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England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Tayeb v HSBC Bank Plc & Anor  EWHC 1529 (Comm) (05 July 2004)
Cite as:  1 CLC 866,  4 All ER 1024,  EWHC 1529 (Comm),  2 All ER (Comm) 880
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QUEENS BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| HOSNI TAYEB
|- and -
|(1) HSBC BANK PLC
(2) AL FOURSAN INTERNATIONAL COMPANY
Mr Jeremy Cousins QC and Mr Stephen Eyre (instructed by Messrs DG Solicitors) for the Defendant
Hearing dates: 21, 22, 26, 27 and 28 April 2004
Crown Copyright ©
Mr Justice Colman:
The CHAPS System
"CHAPS Sterling commenced operation as a same day value electronic sterling credit transfer system in 1984. CHAPS replaced Town Clearing whereby high value cheques drawn on a City of London branch of a participating bank and paid into a City of London branch of a participating bank would be cleared on the same day. In 1996 CHAPS Sterling converted to a real time gross settlement system. This means that payments clear during the day on which they are made, within a short period after the payer's bank issues the payment instruction, rather than by netting off against all other relevant payments at the end of the day."
"an irrevocable guaranteed unconditional sterling payment for settlement in real time across Members' settlement accounts at the Bank of England."
CHAPS settlement members are provided with special computer software known as gateways. The gateways handle all communications between participating banks and security. The gateways are linked to and accessible from the member's own internal computer system and they can communicate with the gateways of other participants over telecommunications links.
A critical feature of CHAPS is that every payment is settled across the payer's bank's and the payee's bank's accounts at the Bank of England before any payment notification is sent to the payee's bank. The sequence of events is as follows:
(1) The payer's bank initiates a payment instruction on its computer system.
(2) The payer's bank's computer system causes a settlement request to be sent to the Bank of England. This includes details of the payee's bank and account number.
(3) If there are sufficient funds in the payer's bank's account at the Bank of England, the payment is settled by the Bank of England by debiting the payer's bank's account and crediting the payee's bank's account.
(4) The Bank of England sends a confirmation of settlement to the payer's bank.
(5) On receipt of confirmation from the Bank of England, the payer's bank's gateway automatically sends a payment message to the payee's bank.
(6) On receipt of the payment message the payee's bank immediately transmits a logical acknowledgement ("LAK") to the payer's bank. This follows authentication, but at HSBC that did not occur automatically if the amount transferred was over £50,000.
(7) Mechanisms exist to ensure that inter-bank settlement can take place even where there is a temporary shortage of liquidity. However, in every case such settlement occurs before the payee's bank receives any notification of the payment.
"Mere receipt of funds by the beneficiary's bank is not enough to constitute payment. It is the beneficiary's bank's decision to accept those funds for the beneficiary's account which is vital. The bank may have good reasons for not making that decision. The payment order may not adequately identify the beneficiary, or the bank may wish to check that it has the beneficiary's authority to accept the payment, or the bank may be concerned that it will break the law by crediting the beneficiary's account, eg. where regulations prohibit credits being made to the accounts of certain foreign nationals. Until the beneficiary's bank reaches its decision to accept the funds for the beneficiary's account, it holds those funds as agent for the originator and not for the beneficiary. The funds constitute an unaccepted tender by the originator and not discharge of the underlying money obligation between the originator and the beneficiary. Of course, the beneficiary's bank must be aware that the funds have been transferred for the account of a particular beneficiary, if it is to accept them on that beneficiary's behalf. In Royal Products Ltd v. Midland Bank Ltd, it was held that a transfer of funds from a customer's account with one bank to its account with another was complete only when the funds were available to the other bank and it was notified for whose credit they were to be held."
" CHAPS CLEARING TIMETABLE
ITEMS FOR REPAIR SORTING CODES
By 12.00 Noon next business day. To be applied or returned to Payer Settlement Member, as soon as practicable but in any case no later than 12.00 Noon the next business day.
