IN
THE HIGH COURT OF SWAZILAND
Held
at Mbabane
Civil
Case No. 3276/2003
In
the matter between
STANDARD
BANK OF SWAZILAND LIMITED Plaintiff
And
BHEKIWE
VUMILE HLOPHE 1st Defendant
SANDILE
DLAMII 2nd Defendant
Coram Annandale,
ACJ
For
Plaintiff Adv. Wise instructed by
Robinson
Bertram
Attorneys
For
both Defendants Mr. P.M. Shilubane
JUDGMENT
19 November 2004
This
matter concerns a claim for the repayment of monies which the
plaintiff credited to a third party on strength of a cheque drawn by
the first defendant, a customer of plaintiff bank, while the
defendant did not have
2
-sufficient
funds to cover the cheque, nor a formalised overdraft facility. The
bank's case is that it treated the cheque as if it was a tacit
request for overdraft facilities which causes defendant to be liable
for repayment of the monies and interest, while the defendant's case
is that there was no request for any overdraft facility, that if
money was disbursed to the third party it was not on her behalf, that
she does not owe anything to the bank and therefore is not liable to
pay the claim.
The
issue to decide, to determine if the first defendant is liable to the
bank for the amount of her cheque and interest, is whether her cheque
should have been treated by the bank as an overdraft request or not.
It
is common cause that the plaintiff was the banker of first defendant.
The bank is a registered financial institution in Swaziland, formerly
known as Barclays Bank of Swaziland Limited, prior to its
amalgamation with plaintiff bank. The second defendant enters the
arena as husband of the first defendant, supplementing her lack of
locus standi in so far as her legal capacity to be sued may come into
play. It is further beyond dispute that the first defendant is the
drawer of the cheque in issue, in favour of Computronics Systems in
the amount of E73 400, dated the 30th January 1998. The plaintiff's
bank is its Matsapha branch and plaintiff alleged that she did not
have funds to cover the amount of the cheque, which is admitted, but
defendant avers in her plea that she stopped payment of the cheque.
The
bank says that it treated the cheque as a tacit request for overdraft
facilities, which it granted and that it effected payment in terms of
her instructions, on its usual terms. These terms are claimed to be
that all overdrawn sums would be payable on demand, that interest is
payable at the bank's usual rate, compounded monthly and also the
usual or customary banking charges.
To
this, the defendant denies requesting an overdraft and denies any
tacit agreement to that effect as plaintiff alleges.
A
crucial averment by the plaintiff is that it disbursed and paid out
on behalf of the defendant the sum of E73 400, the amount of the
cheque drawn by the first defendant, in the alternative that it lent
and advanced that money to the defendant. The defendant pleads that
she denies that the bank disbursed any monies on her behalf or that
it lent and advanced it to her, either as alleged or at all.
4
At
the hearing of the matter, the plaintiff called two witnesses to
supplement its case on the papers, the admitted pleadings and the
uncontested documents. The defendant chose not to testify and adduced
no evidence, save for the pleadings.
There
is very little in the way of a factual dispute. The cheque which
forms the core of the dispute is common cause with both parties. It
is an instruction by the first defendant to Barclays Bank to pay the
sum of E73 400 to Computronics, which amount ended up in their
account. It is not in dispute that Barclays Bank merged with the
plaintiff bank.
As
part of his evidence, First National Bank's (FNB) Manager of
Operations,. Mr. Pringle, handed in exhibit "A", the
original cheque deposit slip reflecting the deposit of the first
defendant's cheque into the payee's account with F.N.B. on the 30th
June, 1998.
His
further evidence is that thereafter, the account of their client,
Computronics, was credited with that amount as a consequence of the
cheque deposit. He stated that the banking practise at that time was
that
5
-cheques
of a clearing bank had 7 days to be rejected by the drawer's bank and
that by the time the cheque concerned was rejected on the 24th July,
it was too late to repudiate it, therefore Computronics remained with
the funds.
The
defendants' attorney took issue with this witness on his reliance on
microfiche statements which he used for his evidence, also that he
did not himself prepare the bank statements, which are computer
processed, to conclude as he did.
Mr.
