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[2012] ZAGPPHC 115
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Firstrand Bank Ltd v Spar Group Ltd and Another (12713/2011) [2012] ZAGPPHC 115 (15 June 2012)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG HIGH COURT. PRETORIA)
CASE
NO:12713/2011
DATE:15/06/2012
In
the matter between:
FIRSTRAND
BANK
LIMITED
..................................................................................
APPLICANT
And
THE
SPAR GROUP LTD
(REG
NO
1967/001572/06)
....................................................................
FIRST RESPONDENT
CENTRAL
ROUTE TRADING 64
CC
.................................................
SECOND
RESPONDENT
Judgment
MAVUNDLA,
J.
[1]
On the 23 March 2012 I made the draft order Marked X, presented to me
by agreement between the applicant's and first respondent's
counsel,
an order of court. This Order read as follows:
"Having
heard Counsel and having read the documents filed of record it is
ordered that:
1.
It is declared that the first respondent is entitled to the credit
balance on account number 62101-769-323 held by the applicant
in the
name of second respondent.
2.
Subject to paragraph 4 below, the applicant is directed to pay the
full credit balance referred to in paragraph 1 above to the
first
respondent.
3.
The applicant is authorized to close the second respondent's account
referred to in paragraph 1 above, after the applicant has
complied
with its obligations in terms of the Order.
4.
The applicant is permitted to recover its taxed costs from the funds
which are currently held in the account referred to in paragraph
1
above.
5.
The second respondent is ordered to pay the first applicant's costs
of the application."
[2]
I indicated that the reasons will follow. I proceed to set out the
reasons for the aforesaid order herein below.
[3]
The applicant brought the application for the declaratory order, in
terms of which it is ordered that the first respondent is
entitled to
the funds currently held in the banking account number 62101769323,
directing it(i.e. the applicant) to pay the funds
to the first
respondent and permitting it to close the account.
[4]
The first respondent, was in principle not opposed to the order
sought by the applicant, save that it sought an amended order,
along
substantially the same lines as reflected in the order marked X
referred to herein above.
[5]
The second respondent was opposing the matter, claiming that it is
entitled to the moneys standing to the credit of the bank
account
number 62101769323, which is in its name. It prayed for the dismissal
of the application with costs.
BACKGROUND
FACTS
[6]
It is common cause that Umtshingo Trading 30 (Pty) Ltd (hereinafter
referred to as "Umtshingo" at all relevant times
traded as
Belladonna Kwik Spar, Belladonna Tops Bottlestore and Sonpark Tops,
and did not have an account in its name.
[7]
Bella Donna Kwik Spar utilized the account in the name of the Second
respondent, under bank account number 62101769323, held
with the
applicant. All payments received went into this account and all
expenses of Bella Donna Kwik Spar were paid from this
account. Since
March 2010 the applicant allowed no debits against this account. The
account still received credits in the form
of credit card
transactions(the so-called "speed payments") at the Bella
Donna Kwik Spar.
[8]
A further account was being operated by Sonpark Tops, held in the
name of Umtshingo Trading 30 (Pty) Ltd under account number
62117-754-988. This account was credited with credit cards payments
at the Sonpark Tops. This account was further debited with
installments on a loan from the Applicant to Umtshingo Trading 30
(Pty) Ltd.
[9]
The first respondent supplied Umtshingo with certain goods and
allowed certain credit facilities to Umtshingo for trading purposes.
In order to secure Umtshingo's indebtedness to the first respondent
from time to time, Umtshingo agreed to pass a notarial bond
over its
movable assets
1
.
Umtshingo fell behind in terms of its payment obligations towards the
first respondent, to such an extent that the first respondent
acted
on the basis of the registered notarial bond to protect its security
on 8 March 2010. A provisional order perfecting the
notarial bond was
granted, although it was not finally adjudicated due to various
postponements of the matter. As at 3 March 2010
the outstanding
balance owing by Umtshingo towards the first respondent was
approximately R2,5 39 408. 14.
2
The fact that Umtshingo was indebted to the first applicant, was
never disputed by Paulo, save the exact amount.
