Pratt v FirstRand Bank Limited

In 2001 the appellant, Anne Pratt, concluded a loan agreement with FirstRand Bank under which the bank advanced R25 million to her as part of a restructuring of her business interests. The funds were paid, at her direction, via foreign accounts to facilitate the acquisition of shares held by an offshore trust. When she later failed to repay the loan, Pratt pre‑emptively instituted proceedings seeking a declaratory order that the loan agreement was null and void on the basis that it contravened regulation 10(1)(c) of the Exchange Control Regulations. The High Court and, on appeal, the Supreme Court of Appeal rejected this contention and held that FirstRand had the necessary permission and that the agreement was valid. Thereafter, when FirstRand pursued its counterclaim for repayment, Pratt amended her plea to allege that the bank had fraudulently devised a prohibited ‘loop structure’ to circumvent exchange control regulations and that the agreement was therefore invalid. FirstRand raised a defence of res judicata.

The appeal was dismissed with costs, including the costs of two counsel. The plea of res judicata was upheld, confirming that the validity of the loan agreement could not be re‑litigated.

The case is an important authority on res judicata and issue estoppel in South African law. It illustrates that parties cannot re‑litigate an issue already finally determined by advancing new factual allegations or legal arguments aimed at reaching a different conclusion. The judgment reinforces the once‑and‑for‑all rule and provides guidance on when courts may, and may not, relax the strict requirements of res judicata in the interests of fairness.