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CIV/T/202/98

IN THE
HIGH COURT OF LESOTHO

In the
matter between:

ANDREAS
NTEBELE PLAINTIFF

and

LESOTHO
BANK 1ST DEFENDANT

TSABELA
TSUINYANE 2ND DEFENDANT

JUDGMENT

For
Plaintiff : Mr. M. Mafantiri

For First
Defendant : Mr. T. Matooane

For
Second Defendant: No appearance

Delivered
by the Honourable Mr. Justice T. Monapathi on the 18th day of April
2000.

On the
2nd March 2000 when the two Counsel appeared to argue, there were two
issues before Court. The first one was about an application for
summary judgment and the second one was the First Defendant's
exception to the claim. I dealt with the application for summary
judgment first.

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SUMMARY
JUDGMENT

The
record showed that after the Defendants were allegedly served the
Second Defendant entered appearance to defend. This resulted in the
application for summary judgment which was opposed as the Second
Defendant's affidavit in terms of Rule 28(3)(b) showed. After about
two postponements the matter of the application came before me on the
15th December 1999. That Defendant's Counsel had withdrawn. The
Defendant undertook to secure the service of another Counsel by the
date of the 2nd March, 2000 being the date to which the matter was
postponed. On the 15th December 1999 the Defendant had appeared in
person. On the 2nd March 2000 the Defendant had not appeared and
neither had his Counsel appeared. The probability was that no Counsel
had been secured. I did not make much of Mr. Mafantiri's statement
that he met the Defendant some days before then when he promised to
see Mr. Mafantiri at his office but never did.

Mr.
Mafantiri then, in the circumstances, chose to apply for confirming
the summary judgment after setting aside the opposition. This I
allowed and I accordingly entered judgment against the Second
Defendant in this claim for:

1. Payment
   of M16,000.00 being outstanding balance of the purchase price.

   
   

2. Interest
   thereon at the rate of 22.5% ex temporae.

   
   

3. Costs
   of suit.

   
   

4. .............................."
   (My emphasis)

   
   

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I had
noted that the Plaintiff had prayed for a judgment against the
Defendants jointly and severally one paying the other to be absolved.

EXCEPTION

The Court
then proceeded to hear the Defendants' Exception to the summons and
declaration which was couched in the following terms:

"1

That the
combined summons do not disclose a cause of action on the following
grounds:

1. They
   do not establish any contractual relations between the parties.

   
   

2. No
   duty of care is established between the parties.

   
   

3. Under
   Aquilian action no claim can be made for purely pecuniary or
   economic loss."

   
   

I made my
decision guided by the following submissions by Mr. Matooane : That
the payment of M16,000.00 said to be balance of the purchase price
did not have a basis in the declaration. The nature of the claim
against the First Defendant had not been intimated. That was to say
that:

"Consequently it is insufficient to state in the summons merely
the relief claims. Plaintiff must set out what the case of action is
and what it is based upon."

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I was in
that regard referred to the fourth edition of the work by Herbstein
and Van Winsen called THE PRACTICE OF THE SUPREME COURT OF SOUTH
AFRICA at page 398. Counsel submitted that there should be a nexus
between the relief claimed and the grounds supporting the claim.
There was therefore no way one could claim balance of purchase price
from a person who was not a party to a contract.

When
damages are claimed (supposing this could be said to be the claim)
those damages (Damnum)

"only are awarded, however as flow naturally and directly from
the breach of contract (general, or intrinsic damages) or as may be
reasonably supposed to have been in the contemplation of the
contracting parties at the time they made the contract........."

See
Wille's PRINCIPLES OF SOUTH AFRICAN LAW D. Hutchison et al 8^th
Edition at page 525. The First Defendant would however argue that
there was no connection between the loss and the misrepresentation,
which misrepresentation as was allegedly said to have been done by
the First Defendant.

