Vereins-Und Westbank AG v Veren Investments and Others (433/2000) [2002] ZASCA 36; 2002 (4) SA 421 (SCA) (2 April 2002)

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[2002] ZASCA 36
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Vereins-Und Westbank AG v Veren Investments and Others (433/2000) [2002] ZASCA 36; 2002 (4) SA 421 (SCA) (2 April 2002)

THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Case no: 433/2000
REPORTABLE
In the matter between:
VEREINS-UND WESTBANK
AG
Appellant
and
VEREN INVESTMENTS
First
respondent
IRVINE INTERNATIONAL TRADE
FINANCE (PTY) LTD
Second
respondent
LESLIE COHEN NO
Third
respondent
Before:
Nienaber,
Streicher, Cameron and Mthiyane JJA and Heher AJA
Appeal heard:
5 March
2002
Judgment:
2 April 2002
Payment
– Method of discharging debt – Subsequent approval of creditor
critical in validating even a method of payment that
debtor may
unilaterally have chosen
JUDGMENT
_____________________________________________________
CAMERON JA:
[1] On 27 February
1991 Nedcor Bank Ltd (as it is now known) (‘the local bank’)
issued a letter of credit for $434 782,61 in
United States currency
in favour of a German supplier in Hamburg, Boli GMBH (‘the German
supplier’). The letter of credit
stated that
it
was available after 360 days with a German bank, which is
the present appellant (‘the German bank’). The local bank issued
the letter of credit on the application of South African buyers,
whose ultimate interests are represented in this appeal by the
three
respondents. It is unnecessary to detail their involvement, and for
convenience I refer to all of them as ‘the South African
buyers’.
The South African buyers supplied, and the local bank still holds,
the then Rand equivalent of the dollar drawing (R1
119 356,60).
[2] In March 1991,
shortly after the letter of credit was issued, the German supplier
entered into a transaction with the German
bank in terms of which the
latter paid it a discounted amount on the letter of credit. The
German bank did so on the basis of
commercial invoices and a
forwarder’s bill of lading that purported to conform with the
documentation itemised in the letter
of credit. These documents it
forwarded to the local bank. Later it placed on record with the
local bank that it expected payment
of $434 782,61 on 22 February
1992 (the due date for payment).
[3] By the time the due date
arose, however, a dispute had arisen about the shipment of the goods.
The South African buyers contended
that the documentation was
forged, that the goods had never been shipped, and that the local
bank was neither entitled nor obliged
to pay out on the letter of
credit. The German bank contended that despite these assertions it
was entitled to payment. The
local bank sought a direction from the
South African Reserve Bank (SARB), which ruled that the funds ‘must
be paid into an account
blocked in terms of
3
Regulation 4(2) of the Exchange
Control Regulations
1
until such time as the matter has been clarified satisfactorily’.
[4] This the local
bank did. On 24 February 1992 it informed the German bank that ‘We
have credited the amount of USD 434 782,61
into a blocked account in
your good bank’s name being in terms of the SA Reserve Bank
directives and in settlement of our obligation
under this letter of
credit. Please be guided accordingly.’ The local bank also sent
the German bank a ‘credit transaction
advice’ notifying it that
‘We have credited your currency account as follows: Drawing under
letter of credit 862241/08/91
Value ben[eficiary]: Boli GMBH. USD
434 782,61’.
5] There matters
remained for some eight weeks, until the SARB informed the local bank
that the funds had been unblocked. On 28
April, the local bank
advised the German bank of this, but also informed it that a High
Court application was pending to prevent
it from releasing the funds.
Within hours of the account being unblocked, the South African
buyers obtained before Schutz J in
the Johannesburg High Court an
interim order attaching the sum of R1 119 356,80 plus interest in the
hands of the local bank.
The order interdicted the local bank from
dealing with the amount and directed that it be paid into a special
interest-bearing
account pending an action by the South African
buyers against the German supplier, the German bank and the local
bank. The local
bank thereupon transferred the amount into an
account in the name of the Sheriff of the Court. The trial action
envisaged before
Schutz J was launched; its outcome is still pending.
The local bank at a later stage closed the Sheriff’s account and
4
transferred the
money into an ‘interdicted’ account in the German bank’s name.
That is still the position.
[6] On the extended return day
of the rule nisi, in November 1992, Goldblatt J after hearing
argument discharged the orders Schutz
J had granted, but substituted
in their place the following:
‘
In the event and to the extent
that [the local bank] has not yet discharged all of its obligations
in terms of the letter of credit
862241/08/91 it is hereby
interdicted from discharging such obligations pending the final
determination of the action [by the South
African buyers].’
[7] The German bank thereupon
instituted the present proceedings. In them, it seeks to isolate
from the outcome of the pending
trial action the fate of the money
the local bank paid into the account in its name on 24 February 1992.
It does so by claiming
a declaratory order based on what it contends
is the proper interpretation of Goldblatt J’s order. It seeks a
declaration that
the local bank ‘has discharged its obligations in
terms of the letter of credit’, and an order that it pay the sum of
US $434
782,61 to it. The local bank, though cited as first
respondent in the proceedings, did not defend them and was not a
party to
the appeal either to the Full Court or to this Court.
[8] Marais J heard the German
bank’s application in October 1993. He dismissed it. He held that
while the local bank’s intention
had been to effect payment to the
German bank and to discharge its obligations in terms of the letter
of credit, it was necessary
for the German bank expressly or tacitly
to accept the unilateral payment into the account created in its
name, and to communicate
this to the local bank. This had not been
properly established on the affidavits. In granting leave to appeal
to the Full Court
in February 1994, however, Marais J noted that
affidavit evidence in the interim proceedings before Goldblatt J
purporting to establish
such acceptance, which the parties had agreed
could be treated as evidence before him, had not been relied on nor
drawn to his
attention.
5
[9] The
matter first came on appeal before the Full Court in April 1997, and
was eventually disposed of in May 2000, when the German
bank’s
appeal was dismissed. Stegmann J (Schabort and Labuschagne JJ
concurring) held that anterior to the question whether
the local bank
had discharged its obligations under the letter of credit was the
question whether it had any such obligations.
The Full Court
therefore focussed on the local bank’s liability under the letter
of credit in terms of international trade law.
It held that fraud on
the part of the German supplier had been sufficiently established so
as to exonerate the local bank from
any liability under the letter of
credit. There could therefore be no question of its having
‘discharged’ any obligation on
22 February 1992, and consequently
no payment had been effected. The letter of credit was moreover not
intended to be negotiable
in the sense of conferring on the German
bank a better title than the party to the alleged fraud, the German
supplier. The appeal
was therefore dismissed. In September 2000
this Court granted the German bank’s petition for special leave for
a further appeal.
2
[10] Before this
Court the German bank’s principal argument was that the local bank
had made an effective payment by depositing
the funds into an account
in its name. Mr Wallis, who appeared at the hearing, sought to
locate this argument in a reading of
the Exchange Control Regulations
(‘the regulations’). I have some doubt whether the solution lies
in their application, but
on the view I take it is not necessary to
decide the effect of the regulations. Mr Wallis also did not persist
in seeking a declaration
that the local bank had discharged its
obligations under the letter of credit, conceding that it was
unnecessary to the main thrust
of the relief the German bank sought.
For reasons that will appear, this course was in my view wise, since
the local bank’s
obligations, and the German bank’s entitlements,
under the letter of
6
credit are best
decided in conjunction with the other matters to be determined at the
trial action pending between the parties.
What is at issue before
this Court therefore is solely the German bank’s entitlement, as
between it and the local bank, to
the money credited to an account in
its name in February 1992.
[11] The
local bank’s act, at the behest of the SARB, in unilaterally
creating an account in the name of the German bank, and
crediting it
with the dollar amount at issue, clearly did not by itself effect
payment to the German bank. This is for two reasons.
First, the
established view is that payment is a bilateral act which, in the
absence of contrary agreement, requires the cooperation
of debtor and
creditor.
3
The second is that the account was blocked under the regulations.
The payment accordingly did not place the dollar amount at
the
disposal of the German bank. In other words, the German bank did not
gain the untrammelled power to dispose immediately, as
cash in its
hands, of the funds transferred. There is no specifically South
African authority for this second proposition, but
it accords with
common sense that for effective payment to occur the payee must in
the absence of contrary agreement acquire ‘the
unfettered or
unrestricted right to the immediate use of the funds in question’;
4
otherwise the payment is inchoate.
