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[2015] ZAGPJHC 207
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D A Ungaro & Sons (Pty) Limited v Absa Bank Limited (20063/2003) [2015] ZAGPJHC 207; [2015] 4 All SA 783 (GJ) (7 September 2015)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
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REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
CASE
NO: 20063/2003
In
the matter between:
D
A UNGARO & SONS (PTY)
LIMITED
Plaintiff
and
ABSA
BANK
LIMITED
Defendant
SUMMARY
Banking
law – savings bank account – relationship between banker
and customer – duties of bank towards customer
–
negligence and breach of agreement in regard to opening of account
and operation thereof – bank customer (company)
instructing its
manager to open savings account – bank subsequently allowing
company manager to make transfers and/or withdrawals
from account
without the requisite authorisation from company – company
suffering loss – bank held liable – no
countering
evidence from bank.
J
U D G M E N T
MOSHIDI,
J
:
[1] This matter has a chequered, long, and old history. The
plaintiff has instituted action against the defendant based on
alleged negligence, and the breach of an agreement relating to the
plaintiff’s bank account held at the defendant during
July
2000, as more specified below. The account in question is
called an Active Save Savings’ Account (“
the
account
”). As the action was heavily contested over
an extended and truncated period, including plaintiff’s
application
to amend its particulars of claim, it is necessary to
refer in some detail to the pleadings, where necessary. The starting
point
is paras 3 to 7 of the particulars of claim framed in the
following terms:
“
3.
3.1
In
or about July 2000 and at the defendant’s branch in Northcliff,
Johannesburg, the Plaintiff (represented by Mr K S Huang)
and the
Defendant (represented by an official whose name is not known to the
Plaintiff) entered into an agreement in terms whereof
the Defendant
permitted the Plaintiff to operate an active savings account under
account number [....].
3.2
The
agreement was orally concluded,
alternatively
,
in writing. The Plaintiff alleges that such writing consists of
standard forms used by the Defendant for the opening of such account,
in accordance with Defendant’s usual banking practice. The
Plaintiff is not in possession of any such documents.
3.3
Alternatively
to paragraphs 3.1 and 3.2 above:-
3.3.1
The
Plaintiff and the Defendant concluded a tacit agreement between them
at Northcliff, Johannesburg, in terms whereof the Defendant
permitted
the Plaintiff to operate an Active Savings Account under Account
Number [....];
3.3.2
The
tacit agreement arose under the following circumstances:
3.3.2.1
During
July 2000 and at the Defendant’s Northcliff Branch, the
Defendant, represented by an employee, opened an Active Save
Account
under Account No. [....] (‘the Actives Save Account) in the
name of the Plaintiff;
3.3.2.2
The
Plaintiff’s Financial Manager, Mr K S Huang, (‘Huang’)
opened the Active Save Account;
3.3.2.3
By
opening the Active Save Account, the Defendant regarded the Plaintiff
as its customer;
3.3.2.4
Pursuant
to the opening of the Active Save account, inter alia:
3.3.2.4.1 Funds of the Plaintiff were
deposited and transferred in the Active Save account; and
3.3.2.4.2 Cheques drawn in favour of the
Plaintiff were deposited into the Active Save account;
3.3.2.4.3
The
Defendant produced Active Save Account bank statements in the name of
the Plaintiff;
3.3.2.5 Conducted
itself and the Active Save Account on the basis that it was the
Plaintiff’s banker
and that a debtor/creditor relationship
existed between the parties in respect of the Active Save Account.
In this regard,
and without limiting the generality of the
aforegoing:
3.3.2.5.1
The
Defendant permitted funds out of the Active Save Account to be
withdrawn and/or transferred to other bank accounts in the name
of
the Plaintiff held with the Defendant (although these other bank
accounts were fraudulent).
3.3.2.5.2
The
Defendant insisted that in order for the Plaintiff to close the
Active Save account, the Plaintiff was required to provide the
Defendant with written documents proving that the account could be
closed.
3.3.2.5.3
The
Defendant was only willing to make payment to the Plaintiff of the
balance outstanding on the Active Save account provided that
the
Plaintiff accepted the said balance in full and final settlement of
all claims that the Plaintiff had against the Defendant.
3.3.2.5.4
Save
for the pleadings in this action, at no time did the Defendant
dispute an agreement in respect of the Active Save account,
nor did
the Defendant allege or inform the Plaintiff that it did not conclude
an agreement with it in respect of the Active Save
Account.
4.
4.1 In terms of
the agreement the Defendant agreed:
4.1.1
to
accept payments and deposits made by the Plaintiff or on its behalf
into the account;
4.1.2
to
make payments out of the account only on instructions duly authorized
by the Plaintiff in writing;
4.1.3
to
pay any amount standing to the credit of the Plaintiff in the account
to the Plaintiff on demand;
4.1.4
it
would not act negligently in dealing with and handling the account.
4.2
It
was also agreed that the Defendant would be entitled to debit the
account with its usual or banking charges as and when they
fell due.
5.
Shortly after the conclusion of the agreement the account was opened
and operated
by the Plaintiff.
6.
6.1 In breach of
its obligation under the agreement the Defendant debited the account
with various
sums of money which were not authorized by the
Plaintiff. Details of these unauthorized debits appear from a
schedule annexed hereto
marked ‘A’.
6.2 As appears
from the Schedule, the total of such unauthorized debits amounts to
the sum of R11
680 928,74. The Plaintiff has recovered R9million of
the unauthorized debits and has accordingly suffered a loss of R2 680
928,74..
6.3
In
the alternative to paragraphs 6.1 and 6.2 above:-
6.3.1
On
the instructions of Mr K S Huang, the Defendant debited the account
with various sums of money, the details of which appear from
the
schedule, annexure ‘A’ hereto;
6.3.2
The
Defendant breached the agreement in that it acted negligently in
dealing with and handling the account. The Defendant was negligent
in
one or more or all of the following respects:
6.3.2.1
…
6.3.2.2
The
Defendant failed to ascertain that Mr K S Huang was not authorized to
instruct the Defendant to make payments out of the account;
6.3.2.3
The
Defendant failed to take all reasonable steps to ensure that payments
out of the account were only authorized by the Plaintiff.
6.3.3
The
Plaintiff did not receive any benefit arising from the debits on the
account, nor did the Plaintiff authorize the debits.
6.3.4
As
a consequence of the Defendant’s conduct and breach of the
agreement, the Plaintiff suffered a loss in the sum of R2 680
928,74
being the amount as set out in the Schedule, less R9 million
recovered by the Plaintiff.
6.3.5
Had
the Defendant acted without negligence and not breached the
agreement, the Plaintiff would not have suffered the loss.
6.3.6
The
loss of the Plaintiff detailed above was contemplated by the parties
as foreseeable at the time of conclusion of the agreement.
7.
