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[2016] ZAGPPHC 809
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Spar Group Limited v Firstrand Bank Limited and Another (14361/2013) [2016] ZAGPPHC 809; [2016] 4 All SA 646 (GP); 2017 (1) SA 449 (GP) (9 September 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
Case
No: 14361/2013
DATE:
9 SEPTEMBER 2016
In
the matter between:
THE
SPAR GROUP
LIMITED
..................................................................................................
Plaintiff
And
FIRSTRAND
BANK
LIMITED
....................................................................................
First
Defendant
ARNALDO
FABIO
PAULO
......................................................................................
Second
Defendant
JUDGMENT
D
S FOURIE, J:
[1]
The plaintiff (“Spar”)
instituted action against the first defendant (“the Bank”)
and the second defendant
(“Paulo”) on two
quasi-vindicatory and two delictual claims, seeking payment from the
Bank and Paulo jointly and severally
in a total sum in excess of R5
million. When the trial commenced, Spar had already obtained default
judgment against Paulo and
the trial proceeded between Spar and the
Bank only.
BACKGROUND
[2]
Prior to March 2010 Spar and a business
known as Umtshingo, represented by Paulo, stood in a trading
relationship in terms of which
Spar as wholesaler supplied goods and
services on credit to Umtshingo as retailer. As security for
Umtshingo’s indebtedness
to Spar a notarial bond over
Umtshingo’s movable assets was registered in favour of Spar. It
was a term of the notarial bond
that should Umtshingo fail to pay any
amount due to Spar on the due date thereof, or commit a breach of any
of the provisions of
the notarial bond, Spar would be entitled to
enter upon, cease and take full possession of the business and all
the assets of Umtshingo
and to hold same as security for the
repayment of all amounts due to Spar.
[3]
At all times relevant Umtshingo
conducted three businesses in Nelspruit, being a supermarket in the
name of Bella Donna Kwik Spar
and two liquor stores, Bella Donna Tops
and Sonpark Tops. Prior to 8 March 2010 the proceeds of speed-point
sales of the three
businesses were deposited into the following bank
accounts held at the Bank (first defendant):
Bella Donna Kwik
Spar: the 323 account held in the name of Central Route; Bella Donna
Tops: the 655 account held in the name of
Umtshingo; and Sonpark
Tops: the 309 account held in the name of Umtshingo.
[4]
At the beginning of March 2010 Umtshingo
was, according to Spar, indebted to it in the sum of R2 539 408.14.
Spar then launched
an application against Umtshingo for the
perfection of its notarial bond in the Magistrate’s Court,
Nelspruit and obtained
a provisional order on 5 March 2010.
Subsequently, on 8 March 2010, the order was executed and the three
businesses were attached
and possession given to Spar.
[5]
Umtshingo was reluctant to have the
businesses closed down pending the further court proceedings and the
parties entered into negotiations
for the conclusion of a short-term
lease of businesses agreement. Various versions of a draft lease were
exchanged, but a final
version was never signed. However, from 9
March 2010 Spar traded the Bella Donna Kwik Spar, Bella Donna Tops
and Sonpark Tops businesses
for its own profit or loss.
[6]
Spar then requested the Bank to change
the beneficiary accounts into which the credits from the speed-points
would be paid. However,
Paulo insisted that the speed-point proceeds
should continue to be paid into Umtshingo’s bank account and as
from 9 March
2010, the speed-point proceeds of the three businesses
continued to be paid into the 323, 655 and 309 accounts.
[7]
It is common cause between Spar and the
Bank that: the Bank, during the period 9 March until 24 June 2010,
permitted Central Route
to draw cheques and process debit and stop
orders on the 323 account on condition that Central Route first made
deposits or transfers
into the 323 account in sufficient amounts to
cover such debts; as from 24 June 2010, the 323 account was frozen in
terms of a
court order; on 8 March 2010, Central Route was indebted
to the Bank in the sum of R1 343 422.92 being the debit balance on
the
323 account; on 9 March 2010, Umtshingo was indebted to the Bank
in the sum of R292 140.84 being the debit balance on the 309 account;
the indebtedness of Central Route to the Bank on the 323 account was
extinguished on or about 12 July 2010 and thereafter the account
remained in credit at all times; the indebtedness of Umtshingo to the
Bank on the 309 account was extinguished on or about 8 May
2010; the
Bank did not obtain the plaintiffs permission to set off the
speed-point credits of R1 300 051.21 against the indebtedness
of
Central Route on the 323 account; the Bank did not obtain the
plaintiffs permission to set off the speed-point credits against
the
overdraft indebtedness of Umtshingo on the 309 account as at 8 March
2010, the payment guarantee of R400 000.00 debited on
25 June 2010,
the monthly loan agreement instalment debited during the period March
2010 to June 2011 and the interest charged
by the Bank on a monthly
basis on the debit balance from time to time; the quantum of Spar’s
claims is no longer in dispute.
[8]
Having regard to the issues between the
parties (to which reference will be made later), this case concerns
the question, in broad
terms, whether the Bank is liable towards the
plaintiff on the basis of alleged unlawful appropriation (Claims 1
and 4) and in
delict (Claims 2 and 3) in respect of an alleged duty
of care to avoid economic loss in circumstances where it is alleged
that
the Bank had knowledge pertaining to the alleged true owner of
moneys deposited into the bank accounts referred to above.
