Greenfield Engineering Works (Pty) Ltd v NKR Construction (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Hoexter J
• Judgment Date: 01 August 1978
• Citation: 1978 (4) SA 901 (N)
• Court: Natal Provincial Division

Hoexter J:

This is an action for payment of R1 969,72. The plaintiff's action is framed in the alternative, the main claim being based on contract and the alternative claim being one for damages flowing from the F defendant's alleged negligence. The essential facts are these. The plaintiff is a private company which carries on business at Edenvale in the Transvaal where it has a structural engineering works. The defendant is a private company which carries on business as a building contractor at Ladysmith in Natal. In 1976 the defendant was lawfully indebted to the plaintiff in the sum of R1 969,72. This amount was the balance due and G owing in respect of materials supplied and work done by the plaintiff on one of the defendant's contracts in Ladysmith. In regard to this outstanding balance there took place correspondence between the parties and on 20 April 1976 the managing director of the plaintiff wrote a letter to the defendant requesting the latter to:

"forward a cheque for R1 969,72 being the outstanding amount, by return of post."

H In due course the defendant at Ladysmith posted to the plaintiff's address at Edenvale a letter containing a remittance slip and a cheque of R1 969,72. The cheque, dated 2 June 1976, was drawn by the defendant on Volkskas Ltd, at its Ladysmith, Natal, branch. The plaintiff's name is "Greenfield Engineering Works (Pty) Ltd". The cheque inaccurately described the payee simply as "Greenfield Engineering Works". The cheque was crossed but it was payable to bearer and not payable to order. The letter and its contents never reached the plaintiff. After the letter had been posted it was

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somehow intercepted by a person whose identity is unknown but to whom I shall refer as "the thief".

On 24 June 1976 the thief, armed with the cheque stolen by him, presented himself at the Braamfontein, Johannesburg, branch of the Standard Bank, A and expressed a desire to open an account. At the Braamfontein branch of the Standard Bank a sub-accountant called Pieterse is in charge of the section dealing with the opening of new accounts. The thief was referred to and interviewed by Pieterse. The thief was dressed in a rather shabby B suit but Pieterse nevertheless gained the impression that he was a respectable person. The thief gave his name as Albert Green and said that his address was 17 Second Avenue, Kew. He told Pieterse that he was the "sole partner" in a business called "Greenfield Engineering Works"; that his business was a new venture in the field of light engineering; and that he wished to open an account in the name of his business by depositing the C cheque in his possession. The cheque, so the thief told Pieterse, represented payment to his business in respect of its first completed contract. Pieterse believed the thief and the cheque was accepted as an initial deposit in the account of "Greenfield Engineering Works" which was opened on the following day, 25 June 1976, under account No 230 - 829 - 0.

D According to Pieterse the Braamfontein branch of the Standard Bank does not issue cheque-books to a new client - "before we've cleared the person with the credit bureau". However, on 29 June 1976 the thief again called at the Braamfontein branch of the Standard Bank. On this occasion he went to the inquiry counter and asked for a sight draft or E "counter cheque" for an amount of R1 800 on the account of "Greenfield Engineering Works". A sight draft in respect of account No 230 - 829 - 0 for R1 800 was duly completed by the bank clerk on duty and thereupon the thief affixed thereto the signature "A Green". The sight draft was referred by the clerk to Pieterse. Pieterse happened to see the thief at the inquiry counter and recognised him as the person "Green" with whom he F had conducted an interview some days before. Pieterse considered that sufficient time had elapsed to allow for the clearing of the cheque deposited by "Green" on 24 June 1976 and accordingly Pieterse authorised encashment of the sight draft, whereupon the thief was paid R1 800 in cash.

On 30 June 1976 the cheque was met on presentation by the defendant's bank G at Ladysmith, Natal, branch of Volkskas Ltd. The R1 800 paid to the thief at the Braamfontein branch of the Standard Bank pursuant to the sight draft represented part of the proceeds of the cheque. This withdrawal left account No 230 - 829 - 0 in credit to the extent of some R169. During argument counsel informed me that the Standard Bank had indicated that (unless this Court should in its judgment in this action otherwise order) H the Standard Bank would pay the balance of R169 to the plaintiff. Accordingly the plaintiff's counsel asked for judgment for R1 800 and costs.