Pringle however confirmed, when viewing a full-colour photocopy of
the cheque, that it is endorsed as being "referred to drawer"
twice, on the 11th July and the 3rd August 1998, both dates outside
the 7 day clearing window. Further endorsements are that the cheque
had gone stale by the 14th August, again so on the 1st September
1998. He said that the endorsements of "refer to drawer" in
normal banking parlance means that the drawer does not have funds to
cover the cheque.
Plaintiff
also called Mr. Nhleko to testify. He has been with the plaintiff
bank for some sixteen years and is head of operations. As custodian
of documents and records relating to this matter, he confirmed the
pleadings
6
to
the effect that first defendant is the account holder of the cheque
concerned. On being shown the deposit slip (exhibit "A"),
he confirmed that her cheque was deposited into the Computronics
account with FNB on the 30th June.
His
further evidence, given with the aid of a computer generated printout
of the first defendant's account with his bank, which he readily
admits not to be the author of namely an A3 size sheet of paper
marked "1.1", is that following the deposit of the cheque,
it was cleared by FNB to Standard Bank, where her account was debited
with the amount of the cheque. However, there was no money on her
account to cover the debit as she was already overdrawn at the time,
owing El 026.59 to the bank. Due to this, the entry was reversed on
the 11th July, being a credit entry of the amount of the cheque
recorded against first defendant's account - the cheque was thus
"reversed out of her account", to quote his words.
However,
at that time the banking practise was that this had to be done within
seven days after the deposit was made, in order for the depositor's
bank to withdraw the deposited funds from the Computronics
7
account
and their bank, FNB, refused the reversal, as it fell outside the
agreed "window period" of seven days.
The
nett result was that in the final instance FNB remained with the
credit of E73 400, which it had already passed on to Computronics,
but that the plaintiff bank debited its own internal accounts with
that amount to balance their books and that in effect, money of
Standard Bank was used to pay FNB, the bankers of the payee of the
cheque, Computronics, instead of taking it from the first defendant's
account, as she did not have funds to meet it. To date, it remains
the same, with the money still not recovered.
The
same cheque now in issue was also the subject matter in other
litigation than the present. In civil case 2984/2000, Protronics
Networks Corporation (Pty) Ltd sued Standard Bank Swaziland Limited
for the same amount of this cheque. Very briefly, the facts were
alleged that Standard Bank improperly deducted this amount from its
account, with the bank stating that Computronics (the payee of the
present cheque) having raised invoices payable by Protronics, in
September 1998. A partial payment was said to be made, leaving a
balance of E73 400 - the amounts of both claims in both matters,
Protronics versus Standard Bank and Standard Bank versus
8
Bhekiwe
Hlophe and Sandile Dlamini. In the other matter, the defendant
further alleges in its affidavit resisting summary judgment, deposed
to by the same Mr. Nhleko of the bank, that Protronics tendered one
and the same cheque as in the present case, drawn by the first
defendant herein, Bhekiwe v Hlophe, in favour of Computronics.
Nhleko
proceeded to state in the affidavit that since Hlophe's account had
insufficient funds to cover the cheque and although Standard Bank
endorsed it "refer to drawer", the cheque was not returned
or delivered to the payee in time, i.e. within the clearing period
(of seven days). Upon expiry of the clearing period, Standard Bank
was obliged to honour it on insistence of the payee's bank FNB.
He
further stated that as consequence, the liability of Protronics to
Computronics was extinguished, without Computronics spending any
money in the process, that its debt was settled at a time when it
(Protronics) had insufficient funds in the account on which the
cheque was drawn and that Computronics was unjustly enriched at the
expense of Standard Bank.
9
An
obvious mistake herein is that the cheque was not drawn by Protronics
but by Bhekiwe Hlophe, in favour of Computronics. Also worthy of note
is that in the summary judgment application, the plaintiff's
declaration was deposed to by its managing director, Sandile Dlamini.
He is stated to be the husband of Bhekiwe Hlophe, the first defendant
in this matter, with himself being the second defendant. It is her
cheque, which was payable to Computronics, which features in the case
by Protronics, said to have been used at the expense of the Standard
Bank, offsetting a debt between Protronics and Computronics. The
recording of this evidence which relates to a different matter was
solicited by the plaintiff's counsel and used by defendant's attorney
in trying to discredit Nhleko.