CLAIM
1
[9]
Claim 1 is for payment in the amount of
R1 343 422.92. It concerns the 323 account held at the Nelspruit
branch of the Bank in the
name of Central Route. It is Spar’s
contention that, in respect of all the speed-point and cash moneys
credited to the 323
account, the personal rights to these funds
vested in Spar at all times and that the Bank was aware that the
funds credited to
the 323 account did not belong to either Umtshingo
or Central Route. The Bank has, in its amended plea, denied that it
unlawfully
appropriated payments made into the 323 account and has
pleaded that its appropriation of payments was lawful under the
circumstances.
[10]
The parties have agreed that the
following pertinent issues are in dispute with regard to Claim 1:
Whether
the Bank was entitled, during the period 9 March 2010 to 12 July
2010, to apply set off between the funds being paid into
the 323
account as a consequence of the trading in Bella Donna Kwik Spar, and
the accountholder’s indebtedness of R1 343
422.92 in respect of
the overdraft balance on the 323 account as at 8 March 2010, or to
receive such moneys in payment of the amounts
owing to the Bank by
the accountholder;
In
the event of the court finding that the set off or payment contended
for by the Bank or payment in respect of the 323 account
was
impermissible, whether the Bank is liable to pay Spar the sum of R1
343 422?
CLAIMS
2 AND 3
[11]
Claim 2 is for payment in the amount of
R2 039 948.68 and relates to the 655 account. Claim 3 is for payment
in the amount of R1
358 890.90 and relates to the 309 account. In its
very essence these claims rest on the contention that the Bank should
not have
allowed Umtshingo and Central Route to withdraw funds from
the 655 and 309 accounts as these funds did not belong to either
Umtshingo
or Central Route, but to the plaintiff. It is also alleged
that the Bank had a duty of care to avoid economic loss to Spar and
by allowing Paulo to withdraw some of the speed-point funds, the
Bank’s conduct was wrongful in that it breached its duty
of
care to Spar.
[12]
The Bank has denied Spar’s alleged
personal rights to these funds and has also denied the existence of a
duty of care as pleaded
by Spar. In its amended plea the Bank has, in
the alternative, pleaded contributory negligence on the side of Spar.
[13]
The issues between the parties with
regard to both these claims are the following:
Whether
the Bank permitted Umtshingo (the accountholder) to withdraw moneys
in excess of the amounts deposited or transferred into
account 655
and account 309 after 9 March 2010;
Whether
the Bank owed Spar a duty of care to avoid economic loss in the
circumstances;
In
the event of a finding that such a duty of care existed, whether the
Bank breached the duty of care;
Whether
the Bank acted intentionally or negligently in permitting the excess
funds to be withdrawn by the accountholder;
Whether
Spar suffered damages as a result of the Bank’s conduct in the
amount of the excess funds so withdrawn;
Whether
the Bank is liable to pay the plaintiff the amount of R2 039 948.68
(Claim 2) and R1 358 890.90 (Claim 3).
CLAIM
4
[14]
Spar’s fourth claim is for payment
in the amount of R898 744.92 and relates to the 309 account. The
relevant time-period pertaining
to this claim is 9 March 2010 until
22 March 2011. This claim is, similar to the first claim, based on
alleged unlawful appropriation
(as opposed to allowing withdrawals to
be made as alleged in Claim 3) by the Bank in respect of credit
payments made to it into
the 309 account during the said period. Spar
again relies on the allegation that the relevant funds did not belong
to either Umtshingo
or Central Route and that the 309 account was
“used to warehouse moneys belonging to the plaintiff’.
[15]
The Bank has, in its amended plea,
denied that it unlawfully appropriated payments and has pleaded that
its appropriation of payments
was lawful. In its amended plea, the
Bank has also raised a special plea of prescription.
THE EVIDENCE
[16]
Spar has called three witnesses. They
are Mr Du Preez, Ms Hopley and Ms Streicher. Pursuant to the close of
Spar’s case, the
Bank has closed its case without calling any
witnesses.
MR
DU PREEZ
[17]
Mr Du Preez is the Divisional Financial
Director of the plaintiff. He is also a chartered accountant. He was
referred to an application
between the Bank, Spar and Central Route
in case No: 12713/2011. He testified that this application “happened
during the
time that I was Financial Director so I have got close
knowledge of this”. He made certain observations about the
contents
of this application which is not necessary to repeat herein.
According
to him they were under the impression, for a considerable period,
that all the funds were deposited into the 323 account
only. The Bank
never notified Spar that other accounts (655 and 309) were also
involved. He also referred to another application
between Spar and
Umtshingo, Central Route and the Bank in case No: 36926/2010.
According to him that application was brought by
Spar to obtain an
order that account 323 be frozen pending final adjudication of legal
proceedings to be instituted. After discussing
the contents of that
application, he also referred to a Spar membership agreement entered
into between Spar and Umtshingo. Reference
was also made to a
notarial bond registered by Umtshingo in favour of Spar as security
for Umtshingo’s indebtedness as retailer
to Spar.
[18]
Umtshingo was unable to comply with its
obligations as a result whereof Spar brought an application in the
Magistrate’s Court
of Nelspruit for the perfection of the
notarial bond in terms whereof Spar took possession of the business
of Umtshingo. It was
then decided, to prevent a close down of the
business, to enter into a short term lease of business agreement with
Paulo. A business
lease agreement was never signed because Spar
insisted that the speed point credits should be paid into its own
bank account, whereas
Paulo refused to give his consent. The result
was that “the money was banked into what we thought the 323
account" was.
