THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Case number: 516/2008

In the matter between:

TSHIDISO ISAAC LEEUW

APPELLANT

and

FIRST NATIONAL BANK

RESPONDENT

Neutral citation:
Leeuw v First National Bank (516/2008) [2009] ZASCA
161 (30 November 2009)

CORAM:

Streicher, Heher, Snyders, Malan JJA and Leach AJA

HEARD:

13 November 2009

DELIVERED:
30 November 2009

SUMMARY:
Estoppel – negligent misrepresentation

ORDER
On appeal from:
The Bloemfontein High Court (Beckley and Van Zyl JJ,
sitting as court of appeal).
Order:

The appeal is dismissed with costs.
JUDGMENT

SNYDERS JA: (Streicher, Heher, Malan JJA and Leach AJA concurring)

[1] The respondent sued its customer, the appellant, in the Thaba’ Nchu
Magistrate’s Court for the recovery of an amount of R48 000 withdrawn from
the appellant’s account with the respondent after the deposit of a cheque in
the amount of R48 598.69 into that account and before it was discovered that
the signatures on the cheque were forged. The appellant not only defended
the claim, but instituted a counterclaim for the amount of R89 000. A cheque
for R89 000 was deposited into the same account, but the respondent
reversed the credit in the appellant’s account upon discovering that the
signatures on the cheque were forged. The decision by the magistrate to
dismiss the respondent’s claim and to grant the appellant’s counterclaim, both
with costs, was appealed by the respondent to the Bloemfontein High Court.
The appeal was upheld and the respondent was awarded its claim of R48 000
with interest and costs, whereas an order for absolution from the instance was
made on the appellant’s counterclaim. It is with the leave of the court below
that the matter is on appeal.

[2] The appellant persisted in this court with an argument that the
respondent’s initial notice of appeal was fatally defective as it did not comply
with Magistrates’ courts rule 51(7)(b) which requires an appellant to state ‘the
grounds of appeal, specifying the findings of fact or rulings of law appealed
against’. The rule is peremptory and non-compliance has been held to render
the notice invalid.1 The object of rule 51(7) is to enable the magistrate to

1 Himunchol v Moharom 1947 (4) SA 778 (N) at 780; Tzouras v SA Wimpy (Pty) Ltd 1978 (3)
SA 204 (W) at 205E-F.

frame his reasons for judgment under rule 51(8) and, insofar as this had not
already been done, to inform the respondent of the case he has to meet and
to notify the appeal court of the points to be raised.2 In 1987 the Uniform rules
of the high court were amended to provide, for the first time, for the delivery,
prior to the hearing, of ‘a concise and succinct statement of the main points. . .
which [a party] intends to argue on appeal’ – so-called heads of argument.3 It
can be said that since then, the object of the notice of appeal to inform the
respondent and the court was also achieved by the heads of argument, and it
has almost become the rule that a full judgment is given after a trial in the
magistrates’ courts which is rarely added to in terms of rule 51(8), as also
occurred in this case.

[3] The grounds in the notice of appeal that are attacked by the appellant
relate only to the counterclaim. It was contended that the magistrate should
have found that both cheques were forged, that the respondent was entitled to
reverse the credit entries in the appellant’s account after it was discovered
that the cheques were forged and that the respondent’s witnesses, especially
Motaung, gave credible evidence which had to be preferred to that of the
appellant. These points, though not a model of eloquence, clarity and
compliance, set out the only point in the appeal on the counterclaim, namely
that if Motaung’s evidence was accepted, the trial court should have
concluded that there was no misrepresentation by the respondent in relation
to the R89 000 cheque. This simple point reflected the entire appeal on the
counterclaim and achieved the objects of rule 51(7) in the circumstances.4

[4] The court a quo decided the matter on an acceptance of Motaung’s
evidence, as the notice urged it to do, and reversed the magistrate’s decision
in this regard. It does not appear from the judgment that the representative of
the respondent had any difficulty dealing with the relevant issue on appeal.
On the contrary, the court below had the impression that the point relating to
the notice of appeal had not been pursued and did not refer to it in its

2 Kilian v Geregsbode, Uitenhage 1980 (1) SA 808 (A) at 815C-D.
3 Regulations R2164, GG10958, 2 October 1987.
4 Gaffoor v Mvelase 1938 NPD 429 at 431.

judgment. Only after judgment and in response to a letter from the appellant’s
attorneys, did it respond by furnishing additional reasons pertaining to the
point and concluded that the grounds of appeal were not too general or too
vague.

[5] In this court it is not required that grounds of appeal be stated in the
notice of appeal.5 The nature of the proceedings is such that this court is
entitled to make findings in relation to ‘any matter flowing fairly from the
record’.6 The parties in their written and oral arguments have dealt with all the
issues relevant to the appeal and the appellant has not pointed to anything
that has been overlooked. The point, apart from being bad, has long lost its
significance.

