Companies allowed to keep fraud funds

The High Court has ruled two companies can keep money mistakenly transferred to them because of a fraud committed by someone else.

High Court judges unanimously held that it would be "inequitable" for the two firms to have to pay back $506,000 they received in good faith.

This complex commercial litigation related to a 2009 scam in which Richard Skarzynski, a director of the company Total Concept Projects (TCP), created false invoices suggesting TCP had purchased audio-visual equipment from two other firms, Hills and Bosch.

In turn, Australian Financial Services and Leasing (AFSL) agreed to purchase this non-existent equipment and lease it back to TCP, paying Hills and Bosch the sums on the false invoices. Both firms used these payments from AFSL to discharge TCP's debts.

AFSL later discovered the fraud and sought to get its money back.

The High Court dismissed the appeal, concluding that in these circumstances Hills and Bosch would be disadvantaged if they were required to repay AFSL.