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[2021] ZASCA 20
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FirstRand Bank Limited v The Spar Group Limited (1334/2019) [2021] ZASCA 20; [2021] 2 All SA 680 (SCA); 2021 (5) SA 511 (SCA) (18 March 2021)

THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 1334/2019
In
the matter between:
FIRSTRAND
BANK LIMITED

APPELLANT
AND
THE
SPAR GROUP
LIMITED

RESPONDENT
Neutral
citation:
FirstRand
Bank Limited v The Spar Group Limited
(1334/2019)
[2021] ZASCA 20
(18 March 2021)
Coram:
CACHALIA,
DAMBUZA and MAKGOKA JJA and SUTHERLAND and UNTERHALTER AJJA
Heard:
9
November 2020
Delivered
:
This judgment was handed down electronically by circulation to the
parties’ representatives by email, and by publication
on the
Supreme Court of Appeal website and release to SAFLII. The time and
date for hand down is deemed to be 10h00 on the 18
th
day of March 2021.
Summary
:
A bank which is aware that funds deposited by a third party into its
client’s bank account to which the client has
no legitimate
claim may not appropriate such funds on the premise that the client
has a claim to the funds and use them by way
of set off to discharge
the client’s debt to the bank – A bank which is aware
that a third party has deposited funds
into its client’s bank
account and is aware that the client has no legitimate claim to the
funds is under a duty to take
steps to prevent harm to the third
party by way of the misappropriation of those funds by its client –
the bank’s failure
to prevent harm to the third party renders
it a co-wrongdoer with the client for the theft.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Baqwa J, Madiba J concurring
and Thlapi J dissenting sitting as court of appeal):
The
appeal is dismissed with costs including the costs of two counsel.
JUDGMENT
Sutherland
and Unterhalter AJJA (Cachalia, Dambuza and Makgoka JJA concurring)
Introduction
[1]
This case is about banks, their customers, and third parties who have
put money into the customers’
accounts. It considers two
interrelated questions. First, can a bank set off the customer’s
debts to the bank against amounts
standing to the credit of a
customer, if the bank knows that a third party has a claim to these
funds? If not, what claim does
the third party have against the bank?
Second, does the bank owe a legal duty to the third party if the bank
allows the customer
to utilise the money deposited by the third party
into the customer’s account, if the bank knows the customer has
no valid
claim to those funds?
[2]
The respondent, Spar Group Ltd (Spar), conducts business as a
franchisor of the Spar brand of retail
grocers and the Tops brand of
liquor vendors. Spar fell into a dispute with one of its franchisees,
Umtshingo Trading 30 (Pty)
Ltd (Umtshingo), whose controlling mind
was Mr Arnaldo Paolo (Mr Paolo). The Umtshingo business, in terms of
the franchise agreement,
operated three outlets. For each outlet,
Umtshingo kept a bank account with the appellant, Firstrand Bank Ltd,
which trades as
First National Bank (FNB or the Bank), at its
Nelspruit branch. One outlet, a grocer, styled Bella Donna Kwik Spar,
was owned by
a close corporation, Central Route Trading 30 CC
(Central Route), the sole member of which was Mr Paolo.
Despite
this distinct corporate identity, the franchise agreement regulated
all three outlets as a single business conducted by
Umtshingo, and
Central route 30 CC was
,
de facto
,
a division of the whole business
–
Umtshingo.
Its account, in the
name of Central Route, was referenced as 323. The other two outlets
were liquor stores, Bela Donna Tops, whose
account was referenced as
656, and Sonpark Tops, whose account was referenced as 309. These
latter two accounts were held in the
name of Umtshingo.
[3]
Spar held a notarial bond over the assets of Umtshingo. Umtshingo
defaulted on its obligations under
the franchise agreement. In
consequence, Spar obtained a provisional order from the local
magistrates’ court perfecting its
security. The terms of the
notarial bond permitted Spar to take over the Umtshingo businesses
and run them for its own account.
Armed with the provisional order,
Spar confronted Mr Paulo with the stark option of closing the
shops or allowing Spar to
trade for its own account in terms of a
‘short term business lease’, during the interim period,
until a final order
to perfect the bond was granted. Mr Paolo was
keen to avoid closure, supposedly to escape a loss of business
reputation, and acquiesced,
save in one important respect, to the
terms of a draft agreement which regulated this arrangement. The
single reservation was that
Mr Paolo refused to de-link the
speedpoint credit card devices of the stores from the bank accounts
of Umtshingo. It is this resistance
that is the
fons
et
origo
of the controversy in this case.
[4]
Spar ran the outlets on the terms of the unsigned draft agreement and
in the course thereof, credited
the stock on hand to Umtshingo and
brought in new stock. Cash receipts were deposited into a Spar
account. However, the speedpoint
credit card devices in use, which
facilitated electronic deposits of revenue directly into Umtshingo’s
designated accounts,
remained in use. Spar continued to allow revenue
earned from its trading to be deposited into these three accounts,
albeit reluctantly,
whilst taking several steps to try to get Mr
Paolo to consent to a change or to get FNB to redirect the revenue to
a Spar account.
Spar’s failure to achieve either of these
objectives resulted in substantial sums flowing into Umtshingo’s
accounts.
[5]
Mr Paolo therefore retained control over the accounts and, during the
period of Spar’s trading,
effected substantial disbursements
out of two of these accounts, namely account 656 and account 309.
Moreover, the debit balances
(in respect of Umtshingo’s
overdraft liability, its debts to FNB in respect of a loan and a
guarantee paid by FNB to Spar)
in two of the accounts, ie account 323
and account 309, were purportedly extinguished by FNB applying set
off against the credits
in these accounts that derived from the
revenue generated by Spar and deposited into the accounts.
[6]
The upshot was that Spar contended that FNB ought not to have allowed
disbursements to be made at Mr
Paolo’s behest because Umtshingo
had no rightful interest or claim to the funds, and that FNB,
furthermore, was not entitled
to set off Umtshingo’s debts in
respect of which Spar had a quasi-vindicatory claim.
[7]
The four claims made by Spar were as follows:
(a)
Claim 1: R1,343,422.92 used by FNB to discharge the overdraft in
account 323.
(b)
Claim 2: R2,039,948.68 disbursed by Paulo from account 655.
(c)
Claim 3: R1,358,890.90 disbursed by Paulo from account 309.
(d)
Claim 4: R898,744.92 used by FNB to discharge the debts due to it by
Umtshingo. FNB alleged that this claim had
prescribed by the time
that it was added to the other claims, by way of an amendment made by
Spar to the pleadings on 6 March
2013.
[8]
FNB’s defence was that it had lawfully appropriated the sums
claimed because these were amounts due and payable
to FNB. It was
common cause that Umtshingo was indebted to FNB in the amounts
alleged by FNB and that FNB did not obtain the permission
of Spar to
effect the set off of Umtshingo’s indebtedness to the Bank. The
quantum of Spar’s claims was not in dispute
.
[9]
The issues that therefore arose for decision were these:
(a)
Was FNB entitled to set-off the credits that derived from the funds
deposited into the accounts by Spar against
Umtshingo’s debts
owing to FNB?
(b)
Was FNB liable in delict to Spar for the losses it suffered when Mr
Paulo caused sums to be withdrawn from these
accounts, which funds
derived from deposits into the accounts by Spar, and to which neither
Mr Paulo, nor Umtshingo, had any rightful
interest or claim?
(c)
Had Claim 4 prescribed?
[10]
Spar sued FNB in the Gauteng Division of the High Court. At the
conclusion of the trial, claim 4 was dismissed
because it was held to
have prescribed, and the other three claims were dismissed on the
basis that FNB had not done anything to
incur liability to Spar. On
appeal to the full court of the Gauteng Division, these results were
reversed by a majority decision.
Spar was held to have proven its
case in respect of all four claims. The dissenting judgment endorsed
the trial court’s holding,
but did not deal with the
prescription issue. It is the majority judgment of the full court
that is on appeal to this Court.
[11]
To make sense of the evidence that gave rise to the issues, it is
necessary first to examine the course of events
in some detail. The
only witnesses to testify at trial were three Spar employees. Much of
what occurred was contemporaneously captured
in prolific
correspondence, among the several actors and their attorneys. The
evidence adduced, some six years after the events,
was often little
more than a running commentary on the correspondence and a spirited
but valueless exchange with counsel about
the what-ifs of those
events.
The
narrative of material events
[12]
The appropriate place to begin is on 1 February 2010. Umtshingo was
in financial trouble. On that date it reached
agreement with FNB to
reorganise its credit facilities to alleviate the distress. Umtshingo
was granted a loan of R2.1m. Central Route
was granted an
overdraft of R200,000. These arrangements were concluded between FNB
and Umtshingo. Spar was neither privy thereto,
nor informed of these
facts. In addition, FNB, on Umtshingo’s behalf, had provided
Spar with a performance guarantee of R400,000,
an additional burden
on the business, if it were to be called up.
[13]
Spar held a general notarial bond over the assets of Umtshingo. Spar,
in response to a default by Umtshingo, which
was in arrears in the
sum of R2,539,408.14, on 5 March 2010, obtained a provisional order,
perfecting its security. On 8 March
2010, Spar took physical control
of the business. The return day was 1 April, 26 days hence. This
date, as it turned out, was extended
and then again extended.
[14]
Spar, as a consequence of assuming beneficial control over the
trading activities of Umtshingo, registered the
Umtshingo businesses
for VAT and became liable as a vendor. Mr Paolo was asked to
authorise a delinking of the speedpoint credit
card devices from
Umtshingo’s accounts so that the revenue would flow to a Spar
account. Mr Paolo refused to do so because
he intended to challenge
the provisional order, although the terms of the ‘short term
business lease’ held out no ultimate
harm to his interests, as
it provided for the net profit made by Spar to be credited against
Umtshingo’s indebtedness to
Spar, regardless of the final
outcome of the application to perfect the notarial bonds. FNB also
refused to change the bank account
linked to the speedpoint devices,
unless Mr Paulo agreed thereto, or a court order was presented to it.
Of course, until the provisional
order perfecting the bond had been
made final, there was no relevant order to present to FNB. What,
then, was to regulate affairs
in the interim?
[15]
Axiomatically, Spar risked the revenue of its own trading being
diverted. This was obvious because Mr Paulo alone
could exercise
control over the Umtshingo accounts. This was appreciated by Spar’s
management. Rob McLagan, the Branch Manager
of FNB, Nelspruit,
got wind of the takeover before any formal communication from Spar.
On 9 March, he emailed Lorraine Hopley,
Spar’s Lowveld
Divisional Credit Manager to ask what was afoot. Ms Hopley replied to
Mr McLagan that Spar had ‘perfected
[its] notarial bond on
an urgent basis’. Further, she stated that the three outlets
were henceforth to be run by Spar for
its own account. She reminded
Mr McLagan of the R400,000 guarantee that would be called up as soon
as the final order was to hand.
She expected the order to be obtained
in ‘early April’. Also, she expressed scepticism that Mr
Paolo was ‘likely
to survive’, financially, alluding to
the prospect of the liquidation of Umtshingo.
[16]
Mr McLagan was alarmed. FNB was then exposed in respect of account
323 in the amount of R1,343,422.92 and in respect
of account 309 in
an amount of R292,140.84.
[1]
Mr
McLagan thereupon asked why the notarial bond was invoked because, as
regards FNB, Umtshingo was not delinquent. Hours later,
Ms Liezel
van der Walt, Spar’s accountant,
[2]
emailed FNB to ask for a change to the bank details and requested
that she be informed of the bank’s procedure so as to achieve

