Ntebele v Lesotho Bank and Another (CIV/T 202 of 98) [2000] LSCA 4 (18 April 2000)

1 C I V / T / 2 0 2 / 98 IN T HE H I GH C O U RT OF L E S O T HO In the matter b e t w e e n: A N D R E AS N T E B E LE P L A I N T I FF and L E S O T HO B A NK T S A B E LA T S U I N Y A NE 1ST 2ND D E F E N D A NT D E F E N D A NT J U D G M E NT For Plaintiff F or First Defendant : M r. T. M a t o o a ne F or S e c o nd D e f e n d a n t: No appearance : Mr. M. Mafantiri D e l i v e r ed by t he H o n o u r a b le M r. J u s t i ce T. M o n a p a t hi on t he 18th d ay of A p r il 2 0 00 On the 2nd M a r ch 2 0 00 w h en the t wo Counsel appeared to argue, there were t wo issues before Court. T he first o ne w as about an application for s u m m a ry j u d g m e nt a nd the second o ne w as the First Defendant's exception to the claim. I dealt with the application for s u m m a ry j u d g m e nt first. S U M M A RY J U D G M E NT T he r e c o rd s h o w ed that after t he D e f e n d a n ts w e re allegedly s e r v ed t he S e c o nd D e f e n d a nt e n t e r ed a p p e a r a n ce to d e f e n d. T h is resulted in the application for s u m m a ry j u d g m e nt w h i ch w as o p p o s ed as t he S e c o nd D e f e n d a n t 's affidavit in t e r ms of R u le 28(3)(b) s h o w e d. A f t er a b o ut t wo p o s t p o n e m e n ts t he m a t t er of t he application c a me b e f o re me on the 15th D e c e m b er 1 9 9 9. T h at D e f e n d a n t 's C o u n s el h ad w i t h d r a w n. T he D e f e n d a nt u n d e r t o ok to s e c u re t he service of a n o t h er C o u n s el by the d a te of t he 2nd M a r c h, 2 0 00 b e i ng t he d a te to w h i ch t he m a t t er w as p o s t p o n e d. On t he 15th D e c e m b er 1 9 99 t he D e f e n d a nt h ad a p p e a r ed in p e r s o n. On the 2nd M a r ch 2 0 00 t he D e f e n d a nt h ad n ot a p p e a r ed a nd neither h ad his C o u n s el a p p e a r e d. T he probability w as that no C o u n s el h ad b e en s e c u r e d. I d id n ot m a ke m u ch of M r. Mafantiri's s t a t e m e nt that he m et t he D e f e n d a nt s o me d a ys b e f o re t h en w h en he p r o m i s ed to see Mr. M a f a n t i ri at his office b ut n e v er did. M r. M a f a n t i ri t h e n, in the c i r c u m s t a n c e s, c h o se to a p p ly for c o n f i r m i ng t he s u m m a ry j u d g m e nt after setting aside the o p p o s i t i o n. T h is I a l l o w ed a nd I a c c o r d i n g ly e n t e r ed j u d g m e nt against the S e c o nd D e f e n d a nt in this c l a im for: (a) P a y m e nt of M 1 6 , 0 0 0 . 00 b e i ng o u t s t a n d i ng b a l a n ce of t he p u r c h a se price. (b) Interest t h e r e on at t he rate of 2 2 . 5% ex temporae. (c) C o s ts of suit. (d) " ( My e m p h a s i s) I h ad n o t ed that the Plaintiff h ad p r a y ed for a j u d g m e nt against the D e f e n d a n ts jointly a nd severally o ne p a y i ng the other to be absolved. E X C E P T I ON T he C o u rt t h en p r o c e e d ed to h e ar t he D e f e n d a n t s' E x c e p t i on to t he s u m m o ns a nd declaration w h i ch w as c o u c h ed in t he following t e r m s: "1 T h at t he c o m b i n ed s u m m o ns do n ot disclose a c a u se of action on t he following g r o u n d s: (a) T h ey do n ot establish a ny contractual relations b e t w e en t he parties. (b) No d u ty of care is established b e t w e en t he parties. (c) U n d er A q u i l i an action no claim c an be m a de for purely p e c u n i a ry or e c o n o m ic loss." I m a de my decision g u i d ed by t he following s u b m i s s i o ns by M r. M a t o o a ne : T h at t he p a y m e nt of M 1 6 , 0 0 0 . 