Co-op VISA **SETTLED IN FULL**

[lickthewallfatboy]

I've seen it mentioned that there is a high court precedent somewhere for £1000 per wrongful default on your credit file

 

anyone know anything about this?

[angryandy]

I've seen it mentioned that there is a high court precedent somewhere for £1000 per wrongful default on your credit file

 

anyone know anything about this?

 

Hope you're right. Need a good holiday!

[lickthewallfatboy]

once I have call credit under the cosh,I'll be going after the others as well

 

someone must know about this if it's true-I'm planning some hols next year as well

[Pinky69]

Kpohraror v Woolwich Building Society [1996]

Durkin Vs DGS 2008

[lickthewallfatboy]

can't give you more rep

 

but thanks!!

[lickthewallfatboy]

Kpohraror v Woolwich Building Society

 

 

COURT OF APPEAL, CIVIL DIVISION

EVANS, WAITE LJJ AND SIR JOHN MAY

 

 

25 OCTOBER, 30 NOVEMBER 1995

Contract - Damages for breach - Measure of damages - Foreseeable consequence of breach - Application of rule in Hadley v Baxendale - Building society mistakenly dishonouring cheque drawn on account used by plaintiff for business purposes - Injury to plaintiff's credit - Plaintiff claiming special damages for trading losses sustained by reason of delay - Building society denying knowledge of plaintiff's trading activities - Whether plaintiff who was not established trader entitled to recover damages.

 

The plaintiff, a Nigerian, converted an existing savings account with the defendant building society to a current account. On the application form he described himself as a self-employed 'exporter/importer' and stated that his annual income was below £5,000. The plaintiff subsequently drew a cheque for £4,550 on his account in favour of P Ltd. When P Ltd presented the cheque for payment with a request for special clearance, the defendants refused payment on the ground that the cheque had been reported lost. Later that same day, the defendants acknowledged that an error had occurred and immediately informed P Ltd that there were sufficient funds in the plaintiff's account to honour the cheque. The following day, P Ltd accepted one of the defendants' own corporate cheques as payment and thereupon released goods which were required by the plaintiff for shipment to Nigeria. The plaintiff subsequently commenced proceedings against the defendants claiming damages for wrongful dishonour of the cheque in breach of his current account contract with the defendants. They admitted liability and the master awarded damages of £5,550 with interest as general damages for the injury to the plaintiff's credit by reason of the dishonour of the cheque and the discreditable reason given by them for so doing. The award included a small allowance for the alleged injury to the plaintiff's credit and reputation in Nigeria. The plaintiff appealed to the Court of Appeal, contending that he was also entitled to recover special damages for trading losses sustained by reason of the delay to the shipment in question and further shipments. The defendants cross-appealed, contending that the damages awarded should be nominal on the ground that they did not know that the account was to be used for trading purposes.

Held - A person who was not a trader could recover substantial rather than nominal damages in contract for loss of credit or business reputation resulting from a cheque being wrongly dishonoured by his bank. It followed that the master's award was consistent with the correct approach to an award of general damages in the circumstances. However, the special damages which the plaintiff sought to recover were too remote, since there was nothing to indicate that a one-day delay in payment would cause the loss of a transaction or a substantial trading loss for the plaintiff, and the defendants could reasonably have expected that they would have been given special notice of the need for immediate clearance so that, if they were willing to do so, a special arrangement could be made. The appeal and cross-appeal would accordingly be dismissed (see p 123 a, p 124 c, p 125 b f, p 127 b c e f and p 128 c, post).

Hadley v Baxendale [1843-60] All ER Rep 461 applied.

 

[1996] 4 All ER 119 at 120

 

Notes

 

For the measure of damages in contract, see 12 Halsbury's Laws (4th edn) paras 1174-1176 and for a case on the subject, see 17(2) Digest (2nd reissue) 248, 1271.

Cases referred to in judgments

Addis v Gramophone Co Ltd [1909] AC 488, [1908-10] All ER Rep 1, HL.

 

Bank of New South Wales v Milvain (1884) 10 VLR 3, Vic Full Ct.

 

Bliss v South East Thames Regional Health Authority [1987] ICR 700, CA.

 

Brown v KMR Services Ltd [1995] 4 All ER 598, CA.