When asked for whose profit and loss the business
had been conducted, the witness replied “it was definitely for
the Spar
group ... all three stores”. In order to justify this
statement, the witness also referred to various invoices.
[19]
The witness then explained that the day
after Spar had started trading for its own account a representative
of the Bank was informed
about this arrangement. The Bank then
indicated that “in the light of the fact the clients cannot
trade any more we cannot
allow any debits against the accounts”.
The witness also referred to a telephonic discussion with the Bank
during the week
of 12 March 2010 when the Bank was informed about the
perfection of the notarial bond and that the management of Bella
Donna Kwik
Spar, Bella Don Tops and Sonpark Tops had been taken over
by Spar. The Bank was then requested to urgently change the bank
details
of all three these businesses to that of Spar. He was
informed that the Bank will not change the bank details unless they
are given
permission to do so.
[20]
The witness then referred to an email
dated 24 March 2010 in terms whereof Spar was informed by the Bank
that the Bella Donna account
had been frozen and that only prefunded
cheques (a deposit out of the client’s own external funds) will
be honoured. According
to the witness he then accepted that their
funds would be safe. After a request by Spar that certain deposits be
transferred to
Spar’s account, the Bank again replied that
these amounts cannot be transferred without Paulo’s written
permission.
[21]
The witness was then referred to an
email from the Bank to Spar dated 2 June 2010. The following has been
stated:
"Can
Spar just sign a new speed point agreement and have the funds
redirected to their account whilst the business is technically
still
that of the Paulos despite the fact that Spar is running the store? I
would think that either Paulo should agree or the Court
order needs
to be perfected and not be provisional.”
The
witness indicated that his understanding of this email was that,
although the Bank was acknowledging that Spar was running the
business, it was not going to support “changing the account
numbers”.
[22]
The witness also referred to an email
from the Bank to Spar dated 17 June 2010. In terms thereof Spar was
informed that the Bank
cannot change the beneficiary account of the
speed point machines, that the Bank has removed all limits on the
account on 10 April
2010 and that it has no control over credit
balances which the client is able to transfer. According to the
witness he was then
very much concerned as he realised that the
account was no longer frozen as he thought it would be.
[23]
In cross-examination the witness
conceded that right from the beginning Paulo refused to give
permission that speed point credits
may be allocated to Spar. He also
accepted that the only basis on which Spar could have continued with
the business, despite the
interim order granted by the Magistrate’s
Court, was by agreement with Paulo. The witness accepted that in
terms of the agreement
between Spar and Paulo, credit and debit card
credits would be paid into the account of Bella Donna conducted by
Central Route.
According to the witness he understood the word
“frozen” to mean that funds could not be withdrawn unless
they were
deposited or prefunded by Paulo himself. It was then put to
the witness that profits earned by Spar which had to be set off
against
Umtshingo’s indebtedness to Spar did not restrict Paulo
using any of the cash in Umtshingo’s bank account. He replied
as follows: "There is no agreement that says that restricts him.
You are correct ”
[24]
The witness was then cross-examined
about the possibility of these businesses conducting an overdraft on
the accounts concerned.
He conceded that it would not have been
unusual, although he was not aware of it. However, he admitted that
he did not give any
thought as to whether there was indeed an
overdraft facility or not. With reference to the affidavit by Paulo
in case No: 12713/2011
the witness conceded, if the affidavit had
been studied properly, that he should have known that not all of the
moneys went into
the 323 account and that Spar would have to look at
all three accounts. The witness finally conceded that the Bank’s
attitude
towards Spar always had been, with regard to the accounts
concerned, to “either get written permission or get a court
order”.
MS
HOPLEY
[25]
Ms Hopley is a Credit Manager employed
by Spar for the Lowveld Division. She referred to speed point
deposits as well as a consolidated
bank account for reconciliation
purposes. The parties thereafter came to an agreement in terms
whereof the quantum of all the claims
is admitted.
[26]
She then testified that, following the
attachment of the businesses, a meeting was held with Paulo on 8
March 2010. The witness,
Paulo, his attorney and the attorney of Spar
were all present. At this meeting Paulo and his attorney resisted the
closing of the
stores pending the return date of 1 April 2010. They
indicated that a closure would damage the businesses and the trade
name. It
was then suggested by the attorney of Spar that the stores
could be traded in the interim period if a short term business lease
agreement was concluded between Spar and Umtshingo. Paulo accepted
the idea in principle, but his attorney insisted to first see
the
terms and conditions in writing.
[27]
A copy of Spar’s business lease
agreement was later forwarded to Paulo’s attorney. In terms of
the proposed business
lease agreement Spar would be entitled to
operate the business solely for its own profit or loss, subject to
the proviso that all
net profits earned during the existence of the
lease shall be set off against Umtshingo’s indebtedness to
Spar. It also contained
a clause authorising bank details to be
changed into the name of Spar and that payments be made into the name
of Spar. According
to the witness Spar was allowed to operate the
business solely for its own profit or loss, but Paulo refused to
agree that banking
details be changed as stipulated in the draft
agreement. A number of versions of the draft agreement were
exchanged, but a final
lease agreement was never signed by the
parties.