[12] Did these two features of
the local bank’s conduct, in unilaterally creating an account to
which the German bank did not
have access, prevent its actions from
constituting a payment to the German bank? The answer depends on
whether the German bank’s
response was sufficient to convert a
unilateral and inchoate payment into effective payment. Though the
general rule is that the
means of payment must be determined by
agreement between the payer and payee, it is clear that unilateral
conduct on the part of
the debtor in purporting to effect
7
payment, if subsequently accepted
by the creditor, is effective to discharge the debt. Thus should the
debtor unilaterally pay
a stranger to the contract, if the creditor
later ratifies and approves the action, this constitutes a valid
payment, and is considered
valid from the moment of payment (and not
from the moment of ratification and approval).
5
[13] It follows that the
unilateral nature of the local bank’s conduct cannot thwart its
payment to the German bank, provided
that the German bank
subsequently approved that conduct. The same principle must apply,
in my view, to the fact that the account
was blocked. If the German
bank accepted the credit to the account opened in its name as a
payment to it, the fact that the funds
were not placed at its
disposal cannot prevent a payment from being effected. The principle
already cited applies equally: subsequent
approval is effective to
validate the payment from the time when it was originally made, even
though the payee did not have access
to it.
[14] But there is a third
aspect. The local bank did not divest itself of the dollars in
question. It did not pay a third party.
What it did was to make an
entry in its own books in favour of the German bank. It is well
established that in our law, apart
from statute, a solitary act by
8
someone in opening a separate
bank account in the name of another and depositing money in it does
not confer any special title on
the person named.
6
This is because the person opening the account cannot by unilateral
act deprive him- or herself of title to the money. The application

of the principle is even more evident when a bank opens a separate
account in another’s name, not with another bank, but with
itself.
It was as if the local bank had a separate safe – the very
circumstance van den Heever envisaged in
ex
parte Kelly
7
–
and placed in it a package containing the dollars and marked with the
name of the German bank. Its solitary act in so sequestering
a
portion of its property was ineffective to confer any title on the
German bank. To this extent the South African buyers are
correct in
contending that the mere fact that the local bank earmarked funds in
an account specially designated for the German
bank did not
constitute an effective payment to it.
[15] The question this appeal
raises, however, is whether the German bank’s subsequent acceptance
of the local bank’s actions
changes the position also in this
respect. The evidence is the following. The local bank created the
account in the German bank’s
name in February. In April, the order
of Schutz J interdicted it from paying out the money. In resisting
the confirmation of
that order, the German bank in June 1992 lodged
affidavits answering those filed by the South African buyers. In
them, its vice-president
and assistant general counsel made the
following averments. (a) He denied the South African buyers’
assertion that because the
funds had been blocked under the
regulations the local bank had made no payment to it. (b) He
endorsed the local bank’s attitude,
namely that it was obliged to
make payment to the German bank of the funds credited to the account
in question. (c) He asserted
that the South African buyers had
9
no title to the money credited to
the account. (d) He stated that the local bank had ‘paid out’
the moneys in question to the
German bank ‘by depositing them into
an account created’ in its name.
[16] After the
South African buyers filed their replying affidavits, the German bank
in August 1992 filed supplementary affidavits.
Its vice-president
again deposed to an affidavit. He asserted that the local bank’s
conduct ‘quite clearly constituted a
payment’ to the German bank
in terms of the letter of credit and that the local bank had complied
with its obligations under
the letter of credit. The South African
buyers filed further affidavits in reply. Thereafter, the German
bank’s South African
attorney filed an affidavit attaching a
deposition from one of the local bank’s senior managers. This
affidavit described the
general procedure of the local bank in
dealing with letters of credit. Regarding its actions in February,
the senior manager testified
as follows:
‘
When the letter
of credit was … submitted to [the local bank], it recognised its
obligation to pay out in terms thereof. It performed
such obligation
by purchasing foreign currency (US dollars) in the required amount
and by depositing such foreign currency into
a blocked account in the
name of the [German bank].’
[17] The order of Goldblatt J
followed, and thereupon the present proceedings. In them, as already
indicated, the German bank
(through the same official) asserts not
only its entitlement to the money the local bank paid into an account
in its name, but
claims that the local bank is ‘obliged to pay such
moneys to [the German bank] who is its customer’. It further
claims that
it was ‘entitled to draw upon that account, in
accordance with the normal relationship between the banker and its
customer’.
It asserted that the local bank’s documents relating
to the creation of the account ‘indicate a clear intention on the
part
of [the local bank] to discharge its obligations under the
letter of credit in that manner, and that has been accepted by (the
German
10
bank) as performance by [the
local bank] of its obligations under the letter of credit’. It
goes on to state:
‘
Once [the German bank’s]
account was credited, the normal relationship of banker and customer
arose between [the local bank] and
[the German bank] respectively in
relation to those funds, and [the local bank] was obliged to deal
with those funds in accordance
with [the German bank’s]
instructions (subject only to such restrictions as may have been
imposed by exchange control regulations).’
[18] In answer, the
South African buyers’ affidavits stated ‘that these submissions
are not supported by the facts when one
has regard to the totality of
the circumstances’, and asserted that ‘the mere fact that an
account is opened and credited does
not … indicate the creation of
a normal relationship of banker and customer’ as contended. They
also denied ‘the arrangement
as alleged’ by the German bank, and
disputed that it was ‘entitled to accept what really amounts to a
self-serving interpretation
of a series of transactions where its own
version is that it was not fully aware of all the material facts and
particularly of
the fraud’.
[19] Whatever the parties’
differing contentions about the legal position, the South African
buyers’ averments clearly contain
no denial that as a matter of
fact the German bank accepted what the local bank had done as payment
to it of the sum it claimed
and that it did so before the order of
Goldblatt J. There was indeed no reason for the South African buyers
to deny that fact.
A senior official, duly authorised to depose on
its behalf, had conveyed the German bank’s stance, which was that
it accepted
what the local bank had done as a payment to it. This
was authoritatively established before the interdict of Goldblatt J.
At
no time before or since then has the local bank disputed that it
made payment to the German bank or that the German bank was entitled

to accept what it had done as payment. Any attempt by the South
African buyers to dispute these facts would have lacked a plausible

foundation. Marais J in my respectful view therefore erred at first
instance in considering that the German bank’s acceptance
of the
11
local bank’s payment had been
insufficiently established on the affidavits.
[20] What is the resulting
position in law? It seems to me that the answer has been clouded by
the South African buyers’ determination
these long years to thwart
the local bank’s consistent assertion that it has in fact paid the
German bank. It deseves emphasis,
again, that the local bank has
never retracted the clear statements in its communications of 24
February 1992 that it had made
a payment to the German bank in
discharge of the letter of credit. A further portion of the
affidavit of the local bank’s senior
manager ( referred to in para
16 above) was later retracted, but not so as to put in issue the
local bank’s claim that it had
performed its obligation to the
German bank by crediting the blocked account. Of course the local
bank had its own reasons for
wishing to pay the German bank on the
date the letter of credit specified. These emerge from its
correspondence with the SARB,
where it recorded that it was –
‘
in a precarious situation in
that it would appear that we are legally obliged to make payment on
22 February 1992 in terms of the
letter of credit. In addition,
non-payment would seriously affect this Bank’s long term
relationship with the correspondent
bank in Germany.’
[21] The local bank’s view of
its legal obligations was of concern to the South African buyers only
insofar as that might have
led it to try to debit their account. But
its commercial interest in maintaining a good relationship with the
German bank, long-term
or otherwise, was emphatically no concern of
theirs at all.
[22] It is correct that in
claiming payment the German bank, echoing the formulation of
Goldblatt J, sought also a declaration that
the local bank had
discharged its obligations under the letter of credit. To the extent
that the grant of such a declarator may
have implied or entailed that
the local bank was in consequence entitled to debit the funds the
South African buyers had provided,
their anxiety may have been
12
understandable. But the German
bank sought no relief directly against the South African buyers,
while against the local bank it
quite clearly sought no relief in
relation to the source of the funds it claimed. So long as it
receives payment, it is indifferent
as to whether the local bank is
entitled to debit the South African buyers. That issue stands for
determination at the trial,
and as mentioned, the German bank did not
in this Court persist in seeking the declarator. Its object was to
secure payment of
the dollars from the local bank, which does not
oppose its attaining that object. And given the attitudes that both
payer and
payee have adopted, that object does not depend on
establishing as between them the validity of the
causa
underlying the payment.
[23] Indeed, the local bank has
conspicuously refrained from defending or participating in the
proceedings despite the German bank’s
assertion both that it has
discharged its obligations under the letter of credit and that it has
thereby made an effective payment
to it. The local bank can
therefore hardly complain if the German bank receives an order only
for payment, which is less than
the sum of the relief whose grant it
did not oppose at all.
