WESTPAC BANKING CORPORATION AND ORS V COMMISSIONER OF INLAND REVENUE HC WN CIV 2006-485-2448

WESTPAC BANKING CORPORATION AND ORS V COMMISSIONER OF INLAND REVENUE HC WN CIV 2006-485-2448 3 November 2008IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY CIV 2006-485-2448UNDER the Declaratory Judgments Acts 1908 IN THE MATTER OF Section 4 of the Unclaimed Money Act 1971 BETWEEN WESTPAC BANKING CORPORATION First Plaintiff AND BANK OF NEW ZEALAND Second Plaintiff AND ANZ NATIONAL BANK LIMITED Third Plaintiff AND THE COMMISSIONER OF INLAND REVENUE Defendant Hearing: 3-4 June 2008 Counsel: D J Goddard QC and J Cheng for defendant in support J S Kós QC, J D Palmer and N K Leslie for plaintiffs to oppose Judgment: 3 November 2008 at 4pm In accordance with r540(4) I direct the Registrar to endorse this judgment with a delivery time of 4pm on the 3 rd day of November 2008.RESERVED JUDGMENT OF MACKENZIE J Introduction[1] This proceeding is concerned with the application of the Unclaimed Money Act 1971 (the UMA) to foreign currency drafts and New Zealand currency bank cheques issued by the plaintiff banks in the course of their business which are notpresented for payment. The case is in many respects a sequel to the decision of the Privy Council in Commissioner of Inland Revenue v Thomas Cook (New Zealand) Limited [2005] 2 NZLR 722, in which the Privy Council dealt with the application of the UMA in relation to foreign currency drafts issued by a non-bank drawer.The Proceedings[2] The plaintiffs initially sought declarations that certain specified categories of money or obligations in relation to foreign currency drafts and New Zealand currency bank cheques are not unclaimed money in terms of the UMA. The Commissioner filed a statement of defence in which the Commissioner did not take issue with the declarations sought, in that the Commissioner accepted that the various categories of money referred to in the statement of claim are not unclaimed money. Rather, the Commissioner contended that the amounts payable by the banks pursuant to the unpresented bank drafts and bank cheques are unclaimed money within the meaning of s 4(1)(e) of the UMA. The Commissioner accordingly issued a counterclaim against the banks in which he pleaded eight causes of action in relation to unpresented drafts and bank cheques for each of the plaintiffs respectively. The Commissioner also applied for summary judgment in respect of, initially, all eight causes of action in the counterclaim. There have been amended pleadings. The summary judgment application is pursued in respect of all but three causes of action, each of which depends on factual matters not yet determined. A decision in favour of the Commissioner on the other causes of action would render pursuit of those causes of action unnecessary. The plaintiffs oppose summary judgment.The Instruments in Question[3] The instruments in question fall into two broad categories: foreign currency drafts and bank cheques issued by the plaintiff banks. Each of these categories of instrument is a basic instrument of New Zealand and international banking practice, and their essential features are not in dispute. They are used as a secure means of payment in both domestic and international commerce. They provide a payment mechanism whereby a party who has a payment obligation can make payment by ameans which will ensure that the recipient is not substantially exposed to a credit risk on the maker of the payment in the course of the settlement process for that payment. The payer can obtain from its bank an instrument which provides security of payment by ensuring that the counterparty risk to which the recipient is exposed in the settlement process is that of the bank which issues the instrument, not that of the original obligor, and that the instrument is one which will not be subject to dishonour in the settlement process. A more detailed description of each of these types of instrument is a necessary prelude to a consideration of the legal issues involved. (a) Bank Cheques[4] Bank cheques are used in everyday banking business for the settlement of New Zealand dollar denominated obligations. A bank cheque is a promissory note under s 84 of the Bills of Exchange Act 1908 (the BOEA). Despite its name, it is not a cheque. It is not a bill of exchange as defined in s 3 of the BOEA, and accordingly not a cheque as defined in s 73 of the BOEA. The practice of all of the plaintiff banks for the issue of bank cheques is essentially the same. The banks in the course of their business sell bank cheques to purchasers. Their policy is to sell bank cheques only to their banking customers. The bank cheque is an instrument which is payable to a named payee (or in some cases an endorsee). The instrument is denominated in New Zealand dollars. The bank is both the drawer of the instrument, and the person who is to make payment under the instrument (in bill of exchange terminology, the drawee). The form of instrument used by the banks does not require payment at any particular place. The typical transaction for the sale and purchase of a bank cheque is that the customer makes a request to purchase a bank cheque from a bank over the counter, by fax, telephone, or e-mail, specifying the face value of the bank cheque and the payee. Some banks require the purchasing customer to sign a purchase form or sign the back of the bank's record of the transaction. The purchasing customer pays for the bank cheque from cleared funds either by making a cash payment or by authorising the bank to debit the face value of the bank cheque plus fees from a New Zealand dollar account held with the bank by the purchaser. The bank prepares and signs the bank cheque and records the details. The purchaser will generally collect the bank cheque from the bank, but in somecases it may be posted to the purchaser. The money paid by the purchaser is credited by the bank to a bank cheque suspense account. [5] Bank cheques will always be honoured (subject to usual checks for stops issued or for fraud) and bank cheques are never considered to the stale. None of the banks will dishonour a bank cheque solely due to its age. Usually, the bank cheque will be presented for payment within a short time, and the bank will record that payment against the credit in the bank cheque suspense account. While most bank cheques are presented within six months, the banks estimate that about 1% of bank cheques remain unpresented after that time. For such cheques, the practice of each of the plaintiff banks varies. BNZ transfers any outstanding credit in the bank cheque suspense account to a central unpresented bank cheque suspense account where the cheque is not presented six months after the date of purchase. In some cases, it takes steps to assist in having the outstanding bank cheque presented. ANZ National Bank will attempt to have the outstanding bank cheque presented if it remains unpresented for more than 12 months. If it remains unpresented for six years from the date of purchase, the outstanding credit is transferred from the bank cheque suspense account to a central unclaimed monies suspense account. Westpac does not take any steps and the outstanding credit remains in the branch's bank cheque suspense account. [6] Each bank will re-purchase a bank cheque which has been sold, provided the bank cheque is returned. Each bank will re-issue or refund a bank cheque where it has been lost, damaged or stolen if security and indemnity arrangements acceptable to the bank are available. In each case the original cheque will be stopped so that payment on it will not subsequently occur. Banks will rarely stop bank cheques outside those situations. That is important to preserve the integrity of bank cheques generally as a secure instrument of payment. Where a bank cheque is refunded the bank will debit the refund against the relevant bank cheque suspense account. In the majority of cases, the payee of the bank cheque is not the purchasing customer. Except in the case of BNZ, bank cheques cannot be transferred or endorsed by the named payee to another party.