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

PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
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

HR Advisor - North London / North West London

£30000 - £35000 per annum + Benefits: Ashdown Group: HR Advisor - North London...

Finance Manager - Recruitment Business (Media & Entertainment)

£28000 - £32000 per annum + negotiable: Sauce Recruitment: We have an exciting...

HR Advisor - North London / North West London

£30000 - £35000 per annum + Benefits: Ashdown Group: HR Advisor - North London...

HR Advisor - North London / North West London

£30000 - £35000 per annum + Benefits: Ashdown Group: HR Advisor - North London...

Day In a Page

Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album
Hugh Bonneville & Peter James: 'Peter loves his classic cars; I've always pootled along fine with a Mini Metro. I think I lack his panache'

How We Met: Hugh Bonneville & Peter James

'Peter loves his classic cars; I've always pootled along fine with a Mini Metro. I think I lack his panache'
Bill Granger recipes: Our chef's heavenly crab dishes don't need hours of preparation

Bill Granger's heavenly crab recipes

Scared off by the strain of shelling a crab? Let a fishmonger do the hard work so you can focus on getting the flavours right
Radamel Falcao: How faith and love drive the Colombian to glory

Radamel Falcao: How faith and love drive the Colombian to glory

After a remarkable conversion from reckless defender to prolific striker, Monaco's ace says he wants to make his loan deal at Old Trafford permanent
Terry Venables: Premier League managers must not be allowed to dictate who plays and who does not play for England

Terry Venables column

Premier League managers must not be allowed to dictate who plays and who does not play for England
The Inside Word: Brendan Rodgers looks to the future while Roy Hodgson is ghost of seasons past

Michael Calvin's Inside Word

Brendan Rodgers looks to the future while Roy Hodgson is ghost of seasons past