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[2011] ZAGPJHC 47
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CHHC Trading (Pty) Limited v Standard Bank of South Africa Limited and Another (5278/2007) [2011] ZAGPJHC 47 (20 May 2011)

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SOUTH
GAUTENG
HIGH COURT, JOHANNESBURG
CASE NO
:
5278/2007
DATE:20/05/2011
In
the matter between:
CHHC
TRADING (PTY)
LIMITED
...........................................................
Plaintiff
and
THE
STANDARD BANK OF SOUTH AFRICA LIMITED
..........
First
Defendant
ABSA BANK
LIMITED
...............................................................
Second
Defendant
______________________________________________________________
J U D G M E N T
______________________________________________________________
KATHREE-SETILOANE, J
:
[1] Central to this action is
the protection granted to bankers by s 79 of the Bills of Exchange
Act 34 of 1964 (“
the
Act
”) thus
involving an examination of the intersection between the private law
of mandate, s 79 of the Act, and the delictual
liability of a
collecting bank to the true owner of a cheque. The plaintiff, CHHC
Trading (Pty) Ltd (“
CHHC
”)
issued summons in the South Gauteng High Court, Johannesburg against
the first defendant, Standard Bank of South Africa
Ltd (“
Standard
Bank
”) and the
second defendant, Absa Bank Ltd (“
Absa
Bank
”),
respectively for payment of the amount of R4 200 000, 00 jointly and
severally the one paying the other to be absolved,
together with
certain ancillary relief.
[2] CHHC’s claim against
Standard Bank is in respect of the loss suffered by it as a result of
Standard Bank’s failure
to perform its mandate as a drawee
bank. CHHC alleges that Standard Bank breached its contractual
obligation to make payment of
the cheque in accordance with its tenor
when it paid out the cheque to Absa Bank. CHHC alleges further that
Standard Bank’s
contractual obligation was to comply with the
written instruction given to it by means of the cheque and with its
fiduciary relationship
with CHHC. CHHC’s claim against Absa
Bank is grounded on a collecting banker’s Aquilian liability to
the true owner
of a cheque. CHHC alleges that Absa Bank breached its
duty of care, as collecting banker, owed to it (as true owner of a
cheque)
not to collect payment of a cheque negligently for a person
not entitled to it. It also alleges that Absa Bank breached its duty

of care by receiving payment of the cheque on behalf of someone who
was not entitled thereto, namely Mr AJ Coetzee (
“Coetzee”)
,
and in receiving such payment, acted negligently.
[3] The circumstances in which
the cheque was drawn has its genesis in an extraordinary, and highly
irregular transaction (described
by counsel for CHHC, Mr Wagenaar SC,
as ‘
curious
’)
between CHHC and a certain Mr AJ Coetzee, who on 28 January 2006
ceased to practice as an attorney as a result of being
suspended by
the Law Society. During the week preceding 28 January 2006, Mrs
Harcourt-Cooke (“
Harcourt-Cooke
”),
a director of CHHC, in charge of handling its financial matters
received a ‘curious’ telephonic call from
Coetzee,
completely ‘out of the blue’. He informed her that he was
an attorney, and that he ran an investment company.
He claimed to
have some sort of association to a financial brokerage company that
administered CHHC’s pension fund. He requested
her to make an
investment of R4.2 million into the trust account of AJ Coetzee
Attorneys. Coetzee, who was the sole proprietor
of AJ Coetzee
Attorneys, was not known to Harcourt-Cooke.
[4] The explanation given by
Coetzee for requiring the funds was vague, and the most
Harcourt-Cooke understood was that there
was a consortium of people
who were intending to acquire a 49% interest in Nationwide Airlines.
Coetzee had also informed her that
he had secured funding, from
Investec Limited
(“Investec”)
,
for the transaction provided that a successful due diligence was
carried out. The due diligence could, however, not take place
unless
the existing shareholder’s of Nationwide Airlines were
satisfied that the prospective purchasers of the 49% interest
in
Nationwide Airlines were people of substance. Confirmation that the
money had been deposited into an attorney’s trust
account was,
therefore, required by Nationwide Airlines.
[5] The investment of R4.2
million which Coetzee requested Harcourt-Cooke to deposit into the
trust account of AJ Coetzee Attorneys
was to be used to convince the
existing shareholders of Nationwide Airlines that the prospective
purchaser’s were people
of substance. Harcourt-Cooke,
however, took no measures to ascertain the details and identities of
the members of the consortium
which Coetzee claimed to represent or,
indeed, the funding which he said that he had secured through
Investec Bank. This inevitably
involved a deception, as
Harcourt-Cooke’s understanding was that the money was safe, and
would remain in the trust account,
to be returned to CHHC. The money
would not belong to the purchasers, and Coetzee would not represent
to the sellers that it belonged
to the purchasers. She understood
that it would be returned to CHHC on 21 March 2006 regardless of
whether the due diligence was
successful or not.
[6] Harcourt-Cooke appeared to
be persuaded to participate in the investment primarily because of
the high interest rate of 2.5
percent per month, which equals 30% per
annum ─ substantially higher than the market rate, or the money
market rate at the
time. It also appears that Harcourt-Cooke was
persuaded by the fact that CHHC was being offered an opportunity to
participate in
the purchase of the shares after completion of the due
diligence. There was, however, no confirmation of this in the
correspondence
which Coetzee gave to her or the letter which she
prepared recording the arrangement, as discussed, between Coetzee and
herself.
Harcourt-Cooke’s insistence that the premium in the
form of the high interest rate could have arisen by virtue of the
fact
that there were delays in obtaining bank loans indicates that
she understood that the money could be utilised by Coetzee. So too,

her explanation that whilst Coetzee had already secured R185 million
finance for the project, she thought that he might still need
her
investment, as the securing of finance does not always enable access
to be had to cash, again indicates that she was aware
that the money
could be used by Coetzee.
[7] Despite the amount of the
investment proposed, and its materiality to CHHC’s operations
and the liquidity of the group,
Harcourt-Cooke did not discuss the
transaction with any director of CHHC other than her husband, Mr
Harcourt-Cooke. Hence, the
only authority for her to make the
investment was an unsigned version of a resolution, supported only by
herself and her husband,
and no other director of CHHC. This was
confirmed by Mr Harcourt-Cooke in evidence in chief.
[8] Harcourt-Cooke requested a
Fidelity Fund certificate (
“the
certificate”
)
from Coetzee, which he then provided her with. She did not request
the original certificate, nor did she verify its contents
with the
Law Society. Unsurprisingly, the Fidelity Fund certificate turned
out to be a forgery, and Coetzee was by then suspended
as an
attorney. Harcourt-Cooke prepared a letter setting out the conditions
upon which she was prepared to make the investment,
but she never
sent it to Coetzee. Its existence is in issue, as she failed to
discover it, without any convincing explanation.
[9] Prior to investing the R4.2
million, Harcourt-Cooke only met Coetzee twice ─ once on 25 or
26 January 2006, and again
on 28 January 2006 when she handed him the
cheque. She was content to give him the cheque based on no
independent investigations,
and even though she had reason to doubt
Coetzee by virtue of the content of the letter which he presented to
her on 28 January
2006 ─ the very day on which she gave him the
cheque. The letter was addressed to her in her deceased husband’s
name,
and contained a material difference to the information which he
had given to her earlier. Reference was made, in the letter, to

