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 affairs and to take reasonable steps to maintain his credit and reputation. Major Wilson was made bankrupt and he and his trustee in bankruptcy joined in an action against the bank. The jury awarded damages of about andpound;45,000 for depreciation in the bankrupt’s business and estate caused by the bank’s negligence (although the House was not unanimous as to whether this finding was justified on the evidence) and andpound;7,500 for damage to his credit and reputation.
Held: The former sum was recoverable by the trustee in bankruptcy, and the latter by the bankrupt personally, even though the damages arose from the same breach of contract.
Lord Birkenhead applied Rolin, saying: ‘The defendants undertook for consideration to sustain the credit of the trading customer. On principle the case seems to me to belong to that very special class of cases in which a banker, though his customer’s account is in funds, nevertheless dishonours his cheque. The ratio decidendi in such cases, is so obviously injurious to the credit of the trader that the latter can recover, without allegation of special damage, reasonable compensation for the injury due to his credit.’
Lord Atkinson said: ‘If one man inflicts an injury upon another the resort by the sufferer to reasonable expedients for the bona fide purpose of counteracting, curing or lessening the evil effects of the injury done him, does not necessarily absolve the wrongdoer, even though the sufferer’s efforts should, in the result, undesignedly aggravate the result of injury.’

Lord Atkinson, Lord Birkenhead LC
[1918-19] All ER Rep1035, [1920] LR AC 102, [1920] AC 102
England and Wales
CitedBeckham v Drake HL 11-Jul-1849
Non-property assets do not pass on bankruptcy
An action was brought on a contract for hiring and service, where the plaintiff was to serve for seven years, and the defendant to pay weekly wages during that time; and the breach was a dismissal during the seven years. The plaintiff, after this . .
FollowedRolin 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. . .

Cited by:
CitedMulkerrins v Pricewaterhouse Coopers HL 31-Jul-2003
The claimant sought damages from her former accountants for failing to protect her from bankruptcy. The receiver had unnecessarily caused great difficulties in making their claim that such an action vested in them. The defendants had subsequently, . .
CitedInvestors Compensation Scheme Ltd v West Bromwich Building Society HL 19-Jun-1997
Account taken of circumstances wihout ambiguity
The respondent gave advice on home income plans. The individual claimants had assigned their initial claims to the scheme, but later sought also to have their mortgages in favour of the respondent set aside.
Held: Investors having once . .
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 . .
CitedKpohraror v Woolwich Building Society CA 10-Jan-1996
The defendants had wrongfully refused payment of the claimant’s cheque for pounds 4,550. The error was realised on the same day, and corrected. The master awarded damages of pounds 5,550 as general damages to the claimant’s credit by reason of the . .
CitedKpohraror 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.
Insolvency, Damages, Banking

Leading Case

Updated: 02 November 2021; Ref: scu.185413