Nissan South Africa (Pty) Ltd v Marnitz NO and Others (Stand 186 Aeroport (Pty) Ltd Intervening)

• Jurisdiction: South Africa
• Judgment Date: 01 October 2004
• Citation: 2005 (1) SA 441 (SCA)

Nissan South Africa (Pty) Ltd v Marnitz NO and Others (Stand 186 Aeroport (Pty) Ltd Intervening)
2005 (1) SA 441 (SCA)

2005 (1) SA p441

Citation	2005 (1) SA 441 (SCA)
Case No	27/2004
Court	Supreme Court of Appeal
Judge	Streicher JA, Nugent JA, Conradie JA, Patel AJA and Ponnan AJA
Heard	September 17, 2004
Judgment	October 1, 2004
Counsel	J G Wasserman SC for the appellant.; J J Brett SC (with him J Wilson) for the respondents.; W B Pye for the intervening party.

Flynote : Sleutelwoorde B

Banker — Mistaken transfer of funds — Banker mistakenly transferring funds into incorrect bank account — No meeting of minds of payer and payee — Accordingly, payee not entitled to funds — In face of customer's fraud or theft, banker not C obliged to pay, on customer's demand, amount by which it credited customer's account — Where stolen money paid into and credited to thief's bank account, thief having as little entitlement to credit as to money itself. D

Headnote : Kopnota

A bank which unconditionally credits its customer's account with an amount received is not liable to pay the amount to the customer on demand if the customer came by such money by way of fraud or theft. Where stolen money was paid into a bank account to the credit of the thief, the thief has as little entitlement to the credit as he has to the money itself.

On its customer's (the appellant's) instructions, Firstrand Bank Ltd (FNB) (the third respondent) transferred an amount in excess of R12 E million from the appellant's account to an account held by one of the appellant's creditors, TSW, at the Standard Bank of SA Ltd. The appellant had, however, provided FNB with the incorrect details of TSW's account, with the result that the funds were transferred to the incorrect payee. The appellant did not owe the payee any amount and had no intention of paying the payee any amount. Immediately upon receipt F of the funds, the payee realised that the transfer had been made in error but it withdrew the funds from the account nonetheless and was thereafter liquidated. The appellant proceeded to bring an application in the High Court for an order declaring that it, alternatively, FNB, was entitled to payment of the funds. The liquidators of the insolvent estate (the first and second respondents) claimed that they were G entitled to the funds as falling into the payee's insolvent estate. The Court a quo held that the payee had been enriched by the transfer of the funds and that the appellant therefore had a concurrent claim against the insolvent estate of the payee; that FNB had not been enriched and the appellant therefore had no claim against FNB.

Held, that a bank which had unconditionally credited its customer's account with an amount received was not liable to pay the H amount to the customer on demand where the customer came by such money by way of fraud or theft. If stolen money were paid into a bank account to the credit of the thief, the thief had as little entitlement to the credit as he had to the money itself. (Paragraph [23] at 448E - G.)

Held, further, that payment was a bilateral juristic act which required there to be a meeting of two minds. (Paragraph [24] at I 448G/H.)

Held, further, that, in the present case, FNB, as agent of the appellant, had intended to effect payment to TSW, whilst Standard Bank, as agent of the payee, had intended to receive payment on behalf of the payee. There had been no meeting of the minds. In those circumstances, the payee had not become entitled to the funds erroneously credited to its account. The first J

2005 (1) SA p442

and second respondents, consequently, had no claim against FNB in respect of A the funds. Therefore, as was common cause, the appellant was entitled to payment of the funds. (Paragraphs [26] - [27] at 449D - G.)

Held, accordingly, that the appeal had to be upheld and that the order of the Court a quo had to be replaced with an order declaring that the funds did not form part of the insolvent estate of the payee (in liquidation) and directing the first and second respondents to release the funds to the appellant. (Paragraph [29] at 450B - E.) B

The decision in the Witwatersrand Local Division in Marnitz NO and Others v Nissan Africa (Pty) Ltd reversed.

