Van Hulsteyns Attorneys v Government of the Republic of South Africa and Another

A cheque drawn by the Department of Customs and Excise in favour of OTK (Kooperatief) Beperk, crossed and marked "not negotiable", was stolen while in the post. Through fraudulent means, the cheque was inserted into First National Bank’s internal processing system and credited to the trust account of Van Hulsteyns Attorneys, who believed they were acting for a client introduced as a foreign investor. After the cheque cleared, the attorneys paid the proceeds (less fees) onward on the purported client’s instructions. The Government, as true owner, sued to recover its loss under section 81 of the Bills of Exchange Act 34 of 1964, alleging that the attorneys had possessed the stolen cheque after theft.

The appeal was dismissed with costs, including the costs of two counsel. The first respondent was ordered to pay the appellant’s and the second respondent’s costs relating to the application for condonation and the second respondent’s costs of appeal.

The case clarifies the application of section 81 of the Bills of Exchange Act by confirming that liability attaches to a party who has mediate possession of a stolen crossed cheque through a collecting bank. It reinforces the role of common-law possession principles in statutory interpretation and provides authoritative guidance on the allocation of risk and loss in cheque fraud involving collecting banks and their customers.