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[2008] ZASCA 140
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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)
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THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case
No: 142/08
In the matter between:
Nedbank limited
A
ppellant
and
jose manuel pestana
Respondent
Neutral Citation:
Nedbank
v
Pestana
(142/08) [2008] ZASCA 140 (27 November 2008)
Coram: Streicher, Brand JJA and Griesel AJA
Heard: 14 November 2008
Delivered: 27 November 2008
Summary
:
Banker
– transfer of funds to client’s account – whether
bank entitled to reverse transfer without client’s
authority
in view of bank’s appointment as agent in terms of s 99
of Income Tax Act 58 of 1962.
Order
On appeal from:
High
Court, Johannesburg (
Goldstein, Schwartzman and Tshiqi JJ
sitting as a court of appeal):
The appeal is dismissed with costs, including the costs of two
counsel.
judgment
griesel
AJA (Streicher
and
Brand JJA
concurring)
:
Introduction
This appeal concerns the effect of s 99 of the Income Tax Act
58
of 1962 (
the Act
)
1
and, more specifically, the question whether the section permits a
bank in the position of the appellant to reverse a credit
to a
client’s account without the latter’s authority. (For
convenience, I refer to the appellant, Nedbank Limited,
as
the
bank
and to the respondent, Mr Jose Manuel Pestana, as
the
plaintiff
.)
The
matter originally came before the Johannesburg High Court
(Matopho J), where the question posed above was answered
in
favour of the bank. On appeal to a full court, the order of the
trial court was reversed and judgment was granted in favour
of the
plaintiff as claimed.
2
The present appeal comes before us with special leave of this Court.
Factual
background
The
case arises from a series of transactions, all taking place on
4 February 2004, involving the appellant’s Carletonville
branch (
the branch
). The facts are common cause and have been
placed before court by way of a stated case in terms of Uniform rule
33(1) and (2).
For purposes hereof the salient facts may be
summarised as follows:
The plaintiff had
been conducting a current account at the branch since 1969. A
namesake, one Joseph Michael Pestana (
Pestana
), conducted a
similar account at the same branch.
3
On 4 February 2004,
at a stage when Pestana’s account was in credit in an amount
of R 496 546,40, he requested
the branch to transfer an
amount of R 480 000 from his account to that of the
plaintiff.
At 11h33 the branch
carried out Pestana’s instruction and ‘transferred the
amount of R 480 000 to the
plaintiff’s account’
from Pestana’s account.
4
The said amount was credited to the plaintiff’s account and
his bank statement (a copy of which was attached to the stated
case) reflected a credit entry to that effect, with a corresponding
debit to Pestana’s account.
Unbeknown to the
staff member at the branch who attended to the transfer of the
money to the plaintiff’s account, the
bank’s head
office in Rivonia had earlier that day, at 8h44, received a
telefaxed notice in terms of s 99 of the
Act from the
Randfontein office of the South African Revenue Service (
SARS
)
in respect of Pestana’s account. In terms of the pre-printed
notice, SARS informed the bank that Pestana was indebted
to it
in an amount of some R340 million; it appointed the bank as
the agent for Pestana and required the bank to make
payments in
respect of the amount due to SARS ‘as funds is (
sic
)
available or became (
sic
) available till full settlement’.
The covering letter accompanying the instruction impressed upon the
bank that it was
intended for its ‘very very urgent
attention’.
Later that day, and
after it had already transferred the R 480 000 to
the plaintiff’s account, the branch
was notified by its head
office of the bank’s appointment in terms of s 99 of the
Act.
The branch thereupon
‘reversed the transfer to the plaintiff’s account’
and, still on the same day, paid an
amount of R 496 000
to SARS from Pestana’s account.
The bank did not
request the authority of the plaintiff to reverse the amount of
R 480 000 and no authority to do
so was given by the
plaintiff.
Against
this background, the parties asked the court to determine the
following question of law:
Was the [bank]
and having regard to its appointment in terms of s 99 of the
Act, entitled to reverse the payment of R 480 000
without
authority from the plaintiff?
