WINDHOEK – It remains something that anyone who has ever had business dealings with a bank will savour – a bank losing out to a customer.
In the present instance Standard Bank lost to a customer who took them to court after they did what banks do best – lose your money and refuse to refund you. Atlantic Meat Market had a loan facility with the bank and ceded some of its book debts as surety for the loan.
During April 2004 they uncovered a massive fraud at their company perpetrated by their financial manager in which he forged signatures on cheques drawn against the accounts of the companies within the group and used the cheques to misappropriate funds. He managed to avoid detention by moving money within the various accounts around and succeeded in fleecing the company of over N$11.5 million.
The cheques were honoured by the bank notwithstanding the forged signatures and debited against the company’s accounts during the period December 31, 2003 to April 26, 2004.
After the forgeries were discovered, the company alerted the bank and pressed criminal charges against the financial manager and his wife who were subsequently arrested. The company then submitted a report to the bank in which it demanded the bank should refund them. Despite numerous enquiries, the bank failed to state its position on the forged cheques and the demand for restitution. Because of this failure to comply, the company then issued summons against the bank seeking an order that its accounts be credited with amounts equivalent to the unauthorised withdrawals and interest charged thereon and the bank defended the action. Since the company denied it owed the bank the money “stolen” from their accounts, it refused to execute further sureties with regard to the loan it obtained from the bank. The bank then called the company’s debtors and informed them that it held a cession of their debts to the company and that all such debts should be paid into the account the company had with the bank. Upon getting wind of this development the company’s lawyers drafted an urgent letter to the bank to stop what it was doing as the behaviour raised serious concerns amongst the company’s clients about its financial health and continuing ability to honour its contracts.
According to an affidavit the company filed with the court this conduct of the bank had an extremely negative impact on its standing with its suppliers.
It also found itself in the position that because of the bank’s demand that debtors pay their debts directly to the bank, their cash flow was in danger of drying up making them unable to trade. If they were forced to close down, the company stated, it would not only cause immeasurable damages to its business, but result in the termination of jobs for some 100 employees. When the bank did not adhere to the demand to desist from collecting its debts, the company approached the High Court with an urgent application for an order compelling the bank to stop its conduct. The bank then asked for a postponement to file opposing affidavits and consult with its legal eagles as the papers were only delivered to the offices of the bank’s legal representatives at 08h45 on the morning of the application date.
The company opposed the application and stated its unwillingness to refrain from collecting the debts during the period of postponement would defeat the objective of the application for “urgent relief” to save the company from ruin.
The court refused to grant the postponement and after several days of heated arguments judgment was reserved and subsequently handed down.
In the judgment the court upheld the company’s claim and granted it the relief sought on March 15, 2005.
The bank then appealed the decision by the High Court to grant it the postponement to adequately prepare answering affidavits. It premised its contentions on Article 12 of the Namibian Constitution which guarantees everyone the right to a fair trial.
Supreme Court Justice, Gerhard Maritz, who wrote the judgment in concurrence with Chief Justice Petrus Shivute and Justice Fred Chomba found that in case of urgency as made out in the present matter a rule nisi is called for where an applicant seeks interim relief pending a matter to protect its interests.
The judge in his view said the bank’s right to fundamental justice was not infringed on and that no irregularity occurred in the proceedings before the High Court and as such the appeal was struck from the roll and the bank was ordered to pay the costs of the proceedings to include the cost for one instructing and one instructed counsel.