Govender v Standard Bank of SA Ltd 1984 (4) SA 392 (C)

Govender v Standard Bank of SA Ltd 1984 (4) SA 392 (C)

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

Facts:

In 1983, Govender, a customer of Standard Bank of SA Ltd (Standard Bank), drew a cheque for R2,000 in favor of a third party. The cheque was stolen from Govender's office and presented for payment at a Standard Bank branch.

Despite the fact that Govender had countermanded payment on the cheque before it was presented for payment, Standard Bank mistakenly paid the cheque into the account of the person who presented it. Govender then demanded that Standard Bank repay the amount of the cheque.

Standard Bank refused to repay the amount, arguing that it was not liable for the consequences of its mistake. The bank claimed that it had paid the cheque in good faith and that it was not aware that the cheque had been stolen or that payment had been countermanded.

Held:

The Court held that Standard Bank was not entitled to recover the amount of the cheque from Govender. The Court reasoned that Standard Bank had been negligent in failing to verify the identity of the person who presented the cheque for payment and that it had therefore not acted in good faith.

The court also found that Govender had not been unjustly enriched as a result of the payment of the cheque. The court reasoned that Govender had not received any benefit from the payment and that the money had been paid to the wrong person.

Key Facts:

• A bank mistakenly paid out a cheque after the drawer had countermanded payment.
• The drawer demanded that the bank repay the amount of the cheque.
• The bank refused to repay the amount, arguing that it was not liable for the consequences of its mistake.

Reasons:

• The Court held that the bank was not entitled to recover the amount of the cheque from the drawer.
• The Court reasoned that the bank had been negligent in failing to verify the identity of the person who presented the cheque for payment and that it had therefore not acted in good faith.
• The court also found that the drawer had not been unjustly enriched as a result of the payment of the cheque.

Conclusion:

The Court's decision in Govender v Standard Bank of SA Ltd 1984 (4) SA 392 (C) is a significant case in South African law. The Court's decision clarified the law relating to the rights of banks that mistakenly pay out cheques after the drawer has countermanded payment.