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[2016] ZASCA 60
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First National Bank and Another v Scenematic One (Pty) Ltd (20832/14) [2016] ZASCA 60 (14 April 2016)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case No:
20832/14
In the matter
between:
FIRST NATIONAL BANK
(A DIVISION OF
FIRSTRAND BANK
LTD)
FIRST APPELLANT
THOMAS JOHANNES
NAUDE
SECOND APPELLANT
and
SCENEMATIC
ONE (PTY)
LTD
RESPONDENT
Neutral
citation:
First
National Bank v Scenematic One (Pty) Ltd
(20832/2014)
ZASCA 60 (14 April 2016)
Coram:
Navsa ADP, Majiedt, Mbha and Zondi JJA
and Tsoka AJA
Heard:
15 March 2016
Delivered:
14 April 2016
Summary
:
Prescription – application of
ss 11
and
12
(3) of the
Prescription Act 68 of 1969
– claim to recover sum of money
deducted through unauthorised debit order payments – appeals in
respect of the special
pleas of prescription dismissed.
ORDER
On appeal from:
Gauteng Division of the High Court, Pretoria
(Hiemstra AJ sitting as a court of first instance).
The appeal is
dismissed with costs.
JUDGMENT
Mbha JA (Navsa
ADP, Majiedt and Zondi JJA and Tsoka AJA concurring):
[1] This appeal
concerns the correctness of a decision of the Gauteng Division of the
High Court, Pretoria, (Hiemstra AJ), in terms
of which it dismissed
the special pleas of prescription of the first and second appellants,
First National Bank (a division of
First Rand Bank Ltd) and Mr Thomas
Johannes Naude respectively, and held them liable for financial loss
sustained by the respondent.
The appeal is before us with the leave
of the court below.
[2] The litigation
culminating in the present appeal arose as set out hereafter. The
first appellant (FNB) was the respondent’s
banker. The
respondent, Scenematic (Pty) Ltd (Scenematic) is a manufacturing
company that constructs various steel items and components.
To that
end it requires specialist equipment which it purchases using finance
provided by Wesbank, also a division of FirstRand
Bank Limited. At
material times Naude was a director and employee of Scenematic. It is
undisputed that on 22 May 2007 Naude entered
into an instalment sale
agreement (the agreement) in his own name with Wesbank, for the
purchase of a Mitsubishi Pajero motor vehicle.
It is not in dispute
that the actions of Wesbank may be attributed to FNB.
[3] In terms of the
agreement, the vehicle would be financed by Wesbank over a period of
46 months commencing on 2 July 2007 and
ending on 21 May 2011. A
typescript cheque bank account number belonging to Naude was
initially reflected on the agreement. Before
signature of the
agreement, Naude struck out the typescript account number and
replaced it with Scenematic’s bank account
number [6.........]
in manuscript. Thereafter Naude initialled the amendment and then
signed the agreement. The purpose for which
the bank account number
was entered in the agreement was to enable Wesbank to draw the
monthly instalment repayment through debit
orders from Scenematic’s
bank account with FNB. It is necessary to record that in the
agreement, under the heading ‘ERKENNINGS’
which
translated means ‘acknowledgments’, the following
appears:
‘
DEBIETORDER
ek magtig hiermee onherroeplik dat
my
bankrekening
gedebiteer mag word met alle bedrae wat verskuldig is of te eniger
tyd in die toekoms verskuldig mag word ten opsigte
van my
verpligtinge kragtens hierdie ooreenkoms’ (my emphasis.)
The translation is as follows:
‘
DEBIT
ORDER I hereby
irrevocably grant authority that
my
bank account be debited with all amounts that may be owing now or at
any time in the future in respect of my obligations in terms
of this
agreement.’ (my emphasis.)
[4] As a result of
the agreement, Scenematic’s bank account was debited monthly in
the amount of R4 362.23 for the duration
of the agreement. The
total amount debited against Scenematic’s account in that
period was R195 661.94. The debit orders
were reflected in the
monthly bank statements issued by FNB in respect of Scenematic’s
bank account, which were sent to Scenematic
in July 2007 and
subsequent months.