WRONGLY DELIVERED PAYMENTS
By 12.00 Noon next business day. To be applied or returned to Payer Settlement Member, as soon as practicable same day but in any case no later that 12.00 Noon the next business day.
WEEKLY RETURN OF NUMBER AND VALUE OF CHAPS PAYMENTS
(a) A Clearing is to take place on each business day in England and Wales for the electronic exchange of CHAPS payment messages between the CHAPS Settlement Members.
In normal operation CHAPS payments are settled in real time across settlement accounts, maintained by Members at the Bank of England. The operation of these accounts and the settlement account movements associated with CHAPS payments are governed by the Bank of England's Reference Manual and Mandate Agreement.
CONSTRUCTION OF RULES
(h) CHAPS Rules shall be construed in accordance with the laws and banking practices (including days of business) of England and Wales.
(2) CHAPS PAYMENTS
Payments to be included must:
(b) Be an irrevocable guaranteed unconditional sterling payment for settlement in real time across Members' settlement accounts at the Bank of England.
(d) Be time-stamped by the Payer Settlement Members' Gateway before the end of the Settlement Period, excepting contingency situations set out in the CHAPS Procedural Documentation.
(3) PAYMENTS EXCLUDED
(b) One which is conditional or requires the transaction to be completed by a deadline.
(c) One which seeks to impose on the Payee Settlement Member any private arrangement which a Payer Settlement Member may have negotiated with a customer.
(4) RESPONSIBILITIES OF A SETTLEMENT MEMBER
(a) Each Settlement Member must comply with CHAPS Rules.
(b) Although a Payee Settlement Member will endeavour to expedite all payments, no responsibility except that specifically stated in CHAPS Rules, will be accepted in respect of transactions in which some further action is dependent upon the time of day for the receipt of funds.
(c) By sending to the Payer Settlement member a LAK (Logical Acknowledgement) for a CHAPS payment the Payee Settlement Member agrees, after authentication verification:-
(i) In the case of payments addressed to one of its own offices, to give same day value to the Payee Customer.
(ii) In the case of payments addressed to another organisation, to give same day value to that organisation.
(7) REPAIR SORTING CODE NUMBER
Each Settlement Member must allocate a unique Sorting Code number to be known as the Repair Sorting Code Number.
(a) Payments received which cannot be applied due to:-
(i) Insufficient or incorrect Bank or beneficiary details
(ii) Authentication failure
(iii) Time stamping by the Payer Settlement Member's Gateway on normal payments after the close of business (or for any payment after the end of the Settlement Period).
(iv) The agreed constant 'SETT' being omitted (by the sending bank) from the after hours field of any payment message received after the first LNP message has been received.
should be returned to the Repair Sorting Code Number of the Payer Settlement Member as soon as practicable but in any case no later than 12.00 noon on the next business day, in which case there will be no interest penalty.
(b) Unapplied payments may also be returned by means other than CHAPS at any time, by mutual agreement, but no later than 12.00 noon on the business day following the original remittance.
(8) WRONGLY DELIVERED AND TRANSMITTED PAYMENTS
(a) Wrongly Delivered Payments
A wrongly delivered payment is one which cannot be applied at the office indicated by the Payee Sorting Code, or is addressed to a non-existent or invalid Sorting Code Number. Such payments must be redirected to the correct destination if within the same Settlement Member.
If by 4.00pm the Payer Settlement Member requests that the payment be returned then the Receiving Settlement Member should return the payment subject to having the full payment details as set out below.
If the Payer Settlement Member does not request the payment be returned until after 4.00pm then the Receiving Settlement Member will use best endeavours to return it that day.
In any event the Receiving Settlement Member will return the payment by 12noon the next day.