In the premises the
Defendant is liable to pay to the Plaintiff the aforesaid sum,
alternatively
,
the Plaintiff has suffered damages in the said sum which, despite
demand, the Defendant has failed to pay.
WHEREFORE THE PLAINTIFF CLAIMS:
1.
Payment
of the sum of R2 680 928,74;
2.
Interest
on the aforesaid sum at the rate of 15,5% per annum calculated from 1
June 2001 to date of payment;
3.
Costs
of suit;
4.
Further
or alternative relief.
”
[3]
Annexure “A” to the particulars of claim detailed the
unauthorised withdrawals out of the account of the plaintiff,
as
follows:
“
1.
24 July 2000
250 000,00
2. 1
November 2000
400 000,00
3.
18 November 2000
100 000,00
4.
13 December 2000
130 928,74
5.
23 March 2001
400 000,00
6. 6
April 2001
100 000,00
7. 8
May 2000
40 000,00
8.
11 May 2001
60 000,00
9.
17 May 2001
100 000,00
10. 22 May 2001
32 000,00
11. 25 May 2001
40 000,00
12. 30 May 2001
28 000,00
13.
30 October
2000
10 000 000,00
TOTAL
11 680 928,74
”
___________
THE
DEFENDANT’S PLEA
[4] In the amended plea, the defendant pleaded,
inter alia
,
as follows:
“
3.
AD
PARAGRAPH 3
3.1 During July
2000 and at the defendant’s Northcliff branch the defendant,
represented by
duly authorised employees including, inter alia, Ms
Judie Lourens, opened an Active Savings account under account number
[....]
(‘the account’) in the name of D A Ungaro &
Sons (Pty) Ltd.
3.2 It is
admitted that Mr K S Huang opened the aforesaid account.
3.3 At the time
of the opening of the account the defendant’s standard form
entitled ‘Application
to Open a Savings/Investment Account’
was completed, and a true copy thereof is attached hereto as Annex
‘B’.
3.4 At the time
of the opening of the account Huang represented to the defendant:-
3.4.1 That he personally had an existing
account with the defendant under account number [....];
3.4.2 That he was entitled to act on
behalf of D A Ungaro & Sons (Pty) Ltd in entering into the
agreement to open the
account in the latter’s name;
3.4.3 That a full and correct disclosure of all relevant
information relative to the account, including the identity of the
person or persons who could lawfully operate on and withdraw or
transfer funds from the account, was made on Annex ‘B’.
3.5 Save as
aforesaid, each and every allegation contained in this paragraph is
denied as if specifically
traversed.
3(
bis
)
The allegations herein contained are denied.
The defendant specifically denies that any
tacit agreement was concluded.
The Defendant pleads that an express agreement
was concluded containing the express terms set out in Annexure ‘B’
to
the plea.
The Defendant pleads further that the agreement
was concluded during July 2000 prior to any of the alleged events set
out in paragraph
3.3.2.4 and as a consequence these alleged events
could never have formed part of the surrounding circumstances at the
time of
the conclusion of the agreement.
Save as aforesaid, the allegations herein contained are denied.
4.
AD
PARAGRAPH 4
Each and every allegation contained in this paragraph is denied as
if specifically traversed.
5.
AD
PARAGRAPH 5
Each and every allegation contained in this
paragraph is denied as if specifically traversed.
6.
AD
PARAGRAPH 6
6.1
The
defendant admits having debited items 1 to 4 and items 8 to 15 of
Schedule ‘A’ to the account.
6.2
The
said debits were effected on the instructions of Huang.
6.3
The
defendant admits that the schedule totals to an amount of R2 680
928.74.
6.4
The
defendant specifically denies that items 5, 6 and 7 were debited to
the account in issue.
6.5
In
the premises the defendant pleads that the total of the aforesaid
admitted debit entries amount to R1 680 928.74.
6.6
Save
as aforesaid, each and every allegation contained in this paragraph
is denied as if specifically traversed.
7.
ALTERNATIVELY
to paragraphs 3, 4, 5 and 6 and only in the event of it being found
that the contents of these paragraphs have been
proved by the
plaintiff, the defendant pleads that:-
7.1
Huang
was the agent of the plaintiff in opening the account;
7.2
Huang
alternatively
the
plaintiff represented to the defendant:-
7.2.1
That
Huang was authorised by the plaintiff to open the account;
7.2.2
that
Huang would impart full and correct information relative to the
account, including the identity of the person or persons who
could
lawfully operate on and withdraw or transfer funds from the account
on behalf of the plaintiff;
7.2.3
that
Huang was authorised to give instructions relating to the operation
of and withdrawal or transfer of funds from the account.
7.3
Huang
opened the account and operated thereon by effecting deposits for the
credit of the account and by giving instructions for
the withdrawal
or transfer of funds from the account;
7.4
The
defendant accepted the correctness of the facts as represented by
Huang or the plaintiff and acted to its detriment by:-
7.4.1
accepting
Huang as the plaintiff’s agent to open the account;
7.4.2
accepting
that Huang had imparted full and correct information as aforesaid;
7.4.3
accepting
Huang as the plaintiff’s agent to give instructions as to how
the account should be operated as aforesaid.
7.5
The
plaintiff acted negligently:-
7.5.1
in
clothing Huang with authority to partly operate on the account;
7.5.2
failing
to advise the defendant that Huang’s authority to operate on
the account did not extent to the effecting of withdrawals
and/or
transfers;
7.5.3
by
failing to provide the defendant with a mandate specifying the
identity of the person who had been authorised to operate on the
account.
7.6
In
the premises the plaintiff:-
7.6.1
is
bound by the aforesaid representations and actions of Huang; and
7.6.2
is
estopped from denying that the withdrawals and/or transfers
underlying the debit entries in issue were not authorised by the
plaintiff.
7.
AD
PARAGRAPH 7
Each and every allegation contained in this
paragraph is denied as if specifically traversed.
WHEREFORE the defendant prays for:-
1.
Judgment
in its favour;
2.
Costs
of suit;
3.
Further
and/or alternative relief.
”
[5]
Annexure ‘B’ referred to in paragraph 3.3 of the
defendant’s plea, is the defendant’s “
application
to open a Savings/Investment Account
”
form which gave rise to the savings account in question. It is
common cause that the application form was completed
and signed by
the plaintiff’s financial manager, Mr K S C Huang (“
Huang
”)
the person referred to in the pleadings, at the defendant’s
Northcliff branch on 6 July 2000. The application
was made on
behalf of the plaintiff on instructions mentioned later below.
The application was also signed, and apparently
completed by the
defendant’s Relationship Manageress, Ms Judy Lourens (“
Judy
”),
referred to in the pleadings above. A new account number, i.e.
[….], was allocated in the name of the plaintiff.
It is
significant that next to the question, “
Do
you have any existing accounts with Absa Bank in the same name
?”,
the relevant block was ticked “
Yes
”.