[6] Many of the facts in this matter are common cause. The appellant, the
proprietor of a liquor outlet, the Love and Happiness Tavern, sold liquor to
Thabo Mofokeng. The latter tendered payment by way of a cheque in the
amount of R48 598.69 drawn by General Food Industries Limited on the
respondent in favour of Mofokeng, or bearer. The appellant accepted the
cheque as payment for the liquor bought and on 14 May 1999 deposited it into
his bank account with the respondent. The circumstances that lead to the
appellant accepting the cheque as payment are in dispute and I shall revert to
that later. On 17 May 1999 the respondent allowed the appellant to utilise R48
000 of the proceeds of this cheque in order to pay for liquor bought for his
business. On 21 May 1999 the appellant again sold liquor to Mofokeng, this
time for R89 000 and again accepted a cheque in that amount, made out as
before, in payment. This cheque was also deposited into the same account.
On 24 May 1999 the respondent was notified by General Food Industries
Limited that each of the two signatures on the cheques was forged. The

5 SCA rule 7(3): ‘Every notice of appeal and cross-appeal shall – (a) state what part of the
judgment or order is appealed against; (b) state the particular respect in which the variation of
the judgment or order is sought; and (c) be accompanied by a certified copy of the order (if
any) granting leave to appeal or to cross-appeal.’
6 Thompson v South African Broadcasting Corporation 2001 (3) SA 746 (SCA) para 7: ‘The
Court is entitled to base its judgment and to make findings in relation to any matter flowing fairly
from the record, the judgment, the heads of argument or the oral argument itself.’

respondent immediately reversed the credits in the appellant’s account
brought about by the deposit of the two cheques and passed debits in the
same amounts. Because the respondent utilised an amount of R48 000 from
the account before the debits were passed, the respondent instituted action to
recover that amount.

[7] The respondent’s claim was based on the condictio indebiti. It alleged
that the appellant was enriched at the expense of the respondent in the
amount of R48 000. The appellant denied that the condictio indebiti was
available to the respondent as a bank, denied that he was enriched and
pleaded that the respondent was estopped from relying on the forgery of the
cheque. In support of the defence of estoppel he pleaded that prior to the
appellant accepting the cheque as payment for liquor supplied, the
respondent represented to him that the cheque was good for the money, and
the appellant relied on the correctness of this representation when he decided
to accept the cheque as payment for the liquor sold to Mofokeng. In his
counterclaim the appellant pleaded that the respondent negligently
represented that the cheque of R89 000 was good for the money before he
accepted it as payment for the liquor bought by Mofokeng; he relied on this
alleged misrepresentation and supplied liquor to Mofokeng for that value and
consequently suffered damages.

[8] The magistrate accepted that the condictio indebiti was ‘not available’
to a bank and found that the respondent, in any event, failed to prove the facts
founding the condictio indebiti that it relied upon. On appeal the court below,
the appellant and the respondent again accepted that the condictio indebiti
was not the respondent’s ‘proper cause of action’. The respondent argued in
the court below that the condictio sine causa was the appropriate remedy.
The court below found that although that was not pleaded, its requirements
were fully canvassed during the trial, the particulars of claim clearly based the
respondent’s claim on enrichment and the evidence required to prove the one
would have sufficed to prove the other. These findings and an absence of
prejudice to the appellant, led the court below to conclude that the respondent
should not fail for having pleaded the ‘incorrect condictio’.

[9] In this court the question whether the respondent’s appropriate remedy
is the condictio indebiti or the condictio sine causa is no longer alive as the
appellant’s counsel conceded, rightly in my view, that if the appellant is to fail
on his defence of estoppel, the respondent was entitled to judgment in the
amount of R48 000.

[10] However, to avoid future confusion it needs to be stated that there is no
principle that the condictio indebiti is not available to a bank. In ABSA Bank
Ltd v De Klerk 1999 (1) SA 861 (W), on similar facts, it was held, in my view
correctly, that the condictio indebiti was the appropriate remedy for the bank
to have relied upon.7 In Saambou Bank Ltd v Essa 1993 (4) SA 62 (N) a
thorough comparative analysis was made of facts that would give rise to a
bank being entitled to rely on the condictio indebiti as opposed to the condictio
sine causa. It was held that if a bank believed it was obliged to pay ‘on
demand any withdrawal sought by [its customer] up to the amount of the
credit standing in his account’ the condictio indebiti was the appropriate
remedy. B & H Engineering v First National Bank of SA Ltd 1995 (2) SA 279
(A), mentioned by the court below as if it entertained another view, dealt with
the different scenario of a bank paying the amount of a cheque to a payee not
realising that the cheque had been countermanded. There was no question in
B & H of the bank performing vis-à-vis the payee. Hence the condictio indebiti
did not arise.