usage of the funds as bridging finance. Harcourt-Cooke says that
Coetzee agreed that the information, which was recorded in the

letter, was incorrect. However, she explained that his only answer
was to refer her to a contradictory allegation in the same letter,

which was not corrected in writing. I am, therefore, of the view
that there can be little doubt that Harcourt-Cooke must have

suspected that Coetzee intended to use the funds, and that he was
dishonest and unreliable.
[10] Apparently, even on her own
version, and despite her instruction to Coetzee that the money should
remain in the trust account,
Coetzee was able to utilise it, provided
he was given a back-to-back guarantee from Investec. Precisely how
this would operate
is unclear, but it certainly did involve the
possibility that the funds would leave the account. Harcourt-Cooke
handed the cheque
payable to A.J. Coetzee Attorneys’ trust
account 10011044151 there and then, accepting that she had not
verified that the
account number was the account number of the trust
account. She said that he had already asked for an electronic
transfer but
she refused as she could not verify the account number.
He did not have a bank statement to verify the account number, but
she
nevertheless went ahead and presented him with the cheque.
Seemingly, for no explicable reason, she treated the transaction as

urgent, admitting that she gave the cheque to Coetzee voluntarily,
and that she intended to do so knowing that he intended to deposit
it
─ hence fully assuming the risk of the consequences.
[11] When Standard Bank called
Harcourt-Cooke for confirmation that the cheque was valid, she
confirmed that she had drawn it.
She did not alert Standard Bank to
any concerns which she might have had about Coetzee and, in
particular, whether he would deposit
the cheque into the account
number which she had specified on the cheque. Neither did she give
Standard Bank any special instruction
or warning that it should
exercise any caution in relation to the cheque. On the contrary, she
seemed to convey that the cheque
could be handled in the ordinary
course.
[12] She contacted Coetzee,
shortly before 21 March 2006, to confirm that he would pay, and when
he did not do so, she spent two
to three months contacting him to try
and extract the money, but to no avail. She took no further steps to
recover the monies
from him. She instructed an attorney sometime
thereafter, but ascertained that Coetzee was struck off the roll of
attorneys, and
that he was in the process of being sequestrated. She
did not, however, send a letter of demand, nor did she lay a criminal
charge.
She could not remember the payments made by Coetzee, other
than an amount of R15 000, 00. She did not even remember the amount

of the bogus cheque which he gave her in order to attempt to persuade
her that he was in the process of making payment. Save for
the
instant summons, the only step which she took to recover the money
was a claim lodged with the Fidelity Fund, which it rejected
as
Coetzee had already been struck from the roll, and had ceased to be a
practising attorney at the time. Consequently, the Fidelity
Fund
certificate provided by Coetzee to CHHC was a forgery. The Law
Society was not aware of any trust account utilized by Coetzee
other
than a Standard Bank and a Nedbank trust account.
[13] Harcourt-Cooke accepted
that it was difficult for the drawee bank to establish the identity
of an account into which a cheque
is deposited, but suggested that
there was a difference, because the special clearance envelope
contained a line inserted by Standard
Bank that payment was being
made to A.J. Coetzee, and not A.J. Coetzee Attorneys’ trust
account. It, however, turned out
that Harcourt-Cooke was mistaken in
this assumption, as Absa Bank had conceded that the identity of the
payee was inserted by it,
and not Standard Bank. She later claimed
that it was simply the fact of special clearance which changed the
position. However,
as will become apparent later in this judgment,
this was plainly not correct.
[14] Thus, as a result of the
fraudulent misrepresentations of Coetzee, CHHC, on 28 January 2006,
issued cheque number 103717 for
the amount of R4.2 million. The
cheque was drawn on Standard Bank as the drawee bank, and was made
payable to “
A.J.
Coetzee Attorneys Trust Account – No. 10011044151
”
with the words “
or
bearer
” and “
of
toonder
”
deleted. The cheque was cross
generally and marked “
Not
Transferable
”,
and was therefore only payable to a banker in terms of s78 of the
Act. On 28 May 2006, Coetzee deposited the cheque into
an account
held at Absa Bank, and Absa Bank thereafter acted as the collecting
banker for Coetzee. The amount was, on face value,
deposited by
Coetzee into an account held at Absa Bank with the account name
“
A.J. Coetzee
”
and with account number 01043960306. Absa Bank, as the collecting
bank, presented the cheque to Standard Bank, as drawee
bank, in
accordance with the
so-called special presentation
procedure that forms part of the long-standing and highly evolved
system of cheque collection and
payment. Standard Bank made payment
of the cheque to Absa Bank. The money eventually found its way into
an Investec account held
in the name of “
Albertus
Johannes Coetzee
”
with account number 10011044151. The money was paid out of the
Investec account concerned by 2 March 2006 at the latest.
Coetzee’s
estate was provisionally sequestrated on 9 November 2006.
[15] CHHC contends that Standard
Bank breached its contractual obligation to make payment of the
cheque in accordance with its
tenor when it paid out the cheque to
Absa Bank. Standard Bank’s contractual obligation, so it
contends, was to comply with
the written instruction given to it by
means of the cheque and with its fiduciary relationship with it. It
contends, in this respect,
that when Standard Bank decided to make
payment of the cheque to Absa Bank, Standard Bank as mandatory of
CHHC, and a reasonable
banker, was aware or should reasonably have
been aware that the cheque was payable to “AJ Coetzee
Attorney’s Trust
Account – number 10011044151” and
not to “AJ Coetzee” or “A.J. Coetzee Attorneys”,
as there
is a material difference between a normal personal or
business account and an attorney’s trust account.
[16] CHHC also contends that
Standard Bank ought to have also been aware that it was required to
insert the number of the account
that it would credit with the amount
of the cheque into Field A of the so called pink (special clearance)
envelope, yet it failed
to do so, and in so doing failed to comply
with the long-established and highly evolved system for the
collection and payment of
cheques, that had to be followed strictly
by all parties. In support of this contention, CHHC relies on
Di
Giulio v First National Bank of South Africa Limited
2002
(6) SA 281
(C) at 288F where it was stated that:
“
the relationship
between banker and customer is that of debtor and creditor, with the
super-added obligation on the part of the
banker to honour the
customer’s cheques if the account is in credit. A cheque drawn
by a customer is in point of law a mandate
to the banker to pay the
amount according to the tenor of the cheque. That the underlying
agreement between bank and client is
one of mandate, has been
unequivocally accepted in South African law, as appears from the
dictum of
Grosskopf J
in
Volkskas Beperk v
Johnson
1979 (4) SA
775
(C) at 777H-778A. ... ’
Die
verhouding tussen bankier en kliënt behels dat die bankier sy
kliënt se opdrag om te betaal, soos uitgedruk in 'n
tjek, moet
uitvoer. Indien hy dit doen, is hy geregtig om die kliënt se
rekening te debiteer met die bedrag van die tjek.
”
[17] In order to succeed in its
claim based on the breach of the contractual mandate, the plaintiff
would ordinarily bear the
onus
of proving the conclusion of the contract, the terms thereof, the
breach and that it caused the loss claimed (
Kriegler
v Minnitzer
1949 (4)
SA 821
(A)). However, by virtue of the fact that the execution of
the mandate, in issue, relates to the payment of a cheque by Standard

