Category: Banking

Nova (Jersey) Knit Ltd v Kammgarn Spinnerei GmbH: HL 1977

English and German companies traded in partnership. They agreed that all disputes between them should be arbitrated in Germany. The English company sold machinery to the German company and by way of payment received some 24 bills of exchange. After the first six bills of exchange had been paid, the German company refused further payment on the ground that the English company had mismanaged the affairs of the partnership and that the machinery which it supplied was defective. The English company then began in England an action on the bills. The German company sought to stay the action under the provisions of the Arbitration Act.
Bristow J at first instance refused the stay but his decision was reversed by the Court of Appeal.
Held: The appeal succeeded. The arbitration agreement did not extend to disputes on bills of exchange upon which, in any event, their Lordships pointed out, there was no dispute.
Lord Wilberforce said: ‘I take it to be clear law that unliquidated cross-claims cannot be relied upon by way of extinguishing set-off against a claim on a bill of exchange . . As between the immediate parties, a partial failure of consideration may be relied upon as a pro tanto defence, but only when the amount involved is ascertained and liquidated . . The amount claimed here in respect of the machines is certainly neither ascertained nor liquidated, and the claim in respect of the mismanagement is one for a wholly unrelated tort, so that there would seem to be no basis for denying the appellant’s claim that, as regards the bills, there is no dispute.’
Lord Salmon (dissenting but on a different point) said: ‘I agree that there is no defence to the bills, since the only possible defence (which is not relied upon by the respondents) could be that their acceptance had been procured by fraud, duress or for a consideration which had failed and because the damages claimed in the arbitration are unliquidated damages and such damages cannot be set off against a claim on the bills of exchange.’
Lord Russell of Killowen said: ‘It is in my opinion well established that a claim for unliquidated damages under a contract for sale is no defence to a claim under a bill of exchange accepted by the purchaser: nor is it available as a set-off or counterclaim. This is a deep rooted concept of English commercial law. A vendor and purchaser who agree upon payment by acceptance of bills of exchange do so not simply upon the basis that credit is given to the purchaser so that the vendor must in due course sue for the price under the contract of sale. The bill is itself a contract separate from the contract of sale. It’s purpose is not merely to serve as a negotiable instrument; it is also to avoid postponement of the purchaser’s liability to the vendor himself, a postponement grounded upon some allegation of failure in some respect by the vendor under the underlying contract, unless it be total or quantified partial failure of consideration.’

Judges:

Lord Wilberforce, Lord Dilhorne, Lord Salmon, Lord Russell of Killowen

Citations:

[1977] 2 All ER 463, [1977] 1 WLR 713

Jurisdiction:

England and Wales

Banking, Contract

Updated: 06 May 2022; Ref: scu.459795

Davidson v Barclays Bank Ltd: 1940

The Plaintiff, a credit bookmaker successfully sued the Bank in libel. The libel proved was writing the words ‘not sufficient’ on a cheque issued by the Plaintiff when they dishonoured it. He would have had sufficient funds ad the bank followed his instructions to stop an earlier cheque. As applied to cheques, s 49(12) of the 1882 Act required notice of dishonour to be given by the bank within a reasonable time thereafter.
Held: Though there was only one cheque Hilbery J thought the effect would have been significant because of the nature of the Plaintiff’s business and the speed with which news of dishonour would travel. Hilbery J said damages had to be ‘a proper sum to be given as a reasonable compensation for the injury which has been done to the plaintiff, and of course it must be sufficient to mark beyond a shadow of doubt the complete lack of justification for making the aspersion which was made by this means on the Plaintiff’s credit’. He awarded andpound;250.
The bank could not rely on mistake as an occasion of privilege: ‘you cannot, by making a mistake, create the occasion for making the communication, and what the bank seek to do here is to create an occasion of qualified privilege by making a mistake which called for a communication on their part.’ No general need was identified which required the engagement of principles of qualified privilege in respect of communication of a notice of dishonour.

Judges:

Hilbery J

Citations:

[1940] 1 All ER 316

Statutes:

Bills of Exchange Act 1882 49(12)

Cited by:

Cited – Kpohraror v Woolwich Building Society CA 1996
The Society, acting as a bank, had at first failed to pay its customer’s cheque for andpound;4,550, even though there were sufficient funds. The bank said that it had been reported lost. The customer sought damages to his business reputation.
Lists of cited by and citing cases may be incomplete.

Banking, Defamation, Damages

Updated: 06 May 2022; Ref: scu.448094

Hurstanger Ltd v Wilson: 2006

(Coventry County Court) Michael Douglas discussed the 1983 Regulations, saying: ‘The 1983 Regulations prescribe, among other things, the minimum contents of a regulated agreement, the information which must be brought to the attention of the borrower and the manner in which it is to be brought to his or her attention.
By Regulation 2 documents embodying regulated consumer credit agreements must ‘contain the information’ set out in Schedule 1. Column two of Schedule 1 specifies the relevant information and column one correspondingly identifies the type or category of regulated agreement in which that information is to be included.
Regulation 6 states that the ‘terms’ specified in Schedule 6, column two are prescribed in relation to the types of regulated agreement referred to in column one. The terms are said to be prescribed for the purposes of Section 61(1)(a) and Section 127(3) of the 1974 Act. It is the failure to incorporate these terms or any of them into the document signed by the debtor or hirer which leads to irredeemable unenforceability.
The 1983 Regulations thus distinguished between the ‘information’ set out in Schedule 1 and the ‘terms’ set out in Schedule 6
. . The organisation and wording of the relevant provisions in the 1983 Regulations therefore suggest that the object of Schedule 1 is to fulfil that part of the purpose of Section 60 which is designed to inform the borrower of all relevant aspects of the agreement. The phraseology of Regulation 6 suggests that it is fulfilling that purpose of Section 60, and 61 is amplified by Section 127(3), which requires certain minimum terms to be included in a regulated agreement.
Regulation 2(4) as it was worded at the date of the agreement in this case makes further a provision about the way in which Schedule 1 information is to be presented: ‘The information about financial and related particulars set out in paragraphs 3 to 19 of Schedule 1 to these Regulations and also the statements of the protection and remedies available to debtors under the Act specified in Forms 5, 7 and 9 of Part 1 of Schedule 2 shall be shown together as a whole in documents embodying regulated consumer credit agreements and not interspersed with other information, apart from subtotals of total amounts and cross-references to terms of the agreement. . . ‘In other words, certain information contained in Schedule 1, primarily financial information, must be presented as a single block so as to prevent any possibility of bits of relevant information being concealed or tucked away in places where the borrower might not look. This provision appears to implement the requirement contemplated in Section 60(2)(b) of the 1974 Act.
On the other hand, Regulation 6(2) as it was at the time of the agreement in this case required only that the terms of the agreement and the information required by Schedule 1 should be legible and of a colour readily distinguishable from the colour of the paper on which they are written. Mr Say accepted in answer to a question which I posed that there is nothing in Regulation 6 which would have made it obligatory for the prescribed terms or any of them to be placed in a prominent part of the document or to have prevented them being interspersed throughout the document. This tends to reinforce the conclusion that the purpose of Schedule 6, whilst of course not inconsistent with the purpose of Schedule 1, is not primarily to inform the borrower (a task discharged by Regulation 2 and Schedule 1).
In my judgment the objective of Schedule 6 is to ensure that as an inflexible condition of unenforceability certain basic minimum terms are included which the parties (with the benefit of legal advice if necessary) and/or the court can identify within the four corners of the agreement those minimum provisions, combined with the requirement under Section 60(1) that all the terms should be in a single document, and backed up by the provisions of Section 127(3) ensure that these core terms are expressly set out in the agreement itself. They cannot be orally agreed. They cannot be found in another document. They cannot be implied and, above all, they cannot be in the slightest misstated. As a matter of policy the lender is denied any room for manoeuvre in respect of them. On the other hand, they are basic provisions and the only question for the court is whether they are, on a true construction, included in the agreement. More detailed requirements which are designed to ensure that the debtor is made aware so far as possible of specified information (including information contained in the minimum terms) are to be found in Schedule 1.’

Judges:

Mr. Recorder Michael Douglas QC

Citations:

[2006] WL 4402848

Statutes:

Consumer Credit Act 1974, Consumer Credit Agreements Regulations 1983

Cited by:

Appeal from – Wilson and Another v Hurstanger Ltd CA 4-Apr-2007
The company sought to enforce its loan agreement and charge over the defendants’ property. The defendants appealed saying that the agreement was unenforceable under the Act, since a commission had been paid to the introducing broker, and his fee had . .
Approved – Brophy v HFC Bank QBD 22-Mar-2010
The customer sought to appeal against a finding of liability for the debt on his credit card, and that the credit card agreement which operated between Mr Brophy and the bank for a period of some 14 years, from 1994 to 2008, was a valid and . .
Cited – HSBC Bank Plc v Brophy CA 2-Feb-2011
The customer appealed against an order finding that his credit card agreement was binding upon him.
Held: The appeal failed. His argument that the application form amounted only to an invitation to treat, and that the contract was one made by . .
Lists of cited by and citing cases may be incomplete.

Consumer, Banking

Updated: 06 May 2022; Ref: scu.430730

Re K (Restraint Order): 1990

An order under the Act prohibited K from disposing of his assets, including a deposit account with the bank. K had an overdraft facility secured against the deposit account. The bank sought to set off the overdraft against the sums held on deposit.
Held: the bank was free to consolidate the accounts. Its actions would not reduce K’s assets.
Otton J said: ‘In my judgment, the right of a bank to combine [accounts] is well established and is fundamental to the bank/customer relationship. It is a means of establishing the indebtedness of the customer to the bank and the bank to the customer. In exercising this right a bank is not asserting a claim over the moneys, nor is it in conflict with the claims of the Crown. It is merely carrying out an accounting procedure so as to ascertain the existence and amount of one party’s liability to the other. This can only be ascertained by discovering the ultimate balance of their mutual dealing.’

Judges:

Otton J

Citations:

[1990] 2 QB 298

Statutes:

Drug Trafficking Offences Act 1986

Jurisdiction:

England and Wales

Citing:

Followed – National Westminster Bank Ltd v Halesowen Presswork and Assemblies Ltd HL 1972
The bank’s common law right of set-off was affirmed. The bank’s appeal succeeded.
The application of section 323 is mandatory in the sense that it cannot be excluded by prior agreement of the parties. . .

Cited by:

Cited – Irwin Mitchell v Revenue and Customs Prosecutions Office and Allad CACD 30-Jul-2008
The solicitors had been paid funds on account of their fees in defending the client. By the time a freezing order was made under the 2002 Act in respect of his assets, the firm’s fees exceeded the amount held. The court was asked what was to happen . .
Lists of cited by and citing cases may be incomplete.

Criminal Practice, Banking

Updated: 06 May 2022; Ref: scu.416227

Lep Air Services v Rolloswin Investments Ltd; Moschi v LEP Air Services: HL 1973

The obligation of a guarantor under a contract ‘is not an obligation himself to pay a sum of money to the creditor, but an obligation to see to it that another person, the debtor, does something.’ When a repudiatory breach is accepted by the injured party to discharge the contract, all primary obligations remaining for performance in the future are discharged and replaced in the case of the party in default by a secondary obligation to pay the damages imposed by law.
Whether a document is a guarantee or an indemnity, or whether it imposes a secondary or a primary liability, will always depend upon ‘the true construction of the actual words in which the promise is expressed.’
Lord Diplock said: ‘The debtor failed to perform voluntarily many of his obligations under the contract – both the obligation of which performance was guaranteed and other obligations. The cumulative effect of these failures by December 22 1967 was to deprive the creditor of substantially the whole benefit which it was the intention of the parties that he should obtain from the contract. The creditor accordingly became entitled although not bound to treat the contract as rescinded.’ and

‘It is because the obligation of the guarantor is to see to it that the debtor performed his own obligations to the creditor that the guarantor is not entitled to notice from the creditor of the debtor’s failure to perform an obligation which is the subject of the guarantee, and that the creditor’s cause of action against the guarantor arises at the moment of the debtor’s default and the limitation period then starts to run.’

He continued: ‘It follows from the legal nature of the obligation of the guarantor to which a contract of guarantee gives rise that it is not an obligation himself to pay a sum of money to the creditor, but an obligation to see to it that another person, the debtor, does something; and that the creditor’s remedy for the guarantor’s failure to perform it lies in damages for breach of contract only. That this was so, even where the debtor’s own obligation that was the subject of the guarantee was to pay a sum of money, is clear from the fact that formerly the form of action against the guarantor which was available to the creditor was in special assumpsit and not in indebitatus assumpsit… Mines v. Sculthorpe (1809) 2 Camp.215.

The legal consequence of this is that whenever the debtor has failed voluntarily to perform an obligation which is the subject of the guarantee the creditor can recover from the guarantor as damages for breach of his contract of guarantee whatever sum the creditor could have recovered from the debtor himself as a consequence of that failure. The debtor’s liability to the creditor is also the measure of the guarantor’s.’
Lord Reid said: ‘With regard to making good to the creditor payments of instalments by the principal debtor there are at least two possible forms of agreement. A person might undertake no more than that if the principal debtor fails to pay any instalment he will pay it. That would be a conditional agreement. There would be no prestable obligation unless and until the debtor failed to pay. There would then on the debtor’s failure arise an obligation to pay. If for any reason the debtor ceased to have any obligation to pay the instalment on the due date then he could not fail to pay it on that date. The condition attached to the undertaking would never be purified and the subsidiary obligation would never arise.
On the other hand, the guarantor’s obligation might be of a different kind. He might undertake that the principal debtor will carry out his contract. Then if at any time and for any reason the principal debtor acts or fails to act as required by his contract, he not only breaks his own contract but he also puts the guarantor in breach of his contract of guarantee. Then the creditor can sue the guarantor, not for the unpaid instalment but for damages. His contract being that the principal debtor would carry out the principal contract, the damages payable by the guarantor must then be the loss suffered by the creditor due to the principal debtor having failed to do what the guarantor undertook that he would do.’

