Bank must pay damages for 'bouncing' cheque
LAW REPORT 4 January 1996
A person whose cheque was wrongly "bounced" by his bank was entitled to claim substantial damages for loss of business reputation without first having to prove actual damage, whether or not he was, or was known by the bank to be, a trader.
The Court of Appeal affirmed the assessment by Master Tennant, on 16 February 1994, of the damages payable by the defendant, Woolwich Building Society, in respect of its admitted liability for wrongful dishonour of a cheque drawn by the plaintiff, Udele Edirin Kpoharor.
The master awarded the plaintiff pounds 5,550 with interest as general damages for injury to his credit. Both the plaintiff's appeal, against the master's refusal to award him a much greater sum in special damages for resulting loss of profit, and the defendant's cross-appeal, against the award of anything other than nominal damages for loss of credit, were dismissed.
Daphne Loebl (Anthony Gold Lerman & Muirhead) for the plaintiff; Katherine McQuail (Woolwich Building Society) for the defendant.
Lord Justice Evans said the plaintiff was a Nigerian who had described himself as a self-employed "exporter/ importer" when opening his current account. On 9 September 1991 he drew a cheque for pounds 4,550 in favour of Phils (Wholesale) Ltd. The current balance was then about pounds 4,800. The cheque was presented for payment on 10 September at the payee's bankers with a request for special clearance. The defendant refused payment on the ground "Cheque reported lost". The defendant acknowledged the error later that day and gave the plaintiff a corporate cheque, which he took next morning to the payee, who then released a consignment of cosmetic goods which the plaintiff required for shipment to Nigeria.
The plaintiff claimed general damages for loss of business reputation and credit. He also claimed special damages amounting to pounds 57,185 in respect of a claim against him by the Nigerian company to whom the goods were to have been shipped, the loss due to selling the goods elsewhere at a loss, and various other losses of profit.
The defendant did not dispute the claim for loss of credit or business reputation, but said the amount should be nominal unless special facts were proved which had been made known to them when the contract was made. The plaintiff relied on a line of authority which held that actual damage need not be alleged or proved by "a trader". The defendant said it was unaware of this, and that for this reason alone the rule relied upon did not apply.
The rule as stated in Rolin v Steward (1854) 14 CB 595 at 607 made it necessary to consider in every case whether or not the plaintiff was a trader. But it was clear that history had changed the social factors which moulded the rule in the 19th century. It was not only tradesmen of whom it could be said that the refusal to meet his cheque was "so obviously injurious to his credit" that he should "recover, without allegation of special damage, reasonable compensation for the injury done to his credit" (see Wilson v United Counties Bank Ltd  AC 102, per Lord Birkenhead LC).
The credit rating of individuals was as important for their personal transactions, including mortgages and hire purchase as well as banking facilities, as it was for those who were engaged in trade, and it was notorious that central registers were now kept.
What was in effect a presumption of some damage now arose in every case; and in his Lordship's judgment the authorities did not, as a matter of law, prevent such a presumption of fact extending beyond the category of trader.
As for the special damages claim, the damages arising from the loss or late performance of his contract to sell and deliver the goods to Nigeria could not reasonably be supposed to have been in the contemplation of both parties when the contract was made, and such damages were accordingly too remote to be claimed under this head.
Lord Justice Waite and Sir John May agreed.
Paul Magrath, Barrister
- 1 Bill Clinton portrait features Monica Lewinsky reference, artist admits
- 2 Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
- 3 Pornhub turns masturbation into energy in bid to save the planet
- 4 Have sex with your iPad thanks to the new sex toy no-one asked for
- 5 Average penis size revealed: Scientists attempt to find what is 'normal' to reassure concerned men
Bill Clinton portrait features Monica Lewinsky reference, artist admits
Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
The 'sex selfie stick' lets you FaceTime the inside of a vagina
Kanye West gives guest lecture at Oxford University: 'If I, Kanye West, can remove my ego, I think there's hope for everyone'
'This is what Islam tells us to do': A rare glimpse inside a Saudi Arabian prison – where Isis terrorists are showered with perks and privileges
New theory could prove how life began and disprove God
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
This is what it's like to be dead, according to a guy who died for a bit
Ukip would cut billions from Scottish budget to fund English tax cuts
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
End of the licence fee: BBC to back radical overhaul of how it is funded
Negotiable: Recruitment Genius: Have you been doing a brilliant job in an admi...
£26,498 - £31,556: Surrey County Council: We are looking for an outgoing, conf...
£50000 - £60000 per annum: Recruitment Genius: Are you an innovative, senior H...
£20000 - £22000 per annum: Recruitment Genius: Our client, a very well respect...