THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 164/2021
In the matter between:
NEDBANK LIMITED

APPELLANT
and
HOUTBOSPLAAS (PTY) LTD

FIRST RESPONDENT
TBS ALPHA BELEGGINGS (PTY) LTD          SECOND RESPONDENT

Neutral citation: Nedbank Limited v Houtbosplaas (Pty) Ltd and Another
(Case no 164/2021) [2022] ZASCA 69 (19 May 2022)
Coram:
PETSE DP and ZONDI and GORVEN JJA and TSOKA and
MAKAULA AJJA
Heard:
08 March 2022
Delivered: 19 May 2022
Summary: Banking law – banker and client – summary closure of bank
accounts by client – exercise of contractual right by client to do so – trusts that
held shares in companies which were the bank's clients refusing to provide their
trust deeds requested by bank ostensibly for verification of the companies under

Financial Intelligence Centre Act 38 of 2001 (FICA) – bank refusing to give
effect to client's instruction on grounds that accounts restricted – ss 21 and 22
of FICA read with regulations promulgated in terms of s 77(1) thereof – bank's
refusal to execute client's instructions unlawful.

Mora interest – client's claim therefor – claim for mora interest following the
bank's refusal to close accounts upon client's summary termination of banker
and client contractual relationship upheld.

ORDER

On appeal from: Gauteng Division of the High Court, Pretoria (Mothle J,
sitting as court of first instance): judgment reported sub nom Houtbosplaas
(Pty) Ltd v Nedbank Ltd 2020 (4) SA 560 (GP).

The appeal is dismissed with costs.

JUDGMENT

Petse DP (Zondi and Gorven JJA and Tsoka and Makaula AJJA
concurring):

Introduction
[1] This appeal is about two companies, namely Houtbosplaas (Pty) Ltd
(Houtbosplaas) and TBS Alpha Beleggings (Pty) Ltd (TBS Alpha), suing their
erstwhile bank, Nedbank Limited (Nedbank), for damages (ie mora interest) for
failing to give immediate effect to their instructions. The gravamen of the
complaint by Houtbosplaas and TBS Alpha is that Nedbank refused to close
their bank accounts pursuant to their written instructions of 20 January 2017 to
Nedbank to do so upon termination of the parties' customer and banker
contractual relationship.

[2] The appeal concerns, primarily, the right of a customer of a bank to
summarily terminate its customer and banker contractual relationship 1 and
close the customer's account. Allied to the primary issue is the question whether
Houtbosplaas and TBS Alpha have a right of recourse against Nedbank for
mora interest as a consequence of Nedbank's failure to pay over the funds held
in their respective accounts to a nominated Bank within a reasonable time of
having been requested to do so by its customers.

The facts
[3] Houtbosplaas and TBS Alpha are both limited liability private companies
incorporated during 1973 and 1978 respectively in accordance with the
company laws of this country. Before the dispute giving rise to the current
litigation arose, both Houtbosplaas and TBS Alpha had held several banking
accounts with Nedbank for decades. Retired Judge van Dijkhorst is and has
been the sole director of Houtbosplaas and TBS Alpha since their incorporation.

[4] During October 2017 Houtbosplaas and TBS Alpha, as applicants,
instituted motion proceedings against Nedbank in the Gauteng Division of the
High Court, Pretoria (the high court) in which they sought the following relief:
'1.1
Judgment against [Nedbank] in favour of [Houtbosplaas Pty Ltd] for payment of the
amount of R66 814,68;
1.2
Interest on the amount of R66 814,68 at the rate of 10,25% per annum from
8 July 2017 to date of final payment;
2.1
Judgment against the [Nedbank] in favour of the [TBS Alpha Beleggings (Pty) Ltd]
for payment of the amount of R114 288,63;

1 The contractual relationship between a bank and its customers was described as '. . . an inherently and
conspicuously complex collection of juristic relationships. . . .' by Moseneke AJ in Standard Bank of SA Ltd v
ABSA Bank Ltd and Another [1995] All SA 535 (T); 1995 (2) SA 740 (T) at 746G-747E.

2.2
Interest on the amount of R114 288,63 at the rate of 10,25% from 8 July 2017 to date
of final payment;
Costs of the suit on the scale as between attorney-and-own-client;

. . .'

[5] The following is briefly what precipitated the litigation. As already
mentioned above, Houtbosplaas and TBS Alpha were incorporated in 1973 and
1978 respectively. Retired Judge van Dijkhorst holds one preference share2 in
each of the companies. In addition, four trusts formed in 1978 and 1980 and
named after his four daughters each hold one preference and ordinary shares in
the two companies. Retired Judge van Dijkhorst is the sole trustee of the four

2 In so far as the right of preference shareholders are concerned, the companies' memoranda of incorporation,
in article 2.1, provide as follows:
'Shares
(1) The company is authorised to issue no more than:

1,800 ordinary no par value shares, each of which entitles the holder to–

. . .

2,200 Preference no par value shares,

each of which have the following rights–

Preference Shares are entitled to, and their rights to dividends are limited to a preferred dividend of a
percentage of the nominal value, which percentage will be determined by the company upon the issuing
of the shares. These preference shares are noncumulative.

The holders of preference shares shall not upon liquidation of the company be entitled to receive anything
by way of distribution, with the exception of the nominal value of the shares and any unpaid dividends
accruing to the shares.

It is expressly determined that the rights and conditions of the preference shares are not subject to
amendments by the company.

The holders of preference shares will not be entitled to cast their vote when voted upon for a resolution
that may have the result that a determination is made concerning the property of the company for their
own benefit or for the benefit of their estates. Without derogating from the generality of the aforegoing,
they are specifically not entitled or authorized to vote for a resolution that may have the effect of:

Accruing any of the property of the company for themselves or dispose thereof as they deem fit.

The amendment or cancellation of any rights relating to any class of shares, including the authority to
redeem preference shares, if they by the exercise of such authority award to themselves any benefit in
respect of the assets or profits of the company.

The provisions of this paragraph shall not have the effect of excluding the right of the preference
shareholders to vote on any resolution relating to the compensation of directors or other matters within the
normal scope of the powers of the company.'

trusts and represents them – and himself – at shareholders' meetings of the
companies. For convenience, I shall henceforth refer to Judge van Dijkhorst as
the companies' representative or trustee as the context dictates.

