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You are here: BAILII >> Databases >> The Judicial Committee of the Privy Council Decisions >> Dextra Bank & Trust Company Ltd v. Bank of Jamaica (Jamaica) [2001] UKPC 50 (26 November 2001) URL: https://www.bailii.org/uk/cases/UKPC/2001/50.html Cite as: [2001] UKPC 50, [2002] 1 All ER (Comm) 193 |
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Mr Justice Collins
Dextra Bank & Trust Company Limited Appellant
v.
Bank of Jamaica Respondent
FROM
THE COURT OF APPEAL OF JAMAICA
COMMITTEE OF THE PRIVY COUNCIL,
------------------
Present at the hearing:-
Lord Bingham of Cornhill
Lord Goff of Chieveley
Lord Hobhouse of Woodborough
Sir Martin Nourse
Sir Patrick Russell
[Delivered by Lord Bingham of Cornhill
and Lord Goff of Chieveley]
------------------
"I suggest you show this letter to the Bank of Jamaica and if they have any further problems with the document let them call us direct to discuss them as going through you as intermediary is a waste of time."
He then gave Wildish instructions as to the signing of the promissory note:
"A resolution of the board will be required … you must therefore get from the bank a certified copy of the resolution unless Mr Beckford, who I assume has the authority, tells you it is not necessary … if not this is going to cause delay … we must be sure that the note is properly authorised and signed."
The BOJ knew nothing of any proposed loan or promissory note. No contact had been made with anyone acting on its behalf or with its authority.
"… the undisputed fact is that certain of those cheques made payable to fictitious persons were lodged to the credit of Le Par Ltd in the account at the New Kingston branch of the Eagle Commercial Bank. Phillips and Wildish were the signatories to and operators of that account. Certain other cheques used in purchasing the Dextra cheque were lodged to the Troy McGill account. The lodgment slips were signed by Phillips or Wildish in each case".
"All payments for purchases by the Agent must be by way of cheques drawn in the name of the Vendor. Payment may only be made to the Vendor against immediate delivery of the cash items or effects to the Agent."
Dextra's claim in conversion
"(1) Every contract on a bill, whether it be the drawer's, the acceptor's, or an indorser's, is incomplete and revocable, until delivery of the instrument in order to give effect thereto.
Provided that where an acceptance is written on a bill, and the drawee gives notice to or according to the directions of the person entitled to the bill that he has accepted it, the acceptance then becomes complete and irrevocable.
(2) As between immediate parties, and as regards a remote party other than a holder in due course, the delivery in order to be effectual –
(a) must be made either by or under the authority of the party drawing, accepting, or indorsing, as the case may be;
(b) may be shown to have been conditional or for a special purpose only, and not for the purpose of transferring the property in the bill.
But if the bill be in the hands of a holder in due course a valid delivery of the bill by all parties prior to him so as to make them liable to him is conclusively presumed.
(3) Where a bill is no longer in the possession of a party who has signed it as drawer, acceptor, or indorser, a valid and unconditional delivery by him is presumed until the contrary is proved."
Subsection (1) lays down the cardinal rule that title to a bill passes on delivery. This reflects the commercial reality that cheques are treated as the equivalent of cash. "Delivery" is defined in section 2 of the Act to mean "transfer of possession, actual or constructive, from one person to another". There is no question of constructive possession here, since the BOJ acquired actual possession. Section 2 makes plain that a cheque is issued when it is first delivered, complete in form, to a person who takes it as a holder. "Holder" is defined to mean "the payee or indorsee of a bill or note who is in possession of it".
Dextra's Restitutionary Claim
Mistake of Fact
"The reason is that restitution for mistake rests on the fact that the plaintiff's judgment was vitiated in the matter of the transfer of wealth to the defendant. A mistake as to the future, a misprediction, does not show that the plaintiff's judgment was vitiated, only that as things turned out it was incorrectly exercised. A prediction is an exercise of judgment. To act on the basis of a prediction is to accept the risk of disappointment. If you then complain of having been mistaken you are merely asking to be relieved of a risk knowingly run …
The safe course for one who does not want to bear the risk of disappointment which is inherent in predictions is to communicate with the recipient of the benefit in advance of finally committing it to him. He can then qualify his intent to give by imposing conditions, or sometimes by making a trust ..."
Here, unfortunately, Dextra failed to communicate directly with the BOJ to make sure that the BOJ understood that the money was being offered as a loan. Instead, it left the communication of this vital matter to its agent, Phillips. Dextra's misplaced reliance on Phillips led it to assume that a loan would result; and this prediction proved to be mistaken. But a misprediction does not, in their Lordships' opinion, provide the basis for a claim to recover money as having been paid under a mistake of fact.
Change of Position
Anticipatory Reliance
"At present I do not wish to state the principle any less broadly than this: that the defence [of change of position] is available to a person whose position has so changed that it would be inequitable in all the circumstances to require him to make restitution, or alternatively to make restitution in full."
Their Lordships add that, although the actual decision in that case does not provide any precise guidance on the question now under consideration, since it was based upon the peculiar nature of gaming transactions, nevertheless the Appellate Committee in that case appears to have adopted a broad approach based on practical justice, and to have avoided technicality: see in particular [1991] 2 AC at pp. 581-583, per Lord Goff of Chieveley.
"In my judgment in circumstances such as these the bank is not entitled to rely upon the underlying validity of the transaction either in support of a plea of estoppel or in support of a defence of change of position. That is because the transaction is ultra vires and void. It is for that reason that in a case of this kind, save perhaps in exceptional circumstances, the defence of change of position is in principle confined to changes which take place after receipt of the money. Otherwise the bank would in effect be relying upon the supposed validity of a void transaction … It does not however follow that the defence of change of position can never succeed where the alleged change occurs before receipt of the money …"
It follows that the exclusion of anticipatory reliance in that case depended on the exceptional facts of the case; though it is right to record that the decision of Clarke J has been the subject of criticism - see, eg, Goff and Jones, Law of Restitution, 5th ed, 823-4.
The relevance of fault to the defence of change of position
"Change of circumstances may be a defense or a partial defense if the conduct of the recipient was not tortious and he was no more at fault for his receipt, retention or dealing with the subject matter than was the claimant."
The Restatement of Restitution is a remarkable work, of which the Reporters were two much respected jurists, Professor Warren A Seavey and Professor Austin W Scott. It was however a pioneering work, and much water has flowed under the bridge since its publication in 1937. In particular another much respected American expert in the law of restitution, Professor J P Dawson, was later to express his regret at the inclusion in paragraph 142(2) of the provision relating to relative fault: see (1981) 61 Boston U L Review 565, 571 et seq., referred to by Professor Birks at page 41 of his account of Change of Position and Surviving Enrichment in The Limits of Restitutionary Claims: A Comparative Analysis, ed. by William Swadling. Professor Dawson's comment on the relevant part of paragraph 142(2) of the Restatement is as follows:-
"The introduction of these complex themes would have been, I believe, a real disservice. Fortunately they have been disregarded in court decisions."
Bona fide purchase
Conclusion