[28]
On 23 March 2010 the witness sent an
email to the Bank. She notified the Bank that Spar was now trading
for its own account until
the return date of 1 April 2010. It was
then pointed out to the Bank that as Spar was trading for its own
account, “we need
the credit card payments to not be paid into
the existing bank account, but to be paid to us”. The witness
then also referred
to an email from the Bank in terms whereof Spar
was informed that the account had been frozen on 10 March 2010.
Later, on 17 June
2010, the witness was informed by the Bank that it
could not change the beneficiary account of the speed point machines
and that
only Paulo could authorise the bank to change the account
details. The witness was concerned and immediately started
proceedings
to obtain a court order to have the accounts frozen. On
24 June 2010 a rule nisi was granted with interim operation in terms
whereof
account 323 was frozen pending final adjudication of a legal
process to be instituted by Spar.
[29]
In cross-examination the witness
conceded that it was not unusual for Spar stores to have overdraft
facilities with their bankers.
She also conceded that on 10 or 11
March 2010 no business lease agreement had been concluded as she and
Paulo were still busy negotiating
an agreement. She explained that
Spar was entitled to all the funds because “we were trading for
our own profit and loss’’.
She conceded that she never
had considered the possibility that there could have been an
overdraft facility for the 323 account.
She then referred to this
account which had been “blocked", but immediately conceded
that “credits would still
come in”.
MS
STREICHER
[30]
Ms Streicher is the Financial Director
of Spar, but during 2010 she was the accountant. She referred to an
email addressed to the
Bank dated 10 March 2010. In that email she
informed the Bank that the management of all three outlets had been
taken over by Spar.
She also requested the Bank to change the banking
details of all three businesses to that of Spar. Later, on 19 March
2010, she
repeated this request. On 23 March 2010 she informed Ms
Hopley that the Bank was still refusing to change the bank details as
they
were awaiting a court order. She also informed Ms Hopley that
the Bank would change the bank details “if the signatories sign
an authorisation letter that they can do so”. According to the
witness Paulo was thereafter requested to sign such a letter,
but he
refused to do so.
[31]
In cross-examination she explained that
they had reluctantly agreed that the speed point moneys could be
deposited “into a
frozen account but it was always our money
because we provided the stock for it”. She conceded that there
was a dispute regarding
the terms of the business lease agreement and
therefore it was never signed. She also pointed out that they had
requested copies
of bank statements from the Bank, but was unable to
obtain access to those statements. She conceded that Spar already
knew in June
2010 that there existed a significant deficit, in excess
of R1,8 million, in respect of the available funds in the 323
account.
DISCUSSION
PLEA
OF PRESCRIPTION
[32]
Before considering the merits of the
claims and the defence thereto, it is necessary to first deal with
the Bank’s special
plea of prescription with regard to Claim 4.
Spar has instituted its fourth claim on 28 July 2015 by service on
the Bank of its
notice of amendment dated 27 July 2015. A plea of
prescription was anticipated in paragraph 48 of the amended
particulars of claim.
It reads as follows:
"The
plaintiff discovered the existence of the debts referred to in
47.1-47.4, the identity of the first defendant as its debtor
in
respect of these debts, and the facts from which these debts arose,
during or about January 2015 when the first defendant furnished
the
plaintiff with statements for the 309 account for the period March
2010 to September 2012, and the plaintiff M/as able to perform
a
reconciliation of the debit and credit entries on the 309 account.”
[33]
In its plea, the Bank pleads that the
plaintiff could have acquired knowledge of the identity of the Bank
and the facts from which
the alleged debt arose, by exercising
reasonable care on or immediately after the relevant dates. The
relevant dates referred to,
are the following:
8
May 2010, being the date on which the
debit balance on the 309 account was extinguished;
25
June 2010, being the date on which the Bank debited the 309 account
with the amount of R400 000.00 paid to Spar under the payment
guarantee;the period March 2010 until June 2011 during which the Bank
debited the 309 account with the monthly instalments on Umtshingo’s
loan agreement with the Bank; the period March 2010 until September
2012, being the period during which the Bank debited the 309
account
with interest on the debit balance.
[34]
Claim 4 is based upon alleged unlawful
appropriation of funds in the 309 account which occurred on the dates
or during the periods
referred to above.
Section 12(1)
of the
Prescription Act, No 68 of 1969
provides that, subject to the
provisions of subsections (2), (3) and (4), prescription shall
commence to run as soon as the debt
is due. In terms of subsection
(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.
[35]
Having regard to the special plea as
pleaded, it seems that the Bank’s case is not that Spar had
actual knowledge of the identity
of its debtor and the facts from
which the debt arose, but rather that such knowledge could have been
gained by Spar by the exercising
of reasonable care. The onus of
proof rests on the party raising the special plea of prescription. In
the present case, it is for
the Bank to allege and prove the date
upon which Spar should have had knowledge of the identity of the Bank
and of the facts from
which the debt arose (Gericke v Sack
1978 (1)
SA 821
(A)).
[36]
It was pointed out on behalf of the Bank
that Mr Du Preez acknowledged that Spar could have obtained knowledge
of the fact that
the speed point sales were not channelled into the
323 account only (held in the name of Central Route), had Spar
investigated
the matter earlier and had Spar made enquiries with Mr
Paulo in this regard. In answer thereto it was contended on behalf of
Spar
that it only learnt about the existence of the 309 account when
the Bank eventually in January 2015 furnished Spar with bank
statements
for this account. It was further pointed out that, given
the Bank’s insistence on customer confidentiality and refusal
to
provide Spar with the information relating to the balances from
time to time or copies of the bank statements, it was impossible
for
Spar to have knowledge of the fact that the Bank appropriated these
amounts for its own benefit.