[6] During 2016 Nedbank requested the companies' representative to provide
certain information in respect of the companies ostensibly pursuant to the
provisions of the Financial Intelligence Centre Act (FICA). 3 In particular,
Nedbank required that it be provided with copies of the trust deeds of the four
trusts together with copies of the letters issued by the Master of the High Court
appointing the companies' representative as the sole trustee of the four trusts.
Begrudgingly, the auditors of the companies, on instructions from the
companies' representative, provided the trust deeds of only three of the four
trusts. The companies' representative was reluctant to provide a copy of the
outstanding trust deed, asserting that Nedbank's request therefor constituted an
unjustifiable intrusion into the trusts' right to privacy. Nevertheless, on
2 December 2016 he was only prepared to show the trust deed to Nedbank's
representatives, a Mr Moolman and Ms de Kock, for inspection and
examination. He was also prepared for them to photograph the trust deed but
they declined this offer. However, he steadfastly refused to allow Nedbank's
representatives to remove the trust deed from his home.

[7] Nedbank's standpoint was that each of the four trusts held 25% of the
issued shares in the two companies. Accordingly, Nedbank contended that the
companies were obliged under FICA to provide the requested documentation.
On the contrary, Houtbosplaas and TBS Alpha asserted that according to their

3 Financial Intelligence Centre Act 38 of 2001.

memoranda of incorporation each one of the trusts holds less than 25% of the
issued shares in the two companies and, more specifically, they each hold 22%
of the issued shares. The entrenched opposing views held by the parties as to
the trusts' shareholding in the two companies resulted in an impasse. In
exasperation, on 20 January 2017, the companies' representative, acting on
behalf of the companies, gave written notice to Nedbank to close the companies'
bank accounts and transfer all funds held in those accounts to ABSA Bank to
be credited to various accounts, details of which were provided.

[8] In response, on 8 February 2017, Nedbank advised the companies that it
would not comply with the request to close the accounts and transfer the funds
to ABSA Bank because the companies had failed to comply with Nedbank's
request and, as a result, the accounts were restricted in accordance with the
prescripts of FICA. For their part, the trusts asserted that they were not
Nedbank's clients and were consequently under no statutory obligation to
provide the trust documents required by Nedbank. On 11 February 2017 the
companies turned to the Banking Ombudsman, soliciting the latter's assistance
in order to resolve the impasse. This, too, failed to yield the desired outcome.

[9] Ultimately, and on 7 June 2017, the companies relented and provided the
outstanding documentation, namely the copy of the trust deed of the Hettie van
Dijkhorst Trust, to Nedbank. On 7 July 2017 Nedbank finally closed the
companies' accounts and transferred all of the funds held in those accounts to
ABSA Bank as previously requested by the companies on 20 January 2017.
Aggrieved by what the companies' representative viewed as Nedbank's
unjustifiable and unlawful conduct, Houtbosplaas and TBS Alpha instituted
legal proceedings against Nedbank for the relief set forth in paragraph 4 above.

Nedbank resisted the claim, contending, in essence, that it had acted perfectly
within its rights in discharge of its statutory obligations as required by FICA.

[10] At the hearing of the matter, on 8 October 2019, the parties formulated
seven questions for determination by the high court. These were:
'2.1
Whether the restriction/freezing of the Applicants' accounts by Nedbank was lawful,
when considering the provisions of the Financial Intelligence Centre Act 38 of 2001
("FICA").
2.2
Whether the restriction/freezing of the Applicants' accounts by Nedbank was lawful,
in the light of the fact that the Applicants terminated Nedbank's mandate on
20 January 2017.
2.3
What should Nedbank's approach be to the Trust's privacy?
2.4
How are the voting rights of the shareholders of the Applicants determined and is
Nedbank's interpretation of Regulation 7(f)(ii) correct?
2.5
Is the closure of the Applicants' accounts a transaction as envisaged in FICA?
2.6
Whether the Applicants are entitled to their claims against Nedbank in terms of
prayers 1, 2 and 3 of the Notice of Motion dated 2 October 2017. Alternatively, what
is the correct remedy that this Honourable Court should grant?
2.7
Whether the Applicants are entitled to a punitive order for costs against Nedbank.'

[11] The matter came before Mothle J who granted the relief sought by
Houtbosplaas and TBS Alpha as prayed in their notice of motion. In reaching
his conclusion, the learned Judge reasoned as follows:

'In terms of Regulation 7 of the published Regulations, an accountable institution must
obtain from the natural person acting or purporting to act on behalf of a close
corporation or the company with which it establishing a business relationship or
concluding a single transaction:
"(f)
In the case of a company–
(ii)
The full names, date of birth, identity number, ........

concerning the natural or legal person, partnership or trust holding 25% or
more of the voting rights at the general meeting of the company concerned;"

In essence, the provisions of FICA read with the Regulations, in particular Regulation
7(f)(ii), obligates the Nedbank to obtain particulars of trusts holding 25% or more of
the voting rights at the general meeting of the company concerned, in this case both
the Applicants.

. . .

The Memorandum of Incorporation ("MOI") of the two applicant companies is
identical in its description of voting rights in a general meeting. Article 2.1 of the
MOI deals with shares and the rights of shareholders that accrue therefrom. In
particular, the voting rights accorded to the preference shares are restricted as they
concern "a resolution that may have the result that a determination is made
concerning the property of the company for their own benefit or for the benefit of the
estate." However, the restriction "shall not have the effect of excluding the right of
the preference shareholders to vote on any resolution relating to the compensation of
directors or other matters within the normal scope of the powers of the company."

The Applicants' counsel submits that in determining the voting rights exercised by
each trust shareholder in a general meeting, one has to include the preferential shares
held by such trust and in essence, each trust will in fact have 22% of the voting rights.
Consequently, Nedbank erred in invoking the provisions of Regulation 7(f)(ii), to
demand the trust deeds of the shareholders to the Applicants. I agree with this
submission and in my view on this point alone, Nedbank's interpretation of
Regulation 7(f)(ii) in relation to the applicants was incorrect. Nedbank was therefore
not lawfully entitled to demand the trust deeds of the trust's shareholders of the
applicants.

On this point alone, Nedbank ignored or misinterpreted the provisions of the MOI of
the two companies and thus acted unlawfully in imposing the restrictions of access to
the accounts. Nedbank is therefore liable for payment of the loss of mora interest.

