Marshall v Colonial Bank of Australasia Ltd

In *Marshall v Colonial Bank of Australasia Ltd*, the plaintiff, Marshall, brought an action against the defendant bank, Colonial Bank of Australasia Ltd, concerning a cheque that had been fraudulently altered after it was signed. The dispute centred on whether the bank was liable for the loss incurred due to the fraudulent alteration of the cheque's amount. The case was heard before Griffith, C.J., Barton, and O'Connor, JJ.

The central legal issue before the Full Court was the extent of a customer's duty to their banker in preventing fraudulent alterations to cheques. Specifically, the court had to determine whether the customer had taken reasonable precautions to guard against forgery or fraudulent alteration of the cheque after it had been signed, and if not, what the consequences of such a failure were for the customer's claim against the bank.

The court reasoned that a customer owes a duty to their banker to exercise reasonable care in drawing cheques to prevent them from being easily altered. In this instance, the court found that the manner in which the cheque was drawn facilitated the fraudulent alteration of its amount. Applying the principle that a customer must take reasonable precautions to prevent forgery or fraudulent alteration, the court held that the plaintiff had failed in this duty. Consequently, the bank was not liable for the loss arising from the altered cheque, as the customer's own negligence contributed to the fraud.