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[2023] ZAFSHC 191
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Bresler Boerdery (Pty) Ltd v Remitto (Pty) Ltd and Another (2412/2023) [2023] ZAFSHC 191 (24 May 2023)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Case no: 2412/2023
In
the matter between:
BRESLER
BOERDERY (PTY) LTD
Applicant
(Registration
number: 2021/994230/07)
and
REMITTO
(PTY) LTD (under provisional liquidation)
First
Respondent
(Registration
number: 2005/012357/07)
THE
MASTER OF THE HIGH COURT: FREE STATE
Second
Respondent
BLOEMFONTEIN
CORAM:
OPPERMAN, J
HEARD
ON:
19 May 2023
DELIVERED
ON:
24 May 2023. The judgment was handed down
electronically by circulation to the parties’ legal
representatives
by email and release to SAFLII on 24 May 2023. The
date and time for hand-down is deemed to be 24 May 2023 at 16h00
JUDGMENT
BY:
OPPERMAN, J
SUMMARY:
Urgent application – reimbursement of monies erroneously
paid
into bank account of a provisionally liquidated company –
suspicious conduct of the director of the liquidated company
to be
investigated
JUDGMENT
[1]
The real truth of this case is that an innocent
bystander was
unknowingly drawn into possible illegal conduct committed by the
director of a company under provisional liquidation.
[2]
The
lis
on the untoward
conduct lies between the director of the company under provisional
liquidation and the provisionally appointed liquidators.
[1]
[3]
It is prudent to introduce the parties involved
at this stage of the
judgment:
1.
Remitto (Pty) Ltd (Remitto),
the first respondent, is a company under
provisional liquidation. The first respondent was apparently
registered as such in 2005.
On the 3
rd
of February 2023
the business rescue proceedings in respect of Remitto was converted
into liquidation proceedings and the company
was placed under
provisional liquidation in the hands of the Master of the High Court:
Free State.
2.
The Master is the second
respondent in this case. They did not oppose
the application.
3.
Parallel hereto did the
sole director of Remitto, one Alexander,
register a company Remitto Grow Smarter (Pty) Ltd, registration
number 2015/139292/07
(Remitto Grow Smarter), that conduct the same
business as Remitto with, apparently, the same clients.
4.
On 23 February 2023 the
Master went forth and appointed Mr ER Smith
and Mr CT Maredi as provisional liquidators.
5.
Standard Bank is the applicant
in the liquidation under case no.:
3538/2022 and also the bank that manages the account of Remitto and
wherein the erroneous payment
was made.
6.
Mr Bresler is the single
shareholder and a director of the applicant
company, Bresler Boerdery (Pty) Ltd, that has its registration number
as 2021/994230/07.
[4]
The calamity of the case has its origin on
the farm Kroonland where
Mr Bresler started to prepare for the 2023 planting season. He
ordered herbicide from Remitto Grow Smarter.
[5]
On 27 February 2023 he received a tax invoice
from Remitto Grow
Smarter to the amount of R1 300 000.00 under document D52120.
[6]
The banking details on the invoice is for
a First National Bank
account wherein the payment was due.
[7]
On 28 March 2023 his wife, that manages the
payments for the
applicant, made a payment of the amount due to Remitto Grow Smarter
in the amount of R1 300 000.00 into the Standard
Bank account of the
first respondent, Remitto.
[8]
It is common cause that the error was
bona fide.
The applicant
did business with Remitto in the past and Mrs Bresler did not take
cognisance of the details of the bank account of
Remitto Grow
Smarter.
[9]
It is common cause that the applicant was
not a debtor of the first
respondent during February – March 2023 and did not owe any
money to the first respondent, Remitto.
[10]
In the meanwhile, Remitto Grow Smarter delivered the herbicide to
the
applicant on the farm Vierdehoek in the beginning of March 2023. The
amount of R1 300 000.00 was paid for the product on 28
March 2023
into the account of Remitto.
[11]
Mr Bresler received a call from Remitto Grow Smarter in April 2023
and he realised that the deposit of the monies was made into the
wrong account. He was also later issued with a credit note from
Remitto Grow Smarter and threatened with the repossession of the
herbicide delivered to the farm Vierdehoek.