It was
agreed between the parties that if the answer to this question was
in the negative, the plaintiff would be entitled to
judgment as
claimed.
With
regard to the question of law posed, the plaintiff contended that
the notice in terms of s 99 of the Act was received by
the branch
after transfer of the money to the plaintiff’s account. The
branch was not aware of the notice which had been
given by SARS to
the bank’s head office and was accordingly not obliged to act
in terms thereof. Once the funds had been
transferred from Pestana’s
account to the plaintiff’s account, the funds belonged to the
plaintiff; accordingly the
funds could not be transferred out of the
plaintiff’s account without his authority and consent which
was not given.
The bank contended, on the other hand, that it was obliged,
following its appointment as agent of SARS in terms of s 99,
to
reverse the transfer made to the plaintiff’s account as the
bank was appointed as such prior to the transfer being made
to the
plaintiff’s account. The instruction by Pestana to transfer
the money to the plaintiff’s account was received
after the
bank’s appointment in terms of s 99 and accordingly the
transfer to the plaintiff’s account was invalid
and was made
erroneously, with the result that the plaintiff was not entitled to
receive the money so transferred. The act of
crediting the
plaintiff’s account in its books, so the bank contended, did
not in itself create liability towards the plaintiff,
as the credit
in the plaintiff’s account was wrongly made and could be
reversed.
5
Finally, the bank contended that the transfer of the funds to the
plaintiff’s account was invalid and the defendant could
not
validly adhere to the instruction given to it by Pestana in the
light of the notice in terms of s 99, as the notice
was
received prior to the instruction being given to the bank by
Pestana.
As
mentioned earlier, the trial court answered the question of law in
favour of the bank, holding that the bank was entitled to
reverse
the credit to the plaintiff’s account. The full court
disagreed with this conclusion for the reasons stated in
the
reported judgment. In essence, the court held that a completed and
unconditional payment had been effected when the bank
credited the
plaintiff’s account, with the result that the bank could not
unilaterally reverse the credit.
6
Legal
position
It is well-established that, in general, entries in a bank’s
books constitute prima facie
evidence of the transactions so
recorded. This does not mean, however, that in a particular case one
is precluded from looking
behind such entries to discover what the
true state of affairs is.
7
Some examples where a credit may be validly reversed by a bank were
mentioned by Zulman JA in
Oneanate
:
8
‘
. . . [I]f
a customer deposits a cheque into its bank account, the bank would
upon receiving the deposit pass a credit
entry to that customer’s
account. If it is established that the drawer’s signature has
been forged it cannot be suggested
that the bank would be precluded
from reversing the credit entry previously made. So, too, if a
customer deposits bank notes into
its account the bank would
similarly pass a credit entry in respect thereof. If it subsequently
transpires that the bank notes
were forgeries it can again not be
successfully contended that the bank would be precluded from
reversing the credit entry.’
Further examples where a credit may be validly reversed, include
cases where a cheque has been deposited into a client’s
account and the resultant credit entry is treated as provisional (or
conditional), subject to a hold period in terms of ‘standard
banking practice’;
9
or where the client came by the money by way of fraud or theft;
10
or where a wrong account was erroneously credited.
11
Absent
some
legitimate reason for reversal, however, the
general principle is that once an amount has been
validly
transferred by A to the credit of B’s bank account, the credit
belongs to B and the bank has to keep it at B’s disposal;
it
cannot simply retransfer the money back into the account of A
without the concurrence of B.
12
Reverting
to the case at hand, the court a quo rightly observed that its duty
was to ascertain ‘whether the court below
came to the correct
conclusion
on the case submitted to it
’.
