In the matter between:
LESOTHO BANK (1999) LIMITED) Defendant
JUDGMENT
Delivered by the Hon. Mrs Justice A. M. Hlajoane on 15th August, 2011.
Plaintiff is claiming payment of an amount of M140,500.00 from the defendant, together with interest thereon at the rate of 18.5% from March 2004 to date of payment. The claim according to plaintiff arose due to payment by defendant of some three fraudulent cheques upon which plaintiff’s signatures were forged. But according to the defendant the said cheques were good on the face of them and not forged.
The claim was couched as follows:
(a) Payment of M140,500.00;
(b) Interest thereon at the rate of 18.5% from March 2004 to date of payment;
(c) Costs of suit;
(d) Further and / or alternative relief.
Plaintiff led the evidence of the only one witness, ‘Mamoeketsi Monapathi, the Sales Manager of the plaintiff. Her evidence in a nutshell was that plaintiff has an account with the defendant. P.W.1 as the supervisor was the signatory for plaintiff’s cheques.
In her evidence, P.W.1 produced both originals of the authentic and forged cheques. In her evidence P.W.1 explained that she came to the conclusion that the cheques were forged because of the following features:
(a) The forged cheques had perforations.
(b) Her signature in the forged cheques was not authentic.
(c) The original cheques bore the signature of one Mosehle Khalema which was not there in the forged ones.
(d) She knew the payees in the original cheques as they were customers of plaintiff but she could not identify the payees in the forged cheques.
(e) The logo on authentic cheques not the same as on perforated cheques.
(f) The signature supposed to be hers on the forged cheque has no dot at the end but her signature on genuine cheques has that dot as reflected on her specimen signature.
The cheques bore these numbers 986, 991 and 993, and P.W.1 in her evidence showed that the cheques were duplicated as both authentic and perforated cheques bore the same numbers 986, 991 and 993. She said the authentic cheque 986 has her signature and that of Mrs Monapathi, and the same with 991. As for 993 she said it has Mrs Monapathi’s signature and that of Mr Khalema.
It would seem that the bank, the plaintiff, is for Monapathi family as P.W.1 testified further that for non authentic cheques 991, 993 and 986 all have signatures of Mrs Monapathi and Miss Monapathi, but said her signature there is only similar but not authentic as she puts a dot at the end of her signature which is not there in perforated cheques.
The witness in cross examination admitted that once issued with a cheque book, that cheque book remains in their custody and control. She also showed that she was not giving evidence as an expert in relation to those cheques on the signatures thereon. She showed further that all the signatories to plaintiff’s cheques had forwarded their specimen signatures to the defendant.
It was put to the witnesses in cross examination that what defendant did when the cheques were presented for payment was that it looked at the cheques, verified the signatures, confirmed that funds were available and then paid, and the response was that it ought to have done that.
The defendant did not lead any evidence but closed its case. Defendant’s argument was that P.W.1 was not an expert in handwriting and that without any evidence from other signatories the Court cannot come to a decision that the cheques, the perforated cheques were forged. It was also argued that plaintiff failed to prove any wrongfulness on the part of the defendant.
A brief response by the plaintiff’s counsel was that the Court has to take the evidence of P.W.1 commulatively on signatures, serial numbers, perforations and the logo.
We are leading with a civil case where the standard unlike in criminal matter, is on balance of probabilities. As rightly pointed out by the defendant, the burden would be discharged if the evidence is such that the tribunal can say “we think it is more probable than not”, but not when the probabilities are equal.
Defendant’s counsel relied on the authority of Shenker Brothers V Bester 1952 (3) S.A 664 A at 670 E – G, that evidence does not have to be accepted merely because it is uncontradicted. That ‘what is being weighed in the “balance” is not quantities of evidence, but are the probabilities arising from that evidence and all the circumstances of the case’, Selamolele v Makhado 1988 (2) S.A 372 at 375.
According to the defendant, plaintiff only managed to point out the different features on the cheques but failed to prove that they are duplicates. He said because the Court did not have sight or occasion to see other cheques that Boliba used and defendnant paid during the relevant period, the Court cannot conclude that the other cheques are duplicates or fraudulant because of perforations.
The defendant further argued that in as much as Boliba was the sole custodian of the cheques, it has not been shown or been clear as to how any one could have made fraudulent cheques. That there has been no evidence that the cheque book got lost or that Boliba received the cheque book from Lesotho Bank in a compromising manner. That the Court was left to speculate as to what exactly happened.
Defendant pointed out that the only reasonable inference, in the circumstances of this case, that can be drawn is that, someone who had inside knowledge of the relevant pages left in the cheque book and about to be used, took an opportunity.
That there is no evidence as to who that person might be, but that it cannot be stretching the imagination too far if it can be deduced from the evidence led that it could be someone within Boliba because at all material times the cheque book remained with it. Defendant argued that that is the direct evidence in this case.