Cases Considered

Annotations

Reported cases C

Absa Bank Ltd v Standard Bank of SA Ltd 1998 (1) SA 242 (SCA): referred to

Burg Trailers SA (Pty) Ltd and Another v Absa Bank Ltd and Others 2004 (1) SA 284 (SCA): dictum at 289B applied

Commissioner of Customs and Excise v Bank of Lisbon International Ltd and Another 1994 (1) SA 205 (N): D discussed and dictum at 209A - B approved

Commissioner, South African Revenue Service, and Another v Absa Bank Ltd and Another 2003 (2) SA 96 (W): referred to

First National Bank of Southern Africa Ltd v Perry NO and Others 2001 (3) SA 960 (SCA): discussed and applied

Lockie Bros Ltd v Pezaro 1918 WLD 60: referred to

R v Oelsen 1950 (2) PH H198: E applied

S v Graham 1975 (3) SA 569 (A): dictum at 573E - H and 576E - H applied

Take and Save Trading CC and Others v Standard Bank of SA Ltd 2004 (4) SA 1 (SCA): distinguished.

Case Information

Appeal from a decision in the Witwatersrand Local Division (Mailula J). The facts appear from the reasons for judgment. F

J G Wasserman SC for the appellant.

J J Brett SC (with him J Wilson) for the respondents.

W B Pye for the intervening party.

Cur adv vult. G

Postea (October 1).

Judgment

Streicher JA:

[1] What are the consequences of mistakenly transferring money to an incorrect bank account? That is the question that arises for decision in this appeal. H

[2] The appellant is a customer of the third respondent (FNB). On 31 December 2002, it instructed FNB to make certain payments to its creditors. One such creditor was TSW Manufacturing. Insofar as TSW was concerned, FNB was instructed to pay an amount of I R12 767 468,22 into Standard Bank account number 0202216657. However, that account was the account of Maple Freight CC (Maple). Due to a clerical error, the wrong banking details had been furnished. The appellant did not owe Maple any amount and had no intention of paying any amount to Maple. J

2005 (1) SA p443

Streicher JA

[3] As a result of the erroneous instruction, on 31 December 2002, an amount of R12 767 468,22 was transferred by FNB A from the appellant's account to Maple's account at Standard Bank. Shortly thereafter, Maple became aware of the deposit into its account. It realised immediately that it had been made by mistake. One would have thought that it would have been obvious to Maple as to what should be done in the circumstances. However, that was not the case. Maple B considered it necessary to obtain legal advice as to what its position was as recipient of the funds. Quite surprisingly, it was advised that the amount should be transferred to a call account, that it was entitled to the interest earned on the funds and that the amount transferred would eventually have to be repaid on demand. C

[4] In terms of a factoring agreement, Maple had a receipts, as well as payments, account with FNB. Payments and transfers could not be made from the receipts account to any account other than the payments account. On 2 January 2003, Maple transferred an amount of D R12 700 000 from its Standard Bank account to its FNB receipts account. It has not been explained why, if the intention was to follow the legal advice obtained, the call account had not been opened at that stage and the amount had not been paid into that account. On 2 January 2003, R12 700 000 was withdrawn from the receipts account and, on 3 January 2003, R9 750 000 thereof was deposited into the payments account. On 6 January 2003, a further amount of E R3 250 000 was deposited into the payments account.

[5] After payment into the FNB receipts account, one Stanley, the sole member of Maple, instructed Maple's accountant to open a call account and to place the amount of R12 700 000 into that account. F These instructions were conveyed to FNB and a call account was opened on 7 January 2003. According to Stanley, the funds had been transferred from the receipts account to the payments account to permit them to be transferred to the call account. He does not explain the discrepancy between the amount debited to the receipts account on 2 January and the amount credited to the payments account on G 3 January.

[6] However, the funds were never transferred to the call account, due, according to Stanley, to an error on the part of FNB. According to FNB, it was never instructed to transfer...