(b) Wrongly Transmitted Payments
A wrongly transmitted payment is one which incorporates valid payee details but is made in error (including where the payment has been duplicated) and has been applied to an account in accordance with the details given by the Payer Settlement Member. Nothing in these Rules requires the Receiving Settlement Member to return the payment until the Payer Settlement Member informs them of the problem together will all relevant information as specified below.
If before 4.00pm the Payer Settlement Member requests the payment be returned then the Receiving Settlement Member will return it that day, subject to receiving the correct payment information and gaining the authority of the account holder if appropriate.
In the event that a Receiving Settlement Member which has received a wrongly transmitted payment requires the permission of an account holder to return it, that Receiving Settlement Member shall use all reasonable endeavours to obtain such permission, providing that nothing in these Rules shall be taken to require or permit that Receiving Settlement Member to return that payment in the absence of any such permission from the account holder. The Receiving Settlement Member may, in the course of seeking such permission from the account holder, need to assure the account holder that such a payment has been received even though the account holder may not be able to identify the relevant credit.
(9) AUTHENTICATION FAILURES
The value of payments received by a Payee Settlement Member which do not contain valid Authentication Codes or valid Authentication Sequence Numbers must be returned to the Repair Sorting Code Number of the Payer Settlement Member as soon as practicable, but in any case no later than 12.00 Noon on the next business day in which case there will be no interest penalty.
All authentication failures within CHAPS must be handled according to the "Security Standards Code of Conduct".
i) The Rules are to be "construed in accordance with" the laws and banking practices of England and Wales. That does not indicate that express provisions of the Rules are to be displaced if they are inconsistent with banking practices, but are to be given that meaning within the range of their ordinary and natural meaning which is consistent with banking practices rather than that which is not.
ii) Payer banks remit funds on an irrevocable guaranteed unconditional basis, in sterling and for settlement in real time on the same day as between the accounts of CHAPS members at the Bank of England.
iii) The relationship between "payer bank and payee bank" is a self contained regime identified in the Rules and is not to be affected by private customer/bank transactions.
iv) By the sending of a LAK after authentication and verification the payee bank agrees with the payer bank to give same day value to the beneficiary.
v) The return of unapplied payments to the payer is provided for at Rule (7). Four instances are given. The deadline for returns is 12 noon on the next business day. As appears from the context unapplied payments are those which have not yet been credited to the account holder. A similar deadline applies under Rule 8(a) to wrongly delivered payments. These are also by definition unapplied.
vi) The only provision which deals with the return of applied payments is to be found at Rule (8)(b). It is to be observed that this Rule makes special provision for the need to obtain from the payee account holder authority for the return of payment, but it also expressly contemplates that in some cases such consent may be unnecessary. Those cases are not, however, identified. The requirement for the authority of a payee account holder for the return of funds is consistent only with the effect of such return being the discharge of a debt from the bank to the account holder at the time in question and inconsistent with the payee bank holding those funds as agent for the payor bank at the relevant time.
vii) Payments which fail authentication must be returned no later than 12 noon on the next business day.
viii) The deadline for the return of funds to the payer bank is in all cases 12 noon on the next business day.
93A (1) Subject to subsection (3) below, if a person enters into or is otherwise concerned in an arrangement whereby-
(a) the retention or control by or on behalf of another ("A") of A's proceeds of criminal conduct is facilitated (whether by concealment, removal from the jurisdiction , transfer to nominees or otherwise); or
(b) A's proceeds of criminal conduct-
(i) are used to secure that funds are placed at A's disposal; or
(ii) are used for A's benefit to acquire property by way of investment,
knowing or suspecting that A is a person who is or has been engaged in criminal conduct or has benefited from criminal conduct, he is guilty of an offence.
(2) In this section, references to any person's proceeds of criminal conduct include a reference to any property which in whole or in part directly or indirectly represented in his hands his proceeds of criminal conduct.
