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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Surrey Asset Finance Ltd v National Westminster Bank [2001] EWCA Civ 60 (24 January 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/60.html Cite as: [2001] EWCA Civ 60

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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(Mr Anthony Temple QC)

		The Royal Courts of Justice The Strand London WC2A Wednesday 24 January 2001

Wednesday 24th January 2001

1. LORD JUSTICE RIX: This is an application for permission to appeal by the claimant, Surrey Asset Finance Ltd. It is a second-tier application. Surrey Asset Finance is a company which finances the hire purchase of cars. On 23 April 1998 it purchased a Mercedes for £32,500 from a supplier called SAC Car & Commercial Sales Ltd ("SAC Car"). It did so in order to let the car on hire purchase terms to a company called Transglobal Communications Ltd ("Transglobal"). The latter contract was dated 27 April 1998. On the same day, it drew a cheque for £26,000, the net balance of the purchase price, in favour of SAC Car. According to the sale contract, a deposit of £6,500 had already been paid to the supplier.
2. It so happens that a Mr S A Cook was a director of both SAC Car and Transglobal. He was the sole director of SAC Car. The cheque for £26,000 was either handed to Mr Cook or sent in the ordinary way by post to SAC Car. Mr Cook, instead of banking that cheque in the account of SAC Car (because it was, as nearly all cheques nowadays are, an account payee cheque) banked it into his personal account, an account in his name trading as"SAC Car Sales". The defendant in these proceedings, National Westminster Bank plc, was the collecting bank, which effected the transfer of the funds into the wrong account.
3. Some considerable time went past. It would appear to be more than year after April 1998 when things went wrong. The hire payments under the hire purchase contract ceased to be made. The claimant recovered the car and sold it for £13,000. In August 1999 it turned to the defendant bank for recovery of the £26,000, upon learning of the way in which the proceeds of that cheque had been dealt with. In effect, it said that the bank had converted its cheque and that if it had known that the money had been paid into the personal account of Mr Cook rather than into his company account, SAC Car, it would not have gone ahead with the transaction or it would have sought to bring the transaction to an end and recovered the car; and at that earlier time it would not have lost the difference between the purchase price of the car and its recovery value at the time of repossession.
4. The claimant brought an application under CPR Part 24 for summary judgment. The defendant brought a counter application for a strike-out, at any rate of the claim in conversion. The matter was heard first by Master Rose, who on 22 May 2000 gave summary judgment in favour of the claimant. Upon appeal, Mr Anthony Temple QC, sitting as a Deputy High Court Judge, on 8 September 2000 allowed the appeal by the defendant and held in his judgment that there could be no claim in conversion against the collecting bank by a drawer of a cheque who no longer had title to the cheque; that is to say, no longer had ownership, possession or a right to possession of it. There is some uncertainty as to the effect of his judgment. A copy of what is said to have been the order made, which is before me, simply says that "The order of Master Rose [for summary judgment] be set aside" and "The Claimant's Application for Summary Judgment be dismissed". The last paragraph of Mr Temple's judgment contemplates that there might be a future trial, at any rate if there was some reformulation of the claimant's case.
5. The matter is put before me on this application as an appeal against the dismissal for summary judgment. I am told that, although the matter is not dealt with in the form of order that I have seen, Mr Temple also dismissed the application by the defendant for a strike out. At any rate, I am asked to deal with the matter upon the basis that this is a claim for summary judgment at a second tier level, in circumstances where the applicant has not lost at both levels. Nevertheless, the test which I must apply is that there must be some important point of principle or practice or some other compelling reason for any further appeal.
6. In support of his application, Mr Stephen Shaw, who has appeared on behalf of the claimant, submits that there must be some remedy available to the drawer of a cheque, whose instructions that the cheque should be paid only into the account of the payee are ignored by a collecting bank; and that that remedy must be in conversion, since, he submits, there is no other remedy available. However, for the reasons given by the learned Deputy High Court Judge, there seem to be very great difficulties - I need say no more - in seeing that the drawer of a cheque who has delivered it to the payee is in a position to bring a claim in conversion, which requires title in such a claimant. I would draw attention to section 21(3) of the Bills of Exchange Act 1882 which states:

"Where a bill is no longer in the possession of a party who has signed it as drawer, acceptor, or indorser, a valid and unconditional delivery by him is presumed until the contrary is proved."

7. On the very basic facts before the court at the moment in these summary proceedings, it is very difficult to see that there is material by which that presumption is reversed. That is not to say that there may not be circumstances in which it could be. But I do not think that it is reversed by the mere direction "account payee" on the cheque. Otherwise, where such a cheque was paid into the wrong account, the claim would always be with the drawer, rather than the payee.
8. In effect, this is a claim by a buyer of goods, who has received the Mercedes car that he wanted in return for his cheque, who seeks to say, at some later time, that if he had known that the payment that he wished to make for the goods supplied to him had gone into the wrong pocket, he would have sought to rescind the sale contract and recover his money. The claimant seeks to say that, at the time of the defenant's collection of the cheque's proceeds, the claimant had possession of and title to not only the car, but also the cheque. But one would be inclined to say, in accordance with the presumption in section 21(3) that it was the payee who had title, in payment for the car it had sold.
9. The question before me is not whether such a claim cannot succeed, but whether such a claim is entitled to summary judgment; or, at any rate, whether a claim for summary judgment in such circumstances raises such a point of principle or such a compelling case as to permit a second-tier appeal to go forward.
10. In support of his submission, Mr Shaw has not been able to cite any previous authority to me in which a drawer of a cheque who has delivered it to his payee has recovered in conversion against a collecting bank. In these circumstances, I cannot fault the decision below which denies to the claimant at this early stage of the proceedings a summary judgment. In my judgment, there is no important point of principle or practice, or any other compelling reason why permission to appeal should be granted in this case. I bear in mind that the claimant has not lost twice below, but even if I were permitted to apply the test of a first-tier application, the claimant could not in my judgment show that it had a real prospect of success.
11. For those reasons this application is dismissed.
ORDER: Application dismissed