(b) Foreign currency drafts[7] Foreign currency drafts serve a similar purpose as a means of payment to a bank cheque, for payments in a foreign currency. A foreign currency draft (to which I refer for convenience as a "bank draft" or a "draft") is an instrument which, subject to the terms and conditions agreed between the bank and the customer purchasing it, is drawn by that bank in New Zealand, is payable to a named payee (or, in some cases, their endorsee), is denominated in a foreign currency, and specifies a bank in the jurisdiction of the denominated currency as the drawee. As I have noted the nomenclature is technically imprecise in that while a bank cheque is not a bill of exchange, and accordingly not a cheque, a bank draft is both a bill of exchange as defined in s 3 of the BOEA, and a cheque as defined in s 73. In a typical transaction, a purchaser requests from one of the plaintiff banks a draft for a specified amount in a particular currency. The New Zealand bank will draw a draft on a drawee bank in the place at which payment is to be made, and hand the draft to the purchaser, upon receipt of payment in New Zealand currency in the same ways as described for a bank cheque. The drawee bank is one with which the New Zealand bank has an account, or some other payment arrangements, to provide a source of funds from which the drawee bank can make payment of the draft. The New Zealand bank sends (usually overnight) to the drawee bank, advice that the draft has been drawn on it by electronic message through an international funds transfer system. The purchaser of the draft will deliver or send the draft to the payee, who will then present the draft for payment to the drawee bank, normally through the payee's own bank in that country as collecting banker. The drawee bank will pay, provided the New Zealand bank's account is in funds, after checking the draft for stop payments, alterations, and against the electronic advice of issue from the New Zealand bank. Typically the draft will be presented and paid within a short time after issue. If the draft is old, the overseas bank may pay out on the draft, check with the New Zealand drawer bank before paying, or, rarely, dishonour the draft. All of the plaintiff banks will always instruct their overseas banks to pay drafts regardless of age and accordingly generally believe that their drafts will be paid when presented, regardless of their age.The rival contentions (a) The Issue[8] The issue in these proceedings is whether, in respect of any bank cheque or drafts which, for whatever reason, are not presented for payment, the bank by which the instrument was issued is the holder of unclaimed money under the UMA. The relevant provision is s 4(1)(e) which provides:4 Unclaimed money(1) Subject to this section, unclaimed money shall consist of— (e) Any other money, of any kind whatsoever, which has been owing by any holder for the period of 6 years immediately following the date on which the money has become payable by the holder:[9] That issue has been the subject of consideration, in relation to a payment instrument essentially the same as a bank draft, in Commissioner of Inland Revenue v Thomas Cook (New Zealand) Limited [2005] 2 NZLR 722. The Privy Council held that the monies unclaimed under the instruments were for the purposes of the UMA owing and payable from their date of issue.(b) The case for the Commissioner[10] The principal contention of counsel for the Commissioner is that the essential issue has been authoritatively determined by the Privy Council in Thomas Cook. Counsel submitted that that decision is directly applicable to the instruments in issue in this case. The Commissioner submits that the relevant instruments in this case are in all material respects so similar that the case is on all fours with Thomas Cook and the Privy Council's decision in that case must govern the determination of these claims in this Court. The Commissioner submits that there is no basis on which the instruments in question here could properly be distinguished on the facts. Counsel submits that the Bank's submission that the Commissioner cannot prove that the sums for which the instruments were drawn ever became payable must fail because:(a) it was rejected in Thomas Cook, which is binding on this Court; (b) it seeks to draw a distinction not supported by the language of the UMA, and that the term "payable" is best read, in the context of the UMA, as covering all amounts which would be legally due if demanded, whether or not a demand has been, or practically could be, made; (c) it is inconsistent with the policy of the UMA.(c) The Case for the Banks[11] The primary argument for the banks is that any liability they have under the BOEA in respect of bank cheques and drafts, is not unclaimed money under the UMA. Their secondary argument is that, notwithstanding the Privy Council decision, the banks have no immediate liability at the time of issue of foreign currency drafts and bank cheques to the customer under the BOEA. On primary argument, that the UMA does not apply to BOEA liabilities, counsel submits: (a) Section 4(1)(e) is limited to money which is held on behalf of another for "safe keeping" and is in the nature of a fund or deposit; (i) The statutory purpose is limited to funds entrusted to another for investment or safekeeping purposes; and (ii) Section 4(1) read as a whole and the use of "owner" terminology in the UMA demonstrate that s 4(1)(e) cannot have been intended to extend to trade debts or other general liabilities. (b) Section 4(1)(e) does not extend to the banks' potential liabilities under the BOEA in relation to unpresented drafts and bank cheques:(i) The transaction is not a deposit, but the purchase by the customer of a negotiable instrument; (ii) The liability of the banks under the BOEA in respect of drafts and bank cheques is complex and conditional; (iii) Early New Zealand bank notes would have given rise to UMA obligations on the Commissioner's interpretation; (iv) The absence of a single defined "owner" is inconsistent with the scheme of the UMA; (v) If the banks pay the amounts in question to the Commissioner they are subject to a "triple jeopardy" in that in addition to the obligation to make that payment to the Commissioner, they may face a claim from the holder of the instrument and also a claim from the original purchaser of the instrument. (vi) The UMA reporting requirements do not fit with the BOEA liabilities; and (vii) If these BOEA liabilities come within s 4(1)(e) then so would general trade debts, which would be an absurd result. [12] The secondary argument advanced on behalf of the banks is that there are no BOEA liabilities at the time of issue to the customer. This argument involves the proposition that Thomas Cook proceeded on two incorrect assumptions, namely that "payable" for UMA purposes means "legally due if demanded" and demand is quite unnecessary; and that international drafts are legally due if demanded. The reasoning on this branch of the argument is as follows: (a) "Payable" connotes a present liability to pay. That was the approach taken by all Courts and all counsel prior to the Privy Council hearing: (b) The UMA supports that approach;(c) The Privy Council was wrong to reason otherwise and to exclude the ordinary pre-condition of demand in the UMA context; (d) Even if "payable" does mean no more than legally due if demanded, the instruments in question were not "legally due if demanded" from the time of issue to the customer; (e) Before the drawer has any liability to the payee the instrument must also be delivered to the customer by the payee to become effective and, in the case of a draft, it must have been presented to and dishonoured by the drawee; and (f) The Commissioner's attempt to explain the Privy Council's decision as directing the Court to disregard other contingencies such as "whether or not the payee actually holds the bank cheque/draft at that time" and presumably whether or not the drawee bank would have dishonoured the draft, is not a plausible explanation.The Thomas Cook case[13] Thomas Cook was concerned with the applicability of the UMA to unpaid drafts. The procedure for issue of a draft was for the customer to request from Thomas Cook a draft for a certain amount of money in a foreign currency. The customer paid Thomas Cook the New Zealand dollar equivalent plus commission. Thomas Cook prepared and issued a draft in the name of a payee requested by the customer (who might be the customer or some third party). The draft was drawn on an overseas bank with which Thomas Cook held a bank account. The money which Thomas Cook received from its customers was placed in a general cash account which it had with a bank in New Zealand. Thomas Cook was responsible for taking steps to ensure that the balance standing to its credit at the relevant foreign bank was enough to meet outstanding drafts in calculating what was owing on outstanding drafts. Thomas Cook left out of consideration drafts which had not been presented for payment after 12 months from their date of issue.