The Rights of the True Owner in Terms of Section 81 of the Bills of Exchange Act 34 of 1964

• Jurisdiction: South Africa
• Author: IL Van Jaarsveld
• Published date: 03 September 2019
• Pages: 54-68
• Date: 03 September 2019

The Rights of the True Owner in Terms

of Section 81 of the Bills of Exchange

Act 34 of 1964

IL VAN JAARSVELD

University of South Africa

1 Introduction

Section 81 of the Bills of Exchange Act 34 of 1964 ('the Act') gives the

true owner of a lost or stolen cheque a right of recourse against any

subsequent possessor of the cheque whether he is mala fide or bona fide.

This seemingly wide liability is limited by six requirements which needed

to be satisfied before a true owner can bring an action. These

requirements are: the claimant must be the true owner of a lost or

stolen cheque; the cheque must be crossed and marked 'not negotiable';

the payee bank must have paid under circumstances which offer it

protection against a true owner (that is, in good faith and without

negligence as stated in s 79 of the Act); the true owner must have suffered

a loss as a result of the theft or loss of the cheque; the defendant must

have been a possessor of the cheque after the loss or theft of it; and the

defendant either must have given consideration for it or have taken it as a

donee (see further FR Malan & JT Pretorius

Malan on Bills of Exchange

and Promissory Notes

3 ed (1997) in par 222 at 397;

Standard Bank of SA

Ltd v Minister of Bantu Education

1966 (1) SA 299 (N) at 231H).

Section 81(2) stipulates that a person who deposits a loss or stolen cheque

into his banking account will be deemed a possessor of it and to have given

consideration for the cheque. In a recent judgment the Court found that

where money was deposited by a client into the trust account of an attorney,

the attorney qualifies as a possessor of the cheque in terms of s 81(2). It

further confirmed that an irrefutable presumption is created in that a

person who pays such a cheque into his bank account after the loss or theft

of it, is deemed a possessor and will be held liable on the cheque

(Govern-

ment of RSA v Van Hulsteyns Attorneys & Others

[1999] 2 All SA 29 (T)).

The collecting bank in the latter judgment escaped liability only because no

damage could be proven on the side of the true owner

(Government of RSA

v Van Hulsteyns Attorneys

supra at 371). The repercussion for any

person who deposits or accepts money for third parties, be it as a

professional or as a favour, may be worth considering. Similar strict

liability is envisaged in the English common-law tort of conversion.

Conversion in these circumstances is a wrongful interference with goods —

such as by taking, using or destroying them — inconsistently with the

owner's right of possession

(Paget's Law of Banking 11

ed (1996) by Mark

Hapgood at 418; RP Balkin & JLR Davis

Law of Torts

(1991) at 64).

54

(2000) 12 SA Merc LJ 54

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