this result. She alluded to two earlier instances, Longtom Spar and
Silinda Spar, where, similarly, the businesses had been taken
over by
Spar, during an interim period until a final order was granted, and,
as her email implied, FNB had changed bank accounts
in those
instances. The implication was conveyed that there was an expectation
by Spar that such a change would be straightforward.
It is not clear
whether the two examples alluded to were businesses that banked at
the Nelspruit branch of FNB of which, therefore,
that branch would
have had knowledge or whether they were examples of which it was
taken for granted that the Nelspruit branch
would have had knowledge
because of the ostensibly informal relationship between Spar and FNB.
Spar was itself a client account-holder
of FNB at its Durban branch,
a relationship which Spar thought was pertinent to its dealings in
matters such as this.
[17]
Mr McLagan alerted his senior staff to the Spar takeover. He had also
spoken to Mr Paolo who had questioned the
legitimacy and the legality
of the court order obtained from the magistrate.
[3]
Significant for the controversy, Mr McLagan noted his concern that ‘.
. . we sit with an account where there is no income
to service our
facility’. Ms Grobler, the FNB Risk Manager, warned that
because the client could no longer trade, ‘.
. . we cannot
allow any debits against the accounts’. Ms Grobler made two
further remarks. First, she stated that she was
irked by Spar acting
against a franchisee without telling FNB, which was not in line with
‘a franchise arrangement’
between FNB and Spar. Plainly,
she understood that a risk to FNB by a potential default of a client
because of action taken by
Spar was an event of which she expected
prior notification. This suggests that Spar routinely knew with whom
its franchisees banked
and exchanged information about them. Second,
she announced that she would take up this dissatisfaction with Spar’s
Franchise
Specialist, Ms Ash Sodha. Ms Grobler reported the next day
to Mr McLagan:
‘
I
spoke to Ash . . . regarding our dissatisfaction surrounding the way
Spar deals with distressed franchisees where FNB is also
involved as
a credit provider. . . The bank (who has marked unsecured facilities
for the specific franchisee based on the Spar
model) is then left
with an unsecured exposure and no business to service the [debt?]’
[4]
Plainly,
the principal concern of the several FNB officials was the bank’s
risk.
[18]
Meanwhile, Ms Hopley was in earnest pursuit of Mr Paolo’s
consent to delink the speedpoint credit card devices.
On 11 March
2010, she emailed Mr Paolo’s attorney, having previously sent a
draft lease agreement for signature. She had
also been present on 8
March when the seizure of the business was effected. At that time,
she had spoken to Mr Paolo and his attorney
about the ‘short
term business lease’. The draft agreement contained a consent
to change the bank account. She warned
Mr Paolo that a delay could
result in the closure of the stores. In similar vein, on 19 March
2010. Ms van der Walt emailed
FNB with reference to an earlier oral
request made on 12 March, reiterating the requirement to change the
account. She also furnished
the new proposed account details.
[19]
It is notable that in this email from Ms van der Walt the three
outlets were expressly mentioned and her request
to change the
details of the bank account was couched as if a
single bank
account
was in issue. It is common cause that at this time Spar
was unaware that there were three distinct bank accounts; that FNB
had
not divulged their existence; and that Spar was under the
incorrect impression that all revenue was being channelled into the
323
account. FNB’s failure to alert Spar is a central aspect of
the dispute.
[20]
Four days later, on 23 March 2010, Ms van der Walt was still chasing
after a change of the bank accounts. She undertook
to provide a copy
of the provisional order which she hoped would be ‘sufficient
proof’ to have the bank account
details changed. She
supplied the provisional court order. Soon afterwards, she reported
to Ms Hopley that FNB had insisted on
a final order and that a
request to change the details would only be considered thereafter. Ms
Hopley then emailed Mr McLagan.
She stated that the predicament was
plain: if the account was not changed, the revenue would have to be
refunded to Spar. She then
asked:
‘
Please
can you at least give me the assurance that [Paolo] does not have
access to this money in the interim as he will have to
pay us back
irrespective of what happens on 1 April. If necessary, could you put
a hold on this money in the account until the
matter is resolved.’
[21]
Mr McLagan answered:
‘
The
belladonna
account
has been frozen
and only pre-funded cheques are being paid. Pre-funded means a
deposit out of the
client’s
own external funds
.
. . .’
(Emphasis
added.)
[22]
What was meant by client’s ‘own external funds’ was
not further elaborated upon. However, it
may be reliably surmised
that such a remark could not have been understood to include the
revenue generated by Spar. The theme
of a ‘frozen’
account came up again in relation to some cash takings that were
deposited, mistakenly, into the 323
account. On 31 March, Ms Hopley
raised this error with McLagan and asked that the sum be transferred
to Spar’s account, alternatively,
to ‘freeze’ the
sum pending the final court order. Mr McLagan refused. On 31 March he
emailed Ms Hopley to advise that
this could not be done without
Paulo’s consent. He added:
‘
I
do reiterate that the account is frozen and no day-to-day payments
are permitted without prior approval or against confirmation
of a
specific
deposit
from Paulo
to cover the payment.’
(Emphasis
added.)
These
assurances by Mr McLagan were significant communications and are
pertinent to understanding Spar’s conduct in tolerating
the
revenue flows into Umtsthingo’s accounts.
[23]
At about this time, the exact time being uncertain, Spar put up a
sign in the outlets saying that credit card payments
would not be
accepted. Mr Paolo objected and insisted the ban be lifted,
supposedly to preserve his business reputation. Spar acquiesced.