Lastly
Counsel for First Defendant would argue that "The rights and
duties under a contract ordinarily attach only to the original
parties to the agreements." And would refer in that regard to
the sixth edition of the work Wille and Millin's MERCANTILE LAW OF
SOUTH AFRICA at page 77.

It had
been common cause that on or about the 1st July 1997 Plaintiff had
entered into an agreement with Second Defendant. Second Defendant had

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undertaken
to buy Plaintiff's vehicle in the amount of M26,556.29. It had been a
term of the agreement that the Second Defendant would pay M10,000.00
as deposit. This he duly did. As a result the Plaintiff delivered the
vehicle to the Second Defendant. A document annexed as "A"
evidenced the agreement and it had a fair translation thereto
attached to the record of pleadings. The outstanding balance
therefore became an amount of M16,556.29.

On or
about the 30th September 1997, the Second Defendant signed a Standard
Bank Lesotho Ltd current account cheque in the sum of Ml 6,000.00 in
part payment of the sale price. The cheque was duly presented to the
First Defendant's Bank (the Second Defendant) on the 30th September
1997. The Plaintiff said the cheque was honoured and his account
number 0010-13510-100 was credited with appropriate funds on the 1st
October 1997. Then most importantly paragraph 8 of the declaration
the Plaintiff said:

"Acting upon the claims of defendant's cheque by the first
defendant plaintiff duly signed documents changing ownership of the
vehicle in question into the said defendant's names."

What was
meant by the Plaintiff was that because his own bank had
misrepresented that the Second Defendant's cheque was good he
proceeded to transfer the vehicle into the Second Defendant's name
which he would otherwise have not done. It meant that that Defendant
had misled him. As Plaintiff said this was the beginning of the
misinterpretation. This instant case was where the cheque was
originally allegedly honoured as against the usual dishonoured
cheque. In the former a bank would bear the onus of proving that
payment was made in good faith and without negligence on its part.
Where a cheque had been a bad one there again a Plaintiff can claim
against the drawer of the cheque. Here the claim was not against
First

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Defendant as a drawee bank but as a collecting bank.

A quick
answer was needed to the question of whether a collecting bank would
be liable under Lex Aquilia. It was that despite the holding of our
Courts and South African Courts for a number of years that the owner
of a lost or stolen cheque ought to be protected by the Courts by
holding that a collecting bank has a duty of case to that owner. Such
opinion do not however support recovery of purely pecuniary loss.
This means that negligence, causation and patrimonial loss would
still have to be proved. As to a South African case on the liability
of a collecting bank see INDAC ELECTRONICS (PTY) LTD v VOLSKAS BANK
LTD 1992(1) SA 755(A) see also SOUTH AFRICAN LAW JOURNAL 110 (1993)
1: "Can a collecting Bank be held liable under the Lex Aquilia?
Recent development and some thoughts on the future." - Michael
Kidd.

Coming
back to the facts in this case, it was almost five months later that
is on the 4th February 1998 the First Defendant Bank returned the
Second Defendant's cheque to Plaintiff as being "Return to
drawer" and consequently denied Plaintiff to withdraw an amount
of M16,000.00 from his account.

The
Plaintiff then concluded in the paragraph 10 of the declaration and
said:

"Despite demand the defendants have failed, neglected and/or
refused to pay plaintiff and amount of M16,000.00 which is due and
owing to plaintiff as aforesaid."

Who was
it that owed the Plaintiff "the balance of the purchase price?"
The way I saw it it could only have been the Second Defendant who
could have failed or neglected to pay in terms of the contract
between the Plaintiff and the Second

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Defendant.

The
behaviour of the First Defendant did not mean that it could not have
done a wrong of some kind more especially through a representation
that funds would be available and payable to the Plaintiff. This I
did not decide. One would be inclined to feel that the First
Defendant as the Plaintiffs collecting bank did not owe a duty of
care to the Plaintiff as to whom it was a drawee bank. It might even
have been that the cheque from the Second Defendant was a bad cheque
because of fraud or some other reason. The First Defendant or any
bank would still have a right to impeach a fraudulent cheque or
payment made on its strength. In the absence of a statement from the
Plaintiff that the Second Defendant's cheque was good for funds I did
not see why the First Defendant's action was assailable.

