Saambou Bank Ltd v Essa 1993 (4) SA 62 (N)

Saambou Bank Ltd v Essa 1993 (4) SA 62 (N)

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

Facts:

Saambou Bank Ltd (Saambou Bank) was a commercial bank in South Africa. In 1992, Essa, a customer of Saambou Bank, drew a cheque for R20,000 in favor of a third party. The cheque was stolen from Essa's office and presented for payment at a Saambou Bank branch.

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

Saambou 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 Saambou Bank was entitled to recover the amount of the cheque from Essa. The Court reasoned that Essa had been unjustly enriched as a result of the payment of the cheque.

The court also found that Essa had not changed its position in reliance on the payment of the cheque.

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 entitled to recover the amount of the cheque from the drawer.
• The Court reasoned that the drawer had been unjustly enriched as a result of the payment of the cheque.
• The court also found that the drawer had not changed its position in reliance on the payment of the cheque.

Conclusion:

The Court's decision in Saambou Bank Ltd v Essa 1993 (4) SA 62 (N) 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.