Nevertheless, the saga of Mr Paulo’s refusal to change bank
accounts persisted, with his attorney as spokesman. On 7 April,
the
attorney, in an email to Spar’s attorney, claimed that Mr
Paolo’s continued refusal was based on FNB’s insistence.

This finger-pointing between Mr Paolo and FNB continued.
[24]
On 24 May 2010, Spar called in the R400,000 guarantee from FNB. This
triggered an email from Mr McLagan to Mr Paolo,
bemoaning the delays
in finalising the perfection order. Significantly, he stated:
‘
The
fact that Spar Group has taken over the daily management of the
franchisee and the
business
is for all intents and purposes no longer under your control
,
the
bank is currently extending facilities to an entity with no trading
capability.
This
position in itself holds risk for the bank due to the absence of a
business case to support the lending.’
(Emphasis
added.)
Mr
McLagan thereupon noted an exposure of R575,334.13 on the Central
Route account 323. He demanded a reduction of R100,000 per
month. In
respect of the Umtshingo accounts, he demanded rectification of the
default on the loan in a sum of R21,802.23 by 31
May. It is
significant that at this date, two and a half months after Spar had
taken over the outlets, the exposure of FNB on account
323 had
reduced from R1,343,422.92, on 10 March, to R575,334.13. The only,
and obvious, source of funds to reduce this exposure
was the earnings
of Spar.
[25]
Not unsurprisingly, Spar was interested from the outset to know the
state of ‘the account’. Mr McLagan
refused to disclose
any details. On 27 May 2010, he emailed Ms van der Walt and said
this:
‘
The
speedpoint monies are banking into
the
account
which is
currently
blocked.
Unfortunately I am unable to give you details on the amount or
balances in
the
account
in terms of client confidentiality until a final order is granted and
we are instructed to do so in terms of the law.’
(Emphasis added)
Significantly,
Mr McLagan alluded to ‘the account’, singular, thereby
concealing the existence of two other accounts
into which
Spar-generated revenue was steadily flowing, and leaving Spar under
the impression only one account existed.
[26]
On 2 June 2010, a communication from FNB’s Manager, Customer
Service, Speedpoint, in the Corporate and Commercial
Banking office
in Pretoria, to Mr McLagan, advised him of Spar’s request
to change the bank accounts. Mr McLagan
queried the legitimacy
of this request. Mr McLagan then emailed the Risk Manager, Ms
Grobler, to question whether Spar could just
introduce new speedpoint
accounts ‘. . . while the business is still technically that of
Mr Paolo?’ He opined that
despite Spar running the store, Mr
Paolo should consent or an ‘order of court should be
perfected’. This view was then
backed up by Ms Grobler, acting
on the advice of ‘Corrie’, that no amendments should be
made without Paolo’s
consent or pursuant to a court order.
[27]
Shortly thereafter, on15 June 2010, Ms Hopley sought clarity that the
account had been frozen from 8 March and not 24 March.
Mr McLagan
evaded a direct answer. He stated that he had no formal notification
on 8 March. He omitted reference to the email of
10 March notifying
him of Spar’s takeover. On 17 June, Ms Hopley reminded Mr
McLagan of the 10 March communication. Mr McLagan
again evaded an
answer. He regurgitated his stock reply about being unable to do
anything until a final order was presented. He
added that on 10
April, a month after his first knowledge of the takeover, all limits
on the account, ie, making payments from
the account dependent upon
external sources, had been lifted. Moreover, he added:
‘
We
have no control over credit balances which the client is able to
transfer.’
[28]
The very next day 18 June 2010, Spar’s attorney ceased to beg
Mr Paolo to consent to an account change, more
than three months
after first asking. An urgent application was threatened. Mr Paolo’s
attorney again obfuscated and blamed
the bank for the refusal and
alleged FNB required nothing less than the final order. An urgent
application to freeze the account
was then launched. A provisional
order was granted on 24 June 2010 and confirmed on 27 July 2010.
[29]
Mr Paulo’s attorney, on 25 June 2010, was quick to point out to
FNB that the order to freeze mentioned only
the 323 account. Thus,
the other two accounts were not to be frozen. On 28 June 2010, Mr
McLagan sought advice whether he should
unblock the other two
accounts. Ms Grobler then told him to lift the block on these
accounts:
‘
.
. . although we suspect that Spar intended for all the proceeds of
the Spar and the 2 Tops outlets to be frozen, the order specifically