00 said to be b a l a n ce of t he p u r c h a se price d id n ot h a ve a basis in t he declaration. T he n a t u re of t he c l a im against t he First D e f e n d a nt h ad n ot b e en intimated. T h at w as to s ay that: " C o n s e q u e n t ly it is insufficient to state in t he s u m m o ns m e r e ly t he relief claims. Plaintiff m u st set o ut w h at t he case of action is a nd w h at it is b a s ed u p o n ." I w as in that regard referred to the fourth edition of the w o rk by Herbstein a nd V an Winsen called T HE P R A C T I CE OF T HE S U P R E ME C O U RT OF S O U TH A F R I CA at page 398. Counsel submitted that there should be a nexus between the relief claimed a nd the grounds supporting the claim. T h e re w as therefore no w ay o ne could claim balance of purchase price from a person w ho w as not a party to a contract. W h en d a m a g es are claimed (supposing this could be said to be the claim) those d a m a g es ( D a m n u m) "only are awarded, h o w e v er as flow naturally a nd directly f r om the breach of contract (general, or intrinsic d a m a g e s) or as m ay be reasonably supposed to have been in the contemplation of the contracting parties at the time they m a de the contract " See Wille's P R I N C I P L ES OF S O U TH A F R I C AN L AW D. Hutchison et al 8th Edition at page 525. T he First Defendant w o u ld h o w e v er argue that there w as no connection between the loss a nd the misrepresentation, w h i ch misrepresentation as w as allegedly said to have b e en d o ne by the First Defendant. Lastly Counsel for First D e f e n d a nt would argue that " T he rights a nd duties u n d er a contract ordinarily attach only to the original parties to the agreements." A nd w o u ld refer in that regard to the sixth edition of the w o rk Wille a nd Millin's M E R C A N T I LE L AW OF S O U TH A F R I CA at page 77. It h ad been c o m m on cause that on or about the 1st July 1 9 97 Plaintiff h ad entered into an agreement with S e c o nd Defendant. S e c o nd Defendant h ad u n d e r t a k en to b uy Plaintiff's vehicle in the a m o u nt of M 2 6 , 5 5 6 . 2 9. It h ad b e en a t e rm of the a g r e e m e nt that the S e c o nd D e f e n d a nt w o u ld p ay M 1 0 , 0 0 0 . 00 as deposit. T h is he duly did. As a result the Plaintiff delivered the vehicle to the S e c o nd D e f e n d a n t. A d o c u m e nt a n n e x ed as " A" evidenced the a g r e e m e nt a nd it h ad a fair translation thereto attached to the record of pleadings. T he outstanding balance therefore b e c a me an a m o u nt of M 1 6 , 5 5 6 . 2 9. On or a b o ut the 30th S e p t e m b er 1 9 9 7, the S e c o nd D e f e n d a nt signed a S t a n d a rd B a nk L e s o t ho L td current account c h e q ue in the s um of Ml 6,000.00 in part p a y m e nt of the sale price. T he c h e q ue w as duly presented to the First Defendant's B a nk (the S e c o nd D e f e n d a n t) on the 30th S e p t e m b er 1 9 9 7. T he Plaintiff said the c h e q ue w as h o n o u r ed a nd his a c c o u nt n u m b er 0 0 1 0 - 1 3 5 1 0 - 1 00 w as credited with appropriate funds on the 1st O c t o b er 1 9 9 7. T h en m o st importantly p a r a g r a ph 8 of the declaration the Plaintiff said: "Acting u p on the claims of defendant's c h e q ue by the first defendant plaintiff duly signed d o c u m e n ts c h a n g i ng o w n e r s h ip of the vehicle in question into the said defendant's n a m e s ." W h at w as m e a nt by the Plaintiff w as that because his o wn b a nk h ad misrepresented that the S e c o nd Defendant's c h e q ue w as g o od he p r o c e e d ed to transfer the vehicle into the S e c o nd Defendant's n a me w h i ch he w o u ld otherwise h a ve n ot d o n e. It m e a nt that that D e f e n d a nt h ad misled h i m. As Plaintiff said this w as the beginning of the misinterpretation. T h is instant case w as w h e re the c h e q ue w as originally allegedly h o n o u r ed as against the usual dishonoured c h e q u e. In the former a b a nk w o u ld bear the o n us of proving that p a y m e nt w as m a de in g o od faith a nd without negligence on its part. W h e re a c h e q ue h ad b e en a b ad o ne there again a Plaintiff c an