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[2017] ZAWCHC 139
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Ixocure (Pty) Ltd v Firstrand Bank Ltd (19619/2014) [2017] ZAWCHC 139 (30 November 2017)
THE
REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH
AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No: 19618/2014
Before
the Hon. Mr Justice Bozalek
Hearing: 6 –
9 November 2017
Judgment
Delivered: 30 November 2017
In
the matter between:
IXOCURE
(PTY)
LTD
Plaintiff
and
FIRSTRAND
BANK
LTD
Defendant
JUDGMENT
BOZALEK
J
[1]
The
plaintiff, a construction company, claimed payment of the amount of
R623 645.32 from the defendant bank primarily on the
basis that
the defendant had unlawfully, unilaterally and without the
plaintiff’s authorisation transferred the said amount
out of
the plaintiff’s bank account on 29 July 2014.
[2]
The
defence raised by the defendant was that another of its clients,
Likhanyile Trading Enterprises (Pty) Ltd (‘Likhanyile’),
from whose account the said sum had ostensibly been transferred to
the plaintiff’s account, had instructed it to stop the
transfer
due to a suspected fraud. The transfer was stopped and the amount was
never finally credited to the plaintiff’s
account and therefore
never transferred out of Likhanyile’s account. The defendant
also relied on clause 7.8 of its standard
banking agreement which
provides that:
‘
7.8.
In case of fraud, suspected fraud, or the law compels the bank to do
so, the (bank) reserves the right to freeze or close the
customer’s
account and/or stop a service without notice’.
[3]
In
its replication the plaintiff pleads that in the event of it being
found that the said amount was never credited to and/or transferred
out of its account the defendant was estopped from relying upon such
facts for a number of reasons which I shall canvas later.
Background
[4]
Plaintiff
company was controlled by Mr LJE Lombard (‘Lombard’). It
held a bank account with the defendant as did Lombard
in his personal
capacity. The transactions in question arose out of a business
relationship between the plaintiff/Lombard and Likhanyile
which
during 2013/2014 won a tender from the City of Cape Town (‘the
City’) to perform repairs to the Glencairn seawall.
Likhanyile,
represented by its sole director, Ms Bongiwe Baleni, appointed the
plaintiff as a sub-contractor to take overall charge
of the project.
Plaintiff was entitled to be reimbursed for its services out of
monies paid to Likhanyile by the City as authorised
by certificates
issued by the City engineer from time to time. Since the plaintiff
was using its own funds in the short term to
complete the project,
Lombard insisted that he be appointed as a signatory to Likhanyile’s
bank account with the defendant
and this was duly effected on or
about 19 December 2013.
[5]
On
behalf of Likhanyile Ms Baleni also granted Lombard the right and the
ability to operate its account electronically and this
he did from
time to time reimbursing the plaintiff for monies he had spent on the
project against monies released or paid out by
the City.
[6]
The
present dispute relates to the last occasion on which Lombard
accessed the Likhanyile’s account on 28 July 2014 when he
transferred or sought to transfer the sum of R623 645.32 to the
plaintiff’s account. Having apparently achieved this
he then
transferred the sum of R620 000.00 from the plaintiff’s
account to his personal account.
[7]
The
following day it came to Lombard’s attention that although his
personal account had been credited with the sum of R620 000.00
the plaintiff’s account now registered a debit of some
R615 000.00 and showed no trace of the transfer to it of the
sum
of R623 645.32 from Likhanyile’s account.
The
evidence
[8]
On
behalf of the plaintiff Lombard gave evidence in accordance with the
background set out above save for denying that the sum in
dispute was
not received into the plaintiff’s account. He emphasised that
the only ‘
security’
which he had arising out of his agreement with Likhanyile was his
status as a signatory to its account and his ability to operate
the
account electronically. He confirmed that between December 2013 when
he was appointed as a signatory and July 2014 when the
disputed
transactions took place he received no notification from anyone that
he was no longer a signatory to Likhanyile’s
account. On 23 May
2014 he had transferred monies out of Likhanyile’s account,
this being the last occasion he had done so
prior to the transactions
on 28 July 2014. He testified that just prior to these transaction he
noted on 28 July another payment
had been received from Likhanyile
from the City. This, I interpolate, proved to be incorrect since the
payment he was referring
to, R3.9mil, was received from the City of
Ekurhuleni and this is apparent from the bank statement. Seeing this
payment, he transferred
the sum of R623 645.32, this being an
amount which he calculated was owing to the plaintiff by Likhanyile
arising out of the
work it had done on the Glencairn project.