Bank, in its capacity as drawee bank, the statutory exemption of
liability contained in s 79 of the Act has application. Section
79
of the Act provides:
“
79.
Protection to
bank and drawer where cheque is crossed. –
If the bank on which a crossed
cheque is drawn, in good faith and without negligence pays it, if
crossed generally, to a bank, and,
if crossed, specially, to the bank
to which it is crossed, the bank paying the cheque … shall …
be entitled to the
same rights and be placed in the same position as
if payment of the cheque had been made to the true owner thereof.
”
[18] In
Eskom
v First National Bank of South Africa Limited
[1994] ZASCA 186
;
1995 (2) SA 386
(A), the Appellate Division explained the juridical
interaction between s 79 of the Act, and the contract of mandate with
a drawee
bank. The Appellate Division (per Grosskopf JA) stated (at
391B) that:
“
…
Section 79 provides a
statutory protection for bankers in certain circumstances. It is true
that Section 79 affects the rights and
obligations of parties to a
crossed cheque and thus, in a sense, modifies the parties' contract.
A banker who is, in terms of Section
79, 'entitled to the same rights
and . . . placed in the same position as if payment of the cheque had
been made to the true owner
thereof' may debit his customer's account
with the amount of the cheque even though payment may have been made
to somebody who
was not the holder. This does not, however, arise
from
consensus
between the
parties. It arises from a legislative act. If the statutory origin of
Section 79 were kept firmly in mind, no great
harm would be done by
regarding it as creating an implied term in the banker-customer
relationship. Nothing is gained, however,
by so regarding it, and it
may tend to mislead, as happened in the present case. Whether or not
Section 79 is deemed to form a
part of the contract between the
parties, its nature and effect must be ascertained by the ordinary
processes of statutory interpretation.
The section cannot have a
different effect depending on whether it is regarded, on the one
hand, as a statute applying to the contract
or, on the other hand, as
a contractual term imposed by statute.
”
[19] Although it is settled law
that the underlying agreement between bank and client is one of
mandate, the Appellate Division
made it clear in
Eskom
that the contract of mandate must yield to s 79, regardless of
whether the statute applies to contract, or it has become a
contractual
term imposed by the statute. Accordingly, I agree with
Standard Bank’s contention that CHHC’s sole reliance on
Volkskas Beperk v
Johnson
and
Di
Giulio
in construing
the dispute as entailing only the interpretation of a mandate, is
misplaced, and displays an incorrect appreciation
of the effect of s
79 of the Act. In this regard, the Appellate Division in
Eskom
stated (at 391E-H)
that:
“
…
Before analysing the
wording itself
[of s
79]
it is convenient to
set out the broader context in which the section operates. It is
common cause that the prime obligation of
a banker towards a customer
who operates a cheque account is to pay the cheque drawn on him
according to its tenor (I assume that
the customer's account is
sufficient in credit or that sufficient overdraft facilities have
been granted). Included in this general
obligation is a duty to pay
to the correct person designated by the cheque, i.e. to the holder
thereof (defined in Section 1 of
the Act as 'the payee or endorsee of
a bill who is in possession of it, or the bearer thereof'). Where the
cheque is crossed there
is an additional obligation on the drawee
banker to pay the amount of the cheque to a banker. The drawee banker
would accordingly
be obliged to pay to a banker (the collecting
banker) acting on behalf of the holder. Section 79 disturbs this
situation by granting
a drawee banker protection where he pays the
wrong collecting banker, i.e. a collecting banker acting for somebody
other than the
holder. In such a case, if the drawee banker
made payment in good
faith and without negligence, he is placed in the same position as if
he had made payment to the true owner
of the cheque.
”
[20] it is clear from the
Eskom
judgment that in terms of the statutory exemption of liability
contained in s 79 of the Act, even if it is established that the

terms of the mandate have been breached causing loss, there will be
no liability on a drawee bank, provided the cheque in issue
has been
crossed generally and it was paid to a bank, in good faith and
without negligence. It is accordingly clear from the protection
which
s 79 affords to a drawee bank, that where a cheque is crossed, a
breach of mandate is not
per
se
sufficient to
recover loss against a drawee bank.
[21] Underlying the protection
afforded by s 79 to bankers, is the public policy imperative relating
to the clash in value between
the recognition that a breach of
contract should attract a private law remedy and the public law
interest in creating an efficient
system for the collection and
payment of cheques, in which the collecting banker and the drawee
banker have well-established and
distinct functions and
responsibilities.
[22] In a constitutional
dispensation, such as ours, this would involve balancing the
legitimate expectations of a drawee bank’s
customer, that its
instruction in respect of a cheque will be met, against a recognition
that sometimes private arrangements have
to yield to greater
expediency within a larger economic system. Significant, in this
regard, is that the cheque payment system
is a matter of national
importance requiring speed and fluency to settle debt without cash,
and in an environment which must accommodate
the payment of thousands
of cheques on a daily basis.
[23] Our law has accordingly
resolved this public policy dilemma by allocating the responsibility
for harm in accordance with the
function performed within the system.
If loss is caused to a customer in circumstances deserving of
compensation, it is fair and
appropriate that it should ordinarily be
borne (if not caused by the customer itself) by the banker (drawee or
collecting), whose
role in processing the cheque in issue is most
closely associated with the fault, and hence the loss. It is within
this context
that it becomes essential to determine the different
roles and functions performed by each of the bankers in the system.
Now a
collecting bank, such as Absa Bank in this case, is ordinarily
concerned with the creditor who requires the cheque to be deposited

to discharge the debt of the debtor. Typically, the collecting
banker determines the identity of the account into which the proceeds

