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Vereins-Und Westbank AG v Veren Investments and others (3) (433/2000) [2002] ZASCA 38 (2 April 2002)

.RTF of original document

THE SUPREME COURT OF APPEAL

OF SOUTH AFRICA

Reportable

Case No: 433/2000

In the matter between:

VEREINS-UND WESTBANK AG Appellant

and

VEREN INVESTMENT 1^st Respondent

IRVINE INTERNATIONAL

TRADE FINANCE (PTY) LTD 2^nd Respondent

LESLIE COHEN N O 3^rd Respondent

Coram: Nienaber, Streicher, Cameron, Mthiyane, JJ A and Heher, A J A

Heard: 5 March 2002

Delivered: 2 April 2002

J U D G M E N T

STREICHER JA:

[75] I have read the judgments by Cameron JA and Nienaber JA. I agree with the judgment by Cameron JA but wish to add a few comments of my own, more specifically in relation to the judgment by Nienaber JA.

[76] The appellant claimed an order:

‘1 Declaring that (Nedbank) has discharged its obligations in terms of the letter of credit 862241/08/91.

2 Directing (Nedbank) to reverse the debits which it effected to the applicant’s account number 7986-017325 on 29 April 1992.

3 Directing (Nedbank) to pay to the applicant the sum of US $434 782,61 together with such interest as has accrued thereon from 24 February 1992 to date of payment.’

[77] In argument the appellant indicated that it would be satisfied with an order in terms of prayer 3. That claim of the appellant is not a claim for payment in terms of the letter of credit. The appellant’s case is that the letter of credit was discharged and that it no longer has any claim against Nedbank in terms of the letter of credit. If its claim were a claim in terms of the letter of credit the simple answer would have been that payment in terms of the letter of credit is prohibited by the interdict granted by Goldblatt J on 17 November 1992. It is also not a claim for money that has been credited to an account in the name of the appellant as a result of a fraud. Nedbank had been advised before it credited the account that the documents required in terms of the letter of credit had been forged. It is not contended that the appellant was a party to any such forgery.

[78] Nedbank at no stage opposed the appellant’s claim for payment of the aforesaid amount. It considered itself legally obliged to make payment in terms of the letter of credit. That appears firstly from its letter to the South African Reserve Bank (‘the SARB’) and secondly from its notification to the appellant that it had credited the amount into a blocked account in the name of the appellant ‘in settlement of our obligation under this letter of credit’ (my italics). It probably wrote to the SARB because it was worried that it may be transgressing exchange control regulations by transferring money abroad in respect of vehicles which had not arrived. In the proceedings before Goldblatt J an affidavit by a Mr Rheeder, a Senior Manager Operations, International Branch of Nedbank was filed which was later amplified and qualified by him. This is referred to in para 16 of Cameron JA’s judgment. So amplified and qualified he said:

‘When the letter of credit was subsequently, within the extended period of validity, submitted to (Nedbank), it recognised its obligation to pay out in terms thereof. It performed such obligation by purchasing foreign currency (US dollars) in the required amount and by depositing such foreign currency into a blocked account in the name of the (appellant). All the monetary transactions referred to . . . were undertaken and performed by way of book entries. No physical moneys were identified or are identifiable. The (appellant) when credited with amounts has a claim thereto.’

The last three sentences replaced the following sentence:

‘From that moment, the (appellant) became entitled to that money and it did not belong to anyone else, least of all (Nedbank), Pienaar or Pinebro.’

[79] In my view it is clear from the aforesaid facts that Nedbank refrained from opposing the claim for payment of the aforesaid amount because it considered itself obliged to pay the amount to the appellant. The respondents do oppose the granting of an order in terms of prayer 3 against Nedbank but could not say on what basis they had standing to do so. Having regard to the fact that the amount is not claimed on the basis that it is payable in terms of the letter of credit and that it has not been credited as a result of fraud, they had no standing to do so.

[80] It is nevertheless necessary to determine whether the appellant made out a case for payment of the amount.

[81] Nedbank stated that the amount had been credited into a blocked account in the appellant’s name ‘being in terms of the SARB directive and in settlement of our obligation under this letter of credit.’

[82] The SARB directed that the amount had to be paid ‘into an account blocked in terms of Regulation 4(2)’. Regulation 4(5) provided that ‘any payment made to a blocked account in terms of this regulation shall, to the extent of the sum paid, operate as a valid discharge to the person making payment.’ Nienaber JA is of the view that a payment in terms of the regulation would operate as a valid discharge as far as the payer is concerned but not as a valid discharge by the payer to the ostensible payee. I cannot agree with this construction of the regulation. If the payment constitutes a discharge of the payer it must be a discharge in respect of the obligation in respect of which the Treasury ordered the payment to a blocked account. It must of necessity then operate as a valid discharge by the debtor to the creditor. Any claim by the creditor in terms of the legal obligation which gave rise to the payment into the blocked account could be met by a defence that the payment into the blocked account operated as a valid discharge of that obligation i.e. it operated as a discharge by the payer to the payee.

