Smith v Lloyds TSB [2001] QB 541

Key Point

  • The application of conversion to document of title or debt is a legal fiction, only nominal damages awarded

Facts

  • Cs were owners of cheques that were stolen and falsified by changing the name of the payee
  • The cheques were cleared by D bank
  • Cs sued D bank for conversion for face value of the cheque
  • Ds conceded that they had converted pieces of paper but denied liability for face value of the instruments on the ground that pursuant to legislation, a materially altered cheque was avoided and worthless

Held (Court of Appeal)

  • Damages were denied
  • Due to material alteration, the effect was that a cheque was no longer representing a chose in action but a worthless piece of paper

Potter LJ

  • The legal fiction as to the value for the purposes of a claim in conversion would be inappropriate and inapplicable in this case