In addition, in the follow up question, “
If
‘Yes’, please quote the account number
”
,
and the account number i.e. [....],
being the personal account of Huang, was inserted. The address of the
plaintiff was given as
487 Gelding Avenue, Ruimsig which is Huang’s
address. Huang became the Financial Manager of the plaintiff
from about
October 1992. The plaintiff was in the tyre
business, including wheel alignment and balancing. Prior to the
opening of the
Account under discussion, the plaintiff was offered by
the defendant a rate of 10,45% per annum on a R15 million
investment.
Huang turned out to be the fraudster in this
matter. As a consequence, Huang was under criminal
investigation by the police
at the time of the trial. All of
the above were common cause at the trial. However, there will
be more to say about
the application form, annexure “B”,
later.
[6]
As stated before, the trial was truncated and postponed at least
twice when it was set down. This, in between long periods.
There were several reasons responsible for this. These included
that, estimates provided for the duration of a civil trial
in this
high court, are often unpredictable and unreliable; by the nature of
the plaintiff’s claim, it sought to rely partly
on the evidence
of witnesses who were either, in the employ of the defendant, or had
since become unavailable for a variety of
reasons; the change of
legal representatives involved; the absence of the defendant’s
procedure manuals for the period 2000
to about 2003 in regard to the
account in question; the plaintiff’s application to amend its
particulars of claim brought
during the trial, which was opposed
strenuously, and had to be heard later when this court was in the
opposed motion court; part-heard
civil trials in this high court are
notorious for taking long (at that stage) for re-enrolment; the
defendant’s initial contention
that it never entered into an
agreement with the plaintiff when the account in question was opened;
and finally, that the court
was on long leave during the second term.
[7]
Be that as it may, the trial was set down before me for 27 August
2007 and became part-heard on 30 August 2007. At that stage
the
plaintiff was represented by Mr Maselle and the defendant by Mr
Cochrane. The parties agreed to postpone the matter
sine
die
on the basis that certain
documentation in the possession of the defendant, excluding the
defendant’s procedure manuals for
the period 2000 and 2001, had
come to light belatedly. This, after lengthy addresses,
including interlocutory applications,
such as the separation of
issues in terms of Rule 33(4), and after the plaintiff had led the
evidence of certain witnesses as discussed
immediately below.
THE
PLAINTIFF’S WITNESSES
[8]
On 28 August 2007, Ms Nancy Sheila Wright (“
Wright
”),
was the plaintiff’s first witness. Wright was apparently
subpoenaed by the plaintiff, as became evident in
her testimony.
At the time of her evidence, she had been employed by the defendant
from about 1998. She was a branch
manageress at defendant’s
Rivonia branch. She was not involved in the opening of accounts
such as the one under discussion.
Wright’s evidence
plainly was not helpful at all. She was not cross-examined.
Mr Yassim Hendricks (“
Hendricks
”)
testified.
[9]
He testified on two separate occasions. At the time of his
initial evidence, and also subpoenaed by the plaintiff to testify,
he
was a branch manager of the defendant with some 10 years’
service. In that time, he worked in different departments
of
the bank. He was also involved in the opening of savings accounts,
but only in 2003. On the hotly debated and controversial
matter
of the defendant’s procedural manuals, Hendricks said that the
defendant indeed had procedural manuals in respect
of an Active Save
Account for the period 2000 to 2001. In a rather evasive
manner, Hendricks said that he had never, either
dealt with a company
account or opened a company account as such. The evidence of
Hendricks, confirming the existence of
the procedural manuals at the
time of the opening of the account in question, swiftly prompted
counsel for the plaintiff to seek
better compliance with a previously
served notice in terms of Rule 35(3). In response to the latter
rule request, the defendant
had responded that it did not have such
procedure manuals. The plaintiff’s counsel also argued
that, in its Rule 36(9)(b)
notice, the defendant indicated that, its
expert witness, Ms Ethel Weppenaar, would testify on
inter
alia
,
the standard banking procedures and practices in general and in
particular in the conduct of savings accounts such as the Active
Save
Savings Accounts from time to time, including such procedures and
practices during 2000.
[1]
[10]
When Hendricks re-entered the court room and the witness stand, he
was asked a few hypothetical questions. These included that,
if an
account was in the name of an individual customer, would the
defendant allow the individual’s brother to transact and
withdraw out of such account. The answer was that it all
depended on whether or not the brother had authority to transact
on
the account. The other question was whether if an individual
approached the defendant and alleged that they are the client
of the
defendant, how would the defendant check the veracity of such
allegation, Hendricks answered that, “
by
means of an identification book, and if they did not have an
identification book, the defendant would request a signature
verification
on the account …
”.
However, “
the
defendant would first try and establish where the person’s
identification is and why that person does not have their
identification with them
”.
[2]
[11]
In regard specifically to the procedures the defendant had in place
for ascertaining who was entitled to operate on an Active
Savings
Account, Hendricks said that, “
the
accountholder would transact on the account, unless he provides power
of attorney to someone else
”.
[3]
When asked if he knew Huang was only a manager at the plaintiff and
Huang phoned him to transfer money from plaintiff’s
account
into his (Huang’s) account, what would the witness do,
Hendricks again gave a similar reply, namely it depended on
whether
or not Huang had signing instructions on the account. In reply
to the defendant’s counsel’s question
whether it was
permissible for one individual to have an account, and for another
individual to sign on the account, Hendricks
said that if the
non-accountholder had a power of attorney over the account, then they
would be able to operate on the account.
[4]
[12]
At the resumption of the trial on 5 September 2011, Mr Giovanni
Ungaro (“
Ungaro
”),
one of the two directors of the plaintiff testified. I must at
the outset mention that his evidence was in large
measure
corroborated by plaintiff’s bookkeeper, Ms Vivienne Longley
Taylor (“
Taylor
”).
The other director was his brother, Mr Temasso Ungaro. Ungaro
said Huang was first employed by the plaintiff
as financial manager
from October 1992. One Ms Felicia van der Berg and Taylor
worked under Huang.
[13]
It is significant that Ungaro testified that prior to 2000, Huang
never opened banking accounts on behalf of the plaintiff.
Ungaro identified the account forming the subject-matter of this case
as the plaintiff’s account held at the defendant.
In July
2000, Ungaro instructed Huang to open an investment account (“
the
account
”) for plaintiff at the
defendant. The opening of the account was motivated by the fact
that the defendant offered plaintiff
a reasonable interest rate on
plaintiff’s investments. Huang brought the forms which
were completed by the directors
of plaintiff, i.e. Ungaro and his
brother, Temasso Ungaro. This was so, according to Ungaro,
since Huang had no signing powers
and there was no company resolution
empowering him to sign on behalf of plaintiff.