mentions that a hold is to be placed on funds flowing into that one
account.’
To
FNB’s knowledge therefore Spar remained ignorant that there
were three accounts, and despite the acknowledgement by Ms
Grobler of
Spar’s misapprehension, a deliberate decision was taken that no
disclosure be made to Spar.
[30]
Ultimately, the provisional order perfecting the bond was not
confirmed.
[31]
On 25 October 2010, about eight months after the takeover of the
business, a demand was made by Spar to FNB to
pay the moneys that
Spar had earned whilst trading. The letter of demand conveyed that
even then Spar was under the mistaken impression
that all the revenue
from all three outlets was being channelled into one account. Mr
Paulo also claimed the credit balance in
this account.
[32]
After further ruminations, FNB accepted it was in the position of a
stakeholder and thereupon itself on 24 February
2011, three months
after the demand had been made, initiated an application to obtain an
order of court to pay the sum in account
323 to Spar. In the argument
advanced on appeal, on behalf of FNB, it was submitted that because
the account in issue, account
323, was in the name of Central Route,
Umtshingo Trading (Pty) Ltd was not a party. This sophistry is, of
course, literally correct,
but substantively a misrepresentation of
the true relationship between FNB and Umtshingo.
[33]
Central Route was deregistered on 24 February 2011.
[34]
On 10 March 2011, a month after FNB launched the interpleader
application, the Managing Director, Spar Lowveld,
addressed yet
another request to FNB to cancel several speedpoint devices. There is
an oblique allusion to Ms van der Walt being
aware by this time that
Mr Paolo must have been operating more than one account. On 11 March
2011, Spar’s attorney tackled
Mr Paolo’s attorney with
the accusation of Mr Paolo diverting money from the two Tops outlets
to ‘another account or
accounts under his control’. The
generalised tenor in which these allegations was articulated
indicated that Spar knew no
details and had surmised the diversion of
funds, possibly from reading the 323 account statement, disclosed in
FNB’s interpleader
application and realising that substantial
sums were not accounted for. Mr Du Preez, the Divisional Financial
Director, Lowveld
Spar, deposed to an answering affidavit in which he
stated that it was only in the course of this interpleader
application that
Spar learned that there had been credit card revenue
diverted from the two Tops stores ‘ . . . to an account other
than the
frozen account’ (ie Account 323). This information
could only have been derived from the contents of FNB’s
founding
affidavit and Mr Paolo’s answering affidavit. Mr Paolo
had alluded to the two Tops accounts (albeit giving the wrong
account
number in one case, ‘988’, instead of 309) in his
answering affidavit dated 15 June 2011. An order
directing
FNB to pay over the money was eventually given on 23 March 2012.
[35]
The liquidation of Umtshingo took place on 6 August 2012. On
10 August 2012, the three outlets ceased
to trade.
[36]
On 22
January 2015, in replying to a Rule 35(3) notice, FNB’s
attorneys provided details of account 309. This was when Spar
first
learned of the 309 account and of the transactions that had occurred.
It promptly caused an amendment to be made to its pleadings
in the
form of claim 4.
Analysis
of Claims 1 and 4
[37]
FNB’s
professed entitlement to claim set off is the appropriate starting
point of the analysis. It is a durable proposition
of our law that
when the customer of a bank deposits money into their account, the
money becomes the property of the bank. The
bank enjoys a real right
of ownership. In the usual case, the deposit gives rise to a credit
balance in the account of the customer
and a personal obligation owed
by the bank to its customer to pay the credit balance, together with
interest, if agreed.
[5]
[38]
The
ownership by the bank of deposits made into an account by a customer
is of systemic importance to the banking system. Deposits
made into
the accounts of customers are pooled so as to permit the bank, in
turn, to grant credit and make loans. The bank is the
economic
intermediary that secures savings and enables borrowing. Central to
this function is the recognition of the bank’s
ownership of the
deposits made with it and the bank’s right to extend loans
without reference to the customers who made such
deposits. Were it
otherwise, absent customer consent, the bank’s loans would be
akin to theft.
[39]
The
personal obligation of the bank to pay the balance standing to the
credit of the customer may be discharged by payment to the
customer,
payment to persons designated by the customer, or set off. Set off
comes about when two parties are mutually indebted
to one another,
and both debts are liquidated, due and payable. The bank may set off
a customer’s indebtedness to the bank
against that customer’s
claim against the bank, arising from deposits made by the customer
and standing to their credit.
Put simply, the bank may set off the
credit and debit balances of the same client. These claims are then
extinguished.
[40]
Set
off, like payment, extinguishes a debt, but does so reciprocally –
one debt extinguishes another. Set off is not an appropriation
of
property. The operation of set off and the FNB’s reliance upon
it cannot be characterised as an issue as to whether FNB
lawfully
appropriated the property of Spar. Rather, the issue is whether FNB
could set off Umtshingo’s indebtedness against
the credit
balance in Umtshingo’s accounts, arising from the deposits made
into those accounts by Spar.
[41]
There
is no dispute as to Umtshingo’s indebtedness to FNB. That much
was common ground. The question is whether FNB was indebted
to
Umtshingo. It will ordinarily be the case that, when the customer of
a bank makes a deposit into their account, it is an incident
of the
contract between the bank and its customer that the bank has an
obligation to pay its customer the credit balance arising
from the
deposit made. The customer enjoys a personal right to payment from
the bank.
[42]
However,
this is not invariably the case. The customer may be acting as the
agent of a third party, permitting the third party to
utilise the
account. The third party may make a deposit into an account, whether
in error or by arrangement with the account holder,
to which the
third party enjoys an entitlement. Here, the money, once deposited,
is no less the property of the bank. The origin
of the deposit is not
relevant to the assumption of ownership by the bank.
[43]
Who
then acquires the personal right to the credit arising from the
deposit? One answer is provided by an agreement subsisting between