There is another matter. Nedbank seems to hold the view that its customers with
which it has a business relationship are obligated by FICA to provide verification
documents to it on demand. I could not find anywhere in the provisions of FICA, that
apart from demanding new customers to submit identification documents, Nedbank,
or any financial institution for that matter, can demand from their existing account
holders, and enforce that demand for submission of identity documents for
verification, by restricting access to their accounts. On the contrary, Section 21B(4)
enjoins the bank to establish the address of the Master of the High Court where a trust
is registered, if applicable. It seems to me that by not specifically providing that the
financial institutions should obtain identification only from the customers, FICA has
left room for these financial institutions to access other sources from which such
documents and/or information could be obtained, such as the office of the Companies
and Intellectual Property Commission ("CIPC"), the office of the Master of the High
Court in respect of trusts and the personal identity documents of individuals and
partners to a partnership from the Department of Home Affairs.'4

[12] In short, the high court found in favour of Houtbosplaas and TBS Alpha
on two bases. First, it held that each one of the four trusts did not exercise 25%
of the voting rights at general meetings of the companies, that is Houtbosplaas
and TBS Alpha. Second, it concluded that clients of a bank were under no
statutory obligation under FICA to provide documents to a bank for verification
purposes upon request to do so by such bank. Thereafter, the high court refused
Nedbank's application for leave to appeal which was subsequently granted by
this Court on petition to it.

[13] Although the allegations and counter-allegations made in the affidavits
of the protagonists are wide-ranging in scope, the issue that is at the core of this

4 Emphases from the high court judgment.

appeal falls within a narrow compass. Ultimately, the issue revolves around the
sole question whether Nedbank was entitled, under FICA, to certified copies of
the trust deeds of the four trusts of which Judge van Dijkhorst was the
sole trustee. In this regard, it bears mentioning that it is common cause between
the parties that the trusts were not Nedbank's clients5 and therefore held no bank
accounts with Nedbank.

[14] In the event that the question posed in the preceding paragraph is
answered in the negative, a secondary issue will arise, namely, whether
Houtbosplaas and TBS Alpha are entitled to damages by way of mora interest
because they were deprived of the use of their funds, withheld by Nedbank in
the face of unequivocal instructions by the two companies to release the funds,
for some five months. The calculations reflected in the notice of motion in this
regard were not challenged.

The statutory framework
[15] In paragraph 6 of this judgment reference is made to FICA. FICA was
enacted in order to, amongst other things, '. . . combat money laundering
activities and the financing of terrorist and related activities; to impose certain
duties on institutions and other persons who might be used for money
laundering . . . to provide for a risk based approach to client identification and
verification . . . to provide for the registration of accountable and reporting
institutions; to provide for the roles and responsibilities of supervisory bodies.
. . .'6

5 FICA defines a 'client', in relation to an accountable institution, as 'a person who has entered into business
relationship or a single transaction with an accountable institution.'
6 See the Preamble.

[16] Section 2 established the Financial Intelligence Centre (the Centre) which
is a juristic person.7 Section 3 provides that '[t]he principal objective of the
Centre is to assist in the identification of the proceeds of unlawful activities
[and] combating of money laundering activities and the financing of terrorist
and related activities. . .'. Section 20A provides that ‘[a]n accountable institution
may not establish a business relationship or conclude a single transaction with
an anonymous client or a client with an apparent false or fictitious name'.8

[17] Section 21 provides for identification of clients and other persons. It
states that:
'(1)
When an accountable institution engages with a prospective client to enter into a
single transaction or to establish a business relationship, the institution must, in the course of
concluding that single transaction or establishing that business relationship and in accordance
with its Risk Management and Compliance Programme-
(a)
establish and verify the identity of the client;
(b)
if the client is acting on behalf of another person, establish and verify-

(i)
the identity of that other person; and

(ii)
the client's authority to establish the business relationship or to conclude the
single transaction on behalf of that other person; and
(c)
if another person is acting on behalf of the client, establish and verify-

(i)
the identity of that other person; and

(ii)
that other person's authority to act on behalf of the client.
(2)
If an accountable institution had established a business relationship with a client
before this Act took effect, the accountable institution may not conclude a transaction in the

7 Section 2 reads:
'Establishment
(1) A Financial Intelligence Centre is hereby established as an institution outside the public service but within
the public administration as envisaged in section 195 of the Constitution.
(2) The Centre is a juristic person.'
8 An 'accountable institution' is defined with reference to Schedule I of FICA which contains a list of natural
and juristic persons who are described in Schedule I and are regarded as accountable institutions in terms of
FICA.

course of that business relationship, unless the accountable institution has taken the
prescribed steps-
(a)
to establish and verity the identity of the client;
(b)
if another person acted on behalf of the client in establishing the business relationship,
to establish and verify-

(i)
the identity of that other person; and

(ii)
that other person's authority to act on behalf of the client;
(c)
if the client acted on behalf of another person in establishing the business relationship,
to establish and verify-

(i)
the identity of that other person; and

(ii)
the client's authority to act on behalf of that other person; and
(d)
to trace all accounts at that accountable institution that are involved in transactions
concluded in the course of that business relationship.'

[18] Section 21C deals with ongoing due diligence which accountable
institutions are required to conduct from time to time. It reads:
'An accountable institution must, in accordance with its Risk Management and Compliance
Programme, conduct ongoing due diligence in respect of a business relationship, which
includes-
(a)
monitoring of transactions undertaken throughout the course of the relationship,
including, where necessary-

(i)
the source of funds, to ensure that the transactions are consistent with the
accountable institution's knowledge of the client and the client's business and risk
profile; and

(ii)
the background and purpose of all complex, unusual large transactions, and all
unusual patterns of transactions, which have no apparent business or lawful
purpose; and
(b)
keeping information obtained for the purpose of establishing and verifying the
identities of clients pursuant to sections 21, 21A and 21B of this Act, up to date.'

[19] Reference should also be made to s 22 which imposes obligations on
accountable institutions to keep customer due diligence records. It states that:
'(1) When an accountable institution is required to obtain information pertaining to a client
or prospective client pursuant to sections 21 to 21H the institution must keep a record of that
information.
(2)
Without limiting subsection (1), the records must-
(a)
include copies of, or references to, information provided to or obtained by the
accountable institution to verify a person's identity; and
(b)
in the case of a business relationship, reflect the information obtained by the
accountable institution under section 21A concerning-

(i)
the nature of the business relationship;

(ii)
the intended purpose of the business relationship; and

(iii) the source of the funds which the prospective client is expected to use in
concluding transactions in the course of the business relationship.'

