Mistaken Payment of Another’s Debt — Is There an Equitable Solution?: A Reflection on Westpac Banking Corporation v Raw

Abstract

This article analyses the situation where a bank mistakenly makes a payment thereby appearing to pay a customer’s debt. The Bank may have mistaken believed that there was sufficient funds in the customer’s account or it may have overlooked a stop-payment instruction. Common law cases and restitutionary theory suggests that the bank can recover against its customer when the payment was authorized or subsequently ratified; otherwise the bank should seek recovery from the recipient of the payment. This article interprets an alternative line of authority developed by the Courts of Equity, which suggest that authorization or ratification is not necessary.