REPORTABLE

REPUBLIC OF NAMIBIA

HIGH COURT OF NAMIBIA
MAIN DIVISION, WINDHOEK

JUDGMENT

Case no: A 98/2011

In the matter between:

MACHADO ANDRE PINTO
.........................................................................APPLICANT

and

FIRST NATIONAL BANK OF
NAMIBIA LIMITED ............................1^ST
RESPONDENT

STANDARD BANK NAMIBIA
LIMITED ...........................................2^ND
RESPONDENT

Neutral citation:
Pinto v First National Bank of Namibia Ltd (A 98/2011)
[2012] NAHCMD 43 (31 October 2012)

Coram: GEIER J

Heard: 24 July
2012

Delivered: 31
October 2012

Flynote:
Contract – terms implied by law – test be applied in the
determination of whether statutory provisions are to be implied in a
contract - such enquiry entails a consideration
of the circumstances of the particular case, the ‘naturalium’
of the agreement, whether or not the
contract is of the type in which the law implies the term and
whether or not the parties have expressly excluded such
term and whether or not the legislature intended
to use its overriding power to nullify or control any attempt by the
parties to exclude a term imposed by statute or the common law in
their contract –

Banker - relationship
between banker and client - traditionally viewed as based in contract
- being essentially one of creditor and debtor, with the underlying
nature of mandate – question arising whether or not the
provisions of the Financial Intelligence Act 2007 and the Prevention
of Organised Crime Act 2004 had superimposed any residual terms on
the traditional contractual relationship between banker and client
which would exonerate respondents actions in refusing the applicant’s
demand for payment and reversing funds standing to the credit of the
applicant in the first respondents books of account and to repatriate
such funds to the second respondent were they eventually became
subject to the confiscation and forfeiture proceedings in terms of
POCA – court finding that certain provisions of FIA and POCA
are to be regarded as terms imposed by law on the traditional
banker-client contractual bond – actions of respondents
justified – application dismissed

Summary: Applicant
had participated in a lottery operated by Scratch- A- Million
Enterprise CC and won N$ 250 000.00 – the lottery paid his
winnings by cheque – drawn on first respondent – which
cheque was paid into applicant’s account held with second
respondent – after the cheque had been cleared the applicant
attempted to withdraw N$ 80 000.00 – the transaction seemed
suspicious given applicant’s account history and was
investigated – second respond informed first respondent that at
least 80% of the credit card transactions in Scratch-A-Million CC
account related to fraudulent transactions – first respondent
requested second respondent to reverse the credit entry on applicants
banking account and return the funds to first respondent against the
furnishing of an indemnity –first respondent heeded the request
– Prosecutor-General subsequently obtaining court order
freezing all funds standing to the credit of Scratch-A-Million
Enterprises CC and others inclusive of applicant – rule nisi
granted against applicant only discharged against him eventually -
Prosecutor-General also subsequently applying for forfeiture order in
terms of POCA – this effectively meant that all affected funds
inclusive of the N$ 250 000.00 continue to be frozen –
applicant then bringing an application for declaratory relief and an
order that his account be once again credited with the amount of N$
250 000.00 plus interest – question to be determined was
whether the Financial Intelligence Act 2007 and the Prevention of
Organised Crime Act 2004 had superimposed any residual terms on the
traditional contractual relationship between banker and client which
would exonerate respondents actions -

Held:
Relationship between banker and client traditionally a contractual
one of debtor and creditor with the underlying nature of a mandate –

Held:
The enquiry whether the Financial Intelligence
Act 2007 and the Prevention of Organised Crime Act 2004 had
superimposed any residual terms on this contractual relationship
entailing a consideration of the circumstances of the particular
case, the ‘naturalium’
of the agreement, whether or not the
contract is of the type in which the law implies the term and
whether or not the parties have expressly excluded such
term and whether or not the legislature intended
to use its overriding power to nullify or control any attempt by the
parties to exclude a term imposed by statute or the common law in
their contract –

Held:
there was no express agreement between any of the
parties which expressly excluded the operation of Prevention
of Organised Crime Act 2004,
(Act 29 of 2004), (POCA)
or the Financial
Intelligence Act,
2007, (Act 3 of 2007) (FIA)
from their agreement –

Held:
The ‘naturalium’
of the underlying agreement regulated the banker- client
relationship-

Held:
That the underlying agreement was of the type on which the
Prevention of Organised Crime Act
2004, (Act 29 of 2004), (POCA)
or the Financial
Intelligence Act,
2007, (Act 3 of 2007) implies its terms –

Held
:That the legislature had intended to use its
overriding power to nullify or control any attempt by the parties to
exclude the terms imposed by Prevention
of Organised Crime Act 2004,
(Act 29 of 2004), (POCA)
or the Financial
Intelligence Act,
2007, (Act 3 of 2007) from their contract
–

Held:
That in view of such residual terms superimposed on the agreement
between applicant and first and second respondents actions exonerated
–

Held:
As applicant’s cause of action based on the traditional
banker-client agreement – failing to take into account the
residual terms imposed by law – application could not succeed
and thus fell to be dismissed.

ORDER

1. 
   The application is
   dismissed with costs –
   

   
   

2. 
   Such costs are to
   include the costs of one instructed- and one instructing counsel, as
   far as the first respondent is concerned, and the costs of one
   instructed counsel and one instructing counsel – up to the
   stage of the drawing of the second respondent’s heads of
   argument – the remainder of the costs awarded to second
   respondent are awarded on the scale of one instructing counsel.

   
   

JUDGMENT

GEIER J:

[1] The
applicant participated in a lottery offered by Scratch-A-Million
Enterprise CC in that he purchased two batches of scratch cards at a
total amount of N$3 000.00.

[2] Amongst the scratch
cards so purchased was a card indicating that he was the lucky winner
of N$ 250 000.00. He approached Scratch-A-Million Enterprise CC who
issued a cheque for the corresponding amount in his favour, which
cheque he deposited with his bank, being the first respondent.

[3] The applicant’s
account was duly credited with such amount as per normal banking
practice.

[4] With effect of 6
November 2009 these funds were also cleared.

[5] The applicant learnt
of this fact on 7 November 2009 when he attempted to withdraw N$ 80
000.00 from his account.

[6] Instead of releasing
the requested amount to applicant the first respondent however
refused to so. The applicant all of a sudden found himself in the
focus of an interrogation by the bank’s employees and by
officers of the Namibian Police.

[7] The applicant’s
funds were practically frozen from that date until a provisional
restraining order was obtained on 22 December 2009 by the
Prosecutor-General against one Nalisa Situmbeko, Scratch-A-Million
Enterprise CC, Keneilwa Langa, Florence Situmbeko and the applicant
under the Prevention of Organised Crime Act 2004 in Case 2/2009.

[8] This provisional
order was discharged vis a vis the applicant on 7 September
2010.

[9] In the interim and
without applicant’s knowledge or consent, so it is alleged -
and without any authorisation to do so - the first respondent
effected a debit entry of N$ 250 000.00 against the applicant’s
account.