[20] Section 77(1) authorises the Minister of Finance to ‘make, repeal and
amend regulations concerning any matter that may be prescribed in terms of
[FICA], and any ancillary or incidental administrative or procedural matter
which is necessary to prescribe for the proper implementation or administration
of [FICA]’. Of particular relevance for present purposes is regulation 7(f)(ii).9
Regulation 7 deals with information concerning, inter alia, South African
companies. It sets out in detail the information that '[a]n accountable institution
must obtain from the natural person acting or purporting to act on behalf of a
South African company with which it is establishing a business relationship or
concluding a single transaction. . . '. Regulation 7(f)(ii) states that in the case of
a company the following information is required, namely:

9 The Regulations were promulgated in Government Gazette no 24176 of 20 December 2002.

'the full names, date of birth, identity number, referred to in regulation 3 (1) (a), (b) and (c),
full names, date of birth and name of the country, referred to in regulation 5 (1) (a), (b) and
(c), registered name, registration number, registered address, trade name and business
address referred to in regulation 7 (a), (b), (c), (d) and (e), names, numbers and addresses
referred to in regulation 9 (a), (b), and (c), name, address and legal form referred to in
regulation 11 (a), (b) and (c), name referred to in regulation 13 (a) or name and number
referred to in regulation 15 (a), as may be applicable, concerning the natural or legal person,
partnership or trust holding 25% or more of the voting rights at a general meeting of the
company concerned.'

[21] There is at least one crucial point that can be made about the introductory
part of regulation 7. It is this: an accountable institution is authorised and
obliged to obtain certain information from the natural person acting or
purporting to act, inter alia, on behalf of a South African company – in this
instance Houtbosplaas and TBS Alpha – with which it (that is, the accountable
institution) is establishing a business relationship 10 or concluding a single
transaction.11

[22] Of relevance for present purposes is regulation 7(f)(ii) to which reference
has been made in paragraph 20 above. As will have been observed from
paragraph 20 above, regulation 7(f)(ii), in turn, makes reference to
regulation 15. However, in order for the provisions of regulation 7(f)(ii) to be
triggered, the trust involved must '. . . [hold] 25% or more of the voting rights
at a general meeting of the company concerned' but not otherwise.

10 In terms of FICA 'business relationship' means an arrangement between a client and an accountable institution
for the purpose of concluding transactions on a regular basis'.
11 A 'single transaction' is, in turn, defined to mean 'a transaction-
(a)
other than a transaction concluded in the course of a business relationship; and
(b)  where the value of the transaction is not less than the amount prescribed, except in the case of section
20A.'

[23] In this Court counsel for Nedbank submitted that the high court erred in
its conclusion because it overlooked a cardinal fact, namely that in terms of the
memoranda of incorporation of the companies concerned preference
shareholders were not eligible to vote in relation to certain matters at general
meetings of the companies. Bearing this consideration in mind, it was argued
that, with respect to those matters the four trusts would each exercise 25% of
the voting rights. Insofar as the high court's second finding is concerned,
counsel contended that the high court had regard to the amended version of
s 21(2) of FICA that was not of application,12 ignoring the pre-amended version
that was in operation at the relevant time.

[24] Before its amendment, s 21(2) read as follows:
'If an accountable institution had established a business relationship with a client before this
Act took effect, the accountable institution may not conclude a transaction in the course of
that business relationship, unless the accountable institution has taken the prescribed steps–
(a)
to establish and verify the identity of the client;
. . .'

[25] There are at least two notable features of s 21(2) that immediately attract
the attention of the reader. Even on a cursory reading of the provisions of s 21(2)
it becomes readily manifest that it applied to existing clients of a bank who had
already established a business relationship like the two companies in this case.
The other feature is that an accountable institution '. . . may not conclude a
transaction13 in the course of that business relationship. . .' save where the

12 The amended version was introduced in terms of s 82(2)(b)of Act 38 of 2001 with effect from 30 June 2004.
13 Section 1 of FICA defined a 'transaction' to mean 'a transaction concluded between a client and an accountable
institution in accordance with the type of the business carried on by that institution'. This definition was deleted
by s 1(5) of Act 1 of 2017.

institution – Nedbank in this case – '. . . has taken steps. . . ', inter alia, 'to
establish and verify the identity of the client.'

[26] Section 21(2) of FICA, already quoted in paragraph 17 above, provides
for the retention by an accountable institution of records relating to the
verification of any person in terms of s 21(1) or (2). For present purposes, the
most crucial requirement of s 21(2) relates to the conclusion of a transaction
with a client – in this instance Houtbosplaas and TBS Alpha – whether it is a
single transaction or one concluded in the course of a business relationship
between an accountable institution and a client.

[27] For the sake of completeness, it is useful to also make reference to s 21(1)
of FICA. Section 21(1) deals with situations where an accountable institution
engages with a prospective client with a view to entering into a single
transaction or to establish a business relationship. In that event, the section
imposes an obligation on such accountable institution in the course of
concluding that single transaction14 or establishing the business relationship to,
amongst other things, establish and verify the identity of the client. An
accountable institution does this in accordance with its risk management and
compliance programme.15

[28] It bears mentioning that in January 2012 the Centre, acting in terms of s 4
of FICA, issued a public notice headed 'Public Compliance Communication No
11' to all accountable institutions to, amongst other things, regulate the closure

14 A 'single transaction' is defined as 'a transaction other than a transaction concluded in the course of a business
relationship' whose value is not less than the amount prescribed.
15 Risk management and compliance programme is provided for in s 42(1) of FICA.

of a client's account held with an accountable institution. For present purposes,
the relevant part is clause 416 thereof. The material features of this clause are:
(a) The closing of an account is an action terminating a business relationship
which is regarded as inherently linked to the existence of a business
relationship.
(b) Therefore the closing of an account is regarded as a provision of
account-based services to a client in the course of a business relationship.
(c) The closing of a client's account and the transferring of the remaining
balance to the client constitutes a transaction.
(d) In conducting such a transaction an accountable institution must comply
with statutory and regulatory prescripts.

[29] As already mentioned above, the high court held that Nedbank was not
justified in law to require a copy of the Hettie van Dijkhorst trust deed. The
underlying reasoning of the high court on this score was that none of the trusts,
including the Hettie van Dijkhorst trust in particular, exercised 25% voting
rights at the companies' general meetings. Further, the high court held that
nowhere does FICA require bank clients to provide verification documents to a
bank when requested to do so. In criticising the high court's findings, counsel
for Nedbank contended that the high court failed to take cognisance of the fact

16 Clause 4, which is headed 'Closing of an account amounts to a transaction.' It reads:
'4.1 A transaction is defined in the FIC Act as a transaction concluded between a client and an accountable
institution in accordance with the type of business carried on by that institution.
4.2 The closing of an account is an action which terminates a business relationship. This is inherently linked
to the existence of a business relationship and is performed in the course of that business relationship.
4.3 Hence the termination of a business relationship in accordance with the nature of an accountable
institution's business, such as the closing of an account by an accountable institution which provides
account-based services to its clients, amounts to a transaction in the course of that business relationship.
4.4 It is the Centre's view that the closing of a client's account by an accountable institution and the transferring
of the remaining balance to the client amounts to the conclusion of a transaction with a client in the course
of a business relationship.
4.5 An accountable institution may not conduct a transaction in the course of a business relationship unless it
has complied with Part 1 and Part 2 of Chapter 3 of the FIC Act as well as the relevant Regulations.'

that with respect to certain matters holders of preference shares were, in terms
of the companies' memoranda of incorporation, not eligible to vote at general
meetings. Therefore, it was argued that each one of the four trusts would, in
such circumstances, exercise 25% of the voting rights.

