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[2012] ZAGPJHC 271
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Sable Place Properties (Pty) Ltd v Bott (30476/12) [2012] ZAGPJHC 271 (26 October 2012)
REPUBLIC OF SOUTH AFRICA
SOUTH GAUTENG HIGH COURT
(JOHANNESBURG)
CASE NO: 30476/12
DATE:26/10/2012
In the matter between:
SABLE
PLACE PROPERTIES (PTY) LIMITED
........................
Plaintiff
and
ERIC
JULIAN
BOTT
........................................................................
Defendant
JUDGMENT
This is an application for summary judgment.
On 20 August 2009, Riverside Industrial Park Joint Venture (“the
JV”) concluded an agreement with CFS Electrical
Suppliers
(Pty) Limited (“CFS”) and the defendant termed a
“settlement agreement”.
The preamble to the agreement recorded that the
purchaser purchased a property from the seller for a price of
R2 502 000,
that the seller had cancelled the sale as a
result of breaches of the sale agreement by the purchaser and that
to avoid further
litigation in respect of “
damages
and further issues arising
” the
parties had agreed on the terms of the settlement agreement.
In terms of the settlement agreement, CFS was to pay to the JV an
amount of R120 000 by 20 September 2009. Failing payment
by
that date, CFS would pay interest to the JV at 15,5% per annum,
compounded monthly.
The defendant bound himself as surety and Concessionaire-principal
debtor for the obligations of CFS in terms of the settlement
agreement.
On 1 November 2009, the JV ceded its rights under the settlement
agreement to the plaintiff.
It is not disputed that CFS defaulted on its obligation to pay in
terms of the settlement agreement. The plaintiff has accordingly
issued summons for the amount of R185 646,87, being the R120 000
referred to in the settlement agreement plus compound interest
until
21 July 2012.
The defendant resisted summary judgment on various grounds but
ultimately relied only on the averment that the settlement agreement
was a credit agreement as contemplated in the
National Credit Act
No. 34 of 2005
and that the plaintiff had failed to comply with
sections 129
and
130
of that Act.
The plaintiff disputed that the agreement was a
credit agreement and relied on the fact that the original
transaction of which
the settlement agreement was borne was a “
large
agreement”
as contemplated in
section 4(1)(b)
(read with
section 9(4)
and
7
(1)(b) of the Act)
concluded by a consumer who was a juristic person, namely CPS.
The plaintiff relie
d
further on the decision in
Grainco
(Pty) Ltd v Broodryk NO en andere
1
where an acknowledgment of debt was held not to have been a credit
agreement.
Section
8(4)
of the Act
provides in relevant part as follows :
“
An agreement,
irrespective of its form … constitutes a credit transaction if
it –
(a) … a pawn
transaction or a discounted transaction;
(b) [various specific forms of
agreement are then listed];
(f) any other agreement, other
than a credit facility or credit guarantee, in terms of which payment
of an amount owed by one person
to another is deferred, and any
charge, fee or interest is payable to the credit provider in respect
of-
(i) the agreement; or
(ii) the amount that has been
deferred.”
In the settlement agreement, the payment of the amount of R120 000
is clearly deferred and interest is payable on it.
In
Grainco
the court reasoned as follows in holding that a
similar agreement, notwithstanding that it ostensibly fell within
the terms of
section 8(4)(f)
, not a credit transaction:
“
[7.4] Ek
stem met mnr Joubert, namens die eiser, saam dat dit nooit die
bedoeling van die wetgewer kon gewees het om so 'n transaksie
te tref
nie. Sodanige uitleg van die Wet sou lei tot 'absurdity so glaring
that it would never have been contemplated by the legislature'.
(Vergelyk Caroluskraal Farms (Edms) Bpk v Eerste Nasionale Bank van
Suider-Afrika Bpk; Red Head Boer Goat (Edms) Bpk v Eerste Nasionale
Bank van Suider-Afrika Bpk; Sleutelfontein (Edms) Bpk v Eerste
Nasionale Bank van Suider-Afrika Bpk
[1994] ZASCA 23
;
1994 (3) SA 407
(A) te 422A –
G.)
[7.5] Die onderhawige
transaksie val nie binne die besigheid van geldlenings en
kredietverskaffing in die gewone sin van die woord
nie. Die aanhef
tot die Nasionale Kredietwet waarin die doelstellings beskryf word,
bevestig 'n uitleg dat dit nie die oogmerk
was om so 'n onderlinge
uitstel van betaling van skadevergoeding te tref nie. (Vergelyk
Bridgeway Ltd v Markam
[2008] ZAGPHC 251
;
2008 (6) SA 123
(W) te 127I – 128A.)”
By contrast, in
Carter Trading (Pty) Ltd v Blignaut
2
that court held that an acknowledgement of debt involving a much
shorter deferment of payment and in the present instance did
indeed
constitute a credit transaction holding-
“
[17] In the application
of these terms of the acknowledgement of debt to the provisions of
s
8(4)(f)
of the Act it would appear that those terms are exactly what
is envisaged in the Act to be a credit agreement, namely an agreement
in terms of which payment is deferred and at least a fee or charge is
payable in respect of the acknowledgment of debt, and interest
and
legal fees are payable in the event of a failure by the defendant to
pay the amount as agreed therein.”