Immediately thereafter he had transferred R620 000.00 from the
plaintiff’s
account to his personal account since the monies he
used on the project were his personal funds. He testified that when
he logged
on to FNB’s online platform and went to his profile
it indicated that he could operate various accounts, namely, the
plaintiff’s,
his personal account and Likhanyile’s.
[9]
The
following day, when he logged on again, he found that the plaintiff’s
account had been debited with R620 000.00,
putting the account
into debit to the extent of some R615 000.00 despite the fact
the he had no overdraft facility. He immediately
called an official
of the defendant and was told that he had no authority to transfer
monies out of Likhanyile’s account
and that he had been removed
as a signatory with effect from 23 May 2014. This he was told in
response to his enquiries at the
defendant’s Sea Point branch.
Subsequently he transferred the credit of R620 000.00 in his
personal account back to
the plaintiff’s bank account in order
to bring it out of overdraft. He did this because he had no option
but to do so and
it was also necessary in order to ‘
unfreeze’
the plaintiff’s account and his personal account. The nett
result was that he was back in the position he had been in before
he
had performed the banking transactions on the night of 28 July 2014.
[10]
Under
cross-examination he agreed that the terms of the agreement between
the plaintiff and Likhanyile were that the latter would
repay him for
expenses incurred on the Glencairn project as and when income was
received from the City on that project. Various
statements relating
to the plaintiff’s account were put up as exhibits and dealt
with by Lombard. The first was an online
banking transaction history
dated 29 July 2014 which reflected an internet transfer from
Likhanyile to the plaintiff’s
account in the amount claimed and
preceded by a transfer from the plaintiff’s account to
Lombard’s personal account
in the amount of R620 000.00.
Significantly, neither of these transactions show an ensuing balance,
only the figure zero.
The second statement was the plaintiff’s
for the period 11 July to 11 August 2014. It reflects a transfer to
Lombard’s
personal account of R620 000.00 on 29 July and a
transfer back to the plaintiff’s account of the same sum on the
following
day 30 July. That statement reflects no transfer into the
account of the sum of R623 000.00. Lombard also conceded that
six
payments had been made by the City in respect of the Glencairn
project and that he had drawn against all six payments. He conceded
that no seventh payment had been made by the City and the plaintiff’s
claim for R623 000.00 had not been matched or
covered by any
corresponding payment from the City. He insisted, however, that he
was entitled to withdraw the sum claimed because
of the plaintiff’s
exposure to the project and an agreement with Likhanyile that he
could withdraw from its account at any
time if there were funds
therein, in order to keep the project going.
[11]
In
answer to the Court’s question Lombard confirmed that he was
never a director of Likhanyile and that to the extent that
he was
appointed as a signatory of Likhanyile he could be removed as one.
After the disputed transactions he had terminated his
relationship
with Likhanyile because it was in breach of their agreement. He had
been advised by his legal representative to sue
the bank as opposed
to Likhanyile.
[12]
Lombard
testified that his essential complaint was that the bank should have
advised him that he was no longer a signatory after
he was removed in
which event he would have limited his financial exposure to
Likhanyile. He added also that he had been removed
as a signatory he
should not have been able to operate Likhanyile’s account
electronically.
[13]
The
defendant called three witnesses, namely, Ms Baleni, Ms Jeanette
Buda, an employee at the defendant’s Hyde Park branch
who dealt
with Likhanyile’s account, and Ms Karen Botha, the head of the
defendant’s Digital business channel.