[5] As Scenematic’s
financial year ends on 30 June, the first instalment that was debited
against Scenematic’s account
on 2 July 2007 fell in
Scenematic’s financial year commencing 1 July 2007 and ending
30 June 2008. During the 2008 audit
process, which was carried out
during August 2008, Scenematic’s auditors requested to be
furnished with the substantiating
documentation in respect of the
specific monthly debit order in the amount set out in para 4 above.
At that stage Scenematic had
incurred monthly debit orders, totalling
approximately R150 000. At least seven of those debit orders
related to transactions
entered into with Wesbank for the financing
of specialist equipment. As Scenematic’s staff did not have the
documentation
required by the auditors, they then made numerous
enquiries with Wesbank requesting a copy of the agreement in relation
to the
amount of R4 362.23, but without success. During November
2008 Naude was dismissed after unrelated disciplinary proceedings
were taken against him. However, the monthly instalment for the
vehicle continued to be debited against Scenematic’s bank
account. FNB eventually forwarded a copy of the agreement to
Scenematic in March 2011. It was only then, according to Scenematic,
that Mr William Annandale (Annandale), its managing director, became
aware of the existence of the agreement for the purchase of
the
vehicle which led to the institution of the action in the Gauteng
Division of the High Court, Pretoria. Summons was served
on the
appellants on 19 May 2011.
[6] In its
particulars of claim, Scenematic alleged that FNB, as its banker, had
undertaken tacitly or impliedly that it would perform
its duties
towards Scenematic diligently and without negligence. This
undertaking included that the bank would not debit Scenematic’s
account without proper authority. Scenematic claimed that FNB had
breached this duty in that it had failed to ensure that it obtained
the necessary authority from Scenematic to debit its account.
Furthermore, that FNB failed to take the necessary steps to ensure
that there was authority from Scenematic for a debit order in
relation to the instalment sale agreement referred to above.
[7] With regard to
the claim against Naude, Scenematic alleged that it had no knowledge
of the agreement signed by him and that
it had never authorised
Wesbank or either of the appellants to have the instalments flowing
from the agreement debited to its bank
account with FNB. Scenematic
was emphatic that at the time of the conclusion of the agreement
Naude had fraudulently, with the
intention to deceive Wesbank and/or
Scenematic and/or FNB, misrepresented that he had been authorised by
Scenematic to have its
bank account details (account number
[6.........]) inserted in the agreement as the account to be debited
in relation to payments
due under the agreement. It was alleged
further, apparently in the alternative, that Naude fraudulently
misrepresented that the
account number referred to above was his
personal account and that he was authorising debit orders in relation
to such account.
Scenematic alleged that as a result of Naude’s
fraud it suffered damages in the total amount of the instalments
which had
been debited against its account, namely, the amount of
R195 661.94.
[8] In response to
Scenematic’s claim, FNB raised prescription as a special
defence. FNB’s special plea reads as follows:
‘
1.
The first defendant [FNB] specifically pleads that the plaintiff’s
[Scenematic] claim, alternatively, a portion thereof
prescribed by
virtue of the provisions of
section 11
of the
Prescription Act 69 of
1969
. In the aforesaid regard:
1.1.
the plaintiff paid monthly instalments to the first defendant since
May 2007;
1.2.
the plaintiff claims payment of all instalments paid including the
instalments paid over the period May 2007 to May 2008;
1.3.
a period in excess of three years lapsed in respect of all
instalments paid over the period May 2007 to May 2008, in that the
plaintiff’s summons was only served upon the first defendant
during May 2011;
1.4.
in the premises the plaintiff’s claim for repayment of
instalments over the period May 2007 until May 2008 became
prescribed.’
Thus, FNB confined its plea
of prescription to the period May 2007 to May 2008. In this regard
FNB relied on s 11
(d)
of the Prescription Act 68 of 1969 (the
Act), which provides:
‘
The
periods of prescription of debts shall be the following:
.
. .
(d)
save
where an Act of Parliament provides otherwise, three years in respect
of any other debt.’
[9] Naude too raised a
special plea of prescription, in which he stated:
‘
The
second defendant [Naude] raises a special plea against the
plaintiff’s [Scenematic] claim:
1.