the bank, the customer and the third party depositor, in terms of
which deposits made into the account give rise to an obligation
by
the bank to pay any credit thereby accruing in the account to the
third party. In such a situation, the bank cannot set off
the
indebtedness of its customer to the bank against the bank’s
indebtedness to the third party. No mutuality exists, the
debts are
not due as between the same parties.
[44]
What
then occurs if there is no such agreement as between the bank and the
third-party depositor? Does the knowledge of the bank
that a third
party has deposited money into a customer’s account, to which
the customer has no claim, give rise to any right
enjoyed by the
third party to payment of this money from the bank? And if so, what
right would that be?
[45]
These
questions gave rise to the different interpretations of
Joint
Stock
[6]
that divided the courts below. On one interpretation of the majority
judgment in
Joint Stock
,
agreement and knowledge were used interchangeably, but the true
ratio
of the majority judgment was that the claim of the third party rests
upon agreement with the bank. So understood,
Joint
Stock
,
on its facts, simply recognised that where the bank owes a personal
obligation to the third party to pay the credit balance accruing
from
the third party’s deposits, the bank cannot set off its
customer’s indebtedness to the bank against the bank’s

debt that is due to the third party. The other interpretation of
Joint
Stock
is
that it went further and recognised that the bank’s knowledge
of the entitlement of the third party, rather than its customer,
to
the funds credited to the account may give rise to a right enjoyed by
the third party to payment from the bank.
[46]
This
difference of interpretation, pertinent for the resolution of the
case before us, is best approached in the following way.
The evidence
at trial clearly established that Spar had, for its own benefit,
assumed control of the trading activities of Umtshingo’s

businesses. Whatever reservations Mr Paolo may have expressed as to
the perfection of Spar’s notarial bond, he plainly acquiesced

in the arrangement that Spar take over the running of the businesses,
at least until his reservations were finally determined by
a court.
It follows that moneys deposited into the accounts of Umtshingo were
the proceeds of Spar’s trading activities to
which Umtshingo
had no claim.
[47]
Although
the deposit of the proceeds of these businesses into the accounts of
Umtshingo gave rise to credits in the accounts of
Umtshingo held with
FNB, this did not mean that Umtshingo had a claim against FNB for the
amounts standing to its credit. In
Perry
NO
[7]
stolen money was deposited into a Nedbank account. Schutz JA
explained that, by operation of law, ownership of this money
passed
to Nedbank and could not be claimed by way of the
rei
vindicatio.
However, the mere fact that the customer’s account had been
credited with the stolen money did not mean that the customer
(and
thief) had a claim against Nedbank for payment of the amount standing
to his, ostensible, credit.
[48]
The
same position arises when funds are paid into a bank account in
error. The customer into whose account an amount is paid in
error has
no entitlement to the funds credited to that account.
[8]
And an appropriation of the funds by such a customer, with knowledge
that they were not entitled to deal with the funds, would
amount to
theft.
[49]
Umtshingo
had no entitlement to the funds paid into the accounts held with FNB.
Those funds were the proceeds of the business conducted
by Spar for
its own benefit. At a minimum, FNB knew that this was so. In these
circumstances, Umtshingo enjoyed no personal right
against FNB to the
funds credited to its accounts that derived from Spar’s
deposits.
[50]
Once
that is so, it follows that FNB cannot contend that Umtshingo’s
indebtedness to the Bank was set off against FNB’s
indebtedness
to Umtshingo because FNB owed no such debt to Umtshingo. FNB’s
defence of set off must therefore fail.
[51]
What
then is the basis upon which Spar enjoyed a claim to the funds
credited to the Umtshingo accounts in respect of which FNB cannot

rely upon set off? In both
Joint
Stock
[9]
and
Nissan
[10]
it was common ground that if no person had an interest or claim to
the money credited to the account, other than the party in the