[12]
Crucial is the fact that the planting season must commence within
three weeks from the date of delivery of this application on 15 May
2023. Farmers nationwide are preparing fields for planting
after
having gathered the 2022-2023 harvest. The herbicide ordered by the
applicant, and now in Mr Bresler’s possession,
is all but
unobtainable currently due to the demand therefor. The price of the
herbicide increased extensively and is almost 20%
higher than what
the applicant paid for it during March 2023. As result of the small
profit margins in grain farming due to various
factors such as
inflation, fuel costs, equipment costs and other factors; the
applicant’s farming operations will be dealt
a devastating blow
if it was forced to plant its fields without the necessary herbicide
being used to prepare the fields. It is
the case of Mr Bresler, that
the applicant’s cashflow and business will not survive the
devastating blow of losing the R1
300 000.00 and not being able to
plant the next season’s harvest.
[13]
Central to the application is also the fact that Mr Bresler at all
times presented to this court that he wants to comply with the law
and at all times do what was honourable and legal; hence the
application.
[14]
After the information that the monies were erroneously paid into
the
Standard Bank account came to his notice, Mr Bresler immediately
contacted his attorney and they contacted the provisional
liquidator,
Mr Smith on 17 April 2023. Mr Smith investigated the situation and
informed that they will give feedback to the applicant
“by end
of business on 12 May 2023”. This was on 8 May 2023.
[15]
On 11 May 2023 the situation turned dire when Remitto Grow Smarter
issued a credit note and threatened with repossession of the
herbicide.
[16]
The applicant launched an urgent application on 15 May 2023 for
the
monies to be returned to their account and for the provisional
liquidators to authorise the payment.
[17]
The provisional liquidators maintained the refusal to release of
the
R1 300 000.00 to the applicant on the grounds that they are duty
bound to investigate the conduct of Alexander. They opposed
the
application on urgency and merits.
[18]
The Master is
apparently not legally authorised to intervene or authorise any
payments of monies that lie in the hands of the liquidators.
[2]
[19]
Lateral hereto the liquidators applied, on an urgent and
ex parte
basis, for an extension of their authority to investigate the conduct
of the first respondent and its director. The cases were
set down for
19 May 2023.
[20]
Prayer 7 to the effect that the funds deposited with the liquidated
estate in the amount of R1 300 000.00, to which Bresler Boerdery
(Pty) Ltd has laid claim by way of the application launched under
civil case cover number 2412/2023, to be kept in trust in an
interest-bearing account up and until 24 August 2023, by which date
the liquidators must inform Bresler Boerdery (Pty) Ltd whether or not
they accept or reject the claim; was denied. The concession
was made
by advocate Tsangarakis that it would not be appropriate to grant
prayer 7 due to the urgent application from Bresler
Boerdery that had
to be adjudicated first and foremost.
[21]
The conundrum on the facts is that Bresler Boerdery will suffer
a
severe injustice should the urgent application for the release of the
money from the Standard Bank account not be granted. An
innocent
bystander will definitely be punished for the suspected illegal
conduct of the sole director of the first respondent.
A dispute in
which Mr Bresler has not an inkling of interest or fault.
[22]
The facts have shown beyond any doubt that the application is urgent
and that the applicant did all it could to expedite the events. The
delay was with the provisional liquidators that took some time
to
reply to the request of the applicant. The prejudice to the applicant
will be severe if the matter is not adjudicated immediately
and this
application is the only remedy.
[23]
This brings me to the law that regulates the facts of the case.
1.
The cases of
FirstRand Bank Limited v The Spar Group Limited
(1334/2019)
[2021] ZASCA 20
(18 March 2021) (the Spar Group - case)
and
Nissan South Africa (Pty) Ltd v Marnitz No and Others (Stand
186 Aeroport (Pty) Ltd Intervening)
2005 (1) SA 441
(SCA) (the
Nissan - case) dictates the law on the facts of this case.
2.
In the Nissan - case the
court was required to decide whether a bank
can unilaterally reverse a credit without the consent of the
recipient. In answering
this question, the Supreme Court of Appeal
held that payment in these scenarios is a bilateral act and requires
the meeting of
two minds. In the circumstances where Nissan did not
intend transferring R12.7 million into the recipient’s account,
there
was no meeting of minds and consequently
no valid transfer
of funds
. On the facts, the recipient’s conduct in using
the funds for its own purposes’ amounts to appropriation and
fraud.
3.
Nissan South Africa (Pty)
Ltd (Nissan) instructed its bank, FNB, to
make certain payments to its creditors. One of the creditors that had
to be paid an amount
of R12 767 468.22, was TSW Manufacturing.
