THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No:   629/2011
In the matter between:

ABSA BANK LIMITED
APPELLANT

and

LOMBARD INSURANCE COMPANY LIMITED
RESPONDENT

Case No:   684/2011
In the matter between:

FIRSTRAND BANK LIMITED
APPELLANT

and

LOMBARD INSURANCE COMPANY LIMITED
RESPONDENT

Neutral citation:
ABSA and FIRSTRAND v LOMBARD INSURANCE (629/2011 and
684/2011) [2012] ZASCA 139 (28 September 2012)
Coram:
Mthiyane DP, Cloete, Malan, Pillay and Petse JJA
Heard:
13 September 2012
Delivered:
28 September 2012

Summary:
Recovery of stolen money – stolen money paid into thief’s
account – whether debts on overdraft, credit card account and
home loan extinguished – whether banks holding the accounts
enriched – suum recipit.

ORDER

On appeal from: the South Gauteng High Court, Johannesburg (P A Meyer J sitting as
court of first instance):

(1) The appeal of the appellant in case 684/2011 is upheld with costs.
(2) The order of the court below is replaced with the following:
‘The application against the first respondent is dismissed with
costs.’

(1) The appeal of the appellant in case 629/2011 is upheld with costs
including the costs of two counsel save that the appellant is ordered to
pay the respondent’s costs up to the time of filing of the appellant’s
heads of argument.

(2) The order of the court below is replaced with the following:
‘The second respondent is ordered to pay to the applicant the sum
of R573 346,66 together with the interest that in fact accrued
thereon until the date of payment and costs of suit.’

__________________________________________________________________

JUDGMENT

Malan JA (Mthiyane DP, Cloete, Pillay and Petse JJA concurring):

[1] These are two appeals against the judgment and order of Meyer J in the
South Gauteng High Court, Johannesburg granting an application for the payment of
money stolen from the respondent’s bank account and transferred to accounts held
by the thief with the two appellants. The appeals are with the leave of this court.

[2] The central figure in this matter is Ms Manickum. She was employed by the
respondent, Lombard Insurance, as a financial accountant in its finance department.
She was, as it was said, the ‘second-in-command’. She had cheque accounts with
both ABSA and FNB, the two appellants in this appeal. In addition, she had a home
loan and a credit card account with FNB as well as a credit card account with ABSA.
Most, if not all, of these accounts were in debit at the time of these events.

[3] Lombard Insurance is a short-term insurer and licensed financial services and
credit provider. Its principal business is the provision of guarantees to customers
guaranteeing the latter’s performance of their contractual obligations to third parties.
As security for issuing a guarantee Lombard Insurance would hold a cash deposit
from its customer. These deposits are repayable once the guarantee has served its
purpose and there are no outstanding amounts due by the customer to Lombard. In
order to obtain repayment of the deposits a customer would in writing request

Lombard Insurance to effect payment by means of an electronic transfer of the
amount due into the customer’s account.

[4] Ms Manickum, heavily indebted, could not resist the temptation to forge a
letter purporting to be a request by a customer of Lombard’s for repayment of cash
deposited as security. The customer never made the request and was quite unaware
of it at the time. Ms Manickum prepared the required forms for the electronic transfer
for signature by the authorised officials of Lombard Insurance. They were duly
signed and the funds transferred by Lombard Insurance’s bank and from its account,
not to the innocent customer’s account, but to the current account of Ms Manickum
at FNB. Some R2 114 947,44 was credited to her current account on 2 August 2007.
The existing debit balance of R57 013,42 was extinguished and converted into a
credit balance of R2 057 934,02.

[5] Not satisfied with this windfall on her current account, Ms Manickum on 3 and
4 August 2007 made a number of further transfers from her FNB current account.
She transferred R1 million to her home loan account thereby reducing the amount
owing to FNB; and R100 000 to her FNB credit card account extinguishing the debit
of R39 775,74 and leaving a credit balance of R60 224,26.

