Woodland Development Sdn Bhd - vs - Chartered Bank

Woodland Development Sdn Bhd

- vs -

Chartered Bank

Judgment

CT Gunn, J

1.     The defendants in this suit, the Chartered Bank, are bankers carrying on business at their branch in Petaling Jaya, Selangor, whilst the plaintiff, Woodland Development Sdn Bhd, is a locally incorporated company. It was agreed and not disputed by the defendants that at all material times the third party, one PJTV & Densun (M) Sdn Bhd, another locally-incorporated company, was a customer of the defendants.

2.     On and about 27 March 1974, the defendants collected for the third party a crossed cheque No 168813 for the sum of $10,000 drawn on Malayan Banking Bhd, Sungei Patani branch, made payable to the plaintiff or bearer. On or about the same date the defendants collected for the third party a crossed “account payee” cheque No 139080 for the sum of $50,000 drawn on United Malayan Banking Corp Bhd, Campbell Street, Penang branch made payable to the plaintiff. And on or about 15 April 1974, the defendants collected for the third party a crossed “account payee” cheque No 135236 for the sum of $10,000 drawn on Overseas Chinese Banking Corp Ltd, Penang branch made payable to the plaintiff or bearer. The defendants collected the proceeds of the said three cheques totalling $70,000 and credited the same into the third party’s account with it.

3.     What was disputed was whether the defendants have converted the said cheques to their own use and wrongfully deprived the plaintiff of the same whereby it has suffered damage. Alternatively it was denied by the defendants that the said sums of $10,000, $50,000 and $10,000 are payable to the plaintiff as money had and received by the defendants to the plaintiff’s use. In the further alternative it was also averred that the said cheques were collected for the third party, the customer of the defendants, in good faith and without negligence and that the defendants could rely upon the provisions of s 85 of the Bills of Exchange Act, 1949.

4.     According to one Kim Chean Han (PW2), whose evidence I had to consider with caution because he was a common director of the plaintiff and the third party at the material times, the said cheques were handed by him to one Richard Seow (DW2) and Yap Yoke Min (DW3) with the request that they open an account in the name of the plaintiff in a Petaling Jaya Bank. Yap and Seow agreed and said that they would get a resolution prepared by the secretary for the plaintiff board’s approval. There was no meeting of the plaintiff called to pass the resolution nor was there a circular resolution. After some time he checked up and discovered that no account had been opened for the plaintiff but the three cheques had been paid into the account of the third party. He enquired from Seow and Yap and was told by them that the said cheques were used to cover up some temporary overdraft account of the third party at the Chartered Bank, Petaling Jaya.

5.     Under cross-examination PW2 explained that the said cheques were for the purchase of shares in the plaintiff and that when those cheques were collected from the subscribers, the plaintiff did not have any particular project in mind. They were then thinking of housing development and did not think of purchasing a property in Cameron Highlands until later on. As far as he could remember the land in Cameron Highlands was purchased after July 1974. PW2 also confirmed that he did not go with Yap and Seow to the Chartered Bank when they paid in the said cheques, and denied that those cheques were collected by the defendants on the instructions of all three of them.

6.     During re-examination PW2 explained further that the plaintiff only bought the Cameron Highlands property in June and a resolution was passed to that effect on 15 June 1974. He then corrected his earlier statement in examination-in-chief that no meeting of the plaintiff had been called to pass a resolution to open a bank account in the name of the plaintiff and stated that at a meeting of the directors in March it was resolved that an account for the plaintiff be opened at the Petaling Jaya Chartered Bank or the Petaling Jaya Hongkong Shanghai Bank. In answer to a question by the Court, PW2 stated that it was sometime in April that he found out that the said cheques had been paid into the account of the third party. After enquiring from Yap and Seow he went to see the manager of the Chartered Bank, Petaling Jaya, whom he thought was called Dr Foley. He then approached Seow and Yap who promised to pay back the money.

