(1988)1988 May 13 (A LOIZOU Ρ DEMETRIADES KOURRISJJ ) C ΤC CONSULTANTS LTD, Appellants-Plaintiffs ν GRINDLAYS BANKLTD Responden ts-Defendants And by amendment pursuant to theOrder of the Court dated 22 5 84 C ΤC CONSULTANTS LTD , Appellants-Plaintiffs, 1 GRINDLAYS BANK LTD, 2 CYPRUSTRANSPORT CO LTD, Respondents-Defendan ts (CivilAppealsNos 7159and7161) Banking—Negligence of banker—Crediting cheque to wrong account— Prerequisites for establishing negligence Contracts—Quasi contract—Money hadandreceived andmoney paid by mistake 5 Civil Procedure—Joinder of parties—Joinder of causes of action— Banker crediting cheque in wrong account—Action for negligence against banker andaction forthe returnof the money against owner ofsuch account Respondents 2 aregenerallyknownas «CΤC LTD » The Grain Commission issuedacrossedcheque inrespectofmoneyduebythem to the appellants, but instead of making it payable to « C T C Consultants Ltd ,»theymadeitpayabletoCΤC.Ltd 294 10 1 C.L.R. C.T.C Consultantsv. GtindlaysBank The appellants without indorsing it sent the cheque to be deposited with their bankers respondents 1 The cashier of respondents 1credited the cheque totheaccountof respondents 2 5 When the mistake was discovered, the appellants filed anaction against both respondents Thecause of actionagainst respondents1 was negligence, whereas that against respondents 2 was unjust enrichment The tnal Court dismissed the action as against respondents 1,but gave judgment for the plaintiffs against respondents 2 10 15 20 25 As aresult two appeals were filed, oneby the plaintiffs andone by respondents2 Thetwo appeals were heard together Held, dismissing both appeals
(1)In the circumstances of the present case, therewas nothingtosuggestthatwhen thecheque was being paid in the Bank it could arouse a query in the mind of the cashier or ought to arouse any (A passage relating to «negligence» from Law and Practice Relating to Banking by FΕ Perry cited with approval) The tnal Court nghtly concluded that the plaintiffs failed to establish negligence onthe part of the Bank
(2)The amount of the cheque was money had and received and money paid torespondents2by mistake Theappellantsas plaintiffs established that the defendants themselves actually received the money in such circumstances that there is created pnvity between them
(3)In the circumstances the appellants as plaintiffs rightly joined the two respondents and thetwo causes of action inone Appeals dismissed Appellant to pay the costsof respondent 1 No orderas to costs as between appellants and respondents 1 30 35 Appeals. Appeals by plaintiffs and defendants 2 against the judgment of the DistrictCourt of Nicosia (Laoutas, S.D.J.) dated the 3rd April, 1986 (Action No. 2116/81) whereby the plaintiffs' action for damages for negligence against defendants 1 was dismissed and defendants No. 2 were ordered to pay to the plaintiffs the sum of £838.068 paid by mistake to such defendants No. 2. Ch. iendes, for the appellants X Clendes for respondents No 1 295 C.T.C.Consultants v. Grindlaye Bank
(1988)Μ Chnstophides for respondents No 2 Cur adv vult A LOIZOUP cjave the followingjudgment of theCourt These two appealshavebeen heardtogether,asCivilAppealNo 7161, couldin factbe descnbed ascross-appeal 5 The Company, C Τ C Consultants Ltd the appellants in Civil Appeal No 7159, instituted before the District Court of Nicosia proceedings against the two respondents respondentNo 1 being Gnndlays Bank Ltd , and respondent No 2 being the Cyprus Transport Co Ltd ,claiming the amount of £838 068 mils which 10 represented the amount of a crossed cheque issued by the Grain Commission for their benefit in payment of money due to them but issued in the name of «CΤ C Ltd» which is the name with which respondents No 2 are generally known The appellants, though they noticed that the said cheque did 15 not bear thefull name of theircompany, thoughtitunnecessary to have itcorrected andsent itasitwas with afemale employee tothe office of respondent No 1tobe deposited intotheirown account There, the lodgment form was filled in by the cashier of the Bank to the credit of «CΤ C Ltd» Respondents No 2 had also at that 20 time a bank account and that cheque was deposited m their account and they were credited with the aforesaid amount Some two years later this mistake was discovered as respondents No 2 did not have to receive any amount from the Grain Commission, the person entitled to itbeing the appellants 25 After an exchange of letters thecase reached the DistrictCourtof Nicosia which had to decide (a)whether respondents No 1were negligent in the discharge of their duties as bankers towards the appellants and (b) whether there had been undue enrichmentof respondents No 2 and, therefore they had torefund the amount 30 in question to the rightful owners, the appellants The learned trial Judge after examining the evidence, mainly documentary, as respondents No 2 adduced no evidence, concluded that no negligence had been proved against respondents No 1 and dismissed the action against them with no 35 orderas tocosts and§evejudgment against respondents No 2 for the amount of the cheque with legal interest and costs On appeal today before us learned counsel for the appellants argued that negligence had been established and that the 296 1 C.L.R. C.T.C.Consultants v.Grindlays Bank A. LoUou P. conclusion of thelearned trialJudge waserroneouson thispoint. On the other hand, counsel for respondents No.