13
This means that the parties
and
the court are bound by the
agreed facts as set out in the stated case. In terms of rule 33(3),
‘. . . the
court may draw any inference of fact
or of law from the facts and documents placed before it as if proved
at a trial’,
but it may not stray beyond those parameters. It
is wholly impermissible, therefore, for the court to read between
the lines,
as it were, and to speculate (as Schulze does)
14
that, because the available facts ‘have a decidedly suspicious
ring to them’, the mandate given by Pestana to the
bank may
have been ‘tainted with fraud’ and that it was therefore
‘in all probability not a valid mandate as
it was given in
order to commit a crime’. On the agreed facts and documents
before us, there is no suggestion that either
Pestana or the
plaintiff were parties to a theft or a fraud or any other improper
conduct relating to the money in Pestana’s
account; nor are
there any facts from which it can be inferred that the transfer of
the money to the plaintiff’s account
was in any way
conditional.
Section 99
Against
the foregoing background, counsel attempted to justify the bank’s
unilateral reversal of the transfer by relying
squarely on the
provisions of s 99. Counsel submitted in their written heads of
argument (a) that the appointment of
the bank in terms of s 99
was a form of garnishment, such as is available in regard to
ordinary civil judgments; and (b) that
it ‘has an effect
similar to a seizure of the funds’. While there is authority
for proposition (a),
15
we were not referred to any authority in support of proposition (b),
nor am I aware of such authority.
The court a quo did not accept this argument, holding instead
‘. . . that there were two things that the
s 99
notice did not do: it did not freeze Pestana’s account and it
did not transfer or effect a cession of the funds
in Pestana’s
account to SARS’.
16
Later in the judgment, the court emphasised that ‘the s 99
notice did not divest Pestana of the R 480 000
standing to
the credit of his account’.
17
In my view, these conclusions are clearly correct, with the result
that the bank’s argument cannot succeed.
A
related argument on behalf of the bank was based on the following
finding of the court a quo, paraphrasing a dictum by Harms JA
in
Burg Trailers, supra,
18
namely that –
‘
the
[bank] could on 4 February 2004 only have had one intention and this
intention would have affected both of its clients. It was
not
possible for it to intend to accept payment on behalf of the
plaintiff while simultaneously intending, on behalf of Pestana,
not
to pay. Once it intended to pay unconditionally on behalf of Pestana,
it could not intend not to accept payment on behalf of
the plaintiff.
If the payment to the plaintiff, or the crediting of his account, was
unconditional, it follows that the bank could
not unilaterally
reverse the credit.’
19
Counsel
submitted that it was common cause that the bank’s head office
– the ‘directing mind’ of the bank,
in the words
of counsel – intended to comply with its appointment in terms
of s 99. Although this is not spelt out
in so many words in the
stated case, I am prepared to accept for purposes of the present
argument that this was indeed the bank’s
intention at head
office level. From this premise, counsel sought to conclude that
‘[t]herefore the decision by the branch
to effect the credit
entry (without knowledge of the s 99 appointment) is not
relevant in law: it was not a decision made
by the [bank], ie by its
relevant organ’.
In my
view, this argument amounts to a non sequitur. First, whereas the
s 99 notice to head office may be regarded as effective
notice
by SARS to the bank as a single corporate entity, it does not follow
that it must at the same time be regarded as constructive
notice to
each branch of the bank. It was incumbent upon the bank – and
obviously in its own interest – to ensure
that notice of its
appointment reaches the relevant branch(es) as soon as possible.
20
Second, until such time as it received actual notice of the bank’s
appointment as agent in terms of s 99 and head
office’s
intention thereanent, the branch was entitled to continue its
ordinary everyday banking functions. Thus it was
entitled to accept
a valid and lawful mandate from its client, Pestana, to transfer
money from his account to that of the plaintiff.
In executing that
mandate in the ordinary course of its business, the branch clearly
intended to pay on behalf of Pestana and
to accept payment on behalf
of the plaintiff.
21
I cannot agree, therefore, that the decision to pay was ‘erroneous’,
or that the decision of the branch is ‘not
relevant in law’,
as argued. The fact that the branch subsequently changed its mind
cannot, in my view, undo the validity
of the completed transaction.
As it was put by the court a quo:
22
‘
Once
the debit and credit occurred as they did, they constituted a
completed juristic act independent of any underlying
justa causa
.’