[83] It is true that the discharge could be undone in terms of reg 4(8) which provided that ‘the Treasury may grant exemptions from the provisions of this regulation and may authorise the refund to any person of moneys paid by him into a blocked account’ and that ‘to the extent of such refund no payment shall be deemed to have been made for the purposes of sub-regulation (5)’ but until such a refund had been ordered the payment remained one operating as a valid discharge to the person who made the payment. Nienaber JA would seem to equate the unblocking of an account with an authorisation by the Treasury of a refund of the amount paid into the blocked account to the person who paid the amount into that account. Neither in the papers before the court nor in argument has it been suggested that the unblocking of the account constituted an authorisation in terms of reg 4(8). I do not think that there is any basis for so equating an authorisation in terms of reg 4(8) with an unblocking of an account.

[84] Nedbank considered itself obliged to pay the amount to the appellant and in my view it is clear in the light of that fact coupled with the fact that it advised the appellant on 24 February 1992 that it had credited the amount to an account in the name of the appellant ‘in settlement of our obligation’ that it intended to discharge that debt. Notwithstanding an allegation by the appellant in its founding affidavit that the documents indicate a clear intention on the part of Nedbank to discharge its obligations in that manner no affidavit by Nedbank denying that to be the case has been filed. On the contrary Rheeder’s affidavit would seem to confirm that to have been the case.

[85] Not surprisingly the appellant did not immediately react. There was nothing it could do other than accept Nedbank’s actions as a proper discharge of its obligations in terms of the letter of credit.

[86] When the account in the name of the appellant was unblocked Nedbank considered the appellant to be entitled to payment of the amount standing to the credit of the account in the name of the appellant as is shown by the fact that it advised the appellant on 28 April 1992 that the funds had been unblocked but that there was an application pending to prevent it from releasing the funds to the appellant, that it had no option but to act in terms of the documentation served on it and that it would keep the appellant informed of developments. At the same time Nedbank recommended an attorney to the appellant. It is implicit in Nedbank’s advice that there was no dispute between it and the appellant and that had it not been for the pending application the funds would have been ‘released’ to the appellant.

[87] The application resulted in an interim order granted by Schutz J on 28 April 1992 that Nedbank be interdicted from in any way dealing with the funds which had been unblocked and that such moneys be attached pending an action to be instituted. Nedbank thereupon, presumably as a result of an attachment by the Sheriff of the Supreme Court, on 29 April 1992 debited the account in the name of the appellant and credited an account styled ‘Sheriff of the Supreme Court’. Subsequently the interim order was set aside by Goldblatt J who issued an interdict prohibiting Nedbank from discharging its obligations in terms of the letter of credit to the extent that it had not already done so, pending the final determination of an action which had by then been instituted.

[88] There is no evidence and no reason to believe that Nedbank ever changed its attitude that it had made a payment in settlement of its obligations in terms of the letter of credit by crediting an account opened in the name of the appellant and that the appellant was as far as Nedbank was concerned entitled to payment of that amount. Rheeder’s affidavit is confirmation that that was the case at least until the order by Goldblatt J was made.

[89] It was therefore at any time before the order by Goldblatt J open to the appellant to accept the actions of Nedbank as a payment in terms of the letter of credit or as a discharge of Nedbank’s obligations in terms of the letter of credit, as was contended by Nedbank.

[90] At the hearing of the application by Marais J the parties accepted that the papers in the proceedings before Goldblatt J could be treated as evidence before Marais J. The affidavits filed by the appellant and deposed to by Mr Testdorpf, a vice-president and an assistant general counsel of the appellant, in these proceedings are replete with allegations that Nedbank discharged its obligations to the appellant by crediting the relevant amount to an account in the appellant’s name and that such crediting constituted a payment to the appellant. Nienaber JA is of the view that such statements did not prove acceptance by the appellant in that they were little more than conclusions of law and were denied. In my view, even if there had been no acceptance by that time, the statement itself indicates that the appellant accepted that Nedbank’s actions constituted a discharge of its obligations in terms of the letter of credit. Not only did the appellant say that Nedbank’s actions constituted a discharge of its obligations and did it claim, on a basis other than the provisions of the letter of credit, to be entitled to payment of the amount that had been credited to the account opened in its name, it, in addition, obtained an affidavit by Rheeder to the effect that Nedbank performed its obligations in terms of the letter of credit and that the appellant became entitled to the money credited to the account opened in its name.

[91] In the present application Tesdorpf submits that the documents indicate a clear intention on the part of Nedbank to discharge its obligations under the letter of credit. He then makes the statement that the appellant accepted Nedbank’s actions as a discharge of its obligations under the letter of credit. Nienaber JA says that these statements are simply legal contentions. I cannot agree. The statements purport to be statements of fact and there is, in my view, no reason to interpret them otherwise. The statement is not denied by Nedbank or by any of the other respondents. Whether or not there was an acceptance by the appellant was, therefore, not even an issue in the present application.

[92] In my view it has been established:

1. That Nedbank’s attitude was that it had discharged its obligations in terms of the letter of credit and that the appellant was entitled to such money unless the Exchange Control Regulations or a court order prevented it from paying to the appellant.

2. That the appellant accepted Nedbank’s actions and thereby accepted that it had become entitled to payment of the money credited to the account opened in its name.

[93] In the circumstances the appellant is entitled to payment of the amount claimed. For these reasons and for the reasons given by Cameron JA I agree with the order proposed by him.

_____________ P E Streicher

Judge of Appeal

Cameron, JA)

Mthiyane, JA)

Heher, AJA) concur