Judges:

Lord Diplock, Lord Reid

Citations:

[1972] 2 All ER 393, [1973] AC 331

Jurisdiction:

England and Wales

Cited by:

Cited – Marubeni Hong Kong and South China Ltd v Ministry of Finance of Mongolia CA 13-Apr-2005
A letter was written by the Mongolian Ministry of Finance guaranteeing payment for textile plant and machinery to be supplied to a Mongolian company. A letter from the justice minister confirmed the authority of the finance minister to sign the . .
Cited – In Re A Debtor (No 1594 of 1992) ChD 20-Nov-1992
A one-sided term inserted into a contract between solicitors and their clients by the solicitors was to be construed against the solicitors and in the client’s favour where any ambiguity allowed this. The contra preferentem rule was to be applied. . .
Cited – Anglo Group Plc, Winther Brown and Co Ltd v Winter Brown and Co Ltd, BML (Office Computers) Ltd, Anglo Group Plc, BML (Office Computers) Ltd TCC 8-Mar-2000
Contract – Contract for provision of computer services – purchaser contract with finance company – duty of co-operation to be implied in computer contracts – practice – responsibilities of expert witnesses generally – whether computer company liable . .
Cited – Tabarrok v E D C Lord and Co (A Firm) CA 14-Feb-1997
The appellant wanted to open a pizza restaurant. He and his partners acquired a company for the purpose, which was to take a lease of premises. They sought advice from the defendants who, they said, failed to advise them of the need to be aware of . .
Cited – Stocznia Gdynia Sa v Gearbulk Holdings Ltd CA 13-Feb-2009
Orders were placed for the construction of ships. They were not delivered. The buyer, the defendant, cancelled the orders. The defendants sought the loss of profit. The claimants said they were entitled only to the repayment of instalments. The . .
Cited – Associated British Ports v Ferryways Nv and Another CA 18-Mar-2009
The court considered whether a document was a guarantee requiring the formality of the 1677 Act, or an indemnity.
Held: The appeal failed. The letter agreement was properly a contract of guarantee which foundered on the subsequent variation. . .
Cited – Remblance v Octagon Assets Ltd CA 17-Jun-2009
A statutory demand was served against the guarantor of the lease after rent arrears arose. He applied for the demand to be set aside, and now appealed against its refusal. He said that the court would have set aside such a demand against the tenant, . .
Cited – McGuinness v Norwich and Peterborough Building Society ChD 23-Nov-2010
The claimant appealed against his bankruptcy saying that it had followed as statutory demand based upon his alleged default under a guarantee of his brothers mortgage borrowings. He said that such a claim was not a liquidated sum within the 1986 . .
Cited – McGuinness v Norwich and Peterborough Building Society CA 9-Nov-2011
The appellant had guaranteed his brother’s loan from the respondent, and the guarantee having been called in and unpaid, he had been made bankrupt. He now appealed saying that the guarantee debt, even though of a fixed amount could not form the . .
Lists of cited by and citing cases may be incomplete.

Contract, Banking

Updated: 06 May 2022; Ref: scu.225900

Lloyds Bank v Mitchell: CC 13 Sep 2009

(Leeds County Court) The defendant sought to escape liability under a consumer credit agreement saying that the bank had failed to provide a true copy of the agreement as required by the Act.
Held: A strict requirement that the bank produce the original could work injustice. A photocopy was not necessary and a reconstruction would do. HHJ Langan QC said: ‘Suppose a situation in which a lender could not find an original agreement which had been misplaced in its archives, or in which a batch of such agreements was destroyed in a fire. Suppose also that the lender could reconstitute the agreement or agreements from other sources – a card index or computerised records of transactions, and a copy of the standard terms printed on application forms at the relevant date. In such a case, even though no doubt could be cast on the accuracy of the work of reconstruction, the lender would be subject to the section 78(6) bar on enforcement and, in the case of destruction by fire, the bar would necessarily be perpetual. This would, in my judgment, be a grave injustice to the lender, while to permit reconstruction would not work any countervailing injustice to the borrower. I do not accept that a fair apportionment of risk between the parties requires the court to adopt the interpretation for which Mr Berkley contends.’

Judges:

HHJ Langan QC

Citations:

Unreported, 13 September 2009

Statutes:

Consumer Credit Act 1974 61 78 189

Cited by:

Cited – Carey v HSBC Bank plc, Yunis v Barclays Bank plc and similar QBD 23-Dec-2009
(Manchester Mercantile Court) The court considered the effects in detail where a bank was unable to comply with a request under section 78 of the 1974 Act to provide a copy of the agreement signed by the client.
Held: The court set out to give . .
Lists of cited by and citing cases may be incomplete.

Consumer, Banking

Updated: 05 May 2022; Ref: scu.384475

Kellock v Robinson: 1795

Where part of a note is received of the drawer, the indorsor is not to be resorted to for the rest.
In an action by the indorsee of a promissory note against the indorsor, it appeared the plaintiff had after the indorsement received part of the drawer of the note : and it was held to be a taking upon himself to give the whole credit to the drawer of the note, and absolutely discharged the indorsor. So the plaintiff was nonsuit.

Citations:

[1795] EngR 2268, (1795) 2 Str 745, (1795) 93 ER 822 (B)

Links:

Commonlii

Banking

Updated: 05 May 2022; Ref: scu.354613

Jose Ventura De Aguiree Solarte, Abel, And Anselmo De Arroyave, Assignees, Etc, Of Joaquim Ruez De Alzedo, A Bankrupt v John Archdale Palmer, And William Bough: PC 1834

Upon the dishonour of a bill of exchange by the acceptor, a letter was written to the indorsers in the following terms :– ‘A bill for andpound;683, drawn by ‘ J. upon D. and Co., and bearing your indorsement, has been put into our hands by the assignees of A.’ (the holder, who had become bankrupt), with directons to take legal measures for the recovery thereof unless immediately paid.
Held: upon a bill of exceptions to the direction of the judge, upon the trial of an action against the indorser to recover the amount of the bill, that this was not a sufficient notice of the dishonour and non-payment of the bill to entitle the plaintiffs to maintain their action.

Citations:

[1834] EngR 186, (1834) 8 Bligh NS PC 874, (1834) 5 ER 1166

Links:

Commonlii

Jurisdiction:

Commonwealth

Banking

Updated: 05 May 2022; Ref: scu.316863

Rolin And Another v Steward, Public Officer of The East of England Bank: 8 May 1854

Substantial damages may be recovered against a banker, for dishonouring an acceptance and cheques of a customer, there being sufficient assets in his hands at the time to meet them.

Citations:

[1854] EngR 492, (1854) 14 CB 595, (1854) 139 ER 245

Links:

Commonlii

Cited by:

Followed – Wilson v United Counties Bank Ltd HL 1920
Bank’s duty to client’s reputation and credit
Major Wilson had left England on active service soon after the beginning of the Great War, leaving his business affairs, in a fairly precarious state, with his bank. The jury found that the bank had failed in its duty to supervise his business . .
Lists of cited by and citing cases may be incomplete.

Banking, Damages

Updated: 05 May 2022; Ref: scu.293349

Cook And Another v Lister: 19 Jan 1863

Three parties including the defendant had drawn bills against each other, which bills came to the plaintiff as bona fide holder for value indorsee. Various sums had been paid on account, and the plaintiff sued the defendant but giving him credit only for the sums he had paid, saying that any excess would be held for the use of the drawers. The defendant offered to pay the sums he owed and the balance outsanding under all the bills, but no more, and paid that sum into court.
Held: Though the bills were not accomodation bills as such, the defendant could not be called on to pay the sum already paid again.

Judges:

Willes J

Citations:

[1863] EngR 154, (1863) 13 CB NS 543, (1863) 143 ER 215, (1863) 1 New Rep 280, (1863) LJCP 121, (1863) 7 LT 712

Links:

Commonlii

Cited by:

Cited – Hirachand Punamchand v Temple CA 1911
The defendant, a British army officer in India, had given a promissory note to the plaintiff moneylenders. Unable to pay, he suggested they apply to his father, Sir Richard Temple. In reply, Sir Richard Temple’s solicitors wrote saying they were . .
Lists of cited by and citing cases may be incomplete.

Banking, Contract

Updated: 05 May 2022; Ref: scu.282809

Bank of New South Wales v Laing: 1954

A bank is not under an obligation to lend to a current account customer or to allow him overdraft facilities unless it has agreed to do so.

Citations:

[1954] AC 135

Cited by:

Cited – Office of Fair Trading v Abbey National Plc and seven Others ComC 24-Apr-2008
The Office sought a declaration that the respondent and other banks were subject to the provisions of the Regulations in their imposition of bank charges to customer accounts, and in particular as to the imposition of penalties or charges for the . .
Lists of cited by and citing cases may be incomplete.

Banking

Updated: 05 May 2022; Ref: scu.267118

Beevor v Mason: 1978

Under the 1948 Act, effect must be given to a notice to quit served after failure to comply with a notice requiring the tenant to pay any rent due within two months of the notice. The evidence showed that the landlord had previously accepted payment of the rent by cheque posted on the date it was due. The court held that a cheque posted in this way on the last day of the two month notice period was payment of the rent on that day if the cheque was honoured. The cheque was not received by the landlord until after the notice had expired. Nevertheless, as a result of the previous course of dealing, the court held that the tenant was entitled to pay by cheque and treated the post office as the landlord’s agent for the purpose of deciding when the cheque was delivered.

Citations:

(1978) 37 P and CR 452

Statutes:

Agricultural Holdings Act 1948

Cited by:

Cited – Andy Coltrane v Janice Day CA 14-Mar-2003
In the course of possession proceedings for non payment of rent under an assured tenancy, the tenant gave the landlord a cheque which cleared the arrears.
Held: The past course of dealings between the parties showed that the landlord had . .
Lists of cited by and citing cases may be incomplete.

Landlord and Tenant, Banking, Agriculture

Updated: 05 May 2022; Ref: scu.180780

Turner v Royal Bank of Scotland plc: CA 6 May 1999

The bank replied to several enquiries as to the customer’s credit status without first seeking the customer’s consent. It claimed that this was general practice at the time.
Held: The practice fell short of being ‘notorious’ or well known, and was a breach of confidentiality.

Judges:

Chadwick LJ

Citations:

Gazette 06-May-1999, [2000] BPIR 683

Jurisdiction:

England and Wales

Citing:

See Also – Turner v Royal Bank of Scotland Plc CA 24-Mar-1998
The plaintiff complained as to the provision of references by his bank. The bank said he had given an implied permission through the bank which had made the request. Later changes in the bankers code of practice would have required explicit written . .

Cited by:

Cited – Commissioners of Inland Revenue v Lee-Phipps ChD 2003
In a case where there had been no reasoned determination of the arguments at the earlier stage and the application had simply been struck out for a formal defect, then the principle referred to in Turner was not engaged.
The court heard an . .
Lists of cited by and citing cases may be incomplete.

Banking

Updated: 05 May 2022; Ref: scu.90032

North Central Wagon Finance Co Ltd v Brailsford: 1962

The onus of proof of establishing the application of the exception in the section lay with the company claiming it.

Judges:

Cairns J

Citations:

[1962] 1 WLR 1288, [1962] 1 All ER 502

Statutes:

Moneylenders Act 1900 6(d)

Jurisdiction:

England and Wales

Cited by:

Applied – United Dominions Trust Ltd v Kirkwood CA 24-Feb-1966
The defendant was MD of a company which borrowed from the plaintiff. The company drew five bills as security, and the defendant endorsed them. When the company failed, the plaintiff gave notice of dishonour and sued the defendant as indorsee. The . .
Cited – United Dominions Trust Ltd v Kirkwood CA 24-Feb-1966
The defendant was MD of a company which borrowed from the plaintiff. The company drew five bills as security, and the defendant endorsed them. When the company failed, the plaintiff gave notice of dishonour and sued the defendant as indorsee. The . .
Lists of cited by and citing cases may be incomplete.

Banking

Updated: 04 May 2022; Ref: scu.260039

London and River Plate Bank Ltd v Bank of Liverpool Ltd: 1896

Mathew J said: ‘when a bill becomes due and is presented for payment the holder ought to know at once whether the bill is going to be paid or not’. And ‘it is manifest that the position of a man of business may be most seriously compromised, even by the delay of a day.’ and ‘It seems to me the principle underlying the decision is this: that if the plaintiff in that case so conducted himself as to lead the holder of the bill to believe that he considered the signature genuine, he could not afterwards withdraw from that position; and no single case has been produced in which, where payment has been made on a forged indorsement to the holder of it in good faith, the money has been recovered back. This case was followed by another case, Smith v. Mercer 6 Taunt 76, where it was said in the course of some of the judgments that, where a banker had paid a forged draft believing that it had been accepted by his customer, he ought to know his customer’s signature. The same observations that I have made apply to that case. He may not be able by any amount of care to ascertain whether or not the acceptance was a forgery. That case, therefore, does not establish the principle for which Mr. Bigham contended. The true principle is developed in the clearest possible form in the case of Cocks v. Masterman. 9 B. and C. 902. There was an intermediate case of Wilkinson v. Johnson 3 B. and C. 428, which stands by itself, and which we need not discuss. In Cocks v. Masterman the simple rule was laid down in clear language for the first time that when a bill becomes due and is presented for payment the holder ought to know at once whether the bill is going to be paid or not. If the mistake is discovered at once, it may be the money can be recovered back; but if it be not, and the money is paid in good faith, and is received in good faith, and there is an interval of time in which the position of the holder may be altered, the principle seems to apply that money once paid cannot be recovered back. That rule is obviously, as it seems to me, indispensable for the conduct of business. A holder of a bill cannot possibly fail to have his position affected if there be any interval of time during which he holds the money as his own, or spends it as his own, and if he is subsequently sought to be made responsible to hand it back. It may be that no legal right may be compromised by reason of the payment. For instance, the acceptor may pay the bill and discover on the same day that the bill is a forgery, and so inform the holder of it, so that the holder would have time to give notice of dishonour to the other parties to the bill; but even in such a case it is manifest that the position of a man of business may be most seriously compromised, even by the delay of a day. Now that clear rule is one that ought not to be tampered with.’

Judges:

Mathew, J

Citations:

[1896] 1 QB 7

Cited by:

Cited – Lipkin Gorman (a Firm) v Karpnale Ltd HL 6-Jun-1991
The plaintiff firm of solicitors sought to recover money which had been stolen from them by a partner, and then gambled away with the defendant. He had purchased their gaming chips, and the plaintiff argued that these, being gambling debts, were . .
Lists of cited by and citing cases may be incomplete.

