Absa Bank Limited v van der Westhuizen and Another (3486/2001) [2004] ZAFSHC 102 (11 November 2004)

IN THE HIGH COURT OF SOUTH AFRICA

(ORANGE FREE STATE PROVINCIAL DIVISION)

Case No. : 3486/2001

In the matter between:

ABSA BANK LIMITED PLAINTIFF

and

KAREL JOHAN VAN DER WESTHUIZEN FIRST DEFENDANT

BELIA VAN DER WESTHUIZEN SECOND DEFENDANT

HEARD ON: 7 SEPTEMBER 2004

JUDGMENT: RAMPAI J

DELIVERED ON: 11 NOVEMBER 2004

_____________________________________________________

[1] By way of an action the plaintiff claims from the defendants, jointly and severally, the one paying the other to be absolved:

Payment of the amount of R1 228 167,60;

Interest thereon at the rate of 15,5% per annum from 10 April 2000 until the date of final payment as well as

the costs of the action on the scale as between attorney and client.

[2] It is necessary to outline a brief background of the matter. The second defendant was the holder of a current account no. 4048946757 at all times relevant to this dispute. The account was held at the Welkom Branch of the plaintiff, Absa Bank Limited. It was opened pursuant to the lodging of a written application by the second defendant. It was opened more than five years ago, during January 1999. It was opened in the name of the second defendant trading as Superior Transport. Both defendants had signing powers on the business account. Together they conducted the account.

[3] The plaintiff collected the deposits which were made in favour of the account. The plaintiff also honoured the cheques which were drawn against the account from time to time. The plaintiff also regularly debited the account with its own banking charges.

[4] On Monday 10 April 2000 a cheque in the amount of R1 228 167,60 was deposited into the said account. It was drawn in favour of SSEM. It was drawn on the Standard Bank Limited Gauteng Province branch. It was crossed and marked “NOT NEGOTIABLE” and “NOT TRANSFERABLE”. It was dated 16 March 2003. It was numbered GQ331467 and it was drawn by the paymaster general of the Gauteng Provincial Government. It was obvious ex facie the instrument that it was not intended for the account of Superior Transport.

[5] In due course the plaintiff as the collecting bank presented the cheque it had collected on behalf of its customer to the drawee bank, the Standard Bank. The drawee bank duly honoured the cheque and transferred the funds to the collecting bank, the Absa Bank. The said account of the defendants was credited with the proceeds of the cheque. The defendants withdrew and appropriated the proceeds of the cheque for their own personal purposes.

[6] The pleading show that the drawer of the cheque in other words the aforesaid paymaster general informed the plaintiff during Mary 2000:

that the aforesaid cheque had gone astray or stolen;

that fraud or theft had allegedly been committed in respect of the aforesaid cheque;

that the plaintiff was accordingly liable towards Gauteng Provincial Government as the true owner of the cheque.

The drawer contended and the plaintiff conceded:

that the plaintiff acted as the collecting banker in collecting the proceeds of the cheque from the drawee bank;

that the cheque was clearly marked with the words “NOT TRANSFERABLE”;

that the cheque was drawn in favour of an entity other than the second defendant’s account or trade name;

that in collecting the aforesaid proceeds as it did, the plaintiff breached a legal duty it owed to the drawer as the true owner of the cheque and

that by virtue of the plaintiff’s breach the Gauteng Provincial Government had suffered damages in the amount as was reflected on the cheque.

[7] The first defendant admits that the plaintiff was consequently liable to Gauteng Provincial Government as the true owner of the cheque. He also admits that the plaintiff indeed refunded the amount of R1 228 167,60 to Gauteng Provincial Government on 16 May 2000. Moreover he also admits that, by refunding the amount of the cheque, the plaintiff had accordingly suffered a loss in the amount of R1 228 167,60.

[8] Still on the pleadings, the second defendant denies all the matters I have mentioned in paragraph 7 supra which the first defendant admits. In her answer to the plaintiff’s questions in terms of rule 37(4) Bundle D p. 67 paragraph 1.1.4 she denies that she and the first defendant together operated the business bank account of Superior Transport.

[9] Again in her answer to the questions in terms of rule 37(4) Bundle D p. 68 paragraph 1.8 the second defendant denies the amount of the cheque was withdrawn and appropriated by her together with the first defendant for their personal benefit.

[10] The defence of the defendants is that the first defendant has, on 11 April 2000 orally requested a certain Werner, an employee of the plaintiff at the Welkom Branch of the plaintiff, to clear the cheque and to approach the funds deposited by means of the particular cheque carefully. The said Werner, they alleged, was a person charged with the task of the special clearance of the cheques.

They alleged further that the said employee of the plaintiff thereafter made a negligent misrepresentation to the first defendant. They pleaded that the employee in question represented to the first defendant that the cheque was good and that the first defendant could use the funds. On the premises they plead that the plaintiff is bound by its misrepresentation. And furthermore they plead that the plaintiff is in breach of the contract. The said Werner had concluded on its behalf with the first defendant.

[11] At the beginning of the hearing, I ruled in the first place, that the plaintiff had the duty to begin and to prove that it had an obligation to refund the true owner of the cheque in other words, the Gauteng Provincial Government and to prove that the plaintiff had indeed done so. In the second place, I ruled that the defendants carried the onus of proving the negligent misrepresentation and the breach of contract as alleged in their plea and the further particulars thereto. In the third place, I ruled that after the defendants had presented their evidence in connection with the negligent misrepresentation and the contractual breach the plaintiff could lead evidence in rebuttal. I made the ruling by virtue of an agreement inter partes.