[14]
Ungaro said that after the account was opened, he arranged for monies
to be transferred electronically from Santam direct into
the new
account. In total an amount of about R15 million was deposited
into the account. Ungaro was later alerted by
plaintiff’s
auditors to the irregularities in the account. He subsequently
discovered that the defendant had been transacting
internal transfers
without plaintiff’s knowledge and authorisation. Some of
the transactions had seemingly been performed
telephonically and
included cash withdrawals. Ungaro immediately closed the
account. The defendant paid to the plaintiff
the balance
remaining in the account, leaving a shortfall of R2 680 928,74, the
subject-matter of the claim in the present action.
The matter
was reported to the South African Police Service. Although Huang had
authority to open the account under discussion,
he had no authority
to make withdrawals or transfers in respect of the account.
Neither did he have such authority in respect
of the plaintiff’s
bank accounts.
[15]
In cross-examination, Ungaro testified that he could not have given
Huang the plaintiff’s certificate of incorporation
and
certificate of change of name to take to the defendant when opening
the account, as Huang was in possession of the safe keys.
The
defendant had copies of these documents. The evidence during
cross-examination also showed that the defendant had not
loaded
signatories on its computer system in respect of the account.
[16]
Taylor testified that she commenced employment with the plaintiff in
1994. As mentioned before, her evidence corroborated
Ungaro in
all material respects. It is truly unnecessary to repeat in full all
her evidence. She investigated the relevant transactions,
compiled a
reconciliation and prepared a schedule which formed part of the court
bundle.
[5]
Her evidence covered each of the unauthorised withdrawals, which
included cheques, transfers and cash withdrawals, which
occurred out
of the account of the plaintiff. In short, the investigation
and reconciliation conducted by Taylor revealed
the following
pattern:
16.1
On
24 July 2000, an internal transfer of R250 000,00 was made to Huang’s
personal account, the form thereof having been signed
by Huang and
authorised by Judy of the defendant;
16.2
On
30 October 2000, a cheque payment of R10 million was made to account
number [....], which account was not authorised by the plaintiff;
16.3
On
1 November 2000, an internal transfer of funds (R400 000,00) was made
to Huang’s personal account. The transfer was
once more
authorised by Judy of the defendant. The reference in the
transaction to Huang being ‘
accountholder
’,
was incorrect;
16.4
On
18 November 2000, an internal transfer of R100 000,00 was made from
the account to Huang’s personal account, under almost
similar
circumstances like in paragraph 16.3 above;
16.5
On
13 December 2000, an internal transfer of R130 928,74 was made to
Huang’s personal account;
16.6
Between
the period 22 March 2001 to 30 May 2001, various transfers were made
into the account of Huang, equalling approximately
R800 000,00.
Some of the transfers in the form of cheques, and cash withdrawals,
were authorised by various staff members
of the defendant, such as E
Wepener (“
Wepener
”)
and Z Alpord (“
Alpord
”),
or unidentified staff members. In some cases, the transfer
forms were unsigned or the bank’s authorising officials
were
not identified, and by telephone request or at the request of ‘
the
client
’.
[17]
During the evidence of Taylor, and up to the stage when she was
supposed to be cross-examined, there were various objections
raised
to her evidence by Mr Theron who substituted defendant’s
previous counsel, Mr Cochrane. The objections related mainly
to her
evidence relating to other bank accounts which she investigated,
other than the account in question. It was contended that
the
evidence was irrelevant since those accounts were not pleaded.
It was also argued, surprisingly too, that the plaintiff
was obliged
to allege and prove the agreement and the terms thereof in respect of
those accounts. The other accounts, referred
to were opened with
plaintiff’s authority. The evidence of Taylor, so the
objection continued, was conflating the accounts,
and there was no
negligence or
nexus
in respect of the other accounts and the account in question.
The various objections, repeatedly made, but opposed, were
dismissed
by the court. The court was repeatedly asked to give full
reasons for the rulings made. At that stage I was of
the firm view
that the investigation of the account in question and other accounts,
especially Huang’s account, were matters
which were
inextricably interwoven in the circumstances of this matter. My
view has not changed in the interim. The
objections, like the
objection to the plaintiff’s application to amend its
particulars of claim brought during the trial,
were without merit, to
say the least. The matter was then postponed
sine
die
in September 2011 in order for the
court to hear argument on the opposed application to amend, as
mentioned previously. In April
2012, I handed down a written judgment
on the amendment and in which, I found in favour of the plaintiff.
The reasons for
dismissing the objections form part of the judgment
as dealt with more fully later below.
[18]
When the trial resumed in February 2015, Taylor continued with
evidence-in-chief briefly. She confirmed that the total
amount
of the unauthorised withdrawals from the plaintiff’s account
was the sum of R11 680 928,74, of which the plaintiff
subsequently
recovered the sum of R9 million, leaving a balance of R2 680 928,74,
as claimed in the amended particulars of claim.
Taylor advanced
credible basis and motivation for her calculations based on the
investigations and reconciliation. There
was plainly no reason
to doubt her evidence, which was in any way not rebutted at all.
[19]
Taylor was cross-examined. She confirmed that Huang was authorised to
open the account under discussion, which was variously
and loosely
referred to as ‘
the investment
account
’ in evidence. She could
not remember whether she was present when plaintiff instructed Huang
to open the account since this
occurred some 13 years ago.
Huang dealt with management accounts. She did not know what documents
Huang took along when he
opened the account as she was not with him.
She conceded that Huang had a personal Absa banking account at the
same branch
as plaintiff. Staff members of the plaintiff, including
Huang, were allowed to make deposits into the account. The
cross-examination
did not at all detract Taylor’s core version,
as corroborated by Ungaro.
[20]
The final witness for the plaintiff was Mr Ronald Gordon Wills
(“
Wills
”).
He was previously employed by Standard Bank for a period of about 49
years. He was called by the plaintiff
to furnish expert
evidence. There was no objection to this. He was also
cross-examined closely. In the light
of the view I take in the
matter, and in the absence of any countering evidence from the
defendant, a summary of his evidence only
sufficed: in his
opinion, the opening of an Active Save Account by the defendant for
the plaintiff was unusual since the
plaintiff was a company. A
personal identification number (pin) and/or a card is essential for
all transactions.
[21] Wills opined that, in the circumstances of this case, the
defendant’s employees should have acquired all the relevant
company documents to ensure that the customer was in fact the
plaintiff, and that Huang had the requisite authority to operate
on
the account by withdrawals or otherwise. This did not happen.
[22]
Wills further expressed the opinion that when Huang alleged to the
defendant’s officials that he owned the plaintiff,
the
defendant failed to undertake a search to ascertain if the allegation
was correct. The plaintiff’s records clearly
showed that
Huang was only a manager of the plaintiff, and had a proper check
been carried out, which was a reasonable thing to
do, a warning
signal would have occurred, and the defendant would not have allowed
Huang to operate on the account. Interestingly,
Wills emphasised that
Judy was not the only defendant employee who was involved in the
transactions in question which depleted
the funds in plaintiff’s
account. There were other employees of the defendant involved
in the transactions. These
included Wepener, Alpord and A van
der Merwe. These employees knew that there was no specimen
signature which they should
have checked to ensure if Huang was
authorised to withdraw from the account.
