Marshall v Colonial Bank of Australasia Ltd [1904] HCA 31

Marshall v Colonial Bank of Australasia Ltd [1904] HCA 31 - HCA 1904 case summary — Zoe

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Evans, (1893) 1 Ch., 218. Estoppel must come down to a repre- sentation of fact. In the case of an omission to do or say some- thing there must be a duty to act or speak. So negligent conduct in order to amount to estoppel must really amount to a misrepre- sentation of fact. Cababé on Estoppel, pp. 93, et seq. The misrepresentation must be clear and precise, and not ambiguous; Low vy. Bouwverie, (1891) 3 Ch., 82, at pp. 103, 106,113. Careless- ness in issuing documents has never been considered to create an estoppel. See Lindley on Companies, 6th ed., p. 671; 5th ed., p, 486, and the comment there on Young v. Grote (supra). In Davis v. Bank of England, 2 Bing., 393; 5 B. & C., 185, Best, C.J., took an opposite view from that which he took in Young v. Grote. See also Burton v. London and N.W. Ry. Co., 24 Q.B.D., 77, at pp. 87, 89; British Mutual Banking Oo. v. Charnwood Forest Ry. Co., 18 Q.B.D., 714. It is said that the duty imposed upon the customer arises out of the contractual relationship between banker and customer. But the same sort of relationship, that is, a contractual relationship, exists between a company and its shareholders, and there the duty has been denied. Bank of Ireland v. Evans Charities (supra); Davis v. Bank of England (supra); Barton v. London and N.W. Ry. Co. (supra). Why should a banker have a right not given to other persons? The duty, which has been stated in different ways, must come to this, viz.,a duty not to facilitate fraud, for that is the charge to the jury, and the respondent must support it, or a new trial is inevit- able. The jury might have approached any other proposition with very different minds. The true proposition is that laid down in Bank of England v. Vagliano (supra), viz., that a person must not by his acts or omissions make a misrepresentation of fact to hisbanker. That is a duty of general application. Asto Young v. Grote (swpra), see Chalmers on Bills of Exchange, 6th ed., p. 209. The American cases relied on are cases on stated accounts, and tind their counterpart in the English Courts in Parkinson v. Hanbury, L.R. 1 HL, 1.

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on; seldom, if ever, followed; many different explanations of it have been given; and in Scholjield v. Earl of Londesborough (1896), A.C., 514, Lord Halsbwry, L.C., invited the House of Lords to formally over-rule it. Young v. Grote came before the Court upon a special case stated by an arbitrator in an action by a customer against his banker for the balance of his account. The special case stated, amongst other things, that the plaintiff, being about to leave home for several days, signed and left with his wife five blank cheques, desiring her to have them filled up for such sums as the purposes of his business might require. His wife, requiring £50 2s. 3d. to pay wages, delivered one of the blank cheques to one Worcester, a clerk of the plaintiff, desiring him to fill it up for that sum, which he did, and showed it to her so filled up, whereupon she asked him to get it cashed. He afterwards fraudulently wrote the words "three hundred and" before the word "fifty " in the body of the cheque, and the tigure "3" before the figures " 50," making the alteration in the same writing as the rest of the cheque, "and in such a manner that no person using due and ordinary diligence, could have discovered that it had been made improperly after the draft had been once filled up for another sum, and signed by the drawer." The defendants paid the amount of the altered cheque to Worcester. The arbitrator thought that it was plaintiff's draft for the £50 2s. 3d. only, but he thought also "that he had been guilty of gross negligence by causing his draft to be delivered to Worcester (in whose hand- writing the body of it had been filled up) in such a state that the latter could and did, by the mere insertion of other words, make it appear to be the plaintift's draft for the larger sum, and that as he, partly by his negligence, had caused the bankers to pay the larger sum, he was bound to make good to them the loss which by reason of his negligence they had sustained by paying that sum. If the Court should think that opinion wrong, he awarded that the plaintiff should recover £300 from the defen- dants." It will be observed that amongst the facts found by the arbitrator was the inference of fact that the plaintiff had been guilty of gross negligence. And it does not appear that the Court - could review this finding. The arbitrator did not seem to think that the bank could set up that they had paid the money in accordance

