To err is human, but to really foul things up requires a computer, so we are told. And it gets really dreadful indeed when computer buzzwords like “crypto” get included. And so it is with cryptocurrency trading platform, Crypto.com. In May 2021, it accidentally transferred Aus$10.5m [€7.35m; US$7m; St£6.3m] to an Australian woman, Thevamanogari Manivel, when processing an Aus$100 [€70; US$67; St£60] refund. Although computers were involved, the problem was plain old human error: Manivel’s account number had been accidentally entered into the “payment amount” field. Worse, they failed to notice the error until the following December, seven months later, by which time much of the money had already been given away to six other family members or spent on various luxury purchases, including an Aus$1.35m [€945,000; US$900,000; St£810,000] home in Craigieburn, Melbourne, for her sister, Thilagavathy Gangadory. [Update: Crypto has company – a Texas bank made the same mistake to deposit US$37m in a customer’s account; but, unlike here, the Texas customer alerted the bank and returned the money].

This sounds like a classic exam question, but it is in fact the scenario faced by Elliott J in the Supreme Court of Victoria, Australia, in Foris GFS Australia Pty Ltd v Manivel [2022] VSC 482 (26 August 2022). In an action arising out of the Aus$10.5 mistaken payment (described in the case as the Wrongful Payment) taken by Crypto.com’s Australian operator, Foris GFS Australia Pty Ltd, against Gangadory, in respect of the Craigieburn property, Elliot J gave judgment against her, in default of appearance. He ordered her to repay the sum of Aus$1,35m; he held that the Craigieburn Property was acquired by her on trust for Foris; he ordered that the Craigieburn property be sold; and he awarded interest of Aus$27,369.64 [€19,158.75; US$18,337.66; St£16,421.78] and costs in favour of Foris. On the substantive issues, Elliott J held (at [65], [66]):

… the Craigieburn Property was acquired with funds traceable to the Wrongful Payment and would never have been in Gangadory’s hands if the Wrongful Payment had not been made. Thus, Gangadory was unjustly enriched by receiving the purchase price of the Craigieburn Property out of the Wrongful Payment, and the first plaintiff is entitled to recover an amount representing that price. These facts are sufficient to ground judgment for the first plaintiff against Gangadory in the sum of $1,350,000.00, being the purchase price of the Craigieburn Property, … [and for] a declaration that Gangadory had acquired the Craigieburn Property on trust for the first plaintiff.

As I have observed many times on this blog, is clear that the recipient of a mistaken payment must make restitution (here ). Hence, here, Manivel was unjustly enriched at Foris’s expense by her receipt of the Aus$10.5m mistaken payment. Presumably, there are other proceedings contemplated or in train against her on this basis.

But establishing Gangadory’s liability is less straightforward. In Lipkin Gorman v Karpnale [1991] 2 AC 548, [1988] UKHL 12 (06 June 1991) the House of Lords held that, where a receipt could be traced from the initial recipient to a remote recipient, a similar action could arise. The precise justification for this is unclear, but if it applies here, then, since Gangadory is a recipient of Aus$1.35m from Manivel, and that payment can be traced to her, then she too is unjustly enriched at Foris’s expense by her receipt of that payment. The obligation to make restitution in such cases is a personal one. But Elliott J went one step further: when he declared that Gangadory held the Craigieburn property on trust, he imposed a proprietary remedy. This was not a necessary consequence of the tracing exercise, which is neutral as to remedy. Nor was it a necessary consequence of the finding of unjust enrichment; the usual remedy in such cases is a personal one; to impose a proprietary obligation such as a trust, something else or something more is required.

Hollywood actor Matt Damon (imdb | wikipedia) starred in a controversial Superbowl advert for Crytpo.com (left). Over the tag-line of “fortune favours the brave”, Damon tells us about intrepid men and women whose bravery was favoured by fortune. Whether or not Manivel and Gangadory were fortunate in Foris’s mistake, they were foolhardy rather than brave in seeking to retain and spend it. Moreover, because the case was decided in default of Gangadory’s appearance, the steps to her personal and proprietary liability were not properly explored. Nevertheless, the outcome is surely right, and stands as the most recent example of the truism that, whatever the monopoly card says, a bank error in your favour is not a gift from God. Rather it is an unjust enrichment for which the recipient must make restitution.