Equity, Banking

Updated: 04 May 2022; Ref: scu.259529

United City Merchants v Royal Bank of Canada: HL 1983

The House was asked as to the question of fraud which would entitle a banker to refuse to pay under a letter of credit notwithstanding the rule requiring payment when the documents were in order on their face.
Held: The whole commercial purpose for which the system of confirmed irrevocable documentary credits has been developed in international trade is to give to the seller an assured right to be paid before he parts with control of the goods. That does not permit any dispute with the buyer as to the performance of the contract of sale being used as a ground for non-payment or reduction or deferment of payment.
To this general statement of principle as to the contractual obligations of the confirming bank to the seller, there is one established exception, that is, where the seller, for the purpose of drawing on the credit, fraudulently presents to the confirming bank documents that contain, expressly or by implication, material representations of fact that to his knowledge are untrue. Although there does not appear among the English authorities any case in which this exception has been applied, it is well established in the American cases of which the leading or ‘landmark’ case is Sztejn v J. Henry Schroder Banking Corporation (1941) 31 N.Y.S. 2d 631 . . The exception for fraud on the part of the beneficiary seeking to avail himself of the credit is a clear application of the maxim ex turpi causa non oritur actio or, if plain English is to be preferred, ‘fraud unravels all’. The courts will not allow their process to be used by a dishonest person to carry out a fraud.

Judges:

Lord Diplock

Citations:

[1983] AC 168

Jurisdiction:

England and Wales

Cited by:

Cited – Banco Santander Sa v Bayfern Ltd and Others ComC 29-Jun-1999
The court was asked whether the risk of fraud on the part of the beneficiary of a confirmed deferred payment letter of credit is to be borne by the issuing bank (and so possibly the applicant for the credit) or by the confirming bank where the . .
Lists of cited by and citing cases may be incomplete.

Banking

Updated: 04 May 2022; Ref: scu.244754

Avon Finance Co Ltd v Bridger: CA 1985

The son arranged finance for his parents to move near to him. He borrowed money to help finance it, secured by an expensive second loan. He deceived his parents into executing the loan. After the son defaulted, the plaintiff sought possession.
Held: The parents had signed the charge without exercising reasonable care, and their plea of non est factum failed. However the charge was voidable in equity. The plaintiff lender had appointed the son to act as their agents to secure the signatures of the parents and to their disadvantage. The finance company should not be allowed to take advantage of their agent’s deceit.

Judges:

Brandon LJ

Citations:

[1985] 2 All ER 281, [1985] CLY 1289

Jurisdiction:

England and Wales

Citing:

Applied – Chaplin and Co Ltd v Brammall CA 1908
The plaintiffs, having agreed to supply goods to the defendant’s husband on credit if his wife would guarantee payment by him of their price, sent to the husband a form of guarantee, in order that he might obtain his wife’s signature to it, leaving . .
Cited – Saunders (Executrix of the Will of Rose Maude Gallie, Deceased) v Anglia Building Society HL 9-Nov-1970
The Appellant had signed an assignment of her lease in favour of her nephew. She said she thought the effect of it would protect her right to continue to live in the house. She now appealed rejection of her plea of non est factum.
Held: The . .
Distinguished – Lloyds Bank plc v Bundy CA 1974
‘Broadchalke is one of the most pleasing villages in England. Old Herbert Bundy, the defendant, was a farmer there. His home was at Yew Tree Farm. It went back for 300 years. His family had been there for generations. It was his only asset. But he . .

Cited by:

Cited – Barclays Bank Plc v O’Brien and Another HL 21-Oct-1993
The wife joined in a charge on the family home to secure her husband’s business borrowings. The husband was found to have misrepresented to her the effect of the deed, and the bank had been aware that she might be reluctant to sign the deed.
Cited – Forsdike v Forsdike CA 21-Feb-1997
The claimant appealed dismissal of his claim to set aside a transfer by way of gift by his father on the basis of an alleged undue influence.
Held: The judges was entitled to make the findings he had done, and to be impressed by the spacing of . .
Lists of cited by and citing cases may be incomplete.

Banking, Undue Influence, Equity

Updated: 04 May 2022; Ref: scu.180569

R D Harbottle (Mercantile) Limited v National Westminster Bank Limited: 1978

The plaintiffs had entered into contracts of sale with Egyptian buyers. Each contract provided that the plaintiffs would establish a guarantee confirmed by a bank in favour of the buyers. The guarantees were widely expressed, and secured payment on the buyers’ demand. They were established with Egyptian banks and confirmed by the defendant English bank. The buyers demanded payment under the guarantees. The plaintiffs maintained that there was no justification for the demand for payment, and sought declarations to that effect and injunctions against the defendants from making payment under the guarantees. Interlocutory injunctions were granted ex parte but then discharged on the application of the defendant bank. Kerr J said: ‘If [the threatened payment] is in accordance with the contract, then the plaintiffs have no cause of action against the bank and, as it seems to me, no possible basis for an injunction against it. Alternatively, if the threatened payment is in breach of contract . . then the plaintiffs would have good claims for damages against the bank. In that event the injunctions would be inappropriate, because they interfere with the bank’s obligations to the Egyptian banks, because they might cause greater damage to the bank than the plaintiffs could pay on their undertaking as to damages, and because the plaintiffs would then have an adequate remedy in damages. The balance of convenience would in that event be hopelessly weighted against the plaintiffs.’
He added: ‘Except possibly in clear cases of fraud of which the banks have notice, the courts will leave the merchants to settle their disputes under the contracts by litigation or arbitration as available to them or stipulated in the contracts. The courts are not concerned with their difficulties to enforce such claims; those are risks which the merchants take . . The machinery and commitments of banks are on a different level. They must be allowed to be honoured, free from interference by courts. Otherwise, trust in international commerce could be irreparably damaged.’

Judges:

Kerr J

Citations:

[1978] 1 QB 146

Cited by:

Approved – Edward Owen Engineering Ltd v Barclays Bank International Ltd CA 1978
Performance guarantees are effectively obligations to pay on demand within the terms of the guarantee, irrespective of the rights and wrongs of any dispute between beneficiary and principal under the terms of their separate contract, subject only to . .
Lists of cited by and citing cases may be incomplete.

Banking

Updated: 04 May 2022; Ref: scu.461945

Montecchi v Shimco (UK) Limited: 1979

Lord Bridge of Harwich said: ‘it is elementary that as between the two immediate parties to a bill of exchange which is treated in international commerce as the equivalent of cash, the fact that the defendant may have a counterclaim for unliquidated damages arising out of the same transaction forms no sort of defence to an action on a bill of exchange.’

Citations:

[1980] 1 Lloyds R 50, [1979] 1 WLR 1180

Banking

Updated: 04 May 2022; Ref: scu.459794

National Westminster Bank Ltd v Halesowen Presswork and Assemblies Ltd: HL 1972

The bank’s common law right of set-off was affirmed. The bank’s appeal succeeded.
The application of section 323 is mandatory in the sense that it cannot be excluded by prior agreement of the parties.

Citations:

[1972] AC 785

Statutes:

Insolvency Act 1986 323(2)

Jurisdiction:

England and Wales

Citing:

Appeal from – Halesowen Presswork and Assemblies Ltd v Westminster Bank Ltd CA 1971
The relationship of banker and customer was a single relationship the situation was not one of lien. Buckley LJ said: ‘Nor is it a set-off situation, which postulates mutual but independent obligations between the two parties. It is an accounting . .

Cited by:

Followed – Re K (Restraint Order) 1990
An order under the Act prohibited K from disposing of his assets, including a deposit account with the bank. K had an overdraft facility secured against the deposit account. The bank sought to set off the overdraft against the sums held on deposit. . .
Lists of cited by and citing cases may be incomplete.

Banking, Insolvency

Updated: 02 May 2022; Ref: scu.416228

Scott v Gillmore: 6 Jul 1810

A bill of exchange, part of the consideration for which is spirituous liquor sold in less quantities than of 20s. value, is totally void, though part of the consideration was money lent -The statute 24 G. 2, c. 40, s. 12, making illegal the sale of spirits in less quantities than to 20s. value, unless paid for, extends to spirits mixed with water.

Citations:

[1810] EngR 393, (1810) 3 Taunt 226, (1810) 128 ER 90 (A)

Links:

Commonlii

Cited by:

Cited – Fielding and Platt Ltd v Selim Najjar CA 17-Jan-1969
The plaintiff company had contracted to make and export to the defendant an aluminium extrusion press. The defendant re-assured the plaintiff that it would be lawful for him to import the plant, but asked that the plant be described falsely on the . .
Lists of cited by and citing cases may be incomplete.

Banking, Contract

Updated: 02 May 2022; Ref: scu.335578

Miles v Pope: 9 Dec 1847

A plea alleging that the defendant obtained a final order for protection and distribution, under the 7 and 8 Vict. c. 96, is not proved by the production of a mere order for personal protection under the 28th section of that statute

Citations:

[1847] EngR 1002, (1847) 5 CB 294, (1847) 136 ER 890

Links:

Commonlii

Banking

Updated: 02 May 2022; Ref: scu.301618

Powney v Blomberg: 11 Jul 1844

A. executed B bond and mortgage to B. to secure andpound;2,000 lent to him by B., with interest at 5%.
B having sold out a sum of stock to enable her to make the loan, the dividends of which exceeded the interest of the andpound;2000 at andpound;5 per cent., A. afterwards agreed, in consideration of her Ietting the andpound;2000 continue secured at interest as aforesaid, to transfer to her, when requested so to do, the amount of the stock sold out, or, at her option, to pay to her a sum of money sufficient to repurchase it, and, in the meantime, to pay to her the amount of the dividends of it, intstead of the interest of the andpound;2000.
Held, that the agreement was additional to and not substitutional for the bond and mortgage, and was, therefore, usurious.

Citations:

[1844] EngR 772, (1844) 14 Sim 179, (1844) 60 ER 325

Links:

Commonlii

Contract, Banking

Updated: 02 May 2022; Ref: scu.305364

Bank of Scotland v Singh: 17 Jun 2005

Judges:

Judge Kershaw QC

Citations:

Unreported, 17 June 2005

Jurisdiction:

England and Wales

Cited by:

Cited – Barclays Bank Plc v Kufner ComC 10-Oct-2008
barclays_kufnerComC2008
The bank sought summary judgment under a guarantee to secure a loan to purchase a luxury yacht which was to be hired out in business. The loan had been charged against the yacht, but when the yacht was re-registered, the bank failed to re-establish . .
Lists of cited by and citing cases may be incomplete.

Banking

Updated: 02 May 2022; Ref: scu.280080

Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd: SC 30 Oct 2019

The Court was asked whether a claim against a bank for breach of the Quincecare duty is defeated if the customer is a company, and the fraudulent payment instructions are given by the company’s Chairman and sole shareholder who is the dominating influence over the company’s affairs. That shareholder had given the bank instructions for various payments intended to defeat the company’s creditors. The bank now appealed against a finding that it was liable for the payments.
Held: The appeal failed. An implied term (‘Quincecare Duty’) of the contract between a bank and its customer is that the bank owes a duty not to execute the customer’s order if it knows the order to be dishonestly given, or shuts its eyes to obvious dishonesty, or acts recklessly in failing to make inquiries.
The Quincecare duty strikes a careful balance between the interests of the customer and those of the bank and denying the claim would not enhance the integrity of the law, the purpose of the Quincecare duty is to protect the bank’s customers from harm caused by people for whom the customer is responsible.
There was no universal rule to attribute the fraudulent acts of a sole shareholder and director to the company.

Judges:

Lady Hale, President, Lord Reed, Deputy President, Lord Lloyd-Jones, Lord Sales, Lord Thomas

Citations:

[2019] UKSC 50, [2019] 2 CLC 743, [2020] 2 BCLC 392, [2019] Bus LR 3086, [2020] Lloyd’s Rep FC 54, [2019] WLR(D) 608, [2019] 3 WLR 997, [2020] BCC 89, [2020] 1 Lloyd’s Rep 47, [2020] AC 1189, [2020] PNLR 5, [2020] 1 All ER 383, [2020] 1 All ER (Comm) 1, UKSC 2018/0039

Links:

Bailii, Bailii Summary, WLRD, SC, SC Summary, SC Summary Video, SC 2019 Jul 23 am Video, SC 2019 Jul 24 am Video, SC 2019 Jul 24 pm Video

Jurisdiction:

England and Wales

Citing:

Appeal from – Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd CA 1-Feb-2018
The court was asked whether the defence of illegality is available to allow a bank to defeat a claim in negligence and breach of contract brought by its corporate customer.
Held: The Court of Appeal unanimously dismissed the appeal. Mr Al . .
Cited – Barclays Bank plc v Quincecare Ltd QBD 1992
The relationship of banker and customer is that of agent and principal: ‘Primarily, the relationship between a banker and customer is that of debtor and creditor. But quoad the drawing and payment of the customer’s cheques as against the money of . .
At First Instance – Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd ChD 16-Feb-2017
Claim for return of money said to be held for the claimant’s benefit by a stockbroker.
Held: Rose J dismissed the dishonest assistance claim because Daiwa’s employees had acted honestly. However, she upheld the negligence claim, while making a . .
Cited – Patel v Mirza SC 20-Jul-2016
The claimant advanced funds to the respondent for him to invest in a bank of which the claimant had insider knowledge. In fact the defendant did not invest the funds, the knowledge was incorrect. The defendant however did not return the sums . .
Cited – Barings Plc and Another v Coopers and Lybrand (A Firm) and others ChD 20-Mar-2002
. .
Cited – Barings Plc and Another v Coopers and Lybrand (A Firm) and Others ChD 11-Jun-2003
Evans-Lombe J expressed an unwillingness to accept any all-embracing test for what may constitute the breaking of the chain of causation, saying: ‘It seems to me that what will constitute such conduct is so fact-sensitive to the facts of any case . .
Cited – Salomon v A Salomon and Company Ltd HL 16-Nov-1896
A Company and its Directors are not same paersons
Mr Salomon had incorporated his long standing personal business of shoe manufacture into a limited company. He held nearly all the shares, and had received debentures on the transfer into the company of his former business. The business failed, and . .
Cited – Luscombe v Roberts 1962
A solicitor’s claim against his negligent accountants failed because he knew that what he was doing – transferring money from his clients’ account into his firm’s account and using it for his own purposes – was wrong. . .
Cited – In re King CA 4-Feb-1963
. .
Cited – Jetivia Sa and Another v Bilta (UK) Ltd and Others SC 22-Apr-2015
The liquidators of Bilta had brought proceedings against former directors and the appellant alleging that they were party to an unlawful means conspiracy which had damaged the company by engaging in a carousel fraud with carbon credits. On the . .
Cited – Moore Stephens (A Firm) v Stone Rolls Ltd (in liquidation) HL 30-Jul-2009
The appellants had audited the books of the respondent company, but had failed to identify substantial frauds by an employee of the respondent. The auditors appealed a finding of professional negligence, relying on the maxim ex turpi causa non . .
Cited – Commissioner of Police for the Metropolis v Reeves (Joint Administratix of The Estate of Martin Lynch, Deceased) HL 15-Jul-1999
The deceased was a prisoner known to be at risk of committing suicide. Whilst in police custody he hanged himself in his prison cell. The Commissioner accepted that he was in breach of his duty of care to the deceased, but not that that breach was . .
Cited – Meridian Global Funds Management Asia Ltd v Securities Commission PC 26-Jun-1995
(New Zealand) The New Zealand statute required a holder of specified investments to give notice of its holding to a regulator as soon as it became aware of its holding. Unbeknown to any others in the company apart from one colleague, its chief . .
Lists of cited by and citing cases may be incomplete.