[14] In the High Court (CIR v Thomas Cook (New Zealand) Limited [2002] NZAR 625) Chambers J held that the drafts were bills of exchange as defined in s 3 of the BOEA and that bills must be duly presented for payment. He held:[14] The key is presentment. Until presentment, the money is not payable. That is the simple answer to this case. These drafts have never been presented with the consequence that the money has not become payable by Thomas Cook. The money is therefore not "unclaimed money" within s 4(1)(e) of the Unclaimed Money Act.[15] The Commissioner appealed to the Court of Appeal (CIR v Thomas Cook (New Zealand) Limited [2003] 2 NZLR 296). The Court of Appeal recorded three bases upon which the Commissioner contended that the stale drafts had become payable: (a) That Thomas Cook, as the drawer of the draft, became liable on each one immediately it was drawn and issued. That was described as "the immediate obligation argument". (b) That the liability of Thomas Cook as drawer, if not arising earlier, arose when the cheque became stale and presentment was thereupon dispensed with. (c) That if Thomas Cook, as drawer, did not acquire any liability to the payee on either of the foregoing bases, a term should be implied into the contract between Thomas Cook and its individual customers, to the effect that Thomas Cook would reimburse the value of the cheque to the customer, in exchange for an indemnity, once the cheque becomes stale. [16] On the immediate obligation argument, the Court of Appeal described the key question as being whether the drawer of a cheque can be sued on the cheque before presentation. It noted that the Commissioner accepted that money does not become payable for the purposes of s 4(1)(e) of the UMA unless and until a legal obligation to make payment arises. It held that the nature of the relationship between drawee and payee of a cheque is clearly such that demand by presentment (unless dispensed with) is a necessary pre-condition to the drawer's liability to pay. It said:"the correct view is that presentment is not just a practical means of payment, it is also, unless dispensed with, a legal pre-condition to the drawer's liability on the cheque". Accordingly, it held against the Commissioner on the immediate obligation argument. [17] The Court of Appeal accepted the argument that the liability arose when the cheque became stale and presentment was thereupon dispensed with. It held that demand does not have to be made in order to cause a stale cheque, presentment of which is dispensed with, to be "overdue and unpaid" within the meaning of s 47(1)(b) of the BOEA. It held that there is a deemed dishonour arising by reason of the payee not presenting the cheque in a timely fashion, with the consequence that the drawee bank is no longer bound to pay upon it. Upon deemed dishonour the drawer's liability to pay damages is an immediate and unconditional obligation and the money concerned must be regarded as becoming payable at that time for the purposes of s 4(1)(e) of the UMA. It further held that Thomas Cook's liability to pay liquidated damages fell within the definition of "unclaimed money" under the UMA. [18] The Court of Appeal did not need to address the third argument, as to the implied term. It said: "We will say only that if it had been necessary to address this argument, we would have regarded it as unpersuasive, at least at first blush, if for no other reason than the difficulty of implying a term involving an indemnity on unspecified terms". (at para 65) [19] In the Privy Council, the case took another tack. The Privy Council said:[4] At the heart of the appeal lies s 4(1)(e) of the 1971 Act. What is the meaning of "payable" within that section? More particularly, in the case of a cheque or other instrument payable on demand, for money to be "payable" and thus (six years later) "unclaimed money" for the purposes of the 1971 Act must payment actually have been demanded (or a cause of action otherwise have arisen) so as to set time running under the Limitation Act? That ultimately is the issue for the Board's determination on this appeal. [5] Unfortunately this issue was not addressed by either Court below. Rather the proceedings hitherto have been conducted on theassumption that money only becomes "payable" under s 4(1)(e) once an action to claim it could have been brought, and such, indeed, was the continuing assumption underlying both parties' written cases before the Board. It was only in response to Their Lordships' promptings that the Commissioner finally submitted that "payable" means no more than legally due if demanded, it being quite unnecessary that any demand should actually have been made or that any cause of action should in fact have accrued. Since, for reasons which will appear, Their Lordships are satisfied that this is the correct view, it becomes unnecessary to say much about the various arguments advanced below, many of them turning on abstruse points of law arising under the Bills of Exchange Act 1908 (the 1908 Act).[20] Of the view that had it found favour with the Court of Appeal, the Privy Council said:[11] Although, as already indicated, it has proved in the event unnecessary for the Board to address any of these difficult issues, Their Lordships certainly ought not to be taken to be endorsing the Court of Appeal's conclusions upon them. Quite the contrary. The Court of Appeal's final conclusion that a payee, by carelessly (acting, indeed, contrary to his express obligation under s 45(2)(b) of the 1908 Act to present the bill within a reasonable time after its issue) letting a bill become stale, immediately thereby becomes entitled to sue for liquidated statutory damages to include interest and expenses is, to say the least, a surprising one. Rather, however, than spend further time on these questions, Their Lordships turn instead to the central issue now arising (the new point raised for the first time by the Board): must a cause of action have arisen in respect of money before it is to be regarded as "payable" within the meaning of s 4(1)(e) of the 1971 Act?[21] The Privy Council focused on the meaning of the word "payable" in s 4(1)(e) of the UMA. It said:[16] As the promoting minister made plain in Parliament, the policy of the 1971 Act is that unclaimed company dividends shall ordinarily accrue to the group within which the money arises rather than to the Crown. Not so, however, in respect of dividends payable by a mutual association. The point is, however, that the word "payable" is used to mean simply that, as between the company and its shareholders, the money is due to the shareholders. They are entitled to it, whether it has been demanded or not and whether, indeed, the company or mutual association can trace them. Money may, of course, be payable only at some specified future date. That is why s 4(1)(e) speaks not merely of money "owing" but of money owing for six years after it "has become payable". But that is not to say that under this legislation it only becomes payable on demand and thus is not payable until claimed. That surely would be the greatest nonsense of all: to say that money can only become unclaimed money once it has in fact been claimed.