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07 Apr 2011
Appeal Status
No right of appeal

Unclaimed money payable to Commissioner

2011 case note - bank cheques and foreign currency drafts which remain unclaimed will be treated as unclaimed money under the Unclaimed Money Act 1971.

Westpac, BNZ & ANZ v Commissioner of Inland Revenue (unclaimed money)


The Supreme Court has followed the Privy Council decision in Thomas Cook (New Zealand) Ltd and held that unclaimed foreign exchange drafts and bank cheques are to pass to the Commissioner as custodian six years after legal demand may be made for payment to the payee.

Impact of decision

It is now clear that bank cheques and foreign currency drafts which remain unclaimed will be treated as unclaimed money under the Unclaimed Money Act 1971.


The appeal relates to the meaning and effect of s 4(1)(e) of the Unclaimed Money Act 1971 ("UMA"). In the High Court, McKenzie J was satisfied that in respect of bank cheques and foreign currency drafts the issuing banks are holders of unclaimed monies under s 4(1)(e) of the UMA. McKenzie J had held that the decision of the Privy Council in CIR v Thomas Cook (New Zealand) Ltd [2006] 2 NZLR 722 (PC) was dispositive of the case. That case concerned the same provision of the UMA and its operation specifically on unredeemed travellers' cheques.

The Court of Appeal also found for the Commissioner, holding as well that they were bound by the Thomas Cook case; that there was no effective difference between travellers' cheques and foreign currency drafts and bank cheques.

The instruments in question are drawn by a bank, issued to a customer, made payable to a person who may or may not be the customer (the payee) and, in the case of foreign currency drafts, cashed by the payee at an overseas bank in that country's currency. In the case of bank cheques, the bank issues a cheque to a customer made payable to a person who may or may not be the customer (the payee) drawn on its own account (having debited the customer's account). A very small minority of drafts and bank cheques are never presented for payment. These, the Commissioner contends, are "unclaimed money".

The years before the Court ranged from 1990 to 2001 for the three banks and the sums in dispute exceed $7 million, plus interest for that period.


The Court was concerned that there would have to be compelling reasons to overturn the Thomas Cook case. Pivotal to their finding were arguments on the interpretation of s 4(1)(e) of the UMA:

  • 4 Unclaimed money
    1. Subject to this section, unclaimed money shall consist of -
    1. 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: ...

In the Thomas Cook case, both the High Court and the Court of Appeal had held that cheques could not be called "unclaimed" until there was a legal liability to pay. This did not occur until the cheque was presented. This finding was based upon an interpretation of certain provisions in the Bills of Exchange Act.

Nonetheless the Court of Appeal also held that after a cheque becomes stale, the requirement for presentment was dispensed with and Thomas Cook became liable for payment. In the Privy Council, such reasoning was dismissed and the term "payable" was held to mean no more than legally due if demanded.

In the present matter, the parties being in agreement that the banks are "holders" under the UMA, argument centred on the meaning of the words "payable" and "owing". The appellants argued that a consistent theme in previous iterations of the UMA led to an interpretation of "a present obligation to pay". The Commissioner supported the Thomas Cook interpretation.

In order to resolve the conflicting, tenable, views the Court consulted Hansard and had regard to the purpose of the legislation whereby money paid for but not collected was never intended to be revenue for the holder. Against that, the Court considered earlier legislative definitions prior to consolidation into the 1971 Act, noting also that the UMA also had amending properties. So noting, the Court dismissed interpretations urged by the appellants based upon earlier definitions and banking law [46]:

  • In these circumstances, the purpose of the 1971 Act, as summarised above, is a more reliable aid to the meaning of "payable" than comparisons with its use in the earlier statutes. To adopt the technical rules of when liability arises, under which there would in all cases have to be a present obligation to pay, would defeat that purpose. And to read s 4(1)(e) as having effect in its application to money payable under foreign currency drafts and bank cheques only if demand is made for the dormant moneys would introduce a self-defeating element to the meaning of the definition that Parliament would not have contemplated.

The Court addressed certain concerns of the appellants as to the scope of such a finding by noting that this interpretation did not extend to conditional liabilities.

The Court emphasised at [49] that the decision was consistent with the maintenance of stability in the law:

  • Had we favoured the appellants' approach to this difficult question of construction, it would have been necessary to consider whether our preference for that different view was sufficient to justify departure from the meaning which had been adopted by the Privy Council. That would have raised questions concerning, on the one hand, desirability of stability in the law and respect for the principle of stare decisis and, on the other, whether there are cogent reasons for reconsideration of, and departure from, that judgment.

Unclaimed Money Act 1971