Banco Standard Toita De Moçambique v Corbett Enterprises (Pty) Ltd 1976 (2) SA 196 (N)

In this matter the appellant, Banco Standard Toita de Mozambique, a commercial bank operating in Mozambique, initiated legal proceedings against the respondent, Corbett Enterprises, a South African company based in Durban. The appellant sought provisional sentence on four bills of exchange, which were drawn and signed by a company referred to in the summons as Impescal. Each bill required the respondent to make payment to the appellant at a specified time and amount in Durban.

The legal context of the case was significantly influenced by the Exchange Control Regulations established under Act 9 of 1933, specifically regulation 3(1)(c). This regulation stipulates that no person may make payments to or in favor of a person resident outside the Republic of South Africa without prior permission from the Treasury or an authorised person. In this instance, the appellant's summons did not include any assertion that such permission or exemption had been granted by the Treasury for the payments claimed.

The respondent contested the application for provisional sentence, arguing that the absence of Treasury permission or exemption rendered the appellant's claim invalid. The Local Division upheld this defense, concluding that the appellant was not entitled to claim payment without the necessary Treasury approval, which the court viewed as a statutory condition that had not been fulfilled.

The appellant, however, contended that the bills of exchange were liquid documents, meaning they contained an unconditional acknowledgment of debt. The appellant argued that the requirement for Treasury approval did not affect the liquidity of the claims and that the absence of such an allegation in the summons did not render it fatally defective. The appellant also pointed out that affidavits had been filed indicating that a certain bank in South Africa was authorized to transfer money to the appellant without further reference to the Reserve Bank, suggesting that there was no legal impediment to the payment.

The case raised significant legal questions regarding the interpretation of the Exchange Control Regulations and the implications for the liquidity of claims involving foreign banks. The Local Division's ruling was appealed to the Full Bench of the Provincial Division, where the appellant sought to overturn the decision that had denied provisional sentence based on the absence of Treasury permission. The appeal ultimately focused on whether the regulations imposed a condition that affected the enforceability of the bills of exchange and whether the summons was indeed fatally defective for lack of an allegation regarding Treasury approval.

The ratio decidendi of Banco Standard Toita de Mozambique v. Corbett Enterprises (Pty.) Ltd. centers on the interpretation of the Exchange Control Regulations, specifically regulation 3(1)(c), and its implications for the liquidity of claims based on bills of exchange. The court held that the requirement for Treasury approval or exemption under the regulation does not impose a condition that affects the enforceability of the bills of exchange.

The key legal principles established in the decision include:

The provisions of regulation 3(1)(c) do not create a condition precedent to the existence of a contract to pay; rather, they imply a term related to the timing of payment. This means that the absence of Treasury approval does not negate the debtor's acknowledgment of indebtedness as reflected in the bills of exchange.

The requirement for Treasury approval is not an essential ingredient of the plaintiff's cause of action. Therefore, the summons is not fatally defective for failing to allege that such approval or exemption had been obtained.

The onus rests on the defendant to prove the facts supporting its defense regarding the lack of Treasury approval, and the defendant failed to discharge this burden.

In summary, the court concluded that the claims were liquid and enforceable despite the absence of Treasury approval, thereby allowing the appellant to succeed in its application for provisional sentence.

In its reasoning process, the court referred to several cases, including:

Rhodesian Pulp and Paper Industries Ltd. v. Plastelect (Pty) Ltd 1975 (1) S.A. 955 (W). This case was discussed in relation to whether Treasury permission was a necessary part of a plaintiff's cause of action when claiming damages by a person resident outside the Republic.

McConnell v. SA Stevedores Service Co. (Holdings) (Pty) Ltd (unreported, delivered in the Cape Provincial Division on 29 September 1975). This case was mentioned in the context of the necessity of stating Treasury permission in the particulars of claim.

Rich and Others v. Lagerwey 1974 (4) S.A. 748 (A.D) This case was cited regarding the requirements of liquidity of documents for the purpose of provisional sentence actions.