THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

No precedential significance

Case No: 686/08

NEDBANK LIMITED

Appellant

and

P U INJECTION MANUFACTURING (PTY) LTD              First Respondent

SOUTH AFRICAN RESERVE BANK                           Second Respondent

Neutral citation:
Nedbank
Ltd
v
P
U
Injection
Manufacturing
(686/2008) [2009] ZASCA 61 (29 May 2009)

Coram:
STREICHER ADP, CLOETE and LEWIS JJA and LEACH
and TSHIQI AJJA

Heard:
22 May 2009
Delivered:
29 May 2009

Summary:
Claim for payment of money from a bank account in which
financial rand had been held refused where applicant unable to
prove any right to the money.

ORDER

On appeal from: Pretoria High Court (Pretorius and Preller JJ and Makhafola
AJ, sitting as a full court on appeal).

1 The appeal is upheld with costs, including the costs of two counsel where so
employed.
2 The order of the court of first instance is altered to read:
‘The application is dismissed with costs.’

JUDGMENT
LEWIS JA (STREICHER ADP, CLOETE JA AND LEACH AND TSHIQI AJJA
concurring)

[1] The question in this appeal is simple: did the first respondent, PU
Injection Manufacturing (Pty) Ltd (PUI) have a claim against the appellant,
Nedbank Ltd, for payment of the sum of R4 3242 817.16 plus interest? Its
application for an order for payment was granted by the court of first instance,
and that order was confirmed on appeal to a full court. Nedbank appeals with
the special leave of this court.

[2] The undisputed facts relevant to the determination of the question are
these. PUI required funding for a manufacturing business. The funding was to
be provided by a company, Olympus Investments Ltd (Olympus), registered in
Guernsey, the sole purpose of which, allegedly, was to make financial rand
available for the benefit of PUI and another company.

[3] On 22 November 1988 Nedbank, an authorized dealer in terms of the
Exchange Control Regulations (RG 45, GG 123, 1 December 1961) as
amended, submitted an application on behalf of Olympus to the South African
Reserve Bank for the release of financial rand to the value of some R12.5m.
(Curiously, Olympus was incorporated only on 30 November, after its
application was made, but nothing in this appeal turns on this.) On 12 January

1989, pursuant to the application, the Reserve Bank approved the release of
financial rand in the sum of R12.5m. The beneficiary of the application was
said to be PUI. The approval was, however, subject to various conditions, in
particular that the financial rand could be released only against the issuing of
ordinary shares at a premium in PUI.

[4] Funds introduced from overseas were converted into financial rand and
deposited in a financial rand suspense account in the name of P U Injection
Manufacturing Pty Ltd / Olympus Ltd at Standard Corporate Bank, Bramley.
Some of the financial rand were paid out, amongst others to PUI’s account
with Standard Merchant Bank, Bramley, leaving a balance of R2 497 793,80
in the financial rand suspense account and R415 027,54 in PUI’s account.
The papers do not disclose whether shares in the required form were ever
issued. On 5 May 1989 the Reserve Bank issued an order to the Standard
Bank of South Africa Ltd attaching all funds held in the name of P U Injection
Manufacturing / Olympus Ltd in terms of reg 22A(1)(a)(i), pending an
investigation by the Reserve Bank. We are not told why the attachment was
ordered nor whether there was an investigation, let alone its outcome.
Pursuant to the attachment the funds were transferred to the Reserve Bank’s
account at Standard Bank.

[5] Attachments in terms of reg 22A are, however, subject to the
provisions of reg 22A(3) which in effect provides that the Treasury must
release funds from attachment, unless they are forfeited in terms of reg 22B,
within a period of three years of the attachment. Regulation 22A(3) requires
that the Treasury must return the money to the person ‘in whose possession it
has been found or the person entitled thereto’.

[6] The financial rand attached were in fact released on 22 October 1992,
three years and five months after attachment. The funds, plus interest, were
transferred by Standard Bank to Nedbank (on the instruction of the Reserve
Bank) by means of a SWIFT (Society for World Wide Interbank Financial
Telecommunication) message. The beneficiary customer was stated to be
Olympus. It is not disputed that SWIFT messages inter banks are binding.