[6] She also favoured ABSA with her generosity. On the same two days she
transferred R400 000 from her FNB current account to her ABSA current account
thereby wiping out a debit balance of R47 440,68 on the latter account and
converting it into a credit of R352 559,32. This amount was subsequently transferred
to an ABSA account held in the name of the trustees of Ms Manickum’s and her

husband’s insolvent estate. A further R150 000 was paid into her ABSA account.  At
the time the theft was detected and Ms Manickum’s accounts frozen, a credit of
R220 392,21 remained in her ABSA current account. This amount was also
transferred to an ABSA account held in the name of the trustees of her and her
husband’s insolvent estate. Her ABSA credit card debt of R43 275,53 was
discharged by a transfer of R50 000 from her ABSA current account leaving it in
credit in an amount of R6 724,47. A number of other transfers were also made from
both her FNB and ABSA accounts but they need not detain us. She also continued
using her credit cards with both banks depleting whatever credit balances remained
on them.

[7] Lombard Insurance sought payment from FNB of the sum of R1 096 789,16
which is made up of R57 013,42 used to extinguish Manickum’s indebtedness on her
FNB current account; R1 000 000 used to reduce her indebtedness on her home
loan account; and R39 775,74 used to extinguish her indebtedness with FNB on her
credit card account. The remedy relied upon is the condictio ob turpem vel iniustam
causam. Lombard Insurance did not seek payment of the credit balance which stood
to the credit of Ms Manickum’s current account with FNB but which was transferred
to ABSA and held by it on behalf of the trustees in the insolvent estate of Ms
Manickum and her husband.

[8] Lombard Insurance sought to recover from ABSA the amounts of R47 440,68
credited to Ms Manickum’s overdraft and R43 275,53 in respect of the debit balance
on her ABSA credit card account after transfer of R50 000 into it (ie a total of
R90 716,21); and the said R220 392,21 as well as the R352 954,45 referred to.

[9] The appellants sought leave to appeal against the whole of the judgment of
the court below. In its heads, however, ABSA conceded that the court below was
correct in so far as it ordered the return of that part of the stolen funds that left the
thief’s accounts with credit balances. The appeal by ABSA relates solely to the
amount of R90 716,21 which is the total of the amounts of R47 440,21 (being the
amount of her overdraft settled by the payments into her ABSA current account) and
R43 275,53 (being the debit balance on her ABSA credit card account settled by the
payment credited to it). The appeal by FNB is concerned with its liability to restore
moneys paid to it and which were used to discharge the debit balances on Ms
Manickum’s account. The appeals are thus concerned with the question whether
receipt of the stolen funds by the appellant banks operated as a discharge of Ms
Manickum’s respective debts to them.

[10] In upholding the application Meyer J said as follows:
‘Neither FNB nor ABSA has succeeded in establishing that either of them was not in the end
enriched by the amounts which are presently claimed from them. Neither bank has set up
facts that, had either sued Manickum, she could have been heard to say that her FNB or
ABSA overdraft accounts had been extinguished or that her FNB home loan account had
been reduced as a result of the payments. Manickum, on the accepted or undisputed facts,
came to the money by way of fraud or theft and she had no entitlement to the amounts
credited to her various FNB and ABSA accounts that are presently in issue. The credits
under consideration may validly be reversed by FNB and by ABSA, whether or not they
reduced or extinguished debit balances or brought about or increased credit balances. The
joint trustees to Manickum’s insolvent estate did not acquire any greater right to the funds
that were credited to the ABSA insolvent estate accounts than Manickum ever had, and she

had none. The right to the funds does not form part of the insolvent estate of Manickum and
that of her husband. No one other than Lombard has been shown to be entitled to these
funds. The credits to the ABSA insolvent estate accounts may be validly reversed by ABSA.’
(My emphasis.)