7.     The evidence of PW2 that he did not go to the Chartered Bank to present the said cheques together with the other two directors was supported by the evidence of one Ooi Kok Hai (PW1) who is now a director of the plaintiff but was not a director when the plaintiff was incorporated in 1973. That witness in answer to a question during cross-examination as to how he knew that the said cheques were presented for payment by Seow and Yap, explained that he found that out after he became a director in 1974 and had approached the bank to make some enquiries. He also confirmed the evidence of PW2 that there was no resolution of the plaintiff that the said three cheques be paid into the account of the third party.

8.     A third witness called by the plaintiff was one Yeong Kok Chun (PW3) who was the company secretary of the plaintiff since 1973 and who produced its minutes book (D1) as requested by the defence. That witness as well as the minute in D1 confirmed the evidence of PW2 that there were no discussions to buy a piece of land in Cameron Highlands in March 1974 and that it was only resolved at a meeting on 15 June 1974, that the plaintiff should buy a piece of land there. The evidence therefore tended to refute the allegations of the defence during the cross-examination of the plaintiff’s witnesses that the said cheques were paid by the plaintiff into the third party’s account with the defendants in March and April 1974, as part purchase price of the land in Cameron Highlands.

9.     At the close of the case for the plaintiff, and having heard and observed all the plaintiff’s witnesses, including PW2, I accepted them as witnesses of truth.

10.                        The defence also called three witnesses, and its first witness was one Abdullah Din Mat Noor (DW1) who was the manager of the defendant’s Petaling Jaya branch from about the middle of February 1974. That witness explained that banks do not generally collect account payee cheques payable to others for their customers. He did not appear certain but said that as far as he could remember the second cheque was brought to him by “the three directors of PJTV”. They had explained to him that they were common directors of the third party and the plaintiff and, as far as he could recall, they also gave him an assurance that should there be any claim against the bank, the third party would indemnify any loss. As he was satisfied and as an exceptional case he accepted that account payee cheque for $50,000 for collection for the credit of the third party, but admitted that he could not remember details about the other two cheques.

11.                        Under cross-examination he admitted that the third party which has an account with their Petaling Jaya branch also had an overdraft with them. He also admitted that the plaintiff did not have an account with them nor has it any dealings with the defendants. DW1 then explained that the reason why banks do not accept third party cheques for their customers was because the proceeds therein belonged to the payees named in the cheques and that there was the danger that such proceeds would be paid into the wrong account. The witness was again not sure but thought that when the directors of the third party came to see him the cheques had already been endorsed and he could not remember whether he had also asked them to have the cheques endorsed from the plaintiff to the third party. In the case of the third cheque on page 3 of the agreed bundle of documents marked ‘A’ he agreed that where the words “account payee only” have been written but the words “or bearer” were left alone, yet in such a case they should get the endorsement of the payee named in the cheque. He conceded that, it was normal banking practice to have cheques payable to “account payee” endorsed by the payees named therein but said that in this case he was satisfied and accepted the said cheques as exceptions to the normal practice. DW1 also said that although they were common directors of the plaintiff and the third party it did not cross his mind to ask them to open an account for the plaintiff first. After he was shown the minutes of the plaintiff dated 26 March 1974, in D1 he agreed that two of the cheques were presented to his branch the very next day but claimed that there was no way to confirm whether they were common directors of both companies. He did not ask them for any document but conceded that he could have done so. DW1 then told the court that he took over officially as branch manager from a Mr. Foley in mid-March 1974. He could not remember the exact date Mr. Foley left the Petaling Jaya branch and conceded that he could not challenge PW2’s evidence that the latter had gone to see Mr. Foley. But when challenged again he did not agree if PW2 had said that he did not come to see him when the said cheques were presented to his branch.

12.                        The second witness for the defence was Seow Tai Sim (DW2) who was also a common director of the plaintiff and the third party at the material times and whose evidence should therefore be treated with caution. He claimed that three of them went to the bank to seek assistance to clear the said cheques and that it was PW2 who had requested that the cheques be paid into the account of the third party so that the money could be sent early to the vendor of the land. Although they met the bank manager yet he was not very sure but thought that the man they met was Mr. Abdullah.