of the cheque will be paid and will do so by reference to the named
payee on the cheque and the account into which it is proposed
to be
deposited, particularly if the cheque is marked “
not
transferable
”.
The drawee bank such as Standard Bank, on the other hand, has no
insight into the identity of the account of the customer
of the
collecting bank into which the proceeds of the cheque are to be paid.
In this situation, it accords with a sense of fairness
and justice
that the remedy, if any, for the payment of the proceeds into the
wrong account (if not attributable to the customer
itself) must lie
against the collecting bank.
[24] By contrast the drawee bank
is typically concerned with the debtor, whose account must ultimately
be debited to meet the cheque.
The fault causing the loss may lie
within the functionality of the drawee bank. For example, if it pays
the proceeds of a cheque
to a collecting banker despite the fact that
the signature of the drawee on the cheque is a forgery. It is
important to recognise,
in this regard, that only the drawee bank has
insight into the mandate, and the authorised signatories on cheques.
The collecting
banker will have no insight or role to play in the
loss caused by the forgery as it does not have the means to verify
the signature.
In this instance, the loss (if not attributable to the
customer) should be borne by the drawee bank.
[25] The imposition of liability
for fault in the system in accordance with the function most closely
related to the loss underlies
the exemption contained in s 79 of the
Act. It recognises that in the ordinary course (other than instances
of negligence and
bad faith on the part of the drawee bank), it will
have discharged its duty within the system by paying the collecting
banker the
proceeds of the cheque. It is the collecting banker
(having satisfied itself that its customer is entitled thereto),
which will
credit the relevant bank. If the fault in the system lies
in the process of collection, it is (in an appropriate case) for the

collecting bank to meet the loss. The allocation of liability in
this manner satisfies the public policy imperative of enabling
the
system to function expeditiously, and allocating responsibility where
the fault most closely associated with the loss lies.
This was
articulated for the first time in
Standard
Bank of South Africa Ltd v Nair and Others
(Bissessur &
Another, Third Parties)
2001 (1) SA 998
(D), where the court referred to two Zimbabwean
cases. The first was
Rhostar
(Pvt) Limited v Netherlands Bank of Rhodesia Limited
1972 (2) SA 703
(R) at 717E-G, where it was said that where
a
cheque is payable to a specified payee, it is
prima
facie
evidence
of negligence in the collecting banker to take the cheque for
collection on behalf of a person other than that indicated.
[26] The second case was
Zimbabwe Bank
Incorporation Limited v Pyramid Motor Corporation (Pty) Ltd
1985 (4) SA 553
(Zs) at 565F-G, where it was emphasised that it is
usually only the collecting banker that will know whether the client
is the
payee named in a cheque:
“
After
all the collecting banker appreciates or ought to appreciate the
significance of instructions upon a cheque and that they
are there to
be observed. He can verify whether the payee designated on the cheque
is his client. He alone is in a
position
to know whether it has been
collected
on behalf of the person entitled to receive payment; the paying
banker has no knowledge of that …”
[27] Accordingly, the court in
Nair
held, on account of the different functionality between the banks,
that (at 1004H):
“
While
the collecting banker is prima facie negligent, the paying banker, in
the absence of some particular factual circumstance
which indicates
otherwise, is normally in no position to know whether the collecting
banker’s client is the payee named
in the cheque. In ordinary
circumstances the paying banker would not therefore be negligent in
paying the collecting banker.”
It reiterated the point (at 1005F), by stating that:
“
The
paying bank, in the absence of some particular reason to suggest
otherwise, cannot know, if such be the case, that the collecting

bank’s client is not the payee in the cheque. On the facts
before me there is no suggestion that the employees of the
plaintiff’s
Greyville branch were in any different position and
there is no reason to suspect that they might or ought to have had
contra information
at their disposal. In the result the plaintiff’s
Greyville branch, as the paying banker, was entitled to the
protection offered
by Section 79. …”
[28] The court held in
Nair
that negligence for purposes of s 79 was to be tested against the
functionality of the particular bank – drawee or collecting