[17] That, really, is the long and the short of this case. The moneys unclaimed under these Thomas Cook drafts were for the purposes of the 1971 Act owing and payable from their date of issue and it matters not whether the drafts could ever have been sued upon without a demand being made, whether before or after they became stale.Whether Thomas Cook is dispositive of this case[22] The first question for consideration is whether this case is one to which the reasoning in Thomas Cook applies. If so, then, in this Court, that decision is binding. [23] In my view, there is no material difference, on the facts, between this case and Thomas Cook. So far as bank drafts are concerned, these instruments are essentially identical with the drafts described in the High Court and Court of Appeal judgments in Thomas Cook. The fact that in this case, but not in Thomas Cook, the drawer is a bank is not a material distinction. In both that case and this, the drawee is a bank. So far as bank cheques are concerned, I consider that, on the approach adopted by the Privy Council, there is no distinction which would materially affect the reasoning. For these reasons, I conclude that the decision in Thomas Cookapplies to both bank cheques and bank drafts. On that basis, the banks have no defence to the Commissioner's counterclaim in the causes of action where summary judgment is sought. [24] That conclusion is sufficient to dispose of this case. However, since this case is clearly destined to go further, and because extensive argument was addressed to me as to the correct answer in the event that Thomas Cook were not binding, I turn to address these arguments.The position if Thomas Cook did not apply[25] It is necessary to deal with the arguments for the banks which I have summarised at paragraphs [11] and [12]. Although these are put as a primary and secondary argument respectively, I consider that it is preferable to deal with the secondary argument first. That involves an analysis of the BOEA liabilities. That is a necessary pre-requisite to considering the broader submission that the UMA doesnot apply to such liabilities. The question whether, properly interpreted in accordance with its purpose, the UMA extends to BOEA liabilities can be answered only in the light of an understanding of what those liabilities are. [26] The essential inquiry, on this aspect of the case, is to determine at what point, if at all, any liability on the issuing bank arising from the bank drafts or bank cheques becomes money which is "payable". In the light of the banks' arguments, I propose to examine that question having regard to the potential meanings of the term "payable" which counsel for the bank has identified in the argument which I have summarised above; (a) That the word "payable" connotes a present liability to pay – which counsel submits is the correct approach, and that taken in Thomas Cook by all Courts and all counsel prior to the Privy Council hearing; and (b) That the word "payable" for UMA purposes means "legally due if demanded" and that demand is unnecessary – the view which counsel submits was taken by the Privy Council.The nature of the BOEA liabilities (a) General Observations[27] Chambers J, in the High Court in Thomas Cook, held that the BOEA was relevant in considering the position under the UMA. He said (at [15]):[15] Mr Bonnar, for the Commissioner, said that, in interpreting s 4(1)(e), "consideration of other issue-specific legislation or principles of law such as the Bills of Exchange Act 1908 or the principles of banking law may be of limited assistance". With respect, I disagree. The law on bills of exchange is of fundamental importance as it is that law which determines the respective rights and obligations of holders, customers, payees, and foreign banks. It is to be presumed that Parliament enacted the Unclaimed Money Act 1971 in light of the Bills of Exchange Act and the general law.[28] I agree with that view. I would go further, in that I consider that it is necessary to have regard not solely to the bank cheque and bank draft respectively, and to the legal incidents which attach to those instruments. In my view, it is necessary to have regard to the wider contractual relationships of which those arrangements form part. The liability of the bank can, in my view, be properly assessed only by having regard to the position under the totality of the arrangements involved. [29] The drafts and bank cheques need to be seen against their wider commercial background. There are four relevant parties: A. The customer of the bank, who is the purchaser of the draft or bank cheque. B. The bank, who is the drawer of the bill of exchange which is the draft, or the maker of the promissory note which is the bank cheque. C. The correspondent bank, who is the drawee of the bill of exchange which is the draft, (but who has no role in the bank cheque transaction); and P. The payee of the draft or bank cheque (it is convenient for present purposes to ignore the possibility of endorsement or negotiation). [30] The commercial purpose of both the bank draft and the bank cheque is to provide a secure means of payment from A and P. Each is used in commercial practice when P requires from A a payment which is not subject to a counter party risk or a payment risk as against A: that is to say, the instrument is one which does not depend for payment upon the credit worthiness of A, and on which A does not have control over whether or not payment will be made, after the instrument has been passed from A to P. For commercial purposes, payment from A to P can safely be regarded as complete once the instrument is passed from A to P, since the settlement risks, (that is, the risks that the instrument will not be paid when presented by P either because of a lack of funds by the drawer or drawee or because of a stop on payment) are at a level which can, for commercial purposes, be ignored. In the case of both the bank draft and the bank cheque, that objective is achieved byensuring that the instrument is one under which the party making payment to P is not A but a bank: either (as the case may be) B or C. [31] The fact that both B and C are banks is crucially important, both commercially and legally. Commercially, it is important because the acceptability of bank cheques and bank drafts as a form of payment in commerce, both within New Zealand and world wide, depends upon certainty that those instruments will be paid. Banks collectively have a considerable commercial imperative to ensure that they do not default, for whatever reason, on such instruments. Legally, the importance of such instruments as secure means of payment is reflected in certain different legal incidents which attach to bank cheques and bank drafts as distinct from those issued by other parties. In Yan v Post Bank Limited [1994] 1 NZLR 154, the Court of Appeal noted, at p 164-5, that the use of bank cheques is commonplace for the settlement of commercial and conveyancing transactions, and they are generally treated as equivalent to cash to the extent that the only risk is that of the solvency of the bank. In Williams v Gibbons [1994] 1 NZLR 273, it held that there is an implied term in contracts for the sale of land that tender of a bank cheque is good tender. [32] The fact that the desired commercial outcome of the issuing of the bank cheque or draft, namely a payment from A to P, is effected by an instrument under which payment is made by B or C to P, means that there must necessarily be an associated transaction by which payment is made from A to B (and in the case of a draft a further arrangement whereby payment is made from B to C). The obligations under a bank draft or bank cheque cannot properly be understood in isolation from the wider payment arrangements of which those instruments form part. [33] It is against that wider background that I now turn to consider the question of when the liability of the bank under either of these forms of instrument becomes payable. Because of their different legal characteristics, it is necessary to deal separately with the draft (a bill of exchange) and the bank cheque (a promissory note).