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_ The case of Guardians of Halifax Union v. Wheelwright, L.R., 10 Ex., 183, in which Young y. Grote is said to have been fol- owed, was also a special case stated by an arbitrator. In that case, he defendant was the plaintiffs' treasurer, and was the manager a bank in which the plaintiffs' aceount was kept. Orders 'igned by the plaintiffs were cashed at the bank. Several orders 4 signed by the guardians were fraudulently altered after signature, and the question was whether the defendant was liable to make good the amounts by which they had been fraudulently increased. 'The arbitrator found as a fact that "the payment by the treasurer's clerks of the excess" in these instances was " due solely the fact that they were misled by want of proper caution on 'the part of the guardians and their clerk in signing the orders audulently prepared by him for their signature." Counsel for the defendant relied expressly upon this finding, which was conclusive upon the question of fact. In that case, as in Young v. Grote, the person who committed the fraud was in the service of the plaintiffs, the fraud was effected while the orders were still in the ossession of their servant. Cleasby,B.,who delivered the judgment the Court of Exchequer, after quoting the passage above recited from the award, said : - * The question therefore which ises upon this item" (there was another point in the case) "is, whether the negligent drawing of the drafts disentitles them" (the plaintiffs) "to complain of the cashing those drafts. Upon this question we had before us the principal case of Young v. ote, followed by several other cases, among others, Robarts . Tucker, 16 Q.B., 560; 20 LJ. Q.B., 270, and Swan v. North tish Australasian Co., 2 H. & C., 175; 32 LJ. (Ex.), 273. We think the position taken by the defendant is made good by those juthorities." An examination, however, of the two last-mentioned ases shows that the learned Baron was in error in supposing that they followed Young v. Grote, as in both of them that case yas distinguished. We have not been able to find any of the "several other cases" referred to by the learned Baron. He wdded that "it is, perhaps, only an application of one of those general principles which do not belong to the municipal law of

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forgery would not establish such authority as between the acceptor and the holder (Scholfield's Case), nor upon the same reasoning, as between the drawer (or maker of a cheque) and the holder. It is not easy to see why the same facts which are no evidence of negligence or breach of duty as between the acceptor and the holder, or as between the drawer and the holder, should be held to establish authority or estoppel as between the drawer and the drawee. We can see no reason for such a distinction, and we have looked in vain for any authority which would support it. It appears, then, that the only foundation for the proposition relied on by the respondents is the dictum of Pothier cited, but without any express assent, by Best, C.J. This dictum, according to Lord Halsbury, "is not, and never has been, the law of England," (1896) A.C., p. 535. In our judgment, when a person signs a writing which is on the face of it a complete document, and issues it to another, he is not bound by any subsequent alteration of it made without his authority, and such authority cannot be inferred merely from the existence of blank spaces in the document. It may well be that the existence of blank spaces, combined with other circumstances, either intrinsic to the document or extrinsic, may be evidence of delegated authority to fill them up. But the mere existence of a blank is not sufficient. It follows that the dictum of the learned Chief Justice, so far as it laid down that, if a cheque is so drawn as to invite or afford opportunity for or temptation to forgery, the customer is estopped from complaining of the forgery, cannot be supported. The learned Chief Justice treated the matter as being entirely a question for the jury, whether they thought the manner of drawing the cheques "so negligent " that it induced or caused opportunity, or was a temp- tation to, forgery. If this rule were adopted, it would, as already pointed out, depend upon the caprice of the particular jury in each case whether the customer or banker should bear the loss. It is manifest that a rule of law must be capable of being stated with sufficient precision to enable an ordinary person to know

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