IN THE HIGH COURT OF SOUTH AFRICA 
(WITWATERSRAND LOCAL DIVISION)
	CASE NUMBER: A5023/07

In the matter between:
PESTANA, JOSE MANUEL	Appellant
and
NEDBANK LIMITED	Respondent
________________________________________________________________
JUDGMENT
________________________________________________________________
SCHWARTZMAN J:
[1]	This Full Bench appeal is from the decision of a Trial Court of this Division that dismissed the appellant’s claim that the respondent bank credit his account at its Carltonville Branch “in the sum of R480 000 and costs”.  The record does not include the pleadings.  This is because the trial proceeded by way of a stated case in terms of Rule 33 (1) and 33 (2).

[2]	The agreed facts (in chronological order) were that:
2.1.	The appellant had, at all material times since 1969, conducted a current account at the respondent’s Carltonville branch.

2.2.	On 4 February 2004 the current account of Joseph Michael Pestana at the Carltonville branch had a credit balance of R496 546.40.

2.3.	At 08h33 on 4 February 2004 the respondent’s head office received a telefaxed instruction from the South African Revenue Services (“SARS”) in terms of Section 99 of the Income Tax Act 58 of 1962 (“the Act”) in respect of Pestana’s account.

2.4.	On 4 February 2004 Pestana approached the respondent’s Carltonville Branch and required that it transfer R480 000 from his account to that of the appellant.

2.5.	At 11h33 on 4 February 2004, the respondent’s Carltonville branch carried out Pestana’s instruction by crediting the amount of R480 000 to the appellant’s account.

2.6.	The respondent’s Carltonville branch was notified of the respondent’s appointment in terms of Section 99 of the Act after it had transferred the R480 000 into the appellant’s account.
2.7.	On 4 February 2004, and after it had received notice from its head office, the respondent’s Carltonville branch reversed the transfer to the appellant’s account.

2.8.	Later that day the respondent paid an amount of R496 000 to SARS.  It did so by debiting Pestana’s account.

2.9.	The respondent did not request the authority of the appellant to reverse the amount of R480 000 and no authority to do so was given by the appellant.

[3]	The question of law between the parties was said to be “Was the defendant (respondent), and having regard to its appointment in terms of Section 99 of the Act, entitled to reverse the payment of R480 000 without authority from the plaintiff (appellant)?”  It was then agreed between the parties that “if it is found that the reversal of the funds could not be effected without the authority of the plaintiff (appellant), the plaintiff (appellant) will be entitled to judgment as claimed”.

[4]	The Court a quo found that:

4.1.	The respondent was entitled to reverse the credit to the appellant’s account because its employees, who authorised or passed the credit, did so erroneously or in the mistaken belief that, as a matter of fact, there was no prior claim on the money.

4.2.	The defendant had acted promptly to rectify the erroneous transaction.

4.3.	On the authority of Standard Bank of South Africa v Oneanate Investments (in Liquidation) 1998 (1) SA 811 (SCA) at 823B, the respondent’s conduct did not amount to self-help and that it could not be “contended that the Bank was precluded from looking behind the true state of affairs (erroneous transaction) and reverse a credit entry previously made in the account of the plaintiff and comply with the section 99 Notice.”

[5]	As a Court of Appeal it is our “duty to ascertain whether the Court below came to the correct conclusion on the case submitted to it” – see Paddock Motors (Pty) Ltd v Igesund 1976 (3) SA 16 (A) at page 23D to H.

[6]	Section 99 of the Income Tax Act provides that:

“The Commissioner may, if he thinks necessary, declare any person to be the agent of any other person, and the person so declared an agent shall be the agent for the purposes of this Act and may be required to make payment of any tax, interest or penalty due from any moneys, including pensions, salary, wages or any other remuneration, which may be held by him or due by him to the person whose agent he has been declared to be.”  (My emphasis).

[7]	Section 97 of the Act provides that:

“Every representative taxpayer shall be personally liable for any tax payable by him in his representative capacity, if, while it remains unpaid-
(a)	he alienates, charges or disposes of the income in respect of which the tax is chargeable; or
(b)	he disposes of or parts with any fund or money, which is in his possession or comes to him after the tax is payable, if the tax could legally have been paid from or out of such fund or money.”

[8]	In Hindry v Nedcor Bank Ltd & Another 1999 (2) SA 757 (W) Wunsh J said, at page 770I, that Section 99 of the Act was “a form of garnishment, such as is available in regard to ordinary civil judgment debts” in terms of Rule 45 (12) of the Uniform Rules and Section 65J and Section 72 of the Magistrates’ Courts Act.