[10] The applicant in
turn launched this application in which he claims that the first
respondent’s reversal of the amount of N$ 250 000.00 in the
applicant’s account was not authorised was unlawful and that
such reversal be declared null and void ab initio and that the
first respondent be ordered to credit the applicant’s account
again with the winnings together with interest as would have accrued
in the interim in the applicant’s favour.

[11] In answer to the
applicant’s claims, Mrs Ingrid Veuza Katjiuka, a manager in the
first respondent’s forensic department, confirmed that the
applicant’s deposit was initially cleared for payment but that
it was not paid out to applicant on the request of the second
respondent.

[12] She explained that
the officials of the second respondent had apparently informed the
first respondent that the amount related to fraudulent transactions
and that legal action would be instituted against Scratch-A-Million
Enterprise CC in terms of the ‘Prevention of the Organised
Crime’ legislation. Second respondent also requested that the
amount of N$ 250 000.00 be repaid to it, in respect of which the
second respondent would provide an indemnity to first respondent.

[13] The requested
repayment was then made to second respondent after the promised
indemnity had been provided.

[14] It should possibly
be mentioned at this juncture that the said indemnity contained a
proviso to the effect that the indemnity would be honoured only in
the event that a person, making a claim, has a valid claim in law not
affected by fraud or illegality.

[15] The second
respondent’s case was made under cover of an answering
affidavit deposed to by Mr. Pumba Munjua, a forensic investigator
employed at the second respondent’s internal audit department.

[16] Mr Munjua firstly
set out the factual background to the relevant transaction involving
the account of Scratch-A-Million Enterprise CC held with the second
respondent and the background to the subsequent transaction between
first and second respondents concerning the reversal of the N$ 250
000.00, initially credited to applicant’s account. He confirmed
that initially the transaction was considered as normal and that in
terms of the latest applicable Bank of Namibia Directive on cheque-
clearing the applicant could access the N$250 000.00 deposited as of
Friday, 6^th of November 2009.

[17] On 7 November 2009,
a forensic investigator of first respondent however raised an initial
concern with second respondent’s Head of Financial Crime
Control concerning the applicant’s deposit, when the applicant
sought to withdraw the amount of N$ 80 000.00 from his account, which
was unusual given the applicant’s account history. First
respondent’s concern apparently also lay with the reputation of
Mr. Situmbeko and the surrounding circumstances of Scratch-A-Million
Enterprise CC in respect of which the first respondent’s
suspected that the funds standing to the credit in Scratch-A-Million
Enterprise CC’s account were the proceeds of unlawful
activities.

[18] It was felt that if
the banks would allow the transaction to proceed they might make
themselves guilty of money laundering in contravention of the
provisions of sections 5 and 6 of the Prevention of the Organised
Crime Act 29, of 2004, which had come into operation on 5 May 2009.

[19] The initial
suspicions were investigated further. In order to avoid falling foul
of the provisions of the POCA legislation the first respondent
deliberately avoided making any payments from the N$ 250 000.00
standing to the credit of the applicant’s account.

[20] Further
investigation established by 12 November 2009 that at least 80% of
the credit card transactions in the Scratch-A-Million Enterprise CC
account were fraudulent. On the strength of that information the
second respondent requested first respondent against the furnishing
of the aforesaid indemnity to reverse the credit entry on applicant’s
account as these funds were to the best of the second respondent’s
knowledge the proceeds of unlawful activities. It is common cause
that the first respondent complied with this request.

[21] On 1 December 2009
the second respondent notified the head of Commercial Crimes
Investigations subdivision of the Namibian Police of this suspicion
in writing.

[22] On 16 December 2009
the Governor of the Bank of Namibia gave a direction to second
respondent not to proceed with any transactions in respect of the
Scratch-A-Million Enterprise CC account.

[23] On 22 December 2009,
the Prosecutor-General secured the interim restraining order referred
to above. In terms of this order all funds, inclusive of the N$ 250
000.00 of the applicant, were thus frozen.

[24] Although the
provisional order was eventually discharged vis a vis the
applicant, the confirmation thereof vis a vis the other
respondents effectively meant that the N$ 250 000.00, which had been
returned to the second respondent, continued to be frozen.

[25] On 27 May 2011 the
Prosecutor-General also obtained a preservation order in terms of
section 51 of the POCA Act, as a result of which the credit balance
in the Scratch-A-Million Enterprise CC account with second respondent
now stands to be forfeited to the state.

[26] It must be mentioned
that the applicable court order also directs that ‘all
persons with knowledge of this order are, other than as required or
permitted by this order, prohibited from removing, and taking
possession of or control over, dissipating ... or dealing in any
other manner with any property to which this order relates’.

[27] Finally it should be
mentioned that the Prosecutor-General’s office was informed by
second respondent of the bringing of this application. The
Prosecutor-General’s stance is reflected in a letter dated 16
June 2011. It reads:

‘16
JUNE 2011

TO:
STANDARD BANK

Risk,
Compliance and Legal

Attention:
Undjii Kaihiva

RE:
MA Pinto / FNB and Standard Bank

1. 
   We
   refer to our letter dated 16 June 2011 and the telephone
   conversation between yourself and Adv Boonzaier;

   
   

2. 
   During
   February 2011 the criminal case against Mr Situmbeko was struck from
   the roll due to the fact that the investigation was not finalised.

   
   

3. 
   On
   30 March 2011 brought an urgent application under case number A70/11
   to rescind the restraint order due to the fact that the criminal
   charges were withdrawn. However, the matter was struck from the roll
   due to lack of urgency.

   
   

4. 
   The
   same application was also launched on 8 April 2011 under case number
   A79/11 and was also struck due to lack of urgency.

   
   

5. 
   On
   27 May 2011 a preservation order under POCA 3/11 was obtained in
   respect of the money held in the Standard bank account relating to
   this matter. This means that the money is frozen even though there
   is also a restraint application freezing the money. The difference
   is that the success of a preservation application and the forfeiture
   application that will follow is not dependant on a successful
   criminal prosecution.
   

   
   

6. 
   Once
   this preservation order was obtained this office then rescinded the
   restraint order due to the fact that the money is protected under
   the preservation order.

   
   

7. 
   It
   is important to note that once a bank suspects that money is the
   proceeds of crime and they still pay the money to the person
   requesting it, they make themselves guilty of money laundering in
   terms of section 5 of the Prevention of Organized Crime Act.
   

   
   

8. 
   Even
   though FNB may claim that they had a contractual obligation to Mr.
   Pinto, they can never claim that they are obliged to pay over the
   proceeds of crime due to the contractual relationship. A legal
   agreement can never justify the payment of the suspected proceeds of
   crime, because the definition in section 5 specifically refers to
   ‘ought to have known’. It is irrelevant when the
   freezing orders came into operation.