[24] All this in my view enables
one to see without intervening obstruction that nothing precluded the
local bank, as between it
and the German bank, from effecting a valid
payment on 22 February 1992 of the dollars credited to the blocked
account in the name
of the latter. The proposition this case
illustrates is that parties to a debt-discharging transaction may
agree to any means
of discharge. The proposition it establishes is
that subsequent ratification approval by the creditor validates any
method the
debtor may unilaterally have chosen to effect the
discharge, even if that method fails to place the performance at the
immediate
disposal of the creditor, and even if that method fails to
sequester the performance effectively from the debtor’s own assets.

The proposition it underscores is that the creditor’s subsequent
approval should always be decisive.
13
[25] The parties to the
debt-discharging transaction at issue here agreed, albeit by the
subsequent approval of the creditor, to
the manner and means of
payment. The manner was by payment into an account held by the
debtor in the creditor’s name. The means
was by the creditor
becoming a customer of the local bank for the limited purpose of the
account the debtor specified by name and
number. The local bank’s
unilateral conduct in opening the account in the German bank’s name
constituted at the very least
an offer to the German bank to become
its customer for the similarly limited purpose of dealing with the
amount credited to the
account, once the obstruction to such dealing
had been removed. That offer the German bank clearly accepted before
the order of
Goldblatt J.Its contention, in opposing the confirmation
of the interim order Schutz J had granted, that the local bank had
‘paid
out’ the moneys to it ‘by depositing them into an account
created’ in its name was therefore correct, since that very
contention
formally (albeit subsequently) approved the local bank’s
conduct, and hence sealed the debt-discharging agreement.
[26] The Full Court in my
respectful view consequently erred in not concentrating on the issue
of payment as between the only parties
to that transaction, namely
the two banks. The issue it focussed on, wrongly in my view, namely
the local bank’s obligation
under the letter of credit, and its
attendant entitlement or otherwise to debit the South African buyers’
account, remains for
determination at the pending trial. For the
present the German bank’s claim to the moneys deposited in its name
must, for the
reasons I have set out, be vindicated.
[27] In the court of first
instance, Marais J reserved all the costs for the pending trial.
That costs order must in my view yield
to the conclusion here
reached.
14
1. The appeal therefore succeeds
with costs, including the costs of two counsel.
2. The order of the Full Court is
set aside.
3. In its place, there is
substituted:
‘
The appeal succeeds with
costs, including the costs of two counsel. The order of Marais J is
set aside. In its place there is
substituted:
(a) The first respondent is
directed to pay the applicant the sum of US $ 434 782,61 together
with such interest as has accrued
thereon from 24 February 1992 to
date of payment.
(b) The second, third and sixth
respondents, jointly and severally, are ordered to pay the costs of
the application, such costs
to include the costs of two counsel.’
E CAMERON
JUDGE OF APPEAL
STREICHER JA)
MTHIYANE JA ) CONCUR
HEHER AJA )
NIENABER JA
:
[28] I have had the benefit of
reading the judgment prepared by Cameron JA. On the law we appear to
be more or less in agreement;
on the interpretation of the evidence
I fear we clearly are not.
[29] All six judges of the High
Court who dealt with this matter previously have stated, five of them
expressly, one by implication,
that
prima facie
at the very
least a fraud had been perpetrated invalidating the letter of credit
which is the source of the appellant’s (‘VWB’’s)
claim
against Nedcor Bank Ltd (‘Nedbank’); and that the issue of fraud
is to be resolved in a trial that had been instituted
for that very
purpose, citing all interested parties including VWB and Nedbank.
Yet if the conclusion reached by Cameron JA is
sound Nedbank is now
to be compelled to make a payment to VWB of what may ultimately prove
to be the fruits of a fraud to which
VWB is not entitled. It is
recognised in the judgment that it by no means follows that Nedbank,
if now compelled to pay, will
be able to recoup itself from the
amount deposited with it by Irvine International Trade Finance (Pty)
Ltd (‘Irvine’). Nedbank
may well not be able to do so since the
spectre of a fraud committed by Boli Speditions-und
Vermittlungsgeschäfte GmbH (‘Boli’)
was explicitly raised with
it by Irvine. In fact that was the very reason prompting Nedbank to
approach the South African Reserve
Bank for guidance as to how it
should deal with the matter. The Reserve Bank’s solution was to
order the funds, earmarked for
payment of the letter of credit, to be
credited to a blocked account ‘until the matter was clarified
satisfactorily’. Everything
hinged on the finding of fraud.
Nevertheless, according to Cameron JA’s judgment, Nedbank is to pay
the disputed amount to
VWB in the meantime. What is more, Nedbank is
to make that payment now for the very reason, so it is found, that it
has already
made it in the past. On the approach of my learned
colleague it will then be left to Nedbank, having made a fresh
payment pursuant
to the proposed order, to engage VWB in further
litigation in a foreign jurisdiction, more than a decade after the
fraud was first
committed, to recover its payment if such fraud is
eventually established in the pending trial in South Africa. Such a
result,
in my view, will be unjust. Moreover, it is predicated on
either a supposed agreement between Nedbank and VWB or on a
reconstructed
ratification that, as I shall attempt to demonstrate -
and I say this with utmost respect -simply did not exist.
[30] In his judgment in matter
no. 11456/92 Goldblatt J said:
‘
It is, however, abundantly
clear that Vereins have not been paid the money in the sense that
they are able to unconditionally utilise
the fund as they wish.
Prima facie
and depending on such evidence as may be led at
a trial
it appears that Nedperm [Nedbank] have not paid the
monies to Vereins [VWB] but have merely credited an account styled
“Vereins”
with the amount referred to in the letter of credit.
Vereins have at present no control at all over the manner in which
Nedperm
deals with such account. If Vereins had sued Nedperm for the
monies I fail to see how Nedperm could have alleged it had paid
Vereins
merely by virtue of crediting an account in its books where
such account had not previously existed and where Vereins had not
specified
the crediting of such an account as a form of
adjectus
solutionis causa
.
Clearly if Nedperm had prior to
the granting of the rule nisi already paid Vereins then the interdict
granted would have been purposeless
and of no protection to the
applicant.’ (The italics are mine.)
From the passage, and in
particular the italicised phrase, it is plain that Goldblatt J
envisaged that the issue (whether VWB had
in fact been paid) was to
be determined at a subsequent trial. As it happens action had
already been instituted by the time Goldblatt
J gave his judgment.
It is matter no. 92/15598. The pivotal issue in that trial was
whether a fraud had been committed in connection
with the letter of
credit and consequently whether Nedbank was obliged to make a payment
to VWB in terms thereof. That being so,
it is not immediately
apparent why Goldblatt J, in granting an order interdicting Nedbank
from discharging its obligations under
the letter of credit to VWB,
thought it necessary to annex a condition to his order. The order
reads:
‘
In the event and to the extent
that the 3
rd
respondent has not yet discharged all of its
obligations in terms of letter of credit 862241/08/91 it is hereby
interdicted from
discharging such obligations pending the final
determination of the action instituted by the applicant in this court
under Case
No 92/15598.’
One can only presume that
Goldblatt J was anticipating a possibility that his
prima facie
view on payment might prove to be wrong, in which event the interdict
he was granting would of course be an idle one. His qualification
of
the order in this manner allowed VWB to attack the interdict not
frontally by means of an appeal, but more insidiously by attempting

to show that it was a
brutum fulmen.
This it sought to do by
launching the present proceedings in matter no 10436/93 by way of
notice of motion. This is the matter
that commenced before Marais J,
whose order, in effect referring the entire matter to the trial
Court, was confirmed on appeal
by the Full Bench. It is that order
that is now under attack before us with special leave granted on
petition.
[31] In VWB’s application the
first prayer of the relief sought reads:
‘
Declaring that the first
respondent [Nedbank] has discharged its obligations in terms of the
letter of credit 862241/08/91.’
This prayer is in line with the
introductory qualification of Goldblatt J’s order. That is the
only issue that was properly before
Marais J.
[32] The second prayer is in the
following terms:
‘
Directing the first respondent
to reverse the debits which it effected to the applicant’s account
number 7986-017325 on 29 April
1992.’
This relates to the unblocking of
the blocked account that Nedbank was directed by the Reserve Bank,
acting on behalf of the Treasury,
to create and credit. When, on 28
April 1992, the Reserve Bank advised Nedbank in a telex message that
the funds had been ‘unblocked’
Nedbank, on 29 April 1992,
credited those funds to an account styled ‘Sheriff of the Supreme
Court’. It is that presumed transfer
which prayer 2, so it seems,
seeks to undo. The underlying logic would appear to be that since
payment into the blocked account
was the equivalent of payment to VWB
the account had to be resurrected so that payment can now be
extracted from it. The logic
is flawed. If payment into the blocked
account discharged Nedbank’s debt to VWB Nedbank was no longer
indebted to VWB and the
status quo could not be restored.
