Absa Bank Ltd v Bernert

• Jurisdiction: South Africa
• Citation: 2011 (3) SA 74 (SCA)

Absa Bank Ltd v Bernert
2011 (3) SA 74 (SCA)

2011 (3) SA p74

Citation	2011 (3) SA 74 (SCA)
Case No	99/09
Court	Supreme Court of Appeal
Judge	Nugent JA, Cachalia JA, Malan JA, Tshiqi JA and Majiedt AJA
Heard	February 18, 2010
Judgment	March 29, 2010
Counsel	SW Burger for the appellant.; DJL Nel (attorney) for the respondent.

Flynote : Sleutelwoorde E

Practice — Trial — Separation of trial on issues — Court to apply mind to whether convenient to separate issues — Questions to be determined must be expressed in its order with clarity and precision — Uniform Rules, rule 33(4).

Headnote : Kopnota

F It is imperative at the start of a trial that there should be clarity on the questions that the court is being called upon to answer. Where issues are to be separated, rule 33(4) requires the court to make an order to that effect. If for no reason but to clarify matters for itself a court that is asked to separate issues must necessarily apply its mind to whether it is indeed convenient G that they be separated, and if so, the questions to be determined must be expressed in its order with clarity and precision. (Paragraph [21] at 79B – D.)

Cases Considered

Annotations:

Reported cases

Aucamp and Others v University of Stellenbosch 2002 (4) SA 544 (C): distinguished H

Bayer South Africa (Pty) Ltd v Frost 1991 (4) SA 559 (A): distinguished

Body Corporate of Dumbarton Oaks v Faiga 1999 (1) SA 975 (SCA) ([1999] 1 All SA 229): referred to

Commercial Union Insurance Co of SA Ltd v Wallace NO; Santam Insurance Ltd v Afric Addressing (Pty) Ltd I 2004 (1) SA 326 (SCA): referred to

Denel (Edms) Bpk v Vorster 2004 (4) SA 481 (SCA) ((2004) 25 ILJ 659; 2005 (4) BLLR 313): applied

Indac Electronics (Pty) Ltd v Volkskas Bank Ltd 1992 (1) SA 783 (A): distinguished

Kantey & Templer (Pty) Ltd and Another v Van Zyl NO 2007 (1) SA 610 (C): distinguished J

2011 (3) SA p75

Medscheme Holdings (Pty) Ltd and Another v Bhamjee 2005 (5) SA 339 (SCA) ([2005] 4 All SA 16): A referred to

Mukheiber v Raath and Another 1999 (3) SA 1065 (SCA) ([1999] 3 All SA 490): distinguished

OK Bazaars (1929) Ltd v Standard Bank of South Africa Ltd 2002 (3) SA 688 (SCA): distinguished

Perlman v Zoutendyk 1934 CPD 151: distinguished B

Standard Chartered Bank of Canada v Nedperm Bank Ltd 1994 (4) SA 747 (A): distinguished

Tsimatakopoulos v Hemingway, Isaacs & Coetzee CC and Another 1993 (4) SA 428 (C): distinguished.

Unreported cases C

Bernert v Absa Bank Limited (TPD case No 14302/03, 15 October 2008): reversed on appeal.

Rules Considered

Rules of court

Uniform Rules of Court, rule 33(4): see Juta's The Supreme Court Act and the Magistrates' Courts Act and Rules (2010) at 54. D

Case Information

Appeal from the North Gauteng High Court, Pretoria (Ranchod AJ sitting as court of first instance).

SW Burger for the appellant.

DJL Nel (attorney) for the respondent. E

Cur adv vult.

Postea (March 29).

Judgment

Nugent JA (Cachalia JA, Malan JA, Tshiqi JA and Majiedt AJA concurring): F

[1] In the course of his evidence the respondent in this appeal, Mr Bernert, said that 'in life you take things at face value', and the court below seems to have seen things in the same way. But I have found that the evidence of Mr Merrett, of whom the trial court was rather dismissive, serves as a more useful guide when evaluating this case. G

[2] Mr Merrett is the assistant director of the Financial Investigation Bureau of the International Chamber of Commerce. The Bureau investigates suspicious banking and financial transactions, and Mr Merrett has considerable expertise in that field. The aspect of his evidence H that I have found to be useful is his explanation of what he called 'financial mist'. He said that it is common for those who engage in financial scams to use fictitious documents, purporting to emanate from major financial institutions, and loaded with financial terminology, to create a mist that blinds their targets to what is in truth occurring. That enables them to induce the gullible into believing that they have wealth I available for investment, and it also enables them to gauge the level of financial sophistication of the target.