[12] Maria Catharina Louw was called as witness no. 1 for the plaintiff. She testified that she was previously in the employ of Pretoria Academic Hospital. She was a grade 3 senior clerk. She was in the expenditure department. She retired at the end of June 2002. The expenditure department processed all the documentation in respect of the payments which Pretoria Academic Hospital had to make to its suppliers. One of the hospital equipment suppliers was SSEM which stood for Specialised Systems Electro Medical (Pty) Ltd.

She explained a certain process which was followed in order to effect payments to the hospital suppliers. She referred to and explained various documents she had to use. By 8 March 2000 the Pretoria Academic Hospital owed the sum of R1 228 167,60 to SSEM in respect of equipment supplied. Pretoria Academic Hospital was a public hospital financed by Gauteng Provincial Government. The arrangement was that the payments due to SSEM were made by means of cheques which were printed in Johannesburg by Gauteng Provincial Government. The messenger from Pretoria Academic Hospital would then drive to Johannesburg to collect the cheque.

[13] A certain Lucas, the messenger, would then hand the cheque to her, on his return to the hospital. Etienne Venter, a representative from SSEM, would then collect a cheque from her at Pretoria Academic Hospital. For some inexplicable reason the usual procedure was not adhered to in respect of the particular cheque. Lucas could not find the cheque when he was in Johannesburg to collect the mail from Gauteng Provincial Government. Instead he received a yellow card which was an indication that the cheque had been directly posted to the supplier concerned by the Gauteng Provincial Government. But SSEM never received the cheque by mail. She made some efforts to trace the cheque. She established that the missing cheque was deposited into a certain account and that it was collected by the plaintiff at its Centurion Branch. She wrote a letter to the branch of the plaintiff at Centurion in which she advised the plaintiff that the payee SSEM did not receive the cheque. In due course she received a message from the said branch. She then send a messenger to collect an Absa Bank cheque drawn in favour of Gauteng Provincial Government in the amount of R1 228 167,60. The hospital messenger, Lucas, collected the cheque and on her instruction, took the refund cheque to the Gauteng Provincial Government in Johannesburg. Lucas had since retired and his exact whereabouts were unknown to her.

[14] She informed Etienne Venter about the aforegoing developments that Absa Bank had refunded the amount of the original cheque to the Gauteng Provincial Government and that SSEM should contact the Gauteng Provincial Government for the payment due to it. Later on Etienne Venter reverted to her and confirmed that the Gauteng Provincial Government did in fact let SSEM have a replacement cheque. As a gesture of appreciation, Etienne Venter brought her a box of chocolates afterwards.

[15] During cross-examination she answered that she did not have personal knowledge that Gauteng Provincial Government indeed posted the original cheque to SSEM. She deduced that from the yellow card which routinely served as proof that the cheques had been posted and not collected.

She could not say who had posted the cheque. On 9 May 2000 she contacted the first respondent and informed him that the cheque had been wrongly deposited into his account.

[16] Etienne Tjaart Venter was then called as witness no. 2 for the plaintiff. He testified that he was employed as an area manager at SSEM. During the year 2000 he was a medical representative of the same company. He had arranged with Ms. Louw that he could collect from her at Pretoria Academic Hospital a cheque in the amount of R1 228 167,60 from the Gauteng Provincial Government. He decided to collect the cheque so that the incident of fraud could be curbed and so that the company debts could quickly be settled in order to avoid paying interest. He was pressured by the company director, a certain Mr. Goldblatt. Ms. Louw told him that despite the arrangements the Gauteng Provincial Government had posted the cheque. He requested his colleague, Sonja Naryan, the credit controller, to follow the matter up. The supplier SSEM never received the cheque by post. However SSEM eventually received a replacement cheque from the Gauteng Provincial Government. He saw the bank statement of his company on which the payment was reflected. He thanked Ms. Louw for the assistance by giving her a box of chocolates.

[17] During cross-examination he answered that he had no knowledge of the telephone conversation he was alleged to have had with the first defendant.

[18] I find it as a matter of practical convenience, expedient to deal with the issue of the plaintiff’s liability towards the Gauteng Provincial Government first. The issue, it will be recalled, was admitted by the first defendant but denied by the second defendant. Has the plaintiff discharged the onus of proving that it was liable to the Gauteng Provincial Government, that it has refunded the Gauteng Provincial Government and that it has thereby suffered loss?

The evidence of Louw, Venter and Belia van der Westhuizen, the second defendant, is relevant to the enquiry. In her testimony the second defendant made no attempt to attack the plaintiff’s version in this regard as narrated by Louw and Venter. Both Louw and Venter were honest and impressive witnesses. Like Louw, Venter gave a logical and a credible account which substantially corroborated an equally logical, credible and probable account given by Louw. Moreover their version is not disputed by the first defendant. Therefore I unconditionally accept their testimonies. I shall evaluate the second defendant as a witness later.

[19] Our banking law tells us that a collecting banker – that is to say a banker in the position of the plaintiff – in this instance, is liable under the extended lex acquilia for negligence to the true owner of a cheque provided all the elements of an acquilian liability have been met. Thus, a delictual action for damages would be available to the true owner of a cheque who can establish:

that the collecting banker had received payment of a cheque on behalf of a person who was not entitled thereto;

that in collection such a cheque from a depositor the collecting bank acted negligently and unlawfully;

that such conduct of the collecting bank caused the true owner of the cheque to sustain loss;

and that the damages claimed represent proper compensation for such a loss. Vide INDAC ELECTRONICS (PTY) LTD v VOLKSKAS BANK LTD [1991] ZASCA 190; 1992 (1) SA 783 (AD) at 797 A – D per Vivier J.A.

