Taranaki chartered accountant Tandem Group is suing ASB Bank alleging it failed to properly follow up on forged amendments to a $200,000 cheque before paying out.
Tandem Group Ltd employee Shaun Quigley committed multiple frauds in 2016, amending client cheques made out to Inland Revenue, adding his name as payee then diverting payments into his personal bank account. Quigley had a gambling habit. The High Court was told he died shortly after the fraud was uncovered, committing suicide. Tandem reimbursed clients.
Before the fraud was discovered, a $200,000 cheque intended for Inland Revenue and signed by Tandem farming client Zena Clark was cleared by ASB Bank with payment made into Quigley’s personal bank account. The funds were supposed to be credited to the Clarks’ farm equalisation account at Inland Revenue; a tax arrangement enabling farmers to smooth income across different tax years. Having been reimbursed, the Clarks assigned to Tandem Group any legal rights they had against ASB.
ASB asked the $200,000 claim be struck out. Bank terms and conditions applying to the Clarks’ ASB account protected it from fraud committed by others, ASB said. ASB’s standard terms still held the Bank liable for any loss ‘directly caused by [the Bank’s] fraud or wilful negligence.’ ASB said clearance of the $200,000 cheque was actioned according to its standard procedures for high value cheques; a staff member rang Mrs Clark who verified cheque details before it was cleared for payment. Mrs Clark says she has no recollection of any phone call from the Bank. She did not become aware that ‘S Quigley’ was added as payee until after the fraud was uncovered, she says. A banking expert told the High Court alarm bells should ring for banks when a payee’s name on a cheque is altered in different handwriting. Evidence was given that Mrs Clark emailed ASB the day the signed cheque was handed to Tandem Group, advising a $200,000 cheque payable to Inland Revenue had been given to their accountant.
Justice Katz dismissed ASB’s application to strike out the claim. A full court hearing is needed to clearly determine whether the Bank was wilfully negligent.
Tandem Group Ltd v. ASB Bank Ltd – High Court (2.02.21)
21.026