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[2010] ZAGPPHC 123
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Afriq Medical Distributors v First National Bank (4883/2002) [2010] ZAGPPHC 123 (21 September 2010)
SAFLII
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Certain
personal/private details of parties or witnesses have been
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NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG HIGH COURT, PRETORIA)
CASE
NO: 4883/2002
DATE:
21/09/2010
In
the matter between:
AFRIQ
MEDICAL
DISTRIBUTORS
..................................................................
Plaintiff
And
FIRST
NATIONAL
BANK
...................................................................................
Defendant
JUDGMENT
LEDWABA,
J
[1]
This matter was initially instituted as motion proceedings. The
plaintiff herein was the applicant and the defendant was the
respondent in the said proceedings. In the application proceedings,
the applicant (plaintiff) sought for an order in terms whereof
the
defendant (First National Bank) should release to the applicant the
funds in account number held at Hatfield branch.
[2]
The motion proceedings consisted of the founding affidavit, replying
affidavits and further supplementary affidavits.
[3]
The application was heard by Goodey AJ and on the 12
th
July
2004 he ordered that the matter be referred to trial, that the
founding affidavit stand as a simple summons, and that the Rules
of
Court will be further applicable with regard to the delivery of a
declaration and the other pleadings that are to be exchanged.
[4]
The plaintiff filed a declaration on 2 November 2007 and the
defendant filed a plea and a special plea in December 2007. The
plaintiff duly delivered a replication to the defendant's special
plea on 24 March 2008.
[5]
The relief sought by the plaintiff in the declaration is the
following:
"1.
Betaling van die bedrag van R2 043 075.42;
2.
Rente op die bedrag van R2 043 075.42 teen 'n koers van 15,5%
a
tempora
morae te wete 21 Desember 2001 tot datum van betaling alternatiewelik
teen sodanige rentekoers of rentekoerse soos wat die
Verweerder van
tyd-tot-tyd vanaf gemelde datum op kredietbalanse op lopende rekening
in terme van die partye se ooreenkoms tot
Eiser se rekening moes
krediteer.
3.
Koste
van die geding;
4.
Alternatiewe
regshulp."
[6]
On 13 October 2009 the plaintiff made an application to amend the
declaration to read as follows:
"1.
Deur die vervanging van die bestaande paragraaf 2 met die
volgende:
"Die
Verweerder is first Rand Bank limited h/a Eerste Nasionale Bank,
'nmaatskappy behoorlik geregisteer en geiinkorporeer
kragtens die
Wette van die Republiek van Suid-Afrika van 1ste Vloer, merchant
Place 4, h/v Fredman Drive en Rivonia weg, Sandton."
2.
Deur
die wysiging van die bedrag R2, 043,075.42 in paragrawe 4, 6, 7, 7.2
en bedes 1 en 2 daarvan na "R2, 012,593.24"
3.
Deur
die wysiging van die bestaande paragraaf 5 deur dit te vervang met
die volgende: "Die Eiser behoorlik verteenwoordig deur
Mnr Braam
cilliers van Le Grange prokureurs het op 20 desember 2001 die bedrag
van R2,000,000.00, synde die bedrag gedeponeer op
29 November 2001 in
die rekening gehou deur die Eiser by die Verweerder soos vermeld in
paragraaf 3 supra opgevra deur die gemelde
deposito beskikbaar te
stel, soos wat hy in terme van die partye se ooreenkoms geregtig was
om te doen, maar desieteenstaande aanvraag
en aanmaning weier en/of
versuim die
Verweerder
om gemelde bedrag of enige bedrag aan die Eiser te betaal of
beskikbaar te stel."
Defendant
did not object and the amendment was granted accordingly,
[7]
When the trial commenced the defendant wanted to amend the pleadings
by filing a special plea of prescription. Plaintiff objected
to the
said proposed amendment. Defendant decided to withdraw the said
special plea and the initial special plea that was raised
in the
pleadings.