The plaintiff’s claim against the second defendant is based on
fraudulent misrepresentation with the intent to mislead
the plaintiff
allegedly committed on or about the 22
nd
of May 2007, it
resulted in the plaintiff’s alleged damages.
2.
The plaintiff acquired knowledge of the facts from which its claim
arose on or about the 22
nd
of May 2007, alternatively,
with the exercise of reasonable care, ought to have acquired
knowledge of the facts from which its
claim arose more than three
years before the date of service of Summons.
3.
The plaintiff’s summons was only issued on the 9
th
of May 2011 and was served on the second defendant on the 19
th
of May 2011.
4.
In the premises, plaintiff’s claim against the second defendant
has become prescribed in terms of section 11 of Act 68
of 1969.’
In respect of what is set
out in para 2 of the plea, s 12(3) of the Act is being relied upon.
It provides as follows:
‘
(3)
A debt shall not be deemed to be due until the creditor has knowledge
of the identity of the debtor and of the facts from which
the debt
arises: Provided that a creditor shall be deemed to have such
knowledge if he could have acquired it by exercising reasonable
care.’
[10] As can be seen,
Naude pleaded that Scenematic acquired knowledge of the facts from
which its claim arose on or about 22 May
2007 alternatively, that
with the exercise of reasonable care, it ought to have acquired
knowledge of the facts from which its
claim arose, more than three
years before the date of service of the summons.
[11] Hiemstra AJ took
the view that evidence was required to decide the special pleas and
since the evidence regarding prescription
appeared to overlap with
the evidence on the merits ‘all the evidence should be
presented’. The proceedings in the
court below were thus
conducted on that basis and evidence was led by all the parties.
[12] The court below
had regard to the evidence of Annandale that in conducting
Scenematic’s business he was not responsible
for scrutinising
the company’s bank statements and had left that duty to the
bookkeeper. According to him, at material times,
the company had been
in a growth phase and as pointed out earlier, there were several
instalment sale agreements with Wesbank and
other credit providers,
totalling approximately R150 000 per month and that a debit
order of R4 362.23, in respect of
the agreement, hidden amongst
the rest of the debit orders would not necessarily have been an
obvious cause for concern. An assumption
could quite easily have been
made that the debit order was one for specialist equipment for the
business. The court below had regard
to Annandale’s evidence
that at the time that Scenematic’s auditors raised a query in
relation to the debit order of
R4 362.23 and sought source
documents, his daughter, Ms Candice Annandale, who was employed by
Scenematic, requested the information
from Wesbank but failed to
obtain relevant information until March 2011, when Wesbank furnished
the agreement. Annandale’s
evidence in regard to the query by
the auditor was confirmed by Mr van Dyk, the auditor in question and
by his daughter.
[13] In relation to
the merits of Scenematic’s claim, Naude pleaded that as a
director of the respondent he had full signing
powers in relation to
Scenematic’s bank account with FNB and that, in any event,
Annandale on behalf of Scenematic had agreed
to the vehicle
instalments being deducted from Scenematic’s account as part of
a remuneration agreement.
[14] Hiemstra AJ took
into account documentation supplied by Scenematic to FNB which
reflected its list of directors, that included
Naude, which FNB
contended represented to it that he was one of its authorised
directors entitled to act on Scenematic’s
behalf. A
resolution in relation to signing powers on Scenematic’s FNB
account, included Naude as a signatory. That
too was in FNB’s
possession.
[15] It is common
cause that on 24 May 2007 Naude requested of Ms Annandale, that she
supply him with a document confirming his
employment status and
salary. This was required to be presented to Wesbank in relation to
the agreement. The document was duly
supplied.
[16] Annandale
disputed Naude’s testimony that he had authorised the debit
orders in pursuance of a remuneration agreement.
[17] The Wesbank
employee who had represented Wesbank in concluding the agreement, Ms
Vanessa Downing, was not available to testify
and could not be
traced. However, it was unchallenged that on behalf of Wesbank she
had completed a check-list and had ticked a
block indicating
‘Agreement signed by authorised signatory and resolution
attached’. It is undisputed that no resolution
was attached and
that none existed. There is nothing on record to suggest that Ms
Downing verified Naude’s bank details or
that she checked that
he had authority to cause Scenematic’s bank account to be
debited in relation to a personal agreement.
