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.


Lord Dunedin


[1920] AC 683


Bills of Exchange Act 1909 88(1)


ApprovedCommissioners 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:

CitedArchitects 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