, LML4807 ASSIGNMENT 2 SEMESTER 2 2026
DUE DATE: SEPTEMBER 2026
Critical Comment on Joint Stock Company Varvarinskoye v Absa Bank Ltd and Others 2008
(4) SA 287 (SCA)
1. Introduction
The decision in Joint Stock Company Varvarinskoye v Absa Bank Ltd and Others 2008 (4)
SA 287 (SCA) is significant in South African banking law because it considers the
relationship between a bank's ownership of money deposited into a customer's account, the
rights of third parties to those funds, and the bank's right of set-off. The Supreme Court of
Appeal held that Absa Bank was not entitled to appropriate approximately R28.2 million
standing to the credit of account 1313 in order to satisfy debts owed to it by the account
holder.1
The judgment is particularly interesting because Navsa JA, writing the main judgment, and
Cachalia JA, in a separate concurring judgment, reached the same conclusion but differed
concerning the significance of the bank's knowledge. Navsa JA regarded Absa's knowledge
of the source and purpose of the funds as directly relevant to the bank's asserted right of set-
off.2 Cachalia JA, however, expressly stated that he considered the bank's knowledge of the
intended purpose of account 1313 to be irrelevant to its entitlement to set-off.3
In my view, the ultimate decision of the court was correct, but Cachalia JA's treatment of the
bank's knowledge requires qualification. His reasoning is persuasive insofar as it focuses on
the legal rights created by the underlying agreement, but it is arguably too broad to regard the
bank's knowledge as irrelevant where the bank itself was aware of, and participated in, the
arrangement governing the account.
1
Joint Stock Company Varvarinskoye v Absa Bank Ltd and Others 2008 (4) SA 287 (SCA) 287–288
2
Ibid 297–298.
3
Ibid 307–308 (Cachalia JA).
DUE DATE: SEPTEMBER 2026
Critical Comment on Joint Stock Company Varvarinskoye v Absa Bank Ltd and Others 2008
(4) SA 287 (SCA)
1. Introduction
The decision in Joint Stock Company Varvarinskoye v Absa Bank Ltd and Others 2008 (4)
SA 287 (SCA) is significant in South African banking law because it considers the
relationship between a bank's ownership of money deposited into a customer's account, the
rights of third parties to those funds, and the bank's right of set-off. The Supreme Court of
Appeal held that Absa Bank was not entitled to appropriate approximately R28.2 million
standing to the credit of account 1313 in order to satisfy debts owed to it by the account
holder.1
The judgment is particularly interesting because Navsa JA, writing the main judgment, and
Cachalia JA, in a separate concurring judgment, reached the same conclusion but differed
concerning the significance of the bank's knowledge. Navsa JA regarded Absa's knowledge
of the source and purpose of the funds as directly relevant to the bank's asserted right of set-
off.2 Cachalia JA, however, expressly stated that he considered the bank's knowledge of the
intended purpose of account 1313 to be irrelevant to its entitlement to set-off.3
In my view, the ultimate decision of the court was correct, but Cachalia JA's treatment of the
bank's knowledge requires qualification. His reasoning is persuasive insofar as it focuses on
the legal rights created by the underlying agreement, but it is arguably too broad to regard the
bank's knowledge as irrelevant where the bank itself was aware of, and participated in, the
arrangement governing the account.
1
Joint Stock Company Varvarinskoye v Absa Bank Ltd and Others 2008 (4) SA 287 (SCA) 287–288
2
Ibid 297–298.
3
Ibid 307–308 (Cachalia JA).