However, due to a clerical error, the wrong banking details were
furnished. This resulted
in the payment being made into a third
party’s account namely, Maple.
4.
At no point in time was
any amount due to Maple by Nissan. Once Maple
realised that the money was deposited to its account, it transferred
R12 700 000.00
from its Standard Bank account to its FNB receipts
account. Soon thereafter Maple transferred the money to its payments
account.
Here the funds were being utilising in conducting the
day-to-day business of Maple.
5.
Twenty days later TSW made
enquiries about the payment. Nissan now
became aware of the erroneous payment and demanded that the funds be
returned. Maple indicated
that they were prepared to comply with the
demand subject to it retaining the interest earned thereon and a
lavish “administration
fee” of 4% of the amount
concerned.
6.
Nissan obtained a court
order to freeze Maple’s account. This,
according to the sole member of Maple; Stanley, placed considerable
financial strain
on Maple. It caused the voluntarily liquidation of
Maple.
7.
Similar to the situation
in casu
, Stanley and Maple’s
liquidators contended that this amount formed part of Maple’s
insolvent estate and is therefore
subject to the
concursus
creditorum
.
8.
Nissan therefore applied
to court for an order declaring that the
money and any interest that accrued thereon did not form part of the
insolvent estate
of Maple Freight CC (in liquidation) and directing
the first and second respondents to pay the amount to the appellant,
alternatively,
FNB.
9.
The Supreme Court of Appeal
held that a bank which had
unconditionally credited its customer’s account with an amount
received was not liable to pay
the amount to the customer on demand
where the customer came by such money by way of fraud or theft. If
stolen money were paid
into a bank account to the credit of the
thief, the thief had as little entitlement to the credit as he had to
the money itself.
10.
It further held that payment was a bilateral juristic act which
required there to be a meeting of two minds. There was no meeting
of
the minds in this scenario, therefore Maple had not become entitled
to the funds erroneously credited to its account.
11.
Accordingly, the Supreme Court of Appeal upheld
the appeal and held
that the order of the Court
a quo
had to be replaced with an
order declaring that the funds did not form part of the insolvent
estate of Maple (in liquidation) and
directing the release of the
funds to Nissan.
12.
The Supreme Court of Appeal in 2021 delivered judgment
in the matter
of
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). It was ruled that:
i.
A customer with no entitlement to monies deposited into its account
and
who knows that it enjoys no such entitlement, may not pay out
monies against the credit to the account and if the customer does
so,
it amounts to theft;
ii.
a third party whose monies are deposited into the customer’s
account enjoys
a claim against the customer’s bank for the
amount so credited if the bank is aware that the monies belong to the
third party;
and
iii.
a bank that knows that its customer enjoys no entitlement to funds
deposited into
the customer’s account, but still allows the
customer to pay out those funds, renders itself a joint wrongdoer. In
these
circumstances, the bank owes the third party whose funds were
wrongly paid into the customer’s account, a legal duty. Such
third party can claim any loss suffered as a result of the bank
permitting the withdrawal of the funds wrongly paid into the
customer’s
account.
13.
The question that now arises is when can a credit
transfer be
reversed from an account?
14.
The general
principle regarding the reversal of credit transfers is that a bank
may not reverse a credit from a customer’s
account without that
customer’s authority.
[3]
15.
In
Nedbank
Limited v Pestana
(142/08)
[2008] ZASCA 140
;
2009 (2) SA 189
(SCA) ;
(2009) 71 SATC 97
;
[2009] 2
All SA 58
(SCA) (27 November 2008),
[4]
the Supreme Court of Appeal held that the bank intended to make an
unconditional payment on behalf of its customer and intended
to
receive payment unconditionally on behalf of the recipient. In these
circumstances, Nedbank was not entitled to reverse the
transfer from
the recipient’s account despite receiving a section 99 order
from the South African Revenue Services earlier
on the day of
payment. The Court however commented, albeit obiter, that payments
may be validly reversed when a credit into an
account is treated as
provisional and is subjected to a hold in terms of standard banking
practice, the recipient received the
credit by way of fraud or theft,
or where an account was erroneously credited.
16.
In
Ixocure (Pty) Ltd v Firstrand Bank Ltd
(19619/2014)
[2017]
ZAWCHC 139
(30 November 2017) the Court took account of the fact that
the bank’s witness gave evidence to the effect that the credit
entry into the recipient’s account was provisional and the
entry was not finalised before the hold was placed on the recipient’s
account because the transfer into its account was reported as
fraudulent. The court ultimately held that the bank was entitled
to
reverse the credit transfer.