13.                        During cross-examination DW2 admitted that it was he who went to the bank to present the first and second cheques. They asked the bank to do them a favour but could not remember which cheque it was that they had asked the bank for assistance. When asked why an account was not opened for the plaintiff he said that they did not do so “because both companies were managed by Kim” and that he had paid the said cheques into the third party’s account at the request of Kim. He did not blame anybody and knew that Mr. Abdullah was doing them a favour by paying the cheques into the third party’s account. When he was shown a copy of a resolution of the third party to sell the land in Cameron Highlands to the plaintiff (P5) he confirmed that that was the resolution but said that he could not remember the date when it was passed, although a perusal of P5 would show that the resolution is dated 22 April 1974, i.e. after the said cheques had been paid into the third party’s account. DW2 claimed that he was never at the first director’s meeting of the plaintiff; but the attendance sheet of the board meeting of the plaintiff held on 26 March 1974, in D1 bears his signature similar to that of his shown on P5. Finally when he was asked to explain why the cheques have been paid into the third party’s account he said that the reason was because the plaintiff did not have a bank account.

14.                        The last witness for the defence was Yap Yoke Min (DW3). He said briefly in examination-in-chief that because the plaintiff had not opened a bank account so they requested the manager of the Chartered Bank to do them a favour by paying the cheques into the third party’s account. Like DW2 although he went to the bank yet he was not too sure whether the man he met was Mr. Abdullah. As he was also a common director of both the plaintiff and the third party at the material times his evidence must be treated with caution too.

15.                        Under cross-examination DW3 admitted that he went to the bank to present the said cheques but then without appearing too certain he said that he thought the three of them went together. He also thought that they went to enquire whether the cheques could be cleared and Mr. Abdullah agreed to clear them. That witness also said that he could not remember if he attended the first board meeting of the plaintiff after D1 was shown to him. Here again an examination of the relevant attendance sheet in D1 shows his signature on it similar to that of his on P5.

16.                        Having seen and heard the three defence witness and having considered their evidence I was not prepared to accept DW1’s evidence that PW2 was present when the said cheques were presented to the defendants for collection, nor did I find DW2 and DW3 to be witnesses of truth. I found on the balance of probabilities on the evidence, both oral and documentary, adduced in this case that only DW2 and DW3 went to the defendants’ bank at Petaling Jaya where they met DW1 who agreed to do them a favour by accepting the second cheque for $50,000 shown on page 2 of the agreed bundle of documents marked ‘A’ for collection for the third party. It was DW2 and DW3 who had presented the other two cheques for $10,000 each shown on pages 1 and 3 of the agreed bundle of documents marked ‘A’ which were accepted by some officers of the defendants for collection and payment of the proceeds into the account of the third party. Neither Mr. Foley nor any other officers of the defendants who could have given evidence of the circumstances under which those two cheques were accepted for collection were called by the defence. I also found that when DW2 and DW3 presented the said cheques for payment into the account of the third party, they did not have the authority of the true owner of the said cheques, that is, the plaintiff, to do so. In fact the minutes of the meeting of the plaintiff’s board of directors held on 26 March 1974, show that “it was resolved that the Chartered Bank at Petaling Jaya and the Hongkong & Shanghai Banking Corp at Petaling Jaya, be appointed bankers to the company and that all documents and cheques drawn on the company’s account be signed by Mr. Kim Chean Han and Mr. Yap Yoke Min and countersigned by Mr. Ooi Kok Hai.” However, instead of proceeding to open as, bank account for the plaintiff at the Chartered Bank or the Hongkong Shanghai Bank at Petaling Jaya in accordance with the said resolution of the plaintiff’s board of directors, DW2 and DW3 after receiving the said cheques from PW2 went to the defendants the very next day and managed to persuade DW1 and some other officers of the defendants to collect and pay the proceeds of the first two cheques into the account of the third party. The third cheque was, it would appear from it, accepted for collection by the defendants’ officers on 15 April 1974.