[37]
The Bank relies on the provisions of
section 12(3)
of the
Prescription Act, i.e
. that Spar could, with the
exercise of reasonable care, have acquired the relevant knowledge.
This can be referred to as constructive
or deemed knowledge. This
means that a creditor is deemed to have the requisite knowledge if a
reasonable person in his position
would have deduced the identity of
the debtor and the facts from which the debt arises {Drennan Maud &
Partners v Town Board
of the Township of Pennington
[1998] ZASCA 29
;
[1998] 2 All SA
571
(A) at 580 (e-f)).
[38]
In Minister of Finance and Others v Gore
2007 (1) SA 111
(SCA) par 17 it was emphasised that time begins to
run against a creditor when it has the minimum facts that are
necessary to institute
action. The running of prescription is not
postponed until a creditor becomes aware of the full extent of its
legal rights, nor
until the creditor has evidence that would enable
it to prove a case comfortably. In short, the word “debt”
does not
refer to a cause of action, but more generally to a “claim”
(Drennan Maud & Partners v Pennington Town Board, supra,
at 583
c-d in a separate concurring judgment by Harms JA).
[39]
Ms Streicher acknowledged that Spar
already knew in June 2010 that there existed a significant deficit
(R1,8 million) in respect
of the available funds (in the 323 account
held in the name of Central Route), regard being had to Spar’s
particular knowledge
of the proceeds of the relevant speed point
sales for the period in question. Mr Du Preez admitted that he gave
no consideration
as to whether or not Central Route’s bank
account and/or the bank account of Umtshingo may have been in
overdraft.
[40]
However, it is common cause that on 17
June 2011 an affidavit by Paulo was served on the attorneys of record
for Spar in a matter
between the Bank, Spar and Central Route (Case
No 12713/2011). In that affidavit (par 28 thereof) Paulo furnished
particulars in
respect of the flow of funds (speed point proceeds)
into three different accounts held at the Bank. He referred to
account 323,
account 655 and account 988. He explained that account
323 had been the operating account of the Bella Donna Kwik Spar and
that
this account still received credits in the form of credit card
transactions. The purpose of account 655, according to Paulo, had
always been to be credited with transactions paid for by way of
credit cards at the Bella Donna Tops. The 988 account was, according
to him, credited with payments by way of credit cards at the Sonpark
Tops as well as with instalments on a loan from the Bank to
Umtshingo.
[41]
Except for an incorrect reference to one
account (988 instead of 309) it was clearly explained by Paulo that
there were three different
accounts at the Bank and that these
accounts received credits in the form of credit card transactions
concluded at the three different
businesses. This means that during
June 2011 Spar already had information to conclude that speed point
sales from the two Tops
stores were being banked into accounts other
than the 323 account, all being held at the same Bank. It could, for
purposes of formulating
a claim timeously, have requested the
necessary information from Paulo who would, in all probability, have
been in possession of
all the bank statements, not to mention the
possibility to avail itself of the procedure set out in
Rule 35(12)
in that application.
[42]
Having regard to the relevant
time-period pertaining to the fourth claim as pleaded in paragraph 46
of the amended particulars of
claim, i.e.
9
March 2010 until 22 March 2011, it
appears to me that Spar could already have obtained the necessary
information during June or
July 2011 to enable it to formulate a
claim timeously. Spar should therefore be deemed to have obtained
knowledge of the identity
of the alleged debtor (the Bank) and of the
facts from which the alleged debt (fourth claim) arose. I therefore
conclude that Claim
No 4 has become prescribed, as a period of more
than three years has expired since June/July 2011 before this claim
was introduced
on 28 July 2015. I shall now proceed to consider the
merits of Claims 1, 2 and 3.
CLAIM
1
[43]
As pointed out above, Claim 1 (and for
that matter also Claim 4) has been formulated on the premise that the
323 account was used
to warehouse moneys belonging to the plaintiff,
that the Bank was aware of this arrangement and therefore unlawfully
appropriated
the amount of R1 343 422.92 of the plaintiffs deposits
in order to settle the debt of Central Route to the Bank. It does not
appear
from the amended particulars of claim that the plaintiff is
relying on an agreement with the Bank to the effect that account 323
would be used to warehouse the moneys allegedly belonging to the
plaintiff. It is in this sense that it has been referred to as
a
quasi- vindicatory claim.
[44]
The general rule is that moneys
deposited into a bank account fall into the ownership of the Bank.
The resulting credit belongs
to the customer, the Bank having a
contractual obligation to pay the customer on demand and to honour
cheques validly drawn on
the account to the extent that it stands in
credit (Standard Bank of SA v Echo Petroleum
2012 (5) SA 283
(SCA) at
par 27). However, the Bank’s apparent ownership of the funds in
an account does not in all circumstances confer
an absolute or
unqualified right on it to treat the funds as its own or the credit
as the property of its customer (Standard Bank
of SA v Echo
Petroleum, supra, par 28 and the authority cited therein).
