The High Court has ordered one of Australia's major banks, Westpac Banking Corporation (ASX:WBC), to pay a former real estate agent $50,000 in damages for defamation resulting from its mistaken dishonouring of his company's cheques.

The payout is expected to be much higher as interest will also be paid.

In December 1997, Westpac mistakenly dishonoured 30 cheques issued by the Paul Aktas' Homewise real estate agency located in Auburn, Sydney.

The cheques were given back to Mr Aktas' clients and stamped "refer to drawer", suggesting there were insufficient funds to meet the payment.

As that was not the case, he subsequently won a breach of contract lawsuit relating to the incident.

However, Mr Aktas has since been involved in a long defamation court case with Westpac, asserting he received hostile reaction, particularly from the local Turkish community, when the cheques bounced.

His appeal of a NSW Supreme Court decision in November 2007 that Westpac's actions were covered by qualified privilege was today upheld by the High Court.

"For the payee, there is no need for any communication from the bank about the fate of the cheque, if it is met on presentation," the court said in a statement.

"Further, to hold that giving a notice of dishonour is an occasion of qualified privilege is not conducive to maintaining accuracy in the decisions banks must make about paying cheques."