17.                        Mr. Naban, counsel for the defendants, referred to the following passage in the chapter on Conversion — Money Had And Received at pages 277 and 278 of Paget’s Law of Banking (9th Ed):—

18.                        He also referred to the following passage on “Money Had And Received” on page 193 of Holden on Banker and Customer (vol I):—

19.                        And then, rather surprisingly, or unless I have misunderstood him, counsel stated that the plaintiff must prove conversion before succeeding in an action for money had and received against a collecting bank. He then submitted that the only issue in this case was whether the defendants had authority from the plaintiff, and that if the plaintiff had given the defendants authority then the action for conversion failed. Counsel also submitted that a question which the court had to consider was whether those three directors had the authority of the plaintiff when they went to the bank. And he referred to the following dictum in the judgment of Bray J in Dey v Pullinger Engineering Co [1921] 1 KB 77:

20.                        It was then the submission of Mr. Naban that the bank manager was entitled to presume that the three directors were acting lawfully in what they did.

21.                        Before considering that brief submission of counsel based on the dictum of Bray J in Dey’s case, I ought to pause here to consider briefly the law relating to the doctrine of constructive notice in relation to delegated authority. That doctrine was that since the memorandum and articles of a company are public documents and open to public inspection, any one who had dealings with the company must be taken to have notice of the contents of those documents whether he had read them or not. Because that doctrine would have been unworkable if applied to its logical conclusion it was mitigated by the rule in Royal British Bank v Turquand (1856) 6 E & B 327; 119 ER 886 which provided that third parties who had dealings with a company need not enquire into the regularity of what Lord Hatherley called in Mahoney v East Holyford Mining Co (1875) LR 7 HL 869 “the indoor management” of the company and may assume that all is being done regularly. But the rule in Turquand’s case was later subject to exceptions in a series of cases most of which were concerned with banks. Thus it was held that a bank was not protected where it deals with the agent as a principal and not as an agent (AL Underwood Ltd v Bank of Liverpool [1924] 1 KB 775, Alexander Stewart & Son of Dundee Ltd v Westminster Bank [1926] WN 271, CA). It was also held that a bank is not protected where the indorsement is a forgery (Kreditbank Cassel GMBH v Schenkens [1927] 1 KB 826), or where the bank has no knowledge of the existence of a power of delegation in the articles of a company (Houghton & Co v Nothard, Lowe & Wills [1927] 1 KB 246) or where the bank is put upon inquiry (B Liggett (Liverpool) Ltd v Barclays Banks [1928] 1 KB 48). The rather confused state of the authorities had been dispelled by the judgment of the Court of Appeal in Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 where the articles of the company authorised the appointment of a managing director, but no such appointment was made. The board of directors nevertheless allowed one of the directors called Kappor to act as managing director in carrying on the business of the company. It was held that the directors had by their conduct held out their colleague as managing director and, since the act he had undertaken on behalf of the company was within the ordinary ambit of the authority of a managing director, the company was bound.

22.                        The authority of an agent may be however an actual authority or an ostensible or apparent authority. And on the distinction between ‘actual’ and ‘apparent’ or ‘ostensible’ authority Diplock LJ (as he then was) said in Freeman & Lockyer’s case that

23.                        Having analysed the relevant law His Lordship then summarised it by stating four conditions which must be fulfilled to entitle a third party whom he called “a contractor” to enforce against a company a contract entered into on behalf of the company by an agent who had not actual authority to do so. It must be shown:

24.                        As a result of that decision the present law is that where the board of a company permits its agent to act in the way in which he did and his act was not ultra vires the company, then any person dealing with the agent can rely on that apparent authority and is entitled to assume that the company was bound by the agent’s representation.