17.
The above indicates that where a credit emanates
from a valid and
correct instruction; the recipient’s consent is required before
the reversal of the transfer. Where the
transfer is invalid or a
bona
fide
error, it might be legal to argue that the reversal of that
credit can be effected without the recipient’s consent.
18.
The circumstances of each matter will dictate whether
the credit can
be reversed and whether such reversal requires the recipient’s
consent.
[24]
In the instance:
1.
The monies that were transferred
by
bona fide
error into the
Standard Bank account was the property of Bresler Boerdery (Pty) Ltd
before it landed into the account.
2.
It is further clear that the payment had to be a bilateral
juristic act which required “a meeting of two minds”.
There
did not occur a meeting of the minds in this scenario. For this
reason, Remitto as the provisionally liquidated estate, did not
become entitled in any way to the funds erroneously credited to its
account.
3.
The liquidators may not
lay claim to it; not even to finalise their
investigations and in the interim. This is specifically pertinent in
the light of the
severe prejudice that the Bresler Boerdery will
suffer.
4.
The money may not be captured
to ease the duties and investigations
of the liquidators. They have the right and remedy to take action
against Remitto Grow Smarter
and to do so on an urgent basis at a
suitable time in future. They may not use an innocent bystander to
promote their cause. It
is just not fair and equitable, no matter the
noble intentions to protect the interest of the liquidated company’s
creditors.
The right(s) of the one does not exceed the other. Bresler
Boerdery may not be held accountable for the suspected and not yet
proven
illegal conduct of Alexander from Remitto Grow Smarter.
5.
The money is the
de facto
property of Bresler Boerdery to be
appropriated as they see fit. In the instance the bank has
de iure
control awaiting the authorization of the liquidators to deal with it
in whatever way they direct; this to play it safe.
6.
The above said; the caveat
is that the judgments of the Supreme Court
of Appeal indicate that where a credit emanates from a valid and
correct instruction;
the recipient’s consent is required before
the reversal of the transfer. Where the transfer is invalid or a
bona
fide
error, it might be legal to argue that the reversal of that
credit can be effected by the bank without the recipient’s
consent.
7.
The first respondent as
represented by the provisional liquidators
will have no option but to authorise the reversal of the monies to
the account of the
applicant.
8.
The liquidators were not
cited in the litigation but Advocate
Tsangarakis gracefully pointed out that the Supreme Court of Appeal
has ruled that and order
against the estate in liquidation is an
order against the liquidators. This in accordance with
Gainsford
N.O. and Others v Tanzer Transport (Pty) Ltd, In Re; Gainsford N.O.
and Others v Tanzer Transport (Pty) Limited and Others
(076/2013)
[2014] ZASCA 32
;
2014 (3) SA 468
(SCA);
[2014] 3 All SA 21
(SCA) (28
March 2014).
9.
Standard Bank was not cited
and is not a party to the litigation.
They are however the applicant in the liquidation of Remitto.
10.
Advocate van Rensburg conceded to an interest rate
of 10,5%.
[25]
ORDER
1.
The court is satisfied that
the abridgement of times and the
deviation from the Uniform Rules are justified by the circumstances
of the case; and if the matter
is not heard immediately, that the
applicant will not be afforded substantial and effective redress at a
hearing in due course.
Condonation is thus granted to the applicant
to have the matter enrolled in terms of Rule 6(12) of the Uniform
Rules of this court.
2.
The relief sought in the
notice of motion is granted and as per the
alternative prayer to prayer 2:
2.1
It is ordered that the first respondent make payment to the applicant
in the amount of R1
300 000.00 plus interest calculated on the said
amount at 10,5% interest per annum
a tempore morae
and
immediately on the service of this order on the first respondent.
2.2
The first respondent to pay the applicant’s costs.
