Annex Distribution (Pty) Ltd and Others v Bank of Baroda

• Jurisdiction: South Africa
• Citation: 2018 (1) SA 562 (GP)

Annex Distribution (Pty) Ltd and Others v Bank of Baroda
2018 (1) SA 562 (GP)

2018 (1) SA p562

Citation	2018 (1) SA 562 (GP)
Case No	52590/2017
Court	Gauteng Division, Pretoria
Judge	Fabricius J
Heard	September 21, 2017
Judgment	September 21, 2017
Counsel	JP Daniels SC for the first to fourth applicants.; RA Bhana SC (with F Ismail and J Griffiths) for the fifth to twentieth applicants.; DM Fine SC (with GJ Marcus SC, C McConnachie and G Singh) for the respondent.

Flynote : Sleutelwoorde

Banking — Relationship between banker and client — Based on contract — Bank may terminate on reasonable notice or as contractually provided for — Motives irrelevant, save perhaps where there was abuse of rights — C Termination on basis of reputational risk posed by client.

Interdict — Interim interdict — Requirements — No such thing in our law as 'interim-interim' interdict based on requirements other than those for common-law interim interdict.

Interdict — Interim interdict — Requirements — Balance of convenience — Weighing heavily in favour of party seeking to uphold integrity of established D financial system and rule of law.

Headnote : Kopnota

The applicants, the Oakbay group of companies linked to the controversial Gupta family, filed an urgent application for an interdict that would prohibit the respondent bank, the Bank of Baroda (the bank), from closing E their accounts and calling up their loans. The bank made the decision to close the accounts on the grounds of reputational harm and the risks posed by the applicants' presumed involvement in money laundering. [*]

In the present application the applicants sought 'interim-interim' relief to keep their accounts open until their application for an interdict was heard early in December 2017. The applicants argued that, for the proposed interim-interim F relief, they were not required to prove the traditional requirements for an interdict, but merely had to show that there was a 'triable issue' that required the court's attention under s 34 of the Constitution. They also argued that the notice period given by the bank was not reasonable, that they would suffer irreparable harm because they would be unable to find another bank or pay their employees or suppliers, leading to their 'inevitable G demise'.

Held

Although the proceedings were of an interim-interim nature, this did not absolve the applicants from having to establish the traditional requirements for an interim interdict, for if there was no merit in the 'main' December 2017 application for an interim interdict, there would be no purpose in H granting the present one either. Our law did not recognise a cause of action for an 'interim-interim' interdict based on requirements other than the existing common-law ones (see [8] – [9], [43]). The applicability of s 34 of the Constitution was never properly raised by the applicants, and while they had at least a prima facie right to be heard, it was subject to the requirements of substantive and procedural law (see[12], [18], [25], [43]).

The I banker – client relationship between the parties was of a contractual nature and the bank's decision to terminate it was governed by the ordinary rules of contract, which allowed banks to terminate their contracts with clients on

2018 (1) SA p563

proper notice (see [22.4]). The bank was under no obligation to give A reasons: its motives were irrelevant, save perhaps where there was found to be an abuse of rights (see [22.2]). Banks were fully entitled terminate on the ground that the client had a bad reputation or because of business or reputational risks (see [22.5] and [22.6]).

Apart from being the applicants' counterparty in the private-law sphere, the bank was also subject to statutory and other legal duties, under both domestic B and international law, to report on and combat money-laundering and other unlawful activities (see [34] – [35]). Since the bank would be liable to administrative and even criminal penalties if it failed to comply with these duties, the logical course for the bank was to avoid these risks by cutting its ties with the applicants (see [36] – [37]). C Such a decision would enhance the integrity of the financial system and enhance the rule of law (see [37]). The harm the bank would likely suffer if it were forced, against its will, to continue with its relationship with the applicants meant that it was entitled to terminate its banker – client relationship with the applicants and that their December 2017 application therefore had little prospects of success (see [41]). Since the bank sought to uphold the integrity of the financial system while the applicants were suspected of subverting it, the balance of D convenience also clearly favoured the former (see [41]). Application dismissed (see [43] – [44]).

Cases cited

Afrisake NPC and Others v City of Tshwane Metropolitan Municipality and Others [2014] ZAGPPHC 191: referred to E

Amalgamated Beverage Industries Ltd v Rond Vista Wholesalers2004 (1) SA 538 (SCA) ([2003] 4 All SA 95): referred to

Barkhuizen v Napier2007 (5) SA 323 (CC) (2007 (7) BCLR 691; [2007] ZACC 5): dictum in para [80] applied

Bredenkamp and Others v Standard Bank of South Africa2010 (4) SA 468 (SCA): applied F

Caesarstone Sdot-Yam Ltd v World of Marble and Granite 2000 CC and Others2013 (6) SA 499 (SCA): dicta in paras [45] – [47] applied

