Navidas (Pty) Ltd v Essop; Metha v Essop

• Jurisdiction: South Africa

Navidas (Pty) Ltd v Essop;
Metha v Essop
1994 (4) SA 141 (A)

1994 (4) SA p141

Citation	1994 (4) SA 141 (A)
Case No	426/1992 and 427/1992
Court	Appellate Division
Judge	Corbett CJ, Hefer JA, Kumleben JA, Nicholas AJA, Mahomed AJA
Heard	February 25, 1994
Judgment	June 1, 1994

Flynote : Sleutelwoorde B

Bills of exchange — Cheque — Presentment for payment — Bills of Exchange Act 34 of 1964 s 43(2)(c) — Clear from Act that cheque must be presented at place specified in cheque and in manner prescribed in s 50(4) — Where C cheque drawn on particular branch of bank, specified place the place of business of branch in question — Automatic clearing system, which involves no more than an electronic communication to processing office that particular cheque will or will not be met if and when presented, not providing for presentment in accordance with provisions of Act, which plainly envisage physical exhibition of cheque to staff of drawee bank at D its place of business — Fact that use of automatic clearing system an established trade practice not sufficient to override detailed requirements for due presentment contained in Act.

E Bills of exchange — Cheques — Presentment for payment — When excused — Bills of Exchange Act 34 of 1964 s 44(2)(c) — In terms of s 44(2)(c) presentment dispensed with where (1) drawee not bound, as between himself and drawer, to pay cheque and (2) drawer has no reason to believe that cheque will be paid if presented — Cheque stopped by drawer — Drawee's F duty and authority to pay cheque accordingly terminated both logically and in terms of s 73(a) of Act — Section 44(2)(c) couched in terms admitting of no doubt that case of countermanded cheque included — No sufficiently cogent indications either in rest of Act or in results to which unrestricted interpretation would lead that Legislature intended to G restrict s 44(2)(c) by excluding case of countermanded cheque from its operation — As to second requirement, drawer, having stopped payments obviously aware that bank's mandate terminated and no possible reason for him to believe that cheque will nevertheless be paid if presented - Mere fact of countermand constituting at very least prima facie evidence of H absence of any reason to believe that cheque would be paid if presented — No basis for submission that second requirement has to be related in time to drawing of cheque — Presentment for payment accordingly dispensed with.

Bills of exchange — Cheque — Holder or holder in due course — Who is — I Cheque drawn in favour of 'Contempo' whereas real payee was 'Contempo CC' which used trade name 'Contempo' — Payee having endorsed cheque 'Contempo CC' and negotiated it to plaintiff — Whether such constituting valid negotiation so that plaintiff became holder or holder in due course — Difference between two names a material one — Impression gained ex facie J cheque that it

1994 (4) SA p142

A was drawn in favour of firm or partnership and endorsed by close corporation — However, in provisional sentence proceedings between immediate parties, payee can, despite rule against admission of extrinsic evidence in such proceedings, be identified by suitable allegations in summons and, if need be, in replying affidavit — Summons alleging that B cheque drawn in favour of Contempo CC and replying affidavit explaining that 'Contempo' trade name used by Contempo CC — Implication clear that 'Contempo' and 'Contempo CC' in fact one and the same — No valid objection to identification of payee in such manner — No difference in principle between identity of payee qua plaintiff and his identity qua endorser — C Since 'Contempo' proved to be trade name used by Contempo CC, to be accepted that Contempo CC real payee and that it was Contempo CC who endorsed cheque in question — Nor could it be said, in view of commercial practice of conducting business under trade name and provision made in s D 21(a) of Bills of Exchange Act 34 of 1964 for signature of cheque in such name, that designation of payee close corporation by its trade name constituting 'wrong' designation of payee/endorsee within meaning of s 30(5) of Act — Endorsement having effected valid negotiation of cheque to plaintiff.