(b) Bank Cheques[34] I deal first with the bank cheque, a promissory note. Promissory notes are governed by Part 3 of the BOEA. Section 84 defines a promissory note in terms which include a bank cheque. In Yan v Post Office Bank Limited at 158-9, it was held that a bank cheque is within the definition of the promissory note, though, under s 5(2) the holder may treat it, at his option either as a bill of exchange or as a promissory note. Section 85 provides "a promissory note is incomplete until delivery thereof to the payee or bearer". Under s 88, unless the promissory note is made payable at a particular place, (which is not the case here) presentment for payment is not necessary in order to render the maker liable. Under s 89, the maker of a promissory note by making it engages that he will pay it according to is tenor. Under s 90, with certain exceptions, the provisions of the BOEA relating to bills of exchange apply with the necessary modifications to promissory notes. [35] Counsel for the banks submits that the requirement of delivery in s 85 is fundamental so that the bank cheque is not effective or operational until the customer delivers the instrument to the named payee. Delivery is defined in s 2 of the BOEA to mean "transfer of possession, actual or constructive, from one person to another". Proof of delivery is not, however, always necessary. Section 21(4) provides that:21 Delivery(4) Where a bill is no longer in the possession of a party who has signed it as drawer, acceptor, or indorser, a valid and unconditional delivery by him is presumed until the contrary is proved.[36] By virtue of s 90, s 21(4) applies to a promissory note. In the typical case with which this case is concerned, delivery will be presumed under s 21(4). The bank cheque is no longer in the possession of the bank which has signed it as maker. Accordingly, a valid and unconditional delivery by the bank is presumed until the contrary is proved. Counsel for the banks submits that the presumption is evidential rather than substantive, and simply enacts a statutory presumption of validity and unconditionality of delivery where the instrument is in the hands of the payee, rather than as to the fact of delivery itself. In the alternative, counsel submits that, if thepresumption does extend to the fact of delivery, this must be the fact of delivery to the customer, not to the payee. [37] As to the first point, the nature of the presumption, I consider that all that is required to give rise to the presumption in s 21(4) is proof that the bill is no longer in the possession of the party signing it. What is then presumed is that delivery by that person has occurred, and that that delivery was valid and unconditional. I do not accept the submission of counsel for the banks that the presumption arises only where the bill is in the hands of a holder in due course. That will be the normal case in which the presumption will be relied upon. I do not consider that it is confined to such a case. It is not an essential element of the operation of the presumption, and the consequent completion of the document as a promissory note, that it be proved that the document itself is in the hands of a holder in due course. If the presumption were so limited, it would arguably add little if anything to the presumption in s 21(3). Counsel for the banks further submits that a presumption as to the fact of delivery would entirely contradict s 21(1) and s 85. I do not agree. The purpose of the presumption is to assist the operation of these provisions, not to contradict them. There being no evidence, in the case of these unpresented instruments, of their whereabouts, proof to the contrary is not available. Thus, in the typical case, a valid and effective delivery is presumed. [38] That then raises the second point, namely whether the presumption extends to the person to whom delivery is presumed to have been made. While s 21(4) creates a rebuttable presumption as to the party by whom delivery has been made, the requirement in s 85, for a promissory note, is that delivery must be made to the payee. The fact that the bank cheque is no longer in the possession of the bank gives rise to a presumption of delivery by the bank, but does it give rise to a presumption of delivery to the payee? The law is clear that the handing of a bank cheque made in favour of a named payee to the bank's customer will, in the absence of other evidence, be sufficient to authorise the customer to deliver the note to the named payee. The Court of Appeal in Yan v Post Office Bank Limited said at page 160:Where as in this case a promissory note is completed by the maker in favour of a named payee or order, and is then handed over by the maker to a thirdperson, that must surely, in the absence of other evidence, be sufficient to authorise that third person to deliver the note to the named payee. .. Here the bank gave the note to its customer Mr Deng, and Mr Yan could have no rights until it became complete by delivery to him. The bank, however, put it into Mr Deng's hands to effect that delivery, and itself gave up control of the instrument. Section 21(4) provides that where a bill (or, by virtue of s 90, a promissory note) is no longer in the possession of a party who has signed it (in this case Post Bank), a valid and unconditional delivery by that party is presumed until the contrary is proved. We conclude, therefore, that Post Bank was the maker of the promissory note in favour of Mr Yan and authorised it to be delivered to him.[39] In that case, it was not necessary for the Court to address the question whether the delivery to the customer, with authority to deliver it to the payee, would have been sufficient to meet the requirements of s 85, because in that case there was evidence that Mr Yan did have possession of the bank cheque, and it was he who was suing on it. The question whether the presumption in s 21(4) (if unrebutted) is sufficient to meet the requirements of s 85 arises directly in this case. [40] I am of the view that the presumption does meet that requirement. Under s 85, the bank cheque is incomplete until it is delivered to the payee. By virtue of s 90, s 21(4) applies, with the necessary modifications, to the bank cheque. In the case of a bill of exchange, s 21(1) provides that the contract of every party on a bill is incomplete and revocable until delivery of the instrument, but there is no specification of the party to whom delivery must be made. Thus, parting with possession of the bill is sufficient to give rise to the presumption of a valid and unconditional delivery, sufficient to complete the contract of the relevant party, the identity of the deliveree being immaterial. So, for a bill of exchange, the presumption under s 21(4) is sufficient to complete the contract of that party. Applying s 21(4), with necessary modifications, to a promissory note, what is presumed from the fact that the promissory note is no longer in the possession of the party who has signed it is "a valid and unconditional delivery". For a promissory note, the giving of a valid delivery requires that the delivery be to the payee. If the s 21(4) presumption extends only to delivery by the person making a promissory note, the presumption is ineffective to complete the contract of that person. The effect of the s 21(4) presumption would therefore be substantially different for apromissory note from that for a bill of exchange. That would be inconsistent with s 90. I consider that the proper