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Lloyds Bank v Independent Insurance: Difference between revisions
Lloyds Bank v Independent Insurance (view source)
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Right. | Right. | ||
=== | ===Background=== | ||
LLoyds transferred money into Independent’s account at the Royal Bank of Scotland by mistake. Independent argued that LLoyds made the transfer on behalf of its customer WFL, with its authority, to discharge WFL’s debt that was due to Independent. | LLoyds transferred money into Independent’s account at the Royal Bank of Scotland by mistake. Independent argued that LLoyds made the transfer on behalf of its customer WFL, with its authority, to discharge WFL’s debt that was due to Independent. | ||
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Lloyds credited Kaffco’s cheque to WF’s new account, but marked it as “uncleared funds”, awaiting clearance from Kaffco’s bank. | Lloyds credited Kaffco’s cheque to WF’s new account, but marked it as “uncleared funds”, awaiting clearance from Kaffco’s bank. | ||
You’ll never guess what happened next.<ref>Not, if you have the same | You’ll never guess what happened next.<ref>Not, if you have the same acumen as the average distressed lender in the New York market, at any rate: about 12 of them [[Citigroup v Brigade Capital Management|testified in court]] that they could not imagine in a trillion years, such a thing happening.</ref> Lloyds only went and paid out the £168,000 before the third-party Kaffco cleared by mistake, didn’t it. | ||
Lloyds | And you’ll never guess what happened after that: the Kaffco cheque bounced. ''Whoops''. Lloyds put WF’s account into overdraft, but in the meantime, asked Independent for the money back. | ||
===Issues=== | |||
'''[[Actual authority]]''': Did Lloyds have ''actual'' authority to pay £162,387.90 to Independent? The Court of Appeal was unanimous: it ''did''. This puts this case on a different footing from both {{casenote|Barclays Bank|WJ Simm}}, where the bank explicitly did ''not'', and {{Casenote|Citigroup|Brigade Capital Management}}, where the bank had no instructions at all. | |||
'' | '''[[Ostensible authority]]''': If not, actual authority, did the bank have [[ostensible authority]]? This is a tricky area and Lord Justice Peter Gibson, realising he did not ''have to'' address this question, preferred not to. Discretion is the better part of valour, and all. | ||
'''[[Restitution]]''': If Lloyds had ''any'' kind of [[authority]], could it claim ''restitution'' of the mistaken payment? | |||