B & H Engineering v First National Bank of SA Ltd (61/93) [1994] ZASCA 152; 1995 (2) SA 279 (AD); [1995] 1 All SA 545 (A) (11 November 1994)

B & H Engineering v First National Bank of SA Ltd (61/93) [1994] ZASCA 152; 1995 (2) SA 279 (AD); [1995] 1 All SA 545 (A) (11 November 1994)

The Supreme Court of Appeal held that where parties agree to make and accept payment of a debt by cheque, the debt is extinguished when the bank pays the cheque to the payee, regardless of whether payment was authorised by the drawer at the time. The court reasoned that the debt-extinguishing agreement between the drawer and payee is fulfilled when the payee receives the money, and the payee should not be exposed to disputes between the bank and the drawer regarding authority. The payment by the bank, even if made after countermand, discharged the underlying debt, and the payee was not unjustifiably enriched. Consequently, the bank's claim for restitution against the payee under condictio...

Citation
[1994] ZASCA 152
Parties
Appellant: B & H Engineering; Respondent: First National Bank of SA Ltd
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
11 November 1994
Case Number
61/93
Procedural Posture
Civil Appeal / Appeal From Transvaal Provincial Division
Outcome
Appeal allowed. The order of the court a quo is set aside and replaced with dismissal of the plaintiff's claim with costs.
Judges
Botha, E M Grosskopf, Smalberger, F H Grosskopf, Van Den Heever
Legal Topics
Unjustified Enrichment, Condictio Sine Causa, Payment by Cheque, Countermanded Cheque, Debt Extinguishing Agreement
Banking and Finance Civil Procedure Unjustified Enrichment Condictio Sine Causa Payment by Cheque Countermanded Cheque Debt Extinguishing Agreement

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 4 Authorities cited 19 Party arguments 2 Amounts and remedies 1
Sign in to unlock

Parties

B & H Engineering

Appellant

First National Bank of SA Ltd

Respondent

Procedural Posture

Civil Appeal / Appeal From Transvaal Provincial Division

Legal Issues

  1. 1 Whether payment by a bank of a cheque after countermand by the drawer extinguishes the underlying debt owed by the drawer to the payee.
  2. 2 Whether the payee is unjustifiably enriched when the bank pays a countermanded cheque.
  3. 3 Whether the bank is entitled to recover the payment from the payee under condictio sine causa.

Ratio Decidendi

The Supreme Court of Appeal held that where parties agree to make and accept payment of a debt by cheque, the debt is extinguished when the bank pays the cheque to the payee, regardless of whether payment was authorised by the drawer at the time. The court reasoned that the debt-extinguishing agreement between the drawer and payee is fulfilled when the payee receives the money, and the payee should not be exposed to disputes between the bank and the drawer regarding authority. The payment by the bank, even if made after countermand, discharged the underlying debt, and the payee was not unjustifiably enriched. Consequently, the bank's claim for restitution against the payee under condictio...

Court Disposition

Appeal allowed. The order of the court a quo is set aside and replaced with dismissal of the plaintiff's claim with costs.

Orders

  • The appeal is allowed with costs, including the costs of two counsel.
  • The order of the court a quo is set aside.