Absa Bank Ltd v Van de Vyver NO

• Jurisdiction: South Africa
• Judge: Howie JA, Zulman JA and Navsa JA
• Judgment Date: 22 March 2002
• Citation: 2002 (4) SA 397 (SCA)
• Docket Number: 431/99
• Hearing Date: 25 February 2002
• Counsel: M J Lowe SC for the appellant. I J Smuts SC for the respondent.
• Court: Supreme Court of Appeal

Howie JA:

[1] This case is about an amount paid by cheque, professedly in full and final settlement. The respondent is executrix of her F deceased husband's estate. The appellant is the successor in title of the erstwhile Trust Bank Ltd, having acquired its assets and assumed its liabilities. When the deceased died in October 1996 his debts included the respective sums owing on two overdrawn current accounts at Trust Bank, Grahamstown. To secure those debts (and other amounts he owed Trust Bank) the deceased had caused several mortgage bonds to be G registered over landed property he owned at Port Alfred.

[2] To recover what was owing on the current accounts the respondent sued the appellant in the High Court at Grahamstown. In her defence the respondent pleaded that the claim for payment of H the accounts had been settled by the appellant's acceptance of an offer of compromise. The appellant replicated that there had been no existing dispute susceptible of settlement, that it had disclaimed having accepted the cheque in question in settlement and that the alleged settlement was in conflict with a non-variation clause in the mortgage bonds. I

[3] The learned trial Judge (Froneman J) concluded that a pre-existing dispute was not an essential requirement for settlement and that the alleged settlement, which was not contrary to the terms of the bonds, had been effected as alleged. The claim was therefore dismissed. The appeal is with the trial Court's leave. J

Howie JA

[4] In presenting his case counsel for the appellant, realistically, did not persist in the contention that there A had been no pre-existing dispute. The evidence reveals that the deceased ceded an insurance policy on his own life to Trust Bank as security in respect of all his indebtedness to it, including the two overdrawn accounts. Payment of the premiums and, with them the policy, had been allowed to lapse. The respondent blamed the appellant for this state of affairs and the appellant, posthumously, blamed the deceased. What B is plain is that receipt by the appellant of the policy's proceeds would have reduced the combined indebtedness on the two accounts considerably. If nothing else, the quantum of that indebtedness was very much a matter in dispute when, under cover of a letter dated 16 July 1997, the respondent's attorney sent the appellant the cheque. C

[5] The letter reads as follows:

'i/s: Boedel wyle J H van de Vyver

Rekeningnommer: 04049441385 en

Rekeningnommer: 04049231381 D

Ons verwys na bogenoemde twee bankrekeninge gehou by u instansie.

'n Metropolitan lewenspolis, sertifikaatnommer TL 26714 uitgeneem oor die lewe van wyle J H van de Vyver is aan u bankinstansie gesedeer as sekuriteit ten opsigte van sy oortrokke fasiliteite by u instansie. Uitbetaling van hierdie polis is geweier as gevolg van die feit dat die premies nie tot datum van dood van die oorledene betaal is nie. Wyle mnr J H van de Vyver het 'n debietorder by u instansie onderteken ten opsigte van die betaling van die betrokke E premies. Die onus was op u bankinstansie om toe te sien dat sodanige premies betaal word.

In die lig van bogenoemde word 'n bedrag van R180 000 in volle en finale vereffening ten opsigte van rekeningnommer 04049231381 en rekeningnommer 04049441385 aangebied.

Ons sluit dan hierby ons tjek ten bedrae van R180 000 in en sien uit om van u te verneem.' F

[6] The appellant answered as follows by letter dated 8 August 1997:

'Ondersoek is ingestel om welke rede premies op Metropolitan polis nie tot datum van dood betaal is nie.

Pencor Wholesalers CC, rekeningnommer 01-01481115-6 is gedebiteer met betaling van premies. Eerste premie ten G bedrag van R240 is op 1 Maart 1990 gemaak, waarna maandelikse premies ten bedrag van R120 gemaak is tot September 1991 toe rekening in opdrag van oorledene gesluit is.

Indien 'n rekening gesluit word, rus die onus op die kliënt indien daar debietorders op die rekening deurgaan om alternatiewe reëlings te tref vir betaling van premies.

Die tjek ten bedrae van R180 000 kan dus nie as volle en finale vereffening beskou word nie aangesien die uitstaande H bedrag baie meer beloop.

Ons bevoordeel ons regte deur die tjek op rekeningnommer 04-04944138-5 met die grootste uitstaande balans in te betaal.

Ons vertrou dat u dit in orde sal vind.'

[7] The evidence reveals that the appellant deposited the cheque on 8 August 1997 and applied the I proceeds in reduction of what was owing on the larger of the two overdraft debts. In short, it appropriated the money. The record does not establish when the appellant's letter was posted. Accordingly one cannot conclude that posting preceded deposit. And there was at no stage any offer to return the cheque. J

Howie JA

[8] In this regard the appellant's counsel made the concession, both at the trial and in this Court, that if the respondent's A attorney's letter of 16 July 1997 amounted to an offer of compromise then the deposit of the cheque and the appropriation of its proceeds constituted acceptance of the offer.

[9] The elements of effective acceptance may constitute a question of law but the question whether those elements have been B proved is one of fact. (Burt NO v National Bank of South Africa Ltd 1921 AD 59 at 62 and Paterson Exhibitions CC v Knights Advertising and Marketing CC 1991 (3) SA 523 (A) at 529C - D.) Of significance here is that on a material number of occasions it has been held that where a creditor receives payment offered in full settlement C and keeps the money, such retention is enough to constitute acceptance and bar proceedings for any balance of the claim notwithstanding the creditor's efforts to qualify the acceptance. See Andy's Electrical v Laurie Sykes (Pty) Ltd 1979 (3) SA 341 (N) and the cases quoted at 343B - C. In Paterson Exhibitions at 529B - C the correctness of those cases was...