New South Wales Court of Appeal CITATION : THOS COOK v KUMARI [2002] NSWCA 141 FILE NUMBER(S) : CA 40882/01 HEARING DATE(S) : 13 May 2002 JUDGMENT DATE : 21 May 2002 THOMAS COOK LIMITED PARTIES : v KAMLESH KUMARI JUDGMENT OF : Handley JA at 1; Sheller JA at 19; Pearlman AJA at 20 LOWER COURT JURISDICTION : District Court LOWER COURT DC 786/00 FILE NUMBER(S) : LOWER COURT Certoma ADCJ JUDICIAL OFFICER : COUNSEL : Appellant - J W Stevenson Respondent - R McColl SC/M Campbell SOLICITORS : Appellant - Gadens Respondent - Dominic David Stamfords CATCHWORDS : BANKING - TRAVELLERS' CHEQUES - LOSS OR THEFT - PURCHASE AGREEMENT PROVIDING FOR REFUND OF CHEQUES LOST OR STOLEN - CONDITION OF REFUND THAT PURCHASER HAD SAFEGUARDED CHEQUES AS THE PURCHASER WOULD A SIMILAR AMOUNT OF HER OWN CASH - WHETHER PURCHASER BREACHED THAT CONDITION Goodwin v Robarts (1875) LR 10 Ex 337 CASES CITED: Glynn v Margetson & Co [1893] AC 351 Braithwaite v Thomas Cook Cheques Ltd [1989] QB 553 El Awadi v Bank of Credit SA Ltd [1990] 1 QB 606 DECISION : Appeal dismissed with costs IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40882/01 DC 786/00 HANDLEY JA SHELLER JA PEARLMAN AJA 21 May 2002 THOMAS COOK LIMITED v KAMLESH KUMARI BANKING – travellers' CHEQUES – loss or theft – purchase agreement providing for refund of cheques lost or stolen –condition of refund that purchaser had safeguarded cheques as the purchaser would a similar amount of her own cash – whether purchaser breached that condition Before leaving Sydney to travel to India via Singapore, the respondent purchased from the appellant travellers' cheques with a face value of $US 50,000. On the day she arrived in Singapore she had those cheques stolen from her or she lost them. This apparently happened while she was walking around some markets. She had kept all the cheques in the outer pocket of her handbag which she carried with her. The purchase agreement provided that the appellant would refund to the respondent the face value of lost or stolen travellers' cheques provided that she had complied with certain conditions. The appellant refused to give the respondent a refund because it claimed she had not complied with a condition. The trial Judge found that the respondent had complied with the condition. HELD: dismissing the appeal: (1) In determining whether the condition was satisfied, it was to be assumed that the purchaser would have been carrying cash of the same value and bulk as the travellers' cheques at the same time and place as she was carrying the cheques when they were lost or stolen; (2) Thus the fact that the respondent would not have taken a similar amount of cash to the markets because of the obvious risk of loss could not of itself establish a breach of the condition; (3) There was no evidence that the respondent would have carried cash of the same value and bulk in any other place. ORDERS Appeal dismissed with costs. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40882/01 DC 786/00 HANDLEY JA SHELLER JA PEARLMAN AJA 21 May 2002 THOMAS COOK LIMITED v KAMLESH KUMARI Judgment 1 HANDLEY JA: This appeal, which concerns a contract for the issue of travellers' cheques, appears to be the first case to reach a superior court in Australia arising out of the issue of these instruments. 2 The relevant contract, which provided for the issue of travellers' cheques with a face value of $US 50,500, was entered into at Sydney on 15 April 1999. The cheques were paid for in Australian dollars in cash, most of the funds having been withdrawn from a nearby bank the same day, the respondent and her husband having gone to the bank for that purpose and then to the appellant's office in Pitt Street, Sydney. 3 The respondent purchased the cheques because she intended to travel to the Punjab in India to make arrangements for her son's forthcoming wedding. She travelled via Singapore where she arrived on 16 April. She cashed one cheque for $US 100 at the duty free shop to purchase some whisky and was driven from the airport by a family friend to the home of other friends. The same friend then drove the respondent and a Miss Zarena Hamidullah to the Tikkiah Markets where he left them. After spending some time in the Markets they walked to the Mustafa Centre where the respondent joined a queue to cash some of her travellers' cheques. When she opened her handbag to obtain the cheques she discovered that they were missing. She had last seen them at the duty free shop. Nothing else was missing. 4 The respondent returned to the home of Zarena's mother, but a search of her luggage and room proved fruitless. 5 The contract, so far as relevant, provided: "If any of the travellers' cheques purchased by you are lost by or stolen from you we, as Issuers, will refund their face value provided you comply with all of the following simple conditions: (1) … (2) You have safeguarded each cheque against loss or theft as you would a similar amount of your own cash. …". 