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Here is a case from last year which might spark some discussion: US International Marketing Ltd v. National Bank of NZ, [2004] 1 NZLR 589 (CA). The plaintiff had two bank accounts with the defendant. One fine day it bought a bank cheque for $15,000 payable to the High Court, in order to try to stop the liquidation of another company, P Ltd. Although these funds were tendered through counsel, P Ltd. went into liquidation anyway so the cheque was not paid into court. The plaintiff re-negotiated the cheque back into the same account from which funds had been withdrawn to purchase it. The next day, P Ltd by its lawyers wrote to the bank claiming that the funds previously embodied in the cheque belonged to P Ltd and asking the bank to freeze the funds pending P Ltd's attempt to get an injunction. Principals of the plaintiff found that they could not operate either of the plaintiff's accounts. Finally the plaintiff sent a letter to the bank indicating that a business opportunity overseas would be lost if the plaintiff could not access $10,000 from its account, and the plaintiff would hold the bank liable for such losses if the accounts were not unfrozen. The bank stood its ground and refused to pay. Later that day the court order was indeed made, and the bank paid the money into court. The order was discharged some months later. Now the plaintiff sued the bank for breach of the banking contract, for its refusal to pay on demand, claiming consequential losses of $731,000. The bank defended on the ground that it did not have to pay if paying would put it in jeopardy of being a dishonest assistant in a breach of trust. Held that the bank was in breach of contract and should have paid (the quantum of liability was separated by consent and the court seems to have had some doubts about the lost business opportunity). A banker would be justified in refusing to pay its customer only if to do so would be dishonest (with the additional reference by Tipping J to the idea of whether it would appear dishonest to a reasonable banker).

Note that the Lexis version does not seem to mark where the judgments begin and end. Tipping J is [1]-[22]; Anderson J is [23]-[76]; Glazebrook J is [77]-[79]. The CA has refused leave to appeal to the PC - I don't know whether the PC can itself be asked for leave to appeal?

Is it right, and if so does it square with strict liability plus defence of change of position for banks who receive trust money? The bank clearly knew that P Ltd might later establish that the money was held in trust for it by the plaintiff, and might well have been aware that there is support for strict liability for receipt of trust property, mitigated by defences. But could the bank have pleaded change of position if it had paid out in full knowledge of the pending claim? The court's decision that the bank had to pay seems to turn largely on the holding that an honest bank is not in danger of liability to the 3d party (P Ltd) under dishonest assistance. There was some mention in the bank's submissions of liability for receipt, but if the bank's liability there were strict, it seems much harder to require the bank to pay its customer and cross its fingers that such payment will give it a defence. The best hope would be to argue that the bank never received the $15,000 at all, since it went into a bank account in credit; but that is a difficult and contested bit of law.

Lionel