[45]
In
Joint Stock Co Van/arinskoye v
ABSA Bank Ltd & Others
[2008] ZASCA 35
;
2008 (4)
SA
287
(SCA) the Supreme Court of Appeal considered a bank’s
appropriation of moneys standing to the credit of one of its client’s
accounts in set-off of money due by the same client on another
account (account 1313). The appellant contended that account 1313
was
utilised to warehouse money until certain formalities were complied
with. It was contended on behalf of the Bank that money
deposited
into a bank account of a client becomes the property of the Bank and
only the client concerned (the accountholder) had
the right to
contest the Bank’s appropriation, which was justified by a
set-off between the two accounts. However, it appears
that only money
due to certain subcontractors and money earned by another party were
deposited into account 1313 by this other
party and that this
arrangement was confirmed by the Bank.
[46]
With reference to the Court a quo’s
decision, the Supreme Court of Appeal accepted that the case
concerned a quasi-vindicatory
claim. The appellant claimed that the
money in account 1313 rightly belonged to it and that the Bank was
not entitled to apply
set-off. The Supreme Court of Appeal concluded
that the accountholder, the Bank and the appellant in effect agreed
that the funds
could only be withdrawn after compliance with a
prescribed procedure which did not involve control of any kind by the
accountholder.
The following was said in this regard (par 39):
"As
pointed out earlier it has been clearly proved that the accountholder
and the bank had agreed to act as the appellant’s
agent to
warehouse the money in account 1313.”
[47]
In ABSA Bank v Intensive Air
2011 (2) SA
275
(SCA) it was again pointed out that the relationship between
banker and client is characterised as being one of debtor and
creditor,
so that a bank is entitled to appropriate a credit balance
in a client’s account by setting it off against the client’s
indebtedness to the bank (par 20). The bank and the accountholder
may, however, agree instead that the client will hold the account
as
agent for a third party, in which case the client will not, even
though he or she is the nominal accountholder, be entitled
to deal
with the funds in the account as if they were his or her own (par
21). With reference to Varvarinskoye it was pointed out
that if funds
held in an account can be identified as having been reserved for or
“belonging” to another by agreement
with the bank, the
accountholder is not entitled to deal with those funds. The person
actually entitled thereto has a quasi-vindicatory
claim to demand
payment of such funds from the bank (par 24).
[48]
It was then concluded by Bertelsmann AJA
(in ABSA Bank v Intensive Air) that the facts in that case differ
significantly from those
in Varvarinskoye. The learned Judge of
Appeal said the following in this regard (par 26):
"It
is clear that the bank was not party to any agreement to treat the
funds in Louw’s ticket account in any way other
than those of
the accountholder. There is no evidence of any agreement other than
that of client and banker entered into by Louw
and the bank.”
[49]
What is the position if a bank has
knowledge of an arrangement between one of its clients (the
accountholder) and a third party
with regard to the latter’s
right to claim ownership of moneys deposited into the accountholder’s
account in the absence
of an agreement with the bank? This question
was answered as follows by Heher JA in Standard Bank of SA \/ Echo
Petroleum, supra,
par 31:
"Echo
did not prove that the bank had knowledge of the modus operandi of
Sky’s business with it. Even if the bank had
been so informed
it M/as not bound to subordinate its interests to Sky in the absence
of an agreement between them: compare ABSA
Bank Ltd v Intensive Air
(Pty) Ltd & Others
2011 (2) SA 275
(SCA) at 2801- 281B”
[50]
It should be pointed out that the
reference to “Sky” in the above dictum is a reference to
the accountholder. It therefore
seems to me, properly interpreted,
that mere knowledge of the Bank about a particular arrangement is not
sufficient. A person claiming
to have a quasi-vindicatory claim with
regard to funds deposited into an account held in the name of a
client of the Bank will
have to prove that the Bank was a party to an
agreement with its client to warehouse such moneys on behalf of such
other person
claiming to be entitled thereto. This appears to be a
sound principle because in the absence of such an agreement (between
the
bank and its client, the accountholder) it would mean, for
instance, that the accountholder and a third party would be able to
agree, where the client’s account shows a debit balance, that
funds deposited into that account by the third party would not
fall
into the ownership of the Bank, by merely notifying the Bank about
this arrangement. The effect would be that a bank can then
unilaterally be deprived of its ownership with regard to moneys
deposited into such account without being a party to the agreement.
If this were to be the law one can imagine the devastating
consequences it will have for commercial banks in future.
[51]
The question now to be considered is
whether the plaintiff was able to prove the existence of an agreement
between the Bank and
its client, the accountholder to warehouse the
speed-point funds deposited into the 323 account on behalf of -Spar?
Mr Du Preez
testified that the Bank was not prepared to change the
bank details unless given permission by Paulo to do so. He also
conceded
in cross-examination that right from the beginning Paulo
refused to give permission that speed-point credits may be allocated
to
Spar. Ms Hopley testified that on 23 March 2010 she notified the
Bank that Spar was trading for its own account and that Spar needed
the credit card payments to be paid into its account. She was then
also informed by the Bank that it could not change the beneficiary
account of the speed-point machines and that only Paulo could
authorise the Bank to change the account details. Ms Streicher was
of
the view that the speed-point credits belonged to Spar because it
“provided the stock for it”. She then also requested
the
Bank to change the bank details of all three businesses to that of
Spar. She was also informed that the Bank would be prepared
to change
the bank details “if the signatories sign an authorisation
letter that they can do so”. According to her
Paulo was
thereafter requested to sign such a letter, but he refused to so do.
[52]
It is important to point out that this
account was in debit during the period 9 March 2010 to 12 July 2010.