[18] In its judgment
the court below recognised that Scenematic’s claim against FNB
was one for damages for pure economic
loss in consequence of a
negligent act on the latter’s part. Hiemstra AJ recorded that
conduct causing pure economic loss
could only be regarded as wrongful
if public or legal policy considerations required that such conduct
should attract legal liability.
The court below took the view that in
the present case FNB had failed in its duty. Hiemstra AJ was
persuaded that Ms Downing was
negligent by not ascertaining that
there was indeed authorisation by Scenematic, and by not checking the
account number, particularly
since it had been altered in manuscript
form. He reasoned that this should have put her on her guard. The
court below held that
the documentation referred to above, relating
to the signing powers of directors, did not extend to an authority to
burden Scenematic’s
account with his liability.
[19] In rejecting the
evidence of Naude, the court below said the following (para 31):
‘
I
have no hesitation in rejecting the evidence of the second defendant
where it is in conflict with that of Mr Annandale. He was
an evasive
witness who continuously adapted his version under cross-examination.
Apart from the fact that I find him to be a dishonest
witness, his
evidence that the alleged motor vehicle benefit had been part of his
remuneration is completely discredited by the
fact that the
instalments continued to be debited to the plaintiff’s account
long after the termination of his services.
His explanation that he
had had a loan account to his credit and that he thought that the
instalments would be debited to his loan
account was another
invention conjured up during cross-examination.’
[20] In relation to the
question whether Scenematic failed to exercise reasonable care in
checking to see whether the debit orders
were indeed authorised each
time its bank account was debited – a question connected to the
provisions of s 12(3) of the
Act – the following parts of the
judgment of the court below are relevant (paras 17-18):
‘
I
find Mr [Annandale’s] explanation for the failure of his staff
to establish the origin of the debits as soon as they were
reflected
on the bank statements plausible. In the context of the huge amounts
debited to the account monthly, these debits were
relatively
insignificant. Although the plaintiff’s staff may not be
entirely blameless, I cannot find that their failure
to investigate
the debits was so unreasonable that it can be said that the plaintiff
had not exercised reasonable care.
I
am, however, not impressed with the explanations of Mr Annandale and
Ms Annandale for the plaintiff’s failure to find the
cause of
the debits when the auditor requested them to find the source
documents. The efforts of Ms Annandale to establish from
Wesbank the
origin of the debits were half-hearted to say the least. However,
that is irrelevant. The auditor requested the documents
during August
or September 2008. That is the date from which prescription ran. That
is less than three years before summons was
issued.’
Hiemstra AJ concluded
that the plaintiff’s claim had not prescribed.
[21] In light of the
findings of the court below, set out in the preceding paragraphs, it
made the following order:
‘
1.
Both defendants’ special pleas are dismissed with costs;
2.
The first and second defendants are ordered to pay to the plaintiff
the amount of R195 661.94 jointly and severally, the
one paying
the other to be absolved.
3.
The first and second defendants are to pay the plaintiff’s
costs, the one paying the other to be absolved.’
[22] It is against
those orders and the findings referred to above that the present
appeal, with the leave of the court below, is
directed.
[23] In my view, the
essential reasoning of the court below cannot be faulted. Naude was
an unsatisfactory witness and counsel on
his behalf did not contend
otherwise. The finding of fraud perpetrated by Naude is impeccable.
It was submitted on his behalf that
the claim had prescribed on the
basis that the agreement had been concluded during May 2007 and the
summons had been served during
May 2011 and that a claim could only
be sustained on the basis of the conduct of either Naude or FNB in
relation to the conclusion
of the agreement rather than in relation
to each individual debit order. These submissions are fallacious.
There was a fraud perpetrated
by Naude in the conclusion of the
agreement and it continued for the period during which debit orders
were processed against Scenematic’s
account with FNB. Naude was
well aware of the period of the agreement and of his continuing fraud
during that period by permitting
the debit orders to continue when,
to his knowledge, Annandale, and thus Scenematic, was unaware of the
true state of affairs.
