Banking - 1992

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This page lists 10 cases, and was prepared on 27 October 2012.

Lloyds & Scottish Finance Ltd -v- Cyril Lord Carpet Sales Limited [1992] BCLC 609
1992 HL Lord Wilberforce, Lord Scarman	Contract, Banking, Company, Insolvency	Casemap 1 Citers
	Lord Wilberforce considering whether certain assignment of book debts were in substance absolute assignments by way of sale or assignments by way of charge and would be void against a liquidator for non-registration under the Companies Act. He said: "My Lords, the fact that the transaction consisted essentially in the provision of finance and the similarity in result between a loan and a sale, to all of which I have drawn attention, gives to the appellants' arguments an undoubted force. It is only possible, in fact, to decide whether they are correct by paying close regard to what the precise contractual arrangements between them and the respondents were." and "it has to be appreciated that block discounting is essentially a method of providing finance. Commercially and in its economic result, it may not differ from lending money at interest: the ‘discounting charge’, which represents the finance house’s profit, is stated in term of so much per cent per annum, which percentage is no doubt based upon current interest rates. Legally, however, there is no doubt that discounting is not treated as the lending of money and that the asset discounted is not considered as the subject of a charge."

Bank of England -v- Riley [1992] Ch 475
1992	Banking, Criminal Practice	1 Citers
	Exercise of the right of privilege against self-incrimination.

Westfield Holdings Ltd -v- Australian Capital Television (1992) 32 NSWLR 194
1992 Young J	Commonwealth, Banking
	The court concluded, after looking at whether there had been a clog on the equity of redemption in an arm's length commercial mortgage transaction where a mortgagee had obtained the right to purchase the whole of the mortgaged property, that: "There does not appear to be any commercial reason why, in 1992, the court should invalidate any transaction merely because a mortgagee obtains a collateral advantage or seeks to purchase a mortgage property. Quite obviously, equity must intervene if there is unconscionable conduct. Again equity must intervene in a classic case where it can see that a necessitous borrower it not, truly speaking, a free borrower."

Re Atlantic Medical Ltd [1992] BCC 653
1992 Vinelott J	Banking	Casemap 1 Cites 1 Citers
	A charge was granted over hire-purchase agreements, sub-leases and rentals of leased equipment. The charge extended to such agreements as the chargor might enter into in the future. Held: Applying Atlantic computers, the charge was a fixed charge.

Barclays Bank plc -v- Quincecare Ltd [1992] 4 All ER 363
1992 Steyn J	Banking	Casemap 1 Cites
	The relationship of banker and customer is that of agent and principal: "Primarily, the relationship between a banker and customer is that of debtor and creditor. But quoad the drawing and payment of the customer's cheques as against the money of the customer's in the banker's hands the relationship is that of principal and agent." and "In my judgment it is an implied term of the contract between the bank and its customer that the bank will observe reasonable skill and care in and about executing the customer's orders. Moreover, notwithstanding what was said in Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] AC 80 at 107, a banker may in a case such as the present be sued in tort as well as contract: see Midland Bank v Hett Stubbs & Kemp [1979] Ch 384. But the duties in tort and contract are coextensive, and in the context of the present case nothing turns on the question whether the case is approached in contract or tort."

