FJS Painting CC v ABSA Bank Limited

FJS Painting CC operated a current account with ABSA Bank. After the death of its sole member, Mr Beytell, Ms Craythorne falsely represented to Sappi (the drawer of the cheques) that she was a member/partner of FJS Painting CC and authorised to continue its business. She opened a separate ABSA account in the name of 'The Sole Owner FJS Painting Sheeting' and deposited four crossed, non-transferable cheques made payable to FJS Painting CC (or variants thereof) into that account. ABSA collected the cheques and credited Craythorne’s account. FJS Painting CC sued ABSA for damages, alleging it was the owner of the cheques and that ABSA negligently collected them for the wrong account. The magistrates’ court found for FJS Painting CC, but this was reversed on appeal to the High Court. The matter came before the Supreme Court of Appeal.

The appeal was dismissed with costs.

The case confirms that ownership of a cheque is an essential requirement for delictual liability of a collecting banker for negligent collection, reaffirming earlier authority such as Indac Electronics and Quality Tyres. It clarifies the application of common-law principles of transfer of ownership to cheques and limits any expansion of a bank’s liability to non-owners, reinforcing certainty in South African banking and negotiable instruments law.