3
Besides, Paulo has himself acknowledged an indebtedness in the sum of
R2, 287 300, 33 alternatively R2 539, 408, 14 as reflected
in the
account balance summary and certificate of balance compiled by
Loraine Patricia Hopley the credit manager of the Spar Group.
4
The Magistrate proceedings are pending as the result of the
intervention of deregistration of Umtshingo but there is an interim
order not confirmed nor discharged.
5
[10]
It is common cause that subsequent and consequential to the
perfecting of the notarial bond, the first respondent has since
taken
occupation and possession of the Spar Outlets (referred to as
Belladonna Kwik Spar, Belladonna Tops and Sonpark Tops) pursuant
to
the grant of the provisional order in the Magistrate's Court
6
.
It was a tacit term of the agreement that the first respondent would
run the business of the aforesaid business entities for its
own
profit and loss, pay off all the expenses of Umtshingo through the
relevant account 6.......
7
[11]
in accordance with the tacit business agreement to run the business
of the 3 outlets, cash collected at the three stores amounting
to R20
176 311, 41 were paid into the second respondent's bank account by
the first respondent. According to the first respondent,
during the
first 12 months from March 2010 up to 12 February 2011, the first
respondent has paid the approximate sum of R4 585
561, 43 towards the
expenses of the three businesses.
8
During the same period the proceeds of the credit card transactions
in the three stores amounting to the value of R7 807 753 were
paid
into the bank account to which "speed point" credit card
machines were collected
9
.
According to the first respondent, Mr. Paulo has diverted
approximately R4.1 million from the speed point payments,
10
although it is denied by Paulo.
[12]
The designated account which Umtshingo used to run the Spar business,
was the account number 62101769323 held in the name of
the second
respondent with Mr. Arnold Fabio Paulo as the sole member of the
second respondent and at all relevant times the person
in charge of
the business activities of Umtshingo and the second respondent. Paulo
and his sister in law, Mrs Maria Joao Venture
Lopes Paulo were the
only directors and shareholders of Umtshingo. They de-registered
Umtshingo on 16 July 2010. After the deregistration
of Umtshingo,
which is referred to herein below
11
,
the Paulo(s) directors failed to have Umtshingo re-registered.
12
[13]
Mr Arnoldo Fabio Paulo was allowed access to the three stores
although the first respondent was running the businesses
13
.
The first respondent paid all moneys received from the business into
the relevant account. Contrary to the first respondent's
belief, the
"speed point" payments were not paid into the designated
account number
6.....
which Umtshingo utilized to run the Spar business, but diverted into
another account by Mr. Arnold Fabio Paulo
14
.
[14]
Upon realizing that the speed point payments were being diverted, the
first respondent brought an urgent application, under
case number
17061/11 against Mr. and Mrs. Paulo in which on 22 March 201.
Fabricius J granted an interim order which was confirmed
on 20 May
2011 by agreement between the parties.
15
On 10 May 2011 Paulo was ordered, by agreement, by Van den Heever AJ
to pay the proceeds of the retail sales in respect of the
revenue
earned by Belladona Kwik Spar, Belladona Tops and Sparks Tops into
the account held in the name of the second respondent,
subject to the
freezing order granted by Prinsloo J on 24 June 2010.
[15]
The first respondent subsequently launched an urgent application,
under case number 17061/11 against Mr. and Mrs. Paulo in
which on 22
March 2011, Fabricius J granted an interim order interdicting them
from, inter alia, "directly or indirectly,
dealing with,
alienating, disposing of or in any way dissipating and or removing
any of the movable assets or appropriating the
proceeds of the retail
sales of stock be it in cash, cheque, debit card or credit card
transactions associated with the businesses
of the aforesaid three
stores. This order by agreement between the parties was confirmed on
20 May 2011.
16
On 10 May 2011, Mr. Paulo was ordered by agreement by Van den Heever
AJ to pay the proceeds of the retail sales in respect of the
revenue
earned by Belladona Kwik Spar, Belladona Tops and Sparks Tops into
the account held in the name of the second respondent,
subject to the
freezing order granted by Prinsloo J on 24 June 2010.