Since the money was regarded as foreign currency, being financial rand, it
could be paid out only with the permission of the Reserve Bank.

[7] Some ten years later PUI finally settled its dispute with the Reserve
Bank and the Reserve Bank wrote to Nedbank on 25 September 2002
advising that the funds could be released. I shall revert to this letter. When
PUI subsequently requested payment of the funds in the Nedbank Olympus
account it was advised that all moneys in the account had been paid out to
two other entities. PUI maintains that Nedbank is nonetheless obliged to pay
to it the sum transferred by Standard Bank in 1992 since it, and not Olympus,
should have been the beneficiary of the payment.

[8] PUI’s claim is founded on the assertion, made in the founding affidavit,
that the SWIFT message ought to have referred not to Olympus, but to PUI
Manufacturing (Pty) Ltd/ Olympus.  PUI contends that this is so since the sole
purpose of Olympus was to pay funds into an account for the benefit of PUI.
The assertion is not substantiated by anything else. There is no such entity as
PUI Manufacturing (Pty) Ltd/Olympus.  And of course the entitlement of PUI to
the funds paid by Olympus was dependent on the issue of shares in the
company to Olympus. There is no evidence – and not even an allegation –
that those shares were issued. There is thus nothing to suggest that PUI was
entitled to the funds at any stage.

[9] PUI nonetheless contends that the Reserve Bank letter of 25
September 2002 to Nedbank’s legal adviser amounted to an instruction to
Nedbank to pay the moneys in the Olympus account to PUI. The letter stated
that the matter between the Exchange Control Department of the Reserve
Bank and PUI/Olympus had been ‘settled’, and that the funds paid in to
Nedbank in October 1992, plus interest, should be transferred to the trust
account of PUI’s attorney.

[10] The letter does not, contrary to PUI’s contention, confer any right on
PUI. It does no more than indicate that the funds may be released in view of
the settlement. The Reserve Bank, in the letter, does not purport to give any

right to PUI to claim payment, nor could it do so. After all, it had some ten
years previously, released the funds from attachment, hence the SWIFT
transfer from Standard Bank to Nedbank.

[11] In view of the fact that PUI has shown no right to the funds that were
transferred into the Nedbank Olympus account, its claim should have failed
and the appeal must succeed.

[12] It is thus ordered that:
1 The appeal is upheld with costs, including the costs of two counsel where so
employed.
2 The order of the court of first instance is altered to read:
‘The application is dismissed with costs.’

______________
C H Lewis
Judge of Appeal

APPEARANCES:

FOR APPELLANT:
J G Wasserman SC

P T Rood

Cliffe Dekker Hofmeyer Inc

Pretoria

Instructed by

Webbers Attorneys

Bloemfontein

FOR RESPONDENT:
D A Gordon SC

H C Janse van Rensburg

Julian Pokroy Attorneys

Pretoria

Instructed by

Horn & van Rensburg Attorneys

Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA

PRESS RELEASE

STATUS: Immediate

Nedbank Ltd v P U Injection Manufacturing (686/2008) [2009] ZASCA x (x
May 2009)

Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal

The Supreme Court of Appeal today upheld an appeal against the decision of
a full court of the High Court, Pretoria, which had confirmed an order of the
court of first instance, ordering Nedbank to pay a substantial sum of money to
P U Injection Manufacturing (PUI).

PUI had claimed payment of financial rand that had been attached by the
Reserve Bank in 1989, and subsequently transferred into an account, in the
name of another entity, Olympus, at Nedbank in 1992. PUI and the Reserve
Bank had settled their dispute over the funds in 2002, hence the claim for
payment of the funds in 2005.

The SCA found that PUI had not established any right to the money
transferred into the account of Olympus. It thus upheld the appeal by
Nedbank against the order that it pay the funds plus interest to PUI.

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