[33] The third prayer is a
supposedly sequential one for the actual payment over by Nedbank to
VWB, with interest, of the amount
Nedbank retained; and the fourth
prayer is one for costs.
[34] The first prayer is in
response to the qualification which Goldblatt J built into his first
order. Prayers 2 and 3, however,
constitute an attempt by VWB to
circumvent the interdict and to pre-empt the pending trial. On the
face of it the prayers are
inherently contradictory. As stated
earlier, if it should be held, in accordance with the first prayer,
that payment had indeed
been made and that Nedbank’s liability in
terms of the letter of credit had been discharged, Nedbank would no
longer be VWB’s
debtor. Yet Nedbank is still in possession of the
money. The very fact that Nedbank is still in possession of the
money, albeit
under a differently styled account, is proof positive
that payment had not yet been made to VWB. In order to entitle it
to lay
claim to the true (as opposed to a fictionalised) payment of
the money it was incumbent on VWB to contrive to invent a new cause

of action. According to VWB’s argument payment became due not in
terms of the letter of credit (which, because it has been discharged,

has expired), but in terms of a new obligation that arose,
Phoenix-like, from the ashes of the defunct letter of credit. That

new obligation, so it was contended, happens to be an ordinary
relationship of banker (Nedbank) and customer (VWB). I shall return

to this point later in the judgment.
[35] Nedbank did not oppose the
relief sought. In taking the decision not to do so, it may have been
poorly advised. Nedbank doubtless
believed that its position was
secure; that, having credited the blocked account, it was immune to
any claim from any other party;
and that once the account is debited
it would as a matter of course be entitled to reimburse itself from
the funds of Irvine which
it held at its disposal. For the reasons
stated in para 29 that view may have been overly simplistic. Having
been forewarned
by Irvine of the possibility of fraud tainting the
letter of credit, any payment to VWB may prove at the trial to have
been a payment
to someone not entitled to it, in circumstances where
it may also prove to be irrecoverable from either its own customer
(Irvine)
or the foreign bank (VWB) that Nedbank seemingly favoured at
the former’s expense.
[36] VWB’s case as initially
presented appears to be based on two propositions:
(1) that the crediting by Nedbank
of the blocked account was coincidentally intended by both Nedbank
and VWB to constitute performance
by Nedbank of its obligations in
terms of the letter of credit; and
(2) since Nedbank’s liability
in terms of the letter of credit had been fully discharged, Nedbank
became obliged to make payment
to VWB of the amount reflected in the
letter of credit, not in its own terms, but in terms of a different
contractual relationship
that was identified
ex post facto
as
an ordinary relationship of banker and customer.
[37] Marais J held that the
unilateral opening of the blocked account at the insistence of the
Reserve Bank was not the equivalent
of payment to the creditor either
by consensus between the debtor and the creditor or in terms of a
proper interpretation of the
Exchange Control Regulations 1961 (‘the
Regulations’), to which I shall return later in this judgment.
Stegmann J in his judgment
for the Full Bench approached the matter
from a different perspective. Since it is the correctness of Marais
J’s judgment that
is at stake before us, I propose to deal with
Marais J’s findings against the following backdrop: first, to
analyse the legal
requirements for a proper payment and, thereafter,
and in the light thereof, to analyse the factual allegations on which
VWB and
Cameron JA in his judgment rely for the conclusion that
Nedbank has discharged its debt.
[38] Performance of an
obligation, whenever the cooperation of a creditor is required in
order to enable the debtor to effect it,
consists of a bilateral
juristic act (De Wet & Van Wyk,
Kontraktereg en Handelsreg
5ed (1992) 263). The payment of a money debt is a case in point (cf
Saambou-Nasionale Bouvereniging v Friedman
1979 (3) SA 978
(A)
at 993A-C;
Volkskas Bank v Bankorp Bpk (h/a Trust Bank) en 'n
Ander
[1991] ZASCA 57
;
1991 (3) SA 605
(A) at 612C-E;
Pfeiffer v First
National Bank of SA Ltd
1998 (3) SA 1018
(A) at 1025I-J). It
requires an
animus
solvendi
of the debtor corresponding
to that of the creditor as to a manner, recognised by law, whereby
the debtor relinquishes and the
creditor acquires access to and
control over the funds to be transferred. A debtor, for instance,
would not be able to effect
payment by electronic transfer to his
creditor’s banking account unless the latter has furnished him with
his banking details
for that purpose. In such a case, although the
creditor can draw on it, it would not count as proper performance
binding the creditor
because his corresponding
animus solvendi
is lacking. He may reject any such attempt at payment if some or
other legal consequence, such as the cancellation of a lease,
should
be dependent on it. In different circumstances his conduct may,
however, indicate assent after the event. The concurrence
will as a
rule relate to a manner of payment that ensures him access to and
control over the funds, either directly or through
an agent.
Notionally, I suppose, it is conceivable that parties may be in
agreement on a method of payment, duly executed, that
would not be
effectual in giving the creditor such access to and control over the
funds; but I would imagine that strong evidence
would be required to
support an arrangement that is essentially sterile, particularly
where the relationship between the parties
is a strictly commercial
one.
[39] The letter of credit
stipulates a deferred payment by Nedbank to Boli to be made to VWB at
Hamburg. The contemplated manner
of payment, one can safely assume,
would have been by means of an electronic transfer as is customary
between banking institutions.
Any deviation from the strict terms of
the letter of credit to allow Nedbank to make a payment by means of a
crediting of a blocked
account, would therefore require either the
prior consent of VWB (which did not happen) or such conduct on its
part as to indicate
to Nedbank that the mere book entry by Nedbank
was per se accepted by VWB as a complete and final discharge by
Nedbank of its obligations
under the letter of credit, thereby at
best giving VWB access to the funds in South Africa.
[40] In determining whether
Nedbank had discharged its obligations under the letter of credit by
the creation and crediting of the
blocked account on the instructions
of the Reserve Bank, there are two distinct aspects that require
scrutiny:
(1) whether Nedbank, as debtor,
had the
animus
to effect a transmission of the funds to VWB;
and
(2) whether VWB’s conduct, on
its side, manifested the
animus
that such crediting would
constitute a transmission of the funds to it.
The answer to both questions, in
my opinion, is in the negative.
[41] Commencing with Nedbank’s
animus,
the first relevant document is its letter to the
Reserve Bank of 24 January 1992 in which it describes the beneficiary
as ‘Boli
GmbH Germany’ (and not VWB), stating:
‘…
we advised you that a
letter of credit had been put in place for the import of motor
vehicles to this country, which to date have
not arrived. In
addition, draws against the Letters of Credit were allowed by the
German correspondent bank and in our application,
we indicated that
same were not legally permissible …
Our bank is therefore in a
precarious situation in that it would appear that we are legally
obliged to make payment on the 22 February
1992 in term of the Letter
of Credit. In addition, non-payment would seriously affect this
Bank’s long term relationship with
the correspondent bank in
Germany.
We therefore seek your urgent
guidance in the matter as to what action should be taken.’
That letter does not reflect an
unqualified resolve on the part of Nedbank to effect payment either
on the due date, at the due
place or at all.
[42] The Reserve Bank responded:
‘
I thank you for
the information furnished and advise that in the particular
circumstances the funds must be paid to an account blocked
in terms
of Regulation 4(2) of the
Exchange Control Regulations until
such
time as the matter has been clarified satisfactorily.
Kindly request your
branch to keep us posted of any further developments, including the
opening of the blocked account and the crediting
of the funds
thereto.’
[43] On 18 February 1992 Nedbank
was again warned by Irvine’s legal representative:
‘
As you are now
aware of the true position, any further dealing by you with the
letter of credit is done at your risk and all my
clients’ rights
are reserved.’
This was followed up
by a further letter from Irvine’s representative, dated 20
February 1992, paragraph 4 of which reads:
‘
I confirm further your
undertaking to include in such letter that you will be complying
strictly with the requirements of the assistant
general manager of
the Reserve Bank, in that the funds
will
be paid into an
account blocked in terms of
Regulation 4(2)
of the
Exchange Control
Regulations until
the matter is clarified.’
[44] Notwithstanding this
admonition Nedbank sent two electronic S.W.I.F.T. messages to VWB on
24 February 1992 (two days after
the due date of the letter of
credit) in the following terms. The one read:
‘
We have credited the amount to USD 434 782-61 into a
blocked account in your good bank’s name being in terms of the S.A.
