Money Had and Received: Understanding the Change of Position Defence

Last Updated on 15/01/2026 by Damin Murdock

Understanding the Change of Position Defence Through Real Disputes

Claims for money had and received commonly arise where funds are transferred by mistake and the payer later seeks restitution. While the starting point is that money paid under a mistake should be repaid, Australian courts have made it clear that recovery is not automatic. In some circumstances, ordering repayment would itself be unjust.

This is where the change of position defence becomes critical.

How the Dispute Typically Arises

A common fact pattern involves a mistaken payment made during a commercial or banking transaction. The recipient receives the funds honestly and, believing the payment to be valid, applies the money in the ordinary course of business. Only later does the payer discover the error and demand repayment.

The recipient then resists recovery, arguing that they relied on the funds in good faith and that their financial position has changed in a way that cannot be reversed without unfairness.

The Legal Framework

The change of position defence operates as a limitation on restitutionary claims for unjust enrichment. It does not depend on whether the recipient still has the money. Instead, the court examines whether it would be inequitable to require repayment.

The key considerations are:

• whether the recipient acted in good faith

• whether the recipient relied on the payment

• whether that reliance caused a material and irreversible change in position

If those elements are established, restitution may be refused wholly or partially.

How the Defence Has Been Applied by the Courts

In the case William Co-Buchong & Anor v Citigroup Pty Limited & Anor [2011] NSWSC 1199, Citibank mistakenly transferred $500,000 to NAB. NAB received the funds without knowledge of the error and applied them in good faith as part of its normal banking operations. When Citibank sought recovery, the Supreme Court refused restitution.

The Court accepted that NAB had changed its position in reliance on the payment and that requiring repayment would be unfair, given the absence of any wrongdoing and the practical impossibility of restoring NAB to its original position.

In the High Court decision Australian Financial Services & Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14, Hills Industries received mistaken payments and used those funds to continue its business operations. Importantly, the company delayed taking legal action it would otherwise have pursued, relying on the mistaken payments as part of its financial position.

The High Court held that repayment would be unjust. Hills Industries had materially altered its position in reliance on the funds, and forcing repayment would impose a loss that went beyond correcting unjust enrichment.

Why These Cases Matter

These decisions demonstrate that the change of position defence is not a technical loophole. It is a substantive fairness doctrine that prevents restitution where recovery would punish innocent reliance rather than correct an injustice.

They also show that delay can be decisive. The longer a mistaken payment remains undiscovered, the greater the risk that the recipient’s position will change in a way that defeats recovery.

Key Takeaway

Money paid by mistake is not always recoverable. Where a recipient has acted honestly and relied on the payment in a way that cannot be undone, courts may refuse restitution altogether. In these disputes, fairness, timing, and evidence of reliance are often determinative.

Next Steps

If you are seeking to recover mistaken payments, or defending a restitution claim, early advice is essential. Outcomes frequently turn on conduct immediately after the payment and how the funds were applied.

If you are interested in discussing your options, please contact Damin Murdock at Leo Lawyers on (02) 8201 0051 or at office@leolawyers.com.au.

DISCLAIMER: This article is not to be taken as legal advice and is general in nature. If you require specific advice, please contact us.