I am bound by neither of these decisions, but prefer the reasoning
in the
Carter
decision. I am accordingly satisfied that the
settlement agreement constituted a credit transaction as
contemplated in
section 8(4)(f)
of the Act. The Act is clearly
framed in the widest terms and aims at inclusion rather than
exclusion.
The question then is whether the agreement still falls outside the
provisions of the Act by reason of its being a large agreement
indistinguishable from the original agreement which gave rise to the
settlement agreement. In this regard the plaintiff relied
on the
decision in
Ribeiro and Another v Slip Knot Investments 777 (Pty)
Ltd
.
3
The facts of that case are recorded in the headnote as follows:
“
The appellants were
sureties in terms of a loan agreement between the principal debtor
and the respondent. This agreement, to which
the NCA did not apply,
was later cancelled by agreement and replaced with a new agreement
between the same parties, in terms of
which the principal debtor was
discharged and the appellants agreed to obligations and undertakings
that were specifically acknowledged
to have originated in their
suretyship obligations in terms of the initial agreement. The
obligations under the initial loan agreements
and those under the new
agreement were thus interdependent, and this could only mean that the
new agreement was in substance an
agreement to guarantee the
principal debtor’s obligations under the national loan
agreements, and was therefore a credit
guarantee to which the NCA did
not apply.”
The difficulty with the application of this case to the present
matter is that I have no proper information before me about the
original agreement other than a passing reference in the preamble to
the settlement agreement.
Moreover, the settlement agreement pertains more to the settlement
of a claim for damages arising from the breach of the early
agreement rather than a reiteration of the obligations under the
early agreement.
The amount provided for in the settlement agreement falls well below
the threshold amount for a large agreement.
Accordingly, I am satisfied that the settlement agreement
constitutes a credit transaction as contemplated in section 8(4)(f)
and is not excluded by virtue of the provisions of section 4(1) of
the Act.
The consequence of this is that the defendant has signed as surety
and Concessionaire-principal debtor in respect of obligations
under
an agreement which constitutes a credit transaction in terms of the
Act. In this regard section 8(5) provides as follows:
“
An agreement,
irrespective of its form … constitutes a credit guarantee if,
in terms of that agreement, a person undertakes
or promises to
satisfy upon demand any obligation of another consumer in terms of a
credit facility or a credit transaction to
which this Act applies.”
Section 4(2)(c) then provides that-
“
This Act applies to a
credit guarantee only to the extent that this Act applies to a credit
facility or credit transaction in respect
of which the credit
guarantee is granted.”
In my view, the defendant having signed as Concessionaire-principal
debtor, in addition to having signed as surety, renders that
component of his obligation a credit transaction in terms of section
8(4)(f) independently of his obligations as surety.
In the circumstances, the plaintiff was obliged to comply with the
requirements of section 129 and 130 of the Act. It is common
cause
that the plaintiff has not done so. That brings section 130(4)(b)
of the Act into play. That provision obliges this court
to:
“
(i) adjourn the matter
before it; and
(ii) make an appropriate order
setting out the steps the credit provider must complete before the
matter may be resumed.”
Accordingly, the plaintiff is entitled to resume the application for
summary judgment once there has been compliance with the
relevant
provisions of the Act. I will make an appropriate order in this
regard.
As far as the matter for costs is concerned, counsel for the
defendant argued that the plaintiff ought to have complied with
its
obligations in terms of the Act from the outset and there is no
reason why the defendant should be forced to incur the cost
consequences of its precipitate action. The plaintiff on the other
hand argued that the matter of costs should be reserved to
see if
the defendant genuinely made use of the remedies afforded him under
the Act or was later found simply to have engaged
in delaying
tactics.
The approach to costs contended for by the defendant was the one
followed in the
Carter Trading
matter. In my view, the
matter of costs will more appropriately be determined after there
has been compliance with the Act and
the summary judgment
application has finally been disposed of.
I accordingly make the following order:
The plaintiff’s application for summary judgement is
postponed sine die;
The plaintiff may not set this matter down until it has-
complied with the provisions of
section 130
of the
National Credit
Act No. 34 of 2005
;
upon completion of the remedies referred to in
section 129(1)(a)
,
if any are resorted to, or otherwise, become entitled to resume its
application for summary judgment.
Costs are reserved.
____________________
A C DODSON AJ
HEARD:
22 OCTOBER 2012
JUDGMENT
DELIVERED: 26/10/12
COUNSEL
FOR THE PLAINTIFF: ADV DL WILLIAMS
NSTRUCTED BY: HUTCHEON
ATTORNEYS, 1
MIRAGE ROAD, BEDFORDVIEW,
JOHANNESBURG
COUNSEL
FOR THE DEFENDANT: DB SUTTNER
INSTRUCTED BY: WERKSMANS ATTORNEYS,
155
FIFTH STREET, SANDTON
1
2012 (4) SA 517
(FB)
2
2010 (2) SA 46
(ECP)
3
2011 (1) SA 575
(SCA).