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26 Aug 2009
Appeal Status

Court of Appeal says Privy Council decision in relation to bank cheques and drafts binding

2009 case note – Unless the Supreme Court finds otherwise unclaimed bank cheques and drafts will be treated as unclaimed money – nature of instruments.

Westpac BNZ ANZ v Commissioner of Inland Revenue (Unclaimed Money)

Unclaimed Money Act 1971


The Court of Appeal held that it must follow the Privy Council decision in CIR v Thomas Cook (NZ) Limited (2006) 2 NZLR 722 (PC), as it considered unpresented bank cheques fell under the definition of unclaimed money in section 4 of the Unclaimed Money Act 1971 ("UMA").

Impact of decision

Unless the Supreme Court agrees to hear an appeal and finds otherwise, bank cheques and drafts which remain unclaimed, will be treated as unclaimed money under the UMA. The decision of the Privy Council in CIR v Thomas Cook will apply.

Background facts

The Appeal relates to the meaning and effect of the UMA. In the High Court McKenzie J was satisfied that in respect of bank cheques the issuing banks are holders of unclaimed monies under section 4(1)(e) of the UMA.

McKenzie J held that the decision of the Privy Council in CIR v Thomas Cook [2006] 2 NZLR 722 (PC) was dispositive of the case. However he also reached the conclusion independently of the Privy Council decision.

The Court of Appeal indicated that if they found the decision of the Privy Council in CIR v Thomas Cook binding they would not need to decide on the independent decision of McKenzie J.

Issues and decision

Whether or not the Court of Appeal is bound in the circumstances by the decision in Thomas Cook? Young P and Robertson J addressed the arguments presented by Mr Kós:

Alleged incorrect legal or factual assumptions by the Privy Council as to the liabilities of the drawer of a bills of exchange

The Court of Appeal was satisfied that their Lordships fully comprehended the nature of the instruments involved and that the definitions contained in section 4(1) of the UMA had to be read within the context of the UMA and not just as an adjunct to the Bills of Exchange Act 1908.

Absence of full argument before the Privy Council on present liability to pay

Although it was apparent that the basis upon which Thomas Cook was decided in the Privy Council arose for the first time in that court, the Court of Appeal was satisfied that the metes and bounds of the argument were discussed, assessed and adjudicated upon.

Alleged assumption that the obligations of Thomas Cook were within section 4(1)(e)

The Privy Council in Thomas Cook ruled that the amounts for which the bank cheques and drafts were drawn are "money" within section 4(1)(e) of the UMA and were owing and payable to the banks' customers. The Court of Appeal disagreed with Mr Kós that this was a mere assumption on the part of the Privy Council. It was found that the particular issue had been live in the Court of Appeal and was resolved against Thomas Cook. The conclusions by the Privy Council that the obligations of Thomas Cook were money for the purposes of section 4(1)(e), was a necessary part of the ratio of the case and is binding on the Court of Appeal.

The statutory history of the UMA

Mr Kós argued that the course events took in the Privy Council meant that the statutory history of the UMA was overlooked. The overlooked statutory history was described by Robertson J as "too frail a premise" for the Court to decide that the Privy Council judgment was decided per incuriam. Furthermore the interpretation argued for was selective and ignored earlier, consistent definitions of "payable".

Separate findings of Baragwanath J

Baragwanath J, agreed with Young P and Robertson J and held that the Privy Council was right because it recognised that its task was to construe the UMA not the Bills of Exchange Act 1908. Section 4 of the UMA states what unclaimed money shall consist of. He saw no reason why the money should become a "windfall" in the hands of the bank. Part (1)(e) of section 4 can be construed textually to like effect to (1)(a) to (d) and there is no reason why it should receive a purposive construction to different effect. Part (1)(e) states:

(e) Any other money, of any kind whatsoever, which has been owing by any holder for the period of 6 years immediately following the date on which the money has become payable by the holder:
[Emphasis added]

He then found that the broader and not the narrower construction of "owing" and "payable" must be adopted.

The Appeal was dismissed and costs awarded to the Commissioner.