THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

Case no:  433/2000
REPORTABLE

In the matter between:

VEREINS-UND WESTBANK AG

Appellant

and

VEREN INVESTMENTS

First respondent

IRVINE INTERNATIONAL TRADE
FINANCE (PTY) LTD

Second respondent

LESLIE COHEN NO

Third respondent

Before:
Nienaber, Streicher, Cameron and Mthiyane JJA
and Heher AJA
Appeal heard:   Tuesday 5 March 2002
Judgment:
Tuesday 2 April 2002

Payment – Method of discharging debt – Subsequent approval of
creditor critical in validating even a method of payment that debtor
may unilaterally have chosen

JUDGMENT

_______________________________________________________

CAMERON JA:

[1] On 27 February 1991 Nedcor Bank Ltd (as it is now known) (‘the
local bank’) issued a letter of credit for $434 782,61 in United
States currency in favour of a German supplier in Hamburg, Boli
GMBH (‘the German supplier’).  The letter of credit stated that it
was available after 360 days with a German bank, which is the
present appellant (‘the German bank’).  The local bank issued the
letter of credit on the application of South African buyers, whose
ultimate interests are represented in this appeal by the three
respondents.  It is unnecessary to detail their involvement, and for
convenience I refer to all of them as ‘the South African buyers’.
The South African buyers supplied, and the local bank still holds,
the then Rand equivalent of the dollar drawing (R1 119 356,60).

[2] In March 1991, shortly after the letter of credit was issued, the
German supplier entered into a transaction with the German bank
in terms of which the latter paid it a discounted amount on the
letter of credit.  The German bank did so on the basis of
commercial invoices and a forwarder’s bill of lading that purported
to conform with the documentation itemised in the letter of credit.
These documents it forwarded to the local bank.  Later it placed
on record with the local bank that it expected payment of $434
782,61 on 22 February 1992 (the due date for payment).

[3] By the time the due date arose, however, a dispute had arisen
about the shipment of the goods.  The South African buyers

contended that the documentation was forged, that the goods had
never been shipped, and that the local bank was neither entitled
nor obliged to pay out on the letter of credit.   The German bank
contended that despite these assertions it was entitled to
payment.  The local bank sought a direction from the South
African Reserve Bank (SARB), which ruled that the funds ‘must
be paid into an account blocked in terms of Regulation 4(2) of the
Exchange Control Regulations1 until such time as the matter has
been clarified satisfactorily’.

[4] This the local bank did.  On 24 February 1992 it informed the
German bank that ‘We have credited the amount of USD 434
782,61 into a blocked account in your good bank’s name being in
terms of the SA Reserve Bank directives and in settlement of our
obligation under this letter of credit.  Please be guided
accordingly.’  The local bank also sent the German bank a ‘credit
transaction advice’ notifying it that ‘We have credited your
currency account as follows:  Drawing under letter of credit
862241/08/91 Value ben[eficiary]: Boli GMBH.  USD 434 782,61’.

[5] There matters remained for some eight weeks, until the SARB
informed the local bank that the funds had been unblocked.  On

1 Exchange Control Regulations in terms of the Currency and Exchanges Act 9 of 1933
(Government Notice R1111, Government Gazette Extraordinary 123 of 1 December 1961, as
subsequently amended).  Regulation 4 deals with ‘Blocked Accounts’.  Reg 4(2) provides that
whenever a person in the Republic is under a legal obligation to make a payment to a person
outside the Republic but is precluded from effecting the payment as a result of any restrictions
imposed by or under the regulations, ‘the Treasury may order such person to make the payment
to a blocked account’.

28 April, the local bank advised the German bank of this, but also
informed it that a High Court application was pending to prevent it
from releasing the funds.  Within hours of the account being
unblocked, the South African buyers obtained before Schutz J in
the Johannesburg High Court an interim order attaching the sum
of R1 119 356,80 plus interest in the hands of the local bank.  The
order interdicted the local bank from dealing with the amount and
directed that it be paid into a special interest-bearing account
pending an action by the South African buyers against the
German supplier, the German bank and the local bank.  The local
bank thereupon transferred the amount into an account in the
name of the Sheriff of the Court.  The trial action envisaged before
Schutz J was launched; its outcome is still pending.  The local
bank at a later stage closed the Sheriff’s account and transferred
the money into an ‘interdicted’ account in the German bank’s
name.  That is still the position

[6] On the extended return day of the rule nisi, in November 1992,
Goldblatt J after hearing argument discharged the orders Schutz J
had granted, but substituted in their place the following:
‘In the event and to the extent that [the local bank] has not yet discharged all of its
obligations in terms of the letter of credit 862241/08/91 it is hereby interdicted from
discharging such obligations pending the final determination of the action [by the South
African buyers].’

[7] The German bank thereupon instituted the present proceedings.
In them, it seeks to isolate from the outcome of the pending trial
action the fate of the money the local bank paid into the account

in its name on 24 February 1992.  It does so by claiming a
declaratory order based on what it contends is the proper
interpretation of Goldblatt J’s order.  It seeks a declaration that the
local bank ‘has discharged its obligations in terms of the letter of
credit’, and an order that it pay the sum of US $434 782,61 to it.
The local bank, though cited as first respondent in the
proceedings, did not defend them and was not a party to the
appeal either to the Full Court or to this Court.

[8] Marais J heard the German bank’s application in October 1993.
He dismissed it.  He held that while the local bank’s intention had
been to effect payment to the German bank and to discharge its
obligations in terms of the letter of credit, it was necessary for the
German bank expressly or tacitly to accept the unilateral payment
into the account created in its name, and to communicate this to
the local bank.  This had not been properly established on the
affidavits.  In granting leave to appeal to the Full Court in February
1994, however, Marais J noted that affidavit evidence in the
interim proceedings before Goldblatt J purporting to establish
such acceptance, which the parties had agreed could be treated
as evidence before him, had not been relied on nor drawn to his
attention.

[9] The matter first came on appeal before the Full Court in April
1997, and was eventually disposed of in May 2000, when the
German bank’s appeal was dismissed.  Stegmann J (Schabort
and Labuschagne JJ concurring) held that anterior to the question

whether the local bank had discharged its obligations under the
letter of credit was the question whether it had any such
obligations.  The Full Court therefore focussed on the local bank’s
liability under the letter of credit in terms of international trade law.
It held that fraud on the part of the German supplier had been
sufficiently established so as to exonerate the local bank from any
liability under the letter of credit.  There could therefore be no
question of its having ‘discharged’ any obligation on 22 February
1992, and consequently no payment had been effected.  The
letter of credit was moreover not intended to be negotiable in the
sense of conferring on the German bank a better title than the
party to the alleged fraud, the German supplier.  The appeal was
therefore dismissed.  In September 2000 this Court granted the
German bank’s petition for special leave for a further appeal.2

[10] Before this Court the German bank’s principal argument was
that the local bank had made an effective payment by depositing
the funds into an account in its name.  Mr Wallis, who appeared at
the hearing, sought to locate this argument in a reading of the
Exchange Control Regulations (‘the regulations’).  I have some
doubt whether the solution lies in their application, but on the view
I take it is not necessary to decide the effect of the regulations.
Mr Wallis also did not persist in seeking a declaration that the
local bank had discharged its obligations under the letter of credit,
conceding that it was unnecessary to the main thrust of the relief
the German bank sought.  For reasons that will appear, this

2 In terms of section 20(4)(a) of the Supreme Court Act, 59 of 1959.

course was in my view wise, since the local bank’s obligations,
and the German bank’s entitlements, under the letter of credit are
best decided in conjunction with the other matters to be
determined at the trial action pending between the parties.   What
is at issue before this Court therefore is solely the German bank’s
entitlement, as between it and the local bank, to the money
credited to an account in its name in February 1992.

[11] The local bank’s act, at the behest of the SARB, in unilaterally
creating an account in the name of the German bank, and
crediting it with the dollar amount at issue, clearly did not by itself
effect payment to the German bank.  This is for two reasons.
First, the established view is that payment is a bilateral act which,
in the absence of contrary agreement, requires the cooperation of
debtor and creditor.3  The second is that the account was blocked
under the regulations.  The payment accordingly did not place the
dollar amount at the disposal of the German bank.  In other
words, the German bank did not gain the untrammelled power to
dispose immediately, as cash in its hands, of the funds
transferred.  There is no specifically South African authority for
this second proposition, but it accords with common sense that for
effective payment to occur the payee must in the absence of
contrary agreement acquire ‘the unfettered or unrestricted right to
the immediate use of the funds in question’;4 otherwise the
payment is inchoate.