interpretation of s 21(4), or a necessary modification of s 21(4), in its application to promissory notes, is that the expression "a valid and unconditional delivery" means "a delivery to the payee so as to make the promissory note complete in terms of s 85". For these reasons, I consider that a bank cheque becomes complete as a promissory note when the bank cheque is handed to the customer ordering it, unless there is evidence to rebut the statutory presumption in s 21(4). [41] Because it is complete as a promissory note at that point, it constitutes, in accordance with the definition in s 84 of the BOEA, an unconditional promise by the bank issuing to pay on demand, or (if the bank cheque is post dated) at the date of it, the amount of the bank cheque to the payee. Presentment of the instrument is not necessary, as I have described at paragraph [34]. There is accordingly no required form of demand as a precondition to the liability of the maker. There is therefore, after delivery, no legal precondition to the liability of the party liable on the promissory note. The Shorter Oxford English Dictionary defines 'payable' is these terms: "Of a sum of money, a bill etc.: that is to be paid". On that ordinary meaning of the word "payable", a bank draft of which delivery has been given, or presumed to have been given, is "payable". I consider that to be the case, whichever of the two meanings of the word 'payable' referred to in paragraph [26] is adopted.(c) Bank Drafts[42] I turn now to consider the position under a bank draft. A draft is a bill of exchange under the BOEA. It is an unconditional order in writing, addressed by the bank issuing it (the drawer, B in my classification) to the correspondent overseas bank (the drawee, C in my classification) signed by the drawer, requiring the drawee to pay on demand (or, in the case of a post dated draft, on its date) the amount specified in the draft to (or in some cases to the order of) the named payee (P in my classification). Under s 21(1) of the BOEA, the drawer's contract on the bill is incomplete and revocable until delivery. The presumption in s 21(4) applies so that where the draft is no longer in the possession of the drawer a valid and unconditional delivery by him is presumed until the contrary is proved. As all of the drafts inquestion have been delivered to the customers of the banks, that presumption will arise here. Each of the relevant drafts is accordingly a bill of exchange on which the contract of the drawer is complete. [43] The liability of the drawer under that bill of exchange is prescribed by s 55(1) of the BOEA which provides:55 Liability of drawer or indorser(1) The drawer of a bill, by drawing it,— (a) Engages that on due presentation it shall be accepted and paid according to its tenor, and that if it is dishonoured he will compensate the holder or any indorser who is compelled to pay it, provided that the requisite proceedings on dishonour are duly taken: (b) Is precluded from denying to a holder in due course the existence of the payee and his then capacity to indorse.[44] The measure of damages in the event of dishonour is specified in s 57. That provides:57 Measure of damages against parties to dishonoured billWhere a bill is dishonoured, the measure of damages, which shall be deemed to be liquidated damages, shall be as follows: (a) The holder may recover from any party liable on the bill, and the drawer who has been compelled to pay the bill may recover from the acceptor, and an indorser who has been compelled to pay the bill may recover from the acceptor or from the drawer, or from a prior indorser,— (i) The amount of the bill: (ii) Interest thereon from the time of presentment for payment if the bill is payable on demand, and from the maturity of the bill in any other case: (iii) The expenses of noting, or, when protest is necessary and the protest has been extended, the expenses of protest. (b) In the case of a bill that has been dishonoured abroad, in lieu of the above damages the holder may recover from the drawer or an indorser, and the drawer or an indorser who has been compelled to pay the bill may recover from any partyliable to him, the amount of the re-exchange, with interest thereon until the time of payment. (c) Where by this Act interest may be recovered as damages, such interest may, if justice requires it, be withheld wholly or in part, and, where a bill is expressed to be payable with interest at a given rate, interest as damages may or may not be given at the same rate as interest proper.[45] Counsel for the banks submits that the bank, as drawer of a draft, has no liability unless it is presented for payment to the drawee and unless and until it is dishonoured by the drawee. Counsel submits that "in the vast majority of cases the drawee honours the draft regardless of date, and the drawee bank is under no liability to the payee at all". [46] The proposition that the drawer incurs no liability until presentment and dishonour was accepted by the Court of Appeal in Thomas Cook. It said, at [27]:[27] The nature of the relationship between drawer and payee of a cheque is clearly such that demand by presentment (unless dispensed with) is a necessary precondition to the drawer's liability to pay. It is impossible to suggest that after a cheque has been issued to the payee, the drawer has an immediate legal obligation to seek out the payee and pay the amount of the cheque by some other means. That would be the logical consequence of adopting the "immediate obligation" argument. The correct view is that presentment is not just a practical means of payment, it is also, unless dispensed with, a legal precondition to the drawer's liability on the cheque. It follows that we accept Mr Harley's submissions on this aspect of the case and reject those of Mr Goddard; albeit recognising the skill and clarity with which they were advanced.[47] The Privy Council, deciding the case on other grounds, did not endorse that view, as I have noted above. In the light of the difference of opinion, I must consider this question afresh. In doing so, some general observations on the point are appropriate. A finding that the drawer bank has no liability unless and until the draft is dishonoured by the correspondent bank as drawee would be a triumph of form over substance. Bank drafts are an essential instrument of international commerce. As I have earlier noted, they provide a very low risk method of settlement of debts. Their value as a method of settlement arises precisely because the risk of dishonour by the drawee is minimal. If the drawer comes under no liability until dishonour, then the position is that large volumes of international commerce are transacted on the basis of instruments on which the party issuing them and who has the primaryresponsibility under them (the drawer) does not have, and will never have, any liability. It is possible that commerce is conducted on that basis, but it would be a surprising situation. That suggests that closer examination is called for. [48] The question whether the drawer is under a liability must be examined first, with regard only to the bill of exchange itself, and second, with regard to the wider payment arrangements which the bill is intended to facilitate. I consider first the position having regard only to the bill of exchange. The liability of the drawer is specified in s 55(1). The drawer of a bill, by drawing it, undertakes two obligations: (a) It engages that on due presentation the bill will be accepted and paid according to its tenor; and (b) It engages that if the bill is dishonoured it will compensate the holder. [49] The first obligation is expressed in terms which suggest that the drawer's obligation is secondary. But it is necessary to have regard to the special features of a cheque as a particular category of bill of exchange. The drawer is the party primarily liable upon a cheque. That this is so has been long recognised. In Ramchurn Mullick v Luchmeechund Radakissen (1854) 9 Moo. P.C. 