New Zealand Supreme Court Upholds Unclaimed Money Act
It is becoming more and more common that countries outside of the United States are enacting or implementing unclaimed property laws, or are enforcing pre-existing unclaimed property laws with new zeal (forshadowing pun intended). Of course, along with such enforcement also comes controversies regarding the validity or scope of unclaimed property acts (generally, brought by the holder as a defense to a government’s claim). Last week saw the end of one such controversy in New Zealand.
Last week, the Supreme Court of New Zealand upheld the validity of the 1971 Unclaimed Money Act, and ruled that the Act applied to certain foreign currency drafts issued by 3 New Zealand banks. (See accompanying article about the lawsuit published on Stuff.co.nz). Specifically, the banks argued that since the currency drafts were “presentment” items — that is, the banks’ liability to pay moneys under the drafts was conditional on the instruments being presented for payment — they had no obligation to pay until the condition was fulfilled, and hence no obligation to turn the underlying monies for unpresented drafts to the government as “unclaimed.” The Suoreme Court rejected that argument.
In so doing, the Court followed precedent set in the 2004 case of Thomas Cook v. Inland Revenue, wherein the Privy Council (formerly the court of last resort for New Zealand and many other Commonwealth countries) upheld the validity of the 1971 Unclaimed Money Act against a similar challenge regarding presentment, noting that it was “nonsense” to argue, as the banks seemed to, that “money can only become unclaimed money once it has in fact been claimed.”