[14]
Ms
Baleni confirmed the business agreement between Likhanyile and the
plaintiff but explained that she had in fact appointed the
latter as
a subcontractor after Likhanyile had won the tender. This was
because, being based in Johannesburg, she could not devote
herself to
the Glencairn project. Likhanyile had three accounts with the
defendant, and she arranged with it that she would use
the particular
account involved in this matter for the Cape Town tender and that she
would appoint Lombard as a signatory. On 23
May 2014 she had called
the defendant’s Hyde Park branch and, by signing a form, had
removed Lombard as a signatory from
the account. The reason for this
was that the project had been terminated by the City even though it
was incomplete and notwithstanding
Likhanyile’s application for
its extension.
[15]
There
had been six payments by the City during the term of the contract
pursuant to six certificates issues by the City’s
engineer. The
plaintiff had claimed against all the certificates. Since no seventh
certificate could or would have been issued
by the City and
accordingly no payment made, she had removed Lombard as a signatory
so that he could no longer draw monies from
Likhanyile’s
account. She had not been able to notify him that she had removed him
as a signatory because he had refused
to take her calls and the
business relationship had effectively ended.
[16]
On
29 July 2014 she noticed an sms on her phone advising her of a
withdrawal or transfer from Likhanyile’s account in the
amount
R623 645.32 at the instance of plaintiff. She had immediately
gone to the defendant’s Hyde Park branch and spoken
to Ms Buda
advising that the transfer had been made without authorisation. She
was asked whether this was fraud and when she replied
in the
affirmative the defendant undertook to put a hold on Likhanyile’s
accounts subject to her laying a charge of fraud
and supplying the
defendant with a case number. This she duly did that day. She pointed
out that the funds which had become available
in Likhanyile’s
account i.e. R3.9mil, and from which the transfer had been made by
the plaintiff, was a payment by the City
of Ekurhuleni in relation to
a completely different contract. Neither plaintiff nor Lombard had
any right to effect transfers or
settle claims against monies in
Likhanyile’s account emanating from contracts other than the
Glencairn contract. As far as
she was concerned the transfer of
R623 645.32 by the plaintiff was fraudulent in that the
plaintiff had no claims to those
monies. Baleni testified further
that she received minimal monies arising from the Glencairn project
and in fact had incurred a
loss of R1mil.
[17]
Ms
Buda, an employee of the defendant for some 20 years and a team
leader at its Hyde Park branch, confirmed Ms Baleni’s account
of how Likhanyile’s account came to be frozen on 29 July 2014.
She had taken the necessary action after Ms Baleni had complained
that an unauthorised transfer had been effected on the account and
she, the witness, had consulted a manager. She confirmed that
she had
been the bank employee who attended on Ms Baleni on 23 May 2014 when
the latter had removed Lombard as a signatory. Ms
Baleni had
explained that she had had a contract in Cape Town which had come to
an end and she was now the only person who should
operate
Likhanyile’s account. After so doing Ms Buda updated
Likhanyile’s account electronically indicating that there
was
only one signatory. As a matter of protocol the defendant did not
inform signatories who were being removed as such of this
fact except
in the case of directors. In the present instant Ms Baleni was the
only director of the company. Furthermore, a director
is not removed
as a signatory until such time as the bank receives CIPC
documentation to the effect that such person is no longer
a director.
She had only become aware of Mr Lombard when he called the branch
after the disputed transaction. Ms Buda also had
no prior knowledge
that Lombard was a secondary electronic user of the account. That
information is not reflected on the account
and in normal
circumstances would only be known to the person operating the
account, in this case Ms Baleni. As a bank official
she herself would
not be able to remove a secondary user, however, but would be able to
advise the operator of the account how
this should be done. To do so
does not involve visiting the bank or interacting with the officials
since the account operator can
do that in private and online.
Contradictorily, she testified that had she been aware that Lombard
was a secondary user she would
have notified Online Banking to remove
him as such. Ms Buda testified that the transfer of R623 645.32
from Likhanyile to
the plaintiff had not been completed since the
hard-hold which she put on the account as result of the complaint of
fraud had prevented
this.
[18]
Ms
Botes testified that she had been employed by the defendant for 35
years and was in charge of its business internet banking system.
She
confirmed that account operators/holders can utilise online banking
through their username and password, a process which is
initiated by
a pin number known only to the client. An option available to clients
was to set up a secondary user of an account
which involves allowing
another party to operate the account electronically. This can only be
permitted or effected by the person
who initially operates the
account using their username and password and going through the
appropriate process as a change to the
standard settings. The bank
played no role in this process which involves filling in fields and
the primary user giving the secondary
user a username and password.
