Did you know: When you discover that a payment on a claim has been made by mistake, or that fraud may be involved, recovery of that payment can be pursued in reliance on the general concept of “unjust enrichment” / “money had and received”.
Unjust enrichment
Generally speaking, a party is said to be “unjustly enriched” if they have unfairly benefitted from another party, for example, where a third party receives a payment that it is not entitled to from an insurer. In order to establish unjust enrichment, the following three elements must be proven:
- that there was a benefit received by the third party;
- that the benefit was at the expense of the insurer; and
- the circumstances make it unjust for the third party to retain the benefit.
It is important to note that “unjust” is not just a descriptive word in the sense that it allows for subjective evaluation of what is fair or unconscionable. Instead, as per the High Court in David Securities Pty Ltd v Commonwealth Bank of Australia, “unjust” has recognised elements (such as mistake, duress, or illegality) which may give rise to recoverability. Accordingly, one or all of these vitiating factors must present in a mistaken payment before insurers can consider an unjust enrichment-style recovery.
Money had and received
“Money had and received” claims fall under the umbrella of unjust enrichment where money was paid by mistake. These style of claims arise where one party has paid a sum to another under the mistaken belief that the funds were lawfully owed. In order to establish a money had and received claim, we must establish that in making the payment there was a belief that there was no other practicable alternative.
In David Securities, the High Court outlined that “when a Plaintiff has paid money for a consideration that had totally failed, the Defendant’s unjust enrichment consists in his retaining of money which, when the consideration fails, he no longer has any right to retain. Enrichment is unjust because the Defendant has no right to receive or, as the case may be, to retain the money … transferred to him”.
We are presently assisting insurers with money had and received recoveries (with respect to claims subsequently determined to be fraudulent after payment has already been made) and are having some great success in recovering funds. So, if you find a claim where it appears that money has been paid where it should not have, please feel to contact William Roberts Lawyers and we can properly advise how best to recover those funds.
About me (Koko Tomazos) – I have been an insurance litigation lawyer for a year in the William Roberts Victorian team and have previous experience in insurance underwriting. When not at work, you can find me spending time with my husband and our two dogs as we await the arrival of our son in October (but don’t worry, I’ll be back before you know it!).
