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National Bank Of New Zealand V. Waitaki Notes

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This is an extract of our National Bank Of New Zealand V. Waitaki document, which we sell as part of our Restitution of Unjust Enrichment BCL Notes collection written by the top tier of Oxford students.

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FACTS Waitaki was a customer of the appellant (the bank). Following deregulation in late 1984, Waitaki became involved in foreign currency transactions. The bank adopted certain procedures for the operation of foreign currency transactions and the relevant aspects of these were made known to Waitaki, in particular to its then treasurer Mr Nichols. In 1986 large numbers of transactions took place, which coupled with the need for immediate processing meant that the procedures were, as Gallen J put it honoured more in the breach than the observance. It was common for Mr Nichols over this period to operate in blocks of US$500,000. On 12 June 1986 he purchased from the bank a sum of US$500,000 on what is described as a spot transaction. A transposition error in respect of this purchase was made by the bank, and on 20 June Mr Nichols advised the bank that Waitaki's account had been debited with this amount when it should have been credited. The bank made a correction, but subsequently when attempting to reconcile its account with Lloyds Bank in New York, concluded that it had retained a sum of US$500,000 which was the property of Waitaki. As a result the bank sought payment instructions from Waitaki, and Mr Nichols said that over a period of some three months he had discussions with bank personnel, maintaining throughout that the fund was not the property of Waitaki. Gallen J accepted the substance of Mr Nichols' evidence in this respect. In the end Mr Nichols agreed to take the sum concerned, but realised that at some time in the future the bank was likely to appreciate the correct position and seek a refund. He therefore decided to place the fund in such a way that it would be available if Waitaki was later faced with a demand for repayment. The fund was deposited with a finance company called AA. In late 1987 the bank, in the course of carrying out reconciliations, discovered that it was US$500,000 short and concluded that this represented an unpaid debt from Waitaki. This was disputed by Waitaki, and as a result the bank carried out extensive investigations and eventually in January 1990 ascertained that there was no debt owed by Waitaki, but that a sum of that amount had been erroneously paid to Waitaki in the transaction of 28 October 1986. Meantime in mid-1987 Mr Nichols had advised Mr Frost of AA that the deposit represented by the US$500,000 would be required. Funds were purchased for this purpose, but never became available to AA which went into liquidation. For reasons which are not entirely clear, the security was worthless to Waitaki with the

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