THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT

Case No: 142/08
In the matter between:

NEDBANK LIMITED
Appellant

and

JOSE MANUEL PESTANA
Respondent

Neutral Citation:
Nedbank v Pestana (142/08) [2008] ZASCA 140
(27 November 2008)

Coram:
STREICHER, BRAND JJA and GRIESEL AJA

Heard:
14 November 2008
Delivered:
27 November 2008

Summary:
Banker – transfer of funds to client’s account – whether bank
entitled to reverse transfer without client’s authority in view of
bank’s appointment as agent in terms of s 99 of Income Tax Act
58 of 1962.

ORDER

On appeal from: High Court, Johannesburg (Goldstein, Schwartzman and
Tshiqi JJ sitting as a court of appeal):

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

JUDGMENT

GRIESEL AJA (STREICHER and BRAND JJA concurring):
Introduction
[1] This appeal concerns the effect of s 99 of the Income Tax Act 58 of
1962 (the Act)1 and, more specifically, the question whether the section
permits a bank in the position of the appellant to reverse a credit to a
client’s account without the latter’s authority. (For convenience, I refer to
the appellant, Nedbank Limited, as the bank and to the respondent, Mr Jose
Manuel Pestana, as the plaintiff.)

1 Section 99 provides: ‘Power to appoint agent – The Commissioner may, if he thinks necessary, declare
any person to be the agent of any other person, and the person so declared an agent shall be the agent for
the purposes of this Act and may be required to make payment of any tax, interest or penalty due from
any moneys, including pensions, salary, wages or any other remuneration, which may be held by him or
due by him to the person whose agent he has been declared to be.’

[2] The matter originally came before the Johannesburg High Court
(Matopho J), where the question posed above was answered in favour of
the bank. On appeal to a full court, the order of the trial court was reversed
and judgment was granted in favour of the plaintiff as claimed. 2 The
present appeal comes before us with special leave of this Court.
Factual background
[3] The case arises from a series of transactions, all taking place on
4 February 2004, involving the appellant’s Carletonville branch (the
branch). The facts are common cause and have been placed before court by
way of a stated case in terms of Uniform rule 33(1) and (2). For purposes
hereof the salient facts may be summarised as follows:
(a)
The plaintiff had been conducting a current account at the branch
since 1969. A namesake, one Joseph Michael Pestana (Pestana),
conducted a similar account at the same branch.3
(b)
On 4 February 2004, at a stage when Pestana’s account was in
credit in an amount of R 496 546,40, he requested the branch to

2The judgment of the full court (per Schwartzman J; Goldstein and Tshiqi JJ concurring) has been
reported: see Pestana v Nedbank 2008 (3) SA 466 (W); [2008] 1 All SA 603 (W). The judgments of the
two courts below have attracted academic discussion, both pro and contra. See: W G Schulze, ‘Electronic
Fund Transfers and the Bank’s Right to Reverse a Credit Transfer: One Small Step for Banking Law, One
Huge Leap for Banks’ (2007) 19 SA Merc LJ 379–387 (Schulze 2007); W G Schulze, ‘Electronic Fund
Transfers and the Bank’s Right to Reverse a Credit Transfer: One Small Step (Backwards) for Banking
Law, One Huge Leap (Forward) for Potential Fraud: Pestana v Nedbank (Act One, Scene Two)’ (2008)
20 SA Merc LJ 290–297 (Schulze 2008); J C Sonnekus, ‘Eensydige Terugskryf van Kliënt se Krediet deur
Bank Onregmatig’ (2008) TSAR 348–354.
3The stated case is silent as to the relationship between the two Pestanas.

transfer an amount of R 480 000 from his account to that of the
plaintiff.
(c)
At 11h33 the branch carried out Pestana’s instruction and
‘transferred the amount of R 480 000 to the plaintiff’s account’
from Pestana’s account. 4  The said amount was credited to the
plaintiff’s account and his bank statement (a copy of which was
attached to the stated case) reflected a credit entry to that effect,
with a corresponding debit to Pestana’s account.
(d)
Unbeknown to the staff member at the branch who attended to the
transfer of the money to the plaintiff’s account, the bank’s head
office in Rivonia had earlier that day, at 8h44, received a telefaxed
notice in terms of s 99 of the Act from the Randfontein office of the
South African Revenue Service (SARS) in respect of Pestana’s
account. In terms of the pre-printed notice, SARS informed the
bank that Pestana was indebted to it in an amount of some
R340 million; it appointed the bank as the agent for Pestana and
required the bank to make payments in respect of the amount due to
SARS ‘as funds is (sic) available or became (sic) available till full
settlement’. The covering letter accompanying the instruction