[20] A cheque is a piece of corporeal movable property. Its ownership can be transferred only in accordance with the general requirements of the law regarding the transfer of ownership of corporeal movables. There must be a delivery of the thing, that is the transfer of possession, either actual or constructive, by the transferor to the transferee, and there must be a real agreement between the transferor and the transferee, constituted by the intention of the former to transfer ownership and the intention of the latter to receive such ownership. Vide FIRST NATIONAL BANK OF SA (LTD) v QUALITY TYRES 1970 (PTY) LTD [1995] ZASCA 65; 1995 (3) SA 556 (AD) at 568 G – H.

[21] If a debtor posts a cheque to his creditor without the creditor’s consent or request, he has to pay the amount of the debt again if the instrument is discharged without the creditor receiving it. Since the cheque has not been delivered, ownership in it does not pass and, consequently, the debtor, because he remains the owner, bears the risk of its theft or loss.

Where a cheque is posted, in accordance with an agreement, the debtor discharges his debt provided the cheque is paid. Such an agreement is usually preceded by a

request from the creditor to the debtor to send a cheque by post.

Vide F.R. Malan, J.T. Pretorius assisted by S.F. du Toit: Malan on BILLS OF EXCHANGE, CHEQUES AND PROMISSORY NOTES IN SOUTH AFRICAN LAW, Fourth Edition p. 323 – 325 paragraph 199 and p. 405 paragraph 222.

[22] In the light of the evidence of Louw and Venter as well as the undisputed facts as set out in paragraph 6 above, I find that the plaintiff has on a balance of probability proved:

that there was an agreement between Pretoria Academic Hospital or Gauteng Provincial Government on the one hand and SSEM on the other;

that Venter would collect the cheque of R1 228 167,60 from Louw in Pretoria;

that there was no agreement between the Gauteng Provincial Government and SSEM that the cheque should be posted;

that the Gauteng Provincial Government posted the cheque on its own without the consent or request of SSEM;

that the plaintiff was liable towards the Gauteng Provincial Government as the true owner of the cheque for the repayment of the amount of the cheque because:

the plaintiff received the payment of the cheque on behalf of someone who was not entitled to the cheque;

the plaintiff acted negligently and unlawfully in receiving such payment;

the conduct of the plaintiff caused the Gauteng Provincial Government to sustain loss and

the Gauteng Provincial Government was lawfully entitled to claim proper compensation from the plaintiff for such loss.

This concludes the first issue.

[23] I turn now to the second issue which concerns the negligent misrepresentation. The onus of proving that the plaintiff made negligent misrepresentation rests on the defendants. The first defendant testified that he and the second defendant previously had a business account at another bank. The second defendant applied to the plaintiff for a bond over her own property. He agreed that the second defendant should open an account at Absa Bank for the business in her own name. He also agreed that their business account be transferred from their old bank to their new bank in other words the plaintiff.

Asked during his examination by his lawyer, Mr. Nel, whether he and his sister, the second defendant, were business partners, he answered as follows:

“Well the business was mine, but the vehicle in question was on her, registered on her name, and so was the banking account, but I did all the business.”

[24] His sister, the second defendant, opened a business account in her name for Superior Transport. She had a fixed property over which to register a bond. Apparently he did not. He operated the account and ran the business of Superior Transport. He won two contracts, one from Sappi Mining Timber and one from Autonet. He needed a truck in order to do the work. The second defendant obtained finance and bought a Volvo FH12 truck. The truck was used in the transportation of mining timber from Sappi to the mines. He was forced to sell the business. One of the business trucks was extensively damaged in an accident at Ixopo in KwaZulu-Natal. The comprehensive insurers repudiated the claim. The accident caused the business a huge loss. In addition to the truck itself, the cargo was also extensively damaged. He had the business advertised by certain specialists in the selling of business. Their representative was Mr. Bertus Claasen. Two of his clients, Lewis and Ntombela, signed an offer to purchase. He wanted R1,7 million but ended up accepting R1,4 million for the sale of the Autonet contract and the Volvo FH12 truck.

[25] The purchasers first paid a cheque deposit of R504 263,89. He gave them the banking details. They deposited the money into the business account at an Absa Branch somewhere in the Gauteng Province. Since the purchasers failed to pay the balance on time, he threatened to cancel the deal unless they paid the original price of R1,7 million. They agreed. They later deposited a cheque at the Centurion Branch of Absa Bank on 10 April 2000

[26] He then telephoned Werner at the Welkom Branch of Absa Bank. He asked him to do a special clearance in respect of the cheque deposited on 10 April 2000. The money became available after fourteen days. He was at Hatfield Branch of Absa Bank in Pretoria when a certain lady, apparently a bank assistant, informed him that the cheque had been cleared. That lady in Pretoria called Werner in Welkom who confirmed that the funds were available. He used part of the money to pay the creditors, among them Stannic who had financed the purchase of the Volvo FH12 truck by the second defendant. The purchasers of the business came and took possession of the truck and the trailers.

[27] Not long afterwards Louw telephoned him and informed him that the cheque was made out in favour of a certain beneficiary and that it should never have been deposited into the bank account of Superior Transport. He then explained to Louw that the purchasers of his goods transportation business deposited the cheque into his bank account. He had no control over the particular bank transaction and the cheque in question. He was unaware that the cheque was stolen. Venter of SSEM also called him. He wanted more details of the purchasers of his business. The plaintiff, Absa Bank, waited for 33 days before they realised that there was a problem with the cheque. He was sued afterwards.

[28] During cross-examination the first defendant testified that he was an experienced business man. The second defendant opened the bank account for Superior Transport by filling in an application form, but he was not sure whether he was present when that was done. The bond at Absa Bank was in the name of the second defendant. The bond was paid by means of the funds drawn from the account after the deposit of 10 April 2000. He denied the account was a joint venture banking account. He did not have a joint venture with the second defendant at all.