[9]	In Reichenberg v Röntgen 1983 (3) SA 745 (W) Nestadt J, at page 747 in fin to 748H, dealt with the form of garnishment constituted by Rule 45 (12) (a) in the following terms:

“I refer in this regard to what TRENGOVE J, as he then was, said in Paramount Furnishers v Lezar's Shoe Store and Outfitters 1970 (3) SA 361 (T) at 364 - 5, namely:

‘The position of a garnishee vis-à-vis a garnishor cannot in my view be equated with that of a debtor and creditor under a contract.  A garnishee proceeding is a species of execution.  It is one of a number of methods available to a judgment creditor for enforcing a judgment or order for the payment of money.  It enables the judgment creditor to have emoluments attached which, when the order is granted, are owing or which would in future become owing to the judgment debtor, to the amount necessary to satisfy the judgment debt.  The effect of such an order is that the employer as garnishee is obliged to deduct the amount stipulated from the emoluments accruing to the judgment debtor and to pay them to the garnishor... but for the garnishee order, the garnishee would ordinarily be obliged to pay the amounts deducted to the judgment debtor as his employee.  Ordinarily the garnishee, as employer, cannot discharge his obligation towards his employee by paying emoluments due to him to any third party unless he has some express or implied authority to do so.  The garnishee order, however, compels him to pay to the judgment creditor and consequently any such payment operates as a discharge pro tanto of the garnishee's obligation as employer to the judgment debtor as his employee.  By operation of law the judgment creditor thus becomes entitled to receive money which would otherwise be payable to the judgment debtor and to that extent he steps into his shoes.’

To similar effect is the following passage from an English case which is quoted with approval in African Distillers Ltd and Others v Honiball and Another 1972 (3) SA 135 (R) at 136H:

‘What the order does is this, it gives the garnishor certain statutory rights; it enables the garnishor to say to the garnishee, 'You shall not pay to your creditor the money which you owe him.'  It enables him to give a valid receipt and discharge for the money.  It enables him in the event of the money not being paid to obtain execution.  He has all those rights, but there is no transfer of the debts, and he has not created a creditor.’

It does not, however, follow, if the garnishee fails to make payment to the judgment creditor of the attached debt, that this is of no concern to the judgment debtor (the garnishee's creditor) or that it cannot be relied on by the latter as constituting a breach of contract by the former.  It is and it can.  The judgment creditor does not become substituted as creditor of the garnishee.  There is no transfer or cession of the debt to the garnishor (African Distillers Ltd v Honiball (supra at 136G)).  Accordingly, the garnishee's indebtedness to its creditor, the judgment debtor, remains.  It is in no way discharged or suspended.  Only the method of payment of the debt is altered in the sense that the judgment creditor is now, because of the attachment, to receive the money.  Nevertheless, as Rule 45 (12) (a) in effect provides and as Trengove J points out and as appears from African Distillers v Honiball (supra ), such payment is still regarded in law as being to the judgment debtor and as operating as a discharge pro tanto of the garnishee's obligation to such judgment debtor.  On this basis the garnishee's failure to pay remains a breach of his obligation to his creditor, the judgment debtor.”  (My emphasis)

[10]	It follows, by parity of reasoning, that there were two things that the Section 99 Notice did not do.  It did not freeze Pestana’s account and it did not transfer or effect a cession of the funds in Pestana’s account to SARS.  Section 99 of the Act mirrors the provisions of Rule 45 (12) (a).  It is in this context that I turn to deal with what happened on 4 February 2004.

[11]	Burg Traders SA (Pty) Ltd v ABSA Bank Ltd 2004 (1) SA 285 (SCA) had to do with a bank (ABSA) that was required to deal with a cheque drawn by one of its clients that was payable to another of its clients.  The cheque in question was drawn on 2 July by Potgieter, a client at ABSA’s Brooklyn Branch.  It was payable to Morgan, a client at ABSA’s Rosebank Branch.  When the cheque was deposited, ABSA immediately entered a provisional credit electronically in favour of Morgan and a provisional debit against Potgieter’s account.  The credit was provisional because it was subject to a ten day hold, which meant that the client (Morgan) may not, during that period, insist upon payment even if it otherwise had been “paid”.  This meant that ABSA was not unconditionally liable for the amount standing to the credit of Morgan and that the credit could be reversed during the period (at 289, [para 9] of the judgment).  During the ten day period a stop payment instruction was given by Potgieter.