I did not
see how the First Defendant guaranteed or made assurances that the
funds would be paid except that it represented that there were funds
collected from the Second Defendant's bank. It later changed its
mind. That the First Defendant's conduct amounted to a representation
which was equally deceptive was that it was close to five (5) months
when the cheque was "referred to the Plaintiff as being R/D and
denied Plaintiff to withdraw an amount of M16,000.00 from his
account......". How in the banking practice this would amount to
the cheque as having been honoured on the 1st October 1997 is only
subject to conjencture.

For my
part I would be inclined to agree that an impression was given to the
Plaintiff that the regulatory clearance period between the bank had
been given for the cheque to enable the Plaintiff to have come to a
conclusion that the cheque had been honoured. He acted upon the
impression given by his own bank being the First Defendant.

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The
question although framed properly of course in the usual technical
way as to whether or not there was a cause action the question would
also really be: Arc the facts or the law advanced against the First
Defendant by the Plaintiff consistent with the claim? Or would the
Plaintiff have rather instituted a second or a different claim
directed at the First Defendant on the facts?

The
reasons for above are clear. If there was privity of contract between
the Plaintiff and Second Defendant there was no such privity between
the Plaintiff and the First Defendant. If the Second Defendant be
found liable for an amount for an amount for specific performance in
the claim in (a) of the summons and in 11 (a) of the declaration that
cannot naturally be claimable against the First Defendant except on a
different claim.

Secondly,
even if the First Defendant would in another claim be found liable
for the payment of damages in the sum of M16,000.00, whether there
they were contractual or delictual damages, the way of arriving at
the damages or the amount would be distinctly different from the way
"outstanding balance of the purchase price" would be
arrived at in the instant claim.

Lastly,
even if one would conclude that there was a basis in law and in fact
for deciding for the Plaintiff, in the absence of an indication in
the pleadings as to how the damages would be arrived at, one cannot
attempt to inquire into the quantum, as the pleadings stood. This is
important for the following reason. If the Plaintiff's claim were to
be based contractual damages he would have to claim for

"damnum emergens or loss actually incurred, termed "actual
damages " and lucrum cessans or loss of profits which would
otherwise have been made............." See Willes PRINCIPLES OF
SOUTH AFRICAN

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LAW,
(supra) aat page 524-524.

The
problem of assuming that the Plaintiff had a remedy somehow based on
the facts in the declaration be it contractual or delictual damag,
did not, most unfortunately, answer the question whether he could
claim as against the Second Defendant for: "Payment of
M16,000.00 being outstanding balance of the purchase price." It
was because while second Defendant owed the Plaintiff, the First
Defendant did not owe the Plaintiff. This meant that should the
Plaintiff have had a claim against the First Defendant it would be
based on their banker/customer relationship. The prayers in the
summons and declaration were not supported by the facts and legal
conclusions even if one were to be very kind to the obviously
skeletal statements directed at showing the allegedly wrongful
conduct of the First Defendant vis-a-vis the Plaintiff.

I did not
have to discuss the question of the duty of care as between the
Plaintiff and the First Defendant for an obvious reasons. It was that
even if there was such a duty not only would it have to be pleaded.
One would still have to grapple with the real problems of the cause
of action and the absence of a claim or a prayer connected with such
premised statements in the declaration. In the same way as I have
avoided concluding positively on the issue whether an action between
the Plaintiff and First Defendant would be sustained on
representation. I did not venture to say whether or not there was
such a duty of care in the circumstances.

It was
clear that in all the circumstances the exception ought to succeed
with costs to the First Defendant.

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T.
MONAPATHI

JUDGE

18th
April, 2000