bank closest to the cause of the loss. It held that the collecting
banker was
prima facie
liable for the loss if a non-transferable cheque was collected for
the account of its customer, which did not correspond with the
named
payee of the cheque. That was the collecting banker’s sphere of
functionality, and fell to be contrasted with that
of the drawee
bank, which did not participate in the identification of the account
into which the proceeds would be paid, and ordinarily
had no insight
therein. Hence, the drawee bank would not be liable for a fault in
the system when the collecting banker collected
the cheque for the
wrong account.
[29] In articulating this basis
for liability, and balancing the interests of promoting a functional
and effective cheque payment
system against the need for a private
law remedy when a mandate has been breached, and allocating
responsibility in accordance
with functionality, our courts followed
Zimbabwean precedent. As is clear from
Pyramid
Motor Corporation
(above), the Zimbabwean courts were ahead of the courts in South
Africa in appreciating the basis for the exemption as lying with
the
allocation of responsibility in accordance with functionality.
Presumably, this was because the Zimbabwean courts recognised
the
delictual liability of a collecting banker for the negligent
collection of a stolen or lost cheque as far back as in 1972,
in
Rhostar
,
whilst the South African courts only recognised this for the first
time, in 1992, in
Indac
Electronics (Pty) Ltd v Volkskas Bank Limited
[1991] ZASCA 190
;
1992 (1) SA 783
(A), where the Appellate Division held (at 797A-D)
that:
“
There
can now be no reason in principle why a collecting banker should not
be held liable under the extended
lex
Aquilia
for
negligence to the true owner of a cheque, provided all the elements
or requirements of Aquilian liability have been met. …
In a situation such as the present a delictual action for damages
would accordingly be available to a true owner of a cheque who
can
establish (i) that the collecting banker received payment of the
cheque on behalf of someone who was not entitled thereto;
(ii) that
in receiving such payment the collecting banker acted (a)
negligently
and
(b)
unlawfully;
(iii) that the conduct of the collecting banker caused the true owner
to sustain loss; and (iv) that the damages claimed
represent proper
compensation for such loss.
”
[30] Accordingly, the
recognition of a delictual claim by the true owner against the
collecting bank enabled responsibility to
follow functionality –
if the collecting banker would be responsible to the true owner for
loss caused on account of the
negligent collection of a cheque, there
would be no basis to make the drawee bank liable unless it was also
negligent, or acted
in bad faith.
[31] Mr Symon SC, appearing on
behalf of Standard Bank, referred me to yet another Zimbabwean case -
Bank of Credit and
Commerce, Zimbabwe Limited v UDC Limited
1991 (4) SA 82
(Zs) – in which the facts are strikingly similar
to those in the current matter. In that case the drawer was a finance
company,
which had issued a cheque pursuant to a purported sale, by
Mixed Tums (Pvt) Limited, of a tractor to a farmer. He was to have
repaid the drawer in monthly instalments. The cheque was marked “
Not
Negotiable
”, but
also “
a/c Payee
Only
” (which the
Zimbabwe court accepted as being a restriction on transferability).
It turned out that Mixed Tums (Pvt) Limited,
the tractor and the
farmer never existed, and the cheque was presented for payment into
an account in the name of Mixed Tans (Pvt)
Limited, trading as Mixed
Tans Global Fashions (i.e. into an account which did not match the
name of the payee). A special clearance
on the cheque had been
requested by the customer of the collecting bank, and the drawee bank
(Barclays Bank Zimbabwe Limited, Pearl
House branch) paid the cheque
to the collecting banker at its request.
[32] The Zimbabwean High Court
held the collecting banker to be liable to the drawer for the
negligent collection of the cheque,
and the case proceeded to appeal.
The Appeal Court also considered the possible liability of the
drawee bank, and rejected
it on the basis that the drawee bank would
not, in the ordinary course, know the identity of the account into
which payment would
be made by the collecting bank, and it was the
collecting bank (and not the drawee bank) which bore responsibility
for ensuring
that the proceeds were credited to the correct account,
regardless of whether a special clearance procedure was used or not.
[33] As to special clearance,
the Zimbabwe Supreme Court held (at 87D-F) that:
“
In
my view, it is not a question of whether the collecting banker acted
as such for the cheque or for the clearance voucher. It
acted as
collecting banker for the proceeds. It collected the proceeds for
its client. The technique of collection may differ
depending on
whether or not special presentation is requested, but the reality
remains the same. The cheque would have to be sent
to the paying
bank in any event. The only real difference between the ordinary
clearing system and the special presentation system
is that the
latter is an accelerated version of the former.
”
The Zimbabwe Supreme Court also
held (at 88A-D) that:
“
…
We are dealing with the different responsibilities of different
banks. On the facts of the present case it was the primary
responsibility
of BCCZ
[the
collecting bank]
to
ensure that the proceeds were credited to the right account. That is
because they were the bankers of the alleged payee (or
at least they
considered themselves so). They knew the person who claimed to be
the payee. He was their customer. Barclays Bank
did not know the
payee. They knew the drawer. He was their customer. Their
responsibility was to him. They had to ensure that
the cheque was in
fact drawn by their customer, properly signed and dated, that the
words and figures agreed, and that all the
other technical aspects of
a good and available cheque were present. In their own interests
they would have also wanted to be
satisfied that their customer’s
account was in funds to meet the cheque. I have no doubt whatsoever
that the responsibility
for ensuring that the proceeds of the cheque
were credited to the right account fell squarely on the bank
purporting to carry out
that service, namely BCCZ, Chitungwiza.
”
[34] That the drawee bank could
not be responsible for an incorrect collection was further emphasised
by the Zimbabwe Supreme Court
(at 89C-G):
“
The
special presentation form prepared by BCCZ, Chitungwiza, does not
actually have a space on it for the name of the account holder.
It
has a space following the words ‘deposited by’. In that
space someone at BZZC wrote ‘Mixed Tans Global’,
which is
not even the correct name of the account. How was Barclays Bank,
Pearl House
[the
drawee bank],
to know
what was the name of the account holder? They would know that Mixed
Tans Global was not the name of a person, whether natural
or legal.
It was clearly a trading name. How could they be expected to know
what individual or company was trading under that
name? It seems
clear that they had to rely on BCCZ, Chitungwiza, for that knowledge.
It does not seem to me to be unreasonable
for Barclays Bank, Pearl
House, to have assumed that BCCZ was satisfied that Mixed Tums (Pvt)
Limited, to whom the cheque was
made out, was the company trading as
Mixed Tans Global. … That is the very point made by Gubbay JA
(as he then was) in the
Pyramid
Motor Corporation
supra when he said at 375F et seq:
‘
After
all the collecting bank appreciates or ought to appreciate the
significance of instructions upon a cheque, and that they are
there
to be observed. He can verify whether the payee designated on the
cheque is his client. He alone is in a position to know
whether it
has been collected on behalf of the person entitled to receive
payment; the paying banker has no knowledge of that.’
”
[35] It is evident from these
cases that liability follows functionality, and that the banker
closest to the loss must assume responsibility
for a fault lying
within its sphere of activity, provided the customer itself is not to
blame. The fact that a special presentation
process is followed
makes no difference to the principle, and the drawee bank is entitled
to assume that the collecting banker
has satisfied itself as to the
party on whose behalf the cheque has been collected. It is the
responsibility of the drawer bank
to ensure that the cheque is in
fact drawn by the customer, properly signed and dated, that the words
and figures agreed and that
all other technical aspects of a regular
cheque are present. It is not its function to second guess the
collecting banker in
this regard.
[36] Public policy leans in
favour of fluency in the system, but does not abandon the plaintiff.
If a mandate is breached without
fault by the drawer bank, the
plaintiff’s remedy lies in depict in an action against the
collecting bank for the negligent
collection of a cheque. The onus
is on the plaintiff to
prove all the elements of the cause of action (
Fudge
Insurance Ltd v Bancorp Ltd
1994
(2) SA 399
(W) at 410E). Significantly, a failure by the plaintiff to
prove any one of the requirements or elements will be fatal to the
success
of its claim.
[37] Based on the case law set
out above, the CHHC bears the onus of proving the mandate, its
breach, causation and the loss as
against Standard Bank, and as
against Absa Bank that it received payment of the cheque on behalf of
someone who was not entitled
thereto; that in receiving such payment
Absa Bank acted negligently and unlawfully; that the conduct of Absa
Bank caused the true
owner of the cheque to sustain loss; and that
the damages claimed represent proper compensation for such loss.
[38] I now turn to the evidence
to establish whether the respective onuses have been discharged.
The first question for
determination is whether the plaintiff has discharged the onus in
respect of the breach of the mandate, causation
and loss. The
existence of the mandate that, in terms of the banker-customer
relationship between CHHC and Standard Bank, the latter
was obliged
to pay cheques drawn upon it by CHHC according to the tenor of the
cheque, and to debit the account of CHHC with the
amount of the
cheque so drawn is not in issue. It is also not in issue that by
statutory intervention or implied term s 79 of the
Act forms part of
the mandate. However, whether the mandate has been breached, causing
the loss, is in dispute. Central to the
determination of this
dispute is the question of whether Harcourt-Cooke, on behalf of CHCC,
intended to pass ownership in the cheque
and deliver it to Coetzee,
who intended to accept it.
[39] In
Standard
Bank of SA Ltd v
Harris and Another NNO
(JA du Toit Inc intervening)
2003 (2) SA (SCA), the Supreme Court of Appeal explained the term
“
true owner
”
of a cheque. It found that:
“…
In a similar context it was held in
First
National Bank of SA Ltd v Quality Tyres (1970) (Pty) Ltd
at
568A-F that the term 'true owner' bears no specialised or technical
meaning and that, more specifically, the reference to 'true'
is not
intended to qualify
the ordinary
meaning of 'owner'. In the result the enquiry in a matter such as
this is whether the claimant for damages has shown
that he became the
owner of the cheque in accordance with the ordinary requirements of
property law. These requirements were succinctly
formulated as
follows by Botha JA in the
Quality
Tyres
case (at
568G-H):
'There
must be a delivery of the thing, i.e. transfer of possession, either
actual or constructive, by the transferor to the transferee,
and
there must be a real agreement (in the sense of ''saaklike
ooreenkoms'') between the transferor and the transferee, constituted