[29] The effective date of the sale was 7 March 2000 in terms of clause 3.2 of the Business Sale Agreement. He, as the seller, was obliged to give possession to the purchasers on the effective date and from that same date the risk of any profit of loss in the business would pass from the seller to the purchaser. See clause 12. He confirmed that in terms of clause 20.2 the agreement cancelled and superseded all other agreements concluded by the same parties and that any amendment or addition would be of no force and affect unless reduced to writing and signed by the parties. He and the purchasers did not sign any amendment or addition and it could be accepted that the agreement was the only agreement between him and the purchasers.

[30] He answered that he was positively sure that he spoke to Werner at the Welkom Branch of the plaintiff’s during April 2000 and asked Werner for a clearance on the cheque. He confirmed that on 12 December 1997 he made an affidavit which appears in Bundle X p. 101 – 102. He admitted that on a previous occasion a cheque which was presented as a payment in respect of a previous sale where he was the seller as in the present case, was not met by the bank as it turned out to be a stolen cheque, as in the present case. In that instant the purchaser was a certain Mr. Simon Petrus Nkosi. The amount of the cheque was R234 300,40.

[31] He again acknowledged that he was the author of another affidavit which he also made and signed in Welkom on 12 December 1997 which appears in Bundle X p. 106 – 107. He entered into a franchise agreement on behalf of Aunty Dolly’s Kitchen with a certain Jan Crous on behalf of Sun Industries BK. He was the franchisor and Crous the franchisee. Crous deposited a cheque of R599 895,50 drawn in favour of Aunty Dolly’s Kitchen and deposited it into his bank account held at Verwoerdburg. Two weeks after the cheque was deposited the bank informed him that the funds were available.

[32] He was aware that a period of approximately fourteen days had to expire before the funds in respect of a cheque deposit could become available to a bank customer. He admitted that this was the knowledge he gained from these previous experiences prior to the sale of the truck and its two trailers.

[33] The second defendant testified in chief that Superior Transport was actually the business of the first defendant. Her father bought a house at an auction. He wanted a bond on the house. The banks declined to give him a bond on the ground that he was too old. For that reason she applied for the bond. Absa bank was willing to grant her a bond over the property on condition she transferred the current business account of Superior Transport from the First National Bank to Absa Bank. She completed the application forms in her name for the opening of the cheque account for the first defendant to run the business of Superior Transport. She had never done any business on the account. She had never signed any cheques and she had never been in contact with anybody from Absa Bank since the day the account was opened. The first defendant operated the account alone ever since she opened it.

[34] The assets set out in the financial statements of the business were not hers although they were reflected as such, but the first defendant’s. The first defendant informed her that he wanted to sell the truck which was costing him more than it was worth keeping because he had financial difficulties. She gave him the permission to sell the truck. But she gave him strict instructions to ensure that the cheque was good and that the bank had cleared it before he delivered the truck to the purchasers. She received bank statements from the plaintiff every month. About twenty days later she noticed from the bank statement that the money was still in the bank. The first defendant handed the truck over afterwards.

[35] During cross-examination the second defendant admitted that she made a false statement in the financial statement. She admitted she deceived the plaintiff with the false financial statements, which she presented to the plaintiff for the purpose of obtaining the bond. She denied that the business was a joint venture. She was not able to dispute that the application form she completed for the opening of a bank cheque account was identical to the example in Bundle X p. 1 – 12. She admitted that she was the author of the letter which appears in Bundle X p. 178. In the letter dated 2 February 1999 she authorised the plaintiff to give her brother, the second defendant, the signing powers and to delete her father as a signatory to her cheque account. She confirmed that the bond statement appearing in Bundle X p. 179 was addressed to her by the plaintiff and that the outstanding balance of R93 571,47 was settled on 2 May 2004.

[36] She handed in yet another affidavit deposed to by the first defendant at Odendaalsrus on 27 October 2003. The affidavit appears in Bundle X p. 180 – 181. In paragraph 5 thereof the first defendant stated that on 10 April 2000 a further cheque in the amount of R1 228 167,60 was deposited into his account held at Absa Bank and that it was cleared after twenty one days.

[37] The second defendant confirmed that she received a letter dated 3 November 2003 from Stannic informing her that her account in respect of the trailer had been paid in full and that her obligation in terms of the sale agreement had been met.

[38] The plaintiff then called four witnesses in rebuttal - amongst them an expert and an employee at its Welkom Branch.

[39] Anthony Barry Fourie, witness no. 3 for the plaintiff, testified:

that he was an expert in banking law;

that it is a universal banking practice that a customer’s account is immediately credited when a cheque is deposited;

that it is an integral part of the contract between a bank and its customer that any cheque deposited will only become available as cash when paid to the colleting bank by the drawee bank;

that it is a universal banking practice that the holding period in respect of a cheque for normal clearance through the automatic clearance bureau system it seven to fourteen days;

that if it becomes evident after the expiry of the holding period that a cheque with which the customer’s account was credited, is a stolen cheque or a forged cheque, the bank would be entitled to reverse the credit and to debit the customer’s account accordingly;

that in the normal course of business, the cheques deposited are sent to the automatic credit bureau system on the same day on which they are deposited.

[40] He testified further that on the evidence as presented by the defendants, there could be no talk of a special clearance in the present matter;

that his opinion was based inter alia on the fact that it would not have been possible for an employee of the bank at its Welkom Branch to visually inspect the cheque deposited at the Pretoria Branch and;

that it was similarly not possible for a special clearance voucher to be issued to the customer as the banking practice requires in respect of a special clearance requested by a customer.

He concluded by saying that banking practice is a practice which is well-known and notorious. His evidence was not at al all shaken during cross-examination.

