A dispute between Bank of Ireland (B o I) and the Educational Building Society (EBS) over countermanded cheques totalling more than £180,000 and alleged to have been issued by a company in the course of a fraudulent "kiting" scheme is to be sent forward for a full hearing following a Supreme Court decision yesterday.

The three-judge court dismissed an appeal by BoI against a High Court decision of April 18th 1997 sending the dispute onward for full hearing. In his reserved judgment yesterday, Mr Justice Keane said the bank's claim was as the holder for value of nine cheques totalling £183,559 against the building society as drawer of the cheques which were drawn upon Ulster Bank Ltd in favour of the plaintiff.

Each of the cheques when presented for payment was dishonoured and returned unpaid to the bank marked "payment countermanded".

The EBS had filed an affidavit disputing the bank's claim and the bank moved a motion for summary judgment which was dismissed by the High Court which concluded the claim should receive a full hearing. The bank had appealed that decision to the Supreme Court.

Outlining the background to the matter, he said a company, Ballinorig Enterprises Limited, of Ballinorig, Tralee, Co Kerry, had a current account with the Tralee branch of BoI. Over 15 months from September 1994 to January 1997, a number of cheques drawn by EBS on its current account with Ulster Bank Limited in which BoI was named as payee was lodged by the company to the credit of its current account with BoI.

Over the same period, Ballinorig drew cheques on their account with BoI which they delivered to the building society. Thus, four cheques totalling £81,155 drawn by EBS in favour of BoI were lodged to the company's account with BoI on January 18th 1996.

The building society claimed they drew the cheques in favour of BoI and gave them to the company because the company had delivered them five cheques totalling £80,913 drawn by them on their account with the bank.

The judge said it was not in dispute that similar transactions took place on a regular basis over the previous five months and that the company were engaged in the practice known as "kiting".

In separate judgments, Mr Justice Murphy and Mr Justice Barron also dismissed the appeal and made an order upholding the decision of the High Court.