Machisa v Zambia National Commercial Bank (Appeal No. 32 of 1990) [1991] ZMSC 65 (21 May 1991)

IN THE SUPREME COURT OF ZAMBIA Appeal No. 32 of 1990 HOLDEN AT NDOLA (Civil Jurisdiction) -if 'X SPIDER MACHISA Appellant v ZA'^IA NATIONAL COMMERCIAL BANK LTD. Respondent ■ ' '' 14 * CORAM: Gardner, Ag. J. S., Chaila and Chirwa, JJS., ‘ i 4th December, 1990 and 21st May, 1991. Mr. H. Chamba of Mwanawasa & Co. for the appellant. Mr. G. Banda of Zambia National Commercial Bank for the respondent. J U D 6 MEN T • ' ' - < ■< ■■ , ’ ■ ' • -■ *' J ■' - 'y * - ’' al ? Chirwa, J. S., delivered the judgment of the court. - • • ‘ / Cases referred to: (1) Gibbon -v- Westminister Bank Ltd. (1939) 3 ALL E. R. 577 (2) Flech v London & South-Western Bank Ltd. (1915) 31 (T. UL 334 The appellant Spider Machisa had sued the respondent Zambia National Commercial Bank Ltd. In this judgment the parties will be referred to as plaintiff and defendant respectively for that is what they were in the court below. The plaintiff’s claim was for damages for breach of contract . I ' and libel plus interest and costs. The undisputed facts found by the court below in this case were that the plaintiff was a customer □2 of the defendant’s Mansa Branch and operated three accounts, namely Current Account No. 10960, Savings Account No. 27343 and a Notice Deposit Account. At the material time the accounts had K16D,D00.00, K10,076.77 and K600,D00.00 respectively. The accounts were used to run businesses namely two shops run by ths plaintiff's two sons and a bar run by himself. On 22nd February, 198B the two shops were acquired by the State underi #*mergency (Essential Supplies and Services) Regulations, 1900. On 27th February, 1980 the T plaintiff advised the defendants by letter dated the same day not to honour all cheques issued to Capperbelt based payees as the plaintiff was temporarily out of business. However, an exception was made for Lyons Brooke Bond's cheque, which the plaintiff allowed to be cashed. On the 29th day of February, 1988 the plaintiff issued a cheque to his advocates in the sum of K5,000.00. This cheque was not honoured by the defendant and was endorsed "payment ; $ • stopped". On 16th March, 1900 the plaintiff personally went to the Bank to withdraw some money but was shown a telex from the defendant's Head Office instructing the Mansa Branch not pay money from the plaintiff's accounts as his trading licence had been revoked by the state. The plaintiff was thus prevented from personally withdrawing any money from hie accounts until after 9th May,. 1988. The court below found that the plaintiff's written instructions also covered hie advocates' cheque and that, since the two shops ............33. □3 had been taken over by the State, the property taken over included cash in the defendant*a Mansa Branch end the defendant's Head Office uias justified in stepping the Mansa Branch from honouring any cheques on the plaintiff's accounts* > • • In arguing the case on behalf of the plaintiff, Mr. Chama argued that the written instructions referred to cheques issued prior to 27th February, 1988 and not cheques issued after that date. Further as the defendant's Branch relied on instructions from its He: ad office which based its decision on Statutory Instrument No. 38 of 1988, the'refusal to honour the cheques was unlawful. He further argued that personal cheques should have been honoured and his client was claiming general damages for loss of access to his accounts and relied on the case of GIBBONS va WEST MINISTER BANK LTD (1). I?. r In reply Mr. Banda for the defendant argued that the defendants I ■■ ■ . '. J,:.? ; were acting on the plaintiff's own written instructions not to honour cheques fronri 27th February, 1988. It was conceedsd that the plaintiff had no access to his accounts far two months but that the plaintiff was himself to blame. In Paget's Law of Banking, Bth edition at Page 312 it is stated that the banker's primary function end duty is to honour his customer's cheques, provided the state of account warrants his doing so and there is no legal reason or excuse to the contrary. Apert from this contractual obligation, or as a . .......... DA. consequence thereof, the paying banker must remember that his * ’ r * K customer’s credit is or maybe seriously injured by the return of one of hie cheques dishonoured and the smaller the cheque* the greater the possible damage to credit* ■ 'tn Section 75 of the Bills of Exchange Act* 1862 provides that:* > I' h The duty and authority of a banker to pay s cheque drawn on him by his customer are determined by (1) countermand of payment, (1) Notice of the customer’s death,” The plaintiff is claiming damages for libel in respect of the dishonoured cheque to his advocates endorsed "payment stopped^. It is contended by the plaintiff that his instructions of 27th February, 1788 to the defendants Here that the defendants should not pay cheques issued to Copperbelt clients before that date and not after that date. That the dlBhonouring of his advocates’ cheques issued after 27th February* 1988 was