[12]	At 288, [para 6] Harms JA, who gave the judgment of the Court, quoted with approval the following extract from the judgment of Caney J in Ormerod v Deputy Sheriff of Durban 1965 (4) SA 670 (D) at page 673C – H, where he explained that:

'The legal relationship between a banking institution and its customer whose account with it is in credit is that of debtor and creditor; although the customer ''deposits'' money to the credit of his account with the bank, the transaction is not one of depositum, but of loan without interest…  The customer is a creditor who has a claim against the bank in the sense that he has a right to have it make payments to him, or to his order, on cheques drawn by him up to the amount by which his account is in credit...  Insofar as his account may not be what is commonly called a current account, but a fixed deposit or upon special terms, such that he has not the right to have the bank make any such payment until after the expiry of a stated time or after a stated period of notice or some other condition, he nevertheless has a claim, a right against the bank, deferred though it may be in operation.  The question for determination is by what process a judgment creditor may resort to execution upon any such claim or right on the part of his judgment debtor.

It follows that in the present instance there is no question of attaching money; what the applicant wishes is to attach and sell the claims, that is to say the rights of action, which the judgment debtors have against the banks.  These are movable incorporeal property.”
At 289 [para 7] Harms JA went on to say that:

“Payment, including by cheque, remains a bilateral juristic act, requiring the meeting of two minds.  ABSA had to act in two capacities: as drawee bank and agent of Potgieter on the one hand, and, on the other, as collecting bank and agent of Morgan.  It had to pay the cheque on behalf of Potgieter and it had to accept payment on behalf of Morgan (who seemingly was blithely unaware of the cheque at the time).  Although different branches and different employees were involved, ABSA, as a single juristic entity, could only have had one intention and this intention would have affected both its clients.  It was not possible for it to intend to accept payment on behalf of Morgan while, simultaneously, intending on behalf of Potgieter not to pay.  Once it intended to pay unconditionally on behalf of Potgieter it could not intend not to accept payment on behalf of Morgan.  And an unconditional acceptance of payment on behalf of Morgan necessarily would have bound it unconditionally to Morgan to pay that amount.  All of this is in accordance with the following statement of Hefer JA (Volkskas Bank Bpk v Bankorp Bpk (h/a Trust Bank) 1991 (3) SA 605 (A) at 611E-F):

‘Wanneer ‘n bank beide as betrokkene en as invorderaar fungeer moet hy noodwendig as gemagtigde van die nemer bewus wees van sy optrede as gemagtigde van die trekker en, in soverre die kreditering en debitering van die onderskeie rekenings gelyk gestel kan word aan betaling, in beide hoedanighede kennis dra van die betaling.'.”  (My emphasis)

[13]	Applying the above reasoning to the facts of this appeal, and paraphrasing what was said by Harms JA, the respondent could on 4 February 2004 only have had one intention and this intention would have affected both of its clients.  It was not possible for it to intend to accept payment on behalf of the appellant while simultaneously intending, on behalf of Pestana, not to pay.  Once it intended to pay unconditionally on behalf of Pestana, it could not intend not to accept payment on behalf of the appellant.  If the payment to the appellant, or the crediting of his account, was unconditional, it follows that the respondent could not unilaterally reverse the credit.

[14]	There are no facts in the stated case from which it can be said that payment to the appellant, or the crediting of his account, was conditional.  On the facts of the stated case, there is nothing to suggest that the plaintiff knew or ought to have known that his account was being mistakenly credited.  It once again follows that the respondent could not unilaterally reverse the credit.

[15]	In argument the respondent’s counsel referred to the decision of Nissan South Africa (Pty) Ltd v Marnitz NO & Others 2005 (1) SA 441 (SCA).  What was decided in this case was that 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 the money by way of theft or fraud (para [23]).  There is no suggestion in the stated case before this Court that Pestana or appellant were party to a theft or a fraud.  As already indicated, the Section 99 Notice did not divest Pestana of the R480 000 standing to the credit of his account.  That the crediting of the R480 000 to the appellant’s account may have consequences for the respondent vis-à-vis SARS does not invalidate the transfer.

[16]	What remains to be considered are the reasons for the Court a quo’s decision (see para [4] supra).

16.1.	That the respondent had effected the debit and credit by a mistake constituted by it having overlooked the Section 99 notice of SARS is a mistake that cannot vitiate its completed bilateral act of payment.  In Van Reenen Steel (Pty) Ltd v Smith NO & Another 2002 (4) SA 264 (SCA) Harms JA said the following at 268E-B, para’s [7] – [9]:

"[7]	The first problem facing the appellants is that they are unable to rely on a unilateral mistake because, as mentioned, the respondents were not the cause of the mistake in the sense discussed in Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis 1992 (3) SA 234 (A).  The next problem is that it is common cause that the written contract expresses the parties' consensus.  Reliance on the March statement is not permitted by their ultimate agreement.  It is for these reasons that they take refuge in the 'doctrine' relating to assumptions and that they argue that a false common assumption relating to a present or past fact vitiates a contract even if it is not a term or condition of the contract. 

