Nedbank Limited and Another v Absa Bank Limited (2011/4672) [2017] ZAGPJHC 139 (8 February 2017)

Nedbank Limited and Another v Absa Bank Limited (2011/4672) [2017] ZAGPJHC 139 (8 February 2017)

The court held that, accepting the facts pleaded by Absa as true, Nedbank's alleged conduct in secretly creating a false market and manipulating the price of PNG shares was wrongful and gave rise to a legal duty towards Absa. The court found that public policy and the legal convictions of the community demand that Nedbank be held liable for the loss suffered by Absa, as Absa was exposed to abnormal risks it could not foresee or protect against. The absence of privity of contract or a special relationship did not preclude the existence of a legal duty in these circumstances. The court concluded that the particulars of claim disclose sufficient averments to sustain a cause of action in...

Citation
[2017] ZAGPJHC 139
Parties
Defendant: Nedbank Limited; Defendant: Syfrets Securities Limited; Plaintiff: Absa Bank Limited
Court
South Gauteng High Court, Johannesburg
Jurisdiction
South Africa
Judgment Date
8 February 2017
Case Number
2011/4672
Procedural Posture
Exception Application / Exception to Particulars of Claim; Interlocutory Judgment
Outcome
Exception dismissed; Nedbank to pay costs including costs of two counsel.
Judges
Epstein AJ
Legal Topics
Pure Economic Loss, Wrongfulness, Market Manipulation, Banking Duties, Derivative Trading, Statutory Breach
Delict Banking and Finance Commercial and Corporate Pure Economic Loss Wrongfulness Market Manipulation Banking Duties Derivative Trading +1 more

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Parties

Nedbank Limited

Defendant

Syfrets Securities Limited

Defendant

Absa Bank Limited

Plaintiff

Procedural Posture

Exception Application / Exception to Particulars of Claim; Interlocutory Judgment

Legal Issues

  1. 1 Whether Nedbank owed Absa a legal duty in the context of SSF trading resulting in pure economic loss.
  2. 2 Whether Nedbank's alleged conduct in creating a false market and manipulating PNG shares was wrongful under South African law.
  3. 3 Whether the particulars of claim disclose sufficient averments to sustain a cause of action in delict for pure economic loss.

Ratio Decidendi

The court held that, accepting the facts pleaded by Absa as true, Nedbank's alleged conduct in secretly creating a false market and manipulating the price of PNG shares was wrongful and gave rise to a legal duty towards Absa. The court found that public policy and the legal convictions of the community demand that Nedbank be held liable for the loss suffered by Absa, as Absa was exposed to abnormal risks it could not foresee or protect against. The absence of privity of contract or a special relationship did not preclude the existence of a legal duty in these circumstances. The court concluded that the particulars of claim disclose sufficient averments to sustain a cause of action in...

Court Disposition

Exception dismissed; Nedbank to pay costs including costs of two counsel.

Orders

  • The exception is dismissed.
  • Nedbank is to pay the costs including the costs consequent upon the employment of two counsel.