GROSVENOR CASINOS LTD V NATIONAL BANK OF ABU DHABI

[2008] EWHC 511, QBD (Comm), Mr Justice Flaux, 17 March 2008-03-18

Banking – Cheques –Fraud – Whether a fraud had been committed when the collecting bank informed the remitting bank that a cheque was paid in spite of insufficient funds in the account on the particular day – Contract – Whether privity created – Uniform Rules for Collection – Articles 1, 2, 3, 4, 9, 11 and 21, URC 522

Two cheques had been issued ‘to bearer’ by R to cover gambling debts incurred to the claimant, a casino. The defendant was the collecting bank and had informed the claimant’s bank (the remitting bank) that the cheques were paid, in spite of the fact that on that particular day, there were insufficient funds in R’s account. The cheques remained unpaid. The claimant provided two arguments. The first was that the defendant’s employee had fraudulently confirmed that the cheques were paid. Flaux J held that the burden of proof for fraud had not been fulfilled. The second argument was in contract, to the effect that a contract had come into being between the parties under which the defendant owed the claimant a duty to act in good faith and to exercise reasonable care.