Chapter 14 - The commercial provisions in the Judicature Act 1908

Section 88: Lost instruments

Section 88 provides that where an action is based on a negotiable instrument that has been lost, the court may allow the action to proceed, provided an indemnity is given. Negotiable instruments are documents guaranteeing the payment of a specific amount of money, either on demand, or at a set time. They include bills of exchange, such as cheques, and promissory notes.

Section 88 modified the common law rule, which required that if a negotiable instrument was lost, no action could be brought on the instrument or on the consideration for it.410 There does not appear to be any New Zealand case law on either this provision, or section 118 of the District Courts Act 1947, which is the District Courts equivalent. It is not clear how frequently these provisions are relied upon.

The Bills of Exchange Act 1908 also contains a provision that is almost identical to section 88 of the Judicature Act 1908.411 This section has the same effect as section 88 of the Judicature Act 1908, but applies only to bills of exchange and promissory notes.

 

Issues

The existence of the Bills of Exchange Act 1908 provision raises the question of whether sections 88 of the Judicature Act 1908 and 118 of the District Courts Act 1947 are necessary. The Bills of Exchange Act 1908 is based on the Bills of Exchange Act 1882 (UK), which includes an identical provision on lost bills of exchange, cheques and promissory notes. The United Kingdom also has a “lost negotiable instruments” provision in the Common Law Procedure Act 1854 (UK) that is nearly identical to section 88 of the Judicature Act 1908.412 It has been suggested that this provision was retained when the Bills of Exchange Act 1882 (UK) was enacted because it applies to all negotiable instruments, and not merely to the instruments specified in the Bills of Exchange Act 1882 (UK) (bills of exchange, cheques and promissory notes). Further, circular notes are a form of negotiable instruments that appear to be within the ambit the Common Law Procedure Act 1854 (UK) provision, but not the Bills of Exchange Act 1882 (UK) provision.413

Therefore, we cannot be sure that there are no negotiable instruments in use in addition to those covered by the Bills of Exchange Act 1908 provision. The possibility of new negotiable instruments developing must also be considered. Our preliminary view is that section 88 of the Judicature Act and section 118 of the District Courts Act 1947 should therefore be retained.

Q42

Do you agree that sections 88 of the Judicature Act and 118 of the District Courts Act, which relate to lost instruments, should be retained?

Pierson v Hutchinson (1809) 2 Camp 211.

Bills of Exchange Act 1908, s 70.

Common Law Procedure Act 1854 (UK), s 87.

F Ryder and A Bueno Byles on Bills of Exchange (Sweet and Maxwell, London, 1988) at 433.

At 433.