Reckitt and Colman Products Ltd (t/a Colmans of Norwich) v Borden Inc. and Others
| Jurisdiction | UK Non-devolved |
| Judge | Lord Bridge of Harwich,Lord Brandon of Oakbrook,Lord Oliver of Aylmerton,Lord Goff of Chieveley,Lord Jauncey of Tullichettle,Lord Atkin |
| Judgment Date | 08 February 1990 |
| Judgment citation (vLex) | [1990] UKHL J0208-1 |
| Court | House of Lords |
| Date | 08 February 1990 |
[1932] UKHL J0229-2
Viscount Dunedin.
Lord Warrington of Clyffe.
Lord Atkin.
Lord Thankerton.
Lord Macmillan.
House of Lords
After hearing Counsel, as well on Tuesday the 26th, Thursday the 28th, and Friday the 29th, days of January last, as on Monday, the 1st day of this instant February, upon the Petition and Appeal of Midland Bank, Limited, of 5, Thread-needle Street, in the City of London, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 24th of November 1930, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet: as also upon the Petition and Cross Appeal of Dame Julia Allen Reckitt of Little Green Lodge, Thurloe Place, London, S.W.7, Sir Philip Bealby Reckitt, Baronet, of Swanland Manor, North Ferriby, East Yorks, James Bryan Upton, of Coptfold Hall, Margaretting, Essex, and Leonard Henry West, of Quainton Cottage, Quainton, Bucks, praying, That the matter of the Order set forth in the Schedule thereto, namely, the said Order of His Majesty's Court of Appeal, of the 24th of November 1930, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be varied, or altered, and that the Petitioners might have the relief prayed for in the Cross Appeal, or such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet: as also upon the printed Case of Dame Julia Allen Reckitt, Sir Philip Bealby Reckitt, Baronet, James Bryan Upton and Leonard Henry West, and also upon the printed Case of Midland Bank, Limited, lodged in answer to the said Original and Cross Appeals respectively; and due consideration had this day of what was offered on either side in these Appeals:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal, complained of in the said Original and Cross Appeals be, and the same is hereby, Affirmed, and that the said Original and Cross Appeals be, and the same are hereby, dismissed this House: And it is further Ordered, That the Appellants in the Original Appeal do pay, or cause to be paid, to the Respondents in the Original Appeal, the costs incurred by them in respect of the said Original Appeal, and that the Appellants in the Cross Appeal do pay, or cause to be paid, to the Respondents in the Cross Appeal, the costs incurred by them in respect of the said Cross Appeal, the amount of the said costs incurred in respect of the said Original and Cross Appeals respectively to be certified by the Clerk of the Parliaments.
My Lords,
This case arises out of the fraudulent acts of Lord Terrington who, in 1922 and during the relevant period, was practising as a solicitor in Clarges Street in the name of H. J. S. Woodhouse and Co. He had as a client Sir Harold Reckitt, now deceased, whose legal representatives are the Respondents to the present appeal. Sir Harold Reckitt appears to have been a wealthy man in the habit of spending part of his time abroad. He employed Lord Terrington as his solicitor. In 1915 Sir Harold being engaged in Red Cross work in France gave Lord Terrington, then Mr. Woodhouse, a Power of Attorney in limited form which did not include a power to draw cheques on his account. It was considered desirable that Lord Terrington should possess this particular power; and it was given by a letter dated 17th August, 1915, written by Sir Harold to his bankers, Barclays Bank, at Hull, empowering Lord Terrington to draw cheques upon the account at Hull "without restriction." In 1922 the original form of Power of Attorney which had been renewed from time to time was superseded by an extended form which expressly gave power to the Attorney to draw cheques on the principal's banking account and to apply moneys for the purposes of the principal; but it does not appear that the general terms of the letter of 17th August, 1915, were in any way modified or that Barclays Bank were even informed of the extended Power of Attorney. The Power of Attorney of 1922 was renewed from time to time and was in force during all times relevant to this action. Lord Terrington to Sir Harold Reckitt's knowledge acted under the Power of Attorney at all times whether Sir Harold Reckitt was in the country or not. Both principal and attorney therefore drew upon Barclays account at Hull, a great number of cheques being drawn in the ordinary course by each of them. Lord Terrington drew cheques on cheque books supplied by Barclays Bank at the cost of the principal, signing the cheques on an impression made by a rubber stamp containing in the upper line "Harold G. Reckitt by" and on the lower line "his attorney" and placing his own signature between the lines: so that the completed signature on each cheque ran "Harold G. Reckitt by Terrington, his attorney."