[23]
For the above reasons, and others as articulated in his evidence, and
written report, Wills concluded, and reliably so, too,
that, on the
facts of this matter, there was an obligation on the defendant to
obtain written authority on each occasion from the
plaintiff when the
account was operated by any person. Further that, the defendant
failed to ascertain that Huang was factually
not authorised by the
plaintiff to make withdrawals out of the account, and more
importantly, that the defendant failed to take
all reasonable steps
to ensure that the payments out of the account were only authorised
by the plaintiff. More about the
evidence of Wills later.
The cross-examination of Wills remained consistent and he was adamant
that even though it was suggested
to him that he was not an expert he
remained confident and reliable in his opinion. At the close of
the plaintiff’s
case, the defendant closed its case without
leading any evidence.
[24]
From the facts of the matter, there were at least three issues for
determination. These were:
24.1
Whether
the opening of the account on behalf of the plaintiff resulted in the
conclusion of an agreement between the plaintiff and
the defendant;
and if it is so;
24.2
Whether
it was a term of the agreement, express or tacit, that the defendant
agreed to make payments out of the plaintiff’s
account number
[….] (the account), only on the instructions authorised by the
plaintiff; and/or;
24.3
Whether
the defendant and its officials acted negligently in dealing with and
handling the account. There were other peripheral
issues.
THE
RELATIONSHIP BETWEEN BANKER AND CLIENT
[25]
The first issue mentioned above is capable of disposal with relative
ease in favour of the plaintiff. There is no doubt
that the
relationship between a banker and its client is based on a mandate.
In
Giulio
v First National Bank of South Africa
,
[6]
the Court said:
“
In the well-known case of London Joint
Stock Bank Ltd v MacMillan and Arthur
[1918] AC 777
(HL) Lord Finlay
LC said the following in his speech (at 789):
‘
The
relationship between banker and customer is that of debtor and
creditor, with a superadded obligation on the part of the banker
to
honour the customer’s cheques if the account is in credit.
A cheque drawn by a customer is in point of law a mandate
to the
banker to pay the amount according to the tenor of the cheque.’
That the underlying agreement between bank and
client is one of mandate, has been unequivocally accepted in South
African law, as
appears from the dictum of Grosskop J in Volkskas Bpk
v Johnson
1979 (4) SA 775
(C) at 777H-778A:
‘
Die
verhouding tussen bankier en kliënt behels dat die bankier sy
kliënt se opdrag om te betaal, soos uitgedruk in ‘n
tjek,
moet uitvoer – indien hy dit doen, is hy geregtig om die kliënt
se rekening te debiteer met die bedrag van die
tjek.’
”
At
para [18] of the judgment, the Court went on to say:
“
In his leading judgment on banking law,
as reported in Standard Bank of SA Ltd v Oneanate Investments (Pty)
Ltd
1995 (4) SA 510
(C) Selikowitz J, with reference to South African
and foreign legal authorities, stated thus (at 530G-H):
‘
The
law treats the relationship between banker and customer as a
contractual one. The reciprocal rights and duties included
in
the contract are to a great extent based upon custom and usage.
Although historically the original objective of a depositor
was to
ensure the safekeeping of his money, over time jurists have
considered characterising and explaining the basic relationship
as
one of depositum, mutuum or agency. All of these approaches
have on analysis proved to be inadequate. It is now
accepted
that the basic, albeit not sole, relationship between banker and
customer in respect of a current account is one of debtor
and
creditor.’
”
See
also Malan on
Bills
of Exchange
,
Cheques
and Promissory Notes;
[7]
and
LAWSA
where it is stated that:
“
The
relationship between a bank and its customer is contractual in
nature, with authority for the view that the relationship is
that of
debtor and creditor, that is a contract sui generis or a contract of
mandate.
”
[8]
[26]
Based on the above legal principles, the contentions of the defendant
throughout the trial, and until 2015, that there was
no agreement in
opening the account, and that the plaintiff first had to allege and
prove such agreement, and the terms thereof,
were without merit at
all. In my view, the defendant in adopting such an attitude, was
unnecessarily obstructionist and dilatory.
The defendant went
out of its way to place all and every impediment in the way of the
plaintiff to present its case. For
it was only in 2015, when
the defendant admitted by way of an amendment to its plea that the
parties indeed entered into an agreement
in terms of annexure “B”
to the defendant’s plea. This, after a request for further
particulars was made, and
only when the further particulars were
furnished, was the defendant prepared to admit the express terms as
set out in annexure
“B” to its plea. It is well to
recall that annexure “B” is the defendant’s
document, i.e. the
application to open a savings/investment account
referred to in para [5] of this judgment.
[27]
In addition, in spite of the fact that the terms of annexure “B”
plainly do not deal with any aspect as to who
was authorised to
withdraw on the account (except for a card and pin number), the
defendant proceeded to plead in further particulars
as follows that:
27.1
“
It
was an express
alternatively
implied
alternatively
tacit
term of the agreement in terms of which the account was operated
that, Huang was entitled to operate on and withdraw or transfer
funds
from the account and that Huang was entitled to instruct the
defendant to effect debits to the account.
”
[9]
27.2
Again that
,
“
in
accordance with the terms and conditions of the agreement in terms of
which the account was opened signature cards were not required
in
respect of an account such as the nature of the account
”.
[10]
[28]
From the above, and once more, the defendant’s assertions with
respect to the terms of the conceded agreement were readily,
not only
baseless, contradictory, but also untenable in the extreme.
This was more so in the absence of any evidence from
the defendant to
prove that signature cards were not required. Neither was there any
evidence led in order to prove who precisely
could withdraw on the
account. I am indeed further fortified in my above finding by
the following: in February 2015,
the parties held a pre-trial
conference whereat the defendant agreed to several portions of Will’s
report. The admissions
included that, Huang withdrew the
amounts therein contained except for certain insignificant
references; that the defendant
opened the account for the
plaintiff and allocated account number [….] to the account;
that the defendant, represented
by Judy, used the defendant’s
standard opening form for savings/investment account; that when Huang
applied to open the account
for the plaintiff, he did so, on behalf
of the plaintiff on the terms and conditions set out by the defendant
in the account opening
form; and finally, that for the purposes of
opening the account, the defendant received from Huang the
plaintiff’s certificate
of incorporation as well as change of
name certificate.
[11]
On the contrary, the plaintiff has proved, on a balance of
probabilities, that an agreement had been concluded between it
and
the defendant on 6 July 2000.
WHAT
WERE THE TERMS OF THE AGREEMENT
?
[29]
I deal with the second issue for determination in this trial.
That is whether it was a term of the agreement between
the parties
that the defendant agreed to only make payments and transfers out of
the account on instructions by the plaintiff.