City of Cape Town v Ad Outpost (Pty) Ltd and Others2000 (2) SA 733 (C) (2000 (2) BCLR 130): dictum at 747A applied

Cronje v United Cricket Board of South Africa2001 (4) SA 1361 (T): applied

Everfresh Market Virginia (Pty) Ltd v Shoprite Checkers (Pty) Ltd2012 (1) SA 256 (CC) G (2012 (3) BCLR 219; [2011] ZACC 30): dictum in para [52] applied

Giesecke & Devrient Southern Africa (Pty) Ltd v Minister of Safety and Security2012 (2) SA 137 (SCA): dictum in para [24] applied

Gool v Minister of Justice and Another1955 (2) SA 682 (C): dictum at 688B – F applied H

Hix Networking Technologies v System Publishers (Pty) Ltd and Another1997 (1) SA 391 (A) ([1996] 4 All SA 675): dictum at 410G applied

Hlongwane v Absa Bank Ltd [2016] ZAGPPHC 938: approved

Knox D'Arcy Ltd v Jamieson and Others1996 (4) SA 348 (A) ([1996] 3 All SA 669; [1996] ZASCA 58): dictum at 361C – 362E applied

Media 24 Ltd and Others v SA Taxi Securitisation (Pty) Ltd I (AVUSA Media Ltd and Others as Amici Curiae)2011 (5) SA 329 (SCA): dicta in paras [42] – [49] applied

Minister of Finance v Oakbay Investments (Pty) Ltd and Others GP 80978/2016: referred to

Molusi and Others v Voges NO and Others2016 (3) SA 370 (CC) (2016 (7) BCLR 839; [2016] ZACC 6): dicta in paras [27] – [28] applied J

2018 (1) SA p564

National A Treasury and Others v Opposition to Urban Tolling Alliance and Others2012 (6) SA 223 (CC) (2012 (11) BCLR 1148; [2012] ZACC 18): discussed

Potgieter and Another v Potgieter NO2012 (1) SA 637 (SCA): dicta in paras [31] – [32] applied

Putco Ltd v TV and Radio Guarantee Co (Pty) Ltd and Other Related Cases B 1985 (4) SA 809 (A): referred to

Simon NO v Air Operations of Europe AB and Others1999 (1) SA 217 (SCA) ([1998] 4 All SA 573): dictum at 228G – H applied

Transnet Ltd v Rubenstein2006 (1) SA 591 (SCA) ([2005] 3 All SA 425; [2005] ZASCA 60): dicta in paras [18] – [19] applied

Trinity Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd C 2018 (1) SA 94 (CC): dictum in para [91] applied

Van der Walt v Metcash Trading Ltd2002 (4) SA 317 (CC) (2002 (5) BCLR 454; [2002] ZACC 4): dictum in para [19] applied

Webster v Mitchell1948 (1) SA 1186 (W): dictum at 1189 applied.

Legislation cited

Statutes

The D Constitution, 1996, s 34: see Juta's Statutes of South Africa 2016/17 vol 5 at 1-30.

Case Information

JP Daniels SC for the first to fourth applicants.

RA Bhana SC (with F Ismail and J Griffiths) for the fifth to twentieth E applicants.

DM Fine SC (with GJ Marcus SC, C McConnachie and G Singh) for the respondent.

An application for an 'interim-interim' interdict. The application was dismissed: see [44] of the judgment.

Judgment

Fabricius J: F

[1] In this urgent application for 'interim-interim' relief, the following was sought:

'2.

Pending the final determination of the action referred to in G paragraph 3 of this notice of motion, the respondent is interdicted and restrained from:

2.1

De-activating and/or closing the applicants' banking accounts held at the respondent and or from terminating the banker-customer relationship between the applicants and the respondent;

2.2

H Demanding that the first to fourth applicants repay the sums owed by each of these applicants to the respondent in terms of their loan agreements with the respondent;

2.3

In any way limiting the manner in which the banking accounts are operated by the applicants so as to ensure that I the applicants are permitted to operate the banking accounts in the same manner as they did prior to the notices of termination dated 6 July 2017;

3.

Within 15 days of the granting of this order, the applicants shall institute an application against the respondent in terms of which the applicants seek the relief set out in paragraphs 3.1, 3.3, 3.4 and 3.5, and the first to fourth respondents seek the relief set out in J paragraphs 3.2, 3.3, 3.4 and 3.5:

2018 (1) SA p565

Fabricius J

3.1

Declaring that the respondent's notices to the applicants A dated 6 July 2017 to de-activate the applicants' bank accounts are invalid and ineffective and that 31 July 2018, or such other date after 30 September 2017 as the court may determine, is the date for the expiry of a reasonable notice period for the respondent to de-activate and/or to close the applicants' bank accounts held at the respondent and/or terminate the banker-customer relationship between the B applicants and...