The
issue canvassed for this purpose was to try to demonstrate that
Standard Bank is at odds with itself in debiting two different
accounts, that of Protronics and of Bhekiwe Hlope, with the same
amount emanating from the same cheque. Nhleko explained how it came
about, referring to the background set out above, emphasising that it
was at different times and for different reasons. He did admit though
that the problematic reversals and book entries were essentially
caused by FNB refusing to accommodate Standard Bank in respect of the
seven day clearing window to reject
10
payment
of a cheque from an account with insufficient funds. However, in the
present matter, it does not form the plaintiff's case on that basis,
but with Standard Bank suing on the basis that it (eventually)
regarded the first defendant's cheque as a tacit overdraft loan
request, inferred by the bank.
In
the pleadings, the defendant avers that she stopped payment of the
cheque in question. It was put to Nhleko that she verbally told the
manager not to pay the cheque, in August 1998. Nhleko replied that
there is not any record of it with the bank and in any event, the
cheque "had gone stale" by then, rendering anything to such
effect impossible by then, it having a validity of only six months.
Defendant's
attorney, Mr. Shilubane, uses the argument that the plaintiff bank
did not base its case on a tacit agreement between the bank and
Hlophe, and did not plead so. but instead that the claim actually
arose from the instance of FNB to adhere to the seven day clearing
period, which had expired by the time that it was made aware that
there were no funds to meet the cheque in the drawer's account.
11
The
position regarding a tacit loan agreement is set out in paragraph 9
of plaintiff's (amended) particulars of claim, alleging that "the
defendant tacitly agreed to the terms and conditions of the overdraft
facility as granted by the plaintiff." The following paragraph
reads that: "pursuant to the foregoing, the plaintiff disbursed
and paid out on the defendant's behalf certain sums of money,
alternatively, lent and advanced certain sums of money to the
defendant."
It
is therefore, he argued, that the plaintiff's claim discloses no
cause of action. Quoting from Amler's Precedents of Pleadings, 6th
edition at pages 94 and 95 (being the pages Mr. Shilubane provided to
the court, and not pages 229 and 56 which he referred to in his heads
of argument), defendant's attorney states as trite law that "if
a party intends to rely on a tacit contract, it is necessary to plead
that fact. In order to establish a tacit contract, it is necessary to
allege and prove unequivocal conduct that establishes on a balance of
probabilities that the parties intended to and did in fact, contract
on the terms alleged."
For
this position, reliance is placed on Triomf Kunsmis (Edms) Bpk v AE &
C I Bpk en andere 1984(2) SA 261 (WLD) where Coetzee J. stated at
267-A (my own translation) that:-
12
"It
is therefore not the case that where one, in an existing contract,
whether oral or written, by implication should read into it certain
terms with the supposition that it was tacitly agreed to. In the case
where a person relies on such a contract, he must allege and prove
certain conduct or a course of conduct which, either individually or
accumulative, leads to only one conclusion, namely that between these
parties, a tacit contract came into existence."
For
this finding, Coetze J relies on what Corbett JA held in Standard
Bank of South Africa Limited and Another v Ocean Commodities Inc and
others 1983 (1) SA 276(A) at 292:-
"Moreover,
I do not think that the tacit agreements alleged can be inferred from
the facts on record. In order to establish a tacit contract it is
necessary to show, by a preponderance of probabilities, unequivocal
conduct which is capable of no other reasonable interpretation that
the parties intended to, and did in fact, contract on the terms
alleged. It must be proved that there was in fact consensus ad idem".
In
Triomf at 267, Coetze J goes on to hold that: (my own translation)
13
"It
is therefore not sufficient generally, in a matter like this, to
refer to a large body of facts or evidence. The person who relies on
a tacit agreement must allege a catalogue of action and specific
conduct. Each such action or specific conduct must then be proved by
him. On top of that, he has to aver that he relies on the thus proven
tacit contract, from which stems the remedies he now seeks to
enforce."
It
is these requirements that the defendant alleges to be absent from
the pleadings. The question is whether it is so, or not. The
contention by the defendant's attorney cannot form the basis for an
adverse finding against the plaintiff on this basis. As already set
out above, the plaintiff pleads that the first defendant was a
customer of plaintiff bank, maintaining a current account at its
Matsapha branch and that she "issued" a cheque in the
amount of E73 400 to Computronics Systems. This is acknowledged.
