ANZ Banking Group Ltd v East [1977] FJSC 47; Civil Action 080 of 1977 (31 August 1977)

Fiji Islands - ANZ Banking Goup Ltd v East - Pacific Law Materials

IN THE SUPREME COURT OF FIJI

CIVIL JURISDICTION

Action No. 80 of 1977

BETWEEN:

:

AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED
Plaintiff

AND:

DAVIDTON EAST
Defendant

Mr. G.P. Lala Lala for the Plaintiff
Mr. P Fright for the Defendant

JUDGMENT

In this action the plaintiff bank seeks to recover from the defendant a sum of $3,000 alleged to be own an overdraft requested byed by the defendant on his current account on or about the 18th December, 1975. The plaintiff bank claims that the overdraft was approved after it was discovered that a sum $3,000 out of a cheque for $3,400 drawn on the plaintiff's bank by the defendant had never been debited from the defendant's account. Out of that cheque only $400 was debited.

The plaintiff bank's case appears to be based on two alternative legal grounds,

(a) that the money in question was paid under a mistake of fact and is therefore recoverable; or

(b) that the money in question was money had and received by the defendant to his use and benefit and for which he is answerable to the plaintiff bank.

The defendant denies having requested the plaintiff bank for an overdraft as alleged. The defendant claims that as he has spent the money in question in ignorance of the error in his account the plaintiff bank is now estopped from obtaining a refunds of the money. The defendant says that as a result of the plaintiff bank's error be has overspent his funds in the account and has thereby altered his position to his detriment.

Apart from the issue pertaining to the alleged overdraft which has given rise to a certain conflict of evidence, the salient facts in this case are not disputed.

The defendant at all material times was a customer of the plaintiff bank with which he operated a current cheque account. On 18th December, 1974 a cheque (No. 662514) for $3,400was drawn by the defendant on the plaintiff's bank and payable to C.J. Patal & Co. Due to a clerical error on the part of the plaintiff bank only $400 out of that cheque was debited against the defendant's account. The defendant's account was therefore left it fund to the extent of $3,000. The error was not discovered until twelve months afterwards. On 18th December, 1975 the then manager of the plaintiff bank, John Garland (P.W 1) telephoned the defendant and advised him of the error. That was the first time the defendant found out about the error in his account. By then much of the money had been spent. On 15th January, 1976 the plaintiff bank debited sum of $3,000 against the defendant's account causing his account to be overdrawn in the sum of $2,389.11. The defendant ceased to operate his account on or about the 27th January, 1976 when the amount in debit in his account was $2,639.51.

According to John Garland (P.W.l) after he advised the defendant of the error, the defendant asked him to carry his account until May 1976. The witness said as the bank had made the error in the entry in the account and was at fault he readily agreed to accommodate the defendant with an unsecured overdraft for $3,000. The witness said afterwards despite repeated requests to the defendant to settle the overdraft the amount was remained unpaid.

The defendant in his evidence said although he had been receiving his bank statements he did not check each individual entry. According to him it was not his custom to do this as he would be only interested in the balance shown on his statements. He said he did not find out the error in his account until the bank manager informed him about it. He said between December 1974 and December 1975 he had spent the money on various things including part of the expenses of renovation to his house and the purchase of a small launch which was later sold for a bigger one. The defendant said he would not have spent the money in his Account over and above what he actually possessed if he had known the true position.

As regards the alleged overdraft the defendant said he recalled when the bank manager rang him about the error in his account, he told the manager he did not have that kind of money and that the bank would have to carry the account. The defendant said during their conversation he did not ask for an overdraft to be opened for him nor did he do so subsequently.

Although the question about the overdraft has dominated the bulk of evidence in this case, I think the matter is quit immaterial as to the liability or otherwise of the defendant to repay the amount said to be owing. This is because any finding relating to the overdraft could not in my opinion affect the legal relationship of the parties arising out of the error in the account. That is to say, the question of liability must be decided on events which occurred before the error was discovered. It will be noted that several months had elapsed before the plaintiff bank find out its error. The time element, is important because in law the defendant as a customer of the plaintiff bank was in the absence of any express agreement under no legal obligation to examine and verify the entries in his bank statements.

In the absence of any contrary evidence I think I am bound to accept the defendant's assertion that he was never aware of the error in his account until the plaintiff bank informed him about it on 18th Decanter, 1975. This was a year later. Moreover, I am bound to accept that for the period in question the defendant never checked the entries in his bank statements but only the balances shown thereon. I am satisfied the defendant would not have depleted his account to the extent he did if the state of his a bank balances had been correctly represented. Indeed I agree it may seems most strange that the defendant should never have discovered for himself the error in his account, especially as the amount involved was a relatively large one. However, I do not think it would be right or proper for this Court to draw any adverse inference against the defendant on that ground alone without some other and more tangible evidence tending to indicate that he was other than truthful in his assertion that at no time prior to the 8th December, 1975 did he ever become aware of the error in the relevant entry in his account. Indeed the general evidence seems to support his contention in this regard. It will be noted that at all material times the defendant had been operating a fairly busy bank account, the striking feature of which was the healthy credit balance which the defendant had continuously maintained after the clerical error has made. This may well have caused him to be complacent about the true state of his account over that period. In any event the onus is on the plaintiff bank to prove knowledge of the error on the part of the defendant soon after such an error was made. This the plaintiff bank has not been able to do. I am satisfied that on the evidence before this Court the defendant was truly under the impression, mistaken though it was, that his account with the plaintiff bank was better than it really was. I accept that the defendant was misled about the state of his account with the plaintiff bank, a fact which had directly caused him to overspend his funds in that account.

It seems to this Court that the law applicable in this case is contained in the case of Lloyd's Bank Ltd. v Brooks (1950) 6 L.D.A.P. 161 which indicates that:

(a) a bank has a duty to its customer to keep the account accurately and render accurate statements;

(b) where the bank has failed in that duty, and by each failure has induced the customer to act to his detriment by overspending, the bank cannot recover provided the customer is not at fault;

(c) if a customer knew, at the time the amount was credited to his account, that it was an overpayment he would not be allowed to retain the benefit of it.

Accepting the above as a correct statement of the law and bearing in mind the facts as I have found them I am of the opinion that the plaintiff bank in perpetrating the error in the defendant's account and in falling to rectify the error within a reasonable time has forfeited its right of recouping any moneys from the defendant as a result of the error in the account. Had the error been discovered shortly afterwards than there would have been no question whatever of the defendant escaping liability on the ground of detriment to his position. However, here the time gap before the error was discovered is so great that the plaintiff bank cannot now be heard to say it is not responsible for the defendant's overspending of his account with the plaintiff bank. The defendant's position has thereby altered to his detriment and consequently as a matter of law the plaintiff bank is now estopped from obtaining any refund of its money from the defendant.

With regard to the two alternative legal grounds upon which this action has been brought and to which reference was made early in this judgement, I can find no basis upon which either them may be applied to the circumstances of this case.

For the reason given the action brought by the plaintiff bank against the defendant must fail and is dismissed with costs.

T.U. Tuivaga
JUDGE

Suva,
31st August, 1977