Court rules man liable for €50,000 cheque error

A €50,000 cheque written by a man to pay fees to solicitors was mistakenly processed by Allied Irish Banks as being for €50 and the mistake went unnoticed for almost a year by two AIB branches and by the lawyers, the High Court has heard.

After Patrick M. Keane Co Solicitors in Galway notified AIB in late January 2010 about the mistake relating to the March 2009 cheque, it paid the outstanding €49,950 and then sought that money from Richard Larkin.

The bank said Mr Larkin, Toureen, Kilcolgan, Co Galway, must have been aware the full amount of the cheque had not been debited from his account. When he denied liability, AIB pursued him for payment in the High Court.

Mr Justice John Hedigan ruled that as Mr Larkin had the benefit of the outstanding money, he had raised no plausible defence. He was in this position probably as a result of a mistake by others but this was not just a court of law, it was also a court of justice, the judge said. Justice could not be served except by ensuring Mr Larkin met his obligations when he had asked his bank to pay his solicitors their fees.

The judge said he did not accept Mr Larkin had not become aware of the mistake quickly and said he had “no hesitation” finding Mr Larkin liable for the €49,950 plus interest from February 2010 when AIB notified him of the mistake and demanded payment, plus costs. AIB had sought some €6,800 interest up to November 2011, when the case issued.

Mr Justice Hedigan also rejected arguments that the cheque became “stale” after a six-month period.

The case arose after Mr Larkin wrote a cheque for €50,000, dated March 9th, 2009, drawn on his account with AIB, Oranmore, Galway, and made payable to “Keane Solrs”. He gave the cheque for payment to Patrick M Keane Co and it was presented for payment at the AIB branch at Eyre Square, Galway.

AIB claimed that due to an error by the payee filling out the lodgement docket, which was not noticed by the bank teller, the cheque was processed as one for €50. The Eyre Square branch passed the cheque to the Oranmore branch, as paying bank, on the basis it was a €50 cheque, resulting in Mr Larkin’s account being debited for just €50.

On January 20th, 2010, Keane Solicitors advised the bank of the mistake and AIB paid the firm the €49,950 outstanding. AIB then sought payment from Mr Larkin. When none was received, the proceedings issued.

Mr Larkin said that when he drew the cheque in March 2009, it authorised AIB to pay out €50,000 in one payment within six months provided there were sufficient funds in his account to cover payment.

When the cheque was presented for payment in March 2009, the bank negligently wrongly debited his account by €50, he claimed. He alleged that staff at AIB Eyre Square and Oranmore negligently failed to notice the cheque was for €50,000 nor was the discrepancy noticed by any other collection or clearing mechanism operated by AIB.

Mr Larkin said he had had sufficient funds in his account in March 2009 to pay the €50,000 and, were it not for the alleged negligence of AIB, that sum would have been paid then, clearing his liability to the law firm.