Red-faced bank mistook €50,000 for €50 – and didn't notice for a year
Published 17/11/2012 | 05:00
A BANK accidentally processed a €50,000 cheque as being for €50 – and didn't notice for a year.
But when red-faced bankers finally realised 12 months later that they were missing €49,950, the man who wrote the cheque refused to pay the money.
AIB had to go to the High Court to try to recoup the money from the March 2009 cheque.
The High Court heard that the issue first arose three years ago after Richard Larkin wrote a cheque for €50,000, dated March 9, 2009, drawn on his account with AIB, Oranmore, Galway, and payable to "Keane Solrs".
He gave the cheque for payment to Patrick M Keane & Co and it was presented for payment at the AIB branch at Eyre Square, Galway.
However, AIB claimed that due to an "error" by the payee filling out the lodgment docket, which was not noticed by the bank teller, the cheque was processed as one for €50.
The Eyre Square branch passed the cheque on to the Oranmore branch, as paying bank, on the basis it was a €50 cheque. and therefore Mr Larkin's account was debited for €49,950 less than it should have been.
Nine months later, on January 20, 2010, Keane Solicitors went to the bank and told them of the mistake and AIB paid the firm the €49,950 outstanding. AIB then sought payment from Mr Larkin.
Opposing the bank's application, Mr Larkin said when he drew the cheque in March 2009, it authorised AIB to pay out €50,000 in one payment within six months provided there were sufficient funds in his account to cover payment.
He alleged bank staff at AIB Eyre Square and Oranmore negligently and in breach of duty and contract failed to notice the cheque was for €50,000 and the discrepancy was also not noticed by any other collection or clearing mechanism.
Mr Larkin said he had had sufficient funds in his account in March 2009 to pay and, were it not for the alleged negligence of AIB, that sum would have been paid then, clearing his liability to the law firm.
In February 2010, AIB chose to credit the lawyers with €49,950 when that payment, he alleged, did not accord with the mandate he gave the bank when he drew the cheque.
Among various arguments, he contended the Bills of Exchange Act 1882 provides, where a bill is not "duly" presented for payment, the drawer and endorser may be discharged and he should be discharged from liability.
He argued he was not liable to AIB for the €49,950 because, when AIB paid Keane's in March 2010, it knew he had insufficient funds in his account then to meet that payment.
Mr Justice John Hedigan ruled that Mr Larkin had raised no plausible defence. Mr Larkin was in this position probably as a result of a mistake by others but this was not just a court of law, it was also a court of justice, the judge said.
Justice could not be served except by ensuring Mr Larkin met his obligations.
The judge did not accept Mr Larkin had not become aware of the mistake quickly and said he had "no hesitation" finding Mr Larkin liable for the €49,950, plus interest from February 2010 when AIB notified him of the mistake and demanded payment.