(3) Where a person discloses to a constable a suspicion or belief that any funds or investments are derived from or used in connection with criminal conduct or discloses to a constable any matter on which such a suspicion or belief is based-
(a) the disclosure shall not be treated as a breach of any restriction upon the disclosure of information imposed by statute or otherwise; and
(b) if he does any act in contravention of subsection (1) above and the disclosure relates to the arrangement concerned, he does not commit an offence under this section if-
(i) the disclosure is made before he does the act concerned and the act is done with the consent of the constable; or
(ii) the disclosure is made after he does the act, but is made on his initiative and as soon as it is reasonable for him to make it.
(4) In proceedings against a person for an offence under this section, it is a defence to prove-
(a) that he did not know or suspect that the arrangement related to any person's proceeds of criminal conduct; or
(b) that he did not know or suspect that by the arrangement the retention or control by or on behalf of A of any property was facilitated or, as the case may be, that by the arrangement any property was used, as mentioned in subsection (1) above; or
(i) he intended to disclose to a constable such a suspicion, belief or matter as is mentioned in subsection (3) above in relation to the arrangement; but
(ii) there is reasonable excuse for his failure to make disclosure in accordance with subsection (3)(b) above.
(5) In the case of a person who was in employment at the relevant time, subsections (3) and (4) above shall have effect in relation to disclosures, and intended disclosures, to the appropriate person in accordance with the procedure established by his employer for the making of such disclosures as they have effect in relation to disclosures, and intended disclosures, to a constable.
93B (1) A person is guilty of an offence if, knowing that any property is, or in whole or in part directly or indirectly represents, another person's proceeds of criminal conduct, he acquires or uses that property or his possession of it."
A defence similar to that provided for under Section 93A (4) and (5) applies by Section 93B (5) and (6) to an offence under S.93 (B)(1).
Section 93C provides:
"93C (1) A person is guilty of an offence if he
(a) conceals or disguises any property which is, or in whole or in part directly or indirectly represents, his proceeds of criminal conduct; or
(b) converts or transfers that property or removes it from the jurisdiction,
for the purpose of avoiding prosecution for an offence to which this Part of this Act applies or the making or enforcement in his case of a confiscation order.
(2) A person is guilty of an offence if, knowing or having reasonable grounds to suspect that any property is, or in whole or in part directly or indirectly represents, another person's proceeds of criminal conduct, he
(a) conceals or disguises that property; or
(b) converts or transfers that property or removes it from the jurisdiction,
for the purpose of assisting any person to avoid prosecution for an offence to which this Part of this Act applies or the making or enforcement in his case of a confiscation order.
(3) In subsections (1) and (2) above, the references to concealing or disguising any property include references to concealing or disguising its nature, source, location, disposition, movement or ownership or any rights with respect to it."
"Banks and Building Societies
1.13 All banks and building societies, as providers of a wide range of money transmission and lending services, are vulnerable to being used in the layering and integration stages of money laundering as well as the placement stage. Electronic funds transfer systems increase the vulnerability by enabling the cash deposits to be switched rapidly between accounts in different names and different jurisdictions. Mortgage and other loan accounts are often used as part of this process to create complex layers of transactions.
1.14 Some banks and building societies will additionally be susceptible to the attention of the more sophisticated criminal organisations and their "professional money launderers". Such organisations, possibly under the disguise of front companies and nominees, will create large scale but false international trading activities in order to move their illicit monies from one country to another. They will create the illusion of international trade using false/inflated invoices to generate apparently legitimate international trade wire transfers, and will use falsified/bogus letters of credit to confuse the trail further. Many of the front companies may even approach their bankers for credit to fund the business activity. Banks and building societies offering international trade services should be on their guard for laundering by these means.
6.2 Where there is a business relationship, a suspicious transaction will often be one which is inconsistent with a customer's known, legitimate business or personal activities or with the normal business for that type of account. Therefore, the first key to recognition is knowing enough about the customer and the customer's business to recognise that a transaction, or series of transactions, is unusual.
