Recovering unauthorised or mistaken payments
In a recent matter decided by the South Wales Court of Appeal, Ms Ramangkura found herself in major trouble when sued by Russell Gould Pty Ltd (‘Company’) for allegedly receiving unauthorized money from the Company.
Mr Gould was one of the directors of the Company, and his wife and son were also on the directorial board. The Company owed a substantial debt to Mr. Gould which was payable on demand. Ms. Ramungkura was Mr. Gould’s companion, carer and “surrogate daughter.” Mr. Gould made a transfer from his bank account to Ms Ramungkura’s home loan account in the amount of $227, 820.
The Company then came after Ms. Ramungkura arguing that because the money was paid toward her home mortgage, she now held this house on trust for Russell Gould Pty Ltd.
The Court did not agree with the Company’s argument. The Court ruled that Mr Gould was merely receiving the money that was rightfully his due to the debt of the Company to him and the money transferred to Ms. Ramungkura was a gift and therefore the Company could not claim against her personally.
Appeal
At the appeal stage, the question was whether Mr. Gould as the director of the Company, had the power to transfer the money owed to him by the Company directly to a third party who had no connection to the Company.[1]
The court of appeal upheld the decision of the trial judge and mentioned several key factors:
Gould’s action was not problematic seeing as the Company never alleged he did anything wrong, such as breaching his duties or powers that were given to him.
In order for the Company’s claim against Ms. Ramungkura to have been accepted, she needed to be in receipt of the Company’s legal property. In fact, she was in receipt of Mr. Gould’s personal money. Therefore the Company’s claim failed.
As a result, the money received by Ms. Rumungkura could not be directly traced to the company. The monies were originally a debt owed to Mr. Gould, which he then transferred to Ms. Rumungkura, therefore breaking any chain between the Company and Ms. Rumungkura.
This area of law is still developing, to stay updated please check our blogs regularly.
What Should I Do Next?
Contact us if you would like further legal advice on issues involving the return of unauthorized or mistaken payments. Our lawyers at You Legal will be happy to assist you in whatever way we can.
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[1] We discussed directorial duties and obligations in our blogs in the past and if you would like to see more on this matter please do take a look at our blog archives.
* This blog is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.