M OPPERMAN, J
APPEARANCES
On
behalf of the applicant
ADVOCATE
GS JANSE VAN RENSBURG
Chambers,
Bloemfontein
Rosendorff
Reitz Barry Attorneys
BLOEMFONTEIN
On
behalf of the first respondent
ADVOCATE
S TSANGARAKIS
ADVOCATE
J DONNELLY-BORNMAN
Chambers,
Bloemfontein
Rossouws
Attorneys
BLOEMFONTEIN
[1]
At
pages 52 to 54 of the Indexed Bundle, it was stated
by the
liquidator, Mr Smith that:
“
9.6.1
Upon being informed by the applicant of the purported erroneous
payment into the liquidated estate,
I requested the applicant to
provide the facts and circumstances relevant thereto in order to
take instructions and obtain the
necessary permission from the
creditors of the liquidated estate;
9.6.2
Upon being provided with the applicant’s version of events and
documentation relevant
thereto however, it would appear as if the
sole director of the liquidated estate has been conducting the
business, and servicing
the customers of the liquidated estate
through another juristic entity namely Remitto Grow Smarter (Pty)
Ltd, which is of course
impermissible.
9.6.2.1
Consequently, there is a reasonable apprehension that the business
of the liquidated estate has been
unlawfully hi-jacked with
commensurate effect that an enquiry to determine the true owner of
the funds is both necessary and
unavoidable. The business to
which I which to refer is
inter alia
that of the sale and
distribution of herbicides, which was previously conducted by the
liquidated estate and which now appears
to be conducted by an entity
known and described Remitto Grow Smarter (Pty) Ltd;
9.6.2.2
In the current circumstances, Maredi and I, as the duly appointed
provisional liquidators of the liquidated
estate, are statutorily
obliged to investigate the true ownership of the funds paid to the
liquidated estate by the applicant
in order to protect the interests
of the general body of creditors which interests are substantial;
and
9.6.2.3
This has necessitated the simultaneous prosecution of an urgent
application, in terms in which we shall
apply for the extension of
our powers and the authorisation of an urgent commission of enquiry.
That application will, together
with the service and filing of this
affidavit, be issued and enrolled to be heard immediately prior to
the hearing of this application.
The commission of enquiry will
furnish us with an extremely effective platform to ascertain the
truth and for which exercise
a period of approximately 3 months is
required.”
[2]
Section 361(1)
of the
Companies Act, 71 of 2008
reads: “In any
winding-up by the Court all the property of the company concerned
shall be deemed to be in the custody and
under the control of the
Master until a provisional liquidator has been appointed and has
assumed office.” This necessarily
implies that upon the
appointment of the provisional liquidator the latter has custody and
control of the company's property
(Delport and Vorster Henochsberg
on the Companies Act 71 of 2008 (LexisNexis, Durban 2021) vol 1 at
764 and Blackman above n
10 at 14-251).
[3]
Schulze, WG: Professor in Banking Law, University of
South Africa:
Journals Collection, Juta's/Mercantile Law Journal (2000 to date)/SA
Mercantile Law Journal/2020 : Volume 32/Part
1 : 1
174/Articles/The reversal of electronic payments under South African
law: Possible guidance from recent developments
in European Union
law URL:
http://jutastat.juta.co.za/nxt/gateway.dll/jelj/samerclj/3/55/56/59/61?f=templates$fn=default.htm
as on 23 May 2023.
The
reversal of electronic payments under South African law: Possible
guidance from recent developments in European Union law
2020
SA Merc LJ 22.
Take
and Save Trading CC & others v Standard Bank of SA Ltd
2004
(4) SA 1
(SCA). For a discussion of Take and Save Trading CC, see
Van Heerden, (Juta 2016) 378–379.
[4]
The judgment of the full court (per Schwartzman J; Goldstein
and
Tshiqi JJ concurring) has been reported: see
Pestana
v Nedbank
[2007] ZAGPHC 283
;
2008 (3) SA 466
(W);
[2008] 1 All SA 603
(W). The judgments of the
two courts below have attracted academic discussion, both pro and
contra. See: W G Schulze,
Electronic
Fund Transfers and the Bank’s Right to Reverse a Credit
Transfer: One Small Step for Banking Law, One Huge Leap
for Banks
(2007) 19 SA Merc LJ 379–387 (Schulze 2007); W G Schulze,
Electronic
Fund Transfers and the Bank’s Right to Reverse a Credit
Transfer: One Small Step (Backwards) for Banking Law,
One Huge Leap
(Forward) for Potential Fraud: Pestana v Nedbank (Act One, Scene
Two)
(2008) 20 SA Merc LJ 290–297 (Schulze 2008); J C Sonnekus,
Eensydige
Terugskryf van Kliënt se Krediet deur Bank Onregmatig,
(2008) TSAR 348
–354.