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[2013] ZAGPJHC 82
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Royal Bafokeng Nation and Others v Absa Bank Ltd and Others (38843/12) [2013] ZAGPJHC 82 (22 February 2013)
IN
SOUTH GAUTENG HIGH COURT
JOHANNESBURG
CASE
NO
:
38843/12
DATE: 22/02/2013
In
the matter between
ROYAL BAFOKENG NATION
& OTHERS
..............................
APPLICANTS
and
ABSA BANK LTD &
OTHERS
....................................................
RESPONDENTS
J U D G M E N T
WILLIS J
:
[1] This is the return day of a so-called
‘
quasi-vindicatory’
claim. My sister Mayat J on 6 December granted an interim order
declaring that moneys held by the second respondent under ‘
Sanlam
Investment Company 5096410
’
at all material times, including at the time of the first
respondent’s purported appropriation thereof is and remains
vested
in the applicants.; that the first respondents shall pay to
the applicants R15 050 000.00, being a sum equal to the sum
purportedly
appropriated by the first respondent from Sanlam
Investment, and interest on the sum of R15 050 000.00 calculated at
15.5 percent
per annum from the date of the purported appropriation,
being 18 November 2011 and that te first respondent shall pay the
applicant’s
cost in the application on an attorney and own
client scale. They also sought an order that a copy of the rule
shall be served
on the first respondent within ten days from the date
of this rule at the first respondent’s chosen address for
service,
namely 7
th
Floor, Group Litigation, Absa Towers, West, 15 Troy Street,
Johannesburg. Reference (Themba Ncubeni).
[2] As I have said, this is the return day of a
‘quasi-vindicatory’ claim. The purists have difficulty
with the concept
of a ‘quasi-vindicatory” claim. I have
some sympathy with that objection. You cannot ‘sort of’
have a
and you cannot have a ‘sort of’ a right. You
either have a right or you do not have it. Be that as it may the
term
has become a part of our legal lexicon and one has to deal with
it as best one can.
[3] The only matter in which I had previously
given a judgment in a quasi-vindicatory
application was the
case of
Joint Stock Co Varvarinskoye
vs Absa Bank Limited
[2008] ZASCA 35
;
2008 (4) SA 287
(SCA). In this matter I was upset on appeal.
Interestingly, shortly after I was upset on appeal, I had the honour
of being entertained
at a luncheon hosted by five very senior counsel
at the Johannesburg Bar, several of whom have international
practices in London,
Europe and in Hong Kong, who happened to say
that I was right and the the Supreme Court of Appeal (‘SCA’)
was wrong.
That might be flattering to one’s ego, but the law
is as pronounced by the SCA..
[4] Perhaps it is precisely by reason of the fact that we have to do
with a quasi-vindicatory claim is that we have much mumbo-jumbo,
hocus-pocus, smoke-and-mirrors – even
abracadabra
before
one. Initially, it was difficult to determine what exactly the
nature of the claim might be. Be that as it may, the facts
are
relatively straight forward. The applicants claim payments of money
which they allege is due to them, by reason of a joint
venture
agreement that they claim existed.
[5] On 1 October 2007 Charize Kailiam Singer Horwitz, Attorneys
invoiced Anglo Platinum Management Services (Pty) Limited with
the
sum of R30 780.00.00. That invoice describes the claim as a long
term rental amount together with associated costs to various
trusts.
Anglo Platinum Management Services (Pty) Limited held a board meeting
on 30 July 2007 and resolved under a heading, ‘Purchase
of land
for Tailingsdam Dam Extension’, that the application for funds
of R30 000.000.00 to acquire land for the Tailingsdam
extension in
respect of the “BRPM joint venture Steeldrift project B and is
hereby approved.”
[6] On 15 November 2007 the sum of R30 780 000.00 was deposited into
the account of Kailiam Kathrada Attorney’s trust account.
Kailiam and Kathrada was the new name of the firm that had previously
been known as Charize Kailiam Singer orwitHorwitzHoHorwitz.
–
i.e. Kailiam Kathrada later became the name under which Charize
Kailiam and Singer Horwitz had previously operated.