6.3 Questions that a financial institution might consider when determining whether an established customer's transaction might be suspicious are:
- is the size of the transaction consistent with the normal activities of the customer?
- is the transaction rational in the context of the customer's business or personal activities?
- has the pattern of transactions conducted by the customer changed?
- where the transaction is international in nature, does the customer have any obvious reason for conducting business with the other country involved?
Reporting of Suspicious Transactions
6.6 There is a statutory obligation on all staff to report suspicions of money laundering. Regulation 14 contains the provision to report to the "Appropriate Person" (for the purposes of these Guidance Notes called the Money Laundering Reporting Officer (MLRO)) in accordance with internal procedures.
6.7 All financial businesses have a clear obligation to ensure:
- that each relevant employee knows to which person he or she should report suspicions; and
- that there is a clear reporting chain under which those suspicions will be passed without delay to the Reporting Officer.
Once an employee has reported his/her suspicion to the "appropriate person", s/he has fully satisfied the statutory obligation.
National Reporting Point for Disclosures
6.20 The national reception point for disclosure of suspicions is the Economic Crime Unit of the National Criminal Intelligence Service (NCIS).
6.21 The Economic Crime Unit is staffed by police and customs officers and its postal address is PO Box 8000, London SE11 5EN. The unit can be contacted during office hours on: 020 7238 8607. Outside office hours an answer phone operates on that number. Urgent disclosures can be transmitted by fax on 020 7238 8286.
Termination of a Business Relationship Following a Disclosure
6.27 The NCIS "consent" to undertake the transaction following a disclosure is provided to the reporting institution as a defence against a charge of assisting a money launderer. It is not intended to over-ride normal commercial judgment, and a financial sector business is not committed to continuing the relationship with the customer if such action would place the reporting institution at commercial risk. However, it is recommended that before terminating a relationship in these circumstances, the reporting institution should liaise with NCIS or the investigating officer to ensure that the termination does not "tip-off" the customer or prejudice the investigation in any other way.
"The bank was, however, in a genuinely difficult situation. There was a dilemma as to what it should do. The mistake it made was not to recognize that there was no point in obtaining relief against A Ltd. It was reasonable to try to anticipate the proceedings which could be expected if it refused to honour instructions of A Ltd as to the moneys which stood to its credit in its accounts. However the appropriate defendant to any application for directions was not A Ltd but the SFO. The question of the information which could properly be disclosed should have been capable of being resolved between the SFO and the bank, but if they could not reach agreement, then the court, would have to resolve the dispute. The hearing could have been held in private and there would have been no question of A Ltd having to be served since it would not have been a party. If it was necessary for any order to be made, in proceedings against the SFO, then the appropriate order would have been an interim declaration under CPR r 25.1(1)(b). The declaration could set out what information it would be proper for the bank to reply on. In determining the terms of any declaration which could be granted, the court would pay most careful attention to the views of the SFO as to what would or would not prejudice the SFO's investigation. With the assistance of the court, in the great majority of cases there is unlikely to be any difficulty in determining the terms of an interim declaration. The life of the interim declaration would probably be short since in the majority of cases it will only be necessary to conceal the existence of the investigations for a fairly limited period."
" from a practical banking point of view, a Bank in making its decision to accept or return a credit for its customer's account would not be conscious of the timing of the LAK. The Bank has received a CHAPS payment and is suspicious about the source of the underlying funds. The Bank would take the same course of action in returning the funds no matter how the funds have been received and it is therefore immaterial that the funds in question were received through CHAPS."
" whilst I do not wish to comment on the substance of the CHAPS Rules, for the reasons set out above I believe that a bank has every right to reject a CHAPS payment should it have grounds to do so, as it would have with any payment received through another channel. Whilst a bank would have to adhere to the criteria of the Banker and Customer Relationship, abide by the CHAPS Rules and meet its obligations under the law, in the case under review the Money Laundering Regulations, first and foremost in the environment pertaining at the time of transaction under dispute the branch would have been conscious of the fraud and money laundering threat and the need to make a decision based on good banking practice and implement any such decision promptly."