In
Alfred
McAlpine & Son (Pty) Ltd v Transvaal Provincial
Administration
,
[12]
the appellant was the plaintiff and the respondent the defendant in
the court
a
quo
.
The parties entered into a contract in terms whereof plaintiff
undertook to build a portion of a national road. Certain
declaratory orders were applied for on behalf of the plaintiff.
During the execution of the contract, the contractor had received
instructions to introduce an exceptionally large number of
alterations which in certain cases had caused disruption. The
plaintiff
alleged that, although each alteration had fallen within
the scope of the contract, the cumulative effect of all the
alterations
was of such a nature that the original contract had
lapsed and a new contract had arisen impliedly through the conduct of
the parties,
in terms whereof the plaintiff was entitled to
reasonable remuneration for all the work done i.e. from the
commencement of the
execution of the contract. The Court
a
quo
had held that the alterations had been envisaged in the original
contract. At p 531D-H, Corbett JA said:
“
In legal parlance the expression
‘implied term’ is an ambiguous one in that it is often
used, without discrimination,
to denote two, possibly three, distinct
concepts. In the first place, it is used to describe an
unexpressed provision of
the contract which the law imports therein,
generally as a matter of course, without reference to the actual
intention of the parties.
The intention of the parties is not
totally ignored. Such a term is not normally implied if it is
in conflict with the express
provisions of the contract. On the
other hand, it does not originate in the contractual consensus:
it is imposed by
the law from without. Indeed, terms are often
implied by law in cases where it is by no means clear that the
parties would
have agreed to incorporate them in their contract.
Ready examples of such terms implied by law are to be found in the
law of sale,
e.g. the seller’s implied guarantee or warranty
against defects; in the law of lease the similar implied
undertakings
by the lessor as to quiet enjoyment and absence of
defects; and in the law of negotiable instruments the engagements of
drawer,
acceptor and endorser, as imported by secs. 52 and 53 of the
Bills of Exchange Act, 34 of 1964. Such implied terms may derive from
the common law, trade usage or custom, or from statute. In a
sense ‘implied term’ is, in this context, a misnomer
in
that in content it simply represents a legal duty (giving rise to a
correlative right) imposed by law, unless excluded by the
parties, in
the case of certain classes of contracts. It is a naturalium of
the contract in question.
”
See
also
Tolgaz
Southern Africa v Solgas (Pty) Ltd and Another; Easigas (Pty) Ltd v
Solgas (Pty) Ltd and Another.
[13]
[30]
On the facts of this matter, the plaintiff clearly relies on events
which occurred after the opening of the account on 6 July
2000.
However, from the nature of the claim, the actual act of the opening
of the account itself remains interlink.
As argued by the
plaintiff, there is nothing for a banking official, upon considering
the form to determine whether Huang, the
fraudster, had authority to
confirm that he had no authority to withdraw from the account since
his name is not on the form.
It is plain that when each of the
defendant’s employees (and there were several of them) attended
to the unauthorised withdrawals,
they were mindless whether Huang
could in fact withdraw or transfer. The defendant should not
have allowed any withdrawals
or transfers out of the account without
the requisite signature of an authorised person of the plaintiff.
This the defendant did
not do. On the basis of the legal
principles set out above, it was clearly an implied term of the
agreement between the parties,
by the nature of things, that the
defendant agreed to only make payments and transfers out of the
account on specific instructions
by the plaintiff. The credible
evidence presented by the plaintiff proved convincingly that the
defendant failed in its obligations
and breached the agreement.
THE
NEGLIGENCE OF THE DEFENDANT
[31]
I deal with the question whether the defendant and its officials
involved acted negligently. This question has already
been
resolved partly in the preceding paragraph of the judgment.
Significantly, the defendant, in para 7.5 of its plea, pleaded
that
it was the plaintiff that acted negligently on certain alleged
grounds.
[14]
The fact that the defendant opened an account on behalf of the
plaintiff styled a savings/investment account, should in my
view, not
affect the bank’s duty of care and responsibility towards its
client. There is plainly no reason not to accept
that the
account was to be operated on the same basis as an ordinary cheque or
current account. The appeal in
Barclays
Bank DCO v Straw
,
[15]
concerned the issue of negligence of the appellant (bank) in
circumstances where its client, the respondent, had issued a cheque
payable to cash or bearer. When the cheque was presented to the
respondent bank, the amount thereon had been increased substantially
by the payee. The bank or its cashiers paid out the increased
amount over the counter. The respondent sued the bank
on the
basis of negligence. The Court
a
quo
found in favour of the respondent, the client. The bank
appealed the decision. In finally dismissing the appeal, the
Court said:
“
According to … This plea
incorporated the defence of estoppel by negligence (on the part of
the client) …
The onus still lay on the defendant to
prove that the negligence of the plaintiff had been the causa causans
of the loss.
(See London Stock Bank v MacMillan and Arthur,
1918 A.C. 777
at pp. 827 and 828, and Cowen Law of Negotiable
Instruments, 3
rd
ed. at pp. 349 and 350.
)
Although
estoppel by negligence has been expressly recognised as a defence in
our Courts in cases such as the present (see Standard
Bank of South
Africa Limited v Kaplan,
1922 CPD 214
at p. 222), … the
question to be resolved remains the same, viz. to determine whose
negligence was the causa causans of
the loss, and the onus of
establishing the defence clearly rests on the defendant.
”
(my insertions)
In
the present matter, the defendant pleaded both the issue of
negligence and estoppel on the part of the plaintiff, without leading
any evidence. Clearly these defences were misplaced. (
Cf
Strydom NO v Absa Bank Bpk,
[16]
on which reliance was incorrectly, in my view, placed by Mr Theron on
behalf of the defendant.)
[32]
Indeed, in
McCarthy
v Absa Bank Ltd,
[17]
the Court dealt with the terms pleaded by the plaintiff in regard to
the agreement between the parties, and whether the bank had
acted
negligently. In upholding the appeal, the Court at para [16]
said:
“
Given the terms in which the question
was framed that finding by the court below cannot be faulted.
An agreement between a
bank and its customer for the operation of a
cheque account is an agreement of mandate that imposes, as a
naturalia of the agreement,
two obligations on the bank (there may be
other terms that are expressly agreed, but that is not now
material). First, it
undertakes, on behalf of its customer, to
pay from the account cheques properly drawn by the customer,
according to their tenor
(provided funds are available in the
account). And secondly, it undertakes, on behalf of the
customer, to collect cheques
properly deposited for collection 3. It
clearly has no obligation to collect, on behalf of someone else,
cheques that are drawn
by the customer (and to do so without
negligence).