3 Volkskas Bank Bpk v Bankorp Bpk (h/a Trust Bank) 1991 (3) SA 605 (A) 612C-D (Hefer JA).
4 A/S Awilco v Fulvia SpA Di Navigazione (The Chikuma) [1981] 1 All ER 652 (HL) 656d-657g,

[12] Did these two features of the local bank’s conduct, in
unilaterally creating an account to which the German bank did not
have access, prevent its actions from constituting a payment to
the German bank?  The answer depends on whether the German
bank’s response was sufficient to convert a unilateral and
inchoate payment into effective payment.  Though the general
rule is that the means of payment must be determined by
agreement between the payer and payee, it is clear that unilateral
conduct on the part of the debtor in purporting to effect payment, if
subsequently accepted by the creditor, is effective to discharge
the debt.  Thus should the debtor unilaterally pay a stranger to the
contract, if the creditor later ratifies and approves the action, this
constitutes a valid payment, and is considered valid from the
moment of payment (and not from the moment of ratification and
approval).5

[1] [1981] 1 WLR 314 at 320, per Lord Bridge.
5 Wessels’ Law of Contract in South Africa 2ed (1951) by AA Roberts vol II para 2206, invoking
Pothier Treatise on the Law of Obligations or Contracts para 492 (‘A payment to a person who
has neither quality nor power to receive, becomes valid, … by a subsequent ratification and
approbation by the creditor … Ratifications, having a retrospective effect, according to the rule
ratihabitio mandato comparatur, … the payment is regarded as valid from the time of making it.
Therefore, if a person engages as surety for my debtor, with a condition that his engagement
shall continue no longer than the 1st of January 1750, at the end of which time he shall be pleno
iure discharged and acquitted; the payment by him in the course of the year 1749, to a person
who had no power from me will be valid and he will have no right to demand a repetition, although
I did not ratify the payment till 1750, the time in which he would have ceased being my debtor if
he had not paid; for by the retrospective effect of my ratification, the payment becomes valid, from
the day on which it was made;  and it was made at a time when his obligation subsisted. …  Upon
the same principle, if I owe a hundred pounds to Peter and Paul, as creditors in solido, and I pay
that sum in the first place to a person who receives it for Peter, without any power from him, and
afterwards pay it a second time to Paul, the validity of the payment made to Paul will depend on
Peter’s ratification; the first payment will be valid, if ratified by Peter; the second void, as being
payment of a debt already discharged;  if Peter does not ratify the first, it will be void, and the
second good.’).

[13] It follows that the unilateral nature of the local bank’s conduct
cannot thwart its payment to the German bank, provided that the
German bank subsequently approved that conduct.  The same
principle must apply, in my view, to the fact that the account was
blocked.  If the German bank accepted the credit to the account
opened in its name as a payment to it, the fact that the funds were
not placed at its disposal cannot prevent a payment from being
effected.  The principle already cited applies equally: subsequent
approval is effective to validate the payment from the time when it
was originally made, even though the payee did not have access
to it.

[14] But there is a third aspect.  The local bank did not divest itself of
the dollars in question.  It did not pay a third party.  What it did
was to make an entry in its own books in favour of the German
bank.  It is well established that in our law, apart from statute, a
solitary act by someone in opening a separate bank account in
the name of another and depositing money in it does not confer
any special title on the person named.6  This is because the
person opening the account cannot by unilateral act deprive him-
or herself of title to the money.  The application of the principle is
even more evident when a bank opens a separate account in
another’s name, not with another bank, but with itself.  It was as if
the local bank had a separate safe – the very circumstance van

6 Ex parte Kelly 1942 OPD 265, per van den Heever J, applied in Dantex Investment Holdings
(Pty) Ltd v National Explosives (Pty) Ltd (in liquidation) 1990 (1) SA 736 (A) and De Freitas v
Society of Advocates of Natal and another 2001 (3) SA 750 (SCA).

den Heever envisaged in ex parte Kelly7– and placed in it a
package containing the dollars and marked with the name of the
German bank.  Its solitary act in so sequestering a portion of its
property was ineffective to confer any title on the German bank.
To this extent the South African buyers are correct in contending
that the mere fact that the local bank earmarked funds in an
account specially designated for the German bank did not
constitute an effective payment to it.

[15] The question this appeal raises, however, is whether the
German bank’s subsequent acceptance of the local bank’s
actions changes the position also in this respect.  The evidence is
the following.  The local bank created the account in the German
bank’s name in February.  In April, the order of Schutz J
interdicted it from paying out the money.   In resisting the
confirmation of that order, the German bank in June 1992 lodged
affidavits answering those filed by the South African buyers.  In
them, its vice-president and assistant general counsel made the
following averments.  (a) He denied the South African buyers’
assertion that because the funds had been blocked under the
regulations the local bank had made no payment to it.  (b) He
endorsed the local bank’s attitude, namely that it was obliged to
make payment to the German bank of the funds credited to the
account in question.  (c) He asserted that the South African
buyers had no title to the money credited to the account.  (d) He
stated that the local bank had ‘paid out’ the moneys in question to

7 1942 OPD 265 at 272.

the German bank ‘by depositing them into an account created’ in
its name.

[16] After the South African buyers filed their replying affidavits, the
German bank in August 1992 filed supplementary affidavits.  Its
vice-president again deposed to an affidavit.  He asserted that the
local bank’s conduct ‘quite clearly constituted a payment’ to the
German bank in terms of the letter of credit and that the local
bank had complied with its obligations under the letter of credit.
The South African buyers filed further affidavits in reply.
Thereafter, the German bank’s South African attorney filed an
affidavit attaching a deposition from one of the local bank’s senior
managers.  This affidavit described the general procedure of the
local bank in dealing with letters of credit.  Regarding its actions in
February, the senior manager testified as follows:
‘When the letter of credit was … submitted to [the local bank], it recognised its obligation
to pay out in terms thereof.  It performed such obligation by purchasing foreign currency
(US dollars) in the required amount and by depositing such foreign currency into a
blocked account in the name of the [German bank].’

[17] The order of Goldblatt J followed, and thereupon the present
proceedings.  In them, as already indicated, the German bank
(through the same official) asserts not only its entitlement to the
money the local bank paid into an account in its name, but claims
that the local bank is ‘obliged to pay such moneys to [the German
bank] who is its customer’.  It further claims that it was ‘entitled to
draw upon that account, in accordance with the normal
relationship between the banker and its customer’.  It asserted

that the local bank’s documents relating to the creation of the
account ‘indicate a clear intention on the part of [the local bank] to
discharge its obligations under the letter of credit in that manner,
and that has been accepted by [the German bank] as
performance by [the local bank] of its obligations under the letter
of credit’.  It goes on to state:
‘Once [the German bank’s] account was credited, the normal relationship of banker and
customer arose between [the local bank] and [the German bank] respectively in relation
to those funds, and [the local bank] was obliged to deal with those funds in accordance
with [the German bank’s] instructions (subject only to such restrictions as may have been
imposed by exchange control regulations).’

[18] In answer, the South African buyers’ affidavits stated ‘that these
submissions are not supported by the facts when one has regard
to the totality of the circumstances’, and asserted that ‘the mere
fact that an account is opened and credited does not … indicate
the creation of a normal relationship of banker and customer’ as
contended.  They also denied ‘the arrangement as alleged’ by the
German bank, and disputed that it was ‘entitled to accept what
really amounts to a self-serving interpretation of a series of
transactions where its own version is that it was not fully aware of
all the material facts and particularly of the fraud’.

[19] Whatever the parties’ differing contentions about the legal
position, the South African buyers’ averments clearly contain no
denial that as a matter of fact the German bank accepted what the
local bank had done as payment to it of the sum it claimed, and
that it did so before the order of Goldblatt J.  There was indeed no

reason for the South African buyers to deny that fact.  A senior
official, duly authorised to depose on its behalf, had conveyed the
German bank’s stance, which was that it accepted what the local
bank had done as a payment to it.  This was authoritatively
established before the interdict of Goldblatt J.  At no time before
or since then has the local bank disputed that it made payment to
the German bank or that the German bank was entitled to accept
what it had done as payment.  Any attempt by the South African
buyers to dispute these facts would have lacked a plausible
foundation.  Marais J in my respectful view therefore erred at first
instance in considering that the German bank’s acceptance of the
local bank’s payment had been insufficiently established on the
affidavits.