4Again, it is not stated exactly how the transfer was effected, eg by way of electronic funds transfer or by
some other means, but nothing turns on this. It is accordingly not necessary, for purposes of this case, to
enter ‘the maze of problems and uncertainties underlying the law relating to electronic fund transfers’
(Schulze (2008) at 291).

impressed upon the bank that it was intended for its ‘very very
urgent attention’.
(e)
Later that day, and after it had already transferred the R 480 000 to
the plaintiff’s account, the branch was notified by its head office of
the bank’s appointment in terms of s 99 of the Act.
(f)
The branch thereupon ‘reversed the transfer to the plaintiff’s
account’ and, still on the same day, paid an amount of R 496 000 to
SARS from Pestana’s account.
(g)
The bank did not request the authority of the plaintiff to reverse the
amount of R 480 000 and no authority to do so was given by the
plaintiff.
[4] Against this background, the parties asked the court to determine
the following question of law:
Was the [bank] and having regard to its appointment in terms of s 99 of the Act, entitled
to reverse the payment of R 480 000 without authority from the plaintiff?
It was agreed between the parties that if the answer to this question was in
the negative, the plaintiff would be entitled to judgment as claimed.
[5] With regard to the question of law posed, the plaintiff contended
that the notice in terms of s 99 of the Act was received by the branch after
transfer of the money to the plaintiff’s account. The branch was not aware
of the notice which had been given by SARS to the bank’s head office and
was accordingly not obliged to act in terms thereof. Once the funds had

been transferred from Pestana’s account to the plaintiff’s account, the funds
belonged to the plaintiff; accordingly the funds could not be transferred out
of the plaintiff’s account without his authority and consent which was not
given.
[6] The bank contended, on the other hand, that it was obliged,
following its appointment as agent of SARS in terms of s 99, to reverse the
transfer made to the plaintiff’s account as the bank was appointed as such
prior to the transfer being made to the plaintiff’s account. The instruction
by Pestana to transfer the money to the plaintiff’s account was received
after the bank’s appointment in terms of s 99 and accordingly the transfer
to the plaintiff’s account was invalid and was made erroneously, with the
result that the plaintiff was not entitled to receive the money so transferred.
The act of crediting the plaintiff’s account in its books, so the bank
contended, did not in itself create liability towards the plaintiff, as the
credit in the plaintiff’s account was wrongly made and could be reversed.5
Finally, the bank contended that the transfer of the funds to the plaintiff’s
account was invalid and the defendant could not validly adhere to the
instruction given to it by Pestana in the light of the notice in terms of s 99,
as the notice was received prior to the instruction being given to the bank
by Pestana.

5This contention appears to be based on a dictum by Schutz JA in First National Bank of SA Ltd v Perry
NO & Others 2001 (3) SA 960 (SCA) para 32.

[7] As mentioned earlier, the trial court answered the question of law in
favour of the bank, holding that the bank was entitled to reverse the credit
to the plaintiff’s account. The full court disagreed with this conclusion for
the reasons stated in the reported judgment. In essence, the court held that a
completed and unconditional payment had been effected when the bank
credited the plaintiff’s account, with the result that the bank could not
unilaterally reverse the credit.6
Legal position
[8] It is well-established that, in general, entries in a bank’s books
constitute prima facie evidence of the transactions so recorded. This does
not mean, however, that in a particular case one is precluded from looking
behind such entries to discover what the true state of affairs is.7 Some
examples where a credit may be validly reversed by a bank were mentioned
by Zulman JA in Oneanate:8
‘. . . [I]f a customer deposits a cheque into its bank account, the bank would upon
receiving the deposit pass a credit entry to that customer’s account. If it is established
that the drawer’s signature has been forged it cannot be suggested that the bank would
be precluded from reversing the credit entry previously made. So, too, if a customer
deposits bank notes into its account the bank would similarly pass a credit entry in
respect thereof. If it subsequently transpires that the bank notes were forgeries it can

6Paras 13 and 14 of the judgment.
7Standard Bank of South Africa v Oneanate Investments (in Liquidation) 1998 (1) SA 811 (SCA) at 823B.
See also Perry’s case, supra, loc cit.
8Supra at 823B–D.