[30] In the second place, it was submitted that in reaching its conclusion the
high court relied on the wrong version of FICA, that is the post-amendment
version, whereas it was the pre- amendment version which was relevant at the
material time.

[31] It was further contended that the memoranda of incorporation of
Houtbosplaas and TBS Alpha provide, in article 2 thereof, amongst other things,
that holders of preference shares shall not be eligible to vote in relation to
resolutions concerning the property of the companies that may have the effect
of conferring a benefit on preference shareholders or their estates. Nor are
preference shareholders permitted to vote with respect to the amendment or
cancellation of any rights relating to any class of shares, including the
redemption of preference shares, if preference shareholders would thereby
derive a benefit from the assets or profits of the company. Accordingly, so the
argument went, each one of the four trusts would hold all the ordinary shares in
the companies in equal proportions. Thus, the four trusts individually met the
minimum threshold prescribed in terms of regulation 7(f)(ii).

[32] It is not in dispute that of the nine issued shares in the companies, one
preference share is held by the trustee, and each of the four trusts holds one
preference share as well as one ordinary share in each of the two companies.
This then raises the question whether in relation to matters that preference

shareholders are not eligible to vote each trust therefore exercises 25% of the
voting rights at general meetings of the companies when matters falling within
the ambit of article 2.1 of the memoranda of incorporation are to be decided.

[33] Nedbank accepts that in respect of all other matters, each one of the trusts
falls below the 25% threshold prescribed in terms of regulation 7(f)(ii).
However, Nedbank contended that in relation to matters that preference
shareholders are precluded from exercising voting rights, the trusts will
separately exercise 25% voting rights thereby bringing them squarely within the
purview of regulation 7(f)(ii). Building on this thesis, Nedbank argued that for
as long as the companies' representative refused to provide a copy of the
Hettie van Dijkhorst trust deed it was duty-bound not to give effect to the
instruction to close the accounts and transfer the balances held in those accounts
to ABSA Bank. Had it closed the accounts and transferred the balances to
ABSA Bank, Nedbank argued, the manifest purpose and objects of FICA which
are to identify the proceeds of unlawful activities, combat money laundering
and financing of terrorist and related activities would, as a result, have been
undermined.

[34] The contentions advanced by counsel for Nedbank as to the import of
article 2.1 of the two companies' memoranda of incorporation renders it
necessary to ascertain the correct construction of the provisions of this article.
It is trite that a memorandum of incorporation is the founding document of a
company and, as such, the sole governing document that regulates the rights,
duties and responsibilities of the shareholders and directors of the company.17

17 See, in this regard, Cassim et al Contemporary Company Law 2ed (2011) at 122.

[35] The law relating to the interpretation of documents (whether statute or
contract) is now well-settled. The logical point of departure in construing a
document is the language of the document itself, interpreted in the light of its
context and purpose which is a unitary exercise.18 These interpretive precepts,
aptly described as '. . .the triad of the text, context and purpose. . .' in Capitec
Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd
and Others,19 were said to be '. . .the relationship between the words used, the
concepts expressed by [the] words and the place of the contested provision
within the scheme of the agreement (or instrument) as a whole that constitutes
the enterprise by recourse to which a coherent and salient interpretation is
determined'.20 The position is no different when it comes to the interpretation
of a company's memorandum of incorporation.21

[36] Bearing those principles of interpretation in mind, I now turn to consider
the question whether each one of the four trusts exercises 25% of the voting
rights in circumstances where the preference shareholders are precluded from
voting by virtue of article 2.1 of the memoranda of incorporation of
Houtbosplaas and TBS Alpha.

[37] Reduced to its bare essentials and properly analysed, the nub of
Nedbank's case is that each one of the four trusts exercises 25% voting rights

18 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262
(SCA); 2012 (4) SA 593 (SCA) para 18. See also: S v Zuma and Others 1995 (2) SA 642 (CC) para 18; Kubyana
v Standard Bank of South Africa Ltd [2014] ZACC 1; 2014 (3) SA 56 (CC); 2014 (4) BCLR 400 (CC) para 18.
19 Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021]
ZASCA 99; [2021] 3 All SA 647 (SCA); 2022 (1) SA 100 (SCA) para 25.
20 Ibid.
21 Marrok Plase (Pty) Ltd v Advance Seed Co (Pty) Ltd [1975] 3 All SA 412 (A); 1975 3 SA 403 (A) at 414-
415; South African Mutual Life Assurance Society v Anglo-Transvaal Collieries Ltd [1977] 4 All SA 203 (A);
1977 (3) SA 642 (A) at 656A.

whenever the provisions of article 2.1 of the memoranda of incorporation
dictate that the voting rights of preference shareholders must be discounted.
From Nedbank's perspective, if this is indeed the position, it will follow
axiomatically that it was entitled to the copies of the deeds of trust of the four
trusts and in particular the Hettie van Dijkhorst trust in terms of s 21(2) of FICA
read with regulation 7(f)(ii). However, if not, the appeal would, as correctly
accepted by counsel for Nedbank, fall to be dismissed. I shall return to these
contentions shortly.

[38] I interpose here to observe that FICA creates a raft of offences in respect
of contraventions of certain of its provisions, and prescribes severe penalties for
some of the contraventions.22 In this regard, it is necessary to mention that the
Centre bears the responsibility, inter alia, to supervise and enforce compliance
with FICA,23 and is authorised in terms of s 2624 through its representatives to
have access to any records kept by or on behalf of an accountable institution.

[39] Reverting to the issue of what is at the core of this case, the outcome of
this appeal, in my view, hinges on the proper interpretation of s 21(2) of FICA
– as it read at the material time – and the provisions of article 2.1 of the two
companies' memoranda of incorporation upon which Nedbank heavily relied. I
proceed to address these in turn below.

[40] Section 21(2) of FICA presents no controversy. It is clear and
unambiguous. Although s 21(2) has already been quoted in paragraph 24 above,

22 See, for example, in this regard, ss 46, 47, 48, 49, 50, 51, 51A, 52, 53, 54, 55, 56, 57, 58, 59, 60 and 61-66.
23 See, in this regard, s 4(g).
24 See ss 22 and 24.

it is convenient to quote it again here. At the relevant time, s 21(2) read as
follows:
'If an accountable institution had established a business relationship with a client before this
Act took effect, the accountable institution may not conclude a transaction in the course of
that business relationship, unless the accountable institution has taken the prescribed steps–
(b)
to establish and verify the identity of the client;
. . .'