25.                        In so far as Dey v Pullinger Engineering Co is concerned, the articles of association of the company in that case empowered the directors to authorize one of their body as managing director to draw bills of exchange on behalf of the company. The managing director drew a bill on behalf of the company without having in fact received any authority from the directors to draw bills. In an action on the bill against the company as drawers, it was held that the managing director, in drawing the bill on behalf of the company was a person acting under its authority, and that the company was liable. As by the constitution of the company the managing director might have been authorized to draw the bill, a person taking the bill in due course was entitled to assume that he had authority in fact. In our present case, although estoppel was not pleaded in the statement of defence, it could nevertheless be noted that the articles of association (a copy of which was exhibited with the minutes of the meeting of the board of directors of the plaintiff held on 26 March 1974) empower the directors to appoint one of their body as managing director, but at the material times when the said cheques were paid into the account of the third party, no one had yet been appointed or was held out by the plaintiff to be its managing director. In any case the facts based on the evidence in this suit are different and can be distinguished from the facts in Dey’s case as well as in Freeman & Lockyer’s case in that when two of the directors, neither of whom was the managing director and who did not have the authority of the board, went to the defendants and tried to pay the said cheques into the account of the third party, the manager and the officers of the defendants who were strangers to the plaintiff which has never had any dealings with the bank, were not, in my view, entitled to presume on a mere oral representation that DW2 and DW3 were acting lawfully in paying the plaintiff’s cheques into the third party’s account. Moreover the manager and the defendants’ other officer would, or, if they had examined the said cheques, should have noticed that the said cheques were endorsed for the third party and not for the plaintiff which was the payee of the said cheques. As such DW1 and the officers of the defendants should have been put on enquiry and should not have assumed that DW2 and DW3 had the authority of the plaintiff to pay the said cheques into the account of the third party.

26.                        Another point, which was not directly relevant to the issues in this suit, made by Mr. Naban was that the cheques which included the words “account payee” within or adjacent to the two parallel lines were not invalidated. He referred to the following dictum of Atkin LJ in Importers Co Ltd v Westminster Bank Ltd [1927] 2 KB 297:

27.                        With respect one cannot but agree with the above dictum as the words “account payee” are not an addition authorized by statute and are “a mere direction to the receiving bank as to how the money is to be dealt with after receipt” (Akrokerri (Atlantic) Mines Ltd v Economic Bank [1904] 2 KB 465). The addition of those words to the crossing does not prevent the cheque from being transferable (National Bank v Silke [1891] 1 QB 435, CA) I think that the point which counsel was trying to make was that an “account payee” cheque could be paid into another person’s account, but he might have overlooked that Atkin LJ also said in the Importers Company’s case that there is a duty upon the bank which takes a cheque marked “account payee” to be cleared through another person’s account “to see that, in fact, they are collecting the money for the account of the payee, and that the proceeds, when received, will go to the payee.” And that was what the defendants did not do in this case.

28.                        As for the alternative claim for money had and received Mr. Naban submitted briefly that it was the instructions of the directors to collect the said cheques and to credit the third party’s account and that the defendants were therefore not liable. On the issue of negligence for the purposes of s 85 of the Bills of Exchange Act which is as follows:

29.                        it was the submission of counsel that in collecting the bearer cheque for $10,000 there was no negligence because a bank could collect it for any bearer of the cheque who brings it. As regards the other two cheques counsel referred to the following passage in the Privy Council case of Commissioner of Taxation v English, Scottish & Australian Bank Ltd [1920] AC 683, 688:

30.                        He then conceded that there was negligence in respect of the collection of the two “account payee” cheques.

31.                        Mr. Moosdeen, counsel for the plaintiff, submitted that one of the issues concerning conversion was who was the owner of the three cheques? Secondly, whether the plaintiff’s directors had authority to pay the cheques into someone else’s account? The third issue involved s 85 of the Bills of Exchange Act, 1949, and lastly there was the alternative claim of the plaintiff for money had and received.

