West v Commercial Bank of Australia Limited

The appellant, Leonard Thomas West senior, brought an action against the respondent, Commercial Bank of Australia Limited, seeking to recover funds allegedly wrongfully paid from his account. The bank contended that the appellant was indebted to it due to an overdraft. The dispute centred on cheques drawn on the appellant's account, which he claimed were unauthorised, while the bank argued they were either authorised, ratified, or that the appellant was estopped from denying their regularity due to his conduct. The matter was heard in the Supreme Court of New South Wales, and after judgment for the bank, the appellant appealed to the Full Court, which dismissed his appeal, leading to this further appeal to the High Court.

The legal issues before the High Court were whether the appellant was precluded by his conduct from denying the regularity of cheques drawn on his account by his son alone, despite his initial authority requiring both his son's and wife's signatures. Specifically, the court had to determine if the appellant's knowledge of and inaction regarding the bank's practice of honouring cheques signed only by his son amounted to ratification or created an estoppel, thereby preventing him from recovering the funds debited from his account.

The High Court affirmed the decision of the lower courts, holding that the appellant was precluded by his conduct from denying the regularity of the drawings. The court reasoned that once the appellant became aware that the bank was honouring cheques signed solely by his son, contrary to the established authority, and he took no steps to correct the bank or stop the practice, he implicitly acquiesced in the arrangement. His subsequent endorsement of promissory notes that were to be debited to the account, despite knowing his wife was no longer signing cheques, and his failure to object when informed of the overdraft and the arrangement for its repayment, further demonstrated his acceptance of the bank's actions. The court applied the principle that a party who, knowing another is acting under a mistake, refrains from correcting them when it is their duty to do so, cannot later depart from the assumption upon which the other has acted to their detriment.

The appeal was dismissed with costs.