CHAPS

Tidal Energy Ltd v Bank of Scotland plc [2013] EWHC 2780 (QB), [2013] All ER (D) 214 (Sep); NLJ 4 October

The proceedings concerned an instruction to pay a sum of money to the beneficiary by CHAPS transfer to the account number and sort code specified. Although the identity of the beneficiary was important to the claimant, the evidence was that CHAPS did not operate in such a way that the beneficiary’s name formed part of the identifier which determined the destination of the payment. The reason was a practical one; the volume of transactions conducted through CHAPS each business day meant that a process of manual checking prevented payments being accomplished within the short time scale that was the hallmark of CHAPS. There was no requirement in the CHAPS rules that the beneficiary’s name be included, and in practice CHAPS transfers were processed without reference to it. The evidence was unequivocal that the identity of the beneficiary was irrelevant to the way in which the payment was processed. It was the destination account number and sort code that mattered. The manner in which CHAPS worked was that a receiving bank which was able to match the account number and sort code to one of its accounts would be expected to credit that account with the money and send a “logical acknowledgement”, or its modern equivalent, back to the paying bank to indicate acceptance of the payment. At that point, the payment was complete.