" . from a practical banking point of view, 'same day value' means that once a CHAPS payment has been unconditionally credited to a customer's account, the customer can access the funds instantly. It is for this reason that bankers have to have procedures in place (see paragraph 11.3 above re HSBC's procedures for CHAPS payments in excess of £50,000) to ensure that funds transferred electronically and that may be considered tainted are identified and the appropriate action taken before they are unconditionally credited to the customer's account."
"He is required to act honestly; but what is required of an honest person in these circumstances? An honest person knows there is doubt. What does honesty require him to do?
The only answer to these questions lies in keeping in mind that honesty is an objective standard. The individual is expected to attain the standard which would be observed by an honest person placed in those circumstances. It is impossible to be more specific. Knox J. captured the flavour of this, in a case with a commercial setting, when he referred to a person who is "guilty of commercially unacceptable conduct in the particular context involved:" see Cowan de Groot Properties Ltd v. Eagle Trust Plc  4 All ER 700, 761. Acting in reckless disregard of others' rights or possible rights can be a tell-tale sign of dishonesty. An honest person would have regard to the circumstances known to him, including the nature and importance of the proposed transaction, the nature and importance of his role, the ordinary course of business, the degree of doubt, the practicability of the trustee or the third party proceeding otherwise and seriousness of the adverse consequences to the beneficiaries. The circumstances will dictate which one or more of the possible courses should be taken by an honest person. He might, for instance, flatly decline to become involved. He might ask further questions. He might seek advice, or insist on further advice being obtained. He might advise the trustee of the risks but then proceed with his role in the transaction. He might do many things. Ultimately, in most cases, an honest person should have little difficulty in knowing whether a proposed transaction, or his participation in it, would offend the normally accepted standards of honest conduct.
Likewise, when called upon to decide whether a person was acting honestly, a court will look at all the circumstances known to the third party at the time. The court will also have regard to personal attributes of the third party, such as his experience and intelligence, and the reason why he acted as he did."
"The observation that "for the most part dishonesty is to be equated with conscious impropriety" must involve that the person alleged to have assisted the breach of trust must be shown to have had, at the time when he provided the assistance, actual knowledge of facts which amount to a breach of trust or which suggest that a breach of trust has been or is to be committed. If the accessory knows facts which fall short of constituting a breach of trust, but which lead him to believe that other facts exist which do amount to an actual breach of trust or will involve a future breach, although he cannot be certain that those facts exist, he will be judged to have been acting dishonestly if he renders assistance when in all the circumstances an honest man, having that knowledge, would not have done so, either at all or without making further enquiry or taking some other steps to satisfy himself that there was no breach of trust."
"Nevertheless we are inclined to the view that it was open to the bank to seek directions on the footing that it was at least a putative fiduciary. If A Ltd had been the recipient of funds which were the proceeds of fraud (something which is not now contended for) and if the bank had such strong grounds for doubting its customer's honesty that it would itself have been dishonest to turn a blind eye to its doubts, then there was a clear risk of the bank incurring liability in equity as an accessory to breach of trust. A bank placed in that dilemma ought to be able to invoke equity's assistance. The fact that the bank was not formally constituted as a trustee and that a tracing process would attach not to any assets of the bank but to the chose in action representing the bank's obligation to its customer, ought not to be an insuperable obstacle. (The terms of Neuberger J's order, requiring the credit balance to be treated as if it had been paid into court, may provide a technique for surmounting the obstacle, although we would not wish to encourage that sort of technical expedient).
