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<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"> <html xmlns="http://www.w3.org/1999/xhtml"> <head> </head> <body> <div style="font-family:Verdana, Geneva, sans-serif; font-size:12px; text-align:justify"> <table width="800" border="0" style="border:1px solid #ccc;padding:5px;" align="center" cellpadding="6" cellspacing="0"> <tr> <td align="left" valign="top"> Once a guarantee is valid on the face of it, the contractual obligation of the bank is to pay the nominated beneficiary, if the conditions are met - (30 Dec 2022) </td> </tr> <tr> <td align="left" valign="top">Cloete Murray N O and Others vs. Humansdorp Co-operative Limited</td> </tr> <tr> <td align="left" valign="top" style="background-color:#FDEDCE">In present case, the High Court dismissed the application brought by the liquidators of the Appellant, Cape Concentrate (Pty) Ltd. to set aside, as a payment without value, the payment of monies made to the Respondent from trust account of Pagdens (a firm of attorneys of which the business rescue practitioner was a director). The high court found that, the payment was a demand guarantees made by Cape Concentrate to the Respondent and was a disposition with value. 
It was common cause that, a debt was owed to the Respondent by the Trust. While Cape Concentrate was under business rescue, the business rescue practitioner caused monies of Cape Concentrate to be paid into the trust account of Pagdens. Pagdens paid that money from its trust account to the credit of Standard Bank Third Party Trust Administration (TPFA) accounts, in order for Pagdens to cause guarantees to be issued by its utilisation of the Standard Bank’s online TPFA system. The guarantees were to secure the debts of the Trust to the Respondent. The Trust was not able to honour its debt to the Respondent, which made demand in terms of the guarantees. When demand was made, the guarantees were not presented to Standard Bank for payment, but to Pagdens. 
It was not disputed that, the bank guarantees were binding on Standard Bank. Once those monies were credited to the Standard Bank TPFA account, they became subject to a pledge and cession in favour of Standard Bank. The fact that the cession was in respect of a property guarantee, as opposed to a demand guarantee, was irrelevant, said the SCA. Once a guarantee is valid on the face of it, the contractual obligation of the bank is to pay the nominated beneficiary if the conditions are met. 
When the demand was made by the Respondent for payment under the guarantees, payment of the pledged and ceded monies was made by Pagdens on behalf of Standard Bank, in line with its obligations under the guarantees. The payment was therefore made by Standard Bank in satisfaction of the demand guarantee and not by Cape Concentrate. Appeal dismissed.</td> </tr> <tr> <td align="left" valign="top" ></td> </tr> <tr> <td align="left" valign="top" >Tags : Payment, Demand, Bank guarantees</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr>  <td align="left" valign="top">Source : newsroom.manupatra.com</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr> <td align="left" valign="top">Regards</td> </tr> <tr> <td align="left" valign="top">Team Manupatra</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> </table> </div> </body> </html>