The Standard Bank of South Africa Limited v Harris NO and Others

Demodig Plant (Pty) Ltd, later placed in liquidation, was the payee of a crossed cheque marked 'not transferable' for R397 657,82 drawn by Barlow Tractor Co (Pty) Ltd on Standard Bank. One of Demodig’s directors delivered the cheque to its attorney, JA du Toit, with instructions that it be deposited into Du Toit’s trust account pending further instructions. Du Toit instructed Standard Bank’s Randburg branch to open a trust savings account in terms of s 78(2A) of the Attorneys Act and to deposit the cheque into an account styled 'JA du Toit Inc Trust – Demodig Plant (Pty) Ltd'. The bank complied. The proceeds were later paid out on Du Toit’s instructions. After Demodig’s liquidation, the liquidators alleged that Demodig never received the proceeds and sued the bank in delict (Aquilian liability) as a collecting bank. The trial court found the bank liable. Standard Bank appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the trial court was set aside and replaced with an order dismissing the liquidators’ claims with costs.

The case clarifies South African law on the delictual liability of collecting banks, particularly where a cheque is drawn on the same bank. It confirms that a crossed 'not transferable' cheque may lawfully be collected into an account other than that of the payee if authorised by the payee or its agent, and that unlawfulness is a distinct and essential requirement for Aquilian liability.