32.                        As to who was the true owner of the said cheques, counsel referred to a paragraph in Paget’s Law of Banking (9th Ed) at page 198 on the meaning of “the true owner” of a cheque, and pointed out that all the three cheques in this case were made out to the plaintiff who was therefore the true owner. He also pointed out that those cheques were presented to the defendants in March and April 1974 whilst the minutes of the plaintiff to buy the property in Cameron Highlands were only passed in June 1974. He also stated that the resolution of the third party (P5) to sell the said land to the plaintiff was passed on 22 April 1974, but those three cheques were presented for collection for the third party even before 15 April 1974. The minutes of the first meeting of the plaintiff on 26 March 1974 did not mention the purchase of the land and the first two cheques were presented and cleared on 27 March 1974. Counsel also pointed out there is no averment in the statement of defence or in correspondence alleging that the money in the said three cheques were taken for the purchase of the said land, and submitted therefore that the suggestion of the defence that the cheques were taken for the price of the land could not stand.

33.                        On conversion Mr. Moosdeen referred to AL Underwood v Bank of Liverpool, which he submitted was a case very similar to the present one. In that case one U, a merchant, had a banking account at the defendant’s bank. Later he converted himself into a limited company, all the shares being allotted to himself except one, which was held by his wife. A debenture in the form of a floating charge over the assets of the company was issued to a creditor of U as a security for his debt. By the articles of the company U was appointed sole director and after formation of the company he kept all his private banking account with the defendants as before. The company had a separate account, which was kept at another bank, but the defendants had no knowledge of that fact. U as sole director became possessed of a number of cheques, some crossed and others uncrossed drawn in favour of the company. He endorsed them and paid them into his own account with the defendants, instead of paying them into the company’s account with the other bank. The defendants, without enquiring whether the company had a separate banking account, collected the cheques and credited U with the proceeds, which he misappropriated. When doing so they treated him as being identical with the company, and overlooked the materiality of the cheques being drawn in the company’s favour and not in his. In an action brought by the company on behalf of the debenture holder for conversion of the cheques, it was held, inter alia, by the Court of Appeal that the defendants were precluded from setting up that U, when paying the cheques into his own account, was acting within the scope of his apparent authority as agent of the company, upon two grounds: first, that the act of an agent paying his principal’s cheques into his own account was so unusual as to put them on inquiry, that they ought to have enquired whether the company had a separate banking account, and, if it had, why the cheques w ere not paid into that account, and that their failure to make that inquiry amounted to negligence; and secondly that U when paying in the cheques did not purport to act as the Company’s agent, but as being himself the company, and that the defendants so treated him. Mr. Moosdeen referred, in particular, to the following passage in the judgment of Scrutton LJ in that case:

34.                        Counsel also referred to the following passage in the judgment of Atkin LJ in that case:

35.                        Counsel then also pointed out that the money of the plaintiff was used to enable the third party and not the plaintiff to buy the land in the first instance. He contended that the directors had no right to use the plaintiff’s money to finance the purchase of the land by the third-party, and stated that no director has authority to use the company’s money to defraud it and that it made no difference whether the directors were acting singly or collectively. Counsel also contended that the plaintiff was not a customer of the defendants and that therefore the manager of the defendants was doing a favour for the directors and not for the plaintiff.

36.                        On s 85 of the Bills of Exchange Act 1949, counsel stated that the burden of proof was on the defence and he relied on the following passage in the judgment of Lord Wright in Lloyds Bank v EB Savory & Co [1933] AC 201, 228 in which His Lordship referred to s 82 of the former UK Bills of Exchange Act, 1882 which is similar to s 85 of our own Bill of Exchange Act, 1949:

37.                        I would pause here to note that the above case shows that a bank is liable to the true owner if it collects a cheque with a forged indorsement, or to which the customer has no title, and if it fails to prove that it had acted without negligence.

38.                        Counsel also referred to the following dictum of Lord Atkin in United Australia Ltd v Barclays Bank Ltd [1941] AC 1:

39.                        and stated that if a cheque is payable to a company but the words “or bearer” have not been crossed out, yet the bank clerk concerned should have been put on inquiry. Counsel then pointed out that the defence had not adduced any evidence of the circumstances under which the first and the third cheques were collected. And lastly, on interest counsel stated that the plaintiff have been kept out the money since 1974 and should be awarded interest with effect from April 1974.