Banking, Company

Updated: 02 May 2022; Ref: scu.642832

The Trustee of the Property of FC Jones and Sons v Jones: CA 25 Apr 1996

Statute may cause the legal ownership of the bank account to change, for example on bankruptcy of the account holder or holders

Judges:

Nourse, Beldam, Millett LJJ

Citations:

[1996] EWCA Civ 1324, [1996] 4 All ER 721, [1996] BPIR 644, [1997] 1 WLR 51, [1997] 1 Ch 159, [1997] Ch 159, [1996] 3 WLR 703, [1997] 1 Cr App R 335

Links:

Bailii

Jurisdiction:

England and Wales

Cited by:

Cited – Scott v Bridge and Others ChD 25-Nov-2020
Claim to recover money and property said to have been transferred by the claimant to the defendants or one or more of them. The money concerned came from a bank account belonging to the claimant. The property concerned consisted of two . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Banking

Updated: 01 May 2022; Ref: scu.276271

Lipkin Gorman (a Firm) v Karpnale Ltd: 1987

A partner in the plaintiff firm of solicitors stole money from them and spent it gambling in the defendant’s casino. The plaintiff cought to recover the money from the defendant, saying that as a gambling debt, no consideration had been given. They sought recovery also from their bankers, who had paid out on firm’s cheques drawn for Cash. At other times, cheques were made payable to a building society from whose account the partner withdrew the proceeds, and at other times, the cheques were made payable to the bank itself. The bank’s branch manager had knowledge of the partner’s gambling activities and was aware that the method used for the drawing of the cheques was unusual, but he had failed to inform the other partners in the solicitors’ firm.
Held: The court declined to extend the categories of quasi contract so as to enable the firm to recover the stolen money from the person to whom the thief has lost it gambling, but the contracts under which the club received the stolen money were void under section 18 of the Act of 1845 and the club was in no better position than a donee. On principle and on authority a donee is bound to reimburse the victim for stolen money received and retained by the donee and, in the circumstances, the club was unjustly enriched to the extent that the solicitors’ money was retained by the club.
Alliott J set out the principles underlying whether a bank can rely upon the authority of an authorised signatory: ‘(1) the bank is entitled to treat the customer’s mandate at its face value, save in extreme cases;
(2) the bank is not obliged to question any transaction which is in accordance with the mandate, unless a reasonable banker would have grounds for believing that the authorised signatories are misusing their authority for the purpose of defrauding their principals or otherwise defeating his true intention;
(3) it follows that, if a bank does not have reasonable grounds for believing that there is fraud, it must pay;
(4) mere suspicion or unease do not constitute reasonable grounds and are not enough to justify a bank in failing to act in accordance with a mandate; and
(5) a bank is not required to act as an amateur detective.’
The Bank, knowing that the partner, because of his gambling, was in financial difficulty, had reasonable grounds for believing that he was fraudulently withdrawing sums from the partnership account. Quite independently of contract, the Bank was also held in breach of duty to the other partners, in honouring cheques drawn by the gambling partner. The Bank was liable as constructive trustee for rendering knowing assistance to the gambling partner.

Judges:

Alliott J

Citations:

[1987] 1 WLR 987, [1992] 4 All ER 313

Jurisdiction:

England and Wales

Cited by:

At first instance – Lipkin Gorman (a Firm) v Karpnale Ltd HL 6-Jun-1991
The plaintiff firm of solicitors sought to recover money which had been stolen from them by a partner, and then gambled away with the defendant. He had purchased their gaming chips, and the plaintiff argued that these, being gambling debts, were . .
At first Instance – Lipkin Gorman v Karpnale Ltd CA 1989
A partner in a firm of solicitors stole money from them, and spent it gambling with the defendants. The firm sued also their banker, who had been held to be aware of the defaulting partner’s weaknesses and activities.
Held: The solicitors . .
Cited – Barclays Bank plc v Quincecare Ltd QBD 1992
The relationship of banker and customer is that of agent and principal: ‘Primarily, the relationship between a banker and customer is that of debtor and creditor. But quoad the drawing and payment of the customer’s cheques as against the money of . .
Lists of cited by and citing cases may be incomplete.

Contract, Equity, Banking

Updated: 01 May 2022; Ref: scu.259421

Bute (Marquess) v Barclays Bank Ltd: 1955

McGaw was the manager of three farms belonging to the plaintiff. He applied to the Department of Agriculture for Scotland for farm subsidies. After he left, the Department sent him three warrants in respect of the subsidies. The warrants were made payable to McGaw, but elsewhere on them appeared the words ‘for the Marquess of Bute.’ McGaw paid the warrants into his own personal account at a branch of defendant bank, which forwarded them for collection and paid the proceeds into his account, upon which he then drew.
Held: The plaintiff was entitled to succeed in an action against the defendant bank for damages for conversion. The words ‘for the Marquess of Bute’ had the effect that, in the circumstances, the warrants were payable to the Marquess of Bute through McGaw. In order to succeed in an action for conversion, it was enough that the plaintiff could prove that, at the time of the alleged conversion, he was entitled to immediate possession; and that, as McGaw’s employment had terminated before he received the warrants, the plaintiff would have been entitled to require McGaw to deliver the warrants to him when they were received.

Judges:

McNair J

Citations:

[1955] 1 QB 202

Cited by:

Cited – Lipkin Gorman (a Firm) v Karpnale Ltd HL 6-Jun-1991
The plaintiff firm of solicitors sought to recover money which had been stolen from them by a partner, and then gambled away with the defendant. He had purchased their gaming chips, and the plaintiff argued that these, being gambling debts, were . .
Lists of cited by and citing cases may be incomplete.

Banking

Updated: 01 May 2022; Ref: scu.259534

Lloyd’s v Harper: 1888

Lush LJ said: ‘ The next question which, no doubt, is a very important and substantial one, is, that Lloyds, having sustained no damage themselves could not recover for the losses sustained by third parties by reason of the default of Robert Henry Harper as an Underwriter. That, to my mind, is a startling and alarming doctrine, and a novelty, because I consider it to be an established rule of law that where a contract is made with A for the benefit of B, A can sue on the contract for the benefit of B, and recover all that B could have recovered if the contract had been made with B himself.’

Judges:

Lush LJ

Citations:

[1888] 16 CD 290

Cited by:

Explained – Coulls v Bagot’s Executor and Trustee Co Ltd 21-Mar-1967
(High Court of Australia) The court considered an action for damages by a party to a contract to enforce an obligation intended to benefit another.
Held: Windeyer J: ‘ I can see no reason why in such cases the damages which A would suffer upon . .
Cited – Beswick v Beswick HL 29-Jun-1967
The deceased had assigned his coal merchant business to the respondent against a promise to pay andpound;5.00 a week to his widow whilst she lived. The respondent appealed an order requiring him to make the payments, saying that as a consolidating . .
Lists of cited by and citing cases may be incomplete.

Banking, Damages

Updated: 01 May 2022; Ref: scu.251050

Commissioners of Taxation v English, Scottish and Australian Bank Limited: PC 2 Jan 1920

The Board considered what would amount to negligence in a bank.
Held: The test in Permewan was to be applied by ‘the standard to be derived from the ordinary practice of bankers, not individuals.’ A customer of the bank is a person who has a more permanent relationship with the bank, for instance, having an existing account with the bank. Habit or continued dealings will not make a party a customer unless there is an account in his name. Thus a person who had opened an account on the day before paying in a cheque was a customer of the bank within the meaning of s 88(1) of the 1909 Act: ‘The contrast is not between an habitue and a newcomer, but between a person for whom the bank performs a casual service, such as, for instance, cashing a cheque for a person introduced by one of their customers, and a person who has an account of his own at the bank.’
A negligence in collection is not a question of negligence in opening an account, though the circumstances connected with the opening of an account may shed light on the question whether there was negligence in collecting a cheque.

Judges:

Lord Dunedin

Citations:

[1920] AC 683

Statutes:

Bills of Exchange Act 1909 88(1)

Citing:

Approved – Commissioners of State Savings Bank v Permewan, Wright and Co 18-Dec-1914
(High Court of Australia) The court considered the nature of negligence in a banker: ‘the test of negligence is whether the transaction of paying in any given cheque [coupled with the circumstances antecedent and present] was so out of the ordinary . .

Cited by:

Cited – Architects of Wine Ltd v Barclays Bank Plc CA 20-Mar-2007
The bank appealed summary judgement against it for conversion of cheques. The cheques had been obtained by a fraud.
Held: The court considered the question of neglience under section 4: ‘The section 4 qualified duty does not require an . .
Lists of cited by and citing cases may be incomplete.

Commonwealth, Banking, Professional Negligence

Updated: 01 May 2022; Ref: scu.250550

Barclay’s Bank v Bank of England: 1985

The court rejected an argument that because it was the usage of bankers to clear cheques through the clearing house system, the obligation of a presenting banker to present the cheque for collection at the branch of the paying bank where the drawer had his account was discharged by delivery of the cheque to the clearing house: ‘The drawer of a cheque has a clear statutory right under section 45 of the 1882 Act (subject to section 46) to be discharged from liability if the cheque is not duly presented to him or his branch of the paying bank for payment. If it is to be said that the drawer loses that right as the result of a private agreement made between the banks for their own convenience, the very strongest proof of his knowledge and assent would be needed.’

Judges:

Bingham J

Citations:

[1985] All ER 385

Cited by:

Cited – Turner v Royal Bank of Scotland Plc CA 24-Mar-1998
The plaintiff complained as to the provision of references by his bank. The bank said he had given an implied permission through the bank which had made the request. Later changes in the bankers code of practice would have required explicit written . .
Lists of cited by and citing cases may be incomplete.

Banking

Updated: 30 April 2022; Ref: scu.230914

Holroyd v Marshall: HL 1862

The debtor gave a mortgage not only over his existing machinery but also over all the machinery which, during the continuance of the security, should be placed in his mill. The question arose whether the equitable title of the chargee in respect of new machinery that had been placed in the mill prevailed over the rights of a judgment creditor of the chargor/debtor. Could the chargee assert an equitable interest in the new machinery? Lord Campbell LC had held not.
Held: The House reversed the decision, holding that ‘ . . immediately on the new machinery and effects being fixed or placed in the mill, they became subject to the operation of the contract, and passed in equity to the mortgagees’ (Lord Westbury) and: ‘in equity it is not disputed that the moment the property comes into existence, the agreement operates on it’ (Lord Chelmsford).

Judges:

Lord Westbury, Lord Chelmsford

Citations:

(1862) 10 HLC 191

Banking

Updated: 30 April 2022; Ref: scu.228299

Trade Indemnity Co Ltd v Workington Harbour and Dock Board: HL 1937

The House held that a loan of andpound;45,000 made by a building owner to a building contractor did not constitute an agreement ‘for any alteration in or to’ the building contract which the company had guaranteed. The question was whether it was ‘within the general purview of the original guarantee’. Lord Atkin also said: ‘My Lords, both actions were brought on the money bond.’ – That is the first and second actions. – ‘It is well established that in such an action the plaintiff has to establish damages occasioned by the breach or breaches of the conditions, and, if he succeeds, he recovers judgment on the whole amount of the bond, but can only issue execution for the amount of the damages proved.’

Judges:

Lord Atkin

Citations:

[1937] AC 1

Cited by:

Cited – Triodos Bank Nv v Dobbs (No 2) CA 24-May-2005
The bank sought payment under a guarantee given by the appellant. The appellant said that the original loan agreement had been varied so as to release him. The loan had been taken out to support a business venture. After the guarantee was signed a . .
See Also – Trade Indemnity Co Ltd v Workington Harbour and Dock Board (No 2) HL 1938
The plaintiffs’ action was derived from a bond given by the defendants guaranteeing a contractor’s performance in building a dock for the plaintiffs. The bond provided that a certificate which complied with certain criteria would prove the amount . .
Lists of cited by and citing cases may be incomplete.

Banking, Contract

Updated: 30 April 2022; Ref: scu.225451

British Motor Trust Co Ltd v Hyams: 1934

Mr Lord acquired two motor coaches under two hire-purchase agreements from the claimants and persuaded his mother-in-law to guarantee his obligations by a contract indorsed on the agreements in the following terms:- ‘We . . guarantee the due and punctual payment by the . . hirer of all . . moneys payable by him under the within written agreement . . and we further agree that this guarantee shall not be avoided . . by the owners and the hirer making any variation in the terms of the said agreement . . provided that no variation shall make us liable for a greater maximum sum under this guarantee than that for which we are at present or may become liable under the present terms of the said agreement.’ Mr Lord fell into arrears and the claimant, instead of resuming possession, made a new single agreement with him by which the two earlier agreements were consolidated and the vehicles were regarded as being hired together so that Mr Lord could not acquire property in any one vehicle unless he paid all instalments due on both vehicles.
Held: The Court described the clause permitting variation to be:- ‘so wide that it was almost impossible to put any limit to the power to vary.’ and added:- ‘It might be that the position of the debtor was so altered that he would be less able to repay the guarantor, but even such a change was not beyond the very wide power of variation contained in the guarantee.’

Judges:

Branson J

Citations:

(1934) 50 TLR 230

Cited by:

Cited – Triodos Bank Nv v Dobbs (No 2) CA 24-May-2005
The bank sought payment under a guarantee given by the appellant. The appellant said that the original loan agreement had been varied so as to release him. The loan had been taken out to support a business venture. After the guarantee was signed a . .
Lists of cited by and citing cases may be incomplete.

