Nestel v National and Grindlays Bank Ltd

• Jurisdiction: South Africa
• Judge: Steyn CJ, Beyers JA, Ogilvie Thompson JA, Rumpff JA and Williamson JA
• Judgment Date: 15 March 1962
• Citation: 1962 (2) SA 390 (A)
• Hearing Date: 26 February 1962
• Court: Appellate Division

Steyn, C.J.:

In this appeal the salient facts are not in dispute. In 1958 the respondent Bank, at its branch in Bulawayo, agreed to allow the appellant, who was at all material times resident and domiciled in

Steyn CJ

this country, an overdraft in an amount of £30,000. To the knowledge of the respondent, the appellant required the money for the purposes of buying shares in a Southern Rhodesian company conducting an hotel business, of lending that company an amount which would enable it to A purchase a certain hotel business in Bulawayo and of acquiring the business of a coffee bar on the premises of the hotel. It was part of the agreement that, as security for the repayment of the amount advanced to him, the appellant would pledge to the respondent the shares acquired in the company, that the company would guarantee his indebtedness for B that amount and to that end pass a notarial bond over its assets in favour of the respondent. The appellant drew the money placed at his disposal and applied it to the purposes mentioned. Sometime thereafter he delivered the shares, accompanied by unidentified documents acknowledging his liabilities, in pledge to the respondent, and the notarial bond was registered.

C The amount due to the respondent under this arrangement as at 6th January, 1959, was R31,254 15s. 6d., being the capital amount advanced together with interest. The appellant having failed to repay the amount, the respondent sought and obtained an order in the Court of first instance directing the appellant to pay it to the Johannesburg Branch of D the Standard Bank of South Africa Ltd., for transmission to the respondent in Bulawayo. An appeal to the Transvaal Provincial Division against this order met with no success.

The issues raised before this Court and the Courts below, turn upon the meaning of paras. (c) and (d) of reg. 3 (1) of the Exchange Control E Regulations promulgated under the Currency and Exchanges Act, 9 of 1933, by Government Notice 2800 of 2nd November, 1951, as amended by Government Notice 797 of 1958, and their application to the facts of this case. They read as follows:

'3. (1)

Subject to any exemption which may be granted by the Treasury, no person shall, except with permission granted by the Treasury and in accordance with such conditions as the Treasury may impose -

(c)

F make any payment to, or in favour, or on behalf of a person resident outside the Union or place any sum to the credit of such person; or

(d)

draw or negotiate any bill of exchange or promissory note, transfer any security or acknowledge any debt, so that a right (whether actual or contingent) on the part of such person or any other person to receive a payment in the Union is created or transferred as consideration -

(i)

G for the receiving by such person or any other person of a payment or the acquisition by such person or any other person of property, outside the Union; or

(ii)

for a right (whether actual or contingent) on the part of such person or any other person to receive a payment or acquire property outside the Union;

or make or receive any payment as such consideration.'

H It is common cause that, in terms of reg. 3 (1) (c), the appellant could not pay his debt to the respondent in Southern Rhodesia by utilising South African currency, except with the Treasury's permission. Former proceedings in the Transvaal Provincial Division by the respondent against the appellant for recovery of the amount in question, had to be withdrawn because no such permission had then been granted. Because of the difficulty which arose in those proceedings and after certain preliminary negotiations between the respondent's attorneys and the

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Treasury had taken place, the Standard Bank of South Africa Ltd., instructed thereto by the respondent, applied for the necessary permission by a letter dated 1st April, 1960, which is in the following terms:

A 'Our Johannesburg Branch are advised by their abovenamed customers, who are acting on behalf of National and Grindlays Bank Ltd., Bulawayo, that you have agreed in principle to an amount of £31,254 15s. 6d., together with interest thereon at 71/2 per cent per annum, being remitted to the Federation, the transaction representing a claim against Mr. I. Nestel, a Union resident who early in 1958 acquired a shareholding of a Rhodesian Company which is now in liquidation. In order to acquire this interest, Mr. Nestel raised an overdraft in the books of the other bank by the pledge...