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BY Aslam Moosajee AND Shenaaz Munga
Court grants FNB the right to sever relationship with Talhado
On 19 July 2022, the Eastern Cape High Court dismissed an urgent application in which Talhado Fishing Enterprises Proprietary Limited sought an interim interdict to prevent First National Bank (“FNB”) from closing its bank accounts pending the outcome of an application to review and set aside the bank’s decision to close Talhado’s accounts.
In the judgment, the court held that:
- if FNB gave the applicant a hearing, it would have made no difference to the decision to close the account;
- the decision made by FNB to protect its reputation should not be interfered with;
- it is not fair to impose an obligation on FNB to retain its relationship with Talhado simply because other banks are not likely to accept it as a client;
- the fact that a business entity is entitled to banking facilities may be a commercial consideration but Talhado cannot insist that the relationship should endure against FNB’s will; and
- FNB’s decision to close Talhado’s accounts was not reviewable in terms of the common law.
This decision will have a positive and significant impact on the country’s banking industry in that it allows banks to take measures in protecting their reputation.
Aslam Moosajee
Executive | Dispute Resolution
Shenaaz Munga
Senior Associate | Dispute Resolution