again not be successfully contended that the bank would be precluded from reversing
the credit entry.’
[9] Further examples where a credit may be validly reversed, include
cases where a cheque has been deposited into a client’s account and the
resultant credit entry is treated as provisional (or conditional), subject to a
hold period in terms of ‘standard banking practice’;9 or where the client
came by the money by way of fraud or theft;10 or where a wrong account
was erroneously credited.11 Absent some legitimate reason for reversal,
however, the general principle is that once an amount has been validly
transferred by A to the credit of B’s bank account, the credit belongs to B
and the bank has to keep it at B’s disposal; it cannot simply retransfer the
money back into the account of A without the concurrence of B.12
[10] Reverting to the case at hand, the court a quo rightly observed that
its duty was to ascertain ‘whether the court below came to the correct
conclusion on the case submitted to it’.13 This means that the parties and
the court are bound by the agreed facts as set out in the stated case. In terms
of rule 33(3), ‘. . . the court may draw any inference of fact or of law from

9Burg Trailers SA (Pty) Ltd & Another v ABSA Bank Ltd & Others 2004 (1) SA 284 (SCA) para 9. See
also Eriksen Motors (Welkom) Ltd v Protea Motors, Warrenton 1973 (3) SA 685 (A) at 693G–H; Absa
Bank Ltd v Standard Bank of SA Ltd 1998 (1) SA 242 (SCA) at 252A–F.
10Nissan South Africa (Pty) Ltd v Marnitz NO & Others (Stand 186 Aeroport (Pty) Ltd Intervening)
2005 (1) SA 441 (SCA) para 23; Perry’s case, supra, loc cit.
11Nissan case supra. For further examples, see Schulze (2008) at 296 in fin.
12Take and Save Trading CC & Others v Standard Bank of SA Ltd 2004 (4) SA 1 (SCA) para 17; Nissan
SA, supra para 22.
13Para 5 (my emphasis). See also Paddock Motors (Pty) Ltd v Igesund 1976 (3) SA 16 (A) at 23D–H.

the facts and documents placed before it as if proved at a trial’, but it may
not stray beyond those parameters. It is wholly impermissible, therefore,
for the court to read between the lines, as it were, and to speculate (as
Schulze does) 14  that, because the available facts ‘have a decidedly
suspicious ring to them’, the mandate given by Pestana to the bank may
have been ‘tainted with fraud’ and that it was therefore ‘in all probability
not a valid mandate as it was given in order to commit a crime’. On the
agreed facts and documents before us, there is no suggestion that either
Pestana or the plaintiff were parties to a theft or a fraud or any other
improper conduct relating to the money in Pestana’s account; nor are there
any facts from which it can be inferred that the transfer of the money to the
plaintiff’s account was in any way conditional.
Section 99
[11] Against the foregoing background, counsel attempted to justify the
bank’s unilateral reversal of the transfer by relying squarely on the
provisions of s 99. Counsel submitted in their written heads of argument
(a) that the appointment of the bank in terms of s 99 was a form of
garnishment, such as is available in regard to ordinary civil judgments; and
(b) that it ‘has an effect similar to a seizure of the funds’. While there is

14Schulze (2008) at 296.

authority for proposition (a),15 we were not referred to any authority in
support of proposition (b), nor am I aware of such authority.
[12] The court a quo did not accept this argument, holding instead
‘. . . that there were two things that the s 99 notice did not do: it did not
freeze Pestana’s account and it did not transfer or effect a cession of the
funds in Pestana’s account to SARS’.16 Later in the judgment, the court
emphasised that ‘the s 99 notice did not divest Pestana of the R 480 000
standing to the credit of his account’.17 In my view, these conclusions are
clearly correct, with the result that the bank’s argument cannot succeed.
[13] A related argument on behalf of the bank was based on the
following finding of the court a quo, paraphrasing a dictum by Harms JA in
Burg Trailers, supra,18 namely that –
‘the [bank] could on 4 February 2004 only have had one intention and this intention
would have affected both of its clients. It was not possible for it to intend to accept
payment on behalf of the plaintiff while simultaneously intending, on behalf of Pestana,
not to pay. Once it intended to pay unconditionally on behalf of Pestana, it could not
intend not to accept payment on behalf of the plaintiff. If the payment to the plaintiff, or

15Hindry v Nedcor Bank Ltd & Another 1999 (2) SA 757 (W) at 770I and the authorities referred to
therein. See also para 8 of the judgment of the court a quo.
16Para 10.
17Para 15. See also Sonnekus op cit at 351 para 9.
18Footnote 9 above, para 7.

