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.
Held: The bank was in breach of contract and in principle liable for injury to the customer’s business reputation if any, where it knew that he was a trader, but not for further business opportunities alleged to have been lost by reason of circumstances of which the bank was unaware on the basis of the limited facts known to it.
In this case, there was nothing to indicate that the cheque, even one drawn in favor of a goods wholesaler, was required for the purposes of international trade and would or might cause the loss of a transaction or a substantial trading profit for the plaintiff. The claim for loss of profits failed. Damages were awarded for the dishonour of the cheque and the ‘discreditable reason given by them for doing so’ and even though the plaintiff was not strictly speaking in business. The damages included a small allowance for loss of reputation in Nigeria.
Evans LJ said: ‘I would prefer to hold that the starting point for any application of Hadley -v- Baxendale is the extent of the shared knowledge of both parties when the contract was made . . When that is established, it may often be the case that the first and the second parts of the rule overlap, or at least that it is unnecessary to draw a clear line of demarcation between them. This seems to me to be consistent with the commonsense approach suggested by Scarman LJ in H. Parsons (Livestock) Limited -v- Uttley Ingham and Co. Limited [1978] QB 791 at 813, and to be applicable here.’
and ‘It is abundantly clear, in my judgment, that history has changed the social factors which moulded the rule in the nineteenth century. It is not only a tradesman of whom it can be said that the refusal to meet his cheque is ‘so obviously injurious to [his] credit’ that he should ‘recover, without allegation of special damage, reasonable compensation for the injury done to his credit’ (see [1920] AC 102 at 112, [1918-19] All ER Rep 1035 at 1037 per Lord Birkenhead LC). The credit rating of individuals is as important for their personal transactions, including mortgages and hire-purchase as well as banking facilities, as it is for those who are engaged in trade, and it is notorious that central registers are now kept. I would have no hesitation in holding that what is in effect a presumption of some damage arises in every case, in so far as this is a presumption of fact.’

Evans LJ, Waite LJ, Sir John May
[1996] 4 All ER 119
England and Wales
CitedH Parsons (Livestock) Limited v Uttley Ingham and C. Limited CA 1978
The defendants had installed a pig nut hopper for the plaintiffs, but failed to provide adequate ventilation, causing the nuts to go sour, and the pigs to be poisoned.
Held: Remoteness of damage is a question of law. The death of the pigs . .
CitedHadley v Baxendale Exc 23-Feb-1854
Contract Damages; What follows the Breach Naturaly
The plaintiffs had sent a part of their milling machinery for repair. The defendants contracted to carry it, but delayed in breach of contract. The plaintiffs claimed damages for the earnings lost through the delay. The defendants appealed, saying . .
CitedBank of New South Wales v Milvain 1884
The farmer customer’s cheque had not been met by the bank, despite his having adequate funds to meet it. The bank appealed against the award of damages to the customer’s reputation.
Held: The customer, as a farmer, was not a trader, and could . .
CitedAddis v Gramophone Company Limited HL 26-Jul-1909
Mr Addis was wrongfully and contumeliously dismissed from his post as the defendant’s manager in Calcutta. He sought additional damages for the manner of his dismissal.
Held: It did not matter whether the claim was under wrongful dismissal. . .
CitedEvans v London and Provincial Bank 1917
Only nominal damages were awarded by a jury for damage to the plaintiff’s reputation after his bank had wrongly failed to pay on his cheque. . .
CitedWilson 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 . .
CitedGibbons v Westminster Bank Ltd 1939
For a non-trading customer of a bank whose cheque has been wrongfully dishonoured, injury to credit in law must be pleaded and proved as special damages. . .
CitedDavidson 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 . .
CitedMonarch Steamship Co Ltd v Karlshamns Oljefabriker A/B HL 1949
Damages were sought for breach of contract.
Held: After reviewing the authorities on remoteness of damage, the court reaffirmed the broad general rule that a party injured by the other’s breach of contract is entitled to such money . .
CitedCzarnikow (C ) Ltd v Koufos; The Heron II HL 17-Oct-1967
The vessel had arrived late at Basrah in breach of the terms of the charterparty. The House was asked as to the measure of damages. The charterers had intended to sell the cargo of sugar promptly upon arrival, and now claimed for the fall in the . .
CitedBliss v South East Thames Regional Health Authority CA 1985
General damages cannot be awarded for frustration, mental distress or injured feelings arising from an employer’s breach of the implied term of confidence and trust. Dillon LJ said that damages for mental distress in contract are limited to certain . .
CitedRae v Yorkshire Bank plc CA 1987
The court considered the award of damages for the wrongful dishonour of its customer’s cheque. . .
CitedJoyce v Sengupta and Another CA 31-Jul-1992
The defendant published an article accusing the plaintiff of theft. Not having funds to launch a claim in libel, the plaintiff obtained legal aid to claim in malicious falsehood. She now appealed against a strike out of that claim.
Held: A . .

Cited by:
CitedJackson and Another v Royal Bank of Scotland HL 27-Jan-2005
The claimants sought damages, alleging that a breach of contract by the defendant had resulted in their being unable to earn further profits elsewhere. The defendant said the damages claimed were too remote. The bank had, by error, disclosed to one . .
CitedTransfield Shipping Inc of Panama v Mercator Shipping Inc of Monrovia ComC 1-Dec-2006
The owners made substantial losses after the charterers breached the contract by failing to redliver the ship on time as agreed.
Held: On the facts found the Owners’ primary claim is not too remote. To the knowledge of the Charterers, it was . .
CitedShah 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 . .

Lists of cited by and citing cases may be incomplete.

Contract, Damages, Banking

Leading Case

Updated: 10 November 2021; Ref: scu.222086