[11] The only issue to be decided in relation to the respondent’s R48 000
claim is whether the appellant proved his defence of estoppel.8 Estoppel
presupposes a representation made by words or conduct relating to a certain
factual position.9

[12] According to the evidence of the appellant and Mr Abram Motaung, a
clerk employed by the respondent at the enquiries desk, the appellant

7 At 864H-I.
8 ABSA Bank Ltd v I W Blumberg & Wilkinson 1997 (3) SA 669 (SCA) at 677G-H.
9 Road Accident Fund v Mothupi 2000 (4) SA 38 (SCA) at paras 27 and 29.

approached him during May 1999 with the cheque of R48 598.69. Motaung
testified that the appellant:
‘came to [him] with a cheque and asked [him] if the cheque was good. [He] then had
to check if the cheque was not post-dated and if the amounts correspond with
figures. [He] then checked in the computer if there was not stop payment on the
cheque. [He] confirmed that the cheque was ok. [He] was not asked to check if there
were funds in the account. [He] did not check if the signatures on the cheque
corresponded’.
Far from this evidence being disputed by the appellant several features of his
evidence support this version. He says that when Motaung came back with
the cheque he said ‘the cheque was genuine and [the appellant] could deposit
the cheque’. This answer indicates that Motaung was verifying that the
cheque was, on the face of it, acceptable for deposit. This was no different
from what Motaung had done for the appellant numerous times before. The
appellant, on his own version, visited the Thaba’ Nchu branch of the
respondent three to four times a week, depending on the state of his
business. He knew Motaung well. He also testified that as he was ‘not
learned’, whenever he made a deposit of cheques at the bank, he would ask
for assistance at the enquiries desk with the completion of the deposit slip
before he went to the tellers to make the deposit. In relation to the cheque for
R48 598.69 Motaung did the same thing he was requested to do by the
appellant numerous times before – to see whether the cheque was
acceptable for deposit and to complete the deposit slip and send the appellant
to the tellers.

[13] In view of the appellant’s self proclaimed habit to ask Motaung to
complete the deposit slips relating to cheque deposits made by him, it was for
the appellant to show that his request on this occasion was different from
those on other occasions in that he required a guarantee that the cheque was
as good as cash.

[14] The appellant said, rather obliquely, that Mofokeng was with him when
he explained to Motaung that Mofokeng wanted to buy liquor from him and
offered the cheque in payment. He wanted to be sure that he ‘was not going

to lose money’. He wanted the respondent to give him the assurance that the
cheque was as good as cash and consequently that there was no risk for him
in delivering liquor to Mofokeng. When Motaung was cross-examined he said
he could not remember whether the appellant told him why he wanted to know
that the cheque was good. If Motaung was aware of the presence of
Mofokeng and the reasons for this, he would have had a better idea of what it
was that the appellant wanted assurances on. Despite his lapse of memory it
was not put to Motaung that Mofokeng, the purchaser and payee, was present
and that the request concerning the cheque was aimed at obtaining
assurances for the purposes of the sale transaction between them. When the
appellant was cross-examined about the failure by his attorney to put this
evidence to Motaung, he was unsure whether he told his attorney about it. In
view of the failure to explore this aspect during Motaung’s evidence, it cannot
be concluded that the appellant’s request in relation to the R48 598.69
cheque was any different from his previous requests.

[15] As far as the respondent is concerned it never furnished the appellant
with a guarantee that the cheque would be paid. This is supported by
Motaung’s evidence that the appellant telephoned him two to three days after
the cheque was deposited and told him that he was busy buying liquor from a
supplier and needed to make payment of an amount of R48 000. He wanted
to draw against the cheque that had been deposited by way of a shoppa card
which apparently operates like a debit card. The appellant denied that he ever
made such a phonecall or had such a conversation with Motaung. Motaung’s
evidence is corroborated by the appellant’s bank statement that reflects that
on 17 May 1999, three days after the cheque was deposited, his shoppa card
was loaded with the amount of R48 000, the exact amount that the appellant
wanted to make his purchase for. Upon receiving this phonecall Motaung
went to the manager of the respondent to obtain authorisation for the
withdrawal of funds before the cheque was cleared. This authorisation was
given. If the cheque was guaranteed earlier there was no need for the
appellant to have made this telephonic request or for Motaung to have sought
this authorisation from the manager.

[16] The further question is whether the facts would have made a
reasonable person in the position of the appellant believe that the respondent
was guaranteeing the funds represented by the cheque.10 The appellant’s
own evidence shows why the answer has to be in the negative. If it was a
matter of the respondent issuing a guarantee, there was no understandable
basis why the funds would not have been available straight away and why the
appellant – on his own version - would have been told that it would take seven
days for the funds to be available. Likewise there would have been no need
for the appellant to have phoned to make the arrangement that the money be
available for his purchase of stock before the expiry of the seven day period.