[20] What is the resulting position in law?  It seems to me that the
answer has been clouded by the South African buyers’
determination these long years to thwart the local bank’s
consistent assertion that it has in fact paid the German bank.  It
deserves emphasis, again, that the local bank has never retracted
the clear statements in its communications of 24 February 1992
that it had made a payment to the German bank in discharge of
the letter of credit.  A further portion of the affidavit of the local
bank’s senior manager (referred to in para 16 above) was later
retracted, but not so as to put in issue the local bank’s claim that it
had performed its obligation to the German bank by crediting the
blocked account.  Of course the local bank had its own reasons
for wishing to pay the German bank on the date the letter of credit

specified.  These emerge from its correspondence with the SARB,
where it recorded that it was –
‘in a precarious situation in that it would appear that we are legally obliged to make
payment on 22 February 1992 in terms of the letter of credit.  In addition, non-payment
would seriously affect this Bank’s long term relationship with the correspondent bank in
Germany.’

[21] The local bank’s view of its legal obligations was of concern to
the South African buyers only insofar as that might have led it to
try to debit their account.  But its commercial interest in
maintaining a good relationship with the German bank, long-term
or otherwise, was emphatically no concern of theirs at all.

[22] It is correct that in claiming payment the German bank, echoing
the formulation of Goldblatt J, sought also a declaration that the
local bank had discharged its obligations under the letter of credit.
To the extent that the grant of such a declarator may have implied
or entailed that the local bank was in consequence entitled to
debit the funds the South African buyers had provided, their
anxiety may have been understandable.  But the German bank
sought no relief directly against the South African buyers, while
against the local bank it quite clearly sought no relief in relation to
the source of the funds it claimed.  So long as it receives
payment, it is indifferent as to whether the local bank is entitled to
debit the South African buyers.  That issue stands for
determination at the trial, and as mentioned, the German bank did
not in this Court persist in seeking the declarator.  Its object was
to secure payment of the dollars from the local bank, which does

not oppose its attaining that object.  And given the attitudes that
both payer and payee have adopted, that object does not depend
on establishing as between them the validity of the causa
underlying the payment.

[23] Indeed, the local bank has conspicuously refrained from
defending or participating in the proceedings despite the German
bank’s assertion both that it has discharged its obligations under
the letter of credit and that it has thereby made an effective
payment to it.  The local bank can therefore hardly complain if the
German bank receives an order only for payment, which is less
than the sum of the relief whose grant it did not oppose at all.

[24] All this in my view enables one to see without intervening
obstruction that nothing precluded the local bank, as between it
and the German bank, from effecting a valid payment on 22
February 1992 of the dollars credited to the blocked account in
the name of the latter.  The proposition this case illustrates is that
parties to a debt-discharging transaction may agree to any means
of discharge.  The proposition it establishes is that subsequent
approval by the creditor validates any method the debtor may
unilaterally have chosen to effect the discharge, even if that
method fails to place the performance at the immediate disposal
of the creditor, and even if that method fails to sequester the
performance effectively from the debtor’s own assets.  The
proposition it underscores is that the creditor’s subsequent
approval should always be decisive.

[25] The parties to the debt-discharging transaction at issue here
agreed, albeit by the subsequent approval of the creditor, to the
manner and means of payment.  The manner was by payment
into an account held by the debtor in the creditor’s name.  The
means was by the creditor becoming a customer of the local bank
for the limited purpose of the account the debtor specified by
name and number.  The local bank’s unilateral conduct in opening
the account in the German bank’s name constituted at the very
least an offer to the German bank to become its customer for the
similarly limited purpose of dealing with the amount credited to the
account, once the obstruction to such dealing had been removed.
That offer the German bank clearly accepted before the order of
Goldblatt J.  Its contention, in opposing the confirmation of the
interim order Schutz J had granted, that the local bank had ‘paid
out’ the moneys to it ‘by depositing them into an account created’
in its name was therefore correct, since that very contention
formally (albeit subsequently) approved the local bank’s conduct,
and hence sealed the debt-discharging agreement.

[26] The Full Court in my respectful view consequently erred in not
concentrating on the issue of payment as between the only
parties to that transaction, namely the two banks.  The issue it
focussed on, wrongly in my view, namely the local bank’s
obligation under the letter of credit, and its attendant entitlement
or otherwise to debit the South African buyers’ account, remains
for determination at the pending trial.  For the present the German

bank’s claim to the moneys deposited in its name must, for the
reasons I have set out, be vindicated.

[27] In the court of first instance, Marais J reserved all the costs for
the pending trial.  That costs order must in my view yield to the
conclusion here reached.

1. The appeal therefore succeeds with costs, including the costs
of two counsel.
2. The order of the Full Court is set aside.
3. In its place, there is substituted:
‘The appeal succeeds with costs, including the costs of two
counsel.  The order of Marais J is set aside.  In its place there is
substituted:
(a) The first respondent is directed to pay the applicant
the sum of US $ 434 782,61 together with such interest
as has accrued thereon from 24 February 1992 to date of
payment.
(b) The second, third and sixth respondents, jointly and
severally, are ordered to pay the costs of the application,
such costs to include the costs of two counsel.’

E CAMERON
JUDGE OF APPEAL
STREICHER JA )
MTHIYANE JA )
CONCUR
HEHER AJA
)

NIENABER JA :
[28] I have had the benefit of reading the judgment prepared
by Cameron JA.  On the law we appear to be more or less in
agreement;  on the interpretation of the evidence I fear we clearly
are not.
[29] All six judges of the High Court who dealt with this matter
previously have stated, five of them expressly, one by implication,
that prima facie at the very least a fraud had been perpetrated
invalidating the letter of credit which is the source of the
appellant’s (‘VWB’’s) claim against Nedcor Bank Ltd (‘Nedbank’);
and that the issue of fraud is to be resolved in a trial that had been
instituted for that very purpose, citing all interested parties
including VWB and Nedbank.   Yet if the conclusion reached by

Cameron JA is sound Nedbank is now to be compelled to make a
payment to VWB of what may ultimately prove to be the fruits of a
fraud to which VWB is not entitled.  It is recognised in the
judgment that it by no means follows that Nedbank, if now
compelled to pay, will be able to recoup itself from the amount
deposited with it by Irvine International Trade Finance (Pty) Ltd
(‘Irvine’).  Nedbank may well not be able to do so since the spectre
of a fraud committed by Boli Speditions-und Vermittlungsgeschäfte
GmbH (‘Boli’) was explicitly raised with it by Irvine.  In fact that was
the very reason prompting Nedbank to approach the South African
Reserve Bank for guidance as to how it should deal with the
matter.  The Reserve Bank’s solution was to order the funds,
earmarked for payment of the letter of credit, to be credited to a
blocked account ‘until the matter was clarified satisfactorily’.

Everything hinged on the finding of fraud.   Nevertheless,
according to Cameron JA’s judgment, Nedbank is to pay the
disputed amount to VWB in the meantime. What is more, Nedbank
is to make that payment now for the very reason, so it is found,
that it has already made it in the past.  On the approach of my
learned colleague it will then be left to Nedbank, having made a
fresh payment pursuant to the proposed order, to engage VWB in
further litigation in a foreign jurisdiction, more than a decade after
the fraud was first committed,  to recover its payment if such fraud
is eventually established in the pending trial in South Africa.  Such
a result, in my view, will be unjust.  Moreover, it is predicated on
either a supposed agreement between Nedbank and VWB or on a
reconstructed ratification that, as I shall attempt to demonstrate -
and I say this with utmost respect -simply did not exist.

[30] In his judgment in matter no. 11456/92 Goldblatt J said:
‘It is, however, abundantly clear that Vereins have not been paid the
money in the sense that they are able to unconditionally utilise the
fund as they wish.  Prima facie and depending on such evidence as
may be led at a trial it appears that Nedperm [Nedbank] have not
paid the monies to Vereins [VWB] but have merely credited an
account styled “Vereins” with the amount referred to in the letter of
credit.  Vereins have at present no control at all over the manner in
which Nedperm deals with such account.  If Vereins had sued
Nedperm for the monies I fail to see how Nedperm could have
alleged it had paid Vereins merely by virtue of crediting an account
in its books where such account had not previously existed and
where Vereins had not specified the crediting of such an account as
a form of adjectus solutionis causa.
Clearly if Nedperm had prior to the granting of the rule nisi already
paid Vereins then the interdict granted would have been purposeless
and of no protection to the applicant.’  (The italics are mine.)