Plaintiff avers that by doing so, she "issued instructions to
the plaintiff to pay the amount reflected on the cheque." To
this, first defendant pleads that she "admits that she issued
the cheque in question but avers that she subsequently stopped
payment of the said cheque." She does not deny the averment of
instructing plaintiff to pay the cheque and also does not state when
or how she "subsequently" stopped payment. She did not give
any evidence at the trial either, but her attorney put it to the
bank's head of operations, Mr. Nhleko,
14
that
she verbally told the branch manager not to pay the cheque in August
1998. He replied that such instruction, if there was one, was not
recorded and moreso, the cheque had gone stale by August, by which
time no effective stopping of payment can be made anymore.
The
plaintiff further pleads and avers that since the first defendant's
account did not have sufficient funds to cover the cheque, it treated
the instruction to be a request for an overdraft facility, which was
granted and duly effected payment in terms with her instructions.
Plaintiff then specifies the terms of the overdraft facility as being
that all sums overdrawn would be payable on demand, the liability for
interest at the banks usual rate on such overdraft as it stood from
time to time on all sums overdrawn plus the usual or customary
banking charges. All of this is denied by the defendant, who further
denies the averment that she "tacitly agreed to the terms and
conditions of the overdraft facility as granted to her by the
plaintiff."
It
is common cause that the plaintiff did not have either sufficient
funds or a pre-arranged overdraft facility at the time the cheque was
presented for payment. Plaintiff alleges a tacit request for an
overdraft facility by way of her drawing a cheque and which cheque
was presented for
15
payment.
Plaintiff not only alleges a tacit request for" an overdraft,
but also the terms of such facility. The bank avers that the conduct
of the first defendant established her tacit request- it is this
conduct that the bank wants to have declared as justifying a
reasonable inference, on a balance of probabilities, as the intention
between the parties, a consensus ad idem, to tacitly contract and
agree to the overdraft facility.
For
this, the bank inter alia relies on ABSA Bank Limited v J.W. Blumberg
and Wilkinson 1997(3) SA 669(SCA). Therein, a firm of attorneys
deposited cheques into its trust account and before the effects were
cleared, drew cheques on the same account. The bank honoured the
cheques of the firm and sued it for the amount thereof when the
deposited effects were not paid. There was no agreement entitling the
firm to draw cheques against uncleared effects, no overdraft
arrangement. The firm denied that the bank was entitled to debit
their account with the relevant amount. Essentially the facts in ABSA
are very much the same as in the present case, where the bank
honoured a cheque and now claim the amount.
At
pages 675-1 to 676 - D, Zulman JA states that:
16
"The
fact that the appellant might have permitted the respondent to draw
cheques against uncleared effects, despite there being no agreement
in this regard, would not excuse the respondent in law from liability
to make payment to the appellant. The appellant was perfectly
entitled to choose to honour such cheques, notwithstanding the fact
that the effects earlier deposited had not been cleared, and to waive
any benefit afforded to it in this regard by its agreement with the
respondent. It would be strange indeed if it were permissible for a
customer of a bank to draw a cheque on the bank. requesting the bank
to honour the cheque, and thereafter, when the bank honoured the
cheque despite the absence of an overdraft facility, to then plead
that this would have resulted in an overdraft facility which had not
been agreed upon. In essence this is precisely what the respondent is
contending for, (my emphasis) It hardly lies in the mouth of the
respondent, who drew the two cheques in question against uncleared
effects, albeit contrary to the agreement between the parties, to be
heard to complain that the bank should not have honoured the cheques
and debited its account. Put differently, it is the appellant, so it
is suggested, who must bear the loss if the uncleared effects were
not met. This can not be so. (Compare Bloems Timber Kilns (Pty) Ltd v
Volkskas Bpk 1976(4) SA 677(A) at 687E-688C; Trust Bank of Africa Ltd
v Wassenaar 1972(3) SA 139(D) at 142G-143A and 143E-F. As pointed out
by Cozens-Hardy MR in Cuthbert v Robarts, Lubbock & Co (1909) 2
Ch 226 at 233:
17
"If
a customer draws a cheque for a sum in excess of the amount standing
to the credit of his current account, it is really a request for a
loan, and if the cheque is honoured the customer has borrowed money."
