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 defence was that the plaintiff had been acting as an unregistered moneylender, and that the debt was void. The plaintiff claimed the benefit of the exception in section 6(d) of the 1900 Act.
Held: Once it was shown that the plaintiff lent money in the course of business, it was for them to show that they acted as a bank. The plaintiff failed to show that it was a bank, but did establish that it had a reputation as such, and that was sufficient. The defendant’s appeal failed.
The law has long recognised that banks maintain accounts on the basis of entries into the bank’s books, not the amount of physical cash that is held.
The following characteristics of the business of banking were set out:
(a) the conduct of current accounts;
(b) the payment of cheques drawn on bankers; and
(c) the collection of cheques for customers.
Lord Denning MR said: ‘Like many other beings, a banker is easier to recognise than to define’
Lord Denning MR, Harman, Diplock LJJ
[1966] 1 All ER 968, [1966] 2 QB 431
Moneylenders Act 1900 6(d)
England and Wales
Citing:
AppliedBank of Chettinad Ltd of Colombo vCommissioners of Income Tax, Colombo PC 1948
Whether a company is a bank or undertakes the ‘business of banking’ can bear a different meaning at different times. . .
AppliedNorth 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. . .
Affirmed on appeal fromUnited Dominions Trust Ltd v Kirkwood QBD 1965
For a company to be taken to carry on the business of banking money it must be able to show that it took money on current accounts. . .
CitedJoachimson v Swiss Bank Corporation CA 1921
The service of the order nisi binds the debt in the hands of the garnishee – that is, it creates a charge in favour of the judgment creditor. No cause of action for non payment arises in respect of money standing on a current account until the . .
CitedIn re Shields’ Estate, Bank of Ireland (Governor and Co.), Petitioners 1901
The court considered whether the maintenance of current accounts was essential before a business could be considered to be a bank. . .
CitedIn re Bottomgate Industrial Co-operative Society QBD 1891
An industrial society took loans on deposit which were entered in a book. in the form of a banking book.
Held: It had by doing so carried on the business of a banker. . .
CitedState Savings Bank of Victoria Comissioners v Permewan Wright and Co Ltd 1915
To be held to be a banker in law, it was not necessary for a company to open current accounts. . .
CitedNorth 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. . .
CitedEdgelow v MacElwee 1918
The court should be astute to see that the Act is not broken. . .
CitedBank of Chettinad Ltd of Colombo vCommissioners of Income Tax, Colombo PC 1948
Whether a company is a bank or undertakes the ‘business of banking’ can bear a different meaning at different times. . .

Lists of cited by and citing cases may be incomplete.
Updated: 04 August 2021; Ref: scu.260038