Eskom v First National Bank of Southern Africa Ltd. (380/93) [1994] ZASCA 186; 1995 (2) SA 386 (AD); [1995] 2 All SA 65 (A) (30 November 1994)

Eskom v First National Bank of Southern Africa Ltd. (380/93) [1994] ZASCA 186; 1995 (2) SA 386 (AD); [1995] 2 All SA 65 (A) (30 November 1994)

The court held that section 79 of the Bills of Exchange Act provides statutory protection to bankers who pay crossed cheques in good faith and without negligence, and that the onus of proving such good faith and absence of negligence lies on the bank, not the customer. The section operates as a statutory exception to the banker's normal liability, and its application must be established by the bank. The court further held that section 79 applies even where the collecting and paying branches are part of the same bank, following English and South African authority for practical and commercial reasons. Additionally, section 79 applies to crossed cheques marked 'not transferable', and the...

Citation
[1994] ZASCA 186
Parties
Appellant: Eskom; Respondent: First National Bank of Southern Africa Limited
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
30 November 1994
Case Number
380/93
Procedural Posture
Civil Appeal / Appeal Against Order Upholding Exception to Particulars of Claim
Outcome
Appeal upheld; order of court a quo set aside; exceptions dismissed with costs.
Judges
CORBETT, E M GROSSKOPF, NESTADT, EKSTEEN, HARMS
Legal Topics
Bills of Exchange Act, Crossed Cheques, Banker Customer Relationship, Onus of Proof, Statutory Protection, Non Transferable Cheques
Banking and Finance Civil Procedure Bills of Exchange Act Crossed Cheques Banker Customer Relationship Onus of Proof Statutory Protection Non Transferable Cheques

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Parties

Eskom

Appellant

First National Bank of Southern Africa Limited

Respondent

Procedural Posture

Civil Appeal / Appeal Against Order Upholding Exception to Particulars of Claim

Legal Issues

  1. 1 Who bears the onus of proof under section 79 of the Bills of Exchange Act in claims against a bank regarding crossed cheques.
  2. 2 Does section 79 apply where the collecting and paying branches are part of the same bank.
  3. 3 Does section 79 apply to crossed cheques marked 'not transferable'.

Ratio Decidendi

The court held that section 79 of the Bills of Exchange Act provides statutory protection to bankers who pay crossed cheques in good faith and without negligence, and that the onus of proving such good faith and absence of negligence lies on the bank, not the customer. The section operates as a statutory exception to the banker's normal liability, and its application must be established by the bank. The court further held that section 79 applies even where the collecting and paying branches are part of the same bank, following English and South African authority for practical and commercial reasons. Additionally, section 79 applies to crossed cheques marked 'not transferable', and the...

Court Disposition

Appeal upheld; order of court a quo set aside; exceptions dismissed with costs.

Orders

  • The appeal is upheld with costs.
  • The order of the court a quo is set aside and substituted with: 'The exceptions are dismissed with costs.'