[41] As regards the proper construction of s 21(2) in the light of its apparent
purpose, I have already made the point (in paragraph 25 above) that it applied
to existing clients of an accountable institution who had already established a
business relationship before FICA took effect. Its spotlight was thus cast on
ensuring that an accountable institution – Nedbank in this instance – establish
and verify the identity of the client, to be understood as a reference to
Houtbosplaas and TBS Alpha in the context of the facts of this case, before
concluding a transaction in the course of that business relationship.
Accordingly, s 21(2) required that at the inception of FICA Nedbank must
comply with FICA's prescripts before concluding any further transaction in the
course of that relationship. Once this had happened, there would be no need nor
basis for Nedbank to verify the companies in respect of each and every
transaction to be concluded in the course of the parties' existing business
relationship. This much was rightly conceded by counsel for Nedbank during
argument. Further, it was conceded on behalf of Nedbank in argument that there
was no evidence that FICA was not complied with at its inception. Having
regard to the object, scope and purpose of FICA, I am driven to the conclusion
that s 21(2), properly construed consistently with its manifest purpose, did not,
on the facts of this case, apply at the time when Nedbank sought to invoke it.

[42] Regulation 7(f)(ii) does not avail Nedbank either. The reason for this is
not far to seek. Regulation 7, as are regulations 2 to 18, is located in chapter I
of the regulations. Regulation 2(2) provides, by way of a prelude to regulation
7, that when an accountable institution establishes and verifies the identity of,
inter alia, a legal person, such institution must do so in accordance with
regulations 2 to 18, whichever is of application. In this instance it is regulation
7 that would, in the normal course, have been of application. However, the
introductory part of regulation 7 makes it plain that it applies only in instances
where an accountable institution is 'establishing a business relationship or
concluding a single transaction'. In this case it is not in dispute that when FICA
took effect on 1 February 2002, both companies had long before then
established business relationships with Nedbank. Thus, regulation 7(f)(ii) finds
no application where, as here, a business relationship was already in existence
when FICA took effect. Moreover, in terms of s 1 of FICA a single transaction
is defined as one concluded otherwise than in the course of a business
relationship. Accordingly, Nedbank's reliance on regulation 7(f)(ii) is
misplaced.

[43] Turning to the provisions of article 2.1 of the companies' memoranda of
incorporation, there was a great deal of debate before us in relation to the
question whether each one of the four trusts exercised 25% voting rights in
circumstances where preference shareholders are not eligible to vote.
Accordingly, I consider it not only prudent but also necessary that this issue,
too, should be addressed.

[44] Article 2.1 was referenced earlier in paragraph 5 of this judgment.
However, it is convenient to quote its provisions again. They read as follows:

'Shares
(1)
The company is authorised to issue no more than:

1,800 ordinary no par value shares, each of which entitles the holder to–

. . .

2,200 Preference no par value shares, each of which have the following rights–

Preference Shares are entitled to, and their rights to dividends are limited to a
preferred dividend of a percentage of the nominal value, which percentage will be
determined by the company upon the issuing of the shares. These preference shares
are non-cumulative.

The holders of preference shares shall not upon liquidation of the company be entitled
to receive anything by way of distribution, with the exception of the nominal value of
the shares and any unpaid dividends accruing to the shares.

It is expressly determined that the rights and conditions of the preference shares are
not subject to amendments by the company.

The holders of preference shares will not be entitled to cast their vote when voted
upon for a resolution that may have the result that a determination is made concerning
the property of the company for their own benefit or for the benefit of their estates.
Without derogating from the generality of the aforegoing, they are specifically not
entitled or authorized to vote for a resolution that may have the effect of:

Accruing any of the property of the company for themselves or dispose thereof as
they deem fit.

The amendment or cancellation of any rights relating to any class of shares, including
the authority to redeem preference shares, if they by the exercise of such authority
award to themselves any benefit in respect of the assets or profits of the company.

The provisions of this paragraph shall not have the effect of excluding the right of the
preference shareholders to vote on any resolution relating to the compensation of
directors or other matters within the normal scope of the powers of the company.'

[45] The last sub-paragraph of article 2.1 quoted in the preceding paragraph is
instructive. It provides that the provisions of this paragraph (ie paragraph 2.1) '.
. . shall not have the effect of excluding the right of the preference shareholders
to vote on any . . . or other matters within the normal scope of the powers of the
company'. This is important. To my mind this can only mean one thing, namely
that preference shareholders have every right to vote at general meetings of the
companies concerned – just like ordinary shareholders – on any matters within
the normal scope of the powers of Houtbosplaas and TBS Alpha. And, in the
context of the facts of this case, one of the normal scope of the powers of
Houtbosplaas and TBS Alpha was to establish a business relationship or
conclude a single transaction with an accountable institution, ie Nedbank. In the
ordinary course, such a business relationship would entail opening, conducting
and closing a bank account. It is common cause between the protagonists that
Houtbosplaas and TBS Alpha had more than three decades ago both opened and
conducted business accounts with Nedbank long before the enactment of FICA.
When a dispute between the disputants arose, resulting in an impasse, the
companies' representative wrote to Nedbank on 20 January 2017 summarily
terminating the business relationship. As already mentioned above, Nedbank
was requested to immediately close the accounts and transfer the amounts held
in those accounts to ABSA Bank. Again, there is no dispute that Nedbank gave
effect to those instructions only on 20 July 2017, after some five months of
having been instructed to do so.

[46] Before us, counsel for Nedbank sought to overcome the obstacles on his
path and was thus driven to contend that article 2.1 of the memoranda of
incorporation should be interpreted expansively. In elaboration, counsel
submitted that having regard to the laudable objectives of FICA, a broader
approach in the interpretive exercise was to be preferred over a restrictive one
in order to give effect to and promote FICA's objectives. The foundation for
counsel's proposition was that the fact that in few instances the trusts would
exercise 25% voting rights overall sufficed. Accordingly, so the argument went,
the fact that in innumerable other instances this would not be the case and that
the trusts would exercise less than 25% voting rights was of no consequence.