 

Davidson v Barclays Bank Ltd [1940] 1 All ER 316.

 

Evans v London and Provincial Bank (1917) 3 LDAB 152.

 

Gibbons v Westminster Bank Ltd [1939] 3 All ER 577, [1939] 2 KB 882.

 

Hadley v Baxendale (1854) 9 Exch 341, [1843-60] All ER Rep 461, 156 ER 145.

 

Heron II, The, Koufos v C Czarnikow Ltd [1967] 3 All ER 686, [1969] 1 AC 350, [1967] 3 WLR 1491, HL.

Joyce v Sengupta [1993] 1 All ER 897, [1993] 1 WLR 337, CA.

 

Monarch Steamship Co Ltd v Karlshamns (AB) Oljefabriker [1949] 1 All ER 1, [1949] AC 196, HL.

Parsons (H) (Livestock) Ltd v Uttley Ingham & Co Ltd [1978] 1 All ER 525, [1978] QB 791, [1977] 3 WLR 990, CA.

 

President of India v La Pintada Cia Navegacion SA [1984] 2 All ER 773, [1985] AC 104, [1984] 3 WLR 10, HL.

 

Rae v Yorkshire Bank plc [1988] BTLC 35, CA.

 

Rolin v Steward (1854) 14 CB 595, 139 ER 245.

 

Wilson v United Counties Bank Ltd [1920] AC 102, [1918-19] All ER Rep 1035, HL.

 

Cases also cited or referred to in skeleton arguments

 

Hill (Christopher) Ltd v Ashington Piggeries Ltd, Christopher Hill Ltd v Fur Farm Supplies Ltd (Norsildmel, third party) [1969] 3 All ER 1496, CA; rvsd sub nom Ashington Piggeries Ltd v Christopher Hill Ltd, Christopher Hill Ltd v Norsildmel [1971] 1 All ER 847, [1972] AC 441 HL.

 

Marzetti v Williams (1830) 1 B & Ad 415, [1824-34] All ER Rep 150, 109 ER 842.

Prehn v Royal Bank of Liverpool (1870) LR 5 Exch 92.

 

Seven Seas Properties Ltd v Al-Essa (No 2) [1993] 3 All ER 577, [1993] 1 WLR 1083.

 

Victoria Laundry (Windsor) Ltd v Newman Industries Ltd (Couldson & Co Ltd, third party) [1949] 1 All ER 997, [1949] 2 KB 528, CA.

 

Appeal and cross-appeal

By notice dated 18 May 1994 the plaintiff, Udele Edirin Kpohraror, appealed from the decision of Master Tennant in chambers on 16 February 1994 whereby he awarded the plaintiff damages of £5,500 in respect of an action for breach of contract for wrongful dishonouring of his cheque against the defendants, Woolwich Building Society, contending that he was also entitled to recover special damages for loss of profit on the transaction and on ten further shipments which would have followed from it. By notice dated 7 June 1994 the defendants cross-appealed against the award on the ground that the plaintiff was only entitled to nominal damages. The facts are set out in the judgment of Evans LJ.

 

Daphne Loebl (instructed by Anthony Gold Lerman & Muirhead) for the plaintiff.

 

Katherine McQuail (instructed by Morgan Bruce, Cardiff) for the defendants.

 

Cur adv vult

 

[1996] 4 All ER 119 at 121

 

30 November 1995. The following judgments were delivered.

 

 

 

EVANS LJ.

 

On 9 September 1991 the plaintiff drew a cheque for £4,550 on his current bank account with the defendants at their branch at 136 Clapham High Street, London SW4. He is a Nigerian and he had described himself as a self-employed 'exporter/importer' as well as a part-time employee of two south London businesses when he converted his six-month-old savings account to a current account in June 1991. He stated that his income was below £5,000 pa.

The cheque was drawn in favour of Phils (Wholesalers) Ltd in the sum of £4,550. The current balance at the time was about £4,800 including a cheque for £3,000 which was credited to the account on 3 September.

