Universal Guarantee Pty. Ltd. v. National Bank of Australasia Ltd.
| Published date | 01 January 1966 |
| DOI | http://doi.org/10.1111/j.1468-2230.1966.tb01101.x |
| Author | Maurice Megrah |
| Date | 01 January 1966 |
NOTES
OF
CASES
UNIVERSAL GUARANTEE
PTY.
LTD.
‘u.
NATIONAL BANK
OF
AUSTRALASIA
LTD.
TXIE facts of this
case
l
disclose
a
simple but ingenious fraud. The
plaintiffs’ employee, empowered with another to draw cheques on
the plaintiffs’ banking account with the defendant bank and respon-
sible for paying moneys into that account, each day extracted
cash
from the day’s credit and replaccd
it
by
a
cheque drawn in favour
of
a
fictitious payee, whose indorsement he wrote in blank and
guarantced.
On
the discovery of the defalcation the plaintiffs sued
the bank for breach of contract, asserting that the bank had failed
to inquire into the circumstances surrounding these cheques and
was
negligent in not observing discrepancies between the top and
duplicate copies of the paying-in slips, the latter having been altered
to facilitate the fraud.
On
this last point, it was held and upheld, on the basis of bank-
ing practice in New South Wales, that the bank was under no duty
to scrutinise the paying-in slips to ensure that there was
no
dis-
crepancy, though cashiers might be expected to notice any striking
and obvious difference; and, further, that there
was
no evidence
that the plaintiffs had suffcred loss in consequence of the alteration,
for the auditing system of the plaintiffs did not provide for examina-
tion of the duplicate credit slips after they had been receipted by
the bank.
As regards the first point, the Board took the view that
(‘
When the bank received the cheque
it
did not
‘
pay
’
it
to
anyone and
it
did not
It
made two
contra
entries in the same account
of
its customer.
In truth and in law nothing
was
paid out and nothing was
col-
lected
or
paid in.
In
the result thc debtor-creditor relationship
between the banker and its customer remained entirely unaf-
fected. In such circumstances any analysis
of
the obligations
of the bank
as
a
paying
or
collecting
’
bank is unrealistic and
entirely out of place,
as
is
any allegation of tortious neglect.
cc
The sole question, thercfore,
is
whether the bank had
failed in its contractual duty to its customer in the particular
circumstances of this most unusual
caw.”
collect
’
it
on behalf of anyone.
It
was held that it had not.
It
is permissible to wonder why the
usual
considerations should
not have been applied to this
case,
even though they would not
1
An
appeal
to the
Priv
Council
from
the Supreme Court
of
New
South
Walee,
reported
in
[lQGG]
1
Lfoyd’e
Rep.
625;
[lOOG]
2
All
E.R.
98.
72
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