Govender v Standard Bank of South Africa Ltd

• Jurisdiction: South Africa
• Judge: Schock J and Rose-Innes J
• Judgment Date: 03 August 1984
• Citation: 1984 (4) SA 392 (C)
• Hearing Date: 30 April 1984
• Court: Cape Provincial Division

Rose-Innes J:

This appeal turns upon whether a bank may recover from the payee of a cheque drawn upon the bank the amount which the bank paid to the payee on the cheque notwithstanding that payment of the cheque had been countermanded by the drawer.

G The plaintiff at the trial in the magistrate's court was the Standard Bank of South Africa Ltd which paid the stopped cheque. The defendant was one Govender who was the payee of the cheque to whom the bank paid the amount of the cheque. The magistrate's court upheld plaintiff's claim for repayment of R1 090 paid on the cheque to defendant. Defendant now appeals H against the judgment and order for repayment of the amount. I shall refer to the appellant as defendant and to the respondent bank as plaintiff as they were at the trial.

It is necessary to state the circumstances in regard to the transaction underlying the cheque, how the cheque came to be stopped and how the bank came to pay the cheque notwithstanding I that it had been stopped.

On 3 April 1979 one Saaiman hired a bus from defendant who agreed to provide the bus and a driver to convey a group of passengers on 6 April from Huguenot, near Paarl, to Prieska where they were to attend the funeral of Saaiman's son. The agreement was concluded at

Rose-Innes J

A Huguenot and Saaiman there and then drew the cheque on the Prieska branch of the plaintiff bank with which Saaiman had a current account. The cheque was dated 4 April 1979, was drawn in favour of defendant or bearer and was handed by Saaiman to defendant as payment in advance of the agreed charge of R1 090 for the hire of the bus on 6 April 1979. Having made these B arrangements at Huguenot, Saaiman returned to his home near Prieska.

One of the group of passengers, a man by the name of Botha, who intended to travel on the bus to the funeral, was present when the agreement to hire the bus was entered into and the cheque drawn and handed by Saaiman to defendant. Botha became C concerned that the group of passengers would be unable to contribute sufficiently to the cost of hiring the bus, the understanding being that the group would recoup Saaiman for the cost of the bus to the extent that they could and Saaiman would bear any shortfall. The following day, 4 April, Botha arranged for cheaper transport for the group by means of another bus D which he hired elsewhere. Botha then telephoned Saaiman and told him that he had arranged other transport, and that he had cancelled the agreement with defendant for the hire of defendant's bus. Botha told Saaiman that Saaiman should accordingly stop payment of the cheque which Saaiman had handed to defendant in payment of the hire of defendant's bus.

E The trial court heard evidence of Botha, and of defendant and a witness Julia Floris in regard to the alleged cancellation of the agreement for the hire of defendant's bus. The trial court found that Botha in fact had not cancelled the agreement. It is common cause on this appeal that this finding of the magistrate's court is a correct finding, that the agreement was F not cancelled and that the statement of Botha to Saaiman that Botha had cancelled the agreement was an incorrect statement, but that Saaiman was under the impression that the agreement had been cancelled as a result of what Botha told him. The agreement for the hire of the bus thus remained a binding and subsisting contract between Saaiman and defendant at all times G material to this case.

On 4 April Saaiman telephoned the Prieska branch of the plaintiff bank and instructed the bank to stop payment of the cheque. He was requested to call at the bank to complete written notice to the bank countermanding payment of the H cheque. He did so the following day, 5 April. He signed and handed to the bank a written form of notice to stop payment. The form contains particulars identifying the cheque and an instruction directed to the manager of the bank as follows:

"I shall be pleased if you will kindly stop payment of the undermentioned document, on the understanding that I have no claim against the bank in the event of such document being inadvertently paid by the bank."