From the passage, and in particular the italicised phrase, it is plain
that Goldblatt J envisaged that the issue (whether VWB had in fact
been paid) was to be determined at a subsequent trial.   As it

happens action had already been instituted by the time Goldblatt J
gave his judgment.  It is matter no. 92/15598.  The pivotal issue in
that trial was whether a fraud had been committed in connection
with the letter of credit and consequently whether Nedbank was
obliged to make a payment to VWB in terms thereof.  That being so,
it is not immediately apparent why Goldblatt J, in granting an order
interdicting Nedbank from discharging its obligations under the
letter of credit to VWB, thought it necessary to annex a condition to
his order.  The order reads:
‘In the event and to the extent that the 3rd respondent has not yet
discharged all of its obligations in terms of letter of credit
862241/08/91 it is hereby interdicted from discharging such
obligations pending the final determination of the action instituted
by the applicant in this court under Case No 92/15598.’

One can only presume that Goldblatt J was anticipating a

possibility that his prima facie view on payment might prove to be
wrong, in which event the interdict he was granting would of
course be an idle one.  His qualification of the order in this manner
allowed VWB to attack the interdict not frontally by means of an
appeal, but more insidiously by attempting to show that it was a
brutum fulmen.  This it sought to do by launching the present
proceedings in matter no 10436/93 by way of notice of motion.
This is the matter that commenced before Marais J, whose order,
in effect referring the entire matter to the trial Court, was confirmed
on appeal by the Full Bench.  It is that order that is now under
attack before us with special leave granted on petition.
[31] In VWB’s application the first prayer of the relief sought
reads:

‘Declaring that the first respondent [Nedbank] has discharged its
obligations in terms of the letter of credit 862241/08/91.’

This prayer is in line with the introductory qualification of Goldblatt
J’s order.  That is the only issue that was properly before Marais J.
[32] The second prayer is in the following terms:
‘Directing the first respondent to reverse the debits which it effected
to the applicant’s account number 7986-017325 on 29 April 1992.’

This relates to the unblocking of the blocked account that Nedbank
was directed by the Reserve Bank, acting on behalf of the
Treasury, to create and credit.  When, on 28 April 1992, the
Reserve Bank advised Nedbank in a telex message that the funds
had been ‘unblocked’ Nedbank, on 29 April 1992, credited those
funds to an account styled ‘Sheriff of the Supreme Court’.  It is that
presumed transfer which prayer 2, so it seems, seeks to undo.

The underlying logic would appear to be that since payment into
the blocked account was the equivalent of payment to VWB the
account had to be resurrected so that payment can now be
extracted from it.  The logic is flawed.  If payment into the blocked
account discharged Nedbank’s debt to VWB Nedbank was no
longer indebted to VWB and the status quo could not be restored.
[33] The third prayer is a supposedly sequential one for the
actual payment over by Nedbank to VWB, with interest, of the
amount Nedbank retained;  and the fourth prayer is one for costs.
[34] The first prayer is in response to the qualification which
Goldblatt J built into his first order.  Prayers 2 and 3, however,
constitute an attempt by VWB to circumvent the interdict and to
pre-empt the pending trial.  On the face of it the prayers are
inherently contradictory.  As stated earlier, if it should be held, in

accordance with the first prayer, that payment had indeed been
made and that Nedbank’s liability in terms of the letter of credit had
been discharged, Nedbank would no longer be VWB’s debtor.  Yet
Nedbank is still in possession of the money.  The very fact that
Nedbank is still in possession of the money, albeit under a
differently styled account, is proof positive that payment had not
yet been made to VWB.   In order to entitle it to lay claim to the
true (as opposed to a fictionalised) payment of the money it was
incumbent on VWB to contrive to invent a new cause of action.
According to VWB’s argument payment became due not in terms
of the letter of credit (which, because it has been discharged, has
expired), but in terms of a new obligation that arose, Phoenix-like,
from the ashes of the defunct letter of credit.  That new obligation,
so it was contended, happens to be an ordinary relationship of

banker (Nedbank) and customer (VWB).  I shall return to this point
later in the judgment.
[35] Nedbank did not oppose the relief sought.  In taking the
decision not to do so, it may have been poorly advised.  Nedbank
doubtless believed that its position was secure;  that, having
credited the blocked account, it was immune to any claim from any
other party;  and that once the account is debited it would as a
matter of course be entitled to reimburse itself from the funds of
Irvine which it held at its disposal.  For the reasons stated in para
29 that view may have been overly simplistic.   Having been
forewarned by Irvine of the possibility of fraud tainting the letter of
credit, any payment to VWB may prove at the trial to have been a
payment to someone not entitled to it, in circumstances where it
may also prove to be irrecoverable from either its own customer

(Irvine) or the foreign bank (VWB) that Nedbank seemingly
favoured at the former’s expense.
[36] VWB’s case as initially presented appears to be based on
two propositions:
(1) that the crediting by Nedbank of the blocked account was
coincidentally intended by both Nedbank and VWB to constitute
performance by Nedbank of its obligations in terms of the letter of
credit;  and
(2) since Nedbank’s liability in terms of  the letter of credit had been
fully discharged, Nedbank became obliged to make payment to
VWB of the amount reflected in the letter of credit, not in its own
terms, but in terms of a different contractual relationship that was
identified ex post facto as an ordinary relationship of banker and
customer.

[37] Marais J held that the unilateral opening of the blocked
account at the insistence of the Reserve Bank was not the equivalent
of payment to the creditor either by consensus between the debtor
and the creditor or in terms of a proper interpretation of the
Exchange Control Regulations 1961 (‘the Regulations’), to which I
shall return later in this judgment.  Stegmann J in his judgment for
the Full Bench approached the matter from a different perspective.
Since it is the correctness of Marais J’s judgment that is at stake
before us, I propose to deal with Marais J’s findings against the
following backdrop:  first, to analyse the legal requirements for a
proper payment and, thereafter, and in the light thereof, to analyse
the factual allegations on which VWB and Cameron JA in his
judgment rely for the conclusion that Nedbank has discharged its

debt.
[38] Performance of an obligation, whenever the cooperation
of a creditor is required in order to enable the debtor to effect it,
consists of a bilateral juristic act (De Wet & Van Wyk, Kontraktereg
en Handelsreg 5ed (1992) 263).  The payment of a money debt is
a case in point (cf Saambou-Nasionale Bouvereniging v Friedman
1979 (3) SA 978 (A) at 993A-C;  Volkskas Bank v Bankorp Bpk
(h/a Trust Bank) en 'n Ander 1991 (3) SA 605 (A) at 612C-E;
Pfeiffer v First National Bank of SA Ltd 1998 (3) SA 1018 (A) at
1025I-J).  It requires an animus solvendi of the debtor
corresponding to that of the creditor as to a manner, recognised by
law, whereby the debtor relinquishes and the creditor acquires
access to and control over the funds to be transferred.  A debtor,
for instance, would not be able to effect payment by electronic

transfer to his creditor’s banking account unless the latter has
furnished him with his banking details for that purpose.  In such a
case, although the creditor can draw on it, it would not count as
proper
performance
binding
the
creditor
because
his
corresponding animus solvendi is lacking.  He may reject any such
attempt at payment if some or other legal consequence, such as
the cancellation of a lease, should be dependent on it.  In different
circumstances his conduct may, however, indicate assent after the
event.  The concurrence will as a rule relate to a manner of
payment that ensures him access to and control over the funds,
either directly or through an agent.  Notionally, I suppose, it is
conceivable that parties may be in agreement on a method of
payment, duly executed,  that would not be effectual in giving the
creditor such access to and control over the funds;  but I would

imagine that strong evidence would be required to support an
arrangement that is essentially sterile, particularly where the
relationship between the parties is a strictly commercial one.
[39]  The letter of credit stipulates a deferred payment by Nedbank
to Boli to be made to VWB at Hamburg.  The contemplated
manner of payment, one can safely assume, would have been by
means of an electronic transfer as is customary between banking
institutions.  Any deviation from the strict terms of the letter of
credit to allow Nedbank to make a payment by means of a
crediting of a blocked account, would therefore require either the
prior consent of VWB (which did not happen) or such conduct on
its part as to indicate to Nedbank that the mere book entry by
Nedbank was per se accepted by VWB as a complete and final
discharge by Nedbank of its obligations under the letter of credit,

thereby at best giving VWB  access to the funds in South Africa.
[40] In determining whether Nedbank had discharged its
obligations under the letter of credit by the creation and crediting of
the blocked account on the instructions of the Reserve Bank, there
are two distinct aspects that require scrutiny:
(1) whether Nedbank, as debtor, had the animus to effect a
transmission of the funds to VWB;  and
(2) whether VWB’s conduct, on its side, manifested the animus that
such crediting would constitute a transmission of the funds to it.
The answer to both questions, in my opinion, is in the negative.
[41] Commencing with Nedbank’s animus, the first relevant
document is its letter to the Reserve Bank of 24 January 1992 in
which it describes the beneficiary as ‘Boli GmbH Germany’ (and
not VWB), stating:

‘… we advised you that a letter of credit had been put in place for
the import of motor vehicles to this country,  which to date have
not arrived.  In addition, draws against the Letters of Credit were
allowed by the German correspondent bank and in our application,
we indicated that same were not legally permissible …
Our bank is therefore in a precarious situation in that it
would appear that we are legally obliged to make
payment on the 22 February 1992 in term of the Letter
of Credit.  In addition, non-payment would seriously
affect this Bank’s long term relationship with the
correspondent bank in Germany.
We therefore seek your urgent guidance in the matter
as to what action should be taken.’

That letter does not reflect an unqualified resolve on the part of
Nedbank to effect payment either on the due date, at the due place or
at all.
[42] The Reserve Bank responded:
‘I thank you for the information furnished and advise that in the
particular circumstances the funds must be paid to an account
blocked in terms of Regulation 4(2) of the Exchange Control

Regulations until such time as the matter has been clarified
satisfactorily.
Kindly request your branch to keep us posted of any further
developments, including the opening of the blocked account and the
crediting of the funds thereto.’

[43] On 18 February 1992 Nedbank was again warned by
Irvine’s legal representative:
‘As you are now aware of the true position, any further dealing by
you with the letter of credit is done at your risk and all my clients’
rights are reserved.’

This was followed up by a further letter from Irvine’s representative,
dated 20 February 1992, paragraph 4 of which reads:
‘I confirm further your undertaking to include in such letter that you
will be complying strictly with the requirements of the assistant
general manager of the Reserve Bank, in that the funds will be
paid into an account blocked in terms of Regulation 4(2) of the
Exchange Control Regulations until the matter is clarified.’

[44] Notwithstanding this admonition Nedbank sent two

electronic S.W.I.F.T. messages to VWB on 24 February 1992 (two
days after the due date of the letter of credit) in the following terms.
The one read:
‘We have credited the amount to USD 434 782-61 into a blocked
account in your good bank’s name being in terms of the S.A.
Reserve Bank directives and in settlement of our obligation under
this letter of credit stop Please be guided accordingly.’

The other read:

‘We have credited your currency account as follows:
Drawing under L/C 862241/08/91
Value Ben : Boli GmbH.’

[45] The statement ‘in settlement of our obligations under this
letter of credit’ in the first message follows broadly the wording of
regulation 4(5) of the Exchange Control Regulations (quoted in full
below)  which state that a payment made to a blocked account
shall ‘operate as a valid discharge to the person making payment’.

This may be an opportune moment of saying something about
those Regulations.  Regulation 4(2) reads as follows:
‘Whenever a person in the Republic is under legal obligation to make a
payment to a person outside the Republic but is precluded from effecting
the payment as a result of any restrictions imposed by or under these
regulations, the Treasury may order such person to make the payment to
a blocked account.’
It postulates a payment made by a person in the Republic who ‘is
under a legal obligation to make a payment to a person outside the
Republic’.  Regulation 4(6) (which I do not need to quote in full)
likewise refers to ‘the liability to make payment’.
[46] In such a case, where the person in the Republic is
precluded from effecting a payment to a foreigner as a result of
any restrictions imposed by or under the Regulations, the Treasury
(acting in the instance through the Reserve Bank) may order such
a person to make ‘the payment’ to a blocked account.  A ‘blocked

account’ means an account opened with an authorised dealer, as
defined (regulation 4(1)).
[47] Any such payment is therefore made on the basis that the
person in the Republic is under a legal obligation to make the
payment.   If the basis should afterwards prove to be false it
follows that the Reserve Bank must reverse its instruction and that
the payment to the authorised dealer is likewise to be reversed.
Where there is no dispute about the legal obligation to make a
payment, the need for such a reversal will of course not arise.
Where there is a dispute, the debtor can simply refrain from
making the payment.  But where (as in this case) the debtor in the
Republic is uncertain as to whether the legal obligation exists, or
where it only emerges after the payment into the blocked account
had been made that the legal obligation is problematic, a

determination will have to be made as to the existence or not of
the legal obligation and therefore as to the possible reversal
thereof.  If the finding is that the legal obligation does not exist the
funds will have to be released by the authorised dealer to the party
who initially paid it into the blocked account, and not to the
ostensible creditor who is outside the Republic.
[48] Regulation 4(2) must be read in conjunction with
Regulation 4(5).  It provides:
‘Any payment made to a blocked account in terms of this
regulation shall, to the extent of the sum paid, operate as a valid
discharge to the person making payment.’

That sub-regulation provides that any payment made to a blocked
account ‘in terms of this Regulation’ (ie on the supposition of the
existence of the legal obligation to make the payment) shall
operate ‘as a valid discharge to the person making payment’.’  The

person ‘making the payment’ is the payer and not the payee.  The
Regulation accordingly does not stipulate that such payment shall
operate as a valid discharge to the person outside the Republic ie
to the ostensible creditor. What Regulation 4(5) contemplates is a
‘discharge’ for a particular limited purpose ie as a valid discharge
as far as the payer is concerned.  The Regulation does not purport
to provide that the payment into the blocked account is for all
conceivable legal purposes to be regarded as a payment to the
creditor.  In particular it does not provide that it is to operate as a
discharge to the ostensible payee.  The limited purpose is
manifestly to favour the debtor in the Republic who, because of the
blockage, is unable to effect payment to his overseas creditor for
as long as the Regulation maintains its blocking effect.  For the
duration thereof the Regulation provides the payer, if sued for

performance, with the legal defence that the debt is deemed to be
discharged.
[49] Such a discharge is a fictional one inasmuch as the
creditor has in fact received neither the money nor full access to or
control over it.  It is a ‘deemed discharged’.  That this is the correct
construction also appears from Regulation 4(8) which, dealing with
a refund, provides ‘to the extent of such refund no payment shall
be deemed to have been made for the purpose of sub-regulation
(5).’  In that event the previously deemed discharge will no longer
operate as such.
[50] From the above analysis of the operation of the Regulations
several conclusions can be drawn.  The first is that there is but one
debt and that is the debt in respect of which the blocked account was

credited.  That debt in this case was the debt in terms of the letter of
credit.  The unblocking of the funds followed by a corresponding
book entry meant that the status quo was restored and that Nedbank
was reinstated in a capacity solely as debtor vis-à-vis VWB in terms
of the letter of credit.  No other ancillary, parallel or complementary
debt supervened.
[51] The second conclusion is that the lifting of the embargo
meant that  Nedbank was no longer an authorised dealer in
respect of that transaction.  In the instant case the situation is
somewhat complicated in that Nedbank operated simultaneously
as debtor and as authorised dealer.  In its capacity as debtor it
made a book entry to itself in its capacity as authorised dealer, in
accordance with the directive of the Reserve Bank.  Thereafter it

held the money in the latter capacity.  When the Reserve Bank, for
reasons not apparent from the papers (and which could not be
explained by counsel) ordered the blocked account to be
unblocked, Nedbank became obliged, which it did, to release the
money by an appropriate book entry.  Nedbank thereupon
relinquished its dual capacity and reverted to its single capacity as
a debtor in terms of the letter of credit.  That did not mean that an
automatic payment had now taken place in terms of the letter of
credit to VWB.  No such payment had been made because VWB
had still not obtained access to the money.  That, after all, is
exactly why VWB grasped the opportunity created for it by
Goldblatt J to launch the current proceedings for payment.  If
payment had effectually been made to it when the blocked account
was created and credited, there would in truth have been no need