(See
also Halsbury's Laws of England 4th ed vol 3(1) at 242 para 298,
Paget's Law of Banking 10th ed at 183 and Willis Banking in South
African Law at 33.) The fact that the respondent's account was a
'trust banking account' is irrelevant for this purpose."
The
defendant's plea that she countered her instruction to the bank to
pay the amount of money to Computronics by issuing an instruction to
stop payment, does not hold water. As stated above, her plea is a
bare assertion which when put to plaintiff's Nhleko, was disposed of
on two grounds, and her version that it was in August that she
instructed stopping of payment, takes it outside the validity period
of the cheque. On the facts, as well as the pleadings, this defence
stands to be dismissed. The result remains that indeed she issued an
instruction to her bankers to pay the amount stated on her cheque,
and indeed the bank did pay, or honour the cheque, despite the
absence of an overdraft facility.
18
The
evidence of both Mr. Pringle and Mr. Nhleko is that the plaintiff
bank "paid the cheque." This was not challenged in cross
examination. The gist of their evidence is that on deposit of the
cheque, the account of the first defendant was debited when it was
received from the payee's bank, FNB. By then, FNB had already
credited the account of Computronics, which left seven days to clear
the cheque, after which normal banking practise at that time caused
it to become fait accompli. Since the cheque was not returned to FNB
in the seven day period, FNB refused to extend the returning period
and plaintiff bank was back to square one. In effect, it had paid
money on behalf of the defendant to a third party, which amount, plus
interest and costs, she now refuses to pay, on the basis that she had
neither a loan agreement or an expressly prearranged overdraft
facility. Accordingly, she wants the bank to foot the bill, or to
give her a "free lunch", in American parlance. This is in
stark contrast to English law.
"'In
English law it is clear that generally speaking, drawing a cheque or
accepting a bill payable at the bankers where there are not funds
sufficient to meet it amounts to a request for an overdraft' -
Halsbury, 3rd ed., vol 2, p 228, para 425. While English decisions
are not invariably a safe guide in banking matters, the principles in
so far as they are relevant to this question appear to me to be the
same in our law"(per Milne J in Trust Bank of
19
Africa
Ltd v Wassenaar 1992(3) SA 139 at 142 - H a decision referred to with
approval in ABSA supra on the same principle).
The
fact that the plaintiff bank has since the event unsuccessfully tried
to recover the funds through other avenues does not alter the
picture. The bank unsuccessfully tried to debit the Protronics
account, as aforesaid, it also tried unsuccessfully to have the
entries of FNB on the Computronics account reversed. The fact that
still remains is that acting on the written instruction of the first
defendant, endorsed on her cheque, the plaintiff bank paid the stated
sum of money to Computronics. This instruction was not stopped, at
least not timeously, if at all.
The
defendant's argument, enumerated above, that there could be no tacit
agreement or request for an overdraft facility places undue
contortions on the premise that the bank did not accede to such a
request as it tried to resolve the issue with FNB, to reverse the
entries, and that it tried to rectify its payment by debiting the
Protronics account, also unsuccessfully. Thus, the efforts by the
bank to try and recover its potential (and real) losses elsewhere, is
argued to negate a tacit acceptance of a (denied) tacit request for
an overdraft in the amount of the cheque. This is based on the
evidence
20
of
Mr. Nhleko who essentially admitted in cross examination that the
cheque was honoured because of the instance of FNB. Ultimately, it
may have been so, but the opposite side of the same coin is that the
bank actually and literally honoured the cheque, despite the absence
of funds to cover it or a pre-agreed overdraft facility. The position
that FNB took does not dispose of this factual position, which the
plaintiff bank pleads to be a tacit request for the facility. The
bank was not obliged to honour her cheque, it was under no express
contractual duty to do so. Yet, it is this obligation that plaintiff
bank incurred on the instructions vis-a-vis the defendant's cheque
that she now wishes to renege. This cannot be so.
To
come to this finding, which I do, does not require that I extensively
deal with the secondary argument raised by the defendant's attorney,
namely that the court should disregard the evidence of both Nhleko
and Pringle, due to them referring to statements of account of both
FNB and Standard Bank. Mr. Shilubane argues that insofar as Mr.
Pringle is concerned, he referred to copies made from a "microfiche".