[41] Debra Joy Venter was called as witness no. 4 for the plaintiff. In brief she testified that during January 1999 the month during which the account was opened in Welkom, the plaintiff generally made use of a printed application form for the purpose of opening a current account which form contained the same terms and conditions as those appearing in Bundle X p. 1 – 14. Nothing significant emerged during her cross-examination other than that the actual agreement between the second defendant and the plaintiff had been lost.

[42] Kurt Gerhard Hartmann was called as witness no. 5 for the plaintiff. He testified that he was employed as an analyst in the forensic department of Absa Bank Limited. His investigation had revealed that at no time was there a person by the name of Werner in the employ of Absa Bank who was responsible for the special clearance of the cheques. He has inspected and analysed the spin report relating to the account. A spin report is a computer generated printout or detailed report of all the transactions relating to an account of a bank customer. The teller with code 7978 who received R1 228 167,60 cheque deposit at Hatfield Branch on 10 April 2000 at 14h28 as shown in Bundle X p. 78 was dismissed. There was no SQD function code next to this transaction. The code SQD stands for special clearance deposit. On 12 April 2000 at 08h58 there was a transaction in respect of this account in Welkom code 8027 but there was no SQD or special clearance deposit entry recorded from 11 April 2000 to 15 April 2000. See Bundle X p. 79. From 15 April 2000 to 19 April 2000 see Bundle X p. 80 and even from 12 March 2000 to 11 April 2000 see Bundle X p. 69. From 19 April 2000 to 28 April 2000 there were three transaction entries in respect of Welkom Branch code 8027 but none of them were SQD. There were several mini statements requested from the Polokwane branch code 8032. The purpose of such mini statements was usually to monitor the flow of funds relating to an account.

[43] During the cross-examination he confirmed that once a cheque is already in the system, no SQD request can be entertained. In such a situation a customer has no option but to wait for the expiry of the normal holding period of fourteen days. He was at a loss as to explain how the computer system captured the transaction which was recorded at Pretoria Administration Centre code 8020 on 10 April 2000 at 01:75:24.1 by teller code 7978 involving the same cheque of R1 228 167,60 hours long before it was actually deposited at 14h28. He remarked that one strange and inexplicable entry did not mean that the entire spin report was incorrect.

[44] Albertus Johannes Claassen was called as witness for the plaintiff. He testified that he was an estate agent in the employ of Rossouw & Partners and Others in Welkom. He knew the first defendant and his father very well. He was the proprietor of a business enterprise called Superior Transport. A certain Mr. Nel of the Volkskas Bank asked him to sell the first defendant’s truck. He advertised the truck for sale. The selling price was R1,5 million. He found the buyers. The buyers and the first defendant agreed on R1,4 million selling price. A lawyer drew up a vehicle sale agreement on 25 February 2000. At the first defendant’s request, he changed this effective date to 7 March 2000. He received the identity documents of the buyers by fax. They were Alan Lewis and Sishosonke Ntombela. The seller, K.J. van der Westhuizen, signed the vehicle sale agreement in his office in Welkom on 2 March 2000. The buyers were not there to sign the contract. He kept the contract in his office afterwards.

[45] Towards the end of March 2000 the first defendant came to see him. He told him that a deposit of about R504 000,00 had been paid. The first defendant then asked him to let him have a contract. He handed the contract still unsigned by the buyers to the first defendant. The first defendant was going to see to it that the buyers signed the contract. About mid April 2000 the first defendant called him and advised him that the balance had also been paid. Soon afterwards he received the contract from the first defendant. He perused the contract and saw that it was signed in Welkom on 2 March 2000 by the buyers. It could not have been.

[46] On 3 May 2000 the first defendant informed him that the cheque money was available. He paid the agency commission in the amount of R79 000,00. The first defendant told him he received R1,7 million for the deal. He was unaware of this R1,7 million or R1,73 million. He had no correspondence whatsoever from either Mr. Nel of Volkskas Bank or Mr. Werner of Absa Bank. He had never met Alan Lewis. He stressed that the day the first defendant took the contract away from him for signing by the buyers, clause 21 was not part of the contract. The clause about optional extras worth R2 431,49 was inserted afterwards without his knowledge and involvement. See Bundle X p. 28. He closed his file on 8 May 2000.

[47] During cross-examination he answered that he had been an estate agent since 1958. He was aware of the code of ethics which governs his profession. He would not have accepted a commission of R79 000,00 if he had known that the business deal between the seller and the buyers was an illegal deal. The plaintiff’s case was then closed.

[48] Mr. van Loggerenberg, counsel for the plaintiff, argued that the plaintiff has on a balance of probability made out a case for the relief sought. He therefore submitted that the plaintiff was entitled to be granted judgment with special costs against the defendant. However, Mr. Nel, attorney for the defendants, argued that the plaintiff had failed to make out a case for the relief sought. The defendants he contended had put up a good defence. He therefore submitted that the plaintiff was not entitled to the judgment as prayed for. He accordingly urged me to dismiss the summons with costs.

[49] I have already dealt with the legal position which obtains between the collecting bank and the true owner of a cheque. The liability of the plaintiff, as a collecting bank, towards the Gauteng Provincial Government as a true owner of the cheque was, on the pleadings, never an issue between the plaintiff and the first defendant. However, on the pleadings, it was an issue between the plaintiff and the second defendant. Having analysed the facts and evaluated the evidence, I found in favour of the plaintiff on the issue. Therefore I shall now proceed to examine the facts and to evaluate the evidence in respect of the second issue.

[50] The second issue concerns the common defence of the defendants. The defendants pleaded that the first defendant made an oral request to the plaintiff for a special clearance of the relevant cheque and that thereafter the plaintiff represented to the first defendant that a special clearance in respect of the cheque had been done as had been requested and that the cheque was good whereas such a representation was untrue. They further pleaded that by making the negligent misrepresentation the plaintiff committed a breach of the contract and was therefore not entitled to recover its loss from them.