 

The cheque was presented for payment on 10 September at the payee's bankers with a request for special clearance. Sometime during that day the defendants refused payment on the ground 'Cheque reported lost' and this was reported by the payee to the plaintiff. He went to the defendants' branch where he had his account before 5 pm. The error, for it was an error, was acknowledged and the manageress told the payee by telephone at the plaintiff's request that there were sufficient funds in the account. She persuaded the payee to accept the defendants' own corporate cheque and gave this to the plaintiff at about 5.15 pm. He took it to the payee, Phils (Wholesalers) Ltd, next morning, who accepted it as payment then and agreed to release goods which the plaintiff required for shipment to Nigeria. The goods were cosmetic products which the plaintiff had bought for re-sale there.

The plaintiff claims damages for wrongful dishonour of the cheque in breach of his current account contract with the defendants, and liability is admitted. The assessment of damages came before Master Tennant in chambers on 16 February 1994. He awarded £5,550 with interest as general damages for the injury to the plaintiff's credit by reason of the dishonour of the cheque and the apparently discreditable reason given for it, which was of course unfounded. He rejected the defendants' submission that the damages award should be nominal only, and he likewise rejected the plaintiff's claim for a much greater sum, pleaded as £57,185·4368.

 

The plaintiff and the defendants appeal and cross-appeal respectively. We have had the benefit, as did the master, of detailed and helpful submissions from Miss Loebl for the plaintiff and Miss McQuail for the defendants.

 

The claim is for general damages for loss of business reputation and credit and for special damages of which particulars are given in the amended statement of claim. These can be set out verbatim:

 

'PARTICULARS OF SPECIAL DAMAGE

 

The said cheque was drawn to pay for goods which were due to be collected from the said Phils (Wholesale) on 12th September 1992 for shipment for McTeri Ltd in Nigeria which shipment could not take place by reason whereof the Plaintiff's contract with the said McTeri Ltd was terminated and the said goods had to be sold elsewhere.

 

The claim is for damages for breach of contract, rather than in tort, although the award of substantial damages for loss of business reputation appears to have an obvious affinity with tortious claims.

 

In Ellinger and Lomnicka Modern Banking Law (2nd edn, 1994) p 387, in their chapter dealing with 'The customer's remedies for wrongful dishonour of his cheques', the authors write: 'A re-examination of the basic principle is timely.' Counsel submit that the present case provides the opportunity for doing so. The basic principle referred to has the authority of the House of Lords in Wilson v United Counties Bank Ltd [1920] AC 102, [1918-19] All ER Rep 1035 and of this court (O'Connor and Parker LJJ) as recently as 1987, in Rae v Yorkshire Bank plc [1988] BTLC 35. It is open to us, however, to consider what the principle is and what its limits are.

 

Both parties accept that the claim is governed by the general law, that is to say the plaintiff may recover general damages under the first head of the rule in Hadley v Baxendale (1854) 9 Exch 341, [1843-60] All ER Rep 461 and special damages under the second head of the rule when the necessary facts are proved. This is not the only sense in which the terms 'general' and 'special' damages are used nor the only context in which a distinction is made between them. One such distinction is that special damages must be expressly claimed and pleaded, whereas general damages need not (see generally McGregor on Damages (15th edn, 1988) para 19).

The claim for general damages rests upon the first part of the rule in Hadley v Baxendale, namely, they are claimed as damages 'arising naturally (which means in the normal course of things)' from the defendant's breach (see Monarch Steamship Co Ltd v Karlshamns (AB) Oljefabriker [1949] 1 All ER 1 at 12, [1949] AC 196 at 221 per Lord Wright). It is not disputed that a claim does arise for loss of credit or business reputation, but the defendants say that the amount should be nominal unless special facts are proved which were made known to them when the contract was made; in other words, that this should properly be regarded under the second, not the first part of the Hadley v Baxendale rule. They rely upon a number of reported cases where nominal damages only were awarded: by a jury in Evans v London and Provincial Bank (1917) 3 LDAB 152, by Lawrence J in Gibbons v Westminster Bank Ltd [1939] 3 All ER 577, [1939] 2 KB 882 and by this court in Rae v Yorkshire Bank plc, where a claim for substantial damages for 'inconvenience and humiliation' was dismissed.

 

However, the plaintiff relies upon the line of authority which holds that actual damage need not be alleged or proved by 'a trader', which he claims that he was. The defendants say that they were unaware of this, and that the rule does not apply, for that reason alone.