   
   

9. 
   FBN
   were informed by Standard Bank that the money might be the proceeds
   of crime. With this knowledge FNB can never claim that it would have
   been obliged in terms of an agreement to pay the money to Pinto as
   they would have committed a criminal offence if they did. The
   contract between FNB and Pinto with respect to this transaction
   would not be binding as it contravenes a law of Namibia.’
   

   
   

[28] It was thus averred
that the first and second respondents conduct and the reasonableness
thereof should be measured against the provisions of Chapter 5 and 6
of the POCA legislation and with reference to which the second
respondent particularly relies in justification of its actions in
this matter.

[29] In this regard it
was further pointed out that the initial suspicions in this regard
were confirmed at every juncture. The funds standing to the credit of
Scratch-A-Million Enterprise CC were to the best of the respondents’
and the applicant’s knowledge the proceeds of unlawful
activities, or at the very least that this could reasonably be
suspected.

[30] In such
circumstances the respondents considered themselves justified in
withholding the funds in their the endeavour not to allow
Scratch-A-Million Enterprise CC to settle, what may be a lawful debt,
to the applicant, with stolen money.

THE APPLICANT’S
ARGUMENT

[31] It was against this
background that Mr. Narib, who appeared on behalf of applicant,
pointed out that the first respondent did not offer any defence on
the merits but instead instituted only a conditional counterclaim
against the second respondent. The essence of the first respondent’s
case was that it stands to be indemnified by second respondent
against any order which the court may make against it. It thus became
apparent that the merits of the second respondent’s defence
should become the focus of this decision in respect of which reliance
was placed on sections 5 and 6 of the POCA legislation.

[32] He argued that
second respondent was unable to counter certain factual allegations
pertaining to the circumstances under which the scratch card in
question was issued to the applicant. He submitted further that it
has long been judicially recognised that the relationship between a
bank and its customer is one of debtor and creditor and that once a
customer deposits money in his/her bank account ownership thereof
passes to the bank, subject to the bank’s obligation to honour
cheques validly drawn by the customer.¹

[33] In terms of these
authorities once money has been paid over it becomes unidentifiable,
and rights of ownership, if any, are lost - money can be therefore
not be vindicated. It was on the strength of such authority then
submitted further that once the funds were deposited into the
applicant’s account they should have been credited to the
applicant and could not be withdrawn, (ie the credit reversed),
without the applicant’s consent.²
The funds in question accordingly became the property of the first
respondent after having collected same from second respondent who
then had a duty in terms of the debtor/creditor relationship with
applicant to honour the instructions from the applicant in respect of
such funds provided that such funds stood to the credit of the
applicant.³

[34] The first respondent
could simply not unilaterally debit the account of the applicant,
without the applicant’s consent, even if it chose to
“repatriate” funds to the second respondent.⁴

[35] The funds standing
to the credit of the applicant was money owed by the first respondent
to the applicant.⁵

[36] In the circumstances
the first respondent had transferred its own funds to the second
respondent as it did not have the right, without the consent of the
applicant, to debit the applicant’s account with the amount to
be transferred. The first respondent appears to accept this as the
correct legal position.

[37] Once the first
respondent had collected the funds from the second respondent on or
about 7 November 2009, so the argument ran further, all the
obligations Scratch-A-Million Enterprise CC had towards to applicant
had been discharged and first respondent became indebted to the
applicant in the amount standing to the credit in the applicant’s
account.⁶

[38] It was also pointed
out that the first respondent was admittedly honouring its subsequent
agreement with the second respondent, to which the applicant was not
a party, when it allegedly “repatriated” funds to the
second respondent and no obligations or implications towards the
applicant could flow from such an agreement.

[39] In such
circumstances the orders sought in the notice of motion should be
granted with costs against both respondents, such costs to include
the costs occasioned by employment of one instructing and one
instructed counsel.

THE FIRST RESPONDENT’S
CASE

[40] Not surprisingly –
given these circumstances - Mr. van Vuuren’s argument, on
behalf of the first respondent, was brief. He mainly pointed out that
the first respondent essentially relied on its conditional counter-
application, based on the indemnity granted to it by second
respondent, in the event of the court making a finding in favour of
the applicant.

[41] Also on behalf of
first respondent it was submitted that the general governing common
law position regarding this transaction and the traditional
relationship between banker and client in this instance had been
affected by the POCA legislation - in terms of which – and once
certain background knowledge had been obtained pertaining to the
nature of the funds in question - also the first respondent would
have made itself guilty of a transgression of the POCA statute in
respect of which it would have become a guilty party if it would have
made the requested funds available to the applicant . This, so Mr.
van Vuuren’s argument ran further, justified the first
respondent’s actions in refusing to honour the applicant’s
request for payment and the subsequent reversal of the amount of N$
250 000.00 in the banking account of the applicant.

[42] He finally submitted
that in terms of the applicable case law the first respondent had in
any event become the owner of the funds in question and that the
first respondent was therefore entitled to deal with the money in
accordance with the obligations imposed on it by the POCA legislation
– the granting of the plaintiff’s claim would ultimately
defeat the intention of the POCA legislation which should therefore
be refused.

THE SECOND
RESPONDENT’S ARGUMENT

[43] Mrs. Angula, who
appeared on behalf of third respondent, forcefully argued that the
court, in deciding this matter, would have to take into account
firstly the provisions of the POCA legislation which was not
considered in the case law relied upon by applicant and that the
court should contextualise the present matter accordingly also when
considering these authorities.

[44] Secondly the court
should take cognisance of the relationship between first and second
respondents being that of a drawing bank and a collecting bank.

[45] Finally the
relationship between first respondent and applicant should be
considered. In this regard it should be taken into account what the
responsibility of a bank is if it comes to its knowledge that a
fraudulent deposit was made. A bank was obviously under a duty to
deal with such a situation with due diligence and that the
applicant’s reliance on the standard relationship was therefore
misplaced as this would be tantamount to turning a blind eye to the
duty of the collecting bank not to honour its client’s requests
for a withdrawal of funds if informed by the drawing bank that the
monies in question constituted the proceeds of time. Both the drawing
and collecting bank, in such circumstances, were clearly under an
obligation to stop payment forthwith - the knowledge of the banks in
this instance - disclosed a legitimate reason to reverse the entry.

[46] She submitted
further that the second respondent’s right of reversal in this
instance rested on an implied term - imposed by operation of law –
which term impacted on the standard banking customer and banker
relationship. She submitted this regard further that the fact - that
the funds had been cleared - was immaterial - and that - on the facts
of this matter - and by operation of the said implied term - the bank
would be entitled to reverse the credit entry in its client’s
book of account at any stage. On the facts of such matter the
particular reversal was justified in terms of section 5 of the POCA
legislation.

[47] All credits in a
client’s banking account would always be subject to the
requirement of legality. She submitted thus that any claim the
applicant might have would rest with Scratch-A-Million Enterprise CC
and not against the bank. In any event the monies were presently
retained in a preservation fund and in terms of the applicable
legislation the applicant could even reclaim such funds in accordance
with the governing legislation.

[48] Finally she
submitted that it was not in the public’s interest to allow the
reversal sought by the applicant.