6 The appellant refused to refund the face value of the cheques and when sued for this amount it relied on a breach of condition 2 to excuse it from performance of this obligation. The trial Judge Certoma ADCJ found that the respondent had complied with condition 2, and having rejected other defences which are no longer pressed, he entered judgment for the respondent for $A 124,340.46. The issue on the appeal is limited to the appellant's challenge to the finding that the respondent had complied with condition 2. 7 The appeal arises under a contract to issue travellers' cheques and does not raise any question concerning the nature of these instruments as such. It seems however that they are neither bills of exchange nor promissory notes but are probably negotiable instruments having acquired this status by the mercantile usage. Compare Goodwin v Robarts (1875) LR 10 Ex 337. 8 The first point taken by Mr Stevenson for the appellant was that condition 2 had been breached because the respondent had frankly conceded that she would never have taken $US 50,000, or the equivalent in Australian currency, in cash into places such as the Tikkiah Markets or the Mustafa Centre in Singapore because of the obvious risk of loss. 9 In my judgment this concession, without more, cannot establish a breach of condition 2. The Court may be taken to know that the public purchase and use travellers' cheques instead of cash when travelling abroad to secure both liquidity and safety, and to reduce the risk of loss. The main object and intent of the contract was to secure these advantages for the purchaser. Compare Glynn v Margetson & Co [1893] AC 351. A construction of condition 2 which would deny the purchaser's right to a refund when he or she lost travellers' cheques at a time and in a place where he or she would not have been carrying the same amount of cash would defeat the main object and intent of the contract and must be rejected. 10 Mr Stevenson's second submission was that the respondent had kept the travellers' cheques in the outer pocket of her handbag where she would not have kept a large amount of cash. This submission raises a question of fact which turns on the evidence given by the respondent during her cross-examination. The Court is also required to construe condition 2. 11 We were referred to Braithwaite v Thomas Cook Cheques Ltd [1989] QB 553 and El Awadi v Bank of Credit SA Ltd [1990] 1 QB 606 which also involved claims for refunds in respect of lost travellers' cheques. However the contracts in those cases were in significantly different terms and the decisions on the facts and on the construction of the relevant contracts cannot determine the result in the present case. 12 Condition 2 requires the customer to safeguard each cheque against loss or theft as he or she would safeguard a similar amount of their own cash. This condition requires comparison to be made between the actual situation of the travellers' cheques immediately before the loss or theft, and the hypothetical situation of the cash equivalent at the same time and place. 13 As I have already held, the hypothetical situation does not permit an assumption that the customer would not be carrying that amount of cash on his or her person in the first place. Equally, in my judgment, there can be no assumption that the cash is held in any particular form. Thus the condition neither authorises nor requires an assumption that the respondent was carrying 50,000 $US 1 currency notes when she went shopping in Singapore. The relevant assumption is simply that she was carrying currency notes of the same value and bulk as the travellers' cheques. 14 The respondent had her handbag with her at the time which had pockets on either side and a large section in the middle. Each side pocket could be closed with a press stud and had its own cover. She kept her passport in the side pocket closest to her body, and her travellers' cheques in the other side pocket. Everything else was carried in the central section which also had a zipper compartment. 15 She said she tried more than once to put the travellers' cheques in the zipper compartment but this was difficult because they did not fit. The envelope stopped the zipper closing and apart from that there was a risk that the cheques would be torn by the zipper. 16 This evidence did not establish a breach of condition 2. The respondent said she carried the travellers' cheques in the outside pocket because they would not fit in the zipper compartment and she did not want them loose in the central section of her handbag, with her lipstick, purse, comb and the like which she would get out and use with some frequency. The travellers' cheques were the only item in the outside pocket where they would be covered by the flap and closed with the press stud. 17 The respondent said that she thought that the travellers' cheques would be safe in the outer pocket, and there is no evidence that she would have carried currency notes of the same bulk and value in any other place, either in her handbag or on her person. 18 In my judgment the appeal should be dismissed with costs. 19 SHELLER JA: I agree with Handley JA. 20 PEARLMAN AJA: I agree with Handley JA. ****** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.