position of Spar, then that party was entitled to payment from the
bank.
[52]
There
are two central conclusions to be found in
Joint
Stock
[11]
.
First,
there is no inflexible rule that only an account holder may assert a
claim to money held in their account with a bank. Second,
the
following conclusion was reached,
‘
[n]or
does the proposition that money deposited in an account becomes the
property of a bank, necessarily militate against a legitimate
claim
by another party’.
[53]
Both
propositions are borne out by a well-established authority. As to the
first proposition, there are a variety of circumstances
in which
persons other than the account holder may claim payment from the bank
of the credit balance in an account. That entitlement
may arise in
different ways. As already indicated, when stolen money is deposited
into an account or a deposit is made in error,
the account holder is
not entitled to claim the credit balance. The person from whom the
funds originated may do so.
[54]
So
too, in
McEwan
[12]
where an agent deposited the money of his principal into an account,
upon the insolvency of the agent, the agent’s trustees
had no
claim to the balance in the account, the claim lay with the
principal. In
Dantex
[13]
,
the court recognised that an agreement might regulate the use of an
account and the entitlements of an account holder to the use
of
credits in the account. These cases were traversed in
Joint
Stock.
[55]
The
cases also make it plain that there is no inconsistency in
recognising that money deposited with a bank becomes the property
of
the bank and that persons enjoy personal rights against the bank to
the credit balance on account deriving from the deposit
made. What
has sometimes created ambiguity is the description of an account
holder ‘owning’ the moneys deposited into
an account.
That is not so. The bank is the owner of the money deposited, save
only in the rather special case, cited in
Dantex,
that the depositor of money, deposited as a corpus and held
separately, may vindicate the money.
[14]
However, the money deposited with the bank gives rise to personal
rights in respect of the credit that is thereby created in the
books
of the bank.
[56]
Once
this distinction is recognised, two questions arise. What is the
nature of the personal right against the bank, and enjoyed
by whom?
In the standard case, the customer deposits money into their account
and has a personal right against the bank to be paid
the credit
reflected on the account (with interest, if agreed) or otherwise to
direct the bank as to who should be paid. The personal
right is an
incident of the contract that subsists between the customer and the
bank.
[57]
However,
as may be observed from the cases to which we have referred, the
personal right to claim against the bank may not be enjoyed
by the
customer. The customer may be the agent of a principal in respect of
the account, and the principal will then have the claim.
Or the bank,
the customer and a third party may have an agreement as to the rights
of the third party to the use of the account
and the credit balance
on account. On one interpretation,
Joint
Stock
is such a case.
[58]
More
difficult is the position in a case such as the present where there
is no privity as between FNB and Spar, nor is it claimed
that
Umtshingo was acting as the agent of Spar. On the evidence, however,
Spar and Umtshingo had agreed that Spar was entitled
to the proceeds
of the businesses that it was running. Spar was entitled to these
moneys and deposited them with FNB. The evidence
also amply
demonstrated that FNB knew of Spar’s entitlement to the moneys
deposited. In these circumstances, Umtshingo had
no right to claim
the credits arising from these deposits. And, as set out above, FNB
could not apply set off.
[59]
What
rights, if any, does Spar have against FNB? It was submitted that
Joint Stock
may be understood on the basis that FNB’s knowledge of Spar’s
entitlement to the funds founds Spar’s claim against
FNB. This
is not the correct way to interpret the holding in
Joint
Stock.
It
is not the knowledge of a bank that gives rise to the rights of the
third party. It is the consequences of such knowledge that
matters.
Once it was apparent to FNB that its customer had no entitlement to
the moneys deposited, two consequences, traversed
above, follow.
First, the customer, Umtshingo, had no claim against FNB in respect
of the credit reflected in the accounts. Second,
FNB could not apply
set off, as there was no mutuality of debts as between FNB and its
customer.
[60]
FNB
was the owner of the funds deposited. Could FNB enjoy the benefit of
that ownership, without any duty to account to Spar, absent
an
agreement between FNB and Spar?
Joint
Stock
answered this question in the negative. It did so on the basis set
out in
Nissan.
[15]
If the customer was not entitled to claim from the bank, then the
third party was entitled to do so. The basis of that entitlement
was
explained in
Nissan.
[61]
In
Nissan,
the
appellant, in error, paid a substantial amount of money into the
account of Maple which was duly credited. Maple was not entitled
to
the funds. Maple had no claim against the bank in respect of the
funds. In
Nissan
,
as also in
Joint
Stock,
it
was accepted by counsel that, if the customer had no claim, the
appellant was entitled to payment. The basis of that acceptance
in
Nissan
derives from the decision of this court in
Perry
NO
,
a case of the deposit of stolen funds into a bank account. The bank
became the owner of the funds deposited. The bank resisted
payment to
the cessionary, who had taken cession of the claim from the person
originally entitled to the funds deposited. The bank
was not obliged
to make payment to its customer because the funds deposited were
stolen. As a result, the bank was enriched, and
an enrichment action
lay against it, in particular the
condictio ob
turpem vel iniustam causam.
[62]
In
Perry
NO,
the
funds deposited were stolen. In
Nissan,
the
funds were deposited in error. The court in
Nissan
nevertheless required that, since the account holder credited with
the deposit had no claim against the bank, payment must be made
to
the appellant who had paid in error. To do otherwise would permit of
the unjustified enrichment of the bank. In
Joint
Stock,
as
in the present case, the funds deposited were neither stolen, nor
deposited in error. The funds were deposited pursuant to an

arrangement between the bank’s customer and the third party.
Yet in
Joint
Stock,
the
court reached the same conclusion as did the court in
Nissan:
the
bank owed a duty to pay the third party. That is so on the basis of
the same underlying principle recognised in
Perry
NO.
Since
the bank incurred no liability to its customer, without an obligation
to pay the third party, who had the original entitlement
to the funds
deposited, the bank would be unjustly enriched.
[63]
It
must be acknowledged, as
Perry
NO’s
case
illustrates, that there is no small measure of difficulty in
determining what
condictio
would be of application. But the general principle is clear. Once the
bank has no liability to its customer in respect of the deposits

made, the bank is enriched. The bank owns the deposits, and its
assets have increased at the expense of the third party, whose
funds
were deposited. The third party is thereby impoverished. Absent an
order upon the bank to make payment to the third party,
the court
would countenance the bank’s unjust enrichment. The recognition
of this unjust state of affairs has led our courts
to recognise a
remedy against the bank to pay to the third party the amount standing
to the credit of its customer’s account,
as was done in
Joint
Stock.
That
remedy is, in this case, appropriate too.
[64]
Lastly,
Spar described its claim as quasi-vindicatory. That characterisation
should be avoided. The Bank is the owner of the funds
deposited.
Spar’s rights are not proprietary in nature. They are founded
upon quite different legal principles, as set out.
If Spar’s
rights were quasi-proprietary, an entirely different set of issues
would become relevant. Not least, how a quasi-proprietary
right could
prevail over the Bank’s ownership of the moneys deposited.
[65]
For
these reasons, the appeal must fail in respect of claims 1 and 4.
Analysis
of Claims 2 and 3
[66]
The
core facts pertinent to these claims are these. It is common cause
that during the period of Spar’s trading, it generated
revenue
which, through the credit card speedpoint channel, was electronically
deposited into both accounts 655 and 309. Similarly,
it is common
cause that Mr Paolo caused disbursements out of these accounts of,
respectively, R2,039,948.68 and R1,358,890.00.
Umtshingo was
liquidated and Central Route was deregistered. Spar could not recover
its losses from Umtshingo.
[67]
The
basis for Spar’s claim against FNB was described in the
pleadings as a duty of care owed by FNB to take reasonable steps
to
protect Spar from loss as a result of Paulo withdrawing funds from
the accounts. It is more accurately described as a legal
duty. The
plea denied the existence of such a duty. In the alternative, FNB
pleaded that if such a claim is competent, and if FNB
was in some
degree negligent and that FNB’s negligence was causally
connected to the harm suffered, Spar too was negligent.
[68]
The
cause of action is predicated upon the legal duty of FNB to prevent
Mr Paulo, as the controlling mind of Umtshingo, from
making
disbursements from Umtshingo’s accounts, into which Spar had
deposited the funds generated by it.
[69]
Whether
such a legal duty exists must commence with a consideration of the
position of Mr Paulo. The evidence at trial supports
two factual
propositions, already addressed in the consideration of claims 1 and
4. First, Mr Paulo entered into an arrangement
with Spar that
permitted Spar to run the Umtshingo businesses for Spar’s
benefit. Consequently, Mr Paulo knew that the proceeds
of the
businesses deposited into the Umtshingo accounts with FNB were Spar’s
funds, and Umtshingo had no entitlement to these
funds. Second, FNB
knew of the arrangement between Umtshingo and Spar, and knew also
that Umtshingo (and hence Mr Paulo) had no
entitlement to the funds
deposited.
[70]
When
Mr Paulo made disbursements from Umtshingo’s accounts, his
conduct amounted to theft. In
Nissan,
[16]
this court explained that an account holder has no entitlement to a
credit resulting from a mistaken transfer into his bank account.

