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[2011] ZAGPJHC 219
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Investec Bank Ltd v Welman (25078/2011) [2011] ZAGPJHC 219 (15 December 2011)
REPUBLIC OF SOUTH
AFRICA
SOUTH
GAUTENG HIGH COURT, JOHANNESBURG
Case No. 25078/2011
Date:15/12/2011
REPORTABLE
In the matter between:
INVESTEC
BANK LIMITED
..
Applicant
and
ANTHONIE
WELMAN
Respondent
JUDGMENT
MEYER, J
[1] The applicant seeks
payment from the respondent on four deeds of suretyship in the total
sum of R10, 260, 716.81, interest,
and costs of the application on
the scale as between attorney and own client.
[2] The respondent has
for the past fifteen years been speculating with immovable
properties, mainly in and around Cape Town.
He often utilised
‘shelf’ close corporations as vehicles for his
speculation activities. It is, I think, safe
to accept that he
did so in order to gain the various advantages of being a juristic
person. He is the sole member of Marcelle
Props 193 CC
(Marcelle 193) and Marcelle Props 194 CC (Marcelle 194). The
acquisition by each close corporation of two apartments
in a
development known as Harbour Bridge at the Victoria and Alfred
Waterfront was financed by the applicant in terms of four loan
agreements, two of which were concluded between the applicant and
Marcelle 193 and two between it and Marcelle 194. The
respondent in each instance bound himself in favour of the applicant
as surety and co-principal debtor with the principal debtor
–
Marcelle 193 or Marcelle 194 - in respect of its liability arising
from each loan agreement.
[3] The applicant has
made out a proper case in support of the relief it claims in terms of
its notice of motion against the respondent.
The amounts
presently due and payable to it by Marcelle 193 and by Marcelle 194
and the respondent’s liability as surety
for the payment of
such amounts have been established. In my view Adv GB Rome, who
appeared for the respondent, correctly
conceded that the respondent
has not raised any defence valid in law to the applicant’s
claims in his answering affidavit.
The matter, however, does
not end here.
[4] A belated notice in
terms of Rule 16(A) was filed on behalf of the respondent regarding
the raising of a constitutional issue
in these proceedings, and
condonation for the late filing thereof is sought. The
respondent now wishes to challenge the constitutionality
of s 4(2)(c)
of the National Credit Act, 34 of 2005 (the NCA). The
contention on behalf of the respondent is that s 4(2)(c)
of the NCA
is inconsistent with the principle of equality enshrined in s 9 of
the Constitution since it ‘arbitrarily’
differentiates
between natural persons who bind themselves as sureties for the
obligations of natural persons and natural persons
who bind
themselves as sureties for the obligations of juristic persons as
defined in s 1 of the NCA. The respondent’s
constitutional challenge rests on the principal contention that he
would have been entitled to the various protection measures
afforded
to a debtor under the NCA had the principal debtors, Marcelle 193 and
Marcelle 194, for which he stood surety been natural
persons and not
juristic persons.
[5] The same
constitutional challenge, however, was rejected in
Standard Bank
of South Africa Ltd v Hunkydory Investments 194 Ltd and Another (No
1)
2010 (1) SA 627
(C), paras [5.2] and [13]
et seq
.
Leave to appeal was refused, and such refusal was confirmed by the
Supreme Court of Appeal and thereafter also by the Constitutional
Court, both courts finding that there were no reasonable prospects of
success. See:
Standard Bank of South Africa Ltd v
Hunkydory Investments 188 (Pty) Ltd and Others (No 2)
2010 (1) SA
634
(WCC), para [3]. The same constitutional challenge was also
rejected in this division in the as yet unreported judgment of
my
brother Van Oosten, J in the matter of
SLP Knot Investments 777
(Pty) Ltd v Coronado Trading 150 CC and Others
(case no.
16108/2009), paras [11] – [17], which was delivered on 3
November 2010.