 

[1996] 4 All ER 119 at 123

 

As will appear below, the issue in my view is whether a person who is not 'a trader' for the purposes of the common law rule--and it is not at all clear what the limits of that category are--can recover substantial rather than nominal damages for loss of business reputation when his cheque is wrongly dishonoured by the bank. A subsidiary question is how much the measure of damages is affected by the extent of the bank's knowledge of its customer and of the purposes for which he uses his account.

 

I will start with the authorities which establish that a 'trader' is entitled to recover substantial, rather than nominal, damages for loss of business reputation without proof of actual damage. This was recognised and applied, although in a different context, by the House of Lords in Wilson v United Counties Bank Ltd [1920] AC 102, [1918-19] All ER Rep 1035. Lord Birkenhead LC said:

 

'The objection was taken by the defendants that this finding of the jury cannot be supported without proof of special damage. In deciding this point, I do not lay down a rule of general law, but I deal with the exceptional language of an exceptional contract. The defendants undertook for consideration to sustain the credit of the trading customer. On principle the case seems to me to belong to that very special class of cases in which a banker, though his customer's account is in funds, nevertheless dishonours his cheque. The ratio decidendi in such cases is that the refusal to meet the cheque, under such circumstances, is so obviously injurious to the credit of a trader that the latter can recover, without allegation of special damage, reasonable compensation for the injury done to his credit. The leading case upon this point is that of Rolin v. Steward ((1854) 14 CB 595, 139 ER 245). The direction of Lord Campbell to the jury has been generally accepted and treated as an accurate statement of the law. If it be held that there is an irrebuttable presumption that the dishonour of a trader customer's cheque in the events supposed is injurious to him and may be compensated by other than nominal damages, the conclusion would appear to follow almost a fortiori that such damages may be given where the defendant has expressly contracted to sustain the financial credit of a trading customer and has committed a breach of his agreement.' (See [1920] AC 102 at 112, [1918-19] All ER Rep 1035 at 1037.)

 

 

(See also [1920] AC 102 at 120, 132-133, [1918-19] All ER Rep 1035 at 1038, 1041 per Viscount Finlay and Lord Atkinson.)

 

Two passages should be quoted from Rolin v Steward (1854) 14 CB 595, 139 ER 245. Lord Campbell CJ directed the jury to give 'not nominal, nor excessive, but reasonable and temperate damages' (see 14 CB 595 at 605, 139 ER 245 at 249). In the Court of Common Pleas, Williams J said that--

 

'when ... the [customer] is a trader ... the jury, in estimating the damages, may take into their consideration the natural and necessary consequences which must result to the [customer] from the [bank's] breach of contract: just as in the case of an action for a slander of a person in the way of his trade, or in the case of an imputation of insolvency on a trader, the action lies without proof of special damage.' (See (1854) 14 CB 595 at 607, 139 ER 245 at 250.)

 

 

The rule so stated made it necessary to consider in every case whether or not the plaintiff was a trader. In Australia in 1884 a farmer was not (see Bank of New South Wales v Milvain 10 VLR 3). In England, in 1940, a bookmaker was (see Davidson v Barclays Bank Ltd [1940] 1 All ER 316), but it is an open question whether

 

[1996] 4 All ER 119 at 124

 

professionals such as solicitors and accountants who are 'akin to businessmen' are within the rule (see Ellinger and Lomnicka p 387).

 

It is abundantly clear, in my judgment, that history has changed the social factors which moulded the rule in the nineteenth century. It is not only a tradesman of whom it can be said that the refusal to meet his cheque is 'so obviously injurious to [his] credit' that he should 'recover, without allegation of special damage, reasonable compensation for the injury done to his credit' (see [1920] AC 102 at 112, [1918-19] All ER Rep 1035 at 1037 per Lord Birkenhead LC). The credit rating of individuals is as important for their personal transactions, including mortgages and hire-purchase as well as banking facilities, as it is for those who are engaged in trade, and it is notorious that central registers are now kept. I would have no hesitation in holding that what is in effect a presumption of some damage arises in every case, in so far as this is a presumption of fact.

