ABSA Bank Limited v Leech and Others

The respondents, as trustees of the Kon Leech Trust, paid ABSA Bank Limited an amount of R4.125 million pursuant to a complex settlement arrangement (the second agreement) concluded in October 1993, which formed part of a broader property development and debt-restructuring transaction. The payment was retained by ABSA in full and final settlement of its claims against the Trust arising from earlier credit facilities and litigation that ABSA had withdrawn. The trustees later sued ABSA for repayment of part of the amount, alleging that a substantial portion of the payment was made under a mistaken belief that it was owing, because the in duplum rule limited the Trust’s indebtedness to a much lower amount. The Witwatersrand Local Division upheld the claim in part. ABSA appealed to the Supreme Court of Appeal.

The appeal was upheld with costs, including the costs of two counsel. The order of the court a quo was set aside and replaced with an order dismissing the plaintiffs’ action with costs.

The case is a leading authority on the requirements of the condictio indebiti in South African law. It clarifies that a deliberate payment made to settle a disputed debt for commercial reasons is not recoverable on the basis of mistake, even if it later appears that the amount was not legally due. The judgment reinforces the distinction between payments made under true mistake and payments made as part of a conscious compromise or settlement.