Contract, Banking

Updated: 30 April 2022; Ref: scu.225453

Bank of Baroda v Vysya Bank Limited: ChD 1994

An Indian buyer had agreed to purchase a consignment of Latvian steel through its London office. The buyer instructed Vysya to issue a credit in favour of the seller beneficiary. The credit was confirmed by the Bank of Baroda’s London office. The seller presented the documents stipulated under the credit to Bank of Baroda and was paid. The Bank of Baroda then sent the documents to Vysya in India claiming reimbursement. Vysya refused to pay and Baroda issued proceedings in England seeking reimbursement. Baroda sought leave to issue the writ and serve it out of the jurisdiction on the grounds, inter alia, that its contract with Vysya was governed by English law.
Held: Dealing with that question under Article 4 of the Rome Convention, under a contract between an issuing bank and a confirming bank the performance which is characteristic of the contract is the addition by the confirming bank of its confirmation of the credit and its honouring of the obligations thereby accepted in relation to the beneficiary. That being so, if the presumption in Article 4(2) were applied, the contract between the issuing bank and the confirming bank would be governed by English law being the law of the place of business through which the Bank of Baroda was to effect its performance. ‘In the present case the application of art. 4(2) would lead to an irregular and subjective position where the governing law of a letter of credit would vary according to whether one was looking at the position of the confirming or the issuing bank. It is of great importance to both beneficiaries and banks concerned in the issue and operation of international letters of credit that there should be clarity and simplicity in such matters. Article 4(5) provides the answer. The Rome Convention was not intended to confuse legal relationships or to disrupt normal expectations in the way which is implicit in Vysya’s submissions’.

Judges:

Mance J

Citations:

[1994] 2 Lloyd’s Rep 87

Cited by:

Cited – Pt Pan Indonesia Bank Ltd Tbk v Marconi Communications International Ltd CA 27-Apr-2005
The parties disputed the jurisdiction of the English courts over a letter of credit. It foresaw payment here and in sterling, made by the English bank as against the appropriate documents. Authority had been given for service out of the . .
Lists of cited by and citing cases may be incomplete.

Banking, Jurisdiction

Updated: 30 April 2022; Ref: scu.224967

Alliance Bank Ltd v Broom: 1864

The bank demanded security for its loan in circumstances in which it would otherwise have enforced payment. It made no promise not to demand payment but: ‘the [bank] did in effect give, and the defendant received, the benefit of some degree of forbearance; not, indeed, for any definite time, but, at all events, some extent of forbearance.’

Judges:

Sir Richard Kindersley V-C

Citations:

(1864) 2 Dr and Sm 289

Cited by:

Cited – R v Her Majesty’s Attorney-General for England and Wales PC 17-Mar-2003
PC (From Court of Appeal of New Zealand) T had been a member of the British SAS. Other members had written books and the Army sought to impose confidentiality contracts or to impose a return to their unit. R . .
Lists of cited by and citing cases may be incomplete.

Banking, Contract

Updated: 30 April 2022; Ref: scu.220491

Westfield Holdings Ltd v Australian Capital Television: 1992

The court concluded, after looking at whether there had been a clog on the equity of redemption in an arm’s length commercial mortgage transaction where a mortgagee had obtained the right to purchase the whole of the mortgaged property, that: ‘There does not appear to be any commercial reason why, in 1992, the court should invalidate any transaction merely because a mortgagee obtains a collateral advantage or seeks to purchase a mortgage property. Quite obviously, equity must intervene if there is unconscionable conduct. Again equity must intervene in a classic case where it can see that a necessitous borrower it not, truly speaking, a free borrower.
In my view, in 1992, the rule [concerning clogs on the equity of redemption] only applies where the mortgagee obtains a collateral advantage which in all the circumstances is either unfair or unconscionable. It may be that the court presumes from the mere fact of a collateral advantage that the transaction is unconscionable unless there is evidence to the contrary, but the principle does not extend to invalidate automatically cases in which the mortgagee has obtained the right to purchase the whole or part of the mortgaged property in certain circumstances or has obtained a collateral advantage where the circumstances show that there has been no unfairness or unconscionable conduct.’

Judges:

Young J

Citations:

(1992) 32 NSWLR 194, 5 BPR 11,615

Jurisdiction:

Australia

Commonwealth, Banking, Equity

Updated: 30 April 2022; Ref: scu.219909

Re Atlantic Medical Ltd: 1992

A charge was granted over hire-purchase agreements, sub-leases and rentals of leased equipment. The charge extended to such agreements as the chargor might enter into in the future.
Held: Applying Atlantic computers, the charge was a fixed charge.

Judges:

Vinelott J

Citations:

[1992] BCC 653

Jurisdiction:

England and Wales

Citing:

Applied – In re Atlantic Computer Systems Plc CA 1992
The chargor was a company which arranged with the chargee, a funding bank, that it should purchase equipment and let it on hire purchase to the chargor with permission to sub-lease to end users. The chargor charged to the chargee by way of security . .

Cited by:

Cited – National Westminster Bank Plc v Spectrum Plus Ltd; In re Spectrum Plus CA 26-May-2004
The court was asked whether a charge given over book debts in a debenture was floating or fixed.
Held: Since the charge asserted some control over receipt of the payments, it was a fixed charge. Upon payment into the account, title to the . .
Lists of cited by and citing cases may be incomplete.

Banking

Updated: 30 April 2022; Ref: scu.198020

Kerrison v Glyn, Mills, Currie and Co: HL 1912

The plaintiff arranged with his bankers for them to honour cheques of one Patterson and when they advised the plaintiff of the amount of the cheques so honoured, the plaintiff would pay Kessler and Co. The plaintiff paid andpound;500 to the defendants for the credit of Kessler and Co., without being advised by Kessler and Co. that that was due, in ignorance of the fact that Kessler and Co. had committed an act of bankruptcy. The plaintiff sought to recover the andpound;500 from the defendants on the basis of mistake of fact. The plaintiff, having paid the money only in anticipation of a future liability, succeeded at first instance. The Court of Appeal took a different view on the basis that under the arrangement in force at the time of payment, the plaintiff owed that sum to Kessler and Co. and so the plaintiff could not recover the money paid to the defendants even though it was paid under a mistake of fact.
Held:
Of the Court of Appeal’s conclusion that the plaintiff was bound to pay Kessler and Co. andpound;500. Lord Atkinson said: ‘But it followed as a necessary consequence of this conclusion . . that when the plaintiff . . lodged with the defendant the sum of 500L to be placed to the credit of Kessler and Co., he was simply in the position of a debtor who had paid to his creditor the debt he owed in ignorance of the fact of that creditor’s bankruptcy, and that this ignorance did not amount to such a mistake of fact as would entitle the debtor to have the money refunded to him. On the assumption that the plaintiff was, by lodging this sum of money, merely paying a debt he owed, the Court of Appeal were, I think, clearly right in this latter conclusion.’ A payment which is made under a mistake of fact but discharges an existing debt owing to the principal, on whose behalf the payee is authorised to receive payment, is irrecoverable.’

Judges:

Lord Atkinson

Citations:

(1912) 81 LJKB 465

Jurisdiction:

England and Wales

Cited by:

Cited – Lloyds Bank Plc v Independent Insurance Co Ltd CA 26-Nov-1998
The bank had made an electronic transfer of funds for a customer in satisfaction of that customer’s proper debt, but it was done under a mistake of fact as to the cleared status of funds received.
Held: The appeal was turned down. The bank was . .
Cited – Morgan v Ashcroft CA 1937
A gift may be recovered where it was made under the mistaken belief that the donee is someone else. The mistake must be as to a fact which, if true, would create a liability to pay .
Scott LJ said of the Kerrison case that ‘it was definitely . .
Lists of cited by and citing cases may be incomplete.

Equity, Banking

Updated: 29 April 2022; Ref: scu.187275

China and South Sea Bank Limited v Tan Soon Gin: PC 1990

A mortgagee’s decision on sale is not constrained by reason of the fact that the exercise or non-exercise of the power will occasion loss or damage to the mortgagor. He can sit back and do nothing. He is not obliged to take steps to realise his security. Where a creditor has concurrent remedies against the debtor, a security and a surety it is matter for him which one he pursues, if indeed he pursues any at all.

Judges:

Lord Templeman

Citations:

[1990] 1 AC 536

Cited by:

Cited – Silven Properties Limited, Chart Enterprises Incorporated v Royal Bank of Scotland Plc, Vooght, Harris CA 21-Oct-2003
The claimants sought damages from mortgagees who had sold their charged properties as receivers. They said they had failed to sell at a proper value. They asked whether the express appointment in the mortgage of receivers as agents of the mortgagor . .
Cited – Mount v Barker Austin (a Firm) CA 18-Feb-1998
The plaintiff sought damages for professional negligence from his former solicitors in respect of their conduct of a claim on his behalf. He succeeded, but was awarded no damages because the judge had found that his action would be bound to fail. He . .
Cited – Palk v Mortgage Services Funding Plc CA 1993
The mortgagees had obtained an Order for possession with the intention, not of proceeding to sell the property but of waiting in the hope that the market might improve. The mortgagor was anxious that the property should be sold so that the proceeds . .
Cited – Meretz Investments Nv and Another v ACP Ltd and others ChD 30-Jan-2006
The applicant challenged the exercise of a power of sale under a mortgage, saying that the mortgagee’s purposes included purposes not those under the mortgage. The parties had been involved in an attempted development of a penthouse.
Held: The . .
Cited – Silven Properties Ltd and Another v Royal Bank of Scotland Plc and Others CA 21-Oct-2003
The claimants complained that the receivers appointed by the bank had failed to get the best price for properties charged to the bank and sold, in that they had failed to obtain planning permissions which would have increased the values of the . .
Cited – Bank of Credit and Commerce International SA (No 8) CA 1997
A security was granted to secure a debt owed by a third party. . .
Lists of cited by and citing cases may be incomplete.

Land, Banking

Updated: 29 April 2022; Ref: scu.187036

National Westminster Bank plc v Skelton (Note): 1993

The court distinguished a claim by the mortgagee for possession from a claim on the mortgagor’s personal covenant to pay what was due. A claim for a set-off is merely a sub-species of counterclaim. The court will not readily imply a term into a legal mortgage restricting the right of the bank, as legal mortgagee, to take possession of the property.
A pleaded equitable set off arising from a counterclaim for an unliquidated sum cannot defeat a claim to possession.

Judges:

Slade LJ

Citations:

[1993] 1 WLR 72

Cited by:

Applied – Ashley Guarantee plc v Zacaria CA 1993
In possession proceedings based on a mortgage debt, the mortgagee’s right to possession of the mortgaged property will not be defeated by a cross-claim of the mortgagor in the absence of some contractual or statutory provision to the contrary. . .
Cited – Sonia Burkett, Regina (on the Application of) v London Borough of Hammersmith and Fulham CA 15-Oct-2004
The appellant challenged an order for costs after dismissal of her application for judicial review of the respondent’s planning decision. The claimant had been granted legal aid at about the time of the bringing in of the new legal aid scheme. The . .
Cited – National Westminster Bank Plc v Ashe (Trustee In Bankruptcy of Djabar Babai) CA 8-Feb-2008
The mortgagees had made no payments under the charge for more than twelve years, and had remained in possession throughout. They argued that the bank were prevented from now seeking to enforce the charge. The bank argued that the possession had not . .
Cited – Lexi Holdings v Pooni and Another ChD 21-Apr-2008
. .
Cited – Thakker v Northern Rock Plc QBD 5-Feb-2014
. .
Lists of cited by and citing cases may be incomplete.

Banking, Equity

Updated: 29 April 2022; Ref: scu.184795

In re Russian Bank for Foreign Trade: 1933

Soviet legislation involved an extinguishment of the rights and obligations of the commercial banks and the creation of equivalent obligations on the part of a new State Bank.

Citations:

[1933] Ch 745

Cited by:

Cited – Wight, Pilling, Mackey v Eckhardt Marine GmbH PC 14-May-2003
(Cayman Islands) An international bank went into liquidation in the Cayman Islands, with liabilities in Bangladesh. A new bank was created in Bangladesh, and the applicants sought to make the new bank liable, and through them the liquidators.
Lists of cited by and citing cases may be incomplete.

Insolvency, Banking

Updated: 29 April 2022; Ref: scu.183829

Marreco v Richardson: CA 1908

The giving of a cheque for a debt is payment conditional on the cheque being met, that is, subject to a condition subsequent, and if the cheque is met it is an actual payment ab initio and not a conditional one.

Judges:

Farwell LJ

Citations:

(1908) 2 KB 584

Jurisdiction:

England and Wales

Cited by:

Cited – Homes v Smith CA 2000
Where a cheque is offered in payment it amounts to a conditional payment of the amount of the cheque which, if accepted, operates as a conditional payment from the time when the cheque was delivered. . .
Lists of cited by and citing cases may be incomplete.

Banking

Updated: 28 April 2022; Ref: scu.180779

Royal Bank of Scotland plc v Bannerman Johnstone Maclay (a Firm) and Others: OHCS 23 Jul 2002

The defenders, a firm of chartered accountants, prepared accounts for a customer of the pursuer bank. The bank claimed damages for negligence having relied upon the accounts. The auditors relied upon the case of Galoo.
Held: It was not necessary for the accounts to have been prepared specifically for the bank, no separate evidence of such an intention was required. Galoo did not refer to the present case where the auditors expressly knew that the bank would be relying on the accounts in making lending decisions. It had been open to the defenders, if they had wished to disclaim any responsibility beyond the statutory duties fulfilled. The auditors had to satisfy themselves that the company could continue, and that required them to test the readiness of the bank to continue its lending, and accordingly also the bank’s reliance upon the audited accounts.

Judges:

Lord Macfadyen

Citations:

Times 01-Aug-2002

Links:

ScotC

Citing:

Cited – Galoo Ltd and Others v Bright Grahame Murray CA 21-Dec-1993
It is for the Court to decide whether the breach of duty was the cause of a loss or simply the occasion for it by the application of common sense. A breach of contract, to found recovery, must be shown to have been ‘an ‘effective’ or ‘dominant’ . .
Lists of cited by and citing cases may be incomplete.

Scotland, Banking, Professional Negligence

Updated: 28 April 2022; Ref: scu.174746

United Bank of Kuwait Plc v Sahib and Others: ChD 24 Jun 1994

The customer had deposited title deeds with the bank as security for a loan, but no deed of charge had been executed.
Held: The mere deposit of title deeds does not create an equitable charge without more. The 1989 Act operated as a statutory bar to such a claim. The rule that the deposit of title deeds by way of security created an equitable mortgage of the property had not survived the coming into force of the section.
Chadwick J said: ‘Whether or not the enforcement of the agreement which is to be inferred or presumed from the deposit of the title deeds was properly to be regarded as an example of the operation of the doctrine of part performance, as Lord Selborne LC suggested in Maddison v. Alderson, 8 App. Cas. 467, or as a sui generis exception to the Statute of Frauds 1677 which was outside the proper scope of that doctrine – in that the act of part performance relied upon was not the act of the mortgagee who was seeking to enforce the agreement – there can, in my view, be no doubt that the courts have, consistently, treated the rule that a deposit of title deeds for the purpose of securing a debt operates, without more, as an equitable mortgage or charge as contract – based, and have regarded the deposit as a fact which enabled the contract to be enforced notwithstanding the absence of evidence sufficient to satisfy the Statute of Frauds. It is impossible to distinguish those cases, of which Ex parte Langston, 17 Ves. 227 is an example, in which the court, having inferred from the fact of the deposit an intention to create security, let in oral evidence to identify the scope of the obligation which was to be secured from cases in which there was no evidence beyond the fact of the deposit. In all those cases, the court was concerned to establish, by presumption, inference or evidence, what the parties intended, and then to enforce their common intention as an agreement.’

