With the general proposition that some legislation is desirable to obviate a great deal of the unnecessary trouble that arises in relation to the endorsement of cheques, no one will quarrel. Indeed, on frequent occasions since the system was introduced on the other side, I have asked the Minister myself when he hoped to introduce legislation.
The legislation introduced now is exactly word for word — with the exception of the preamble — the legislation which is in force in Britain. That legislation arose out of a Private Bill introduced in the British House of Commons. Following that, a Committee on Cheque Endorsement was set up and reported in November 1956 — the Mocatta Committee. The Bill in England did not follow the recommendations of the Mocatta Committee and I have failed to find anywhere an explanation as to why it did not follow the Report of that Committee. As the Minister here has taken the same line, of going in the teeth of the recommendations of the Mocatta Committee, I would like to hear from him the reasons he did not do so.
When you have a cheque drawn, say, by me and payable to Deputy Dr. Ryan, and which is going to be lodged to the account of Deputy Dr. Ryan, it seems to me an utterly nonsensical waste of time for Deputy Dr. Ryan as the payee to have to endorse that cheque. This Bill correctly does away with that necessity and correctly saves that time. I am not going to go into the question of what would happen if the cheque came back again afterwards. We shall leave that for another day.
When the Mocatta Committee reported in England, it made it quite clear that in relation to a cheque drawn in favour of a payee and lodged to that payee's account, certainly the need for endorsement should go. This Bill, however, does more than that. It provides that not merely when you have a cheque payable to a payee and lodged to that payee's account it need not be endorsed but, apart from that, even when the cheque is to be paid over the counter in cash there is no legal obligation, as this Bill is drawn, following the English Bill, as far as I can find out, for that cheque to be endorsed either. The Mocatta Committee made it very clear that they supported the principle where the cheque was going to the payee's account but they did not support the principle where the cheque was going to be cashed — as we understand the word "cashed"— by receiving cash over the counter. I should like the Minister to explain to the House why he has not accepted that recommendation of that Committee, just as the British did not accept it. Why they did not do so I cannot trace, though I have read the entire debate on the similar Bill in the British House of Commons.
The second change this Bill makes — and, I want to be fair to the Minister, that the British Bill made—is in relation to Section 3. There the Bill provides that an unendorsed cheque which appears to have been paid is evidence of the receipt by the payee of the sum payable by the cheque. The Mocatta Committee provided that in such a case the cheque when paid should be prima facie evidence of the particular payment. Deputy S. Flanagan, of course, can appreciate the difference straight away. As far as I can understand the position now, it is that while the Committee's report in England made a saver in the case where a cheque had got into wrong hands — then, though the paid cheque was prima facie evidence it could be rebutted by other evidence — this Bill provides, on the other hand, that no evidence of rebuttal is permissible. I do not quite understand what the position is to be in relation to the provisions of Section 3. If a cheque is drawn now — an order cheque, of course; it does not refer to bearer cheques — and is mislaid and is picked up in the street by someone else and is brought into the Bank and is paid, the effect of Section 3, as I understand it, is that that cheque, having been paid to a thief, operates as a complete estoppel against everybody else, the genuine person entitled and otherwise, to obtain the moneys due.
It might be taken that the two points I have mentioned are more Committee points, but they strike at the fundamental root of the whole Bill. The part which worries me is why they in England, and why we here, other than for the sake of uniformity, flew in the face of the recommendations made by people who had experience of this situation not merely from a legal point of view but from a practical point of view as well.
There has been in America for some considerable time a system by which the collecting bank sometimes endorses a cheque and that the collecting bank "will be accountable for want of endorsement". That has been used in America to obviate the necessity for endorsement. I know of occasions on which it has been used here. It was a possible solution of this problem which was not thought fit. While I am in agreement with the Minister that it is probably better that we should keep complete uniformity in this respect, at the same time I think that, before we ultimately and finally decide that uniformity is desirable, we should have the pros and cons of the other difficulties put down clearly before us.
I take it, from the reference the Minister made, he agrees that under this Bill there will still be room for the provision of special endorsement receipts? Deputy Flanagan will agree with me that in relation to an ordinary cheque, there is no difference between the production of the cheque itself as evidence of payment and the production of the cheque with a blank receipt on the back of it. But there is another method adopted, particularly by insurance companies which saves very considerable administration costs in relation to insurances, where the endorsement on the back of the cheque is that the amount has been received in full discharge of the claim under policy so-and-so.
Under this Bill, it would not be necessary for the banks to continue that type of service, but it is a service that most certainly should be continued and a service which, I think, was continued by an undertaking from the Committee of London Clearing Banks at the time the British Bill was going through. I hope the Minister has obtained the consent of, and in fact a complete understanding from, the Banks Standing Committee here that they will continue that service in the future. If they do not continue that service, then the additional costs in administration involved by the necessity of providing in those cases for further administration receipts, as in the case of insurance companies and so on, and where special endorsement receipts are necessary, will obviate a great deal of the saving that otherwise would arise.
The Minister has, I am sure, read the report of the Mocatta Committee, but I would particularly refer him to recommendation No. 6 in the Summary referring to paragraphs 61-66 of the main report. There the Committee came down quite specifically on the lines I referred to at the commencement of my speech. I quote:—
The endorsement of cheques paid over the counter is outside our terms of reference but we have given consideration to it and we think that there are grounds for retaining endorsement in these cases.
As I understand it, this Bill does not retain endorsement in these cases. If I have misunderstood the Bill, I should be glad to be told so; but if I have not, then I think it is clear that this House should be told why that has been departed from.
I do not know either whether the Minister is in a position to give us an indication of the amount of stamp duty on the ordinary twopenny receipts, where there is a general receipt on the back of a cheque, and what will be the loss in those cases. He may not be able to give us that figure, but perhaps he can give us some indication of the amount of revenue being given up — and revenue is being given up — to assist in this administrative improvement.
I am sure all those who have had the opportunity of seeing commercial concerns deal with a great number of cheques — often made out in the wrong name and having to be endorsed first in the wrong name and then in the right name — will appreciate the necessity and desirability of something like this to obviate that difficulty. I know it is dealt with in some cases by a rubber stamp giving every conceivable misspelling of a person's name; but that is an undesirable method and this is a much better method.
The other summary provision in the Mocatta Report I was looking for and could not find is paragraph 9 on page 25 which deals with paragraphs 75-82 of the main report. It says:—
We have considered the possible objection that, under the foregoing proposals, the value of paid cheques as prima facie evidence of payment would be reduced. We think it difficult to forecast with certainty the view which the Courts would take on this point, but we think that any possible risk of loss of evidental value should be counteracted by a provision that where it appears that a cheque has been paid by the bank on which it is drawn, it shall be prima facie evidence of the receipt of the money by the payee.
The Committee went on in its Schedule to draft what it called "a possible form of legislation." The possible section, which would be the equivalent of our Section 3, included in their report is as follows:—
If it appears that a cheque, or any other document, draft or order covered by Section 4 (i) of this Act, has been paid by the banker on whom it is drawn then it shall be prima facie exidence of the receipt by the payee named thereon of the sum for which such instrument is drawn.
This section makes it, not prima facie evidence, but absolute evidence; and we are entitled to be told why that very proper saver put in by that Committee has been omitted from the Bill.