[51] Mr. van Loggerenberg submitted that the first defendant was an unimpressive and untrustworthy witness. He described the first defendant further as an argumentative witness who constantly evaded questions, contradicted himself and trimmed his sails to the wind. He urged me to treat the testimony of the first defendant with the utmost circumspection. The critique appears to me to be well-founded.

[52] As regards the account, the first defendant in his written plea admitted that he and the second defendant conducted the account together. In his oral evidence he testified:

that he and the second defendant previously had a business account at a different bank;

that he agreed to the idea that the second defendant could open a new account at Absa Bank in her name for the business and that the old account, which as we now know, was held at First National Bank, could be transferred to Absa Bank. So far there was harmony between the first defendant’s plea and his testimony.

[53] But when his own lawyer, Mr. Nel, ask him the pertinent question whether he and the second defendant were partners in the business known as Superior Transport, he became evasive. He said words to the effect that the business was his, but the vehicle was hers as was the banking account. Here we see the first defendant’s fragile attempt to disassociate himself from the account. But extricating himself was no easy task. On a few occasions during his evidence in chief, he repeatedly referred to the account as “our account” and not her account. The possessive phrase he originally chose on his own free will appears to depict the true state of affairs as to how he always saw the account. He said he merely had the signing powers on the account. In paragraph 5 of an affidavit he signed at Odendaalsrus on 27 October 2003 as depicted in Bundle X p. 180 – 181 the first defendant declared that on 10 April 2000 a further cheque in the amount of R1 228 167,60 was deposited into “….. my rekening te Absa Bank”. Once again he contradicted himself.

[54] As regards the truck, the first defendant testified that one of the business trucks was involved in an accident at Ixopo and that as a result of the extensive damage to the truck and its cargo, his business suffered an astronomical loss. He found himself facing a desperate financial dilemma. To recover the losses “that we incurred due to the accident” he decided to sell part of the business. The pronoun ‘we’ refers to the two defendants. Now if the business was his alone, why did the second defendant have to share the loss with him?

[55] As regards the transportation venture, the first defendant was not forthright. He stated in his evidence in chief that the business belonged to him, but the truck to his sister, the second defendant. But in an affidavit he signed at Odendaalsrus on 15 May 2000 he declared that he was the owner of a business known as Superior Transport which he operated with Ms. Belia van der Westhuizen, the second defendant in this case. He further stated that the second defendant owned a truck with two trailers which were used in the joint venture and that he had been authorised to sell those goods on her behalf through the joint venture. But during cross-examination this experienced business man denied that the business was a joint venture. The denial cannot be reconciled with his earlier admissions that the bond at Absa Bank was in the name of the second defendant and that it was finally paid from the business account. His serious attempt to evade his previous inconsistent sworn statement has an adverse impact on his trustworthiness as a witness.

[56] As regards the creditors, the first defendant testified that he paid the creditors, but Absa Bank was also paid in respect of the second defendant’s bond. The bond was settled from the proceeds of the cheque which had been deposited into the account in other words the business bank account. He had no comment when counsel for the plaintiff put it to him that the business was a partnership between him and the second defendant.

[57] The aforegoing factors as analysed and evaluated strongly suggest that the business enterprise was run as a joint venture between the two defendants. Whether the second defendant can rebut this prima facie view remains to be seen.

[58] As regards the business sale agreement, the first defendant confirmed during cross-examination that clause 20.2 of the agreement allowed no future variation whatsoever unless it was written and signed by the parties concerned. He also understood that the business sale agreement he signed in Welkom on 2 March 2000 superseded any other agreement previously entered into by the parties. He also confirmed that subsequent to the signing of the contract he and the purchasers did not sign any amendment or addition to vary the original contract.

[59] When the first defendant was confronted with clause 21 he explained that clause 21 was inserted in the agreement afterwards (after the signing on 2 March 2000) but before 16 March 2000. The first difficulty I have is that the addition was not signed in terms of clause 20.2. The second difficulty is that the first defendant took the contract away weeks after 2 March 2000 from the estate agent who facilitated its drafting and himself had the clause inserted elsewhere and backdated. But that is not all. The third, and certainly the most important query relates to the amount of the optional extras. He wanted R1 730 000,00 without the optionals. The price increased by R2 431,49 to R1 732 431,49 as a result of the inclusion of the optional extras. This revised price was agreed upon before 16 March 2000. As on 16 March 2000 the outstanding balance due by the purchasers was therefore R1 732 431,49 less R504 263,89 which equals R1 228 167,60.

[60] The first defendant wants me to believe that on 16 March 2000 the Gauteng Provincial Government drew up a cheque of precisely the same amount to settle a debt of precisely the same amount it owed to SSEM and that after 16 March 2000 the purchasers stole from Gauteng Provincial Government the same cheque in order to settle their debt of the same amount due to the first defendant. This scenario is highly improbable. The submission by counsel for the plaintiff that the cheque probably went through the hands of the first defendant who then adjusted the figures by means of the imaginative optional extras so-called, before the cheque was deposited is highly probable. It is clear to me, that the suspicious clause 21 and indeed the entire business sale agreement was a deceptive scheme which the first defendant fabricated to cover his back. During intense cross-examination the lies were exposed. We know that the cheque by the Gauteng Provincial Government was made up of four different invoices. But the same cannot be said about the composition of the selling price. I have no doubt in my mind, that the amount of the optional extras was a fictitious amount deliberately fabricated to make the false figures ad up.