[47] Counsel's argument cannot be sustained. The answer to counsel's
contentions is to be found in the terms of the last sub-paragraph of article 2.1 of
the memoranda of incorporation itself. The truth of the matter is that one is here,
in essence, dealing with a question of interpretation, namely the proper meaning
to be ascribed to the words contained in the concluding sub-paragraph of article
2.1. In my view, the provisions of the relevant sub-paragraph are clear and
unambiguous. They enjoin us to give effect to what they explicitly say, that is:
'The provisions of this paragraph [ie 2.1] shall not have the effect of excluding the right of
the preference shareholders to vote on. . . matters within the normal scope of the powers of
the company.' (Emphasis added.)
Thus, to construe them as counsel for Nedbank would have it, would subvert
the well-established tenets of interpretation of documents and undermine the
underlying purpose that the relevant sub-paragraph – in the light of its text and
context – was designed to serve. And as Wallis JA pertinently observed in
Commissioner for the South African Revenue Service v United Manganese of

Kalahari (Pty) Ltd25 '. . . context is as important in construing statutes as it is in
construing contracts or other documents . . . .'

[48] In sum, preference shareholders are precluded from exercising their
voting rights only in relation to matters concerning the assets or profits of the
companies that will benefit them or their estates either financially or materially.
Other than that, their voting rights are untrammelled.

[49] The conclusion to which I have come with reference to the interpretive
questions renders it unnecessary to consider the issue of whether closing a bank
account constitutes 'a single transaction' as contemplated in s 21(1) of FICA. I,
therefore, advisedly refrain from answering that question which will be left
open for another day.

[50] I now turn to consider the secondary issue, namely, whether
Houtbosplaas and TBS Alpha are entitled to mora interest in the various sums
claimed by them in this litigation.26 It is not in dispute that on 20 January 2017
Nedbank was given written instructions to close the various accounts opened in
the names of Houtbosplaas and TBS Alpha and transfer the funds in those
accounts to ABSA Bank. Before delving into the secondary issue, I propose
dealing first, albeit briefly, with the law relating to claims for mora interest.
More than six decades ago this court recognised in Linton v Corser27 that:
'[Today] interest is the life-blood of finance, and there is no reason to distinguish
between interest ex contractu and interest ex mora'.

25 Commissioner for the South African Revenue Service v United Manganese of Kalahari (Pty) Ltd [2020]
ZASCA 16; 2020 (4) SA 428 (SCA) para 17.
26 Houtbosplaas claimed R66 814.68 and TBS Alpha claimed R114 288.63.
27 Linton v Corser [1952] 4 All SA 9 (A), 1952 (3) SA 685 (A) at 695G.

[51] What Fagan JA said in Union Government v Jackson and Others 28
concerning mora interest is instructive. The learned Judge stated the position
thus:
'The other approach is that of dealing with the liability to pay interest as a consequential or
accessory or ancillary obligation (the three adjectives are used as interchangeable words in
the judgments in West Rand Estates Ltd v New Zealand Insurance Co. Ltd., 1926 AD 173 at
pp. 177, 193), automatically attaching to some principal obligation by operation of law. The
best illustration of this type is the liability for interest a tempore morae falling on a debtor
who fails to pay the sum owing by him on the due date. Here the Court does not make an
assessment; it does not weigh the pros and cons in order to exercise an equitable judgment
as to whether, and to what extent, the interest bearing potentialities of money are to be taken
into account in computing its award. The only issue is whether the legal liability exists or
not; if it does, the rest is merely a matter of mathematical calculation: the legal rate of interest
on a definite sum from a definite date until date of payment. The award of interest by the
Provincial Division clearly falls under the second of the two compartments of my
classification.'29

[52] It is by now recognised without question that a party who has been
deprived of the use of his or her capital for a period of time has suffered a loss
and does not need to establish special proof of his or her damages. This was
reiterated by this court in Bellairs v Hodnett and Another30 as follows:
'. . .[U]nder modern conditions a debtor who is tardy in the due payment of a monetary
obligation will almost invariably deprive his creditor of the productive use of the money and
thereby cause him loss. It is for this loss that the award of mora interest seeks to compensate
the creditor.31

28 Union Government v Jackson and Others [1956] 2 All SA 330 (A), 1956 (2) SA 398 (A) at 411F-412.
29 Ibid at 412A.
30 Bellairs v Hodnett and Another 1978 (1) SA 1109 (A).
31 Ibid at 1145D-G.

[53] The sole question to decide insofar as the respondents' claim for mora
interest is concerned is whether there was any lawful justification for Nedbank
to restrict the accounts for the reasons upon which Nedbank relied. In this regard
it will be recalled that Nedbank had refused to close the accounts and transfer
all of the moneys held in those accounts to ABSA Bank pursuant to the written
instructions by the companies' representative. In insisting on being provided
with copies of the trust deeds, Nedbank asserted that the four trusts each
exercise 25% of the voting rights at general meetings of the companies in every
instance where the holders of preference shares are precluded from voting.

[54] However, Nedbank accepted that in relation to matters on which both the
preference and ordinary shareholders may vote, each trust would then exercise
2/9th of the votes at general meetings. Consequently, the threshold of 25%
prescribed in terms of regulation 7(f)(ii) would not be met and, thus,
regulation 7(f)(ii) would find no application. On this score, the high court,
whilst cognisant of the fact that the rights of the preference shareholders were
restricted under certain circumstances in terms of the companies' memoranda
of incorporation, nevertheless held that the voting rights of the trusts fell below
the prescribed threshold and in actual fact constituted 22%. This conclusion led
the high court to find that regulation 7(f)(ii) was not triggered.

[55] On the facts of this case, and viewed from the perspective of Nedbank,
the thrust of its case was that it was justified in restricting the accounts and thus
withhold the funds held in those accounts until the trusts complied with its
request to provide the requisite documents. This was so, it was contended on
Nedbank's behalf, because the companies' representative had refused to provide
the outstanding document, namely the trust deed in respect of the Hettie van

Dijkhorst trust. Had it not restricted the accounts and, instead, released the
funds, Nedbank argued, it would have exposed itself to criminal sanctions for
'entering into any transaction with the companies, including closing their
accounts in contravention of the provisions of FICA'. As pointed out above,
Nedbank was mistaken in its view of the matter. Contrary to what Nedbank
understood to be the position, the true factual state of affairs is that in terms of
article 2.1 of the companies' memoranda of incorporation – properly construed
– none of the four trusts exercised 25% of the voting rights at general meetings
of the companies.

[56] In these circumstances both Houtbosplaas and TBS Alpha were rightfully
entitled to judgment in the amounts claimed, representing mora interest
calculated from 20 January 2017 (ie the date of demand), to 10 July 2017 (ie the
date on which effect was given to their instruction to close the accounts and pay
over the various funds held in those accounts to ABSA Bank).