[17] Counsel’s contention that the appellant was under the impression that
the funds would, as a mere formality, take seven days to become available
cannot be sustained. When the appellant was told about the seven day
clearing period he was not enquiring about the availability of the funds, but,
according to him, whether the cheque was as good as cash. If the funds were
guaranteed there and then there was no conceivable basis on which it would
have taken time for the funds to become available.

[18] The court below was correct in concluding that the defence of estoppel
was not proven.

[19] The appellant’s claim for R89 000 is based on similar allegations, that
Motaung made the same representation to him. Motaung denied that he was
approached by the appellant with the R89 000 cheque. His denial is
supported by the fact that the deposit slip for the cheque was not completed
by him and does not bear his signature as in the case of the cheque for R48
598.69. It was common cause that Motaung had a colleague, Motlhatlhedi,
whom the appellant knew as well as Motaung. Motaung suggested that it
could have been Motlhatlhedi who assisted the appellant with the R89 000
cheque.

10 Aris Enterprises (Finance) (Pty) Ltd v Protea Assurance Co Ltd 1981 (3) SA 274 (A) at
292E-F.

[20] Counsel for the appellant argued that the respondent had a duty to call
Motlhatlhedi as a witness to meet the allegation that the respondent made a
representation to the appellant in relation to the R89 000 cheque and argued
that its failure to do so warrants the adverse inference that the
misrepresentation alleged by the appellant was made. This submission not
only fails in logic, but also in law. Such an inference does not follow of
necessity, but is dependant on the circumstances of the case.11 The allegation
the respondent had to meet was that Motaung made the alleged
representation in relation to the R89 000 cheque. He was called as a witness
and denied the allegation. Nothing in the appellant’s case obliged the
respondent to meet a case that was not pleaded by calling witnesses that
were not alleged to have had anything to do with the alleged representation
and were therefore irrelevant. In addition, before an adverse inference is to be
drawn against a party for not calling a relevant witness, it would have had to
be shown that the witness was available to be called.12 Although Motaung, still
employed by the respondent at the time of his evidence, referred to
Motlhatlhedi as his ‘former colleague’, the question whether Motlhatlhedi was
available to give evidence was never explored during the trial.

[21] The court below was correct in concluding that the appellant did not
prove his counterclaim at the trial and in granting an order of absolution.

[22] The appeal is dismissed with costs.

__________________________
S SNYDERS
Judge of Appeal

11 Webranchek v L K Jacobs & Co Ltd 1948 (4) SA 671 (A); Munster Estates (Pty) Ltd v
Killarney Hills (Pty) Ltd 1979 (1) SA 621 (A) at 624.
12 Elgin Fireclays Limited v Webb 1947 (4) SA 744 (A) at 750; R v Phiri 1958 (3) SA 161 (A) at
164H-165A.

Appearances:

For the Appellant:

N W Phalatsi

Instructed by:
N W Phalatsi Attorneys & Partners, Bloemfontein

For the Respondent:
Adv. J P Daffue SC

Instructed by:
Steyn Meyer Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:

Status:
Immediate

Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal.

* * *
A stolen cheque, signed fraudulently, spells trouble for whoever accepts it, even unwittingly,
as payment for anything. This Mr Leeuw finally discovered in a case between him and First
National Bank, pursued to the Supreme Court of Appeal.

Leeuw sold liquor to one Mofokeng for R48 598.69 and took a cheque as payment. It was a
General Food Industries cheque, made out to Mofokeng in that exact amount. Leeuw
deposited the cheque with FNB and made arrangements to withdraw R48 000 against the
cheque before the expiry of the seven day clearance period. Leeuw then sold more liquor, for
R89 000, to Mofokeng and took a similar cheque in that amount. After the R48 000 was
withdrawn FNB was notified that both cheques were stolen and the signatures forged. FNB
reversed the credits in Leeuw’s account and sued for the R48 000. Leeuw resisted the claim
and counterclaimed for the R89 000, alleging that FNB, at the time that he deposited the
cheques, represented to him that the cheques were good for the money and he relied on that
misrepresentation to his detriment.

The case went all the way from the magistrates’ court, where Leeuw won, to the
Bloemfontein High Court, where Leeuw lost, and ultimately the Supreme Court of Appeal.
The Supreme Court of Appeal confirmed the decision of the Bloemfontein High Court that
the facts did not support Leeuw’s allegation of a misrepresentation by FNB. FNB merely did
what banks do - it accepted the cheques for deposit with no guarantee in relation thereto.
Hence FNB was entitled to reverse the credits in Leeuws account when the cheques were not
cleared and to be paid the R48 000 already withdrawn by Leeuw.