[49] In fairness it
should be mentioned Mrs Angula’s argument was based on heads of
argument drawn on behalf of second respondent by Mr. Coleman.

[50] In these written
heads the following further submissions were made:

‘The
Law

The
series of events that brought this application about occurred in a
highly regulated environment. The facts engage the following
legislation:

1. 
   POCA

   
   

2. 
   The
   Financial Intelligence Act, 2007, (Act 3 of 2007) (FIA)

   
   

3. 
   The
   Bills of Exchange Act, 2003 (Act 22 of 2003) (the Act)

   
   

4. 
   The
   Payment System Management Act, 2003 (Act 18 of 2003) (PSMA)

   
   

5. 
   The
   Lotteries Act, 2002 (Act 15 of 2002) - to some extent and which
   appears not to be in force yet - this may render the “lottery”
   activity of applicant also unlawful.

   
   

POCA

The
following provisions of POCA should be considered for the purpose of
this dispute:

1. 
   The
   definition of ‘proceeds of unlawful activities’ which
   includes any advantage or benefit derived or received directly or
   indirectly and includes property which is mingled with property that
   is proceeds of unlawful activity;

   
   

2. 
   The
   definition of ‘property’ which includes money;

   
   

3. 
   Section
   4 which creates the offence of money laundering by disguising or
   assisting in disguising proceeds of unlawful activities;

   
   

4. 
   Section
   5 which create the offence of assisting in money laundering;

   
   

5. 
   Section
   6 which provides that any person who, amongst others, acquires or
   has possession of property and who knows or ought reasonably to have
   known that it is or forms part of proceeds of unlawful activities
   commits the offence of money laundering. Significantly these
   offences can be committed ‘negligently’ [see section
   10(1) of POCA];

   
   

6. 
   Section
   9 relating to reporting (in terms the FIA) of suspicious
   transactions;

   
   

7. 
   Definitions
   of ‘affected gift’ and ‘realisable property’
   in section 17(1) read with sections 20(1)(b) & 22 - the
   arrangement of paying N$ 3 000.00 for N$ 250 000.00 falls in the
   definition of ‘affected gift’;

   
   

8. 
   Sections
   43 & 44 creating remedies for person who suffered damages as a
   result of an offence - Sections 44(2) & (3) gives this Court the
   power to order payment to an applicant who suffered damages - This
   could be applicant’s remedy –

   
   

9. 
   Section
   51 which standard asserts applies to the money in question - Section
   51(4) stipulates the money must be dealt with in accordance with the
   directions of the High Court - also relief which applicant can
   pursue because the money he lays claim to is in this preservation
   fund.
   

   
   

One
of the primary objectives of POCA is to divest criminals of the
proceeds of their criminal activities.⁷
It also does not intend to take away the common law rights of
ordinary concurrent creditors to claim satisfaction of their debts
from restrained property.⁸

The
Financial Intelligence Act, 2007 (Act 3 of 2007) (FIA)

The
FIA imposes various duties on banks. Relevant provisions are:

1. 
   The
   definitions of ‘accountable institution’ which includes
   a bank, ‘business relationship’ and ‘client’
   which refers to the relationship between bank and client amongst
   others;

   
   

2. 
   Sections
   20, 21 & 23 which impose reporting obligations on banks;

   
   

3. 
   Section
   27 which provides that a bank may continue with a transaction unless
   directed by the Bank of Namibia (BON) not to proceed with it;

   
   

4. 
   Section
   28 empowers the BON to direct a bank not to proceed with a
   transaction - this happened in this matter on 16 December 2009 in
   respect of transactions involving Scratch-A-Million CC. The quick
   action by Standard and FNB to refuse payment of the N$ 80 000.00
   contributed to the preservation of the funds;

   
   

5. 
   Section
   49 contains an indemnity for the BON or any other person performing
   a function in terms of this Act;

   
   

The
Bills of Exchange Act 2003 (Act 22 of 2003) (the Act)

Although
no one mentions the Act in this matter it is pivotal to any dealings
involving cheques. Relevant provisions are:

1. 
   The
   definitions of ‘bearer’, ‘bill’ (and ‘bill
   of exchange’ in section 2 ‘holder’ and ‘collecting
   bank’ in section 1;

   
   

2. 
   Section
   39 which stipulates that if a bill is dishonoured by non-acceptance
   a right of recourse accrues against the drawer (herein
   Scratch-A-Million Enterprise CC) to the holder - this clearly
   contemplates that the drawee bank itself can refuse payment on a
   cheque;

   
   

3. 
   Section
   42 - which provides that a cheque may be presented for payment to
   the drawee by a collecting bank (FNB) on behalf of the holder
   (applicant) - this section [especially sub-section (3)] demonstrates
   that no liability is imposed on the collecting bank in this process
   - this is obviously subject to the various duties (expounded on the
   latter herein) imposed by common law on the collecting bank in this
   context;

   
   

4. 
   Section
   44 (1) (a) stipulates that a bill (which includes a cheque by virtue
   of the definitions referred to above) is dishonoured by non-payment
   if it is presented for payment and payment is refused or cannot be
   obtained. Section 44 (2) stipulates that in such event a right of
   recourse against the drawer accrues to the holder;

   
   

5. 
   Part
   VI sets out the liabilities of parties in respect of a bill of
   exchange. It stipulates that the drawee (Standard in this case) only
   assumes liability of it accepts the bill. It is submitted that on
   the facts of this matter Standard should be treated as not to have
   accepted the bill;

   
   

6. 
   Section
   52 creates a liability for the drawer on a cheque;

   
   

7. 
   Section
   55 stipulates that if a bill is dishonoured the holder may recover
   damages from any party liable on the bill. This does not included
   the collecting bank (FNB);

   
   

8. 
   Section
   71 provides that the duty and authority of a bank to pay a cheque
   drawn on it by its customer are revoked when it receives a
   countermand of payment. This demonstrates that it is conceivable
   that the drawee bank can be relieved of the duty to honour a cheque
   drawn on it by its customer. From this follows that the collecting
   bank equally will have no duty to allow its client (the payee in
   respect of the cheque) to access the money to be paid in terms of
   the cheque in question.

   
   

Bank/client
relationship

The
relationship between a bank and its client is based on contract and
is essentially that of creditor and debtor with the underlying nature
of mandate.⁹
The following is accepted in respect of this relationship:

1. 
   The
   right of reversal of a credit based on a cheque which is dishonoured
   is implied by law as well as by banking custom and usage.¹⁰
   In general a credit can be reversed for any legitimate reason.¹¹

   
   

2. 
   When
   as a result of some conduct of the bank the client believes his
   account has a credit in the amount of the cheque deposited and he
   withdraws money the bank my under certain circumstances be stopped
   from reclaiming the money.¹²
   This principle does not prevent the bank from reversing the entry,
   especially when it transpires the money may be proceeds of crime.

