B & H Engineering v First National Bank of SA Ltd 1995 (2) SA 279 (A)

 B & H Engineering v First National Bank of SA Ltd 1995 (2) SA 279 (A)

Issue: Whether a bank that mistakenly pays a cheque after the drawer has countermanded payment can recover the amount paid from the payee.

Facts:

B & H Engineering (B & H) was a company that supplied goods to Sapco (Pty) Ltd (Sapco). In 1993, Sapco drew a cheque for R16,048 in favor of B & H on the First National Bank of SA Ltd (FNB). The cheque was delivered to B & H and accepted by the company in payment of the contract price for the goods supplied.

Sapco subsequently countermanded the payment of the cheque, but FNB mistakenly paid the cheque into B & H's account. FNB then demanded that B & H repay the amount of the cheque. B & H refused to repay the amount, arguing that it was entitled to the money.

Held:

The Court held that FNB was entitled to recover the amount of the cheque from B & H. The Court reasoned that FNB had made a mistake in paying the cheque and that B & H had been unjustly enriched as a result of the mistake.

The Court also found that B & H had not changed its position in reliance on the payment of the cheque and that it was therefore not unfair to require B & H to repay the amount of the cheque.

Key Facts:

• A bank mistakenly paid a cheque after the drawer had countermanded payment.
• The bank demanded that the payee repay the amount of the cheque.
• The payee refused to repay the amount, arguing that it was entitled to the money.

Reasons:

• The Court held that the bank was entitled to recover the amount of the cheque from the payee.
• The Court reasoned that the bank had made a mistake in paying the cheque and that the payee had been unjustly enriched as a result of the mistake.
• The Court also found that the payee had not changed its position in reliance on the payment of the cheque and that it was therefore not unfair to require the payee to repay the amount of the cheque.

Conclusion:

The Court's decision in B & H Engineering v First National Bank of SA Ltd 1995 (2) SA 279 (A) is a significant case in South African law. The Court's decision clarified the law relating to the rights of banks that mistakenly pay cheques after the drawer has countermanded payment.