claim against the d r a w er of the c h e q u e. H e re the claim w as not against First Defendant as a d r a w ee b a nk but as a collecting bank. A quick answer w as needed to the question of whether a collecting b a nk w o u ld be liable under L ex Aquilia. It w as that despite the holding of our Courts a nd South African Courts for a n u m b er of years that the o w n er of a lost or stolen cheque ought to be protected by the Courts by holding that a collecting b a nk has a duty of case to that o w n e r. S u ch opinion do not h o w e v er support recovery of purely pecuniary loss. This m e a ns that negligence, causation a nd patrimonial loss would still have to be proved. As to a South African case on the liability of a collecting b a nk see I N D AC E L E C T R O N I CS ( P T Y) L TD v V O L S K AS B A NK L TD 1992(1) SA 755(A) see also S O U TH A F R I C AN L AW J O U R N AL 110 (1993) 1: " C an a collecting B a nk be held liable under the L ex Aquilia? R e c e nt development a nd s o me thoughts on the future." - Michael Kidd. C o m i ng back to the facts in this case, it w as almost five m o n t hs later that is on the 4th February 1998 the First Defendant B a nk returned the Second Defendant's c h e q ue to Plaintiff as being "Return to d r a w e r" a nd consequently denied Plaintiff to withdraw an a m o u nt of M 1 6 , 0 0 0 . 00 from his account. T he Plaintiff then concluded in the paragraph 10 of the declaration a nd said: "Despite d e m a nd the defendants have failed, neglected a n d / or refused to p ay plaintiff and a m o u nt of M 1 6 , 0 0 0 . 00 which is d ue a nd o w i ng to plaintiff as aforesaid." W ho w as it that o w ed the Plaintiff "the balance of the purchase price?" T he w ay I s aw it it could only have been the Second Defendant w ho could have failed or neglected to p ay in terms of the contract between the Plaintiff and the Second Defendant. T he behaviour of the First D e f e n d a nt did not m e an that it could not h a ve d o ne a w r o ng of s o me kind m o re especially through a representation that funds w o u ld be available a nd payable to the Plaintiff. This I did not decide. O ne w o u ld be inclined to feel that the First Defendant as the Plaintiffs collecting b a nk did not o we a duty of care to the Plaintiff as to w h om it w as a d r a w ee bank. It m i g ht e v en have b e en that the c h e q ue f r om the S e c o nd D e f e n d a nt w as a b ad c h e q ue because of fraud or s o me other reason. T he First D e f e n d a nt or a ny b a nk w o u ld still h a ve a right to i m p e a ch a fraudulent c h e q ue or p a y m e nt m a de on its strength. In the absence of a statement from the Plaintiff that the S e c o nd Defendant's c h e q ue w as g o od for funds I did not see w hy the First Defendant's action w as assailable. I did not see h ow the First Defendant guaranteed or m a de assurances that the funds w o u ld be paid except that it represented that there were funds collected f r om the S e c o nd Defendant's bank. It later c h a n g ed its m i n d. T h at the First Defendant's conduct a m o u n t ed to a representation w h i ch w as equally deceptive w as that it w as close to five (5) m o n t hs w h en the c h e q ue w as "referred to the Plaintiff as being R /D a nd denied Plaintiff to withdraw an a m o u nt of M 1 6 , 0 0 0 . 