This means that the
accountholder, Central Route was for this period
a debtor of the Bank. It was also during this period that the funds
in question,
totalling R1 343 422.92 (the amount claimed) were paid
into this account. The evidence clearly shows that, although the Bank
was
notified that Spar was trading for its own account and that Spar
requested credit card payments to be made to it, the Bank’s
attitude always had been to “either get written permission or
get a court order”. It also appears to be common cause,
according to the evidence, that Paulo refused to agree that banking
details be changed as stipulated in the draft lease agreement.
He
never consented to any change in this regard and that is why the Bank
insisted that Spar should either obtain a court order
or written
authorisation by Paulo. The fact that the account was at some stage
frozen only means, as was rightly conceded by Ms
Hopley, that the
Bank will not allow any further debits (unless prefunded by Paulo
himself), but “credits would still come
in”.
[53]
The result is that in this account the
debit balance was reduced by the amount of credit entries. This is in
accordance with the
general rule that moneys deposited into a bank
account fall into the ownership of the bank in which event a set-off
between debit
and credit entries will lawfully take place, unless the
Bank was party to an agreement with its client (the accountholder) to
warehouse
funds deposited into that account on behalf of a third
party claiming to be entitled thereto. There is no evidence of any
such
agreement and therefore Claim 1 falls to be dismissed.
CLAIMS
2 AND 3
[54]
As indicated above, Claim 2 is for
payment in the amount of R2 039 948.68 and relates to the 655
account. Claim 3 is for payment
in the amount of R1 358 890.90 and
relates to the 309 account. The relevant period with regard to both
claims is from 9 March 2010
until 22 March 2011 (par 28 and 38 of the
amended particulars of claim).
[55]
In respect of both these claims, the
plaintiff inter alia relies upon the allegation that:
The
funds concerned were transferred into these accounts for a purpose
other than to make them available to Central Route, Umtshingo
or the
second defendant, namely that these accounts were used to warehouse
moneys belonging to the plaintiff;
The
first defendant, as banker, owed the plaintiff, who was a customer of
the first defendant’s Durban Corporate Division,
a duty of care
to avoid economic loss to the plaintiff in circumstances where the
first defendant knew that the plaintiff was the
true owner of the
moneys concerned; and
The
first defendant wrongfully breached its duty of care to the plaintiff
as a result whereof the plaintiff suffered damages.
[56]
In essence both these claims are founded
on the contention that the first defendant should not have allowed
Umtshingo, Central Route
or Paulo to withdraw funds from these
accounts, regard being had to the allegations referred to above. The
plaintiffs contention
that a duty of care existed is based primarily
on the allegation that the plaintiff was a customer of the first
defendant’s
Durban Corporate Division and that the first
defendant was aware of the plaintiffs alleged entitlement to these
funds as the true
owner thereof. It is not in dispute that during the
relevant period the plaintiff was a customer of the first defendant’s
Durban Corporate Division (but not a customer of the first
defendant’s Nelspruit branch). However, the first defendant has
throughout and also in its amended plea denied the existence of a
duty to care as pleaded by the plaintiff.
[57]
It was pointed out by counsel acting for
the plaintiff that as far as he could ascertain, our Courts have
never been called upon
to decide whether or not a duty of care exists
in terms of which a banker is obliged to avoid the loss to a person
other than the
accountholder in respect of the funds being deposited
into such bank account. However, it was pertinently and forcefully
argued
that the Bank knew that Spar was the true owner of the funds
concerned and also knew (or should have foreseen) that if Paulo was
allowed to withdraw the relevant funds, they may well never be
recoverable by Spar. Central to this argument is the contention
that
the plaintiff was the true owner of the moneys concerned and
therefore had an identifiable subjective right with regard to
these
funds.
[58]
The learned authors Neethling, Potgieter
& Visser, Law of Delict, 7
th
Ed p 55 are of the view that even where a subjective right is
identifiable, there are circumstances in which it is more appropriate
to determine wrongfulness by asking whether a legal duty has been
breached than by asking whether a subjective right has been
infringed. They explain the position as follows:
"Accordingly,
in cases of liability for an omission or for causing pure economic
loss (with the exception of the infringement
of the right to goodwill
in the case of unlawful competition) wrongfulness is normally
determined not by asking whether the plaintiff’s
subjective
right has been infringed, but rather by asking whether, according to
the boni mores or reasonableness criterion the
defendant had a legal
duty to prevent harm, in other words whether the defendant could
reasonably (according to the boni mores)
have been expected to act
positively.” (pp 55 and 56)
[59]
No doubt, both Claims 2 and 3 are pure
economic loss claims. They are founded on the contention that the
first defendant should
not have allowed Umtshingo, Central Route or
Paulo to withdraw funds from these accounts. Put differently,
according to this argument
the first defendant should have prevented
these withdrawals by taking some positive action. The question is
therefore whether,
according to the boni mores or reasonableness
criterion, the first defendant had a legal duty to prevent pure
economic loss to
the plaintiff by acting positively?
[60]
It was pointed out in Country Cloud
Trading v MEC
2015 (1) SA 1
(CC) par 23 that our law is generally
reluctant to recognise pure economic loss claims, especially where it
would constitute an
extension of the law of delict. Wrongfulness must
therefore be positively established to provide the necessary check on
liability
in these circumstances. It functions in this context to
curb liability and, in doing so, to ensure that unmanageably wide or
indeterminate
liability does not eventuate and that liability is not
inappropriately allocated (par 25).