I The practice of the bank upon receiving a notice to stop payment was to hand it to the ledger clerk. The ledger clerk would examine the customer's ledger card to ensure that the cheque had not already been paid. If the cheque was still outstanding, as was the case here, the ledger clerk would inform the tellers that the cheque had been stopped. The ledger clerk would also record that the cheque had been

Rose-Innes J

stopped in a book called the stop payments register and in an A index of notices to stop payment. The ledger clerk would then prepare what is referred to as a stop payment cover, which is a red-coloured fold sheet upon which was typed the instruction that payment of the cheque had been countermanded. The customer's ledger card would then be inserted into the stop payment cover so that the ledger card could not be used without B first removing it from the cautionary stop payment cover. It was the function of the ledger clerk to enter the amount of cheques presented to the bank for payment to the debit of the drawers of the cheques on their ledger cards. A cheque, the payment of which had been countermanded could not, or should not, be debited to the account of the drawer because the ledger C card would be inside the stop payment cover recording the countermand of payment of the cheque.

Defendant had no knowledge that the cheque had been stopped. On the morning of 6 April his bus and its driver were ready to convey the group of passengers to Prieska as agreed. No passengers arrived. They departed in the other bus belonging to another road transportation firm.

D On 6 April defendant deposited the cheque with his bank, Barclays Bank, Paarl. Barclays Bank credited defendant's account with the amount of the cheque, presented the cheque to the Paarl branch of the plaintiff bank, which forwarded the cheque to the Prieska branch for payment. On Thursday 12 April, E which was the last business day preceding the Easter long week-end during which banks are closed and was a busy day at the Prieska branch, the ledger clerk debited the amount of the cheque on Saaiman's ledger card despite the notice to stop payment given on 5 April. How this occurred is not clear on the evidence. The probabilities indicate that one of the members of the bank's staff used the ledger card and abstracted it from F its stop payment cover and failed to replace the card in the cover before returning the card to the ledger file. The ledger clerk subsequently posted the amount of the cheque to the debit of the ledger card, forgetting that the cheque had been stopped.

G When Saaiman subsequently received his bank statement he queried the payment of the cheque which he had stopped. The bank reversed the debit in his account.

On 17 May the Prieska branch returned the cheque to its Paarl branch with a request to recover the payment which had been made on the cheque. The plaintiff's Paarl branch returned the H cheque to Barclays Bank, but on 25 May Barclays Bank declined to reverse the payment received on the cheque and returned the cheque to the plaintiff bank. The upshot was the present action by plaintiff bank against defendant for repayment of the amount paid to the defendant's bank for his account as payee of the cheque.

The first submission by Mr Louw, for defendant, is that the I failure by the ledger clerk of plaintiff bank to observe the instruction to stop payment, which she testified she herself typed on the stop payment cover into which Saaiman's ledger card was placed, and which she had entered in the stop payment register and index, was grossly negligent and that gross negligence, or even ordinary negligence, precludes

Rose-Innes J

A recovery of the payment from the payee. Mr Brand, for defendant, submitted that the conduct of the ledger clerk and her mistake was not gross negligence and was no greater negligence than that of the bank officials in Natal Bank Ltd v Roorda 1903 TH 298 and Barclays Bank International Ltd v African Diamond Exporters (Pty) Ltd 1977 (1) SA 298 (W) in which the fault was found to be excusable and did not preclude B recovery.

On appeal both counsel adopted the position that plaintiff's claim was a condictio indebiti. The issue whether or not negligence on the part of the bank precludes recovery is clearly an issue which may arise under a condictio indebiti, C but it may not be a decisive issue under other forms of condictio. It may be an open question whether the action in this case falls to be decided according to the principles governing the condictio indebiti, in which event negligence of the plaintiff may preclude the condictio, or whether the claim is a condictio sine causa, in which event negligence of the plaintiff may be irrelevant. A formalistic approach, of course, D should be avoided where possible. In some cases it is necessary to classify the cause of action. In others, where no issue turns upon classification of the cause of action, a plaintiff need not place a label upon this case. If he is able to show that the law entitles him to relief it is not necessary for him to commit himself in advance in his pleadings to one E form of action to the exclusion of another. It may, however, in this case be of importance in the issue of negligence to bear in mind that the condictio indebiti and the condictio sine causa have different requisites, and to determine which is the appropriate action and consequently what are the appropriate requirements which plaintiff must establish in order to succeed.

F In the case of the condictio indebiti, a person who makes a payment of money (or delivers a thing) to another due to a reasonable error of fact in the belief that the payment is owing, whereas it is not, may claim repayment to...