by the intention of the former to transfer ownership and the
intention of the latter to receive it. . . . either party can, of

course, act through someone duly authorised to act on his behalf ’.”
[40]
It
is crucial, in this regard, that the cheque which the drawer might or
might not have wished the payee to receive must not be
confused with
the cheque itself and the ownership of it, which is what the CHHC
seems to have done in this case. Gering, in
Handbook
on the Law of Negotiable Instruments
3
rd
ed, at 404 stated as follows in this regard:
“
In
Absa Bank v Natasha Investment Co
[AD,
29.5.96, an unreported decision of the AD not included in the SALR]
it was pointed out that in considering whether the drawer of a cheque
intended ownership of the cheque to be transferred to the
named
payee, one must be careful not to confuse the proceeds of the cheque
which the drawer might or might not have wished the
payee to receive,
with the cheque itself, and the ownership of it.
”
Similarly in
First
National Bank v Quality Tyres
at 569B-C the court stated that:
“
The
argument confuses the proceeds of the cheque, to which Senbank
believed the plaintiff to be entitled and which it wishes the

plaintiff to receive, with the cheque itself and the ownership of
it.
”
[41] It is clear from the
evidence of Harcourt-Cooke that she consistently confused the
proceeds of the cheque, which she was at
pains to state had to be
paid into AJ Coetzee Attorney’s trust account with the cheque
itself and ownership thereof, which
she conceded was intended to be,
and was indeed handed to Coetzee. I am therefore of the view that
there is no merit in CHHC’s
contention that it never intended
to transfer ownership of the cheque to Coetzee or AJ Coetzee
Attorneys as Harcourt-Cooke intended
that: the protection provided by
the provisions of section 78(7) of the Attorneys Act, 1979 would
apply; the cheque was drawn in
its terms to so provide; and she
delivered the cheque to Coetzee on such basis.
[42] I also remain unpersuaded by
CHHC’s further contention that there can be no real agreement
to transfer ownership when
consent to do so is induced by fraud. It
is important in this regard to point out that our courts have
consistently held that even
if the transferee was a thief or a
fraudster (as is the case here), ownership in a cheque can still pass
provided the property
has been delivered by the transferor to the
transferee and there is a real agreement, between the transferor and
transferee, to
pass and receive ownership in the sense that the
transferor must intend to transfer ownership and the transferee must
intend to
receive ownership. Accordingly, once the abovementioned
requirements are fulfilled, ownership in the property passes to the
transferee
even if such transfer was obtained by way of false
pretences. (
Absa Bank
Ltd v Greyvenstein
2003 (4) SA 537
(SCA) at [8] and [9];
First
National Bank of SA Ltd v Quality Tyres (1970) (Pty) Ltd
[1995] ZASCA 65
;
1995 (3) SA 556
(A) at
[12]
).
[43] The facts in
Absa
Bank Ltd v Greyvenstein
are,
insofar as they relate to the question of whether ownership of the
cheque passed, virtually on all fours with the facts in
the present
case. In
Greyvenstein
a cheque was drawn by Standard Bank on its Krugersdorp branch and was
made payable to Greyvenstein or order. It was for an amount
of R325
000, crossed and marked “
Not
Negotiable
” as
well as “
Not
Transferable
”.
After having received the cheque from Standard Bank, Greyvenstein
handed it to one Scott, acting on behalf of Scott Asset
Managers,
with the intention that Scott should invest the proceeds on
Greyvenstein’s behalf on the South African Futures
Exchange
(SAFEX). For this purpose, Greyvenstein endorsed the reverse side of
the cheque by signing it and placing his identity
number thereon.
Scott, however, deposited the cheque into the account of Investcorp
CC. The Supreme Court of Appeal (per Streicher
JA) found (at para
10) that at best for Greyvenstein, he had handed the cheque to Scott,
acting on behalf of Scott Asset Managers,
with the intention that
Scott should pay it into a trust account of Scott Asset Managers
(which did not exist); Scott received
the cheque in that capacity and
represented that he would deal with the cheque accordingly; Scott
Asset Managers would thus have
become the owner of the proceeds of
the cheque; if Scott did not intend to deal with the cheque in
accordance with his instructions,
he obtained it by false pretences.
The Supreme Court of Appeal found that ownership of the cheque (the
corporeal movable property)
had nevertheless been transferred to
Scott Asset Managers.
[44] I am in agreement with Mr
Gautschi SC, appearing on behalf of Absa Bank, that because
ownership in a cheque can pass even
if the transferee was a thief or
fraudster, it does not avail CHHC to allege a theft by false
pretences or a fraud by Coetzee
─ as ownership passed
nonetheless. In this regard, the evidence clearly establishes that
CHHC, represented by Harcourt-Cooke,
physically handed over, and
intended to transfer ownership of the cheque to AJ Coetzee Attorneys,
represented by Coetzee. AJ Coetzee
Attorneys, thus represented by
Coetzee, intended to receive ownership of the cheque and to deposit
it. Ownership of the cheque
thus passed to AJ Coetzee Attorneys (a
sole proprietorship) or A.J. Coetzee (a sole practitioner) which is
in effect the same thing,
and CHHC is no longer the true owner of the
cheque. As is apparent from the testimony of Ms Veldsman, an
attorney employed by
the Law Society, Coetzee was a sole proprietor
who practised under the name of AJ Coetzee Attorneys. Accordingly,
the designation
of an account as “
Abraham
Jacobus Coetzee
or “
AJ
Coetzee
” or “
AJ
Coetzee Attorneys
”
amounts to the same thing, and those descriptions could be used
interchangeably. Therefore, by virtue of the fact that Coetzee
acted
as the agent for Coetzee Attorneys in collecting the cheque for
depositing into the trust account, and not as CHHC’s
agent,
ownership of the cheque passed to Coetzee upon him taking the cheque
into his possession, even though he obtained possession
in fraudulent
circumstances, and never intended to deposit the cheque into a trust
account.
[45] As indicated above, the
evidence demonstrates that Harcourt-Cooke, on behalf of CHHC,
intended to pass ownership in the cheque
and deliver it to Coetzee,
who intended to accept ownership thereof thus enabling him to
determine the fate of the proceeds (regardless
of the restriction on
transferability). Coetzee accordingly had the right to instruct Absa
Bank to collect the proceeds of the
cheque into any account of his
choice. Hence, any loss which the CHHC sustained is not attributable
to either Standard bank (because
the mandate has not been breached),
or Absa Bank (because ownership in the cheque had passed to Coetzee),
and it was not negligent
in making the collection into Coetzee’s
personal account. Absa Bank contends, in this regard, that by virtue
of the fact
that it acted upon the instructions of Coetzee, to whom
ownership of the cheque had passed, it acted neither negligently or
unlawfully.
In support of this contention it relies on
Standard
Bank of SA Limited v Harris & Another NNO (JA du Toit Inc
Intervening)
2003 (2)
SA 23
(SCA), where a cheque had been drawn in favour of Demodig Plant
(Pty) Limited (“
Demodig
”).
It was crossed and marked “
Not
Transferable
”.
One Du Toit occasionally acted as attorney for Demodig. A director
of Demodig handed the cheque to Du Toit with a direction
that the
proceeds thereof be deposited in Du Toit’s trust account
pending further instructions. Du Toit opened a separate
trust
savings account for this purpose and deposited the cheque to that
account. The liquidators of Demodig (in liquidation) sued
the
collecting bank for damages, contending that the proceeds of the
cheque had never reached the payee (Demodig).
[46] The court in
Harris
found (at para 17) that:
“
As a consequence of this finding
it is to be accepted
that when Du Toit instructed the bank to collect the cheque for his
trust account, he acted as the agent of
Demodig, duly authorised by a
director. It follows that when the bank collected the proceeds of the
cheque for the credit of an
account nominated by the agent of the
payee, it did so in compliance with the payee’s instructions,
which were conveyed to
it by the payee’s duly authorised agent.
Against the background of the requirements for the collecting bank’s
liability,
as set out in the Indac case, the question arises whether
it can be said that in these circumstances the bank ‘received
payment
of the cheque on behalf of someone who was not entitled
thereto? And the further closely related question – can it be
said
that in these circumstances the bank acted unlawfully vis-a-vis
the payee in receiving payment? The court a quo held that when a
bank
collects a cheque crossed and marked ‘not transferable’
for the credit of an account in the name of someone other
than the
payee, the inference is justified that the proceeds were received for
someone “not entitled thereto” and that
such receipts was
therefore unlawful. As a matter of prima facie inference, I have no
quarrel with this view. On the contrary,