[7] On 19 November R30 000.00.00 was transferred by Charize Kailiam
Singer Horwitz to Prudential Portfolio Managers South Africa
(Pty)
Limited (‘Prudential’). Prudential is an A-rated black
economic empowerment company which operates an institutional
asset
management business. It is an authorised Discretionary Financial
Services Provider, duly licenced in terms of Section 8,
read together
with
section 7
of the
Financial Advisory and Intermediary Services
Act, No. 3 of 2002
. On 23 September 2008 these attorneys Kailiam
Kathrada invested the sum of R30 780 000.00 with Sanlam Collective
Investments under
investor code 509641160.
[8] In October 2010 the fourth respondent, one Mpho Anthony Matchila,
applied for an overdraft facility from the first respondent.
He was,
unsurprisingly, asked by the first respondent whether he could put up
security therefor. The said that he could - the security
would be
funds held under Sanlam Collective Investments, the funds in
question. This fact was confirmed by Kailiam Kathrada
[9] On the same day the first respondent and the fourth respondent
agreed upon the terms of an overdraft agreement to be granted
by the
first respondent to the fourth respondent Kailiam and Kathrada, who
are the third respondents in this matter, ceded all
titled and
interest in and to the Sanlam Collective Investment held under
investor code 509641160 to the first respondent. The
first respondent
duly lent a sum of approximately R15 million to the fourth respondent
on overdraft.
[10] Some time later it came to light that things were untoward and
on 8 August 2011 Bowman Gillfillan wrote a letter to the bank
informing it of irregularities that appear to relate to the
transaction in question. The first respondent replied on 3 October
2012. The letter reads as follows:
“The above matter and our e-mail dated 8 August 2011 refer.
The above investment were ceded to us on 3 November 2010 as
security
for an overdraft for R30 million, furnished to M A Machila in the
amount of R15 800.000.00. The bank holds the investment
as security
until such time as the overdraft facility has been paid in full.
This letters serves as notice that we intend to call
up the security
forthwith.”
[11] After an exchange of correspondence within Bowman Gilfillan and
the first respondent following upon correspondence in which
Kailiam
and Kathrada, the third respondent, were also involved. The first
respondent advised on 15 November 2011:
“We confirm that our client, Mr Matchile, has defaulted on the
agreement in that he has fail to repay the facility on the
due date.
We have therefore decided to immediately take steps to realize the
abovementioned investment pledged to us as security.”
[12] It is common cause that the first respondent did in fact call up
the money ceded to it and that this was used in the liquidation
of
the overdraft of the fourth respondent. Interestingly, in this
matter the second, third and fourth respondents have not opposed
the
relief sought.
[13] The first respondent has raised a number of difficulties with
the applicant’s claim. The first is that the right, title
and
interest of the applicants in the funds in question has been broadly
and insufficiently set out. There is decisive merit in
this point.
On the papers before me the right, title and interest in the money
was vested in Anglo Platinum Management Services
(Pty) Limited. It
is certainly not clear on the papers before me that the Royal
Bafokeng Nation or Royal Bafokeng Resources (Pty)
Limited or
Rustenburg Platinum Mines Limited had any interest in these
particular funds.
[14] Even if I am wrong in this regard and even if the application
should not be dismissed on the basis that there is no apparent
right,
title and interest in the funds in question vesting in the
applicants, there is a further difficulty and this is that, quite
clearly, if one has regard to the facts and circumstances, the funds
were not effectively ‘earmarked’ as belonging
to any of
the applicants in question. Here I have regard to the cases of
Standard Bank of South Africa Limited v Echo Petroleum
CC
2012 (5) SA 283
(SCA) at 287G and the case of
Absa Bank
Limited v Intensive Air
(
Pty
)
Limited
and Others
2011 (2) SA 275
(SCA), especially at [22] where it is said.
“Had the thief, however, deposited the stolen money into an
account where it was still identifiable as the fruit of the misdeed
the company would have had a quasi-vindicatory claim to it.”
Certainly in this particular case there is no earmarking of that
particular kind.