The bank cannot and does not do this on behalf of the primary user.
Just as the primary user would
be responsible for registering a
secondary user, he or she would be responsible for removing a
secondary user. Referring to a letter
from the defendant’s Sea
Point branch dated 19 December 2013 Ms Botes testified that it served
no more than to confirm that
at that point in time Likhanyile had two
authorised signatories i.e. Ms Baleni and Mr Lombard. That letter
confirmed Lombard’s
authority to operate the account in what
she termed ‘
the
physical world’
i.e. drawing cheques, arranging debit orders, making deposits. The
authority did not extend to operating the account electronically
i.e.
by way of the online banking system. She testified that the bank’s
duty was to take directions from the account holder
as to who the
signatories were at any given time and that the bank’s duties
did not extend to notifying a person whose signatory
authority was
removed that he/she was no longer a signatory. This was deemed to be
the responsibility of the account holder.
[19]
Shown
the relevant banking transaction history, the witness confirmed that
it showed transactions which had been processed at a
certain point in
time and that if the document was printed the following day it might
show a different sequence of transacting.
She distinguished between
the bank’s real-time processing of transactions and batch
processing which happens at different
times of the day in relations
to transactions which were effected after 8 o’clock at night
and before 6pm the following day.
She likened the transaction history
to a provisional statement and testified that the first two
transactions reflected there i.e.
the transfer from Likhanyile to the
plaintiff and the transfer from it to Lombard’s personal
account were in a state of memory
or memo-posting, the result being
that the balances were not updated and would only be updated once
full batch processing had taken
place. That batch processing would
take place between approximately 5:45am the following day and
midnight. Ms Botes testified that
the transfer from Likhanyile to the
plaintiff had not been finally completed, the transaction history
indicating no more than that
funds had been made available in good
faith and could be used subject to them successfully passing through
the normal cycle of
processing. This had not been completed in the
case of the transfer from Likhanyile because a so-called hard-hold
had been placed
on Likhanyile’s account pursuant to the
complaint of fraud made the following day by the account operator, Ms
Baleni.
[20]
Ms
Botha testified that the ultimate failure to reflect the transfer of
R623 645.32 into the plaintiff’s account was
not a
reversal of a transaction, but a case of the transferred funds
meeting a barrier by reason of the hard-hold and being redirected
into a suspense account before making their way back into
Likhanyile’s account. By contrast the plaintiff’s and
Lombard’s
banking transactions were not inhibited because there
had been no fraud report by the plaintiff account holder so the
transfer
from the plaintiff to Lombard’s personal account had
been permitted with the result that the plaintiff’s account had
gone into substantial debit even though there was no overdraft
facility. This would have resulted in him receiving a phone call
from
his branch manager, pursuant to which Lombard had given permission
for the R620 000.00 to be transferred back from his
personal
account to the plaintiff’s account. She confirmed that a
secondary user profile could be created only by the primary
user and
not by the bank, and similarly, a secondary user could be removed
only by the primary user. Ms Botha further confirmed
that if Ms Buda
had gone into Likhanyile’s account on the bank system she would
not have been able to see that there was
a secondary user. She
conceded that it would be good banking practice, when a customer
called to remove a signatory, to advise
the customer that if the
signatory was a secondary user they should be removed as such. As far
as the entry in the plaintiff’s
account reflecting it as having
a debit of R620 000 at some point Ms Botes explained that since
the anticipated transfer from
Likhanyile had failed to materialise
the plaintiff had been recorded as having gone into overdraft.
Discussion
[21]
In
Nedbank
Ltd v Pestana
[1]
the Court had to deal with a mistaken transfer of funds where the
bank had unilaterally reversed the transfer. Griesel AJA, in
discussing the legal position stated that,
‘
It
is well established that, in general, entries in a bank’s books
constitute prima facie evidence of the transaction so recorded.
This
does not mean, however, that in a particular case one is precluded
from looking behind such entries to discover what the true
state of
affairs is.’