Moreover, given the fact that he was a
director and had intimate knowledge of the workings of the company,
Naude must have been
aware that the on-going monthly deductions would
be lost or hidden within the multiplicity of debit orders related to
the purchase
of specialist equipment. In any event, in relation to
prescription the court below correctly held that it only commenced
running
from August or September 2008. The summons was served within
3 years of that date.
[24] It was submitted
on behalf of FNB that
it
was, as much as Scenematic, a victim of Naude’s fraud and it
ought, therefore, not to be held liable for the loss occasioned
to
the latter. That submission too is unsustainable. Wesbank, when faced
with the agreement itself, had obvious cause for concern.
The
manuscript change was suspicious. The account number supplied by
Naude was Scenematic’s account number. Scenematic was
its
corporate client. The agreement was a personal one and on the face of
it unconnected to Scenematic’s business. In the
acknowledgement
referred to in para 3 above, Naude was verifying
his
personal account details and
authorising debit orders in relation thereto. If, however, the
acknowledgment was somehow to be construed
to relate to a corporate
client, a resolution was required which Wesbank did not bother to
obtain.
[25] It was contended
on behalf of FNB that the documents indicating Naude as a director
and the authorisations referred to in para
14 above ought to be
viewed as a representation to Wesbank that Naude was authorised by
Scenematic to conclude the agreement and
consequently authorised the
monthly debit orders. This contention is without merit, both for the
reasons supplied by the court
below and on the basis of what is set
out in the preceding paragraphs.
[26] It was also
submitted on behalf of FNB that Scenematic ought to have been put on
its guard from the time it received the first
bank statement in
June/July 2007 reflecting a debit order in respect of the agreement.
Its failure to detect the deduction, so
it was contended, was not the
exercise of reasonable care. Scenematic had an established
relationship with FNB. It had no reason
to suspect that debit orders
reflected in the bank statement were not justified. As pointed out
earlier, the debit order in relation
to the vehicle, appeared amongst
a number of other debit orders. This was a fact that must have been
known by Naude and was exploited
by him.
[27] Insofar as
Scenematic’s claim against FNB is concerned, it is so that in
considering each case, what must be considered
is whether according
to the circumstances, there was a legal duty to avoid pure economic
loss. It requires the court to exercise
‘a value judgment
embracing all relevant facts and involving considerations of
policy’.
[1]
[28] In the present
case, Scenematic was a client of FNB. Wesbank appears to have
regularly financed the acquisition of specialist
equipment. There can
be no doubt that it must have known or subjectively foresaw that
negligence on its part in relation to the
manner in which it handled
Scenematic’s account would have caused it loss and it could
quite easily have taken practical
measures to prevent the loss from
occurring. It was providing a professional banking service. All these
factors point to liability
being imposed on FNB. In relation to
factors to be taken into account in determining whether liability
should be imposed, see
Law of Delict
at 271-274. The court below was correct in dismissing FNB’s
plea of prescription and also, for the reasons set out above,
in
holding FNB liable.
[29] Naude acted
fraudulently and for the reasons set out above the court below was
correct in dismissing his plea of prescription
and holding him
liable.
[30] The appeal is
dismissed with costs.
________________
B H Mbha
Judge of
Appeal
APPEARANCES:
For First
Appellant:
G H Meyer
Instructed
by:
Rossouws Lesie Inc, Johannesburg
Rossouw & Conradie Inc, Bloemfontein
For Second
Appellant:
D Keet
Instructed
by:
AJ Van Rensberg Inc, Johannesburg
Honey Attorneys, Bloemfontein
For
Respondent:
M M W Van Zyl SC
Instructed
by:
Dawie Beyers Attorneys Inc, Pretoria
Kramer Weihmann & Joubert, Bloemfontein
[1]
See J Neethling
et
al Law of Delict
, 5ed (2006) at
269-270. See also
Indac Electronics
(Pty) Ltd v Volkskas Bank Ltd
[1991] ZASCA 190
;
1992 (1)
SA 783
(A), in respect of the duty of a collecting banker in
relation to the true owner of a cheque.