Judges:

Chadwick J

Citations:

Times 07-Jul-1994, [1995] 2 WLR 94

Statutes:

Law of Property (Miscellaneous Provisions) Act 1989 2, Law of Property Act 1925 53(1)(c)

Jurisdiction:

England and Wales

Citing:

Disapplied – Dearle v Hall 1828
. .
Cited – Russel v Russel 16-May-1783
. .

Cited by:

Appeal from – United Bank of Kuwait Plc v Sahib and Others CA 2-Feb-1996
The bank appealed against a decision that the simple deposit of deeds with a bank did not take effect as an equitable charge.
Held: Depositing deeds with a bank is not sufficient to create a charge over them. The old law as to the creation of . .
Lists of cited by and citing cases may be incomplete.

Land, Banking

Updated: 28 April 2022; Ref: scu.90066

Suriya and Douglas (a Firm) v Midland bank plc: CA 24 Mar 1999

A bank, who brought in a new account paying higher rates of interest, and offering other new facilities, was under no duty to take steps to inform existing customers of the bank with similar and known needs.

Citations:

Times 29-Mar-1999, Gazette 24-Mar-1999, Gazette 27-Jun-1999

Jurisdiction:

England and Wales

Banking, Consumer

Updated: 28 April 2022; Ref: scu.89612

Raiffeisen Zentralbank Osterreich Ag v Cross-Seas Shipping Ltd and Others: CA 1 Feb 2000

An alteration to a deed after it had been executed did not necessarily invalidate it. Old rules to that effect need no longer be considered correct. The test was whether any party was adversely affected or the effect of the deed was changed by the alteration. In this case the address of a party to a guarantee had been altered. The alteration was not seen to be significant enough to avoid the deed. Appeal dismissed.

Citations:

Times 01-Feb-2000, [2000] 1 WLR 1135, [2000] 3 All ER 274, [2000] 1 All ER (Comm) 76, [2000] LLoyd’s Rep Bank 108, [2000] CLC 533

Jurisdiction:

England and Wales

Citing:

Appeal from – Raiffeisen Zentralbank Osterreich A G v Crossseas Shipping Ltd and Others ComC 19-Mar-1999
ComC The rule in Pigot’s case. Whether alteration to a guarantee by the insertion of the name and address of a service agent was material so as to render the guarantee unenforceable. . .
Lists of cited by and citing cases may be incomplete.

Banking

Updated: 28 April 2022; Ref: scu.85646

Marfani and Co Ltd v Midland Bank Ltd: CA 1968

A rogue opened a new bank account under a false name with the help of an incorrect reference from a valued customer.
Held: When an account is fraudulently opened with the bank in the name of another person by someone pretending to be that person, the person opening the account is the customer.
The court explained the tort of conversion, with special reference to bills of exchange. Liability is strict for misappropriation of goods.
Diplock LJ: ‘It is, however, in my view, clear that the intention of the subsection and its statutory predecessors is to substitute for the absolute duty owed at common law by a banker to the true owner of a cheque not to take any steps in the ordinary course of business leading up to an including the receipt of payment of the cheque, and the crediting of the amount of the cheque to the account of his customer, in usurpation of the true owner’s title thereto a qualified duty to take reasonable care to refrain from taking any such step which he foresees is, or ought reasonably to have foreseen was, likely to cause loss or damage to the true owner.
The only respect in which this substituted statutory duty differs from a common law cause of action in negligence is that, since it takes the form of a qualified immunity from a strict liability at common law, the onus of showing that he did take such reasonable care lies upon the defendant banker. Granted good faith in the banker (the other condition of the immunity), the usual matter with respect to which the banker must take reasonable care is to satisfy himself that his own customer’s title to the cheque delivered to him for collection is not defective, i.e., that no other person is the true owner of it. Where the customer is in possession of the cheque at the time of delivery for collection and appears upon the face of it to be the ‘holder’, i.e., the payee or indorsee or the bearer, the banker is, in my view, entitled to assume that the customer is the owner of the cheque unless there are facts which are, or ought to be, known to him which would cause a reasonable banker to suspect that the customer was not the true owner.
What facts ought to be known to the banker, i.e., what inquiries he should make, and what facts are sufficient to cause him reasonably to suspect that the customer is not the true owner, must depend upon current banking practice, and change as that practice changes. Cases decided 30 years ago, when the use by the general public of banking facilities was much less widespread, may not be a reliable guide to what the duty of a careful banker in relation to inquiries, and as to facts which should give rise to suspicion, is today.
What the court has to do is to look at all the circumstances at the time of the acts complained of and to ask itself: were those circumstances such as would cause a reasonable banker possessed of such information about his customer as a reasonable banker would possess, to suspect that his customer was not the true owner of the cheque?
In all actions of the kind with which we are here concerned, the banker’s customer has in fact turned out to be a fraudulent rogue, and attention is naturally concentrated upon the duty of care which was owed by the banker to the person who has in fact turned out to be the true owner of the cheque. We are always able to be wise after the event, but the banker’s duty fell to be performed before it, and the duty which he owed to the true owner ought not to be considered in isolation. At the relevant time, the true owner was entitled to take into consideration the interests of his customer, who, be it remembered, would in all probability turn out to be honest, as most men are, and his own business interests, and to weigh those against the risk of loss or damage to the true owner of the cheque in the unlikely event that he should turn out not to be the customer himself.’

As to the practice of bankers: ‘The only evidence of the practice of bankers was given by the manager and the securities clerk of the branch in question of the defendant bank. No evidence that the general practice of other bankers differed from that adopted by the defendant bank was called by the plaintiff company, although they knew well in advance of the trial, as a result of searching interrogatories, exactly what steps the defendant bank had taken, and what inquiries they had made. It seems a reasonable inference that what the defendants did in the present case was in accordance with current banking practice. Nield J accepted that it was, and Mr Lloyd has not sought to argue the contrary. What he contends is that this court is entitled to examine that practice and to form its own opinion as to whether it does comply with the standard of care which a prudent banker should adopt. That is quite right, but I venture to think that this court should be hesitant before condemning as negligent a practice generally adopted by those engaged in banking business.’

Judges:

Diplock LJ

Citations:

[1968] 1 WLR 956, [1968] 2 All ER 573

Statutes:

Cheques Act 1957 4

Jurisdiction:

England and Wales

Citing:

Approved – Commissioners of State Savings Bank v Permewan, Wright and Co 18-Dec-1914
(High Court of Australia) The court considered the nature of negligence in a banker: ‘the test of negligence is whether the transaction of paying in any given cheque [coupled with the circumstances antecedent and present] was so out of the ordinary . .

Cited by:

Cited – Dextra Bank and Trust Company Limited v Bank of Jamaica PC 26-Nov-2001
(Jamaica) A cheque was drawn which was used as part a complex financial arrangement intended to purchase foreign currency to work around Jamaica’s foreign exchange control regulations. It was asserted that by presenting the cheque used in the . .
Cited – Architects of Wine Ltd v Barclays Bank Plc CA 20-Mar-2007
The bank appealed summary judgement against it for conversion of cheques. The cheques had been obtained by a fraud.
Held: The court considered the question of neglience under section 4: ‘The section 4 qualified duty does not require an . .
Cited – White v Withers Llp and Dearle CA 27-Oct-2009
The claimant was involved in matrimonial ancillary relief proceedings. His wife was advised by the defendants, her solicitors, to remove his private papers. The claimant now sought permission to appeal against a strike out of his claim against the . .
Lists of cited by and citing cases may be incomplete.

Banking, Torts – Other

Updated: 28 April 2022; Ref: scu.181845

Moor v Anglo-Italian Bank: CA 1879

The defendant bank had a mortgage over land in Florence belonging to a company in liquidation. The liquidator of the company applied to the court to restrain the bank from realising its security.
Held: The application failed. Jessel M.R. summed up the options of a secured creditor and contrasted the new form of floating security with a ‘specific charge’ on the property of the company: ‘In bankruptcy, if a secured creditor wants to prove, he must do one of three things: he may give up his security altogether and prove for the full amount, or he may get his security valued and prove for the difference, or he may sell and realise his security and then prove for the difference.’

Judges:

Jessel MR

Citations:

(1879) 10 Ch 681

Jurisdiction:

England and Wales

Cited by:

Cited – Cleaver, Bodden v Delta American Reinsurance Company PC 1-Feb-2001
(Cayman Islands) In the course of trading the company had given security to carry on its insurance business. On its insolvency, the administrators required the creditor to bring into hotchpot credit received in a foreign jurisdiction. It was said . .
Lists of cited by and citing cases may be incomplete.

Banking

Updated: 28 April 2022; Ref: scu.181832

North-Western Bank Ltd v John Poynter Son and Macdonalds: HL 16 Nov 1894

On 1st April 1892, Page and Company, merchants in Liverpool, obtained an advance of pounds 5000 from a bank in Liverpool upon the security by way of pledge of a cargo of phosphate rock, then afloat, and handed the bill of lading to the bank. It was agreed that the bank should have immediate and absolute power of sale over the cargo, and under this power the bank authorised Page and Company to enter into contracts for sale of the phosphate rock on their behalf. pounds 3826 of the loan was paid off.
On 12th April the bank, in consideration of Page and Company undertaking to sell the cargo on their behalf, returned the bill of lading to Page and Company ‘as trustees,’ requesting them to obtain delivery of the merchandise, and sell it on account of the bank, and pay the proceeds towards retirement of the advance.
Some months previously Page and Company had sold a similar quantity of phosphate rock through their agents, Poynter, Son, and Macdonalds, to Cross and Sons, merchants in Glasgow, and when they received the bill of lading they forwarded it to Poynter, Son, and Macdonalds, to hand to Cross and Sons in implement of their contract with them. This was done, and Cross and Sons took delivery of the cargo, and in part payment of the price sent a cheque for pounds 1900 to Page and Company, who paid it to the bank to the credit, not of the advance of pounds 5000, but of another advance which they had received from the bank, the bankers not being aware at the time that this cheque was part of the price of the cargo of phosphate. Thereafter, Poynter, Son, and Macdonalds, who were creditors of Page and Company for pounds 2011, arrested the balance of the price (pounds 1039, 7s. 6d.) in the hands of Cross and Sons. The bank also claimed this balance, and Cross and Sons raised an action of multiple-poinding to have these competing claims determined.
Held (rev. the decision of the Second Division) (1) that the bank had not lost their real security over the merchandise by returning the bill of lading to Page and Company, but that Page and Company sold as their agents and on their behalf; (2) that the bank were not bound to attribute the cheque for pounds 1900 to account of the advance of pounds 5000; (3) that in this action Poynter, Son, and Macdonalds were not entitled to claim the amount of their commission and charges in connection with the sale; and therefore (4) that the bank must be preferred to the whole fund in medio.

Judges:

Lord Chancellor (Herschell) and Lords Watson and Macnaghten

Citations:

[1894] UKHL 245, 32 SLR 245

Links:

Bailii

Jurisdiction:

Scotland

Banking, Contract

Updated: 27 April 2022; Ref: scu.634090

J and G Paton v Clydesdale Bank Ltd: HL 12 May 1896

Representations, otherwise falling within sec. 6 of the Mercantile Law Amendment Act 1856, are not excluded from the operation of that section by the fact that the person making them does so fraudulently and with the ulterior purpose of benefit to himself.
In an action of damages against bank, and against S, the agent of the bank, the pursuers founded upon representations alleged to have been fraudulently made to them by S. for the purpose, and with the effect, of inducing them to sign bills for the accommodation of the firm of D., R., and Co. the pursuers alleged that these representations were made by S. in order to enable the bank to apply the bills so procured in reduction of an overdraft which was then due to it by the firm of D., R., and Co. The representations, which it was admitted were made verbally, were (1) that D., R., and Co. Were in a sound condition financially and only required temporary accommodation; (2) that the sum due by them to the bank was very trifling; (3) that D., R., and Co. had made up the losses which they had previously sustained through the failure of a certain firm, by fortunate speculations; (4) that no portion of the proceeds of any acceptances by the pursuers would be applied towards the extinction of the bank’s debt or of any obligation to the bank.
Held ( rev. judgment of the Second Division) that the action was irrelevant, in respect that the first, second, and third representations were not in writing or subscribed by the person making them, as required by the statute, and could not therefore be admitted to proof, and as regards the fourth representation, that there was no averment on record that the bank had in fact applied the proceeds of the bills in a manner inconsistent with that representation.

Judges:

Lord Chancellor (Halsbury), Lord Watson, Lord Herschell, and Lord Davey

Citations:

[1896] UKHL 533, 33 SLR 533

Links:

Bailii

Jurisdiction:

England and Wales

Banking

Updated: 27 April 2022; Ref: scu.634016

Sberbank of Russia v Council: ECFI 13 Sep 2018

Restrictive Measures Adopted In View of Russia’S Actions Destabilising The Situation In Ukraine – Judgment
Common foreign and security policy – Restrictive measures adopted in view of Russia’s actions destabilising the situation in Ukraine – Applicant’s name included and retained in the list of entities to which the restrictive measures apply – Error of assessment – Obligation to state reasons – Rights of the defence – Right to effective judicial protection – Right to property – Right to carry on an economic activity

Citations:

T-732/14, [2018] EUECJ T-732/14, ECLI:EU:T:2018:541

Links:

Bailii

Jurisdiction:

European

International, Banking

Updated: 27 April 2022; Ref: scu.622590

Kleinwort, Sons, and Co v Dunlop Rubber Co: HL 16 Jul 1907

A. was financed by B. and Co. and C. and Co., both firms of bankers, who advanced him money on the security of goods. A. sold goods to D. and Co., and instructed them to remit the price direct to B. and Co., who had a right of security over the particular goods sold. D. and Co. by mistake remitted the price to C. and Co., who received it in good faith believing that it represented a sum due to them of a similar amount. In a previous action, reported (1905) A.C. 454), the House of Lords found D. and Co. liable to pay the sum again to B. and Co. In the present action (a jury having found in fact that what had occurred had not altered C. and Co.’s position as regarded A. for the worse), held that D. and Co. were entitled to recover the money from C. and Co. as being money paid under a mistake of fact.