[2]
[22]
Discussing
instances where a credit might validly be reversed by a bank Griesel
AJA referred to a dictum by Zulman JA in
Standard
Bank of
South
Africa Ltd v Oneanate Investments (Pty) Ltd (in Liquidation)
[3]
to
the following effect,
‘
(I)f
a customer deposits a cheque into its bank account, the bank would
upon receiving the deposit pass a credit entry to that customer's
account. If it is established that the drawer's signature has been
forged it cannot be suggested that the bank would be precluded
from
reversing the credit entry previously made. So, too, if a customer
deposits bank notes into its account the bank would similarly
pass a
credit entry in respect thereof. If it subsequently transpires that
the bank notes were forgeries it can again not be successfully
contended that the bank would be precluded from reversing the credit
entry.’
[23]
Griesel
AJA went on to state:
‘
Further
examples where credit may be validly reversed, include cases where a
cheque has been deposited into a client’s account
and the
resultant credit entry is treated as provisional (or conditional),
subject to a hold period in terms of “standard
banking
practice”; or where the client came by the money by way of
fraud or theft; or where a wrong account was erroneously
credited.
Absent
some
legitimate reason for reversal, however, the general principle is
that once an amount has been
validly
transferred by A to the
credit of B’s bank account, the credit belongs to B and the
bank has to keep it at B’s disposal;
it cannot simply
re-transfer the money back into the account of A without the
concurrence of B.’
[24]
On
the evidence placed before the Court the transfer from Likhanyile to
the plaintiff fell squarely within the above quoted dicta
of the
Zulman JA and Griesel AJA. The evidence of Botes, a senior bank
official with extensive knowledge of its online banking
system, was
that the credit entry into the plaintiff’s account was treated
as provisional (or conditional) in terms of standard
banking process.
This was as a result of the fact that the transaction was initiated
after 8pm at night on the online banking system.
The evidence was
further that before this credit entry could be made final
Likhanyile’s director had alleged that the transfer
was
fraudulent and succeeded in having a hold placed on her account,
which had eventually led to the transfer not being completed
or
finally credited to the plaintiff’s account. This is borne out
by both banking documents relating to this transaction,
namely the
transaction history reflecting the contemporaneous record of these
transactions on 29 July and the final statement relating
to the
plaintiff’s account over the relevant period. In the first
document the provisional nature of the transfer is evidenced
by the
fact that the balance after both the transfer in and out of the
plaintiff’s account is reflected as nought and, in
the second
document there is no evidence of the transfer of R623 645.32.
[25]
It
follows that the principle established or confirmed in
Nedbank
Ltd v Pestana
,
namely that in general a bank may not reverse a credit to a client’s
account without the latter’s authority does not
apply, and the
result is that the plaintiff’s claim cannot succeed on the
first leg of its case.
[26]
This
leaves the alternative basis upon which it sought relief, namely the
defence first raised in the plaintiff’s replication
that, in
the event that the said amount was never transferred out of
Likhanyile’s account into the plaintiff’s account,
the
defendant was estopped from relying on such fact for various reasons.
The
law relating to estoppel
[27]
The
following appears as a general statement of the doctrine of estoppel
by representation in LAWSA at para 652:
‘…
the
doctrine as applied in the courts of South Africa may be said to
amount to the following: namely, that where a person (the
representor) has by his or her words or conduct made a representation
to another person (the representee) and the latter, believing
their
representation to be true, acted thereon and would suffer prejudice
if the representor were permitted to deny the truth of
the
representation made by him or her, the representator may be estopped,
that is precluded, from denying the truth of the representation.
This
statement is subject to the qualification that in certain cases
estoppel will arise only if there was fault, that is, dolus
or culpa,
on the part of the representor when he or she made the representation
on which the plea of estoppel is based.
…
it
is a rule of substantive law, and its function is to provide a
defence to a claim or to counter a defence to a claim. It has
to be
pleaded and proved by the party who raises it. It is not a cause of
action and cannot found a claim, but it can, in an indirect
way, be
defeating a defence to a claim, operate to secure the enforcement of
a claim.’