   
   

3. 
   It
   is a fundamental principle that the risk of non-payment, for
   whatever reason, of a cheque deposited for collection, falls on the
   customer and not on the bank.¹³

   
   

4. 
   Money
   paid into the bank account of a client becomes the property of the
   bank. This only happens if the bank has no reason to believe it had
   been stolen or obtained by fraud.¹⁴
   Ownership never vests in the client.

   
   

1. 
   A
   collecting bank owes a duty towards the drawee bank to ascertain
   that payment is being collected on behalf of a person who is
   entitled to it.¹⁵
   It is submitted this implies that once the collecting bank is
   informed that a cheque is drawn in respect of proceeds of crime it
   is under a duty to ensure its client does not have access to the
   money.

   
   

2. 
   In
   general a collecting bank should exercise reasonable care in the
   collection of cheques on behalf of its customers.¹⁶

   
   

3. 
   Although
   the underlying agreement is one of mandate the contract between the
   bank and its client must yield to applicable legislation regardless
   of whether the statute applies to contract or it has become a
   contractual term imposed by the statute.¹⁷
   It is submitted this means that POCA, FIA and the Act inform the
   relationship.

   
   

4. 
   Public
   policy considerations are also at play here. It is submitted that
   even if applicant had a ‘right’ to the money (which he
   does not in this case) the supervening illegality of him accessing
   it excused FNB of any obligation to permit him to do so:

   
   

“The
role of public policy in cases of supervening illegality is discussed
in depth by Treitel in his recent work to which reference was made
earlier, at 326, on the strength of various decided cases
illustrating the point, the learned author emphasises the difference
between supervening impossibility and supervening illegality as
grounds of a contract’s discharge. The payment of money, he
says, cannot in law become impossible, but the contract is discharged
on the ground of public policy by the preventing prohibition. That is
the basic principle. The ratio is that the parties must not be given
the incentive, which they might have if the contract remained in
force, to violate the prohibition which gives rise to the
illegality.”¹⁸

5. 
   Finally
   it is submitted the following dictum is also applicable here:

   
   

“As
examples of the grounds on which the Courts have exercised their
discretion in refusing to order specific performance, although
performance was not impossible, may be mentioned: (a) where damages
would adequately compensate the plaintiff; (b) where it would be
difficult for the Court to enforce its decree; (c) where the thing
claimed can readily be bought anywhere; (d) where specific
performance entails the rendering of services of a personal nature.

To
these may be added examples given by Wessels on Contract (vol 2) of
good and sufficient grounds for refusing the decree, (e) where it
would operate unreasonably hardly on the defendant, or where the
agreement giving rise to the claim is unreasonable, or where the
decree would produce injustice, or would be inequitable under all the
circumstances”¹⁹

‘Submissions

Against
this background it is submitted:

1. 
   FNB
   acting as collecting bank for applicant did nothing wrong.
   

   
   

2. 
   In
   fact had FNB ignored Standard’s caveat on 7 November 2011 and
   allowed applicant to withdraw the N$ 80 000.00 it may have found
   itself being liable in negligence as well as under POCA.

   
   

3. 
   The
   bank-client relationship does not require the bank qua collecting
   bank to obtain the client’s authority to reverse an unpaid
   cheque. In fact it has a duty towards the drawee bank to ensure the
   money does not go where it should not.

   
   

4. 
   Applicant’s
   remedy (assuming he has one) lies against the drawer on the cheque.
   He also has remedies under POCA against the preservation fund. He
   does not explain why he does not follow either of these routes.

   
   

5. 
   Furthermore
   this is a matter where public policy comes to play. Neither FNB nor
   Standard should be made to pay the debt of someone who is suspected
   of laundering money. The money applicant lays claim to sits in an
   identified fund and bears the attributes of ‘earmarked
   money’.²⁰
   He should pursue his relief there.

   
   

6. 
   In
   the final analysis applicant does not make out a case for the relief
   he claims.’

   
   

WHERE THE RESPONDENT’S
ENTITLED TO CAUSE A REVERSAL OF THE AMOUNT STANDING TO APPLICANT’S
CREDIT IN THE FIRST RESPONDENT’S BOOKS

[51]
The parties were ad idem that
the relationship between a bank and
its client is based on contract and that is essentially one of
creditor and debtor, with the underlying nature of mandate.

[52] Also Mr Narib did
not dispute that a bank may, in certain instances, reverse a credit
standing to a client’s credit in a bank’s books of
account.

[53]
The general underlying position was aptly summed up by Griesel AJA in
Nedbank Ltd v
Pestana 2009 (2) SA
189 (SCA):

‘[8]
It is well established that, in general, entries in a bank's books
constitute prima facie evidence of the transactions so recorded. This
does not mean, however, that in a particular case one is precluded
from looking behind such entries to discover what the true state of
affairs is.²¹
Some examples where a credit may be validly reversed by a bank were
mentioned by Zulman JA in Oneanate: ²²

(I)f
a customer deposits a cheque into its bank account, the bank would
upon receiving the deposit pass a credit entry to that customer's
account. If it is established that the drawer's signature has been
forged it cannot be suggested that the bank would be precluded from
reversing the credit entry previously made. So, too, if a customer
deposits bank notes into its account the bank would similarly pass a
credit entry in respect thereof. If it subsequently transpires that
the bank notes were forgeries it can again not be successfully
contended that the bank would be precluded from reversing the credit
entry.

[9]
Further examples where a credit may be validly reversed, include
cases where a cheque has been deposited into a client's account and
the resultant credit entry is treated as provisional (or
conditional), subject to a hold period in terms of 'standard banking
practice';²³
or where the client came by the money by way of fraud or theft;²⁴
or where a wrong account was erroneously credited.²⁵
Absent some legitimate reason for reversal, however, the general
principle is that once an amount has been validly transferred by A to
the credit of B's bank account, the credit belongs to B and the bank
has to keep it at B's disposal; it cannot simply retransfer the money
back into the account of A without the concurrence of B.’²⁶

[54] It will have been
noted immediately that even the general principle, enunciated above,
is qualified to the extent that it is only applicable in the absence
of a legitimate reason for reversal.

[55] The question
therefore arises whether or not the reasons advanced by the
respondents amount to such a legitimate reason?

[56] Put more succinctly
– and given the defences raised - the question that will have
to be answered is whether or not the cited statutory provisions have
impacted on the traditional banker client relationship, to such an
extent that they afforded the second respondent a legitimate reason
to request the first respondent to return the funds standing to the
credit of the applicant in first respondents books and for the first
respondent to heed such request?

[57] As the relationship
between banker and client is essentially a contractual one it needs
to be examined further whether – in the absence of any express
or tacit agreement to the effect – the statutes impose any
residual²⁷
conditions onto this contractual relationship.

