Africa Community Media (Pty) Ltd and others v Standard Bank of SA Ltd
| Jurisdiction | http://justis.com/jurisdiction/166,South Africa |
| Judge | Cloete J |
| Judgment Date | 14 September 2023 |
| Citation | 2023 JDR 3446 (WCC) |
| Hearing Date | 12 September 2023 |
| Docket Number | 9318/2022 |
Cloete J:
Introduction and factual background
There are two urgent applications before me at this stage of what appears to be a titanic battle between what I will refer to, for convenience, as the Sekunjalo Group and related entities (“SG”) and, amongst others, Standard Bank. The main issue I must determine in both is whether Standard Bank should be interdicted from closing SG’s accounts with it this coming Friday 15 September 2023 until finalisation of proceedings currently pending in the High Court and Equality Court. On an ancillary issue, there is no objection to the relief sought by SG for the 28th to 31st applicants being joined.
The facts are as follows. On 25 April 2022, SG received a notice from Standard Bank of its intention to terminate SG’s banking relationship with it. For present purposes what is relevant are the following paragraphs in that notice:
In order to assess the extent of the risks that a continued relationship with the Sekunjalo Group may pose, Standard Bank has given careful consideration to the responses of the Sekunjalo Group, including the report provided on 7 March 2022, and all potentially relevant information to which Standard Bank has had access to date.
The responses provided have, however, not been sufficient for the purpose of allaying Standard Bank’s concerns. Given this, and on the strength of the risk assessment that was conducted, Standard Bank has
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decided to discontinue its banking relationship with the Sekunjalo Group and will no longer grant new or further facilities or products.
Standard Bank will directly communicate its decision to terminate its relationship with each Sekunjalo Group entity. Each termination, and the consequences of each termination, will be in accordance with the contractual arrangements and terms and conditions governing the relationship between Standard Bank and each Sekunjalo Group entity. Standard Bank will consider the complexities of each business and product in the assessment of the appropriate notice period so as to allow each Sekunjalo Group entity an opportunity to arrange its affairs.
Notwithstanding what is set out above, Standard Bank acknowledges and continues to respect the legal process currently pending at the Competition Tribunal under case number IR153/21 and affirms its commitment to have due regard to any order that is granted in respect of the application. . ..’ (my emphasis)
On 2 June 2022, SG launched an application in the High Court in this Division under case number 9318/2022 to interdict Standard Bank from discontinuing its banking services pending the final determination of an application to be launched within 15 days ‘for the final relief the applicants deem appropriate concerning the validity or otherwise of the termination notice dated 25 April 2022 issued by the respondent’. The interim application was opposed and full sets of papers filed, with SG’s replying affidavit being delivered on 12 August 2022. It is that application which is now pursued along with a separate urgent application, recently launched, in terms of s 21(5) of the Equality Act. [1]
On 4 August 2022, SG instituted the main application in the High Court under case number 13034/2022. In that litigation there are 80 applicants and
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23 respondents, including Standard Bank and six other major South African banks, the South African Reserve Bank, the Financial Sector Conduct Authority, the Minister of Finance and the Minister of Justice and Correctional Services. From a perusal of the presently amended notice of motion there are 5 main orders sought for declaratory relief as well as review relief to set aside ‘the refusal, withdrawal, termination and closure by the banks [cited] of the financial products or services and bank relationships with the applicants’. The issues to be considered in the main High Court application (which is opposed) are complex, in certain respects novel, and have at their heart constitutional issues including complaints of unfair or unequal treatment, anti-competitiveness and discrimination.
In about August/September 2022, SG along with other complainants (presently totalling 84 in all) instituted separate proceedings in the Equality Court under case number EC01/2022 against 27 respondents (including Standard Bank, the other major South African banks and the further respondents mentioned above in the High Court application). The presently amended notice of complaint, albeit based squarely on provisions of the Equality Act, seeks relief of similar nature. For contextual purposes it is convenient to quote the following paragraphs from the founding affidavit deposed to by Dr Iqbal Survé in the Equality Court urgent application before me in relation to those proceedings:
At the heart of the challenge is the fact that unilateral termination of bank accounts has far reaching implications for those involved. It prevents them from trading freely as guaranteed by section 22 of the Constitution. Without banking facilities no person can meaningfully take part in the
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economy of the country. Such action as serious as terminating banking facilities cannot be implemented on flimsy and irrational grounds. It has dire consequences for thousands of employees and companies who have separate legal personality and [are] governed by independent boards in which I do not participate at all. I state at the outset that the termination of accounts constitutes collective punishment of all companies and employees of several companies. Furthermore, the termination constitutes cruel punishment for innocent employees who have nothing to do with the motive for which Standard Bank wishes to punish me and Independent Media.
There is a growing concern that banks, like Standard Bank, are indeed weaponizing their control of banking facilities. In modern society a bank account is an essential tool for a meaningful participation in the economy and trade as guaranteed in section 22 of the Constitution. Terminating one’s bank account, without any reason is indeed tantamount to capital punishment in the context of economic participation.
In both the Equality Court and the High Court review, the applicants contend that banks are performing a public function and terminating bank accounts has far-reaching implications for those affected. In this particular instance, the termination is irrational and constitutes unfair discrimination against black owned companies employing thousands of black employees whose lives will be affected by the envisaged termination.
The applicants, including other applicants who are not part of this application but are entities related to the Sekunjalo Group, are challenging the banks for being selective as to which entities, in their view, pose reputational risk. . .’
On 16 September 2022 the Competition Tribunal granted some of the SG entities interim relief directing inter alia Standard Bank to suspend the closure of their accounts for a period of 6 months ‘or until such time as the Competition Commission has concluded its investigation’. Standard Bank (and other banks) lodged an appeal/review of the Tribunal’s order to the Competition Appeal Court
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(“CAC”). Accepting that its appeal/review to the CAC did not suspend the Tribunal’s order, Standard Bank did not seek any such suspension. Instead it undertook in a letter from its attorney dated 14 November 2022 to: (a) comply therewith while it remained effective and pending ‘the outcome of the appeal/review’; and (b) afford the affected entities a 30-day notice period prior to closing the accounts ‘in the event that the appeal/review is upheld, or the Tribunal’s order lapses due to the effluxion of time’. This...
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