Reserve
Bank directives and in settlement of our obligation under
this letter of credit stop Please be guided accordingly.’
The other read:
‘
We have credited
your currency account as follows:
Drawing under L/C
862241/08/91
Value Ben : Boli
GmbH.’
[45] The statement ‘in
settlement of our obligations under this letter of credit’ in the
first message follows broadly the wording
of
regulation 4(5)
of the
Exchange Control Regulations (quoted
in full below) which state that
a payment made to a blocked account shall ‘operate as a valid
discharge to the person making
payment’. This may be an opportune
moment of saying something about those Regulations.
Regulation 4(2)
reads as follows:
‘
Whenever a person
in the Republic is under legal obligation to make a payment to a
person outside the Republic but is precluded
from effecting the
payment as a result of any restrictions imposed by or under these
regulations, the Treasury may order such person
to make the payment
to a blocked account.’
It postulates a payment made by a
person in the Republic who ‘is under a legal obligation to make a
payment to a person outside
the Republic’.
Regulation 4(6)
(which
I do not need to quote in full) likewise refers to ‘the liability
to make payment’.
[46] In such a case, where the
person in the Republic is precluded from effecting a payment to a
foreigner as a result of any restrictions
imposed by or under the
Regulations, the Treasury (acting in the instance through the Reserve
Bank) may order such a person to
make ‘the payment’ to a blocked
account. A ‘blocked account’ means an account opened with an
authorised dealer, as defined
(regulation 4(1)).
[47] Any such payment is
therefore made on the basis that the person in the Republic is under
a legal obligation to make the payment.
If the basis should
afterwards prove to be false it follows that the Reserve Bank must
reverse its instruction and that the payment
to the authorised dealer
is likewise to be reversed. Where there is no dispute about the
legal obligation to make a payment, the
need for such a reversal will
of course not arise. Where there is a dispute, the debtor can simply
refrain from making the payment.
But where (as in this case) the
debtor in the Republic is uncertain as to whether the legal
obligation exists, or where it only
emerges after the payment into
the blocked account had been made that the legal obligation is
problematic, a determination will
have to be made as to the existence
or not of the legal obligation and therefore as to the possible
reversal thereof. If the finding
is that the legal obligation does
not exist the funds will have to be released by the authorised dealer
to the party who initially
paid it into the blocked account, and not
to the ostensible creditor who is outside the Republic.
[48]
Regulation 4(2)
must be read
in conjunction with
Regulation 4(5).
It provides:
‘
Any payment made to a blocked
account in terms of this regulation shall, to the extent of the sum
paid, operate as a valid discharge
to the person making payment.’
That sub-regulation provides that
any payment made to a blocked account ‘in terms of this Regulation’
(ie on the supposition
of the existence of the legal obligation to
make the payment) shall operate ‘as a valid discharge to the person
making payment’.’
The person ‘making the payment’ is the
payer and not the payee. The Regulation accordingly does not
stipulate that such payment
shall operate as a valid discharge to the
person outside the Republic ie to the ostensible creditor. What
Regulation 4(5) contemplates
is a ‘discharge’ for a particular
limited purpose ie as a valid discharge as far as the payer is
concerned. The Regulation
does not purport to provide that the
payment into the blocked account is for all conceivable legal
purposes to be regarded as a
payment to the creditor. In particular
it does not provide that it is to operate as a discharge to the
ostensible payee. The
limited purpose is manifestly to favour the
debtor in the Republic who, because of the blockage, is unable to
effect payment to
his overseas creditor for as long as the Regulation
maintains its blocking effect. For the duration thereof the
Regulation provides
the payer, if sued for performance, with the
legal defence that the debt is deemed to be discharged.
[49] Such a discharge is a
fictional one inasmuch as the creditor has in fact received neither
the money nor full access to or control
over it. It is a ‘deemed
discharged’. That this is the correct construction also appears
from Regulation 4(8) which, dealing
with a refund, provides ‘to the
extent of such refund no payment shall be deemed to have been made
for the purpose of sub-regulation
(5).’ In that event the
previously deemed discharge will no longer operate as such.
[50] From the above analysis of
the operation of the Regulations several conclusions can be drawn.
The first is that there is but
one debt and that is the debt in
respect of which the blocked account was credited. That debt in this
case was the debt in terms
of the letter of credit. The unblocking
of the funds followed by a corresponding book entry meant that the
status quo was restored
and that Nedbank was reinstated in a capacity
solely as debtor vis-à-vis VWB in terms of the letter of credit. No
other ancillary,
parallel or complementary debt supervened.
[51] The second conclusion is
that the lifting of the embargo meant that Nedbank was no longer an
authorised dealer in respect
of that transaction. In the instant
case the situation is somewhat complicated in that Nedbank operated
simultaneously as debtor
and as authorised dealer. In its capacity
as debtor it made a book entry to itself in its capacity as
authorised dealer, in accordance
with the directive of the Reserve
Bank. Thereafter it held the money in the latter capacity. When the
Reserve Bank, for reasons
not apparent from the papers (and which
could not be explained by counsel) ordered the blocked account to be
unblocked, Nedbank
became obliged, which it did, to release the money
by an appropriate book entry. Nedbank thereupon relinquished its
dual capacity
and reverted to its single capacity as a debtor in
terms of the letter of credit. That did not mean that an automatic
payment
had now taken place in terms of the letter of credit to VWB.
No such payment had been made because VWB had still not obtained
access to the money. That, after all, is exactly why VWB grasped the
opportunity created for it by Goldblatt J to launch the current

proceedings for payment. If payment had effectually been made to it
when the blocked account was created and credited, there would
in
truth have been no need for it to do so.
[52] At that stage, once Nedbank
was ordered to unblock the funds, Nedbank, if it believed itself to
be obliged to do so, could
have transmitted the money electronically
to VWB in Germany. But because it got wind of the impending
interdict proceedings it
refrained from doing so. The money
therefore remained with Nedbank. It is still with Nedbank. The
issue whether VWB is entitled
to payment as against Nedbank,
therefore remains an open one.
[53] The next conclusion to be
drawn from the analysis of the Regulations is that Nedbank was not
constituted, merely by virtue
of the book entry made by it in terms
of the Regulations, as the agent of VWB for the purpose of accepting
payment to it. Payment
to an authorised dealer in terms of the
Regulations is not per se a payment to the creditor. The creditor
after all has not received
the funds and he cannot do so for as long
as the money remains in the blocked account. An authorised dealer to
which payment is
directed by the Reserve Bank to be made will in the
normal course of events not be in a legal relationship with the
creditor outside
the Republic. The creditor outside the Republic
will have no claim against the authorised dealer in that capacity.
The authorised
dealer is not a party, it is merely a holder of the
money for the time being in accordance with both the directives of
the Reserve
Bank and the provisions of the Regulations. It is, in
short, not the agent of the one party or the other. To the extent
that
an actual deposit is made to it in terms of the Regulations by a
person in South Africa any repayment or refund to be made in terms
of
the Regulations is therefore to be made to the party who made the
payment in the first instance. In the instant case Nedbank,
as
authorised dealer, was, therefore, upon the unblocking of the funds,
obliged to make a book entry in favour of itself. It did
so and was
thereby restored merely as the debtor in terms of the letter of
credit. The so-called discharge in terms of Regulation
4(5) was
therefore merely a temporary measure, for a limited time and for the
limited purpose of assisting the South African debtor
(Nedbank) in
the predicament in which it found itself. Because of the blocking
effect of the Reserve Bank’s directive, Nedbank
was legally unable
to satisfy its liability to VWB in terms of the letter of credit by
transmitting any payment to its creditor
(VWB) overseas.
[54] The fact that
Nedbank as authorised dealer was not and could never have been
thought to be VWB’s agent for purposes of receiving
performance,
puts paid to any suggestion that this is properly a case of
ratification, if that is what was intended by the extended
reference
in footnote 5 of Cameron JA’s judgment to Pothier,
Obligations
para 492. Ratification in its true sense describes ‘a subsequent
expression of will validating an antecedent unauthorised act
of
representation’ (Joubert (ed)
The Law of South Africa
1
st
reissue vol 1 para 126; De Wet & Van Wyk,
Kontraktereg en
Handelsreg,
supra,
114 ff). It is apposite in the field
of agency, and applies when someone without the requisite authority
purported to act on behalf
of a principal, and the principal
afterwards ratifies the professed agent’s prior actions.