[8]	Assumptions or suppositions can have many forms and have different effects depending upon the circumstances.  An assumption relating to a future state of affairs
'relates to an agreement which is in operation and its recognition would have a direct bearing upon one of the terms of the agreement.  Such a supposition is indistinguishable from a condition,'
usually a resolutive condition, perhaps also a condition precedent or an ordinary term of the contract.  The use of the word 'supposition' or 'assumption' instead of 'condition' in this context is not conducive to clear thinking. 

[9]	Assumptions may also relate to present or past facts.  If unilateral, one is back to the effect of a unilateral mistake on a contract.  If common, unless elevated to terms of the agreement, they invariably amount to no more than the reasons for contracting (on those terms)or, expressing the same idea, common mistakes relating to a motive in entering into the agreement ('dwaling in beweegrede').  Whether or not a motive leading up to an agreement is based upon an assumption of fact, it remains a motive.  A party cannot vitiate a contract based upon a mistaken motive relating to an existing fact, even if the motive is common, unless the contract is made dependent upon the motive, or if the requirements for a misrepresentation are present.”

Once the debit and credit occurred as they did, they constituted a completed juristic act independent of any underlying justa causa – cf Johnson v Incorporated General Insurance Ltd 1983 (1) SA 318 (A) at 331G-H and Brits & Another v Eaton NO & Others 1984 (4) SA 728 (T) at 734-5.  What is important in this appeal is that there is nothing in the stated case to suggest that Pestana or the appellant were the cause of the mistake.

16.2.	The promptness with which the respondent may have acted does not assist the respondent.

16.3.	I turn to deal with whether the decision in Oneanate Investments (Paragraph 4.3 supra) assists the respondent.  At 823B Zulman JA said that:

“Entries on bank accounts may reflect valid juristic acts, but that is not necessarily so.  Whilst in general it may be said that entries in a bank's books constitute prima facie evidence of the transactions so recorded, this does not mean that in a particular case one is precluded, unless say by estoppel, from looking behind such entries to discover what the true state of affairs is.  So, for example, if a customer deposits a cheque into its bank account, the bank would upon receiving the deposit pass a credit entry to that customer's account.  If it is established that the drawer's signature has been forged it cannot be suggested that the bank would be precluded from reversing the credit entry previously made.  So, too, if a customer deposits bank notes into its account the bank would similarly pass a credit entry in respect thereof.  If it subsequently transpires that the bank notes were forgeries it can again not be successfully contended that the bank would be precluded from reversing the credit entry.”

[17]	The distinguishing feature in this appeal is that the facts in the case show, at best for the appellant, no more than a mistake in motive.

[18]	On the facts of the stated case there is nothing to suggest that the appellant knew or should have known that the respondent had mistakenly credited his account with the R480 000.  There is accordingly no ground on which the respondent could act as it did.  

[19]	This is an appeal in which the employment of senior and junior counsel was justified.

[20]	The following order is made:

1.	The appeal is upheld with costs, including the costs of two counsel.

2.	The order of the Court a quo is set aside and the following substituted:
"1.	The defendant is ordered to credit the plaintiff’s account with the amount of R480 000.
2.	The defendant is ordered to pay the plaintiff’s costs.”

	_________________________
	I W SCHWARTZMAN
	JUDGE OF THE HIGH COURT

I agree:

	_________________________
	E L GOLDSTEIN
	JUDGE OF THE HIGH COURT

I agree:

	_________________________
	Z L L TSHIQI
	JUDGE OF THE HIGH COURT

For the Appellant:	J J Brett SC
	N Jagga
Instructed by:	David Kotzen Attorneys

For the Respondent:	J G Wasserman SC
	H J Smith
Instructed by:	Cliff Dekker Incorporated

Date of hearing:	17 October 2007
Date of judgment:	19 November 2007

PESTANA, JOSE v NEDBANK LTD (A5023/07)

REPORTABLE / OF INTEREST TO OTHER JUDGES

The head office of a Bank received a garnishment instruction in terms of Section 99 of the Income Tax Act 58 of 1962, requiring it to pay SARS an amount standing to the credit of an account conducted by Client A at one of the Respondent’s branches.  Unaware of this instruction, the branch, on the instruction of Client A, transferred an amount to Client B, who conducted an account at the same branch.  On being informed of the garnishment instruction the branch unilaterally reversed the credit to Client B’s account, transferred the funds back into Client A’s account and then paid SARS.

In an appeal against an order dismissing with costs Client B’s claim that the Bank credit his account with the amount it was held:

[1]	The Bank was bound by its completed juristic act of the payment, which occurred between Client A and B, both represented by the Bank.
[2]	The Bank’s mistake in overlooking the instruction was no more than a mistake in motive that did not vitiate the completed juristic act.
[3]	The Bank could not unilaterally reverse the credit.