[57] The conclusion reached above addresses both the question whether with
the exclusion of preference shareholders at general meetings of the companies,
the four trusts, as holders of ordinary shares only, exercise 25% voting rights at
general meetings and the question whether Nedbank was in law justified to
insist on being provided with copies of the various trust deeds in circumstances
where none of the trusts was Nedbank's client. Both questions have been
answered against Nedbank. Thus, in all the circumstances, there is no basis for
concluding that Nedbank was justified in refusing to give effect to its erstwhile
clients' instructions to close the relevant bank accounts. In so doing Nedbank
acted in breach of its obligations. That being so, the appeal should therefore fail.

[58] In the result the following order is made:
The appeal is dismissed with costs.

X M PETSE
DEPUTY PRESIDENT
SUPREME COURT OF APPEAL

APPEARANCES

For the appellant:
A Friedman (with T Mphahlwa) (heads of argument
drawn by K Hofmeyr SC with T Mphahlwa)
Instructed by:

Cliffe Dekker Hofmeyr Inc., Johannesburg
Webbers Attorneys Inc., Bloemfontein

For the respondents:
C A Da Silva SC
Instructed by:

Coetzer and Partners, Pretoria
Honey Attorneys Inc., Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:

19 May 2022
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not form part of
the judgments of the Supreme Court of Appeal
Nedbank Limited v Houtbosplaas (Pty) Ltd and Another (Case no 164/2021) [2022] ZASCA 69 (19 May 2022)
Today the Supreme Court of Appeal (SCA) dismissed the appellant’s appeal with costs
The appeal was about two companies, namely Houtbosplaas (Pty) Ltd (Houtbosplaas) and TBS Alpha Beleggings
(Pty) Ltd (TBS Alpha) suing their erstwhile Bank, Nedbank Limited (Nedbank), for damages (ie mora interest)
for failing to give immediate effect to their instructions. The gravamen of the complaint by Houtbosplaas and TBS
Alpha was that Nedbank had refused to close their bank accounts pursuant to their written instructions of
20 January 2017 to Nedbank to do so upon termination of the parties' customer and banker contractual
relationship.
The appeal concerned, primarily, the right of a customer of a bank to summarily terminate its customer and banker
contractual relationship and close the customer's account. Allied to the primary issue was the question whether
Houtbosplaas and TBS Alpha had a right of recourse against Nedbank for mora interest as a consequence of
Nedbank's failure to pay over the funds held in their account to a nominated Bank within a reasonable time of
having been requested to do so.
Both parties had opposing views as to the trusts' shareholding in the two companies and this resulted in an impasse.
On 20 January 2017, the companies' representative, acting on behalf of the companies, gave written notice to
Nedbank to close the companies' bank accounts and transfer all funds held in those accounts to ABSA Bank to be
credited to various accounts, details of which were provided.
The high court granted the relief sought by Houtbosplaas and TBS Alpha as prayed in their notice of motion. In
short, the high court found in favour of Houtbosplaas and TBS Alpha on two bases. First, it held that each one of
the four trusts did not exercise 25% of the voting rights at general meetings of the companies, namely
Houtbosplaas and TBS Alpha. Second, it concluded that clients of a bank were under no statutory obligation under
the Financial Intelligence Centre Act 38 of 2001 (FICA) to provide documents to a bank for verification purposes
upon request to do so by such bank. Thereafter, the high court refused Nedbank's application for leave to appeal
which was subsequently granted by this Court on petition to it.
In this Court counsel for Nedbank submitted that the high court erred in its conclusion because it overlooked a
cardinal fact, namely that in terms of the memoranda of incorporation of the companies concerned preference
shareholders were not eligible to vote in relation to certain matters at general meetings of the companies. Bearing
this consideration in mind, it was argued that, with respect to those matters the four trusts would each exercise
25% of the voting rights. Therefore, Nedbank was entitled to copies of the trust deeds of the four trusts in line

with FICA's requirements. Insofar as the high court's second finding was concerned, counsel contended that the
high court had regard to the amended version of s 21(2) of FICA that was not of application, ignoring the pre-
amended version that was in operation at the relevant time.
Nedbank argued that for as long as the companies' representative refused to provide a copy of one of the trust
deeds it was duty-bound not to give effect to the instruction to close the accounts and transfer the balances held
in those accounts to ABSA Bank. Had it closed the accounts and transferred the balances to ABSA Bank, Nedbank
argued, the manifest purpose and objects of FICA – which are, inter alia, to identify the proceeds of unlawful
activities, combat money laundering and financing of terrorist and related activities – would, as a result, have been
undermined.
In relation to the contentions advanced by counsel for Nedbank as to the import of article 2.1 of the two companies'
memoranda of incorporation the SCA considered it necessary to ascertain the correct construction of the
provisions of this article. The SCA stated that the logical point of departure in construing a document was the
language of the document itself, interpreted in the light of its context and purpose which was a unitary exercise.
Bearing those principles of interpretation in mind, the SCA turned to consider the question whether each one of
the four trusts exercised 25% of the voting rights in circumstances where the preference shareholders were
precluded from voting by virtue of article 2.1 of the memoranda of incorporation of Houtbosplaas and TBS Alpha.
The SCA found that preference shareholders were precluded from exercising their voting rights only in relation
to matters concerning the assets or profits of the companies that would benefit them either financially or
materially. Other than that, their voting rights were untrammelled. Concerning s 21(2) of FICA before its
amendment, the SCA held that it applied to Bank customers who already had existing accounts with a Bank when
FICA took effect on 1 February 2002 and thus did not avail Nedbank. Similarly, regulation 7(f)(ii) was not of
application for the same reason as s21(2) of FICA.
Insofar as the claims of Houtbosplaas and TBS Alpha for mora interest in the various sums claimed by them in
this litigation were concerned, the SCA held that it was by now recognised without question that a party who had
been deprived of the use of his or her capital for a period of time has suffered a loss and did not need to establish
special proof of his or her damages. It found that the sole question to be decided insofar as the respondents' claim
for mora interest was concerned was whether there was any lawful justification for Nedbank to restrict the
accounts for the reasons upon which Nedbank relied. The SCA held that both Houtbosplaas and TBS Alpha were
rightfully entitled to judgment in the amounts claimed representing mora interest calculated from 20 January 2017
(ie the date of demand), to 10 July 2017 (ie the date on which effect was given to their instruction to close the
accounts and pay over the various funds held in those accounts to ABSA Bank).
The SCA held that there was no basis for concluding that Nedbank was justified in refusing to give effect to its
erstwhile clients' instructions to close the relevant bank accounts. In so doing Nedbank acted in breach of its
obligations. That being so, the SCA dismissed the appeal with costs.

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