[61]
The same authors (Law of Delict, supra,
p 56) also point out that the requirement of a legal duty in respect
of wrongfulness is
probably because impairment is not prima facie
wrongful in these cases, but rather prima facie lawful, because
according to the
boni mores criterion there is neither a general duty
to prevent loss to others by positive conduct, or a general duty to
prevent
pure economic loss. They conclude as follows:
"Therefore,
one must determine in- each case whether there is a legal duty to act
positively or a duty to avoid pure economic
loss. In these cases, it
is consequently more appropriate to make use of a breach of a legal
duty rather than infringement of a
subjective right, to establish and
express wrongfulness.” (p 56)
[62]
The existence of a duty of care or a
legal duty to prevent loss is a conclusion of law depending on a
consideration of all the circumstances
of the case. The enquiry
encompasses the application of the general criterion of
reasonableness, having regard to the legal convictions
of the
community as assessed by the Court (Knop v Johannesburg City Council
1995 (2) SA 1
(AD) at 27F-I). An omission is wrongful if the
defendant is under a legal duty to act positively to prevent the harm
suffered by
the plaintiff. A defendant is under a legal duty to act
positively to prevent harm to a plaintiff if it is reasonable to
expect
of the defendant to have taken positive measures to prevent
the harm (Van Eeden v Minister of Safety & Security
2003 (1) SA
389
(SCA) at pp 396 and 400).
[63]
Can it be said that the first defendant
had a legal duty to avoid economic loss to the plaintiff by acting
positively? When considering
this question one has to take into
account that the plaintiff was not a customer operating a bank
account at the first defendant’s
Nelspruit branch, although it
was a customer of the first defendant’s Durban Corporate
Division. Both accounts 655 and 309
were conducted in the name of
Umtshingo at the first defendant’s Nelspruit branch. The first
defendant therefore had a duty
of confidentiality towards Umtshingo
and was therefore obliged not to disclose any particulars concerning
the accountholder’s
bank accounts and the transactions
concluded by such accountholder. No doubt, considerations of public
policy dictate that the
relationship between a bank and its client
must be of a confidential nature, unless for considerations of public
policy this duty
is overridden by a greater public interest
(FirstRand Bank Ltd v Chaucer Publications (Pty) Ltd
2008 (2) SA 592
(CPD) at par 19 and 20).
[64]
Another important consideration to be
taken into account is the question whether these accounts were indeed
“used to warehouse
moneys belonging to the plaintiff”. As
already pointed out above (par 44), the general rule is that moneys
deposited into
a bank account fall into the ownership of the bank. I
have also concluded (par 50) that a person claiming to have a
quasi-vindicatory
claim with regard to funds deposited into an
account held in the name of a client of the bank will have to prove
that the bank
was a party to an agreement with its client to
warehouse such moneys on behalf of such other person claiming to be
entitled thereto.
There is no evidence to prove the existence of such
an agreement between the Bank and Umtshingo (or Paulo), the
accountholder of
both these accounts. On the contrary, the evidence
indicates that Paulo refused to agree that the proceeds of the
speed-point sales
be routed to the plaintiff’s own bank
account.
[65]
It was also suggested by counsel for the
plaintiff that the public will be benefited by a better safeguarding
of “their funds”
in similar circumstances if a liability
on the bank is imposed to prevent pure economic loss. The problem
with this submission
is twofold. First, it assumes that the funds in
question belonged to the plaintiff after these funds had been
deposited into another
person’s account (Umtshingo). Having
regard to the facts of this matter, this assumption about entitlement
is not correct
(par 63 above). Second, one has to bear in mind that
the imposition of such a duty would probably place too heavy a burden
on banks
to protect the interests of third parties in circumstances
where the interests of its own client(s) are also to be taken into
account.
This can result in a conflict of interest which may have a
detrimental effect on the interests of existing clients of a bank. I
am therefore not convinced that in this case public-policy requires
the imposition of such a duty on the Bank. Furthermore, such
a duty
may result in an unmanageably wide or indeterminate liability as was
referred to in Country Cloud Trading, supra.
[66]
Having regard to all these
considerations and by applying the general criterion of
reasonableness, it will be unreasonable to conclude
that the Bank in
the present case had a legal duty (or a duty of care) to avoid
economic loss to the plaintiff as contended for
in the pleadings.
Claims 2 and 3 can therefore not succeed. Having regard to this
conclusion, it is not necessary to consider any
of the other issues
pertaining to Claims 2 and 3.
[67]
Finally, there still remains a dispute
with regard to the reserved costs of a postponement on 3 March 2015.
I was given a chronology
regarding the events which preceded the
postponement. According to this chronology it appears that the main
cause of the postponement
was the late discovery of documents
relating to the 309 account by the Bank, notwithstanding service of
two
Rule 35(3)
notices by Spar. In the circumstances I am of the view
that the Bank should be held liable for payment of the wasted costs
occasioned
by the postponement.
ORDER
In
the result I make the following order:
1.
Plaintiffs claims 1, 2, 3 and 4 against
the first defendant, are dismissed;
2.
Subject to paragraph 3 below, costs of
suit shall be paid by the plaintiff, including the costs of two
counsel;
3.
Costs reserved on 3 March 2015 shall be
paid by the first defendant, including the costs of two counsel.
D STOURIE
JUDGE
OF THE HIGH COURT PRETORIA
Date:
9 September 2016