Barclays Bank Ltd v WJ Simms: Difference between revisions

Barclays Bank Ltd v WJ Simms (view source)

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 ''Prima facie'', the bank is entitled to recover the money from the payee, unless the payee has [[Change of position|changed his position]] in good faith, or is deemed in law to have done so.
+Robert Goff J seemed rather relieved at this outcome, expressing his basic conviction that, to hell with the law, the right outcome was to give the bank back the money, and let the principals duke it out. This is the ''[[non nocere, nulla turpi]]''<ref>[[No harm, no foul]].</ref> principle:
+{{quote|If the bank had not failed to overlook its customer’s instructions, the cheque would have been returned by it marked “Orders not to pay,” and there would have followed a perfectly bona fide dispute between the association [... ''as to''] whether the association was entitled to stop the cheque — which ought to be the real dispute in the case. If the plaintiff bank had been unable to recover the money, [ ... ''it''] would have had no recourse to the association [... ''meaning''] a windfall for the preferred creditors of the defendant company at the plaintiff bank’s expense. As, however, I have held that the money is recoverable, the situation is as it should have been; nobody is harmed, and the true dispute between the association and the receiver can be resolved on its merits
 ===The JC says===
-There is a conundrum at the heart of this decision, in that it depends whether you regard it primarily one of [[agency]] or [[restitution]]. As the [[ostensible agent]] of the debtor, the bank’s performance of the contract ought to bind the principal the same way the direct action of the principal would.<ref>It is not just the [[JC]] that says this: So did Professor Roy Goode in the Law Quarterly Review: "The bank’s right to recover money paid on a stopped cheque" (1981) 97 LQR 254. </ref> But this puts the bank in an invidious position: it has discharged the customer’s debt, but in acting outside its mandate, so the customer is not obliged to reimburse it. But an agent should not become liable as principal. The better approach is to say ''the sum was not due'', so was not obliged to be paid. Therefore it was paid outside the terms of the contract, and resitutionary principles can apply.
+There is a conundrum at the heart of this decision, in that it depends whether you regard it primarily one of [[agency]] or [[restitution]]. As the [[ostensible agent]] of the debtor, the bank’s performance of the contract ought to bind the principal the same way the direct action of the principal would.<ref>It is not just the [[JC]] that says this: So did Professor Roy Goode in the Law Quarterly Review: "The bank’s right to recover money paid on a stopped cheque" (1981) 97 LQR 254. </ref> But this puts the bank in an invidious position: it has discharged the customer’s debt, but in acting outside its mandate, so the customer is not obliged to reimburse it. But an agent should not become liable as principal. The better approach is to say ''the sum was not due'', so was not obliged to be paid. Therefore it was paid outside the terms of the contract, and restitutionary principles can apply.
 This is all complex stuff and requires a bit of sitting on the lavatory and mulling over, especially given [[obiter]] statements in {{casenote|Lloyds Bank|Independent Insurance}} and I might well change my mind about this.