The High Court has, unsurprisingly, confirmed that a 'promissory note' from a bank customer noting the Crown as the drawee (ie the payer of the note) is not legal tender.
Ms Donaldson owed the bank $38,291.90 in credit card debt. Over the course of four months Ms Donaldson sent four 'promissory notes' to the bank to repay her debt, claiming that these notes were an acceptable form of payment under the Bills of Exchange Act 1908. The notes purported to be an unconditional promise by The New Zealand Treasury, c/o Minister of Finance, Hon Bill English, to pay specified sums towards Ms Donaldson's credit card account. The bank rejected the payment on the basis that the 'promissory notes' were unenforceable and therefore not an acceptable form of payment.
Ms Donaldson's claim of payment pursuant to the promissory notes was noted by the Court to be "out of touch with reality". It was held that the purported 'promissory notes' were not akin to cash or a bank cheque and were therefore not to be treated as legal tender. There was "ample reason" for the bank to refuse to treat the notes as a cash equivalent. When questioned, Ms Donaldson was unable to provide a satisfactory answer as to why the New Zealand government would pay the bank on her behalf.
See Court decision here.