The bank practise is to make photographic copies of records, like
account statement which requires vastly less storage space than the
original papers. This is common knowledge. However, he contends that
since there was no evidence to prove that the
21
original
documents were lost or destroyed or not available or that it was
searched for and could not be found, it would be inadmissible for the
court to have regard to reproductions of the microfiche records. In
any event, so the argument continues, Pringle was not the author of
the original records, the reproductions are relegated to secondary
evidence and furthermore, the plaintiff did not cause the "payee
of the cheques to produce the originals." He therefore argues
that Pringle's evidence should be dismissed, relying on Barclays
Western Bank Ltd v Creser 1982(2) SA 104(T) as authority. On pages
106 and 107, Eloff J (as he then was) held:
"The
best evidence rule is that no evidence is ordinarily admissible to
prove the contents of a document except the original document itself.
The exception to the rule is that on proof, inter alia, of the
destruction of the document the contents of the document may be
proved by secondary evidence. The only significance of the fact, if
fact it is, that the party concerned deliberately destroyed a
document, is that, if it appears that that was done in contemplation
of legal proceedings, possibly with a fraudulent objective, the court
may decline to dispense with the requirement of production of the
original. There was no question of anything of that sort in the
present case. Litigation was not contemplated when the original was
destroyed. And the destruction was done in the ordinary course of
business."
22
Wigmore on Evidence vol 4 para 1199 at 353 says:
"But
it is obvious that there may be many cases of intentional destruction
which do not present the above extreme features. The intentional
destruction may have been natural and proper or it may have been
merely open to the bare suspicion of fraudulent suppression and in
such cases the evidence of its contents should not be received
subject to comment on the circumstances."
And
furtheron Wigmore states, again at 354 and 355:
"the
view now generally accepted is that a destruction in the ordinary
course of business is sufficient to allow the contents to be shown as
in other cases of loss."
(See
Hoffmann South African Law of Evidence 3rd ed at 306 and May South
African Cases and Statues on Evidence 4th ed para 123 at 72.)
It
has, I think, been judicially recognised that systematic recording in
the ordinary course of business is a feature of modern commercial
procedures (see Barker v Wilson (1980) 2 All ER 8). In that case the
following was said by CAULFIELD J:
23
"The
magistrates came to their conclusion and they put their conclusion in
these terms, that they adopted some robust common sense that section
9 does not include microfilm which is a modern process of producing
bank records. It is probable that no modern bank in this country now
maintains the old-fashioned books which we maintained at the time of
the passing of the 1879 Act, and possibly maintained for many years
after 1879."
That
matter concerned the production of a microfiche copy of a time
purchase agreement where the original was destroyed due to lack of
office space. Section 9 of the Bankers Books Evidence (Amendment) Act
of 1879 regulated English law insofar as it defined what is meant by
"bankers books", including ledgers, day books, cash books,
account books and all other books used in the ordinary business of
the bank. It did not include, in 1879, "microfiche records",
nor photocopies, nor computer generated statements. It was therefore
that Eloff J held that the magistrate a quo should have received a
copy of the high purchase agreement, which was accompanied by an
affidavit of an employee of the bank to explain why that document was
not the original. This being secondary evidence, it was incorrectly
not received by the magistrate, whose ruling was overturned on
appeal.
24
I
have a difficulty with defendant's argument that on the same basis,
Pringle's references to the microfiche documents must be dismissed.
True, there is no evidence that the original documents were destroyed
and yes, Pringle was not the person who generated, with a computer,
the statements in the first place.
In
perspective, one must also have regard to what is actually the
evidentiary value of the 13 microfiche copied papers that Pringle
produced, statements of account of Computronics Systems with FNB over
a 3 months period. All that Pringle testified, with reference to the
statements, is that "on the 30th June 1998, E73 400 is an entry
as a consequence of the cheque that they (i.e. Computronics)
deposited." All that it does is to show that the original
deposit slip (exhibit "A"), reflecting the exact same
transaction, had actually been acted upon. It introduces nothing new
at all.
To
hold that Pringle's evidence be ruled inadmissible and discount it
would not be justified. To disregard his evidence pertaining to
exhibit "B", the microfiche statement of the Computronics
account with FNB, which reflects a cheque deposit of E73 400 on the
30th June 1998, is of no
25
consequence
to the merits of the present matter and dees not require further
enquiry into its admissibility or otherwise.