for it to do so.
[52] At that stage, once Nedbank was ordered to unblock the
funds, Nedbank, if it believed itself to be obliged to do so, could
have transmitted the money electronically to VWB in Germany.
But because it got wind of the impending interdict proceedings it
refrained from doing so.  The money therefore remained with
Nedbank.  It is still with Nedbank.  The issue whether VWB is
entitled to payment as against Nedbank, therefore remains an
open one.
[53] The next conclusion to be drawn from the analysis of the
Regulations is that Nedbank was not constituted, merely by virtue
of the book entry made by it in terms of the Regulations, as the
agent of VWB for the purpose of accepting payment to it.
Payment to an authorised dealer in terms of the Regulations is not

per se a payment to the creditor.  The creditor after all has not
received the funds and he cannot do so for as long as the money
remains in the blocked account.  An authorised dealer to which
payment is directed by the Reserve Bank to be made will in the
normal course of events not be in a legal relationship with the
creditor outside the Republic.   The creditor outside the Republic
will have no claim against the authorised dealer in that capacity.
The authorised dealer is not a party, it is merely a holder of the
money for the time being in accordance with both the directives of
the Reserve Bank and the provisions of the Regulations.  It is, in
short,  not the agent of the one party or the other.  To the extent
that an actual deposit is made to it in terms of the Regulations by a
person in South Africa any repayment or refund to be made in
terms of the Regulations is therefore to be made to the party who

made the payment in the first instance.  In the instant case
Nedbank, as authorised dealer, was, therefore, upon the
unblocking of the funds, obliged to make a book entry in favour of
itself.  It did so and was thereby restored merely as the debtor in
terms of the letter of credit.  The so-called discharge in terms of
Regulation 4(5) was therefore merely a temporary measure, for a
limited time and for the limited purpose of assisting the South
African debtor (Nedbank) in the predicament in which it found
itself.   Because of the blocking effect of the Reserve Bank’s
directive, Nedbank was legally unable to satisfy its liability to VWB
in terms of the letter of credit by transmitting any payment to its
creditor (VWB) overseas.
[54] The fact that Nedbank as authorised dealer was not and

could never have been thought to be VWB’s agent for purposes of
receiving performance, puts paid to any suggestion that this is
properly a case of ratification, if that is what was intended by the
extended reference in footnote 5 of Cameron JA’s judgment to
Pothier, Obligations para 492.  Ratification in its true sense
describes ‘a subsequent expression of will validating an antecedent
unauthorised act of representation’ (Joubert (ed) The Law of South
Africa 1st reissue vol 1 para 126;  De Wet & Van Wyk, Kontraktereg
en Handelsreg, supra, 114 ff).  It is apposite in the field of agency,
and applies when someone without the requisite authority purported
to act on behalf of a principal, and the principal afterwards ratifies
the professed agent’s prior actions.  Translated to the facts of this
case ratification will only be in point if Nedbank (in its capacity as

an authorised dealer in terms of the Regulations) purported to act as
agent on behalf of VWB in accepting its own crediting of the
blocked account as due and proper performance by Nedbank (in its
capacity as a debtor) of its liability in terms of the letter of credit.
Any suggestion that such a scenario reflected the true intention  of
Nedbank at the time is fanciful;  and there is no suggestion in the
evidence or even in Tesdorpf’s exposition thereof that VWB ever
professed to ratify a lack of authority by Nedbank in paying itself on
behalf of VWB.
[55] The final conclusion to be drawn from the above analysis
of the Regulations is that Nedbank could never have intended that
by its book entry in respect of the blocked account it was making a
final and conclusive payment to VWB. Nedbank knew that it was

crediting the blocked account on the instructions of the Reserve
Bank and in accordance with the Regulations.   It furthermore
knew that this was a purely temporary state of affairs ‘until such
time as the matter had been clarified satisfactorily’.  Depending on
such clarification and in particular whether the motor vehicles in
question had or had not been duly delivered, the money would
eventually, once the bar imposed by the Reserve Bank had been
lifted, have to be released.  It would have to be released by itself
as authorised dealer to itself as a debtor.  Only in that event would
an actual payment have to be made - to VWB if there was no
fraud, and to Irvine if there was.  That stage has not yet been
reached.  In both instances the actual payment would have to be
made some time in the future - which is utterly destructive of any
notion that it was intended by it to have been made in the past.

Nedbank knew that it did not intend to transmit the money to VWB
in Germany - the very purpose of crediting the blocked account
was, after all, to preclude it from doing so.
[56] Against that background I return to the manner in which
Nedbank actually expressed its intention.  In paras 41 to 44 above
I have referred to its exchanges with the Reserve Bank and VWB
and in particular to its S.W.I.F.T. messages of 24 February 1992.  I
cannot read in the above exchanges any intention on Nedbank’s
part other than that it was  acknowledging its liability to VWB and
was complying with the Reserve Bank’s directives.
[57] In an affidavit filed in the earlier application before
Goldblatt J, an official in Nedbank’s employ, one Rheeder, stated:
‘When the letter of credit was subsequently, within the extended
period of validity, submitted to the third respondent, it recognised its

obligation to pay out in terms thereof.  It performed such obligation
by purchasing foreign currency (US dollars) in the required amount
and by depositing such foreign currency into a blocked account in
the name of the sixth respondent.  From that moment, the sixth
respondent became entitled to that money and it did not belong to
anyone else, least of all the applicant, Pienaar or Pinebro.’

That statement was later recanted by Rheeder in stating that all
monetary transactions:
‘were undertaken and performed by way of book entries.  No
physical moneys were identified or are identifiable.  The Sixth
Respondent [VWB] when credited with amounts has a claim
thereto.’

He also asked that the opinion he expressed in the last sentence of
his earlier statement be deleted.
[58] I digress for a moment to say that it is plain from Rheeder’s
later statement that it is factually wrong to suggest, as is done in
paras 10, 15, 16 and 25 of the judgment of Cameron JA, that an

amount was ‘deposited’ into the blocked account.  There was no
deposit.  It was simply a book entry under a unilaterally created
account to which VWB never had and never could gain access.  It
could never gain such access because the closing of the account
necessarily meant its debiting in Nedbank’s books of account.
[59] Regardless of the deletion of the last paragraph, Rheeder’s
statement goes no further than to recognise that, as far as Nedbank
was concerned, VWB was ‘entitled’ to the money and that it ‘did not
belong to anyone else’.  That statement falls far short of manifesting
an animus on Nedbank’s part that it intended to make,  and believed
that it had thereby effected, a payment to VWB in a manner that
gave the latter access to the fund;  and that it was therefore effectual
as a form of payment for all legal purposes.

[60] To sum up, therefore, VWB, on which the onus rested, had
not shown that the crediting of the blocked account was intended by
Nedbank to operate as a proper payment.
[61] Absent any true animus solvendi on Nedbank’s part there
can of course be no corresponding animus solvendi on VWB’s part.
Even so, it is necessary to examine VWB’s  response.  There was
none.   While the funds remained under embargo in the blocked
account there was not a single document or message by VWB in
response to Nedbank’s S.W.I.F.T. messages to it of 24 February
1992.  Not once did VWB intimate to Nedbank that it agreed or
accepted that the payment into the blocked account would function
as a full and final discharge by Nedbank of its liability to it in terms
of the letter of credit.  Complete silence, in the absence of a duty to

speak, cannot qualify as a tacit acceptance.  Such a duty to speak
was not alleged by any of the parties.  VWB’s attitude was a purely
passive one, which was perfectly sensible  since there was nothing
VWB could have done to alter the situation for as long as the funds
remained blocked.  It accepted the crediting of the blocked account
as a fait accompli -  as a discharge by Nedbank of its obligations
under the Regulations rather than under the letter of credit.  Indeed,
there is nothing to indicate that it ever occurred to either Nedbank or
VWB at the time that the crediting of the blocked account would put
a final end to the letter of credit.
[62] And there the matter rested until 28 April 1992 when
Nedbank was telephonically notified by the Reserve Bank that the
blocked funds should be released.  Nedbank thereupon sent VWB a

message, referring expressly to the letter of credit, and informing it
of the unblocking.  It proceeded:
‘We have however also received notification from S.A. Supreme
Court that an application will be made to the court to prevent us to
release the funds to you.’