[16]
The first respondent subsequently brought an urgent application under
case number 300795/2011 for the restoration of the registration
of
Umtshingo's registration to the company registrar, under the same
name and registration number that it previously had. Mabuse
J granted
an interim order on 28 June 2011 which was eventually confirmed by
Heefer J on n 6 September 2011.The effect of the last
mentioned order
was to restore the previously bona vacantia assets of Umtshingo to
the latter and declaring void any action taken
by the Paulo(s) whilst
Umtshingo was deregistered.
17
[17]
The attitude of the first respondent in not opposing the relief
sought, was that it is entitled to be paid the full balance
up to the
date of the closure of the account. This includes not only the funds
in the account as at the date of the launch of the
present
application, or the date this Court makes an order, but also the
funds paid into the bank account pursuant to the Court
order granted
on 22 March 2011 by Fabricius J under case number 17061/11.
[18]
The second respondent, in its opposing affidavit, contended that
applicant is the second respondent's banker and therefore
there
existed a banker and client relationship between applicant and second
respondent and therefore, strictly speaking, applicant
should act
within the scope of the mandated granted to it by the second
respondent. The relationship between the applicant and
the second
respondent carries with it duties of fiduciary nature, which entails
that information within its privy regarding the
second respondent is
confidential. The applicant must therefore protect the interest of
the second respondent. The applicant seeks
an order from the Court
which entails that it must close the second respondent's account,
which the latter has no intention of
closing.
[19]
The second respondent further is opposed to the order sought being
granted. It denied that it is indebted to the first respondent
and
contended, inter alia, that it has no relation with the first
respondent.
18
It further contended that it has no legal obligation to pay for the
debts of Umtshingo and has no desire to close its account with
the
applicant. It however does not deny that Umtshingo did not have an
account and utilized the account belonging to the second
respondent.
[20]
The second respondent further contended, inter alia, that there is no
legal basis in terms whereof the first respondent is
entitled to the
funds held by the applicant on behalf of the second respondent. It
further contended that the first respondent
has not instituted any
action against the second respondent for payment of its alleged debt.
Second respondent further contended
that the first respondent has not
instituted any summons against Umtshingo and or the second respondent
for payment of the alleged
amount of R2 058 191, 94 allegedly owing.
The second respondent is not legally obliged to pay the debts of
Umtshingo. It further
contended that the deponent to the applicant's
founding affidavit has no personal knowledge regarding this matter
and his knowledge
comes from the allegations of the first respondent.
The second respondent further denied that t is indebted to the first
respondent.
The second respondent submitted that the application
should be dismissed with cost.
[21]
The relief sought is a semi interpleader. An interpleader application
"is a form of procedure whereby a person in possession
of
property not his own (e.g. a stakeholder or other custodian of
property to which he lays no claim in his own right), which is
claimed from him by two or more other persons, is enabled to call
upon the rival claimants to such property to appear before the
court
in order that the right to such property, as between the rival
claimants, may be determined without putting the holder of
the
property to the trouble and expense of an action or actions."
19
[22]
In casu, from the evidence that has been placed before me, it is
clear that the applicant is holding in this specific account,
sum of
moneys. The applicant does not lay claim to this money. It merely
seeks an order relieving it of this money and placing
it in the hands
of the first respondent. The order sought by the applicant was in
nature like an interpleader procedure.
[23]
It may well be so that there exists a fiduciary relationship between
the applicant and the second respondent with regard to
the account in
issue. That does not, however, in my view, preclude the applicant in
approaching the court, where there is a need
for an order akin to an
interpleaded order.
[24]
The second respondent does not dispute that the account in issue was
being used by Umtshingo to conduct the latter's business
transactions. The second respondent was not conducting any business
of its own or at all, but at best was an agent for Umtshingo.
The
second respondent can therefore not dispute that any money that found
its way into the relevant account was either generated
by Umtshingo
and or the first respondent through the three business entities,
namely as Belladonna Kwik Spar, Belladonna Tops Bottle
store and
Sonpark Tops and not by itself.