[11] The judgment thus raises important questions concerning payment and in
particular the question whether payment by Ms Manickum of her debts with stolen
funds discharges them. It was argued on behalf of Lombard Insurance that, because
a bank may, generally, reverse a credit entry made in respect of a stolen cheque
deposited or stolen money paid into an account, the bank may do so whether or not
the proceeds of the cheque or the money paid was accepted in discharge of a debt
owing by the customer (the thief) to the bank. It was contended that, following the
cases of First National Bank of Southern Africa Ltd v Perry NO1 and Nissan South
Africa (Pty) Ltd v Marnitz NO,2 a development in our law had taken place in terms of
which a bank which has credited a thief’s account with the proceeds of stolen money
is liable to the owner of the money because it has no obligation to account to its
customer (the thief having no enforceable claim against the bank). The bank, so the
argument went, is obliged to repay the whole amount of the stolen money credited to
the thief’s account because it is enriched by its receipt also where and to the extent
to which the whole or part of the stolen funds is used to discharge the thief’s
indebtedness to the bank. To my mind, too much has been read into these
judgments and they do not justify the conclusion advanced. In fact, a proper reading
of them establishes the contrary. Perry’s case is not support for the conclusion that
the bank crediting the thief’s account with the amount of stolen money is obliged to

1First National Bank of Southern Africa Ltd v Perry NO & others 2001 (3) SA 960 (SCA).
2Nissan South Africa (Pty) Ltd v Marnitz NO & others (Stand 186 Aeroport (Pty) Ltd Intervening) 2005
(1) SA 441 (SCA).

restore the whole of the amount to the owner. It is correct that the condictio ob
turpem vel iniustam causam is available against a possessor of stolen property who
acquired it with knowledge of the theft and also against the possessor who becomes
aware of it at a later stage.3 But, and this is decisive:
‘It is not only the person who receives with knowledge of illegality but also one who learns of
it while he is still in possession. This does not mean that he is treated as liable for a delict as,
among other things, his liability is limited to his enrichment, that is if he is enriched at all.’4
The court simply did not deal with the question whether any debt owed by the thief to
the bank, such as an amount on overdraft, was discharged by the bank’s crediting
the account. Moreover, Perry was decided on exception. The question in that case
was whether prima facie Nedbank had been enriched to the extent that the stolen
funds received were used to repay the overdraft. No view was expressed on this
question. The court expressly stated that ‘non-enrichment is a matter of defence and
is something yet to be fought out between FNB and Nedbank.’5

[12] The conclusion that the overdraft is discharged by receipt of the stolen funds
is supported by ABSA Bank Ltd v Intensive Air (Pty) Ltd & others:6
‘Had the company’s money been stolen, and had the thief paid off his overdraft with the
stolen money, the company would have no claim for repayment thereof against the bank …
but would, of course, have had a claim against the thief and a possible enrichment action
against anyone who knowingly received or retained the stolen money.’

3Perry paras 24 and 25.
4 Id para 25.
5 Id para 34.
6 2011 (2) SA 275 (SCA) para 22. I need not concern myself with the question whether the reference
to Perry’s case in this passage supports the text. The text is quite clear.

[13] I fail to see how the judgment in ABSA Bank Ltd v Standard Bank of SA Ltd7
advances the contentions of Lombard Insurance. In that case a forged cheque drawn
on Standard Bank was deposited to the credit of an overdrawn account of one Horn
with ABSA leaving a credit balance on the account. A week later Standard Bank
alerted ABSA to the forgery and ABSA froze the account. Standard Bank claimed the
funds used to extinguish the overdraft. Its claim was dismissed on the basis that the
credit that was made was provisional and never became final.8 The implication is
that had the payment been final the result would have been different. This is borne
out by the following statement:9
‘It is true that a collecting bank presents a cheque to the drawee bank on behalf of the
former’s customer, the payee, but once the amount in question is effectively credited to the
payee’s account there is no longer a question of an agency relationship. The collecting bank
then holds the proceeds in its own right. If the account was in credit, the collecting bank
becomes the debtor of the payee to the extent of the increased credit. And, if the account
was overdrawn, the payee’s indebtedness to the collecting bank is extinguished or reduced.’

[14] Nor does Nissan’s case support counsel’s argument. That case was
concerned with credit balances on accounts and not with an overdraft. The court
there found that a bank which credited its customer’s account is not liable to pay the
amount to the customer if the customer came to the money by theft or fraud. In that
case the customer knew that it was not entitled to the money credited to its account.