- the appellants inappealNo.7161,inarguingontheappealagainsttheBankand further in arguing their appeal against the judgment of the trial 5 judge, contended in fact that there is no nexus between respondentsNo.2andtheappellantsand iftherewasanyissue for determination, thatisbetween themselvesandrespondentsNo.
- As regards the question of negligence we have come to the conclusion that on the evidence before the learned Judge, the 10 result arrived at by him was dulyjustified as there was nothing in theevidence tosuggest thattheattention ofthecashierwasdrawn or could be drawn to the effect that C.T.C. Ltd. were not respondents No.2butinstead they wereC.T.C. Consultants Ltd., the appellants. In fact the cheque itself had not even been signed 15 by the said appellants so that a discrepancy between their signature at the back of the cheque and the name of the payee on the cheque would arouse the cashier toproceed and carryout an examination any further than merely have the lodgement form prepared tothe credit of C.T.C. Ltd. 20 We have been referred to a passage from the Law &Practice Relating toBanking byF.E.Perry, Fourth Edition at p.83,where, under the heading «Negligence» itisstated that «negligence may be defined in this context as the failure to make inquiry in cases when a reasonably competent cashierwould make an inquiry, or, 25 when such an inquiry has been duly made, failure to appreciate that the answer obtained is an unsatisfactory one». And it goes further tosaythat:«Theinquiry referred toisthat whichshould be made bythe cashier, or, perhaps by a more senior officer of the bank, when a cheque being paid in, arouses a query in the mind 30 of the cashier orought toarouse it.Thisobligation stems from the duty of the collecting banker to collect the cheque for the person rightfully entitled to it and for no other». We agree fully with this stai-.'mentbased on the case law on the issue. In the circumstances of the present case, there was nothing to 35 suggest that when the cheque wasbeing paid in itcould arouse a query inthe mind of the cashier or ought to arouse any. We therefore, find no merit in thisappeal against the judgment inso far as respondents No. 1are concerned. We have now to examine as to whether judgment could have 40 been entered against respondents No. 2, a matter contested by 297 A. Lolzou P. C.T.C.Consultants v.Grindlays Bank
(1988)appeal No. 7161.Inthe Statement of Claim the cause ofaction is that of money received by Respondent 2, to which they were not entitled and they were unduly enriched by that amount and they refusedtoreturnit.Thereisnodifficultyinthiscasetoconclude,as the learned trial Judge did. that respondents No. 2 did really 5 receive by the crediting of their account with the amount of the cheque the benefit of that money to which they were not entitled and infact atnostagetheyhaveraisedanyclaimtothem.Theyare money had and received and money paid to the respondents by mistake, and the appellants asplaintiffs established, asthey ough' 10 to in such cases,that the defendants themselves actually received the money which was sought to be so recovered and that the moneywasreceived bythedefendantsinsuchcircumstancesthat there iscreatedprivitybetween them. The other question whether the appellants could in law join 15 respondents No. 2 as defendants No. 2 in the action, must be answered in the affirmative because they were seeking to recover their lost money by one action, byjoining two persons who were the likely ones to be in lawanswerable and depending which one of thetwocausesofaction wasestablished, one ofthemwouldbe 20 liable to refund the money towhich they were entitled. For all the above reasons both appeals are dismissed. The appellantstopaythecostofrespondentsNo. 1 buttherewillbe no order as to costs as between the appellants and respondents No. 25 2 either on the appeal or the cross-appeal. Appeals dismissed. Orderforcosts as above. 298