Tidal Energy Ltd v Bank of Scotland Plc
Jurisdiction | England & Wales |
Judgment Date | 31 July 2014 |
Date | 31 July 2014 |
Court | Court of Appeal (Civil Division) |
Court of Appeal
Before Lord Dyson, Master of the Rolls, Lord Justice Tomlinson and Lord Justice Floyd
Banks made rapid transfers between accounts using the clearing houses automated payment system (CHAPS) by reference to the sort code, bank name and account number, but not the customer name, and the CHAPS transfer form had to be construed in accordance with that banking practice. Accordingly, a ban k was not liable to a customer for a payment made into an account at a different bank by reference to the sort code and account number entered on the transfer form by the customer but to a different payee from the one named on the form.
The Court of Appeal so held (Lord Justice Floyd dissenting), dismissing the appeal of the claimant, Tidal Energy Ltd, against the granting of summary judgment to the defendant, Bank of Scotland plc, (the sending bank) by Judge Havelock-Allan, QC, sitting as a judge of the Queen's Bench Division ([2013] Bus LR 1379), on the ground that a CHAPS transaction was complete when the receiving bank matched the account number and sort code on the CHAPS transfer form to one of its accounts and was expected to credit the account with the money paid by the sending bank. It followed that the cla imant was not entitled to have its account re-credited by the defendant with the sum paid to a payee different from the one named on the form.
Mr Guy Adams for the claimant; Mr Raymond Cox, QC and Mr Neil Levy for the defendant.
THE MASTER OF THE ROLLS said that the question was the proper construction of the CHAPS transfer form. In particular, did it authorise the sending bank to debit the claimant's account (i) only when the payment was made to an account matching all four "identifiers" (sort code, bank na me, account number and customer name), as the claimant argued, or (ii) only when the payment was made to the first three identifiers.
The critical question was whether the banking practice could be relied on to construe the transfer form. Subject to any contrary express terms, a customer who used CHAPS was taken to contract on the basis of the banking practice governing CHAPS transactions.
The clear and settled practice was that the receiving bank in a CHAPS transaction did not check the beneficiary's name for correspondence with other identifiers, for good commercial reasons. The CHAPS practice of clearing banks would have been reasonably...
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