COLLECTING BANKER'S DUTY OF CARE

In a series of recent decisions, our courts have recognised the principle that a collecting
bank does in fact owe a duty of care to the true owner of a cheque, not to act negligently
when dealing with the cheque (Indac Electronics (Pty) Ltd v Volkskas Bank Ltd 1992 1
SA 783 (A), Kwamashu Bakery Ltd v Standard Bank of South Africa Limited 1995 1
SA 377 (D)).

This does not mean that a collecting bank will automatically be liable in each instance, as
its liability is based in delict, and accordingly the requirements for delictual liability must
first be met.

As bankers are considered to render a professional service, the standard of care to which
they will be held, is that of the bonus argentarius, or reasonable banker. Negligence in this
context is present if (i) a reasonable banker would have foreseen that his conduct might
reasonably cause another to sustain a patrimonial loss, (ii) would have taken reasonable
steps to guard against such an occurrence, and (iii) the defendant banker failed to take
such steps (Kruger v Coetzee 1966 2 SA 428 (A) 430 E-F).

As regards the duty of care imposed on banks when opening accounts for clients, the
courts draw a distinction between new and existing clients of the bank. When dealing with
new clients, a reasonable banker should not only satisfy himself as to the identity of the
new client, but should also gather sufficient information to enable him to establish whether
the person is the actual person or entity which he or she purports to be. Whilst bankers
should constantly guard against offending potential new clients, the latter should
reasonably expect a thorough probe into their financial affairs (see the Kwamashu case
above).

When dealing with existing clients wishing to open new accounts, the position is
somewhat different. In this instance the bank need not repeat the enquiry process unless
there are compelling circumstances justifying such enquiry. A bank would be under a duty
to make enquiries where it is put on enquiry or where a transaction is out of the ordinary.
The bank is not however required to cross-examine the client to determine whether the
customer is lying, nor need the bank enquire as to the source of the client's funds in the
absence of compelling reasons to do so (Columbus Joint Venture v Absa Bank Ltd
2000 (2) SA 491 (W)).

In terms of section 1 of the Apportionment of Damages Act, 1956 (the "Act"), a plaintiff's
claim must be reduced in accordance with his own degree of fault. The concept of "fault"
within this context has given rise to uncertainty and it is presently unclear whether section
1 is applicable to intentional or negligent conduct. The South African Law Commission has
supported the view that "fault" in section 1 of the Act means "negligence", and has made
certain recommendations in this regard. Fault does however include vicarious liability. A
party may therefore be held strictly liable for the wrongful conduct of an employee or
agent committed in the course and scope of the latter's employment or mandate.
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In terms of section 2 of the Act, persons who are delictually liable to the plaintiff for the
same damage, are considered to be joint wrongdoers, and may be sued in the same
action by the plaintiff. An employer who becomes vicariously liable for the delict of an
employee may therefore be sued together with the employee in the same action.

The question whether apportionment can take place where one wrongdoer acts
negligently and the other intentionally has been the subject of much debate. Where for
example a collecting banker's negligent conduct and a thief's intentional conduct both
cause the true owner of a cheque to suffer patrimonial loss, it is uncertain whether they
may be treated as joint wrongdoers in terms of section 2 of the Act. Although the court in
Lloyd-Gray Lithographers (Pty) Ltd v Nedcor Bank Ltd t/a Nedbank 1998 (2) SA 667
(W) answered this question in the affirmative, the issue is at present far from resolved.