An employee of the respondent perpetrated a large-scale fraud by requisitioning cheques payable to six entities and depositing them into accounts he controlled.
Two of the entities were invented, and four were customers not owed money.
The respondent sued the appellant banks for conversion.
The Court of Appeal allowed the banks' appeal, finding they had a valid defence under s. 20(5) of the Bills of Exchange Act.
The court held that the two invented payees were non-existing, and all six payees were fictitious because the respondent's directing minds never formed an intention to pay them.