7 1998 (1) SA 242 (SCA).
8 Id at 252 C-D.
9 Id a 251F-G. There is no evidence in the present case concerning any applicable clearing rule
governing electronic funds transfers. The credit effected by means of an electronic funds transfer
seems to be immediate. See Take and Save Trading CC & others v Standard Bank of SA Ltd 2004
(4) SA 1 (SCA). No question of the countermand of an electronic payment instruction arises in the
present case. See W G Schulze ‘Countermanding an Electronic Funds Transfer: The Supreme Court
of Appeal Takes a Second Bite at the Cherry’ (2004) 16 SA Merc LJ 667.

Its appropriation of it subsequently amounted to theft. As far as the credit balance
remaining on the account was concerned the court said the following:
‘I agree … that our law would be deficient if it did not provide a remedy for recovery of stolen
money direct from the bank which received that money to the credit of the thief’s account, for
as long as the amount stands to the credit of the thief.’10
The implication is that the amount standing to the thief’s credit may be recovered by
condiction, but not the amount that discharged a debt owed by the thief to the bank.
Nissan was concerned with a credit balance on the perpetrator’s account. The bank
had no duty to account to its customer. Nor did the customer have a contractual or
other right to the stolen funds. The bank, by remaining in possession of the funds
without any corresponding liability to account to its customer, was enriched and
liable to make restitution to the owner.11 Generally, where a customer deposits
money in his account the customer becomes entitled to repayment but this is so only
where the instruction given to the bank to collect or pay on his account pursuant to
the general bank and customer contract is enforceable, not where it is contra bonos
mores.12 The effect of Nissan is that where a thief deposits stolen money into his
account any instruction disposing of the funds is unenforceable. Hence, there is no
obligation on the bank to account to the customer. Consequently, the bank retaining
the funds could well be enriched because it is not liable to account to its customer,
but retains the funds. The account holder, well knowing that he is not entitled to the
funds, would thus not have been entitled to dispose of the funds credited to his

10 Nissan para 16 and cf para 28.
11 See F R Malan and J T Pretorius ‘Credit Transfers in South African Law’ 2006 (69) THRHR 594
and 2007 (70) THRHR 1 at 15 ff; Jacques du Plessis ‘The cause of action in Nissan South Africa (Pty)
Ltd v Marnitz NO’ in H Mostert and M J de Waal (eds) ‘Essays in Honour of C G van der Merwe’
(2012) 1 at 8 and 16-17; and F R Malan, J T Pretorius and SF du Toit ‘Malan on Bills of Exchange,
Cheques and Promissory Notes in South African Law’ 5 ed (2009) at 348-350.
12 Cf Nedcor Bank Ltd v ABSA Bank Ltd & another 1995 (4) SA 727 (W) at 730E–F.

account because any act of disposition would have been tantamount to theft13 and,
moreover, because he never acquired a right against his bank to claim the funds, the
mere credit entry on its account not having any material effect.14 But it must be
emphasised that Nissan dealt with an account in credit.

[15] Nor does Nedbank Ltd v Pestana15 add to Lombard Insurance’s case. The
court there stated, quite correctly:
‘[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. Some examples where a credit may be validly reversed by a bank were mentioned
by Zulman JA in Oneanate:16
“[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 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”;
or where the client came by the money by way of fraud or theft; or where a wrong account
was erroneously credited. Absent some legitimate reason for reversal, however, the general

13See Nissan para 24.
14 See para 15 below.
15 2009 (2) SA 189 (SCA).
16Standard Bank of South Africa Ltd v Oneanate Investments (Pty) Ltd (in Liquidation) 1998 (1) SA
811 (SCA) at 823B and see Burg Trailers SA (Pty) Ltd & another v ABSA Bank Ltd & others 2004 (1)
(SA) 284 (SCA) para 9.

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.’
The issue in the present case was simply not addressed in Pestana.

