... and a Last-Minute Cheque

The court agreed to let Chattan extend the time by 13 days but on the condition that it pay Reigill’s costs of £16,000 by 4pm on Monday, January 29, 2007.

At 3.07pm on Monday, January 29, Chattan’s managing director, Mr Cattanach, paid Chattan’s cheque into the Burnley branch of the Royal Bank of Scotland. The cheque was made payable to Reigill’s solicitors Kershaw-Abbott and was to be paid into their client account kept at another RBS branch.

At just after 4pm Mrs Kershaw, Reigill’s solicitor, checked with her bank, which reported that no money had been credited to the client account at that time.

At 7.24pm, Chattan’s solicitor wrote to Mrs Kershaw confirming that the £16,000 cheque had been paid in, but wrongly stating that it had been paid into her account that morning. The £16,000 was credited to the Kershaw-Abbott’s client account on the following day, January 30. The credit remained there and Reigill did not return the money.

Reigill argued that as the payment had been made late, Chattan should not be allowed to proceed with its appeal.

The court found, however, that Reigill could have rejected the cheque as it had not been paid on time. But as it had not done so and had kept the money, Reigill could not later contend that the payment by cheque was invalid.

Moral: Check the cheques.

Case: Chattan Developments Ltd v Reigill Civil Engineering Contractors Ltd. (TCC February 2007)