ABSA Bank Limited v Intensive Air (Pty) Limited (in liquidation) and Others

Dr J W K Louw, a heart surgeon, was the sole shareholder and director of Intensive Air (Pty) Ltd, which operated an air passenger and air ambulance service. Ticket sales from the company’s operations were paid into a cheque account opened with Absa Bank in Louw’s personal name, trading as ‘Intensive Air’. Louw also held other personal accounts with Absa, including an aircraft lease account with a substantial overdraft. Funds from the ticket account were used to pay company expenses and to service Louw’s personal overdraft. When the company was liquidated in 2002, the ticket account reflected a credit balance of R293 656.56. Absa appropriated this amount by setting it off against Louw’s personal indebtedness. The company’s liquidators claimed that the credit balance belonged to the company and that Absa was not entitled to set-off, alternatively that the deposits constituted dispositions without value under insolvency legislation.

The appeal was upheld with costs. The order of the full court was set aside and replaced with an order dismissing the liquidators’ appeal, confirming Absa Bank’s entitlement to the credit balance by set-off.

The case clarifies South African law on banker–customer relationships where company funds are paid into a director’s personal account. It confirms that, absent an agreement with the bank creating an agency or earmarking arrangement, the bank may treat the account as belonging to the named account holder and exercise set-off. The judgment limits the application of Varvarinskoye to its specific facts and reinforces orthodox principles of debtor–creditor relationships in banking law.