I have never known until recently what the law was in relation to a creditor’s obligations and entitlements where a debtor makes a payment which could be applied to one of several debts. I never went to look it up, but had I needed to, I’m not sure I would have known where to look. Then I stumbled across it while reading a judgment. Experience teaches that allocations of payments against debts can have many ramifications, the most obvious of which is in relation to interest. This statement was recently re-stated as good law in Victoria:
When a debtor is making a payment to his creditor he may appropriate the money as he pleases, and the creditor must apply it accordingly. If the debtor does not make any appropriation at the time when he makes the payment the right of application devolves on the creditor.
It is a statement of Lord McNaughten in
Cory Brothers & Company v Owners of Turkish Steamship ‘Mecca’ [1897] AC 286 at 293 and
Deeley v Lloyds Bank Limited [1912] AC 756, 783 is apparently to like effect.
Cheers
NICHOLAS NI KOK CHIN.
(note:THIS EMAIL IS TO BE SENT SEPARATELY BY THE RESPONDENT THROUGH THE COMMUNICATION CHANNEL TO SAT ON THE SAME DAY by facsimile).
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