[15] I also have had regard to the cases of
First National Bank
of Southern Africa Limited vs Perry
N.O.
a
nd Others
2001 (3) SA 960
(A) at paragraph [18] and
Nissan South Africa
(Pty) Limited v Marnitz N.O. and Others
(
Stand 186 Aeroport
(Pty)
Limited Intervening
)
2005 (1) SA 441
(SCA). Where
Striecher JA, delivering the unanimous judgment of the court said at
pargraph [16]:
“I agree with Thirion J that our law would be deficient if it
did not provide a remedy for recovery of stolen money direct
from the
bank which receive that money to the credit of the thieve’s
account for as long as that money stands to the credit
of the thief.”
[16] “The thief” in this instance would have been either
Machiela, the fourth respondent, or Kailiam and Kathrada Attorneys,
the third respondent, or the two of them acting in concert together.
It is quite clear, on the facts before me, that these funds
do not
stand to the credit of either of these two “thieves”.
There is no money standing to the credit of either Machiela
or
Kathrada and Attorney’s in the account of the first respondent.
This again in my respectful submission, presents the
applicants with
an insuperable difficulty.
[17] There are further difficulties. In the case of
V. S.
Rajah & Co v Fann
1976 (2) SA 351
(D) at 353 - 354 Didcott
J (then a
puisne
judge in the Natal Provincial Division)
referred with approval to the case
De Villiers
N.O.
v
Kaplan
1960 (4) SA 476
(C) at 478 E - 480 A where Van Winsen J
(as he then was) and De Villiers AJ affirmed the principle that
moneys in attorney’s
trust account
quoad
the rest of the
world are the attorneys to deal with it as it wishes. This principle
has been affirmed recently by the SCA in the
case of
Wypkema v
Lubbe
2007 (5) SA 138
(SCA) at paragraph [6]. In the
Wypkema
vs Lubbe
case the SCA a
lso
referred unanimously with approval to the case of
Fuhri
vs
Geyser NO and Another
1979 (1) SA 747
(N) at 749 C - E to what
was said by Hefer J (as he then was). Hefer J also referred with
approval to the judgment of
De Villiers NO vs Kaplin
to which
I have referred earlier.
[18] I respectfully agree with Mr McNally when he submits that is the
end of the matter: The first respondent, ABSA bank, when
it dealt
with the third respondent as attorneys was entitled to accept that
the firm of attorneys was dealing with money at its
disposal. First
respondent could not be put to further enquiry. On this basis alone
the first respondent should succeed.
T
[19] There is a final point that needs to be considered and that was
the point raised by Mr
Wasserman
that an invalid cession
remains invalid and no amount of sophistry, legally or otherwise,
can resurrect to life something that
is invalid
ab
initio
.
The argument by Mr
Wasserman
that there was an invalid
cession, this cession could never been resurrected and, accordingly
therefore, the funds that the first
respondent received should be
refunded to the applicants.
[20] In the case of
Graf v Buechel
2003 (4) SA 378
(SCA) it
was unanimously held that where a right is ceded with the object of
securing a debt the cession is regarded as a pledge
of the rights in
question. The court reaffirmed Millman
NO vs Twiggs and Another
[1995] ZASCA 62
;
1995 (3) SA 674
(A) at 676 H - J and the the cases therein quoted.
No reason, commercial of otherwise, requires in a case such as the
present
that such a cession of all right title and interest in and to
the Sanlam Collective Investment held under investor code 509641160
to the first respondent. should be dealt differently from a pledge of
a movable. The court was dealing with a session
in securitatem
debiti
as we are dealing with in this particular case.
[21] Moreover, if the cession was invalid then the payment of the
funds in question to the first respondent would have been invalid.
On
this basis alone I would have difficulty in seeing how the applicants
could successfully proceed against the first respondent.
They should
have proceeded against the third respondent because the funds should
been treated as not having been ceded and therefore
still under the
third respondent’s its control.
[22] Be that as it may, there is yet another basis on which I have
difficulty with the argument on the ‘invalidity of the
cession’
point. In the case of
Oceana Leasing Services (Pty) Limited v BG
Motors (Pty) Limited
1980 (3) SA 267
(W), Melamet J referring to
the case of
Roos vs Ross & Co
1917 CPD 303
at 306 - 307,
and
Tyre and Motor Supply Company Limited v Leibrandt
1926
CPD 421
at 425 - 426 indicated that the conduct of a party claiming
possession of a movable that was subject to a lien could prevent it
from exercising its vindicatory rights. (See 273C-274A.)