The
further ruse that defendants raise is to move the court to discount
the evidence of Mr. Nhleko of plaintiff bank, which has been alluded
to above. During his evidence, Mr. Nhleko referred to a document
marked "1.1". This is an A3 size paper, headed "Detail
Account Enquiry" of Standard Bank Swaziland. It pertains to the
account of the first defendant.
From
this 'computer printout', he testified that on the first date
thereon, 29 June 1978, her (i.e. first defendant) account was
overdrawn by El 808 10, a debit balance, meaning that she owed money
to the bank. On the 4th July 1998, cheque No. 400 (see the first page
of the book of discovered documents or annexure STB 1) was debited to
her already overdrawn account. Immediately before that, she was
overdrawn by El 026.59 and accordingly there were no funds to meet
her cheque. The amount of the cheque was reversed out of her account
on the 11th July, 1998. These are the essential details of his
evidence, over and above some other procedural details.
26
The
complaint against this is that it is a computer .printout which he
used, with Nhleko not being the author of the document, despite his
evidence that as Head of Operations at the bank he has the documents
relating to this matter "under (his) jurisdiction." The
objection is based on the absence of a Computer Evidence Act in
Swaziland.
Mr.
Shilubane relies on Narlis v South African Bank of Athens 1976 (2) SA
573 (AD) as authority to reject the evidence of Nhleko which is
founded on the computer printout. Part of the headnote reads that:-
"Although
in terms of Section 28 of the Civil Proceedings Evidence Act, 25 of
1965, entries on bankers' books are admissible in certain cases, in
terms of Section 32 the provisions of Section 28 do not apply (my
underlining) in a case in which the bank is a party. Although section
34(2) of Act 25 of 1965 gives the person presiding at any civil
proceedings a discretion to admit, in certain circumstances, certain
statements as evidence, before that discretion can be exercised it is
essential to note that Section 34(2) deals only with such a statement
as it is referred to in Sub-section (1), and sub-section (1) refers
only to 'any statement made by a person in a document.' A computer is
not a person. It was held that as the computerised bank documents
handed in by the manager of the respondent bank giving evidence did
not constitute proof of their contents and the admissible evidence
only raised a suspicion that the
27
money
was owing, that the respondent bank had failed to discharge the onus
on it of proving that this was so."
The
headnote is an accurate summary of the judgment by Holmes JA on the
above aspects, where the learned Justice of Appeal analysed the South
African law, based on English law, regarding the admissibility of a
document like "1.1" and its probative value.
The
present matter is distinguishable and on a different footing when
regard is given to the pleadings.
It
was averred and admitted that at the time the first defendant's
cheque was deposited by the payee, her account did not have funds to
meet it. This is also the foundation and essence of the evidence of
Nhleko. Document "1.1" does not form the basis of proof by
the plaintiff that the first defendant did not have the funds to meet
the cheque. It is already admitted in the pleadings. If this document
is to be totally disregarded, it still would not suffice to say that
the plaintiff has failed to prove its claim in so far as the
insufficiency of funds to cover a cheque she had issued and which was
28
paid
by the plaintiff bank to the payee's bank, caused the plaintiff bank
to regard her instruction as a request for an overdraft.
Due
to the view I hold on the evidence, the pleadings and the law, the
secondary defence of the defendants also has no merit. I therefore
need not deal with the persuasive argument to the contrary of
Advocate Wise in respect of the secondary defence.
I
now turn to the issue of interest.
The
claimed rate of interest is 28.75% per year as from the 30th January
1998 to date of payment. When cognisance is taken of the in duplum
rule, it really becomes academic as to what the amount of interest is
at even date of this judgment, as the amount of interest has exceeded
the amount of capital claimed quite some time ago. Once interest
reaches the same amount as that of the initial unpaid capital, the
courts will not enforce repayment of any excess. The upshot of this
is that effectively, the claimed amount, save for costs, is limited
to double of the amount of cheque.