So the question becomes, whether the authorities compel the conclusion as a matter of law that the presumption cannot extend beyond the category of trader. In my judgment, they do not. The most directly relevant are Gibbons v Westminster Bank Ltd [1939] 3 All ER 577, [1939] 2 KB 882 and Rae v Yorkshire Bank plc [1988] BTLC 35. In the former case, Lawrence J regarded the presumption in favour of a trader as one of four exceptions to the general rule that the plaintiff in a claim for damages for breach of contract cannot recover substantial damages in the absence of proof that some actual damage has been suffered, and he felt unable to extend the exception to non-traders (see Addis v Gramophone Co Ltd [1909] AC 488 at 495, [1908-10] All ER Rep 1 at 5 per Lord Atkinson). He said:

 

'The authorities which have been cited to me all lay down that a trader is entitled to recover substantial damages without pleading and proving actual damage for the dishonour of his cheque, but it has never been held that that exception to the general rule as to the measure of damages for breach of contract extends to any one who is not a trader.' (See [1939] 3 All ER 577 at 579, [1939] 2 KB 882 at 888.)

 

 

In Rae v Yorkshire Bank plc the plaintiff's claim was for damages for 'inconvenience and humiliation' (see [1988] BTLC 35 at 37). Parker LJ, with whom O'Connor LJ agreed, cited Bliss v South East Thames Regional Health Authority [1987] ICR 700, where Dillon LJ held that the general rule laid down in Addis v Gramophone Co Ltd is that--

 

'where damages fall to be assessed for breach of contract rather than in tort it is not permissible to award general damages for frustration, mental distress, injured feelings or annoyance occasioned by the breach.' (See [1987] ICR 700 at 717-718.)

 

 

Dillon LJ also noted a further exception to the general rule which is now permitted 'where the contract which has been broken was itself a contract to provide peace of mind or freedom from distress' (see [1987] ICR 700 at 718). Parker LJ continued ([1988] BTLC 35 at 37): 'That authority, and Gibbons, are two of many which in my view make Mr Rae's an appeal which must inevitably fail.' Clearly, the judgment in Rae v Yorkshire Bank plc was based primarily in the application of the law as stated by Dillon LJ to the facts of that case, where the claim was for 'inconvenience and humiliation' (only). That is a different kind of damage from loss of reputation or credit, unless 'humiliation' is intended to include such injury in the eyes of third parties, but that point was not taken in

 

[1996] 4 All ER 119 at 125

 

Rae's case because the kinds of damage referred to by Dillon LJ all refer to the injured feelings of the plaintiff himself.

 

The trial judge in Rae had referred to Gibbons and said (see [1988] BTLC 35 at 36): 'It is clear that Mr Rae was not a trader and that in those circumstances, damages are purely nominal'. Apart from the passing reference to Gibbons in the passage already quoted, the 'trader' rule, or exception, was not considered in the judgments in the Court of Appeal.

In these circumstances, neither Rae nor Gibbons itself is binding authority which precludes this court from considering whether a bank's customer who is not a trader is precluded from recovering substantial damages for injury to his reputation or credit, unless special damage is alleged and proved. The trader exception itself recognises, as does the general rule regarding the recovery of damages for tort, that this is a kind of injury recognised by law. If the trader is an exception to the general rules regarding damages for breach of contract, then the explanation may lie in the tortious analogy with damages for injury to business credit. In Addis v Gramophone Co Ltd Lord Atkinson did not refer to any 'trader' rule, but generally to 'actions against a banker for refusing to pay a customer's cheque when he has in his hands funds of the customer's to meet it' (see [1909] AC 488 at 495, [1908-10] All ER Rep 1 at 5). McGregor deals with the rule as applying only to traders but also states generally that 'loss by injury to credit and reputation caused by the defendants' failure to honour the plaintiff's drafts may be presumed' (see paras 1222, 1785). (Damages for loss of reputation simpliciter are excluded, whether in contract or for torts other than defamation (see Joyce v Sengupta [1993] 1 All ER 897, [1993] 1 WLR 337).)

 

Moreover, if the exception is a presumption of fact then it is open to the court, in my judgment, to hold that changing social circumstances should cause the presumption to be reviewed and if necessary expanded in order to take those changes into account.