Translated to the facts of this case
ratification will only be in
point if Nedbank (in its capacity as an authorised dealer in terms of
the Regulations) purported to
act as agent on behalf of VWB in
accepting its own crediting of the blocked account as due and proper
performance by Nedbank (in
its capacity as a debtor) of its liability
in terms of the letter of credit. Any suggestion that such a
scenario reflected the
true intention of Nedbank at the time is
fanciful; and there is no suggestion in the evidence or even in
Tesdorpf’s exposition
thereof that VWB ever professed to ratify a
lack of authority by Nedbank in paying itself on behalf of VWB.
[55] The final conclusion to be
drawn from the above analysis of the Regulations is that Nedbank
could never have intended that
by its book entry in respect of the
blocked account it was making a final and conclusive payment to VWB.
Nedbank knew that it was
crediting the blocked account on the
instructions of the Reserve Bank and in accordance with the
Regulations. It furthermore
knew that this was a purely temporary
state of affairs ‘until such time as the matter had been clarified
satisfactorily’.
Depending on such clarification and in particular
whether the motor vehicles in question had or had not been duly
delivered, the
money would eventually, once the bar imposed by the
Reserve Bank had been lifted, have to be released. It would have to
be released
by itself as authorised dealer to itself as a debtor.
Only in that event would an actual payment have to be made - to VWB
if there
was no fraud, and to Irvine if there was. That stage has
not yet been reached. In both instances the actual payment would
have
to be made some time in the future - which is utterly
destructive of any notion that it was intended by it to have been
made in
the past. Nedbank knew that it did not intend to transmit
the money to VWB in Germany - the very purpose of crediting the
blocked
account was, after all, to preclude it from doing so.
[56] Against that background I
return to the manner in which Nedbank actually expressed its
intention. In paras 41 to 44 above
I have referred to its exchanges
with the Reserve Bank and VWB and in particular to its S.W.I.F.T.
messages of 24 February 1992.
I cannot read in the above exchanges
any intention on Nedbank’s part other than that it was
acknowledging its liability to
VWB and was complying with the Reserve
Bank’s directives.
[57] In an affidavit filed in the
earlier application before Goldblatt J, an official in Nedbank’s
employ, one Rheeder, stated:
‘
When the letter
of credit was subsequently, within the extended period of validity,
submitted to the third respondent, it recognised
its obligation to
pay out in terms thereof. It performed such obligation by purchasing
foreign currency (US dollars) in the required
amount and by
depositing such foreign currency into a blocked account in the name
of the sixth respondent. From that moment, the
sixth respondent
became entitled to that money and it did not belong to anyone else,
least of all the applicant, Pienaar or Pinebro.’
That statement was
later recanted by Rheeder in stating that all monetary transactions:
‘
were undertaken
and performed by way of book entries. No physical moneys were
identified or are identifiable. The Sixth Respondent
[VWB] when
credited with amounts has a claim thereto.’
He also asked that
the opinion he expressed in the last sentence of his earlier
statement be deleted.
[58] I digress for a
moment to say that it is plain from Rheeder’s later statement that
it is factually wrong to suggest, as is
done in paras 10, 15, 16 and
25 of the judgment of Cameron JA, that an amount was ‘deposited’
into the blocked account. There
was no deposit. It was simply a
book entry under a unilaterally created account to which VWB never
had and never could gain access.
It could never gain such access
because the closing of the account necessarily meant its debiting in
Nedbank’s books of account.
[59] Regardless of
the deletion of the last paragraph, Rheeder’s statement goes no
further than to recognise that, as far as Nedbank
was concerned, VWB
was ‘entitled’ to the money and that it ‘did not belong to
anyone else’. That statement falls far short
of manifesting an
animus
on Nedbank’s part that it intended to make, and
believed that it had thereby effected, a payment to VWB in a manner
that gave
the latter access to the fund; and that it was therefore
effectual as a form of payment for all legal purposes.
[60] To sum up,
therefore, VWB, on which the onus rested, had not shown that the
crediting of the blocked account was intended by
Nedbank to operate
as a proper payment.
[61] Absent any true
animus solvendi
on Nedbank’s part there can of course be no
corresponding
animus solvendi
on VWB’s part. Even so, it is
necessary to examine VWB’s response. There was none. While the
funds remained under embargo
in the blocked account there was not a
single document or message by VWB in response to Nedbank’s
S.W.I.F.T. messages to it of
24 February 1992. Not once did VWB
intimate to Nedbank that it agreed or accepted that the payment into
the blocked account would
function as a full and final discharge by
Nedbank of its liability to it in terms of the letter of credit.
Complete silence, in
the absence of a duty to speak, cannot qualify
as a tacit acceptance. Such a duty to speak was not alleged by any
of the parties.
VWB’s attitude was a purely passive one, which was
perfectly sensible since there was nothing VWB could have done to
alter
the situation for as long as the funds remained blocked. It
accepted the crediting of the blocked account as a
fait accompli
-
as a discharge by Nedbank of its obligations under the Regulations
rather than under the letter of credit. Indeed, there is
nothing to
indicate that it ever occurred to either Nedbank or VWB at the time
that the crediting of the blocked account would
put a final end to
the letter of credit.
[62] And there the
matter rested until 28 April 1992 when Nedbank was telephonically
notified by the Reserve Bank that the blocked
funds should be
released. Nedbank thereupon sent VWB a message, referring expressly
to the letter of credit, and informing it
of the unblocking. It
proceeded:
‘
We have however
also received notification from S.A. Supreme Court that an
application will be made to the court to prevent us to
release the
funds to you.’
[63] To that message
there was once again no response from the VWB. In particular, VWB
did not react to it by adopting the attitude
that a discharge of
Nedbank’s liability under the letter of credit had already occurred
and that Nedbank was now liable to it
on some other basis such as an
ordinary commercial banker-customer relationship.
[64] In anticipation
of the impending interdict Nedbank thereupon unilaterally created a
new account which it credited with the
amount reflected in the letter
of credit. Again there was not a word of protest from VWB or, for
that matter, a reaction of any
kind.
[65] Later that same
day the interdict was granted by Schutz J precluding an actual
payment by Nedbank to VWB in the meantime.
That interdict was
eventually overtaken by the interdict granted by Goldblatt J on 17
November 1992, referred to in para 3 above.
[66] The position,
then, is that there was no reaction by VWB to the events until after
the interdict was granted by Schutz J.
It was only in an answering
affidavit in the subsequent proceedings before Goldblatt J that VWB’s
vice president and assistant
general council, Mr Tesdorpf, for the
first time suggested, not by way of a positive averment, but by way
of a general denial ‘that
no payment had been made in terms of the
letter of credit’. In a supplementary affidavit Tesdorpf
elaborated on his earlier
statement by saying:
‘
It is clear from
annexure ‘JCT9’ [the S.W.I.F.T. message sent by Nedbank to VWB on
24 February 1992, referred to in para 18
above] to the sixth
respondent’s [VWB’s] answering affidavit that the third
respondent [Nedbank], as it was obliged to do,
complied with its
obligations in terms of the letter of credit and transferred an
amount of US $ 434 786,61 into an account in
the sixth respondent’s
name. This quite clearly constitutes a payment by the third
respondent to the sixth respondent in terms
of the letter of credit.’
This is not a
statement of fact as to what transpired between the parties at the
time; it is little more than a conclusion of law
that, for the
reasons stated earlier, is in any event incorrect. It denies the
bilateral nature of payment and falls far short
of an allegation of
fact that Nedbank’s crediting of the blocked account was intended
by it, and accepted by VWB, as a definitive
discharge by Nedbank of
its liability to the VWB in terms of the letter of credit. The
paragraph, it needs to be said, was explicitly
denied by the
respondents in the application.
[67] A final
statement by Tesdorpf, contained in para 43 of the supplementary
affidavit, adds little to the earlier statement and
was likewise
denied. It reads as follows:
‘
Once the third
respondent paid the moneys into an account in the name of the sixth
respondent, it complied with its obligations
under the letter of
credit and the sixth respondent is entitled thereto. Any subsequent
withdrawal by the third respondent of
such moneys cannot affect the
sixth respondent’s right to receive the moneys set aside by the
third respondent for the sixth
respondent.’
This, once again,
falls far short of a positive averment of an intention by VWB to
accept the book entry as a substituted form of
performance and of
any intimation by VWB of its acceptance thereof. Furthermore there
is in this set of affidavits not even a
hint of an ordinary
banker-customer relationship that was supposedly established between
Nedbank and VWB.