[58] According to Prof RH
Christie²⁸
‘the nature of terms implied by law has never been better
expressed than by Corbett AJA in his dissenting judgment’ in
Alfred McAlpine & Son (PTY) LTD v Transvaal Provincial
Administration 1974 (3) SA 506 (A) at 531:

‘In
legal parlance the expression "implied term" is an
ambiguous one²⁹
in that it is often used, without discrimination, to denote two,
possibly three, distinct concepts. In the first place, it is used to
describe an unexpressed provision of the contract which the law
imports therein, generally as a matter of course, without reference
to the actual intention of the parties. The intention of the parties
is not totally ignored. Such a term is not normally implied if it is
in conflict with the express provisions of the contract. On the other
hand, it does not originate in the contractual consensus: it is
imposed by the law from without. Indeed, terms are often implied by
law in cases where it is by no means clear that the parties would
have agreed to incorporate them in their contract. Ready examples of
such terms implied by law are to be found in the law of sale, e.g.
the seller's implied guarantee or warranty against defects; in the
law of lease the similar implied undertakings by the lessor as to
quiet enjoyment and absence of defects; and in the law of negotiable
instruments the engagements of drawer, acceptor and endorser, as
imported by secs. 52 and 53 of the Bills of Exchange Act, 34 of 1964.
Such implied terms may derive from the common law, trade usage or
custom, or from statute. In a sense "implied term" is, in
this context, a misnomer in that in content it simply represents a
legal duty (giving rise to a correlative right) imposed by law,
unless excluded by the parties, in the case of certain classes of
contracts. It is a naturalium of the contract in question.’³⁰

[59] In his helpful
discussion of terms implied by law Professor Christie goes on to
state:

‘To
say that terms are implied by law without reference to the actual
intention of the parties does not mean that the actual or presumed
intention of the parties has been ignored in the historical process
by which the law was made. The origin of many terms now implied by
law was no doubt the idea that any, or at least any honest party
entering into a particular type of contract would want to include
such a term in it …

But
once the law has settled on a particular term it is fruitless to
inquire into the intention of the parties except to the extent of
ascertaining whether they have exercised their privilege of expressly
excluding the term that would otherwise be implied, as when a sale is
made voetstoots. A term that would normally be implied by law may
also be excluded because it would conflict with the express terms of
the contract.’ …

‘Once
the law has been settled, its application in a particular case will
depend upon whether the contract is of the type in which the law
implies the term …

A
term implied by law in a written contract is just as much a term of
that contract as the written terms, and equally resistant to
variation by parol evidence.’ ³¹

[60] Professor AJ Kerr’s³²
analysis of the nature of ‘residual’ provisions then
amplifies Professor Christies commentary in the following respects:

‘Residual
provisions are contractual provisions which the law provides and
imposes in the absence of express or implied agreement of the
parties. Their number and importance depend upon the nature of the
contract in question and upon the extent of the parties’
agreement …

Residual
provisions are part of the contract but they are not added at the
beginning or at any particular point in the contract …

That
it is the law which provides and imposes residual obligations is
clear in principle and is reflected in much of the language used by
the courts. Thus in Ace Motors v Bamard,³³
Dowling J said:

There
are in the special contract of sale, which is perhaps the most
frequendy recurring contract in human affairs, a number of
established ‘incidentals’ of the contract which, unless
they are excluded by agreement, form part of it by operation of law.

… Holmes
JA, with whom all the other members of the court concurred,³⁴
said that in the case of a merchant seller of latently defective
goods who publicly professes to have attributes of skill and expert
knowledge in relation to the kind of goods sold the law irrebuttably
attaches to him the liability in question, save only where he has
expressly or by implication contracted out of it.³⁵

Clearly
residual provisions differ in their origin from implied provisions,
the latter not being imposed ab extra. Residual provisions are
often not in the minds of the parties when negotiations take place
and would frequently not pass the hypothetical bystander test …

It
is not argued that provisions expressing residual obligations are
never in the minds of parties, only that the circumstances of each
case in which the question arises should be examined…

Because
residual provisions differ from implied provisions and because the
application of the test for implied provisions would often lead to
the rejection of residual provisions in cases in which they are in
fact enforced as part of the contract, the point of view put forward
by many authorities that all residual provisions are to be called
implied provisions ought not to be adopted. Voet expresses the
point of view of such authorities clearly:

[N]o
one can have any doubt that one who contracts in the most unqualified
terms is understood to have also made an implied agreement in regard
to the making good of all those things which the public law directs
must be made good on such a contract, so often as no covenant has in
so many words been made to the contrary.’³⁶

THE APPLICABLE TEST

[61]
It has thus appeared that - in the enquiry – of whether or not
any statutory terms will be superimposed on a contract - one will
have to consider the circumstances of the particular case, the
‘naturalium’ of
the agreement, whether or not the contract is of
the type in which the law implies the term and whether
or not the parties have expressly excluded such term.

[62] To this one might
add that one would also have to consider whether or not the
legislature intended to use its overriding power to nullify or
control any attempt by the parties to exclude a term imposed by
statute or the common law in their contract.

[63] Reverting to the
facts.

[64]
It is without doubt that there exists no express agreement between
any of the parties which expressly excludes the operation of
Prevention of Organised
Crime Act 2004,
(Act 29 of 2004), (POCA)
or the Financial
Intelligence Act,
2007, (Act 3 of 2007) (FIA)
from their agreement.

[65]
If one considers the ‘naturalium’
of the underlying agreement it is clear that it
regulates the banker- client relationship.

IMPACTING LEGISLATION
: THE FINANCIAL INTELLIGENCE ACT 2007

[66]
From the provisions of Financial Intelligence Act 3 of 2007 (FIA)
it appears firstly that FIA
does indeed make a bank an
‘accountable institution’ on which, in terms of Sections
20, 21 & 23 reporting obligations are imposed. The term ‘business
relationship’ is defined in Section 1 to mean "an
arrangement between a client and an accountable institution for the
purpose of concluding transactions on a regular basis’ - that
would obviously include banking transactions - the word
"client" is defined to mean
‘a person who has entered into a business relationship or a
single transaction with an accountable institution’ – it
is clear that a person who holds a bank account with a banking
institution has entered into such a business relationship with the
particular bank in question. Additional factors such as that the
banker client relationship is contractual, in terms of which the bank
will conduct banking transactions with or on behalf of the client and
that a client has to pay banking charges for the banking services so
rendered are all indicative that the relationship between banker and
client is also a ‘business relationship’ which would fall
within the ambit of the referred to definitions.

[67] It is to be noted
secondly that in terms of Section 25 accountable institutions, ie.
also banks, must adopt, develop and implement a customer acceptance
policy, internal rules, programmes, policies, procedures and controls
as prescribed to protect its systems against any money laundering
activities An accountable institution must designate compliance
officers at management level who will be in charge of the application
of the internal programmes and procedures, including proper
maintenance of records and the reporting of suspicious transactions.