46, 69-70. Parke B said that a cheque seemed to him to be: a peculiar sort of instrument, in many respects resembling a Bill of Exchange, but in some entirely different. A cheque does not require acceptance; in the ordinary course it is never accepted; it is not intended for circulation, it is given for immediate payment, it is not entitled to days of grace; and though it is, strictly speaking, an order upon a debtor by a creditor to pay to a third person the whole or part of a debt, yet, in the ordinary understanding of persons, it is not so considered. It is more like an appropriation of what is treated as ready money in the hands of the banker, and in giving the order to appropriate to a creditor, the person giving the cheque must be considered as the person primarily liable to pay, who orders his debt to be paid at a particular place, and as being much in the same position as the maker of a promissory note, or the acceptor of a Bill of Exchange, payable at a particular place and not elsewhere, who has no right to insist on immediate presentment at that place.The proposition that the liability of the drawer of a cheque is a primary one is reinforced by the omission, for cheques, of the acceptance step, since the drawee has no liability until acceptance. That means that there is no other party liable on acheque. The engagement that on due presentation the cheque will be paid creates a primary liability on the drawer, and that liability arises at the time the cheque is issued. The enforcement by the holder in due course of the liability of the drawer is dependent upon presentment and dishonour. If a bill is dishonoured, the action is essentially one for enforcement of the second obligation contained in s 55(1)(a): the engagement that on dishonour the drawer will compensate the holder. The measure of that obligation is determined by s 57. But the existence of the first obligation in s 55(1)(a), as well as the second, serves to emphasise that the obligation of the drawer under a cheque arises at the time of issue. That is supported by s 45, which prescribes the rules as to presentment for payment. It provides that if a bill if not so presented "the drawer shall be discharged". That wording is consistent with the existence of an obligation prior to presentment, in that it is not a natural use of language to refer to the discharge of a liability which has not arisen. [50] The fact that the liability of the drawer bank on a draft arises when the draft is issued becomes even clearer when regard is had, as in my view it must, to the totality of the commercial and contractual arrangements of which the draft forms part. A bank draft is, in legal form, a cheque, drawn by the drawer bank on its banker, the drawee bank. The banker/customer relationship is one which has special duties incidental to it. Those will apply where the customer is itself a bank. Those duties include a duty on the bank to pay cheques drawn on the bank for which the customer has funds: Joachimson v Swiss Bank Corporation [1921] 3KB 110 per Atkin LJ at 127. The existence of that duty enables the drawer to ensure that the first part of the engagement given by s 55(1)(a) will be met, and consequently that it will be unnecessary for the second part of the engagement to be called upon. While no cause of action will accrue to the holder of the cheque against the drawer until presentment and dishonour, it does not follow that there is no obligation owed by the drawer under the cheque prior to that point. The commercial reality of a cheque is that though payment will be made by the drawee bank, that payment will be made from funds in the account of the drawer. In this case, arrangements are always made for funds to be available in that account. It is commercially unrealistic to regard the drawer as having no liability unless and until the drawee fails to perform its contractual obligation to the drawer to make payment."Money payable"[51] The next question is whether the liability which arises under either the bank cheques or the bank drafts constitutes "money payable" in terms of the UMA. InThomas Cook the focus in both the High Court and the Court of Appeal was on the necessary pre-conditions to a cause of action on the bill of exchange, namely the steps of presentment and dishonour. In both Courts, it was held that the nature of the relationship between the drawer and payee of a cheque was clearly such that demand by presentment (unless dispensed with) was a necessary pre-condition to the drawer's liability to pay. The Privy Council held that it was unnecessary for payment actually to have been demanded (or a cause of action otherwise have arisen) so as to set time running under the Limitation Act before money can be said to have become payable. [52] A distinction must be drawn between the existence of an obligation, and the existence of a cause of action in respect of that obligation. Generally speaking, a cause of action arises on the breach of an obligation. A cause of action in contract arises upon breach of the contract. But the fact that there is no cause of action until breach does not mean that there is no obligation until breach. To the contrary, there can be no breach unless there is a pre-existing obligation. [53] I consider that the essential question under the UMA is not when the cause of action for breach of the obligation arises, but when the obligation itself arises. That is essentially the effect of the Privy Council decision in Thomas Cook. The question is, as the Privy Council has observed, not when a cause of action arises but when money becomes payable. Even if that were not binding on me, I would respectfully reach the same conclusion. A focus on the point at which the rights of the holder arise on default under the BOEA would be particularly inappropriate in the case of a bank cheque or a bank draft. Those instruments have commercial utility as a payment mechanism precisely because the risk of default is very low. [54] The Court of Appeal in Thomas Cook applied, by analogy, the decision inJoachimson v Swiss Bank Corporation. It said at [26]:[26] Although the relationship between the drawer of a cheque and the payee is different from that between the drawer, as customer of the drawee bank, and the bank itself, there is sufficient analogy between the two relationships in commercial terms to make the decision of the Court of Appeal in N Joachimson (A firm name) v Swiss Bank Corporation [1921] 3 KB 110 of some present relevance. In that case the Court (Bankes, Warrington and Atkin LJJ) held that a demand by the customer for funds standing in the customer's account was a necessary precondition to the bank's liability to pay. While the relationship was that of debtor and creditor, the nature of the relationship in its commercial context required that the bank not be liable unless and until actual demand was made. At p 129 Atkin LJ said "The question appears to me to be in every case, did the parties in fact intend to make the demand a term of the contract?" He added that, in seeking to ascertain their intention, the nature of the contract may be material. [27] The nature of the relationship between drawer and payee of a cheque is clearly such that demand by presentment (unless dispensed with) is a necessary precondition to the drawer's liability to pay. It is impossible to suggest that after a cheque has been issued to the payee, the drawer has an immediate legal obligation to seek out the payee and pay the amount of the cheque by some other means. That would be the logical consequence of adopting the "immediate obligation" argument. The correct view is that presentment is not just a practical means of payment, it is also, unless dispensed with, a legal precondition to the drawer's liability on the cheque. It follows that we accept Mr Harley's submissions on this aspect of the case and reject those of Mr Goddard; albeit recognising the skill and clarity with which they were advanced.