[61] There are more questions than answers. The drawing up of the business sale agreement, the true identities of the buyers, the signing of the business sale agreement, the identity of the depositor of the cheque, the contract selling price, the abortive but cunning attempt to vary the business sale agreement – all these matters are shrouded by an uneasy cloud of mystery. I was amazed by the numerous sworn statements this experienced businessman had to make to explain his supposed business decisions and actions. This is unusual. The ordinary men and women in business do not act this way. He is a prolific deponent.

[62] On the pleadings, the second defendant admitted that the account was conducted and used by both defendants. But in her answer to the plaintiff’s questions in terms of rule 37(4) she denied that she and the first defendant together conducted and used the account. She admitted that she completed the application forms for the opening of the new account. She testified that the old account was held at the First National Bank from where it was transferred to the Absa Bank. She did so for the sole purpose of obtaining a bond and opening a current account for the first defendant. Besides that she had nothing to do with the account. Despite this averment, she admitted, still in her chief evidence that she received bank statements in connection with the account every month. She knew about the relevant deposit into the account. Twenty one days afterwards she noticed from the bank statement that the money was still in the account.

[63] It seems to me, therefore, that she was fairly informed about the transactions relating to the account. It must be mentioned that besides the monthly bank statements, the plaintiff also addressed a few letters of concern to her as the account holder regarding the unsatisfactorily manner in which she was conducting the account. She also addressed a letter to the plaintiff in connection with the account whereby she cancelled her father signing powers. Although she tried to distance herself from the account, she was unconvincing. Even her own brother, the first defendant, said the account was hers. It was contended on behalf of the plaintiff that together the siblings were managing the account. That contention appears to have substance.

[64] As regards the truck, she testified that the first defendant told her that he wanted to sell the Volvo FH12 truck because it made no sound economic proposition keeping it. This version sharply contradicted the version of the first defendant. It will be recalled that according to the first defendant the collapse of his business was occasioned by the Ixopo accident where a different truck was involved. She stated that she gave the first defendant permission to sell the truck although it was not really hers but his. This evidence contradicted the evidence of the first defendant who stated earlier that the truck was hers. Her denial appears irreconcilable with her evidence soon afterwards that she gave strict instructions, not an advice, a request or a suggestion, but strict instructions to the first defendant to make sure that the cheque was good and that the bank had cleared the funds before he handed the vehicles over to the purchasers. This goes to show that she had greater interest in the truck than she is willing to admit.

[65] As regards the cheque the second defendant knew that it had been paid and that the funds remained intact in the account for three weeks. But she denied, in her answers to rule 37(4) questions raised by the plaintiff, that she and the first defendant had withdrawn the proceeds of the cheque for their personal purposes. The denial is in conflict with an admission made on the pleadings. The relevant averment was made in the plaintiff’s declaration p. 8 paragraph 7.3.3 and not denied in the defendants’ plea p. 23 paragraph 7. Her concern and the strict instructions she gave to her brother about the cheque are relevant here as well.

[66] As regards the creditors, the second defendant testified that she wanted to take out a bond. She applied to the plaintiff for the facility. She furnished the plaintiff with her financial statements. On the strength of such financial information the plaintiff granted her a bond. She used the funds to buy the Volvo FH12 truck and two trailers. The deal was financed by Stannic. These two were her major creditors. The financial statements she presented to Absa Bank were admittedly false. She knew it and her bookkeepers knew it. She did so deliberately for the purpose of obtaining a bond. The balance of the trailer account was also settled as per confirmation letter from Stannic dated 3 November 2003. The proceeds of the stolen cheque were used to settle the truck account. The contents of the letter contradict the second defendant’s earlier allegation that the truck belonged to the first defendant. Notwithstanding her denials the second defendant unduly benefited from the proceeds.

[67] As regards the business enterprise, the second defendant asserted that the enterprise was actually the business of the first defendant. The assets specified in the financial statements for the financial year, which ended on 28 February 1999, were not hers though referred to as hers, but were the first defendant’s. Vide Bundle X p. 165 – 170. She emphatically denied any suggestion that the business was a joint venture. However in the letter to Absa Bank dated 2 February 1999 Bundle X p. 178 she granted the signing powers on the bank account of the enterprise to the first defendant she stated among others:

“We are going to deposit into the account …………… and will need him to collect cheques on my behalf.”

This letter contradicted her earlier denial that she never had anything to do with the account. The second defendant’s involvement in the business affairs of the enterprise is further evidenced by the financial statement which she admittedly signed in her capacity as the proprietor of Superior Transport as well as the sworn statement by her brother who declared that she authorised him to sell her truck and trailers through the joint venture.

[68] The second defendant was an untrustworthy witness. She was unimpressive. She contradicted the version of the first defendant. Her own testimony was fraud with unsatisfactory aspects and serious discrepancies. Wherever her evidence does not correspond with the evidence of the undisputed facts or common cause or the evidence of the plaintiff’s witnesses, it cannot be accepted.

[69] The defendants’ defence is that the first defendant has on 11 April 2000, orally requested the plaintiff’s employee, in the person of Werner at the plaintiff’s Welkom Branch, to clear the cheque and to carefully approach the funds so deposited. It is a further dimension of their defence that the said Werner subsequently made a negligent misrepresentation to the first defendant in that he represented to the first defendant that a special clearance had been done, that the cheque was good and that the first defendant was at liberty to use the funds. In the circumstances the defendants pleaded that the plaintiff was bound by its misrepresentation. Furthermore they pleaded that in view of such misrepresentation the plaintiff was in breach of the alleged oral agreement.

[70] The defendants carry the onus to prove the alleged negligent misrepresentation and the alleged breach of the contract as set out in their plea as amplified by their further particulars thereto. The plaintiff was entitled to lead evidence in rebuttal.

