PIKES LAW, 0109 - Maritime and Corporate Lawyers by monkey6


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									                                                               31 January 2009

Happy new year to you and welcome to the January 2009 edition of Pike‟s Law
Monthly, our legal window to the South African legal and business scene. I hope
that 2009 offers a revived economy and more prosperous times for all.

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 Another consumer victory over banks
 The complexities of the National Credit Act flummox ABSA
 Facebook and other social networking sites a potential liability
 Shipbrokers (and other intermediaries) at risk!
 Stamp duty abolished


Another consumer victory over banks
In the recent case of Nedbank v Pestana (142/08) [2008] ZASCA 140 (27
November 2008), the respondent, Mr Jose Manuel Pestana, conducted a current
account at the Carletonville branch of the appellant, Nedbank. A different Mr J M
Pestana (Pestana) conducted a similar account at the same branch. On 4 February
2004, Pestana instructed the branch to transfer R480 000 from his account to the
account of the respondent. The bank duly complied with this instruction and
credited the respondent‟s account. Unbeknown to the bank official at the branch
who effected the transfer, Nedbank had earlier that same day received an
instruction from SARS, informing the bank that Pestana owed SARS some R340
million. Nedbank was accordingly appointed as agent for Pestana in terms of sec 99
of the Income Tax Act 58 of 1962 and was instructed to pay to SARS the amount
standing to the credit of Pestana. The bank accordingly reversed the credit in the
respondent‟s account without authority from the respondent and paid the money to

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

The SCA accordingly dismissed the appeal and ordered Nedbank to pay the costs of
the respondent, including the costs of two counsel.
Once again, it has been necessary for the consumer to take a bank all the way to
Bloemfontein in order to have his rights protected against high-handedness and
unilateral actions.

Readers are of course cautioned to watch their bank statements closely for
unilateral dealings by the banks.


The complexities of the National Credit Act flummox ABSA
In the case of ABSA Bank Ltd v De Villiers & Another [2008] JOL 22874 (C), the
bank wanted to realise its security after a purchaser of a motor vehicle defaulted on
an instalment agreement. The latter falls within the ambit of the National Credit
Act 34 of 2005 (the NCA).

Being a credit agreement in terms of section 8 of the NCA, the applicant/ABSA had
first to comply with sections 129(1) and 130(1) of the Act. Section 129(1) is a
default notice to the debtor informing him of his rights under the NCA, which
includes various payment options. In theory, this is then followed by a further
notice in terms of section 130(1) stating that because the debtor has not adopted
the course of action proposed in the section 129(1) notice, legal proceedings will be
instituted without further notice (in practice both notices are combined).

Subsequent to that the applicant brought an application in terms of section 130(1)
authorising the sheriff to attach the car. The application was refused, and on review
the court held that even although the applicant had complied with the NCA, it did
not formally cancel the instalment agreement, thus not entitling it to a final order
for the attachment of the vehicle.


Facebook and other social networking sites a potential liability
Facebook users could be sued or criminally prosecuted if they overstep the line,
according to a recent report in The Times. It says the warning follows the arrest of
Duane Brady, of Johannesburg, who is alleged to have defamed a friend of his wife
on the popular social networking site. Brady will apply for bail in the Kliptown
Magistrates Court on Wednesday, and is facing charges of crimen injuria and
common assault. According to the police, Brady allegedly wrote that his wife's
friend was sleeping around to buy drugs. The article warned that Facebook users
could find themselves facing criminal prosecution for insulting someone on the
Internet. Users of Facebook or other social networking sites should be aware that if
they defame or insult others without justification, they could face a civil claim for
defamation, and potentially also a criminal prosecution for crimen injuria. Also,
posting embarrassing photographs of others without their consent could result in
claims for invasion of privacy.

Internet libel claims have been litigated in the United Kingdom and US , and South
Africa also saw a similar case recently when the owner of the “Do Not Date Him”
website was threatened with legal action by a group of angry men.
The website‟s owner had no choice but to remove the site, which named and
shamed men who were not faithful to their partners.

The simple message, therefore, is that users of social networking sites and owners
of their own websites must be extremely cautious about content which might be

defamatory.    If in doubt, advice should be sought from defamation or media


Shipbrokers (and other intermediaries) at risk!
Thomas Miller-managed insurer International Transport Intermediaries Club (ITIC)
has advised shipbrokers against using the term „first-class charterers‟ when
conducting fixture negotiations, following a claim made by shipowners against one
of its broker members in respect of the failure of charterers to perform a contracted

Writing in the latest issue of its Claims Review, ITIC explains, “Norwegian
shipbrokers were involved in negotiations for a voyage charter. When entering the
market, they described the charterers as ‘first-class’. It was also alleged that,
during the negotiations, they made positive representations that the charterers had
the money to perform the fixture. Ultimately, however, after the voyage had been
fixed, the charterers did not perform the contract. The owners obtained an
arbitration award but the charterers had no assets to satisfy it.

“The owners subsequently sued the shipbrokers, stating that they had been induced
into the charter party because of misrepresentations made regarding the financial
standing of the charterers. The claim totalled approximately US$3m.”

ITIC discourages the use of the expression „first-class charterers‟. It says, “If, as is
often the case, brokers do not wish to identify the charterers, it is better to use the
more neutral term ‘private clients’ than anything that could imply a financial
reference. In this case, although many of the representations were oral, lawyers
advised that there was a real possibility that the broker could be held liable.
Accordingly, a settlement was agreed at $650,000.”

Although this was shipping-specific, we sound this as a warning to any sort of
intermediary who makes any sort of representations regarding the financial
standing of a party to a transaction.


Stamp duty abolished
In a welcome move, the Stamp Duties Act will be repealed on 1 April 2009. The
effect of this is that no stamp duty will be payable any longer on the documents
contained in the Schedule to the Act. This includes documents such as leases of
immovable property, which usually attract significant amounts of stamp duty. Any
lease executed prior to 1 April 2009 will continue to attract stamp duty, meaning
that clients are advised to try and delay the entering into of leases until after that

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Editor: Andrew Pike


Office:            +27-31-7643111
Andrew Pike:       andrew@pikeattorneys.com
Website:           www.pikeattorneys.com

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