[16] The basis on which ABSA and FNB resist the claims against them can loosely
be termed the defence of suum recipit. It is based on the principle described in D
12.6.44 where it was said:17 ‘Repetitio nulla est ab eo qui suum recipit, tametsi ab
alio quam vero debitore solutum est’  or ‘there is no restitution from him who received
what is due to him even though it was given as payment by someone other than the
true debtor’. Its operation is described as follows by Niall R Whitty:18
‘The concept of “enrichment” … is ambiguous. It can be loosely used to mean receipt of a
benefit in money or money’s worth. Such a receipt does not necessarily enrich the recipient.
A creditor is not enriched merely because a debt of £100 owed to him is discharged by
payment. Immediately before the payment, he had a personal right of action or book asset
worth £100. Immediately after the payment, the book asset is extinguished but he has £100
in cash. One form of wealth is replaced by another of equal value: suum recipit. For the
same reason, the debtor suffers no loss by making the payment. In such a case, it is
sometimes said that the recipient is “enriched” (lucratus) but justifiably, the justification being
his entitlement to the benefit. This usage seems incorrect.’

17See Jacques du Plessis The South African Law of Unjustified Enrichment (2012) at 153 fn 394 and
see Robin Evans-Jones ‘Unjustified Enrichment vol I: Enrichment by Deliberate Conferral: Condictio’
(2003) paras 7.22 and 8.53 and Niall R Whitty ‘The Edinburgh Seminars on Unjustified Enrichment
(LLB Honours) offered in the School of Law at the University of Edinburgh’  (2006-2007) at 45.
18Niall R Whitty ‘Indirect Enrichment in Scots Law’ 1994 Juridical Review 200 at 203 (and ‘Indirect
Enrichment in Scots Law: Part II’ 1994 Juridical Review 239). See B & H Engineering v First National
Bank of SA Ltd 1995 (2) SA 279 (A) at 285C-E and Nedcor Bank Ltd v ABSA Bank & another 1995
(4) SA 727 (W) at 730C-D.

[17] An example illustrating the suum recipit principle is found in Commissioner for
Inland Revenue v Visser.19 In that case a fraudster represented that a cheque signed
by Visser in favour of the Commissioner was intended to serve as payment for the
debt of a third person. It was held that that debt had been paid since payment was
made in the name of the third person. Visser was not allowed to recover the amount
paid which served to discharge the debt of the third person.20 Voet21 made it clear
where he stated that–
‘[t]his power of vindicating stolen property from a third party possessing in good faith fails
nevertheless when stolen money has been paid by a thief to a creditor of his who receives it
in good faith, or has been counted out by way of price for a thing sold, and has been either
used up or mixed with other money; for cash is regarded as used up by the latter process;
moreover cash of another which has been used up in good faith by a creditor can neither be
vindicated nor claimed in a personal action.’
Elsewhere Voet stated:22
‘Generally if a person has paid what he did not himself owe but another owed, then if indeed
he paid in his own name as though he were himself the debtor, he rightfully employs this
action. But if he paid in the name of the debtor this action falls away and the debtor will have
release from the creditor, who has gotten back his own; and the debtor will start to be bound

191959 (1) SA 452 (A).
20See also John Bell & Co v Esselen 1954 (1) SA 147 (A). Cf B & H Engineering v First National Bank
of SA Ltd 1995 (2) SA 279 (A) at 291F-G and First National Bank of Southern Africa Ltd v East Coast
Design CC & others 2000 (4) SA 137 (D) at 141-2. See J C Stassen and A N Oelofse ‘Terugvordering
van Foutiewe Wisselbetalings: Geen Verrykingsaanspreeklikheid sonder Verryking nie’ (1983) 4
Modern Business Law 137 at 143 and 145; Jacques du Plessis Unjustified Enrichment at 242 and
Daniel Visser Unjustified Enrichment at 354 ff. See, however, Catherine Joy Maxwell Aspects of Multi-
party Enrichment in South African Law – A Comparison with German Law (unpublished LLD thesis,
University of Cape Town) (2006) at 302 ff.
21The Selective Voet being the Commentary on the Pandects translated by Percival Gane 6.1.8. See
the discussion of Stassen and Oelofse ‘Terugvordering van Foutiewe Wisselbetalings’ at 139-140 and
also Lord Patrick Grant Elchies Annotations on Lord Stair’s Institutions of the Law of Scotland (1824)
para 1.7.9 at 39 ff.
22 12.6.9. Voet 12.7.2 stated that an action for the recovery of what was paid without cause lies ‘when
a third party pays money of mine to his own creditor without my consent; since certainly as regards
me my cash is in the possession of a third party without cause.’ It is suggested that in our law the
owner of the money will succeed only where the creditor received the money in the absence of a
causa retinendi or not ex causa onerosa. See First National Bank of Southern Africa Ltd v East Coast
Design CC & others 2000 (3) SA 137 (D&CLD) at 142A-D and 144A-C.