the crediting of his account, was unconditional, it follows that the bank could not
unilaterally reverse the credit.’19
[14] Counsel submitted that it was common cause that the bank’s head
office – the ‘directing mind’ of the bank, in the words of counsel – intended
to comply with its appointment in terms of s 99. Although this is not spelt
out in so many words in the stated case, I am prepared to accept for
purposes of the present argument that this was indeed the bank’s intention
at head office level. From this premise, counsel sought to conclude that
‘[t]herefore the decision by the branch to effect the credit entry (without
knowledge of the s 99 appointment) is not relevant in law: it was not a
decision made by the [bank], ie by its relevant organ’.
[15] In my view, this argument amounts to a non sequitur. First, whereas
the s 99 notice to head office may be regarded as effective notice by SARS
to the bank as a single corporate entity, it does not follow that it must at the
same time be regarded as constructive notice to each branch of the bank. It
was incumbent upon the bank – and obviously in its own interest – to
ensure that notice of its appointment reaches the relevant branch(es) as
soon as possible.20 Second, until such time as it received actual notice of
the bank’s appointment as agent in terms of s 99 and head office’s intention
thereanent, the branch was entitled to continue its ordinary everyday
banking functions. Thus it was entitled to accept a valid and lawful

19Para 13.
20Cf Schulze (2007) at 385.

mandate from its client, Pestana, to transfer money from his account to that
of the plaintiff. In executing that mandate in the ordinary course of its
business, the branch clearly intended to pay on behalf of Pestana and to
accept payment on behalf of the plaintiff.21 I cannot agree, therefore, that
the decision to pay was ‘erroneous’, or that the decision of the branch is
‘not relevant in law’, as argued. The fact that the branch subsequently
changed its mind cannot, in my view, undo the validity of the completed
transaction. As it was put by the court a quo:22
‘Once the debit and credit occurred as they did, they constituted a completed juristic act
independent of any underlying justa causa.’
[16] In argument before us, counsel for the bank conceded that if it were
to be found that the bank intended to make payment to the plaintiff, that is
the end of the matter. For the reasons set out above, I am satisfied that the
bank, as represented by the branch in question, clearly had the requisite
intention.
Conclusion
[17] It follows that, in my view, the court a quo came to the correct
conclusion with regard to the legal question posed in the stated case.
Accordingly the appeal is dismissed with costs, including the costs of two
counsel.

21Cf Burg Trailers supra loc cit; Volkskas Bank Bpk v Bankorp Bpk (h/a Trust Bank en ’n Ander)
1991 (3) SA 605 (A) at 611E–F.
22Para 16.1.

______________________
B M GRIESEL
ACTING JUDGE OF APPEAL

APPEARANCES:
COUNSEL FOR APPELLANT:  J.G. Wasserman SC; H.J. Smith
INSTRUCTED BY:                     Cliffe Dekker Inc; Johannesburg
CORRESPONDENT:                   Webbers; Bloemfontein
COUNSEL FOR RESPONDENT:   J.J. Brett SC; N. Jagga
INSTRUCTED BY:
David Kotzen Attorneys; Johannesburg
CORRESPONDENT:
Lovius Block Attorneys; Bloemfontein
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal

Date:
27 November 2008

Status:
Immediate

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

NEDBANK LIMITED v JOSE MANUEL PESTANA

The respondent, Mr Jose Manuel Pestana, conducted a current account at the
Carletonville branch of the appellant, Nedbank. A different Mr J M Pestana
(Pestana) conducted a similar account at the same branch. On 4 February 2004,
Pestana instructed the branch to transfer R480 000 from his account to the account
of the respondent. The bank duly complied with this instruction and credited the
respondent’s account. Unbeknown to the bank official at the branch who effected the
transfer, Nedbank had earlier that same day received an instruction from SARS,
informing the bank that Pestana owed SARS some R340 million. Nedbank was
accordingly appointed as agent for Pestana in terms of sec 99 of the Income Tax Act
58 of 1962 and was instructed to pay to SARS the amount standing to the credit of
Pestana. The bank accordingly reversed the credit in the respondent’s account
without authority from the respondent and paid the money to SARS.

The respondent sued Nedbank in the Johannesburg High Court for payment of the
amount of R 480 000, but the claim was dismissed by the court of first instance. On
appeal to the full court in Johannesburg, the claim succeeded. On further appeal to
the Supreme Court of Appeal, the court agreed with the full court that payment to the
respondent had taken place. Furthermore, there was no evidence before the court to
indicate that the payment was conditional or that there was anything improper about
the instruction by Pestana to the bank to transfer the money to the account of the
respondent.

The SCA accordingly dismissed the appeal and ordered Nedbank to pay the costs of
the respondent, including the costs of two counsel.