[25]
Paulo is the only member of the second respondent
20
.
Although Paulo and his sister-in-law, Mrs. Maria Joao Venture Lopes
Paulo (Mrs Paulo), were the only directors and share holders
of
Umtshingo, Paulo acted as the latter's representative
21
and presented himself as the owner thereof
22
.The
first respondent took over the running of the three businesses of
Umtshingo. This could not have materialized if the latter
was not
indebted to the first respondent. In business transactions, in my
view, it is fundamental that parties must at all times
demonstrate
uberrimae fides, utmost good faith, vide Everfresh Market Virginia
(Pty) Ltd v Shoprite Checkers (Pty) Ltd
23
.
Any denial of the aforesaid indebtedness by Paulo and or the second
respondent can only be disingenuous on Paulo's part as the
second
respondent's sole member, and I find as such.
[26]
The evidence reveals that the first respondent took charge of the
running of the business of Umtshingo as from 9 March 2010
and
continues to do so to date. The first respondent conducted the
businesses of Umtshingo from 9 March 2010 until the date of
de-registration of Umtshingo on 16 July 2010 and has continued ever
since. During the aforesaid period, the applicant has been
running
the business of Umtshingo. In my view, the second respondent did not
at any stage generate any money deposited into this
account, save
allowing the use of the account. This fact is also admitted in the
letter of the second respondent's attorneys dated
25 October 2010
24
.
In my view, the second respondent does not have any right of
entitlement to the moneys lying in this specific account,
particularly,
because it did not generate these moneys, and was in
the same position as an agent receiving the moneys into the relevant
account
on behalf of Umtshingo vide Mc Ewen, NO v Hansa,
25
over and above the fact that the first respondent was operating the
relevant businesses for its own profit and loss, subject to
it
defraying the indebtedness of Umtshingo; vide Joint Stock Co
Varvarinskoye v ABSA Bank Ltd and Others
26
[27]
In my view, for the above mentioned reasons, the applicant was
justified in bringing these proceedings and entitled to the
order
sought and granted herein above.
N
.M. MAVUNDLA
JUDGE
OF THE COURT
HEARD
ON THE: 30/03/2012
DATE
OF JUDGEMENT : 15 /06 /2012
1
Vide
page 162 of first respondent's answering affidavit para 22 thereof.
2
Vide
First respondent's answering affidavit paginated page 166.
3
Vide
paginated page 167 para 25; paginated page 313 para 5 of Paulo's
answering affidavit in the Mgaistrate's Court proceedings
under case
3020/2010..
4
Vide
paginated pages 335-6.
5
Vide
paginated pages 296-298 of first respondent's answering affidavit.
6
Vide
paginated page 172 of first respondent's answering affidavit at para
35-36 and paginated page 32 para 6.5 of applicant's
founding
affidavit.
7
Vide
paginated page 32 para 6.7 of applicant's founding affidavit and
paginated pages 172 para 36 and 174 para 40.1 of first respondent's
affidavit.
8
Vide
paginated page 178 para 48 of first respondent's answering
affidavit.
9
Paginated
page 179 of first respondent's answering affidavit.
10
Paginated
page 177,179-180 of the first respondent's answering affidavit.
11
Page
8 para[16].
12
Vide
applicant's replying affidavit paginated page 439-440.
13
Vide
page 175 para 40.4 of first respondent's answering affidavit.
14
Vide
paginated pages 178-9 para 49 et page 441 para 3.4
15
Paginated
page 467-474.
16
Paginated
page 467-474.
17
Paginated
pages 479-483.
18
Paginated page 412 para 10
19
Erasmus
Superior Court Practice, Bl-399.
20
Paginated page 409
21
Vide
page 158 para 16 of the first respondent's answering affidavit
22
Paginated
page 269.
23
2012
(1) SA 256 (CC) at 268 para [36].
24
Paginated
page 58 annexure "F" para 3.1.
25
1968
(1) SA 465 (A) at 472B-E.
26
2008
(4) SA 287 (SCA) at 295B-H.