Leeuw v First National Bank

The appellant, a liquor trader, deposited two cheques (R48 598.69 and R89 000) into his account with First National Bank (FNB). Both cheques were later discovered to bear forged signatures. Before the forgery was detected, FNB allowed the appellant to withdraw R48 000 against the first cheque. Once the forgery was discovered, FNB reversed the credits. FNB sued to recover the R48 000 already withdrawn, while the appellant counterclaimed R89 000, alleging that FNB negligently misrepresented that the cheques were ‘good for the money’ and was estopped from reversing the credits.

The appeal was dismissed with costs. The High Court order awarding FNB judgment for R48 000 and granting absolution from the instance on the appellant’s counterclaim was upheld.

The case clarifies the application of estoppel and negligent misrepresentation in banking transactions involving forged cheques. It affirms that confirmation that a cheque is acceptable for deposit does not amount to a guarantee of payment and that banks may recover funds paid out on forged instruments. The judgment also provides guidance on enrichment remedies available to banks and on when adverse inferences may be drawn from the failure to call witnesses.