For these reasons, I would reject the defendants' allegation by way of cross-appeal that the master was wrong to award more than a nominal sum by way of general damages. I should, however, also refer to their contention that the master was wrong to do so when the defendants denied that they had knowledge of the fact that he was a trader. In none of the reported cases where a trader has succeeded in recovering substantial damages has the bank's knowledge been in issue. The master decided this effectively as a preliminary issue. The defendants wished to call as a witness their employee who dealt with the plaintiff when he converted his savings account into a current account in June 1991. She would have denied, as her affidavit evidence indicated, that he told her that the account would be used for trading purposes. So the master gave 'part 1' of his judgment holding that substantial damages could be awarded even where the bank had no knowledge 'actual or implied of the plaintiff's status as a trader and the use of his account'. If the trader 'exception' is good law then I doubt whether this can be correct, if only because it offends against the basic requirement of both parts of the rule in Hadley v Baxendale which is that the test of remoteness and therefore of the right to recover a particular head of damage depends upon the state of the defendant's knowledge of the likely, or 'not unlikely' (see The Heron II, Koufos v C Czarnikow Ltd [1967] 3 All ER 686, [1969] 1 AC 350), consequences of his breach, whether 'in the usual course of things' because of what the defendant is taken to have known or by reason of his actual knowledge of special facts. But it is unnecessary to express a concluded view, because the evidence is that the plaintiff described himself in the application form

 

[1996] 4 All ER 119 at 126

 

as a part-time self-employed 'exporter/importer' although clearly on a modest scale. This evidence is not and cannot be disputed and it is sufficient in my judgment to fix the defendants with knowledge that that was the self-styled description of the plaintiff for the purposes of the contract between them with regard to the current account. To this extent, it was a question of 'status' and the defendants knew what that status was. If it is objected that they should also have knowledge that the account was to be used for trading purposes, then this is a further refinement of the trader exception--the dishonour of a personal cheque could be no less harmful to the trader's credit than of one drawn on a trading account, perhaps even more so--and an additional reason why in my judgment, the exception or rule should not be confined as the defendants say that it should.

Special damages

 

I come therefore to the plaintiff's main ground of appeal. He asserts, in the 'particulars of special damage' already quoted, that he is entitled to recover damages for his loss of profit on the transaction in question and on ten further shipments which, he says, would have followed from it if the first shipment had not been delayed. He claims, moreover, that his losses in respect of the goods which were delayed included a very large sum ('Claim from McTeri Ltd in Nigeria for N300,000 (converted as) £15,949·4349') which he was compelled to pay to his Nigerian customer both by reason of his legal liabilities, as he asserts, owed to that customer and because considerable pressures, both commercial and social, were brought to bear upon him and his father and family by that customer in Nigeria. So, Miss Loebl submits on his behalf, these were all heads of damage which could reasonably be contemplated by the defendants when the banking contract was made, not because they had any knowledge of the circumstances of the particular transaction or of any intended transaction, but because they knew, as the plaintiff asserts, that he was an 'exporter/importer' and that he intended to use the account for his business activities. To these might be added the fact which is undisputed that the defendants knew that the plaintiff is Nigerian and so, it might be submitted, were also aware that exports of goods might be delivered there.

The master dealt with this part of the claim on the assumption that the plaintiff was correct as to the extent of the defendants' knowledge. He held that nevertheless these damages could not be recovered, either under the first limb of Hadley v Baxendale ('this was such an extraordinary outcome it could not possibly be regarded as a natural consequence of a banker's breach of contract') or under the second limb, because even on the basis of the defendants' assumed knowledge 'this claim ... raises a narrative of events which though not unimaginable is certainly not foreseeable in the ordinary course'.

 

Miss Loebl submits that it is not necessary for the plaintiff to prove either that the precise sequence of events was foreseeable or that the losses might be as extensive as they were. She relies in particular upon H Parsons (Livestock) Ltd v Uttley Ingham & Co Ltd [1978] 1 All ER 525, [1978] QB 791 and the recent judgments in Brown v KMR Services Ltd [1995] 4 All ER 598. Given the facts which were known, or are asserted to have been known by the defendants, they could reasonably contemplate, it is submitted, that a breach of contract such as occurred might cause him losses of the kind which he alleges that he has suffered.