[71] The first question which now arises is whether the defendants have, on a balance of probability, proved that the plaintiff had made such misrepresentation to the first defendant at the First National Bank in Welkom on 11 April 2000. During the trial the first defendant conceded that the plaintiff never had an employee by the name of Werner at the Welkom Branch, working with special clearance of the cheques at any times relevant to the dispute. In the light of this concession the answer to the question inevitably must be negative. Therefore my finding is that the defendants have failed to prove on a balance of probability that the plaintiff made a negligent representation to the first defendant as alleged.

[72] The second question is whether the defendants have proved on a balance of probabilities that a contract was concluded between them and the plaintiff in terms of which the plaintiff was obliged to effect a special clearance of the cheque. Naturally the critical connective tissue is missing. The Werner factor was the foundation of the defensive averment. Once again, in view of the material concession made by the defendants as regards the said gentleman, the answer to the second question cannot be otherwise but in the negative. Consequently, my finding is that the defendants have failed to prove any contract. It follows from this finding that the plaintiff’s alleged breach does, therefore, not arise.

[73] In the case of ABSA BANK LTD v SWISA 1996 CLD 522 (W) the court held that there was no reason to hold that the bank was not entitled to recover the sum claimed from the defendants. The court, however, also held that is was obviously open to a bank and its customer to agree or to arrange that the bank and not the customer would bear the risk of a dishonoured cheque in the circumstances where a customer has drawn against an uncleared effects.

[74] In the instant case I am not dealing with an uncleared effects. I am dealing with a situation where a cheque was deposited on 10 April 2000, where no special clearance was requested at the time the cheque was deposited, and where the normal holding period ran its full ordinary course of fourteen days and where the proceeds of the stolen cheque were withdrawn not before but after the ordinary holding period had expired. Therefore this is not a situation where the bank has allowed the defendant or its customer to prematurely draw against uncleared effects.

[75] The standard application form which embodies normal terms, conditions, procedures and practices in connection with cheque accounts provides among others:

that instruments delivered by the customer to the bank for collection shall be made available as cash only after payment thereof by the drawee bank; provided that the bank in its own discretion, may allow withdrawal against uncleared effects;

that the bank does not accept responsibility to ensure that a customer has lawful title to the instruments handed in for the bank to collect on behalf of such a customer.

[76] The aforesaid document does not contain any term to the effects that the plaintiff would bear the risk of a dishonoured cheque in the circumstances where a customer has withdrawn against such a cheque after the ordinary fourteen day holding period has expired and the normal hold on the cheque had been lifted by the effluxion of time. It is significant to bear in mind that the evidence of Fourie and Hartmann that once a cheque is deposited into the system without the requisite special clearance request, the special clearance cannot be done afterwards. So even if the first defendant did approach the plaintiff on 11 May 2000 in connection with a cheque deposit made a day earlier, the request for special clearance would have been belated and nothing could have been done to accede to a request for special clearance. Moreover the spin report also showed there was no such a request recorded.

[77] In BURG TRAILERS SA (PTY) LTD AND ANOTHER v ABSA BANK LTD AND OTHERS 2004 (1) SA 284 (SCA) at 290 B Harms J.A. said about the legal position:

“…… if it should transpire that a cheque, after having been cleared, was forged would the banker nevertheless be obliged to pay according to the credit entry raised by it? That cannot be so. The bank would be entitled to reverse the entry.”

See also STANDARD BANK OF SOUTH AFRICA LTD v ONEANATE INVESTMENTS (PTY) LTD (IN LIQUIDATION) [1997] ZASCA 94; 1998 (1) SA 811 (SCA) at 823 B –C.

The same holds true where a stolen cheque is involved.

[78] In my view the plaintiff has succeeded in proving on a balance of probability that the second defendant signed a standard application form for the purpose of opening a cheque account - which document contained the same terms and conditions as the example appearing in Bundle X p. 1 – 12. I accept the document as the best secondary evidence available since the actual original document is lost.

[79] I found Fourie, D.J. Venter, Claassen and Hartmann in addition to Louw and E.T. Venter impressive and trustworthy witnesses. No serious critique could be levelled against their testimonies. I accept their evidence. There is no need to evaluate them individually.

[80] In the circumstances I have come to the conclusion:

that the defendants were not entitled to the proceeds of the cheque in the amount of R1 228 167,60 which was deposited into their account at Centurion Branch of Absa Bank on 11 April 2000;

that the plaintiff is lawfully entitled to reverse the credit passed on the account in the aforesaid amount and

that the plaintiff was indeed entitled to claim and recover the full amount of the cheque from the defendants;

that since the full proceeds of the cheque have been withdrawn from the account and appropriated for the defendants benefit, the plaintiff is entitled to reclaim it from the defendants, jointly and severally, the one paying the other to be absolved.

[81] In clause 10 of the standard agreement, it was agreed that should the bank bring any legal proceedings against the customer for the recovery of any monies which a customer may owe to the bank, the customer shall on demand pay to the bank all the legal costs on an attorney and client scale. I can see no reason why that provision should not be enforced. The case merits such a special cost order.

[82] In the premises I give judgment in favour of the plaintiff against the defendants, jointly and severally, the one paying the other to be absolved, for:

The payment of the amount of R1 228 167,60;

The interest thereon at the rate of 15,5% p.a. from 10 April 2000 to date of final payment;

The cost of the action on the scale as between attorney and client;

The costs shall include the costs occasioned by the employment of two counsels as well as the qualifying fee of the plaintiff’s expert witness, Mr. A.B. Fourie.

______________

M.H. RAMPAI, J

On behalf of the plaintiff: Adv. D.E. van Loggerenberg S.C.

With him Adv J. Malan

Instructed by:

Routledge-Modise

p.a. McIntyre & Van der Post

BLOEMFONTEIN

On behalf of the defendants: Attorney Piet Nel

Instructed by:

The Justice Centre

/spieterse