Mercedes-Benz Finance Ltd v Clydesdale Bank Plc [CSOH]
| Jurisdiction | Scotland |
| Judge | Lord Penrose |
| Judgment Date | 14 June 1996 |
| Court | Court of Session (Outer House) |
| Date | 14 June 1996 |
Outer House of the Court of Session
Before Lord Penrose
Scots law - banking - direct debit instruction does not vest payer's rights in payee
A direct debit instruction did not operate to vest in the payee the rights of the payer under his contract with his banker whether by mandate or assignation. Further, the contract between banker and customer did not depend upon or reflect the view that the banker received and held assets transferred to him by the customer on trust for the customer or his nominees.
Lord Penrose, sitting in the Outer House of the Court of Session, so held in an action of payment by Mercedes-Benz Finance Ltd against the Clydesdale Bank, excluding averments by the pursuers pleading a case based, first, on a direct debit mandate in their favour and, second, on an alleged trust constituted in their favour.
Mr James Mure for the pursuers; Mr David Sellar for the defenders.
LORD PENROSE said that the action arose from claims by the pursuers for payment to them by the bank of sums received by G, a member company of a group which banked with the defenders, in connection with the sale of motor vehicles by G.
G had been employed by the pursuers for the sale of such vehicles in the UK. In terms of the two agreements between the pursuers and G, vehicles were to be supplied on consignment terms, each vehicle remaining the property of the pursuers until payment was received by them.
In pursuance of those agreements, the pursuers had been authorised to obtain payments from G's account with the defenders by direct debit.
The group of which G was a member had experienced financial difficulties and in October 1990 the defenders had frozen the group accounts; at that time G's account had been in credit in the sum of £819,479.09.
A separate account had been opened for G and other group companies with an overdraft limited to £100,000. G had continued to trade, utilising that new facility. It had sold, and been paid for vehicles in respect of which the total due to the pursuers was £111,598.38.
The pursuers had intimated direct debit requests in that amount which the defenders had declined to pay. G pled that there had been about £ 40,000 available on the facility at that time and that G had lodged additional funds with the defenders so as to bring the balance due within the limit.
The defenders had declined to make the...
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...- Introduction to the Law of Scotland (11th edition) at paras. 12.04-.05 and to Mercedes- Benz Finance Limited v Clydesdale Bank plc 1997 SLT 905, per Lord Penrose at page 912J-L. [14] On this aspect of the case Mr. Johnston stated that he did not rely upon the concept of ius quaesitum tert......
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