had benefited from the direction to pay into his account, for example, by discharging some liability, then it could be said that the son had been ‘enriched’. No such evidence had been presented and the pure act of direction did not, as a matter of substance, confer a benefit on or generate a liability in the son. Their Honours found the son acted as a mere ‘conduit’ for the benefit received by Mr Griffiths in the sense described in Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 at 673-674. Accordingly, the son was not liable to make restitution to the appellant.

In the course of reasoning, McCallum JA made some observations on the potential relevance of the subsidiarity doctrine, that is the principle that a claim in unjust enrichment cannot be used to subvert the allocation of risk and liability in an otherwise valid and enforceable contract. However, her Honour declined to consider the issue further where the point had not been taken.

As to the second issue, both Bell P and McCallum JA found the opening submissions created the impression that only the first three payments were in issue. It was therefore open to the primary judge to conclude that the issues had been narrowed from those pleaded. In any case, the son had not received a benefit from the fourth payment.

As to the third issue, Bell P and McCallum JA found it was unnecessary for it to be determined. Nevertheless, both judges considered there was support for a finding that the appellant was not the proper plaintiff in circumstances where she had not established the payments were made at her expense.

Joanne Shepard is a barrister in 12 Wentworth Selborne Chambers, Sydney.