It has been the defendant’s case that, though the Court does not know how the cheques were duplicated, if it so finds as alleged, and how one could have had access to the signatures so as to forge them, if the Court so find as alleged, that circumstances of this case point to one source, Boliba itself.
What this Court is called to determine is whether it can be said that the perforated cheques were duplicated and therefore forged. Defendant has argued that plaintiff has only managed to point out the different features on what she said were authentic cheques and perforated forged cheques, but failed to prove that they were duplicated.
Without necessarily being an expert, when one looks at both sets of cheques it becomes clear that there has been duplication as they both bear the same serial or cheque numbers 986, 991 and 993. What remains to be answered is whether the Bank can be said to be entitled to debit the customer when the signature is forged.
Again the defendant had said that because the Court did not have occasion to see the other cheques that Boliba used and defendant paid during the relevant period, the Court cannot conclude that the other cheques were duplicates or fraudulent because of perforations. That cannot be true as the cheques referred to by P.W.1 as authentic are the very cheques that were used by plaintiff during that relevant time and paid by the defendant. The said cheques were presented before this Court for the Court to see and were even marked collectively exhibit “A”.
Plaintiff has stated the position of the law to the question of whether the Bank is entitled to debit the customer where the signature is forged. He referred to the Learned Author Willis in Banking in South African Law 1981 Edition at 34 where it was said;
“If a Bank pays a cheque to which a customer’s signature as a drawer has been forged or where the amount has been fraudulently raised, it cannot debit the customer’s account with the amount so paid.”
Plaintiff again referred to the dicta that was followed by the Privy Council in the case of Tai Hing Cotton Mill Ltd v Lin Chen Hing Bank Ltd [1985] All ER 947 PC. The case where the accounts clerk of a company had forged 300 cheques and the Bank arguing that the company was estopped by its own negligence to hide behind the forgery.
It was held that:
“The relationship of Banker and customer does not rise either in contract (by way of implied term) or in tort to a duty owed by customer to the Bank to check his monthly (or other periodic) bank statements so as to be able to notify the Bank if any items which were not, or may not have been authorized by him.”
That the above dicta finds approval in the work of the Learned Authors Robert Sharrock & Michael Kidd, “Understanding Cheque Law 1992 Edition at 161 to 179,” where it says;
“A cheque does not constitute the customer’s mandate if his signature on the instrument has been forged or appended without his authority, should the Bank pay the instrument, it is not entitled to debit customer’s account.”
It goes further at page 170 to say that;
“Negligence other than the drawing of the mandate does not operate against the drawer. Thus the bank cannot debit the customer’s account for more than the authorized amount merely because he failed to keep his cheque book in a safe place.”
South African authorities on the same point are Dutchman (South Africa) (Pty) Ltd v Barclays Bank 1979 (3) S.A 267 and Hozman v Standard Bank Ltd 1985 (1) S.A 360. And Nicholas J in Holzman’s case had this to say that;
“A customer’s duty to his Banker is a limited one save in respect of drawing documents to be presented to the Bank and in warning of known and suspected forgeries he has no duty to the Bank to supervise his employees to run his business carefully or to detect frauds.”
It has not been the defendant’s case that it was normal for the Bank to have issued a cheque book which has two cheque leaves bearing the same serial number. If that was the case, would be encouraging fraud. Even twins are never given the same name despite their being identical. That duplication of serial numbers clearly confirms that there has been forgery. And that would not need an expert evidence to verify.
Authorities above have shown that once a bank honours a cheque where customer’s signature as a drawer has been forged, such bank would be wrong to debit the customer’s account with the amount so paid.
London Joint Stock Bank Ltd v Macmillan 1918 AC 777shows that the above is the position precisely because:
“A cheque with the signature of a customer forged is not the customer’s mandate or order to pay.”
According to the Rule in Macmillan’s case supra the duties of the customer to his/her Bank are two fold;
(a) Undertakes to exercise reasonable care in executing his written orders so as not to facilitate forgery.
(b) To inform the bank of any forgery of a cheque purported to be drawn on the account as soon as the customer becomes aware of it.
It came out in cross examination to P.W.1 that plaintiff could not act as soon as was reasonably possible to reconcile the cheques in question as she showed that when they were enquiring about the cheques the bank kept on saying were looking for them.
The standard of proof in this case being on a balance of probabilities, I find that from the facts of this case, it is more probable than not that the cheques were forged because of the features already alluded to on perforated cheques, and whether or not plaintiff had been negligent in keeping its cheque book is neither here nor there, but that some three forged cheques were paid by defendant against plaintiff’s account held with the defendant.
Plaintiff’s claim succeeds and judgment granted in terms of prayers (a), (b) and (c) of the summons.
A. M. HLAJOANE
JUDGE
For Plaintiff: Mr Matooane
For Defendant: Mr Mpaka
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