Crockfords Club Ltd -v- Mehta [1992] 1 WLR 355
8 Jan 1992 CA Lloyd LJ	Contract, Banking	1 Citers
	The Defendant had gambled at the plaintiff's casino, using cheques drawn on a company to obtain chips, all of which he lost. The cheques not having been honoured, Crockfords sued the Defendant for repayment of the loan made to him on the issue of the chips, and applied for summary judgment. At first instance, Henry J held that the cheques had been accepted in conditional repayment of the loan, so that on dishonour of the cheques, the Defendant remained liable on the loan. He then held that, just as section 16(2) and (4) validated the cheques, so they validated the underlying loan. Held: A cheque which had been given in exchange for gaming tokens which complied with the Act was to be enforced as would be any other cheque. The use of such tokens was regulated and supported by the law. No new sub-species of contract was created by the Act. Lloyd LJ said: "The legislative purpose of section 16 of the 1968 Act was to discourage gaming on credit. But consistently with that overall objective Parliament had to allow machinery for enabling lawful gaming to take place at licensed clubs. Otherwise those taking part in the gaming would have had to bring their own cash. The solution adopted was a neat one, and is to be found in section 16(1) and (2). Provided the cheque meets the requirements of subsection (2) and subsection (3), the giving of cash or tokens in exchange for the cheque does not contravene subsection (1). The error in Mr Glick's argument is to treat section 16(2) as if it only validated the cheque. It does more than that. It validates the whole transaction. Subsection (1) is subject to subsection (2). Subsection (2) provides that the transaction—that is to say the giving of the cash or tokens in exchange for the cheque—shall not contravene section 16(1). Provided the cheque complies with subsections (2) and (3) there is nothing in subsection (1) to prohibit the underlying loan. What then was the purpose of section 16(4)? The explanation, like so much else in our law, is historical. The old legislation did not make loans for lawful gaming illegal. The Act of 1710 is concerned with securities. It provides that all securities for repaying money knowingly lent for gaming should be 'utterly void frustrate and of none effect to all intents and purposes whatsoever'. But this was found to work injustice on an innocent holder for value—that is to say a third party to whom the security may have been negotiated without notice. So 125 years later, by the Act of 1835, Parliament amended the law so as to provide that the security should not be void, but should be deemed to have been given for an illegal consideration. Nothing in either Act affects the underlying loan. The subsequent history is traced in CHT Ltd v Ward [1965] 2 QB 63. It was argued that it would be absurd to invalidate the security but to leave the contract of loan unaffected. That cannot have been Parliament's intention. This argument was accepted by the Divisional Court in Carlton Hall Club Ltd v Laurence best reported in 98 LJKB 305. It was held that the consideration for the security which was deemed to be illegal as between immediate parties under the Act of 1835 tainted the loan itself. It was to prevent this line of argument being resurrected that Parliament found it necessary, or at any rate desirable, to enact section 16(4). The source of the taint has now been removed. There is no longer, therefore, any basis for the argument that the underlying loan is illegal or unenforceable. Indeed, to turn the argument the other way, it would surely be absurd to hold that Parliament had, by the Act of 1968, made the cheque enforceable, but made it a criminal offence to enter into the underlying contract of loan."
	Gaming Act 1968 16

Cheah Theam Swee -v- Equitcorp Finance Group Ltd and Another [1991] 4 All ER 989
8 Jan 1992 PC	Company, Banking, Commonwealth	Casemap 1 Cites
	A had given two charges over his shares to different lenders. The charges came to be both owned by the same person, who obtained judgment under the first charge, but then exercised its power of sale under the second, waiving its priority under the first. The chargor complained that the chargee should have exercised his power under the first charge which would have discharged the judgment. Held: Owners of different mortgagees of a property can agree to alter the priority of their respective charges irrespective of the wishes of the chargor, and without needing his consent. The mortgagor had no control over which remedy was taken by the chargees.

Barclays Bank Plc -v- Khaira and Another [1992] 1 WLR 623
6 May 1992 ChD Deputy Judge Morison QC	Banking, Legal Professions
	A Bank owed no duty of care to explain the effect of a charge despite the chargee having an account with them. However, if a bank, or its solicitors, elect to give an explanation of documents then it has a duty to explain them accurately

Barclays Bank Plc -v- O'Brien and Another [1992] 4 All ER 983; [1993] QB 109
22 May 1992 CA	Banking, Undue Influence	Casemap 1 Citers
	A bank leaving a husband to explain a proposed charge over the matrimonial home to his wife to secure his business debts, could not enforce that charge against her. There was a presumption of undue influence in the husband which made the charge defective.
	Link[s] omitted

Depositors Protection Board -v- Dalia and Another
18 Nov 1992 ChD	Contract, Banking, Financial Services	1 Cites 1 Citers
	Equitable assignees of deposits in a bank where those deposits were protected under the scheme, were entitled to the compensation which would have been paid to the beneficial owners.
	Banking Act 1987 59(1)(a)