there is good authority for
the proposition that the collection of a cheque crossed ‘not
transferable’ for an account
in the name of someone other than
the payee, justifies the prima facie inference not only that the bank
acted unlawfully, but also
that it was negligent in so doing. (See eg
Volkskas Bank Bpk v Bonitas Medical Aid Fund
[1993] ZASCA 68
;
1993
(3) SA 779
(A) 791H-J and
Holscher v ABSA Bank en ‘n
Ander
1994 (2) SA 667
(T)
672E). The question remains, however ─ does evidence that the
bank acted on instructions of the payee rebut the prima
facie
inference of unlawfulness? I think it does. It is true that a cheque
marked ’not transferable’ is ‘not
negotiable’
in terms of s 6(5) of the Bills of Exchange Act 34 of 1964. This
means that the payee’s rights derived
from the cheque cannot be
transferred to anyone else. Consequently, no-one but the payee can
enforce payment thereof. This does
not mean, however, that the payee
cannot authorise someone else to receive the proceeds of the cheque.
As was pointed out in
African Life Assurance Co Ltd v
NBS Bank Ltd
2001 (1) SA
432
(W) 441(C) in similar context:
‘
ordinarily
the payee of the cheque is free to deal with the proceeds thereof as
it chooses’ –
It
follows in my view that the payee can authorise the bank to collect
the proceeds of the cheque for any account of the payees
choice and
as long as the bank follows the instructions of the payee, it cannot
be said to act unlawfully. Nor can it be said,
where the payment of
the proceeds of the cheque were received in an account nominated by
the payee, that such payment was received
‘on behalf of someone
who was not entitled thereto’. It was after all received into
an account of the payee’s
choice and for no-one other than the
payee.”
The evidence, in this matter,
clearly demonstrates that Coetzee collected the cheque on Saturday 28
January 2006, from Harcourt-Cooke
and personally deposited the
cheque. It was, therefore, he who instructed Absa Bank to credit the
proceeds of the cheque to the
account of AJ Coetzee. As indicated
earlier in this judgment, it is clear from the evidence presented on
behalf of CHHC, that Harcourt-Cooke,
on behalf of CHHC, delivered the
cheque to Coetzee with the intention that he became the owner
thereof, and Coetzee accepted it
with the intention of taking
ownership. After all, no one else could have taken ownership of the
cheque destined for his own trust
account (if it existed), and hence,
based on the authority of
Harris
’
case, I am satisfied that Absa Bank followed the instructions of the
payee, represented by Coetzee, and it did not act unlawfully
or
negligently in collecting the cheque for the credit of Coetzee’s
personal bank account. Consequently no loss would be
recoverable
against either defendant.
[47] It is clear from
Harcourt-Cooke’s evidence that the cheque was drawn in very
suspicious circumstances, and that she
assumed the risk of handing it
to Coetzee, knowing full well that he was dishonest and unreliable.
She accepted that on the contradictory
letter, which Coetzee
presented to her on 26 January 2006, describing the proposed
investment, there was a possibility that he
would view the proceeds
of the cheque as bridging finance available to him in connection with
the Nationwide transaction. Harcourt-Cooke
is a trained chartered
accountant. Chartered accountants are specifically trained to assess
the credibility of assertions made
and the level of assurance to be
derived from such assertions. She was, by all accounts, not a naïve
investor, who did not
understand risk. Thus, despite the inherent
risks involved in a transaction of this nature, it remains
inexplicable how Harcourt-Cooke,
a director of CHHC, for many years,
and a chartered accountant by training was unaware of the inherent
risks involved ─ as
an investment of this nature could not
simultaneously be risk-free and attract a high interest rate if it
was above board.
[48] I am of the view that, in
these circumstances, it would be unacceptable for public policy to
place the risk on the bankers,
merely because of the tenor of the
cheque, which, in any event, identified the payee not only by name as
being an attorney’s
trust account, but also by reference to
Coetzee’s own account number, which he gave her and into which
the proceeds were
deposited by him.
[49] I am accordingly of the
view that the functionality most closely associated with the loss was
the extraordinary risk assumed
by CHHC itself. As so eloquently put
by Mr Symon SC, the tenor of the cheque is not a mechanism for the
protection of the drawer
against commercial risk, and
misrepresentation by an unscrupulous business partner. It is not a
means whereby a drawee bank can
be unknowingly appointed by proxy to
protect a plaintiff seeking profit from the risk inherent in the
unusually high interest return
on money supposedly deposited into an
attorney’s trust account. This is particularly the case where
the plaintiff knows
or reasonably suspects that the attorney is
unscrupulous, and the investment proposed is extraordinary and
involves a deception,
as is clearly the case in this matter.
[50] I am of the view that if
Coetzee had a trust account and the proceeds of the cheque were
deposited into that account, it would
not avail CHHC to complain to
the bankers if Coetzee, who controlled the trust account, disbursed
funds from that account. If
this is in fact the case, then it makes
little sense to punish the bankers because Coetzee, who was
authorised to deal with the
proceeds, deposited the funds into the
very account number into which he advised CHHC that he would.
[51] CHHC is required to prove
that its loss was caused by the actions or omissions of Absa Bank as
collecting bank (
FNB v
Duvenhage
(above at
para 13)). CHHC places great reliance on the fact that the cheque was
destined for a trust account, namely AJ Coetzee
Attorney’s
Trust Account but was instead paid into Coetzee’s personal
account. Even if, as contended by CHHC, the
proceeds of the cheque
were paid into the wrong account, I am of the view that that was not
the cause of CHHC’s loss. It
is clear that Coetzee would have
misappropriated the money regardless of whether it was paid into a
trust account or his personal
account. It was, in this regard,
assumed by the CHHC, but not proved, that the cheque was paid into
A.J. Coetzee’s personal
account with Investec Bank. It is
common cause that the cheque was paid into a bank account with number
100110445151 in the name
of Abraham Jacobus Coetzee. There was no
evidence that the bank account was not A.J. Coetzee’s trust
account. On the contrary,
it is clear from the evidence of Ms
Veldsman, of the Law Society, that Coetzee paid attorneys from that
account. He also represented
to Harcourt-Cooke that it was his trust
account, and he paid a cheque designated to a trust account into that
account. CHHC did
not call an available witness from Investec (as
foreshadowed) to establish that it was not a trust account. There is
accordingly
no proof that the account in question was not the trust
account of AJ Coetzee Attorneys, and therefore no proof that the
cheque
had been deposited into the incorrect account.
[52] CHHC has, similarly,
focussed upon certain purported acts and omissions of the teller of
Absa Bank in the process of collecting
the cheque. In this regard it
alleges,
inter alia
,
that: Standard Bank failed to complete Field A on the pink envelope
at all; it had inserted into Field D of the pink envelope
the name of
a third party who was neither the drawee of the cheque, the payee of
the cheque, the drawee banker or the collecting
banker. I am in
agreement with Standard Bank that CHHC’s focus is entirely
misplaced. If the proceeds were ultimately credited
to the correct
account, then any acts or omissions by Absa Bank, or even Standard
Bank for that matter, prior thereto, no matter
how negligent, are
simply irrelevant. The requirement that there should be loss
consequent upon negligent conduct often receives
the least attention
as illustrated by Nugent JA in
First
National Bank of South Africa Ltd v Duvenhage
2006 (5) SA 319
(SCA) (at 320F-G) :
“
Of
the three elements that combine to constitute a delict founded on
negligence – a legal duty in the circumstances to conform
with
the standard of the reasonable person, conduct that falls short of
that standard, and loss consequent upon that conduct –
the last
often receives the least attention. Yet it is as essential as the
others, for without it there is no delictual liability.
Indeed, in a
recent illuminating note JC Knobel suggests, on doctrinal grounds,
that loss, and its causal connection, might even
be the proper
starting point for the enquiry.
”
[53] As indicated, even if the
proceeds of the cheque were paid into the wrong account, I am of the
view, on a consideration of
all the evidence before me, that that was
not the cause of CHHC’s loss. It is apparent that Coetzee would
have misappropriated
the money regardless of whether it was paid into
a trust account or his personal account. As indicated, it was assumed
by CHHC,
but not proved, that the cheque was paid into Coetzee’s
personal account with Investec Bank. I am of the view that there was