In
argument before us, counsel for the bank conceded that if it were to
be found that the bank intended to make payment to the
plaintiff,
that is the end of the matter. For the reasons set out above, I am
satisfied that the bank, as represented by the
branch in question,
clearly had the requisite intention.
Conclusion
It
follows that, in my view, the court a quo came to the correct
conclusion with regard to the legal question posed in the stated
case. Accordingly the appeal is dismissed with costs, including the
costs of two counsel.
______________________
B M GRIESEL
ACTING JUDGE OF APPEAL
APPEARANCES:
COUNSEL
FOR APPELLANT: J.G. Wasserman SC; H.J. Smith
INSTRUCTED
BY: Cliffe Dekker Inc; Johannesburg
CORRESPONDENT:
Webbers; Bloemfontein
COUNSEL
FOR RESPONDENT: J.J. Brett SC; N. Jagga
INSTRUCTED
BY: David Kotzen Attorneys; Johannesburg
CORRESPONDENT: Lovius
Block Attorneys; Bloemfontein
1
Section 99 provides: ‘
Power to appoint agent –
The
Commissioner may, if he thinks necessary, declare any person to be
the agent of any other person, and the person so declared
an agent
shall be the agent for the purposes of this Act and may be required
to make payment of any tax, interest or penalty
due from any moneys,
including pensions, salary, wages or any other remuneration, which
may be held by him or due by him to the
person whose agent he has
been declared to be.’
2
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.
3
The
stated case is silent as to the relationship between the two
Pestanas.
4
Again,
it is not stated exactly how the transfer was effected, eg by way of
electronic funds transfer or by some other means,
but nothing turns
on this. It is accordingly not necessary, for purposes of this case,
to enter ‘the maze of problems and
uncertainties underlying
the law relating to electronic fund transfers’ (Schulze (2008)
at 291).
5
This
contention appears to be based on a dictum by Schutz JA in
First
National Bank of SA Ltd v Perry NO & Others
2001 (3) SA 960
(SCA) para 32.
6
Paras
13 and 14 of the judgment.
7
Standard
Bank of South Africa v Oneanate Investments (in Liquidation)
1998 (1) SA 811 (SCA) at 823B. See also
Perry’s
case,
supra, loc cit.
8
Supra
at 823B–D.
9
Burg
Trailers SA (Pty) Ltd & Another v ABSA Bank Ltd & Others
2004 (1) SA 284 (SCA) para 9. See also
Eriksen
Motors (Welkom) Ltd v Protea Motors, Warrenton
1973 (3) SA 685
(A) at 693G–H;
Absa Bank Ltd v Standard Bank of SA Ltd
[1997] ZASCA 71
;
1998 (1) SA 242
(SCA) at 252A–F.
10
Nissan
South Africa (Pty) Ltd v Marnitz NO & Others (Stand 186 Aeroport
(Pty) Ltd Intervening)
2005 (1) SA 441 (SCA) para
23;
Perry’s
case,
supra
,
loc cit
.
11
Nissan
case
supra
. For further examples, see Schulze (2008) at
296
in fin
.
12
Take
and Save Trading CC & Others v Standard Bank of SA Ltd
2004
(4) SA 1
(SCA) para 17;
Nissan SA, supra
para 22.
13
Para
5 (my emphasis). See also
Paddock Motors (Pty) Ltd v Igesund
1976 (3) SA 16 (A) at 23D–H.
14
Schulze
(2008) at 296.
15
Hindry
v Nedcor Bank Ltd & Another
1999 (2) SA 757
(W) at 770I and the authorities referred to therein. See also para 8
of the judgment of the court
a quo.
16
Para
10.
17
Para
15. See also
Sonnekus
op cit
at
351 para 9.
18
Footnote
9 above, para 7.
19
Para
13.
20
Cf
Schulze (2007) at 385.
21
Cf
Burg Trailers supra
loc cit
;
Volkskas Bank Bpk v
Bankorp Bpk (h/a Trust Bank en ’n Ander)
1991 (3) SA 605
(A) at 611E–F.
22
Para
16.1.