”
At
para [22] of the judgment, the Court went on to say that:
“
The fact alone that McCarthy had a
cheque account justifies the inference that an express agreement (not
necessarily reduced to
writing) was concluded between McCarthy and
Absa (or their predecessors) at sometime in the past that such an
account should be
operated (it is difficult to see how a bank account
might otherwise come into existence). Where such an agreement
exists,
as pointed out by the authors of Malan on Bills of Exchange
etc.:5
‘
5
It is the duty of the bank
to pay cheques drawn by the customer that are in all respects
genuine
and complete, on demand, provided sufficient funds or credit for
their payment are available in the customer’s account
…
In paying cheques, the bank must adhere strictly to the customer’s
instructions, and must perform its duties
with the required degree of
care, generally, in good faith and without negligence.
’”
See
also
McAlpine and Son (Pty) Ltd supra
where the Court elucidated fully the scope of implied terms in
contracts.
[33]
I have already dealt partially with the evidence of Wills. His
admitted and uncontested opinion, clearly showed that
the defendant
and its staff members involved, acted negligently in regard to the
plaintiff’s account. In this regard,
the plaintiff
submitted that: when dealing with a corporate entity, banking
officials must satisfy themselves that the corporate
entity has
indeed authorised a specific person to operate the account; in
opening the account, the defendant should have worked
through its
check list, and by doing so, as well as making the necessary
inquiries, it would have ascertained that Huang had no
authority to
operate the account, the
ipse dixit
of the Huang alone that he owned the plaintiff, was insufficient in
the circumstances. As no card had been issued in respect
of the
account to the plaintiff, nor had a personal identification number
been given, the defendant’s employee, Judy, would
have known,
or ought to have known that the only way moneys could be withdrawn or
taken out of the account, was by a signature
of an authorised person
from the plaintiff.
[34]
It was also Wills’ opinion that as the plaintiff was a company,
the defendant should have realised that the address furnished
by
Huang when the account was opened, i.e. within a residential area,
and that the address given in Ruimsig, had no street address
by the
name “
Gelden Avenue
”.
A simple enquiry by the defendant into such mundane aspect, would
have provided a further warning signal, and the
loss suffered by the
plaintiff would have been averted. The defendant, manifestly
did not act reasonably in the opening of
the account by not taking
reasonable steps to ascertain whether Huang, the fraudster, was
entitled to operate the account.
The plaintiff had no previous
accounts with the defendant. The account furnished in the
application form as an existing one
was that of Huang. This was
common cause during the trial.
[35]
It was the further opinion of Wills that the defendant’s
procedure for withdrawals of cash is for its personal customers
to
produce an identity document and automatic teller machine (“ATM”)
card. In the present matter, it was common
cause that there was
no ATM card and no identity number to check since the plaintiff is a
company, the defendant was unable to
verify the signature as well as
the authority of Huang to withdraw the cash amounts, and should not
have been done without proper
cheques. Wills further opined that in
terms of the defendant’s internal financial history documents,
it is reflected that
the account medium is a “
card
”.
The reflection was clearly incorrect as no card was issued in respect
of the account, as mentioned before. Indeed,
if a card was issued to
the plaintiff, such card would have been one only of the several
mediums to cheque if Huang was factually
authorised by the plaintiff
to operate the account, and to make the withdrawals and transfers,
which he did. In the absence
of anything on the file, as
happened here, the plaintiff should have been contacted immediately
and steps should have been taken
in order to obtain the company
documents to clarify the issue, and to ensure that the defendant had
all the appropriate information
at hand. All of these, the
defendant did not do. A reasonable banker should have and would
have done so in the circumstances
of the case. In my view, the
conclusion that the defendant acted negligently in regard to the
plaintiff’s account,
became irresistible.
THE
DEFENDANT’S ASSERTIONS OF PLAINTIFF’S NEGLIGENCE
[36]
The contentions of the defendant that the plaintiff was negligent in
certain respects, were equally without merit at all in
the
circumstances of the matter and based on the finding above. For
in
Absa
Bank v Hanley
,
[18]
Malan JA stated that:
“
Save in respect of drawing documents to
be presented to the bank and in warning of known or suspected
forgeries he (the customer)
has no duty to the bank to supervise his
employees, to run his business correctly, or to detect frauds.
The negligence or
carelessness of the customer must be real, direct
or immediate cause of the bank having been misled, and must be
evident in the
transaction itself, in the manner in which the cheque
or payment instruction was drawn.6.
”
(my insertion)
To
make matters worse, in a request for further particulars for purposes
of trial, the plaintiff took the trouble to request the
defendant to
set out the exact procedures that were required to be adopted during
July 2000 for the opening of the Active Save
Account with the
defendant. The defendant chose to respond that the plaintiff was not
entitled to the particularity sought.
[19]
As stated earlier in the judgment, it was only in 2015 when the
defendant admitted by way of an amendment to its plea that
the
parties in fact entered into an agreement in terms of annexure “B”
to the defendant’s plea. The defendant
was only prepared
to admit, belatedly too, the express terms set out in annexure “B”
to its plea. In my view,
this was unreasonable in the extreme
on the part of the defendant, one more.
[37]
The fact that Huang was known to the defendant’s employees he
interacted with on regular basis, was of no assistance
to the
defendant’s cause.
[38]
In
Columbus
Joint
Venture v Absa Bank Ltd
,
[20]
the Court, in finally dismissing the plaintiff’s claim against
the defendant bank, based on negligence, dealt with different
situations in the process of a bank opening an account for a
customer. These situations are, when a stranger requests that
a
bank account be opened for him/her; and the other situation is when
an existing client requests further facilities or another
account.
In the process of dealing with the duties of a bank, the Court also
referred to
Energy
Measurements (Pty) Ltd v First National Bank of SA Ltd.
[21]
At p 511 of the
Columbus
case, Malan J said:
“
The stated case severely limits the
facts and circumstances on which a finding of negligence can be
made. There is no evidence
of what banking procedure is or of
what a prudent banker would or should have done under the
circumstances. The stated case
is quite silent on this matter.
In the absence of evidence the question is thus whether the defendant
displayed reasonable
care in opening the account … The
personal particulars given by Bertolis when opening the account were
correct: in
addition, his identity document was seen and the number
of his other account entered onto the application form. Various
other
documents relating to the account form part of the stated case
but it is not known whether reference was made to them when the
account was opened. To my mind, it has not been shown that, had
the official opening the account looked at them, he would
not have
accepted the account. Nor have any circumstances been shown
indicating that he should have had access to them or
called for
them.
”
The
learned judge went on to say that:
“
Where a stranger requests that an
account be opened for him the circumstances are quite different from
those when an existing client
applies. An existing client
asking for further facilities or another account is known to the bank
and his personal particulars
are, if known to the official, are
certainable.
”
Later
on, in the judgment, and finally, Malan J said:
“
A
bank should also be careful not to inquire where inquiries might
offend the customer and invade his privacy. A right balance
should be struck:
a bank should inquire
where it is put on inquiry
or
the transaction is out of the ordinary.
