Demand is not of substantial assistance in determining whether money is payable under the Unclaimed Money Act 1971

Summary

The taxpayers sought declarations that certain specified categories of money or obligations in relation to foreign drafts and New Zealand currency bank cheques are not "unclaimed money" in terms of the UMA. The Court upheld the Commissioner's counterclaim and contended that the amounts payable by the banks pursuant to the unpresented bank drafts and bank cheques are "unclaimed money" within the meaning of section4(1)(e) of the UMA.

Facts

This proceeding concerned the application of the Unclaimed Money Act 1971 ("UMA") to foreign currency drafts and New Zealand currency bank cheques, issued by the plaintiff banks in the course of their business, which are not subsequently presented for payment.

The plaintiff banks sought declarations that certain specified categories of money, or obligations in relation to foreign drafts and New Zealand currency bank cheques, are not "unclaimed money" in terms of the UMA. The Commissioner did not contest the declarations in that the various categories of money referred to are not unclaimed monies but did, by virtue of a counterclaim, contend that the amounts payable by the banks pursuant to the unpresented bank drafts and bank cheques are "unclaimed money" within the meaning of section4(1)(e) of the UMA.

Decision

MacKenzie J referred to the decision in Commissioner of Inland Revenue v Thomas Cook (New Zealand) Limited [2005] 2 NZLR 722 where the Privy Council held that the unclaimed monies (under similar instruments) were, for the purposes of the UMA, owing and payable at the date of issue, not from the time of any demand.

His Honour held there is no material difference on the facts between this case and the Thomas Cook case as the instruments are essentially identical. The fact that here, but not in Thomas Cook, the drawer is a bank is not a material distinction as in both cases the drawee was a bank. Accordingly, on the basis that Thomas Cook was binding, the Commissioner's counterclaim succeeded.

MacKenzie J did go further and consider the position if Thomas Cook did not apply (in the event, on appeal, it is considered not binding).

After concluding there is a liability owed under a bank draft when it is issued and under a bank cheque when it is delivered (as a complete promissory note), his Honour considered whether that liability would constitute "money payable" under the UMA. MacKenzie J stated that the essential question under the UMA is not whether the breach of the obligation arises (as in an action in contract) but when the obligation itself arises. His Honour concluded that a demand is not of substantial assistance in determining whether money is payable under the UMA and therefore, even if it were open to him to do so, his decision would not have differed from the Privy Council in that regard.