40.                        Apart from the English authorities referred to above, reference ought to be made to our former Court of Appeal (Straits Settlements) case of The Bankrupt v The Overseas Chinese Bank Ltd [1934] MLJ 76, which is a decision of more than half a century. In that case a crossed cheque for the purpose of paying a dividend in bankruptcy was fraudulently obtained from the Official Assignee. The cheque was signed by the Colonial Treasurer, countersigned by the Colonial Secretary and further countersigned by the Official Assignee. By means of a forged endorsement the cheque was negotiated and paid. The Official Assignee brought an action against the collecting bank for damages for conversion. The bank pleaded among other things that the Official Assignee was not the true owner of the cheque in as much as he was not the drawer. It was held by the Court of Appeal, upholding in part the decision of Mills J, that the Official Assignee was not the drawer nor was he in the position of a drawer in the mercantile sense. Nevertheless, the Court of Appeal held that the right to possession of and the property in the cheque was vested in the Official Assignee and that he was therefore entitled to maintain an action for conversion against any person who, however innocently, had obtained possession of the cheque and disposed of the proceeds. Whilst considering the question of who may sue for conversion of the cheque Huggard CJ at page 80 said:

41.                        Bearing in mind the relevant legal principles established in the cases referred to above and applying them to the facts of this case found by me on the evidence adduced, it was my judgment that the true owner of the said cheques was the plaintiff and that DW2 and DW3 did not have the authority of the plaintiff when they presented those cheques to the defendants’ branch manager and other officers for collection and for payment of the proceeds therein into the third party’s account. I therefore held that in the circumstances of this case the defendants were liable in damages for conversion of the said cheques. Alternatively, I held that the plaintiff was also entitled to repayment of the said sums of $10,000, $50,000 and $10,000 as money had and received by the defendants to its use, because it has been conceded by the defence that there was negligence in respect of the collection of the two account payee cheques. As regards the third cheque i.e. the bearer cheque I agree with counsel for the plaintiff that no evidence has been adduced to show the circumstances under which that cheque was received for collection and the defendants have therefore failed to prove that it had acted without negligence and were not protected under s 85 of the Bills of Exchange Act and were therefore also liable. I therefore ordered the defendants to pay the plaintiff $70,000 together with interest at the rate of 8% per annum on $60,000 with effect from 26 March 1974, and 8% per annum on $10,000 with effect from 14 April 1974, and costs. Finally I also ordered the third party to indemnify the defendants with an amount equivalent to that paid by the defendants to the plaintiff and costs. 

Cases

Dey v Pullinger Engineering Co [1921] 1 KB 77; Turquand v Royal British Bank [1856] 6 E & B 327; 119 ER 886; East Holyford Mining Co v Mahoney (1875) 7 LR HL 869; Bank of Liverpool v AL Underwood Ltd [1924] 1 KB 775; Westminster Bank v Alexander Stewart & Son of Dundee Ltd [1926] WN 271; Schenkers v Kreditbank Cassel GMBH [1927] 1 KB; Nothard, Lowe & Wills v Houghton & Co [1927] 1 KB 246; Barclays Bank v B Liggett (Liverpool) [1928] 1 KB 48; Buckhurst Park Properties v Freeman and Lockyer [1964] 2 QB 480; Westminster Bank Ltd v Importers Co Ltd [1927] 2 KB 297; Economic Bank v Akrokerri (Atlantic) Mines Ltd [1904] 2 KB 465; Silke v National Bank [1891] 1 QB 435; English, Scottish and Australian Bank Ltd v Commissioner of Taxation [1920] AC 683; EB Savory & Co v Lloyds Bank [1933] AC 201; Barclays Bank Ltd v United Australia Ltd [1941] AC 1; Overseas Chinese Bank Ltd v Official Assignee of the Property of Loh Chuk Poh, A Bankrupt [1934] MLJ 76

Legislations

Bills of Exchange Act 1949:, s.85

Authors and other references

Paget’s Law of Banking (9th Ed)

Holden on Banker and Customer (vol I)

Representation

Ahmad Moosdeen for the plaintiff.

DP Naban for the defendants.

Porres P Royan for the Third Party.