[63] To that message there was once again no response from the
VWB.  In particular, VWB did not react to it by adopting the
attitude that a discharge of Nedbank’s liability under the letter of
credit had already occurred and that Nedbank was now liable to it on
some other basis such as an ordinary commercial banker-customer
relationship.
[64] In anticipation of the impending interdict Nedbank
thereupon unilaterally created a new account which it credited with
the amount reflected in the letter of credit.  Again there was not a

word of protest from VWB or, for that matter, a reaction of any
kind.
[65] Later that same day the interdict was granted by Schutz J
precluding an actual payment by Nedbank to VWB in the meantime.
That interdict was eventually overtaken by the interdict granted by
Goldblatt J on 17 November 1992, referred to in para 3 above.
[66] The position, then, is that there was no reaction by VWB to
the events until after the interdict was granted by Schutz J.  It was
only in an answering affidavit in the subsequent proceedings before
Goldblatt J that VWB’s vice president and assistant general council,
Mr Tesdorpf, for the first time suggested, not by way of a positive
averment, but by way of a general denial ‘that no payment had been
made in terms of the letter of credit’.  In a supplementary affidavit

Tesdorpf elaborated on his earlier statement by saying:
‘It is clear from annexure ‘JCT9’ [the S.W.I.F.T. message sent by
Nedbank to VWB on 24 February 1992, referred to in para 18
above] to the sixth respondent’s [VWB’s] answering affidavit that
the third respondent [Nedbank], as it was obliged to do, complied
with its obligations in terms of the letter of credit and transferred an
amount of US $ 434 786,61 into an account in the sixth respondent’s
name.  This quite clearly constitutes a payment by the third
respondent to the sixth respondent in terms of the letter of credit.’

This is not a statement of fact as to what transpired between the
parties at the time;  it is little more than a conclusion of law that, for
the reasons stated earlier, is in any event incorrect.  It denies the
bilateral nature of payment and falls far short of an allegation of fact
that Nedbank’s crediting of the blocked account was intended by it,
and accepted by VWB, as a definitive discharge by Nedbank of its
liability to the VWB in terms of the letter of credit.  The paragraph,

it needs to be said, was explicitly denied by the respondents in the
application.
[67] A final statement by Tesdorpf, contained in para 43 of the
supplementary affidavit, adds little to the earlier statement and was
likewise denied.  It reads as follows:
‘Once the third respondent paid the moneys into an account in the
name of the sixth respondent, it complied with its obligations under
the letter of credit and the sixth respondent is entitled thereto.  Any
subsequent withdrawal by the third respondent of such moneys
cannot affect the sixth respondent’s right to receive the moneys set
aside by the third respondent for the sixth respondent.’

This, once again, falls far short of a positive averment of an
intention by VWB to accept the book entry as a substituted form of
performance and  of any intimation by VWB of its acceptance
thereof.  Furthermore there is in this set of affidavits not even a hint

of an ordinary banker-customer relationship that was supposedly
established between Nedbank and VWB.
[68] In the subsequent matter before Marais J there are two
further statements by Tesdorpf, this time in VWB’s founding
affidavit, which are in point.  The first is para 15.5 thereof which
reads as follows:
‘It is submitted that the documents aforementioned indicate a clear
intention on the part of the first respondent to discharge its
obligation under the letter of credit in that manner, and that has been
accepted by the applicant as performance by the first respondent of
its obligations under the letter of credit.  Once the applicant’s
account was credited, the normal relationship of banker and
customer arose between the first respondent and the applicant
respectively in relation to those funds, and the first respondent was
obliged to deal with such funds in accordance with the applicant’s
instructions (subject only to such restrictions as may have been
imposed by exchange control regulations).’ (My emphasis.)

The second averment is in para 15.7 which reads:

‘Accordingly I submit that it is clear from the first respondent’s own
documents, and from the admissions made by its authorised official
[presumably Rheeder], that the first respondent discharged its
obligation under the letter of credit by crediting the applicant’s
account.  This has been accepted by the applicant.’ (My emphasis.)

[69] It is to be emphasised that Tesdorpf refers to an acceptance
that supposedly took place in the past but of which he furnishes no
details;  and that Tesdorpf does not claim that his own affidavit,
made long after the blocked account had been closed, was itself to
serve as proof of such ‘acceptance’.
[70] Both the quoted paragraphs are cast in the form of
‘submissions’ by VWB’s assistant general counsel who was not
himself involved in the actual transactions between the two banks.
The italicised phrases are simply legal contentions.  They are not
based on actual evidence or hard fact.  The hard fact is that Nedbank

never intended and VWB never accepted that a mere book entry,
described by Nedbank as a discharge in the language of the
Regulations, was to serve as a form of substituted performance.  The
further allegation that VWB was an ordinary customer of Nedbank
is likewise merely an expedient afterthought.  These statements, in
my opinion, are nothing less than self-serving ex post facto
rationalisations with a view to fabricating a theory of bilateral
performance.
[71] Since that theory would leave VWB without any claim (the
only debt in existence between the parties having, according to it,
been discharged) it was necessary, in addition, to improvise a
banker-customer relationship.  Once again this was a purely
opportunistic post-dated invention.  Nowhere in the actual

exchanges between the parties is there the remotest suggestion that
VWB applied for and that Nedbank agreed to accept VWB as an
ordinary banking client.   No details are given in Tesdorpf’s
affidavits of any application or offers that were made and of any
exchanges that took place as to how and when such a relationship
was created;  whether it is permissible for a foreign bank to enter
into such a relationship with a South African bank;  whether special
permission was required and obtained, and so forth.  And once again
the suggestion of such a relationship, insinuated into Tesdorpf’s
affidavit, was specifically denied.  Such a denial must, in motion
proceedings, be taken as fact.  In short, no basis of any nature
whatsoever has been laid justifying a finding in law or in fact that
such a relationship had ever been established between the parties.

[72] The observation made in the judgment of Cameron JA that
the respondents in the proceedings before both Goldblatt J and
Marais J did not deny that ‘as a matter of fact’ VWB in February
1992 accepted Nedbank’s book entry as a payment to it of the sum
claimed, is, with respect, also not correct.  No such averment was
made by any official of VWB who, at the time, was involved with
the transaction with Nedbank.  There was accordingly nothing to
deny.  And the later gloss that Tesdorpf sought to place on the
evidence, or lack of it, was consistently denied whenever it was
made.  The charge of a non-denial can therefore not be held against
the respondents.
[73] For all the above reasons the appeal should, in my view, be
dismissed.  But there is one further matter that needs to be

mentioned.  VWB raised an additional cause of action structured on
the chance use of the word ‘negotiation’ in the letter of credit.  The
point was not argued before Marais J but a good deal of the
judgment of the Full Bench was devoted to it.  It was found to be
false.  I prefer to express no view on it since it was not, in my
opinion, properly aired in the papers and depends peripherally on
issues that are factually in dispute, such as VWB’s bona fides when
taking cession of the letter of credit.  These, too, are matters best
dealt with by the trial Court to which the entire dispute, in the
manner ordered by Marais J, should properly be referred.
[74] I would accordingly dismiss the appeal with costs,
including the costs of two counsel.

STREICHER JA:
[75] I have read the judgments by Cameron JA and Nienaber
JA. I agree with the judgment by Cameron JA but wish to add a
few comments of my own, more specifically in relation to the
judgment by Nienaber JA.
[76] The appellant claimed an order:
‘1 Declaring that (Nedbank) has discharged its obligations in
terms of the letter of credit 862241/08/91.
2 Directing (Nedbank) to reverse the debits which it effected to
the applicant’s account number 7986-017325 on 29 April 1992.
3 Directing (Nedbank) to pay to the applicant the sum of US $434
782,61 together with such interest as has accrued thereon from 24
February 1992 to date of payment.’

[77] In argument the appellant indicated that it would be
satisfied with an order in terms of prayer 3. That claim of the
appellant is not a claim for payment in terms of the letter of credit.
The appellant’s case is that the letter of credit was discharged and
that it no longer has any claim against Nedbank in terms of the
letter of credit. If its claim were a claim in terms of the letter of
credit the simple answer would have been that payment in terms
of the letter of credit is prohibited by the interdict granted by
Goldblatt J on 17 November 1992. It is also not a claim for money
that has been credited to an account in the name of the appellant
as a result of a fraud. Nedbank had been advised before it credited
the account that the documents required in terms of the letter of
credit had been forged. It is not contended that the appellant was a
party to any such forgery.