[8]
The plaintiff adduced evidence of Mr. Hardy. G. Steyn (Mr. Steyn) and
closed its case provisionally. Thereafter the defendant
closed its
case without calling any witnesses.
[9]
Mr. Steyn testified that he opened an account with the defendant
(FNB) at its Hatfield branch in his personal name trading as
Afriq
Medical Distributors, after Afriq Medical Distributors was
incorporated, the account was registered in the name of the company,
the plaintiff herein. Mr. Steyn was the sole shareholder and director
of the plaintiff.
[10]
The main issue to be determined is whether there was a fraud or
forgery in the documents that were presented in purported compliance
with the provisions of the 'letter of credit' (the LC).
[11]
I will start with the summary of the background which gave rise to
the LC being issued and how the said LC was dealt with by
various
parties.
[12]
Two LC's are involved in this matter. The applicant was Jin Young
Trading in Korea a buyer of diamonds. The issuing bank was
Kookmin
bank in Korea. FNB was the bank appointed as advising bank of Efstral
the beneficiary, its client, regarding the credit.
The first LC was
amended on a number of occasions. The amendments also made FNB to be
a confirming bank which was entitled to buy
the said LC, see page 67
and 68 of the Index: Pleadings.
[13]
The second LC was established when the first LC was transferred.
Efstral was the applicant under the transferring LC, FNB performed
the function of the issuing bank and Metal & Steel Construction
(Pty) Ltd herein after referred to as (MSC) which Mr Steyn
was the
sole shareholder and director was the second beneficiary in the LC,
the first beneficiary being Efstral. See page 79 and
86 of the Index:
Pleadings.
[14]
The LC required three documents to be presented before payment could
be made under it viz, a signed commercial invoice in threefold,
a
packing list in threefold and a copy courier receipt.
[15]
MSC in purporting to comply with the requirements of the transferred
letter of credit presented documents to ABSA, in early
November 2001
and on 12 November 2001, sent documents to ABSA. See pages 91-94 of
the Index: Pleadings.
[16]
The contents of the document clearly cannot be correct because they
reflect a transaction that occurred prior to the delivery
of the
diamonds mentioned in the LC.
[17]
It is important to mention that on the oral evidence of Mr. Steyn no
diamonds were delivered on or before the date in the documents
being
the 10 November 2001. Mr. Steyn said ABSA rejected the documents out
of hand. The documents were drafted by MSC and presented
to ABSA and
ABSA presented them to FNB.
[18]
FNB initially did not realise that the courier receipt was faulty and
it confirmed, however, after discovering the errors,
before the
obligation to pay under the LC arose, it refused to pay and it
managed to trace the R2 million emanating from the MSC
account into
which ABSA had made payment after FNB's confirmation to the account.
It is common cause that ABSA discounted the LC
and paid the proceeds
thereof in two tranches to MSC, as follows:
(i)
R1
834 254,50 on 15 November 2001.
(ii)
R2
919 025.00
on 28 November 2001
Total
amount paid by ABSA is R4 753 279,50
[19]
Immediately before the second tranch was paid into the MSC account,
on 28 November 2001 the balance in the MSC Account was
R23 017, 88.
Thereafter the balance was R2 942 042, 88 after the amount of R2 919
025 was deposited. From this balance, on 29 November
2001, an amount
of R2 million was paid into the plaintiff's account held at
defendant's bank, see page 153 of the Index: Pleadings
[20]
The amount in the plaintiff's account on which the hard hold was
placed, can be traced directly to the discounted amount paid
by ABSA
to MSC.
[21]
Importantly, Mr. Steyn in his evidence conceded that it was a tacit
term of the contract between the plaintiff and FNB that
should an
amount deposited into plaintiff's account be traced to a fraudulent
transaction or if the monies deposited are proceeds
of crime, FNB
would not be obliged to pay such proceeds.