[55] I respectfully venture to question that analogy. The issue in Joachimson was when a cause of action arises against a banker for money standing to the credit of a customer on current account. I would hesitate to apply that case by analogy to determine the point at which money becomes payable by the drawer of a bill of exchange. In Joachimson, it was acknowledged that the question of when a cause of action arises against a banker for the amount standing to the customer's credit on his current account depends upon whether a demand upon the banker is necessary before it comes under an obligation to pay that amount. The answer to that question was held to turn on the terms of the contract between the parties. The Court held that a requirement for a demand was to be implied in the banker/customer relationship. That was expressly acknowledged to be an exception to the general rule, for debts, that there is, in the absence of a specific requirement, no obligation to make demand before payment is due. There was clearly good reason for that exception in the case of a current account. A finding that demand was not necessary before a cause ofaction arose for money in a bank account would mean that money in inactive accounts would become statute-barred after six years. The normal operation of a current account is such that the bank is not expected to make payment except on the customer's request in the form of a withdrawal request in one of the usual ways by which funds in a current account are accessed by customers. That readily lends itself to the implication of a term that money in the account is payable only when such a demand is made. However, there is no obvious case for implying into a quite different form of obligation, namely that arising from the drawing and issuing of a payment instrument recognised in commerce as a secure and certain means of payment, any conditions, additional to those in the BOEA, as to when the obligation of the drawer arises. For the reasons that I have given, I consider that the conditions in the BOEA as to presentment and dishonour are properly to be seen as preconditions to the payee's right of action on the bill of exchange, not as preconditions to the drawer's obligation to pay the sum specified.The purpose and scheme of the UMA[56] The next matter which it is necessary to address is whether there is anything in the purpose and scheme of the UMA which should lead to the conclusion that the obligation of the drawer bank is not "money payable". The bank's primary argument is that the UMA does not apply to BOEA liabilities. The banks submit that if these BOEA liabilities come within s 4(1)(e) then so would general trade debts, which would be an absurd result. Mr Goddard for the Commissioner submits that it would not at all be an absurd result, and that that possibility may well arise. He refers to the origins and policy of the UMA and, by way of analogy, to the Uniform Unclaimed Property Act (1995) of the USA. [57] I do not find it necessary to address the question of whether s 4(1)(e) might potentially apply to a situation where the obligation alleged to constitute unclaimed money has arisen in circumstances where there has been no prior payment of money to the obligor. The use of the term "holder" to refer to persons to whom the UMA applies might suggest that such a requirement is necessary. Such a requirement might also be seen as necessary if s 4(1)(e) is intended to be read eiusdem generiswith the preceding paragraphs. It is unnecessary for me to decide whether s 4(1)(e)is restricted to situations which are eiusdem generis, because I am satisfied that in the circumstances here, the situation is eiusdem generis with money held in a bank account. The banks' evidence shows that in every case the instruments are pre-paid, in the sense that the customer ordering the draft must pay to the bank the amount of the face value of the draft, so that the bank will be in funds to meet its liability, either direct to the presenter of the bank cheque or to the drawee of the bank draft. For the purposes of determining whether the bank is the holder of money payable, the fact that the draft has been pre-paid distinguishes the obligation in this case from a general trade debt, and renders it more analogous to monies held on a current account. I accordingly would not, if the decision in Thomas Cook were not dispositive on this point, accept the banks' primary argument that the UMA does not apply BOEA liabilities. On the facts here, the situation is closely akin to that to which the banks contend that s 4(1)(e) is limited, namely to money which is held on behalf of another for "safe keeping" and is in the nature of a fund or a deposit. It is not necessary, to hold that the UMA applies, to adopt the wider interpretation advanced by Mr Goddard. [58] In Thomas Cook, the Commissioner's third argument in the Court of Appeal was that if the drawer did not acquire any liability to the payee, a term should be implied into the contract between Thomas Cook and its individual customers to the effect that Thomas Cook would reimburse the value of the cheque to the customer in exchange for an indemnity once the cheque had become stale. The Court of Appeal found it unnecessary to address that argument but said:We would have regarded it as unpersuasive, at least at first blush, if for no other reason than the difficulty of implying a term involving an indemnity on unspecified terms.It may be open to question whether a similar conceptual difficulty as to the implication of a term would apply in this case, which involves a banker/customer relationship (which Thomas Cook did not). As Joachimson makes clear, there are many implied duties in the banker/customer relationship. Further, there may be a possibility that the customer who has paid for a bank cheque or bank draft may have some rights, on a restitutionary or money had and received basis, to obtain repayment if the bank cheque or draft becomes stale, or is lost, or otherwise is suchthat presentment for payment becomes impossible. The fact that the face value of the instrument has been pre-paid would suggest that there might be such a claim. On the other hand, the evidence of the banks is that bank cheques are regarded as never becoming stale, and the importance of payment of a bank cheque without question for both the reputation of the individual bank and for the reputation of such instruments generally, might be relevant to the existence of such a right. It is not necessary to explore these issues here. [59] Counsel for the banks submit that the Privy Council in Thomas Cookproceeded on an incorrect assumption, namely that "payable" means "legally due if demanded," and that demand is unnecessary for the instruments in question. Considering for myself what is meant by the word "payable" in the UMA, I would apply the ordinary meaning to which I have referred in paragraph [41]. In doing so, I bear in mind the general rule that no demand is necessary before an action can be brought in respect of a debt, as I have discussed. So a debt may be payable without a demand. As the Privy Council pointed out (at para [16]) to hold that a demand is required would mean that money can become unclaimed money only after it has been claimed. For the reasons I have given, I do not consider that the existence or otherwise of a demand is, in the present context, of substantial assistance in determining whether money is 'payable' under the UMA. Accordingly, even if it were open to me to do so, I would not differ from the Privy Council on this aspect of the case.Result[60] There will be summary judgment and declarations as sought in paragraphs 1 to 6 of the Commissioner's application for summary judgment as to liability dated 15 February 2007. Leave is reserved to apply further in respect of the claims for interest as sought in paragraphs [7] and [8]. Costs are reserved. The parties may file memoranda, if they are unable to agree."A D MacKenzie J"Solicitors: Russell McVeagh, Wellington for plaintiffs Crown Law, Wellington for defendant