 

For my part, I cannot regard this as a claim falling within the second limb of Hadley v Baxendale. It is not a case where the defendant is said to have had knowledge of 'special circumstances' so that this part of the rule applies. Rather,

 

[1996] 4 All ER 119 at 127

 

the question is, in my judgment, whether, given the plaintiff's general description of himself and of the purposes for which he intended to use the account, it can be said that damages arising from the loss or late performance of his contract to sell and deliver the goods to Nigeria can reasonably be supposed to have been in the contemplation of both parties when the contract was made, or as the 'not unlikely consequence' of the defendants' breach, if it should occur (The Heron II). This is the first rather than the second limb of the rule, although as I shall say below I am doubtful whether it assists to make a rigid distinction of this sort.

In my judgment, and in agreement with the master, these damages were too remote to be claimed under this head. Even if the defendants were told that the account was to be used for the plaintiff's business, even trading activities, there was nothing to indicate that a cheque, even one drawn in favour of a goods wholesaler, was required for the purposes of international trade and in circumstances where even one day's delay in payment would or might cause the loss of a transaction or a substantial trading loss for the plaintiff. What might perhaps be contemplated was that, if such a situation did arise, then the plaintiff would give the defendants special notice of the need for immediate clearance so that, if they were willing to do so, a special arrangement could be made.

 

There is also the pragmatic reason given by the master, which is that there is no reported case where a bank's customer has recovered damages such as these for the wrongful dishonour of a cheque, where no special circumstances were alleged to exist.

 

Generally

 

The above conclusions mean that I would dismiss both the appeal and the cross-appeal, and would uphold the master's award of general damages of £5,550. He said that it was 'somewhat coincidental' that this was £1,000 more than the amount of the cheque, although I think he meant by this that the appropriate sum by way of general damages could be calculated in that way in the circumstances of this case. This amount, as he explained, contained some allowance, though not very great, for injury to the plaintiff's credit and reputation in Nigeria such as was alleged to have occurred. This is consistent with a correct approach to the award of general damages in a case where the plaintiff claimed that he was an exporter/importer and therefore the defendants could reasonably contemplate that he might suffer some injury to his credit in a country overseas.

 

The contentions for both parties were presented as if in a straitjacket imposed by the strict application of the rule in Hadley v Baxendale so as to require the separate consideration of each of the two limbs. Miss Loebl submitted that there should be an award of general damages for injury to credit and of special damages for the trading losses allegedly sustained by reason of the delay to the particular shipment. Miss McQuail for the defendants submitted that general damages should be confined to 'loss flowing naturally being the unavailability to the customer of his money'--a difficult submission, in the light of the House of Lords decision in President of India v La Pintada Cia Navegacion SA [1984] 2 All ER 773 esp at 778, 789, [1985] AC 104 esp at 115, 129)--and 'other loss depending upon the matters known to the parties at the time of the contract', which might include damages for loss of reputation or credit and for trading losses, in appropriate circumstances. The master held that the bank's knowledge of whether the customer was 'a trader' or whether the account was to be used for trading purposes was irrelevant as a matter of law to the loss of credit claim. I would prefer to hold that the starting point for any application of Hadley v Baxendale is

 

[1996] 4 All ER 119 at 128

 

the extent of the shared knowledge of both parties when the contract was made (see generally Chitty on Contracts (27th edn, 1994) vol 1, para 26-023, including the possibility that knowledge of the defendant alone is enough). When that is established, it may often be the case that the first and the second parts of the rule overlap, or at least that it is unnecessary to draw a clear line of demarcation between them. This seems to me to be consistent with the commonsense approach suggested by Scarman LJ in H Parsons (Livestock) Ltd v Uttley Ingham & Co Ltd [1978] 1 All ER 525 at 541, [1978] QB 791 at 813, and to be applicable here.

As stated above, I would dismiss both the appeal and the cross-appeal and uphold the master's award.

 

 

 

WAITE LJ.

 

I agree that the appeal and cross-appeal should both be dismissed for all the reasons given by Evans LJ, with which I am in full agreement.

 

 

SIR JOHN MAY.

 

I also wholly agree with the judgment which Evans LJ has just handed down and that in consequence both the appeal and cross-appeal should be dismissed.

 

Appeal and cross-appeal dismissed. Leave to appeal to the House of Lords refused.