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The original problem raised by Eoin was whether a bank which reduced the account balance of its customer without that customer's mandate was liable in an action in "unjust enrichment".

There then followed suggestions that this was a breach of contract which sounded in damages against the bank for the loss caused to the customer by the bank's taking (or holding back) of the customer's money.

My view is that there is no loss at all to the customer - nor any enrichment to the bank. There is no "money" which belongs to the customer. Any "money" belongs to the bank, since money deposited becomes the bank's property. The customer is not therefore "losing" money. Nor is the bank making any enrichment at the customer's expense. It is just that the bank is (wrongfully) refusing to admit the proper extent of the debt it owes the customer. This sort of thing happens when banks pay out on forged or countermanded cheques where (subject to a Liggett or Cleadon "equity") there is no basis on which the bank can lawfully debit its customer's account. If the bank does debit the account, the customer's avenue of redress is probably a declaration that the debit was unlawful (and perhaps if necessary rectification of the account statement to record the correct position). In National Bank v Walpole & Patterson Ltd [1975] 2 NZLR 7, a forged cheques case,the customer got itself utterly confused and founded its claim on loss alleged to have been suffered by it. Richmond J dealt eloquently with the misconception at pp 11-12. I don't think it arguable that the bank is enriched at the customer's expense for the purposes of a "restitutionary" claim by the customer. Mere denial of a debt properly owed is not an enrichment, and particularly where there is no money of the customer at issue.

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Prof Charles Rickett
Faculty of Law, The University of Auckland