Judges:

Lord Chancellor (Loreburn), Lords James of Hereford, Robertson, and Atkinson

Citations:

[1907] UKHL 633

Links:

Bailii

Jurisdiction:

England and Wales

Contract, Banking

Updated: 27 April 2022; Ref: scu.622307

VTB Bank (Austria) v Finanzmarktaufsichtsbehorde: ECJ 7 Aug 2018

Supervision of Credit Institutions – Judgment – Reference for a preliminary ruling – Approximation of laws – Directive 2013/36/EU – Articles 64, 65 and 67 – Regulation (EU) No 575/2013 – Article 395(1) and (5) – Supervision of credit institutions – Supervisory powers and powers to impose penalties – Large exposure limits – Legislation of a Member State under which interest is levied where those limits are exceeded – Regulation (EU) No 468/2014 – Article 48 – Attribution of areas of competence between the European Central Bank (ECB) and national authorities – Formally initiated supervisory procedure

Citations:

ECLI:EU:C:2018:648, [2018] EUECJ C-52/17

Links:

Bailii

Jurisdiction:

European

Banking

Updated: 27 April 2022; Ref: scu.621624

North and South Wales Bank v Irvine: HL 5 Mar 1908

M was induced by the fraud of W to draw a cheque in favour of K or order. K was an existing person, and when M drew the cheque in his favour he intended that K or his indorsee should receive the money. W obtained the cheque, forged K’s indorsement, paid the cheque into his own account with the N. and S. W. Bank, and they, on Presenting it to M’s bank received payment.
Held, that K was not a ‘fictitious’ person within the meaning of section 7, sub-section 3, of the Bills of Exchange Act 1882, and that accordingly the N. and S. W. Bank were liable in the amount of the cheque to M.
Held further, in an action under precisely similar circumstances between I and the bank, that the fact that W had advanced to I a sum of money only pounds 120 less than the sum in the cheque was immaterial, and that the bank had no right of set-off.

Judges:

Lord Chancellor (Loreburn), Lords Robertson and Collins

Citations:

[1908] UKHL 986, 45 SLR 986,

Links:

Bailii

Jurisdiction:

England and Wales

Banking

Updated: 26 April 2022; Ref: scu.621502

Bank of Scotland v Liquidators of Hutchison Main and Co Ltd: HL 6 Feb 1914

The solicitors of a limited liability company wrote to a bank-‘We further write to say that we are authorised by the directors, and our London correspondents have our instructions, forthwith to procure from Mr Johnson a debenture or floating charge over the whole of his assets in name of this company for the amount required to secure the debt due by Mr Johnson to our clients. So soon as that debenture reaches our hands we have instructions to make it available to the Bank of Scotland as further and additional security for the repayment by our clients of their indebtedness to the bank, and it is understood in respect of the arrangements made that the bank will give to those interested in the company the benefit of the arrangements referred to in past correspondence.’ Correspondence followed as to whether an assignation or a mortgage should be given to the bank, but though the debenture in favour of the company was granted, nothing more was done before the company went into liquidation.
Held that the bank had no preferential claim on the debenture.

Judges:

Earl of Halsbury, Lord Kinnear, Lord Atkinson, and Lord Shaw

Citations:

[1914] UKHL 229 – 1, 51 SLR 229 – 1

Links:

Bailii

Jurisdiction:

Scotland

Insolvency, Banking

Updated: 26 April 2022; Ref: scu.620706

Sinclair v Brougham: HL 12 Feb 1914

Where a building society had out with its powers done banking business and taken deposits from the public, held that depositors and shareholders ranked pari passu in the liquidation.
Judgment of the Court of Appeal sub nom. re Birkbeck Permanent Benefit Building Society, 1912, 2 Ch. 183, varied.

Judges:

Lord Chancellor (Viscount Haldane), Lords Dunedin, Atkinson, Parker, and Sumner

Citations:

[1914] UKHL 585, 52 SLR 585

Links:

Bailii

Jurisdiction:

England and Wales

Banking

Updated: 26 April 2022; Ref: scu.620707

Klyuyev v Council: ECFI 11 Jul 2018

Restrictive Measures Taken In View of The Situation In Ukraine – Freezing of Funds – List of Persons – Judgment – Common foreign and security policy – Restrictive measures taken in view of the situation in Ukraine – Freezing of funds – List of persons, entities and bodies subject to the freezing of funds and economic resources – Retention of the applicant’s name on the list – Legal basis – Manifest error of assessment – Rights of defence – Right to effective judicial protection – Right to property – Right to reputation – Plea of illegality

Citations:

ECLI:EU:T:2018:433, T-240/16, [2018] EUECJ T-240/16

Links:

Bailii

Jurisdiction:

European

Banking, International

Updated: 25 April 2022; Ref: scu.620026

Credit Agricole v ECB: ECFI 13 Jul 2018

Judgment – Economic and Monetary Policy – Prudential supervision of credit institutions – Article 4 (1) (d) and (3) of Regulation (EU) No 1024/2013 – Calculation of the leverage ratio – Refusal by the ECB to authorize the applicant to exclude from the calculation of the leverage ratio exposures meeting certain conditions – Article 429 (14) of Regulation (EU) No 575/2013 – ECB discretionary power – Errors of law – manifest error of assessment

Citations:

T-758/16, [2018] EUECJ T-758/16, ECLI:EU:T:2018:472

Links:

Bailii

Jurisdiction:

European

Banking

Updated: 25 April 2022; Ref: scu.620011

Confederation Nationale Du Credit Mutuel v ECB: ECFI 13 Jul 2018

Judgment – Economic and Monetary Policy – Prudential supervision of credit institutions – Article 4 (1) (d) and (3) of Regulation (EU) No 1024/2013 – Calculation of the leverage ratio – Refusal by the ECB to authorize the applicant to exclude from the calculation of the leverage ratio exposures meeting certain conditions – Article 429 (14) of Regulation (EU) No 575/2013 – ECB discretionary power – Errors of law – manifest error of assessment

Citations:

T-751/16, [2018] EUECJ T-751/16, ECLI:EU:T:2018:475

Links:

Bailii

Jurisdiction:

European

Banking

Updated: 25 April 2022; Ref: scu.620010

Banque Postale v ECB: ECFI 13 Jul 2018

Judgment
Economic and Monetary Policy – Prudential supervision of credit institutions – Article 4 (1) (d) and (3) of Regulation (EU) No 1024/2013 – Calculation of the leverage ratio – Refusal by the ECB to authorize the applicant to exclude from the calculation of the leverage ratio exposures meeting certain conditions – Article 429 (14) of Regulation (EU) No 575/2013 – ECB discretionary power – Errors of law – manifest error of assessment

Citations:

ECLI:EU:T:2018:477, [2018] EUECJ T-733/16

Links:

Bailii

Jurisdiction:

European

Banking

Updated: 25 April 2022; Ref: scu.619999

BNP Paribas v ECB: ECFI 13 Jul 2018

Judgment
Economic and Monetary Policy – Prudential supervision of credit institutions – Article 4 (1) (d) and (3) of Regulation (EU) No 1024/2013 – Calculation of the leverage ratio – Refusal by the ECB to authorize the applicant to exclude from the calculation of the leverage ratio exposures meeting certain conditions – Article 429 (14) of Regulation (EU) No 575/2013 – ECB discretionary power – Errors of law – manifest error of assessment

Citations:

ECLI:EU:T:2018:471, [2018] EUECJ T-768/16

Links:

Bailii

Jurisdiction:

European

Banking

Updated: 25 April 2022; Ref: scu.620000

BPCE v ECB: ECFI 13 Jul 2018

Judgment
Economic and Monetary Policy – Prudential supervision of credit institutions – Article 4 (1) (d) and (3) of Regulation (EU) No 1024/2013 – Calculation of the leverage ratio – Refusal by the ECB to authorize the applicant to exclude from the calculation of the leverage ratio exposures meeting certain conditions – Article 429 (14) of Regulation (EU) No 575/2013 – ECB discretionary power – Errors of law – manifest error of assessment

Citations:

ECLI:EU:T:2018:476, [2018] EUECJ T-745/16

Links:

Bailii

Jurisdiction:

European

Banking

Updated: 25 April 2022; Ref: scu.620001

Kirkwood v Gadd: HL 10 Jun 1910

In a moneylending contract a bill of sale was executed at the borrower’s house over his furniture, and the loan itself was advanced and a receipt granted there. The preliminary arrangements had been made by correspondence to and from the moneylender at his registered address – no other address was employed. The Moneylenders Act 1900, sec. 2 (1) ( b), enacts – ‘a moneylender . . shall carry on the moneylending business . . at his registered address or addresses, and at no other address.’ The borrower raised legal proceedings in which he maintained that the moneylending contract was void as in breach of this prohibition.
Held that the prohibition against carrying on business at an address other than the registered address raised a question of fact to be determined by the whole circumstances of each case, and that the carrying out of incidents of the transaction away from the registered address did not in itself constitute a breach of the Act.

Judges:

Lord Chancellor (Loreburn), Lords James of Hereford, Atkinson, Shaw, and Mersey

Citations:

[1910] UKHL 689, 48 SLR 689

Links:

Bailii

Jurisdiction:

England and Wales

Banking

Updated: 25 April 2022; Ref: scu.619794

Eccles Provident Industrial Co-Operative Society v Griffiths: HL 4 Mar 1912

Section 25, sub-section 1, of the Industrial and Provident Societies Act 1893 provides that a member may nominate a person to whom his property in the society ‘shall be transferred at his decease, provided that the amount credited to him in the books of the society does not then exceed pounds 100 sterling.’
Held ( diss. Lord Shaw) that the word ‘then’ was referable to the date of nomination, not to that of the member’s death.

Judges:

Lord Chancellor (Loreburn), Lords Atkinson, Shaw, and Mersey

Citations:

[1912] UKHL 1035, 49 SLR 1035

Links:

Bailii

Jurisdiction:

England and Wales

Banking

Updated: 25 April 2022; Ref: scu.619234

Deeley v Lloyds Bank Ltd: HL 26 Jul 1912

Where a bank holding a first mortgage over property in security for advances on a current account receives intimation of a second mortgage over the property, the priority of the bank as first mortgagee only extends to advances made before the date of the intimation, and all payments to the account after that date must be applied by the bank in reduction of the balance due to it at that date.

Citations:

[1912] UKHL 625, 50 SLR 62

Links:

Bailii

Jurisdiction:

England and Wales

Banking

Updated: 25 April 2022; Ref: scu.619247

Barclays Bank plc v Quincecare Ltd: QBD 1992

The relationship of banker and customer is that of agent and principal: ‘Primarily, the relationship between a banker and customer is that of debtor and creditor. But quoad the drawing and payment of the customer’s cheques as against the money of the customer’s in the banker’s hands the relationship is that of principal and agent.’ and ‘In my judgment it is an implied term of the contract between the bank and its customer that the bank will observe reasonable skill and care in and about executing the customer’s orders. Moreover, notwithstanding what was said in Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] AC 80 at 107, a banker may in a case such as the present be sued in tort as well as contract: see Midland Bank v Hett Stubbs and Kemp [1979] Ch 384. But the duties in tort and contract are coextensive, and in the context of the present case nothing turns on the question whether the case is approached in contract or tort.’
. . And ‘it is right to say, that trust, not distrust, is also the basis of a bank’s dealings with its customers. And full weight must be given to this consideration before one is entitled, in a given case, to conclude that the banker had reasonable grounds for thinking that the order was part of a fraudulent scheme.’

Judges:

Steyn J

Citations:

[1992] 4 All ER 363

Jurisdiction:

England and Wales

Citing:

Cited – Westminster Bank Ltd v Hilton HL 1926
As against the money of the customer’s in the banker’s hands the relationship between banker and customer is that of principal and agent.
Lord Atkinson said: ‘It is well established that the normal relation between a banker and his customer . .
Cited – Lipkin Gorman (a Firm) v Karpnale Ltd 1987
A partner in the plaintiff firm of solicitors stole money from them and spent it gambling in the defendant’s casino. The plaintiff cought to recover the money from the defendant, saying that as a gambling debt, no consideration had been given. They . .

Cited by:

Cited – Sandra Estelle Fielding v The Royal Bank of Scotland Plc CA 11-Feb-2004
The husband and wife had signed a bank mandate allowing the bank to act upon the authorisation of either of them. The wife complained that the bank should not be able to recover from her any sums expended by the husband.
Held: The mandate . .
Cited – Shah and Another v HSBC Private Bank (UK) Ltd QBD 26-Jan-2009
The claimants sought damages after delays by the bank in processing transfer requests. The bank said that the delays were made pending reports of suspected criminal activity. The bank’s delay had stigmatised the claimant causing further losses. The . .
Cited – Shah and Another v HSBC Private Bank (UK) Ltd QBD 26-Jan-2009
The claimants sought damages after delays by the bank in processing transfer requests. The bank said that the delays were made pending reports of suspected criminal activity. The bank’s delay had stigmatised the claimant causing further losses. The . .
Cited – JP Morgan Chase Bank Na v The Federal Republic of Nigeria CA 8-Oct-2019
. .
Cited – Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd SC 30-Oct-2019
. .
Lists of cited by and citing cases may be incomplete.

Banking

Updated: 24 April 2022; Ref: scu.194777

Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd: CA 1 Feb 2018

The court was asked whether the defence of illegality is available to allow a bank to defeat a claim in negligence and breach of contract brought by its corporate customer.
Held: The Court of Appeal unanimously dismissed the appeal. Mr Al Sanea’s fraudulent state of mind could not be attributed to the company; but even if it could, the claim would still have succeeded – the bank’s negligence had caused the loss, it was not defeated by a defence of illegality, or by an equal and opposite claim by the bank for the company’s deceit; and the judge’s finding of 25% contributory negligence was a reasonable one.

Judges:

Sir Geoffrey Vos Ch, Gloster, McCombe LJJ

Citations:

[2018] EWCA Civ 84, [2018] WLR(D) 57, [2018] 1 Lloyd’s Rep 472, [2018] PNLR 19, [2018] 1 WLR 2777, [2018] 4 All ER 204, [2018] Bus LR 1115, [2018] 2 All ER (Comm) 975, [2018] 2 BCLC 1

Links:

Bailii, WLRD

Jurisdiction:

England and Wales

Cited by:

Appeal from – Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd SC 30-Oct-2019
. .
Lists of cited by and citing cases may be incomplete.

