Money was lent to enable a borrower to invest in a pine tree scheme and CBA bought the debt and sought to enforce it and the guarantee. The bank’s alternative claim was that if the loan was unenforceable, then it should recover the money as ‘money had and received’. The borrower cross claimed to recover the interest paid on the basis of a mistake and argued that the loan was unenforceable because the money was lent not just to enable the borrower to invest in the scheme but to get some essential rights according to its contract with the lender’s parent company as contained in its information memorandum. The court found nothing in the loan to that effect.
The court found that the funds were advanced and the lender was entitled to its principal and interest, which it then assigned to CBA, together with its rights under the guarantee. The court found that CBA was entitled to recover from the guarantor.
The court gave judgment for the bank as against the borrower and its guarantor and costs on an indemnity basis pursuant to the loan agreement. However it noted in passing that the bank would not have succeeded on its alternative claim because it had no right to recover money had and received because that right was not assigned, only rights in relation to the debt and that was why the bank had sought an indemnity for any loss suffered, if the loan was unenforceable.
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