Hello again,
I raised an issue last year about my right (or otherwise) to funds from a cheque of £35,000. The issue raised was about clearing timescales. The issue raised some interest (and emotions!) but I want to look at it from a different viewpoint.
In brief, my cheque was deposited, ‘lost’ and then ‘found’ by my bank. Once found, my bank told me verbally that ‘due to the time involved’ the cheque had been placed onto my account as cleared funds and that I was clear to spend them. I did not accept this at face value, so the adviser checked with both his own line manager and also with the bank’s cheque clearance team and rang me back to confirm this was true.
Initially I disbelieved that the funds could be cleared and mine to keep but next day, with Google’s help, I realised it could be true. I therefore tried and withdrew the funds with no problem the day after they were shown on the account.
Later, the cheque bounced (I suffered no loss as the cheque was from my mother). However the bank then removed £9,000 that was already on my account as cleared funds and applied a £25,000 debit to offset their loss. The bank has never given a clear account of why it thinks it had an entitlement to take the funds. It does say that the cheque bounced, which is true, but this of itself does not entitle them to recover funds it had cleared.
My evidence that the funds were cleared is that:
1) The bank told me most vociferously (and after checking) that the cheque was cleared and that I could spend the money
2) I withdrew the money on what, on the bank’s evidence, would only be day 1 of the clearing cycle. In the normal clearing cycle you cannot withdraw money on day 1 of the clearing cycle.
3) This account had no overdraft facility and rarely had a balance above a few hundred pounds during the 35 years that it has been running.
My (admittedly self-interested) view is that, whilst the bank has the power to clear cheques at any point it decides to, once they take a considered decision to clear the funds, they are cleared and that is irrevocable. Once taken, the individual decision to clear takes precedence over any other timescale that might apply under the normal clearing procedure. In my view the bank may have made a misjudgement leading to a commercial loss in clearing the cheque but they cannot 'unclear' or ‘de-clear’ (there doesn’t even seem to be a word to describe this) funds once that decision is made. The rest of us have to live with our misjudgements and the bank has no mercy if we get it wrong. Surely they cannot take money out of my account to pay for their misjudgement. My understanding is that once the funds are cleared the bank takes on the role of guardian of my funds and they cannot simply take the money from my account unless they have a rule that allows them to or my permission.
So my questions are:
1) How is it determined factually whether the funds were cleared or not?
2) Once cleared does the bank have any power to 'unclear’ them and take them from my account?
I found this reference and explanation:
“Case; Dextra Bank and Trust Company Ltd v Bank of Jamaica UKPC 50 (26 November 2001)
The bank made a misprediction of what would happen, a prediction is an exercise of judgment and to act on the basis of prediction is to accept risk of disappointment. If you then complain of having been mistaken you are merely asking to be relieved of a risk knowingly run. The safe course for one who does not want to bear the risk of disappointment is to communicate with the recipient of the benefit in advance of fully committing.
Birks – Introduction to the law of restitution p 147”
Thanking you for taking the time to read this and I look forward to hearing any thoughts you may have about this,
Best wishes,
Nicola
I raised an issue last year about my right (or otherwise) to funds from a cheque of £35,000. The issue raised was about clearing timescales. The issue raised some interest (and emotions!) but I want to look at it from a different viewpoint.
In brief, my cheque was deposited, ‘lost’ and then ‘found’ by my bank. Once found, my bank told me verbally that ‘due to the time involved’ the cheque had been placed onto my account as cleared funds and that I was clear to spend them. I did not accept this at face value, so the adviser checked with both his own line manager and also with the bank’s cheque clearance team and rang me back to confirm this was true.
Initially I disbelieved that the funds could be cleared and mine to keep but next day, with Google’s help, I realised it could be true. I therefore tried and withdrew the funds with no problem the day after they were shown on the account.
Later, the cheque bounced (I suffered no loss as the cheque was from my mother). However the bank then removed £9,000 that was already on my account as cleared funds and applied a £25,000 debit to offset their loss. The bank has never given a clear account of why it thinks it had an entitlement to take the funds. It does say that the cheque bounced, which is true, but this of itself does not entitle them to recover funds it had cleared.
My evidence that the funds were cleared is that:
1) The bank told me most vociferously (and after checking) that the cheque was cleared and that I could spend the money
2) I withdrew the money on what, on the bank’s evidence, would only be day 1 of the clearing cycle. In the normal clearing cycle you cannot withdraw money on day 1 of the clearing cycle.
3) This account had no overdraft facility and rarely had a balance above a few hundred pounds during the 35 years that it has been running.
My (admittedly self-interested) view is that, whilst the bank has the power to clear cheques at any point it decides to, once they take a considered decision to clear the funds, they are cleared and that is irrevocable. Once taken, the individual decision to clear takes precedence over any other timescale that might apply under the normal clearing procedure. In my view the bank may have made a misjudgement leading to a commercial loss in clearing the cheque but they cannot 'unclear' or ‘de-clear’ (there doesn’t even seem to be a word to describe this) funds once that decision is made. The rest of us have to live with our misjudgements and the bank has no mercy if we get it wrong. Surely they cannot take money out of my account to pay for their misjudgement. My understanding is that once the funds are cleared the bank takes on the role of guardian of my funds and they cannot simply take the money from my account unless they have a rule that allows them to or my permission.
So my questions are:
1) How is it determined factually whether the funds were cleared or not?
2) Once cleared does the bank have any power to 'unclear’ them and take them from my account?
I found this reference and explanation:
“Case; Dextra Bank and Trust Company Ltd v Bank of Jamaica UKPC 50 (26 November 2001)
The bank made a misprediction of what would happen, a prediction is an exercise of judgment and to act on the basis of prediction is to accept risk of disappointment. If you then complain of having been mistaken you are merely asking to be relieved of a risk knowingly run. The safe course for one who does not want to bear the risk of disappointment is to communicate with the recipient of the benefit in advance of fully committing.
Birks – Introduction to the law of restitution p 147”
Thanking you for taking the time to read this and I look forward to hearing any thoughts you may have about this,
Best wishes,
Nicola
Can the bank ‘UNCLEAR’ cleared funds?
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