Stolen cheque risk of loss


  1. In a recent Supreme Court of Appeal decision of Stabilpave (Pty) Ltd vs the South African Revenue Service 2014(1) SA350 (SCA), the court was called upon to determine which party assumed the risk of loss arising out of the posting of a cheque.  The principles pertaining to the circumstances where a cheque is intercepted in the post and unlawfully misappropriated are well established in our law. This case re-emphasised these established principles and provided further clarity of the legal principles applicable in instances where a creditor has not been provided with a choice by the debtor as to the method of payment to be followed by the debtor.
  2. This memorandum will provide a brief summary of the facts of the decision, the findings of the court and suggested safe guards to be implemented to avoid the risk of loss. For ease of reference, Stablepave (Pty) Ltd will be referred to as “Stablepave” and South African Revenue Service will be referred to as “SARS”.


  1. Stablepave was owed an amount of R724,494.00 by SARS.  This amount was reflected as an amount due to Stablepave by SARS on its assessment form that had been issued to it by SARS (“the assessment form”).
  2. Included in the assessment form was a notice that stated that the refund would be paid shortly, and that it would be paid either by way of cheque that could be fetched from the nearest post office, or by means of an electronic transfer into Stablepave’s bank account on record with SARS, if these details were available. The notice indicated that Stablepave’s bank account details were not known to SARS.
  3. On 12 November 2006, SARS drew a cheque on ABSA Bank in favour of Stablepave for an amount of R724,494.00, which cheque was marked “not transferrable”.  The cheque was posted by “securemail” to Stablepave and a delivery notice was issued.
  4.  The delivery notice was not received by Stablepave.  The notice was intercepted by a person who then unlawfully collected the envelope containing the cheque. The fraudsters managed to change the company records at the CIPC to reflect a Mr Radebe as its sole director.  Once the CIPC records were changed, Radebe opened up a bank account at FNB in the name of Stablepave.  The cheque was deposited into the FNB account and the proceeds paid.  The account of SARS was debited with the amount paid.  The proceeds of the cheque were withdrawn by Radebe.
  5. Stablepave instituted action against SARS for payment of R724,494.00 plus interest and costs. Stablepave contended that SARS had not discharged its obligation in paying the refund as, according to entrenched principles of our common law, payment is not made if the cheque was posted and lost before it reaches the payee.
  6. SARS defended the action.  The defences raised by SARS were as follows:-
    • SARS admitted the debt, but raised the defence of payment. That is, it had discharged its obligations by paying the debt;
    • in the alternative, it contended that by Stablepave not providing banking details to SARS for the payment to be effected by an electronic transfer, Stablepave chose and accepted that payment would be effected by way of a cheque, which would be collected at its nearest post office;
    • SARS contended that it had legally fulfilled its obligation to pay the amount of R724,494.00 and that it was irrelevant that the amount of the cheque was not received by Stablepave.
  7. If SARS was successful in proving that Stablepave had chosen to be paid by cheque through the post, Stablepave would then be found to have agreed to run the risk if the cheque was lost or stolen in transit.
  8. SARS’ defences were upheld in the court of first instance.  Stablepave then applied to the full bench of the provincial division. Stablepave’s appeal was unsuccessful on the basis that it had made a choice (i.e. by not providing its banking details, it had chosen to be paid by cheque through the post) as to how the cheque was to be remitted.  Given this election, the risk of loss lay with Stablepave.  Stablepave petitioned the SCA and was granted leave to appeal to the SCA.


  1. The decisive question in the case was whether the assessment notice gave Stablepave a choice as to the mode of payment.  If the notice did give such a choice, whether Stablepave chose, expressly or by necessary implication, that SARS should effect payment by means of sending a cheque through the post.
  2. The court re-iterated previously settled legal principles applicable when a cheque is intercepted in the post and misappropriated. That is, an agreement about the mode of payment is only reached if the creditor stipulates a particular mode of payment and the debtor then accedes to the request.
  3. The court found that, on a plain reading of the assessment notice, it was clear that Stablepave was not given a choice as to a mode of payment to be followed by SARS.  There was no invitation, expressly or by implication given to Stablepave to furnish its banking details, should it have wished to be paid by means of electronic transfer.  As there was no choice afforded to Stablepave, the court found that the method of payment was dictated by SARS.
    The fact that Stablepave may have known that it was expected to receive a cheque in the post or that it did not raise an objection thereto was not sufficient to give rise to an implied request or election by it to be paid by means of sending a cheque through the post.
  4. The court found that the risk of loss of the cheque was not assumed by Stablepave.  It found that the risk of loss remained with SARS and accordingly found that SARS had not discharged its indebtedness by posting a cheque to Stablepave.


  1. This case emphasises the necessity for a creditor to receive clear and unequivocal instructions from its debtor as to the method of payment.
  2.  The decision re-emphasises the established legal principle that a creditor has the right to elect the manner in which payment is to be made. If payment is made without the creditor having elected its method of payment and, if the payment is intercepted, the debtor assumes the risk of such loss. If the debtor effects payment by cheque through the post, it must be satisfied that the creditor has agreed to accept this method of payment. If the creditor does not receive such satisfactory confirmation and if the cheque is intercepted, the debtor assumes the risk of loss of its cheque.
  3. Accordingly, and in order to avoid such exposure, it is suggested that processes should be implemented requiring any creditor to specify its method of payment in writing. If, the specified method of payment is by: –
    • electronic transfer, written instruction to this effect must be received from a responsible person of the creditor, simultaneously providing the creditor’s nominated bank account details;  and
    • cheque, written instruction to this effect must be received from a responsible person of the creditor, simultaneously providing details of the nominated postal address.