to the payor for a refund in the judicial proceeding on management of affairs or other like
proceeding.’

[18] To discharge a debt it must be paid in the name of the true debtor.23
Generally, the discharge of a debt requires an agreement between the parties to that
effect. For payment by electronic means to be effective the payee must acquire ‘the
unfettered or unrestricted right to the immediate use of the funds in question’.24 It
requires the parties to be in agreement as to the debt, whether that of the payer of
that of a third party, to be paid.25 A debt-extinguishing agreement, like any other
agreement, may be concluded expressly or tacitly, by conduct. It may or may not be
required to give notice of the acceptance of an offer to conclude a debt-extinguishing
agreement.26 In a case like the present notification of the acceptance of an offer to
enter into a debt-extinguishing agreement would be impractical and superfluous.
Acceptance is evidenced by the corresponding credit and its non-reversal. A debt-
extinguishing agreement may, like any other agreement, not be contra bonos mores.
It will be invalid where both parties know that the debt will be discharged with stolen
money. This conclusion hardly requires authority. But none of the authorities referred
to above suggest that the same result would follow where the creditor is in good faith
and unaware of the fact that the debt is to be discharged with stolen funds.27 Any
suggestion that the validity of the payment may be questioned for this reason would
lead to series of payment transactions being declared invalid ex post facto after
discovery of the theft. Nor is it required that the law be developed further. The

23Scottish Law Commission Recovery of Benefits Conferred under Error of Law Discussion Paper 95
(1993) para 2.175.
24Vereins- und Westbank AG v Veren Investments & others 2002 (4) SA 421 (SCA) paras 11 and 12.
25B & H Engineering at 287A.
26 See R H Christie and G B Bradfield Christie’s The Law of Contract in South Africa 6 ed (2011) at
71-2.
27Christie The Law of Contract in South Africa at 399-401 and see Ericsen v Germie Motors (Edms)
Bpk 1986 (4) SA 67 (A).

common law has already been developed to impose a duty of care on a collecting
bank.28 Extensive legislation aimed at the prevention of money laundering applies to
banks.29 Any further development along the lines suggested on behalf of Lombard
Insurance which, to my mind, is neither necessary nor desirable, should be by way of
legislation.

[19] There seems to be no doubt that Ms Manickum, both when she caused the
fraudulent transfer from Lombard Insurance’s account to her FNB current account
and also when she made the other transfers from the latter account, intended to
discharge or partially discharge her indebtedness to FNB on her credit card and
bond accounts and her indebtedness to ABSA on her current and credit card
accounts. As a matter of fact this is the only inference that can be drawn from her
conduct. But, moreover, the relationship between a bank and its customer is one of
debtor and creditor in terms of which the bank becomes entitled to funds deposited
in the customer’s account and obliged to receive and collect payments on the
account and to give effect to his payment instructions.30 Payments made into the
customer’s account extinguish any debit on it. As it was stated in ABSA Bank Ltd v
Standard Bank of SA Ltd:31
‘When a customer pays a cash amount equal to the debit balance of his overdrawn account
into that account, there is no question of set-off operating. He simply pays the amount owing
to the bank. The position is no different if the customer deposits a cheque drawn on another