[28]
In
my view the plaintiff is not entitled to invoke estoppel in support
of its claim since, for the reasons furnished, that claim
has no
substance at all and to allow the plaintiff to invoke estoppel would
be permitting it to use the doctrine as a sword and
not merely as a
shield. However, even if I am incorrect in this conclusion, there are
several other reasons why the claim based
on estoppel cannot succeed.
[29]
As
pleaded by the plaintiff the representations it relied on were:
1.
to
Lombard that, at all material times, he was an authorised user of
Likhanyile’s bank account;
2.
on
28 July 2014 when Lombard accessed the Likhanyile account on
defendant’s online banking system, that he was a duly
authorised
user of that account;
3.
that
the plaintiff had been credited that night with the amount of
R632 645.32.
[30]
Dealing
with the first of these representations. Lombard testified of two
ways which the defendant alleged represented that he was
an
authorised user of Likhanyile’s bank account. The first was the
letter dated 19 December 2013 issued by the Sea Point
branch of the
defendant confirming that Lombard was one of two signatories to
Likhanyile’s bank account held at Hyde Park.
However, a reading
of this letter, addressed to ‘
To
whom it may concern’
confirms the evidence of Ms Botes to the effect that it represented
no more than on that particular day Lombard was an authorised
signatory of the account. It was not a representation to anyone,
including Lombard, that he would be retained as the signatory
on that
account indefinitely or even beyond 19 December 2013. In the result
no reliance can be properly placed on this letter by
Lombard as a
representation extending beyond 19 December 2013.
[31]
The
second representation relied upon by Lombard was, if I understood the
plaintiffs’ case, was that when he accessed the
defendant’s
online banking system, with specific regard to his ‘
profile’,
it represented, up until 28 July 2014 at least, that he was an
authorised user of Likhanyile’s bank account. The first
difficulty
as regards this representation is the uncontroverted
evidence by the defendant’s witnesses that only a customer i.e.
the
account holder or its authorised representative, in this case Ms
Baleni, could permit a secondary user who would then be able to
operate the account electronically. Ms Baleni did initially alter the
settings on the account to permit Lombard to act as an authorised
secondary user of the account in the electronic format but the bank
had no authority to effect such an arrangement and, at all
material
times, was unaware that Lombard was a secondary user. In these
circumstances, in my view, any representation so made was
that of Ms
Baleni or Likhanyile, not that of the defendant. The only role played
by the defendant was to set up its online banking
system in such a
way that a secondary user authorised by the account holder or its
representative would reflect as such on the
defendant’s online
banking system until this was revoked by the account holder or its
representative. In my view this falls
short of a representation on
the part of the bank.
[32]
The
remaining representations relied upon by the plaintiff are those
contained in paras 2.2, 2.3, 2.4, 2.6 and 2.7 of its replication.
These all relate either to the events of 28 or 29 July 2014 or to the
final statement of the plaintiff’s account which was
obtained
on 4 August 2014. I deal firstly with those representations allegedly
made on or about 28 of 29 July 2014. These are that,
when he accessed
Likhanyile’s bank account, he was a duly authorised user; that
the sum of R632 645.32 had been transferred
to the plaintiff’s
bank account and thereafter that a further transfer of R620 000.00
from plaintiff’s bank account
to his personal account had been
effected as well as the recordings of one or both these transactions
on the transactional history
which he printed off the online banking
system that night and on the final statement which he received on or
about 4 August 2014.
I have already dealt with the alleged
representation that Lombard was an authorised user of Likhanyile’s
account, making
the point that this ‘
representation’
was made at the instance of Baleni or Likhanyile and not by the bank.
As regards as the various provisional indications of the
transfer
from Likhanyile to the plaintiff’s bank account and then
onwards to Lombard’s personal account, as I have
already
indicated, the plaintiff cannot use the doctrine of estoppel to trump
the non-binding effect of a provisional credit which
is not finalised
for good reason. The same reasoning applies both to the
representations said to be made in terms of the transactional
history
and the final statement issued by the bank relating to the
plaintiff’s account on or about 4 August 2014.