00 f r om his account ". H ow in the banking practice this w o u ld a m o u nt to the c h e q ue as having b e en h o n o u r ed on the 1st O c t o b er 1997 is only subject to conjencture. F or my part I w o u ld be inclined to agree that an impression w as given to the Plaintiff that the regulatory clearance period between the b a nk h ad b e en given for the c h e q ue to enable the Plaintiff to have c o me to a conclusion that the c h e q ue h ad b e en honoured. He acted u p on the impression given by his o wn b a nk being the First Defendant. T he question a l t h o u gh f r a m ed properly of course in the usual technical w ay as to w h e t h er or n ot there w as a cause action the question w o u ld also really be: A rc the facts or the l aw a d v a n c ed against the First D e f e n d a nt by the Plaintiff consistent with the claim? Or w o u ld the Plaintiff h a ve rather instituted a s e c o nd or a different claim directed at the First D e f e n d a nt on the facts? T he reasons for a b o ve are clear. If there w as privity of contract b e t w e en the Plaintiff a nd S e c o nd D e f e n d a nt there w as no such privity b e t w e en the Plaintiff a nd the First D e f e n d a n t. If the S e c o nd D e f e n d a nt be f o u nd liable for an a m o u nt for an a m o u nt for specific p e r f o r m a n ce in the claim in (a) of the s u m m o ns a nd in 11 (a) of the declaration that c a n n ot naturally be claimable against the First D e f e n d a nt except on a different claim. S e c o n d l y, e v en if the First D e f e n d a nt w o u ld in a n o t h er claim be f o u nd liable for the p a y m e nt of d a m a g es in the s um of M 1 6 , 0 0 0 . 0 0, w h e t h er there they w e re contractual or delictual d a m a g e s, the w ay of arriving at the d a m a g es or the a m o u nt w o u ld be distinctly different f r om the w ay "outstanding b a l a n ce of the p u r c h a se price" w o u ld be arrived at in the instant claim. Lastly, e v en if o ne w o u ld c o n c l u de that there w as a basis in l aw a nd in fact for deciding for the Plaintiff, in the a b s e n ce of an indication in the pleadings as to h ow the d a m a g es w o u ld be arrived at, o ne c a n n ot a t t e m pt to inquire into the q u a n t u m, as the pleadings stood. T h is is important for the following reason. If the Plaintiff's claim w e re to be b a s ed contractual d a m a g es he w o u ld h a ve to claim for "damnum emergens or loss actually incurred, t e r m ed "actual d a m a g es " a nd lucrum cessans or loss of profits w h i ch w o u ld otherwise h a ve b e en m a de " See Willes P R I N C I P L ES OF S O U TH A F R I C AN L A W, (supra) aat p a ge 524-524. T he p r o b l em of assuming that the Plaintiff h ad a r e m e dy s o m e h ow based on the facts in the declaration be it contractual or delictual d a m a g, did not, m o st unfortunately, a n s w er the question whether he could claim as against the S e c o nd D e f e n d a nt for: " P a y m e nt of M 1 6 , 0 0 0 . 00 being outstanding balance of the purchase price." It w as because while second D e f e n d a nt o w ed the Plaintiff, the First D e f e n d a nt did not o we the Plaintiff. This m e a nt that should the Plaintiff h a ve h ad a claim against the First D e f e n d a nt it w o u ld be based on their b a n k e r / c u s t o m er relationship. T he prayers in the s u m m o ns a nd declaration w e re not supported by the facts a nd legal conclusions even if o ne w e re to be very kind to the obviously skeletal statements directed at showing the allegedly wrongful conduct of the First D e f e n d a nt vis-a-vis the Plaintiff. I did not h a ve to discuss the question of the duty of care as b e t w e en the Plaintiff a nd the First D e f e n d a nt for an obvious reasons. It w as that even if there w as such a duty not only w o u ld it h a ve to be pleaded. O ne w o u ld still h a ve to grapple with the real problems of the cause of action a nd the absence of a claim or a prayer connected with such premised statements in the declaration. In the s a me w ay as I have avoided concluding positively on the issue w h e t h er an action b e t w e en the Plaintiff a nd First D e f e n d a nt w o u ld be sustained on representation. I did not venture to say w h e t h er or not there w as such a duty of care in the circumstances. It w as clear that in all the circumstances the exception ought to succeed with costs to the First Defendant. T. M O N A P A T HI J U D GE 18th April, 2 0 00