29
In
Standard Bank of South Africa v Oneanate Investments (in liquidation)
1998(1) SA 811 (SCA), Zulman J7 A, after a careful analysis of the
relevant authorities, set out the justification for and the proper
application of the in duplum rule at 834 B-H as follows:-
"It
appears as previously pointed out that the rule is concerned with
public interest and protects borrowers from exploitation by lenders
who permit interest to accumulate. If that is so, I fail to see how a
creditor, who has instituted action can be said to exploit a debtor
who, with the assistance of delays inherent in legal proceedings,
keeps the creditor out of his money. No principle of public policy is
involved in providing the debtor with protection pendente lite
against interest in excess of the double. Since the rule as
formulated by Huber does not serve the public interest, I do not
believe that we should consider ourselves bound by it. A creditor can
control the institution of litigation and can, by timeously
instituting action, prevent the prejudice to the debtor and the
application of the rule. The creditor, however, has no control over
delays caused by the litigation process.
The
present case is a good illustration of such delays. Summons was
served in November 1990, the trial commenced in June 1993, the final
judgment of the Court a quo was given in May 1995. This appeal was
heard in August 1997. If one accepts that interest and indeed
compound interest is 'the life-blood of finance' in modern times I am
of the opinion that one
30
should
not apply all of 'the old Roman-Dutch law. to modern conditions where
finance plays an entirely different role' (per Centlivres CJ in
Linton v Corser 1952 (3) SA 685{A) at 695H). See also the remarks of
Kotze JA in West Rand Estates Ltd v New Zealand Insurance Co Ltd 1926
AD 173 at 196-7 dealing with the question of mora.)
Once
judgment has been delivered the question again arises as to what the
public interest demands. It is arguable that the creditor is in duty
bound to execute and bring to a close the further accumulation of
interest. That can be achieved by accepting the approach adopted in
the Commercial Bank case supra at 300G-I that interest on the amount
ordered to be paid may accumulate to the extent of that amount,
irrespective of whether it contains an interest element. This would
then mean that (i) the in duplum rule is suspended pendente lite,
where the lis is said to begin upon service of the initiating
process, and (ii) once judgment has been granted, interest may run
until it reaches the double of the capital amount outstanding in
terms of the judgment."
The
date from which interest could accrue, if indeed the bank were to be
successful in its claim, cannot in any event be from the 30th January
1998, as it claims. This date is as it is endorsed on the cheque
itself, but it is common cause, from exhibit "A", the
deposit slip of the payee, Computronics, that the cheque was
presented for payment much later, on the
31
30th
June 1998. It was only on the 4th July 1998 that the bank first
debited the first defendant's account with the amount of E73 400. It
is therefore incorrect to claim interest on an overdrawn account from
the 30* January 1998. At best, interest comes into play from the 30th
June, the date of the deposit, if not from the 4th July, the date of
debiting the drawer's account.
However,
this will be an academic exercise due to the long lapse of time which
effectively cuts off the accrual of further interest once it equals
the capital sum.
The
plaintiff avers in paragraph 13 of its particulars that the rate of
interest on overdraft facilities, such as that of the first
defendant, was 28.75% per annum at the 30th January, 1998. It claims
(in paragraph 14) that that rate of interest should be awarded on the
capital sum, calculated from the 30th January, 1998 to date of
payment.
For
the abovestated reasons this cannot be done in respect of the date,
and it also cannot be granted in respect of the rate of interest.
32
During
the trial, counsel of both parties agreed to place before court
exhibit "C", a comparative table of applicable interest
rates of Swaziland and South Africa. It indicates the prime lending
rate during 1998 to be 21%, down to 15% in 1999, 14% in 2000, 12.5%
in 2001, 16.5% in 2002 and 11.5% in 2003. It also lists the monthly
variations from 2001 through to April 2004, It is this table of
interest rates that is to be used to determine the applicable
interest rates as ordered hereunder.
It
is for the abovestated reasons that the court finds in favour of the
plaintiff which succeeds in its claim against the first respondent.
The second respondent is only notially cited in his capacity as
husband of the first defendant to "duly assist" her in the
proceedings. No relief was sought against him.
It
is ordered that:-
Judgment
be entered against the first defendant in the amount of E73 400,
together with interest calculated at the prime lending rate of
interest of the plaintiff bank, as applicable from time to time, as
from the 4th July 1998, until date of payment provided
33
that
from the date that the aggregate of interest equals the capital sum
aforesaid, further accrual of interest shall stop. 2) The first
defendant is ordered to pay the plaintiff's taxed costs, which costs
are to include the costs of counsel, which is certified in terms of
Rule 68(2).
J.P.
ANNANDALE ACTING
CHIEF
JUSTICE