[22]
Advocate P. F. Louw SC submitted on the defendant's behalf that the
deposit on 29 November 2001 of R2 million into the plaintiff's
account constituted proceeds of a crime because false documents were
fraudulently submitted to ABSA for payment in respect of the
LC.
[23]
Mr. Louw further argued vigorously that even if Mr. Steyn or MSC did
not have knowledge of the fraud if there is a forged document
in the
LC transaction the effect thereof would be that the fraud unravelled
the LC.
[24]
Advocate Geach SC on behalf of the plaintiff, correctly in my view,
submitted that since FNB relies upon fraud as a defnce
the onus is on
it to prove fraud by presenting sufficient evidence.
[25]
Mr. Geach eloquently submitted that there was no agreement between
the parties to adduce evidence at the trial by way of affidavits
and
consideration of the evidence on affidavit is inappropriate as the
whole point of proceeding to trial was to hear oral evidence.
Since
the defendant chose not to call any witnesses the plaintiff did not
have an opportunity of cross-examining defendant's witnesses.
[26]
He argued that the defendant failed to prove any fraudulent conduct
on the part of the plaintiff. The matter would then be
decided on the
plaintiff's evidence only. He further argued that pleadings do not
constitute evidence, nor do propositions put
in cross-examination. He
submitted that the plaintiff was therefore entitled to succeed.
[27]
It is indeed so that the defendant did not call any witnesses.
However, in determining whether plaintiff should succeed with
its
claim or not, the court should consider the value of the evidence
presented together with the contents of the pleadings, including
the
affidavits.
[28]
In the evaluation of the evidence the court cannot disregard the
effect of cross-examination by the defendant's counsel
on
the evidence of Mr. Steyn and the concessions made by Mr. Steyn.
[29]
Regarding the LC, one of the requirements of the LC that a copy of
the courier receipt had to be presented. Mr. Steyn when
he testified
admitted that MSC received the Chaddi courier receipt and that it
handed it to ABSA under the LC. FNB did receive
the courier receipt.
[30]
The said receipt reflects the delivery of diamonds at the Hong Kong
Airport on 10 November 2001, see page 96 of Index: Notices,
that is
two days prior to the receipt being represented to ABSA for payment.
However, Mr. Steyn testified that the diamonds had
not been
delivered.
[31]
It is clear from the papers that:
31.1
The
three essential documents to the LC viz, the commercial invoice, the
courier receipt and the commercial invoice had falsified
information
regarding the actual transaction that had to take place in terms of
the LC.
31.2
Mr.
Steyn said he knew nothing about the falsified information in the
said documents. He blamed his 'attorney' Braam Cillier for
the
mistakes.
31.3
On
careful analysis of the facts of this case the payment was triggered
by the forged documents.
31.4
What stands out clear from the facts of this case like oil in water
is that the monies in the plaintiff's account were proceeds
of a
transaction which was contaminated.
[32]
On the facts of this case, FNB traced the origin of the funds that
were in the plaintiff's account. It is trite that if money
is in a
bank account a client has a personal right to claim the said monies.
I think that the plaintiff cannot use a vindicatory
action or
proceedings to claim the said monies.
[33]
The relationship between a bank and the client are regulated by a
contract and the tacit terms of the law, for example, it
is trite
that a bank will have no obligation to pay out funds to its client if
it knows that funds are proceeds of a crime. The
person who is
entitled to the said funds can claim these funds from the bank.
[34]
The court must have regard to the weight and totality of the evidence
in deciding whether the plaintiff's claim should succeed.
This case
further depends on the express and tacit contract between the
plaintiff and FNB. The plaintiff's counsel submitted that
if there is
fraud FNB would not be obliged to release the funds.
[35]
On careful analysis of the documents that were submitted to ABSA by
MSC it is clear that there was at least a forgery if not
fraud FNB
was justified in withholding the finds claimed by the plaintiff.
[36]
I
therefore,
make the following order:
The
plaintiff's claim is dismissed with costs.
A.
P.
L
EDWABA
JUDGE
OF
THE
HIGH
COURT