Absa Bank Limited v Greyvenstein

A crossed cheque for R325 000, marked ‘not transferable’ / ‘nie oordraagbaar nie’, was drawn by Standard Bank in favour of the respondent or order. The respondent handed the cheque to Keith Scott of Scott Asset Management for purposes of investment on SAFEX. The respondent endorsed the back of the cheque with his signature and ID number. Instead of being deposited into a trust account for the respondent, the cheque was deposited by Scott/Investcorp CC into Investcorp’s account at Absa Bank. Absa collected the cheque and credited Investcorp’s account. Scott, Investcorp and Scott Asset Management were later sequestrated/liquidated. The respondent sued Absa in the Transvaal Provincial Division, alleging that Absa unlawfully and negligently collected a non-transferable cheque for someone other than the named payee, causing him loss equal to the cheque amount. The court a quo upheld the claim. Absa appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the court a quo was set aside and replaced with an order dismissing the plaintiff’s claim with costs.

The case clarifies the distinction in South African law between non-transferability (lack of negotiability) of a cheque and the transfer of ownership of the document itself. It confirms that ownership of a cheque may pass despite fraud and despite a ‘not transferable’ marking, and limits the delictual liability of collecting banks where the claimant is no longer the owner of the cheque.