[3] This case is about documents, particularly a document that was produced on a letterhead of the appellant, a well-known financial institution, which I will refer to as Absa Bank. Notwithstanding the J

2011 (3) SA p76

Nugent JA

A voluminous evidence, the case really comes down to evaluating the response of Absa Bank when it discovered the existence of that document. But, while the issue is narrowly confined, I think it is important to appreciate the context within which the document came to be created.

[4] There are many curious features of this case that were left B unexplained, and there are many gaps in the narrative of what occurred. That is because much of the trial was taken up with arguments between counsel and witnesses on the meaning of documents, and little interest was shown in establishing all the facts.

[5] Before turning to the evidence in more detail I think that a brief C description of the principal characters in the story that unfolded, and a short synopsis of how this case came about, will assist to explain what is in issue in this appeal.

[6] Early in his life Mr Bernert received two years' training as an apprentice motor mechanic. He then joined his father's business restoring motor vehicles. In the course of this business he came across an interesting D design for a motor vehicle. He acquired the rights to the design and, after making various modifications, he began building the vehicles, which he called the 'El Macho'. The events that led to this case arose from his attempts to find finance to build a production plant.

E [7] I have no reason to think that Mr Bernert is anything but honest, or that he was complicit in anything untoward that might have occurred. But what emerges plainly from his evidence is that Mr Bernert was a novice in the financial world. His evidence demonstrates that he had little knowledge of the nature and structure of corporations, or of F financial transactions in general, and of financial documents in particular. I think it is clear that the meaning that he attached to the various transactions to which he was exposed was largely repetition of what he had been told they meant.

[8] Mr Bernert was the sole member of Rotrax International CC, which G was the vehicle through which he hoped to develop his business. In his search for finance to construct his production plant Mr Bernert met three people through contact with the armaments industry.

[9] First, there was Mr Fanjek. Mr Fanjek has lived in this country from 1967. He described himself as a businessman, but the nature of his H business was not explored. The role that Mr Fanjek purported to play was that of Mr Bernert's agent for raising investment finance. In response to a submission that Mr Fanjek was a liar, the court below said that 'careful scrutiny of the relevant parts of [his] evidence shows that they were common cause or can be inferred from the uncontested facts'. I It is true that at times the evidence of Mr Fanjek coincided with incontrovertible facts. But, except where his evidence is corroborated in that way, I do not believe a word that Mr Fanjek said. There was hardly a question to which he gave a direct answer, and for the most part his evidence was nonsensical verbiage.

[10] Then there was Mr Dinawi, a citizen of Syria, whom Mr Bernert J met at an armaments exhibition in Abu Dhabi. Mr Dinawi held himself

2011 (3) SA p77

Nugent JA

out to be the 'business manager' of Sheikh Fawaz Bin Abdullah Al-Khalifa. A He did not give evidence at the trial.

[11] And finally there was Sheikh Fawaz himself. He volunteered at the close of his evidence that he had come to this country to testify, so as to scotch doubts that had been expressed by Absa Bank as to his existence. Sheikh Fawaz said that he was a member of the dynasty that has ruled B Bahrain for almost three centuries. The documents do not disclose precisely where the Sheikh conducts business. His personal letterhead reflects only that he receives his correspondence at a post office box in Bahrain and at a 'hotmail.com' electronic address.

[12] The court below described Sheikh Fawaz as an impressive witness, C but the record of his evidence does not bear that out. This court has warned before against being seduced by the appearance of a witness, at the expense of analysing what the witness has to say. [1] I have found the evidence of the Sheikh to be almost as unimpressive as that of Mr Fanjek. Most of his answers to questions about the transactions that D I refer to later in this judgment were incoherent, and attempts to probe them in more detail were brushed aside on the basis that those were matters that he left to his advisers.

[13] Another person who played a prominent role was Mr Els, who was E employed as an insurance broker by Absa Brokers (Pty) Ltd. Mr Els was deceased by the time of the trial, and we thus have no tested explanation for his unauthorised conduct, but it certainly seems to me that he was up to no good.

[14] And then there was Mr Coetzee, who was employed by Absa Bank as a 'business manager'. One of his functions was to solicit deposits for F the bank. Mr Coetzee was an authorised signatory for a class of bank transactions. The fact of his authority was reflected in a manual that is available to banks internationally. Mr Coetzee was dismissed in consequence of the events that gave rise to this case, but he was later reinstated. Though the explanations that he gave for his conduct are extraordinary, it is not material to this case whether or not they are true. G

[15] Now a brief synopsis of what the case is about. In his...