Anglo African Factors (Pty) Ltd v P & I Engineering
Jurisdiction | South Africa |
Citation | 1984 (2) SA 501 (W) |
Anglo African Factors (Pty) Ltd v P & I Engineering
1984 (2) SA 501 (W) [*]
1984 (2) SA p501
Citation |
1984 (2) SA 501 (W) |
Court |
Witwatersrand Local Division |
Judge |
Nestadt J |
Heard |
September 28, 1983; September 29, 1983 |
Judgment |
September 30, 1983 |
Flynote : Sleutelwoorde A
Bills of exchange — Accommodation party — A issuing a series of bearer cheques, post-dated and crossed "not negotiable", to B — B issuing a corresponding series of cheques, in the same amounts and similarly B post-dated, to A — B negotiating one of cheques to C for discounting purposes — C suing A upon cheque — A alleging an agreement with B that A would only be obliged to meet the cheques issued by it if B's cheques had first been met — A alleging that, inasmuch as B's cheques had not been met, it had a defence against B and accordingly, by virtue of the crossing C and the operation of s 80 of Act 34 of 1964, against C — Court holding that transaction was an accommodation transaction with A being the accommodation party — Section 26 of the Act, governing the liability of an accommodation party vis-à-vis a holder for value (ie C) accordingly applicable — A accordingly liable on cheque as against C.
Headnote : Kopnota
In an action for provisional sentence on a bearer cheque D crossed and marked "not negotiable", defendant argued that, by virtue of s 80 of the Bills of Exchange Act 34 of 1964, it was not liable to plaintiff, a holder to whom the cheque had been negotiated by the payee, inasmuch as the cheques had been issued as part of a series of cheques matched by a corresponding series (similarly post-dated and in identical E amounts) issued by the payee to the defendant on the understanding that the defendant would not be obliged to meet the cheques which it had issued unless the corresponding cheques were first met, which they were not. Plaintiff denied that s 80 (in terms of which the holder of a "not negotiable" cheque takes it "subject to the equities", being in no better a position than his predecessor in title) applied, arguing that it appeared from the papers that the cheque had been issued to F the payee to enable it to raise money by having it discounted by plaintiff, ie purely in order to accommodate the payee and without the defendant having received value therefor. Accordingly, it was argued that in terms of s 26 (2) of the Act defendant, being an accommodation party, was liable to plaintiff as a holder for value, plaintiff alleging that it had "given value for all cheques negotiated to it for the purposes of discounting". Defendant replied that, even if an "accommodation transaction" had taken place, it was not an G accommodation party as defined in s 26 (1) (ie a "person who signed on a bill... without receiving value therefor") since the receipt by it of the payee's corresponding series of cheques constituted value received. Accordingly, defendant contended, it could not be held liable on the basis advanced by plaintiff.
Held, that on the papers, and in the absence of an explanation by defendant, it had to be concluded that an accommodation transaction had taken place.
Held, further, that defendant had not received value in the H exchange of cheques: the object of the exercise was merely to provide funds for the payment of the cheques issued by defendant upon their due dates, which did not amount to the giving of value, for in the ordinary case the accommodated party undertakes to make such provision.
Held, further, that, in the absence of a denial by defendant, plaintiff's allegation that it was a holder for value had to stand.
1984 (2) SA p502
Held, accordingly, that s 26 was applicable and that, inasmuch as the defence raised was inextricably bound up with the issue of accommodation, defendant had failed to establish such defence. Provisional sentence accordingly granted.
National Office Supplies (Pty) Ltd v Jhazbhay 1975 (3) SA 977 (D) A approved and applied.
Case Information
Action for provisional sentence. The facts appear from the reasons for judgment.
D M Fine for the plaintiff.
S W Sapire for the defendant.
Cur adv vult.
Postea (September 30). C
Judgment
Nestadt J:
This is an action for provisional sentence in the sum of R18 500. It is based on a cheque for this amount drawn by the defendant in favour of Interlease Ltd or bearer. The cheque is dated 6 November 1982. The plaintiff is the holder. It was presented for payment but payment was stopped.
In its answering affidavit opposing provisional sentence a D number of defences are relied on. During argument however, Mr Sapire, on its behalf, confined defendant's opposition to only one of them, which, in a nutshell, is that the defendant is not liable to the payee and that the plaintiff, having taken the instrument subject to equities, stands in no better position.
The defence against the payee rests on the following E allegations contained in defendant's answering affidavit:
Defendant has such defences arising as follows:
On or about 25 June 1982 I, acting on behalf of defendant, entered into an agreement with one Panayotis Kachrilas, a director of Interlease Ltd ('Interlease') who represented Interlease in his capacity as such in terms of which it was agreed that F the defendant would deliver to Interlease three cheques dated 16 September 1982, 6 November 1982 and 25 November 1982, for amounts of R18 500, R18 500 and R7 500 respectively and that Interlease would in consideration therefor deliver to the defendant cheques for the same amounts drawn on the same dates.
The cheques drawn by defendant aforesaid were delivered to Interlease whilst Interlease delivered to defendant the G corresponding cheques, copies whereof are annexed hereto marked 'B, 'C' and 'D'.
It was agreed between the said Kachrilas, representing Interlease, and the defendant, on whose behalf I acted, that the defendant would be obliged to meet the cheques given to Interlease only in the event of the cheques drawn by Interlease in favour of defendant being...
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