Headnote : Kopnota

E The appellants in the two instant cases had been the plaintiffs in a Provincial Division which dismissed their claims for provisional sentence. The summonses were substantially identical: in each it was alleged that the plaintiff (appellant) was the holder in due course, alternatively the holder, of a cheque drawn by the respondent which was duly presented for payment but dishonoured after the respondent had countermanded (stopped) payment. In each case the respondent denied that the cheque had been F properly presented and in the Navidas matter the respondent also denied that the appellant was the holder or the holder in due course. The dispute about the presentment arose from the 'clearing house' system used by commercial banks for the rapid processing and collection of cheques. This system makes it unnecessary to physically present cheques at the drawee bank for payment: instead, the cheques are sent via the clearing house to the drawee bank's central processing office where it is determined via a G computer link whether a particular cheque will or will not be met if and when it is presented. In the instant cases the drawee bank's central processing office had returned the cheques to the collecting bank marked 'payment stopped'. The trial Court held that this did not constitute due presentment and dismissed the claims but granted the appellants leave to appeal to the Appellate Division. Counsel for the appellants submitted that the cheques had been duly presented as required by s 43(2) of the Bills of Exchange Act 34 of 1964, alternatively that presentment had been H dispensed with in terms of the provisions of s 44(2)(c) of the Act. In the Navidas case there was a further point in issue: in that case the cheque had been drawn in favour of 'Contempo' and endorsed 'Contempo CC'. The respondent denied that the appellant was either a holder or a holder in due course because the endorsement did not comply with s 30(5) of the Act, which required that a wrongly designated payee, in order to effect a negotiation, had to endorse the bill as therein described, adding his I proper signature. He submitted that, although 'Contempo' was a trade name used by Contempo CC, the difference between the two names was a material one which could not be ignored because, ex facie the instrument sued upon, the endorsement was not signed by the payee and therefore the cheque was not negotiated in terms of s 29(3) read with s 30(1) of the Act.

Held, as to the issue of presentment, that it emerged clearly from s 43(2)(c) and s 43(4)(a) of the Act that when a place of payment was specified in a cheque, it had, apart from other requirements, to be J presented at the specified place in the manner

1994 (4) SA p143

A prescribed in s 50(4): where it was drawn on a particular branch of a bank the specified place was obviously the place of business of the branch in question. (At 147D-E.)

Held, further, that, bearing the above in mind, there could be no doubt that the clearing house system, useful as it was commercially, did not provide for presentment in accordance with the provisions of the Act, which plainly envisaged the physical exhibition of a cheque to the staff of the drawee bank at its place of business: the seeking and obtaining of B information as to whether a particular cheque will or will not be met, whether it be by electronic or other means, did not constitute presentment in terms of the Act. (At 147E/F-G.)

Held, further, as to the argument that 'presentment' in s 43 had to be construed to mean presentment according to the established usage and practice of bankers, that, although it was true that technology had changed banking and that there was urgent commercial need for giving legal C effect to the practices that had developed as a result thereof, the Court could not, under the guise of interpretation or in any other manner, negate the elaborate set of mandatory rules for the due presentment of a bill set down by the Legislature by recognising another form of presentment which did not comply with the Legislature's explicit directives. (At 148A-C.)

Held, further, that the cheques had accordingly not been properly presented. (At 148F.)

Held, further, as to the argument that presentment was in any event not required because it had been dispensed with in terms of the provisions of D s 44(2)(c), that the section postulated two requirements: in a simple drawer/drawee relationship the first was that the drawee was not bound, as between himself and the drawer, to pay the bill; and the second was that the drawer had no reason to believe that the bill would be met if presented. (At 149G/H-H/I.)

Held, further, that where payment of a cheque was stopped (as had happened in the instant case), the drawer's duty and authority to pay it was E terminated, not only logically but also in terms of s 73(a) of the Act, which inevitably entailed that the drawee was not bound as between himself and the drawer to pay the cheque. (At 149H/I-I.)

Held, further, that the respondent's argument that in view of the separate reference in para (v) of s 48(2)(c) to a countermanded bill, para (iv) had to be interpreted in such a manner as to exclude a countermand, and that by reason of its similarity to para (iv), s 44(2)(c) had to be construed accordingly, could not be upheld: s 44(2)(c) was couched in terms which F admitted of no doubt that the case of a countermanded cheque was included, and there were no sufficiently cogent indications, either in the rest of the Act or in the results to which an unrestricted interpretation would lead, of a...