[33]
Regarding
the other elements necessary for estoppel to operate, I accept that
up until 28 or 29 July 2014, prior to Lombard being
advised of the
circumstances under which a hard-hold had been placed on the account,
he was under the bona fide belief that he
was an authorised signatory
and that the transfers which he purported to effect had been made, at
least provisionally. However,
the representee must also show that,
believing the representation to be true, he acted thereon and would
suffer prejudice if the
representor were permitted to deny its truth.
[34]
Insofar
as the representations were made between on or between 28 or 29 July
and 4 August 2014 there is nothing to suspect that
the plaintiff
suffered any prejudice as a result. There was no evidence from
Lombard that after the aborted transaction he had
continued to
advance or expend monies on behalf of Likhanyile. In fact his
evidence was that after previously successfully operating
Likhanyile’s account against certificate No 6 the plaintiff was
left with an outstanding balance of R200 000.00 which
increased
over the ensuing months to the amount which is now claimed. The only
representation which could have effected this amount
was the
indication on the defendant’s banking platform that Lombard
remained an authorised secondary user of Likhanyile’s
account.
As I have already indicated, that representation was in truth made by
Likhanyile and/or Baleni and cannot be attributed
to the defendant.
In any event, there is no evidence from Lombard that he utilised the
online platform to access Likhanyile’s
account between 23 May
2014, when he was removed as a signatory by Baleni and when he
claimed certain monies against certificate
No 6 and 28 July 2014 when
he sought to perform the abortive transactions.
[35]
Finally,
it is incumbent upon the plaintiff in the circumstances of the
present matter to prove that he had a valid claim to payment
by
Likhanyile of the amount which the plaintiff now claims. This was
denied by Baleni, acting on behalf of Likhanyile, who testified
that
the plaintiff received all monies which were due to it under the
subcontractor’s agreement it held with Likhanyile.
The question
of the validity of the plaintiff’s claim is not an issue in the
present matter and can certainly not be determined
on the evidence
before the court. It is thus doubtful that the plaintiff has been
able to establish the prejudice required for
a successful invocation
of the doctrine of estoppel even bearing in mind that this concept
has a ‘
wide
connotation, not permitting a precise definition’
.
In this regard it must be borne in mind that the function or purpose
of estoppel is to prevent prejudice or loss arising, and
what a
person invoking estoppel is required to prove is, therefore that
there will be prejudice if the estoppel raised by the person
is
denied. I see no sign of any such prejudice.
[36]
Finally,
there must be a causal connection between the representation and the
representee acting to his/her prejudice otherwise
known as the
proximate cause test. Here the Court must enquire as to whether
representation was ‘
the
proximate’
or the ‘
real
and direct’
cause of such persons having acted to his/her prejudice. I return now
to the balance of the defence of estoppel raised by the plaintiff
which was that based on these representations it was induced, to its
detriment, to:
‘
1.
provide loan finance to Likhanyile Trading Enterprises (Pty) Ltd
which loan has not been repaid and which otherwise would not
have
been provided;
2. allow
alternatively fail to prevent\, that defendant from reducing the
plaintiff’s bank account with the amount of R623 645.32.’
[37]
The
second allegation makes no sense and can be disregarded. I have, to
some extent, already dealt with the first allegation regarding
the
plaintiff’s provision of loan finance. At best for the
plaintiff it expended monies on the project against the security
of
knowing that it was an authorised signatory/secondary user of
Likhanyile’s account. As I have indicated, however, the
representation was not made by the bank. Secondly, there is credible
evidence that pursuant to the subcontractor agreement between
Likhanyile and the plaintiff the latter was not entitled to any
further monies under the agreement by virtue of a certificate 7
never
having been authorised by the City and no further payments being made
to Likhanyile on that tender.
[38]
In
the circumstances for all these reasons I consider that the
plaintiff’s claim has no merit and it is accordingly dismissed
with costs.
____________________
BOZALEK
J
For
the Plaintiff
: Adv M Basson
As
Instructed by
: Johan
Victor Attorneys
For
the Defendant
: Adv L Dzai
As
Instructed by
: Glover
Kannieappan Inc
c/o
Cliffe Dekker Hofmeyr
[1]
2009 (2) SA
189 (SCA).
[2]
Para 8.
[3]
[1997] ZASCA 94
;
1998 (1) SA
811
(SCA).