[68] In the
subsequent matter before Marais J there are two further statements by
Tesdorpf, this time in VWB’s founding affidavit,
which are in
point. The first is para 15.5 thereof which reads as follows:
‘
It is submitted
that the documents aforementioned indicate a clear intention on the
part of the first respondent to discharge its
obligation under the
letter of credit in that manner,
and that has been accepted by the
applicant as performance
by the first respondent of its
obligations under the letter of credit. Once the applicant’s
account was credited, the
normal relationship of banker and
customer arose
between the first respondent and the applicant
respectively in relation to those funds, and the first respondent was
obliged to
deal with such funds in accordance with the applicant’s
instructions (subject only to such restrictions as may have been
imposed
by exchange control regulations).’ (My emphasis.)
The second averment
is in para 15.7 which reads:
‘
Accordingly I
submit that it is clear from the first respondent’s own documents,
and from the admissions made by its authorised
official [presumably
Rheeder], that the first respondent discharged its obligation under
the letter of credit by crediting the
applicant’s account. This
has been accepted by the applicant
.’ (My emphasis.)
[69] It is to be
emphasised that Tesdorpf refers to an acceptance that supposedly took
place in the past but of which he furnishes
no details; and that
Tesdorpf does not claim that his own affidavit, made long after the
blocked account had been closed, was
itself to serve as proof of such
‘acceptance’.
[70] Both the quoted
paragraphs are cast in the form of ‘submissions’ by VWB’s
assistant general counsel who was not himself
involved in the actual
transactions between the two banks. The italicised phrases are
simply legal contentions. They are not
based on actual evidence or
hard fact. The hard fact is that Nedbank never intended and VWB
never accepted that a mere book entry,
described by Nedbank as a
discharge in the language of the Regulations, was to serve as a form
of substituted performance. The
further allegation that VWB was an
ordinary customer of Nedbank is likewise merely an expedient
afterthought. These statements,
in my opinion, are nothing less than
self-serving
ex post facto
rationalisations with a view to
fabricating a theory of bilateral performance.
[71] Since that
theory would leave VWB without any claim (the only debt in existence
between the parties having, according to it,
been discharged) it was
necessary, in addition, to improvise a banker-customer relationship.
Once again this was a purely opportunistic
post-dated invention.
Nowhere in the actual exchanges between the parties is there the
remotest suggestion that VWB applied for
and that Nedbank agreed to
accept VWB as an ordinary banking client. No details are given in
Tesdorpf’s affidavits of any application
or offers that were made
and of any exchanges that took place as to how and when such a
relationship was created; whether it is
permissible for a foreign
bank to enter into such a relationship with a South African bank;
whether special permission was required
and obtained, and so forth.
And once again the suggestion of such a relationship, insinuated into
Tesdorpf’s affidavit, was
specifically denied. Such a denial must,
in motion proceedings, be taken as fact. In short, no basis of any
nature whatsoever
has been laid justifying a finding in law or in
fact that such a relationship had ever been established between the
parties.
[72] The observation
made in the judgment of Cameron JA that the respondents in the
proceedings before both Goldblatt J and Marais
J did not deny that
‘as a matter of fact’ VWB in February 1992 accepted Nedbank’s
book entry as a payment to it of the sum
claimed, is, with respect,
also not correct. No such averment was made by any official of VWB
who, at the time, was involved with
the transaction with Nedbank.
There was accordingly nothing to deny. And the later gloss that
Tesdorpf sought to place on the
evidence, or lack of it, was
consistently denied whenever it was made. The charge of a non-denial
can therefore not be held against
the respondents.
[73] For all the
above reasons the appeal should, in my view, be dismissed. But there
is one further matter that needs to be mentioned.
VWB raised an
additional cause of action structured on the chance use of the word
‘negotiation’ in the letter of credit.
The point was not argued
before Marais J but a good deal of the judgment of the Full Bench was
devoted to it. It was found to
be false. I prefer to express no
view on it since it was not, in my opinion, properly aired in the
papers and depends peripherally
on issues that are factually in
dispute, such as VWB’s
bona fides
when taking cession of the
letter of credit. These, too, are matters best dealt with by the
trial Court to which the entire dispute,
in the manner ordered by
Marais J, should properly be referred.
[74] I would
accordingly dismiss the appeal with costs, including the costs of two
counsel.
……
.….………..
P M NIENABER
JUDGE OF APPEAL
STREICHER JA
:
[75] I have read the judgments by
Cameron JA and Nienaber JA. I agree with the judgment by Cameron JA
but wish to add a few comments
of my own, more specifically in
relation to the judgment by Nienaber JA.
[76] The appellant claimed an
order:
‘
1 Declaring that (Nedbank) has
discharged its obligations in terms of the letter of credit
862241/08/91.
2 Directing (Nedbank) to reverse
the debits which it effected to the applicant’s account number
7986-017325 on 29 April 1992.
3 Directing (Nedbank) to pay to
the applicant the sum of US $434 782,61 together with such interest
as has accrued thereon from
24 February 1992 to date of payment.’
[77] In argument the appellant
indicated that it would be satisfied with an order in terms of prayer
3. That claim of the appellant
is not a claim for payment in terms of
the letter of credit. The appellant’s case is that the letter of
credit was discharged
and that it no longer has any claim against
Nedbank in terms of the letter of credit. If its claim were a claim
in terms of the
letter of credit the simple answer would have been
that payment in terms of the letter of credit is prohibited by the
interdict
granted by Goldblatt J on 17 November 1992. It is also not
a claim for money that has been credited to an account in the name of

the appellant as a result of a fraud. Nedbank had been advised before
it credited the account that the documents required in terms
of the
letter of credit had been forged. It is not contended that the
appellant was a party to any such forgery.
[78] Nedbank at no stage opposed
the appellant’s claim for payment of the aforesaid amount. It
considered itself legally obliged
to make payment in terms of the
letter of credit. That appears firstly from its letter to the South
African Reserve Bank (‘the
SARB’) and secondly from its
notification to the appellant that it had credited the amount into a
blocked account in the name
of the appellant ‘in settlement of
our
obligation
under this letter of credit’ (my italics). It
probably wrote to the SARB because it was worried that it may be
transgressing
exchange control regulations by transferring money
abroad in respect of vehicles which had not arrived. In the
proceedings before
Goldblatt J an affidavit by a Mr Rheeder, a Senior
Manager Operations, International Branch of Nedbank was filed which
was later
amplified and qualified by him. This is referred to in para
16 of Cameron JA’s judgment. So amplified and qualified he said:
‘
When the letter of credit was
subsequently, within the extended period of validity, submitted to
(Nedbank), it recognised its obligation
to pay out in terms thereof.
It performed such obligation by purchasing foreign currency (US
dollars) in the required amount and
by depositing such foreign
currency into a blocked account in the name of the (appellant). All
the monetary transactions referred
to . . . were undertaken and
performed by way of book entries. No physical moneys were identified
or are identifiable. The (appellant)
when credited with amounts has a
claim thereto.’
The last three sentences replaced
the following sentence:
‘
From that moment, the
(appellant) became entitled to that money and it did not belong to
anyone else, least of all (Nedbank), Pienaar
or Pinebro.’
[79] In my view it is clear from
the aforesaid facts that Nedbank refrained from opposing the claim
for payment of the aforesaid
amount because it considered itself
obliged to pay the amount to the appellant. The respondents do oppose
the granting of an order
in terms of prayer 3 against Nedbank but
could not say on what basis they had standing to do so. Having regard
to the fact that
the amount is not claimed on the basis that it is
payable in terms of the letter of credit and that it has not been
credited as
a result of fraud, they had no standing to do so.
[80] It is nevertheless necessary
to determine whether the appellant made out a case for payment of the
amount.
[81] Nedbank stated that the
amount had been credited into a blocked account in the appellant’s
name ‘being in terms of the
SARB directive and in settlement of our
obligation under this letter of credit.’
[82] The SARB directed that the
amount had to be paid ‘into an account blocked in terms of
Regulation 4(2)’. Regulation 4(5)
provided that ‘any payment made
to a blocked account in terms of this regulation shall, to the extent
of the sum paid, operate
as a valid discharge to the person making
payment.’ Nienaber JA is of the view that a payment in terms of the
regulation would
operate as a valid discharge as far as the payer is
concerned but not as a valid discharge by the payer to the ostensible
payee.
I cannot agree with this construction of the regulation. If
the payment constitutes a discharge of the payer it must be a
discharge
in respect of the obligation in respect of which the
Treasury ordered the payment to a blocked account. It must of
necessity then
operate as a valid discharge by the debtor to the
creditor. Any claim by the creditor in terms of the legal obligation
which gave
rise to the payment into the blocked account could be met
by a defence that the payment into the blocked account operated as a
valid discharge of that obligation i.e. it operated as a discharge by
the payer to the payee.