It is convenient at this stage to make brief reference to the pleadings. I deal first with the main claim and the plea thereto. The plaintiff pleaded that the balance of the contract price due and payable to it by the defendant was R1 969,72 "which amount notwithstanding demand the defendant has failed to pay". The defendant admitted the above debt but pleaded as follows: "In or about June 1976 defendant paid the said amount of

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R1 969,72." In response to a request by the plaintiff the defendant furnished further particulars to its plea from which it appears that in support of its defence of payment the defendant relies on the fact that it A posted to the plaintiff the cheque which was stolen by the thief.

I turn to the alternative claim. Here the plaintiff pleaded that in payment of its aforesaid debt the defendant posted to the plaintiff a cheque which was stolen before it reached the plaintiff; and that the thief, who had no right to or title in the cheque, obtained payment thereof through the Standard Bank, Braamfontein, whereby the plaintiff was deprived of its claim against the defendant in terms of the contract B mentioned in the main claim and in terms of the cheque. In the premises, so pleaded the plaintiff, it had suffered damages in the sum of R1 969,72. The plaintiff pleaded that the thief of the cheque had been able to procure payment of it as a result of the defendant's negligence in that the defendant, knowing that the cheque was to be sent through the post, nevertheless:

(a) made the cheque payable to the bearer; C

(b) incorrectly described the plaintiff on the face of the cheque.

In its plea the defendant put the plaintiff to the proof of its allegations of the theft of the cheque and payment of its proceeds to the thief. The defendant admitted that the said cheque was made payable to D bearer and that on the face of the cheque the name of the plaintiff was "incompletely described". The defendant denied, however, that it had been negligent, as alleged or at all. The defendant further denied that the plaintiff had suffered damages in any amount; alternatively it pleaded that, if the plaintiff had sustained any damage, such damage was too E remote and accordingly not recoverable from the defendant.

Despite what was set forth in the defendant's plea the disputed issues of fact between the parties were further narrowed as a result of agreement achieved at a pre-trial conference held on 3 March 1978. In terms of the minute of the conference handed in at the beginning of the trial the following matters were stated to be common cause:

(a)

F that the cheque was posted on 2 June 1976 at the Ladysmith Post Office by one Nassi, a director of the defendant;

(b)

that after its posting the cheque was misappropriated by a thief (of unknown identity) who had no right in or title thereto;

(c)

that on 24 June 1976 the thief opened a current account with the G Braamfontein branch of the Standard Bank in the style of "Greenfield Engineering Works, sole partner Albert Green";

(d)

that on 24 June 1976 the thief deposited in the said account the said cheque which was collected by the Braamfontein branch of the Standard Bank and met on presentation by the defendant's bankers, Volkskas Ltd, Ladysmith;

(e)

H that the cheque was collected by the Braamfontein branch of the Standard Bank on behalf of the thief;

(f)

that on 29 June 1976, and by way of a sight draft, the thief obtained payment of R1 800 which amount represents part of the proceeds of the cheque.

The plaintiff was represented by Mr Solomon. Mr Giles appeared for the defendant. The only witness called by counsel for the plaintiff was Pieterse of the Braamfontein branch of the Standard Bank. On the defendant's

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behalf there were called two witnesses: one Vorster, an accountant at the Pietermaritzburg branch of the Volkskas Ltd with considerable experience also as an accountant at other branches of the same bank; and Nassi, the A director of the defendant to whom reference is made in the minute of the pre-trial conference. This is an action in which little if anything turns on the credibility or reliability of the witnesses. I record nevertheless that I was favourably impressed by all three witnesses. Pieterse and Vorster are responsible banking officials of some experience and both were B obviously honest witnesses. Nassi is an immigrant from Italy and although he has lived in South Africa for 20 years he understandably lacks complete fluency in English. He nevertheless seemed to be a frank witness.

Pieterse testified in regard to banking practice and procedures at the C Braamfontein branch of the Standard Bank. Vorster gave evidence as to banking practice and procedures in Volkskas Ltd. Some of the testimony of both Pieterse and Vorster involved little more than a statement of legal principles applicable to negotiable instruments. So far as general banking practice is relevant to a determination of any of the issues in the present case the evidence of Pieterse and Vorster is, in the main, D harmonious. In these circumstances it is unnecessary, I consider, to review their...