28 See Indac Electronics (Pty) Ltd v Volkskas Bank Ltd 1992 (1) SA 783 (A); Columbus Joint Venture
v ABSA Bank Ltd 2002 (1) SA 90 (SCA).
29 See ss 4 and 5 of the Prevention of Organised Crime Act 121 of 1998. See further regulations 47
and 50 of the  Banks Act: Regulations, GN R1033, GG 34838, 15 December 2011; Chapter 3 of the
Financial Intelligence Centre Act 38 of 2001.
30See eg Kearney NO v Standard Bank of South Africa Ltd 1961 (2) SA 647 (T) at 650 and Muller NO
& another v Community Medical Aid Scheme 2012 (2) SA 286 (SCA) para 13.
311998 (1) SA 242 (SCA) at 251G-H.

bank into his account. If his bank collects payment and effectively credits his account, the
debt is likewise paid (or partially paid).’
It matters not that the payments in the present case were made by electronic
transfer. A bank is obliged to accept payments on a customer’s account whether
made in cash or by cheque or by money transfer. Nor does it matter whether the
account was a current, credit card or mortgage loan account, because there is no
contractual restriction on such payments on any of these accounts . When the funds
were transferred into Ms Manickum’s accounts when they were in debit and at a time
when the banks had no knowledge of their theft, the latter were in the same position
as any other creditor and were entitled to appropriate the funds transferred to
extinguish the debts. The legal effect of an electronic funds transfer is that no
physical money changes hands but that the account holder obtains a claim against
his bank for the credit on the account.32 Where the effect of the transfer is that there
is no credit because the entire amount transferred was used to extinguish the debt
on the account, the customer acquires no claim against his bank. However, he is
enriched to the extent that the debt to the bank is no longer due. It follows that it was
Ms Manickum who was enriched when the debit balances on her accounts were
extinguished.

[20] It follows that Lombard Insurance’s claim for the amount of the stolen funds
used to discharge the debit balances on Ms Manickum’s accounts with FNB and
ABSA must fail.

[21] In the result the following order is made:

32 Cf Roestof v Cliffe Dekker Hofmeyr Inc (34306/2010) [2011] ZAGPPHC 219 (2012) paras 47 and
50; Muller NO & another v Community Aid Scheme para 13. See Malan, Pretorius and Du Toit Bills of
Exchange para 202 at 276.

(1) The appeal of the appellant in case 684/2011 is upheld with costs.
(2) The order of the court below is replaced with the following:
‘The application against the first respondent is dismissed with
costs.’

(1) The appeal of the appellant in case 629/2011 is upheld with costs
including the costs of two counsel save that the appellant is ordered to
pay the respondent’s costs up to the time of filing of the appellant’s
heads of argument.
(2) The order of the court below is replaced with the following:
‘The second respondent is ordered to pay to the applicant the sum
of R573 346,66 together with the interest that in fact accrued
thereon until the date of payment and costs of suit.’

__________
F R Malan
Judge of Appeal

APPEARANCES:

For  Appellant:

André Gautschi SC
Case No 629/2011

Lara Grenfell

Instructed by:

Lowndes Dlamini

Johannesburg

Matsepes

Bloemfontein

For  Appellant:

L Meintjies
Case No 684/2011

Instructed by:

Rorich Wolmarans & Luderitz Inc

Johannesburg

Symington & De Kok

Bloemfontein

For  Respondent:

Alan Dodson SC
Case No 629/2011
Case No 684/2011

Instructed by:

Frese Moll & Partners

Johannesburg

Webbers

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:
28 September 2012

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.

ABSA and FIRSTRAND v LOMBARD INSURANCE

The Supreme Court of Appeal today upheld appeals from two banks against the judgment
and order of PA Meyer J in the South Gauteng High Court ordering them to repay stolen
monies which were paid into accounts with the two banks and used to discharge the debit
balances on the accounts reflecting the amounts owed by the thief to the banks. The banks,
the SCA held, were not enriched by these payments which were accepted by the banks on
these accounts in discharge of the amounts owing. The court based its decision on the
common law maxim suum recipit. This means that there can be no enrichment where what is
received by a creditor was in deed owing to him. His nett position remains the same.