nothing which would have prevented him from misappropriating the
money even if it had been paid into a trust account. Harcourt-Cooke

conceded, under cross-examination, that Coetzee had signing powers
on the account and would have controlled the money in the account
and
could have stolen the money from a trust account just as certainly as
he stole the money from the other account. Harcourt-Cooke
also stated
that had the money been paid into a trust account bearing that
account number she would have been quite content.
[54] By the same token, had
Coetzee been honourable, he could have preserved the money in his
personal account as if they were trust
moneys. In any event, the
distinction between a trust account and a personal account has no
relevance in this case because the
Fidelity Fund rejected CHHC’s
claim on the basis that Coetzee had, at the time, not been a
practising attorney, and not on
the basis that the account into which
the moneys were deposited was not a trust account. CHHC’s loss
was accordingly caused
by the theft of the money by Coetzee after he
had deposited the cheque, and not by the depositing of the cheque. As
contended by
Absa Bank, the flaw in CHHC’s case is that it
confuses theft of the proceeds of the cheque (which is what occurred)
with
theft of the cheque itself (which is not what occurred).
[55] I am accordingly of the
view that, even if CHHC was the true owner of the cheque, and both
Standard Bank and Absa Bank acted
unlawfully and negligently, their
actions or omissions would not have caused CHHC’s loss. The
evidence clearly establishes
that Harcourt Cooke, on behalf of CHHC,
intended giving Coetzee the cheque for purposes of depositing it into
the very account
number into which he advised Harcourt-Cooke that he
would, yet CHHC made no attempt to recover any of the moneys from
him, either
before his sequestration, or thereafter. The
sine
qua non
of the loss
lies in the arrangement concluded between CHHC and Coetzee, and not a
breach of the mandate or negligence by the
bankers. CHHC is thus
not entitled to any right of compensation against either Standard
Bank or Absa Bank. CHHC has, accordingly,
failed to discharge its
onus to prove, the breach of the mandate, causation and loss, as
against Standard Bank and, that Absa
Bank was liable under the
extended
lex Aquilia
for negligence to the true owner of the cheque, namely Coetzee.
[56] In view of the conclusion
which I have reached, it is unnecessary to consider the evidence of
the expert witness, Mr Fresci,
who was called by Standard Bank to
testify on the cheque payment system and the allocation of liability
for loss on a functional
basis.
[57] For these reasons
therefore, I make the following order:
The plaintiff’s claim
against the first defendant is dismissed with costs.
The plaintiff’s claim against the second defendant is
dismissed
with costs, such costs to include the costs of two counsel.
The plaintiff is to pay the
wasted costs occasioned by, the postponement from 24 June 2010 to 5
July 2010 and, the delay on 5
July 2010 when the proceedings
commenced at 11h45 only, due to an additional volume of documents
having been made available on
that day.
_____________________________
F
KATHREE-SETILOANE
JUDGE OF THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG
COUNSEL FOR THE PLAINTIFF: Mr SD
Wagenaar SC with Mr B Booth
ATTORNEYS FOR THE
PLAINTIFF: Bouwers (Johannesburg) Inc
COUNSEL FOR THE
FIRST DEFENDANT: Mr S
Symon SC
ATTORNEY FOR THE FIRST DEFENDANT: Deneys Reitz
COUNSEL FOR THE SECOND DEFENDANT: Mr A Gautschi SC with Ms L
Grenfell
ATTORNEYS FOR THE
SECOND
DEFENDANT: Lowndes Dhlamini Attorneys
DATES OF HEARING: 5-7 May 2010, 24 June 2010, 5-7 July 2010, 3
August 2010
DATE OF JUDGMENT: 20 May 2011