A recent New South Wales decision has dealt with what happens when a cheque is presented after the death of the person drawing the cheque.

The deceased was aware that they were about to die and drew a cheque as a gift which the recipient banked the day after the deceased died. The cheque was honoured by the bank and the proceeds deposited into the recipient’s account.

The court ruled that the gift was imperfect because the cheque had not cleared at the date of death and therefore properly formed part of the estate.

However, after considering the clear intention of the deceased that the cheque was a gift, the fact that the bank was unaware of the death of the deceased at the time of presentation of the cheque, the effect of the Commonwealth Cheques Act and community usage of cheques the court held that the recipient would not need to repay the proceeds.

The court concluded that, although the principles of equity will not usually assist someone to perfect an otherwise imperfect gift, it will also not strive officiously to defeat them.