[6] Adv Rome submitted
that the constitutional challenge that was rejected in
Hunkydory
(1)
only concerned ss 4(1)(a) and 4(1)(b) and not s 4(2)(c) of
the NCA. There is no merit in this submission. It is
based
on a selective reading of that judgment. The first
defendant in that case was a juristic person principal debtor and the
second defendant a natural person surety. They opposed that
application
inter alia
on the basis that ss 4(1)(a), 4(1)(b)
and 4(2)(c) of the NCA are unconstitutional insofar as those
provisions exclude juristic persons
from the application of the NCA
in the circumstances referred to in s 4. See:
Hunkydory
(1),
para [5]. The submission on behalf of the second
defendant in that case was also that ‘… s 4(2)(c) should
be
so interpreted as to afford him, as the ‘alleged surety’,
the same protection as any other natural person who signed
surety for
the debt of another natural person.’ See:
Hunkydory
(1),
para [15]. It is clear from a contextual reading of
the judgment that the interpretation contended for and the defence of
the unconstitutionality of ss 4(1)(a), 4(1)(b) and 4(2)(c) of the NCA
were rejected. It is important to note that an order
was made
also against the second defendant (the natural person surety),
jointly and severally with the first defendant (the juristic
person
principal debtor), for payment of the amounts that were claimed.
[7] A similar argument
that the decision and refusals of leave to appeal in
Hunkydory (1)
did not decide the constitutional validity of the NCA’s ‘…
exclusion of natural persons having bound themselves
as sureties to
entities from the protection of the NCA…’ was rejected
in
Slip Knot Investments 777
, para [12]. I respectfully
agree with Van Oosten, J in finding that
‘
[t]he
argument resulted from a misreading of the judgment in
Hunkydory
as this aspect was
specifically addressed by the learned Judge in relation to the second
defendant in that matter. The circumstances
and principles
applicable in both matters are identical.’
[8] I, in any event,
endorse and adopt the reasoning in
Hunkydory (1)
and that in
Slip Knot Investments 777
, which, in my view, applies equally
to the constitutional challenge which the respondent wishes to raise
against s 4(2)(c) of the
NCA in this matter. The
differentiation presently relevant is tailored to arise only in
instances when a credit agreement
is concluded by a juristic person
whose asset value or annual turnover exceeds the prescribed threshold
or when the credit agreement
concluded by it is a ‘large’
one as described in s 9(4) of the NCA. There is, in my view -
for the reasons given
in
Hunkydory (1)
and in
Slip Knot
Investments 777
- a rational connection between the exclusion
from the application of the NCA of such juristic person principal
debtors and those
who
inter alia
stand surety for them and the
legitimate governmental purpose behind its enactment. Such
limited exclusion is evidently aimed
at furthering the object of
protecting individual consumers ‘… while avoiding the
imposition of regulatory burdens
which may limit the availability of
credit to small businesses.’
Per
Van Oosten, J in
Slip Knot Investments 777
, para [16].
[9] I am accordingly of
the view that the constitutional challenge which the respondent
wishes to raise is ‘ill-founded’
or ‘appears to be
hopeless’. The ineluctable inference is therefore, as was
in my view correctly submitted by
Adv DC Fisher SC who appeared on
behalf of the applicant, that the respondent’s application for
condonation is made with
the object of delaying the applicant’s
claim. See:
Smith N.O. v Brummer N.O.
1954 (3) SA
352
(O), at pp 357 – 358B.
[10] In the result, I
make the following order:
1. The respondent’s
application for condonation of the late filing of his Rule 16(A)
notice in terms of the Uniform
Rules of Court is refused with costs.
2. The respondent
is ordered to pay to the applicant:
2.1. the sum of R1, 724,
734.36, and interest thereon at the rate of 12.15% per annum from 27
May 2011 to date of payment compounded
monthly;
2.2. the sum of R1, 724,
612.67, and interest thereon at the rate of 12.15% per annum from 27
May 2011 to date of payment compounded
monthly;
2.3. the sum of R3, 854,
194.27, and interest thereon at the rate of 12.15% per annum from 27
May 2011 to date of payment compounded
monthly;
2.4. the sum of R2, 957,
175.51, and interest thereon at the rate of 13% per annum from 27 May
2011 to date of payment compounded
monthly; and
2.5. the costs of this
application on the scale as between attorney and own client.
P.A. MEYER
JUDGE OF THE HIGH COURT
15 December 2011
Date of hearing: 27
October 2011
Date of judgment:
15 December 2011
Counsel for applicant:
Adv DC Fisher SC
Counsel for respondent:
Adv GB Rome
Attorneys for applicant:
Blakes Maphanga Inc
Randburg
Ref:
Mr Sanchez
c/o
Breytenbach Mostert Skosana Inc
Braamfontein,
Johannesburg
Attorneys for respondent:
Herold Gie Attorneys
c/o
Read Hope Phillips Thomas & Cadman Inc
Melrose
Arch, Johannesburg
Ref: S
Read