[23] In the present case the applicants acted in an entirely supine
manner for some four years. This must count against them.
In the
case of
Tyre and Motor Supply Company Limited
,
the
court referred to the case of
United Building Society vs
Smookler’s Trustees
and
Galombick’s Trustee
1906
TS 623
at 629. In the case of
United Building Society vs
Smookler’s Trustee
Bristowe J delivered, in my respectful
opinion, a learned exposition of the law. He referred to the
Digest
(50,17, 206). He also referred to what he described as a well-known
decision of the Supreme Court of Holland decided in 1582 cited
as Van
Nieustad en Kooren,
Vonnis 35
, Gail’s
Observati
ë
n
,
book two, obs.12, the Register of Nassau La Leck, p324 register,
Johannes Voet
, 20,1,4 and Kersteman’s
Woordenboek
,
sub voce
Retentie
in coming to the conclusion that a person
who had a quiet possession of a good
bona fide
had a right to
retain possession to avoid it being out of pocket, even against the
true owner thereof.
[23] In the case of
Roos vs Ross
(at p306) the learned judge,
Juta JP makes a distinction between the
jus pignoris
and the
contractus pignoris.
He refers to various actions which might
arise, actions to which he refers as
pignoratitia directa et
contraria
. The gist of this is that, although the owner was not
a party to the pledge, the
bona fide
receiver of goods may
have a right against the world to insist on retention until such time
as the fact that it is out of pocket
as been remedy. On this basis,
although the first respondent could be open to criticism for
proceeding to call up this particular
cession in the discharge of the
debt, it would certainly be entitled to refuse to pay over the money
until such time as its prejudice
had been cured.
[24] In summary therefore, there are the following bases upon which
the application stands to be dismissed
1) The lineage or pedigree of the funds in question is baldly set out
and it is not clear that the applicants had any right at
all in the
funds in question.
2) There is no evidence satisfactory before the court that the funds
in question were ‘earmarked’ as those belonging
to any of
the applicants.
3) The cession by the third respondents as the attorneys Kailiam and
Kathrada is on the basis of clear authority valid as against
(
quoad
)
the world (which will include the first respondent).
4) Even if the cession was invalid, the first respondent would have a
right at common law to insist on retaining its rights that
arise
there from until such time as any prejudice to it had been cured.
5) If this cession was invalid then the payment to the bank would
have been invalid and it would be seem that the claim lies against
the third respondent.
It needs to be emphasised that the first respondent acted
bona
fide
(on the papers before me) and was entirely innocent of any
wrongdoing. It also needs to be emphasised on the facts before me
that
there was nothing to alert the first respondent to the fact that
anything might amiss, that it might have been put on enquiry. The
reason why I am emphasise this is that I fully accept that the first
applicant is, in many respects ,the darling of the financial
press
repeatedly receiving applause for its sensible approach to joint
venture capitalism. I also need to acknowledge that the
status of
the banks has changed somewhat, especially since 2008, and there is
lurking in the minds of many people an attitude of
‘The big,
bad banks’. Against this background it really is important
that the
bona fides
of the first respondent need to be
emphasised.
[25] I also which to emphasise that there is nothing whatsoever to
prevent the applicants proceeding against the other respondents
or
even the first respondent by way of an action. In other words the
judgment that I will give will not be
res judicata
as to the
whole issue of whether or not funds should be paid over to any of the
applicants.
[26] This is an important matter. It is a big case. It involves
complex issues of law. R15 million, even today is a large sum of
money. Both sides had two counsel. The costs of two counsel are
certainly justified.
[27] The following is the order of the court:
1) The rule
nisi
of 6 December 2012 is discharged.
2) The application is dismissed with costs, which costs are to
include the costs of two counsel.
Counsel for the Applicants: Adv J
.D. Wasserman
SC
(Adv. T.
Van der Walt
)
Attorneys for the Applicants: Bowman Gilfillan Inc.
Counsel for the Respondents: Adv P.
McNally
SC
(Adv.
A. Lamplough
)
Attorneys for the Respondents: Edward Nathan Sonnenbergs Inc.