Papandony and Another v Citibank [2002] NSWSC 388

New South Wales Supreme Court

CITATION : Papandony and Another v Citibank [2002] NSWSC 388 FILE NUMBER(S) : SC 50148/01 HEARING DATE(S) : 18/04/02 JUDGMENT DATE : 14 May 2002

Steven Papandony - 1st Plaintiff PARTIES : Gannemon Pty Ltd - 2nd Plaintiff Citibank Limited - Defendant JUDGMENT OF : Gzell J

COUNSEL : B R McClintock SC with Kate Trail for the plaintiffs S Epstein SC for the defendant SOLICITORS : Deacons Lawyers Christopher Levingston & Associates Solicitors CATCHWORDS : CHEQUES- bearer cheques crossed "not negotiable" - drawing procured by fraud - no concluded contracts - drawer remains true owner entitled to immediate possession - third party deposits permitted by bank - conversion - deposit not authorised by senior executive contrary to standard procedure - bank fails to establish it acted without negligence - statutory defence fails - bank allows drawings on customer account before notice of fraud - change of position and acting to detriment relevant to voidable transactions but not to void transactions - formal submission that contributory negligence a defence to conversion. LEGISLATION CITED : Cheques Act 1986 (Cth) Penfolds Wines Pty Ltd v Elliott (1946) 47 CLR 204 at 229 Lloyds Bank v The Chartered Bank of India Australia and China [1929] 1 KB 40 Marfani & Co Ltd v Midland Bank Ltd [1968] 1 WLR 956 at 970-971 Bute (Marquess) v Barclays Bank Ld [1955] 1 QB 202 at 211 Hunter BNZ Finance v ANZ Banking Group [1990] VR at 46 North and South Wales Bank v Macbeth [1908] AC 137 Midland Bank Ld v Reckitt [1933] AC 1 Great Western Railway Co v London and County Banking Co Ld [11901] AC 414 Morison v London County and Westminster Bank Ld [1914] 3 KB 356 Lloyds Bank Ld v Chartered Bank of India, Australia and China [1929] 1 KB 40 Australian Guarantee Corporation Ltd v State Bank of Victoria [1989] VR 617 Hunter BNZ Finance v ANZ Banking Group [1990] VR 41 Ludbroke Co v Todd (1914) 30 TLR 433 Cundy v Lindsay (1878) 3 App Cas 459 at 461 Tate v Wilts and Dorset Bank (1899) 1 Legal Decisions Affecting Banker 286 CASES CITED : Holland v Russell 4 B & S 14 (122 ER 365) Harrisons Group Holdings Ltd v Westpac Banking Corporation (1989) 51 SASR 36 Hunter BNZ Finance Ltd v C G Maloney Pty Ltd (1988) 18 NSWLR 420 Orix Australia Corporation Ltd v M Wright Hotel Refrigeration Pty Ltd (2000) 155 FLR 267 Associated Midland Corporation Ltd v Bank of New South Wales [1983] 1 NSWLR 533 Associated Midland Corporation Ltd v Bank of New South Wales (1984) 51 ALR 641 State Bank of New South Wales v Midland Credit Ltd, unreported, Court of Appeal, 16 July 1984 Commissioners of the State Savings Bank of Victoria v Permewan Wright & Co Ltd (1914) 19 CLR 457 at 467 Bavins, Junr & Sims v London South Western Bank [1900] 1 QB 270 Australia and New Zealand Banking Group Ltd v Westpac Banking Coproration (1987-1988) 164 CLR 622 David Securities Pty Ltd v Commonwealth Bank of Australia (1991-1992) 175 CLR 353 Nemur Varity Pty Ltd v National Australia Bank Ltd [1999] VSC 342 Wilton v Commonwealth Trading Bank of Australia [1973] 2 NSWLR 644 Day v Bank of New South Wales (1978) 18 SASR 163 Grantham Homes Pty Ltd v Interstate Permanent Building Society Ltd (1979) 37 FLR 191 Australian Guarantee Corporation Ltd v Commissioners of the State Bank of Victoria [1989] VR 617 DECISION : See par 43