”
(my
underlining)
See
also
KwaMashu
Bakery Ltd v Standard Bank of South Africa Ltd.
[22]
[39]
The
Columbus
Joint Venture
case
was taken on appeal to the Supreme Court of Appeal.
[23]
The appeal was dismissed since the Court could not find any basis for
concluding that the bank failed in the duty of care
it owed to the
plaintiff. However, I must point out that at para [18] of the
judgment, the Court said:
“…
The bank is under an
obligation to take reasonable steps to ensure that its clients are
who they say they are, and to scrutinize
with reasonable caution
documentation submitted to it in substantiation of the uses to which
they propose to put their accounts
they open. The plaintiff’s
argument seeks to go far further. It would make the bank the
guarantor of the probity
of its customers, or at least of their
dealings and doings, as against all they injure by utilising banking
facilities reasonably
extended to them …
”
DISTINGUISHABLE
FACTS
[40]
From the above, it is self-evident that the facts in the present
matter are distinguishable from the facts in the
Columbus
Joint Venture
case, on which the defendant relied. For example,
although Huang, the fraudster, was known to some of the defendant’s
officials he interacted with, he was an employee of the plaintiff;
the plaintiff’s claim is based on facts which occurred
after
the account had been opened; the account was not an ordinary cheque
account, but a savings account; the account was opened
in the name of
the plaintiff; the moneys therein deposited after the opening, came
from the plaintiff; and the conduct of the defendant’s
representatives and/or the lack thereof in opening the account, based
on the plaintiff’s evidence, played an integral part
in
determining the issue whether the defendant breached the relevant
terms of the belatedly conceded agreement. All of this, in
the
absence of any countering evidence from the defendant. However,
each case must be decided on its own merits. For
the same
reasons, the defendant’s reliance on case law such as
Marfani
and Co Limited v Midrand Bank Limited;
[24]
Powell and Another v Absa Bank Limited t/a Volkskas Bank;
[25]
and
Strydom
NO v Absa Bank Bpk,
[26]
did
not advance the defendant’s case in the circumstances of the
present matter.
[41]
In addition, as shown earlier in the judgment, the defendant’s
allegations that the plaintiff was negligent as it alleged,
were not
based on any evidence and remained as such. Even if I am
incorrect in this regard, any such alleged negligence ought
to have
been linked sufficiently directly to the undisputed loss of legal
liability.
[42] The fact that the defendant dragged the plaintiff throughout the
duration of the trial to prove its case, and ending with
the
defendant not tendering any countering evidence at all, as well as
the probable inferences to be made by the court for such
failure, did
not justify to be unduly over-emphasised. However, it remained
a significant factor in this trial. There
was limited room for
the court to speculate as to the reasons why the apparently available
witnesses of the defendant, were not
called. All the court knew
was that Judy had since passed away. The court was also not
told why the defendant’s
expert witness, Weppenaar, involved in
some of the unauthorised withdrawals made by Huang from the account,
was also not called.
In the end, it remained the prerogative of
the defendant to run its case, as it did. Indeed, the absence
of and/or refusal
of the defendant to make available its procedure
manuals for the relevant period, also remained puzzling.
CONCLUSION
[43]
In the circumstances, I concluded that the plaintiff has succeeded in
proving, on a balance of probabilities, that there was
an agreement
between the parties in the opening of the account in question.
Further that, during the opening of the account,
which was on
instructions of the plaintiff, and subsequently, the defendant
proceeded to breach its duty of care towards the plaintiff
as its
client, and acted wrongfully and negligently in regard to the
account. This was a direct cause of the plaintiff’s
loss, as
claimed. In her evidence Taylor of the defendant, the defendant
informed the court that in the event the plaintiff
proved that the
withdrawals in the account were indeed unauthorised, the defendant
admitted the quantum of the plaintiff’s
claim. This was
the amount of R2 680 928,74, as pleaded.
COSTS
[44]
It remains for me to deal with the issue of costs, which is tritely a
matter within the discretion of the court. There
was no
credible reason advanced why the costs should not follow the result.
The only aspect is on what scale
such costs should be
awarded on the facts and the history of this case. I was more than
tempted to initially award the costs on
the scale as between attorney
and client, which would have been perfectly justified. However,
in the heads of argument, counsel
for the plaintiff did not argue for
such costs award.
ORDER
[45] In the result the following order is made:
1.
The
defendant is ordered to pay to
the plaintiff the sum of R2 680 928,74 (two million
six hundred
and eighty thousand nine hundred and twenty eight rand and seventy
four cents).
2.
Interest
on the said amount at the rate of 15,5% per annum from 1 June 2001 to
31 July 2004, and 9% per annum from 1 August 2014
to the date of
payment.
3.
Costs
of the action, including all and any costs previously reserved.
__________________________________________
D S S MOSHIDI
JUDGE OF
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
COUNSEL FOR THE
PLAINTIFF
B W MASELLE
INSTRUCTED BY
MICHAEL KRAWITZ AND CO
COUNSEL FOR THE DEFENDANT
M
D COCHRANE
LATER
E
L THERON (NOW SC)
INSTRUCTED
BY
HOGAN LOVELLS (SOUTH AFRICA)
DATE
OF HEARING
AUGUST 2007, SEPTEMBER 2011 AND FEBRUARY 2015
DATE
OF JUDGMENT
7 SEPTEMBER 2015
[1]
See
index to expert witnesses’ statement bundle pages 34 to 40.
[2]
See
transcript p 45, line 20 and p 46, line 5.
[3]
See
transcript p 48, lines 10 to 14.
[4]
See
transcript p 68, lines 15 to 21.
[5]
See pp
62 and 62A and p 93 of the court bundle.
[6]
2002
(6) SA 281
(C) at para [17].
[7]
5ed
(2009) Chapter 17, para 217.
[8]
2
nd
ed, Part 1 para 343.
[9]
See
pleadings bundle p 57 para 4 and p 58 para 5.3.
[10]
See
pleadings bundle p 56 para 1.1.4.
[11]
See
pre-trial notices bundle pp 87 to 92.
[12]
1974
(3) SA 506 (A).
[13]
2009
(4) SA 37
(W) at [32].
[14]
See
para 7.5 of defendant’s plea above.
[15]
1965
(2) SA 93 (O).
[16]
2001
(3) SA 185 (T).
[17]
[2010]
1 All SA 435
(SCA), also reported at 2010 (2) SA 321 (SCA).
[18]
2014
(2) SA 448
(SCA) at 457F-458A.
[19]
See
pleadings bundle p 37 to 38, paras 2.4 and p 49.
[20]
2000
(2) SA 491 (W).
[21]
2001
(3) SA 132
(W) and the judgment of the SCA at paras [135] to [139].
[22]
1995
(1) SA 377 (D).
[23]
See
[2002] 1 All SA 105
(A).
[24]
[1868]
2 All ER 573.
[25]
1998
(2) SA 807 (SE).
[26]
Supra
.