[78] Nedbank at no stage opposed the appellant’s claim for
payment of the aforesaid amount. It considered itself legally
obliged to make payment in terms of the letter of credit. That
appears firstly from its letter to the South African Reserve Bank
(‘the SARB’) and secondly from its notification to the appellant that
it had credited the amount into a blocked account in the name of
the appellant ‘in settlement of our obligation under this letter of
credit’ (my italics). It probably wrote to the SARB because it was
worried that it may be transgressing exchange control regulations
by transferring money abroad in respect of vehicles which had not
arrived. In the proceedings before Goldblatt J an affidavit by a Mr
Rheeder, a Senior Manager Operations, International Branch of
Nedbank was filed which was later amplified and qualified by him.
This is referred to in para 16 of Cameron JA’s judgment. So

amplified and qualified he said:
‘When the letter of credit was subsequently, within the extended period
of validity, submitted to (Nedbank), it recognised its obligation to pay out
in terms thereof. It performed such obligation by purchasing foreign
currency (US dollars) in the required amount and by depositing such
foreign currency into a blocked account in the name of the (appellant).
All the monetary transactions referred to . . . were undertaken and
performed by way of book entries. No physical moneys were identified
or are identifiable. The (appellant) when credited with amounts has a
claim thereto.’

The last three sentences replaced the following sentence:
‘From that moment, the (appellant) became entitled to that money and it
did not belong to anyone else, least of all (Nedbank), Pienaar or Pinebro.’

[79] In my view it is clear from the aforesaid facts that
Nedbank refrained from opposing the claim for payment of the
aforesaid amount because it considered itself obliged to pay the
amount to the appellant. The respondents do oppose the granting
of an order in terms of prayer 3 against Nedbank but could not say

on what basis they had standing to do so. Having regard to the
fact that the amount is not claimed on the basis that it is payable in
terms of the letter of credit and that it has not been credited as a
result of fraud, they had no standing to do so.
[80] It is nevertheless necessary to determine whether the
appellant made out a case for payment of the amount.
[81] Nedbank stated that the amount had been credited into a
blocked account in the appellant’s name ‘being in terms of the
SARB directive and in settlement of our obligation under this letter
of credit.’
[82] The SARB directed that the amount had to be paid ‘into
an account blocked in terms of Regulation 4(2)’. Regulation 4(5)
provided that ‘any payment made to a blocked account in terms of

this regulation shall, to the extent of the sum paid, operate as a
valid discharge to the person making payment.’ Nienaber JA is of
the view that a payment in terms of the regulation would operate
as a valid discharge as far as the payer is concerned but not as a
valid discharge by the payer to the ostensible payee. I cannot
agree with this construction of the regulation. If the payment
constitutes a discharge of the payer it must be a discharge in
respect of the obligation in respect of which the Treasury ordered
the payment to a blocked account. It must of necessity then
operate as a valid discharge by the debtor to the creditor. Any
claim by the creditor in terms of the legal obligation which gave
rise to the payment into the blocked account could be met by a
defence that the payment into the blocked account operated as a
valid discharge of that obligation i.e. it operated as a discharge by

the payer to the payee.
[83] It is true that the discharge could be undone in terms of
reg 4(8) which provided that ‘the Treasury may grant exemptions
from the provisions of this regulation and may authorise the refund
to any person of moneys paid by him into a blocked account’ and
that ‘to the extent of such refund no payment shall be deemed to
have been made for the purposes of sub-regulation (5)’ but until
such a refund had been ordered the payment remained one
operating as a valid discharge to the person who made the
payment. Nienaber JA would seem to equate the unblocking of an
account with an authorisation by the Treasury of a refund of the
amount paid into the blocked account to the person who paid the
amount into that account. Neither in the papers before the court
nor in argument has it been suggested that the unblocking of the

account constituted an authorisation in terms of reg 4(8). I do not
think that there is any basis for so equating an authorisation in
terms of reg 4(8) with an unblocking of an account.
[84] Nedbank considered itself obliged to pay the amount to
the appellant and in my view it is clear in the light of that fact
coupled with the fact that it advised the appellant on 24 February
1992 that it had credited the amount to an account in the name of
the appellant ‘in settlement of our obligation’ that it intended to
discharge that debt. Notwithstanding an allegation by the appellant
in its founding affidavit that the documents indicate a clear
intention on the part of Nedbank to discharge its obligations in that
manner no affidavit by Nedbank denying that to be the case has
been filed. On the contrary Rheeder’s affidavit would seem to
confirm that to have been the case.

[85] Not surprisingly the appellant did not immediately react.
There was nothing it could do other than accept Nedbank’s actions
as a proper discharge of its obligations in terms of the letter of
credit.
[86] When the account in the name of the appellant was
unblocked Nedbank considered the appellant to be entitled to
payment of the amount standing to the credit of the account in the
name of the appellant as is shown by the fact that it advised the
appellant on 28 April 1992 that the funds had been unblocked but
that there was an application pending to prevent it from releasing
the funds to the appellant, that it had no option but to act in terms
of the documentation served on it and that it would keep the
appellant informed of developments. At the same time Nedbank
recommended an attorney to the appellant. It is implicit in

Nedbank’s advice that there was no dispute between it and the
appellant and that had it not been for the pending application the
funds would have been ‘released’ to the appellant.
[87] The application resulted in an interim order granted by
Schutz J on 28 April 1992 that Nedbank be interdicted from in any
way dealing with the funds which had been unblocked and that
such moneys be attached pending an action to be instituted.
Nedbank thereupon, presumably as a result of an attachment by
the Sheriff of the Supreme Court, on 29 April 1992 debited the
account in the name of the appellant and credited an account
styled ‘Sheriff of the Supreme Court’. Subsequently the interim
order was set aside by Goldblatt J who issued an interdict
prohibiting Nedbank from discharging its obligations in terms of the
letter of credit to the extent that it had not already done so,

pending the final determination of an action which had by then
been instituted.
[88] There is no evidence and no reason to believe that
Nedbank ever changed its attitude that it had made a payment in
settlement of its obligations in terms of the letter of credit by
crediting an account opened in the name of the appellant and that
the appellant was as far as Nedbank was concerned entitled to
payment of that amount. Rheeder’s affidavit is confirmation that
that was the case at least until the order by Goldblatt J was made.
[89] It was therefore at any time before the order by Goldblatt J
open to the appellant to accept the actions of Nedbank as a payment
in terms of the letter of credit or as a discharge of Nedbank’s
obligations in terms of the letter of credit, as was contended by

Nedbank.
[90] At the hearing of the application by Marais J the parties
accepted that the papers in the proceedings before Goldblatt J
could be treated as evidence before Marais J. The affidavits filed
by the appellant and deposed to by Mr Testdorpf, a vice-president
and an assistant general counsel of the appellant, in these
proceedings are replete with allegations that Nedbank discharged
its obligations to the appellant by crediting the relevant amount to
an account in the appellant’s name and that such crediting
constituted a payment to the appellant. Nienaber JA is of the view
that such statements did not prove acceptance by the appellant in
that they were little more than conclusions of law and were denied.
In my view, even if there had been no acceptance by that time, the
statement itself indicates that the appellant accepted that

Nedbank’s actions constituted a discharge of its obligations in
terms of the letter of credit. Not only did the appellant say that
Nedbank’s actions constituted a discharge of its obligations and
did it claim, on a basis other than the provisions of the letter of
credit, to be entitled to payment of the amount that had been
credited to the account opened in its name, it, in addition, obtained
an affidavit by Rheeder to the effect that Nedbank performed its
obligations in terms of the letter of credit and that the appellant
became entitled to the money credited to the account opened in its
name.
[91] In the present application Tesdorpf submits that the
documents indicate a clear intention on the part of Nedbank to
discharge its obligations under the letter of credit. He then makes
the statement that the appellant accepted Nedbank’s actions as a

discharge of its obligations under the letter of credit. Nienaber JA
says that these statements are simply legal contentions. I cannot
agree. The statements purport to be statements of fact and there
is, in my view, no reason to interpret them otherwise. The
statement is not denied by Nedbank or by any of the other
respondents. Whether or not there was an acceptance by the
appellant was, therefore, not even an issue in the present
application.
[92] In my view it has been established:
That Nedbank’s attitude was that it had discharged its obligations
in terms of the letter of credit and that the appellant was entitled to
such money unless the Exchange Control Regulations or a court
order prevented it from paying to the appellant.
That the appellant accepted Nedbank’s actions and thereby

accepted that it had become entitled to payment of the money
credited to the account opened in its name.
[93] In the circumstances the appellant is entitled to payment
of the amount claimed. For these reasons and for the reasons
given by Cameron JA I agree with the order proposed by him.

_____________

P E Streicher
Judge of Appeal

Cameron,
JA)
Mthiyane,
JA)
Heher,
AJA)
concur