Bank must pay damages for 'bouncing' cheque

LAW REPORT 4 January 1996

Kpoharor v Woolwich Building Society; Court of Appeal (Lord Justice Evans, Lord Justice Waite and Sir John May); 30 November 1995

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 [1920] 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

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs People

Ashdown Group: HR Manager - West London - £50,000

£40000 - £50000 per annum + bonus: Ashdown Group: HR Manager - West London - £...

Recruitment Genius: Recruitment & HR Administrator

£17000 - £18000 per annum: Recruitment Genius: This is an exciting opportunity...

Guru Careers: HR Manager / HR Business Partner

£55 - 65k (DOE) + Benefits: Guru Careers: A HR Manager / HR Business Partner i...

Recruitment Genius: Senior HR Assistant

£23000 - £25000 per annum: Recruitment Genius: The Company's vision is to be t...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test