wrong and libellous. Ide agree with the Law stated in Paget’s Law of Banking quoted, above. From the evidence available on record* it is clear that the plaintiff had sufficient funds in his accounts to meet K5,000.00 cheque. On the face of it* dishonouring this cheque was a breech of contract between the parties end unless there is some legal reason or excuse, the plaintiff’s credit is or maybe seriously Injured. The defendants are relying on the letter to them by the Plaintiff dated 27th February, 1988. Ule will quote the relevant parts of this letter in full:* - v; ■ ' |T' * Ax i - - * Dear Sir, REQUEST TO STOP PAYMENT OF ALL THE CHEQUES WE HAVE ISSUED TO COPPERBELT EXCEPT CHQ. NO, 097838 FOR LYONS BROOKE BOND FOR K6,986.80 I I ' r Following the seizure of our both two ehops by the State, It has come^to our mind tn request you not to honour any one of ths cheques we have issued for the simple reasons that we have been completely put out of business. We further request you to kindly advise the payees to hold on to the cheques until when they will be advised to redpposit them by us. We have only mode one exception] "that le Lyons Brooke Bond11 when the cheque payable to them comes please, do honour it. We thank you in anticipation of your co-operation in this matter. Yours faithfully, • I ' - «■ *• ■ । • t ’ m -•/£*; Spider Hachisa ■ There is again a small note dated the same dsy 27th February, 1988 which reads ” Apart from cheque No. 097B38 for K9,986.80 dated 5/3/88 all other cheques must not be paid. Please advise the payees to represent them later. Shipaita Makishi 1 * • - r- \ ; t ‘ " • « * '• . ■■ ‘ . i i ’ , ■ ‘"<f * >■- 4, , J f From these two written instructions to the defendant we have found it extremely difficult to accept the interpretation put on them by Mr. Chwna that these instructions were for cheques Issued prior to the 27th February, 1988.because the shorter note ; dated 27th February, 1988 clearly shows that cheque No.097838 to Lyons Brocket’ Bond in the sum of K9.986.80 was already Issued /.□6. r •-& □6 - „ '. ■ ; but post-dated to 5th March* 198B* looking at the two written instructions, it is clear to us that all cheques ware not to be honoured until these instructions were.countermanded* There was no evidence in the court below that at the time the cheque to the plaintiff’s advocates was ^saued and presented the previous instructions to the defendant had been countermanded* The plaintiff's t advocates are on the Copperbelt* they are therefore covered by the plaintiff’s instructions to the defendant and their cheque was properly not honoured* In any event we do not hold the view that the endorsement "payment stopped* is defamatory end cannot bear - - ‘ ' S’ ■’ C. the imputation as pleaded* In fact even such endorsements as "refer to drawer" have been held to seem not to be defamatory on their own as was stated in the case of FLECH vs LONDON ANO SOUTH- , WESTERN BANK LTD (2) AT 336 by Scrutton, J* that such an expression amounted to a statement of the Bank "we are nbt paying; go beck to the drawer and esk him to pey** - r < On the facts of the case we hold that the learned trial judge properly directed himself when he dismissed this heed of claim end we dismiss the appeal on this head of claim* A Coming to the personal cheques, the refusal to honour them was not wholly based on his written instructions but on the telex message received by the Mensa Branch of the defendants from their Head Office. We have found no legal basis for these instructions to Hansa Branch of the defendants* Even Hr, Banda for the defendants did not seriouelyaargue any legal basis for these instructions. The plaintiff was stopped from cashing personal cheques for hie survival. The conduct of the defendants wee a breach of contract between themselves and the plaintiff and this breach had been proved on evidence on record. Ue allow this appeal under this claim and enter judgment in his favour* On the question of damages, although the plaintiff's bar was not effected by the Emmergency (Essential Supplies and Services) / Regulations 19SB no evidence use led in the court below as to what loss the plaintiff suffered in his business* Ue accept that GIBBONS vs WEST MINISTER BANK LTD (1) and the caseS-Cited therein, lay down good lew that a trader whose cheque has wrongly been dishonoured by bis banker is entitled to recover substantial damages without pleading and proving actual damages for the dishonour of hla cheque* However the GIBBONS csss is distingui­ shable from our instance case. Our instance case does not involve any dishonoured cheque but refusal by the defendant from allowing the plaintiff from cashing personal cheque because the accounts were "frozen*. The plaintiff clearly states in his evidence that he was not allowed to sign any cheques. It follows therefore that although the plaintiff is a trader he cannot recover substantial damages without pleading and prlving the actual damage suffered as a result of the defendant's refusal to r allow him to Isaue personal cheques. The damages have to be ••••*..*;.*.j8.