[83] It is true that the
discharge could be undone in terms of reg 4(8) which provided that
‘the Treasury may grant exemptions
from the provisions of this
regulation and may authorise the refund to any person of moneys paid
by him into a blocked account’
and that ‘to the extent of such
refund no payment shall be deemed to have been made for the purposes
of sub-regulation (5)’
but until such a refund had been ordered the
payment remained one operating as a valid discharge to the person who
made the payment.
Nienaber JA would seem to equate the unblocking of
an account with an authorisation by the Treasury of a refund of the
amount paid
into the blocked account to the person who paid the
amount into that account. Neither in the papers before the court nor
in argument
has it been suggested that the unblocking of the account
constituted an authorisation in terms of reg 4(8). I do not think
that
there is any basis for so equating an authorisation in terms of
reg 4(8) with an unblocking of an account.
[84] Nedbank considered itself
obliged to pay the amount to the appellant and in my view it is clear
in the light of that fact coupled
with the fact that it advised the
appellant on 24 February 1992 that it had credited the amount to an
account in the name of the
appellant ‘in settlement of our
obligation’ that it intended to discharge that debt.
Notwithstanding an allegation by the appellant
in its founding
affidavit that the documents indicate a clear intention on the part
of Nedbank to discharge its obligations in
that manner no affidavit
by Nedbank denying that to be the case has been filed. On the
contrary Rheeder’s affidavit would seem
to confirm that to have
been the case.
[85] Not surprisingly the
appellant did not immediately react. There was nothing it could do
other than accept Nedbank’s actions
as a proper discharge of its
obligations in terms of the letter of credit.
[86] When the account in the name
of the appellant was unblocked Nedbank considered the appellant to be
entitled to payment of the
amount standing to the credit of the
account in the name of the appellant as is shown by the fact that it
advised the appellant
on 28 April 1992 that the funds had been
unblocked but that there was an application pending to prevent it
from releasing the funds
to the appellant, that it had no option but
to act in terms of the documentation served on it and that it would
keep the appellant
informed of developments. At the same time Nedbank
recommended an attorney to the appellant. It is implicit in Nedbank’s
advice
that there was no dispute between it and the appellant and
that had it not been for the pending application the funds would have

been ‘released’ to the appellant.
[87] The application resulted in
an interim order granted by Schutz J on 28 April 1992 that Nedbank be
interdicted from in any way
dealing with the funds which had been
unblocked and that such moneys be attached pending an action to be
instituted. Nedbank thereupon,
presumably as a result of an
attachment by the Sheriff of the Supreme Court, on 29 April 1992
debited the account in the name of
the appellant and credited an
account styled ‘Sheriff of the Supreme Court’. Subsequently the
interim order was set aside by
Goldblatt J who issued an interdict
prohibiting Nedbank from discharging its obligations in terms of the
letter of credit to the
extent that it had not already done so,
pending the final determination of an action which had by then been
instituted.
[88] There is no evidence and no
reason to believe that Nedbank ever changed its attitude that it had
made a payment in settlement
of its obligations in terms of the
letter of credit by crediting an account opened in the name of the
appellant and that the appellant
was as far as Nedbank was concerned
entitled to payment of that amount. Rheeder’s affidavit is
confirmation that that was the
case at least until the order by
Goldblatt J was made.
[89] It was therefore at any time
before the order by Goldblatt J open to the appellant to accept the
actions of Nedbank as a payment
in terms of the letter of credit or
as a discharge of Nedbank’s obligations in terms of the letter of
credit, as was contended
by Nedbank.
[90] At the hearing of the
application by Marais J the parties accepted that the papers in the
proceedings before Goldblatt J could
be treated as evidence before
Marais J. The affidavits filed by the appellant and deposed to by Mr
Testdorpf, a vice-president
and an assistant general counsel of the
appellant, in these proceedings are replete with allegations that
Nedbank discharged its
obligations to the appellant by crediting the
relevant amount to an account in the appellant’s name and that such
crediting constituted
a payment to the appellant. Nienaber JA is of
the view that such statements did not prove acceptance by the
appellant in that they
were little more than conclusions of law and
were denied. In my view, even if there had been no acceptance by that
time, the statement
itself indicates that the appellant accepted that
Nedbank’s actions constituted a discharge of its obligations in
terms of the
letter of credit. Not only did the appellant say that
Nedbank’s actions constituted a discharge of its obligations and
did it
claim, on a basis other than the provisions of the letter of
credit, to be entitled to payment of the amount that had been
credited
to the account opened in its name, it, in addition, obtained
an affidavit by Rheeder to the effect that Nedbank performed its
obligations
in terms of the letter of credit and that the appellant
became entitled to the money credited to the account opened in its
name.
[91] In the present application
Tesdorpf submits that the documents indicate a clear intention on the
part of Nedbank to discharge
its obligations under the letter of
credit. He then makes the statement that the appellant accepted
Nedbank’s actions as a discharge
of its obligations under the
letter of credit. Nienaber JA says that these statements are simply
legal contentions. I cannot agree.
The statements purport to be
statements of fact and there is, in my view, no reason to interpret
them otherwise. The statement
is not denied by Nedbank or by any of
the other respondents. Whether or not there was an acceptance by the
appellant was, therefore,
not even an issue in the present
application.
[92] In my view it has been
established:
That Nedbank’s attitude was
that it had discharged its obligations in terms of the letter of
credit and that the appellant was
entitled to such money unless the
Exchange Control Regulations or
a court order prevented it from
paying to the appellant.
That the appellant accepted
Nedbank’s actions and thereby accepted that it had become entitled
to payment of the money credited
to the account opened in its name.
[93] In the circumstances the
appellant is entitled to payment of the amount claimed. For these
reasons and for the reasons given
by Cameron JA I agree with the
order proposed by him.
P E Streicher
Judge of Appeal
Cameron, JA)
Mthiyane, JA)
Heher, AJA) concur
1
Exchange Control Regulations in
terms of the Currency and
Exchanges Act 9 of 1933 (Government Notice R1111, Government Gazette
Extraordinary 123 of 1 December
1961, as subsequently amended).
Regulation 4 deals with ‘Blocked Accounts’. Reg 4(2) provides
that whenever a person in
the Republic is under a legal obligation
to make a payment to a person outside the Republic but is precluded
from effecting the
payment as a result of any restrictions imposed
by or under the regulations, ‘the Treasury may order such person
to make the
payment to a blocked account’.
2
2
In terms of section 20(4)(a) of the Supreme Court Act, 59 of 1959.
3
Volkskas Bank Bpk v Bankorp Bpk (h/a Trust Bank)
[1991] ZASCA 57
;
1991 (3) SA
605
(A) 612C-D (Hefer JA).
4
A/S Awilco v Fulvia SpA Di Navigazione (The Chikuma)
[1981] 1
All ER 652
(HL) 656
d
-657
g
,
[1981] 1 WLR 314
at 320,
per Lord Bridge.
5
Wessels’ Law of Contract in South Africa
2ed (1951) by AA
Roberts vol II para 2206, invoking Pothier
Treatise on the Law of
Obligations or Contracts
para 492 (‘A payment to a person who
has neither quality nor power to receive, becomes valid, … by a
subsequent ratification
and approbation by the creditor …
Ratifications, having a retrospective effect, according to the rule
ratihabitio mandato comparatur
, … the payment is regarded
as valid from the time of making it. Therefore, if a person engages
as surety for my debtor, with
a condition that his engagement shall
continue no longer than the 1
st
of January 1750, at the
end of which time he shall be
pleno iure
discharged and
acquitted; the payment by him in the course of the year 1749, to a
person who had no power from me will be valid
and he will have no
right to demand a repetition, although I did not ratify the payment
till 1750, the time in which he would
have ceased being my debtor if
he had not paid; for by the retrospective effect of my ratification,
the payment becomes valid,
from the day on which it was made; and
it was made at a time when his obligation subsisted. … Upon the
same principle, if
I owe a hundred pounds to Peter and Paul, as
creditors
in solido
, and I pay that sum in the first place to
a person who receives it for Peter, without any power from him, and
afterwards pay
it a second time to Paul, the validity of the payment
made to Paul will depend on Peter’s ratification; the first
payment will
be valid, if ratified by Peter; the second void, as
being payment of a debt already discharged; if Peter does not
ratify the
first, it will be void, and the second good.’).
6
Ex parte Kelly
1942 OPD 265
, per van den Heever J, applied in
Dantex Investment Holdings (Pty) Ltd v National Explosives (Pty)
Ltd (in liquidation)
1990 (1) SA 736
(A) and
De Freitas v
Society of Advocates of Natal and another
2001 (3) SA 750
(SCA).
7
1942 OPD 265
at 272.