R v Charles
| Jurisdiction | England & Wales |
| Judge | Lord Diplock,Viscount Dilhorne,Lord Salmon,Lord Edmund-Davies,Lord Fraser of Tullybelton |
| Judgment Date | 28 July 1976 |
| Judgment citation (vLex) | [1976] UKHL J0728-4 |
| Date | 28 July 1976 |
| Court | House of Lords |
[1976] UKHL J0728-4
House of Lords
Lord Diplock
Viscount Dilhorne
Lord Salmon
Lord Edmund-Davies
Lord Fraser of Tullybelton
Upon Report from the Appellate Committee, to whom was referred the Cause Commissioner of Police for the Metropolis against Charles (on Appeal from the Court of Appeal (Criminal Division)), That the Committee had heard Counsel, as well on Tuesday the 8th, as on Wednesday the 9th, days of June last, upon the Petition and Appeal of Derek Michael Charles of 14 Briarwood Road, London, S.W.4, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal (Criminal Division) of the 17th of November 1975, so far as therein stated to be appealed against, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order, so far as aforesaid, might be reversed, varied or altered, or that the Petitioner might have such other relief in the premises as to Her Majesty the Queen in Her Court of Parliament, might seem meet; and Counsel having been heard on behalf of the Commissioner of Police for the Metropolis, the Respondent to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal (Criminal Division), of the 17th day of November 1975, in part complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House.
My Lords,
I have had the advantage of reading in advance the speeches of my noble and learned friends Viscount Dilhorne and Lord Edmund-Davies. I agree with their conclusions, with the revision which they suggest is needed to the certified question and with the answer that they propose to the question as revised.
I will accordingly confine my own speech to a brief analysis of the representations made by the drawer of a cheque; first, where he proffers it to the payee without a cheque card as payment for goods or services or in exchange for cash, and secondly, where the drawer shows to the payee a cheque card and the cheque which he then draws appears to comply with the conditions endorsed upon the card.
It has been argued forcibly on behalf of the accused that in either case the only representation made by the drawer to the payee is that the cheque will be paid by the bank on presentment; that it is mere pedantry, which should play no part in criminal law, to suggest that the drawer makes any more elaborate representation; and that in the case where the cheque is shown to the payee the representation is necessarily true, since by providing the drawer with the cheque card the bank has given him ostensible authority to communicate to the payee on its behalf an undertaking that the cheque will be paid by it on presentment.
To take first the case in which no cheque card is involved, it is no doubt true to say that all the payee is concerned with is that the cheque should be honoured by the bank, and that to induce the payee to take the cheque all that the drawer is concerned to do is to assure him that as far as can be reasonably foreseen this is what will happen. But payment by the bank cannot be reasonably foreseen as likely unless the fact be that the cheque is one which the bank on which it is drawn is bound, by an existing contract with the drawer, to pay on presentment or, if not strictly bound to do so, could reasonably be expected to pay in the normal course of dealing. This, I think to be a simpler way of expressing the statement of existing facts which is to be implied from the familiar act of drawing a cheque, than that cited by my noble and learned friend Lord Edmund-Davies from Kenny which was adopted by the Court of Appeal in Reg. v. Page [1971] 2 Q.B. 330. It combines representations (1) and (3) from Kenny, but it omits representation (2). A customer needs no authority from his banker to draw a cheque on him; it is the banker who needs authority from the customer to pay it on presentment.
When a cheque card is brought into the transaction, it still remains the fact that all the payee is concerned with is that the cheque should be honoured by the bank. I do not think that the fact that a cheque card is used necessarily displaces representation to be implied from the act of drawing the cheque which has just been mentioned. It is, however, likely to displace that representation at any rate as the main inducement to the payee to take the cheque, since the use of the cheque card in connection with the transaction gives to the payee a direct contractual right against the bank itself to payment on presentment, provided that the use of the card by the drawer to bind the bank to pay the cheque was within the actual or ostensible authority conferred upon him by the bank.
By exhibiting to the payee a cheque card containing the undertaking by the bank to honour cheques drawn in compliance with the conditions endorsed on the back, and drawing the cheque accordingly, the drawer represents to the payee that he has actual authority from the bank to make a contract with the payee on the bank's behalf that it will honour the cheque on presentment for payment.
It was submitted on behalf of the accused that there is no need to imply a representation that the drawer's authority to bind the bank was actual and not merely ostensible, since ostensible authority alone would suffice to create a contract with the payee that was binding on the bank; and the drawer's possession of the cheque card and the cheque book with the bank's consent would be enough to constitute his ostensible authority. So, the submission goes, the only representation needed to give business efficacy to the transaction would be true. This argument stands the doctrine of ostensible authority on its head. What creates ostensible authority in a person who purports to enter into a contract as agent for a principal is a representation made to the other party that he has the actual authority of the principal for whom he claims to be acting to enter into the contract on that person's behalf. If (1) the other party has believed the representation and on the faith of that belief has acted upon it and (2) the person represented to be his principal has so conducted himself towards that other party as to be estopped from denying the truth of the representation, then, and only then, is he bound by the contract purportedly made on his behalf. The whole foundation of liability under the doctrine of ostensible authority is a representation, believed by the person to whom it is made, that the person claiming to contract as agent for a principal has the actual authority of the principal to enter into the contract on his behalf.
That is the representation that the drawer makes to the payee when he uses a cheque card to back a cheque which he draws in compliance with the conditions endorsed on the card. That in the instant case Mr. Cersell so understood it is implicit from the passages in his evidence to which my noble and learned friend Lord Edmund-Davies refers. Mr. Cersell may not have known the doctrine of ostensible authority under that name, but he knew what it was all about. He would not have taken the accused's cheques had he not believed that the accused was authorised by the bank to use the cheque card to back them.
My Lords,
On the 31st October 1972 the appellant opened a bank account at the Peckham Rye Branch of the National Westminster Bank. On the 23rd November the manager of that branch agreed to allow him to have an overdraft of £100 for one month, a facility which was later extended for a further month.
On the 19th December 1972 he was given a cheque card headed
"National Westminster Bank £30 for conditions see over."
and on its front with a space for the appellant's signature.
On the back was printed:—
"The issuing Banks undertake that any cheque not exceeding £30 will be honoured subject to the following conditions:
( a) The cheque must be signed in the presence of the payee
( b) The signature on the cheque must correspond with the specimen signature on this card
( c) The cheque must be drawn on a bank cheque form bearing the code number shown on this card
( d) The cheque must be drawn before the expiry date of this card
( e) The card number must be written on the reverse of the cheque by the payee."
These conditions are designed to secure that the cheque is drawn by the customer to whom the bank has given a cheque book and a cheque card. If they are complied with the recipient need not concern himself about the drawer's credit worthiness for he knows the cheque will be honoured on presentment.
On the 27th December a cheque drawn by the appellant was presented and returned unpaid. The next day the appellant was notified that he had exceeded his overdraft limit and on the 2nd January 1973 his overdraft rose to £248.00 due to the presentment that day of four cheques each for £30.00 drawn by the appellant with the use of his cheque card. The bank manager tried to get in touch with the appellant immediately and saw him that day. The bank manager knew that a cheque in favour of the appellant for £500 had been paid into a branch of the bank. Payment of that cheque was, however, stopped and it was not met until March.
When he saw the appellant the bank manager did not know, did not ask and was not told what other cheques had been drawn by the appellant and not presented. In fact the appellant had by the 2nd January drawn a further 14 cheques which had...
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Table of cases
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