TIDAL ENERGY LTD V BANK OF SCOTLAND PLC

[2014] EWCA Civ 1107, Court of Appeal, Lord Dyson MR, Lord Justice Tomlinson and Lord Justice Floyd, 31 July 2014

Banking - Instruction for payment through CHAPS mentioning correct bank sort code and account number but wrong beneficiary - Funds accepted by receiving bank - Whether instruction satisfied - Whether payment made

The claimant, Tidal Energy Ltd, was a customer of the defendant, Bank of Scotland plc. In January 2012 the claimant was indebted to one of its suppliers, D, and gave an instruction to the bank to pay the debt through the clearing house automated payment system (CHAPS). The instruction contained the name of D but a sort code and account number held by Barclays Bank for someone else entirely, C. The claimant discovered the error and asked its own bank to stop the payment, but Barclays allowed the funds to be drawn by C. The claimant sought to have the money refunded by its own bank on the basis that Barclays had no authority from D, which was not one of its customers, to accept the money into C's account, so that payment was not complete.