Banking, Negligence

Updated: 24 April 2022; Ref: scu.604161

VQ v ECB: ECFI 3 May 2018

Economic and Monetary Policy – Prudential Supervision of Credit Institutions – Order – Application for interim measures – Economic and monetary policy – Prudential supervision of credit institutions – Tasks conferred on the ECB by Regulation (EU) No 1024/2013 – Powers of the ECB – Specific supervision powers – Administrative penalties – Publication – Application for suspension of operation – No urgency

Citations:

ECLI:EU:T:2018:261, [2018] EUECJ T-203/18 – CO

Links:

Bailii

Jurisdiction:

European

Banking

Updated: 21 April 2022; Ref: scu.615566

Halesowen Presswork and Assemblies Ltd v Westminster Bank Ltd: CA 1971

The relationship of banker and customer was a single relationship the situation was not one of lien. Buckley LJ said: ‘Nor is it a set-off situation, which postulates mutual but independent obligations between the two parties. It is an accounting situation, in which the existence and amount of one party’s liability to the other can only be ascertained by discovering the ultimate balance of their mutual dealings.’

Judges:

Lord Denning MR, Buckley LJ

Citations:

[1971] 1 QB 1

Jurisdiction:

England and Wales

Cited by:

Cited – Wade v Grimwood CA 28-Jul-2004
The claimant and the deceased had cohabited for many years. She died intestate, and her mother inherited her estate. His claim had been largely successful, but he now appealed, wanting all the proceeds of sale of the home. The home had been divided . .
Cited – National Westminster Bank plc v Spectrum Plus Limited and others HL 30-Jun-2005
Former HL decision in Siebe Gorman overruled
The company had become insolvent. The bank had a debenture and claimed that its charge over the book debts had become a fixed charge. The preferential creditors said that the charge was a floating charge and that they took priority.
Held: The . .
Appeal from – National Westminster Bank Ltd v Halesowen Presswork and Assemblies Ltd HL 1972
The bank’s common law right of set-off was affirmed. The bank’s appeal succeeded.
The application of section 323 is mandatory in the sense that it cannot be excluded by prior agreement of the parties. . .
Lists of cited by and citing cases may be incomplete.

Banking

Updated: 20 April 2022; Ref: scu.211389

Caisse Regionale De Credit Agricole Mutuel Alpes Provence v ECB: ECFI 24 Apr 2018

Economic and Monetary Policy – Judgment – Economic and Monetary Policy – Prudential supervision of credit institutions – Article 4 (1) (e) and (3) of Regulation (EU) No 1024/2013 – Person effectively directing the activities of a credit institution – Article 13 (1) of Directive 2013/36 / EU and Article L. 511-13, second paragraph, of the French Monetary and Financial Code – Principle of non-cumulation of the presidency of the management body of a credit institution credit in its supervisory role with the function of Director-General in the same establishment – Article 88 (1) (e) of Directive 2013/36 and Article L. 511-58 of the French Monetary and Financial Code

Citations:

ECLI:EU:T:2018:219, [2018] EUECJ T-133/16

Links:

Bailii

Jurisdiction:

European

Banking

Updated: 14 April 2022; Ref: scu.609300

Chase Manhattan Bank NA v Israel-British Bank (London) Ltd: 1981

Goulding J approved the statement in Story’s Commentaries on Equity Jurisprudence: ‘the receiving of money which consistently with conscience cannot be retained is, in equity, sufficient to raise a trust in favour of the party for whom or on whose account it was received. This is the governing principle in all such cases. And therefore, whenever any controversy arises, the true question is, not whether money has been received by a party of which he could not have compelled the payment, but whether he can now, with a safe conscience, ex aequo et bono, retain it.’

Judges:

Goulding J

Citations:

[1981] Ch 105

Cited by:

Cited – Bailey and Another v Angove’s Pty Ltd SC 27-Jul-2016
The defendant had agreed to act as the claimant’s agent and distributor of the claimant’s wines in the UK. It acted both as agent and also bought wines on its own account. When the defendant went into litigation the parties disputed the right of the . .
Lists of cited by and citing cases may be incomplete.

Banking, Equity

Updated: 12 April 2022; Ref: scu.568653

Lipkin Gorman v Karpnale Ltd: CA 1989

A partner in a firm of solicitors stole money from them, and spent it gambling with the defendants. The firm sued also their banker, who had been held to be aware of the defaulting partner’s weaknesses and activities.
Held: The solicitors could not recover from the gambling house. The defendants gave valuable consideration in good faith for the cheques taken by the partner.
A bank will be liable for honouring a cheque drawn by one of the partners in fraud of the others if ‘a reasonable and honest banker [who] knew of the relevant facts would have considered that there was a serious or real possibility, albeit not amounting to a probability, that its customer might be being defrauded . . That at least the customer must establish.’
May LJ said: ‘The money which a customer deposits with a bank becomes the bank’s money, but the bank is prima facie bound to meet its debt when called upon to do so by the customer. The arrangement between some banks of giving references secretly could not displace the rule in Tournier. The bank was in breach of its contract.’
Nicholls LJ said: ‘the chips were not money or money’s-worth; they were mere counters or symbols used for the convenience of all concerned in the gaming. As tokens, the chips indicated that the holder had lodged cash with the club or, when a cheque had been used, had been given credit by the club, to the extent indicated by the tokens. It is as though the customer had been given a series of receipts in respect of the money handed over by him prior to beginning to play. The money was to go to the winners, or be returned to the customer if not spent on gaming. When the customer played at the table he was playing with the money he had brought with him to the casino, just as much as if he had used the banknotes themselves rather than the chips for which he had exchanged the banknotes preparatory to the start of play. I do not believe that this internal, preliminary, preparatory step, of issuing chips for cash, adopted for considerations of practical convenience, can have the effect in law that the club gave valuable consideration for the money it received, when the position in law under the statute is that if money rather than tokens had been used at the table, the club would not have given valuable consideration. I find such a conclusion repugnant to common sense.’
Parker LJ said that the defendants had given good consideration for two reasons. The club supplied chips in exchange for the money. The contract under which the chips were supplied was a separate contract, independent of the contracts under which bets were placed at the club; and the contract for the chips was not avoided as a contract by way of gaming and wagering under section 18 of the Gaming Act 1845. Secondly, although the actual gaming contracts were void under the Act, nevertheless Cass in fact obtained in exchange for the money the chance of winning and of then being paid and so received valuable consideration from the club.

Judges:

Parker LJ, May LJ, Nicholls LJ

Citations:

[1989] 1 WLR 1340

Statutes:

Gaming Act 1845 18

Jurisdiction:

England and Wales

Citing:

At first Instance – Lipkin Gorman (a Firm) v Karpnale Ltd 1987
A partner in the plaintiff firm of solicitors stole money from them and spent it gambling in the defendant’s casino. The plaintiff cought to recover the money from the defendant, saying that as a gambling debt, no consideration had been given. They . .
Cited – Tournier v National Provincial and Union Bank of England CA 1924
The court considered the duty of confidentiality owed by a banker to his client. Bankes LJ said: ‘At the present day I think it may be asserted with confidence that the duty is a legal one arising out of contract, and that the duty is not absolute . .

Cited by:

At CA – Lipkin Gorman (a Firm) v Karpnale Ltd HL 6-Jun-1991
The plaintiff firm of solicitors sought to recover money which had been stolen from them by a partner, and then gambled away with the defendant. He had purchased their gaming chips, and the plaintiff argued that these, being gambling debts, were . .
Cited – Sandra Estelle Fielding v The Royal Bank of Scotland Plc CA 11-Feb-2004
The husband and wife had signed a bank mandate allowing the bank to act upon the authorisation of either of them. The wife complained that the bank should not be able to recover from her any sums expended by the husband.
Held: The mandate . .
Cited – National Westminster Bank plc v Spectrum Plus Limited and others HL 30-Jun-2005
Former HL decision in Siebe Gorman overruled
The company had become insolvent. The bank had a debenture and claimed that its charge over the book debts had become a fixed charge. The preferential creditors said that the charge was a floating charge and that they took priority.
Held: The . .
Mentioned – Turner v Royal Bank of Scotland Plc CA 24-Mar-1998
The plaintiff complained as to the provision of references by his bank. The bank said he had given an implied permission through the bank which had made the request. Later changes in the bankers code of practice would have required explicit written . .
Lists of cited by and citing cases may be incomplete.

Banking, Equity, Contract

Updated: 12 April 2022; Ref: scu.194782

Re Armagh Shoes Ltd: 1984

Citations:

[1984] BCLC 405

Jurisdiction:

England and Wales

Citing:

Applied – Siebe Gorman and Co Ltd v Barclays Bank Ltd ChD 1979
It was possible to create a fixed charge over present and future book debts and on its true construction, the debenture granted to Barclays Bank Ltd in this case had done so. If the chargor of book debts, having collected the book debts, ‘[had] had . .

Cited by:

Doubted – National Westminster Bank Plc v Spectrum Plus Ltd and others ChD 15-Jan-2004
The company granted a debenture to the claimant purporting to secure its book debts. The company went into liquidation. The liquidator challenged the bank’s charge.
Held: Siebe was wrongly decided. The charge was ineffective over the book . .
Lists of cited by and citing cases may be incomplete.

Banking

Updated: 12 April 2022; Ref: scu.191957

Bolivinter Oil SA v Chase Manhattan Bank NA: 1984

The court emphasised ‘the great and fundamentally important separation’ between bankers and re-insurers.

Judges:

Sir John Donaldson MR

Citations:

[1984] 1 WLR 392, [1984] 1 Lloyds Rep 251

Jurisdiction:

England and Wales

Cited by:

Cited – Manx Electricity Authority v J P Morgan Chase Bank CA 3-Oct-2003
The claimant sought to appeal an order striking out its claim against the defendant under a performance bond. The defendant denied that the demand was valid, saying it did not allege a current breach of the contract.
Held: The point upon which . .
Cited – Sirius International Insurance Company (Publ) v FAI General Insurance Limited and others HL 2-Dec-2004
The appellant had taken certain insurance risks on behalf of the respondents, subject to banking indemnities. Disputes arose and were settled under a Tomlin order, which was now itself subject to challenge.
Held: The appeal was allowed. The . .
Lists of cited by and citing cases may be incomplete.

Banking, Insurance

Updated: 12 April 2022; Ref: scu.186575

Kredietbank Antwerp v Midland Bank Plc, Karaganda Ltd v Midland Bank Plc and Another: CA 26 May 1999

The Bank refused to pay on letters of credit. They had required production of an original life policy, and been shown the original and a copy. The difficulties in distinguishing the two were not great, and did not justify the refusal. The contract in any event allowed for a copy to be produced and relied upon.

Citations:

Gazette 23-Jun-1999, [1999] All ER (D) 431, [1999] EWCA Civ 1489

Jurisdiction:

England and Wales

Banking

Updated: 12 April 2022; Ref: scu.146404

Regina v Inland Revenue Commissioners Ex Parte Banque Internationale a Luxembourg Sa: Admn 23 Jun 2000

The commissioners obtained court orders directing the applicant bank to disclose confidential information in their possession. The bank resisted on the ground that the demand breached their rights to confidentiality and to privacy. Although the orders did infringe the Bank’s article 8 rights, the notices were valid because the interference was justified under article 8(2). The notices were served in accordance with law, and were justified in pursuit of a legitimate aim and necessary in a democratic system for protecting the taxation system.

Citations:

Gazette 06-Jul-2000, [2000] EWHC Admin 360

Links:

Bailii

Statutes:

European Convention on Human Rights 8, Taxes Management Act 1970, Income and Corporation Taxes Act 1988

Jurisdiction:

England and Wales

Corporation Tax, Human Rights, Banking

Updated: 12 April 2022; Ref: scu.140175

Elli Christofi v Barclays Bank Plc: PatC 19 Jan 1998

A bank’s duty of confidentiality did not arise as regards information received but already known pursuant to statutory duty. The claimant’s writ and statement of claim were struck out as disclosing no cause of action. As regards the allegation of an implied duty of confidentiality arising from the relationship of banker and customer, the court held that whether an obligation was to be implied was a matter of law; and that as a matter of law no duty was to be implied in relation to information which the bank had every reason to think that the trustee already had: ‘the duty extends beyond information which is secret. It is clear from the judgment in Tournier’s case [1924] 1 K.B. 461 that the duty extends to information gained during the currency of the account and that it goes beyond the state of the account, and extends to information derived from the account itself.
But the obligation depends on a term implied by law: ‘the duty is a legal one arising out of contract’ (pp. 471-472); ‘the limits and qualifications of the duty of the bank [are] a matter of law’ (p.475). The limits of the duty must be ascertained in accordance with common sense. In modern times, banks have a variety of dealings with persons other than account holders, and it is entirely contrary to the rationale of the rule in Tournier, the privacy of the customer-banker relationship, that a bank should be bound not to inform a trustee in bankruptcy, making legitimate inquiries of the bank about an account in which the bankrupt had a joint interest with his wife, of a fact which any bank would have had every reason to suppose the trustee already knew, namely, that the caution on the matrimonial home had been warned off.’

Judges:

Lawrence Collins QC

Citations:

Times 03-Feb-1998, [1998] 1 WLR 1245

Citing:

Cited – Tournier v National Provincial and Union Bank of England CA 1924
The court considered the duty of confidentiality owed by a banker to his client. Bankes LJ said: ‘At the present day I think it may be asserted with confidence that the duty is a legal one arising out of contract, and that the duty is not absolute . .

Cited by:

Appeal from – Christofi v Barclays Bank Plc CA 28-Jun-1999
A bank is under no obligation of confidence to its customer so as to prevent it disclosing to another party a fact which was ascertainable from inspection of public registers, namely in this case that a caution against registration having been . .
Lists of cited by and citing cases may be incomplete.

Banking, Intellectual Property

Updated: 11 April 2022; Ref: scu.135909

Yorkshire Bank plc v Lloyds Bank plc: CA 12 May 1999

A customer of the plaintiff, sent a cheque to the defendant, with an application for shares. The cheque was stolen whilst in the defendant’s custody, but the plaintiff at first debited the account, then re-credited the balance. The claim failed following the Tai Hing Cotton Mill Ltd case.

Citations:

Gazette 27-Jun-1999, Times 12-May-1999

Jurisdiction:

England and Wales

Citing:

Cited – Tai Hing Ltd v Liu Chong Hing Bank PC 1985
(Hong Kong) The relationship between banker and customer is principally a contractual one between debtor and creditor. As between the banker and his customer, the risk of loss through forgery of the customer’s signature falls on the banker unless . .
Lists of cited by and citing cases may be incomplete.

Banking

Updated: 10 April 2022; Ref: scu.90666