Should the account holder, well knowing that the credit is not due to
him, appropriate the amount credited to his account by withdrawing

funds, the account holder is guilty of theft.
[71]
Mr
Paulo knew that the funds deposited by Spar were the proceeds of the
Umtshingo businesses to which Umtshingo had no claim. That
was the
arrangement he had struck with Spar. He knew, as a result, that
Umtshingo had no claim to the credits generated by the
deposits made
by Spar into the accounts. Mr Paulo nevertheless made disbursements
from the accounts. Mr Paulo thereby appropriated
the funds, knowing
that neither he, nor Umtshingo, were entitled to the funds. Mr Paulo
stole the funds.
[72]
The
issue that arises is whether FNB’s knowledge that Umtshingo had
no entitlement to the funds deposited by Spar, and nevertheless

permitted Mr Paulo to make disbursements from the accounts, gave rise
to any liability by FNB to Spar in delict. Clearly, since
the actions
of Mr Paulo amounted to theft, Spar had a cause of action against Mr
Paulo and Umtshingo. The disbursements were wrongful.
But Umtshingo
was in liquidation, and Mr Paulo, no doubt, had no assets to satisfy
any claim that Spar might have made against
him. Whether FNB can be
held liable for the wrongful conduct of Mr Paulo, depends upon
whether FNB was a joint wrongdoer.
[73]
This
issue was determined in
Yorkshire
Insurance Co Limited,
[17]
recently affirmed in this court in
Breetzke
.
[18]
In
Yorkshire
Insurance Co Limited,
Harris,
a professional trustee and liquidator, paid cheques in respect of
estates under his administration into his personal bank
account and
stole the money. A delictual action was brought against the bank.
Greenberg J held that Harris, in drawing the cheques,
for an
unauthorised purpose, commenced the process of misappropriation. The
bank honoured the cheques, knowing that Harris had
no right to draw
them. The bank was a party to Harris’ unlawful conduct, and
hence a joint wrongdoer.
[74]
Breetzke
concerned
a breach of trust. Wallis JA expressed the principle thus:
‘
Where
the execution of a breach of fiduciary duty involves or requires the
involvement or participation of a third party, and that
third party
has knowledge that the transaction in question involves a breach of
fiduciary duty, it seems to me clear that the legal
convictions of
the community demand that the third party share the liability of the
person breaching the fiduciary duty. That is
not because they owe a
similar duty to the injured party, but because by aiding, enabling or
facilitating the breach they are themselves
equally responsible for
the injury caused to, or loss suffered by, the injured party.’
[75]
Although
Mr Paulo’s disbursements from the accounts were not a breach of
fiduciary duty, they were plainly wrongful. The Bank
enabled Mr
Paulo’s conduct by allowing him to operate the accounts, well
knowing that Umtshingo had no claim to the credits
reflected in the
accounts. Indeed, the Bank had assured Spar that the Bank had frozen
the one account of which Spar had knowledge.
The Bank was a joint
wrongdoer owing a legal duty to Spar.
Contributory
negligence by Spar?
[76]
Did
Spar blunder culpably? With hindsight, Spar, doubtless, appreciated
that it could not rely on FNB to make proper and open disclosure,
nor
rely on FNB’s assurances. The notion of Spar’s
contributory ‘negligence’ is ironic because nothing
FNB
did was as a result of negligence. Its conduct, as traversed above,
was throughout, deliberate and partisan in its own interest.
From the
outset Spar wanted the accounts changed. It was blocked by both Mr
Paulo and FNB who passed the blame to each other. The
deliberate
misleading of Spar by FNB about the truth of what was happening is
the single most important fact to explain Spar’s
conduct. Spar
relied on FNB’s assurances of ‘the account being frozen’
which was a misrepresentation. This conduct
by FNB lies at the core
of its culpable facilitation of the theft by Mr Paulo.
[77]
When
Spar was told that the limits on the only account it knew of, account
323, were lifted, it reacted immediately by an urgent
application to
freeze the funds. The contention that Spar should have done so sooner
ignores the context. FNB officials discussed
the misapprehension of
Spar which their own conduct had brought about and resolved to
preserve Spar’s ignorance. There is
no merit in the submission
that Spar was contributorily negligent in circumstances that were
created by FNB’s conscious preference
of its own interests, and
cynical obfuscation of critical facts which render FNB a joint
wrongdoer with Mr Paulo. Fault cannot
be founded on the premise that
a person could have avoided a loss, by its own timeous volition, if
at the relevant time, it was
not unreasonable for the person not to
have taken that step. To argue that Spar could have been ‘more
careful’ is a
misdirected perspective. In this context the
argument was advanced that the speedpoint devices should have been
removed. However,
this ignores the fact that Mr Paolo prevented that
from happening. Spar’s conduct was not, in these circumstances,
negligent
nor a contributing cause of its loss.
[78]
Moreover,
as the details of FNB’s conduct as a joint-wrongdoer with Mr
Paulo make plain, it is incongruent to construe Spar’s
conduct,
as described, as being negligent in relation to the culpable conduct
of a joint wrongdoer.
[79]
For
these reasons, the appeal must be dismissed in respect of claims 2
and 3.
Analysis
of the prescription argument: claim 4.
[80]
The
formulation of claim 4 was introduced by an amendment in July 2015.
The reaction of FNB to that was to plead prescription, the
claim
relating, of course, to events in 2010 to 2011. The stance of FNB is
not that Spar knew of the claim in 2010 or 2011. FNB
accepts, as it
must, that Spar was ignorant until 2015. Instead, it seeks to avoid
liability by pleading that Spar could have learned
of its claim, at
the latest, in 2011 by using reasonable care. This dispute therefore
is informed by
s 12
of the
Prescription Act 68 of 1969
which
provides:
‘
(1)
Subject
to the provisions of subsections (2), (3), and (4), prescription
shall commence to run as soon as the debt is due.
(2)
If the debtor wilfully prevents the creditor from coming to know of
the existence of the debt, prescription shall not commence
to run
until the creditor becomes aware of the existence of the debt.
(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.
(4)
. . . .’
[81]
Spar
alleges that FNB, within the meaning in
s 12(2)
, prevented Spar from
learning of the debt. The debt in question, it must be emphasised, is
the consequence of the purported set
off by FNB in respect of credits
in account 309. It was by this act that FNB became a debtor of Spar.
The debt is the sum of R898,744.92
by which FNB had been enriched and
Spar impoverished between March 2010 and 8 May 2010 as a
result of FNB’s purported
set off. To know of the ‘debt’
it would have been necessary to know that (1) an identifiable sum of
money purportedly
set off, (2) from an identifiable account (3) by an
identifiable person.
[82]
The
trial court held that Spar had the necessary minimum knowledge of
this debt by June 2011 because at that time Mr Paolo had made
the
affidavit alluded to in the traverse of the facts.
[19]
A deficit in the funds in account 323 the statements of which account
were disclosed in the interpleader application would, so
the trial
court held, have indicated that, when compared to the takings, money
was missing. The court held that the revelation
of two other
accounts, but not account 309, should have prompted further and
better enquiries by Spar. The key argument advanced
on behalf of FNB
is that Ms Hopley should have demanded further bank statements in
2011. However, this submission is meritless.
There was no reasonable
prospect of those statements being forthcoming because of the
obdurate stance of both FNB and of Mr Paolo.
The so-called
‘concession’ relied on from Ms Hopley that no
‘investigations’ were carried out by Spar,
takes the
matter no further because of FNB’s stance.
[83]
The
majority of the full court disagreed that Spar could have learned of
the debt at that time, and correctly so. It addressed specifically