[68]
In this conjunction sight must not be lost of the concept of
"money laundering" or "money
laundering activity" as defined³⁷.
Two facets of that definition are, in the main, of relevance in this
instance : a) there must be a transaction³⁸
which involves the proceeds of unlawful activity - as
may be inferred from objective factual circumstances - and
were a person knows, or
has reason to believe, that the property is proceeds from any
unlawful activity - or were in respect of
the conduct of a person – engaged in a transaction which
directly or indirectly involves the proceeds of unlawful activity -
such person - without
reasonable excuse fails to take reasonable steps to ascertain whether
or not the property is proceeds from any unlawful activity –
or – b) there must be activity which
constitutes an offence as defined in section 4, 5 or 6 of the
Prevention of Organised Crime Act, 2004 (Act 29 of 2004);

[69]
Importantly it is to be noted that Section 21 of FIA
imposes reporting obligations on
accountable institutions as well as ‘reporting procedures’³⁹
– which – as far as accountable institutions are
concerned may attract - on non-compliance a fine not exceeding N$500
000 or, in the case of an institution which is an individual, to
imprisonment for a period not exceeding 30 years or to both such fine
and imprisonment.

[70] Finally it is of
relevance to note that – an accountable institution that has
made a report to the Bank of Namibia concerning a suspicious
transaction, may continue with and carry out the transaction in terms
of Section 27 - unless the Bank of Namibia directs such accountable
institution in terms of section 28 not to proceed with the
transaction. The Bank of Namibia – in turn – is afforded
the right in terms of Section 28 to direct the accountable
institution in writing not to proceed with the carrying out of a
suspicious transaction or any other transaction in respect of the
funds affected by that transaction or proposed transaction for a
period determined by the Bank in order to allow the Bank of Namibia
to make the necessary inquiries concerning the transaction; and if
the Bank deems it appropriate, to inform and advise an investigating
authority and the Prosecutor-General.

THE
LINK BETWEEN FIA
AND POCA

[71]
One of the main aims of the Financial Intelligence Act 2007 is the
combating of money laundering.⁴⁰
The Prevention of Organised Crime Act 29 of 2004 (POCA)
was also enacted,
inter alia, to introduce measures to combat money laundering⁴¹.
It is not
surprising therefore that the definition of ‘money laundering’
– as contained in Section 1 of FIA
- then contains a direct link to
POCA, which
Act then reciprocates the link to FIA
in Section 9.

IMPACTING LEGISLATION
: THE PREVENTION OF ORGANISED CRIME ACT 2004

[72]
From the
definition of ‘proceeds of unlawful activities’ as
contained in Section 1 of POCA
it appears that this concept includes
any property or any service, advantage, benefit or reward that was
derived, received or retained, directly or indirectly in Namibia or
elsewhere, at any time before or after the commencement of this Act,
in connection with or as a result of any unlawful activity carried on
by any person, and includes any property representing property so
derived and includes property which is mingled with property that is
proceeds of unlawful activity - the definition of ‘property’
includes money.

[73] Section 4 which
creates the offence of disguising the unlawful origin of property.
More particularly this section brings within the ambit of that Act
any person who knows or ought reasonably to have known that property
is or forms part of the proceeds of unlawful activities and engages
in any arrangement or transaction with anyone in connection with that
property, whether that agreement, arrangement or transaction is
legally enforceable or not; or any person who performs any other act
in connection with that property, whether it is performed
independently or in concert with any other person, and that
agreement, arrangement, transaction or act has or is likely to have
the effect of concealing or disguising the nature, origin, source,
location, disposition or movement of the property or its ownership,
or any interest which anyone may have in respect of that property; or
that the arrangement enables or assists any person who has committed
or commits an offence, whether in Namibia or elsewhere to remove or
diminish any property acquired directly, or indirectly, as a result
of the commission of an offence commits the offence of money
laundering. The section is thus couched in extremely wide terms.

[74]
In terms of Section 5 a
person who knows or ought reasonably to have known that another
person has obtained the proceeds of unlawful activities, and who
enters into an agreement with anyone or engages in any arrangement or
transaction whereby-the retention or the control by or on behalf of
that other person of the proceeds of unlawful activities is
facilitated; or the proceeds of unlawful activities are used to make
funds available to that other person or to acquire property on his or
her behalf or to benefit him or her in any other way,commits the
offence of money laundering.

[75] Even a person who
has possession of property and who knows or ought reasonably to have
known that it is or forms part of the proceeds of unlawful activities
commits the offence of money laundering in terms of Section 6.

[76] In terms of Section
7 the liability of persons under section 4, 5 or 6 is extended to a
directors, managers, secretaries or other similar office holders of
corporations

[77]
Lastly it should be mentioned that severe penalties are imposed for
contraventions of Sections 2(1) to 7 of POCA
in terms of Section 3.⁴²

IS THE CONTRACT
BETWEEN BANKER AND CLIENT THE TYPE OF CONTRACT ON WHICH THE LAW
IMPOSES ITS TERMS

[78]
Given the fact that FIA is
expressly made applicable to accountable institutions such as banks
and the transactions it concludes with and for clients - imposing on
a commercial bank the duty to put anti-money laundering mechanisms in
place – as well as reporting obligations, it does not take much
to conclude the contract is of the type on which
this statute superimposes its terms. It has appeared that at least
Sections 20 to 23 and 25 and 26 are to be imported into the contract
in question.

[79]
The traditional banker- client relationship is also directly affected
by Section 28 in terms of which the
Bank of Namibia is afforded the right to direct a bank in writing not
to proceed with the carrying out of a suspicious transaction or any
other transaction in respect of the funds affected by that
transaction or proposed transaction for a period determined by the
Bank of Namibia in order to allow the Bank of Namibia to make the
necessary inquiries concerning the transaction; and if the Bank of
Namibia deems it appropriate, to inform and advise an investigating
authority and the Prosecutor-General. Also this right and the banks
corresponding obligations – and thus the effect that Section 28
has for the client in question – will surely also form part of
any agreement between banker and client.

[80]
In addition it needs to be taken into account that the above cited
provisions have created a direct link between FIA
and POCA.

[81]
In terms of POCA,
transactions - which involve money – and
which thus include money standing to the credit of a particular
client in a bank’s books of account – fall within the
ambit of POCA.

[82] If a banker
therefore knows or ought reasonably to have known that such money is
or forms part of the proceeds of unlawful activities and engages in
any arrangement or transaction with anyone, (inclusive of his or her
clients), in connection with such moneys - or if a banker performs
any other act in connection with that money and the transaction is
likely to have the effect of concealing or disguising the nature,
origin, source, location, disposition or movement of the money or its
ownership, or that the arrangement enables or assists any person who
has committed or commits an offence to remove or diminish any
property acquired directly, or indirectly, as a result of the
commission of an offence, the banker – and one would imagine
the client as well – would commit the offence of money
laundering in terms of Section 4.

[83]
In terms of Section 5 a banker who knows or
ought reasonably to have known that another person - such as a client
- has obtained the proceeds of unlawful activities, and if the banker
would perform a transaction whereby-the retention or the control by
or on behalf of that other person of the proceeds of unlawful
activities is facilitated; or the proceeds of unlawful activities are
used to make funds available to that other person or to acquire
property on his or her behalf or to benefit him or her in any other
way, a banker would commit the offence of money laundering.

