''United Dominions Trust Ltd v Kirkwood''
966
Year 966 (Roman numerals, CMLXVI) was a common year starting on Monday (link will display the full calendar) of the Julian calendar.
Events
By place Byzantine Empire
* 23 June - Arab-Byzantine Wars, Byzantine-Arab War: Arab-Byzantine ...
2 QB 431 was a decision of the
Court of Appeal
A court of appeals, also called a court of appeal, appellate court, appeal court, court of second instance or second instance court, is any court of law that is empowered to hear an appeal of a trial court or other lower tribunal. In much of t ...
relating to what constitutes "banking business" as a matter of English law.
''Ellinger's Modern Banking Law'' refers to the judgment as a "
landmark decision
Landmark court decisions, in present-day common law legal systems, establish precedents that determine a significant new legal principle or concept, or otherwise substantially affect the interpretation of existing law. "Leading case" is commonly u ...
".
Facts
United Dominions Trust
Black Horse Limited is a motor finance company based in the United Kingdom. It was formed in July 2001, as a wholly owned subsidiary of Lloyds Banking Group, but its origins can be traced back to 1922.
The business should not to be confused wit ...
was a finance company which brought an action to recover payment of a loan which it had made to a dealer. The dealer defended the claim for repayment on the basis that the United Dominions Trust was not registered under the
Moneylenders Act 1900 and hence the loan contract was unlawful. United Dominions Trust claimed that it was exempt under section 6(d) of that Act because it conducted "banking business". In support of this it argued that it was recognised in the
City
A city is a human settlement of notable size.Goodall, B. (1987) ''The Penguin Dictionary of Human Geography''. London: Penguin.Kuper, A. and Kuper, J., eds (1996) ''The Social Science Encyclopedia''. 2nd edition. London: Routledge. It can be def ...
as a bank, it enjoyed certain privileges given only to banks, and it had a clearing number.
Judgment
All three judges gave reasoned judgments.
The court considered an older Australian decision, ''Commissioners of the State Savings Bank of Victoria v Permewan, Wright and Co Ltd'' (1915)1 19 CLR 457 where
Issacs J said (at 470):
The court also considered decisions in ''Bank of Chettinad Ltd of Colombo v Commissioner of Income Tax, Colombo''
948
Year 948 ( CMXLVIII) was a leap year starting on Saturday (link will display the full calendar) of the Julian calendar.
Events
By place
Byzantine Empire
* Arab–Byzantine War: Hamdanid forces under Sayf al-Dawla raid into Asia Minor ...
AC 378, 383 (PC); ''Banbury v Bank of Montreal''
918
__NOTOC__
Year 918 ( CMXVIII) was a common year starting on Thursday (link will display the full calendar) of the Julian calendar.
Events
By place
Europe
* December 23 – King Conrad I, injured at one of his battles with Arnu ...
AC 626 and ''Woods v Martins Bank Ltd''
959
Year 959 ( CMLIX) was a common year starting on Saturday (link will display the full calendar) of the Julian calendar.
Events
By place
Byzantine Empire
* April - May – The Byzantines refuse to pay the yearly tribute. A Hungaria ...
1 QB 5.
Lord Denning MR
Alfred Thompson "Tom" Denning, Baron Denning (23 January 1899 – 5 March 1999) was an English lawyer and judge. He was called to the bar of England and Wales in 1923 and became a King's Counsel in 1938. Denning became a judge in 1944 when ...
opined that normally a company would only constitute a bank if it undertook certain activities: (1) the acceptance of money from, and the collection of
cheque
A cheque, or check (American English; see spelling differences) is a document that orders a bank (or credit union) to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. The pers ...
s for, customers and the placing of the funds to the customers’ credit; (2) honouring cheques or orders drawn on the bank by their customers when presented for payment and the debiting of the customers' accounts accordingly; and (3) keeping some form of current or running accounts for the entries of customers' credits and debits. But he further added that a company might still constitute a bank, even though it did not undertake these activities if it was regarded as a bank by other bankers. He stated that "
ke many other beings, a banker is easier to recognise than to define. In case of doubt, it is, I think, permissible to look at the reputation of the firm amongst ordinary intelligent commercial men." He also argued that when a business is running as a bank, judges should be reluctant to hold that it is not a bank.
Harman LJ (dissenting) thought the defining feature of a bank was the maintenance of current accounts, including deposit or savings accounts where notice is required before withdrawal of funds. The collection of cheques was "an additional requirement", but not an essential feature of a bank. Therefore, he opined, United Dominion Trust was not a banker because it did not operate current accounts. He acknowledged that it was regarded as such by other bankers, he regarded this as insufficient to make it a bank itself.
Diplock LJ
William John Kenneth Diplock, Baron Diplock, (8 December 1907 – 14 October 1985) was a British barrister and judge who served as a lord of appeal in ordinary between 1968 and until his death in 1985. Appointed to the English High Court in ...
stated:
Both Lord Denning and Diplock LJ seemed to have been influenced by the consequence of not finding United Dominions Trust to be a banker within the meaning of the legislation, which would have meant that potentially thousands of agreements would have been rendered unenforceable.
The court accepted that whilst acceptance of deposits was a ''necessary'' condition of being a bank, it was not of itself a ''sufficient'' condition.
An institution cannot be a bank unless it opens on behalf of customers current accounts which are operable by cheque and into which customers can pay cheques and other financial instruments for collection.
Commentary
The decision of the Court of Appeal has now been largely superseded for
banking regulatory purposes in terms of defining what constitutes a bank - firstly by the
Banking Act 1979 and then by the
Financial Services and Markets Act 2000
The Financial Services and Markets Act 2000c 8 is an Act of the Parliament of the United Kingdom that created the Financial Services Authority (FSA) as a regulator for insurance, investment business and banking, and the Financial Ombudsman Serv ...
. However, the decision remains important for determination of who constitutes a banker (and accordingly, a customer) for the purposes of bankers' rights and duties at common law.
See also
*
Footnotes
{{DEFAULTSORT:United Dominions Trust Ltd v Kirkwood
English banking case law
1966 in case law
1966 in British law