However we do not find it necessary to express a final view on these points, which were not fully explored in argument, since with the development of the court's powers to grant declaratory relief in appropriate cases it is no longer necessary for the bank to establish the status of a trustee in order to obtain relief."
and concluded his judgment with these words at page 768:
"The use of the court's power to grant interim declarations in proceedings involving the SFO will protect a bank from criminal proceedings but it will not automatically provide protection for the bank against actions by customers or third parties. However it seems almost inconceivable that a bank which takes the initiative in seeking the court's guidance should subsequently be held to have acted dishonestly so as to incur accessory liability. The involvement of the court should however enable, in the great majority of cases, a practical solution to be determined which protects the interests of the public but allows the interests of a bank to be safeguarded."
"What, then, are the legal implications of those instructions? How are they to be regarded, as a matter of law? In my judgment they are to be regarded simply as an authority and instruction, from customer to its bank, to transfer an amount standing to the credit of that customer with that bank to the credit of its account with another bank that other bank being impliedly authorised by the customer to accept that credit by virtue of the fact that the customer has a current account with it, no consent to the receipt of the credit being expected from or required of that other bank, by virtue of the same fact. It is, in other words, a banking operation, of a kind which is often carried out internally, that is to say, within the same bank or between two branches of the same bank and which, at least from the point of view of the customer, is no different in nature or quality when, as in the present case, it is carried out between two different banks."
and at page 201
"The substance of Royal Products' contentions, through Mr. Tugendhat, as I understand them, is that the instructions were not carried out until BICAL had been "paid" and that in law payment is never complete until the payee has consented to the receipt of the payment or is estopped in one way or another from repudiating his consent. It may very well be in the ordinary course that that contention is correct, when one person instructs another to make payment to a third person. But this is not such a case. In the absence of special circumstances which may introduce expressly or by implication special conditions, I cannot see the necessity, either in practice or in law, for the consent of a bank to be obtained before it is to be treated as having received, in one way or another, money or credit which it in turn is to credit to the current account of one of its customers."
"The physical or ministerial aspect of payment involves the delivery of money by one person to another. Where the two persons meet together face to face and the debtor seeks to hand to the creditor legal tender the physical act of delivery (in the absence of some misrepresentation or mistake) will not be achieved without the concurrence of the debtor [sic] [creditor]. Where the relevant contract or terms of the debt requires payment to be made in a particular way, as for example by payment into an identified branch of a named bank, the payment will be effected by payment into that account. Prior authority has been given to discharge the debt or other obligation in that way: the debtor [sic] has authorised the bank (or other relevant person) to receive and accept the money on his behalf. No further act of concurrence or assent is required from the debtor [sic]. The creditor [sic] discharges his obligation by making the contractual payment in the contractually stipulated manner."
"The issue is whether or not a completed payment had been made by the defendants to the plaintiffs on June 26. This is a question of law. If the answer is "Yes," it is not contested that the plaintiffs have a good cause of action. If there were no authorities on this point, I think that the reaction, both of a lawyer and a banker, would be to answer this question in the affirmative. I think that both would say two things. First, that in such circumstances a payment has been made if the payee's account is credited with the payment at the close of business on the value date, at any rate if it was credited intentionally and in good faith and not by error or fraud. Secondly, I think that they would say that if a payment requires to be made on a certain day by debiting a payor customer's account and crediting a payee customer's account, then the position at the end of that day in fact and in law must be that this has either happened or not happened, but that the position cannot be left in the air. In my view both these propositions are correct in law."
The Claim based on Breach of Contract
"There will be circumstances in which a court may intervene to prevent unjust enrichment either by the customer in having his money from the bank as well as having the claim of his creditor met, or by the creditor who has double payment of the debt. The onus is in my judgment on the bank to establish the unjust enrichment on the evidence. In this case not only is there no evidence of authorisation or ratification of the payment to the third party by the customer but there is no evidence of unjust enrichment by the customer. In the absence of authorisation or ratification of the payment, the bank must in my judgment meet this claim and recoup the sum paid, if they can, from the third party to which it was paid."