In 1920, it was discovered that Lord Terrington had been in the habit of fraudulently drawing cheques for his own purposes on Sir Harold Reckitt's account. Twenty such cheques had been paid into Lord Terrington's account with the Appellant bank. In respect of fifteen of these cheques, amounting in all to £17,890, dated at different periods between 15th May, 1922, and 20th February, 1926, Sir Harold Reckitt brought the present action claiming the amount mentioned, as damages for the conversion of the cheques. The bank denying the conversion, relied upon s. 82 of the Bills of Exchange Act, 1882, alleging that the cheques were crossed cheques and that they had received payment of them for a customer in good faith and without negligence. As to two of the cheques they also said that they were holders in due course. Mr. Justice Rowlatt decided in favour of the bank on the issue of negligence: the Court of Appeal decided against the bank in respect of all the cheques except the first two: and gave judgment against the bank for £13,490. The bank appeal from the judgment of the Court of Appeal and the Respondents cross-appeal seeking to have judgment for the whole £17,890. For the purpose of determining the issues so raised, it is necessary to state the circumstances in which the cheques came into existence.
Since 1899, Lord Terrington and his predecessors had had a banking account with the Cornhill branch of the Appellant bank. In 1922. the first of the material years, Lord Terrington had two accounts, No. 1 and No. 2. They were both in the firm name, Lord Terrington being at this time the sole member of the firm. No. 1 account appears to have been used almost exclusively for meeting private expenditure: No. 2 seems to have been the business account. No. 1 account was, except for a short interval, always overdrawn. No. 2 account was throughout, except for a short interval, in credit. The net balance from time to time varied, at times being a credit, at others a debit. It is clear that the manager was never completely satisfied with the position of the account, It gave him "a certain amount of anxious care". The overdraft on No. 1 account was, at one time at any rate, considered by the bank not to be protected by the credit of No. 2. A solicitor's No. 2 account they thought was generally made up of clients' money: and though Lord Terrington gave them assurances as to this with which they said at the trial they were satisfied, it is obvious that the uneasiness never ceased. In January, 1923, acting it is said on legal advice, they took what they call an hypothecation form in which the customer charged any moneys standing in his name to the credit of any account with the repayment of the moneys owing on any account. How this increased their rights if the money was the customer's money, or gave them any rights if the money was client's money it is perhaps not necessary to discuss. A reference to some of the earlier communications between the bank and Lord Terrington will suffice. In January, 1922, the bank record that at an interview Lord Terrington arranged that he would keep his overdraft on the No. 1 account much smaller in the future and that they were to advise him in writing before the figures got large. On 17th February Lord Terrington is informed that No. 1 account stands overdrawn £1,129 which perhaps he would arrange to cover. On 24th February it is £1,274 and his kind attention would greatly oblige. On 4th April, 1922, at an interview the Bank pointed out that they did not care about No. 1 being consistently overdrawn against No. 2, "the reason being that it is commonly understood that a solicitor's No. 2 account is commonly made up of client's money. Lord Terrington did not agree to this but after some conversation said that he would place his No. 1 account in credit." On 9th May, 1922, the bank write that No. 1 was £1,905 overdrawn and would be kindly let them have a transfer from No. 2 to put No. 1 in credit. On 15th May, 1922, the bank write a stiff letter, "We would again draw your attention to the amounts of No. 1 account overdrawn £2,168 … As we mentioned to you recently our Head Office insist that these accounts should be kept in credit and we would ask you to be good enough to see that the present overdrafts are covered without delay and that the accounts are kept in credit in future." Nevertheless No. 1 account continued to be overdrawn and from time to time the net balance on both accounts was in debit. In January, 1923, as I have said they took an hypothecation form over No. 2 though with some doubts as to what their position would be in the event of bankruptcy. For the remainder of 1923 the account appears to have been...
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