[84] Even a bank which
has possession of money and whose officials know or ought reasonably
to have known that it is or forms part of the proceeds of unlawful
activities commits the offence of money laundering in terms of
Section 6 as read with Section 7.

[85] In conjunction with
this it is to be noted that also in terms of Section 9 of POCA
reporting obligations are imposed on bankers.

[86] From all these
provisions it must again be concluded that also POCA imposes its
terms on the type of contract that traditionally is
styled as being ‘essentially one of creditor and debtor, with
the underlying nature of mandate’. This would at the very least
be true in regard to the reporting obligations and in respect
of the duty not to commit any offence in terms of Sections 4,5,6 and
7 in the course of conducting any banking business. This duty
translates itself into the obligation to not honour a demand for
payment made by a client – such as in this instance –
where the heeding of demand would contravene the provisions of POCA.

[87] To illustrate: if Mr
Narib’s argument were correct that the funds - that were
deposited by way of a cheque drawn against the account of
Scratch-A-Million Enterprise CC, held with first respondent - became
the property of applicant and that second respondent therefore became
duty bound to honour the applicant’s demand for payment this
would mean that the money obtained by illegal means by
Scratch-A-Million Enterprise CC would become legal the moment the
clearance period for cheques would have expired or the moment such
moneys would become unidentifiable. Surely this would amount to money
laundering in the clearest terms. Surely this can never be and was
never intended to be permissible and surely a banker cannot be
expected to commit an offence – or even to expose him- or
herself to potential criminal liability in the course of executing a
client’s instructions, such as in this instance.

[88] The cumulative
effect of the referred to provisions is thus ultimately to the effect
that a bank may lawfully refuse to honour a client’s
instructions for payment in the given circumstances. It follows that
a particular credit entry may thus also be validly reversed by a bank
on that same account.

ARE THE PARTICULAR
RESIDUAL TERMS OF SUCH A NATURE THAT THE PARTIES COULD HAVE OPTED TO
EXCLUDE THEM EXPRESSLY OR IMPLIEDLY

[89]
In the quest to determine whether or not the applicable provisions of
FIA and POCA
are to be regarded as contractual terms implied by law,
which would thus have to be superimposed on the standard banker-
client agreement in this instance it remains to be established
whether or not the parties have expressly excluded the operation of
FIA and POCA
from their underlying agreement and/or whether
the legislature has intended to use its overriding power to nullify
or control any attempt by the parties to exclude the terms imposed by
FIA and POCA
on their contract.

[90] It follows as a
matter of logic that if the answer to latter enquiry is in the
affirmative, the need to determine the former, falls away.

[91] The following
factors are indicative of the legislature’s intention:

1. 
   all the above listed
   provisions of FIA and POCA have expressly been made applicable to
   banking transactions and thus also on the banker and client
   relationship and on any business they may transact;

   
   

2. 
   all the above listed
   provisions of FIA and POCA impact directly of indirectly on banking
   business and thus on the banker– client relationship in the
   respects listed above;

   
   

3. 
   all contraventions of
   both FIA and POCA attract severe penalties; it would have been
   absurd for the legislature to exclude banks – whose business
   operations very often lie at the core of money laundering activities
   - from the operation of these Acts and its penalties – to have
   done so would have dramatically reduced the effectiveness of the
   common underlying purpose to both statutes, namely the combating and
   prevention of money laundering activities – surely this could
   never have been intended ;

   
   

4. 
   it would have been an
   easy matter for the legislature to have provided for the exclusion
   of certain categories of persons and entities – such as bank
   and bankers and their clients - from the operation of these statutes
   – which it did not do for obvious reasons. ⁴³
   
   

   
   

[92] In my view there can
be no question that Parliament has not intended to use its overriding
power to nullify any attempt by parties to any agreement to exclude
the terms imposed by FIA and POCA contractually.

[93] It follows from such
conclusion that the aforementioned provisions of FIA and POCA
are to be regarded as terms imposed by law on the traditional banker-
client relationship and the contractual bond that exists between
them.

[94] This finding in turn
exonerates the complained actions by first and second respondents –
who in terms of the residual obligations imposed by the FIA
legislation – not only had the obligation to report the
suspicious transaction – but who were also obliged to honour
the Bank of Namibia’s request, received in
writing, not to proceed with the carrying out of the suspicious
transaction or any other transaction in respect of the funds affected
by that transaction or proposed transaction for the period determined
by the Bank of Namibia in order to allow the Bank of Namibia to make
the necessary inquiries concerning the transaction and to inform and
advise an investigating authority and the Prosecutor-General thereof.

[95]
It is common cause that, as a result, on 22 December 2009, the
Prosecutor-General secured an interim restraining order in terms of
which all funds, inclusive of the winnings of N$ 250 000.00 of the
applicant, were frozen. Although the provisional order was eventually
discharged vis a vis the
applicant, the confirmation thereof vis
a vis the other respondents effectively
meant that the N$ 250 000.00, which had been returned to the second
respondent, continue to be frozen.

[96] The preservation
order obtained by the Prosecutor-General in terms of section 51 of
the POCA Act on 27 May 2011 means that the credit balance in the
Scratch-A-Million Enterprise CC account with second respondent⁴⁴
now stands potentially to be forfeited to the state. Such a result
would never have been achieved if the first and second respondents
would not have assumed the responsibility to withhold payment of the
amount the applicant sought to withdraw on 7 September 2009 or if the
second respondent would not have effected the subsequent reversal of
the credit entry in the second respondent’s books of account or
if the repatriation of the total sum deposited to first respondent
would not have been effected by second respondent.

[97]
Viewed holistically this result is also in line with the fundamental
principle that no one is to benefit from the proceeds of crime and
the recognised principle that it is legitimate for a state to
introduce measures – even if they would impact on the freedom
to contract one might add - that would ensure that no one can benefit
from criminal activity and to induce members of the public – in
this case bankers – to act vigilantly in relation to the
business transactions which they conduct – so as to inhibit
crime.⁴⁵

[98] Ultimately I come to
the conclusion that the applicant’s case for relief, which was
essentially founded on the traditional banker-client relationship, as
regulated by contract, cannot succeed in view of the residual terms
which the law has imposed thereon and which terms exonerate the first
and second respondent’s actions herein.

[99] It follows that the
application falls to be dismissed with costs, such costs are to
include the costs of one instructed- and one instructing counsel, as
far as the first respondent is concerned, and the costs of one
instructed counsel and one instructing counsel – up to the
stage of the drawing of the second respondent’s heads of
argument – the remainder of the costs awarded to second
respondent are awarded on the scale of one instructing counsel.

----------------------------------

H GEIER

Judge

APPEARANCES

APPLICANT: G Narib

Instructed by Swarts &
Bock Legal Practitioners, Windhoek.

1^st
RESPONDENT: A van Vuuren

Instructed by Fisher, Quarmby &
Pfeifer,

Windhoek

2^nd RESPONDENT: EN Angula

AngulaColeman, Windhoek