the notion that Spar could have used
rule 35(12)
in the interpleader
application to access account 309. The full court correctly
observed that account 309 was not mentioned
in the affidavit of
Mr Paolo, although he had referred to account 655 and to account
‘988’, the latter being a
dormant account and of no
relevance to the case. Thus, no demand to access account 309 could
have been made.
[84]
As a
result of the deliberate non-disclosure by FNB, even during the early
stages of litigation, Spar had been misled to believe
that Mr Paulo
had disbursed money in the sum of R2,331,324.33, the amount initially
claimed in claim 3. Only after the 2015 discovery
of account 309 did
it become evident that the ‘missing money’ had not been
filched by Mr Paulo, but that FNB had purported
to effect a set off,
as it had in respect of account 323. It was impossible for Spar to
identify FNB as a debtor until that
information was disclosed. The
amendment effected was to reduce the quantum in claim 3 and claim
against FNB in claim 4.
[85]
These
circumstances were a direct result of FNB’s wilful
non-disclosure. FNB’s plea initially filed in August 2013 made

reference to account 988, a dormant account, thereby perpetuating the
misrepresentation. A request for discovery made by Spar in
November
2013 was answered only in August 2014. Account 988 was not discovered
by FNB in response to that request. On a further
demand for better
discovery, eventually the existence of account 309 was revealed in
2015. A plainer illustration of the circumstances
contemplated in
s
12(3)
would be hard to unearth. Accordingly, the claim had not
prescribed.
[86]
In
summary, the law is as follows:
(1)
Where
a deposit, to the knowledge of the bank, is made into the bank
account of a customer to which the customer has no entitlement,
the
bank cannot set off its customer’s indebtedness to the bank
against the credit in the customer’s account deriving
from such
deposit. The third party whose moneys were deposited enjoys a claim
against the bank for the amount so credited.
(2)
A customer, with no entitlement to moneys deposited into their
account, who knows that they enjoy no such entitlement, may not
make
disbursements from the account in respect of credits deriving from
these moneys. To do so amounts to theft. A bank that knows
that its
customer enjoys no such entitlement and nevertheless permits its
customer to make disbursements in these circumstances
renders itself
a joint wrongdoer. As such the bank owes a legal duty to the third
party who was entitled to the moneys deposited
and suffers loss as a
result of the customer’s disbursements.
[87]
FNB
wrongly misappropriated the funds as averred in claims 1 and 4 and is
liable to pay Spar the amounts pleaded.
[88]
FNB
wrongly allowed Paolo to misappropriate funds from the accounts as
averred in claims 2 and 3 and is liable to pay Spar the amounts

pleaded.
[89]
Accordingly,
the appeal must fail.
[90]
The
costs of Spar, including the costs of two counsel should be borne by
FNB, and having regard to the issues debated, should include
the
costs of two counsel.
The
order
The
appeal is dismissed with costs including the costs of two counsel.
Roland
Sutherland
Acting
Judge of Appeal
David
Unterhalter
Acting
Judge of Appeal
Appearances
For
the Appellant:
D M Leathern SC (with him P A Swanepoel
SC)
Instructed
by:

Rorich Wolmarans & Luderitz, Pretoria
Symington De Kok,
Bloemfontein
For
the Respondent:
J P Vorster SC (with him F P Strydom)
Instructed
by:

Moss Marsh Geogiev, Mbombela,
Weavind &
Weavind, Pretoria,
Peter Skein
Attorneys, Bloemfontein.
[1]
The
scale of the exposure compared to what was arranged on 1 February
2010 is unexplained.
[2]
Ms
Van der Walt was Mrs Streicher by the time she testified. Her name
by which she was known at the time of the events is retained.
[3]
In
due course Mr Paulo’s skepticism about the perfection order
was proven correct because it was dismissed on the grounds
that the
court that ordered it had no jurisdiction to do so.
[4]
The
last word of the sentence is obscured in the document in the record.
[5]
ABSA
Bank Bpk v Janse van Rensburg
2002
(3) SA 701
(SCA) at 709A-B;
Dantex
Investment Holdings (Pty) Ltd v National Explosives (Pty) Ltd (In
Liquidation)
1990
(1) SA 736 (A).
[6]
Joint
Stock Co Varvarinskoye v ABSA Bank
Ltd
and
Others
[2008] ZASCA 35; 2008 (4) SA 287 (SCA).
[7]
First
National Bank of Southern Africa Ltd v Perry NO and Others
2001
(3) SA 960 (SCA).
[8]
Nissan
South Africa (Pty) Ltd v Marnitz NO and Others
2005
(1) SA 441
(SCA) paras 25 and 26.
[9]
At
para 42.
[10]
Supra,
para 27.
[11]
At
para 31.
[12]
McEwen
NO v Hansa
1968
(1) SA 465 (A).
[13]
Dantex
Investment Holdings (Pty) Ltd v National Explosives (Pty) Ltd (In
Liquidation)
1990 (1) SA 736
(AD) at 749H – 750A.
[14]
J
Voet
Commentarius
ad Pandectas
(2012)
para 20.4.13.
[15]
Joint
Stock
para 42;
Nissan
paras
25-27.
[16]
Nissan
para 25.
[17]
Yorkshire
Insurance Co Limited v Barclays Bank (Dominion, Colonial &
Overseas)
1928
WLD 199.
[18]
Breetzke
and Others NNO v Alexander NO and Others
[2020] ZASCA 97; 2020 (6) SA 360 (SCA).
[19]
See
above, para 33.