Panamo Properties 103 (Pty) Ltd v Land and Agricultural Development Bank of South Africa (20051/2014) [2015] ZASCA 70; 2016 (1) SA 202 (SCA); [2015] 3 All SA 42 (SCA) (22 May 2015)

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Panamo Properties 103 (Pty) Ltd v Land and Agricultural Development Bank of South Africa (20051/2014) [2015] ZASCA 70; 2016 (1) SA 202 (SCA); [2015] 3 All SA 42 (SCA) (22 May 2015)

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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 20051/2014
In
the matter between:
PANAMO PROPERTIES
103 (PTY)
LTD
......................................................................
APPELLANT
and
LAND AND
AGRICULTURAL DEVELOPMENT BANK
OF
SOUTH
AFRICA
......................................................................................................
RESPONDENT
Neutral
Citation:
Panamo Properties v Land
and Agricultural Development Bank
(20051/2014)
[2015] ZASCA 70
(22 May 2015)
Coram:
Lewis, Pillay, Willis JJA and Schoeman
and Gorven AJJA
Heard:
7 May 2015
Delivered:
22 May 2015
Summary
:
Agreement of loan made in contravention of the
Land and Agricultural
Development Bank Act 15 of 2002
invalid: mortgage bond registered as
security for moneys lent and advanced would nonetheless secure a
claim based on unjustified
enrichment.
ORDER
On
appeal from
: Gauteng Local Division of the High Court,
Johannesburg (Claassen J sitting as court of first instance):
judgment reported
sub nom Land and Agricultural Development Bank of
South Africa v Panamo Properties 103 (Pty) Ltd
2014 (2) SA 545
(GJ).
The
appeal is dismissed with costs including those occasioned by the use
of two counsel.
JUDGMENT
Lewis
JA (Pillay and Willis JJA and Schoeman and Gorven concurring)
[1]
This appeal concerns the validity of a transaction concluded between
the appellant, Panamo Properties 103 (Pty) Ltd (Panamo),
and the Land
and Agricultural Development Bank of South Africa (the Bank), the
respondent. Also at issue is the validity of a mortgage
bond
registered over Panamo’s property as security for the
indebtedness of Panamo to the Bank. These issues themselves depend
on
an interpretation of the
Land and Agricultural Development Bank Act
15 of 2002
, and of the mortgage bond in question.
[2]
The dispute between the parties was heard by the Gauteng Local
Division of the High Court (C J Claassen J) after referral to
it by
the Bank as the plaintiff, and Panamo as the defendant, of a stated
case. The court a quo found that the loan agreement between
the
parties was invalid since the Bank did not have the power to enter
into the transaction in question, but that the mortgage
bond was
nonetheless enforceable. The court a quo also found that the Bank was
not estopped from asserting that the contract was
invalid. That
aspect of the decision is no longer contested in the appeal, which
lies with the leave of the court a quo.
[3]
The parties asked the court a quo to order the separation of certain
issues, which were defined in the stated case, and to postpone
the
determination of other issues. That order was granted. They defined
the issues for determination in terms of the stated case;
annexed the
agreement between them and the terms of the mortgage bond (amongst
other documents); agreed common cause facts and
listed their
respective contentions.
[4]
The background to the stated case was that on 5 April 2007 the
parties entered into a written agreement in terms of which the
Bank
would lend to Panamo the sum of R52 919 845, which would be used by
Panamo for the acquisition of certain agricultural properties
and the
development of a township, with the services required and engineering
fees, on the properties. A mortgage bond was registered
over the
properties giving the Bank continuous covering security for any
existing or future debt that Panamo might owe up to an
amount of R76
million.
[5]
The agreement was the culmination of negotiations between the
parties, commencing in August 2006 when Panamo asked the Bank
for a
loan for the purpose of acquiring and developing the properties. In
December 2006 the Bank wrote to Panamo advising that
it had agreed to
make the finance requested available. It also stated that it was a
condition precedent to concluding the loan
that Panamo submit its
shareholders’ agreement to the Bank, and that that had to
reflect a minimum 50.1 per cent black economic
empowerment ownership
of Panamo. The offer was accepted on the same day.
[6]
A term of the agreement that was concluded on 5 April 2007 was that a
Panamo Profit Sharing Agreement, in terms of which the
Bank would
participate in the profits made on the sale of any properties, would
also be concluded. A letter sent by Panamo to the
Bank on 9 May 2007
stated that the profit sharing agreement would be entered into. The
parties proceeded as if the loan agreement
was in effect and Panamo
borrowed R18 500 000 from the Bank. However, on 17 January 2008 the
Bank wrote to Panamo contending that
the contract for the loan to it
was invalid.
[7]
In July 2010 the Bank instituted action against Panamo, claiming
enforcement of the contract. Panamo counterclaimed. In 2012
the Bank
amended its particulars of claim and asked for a declaration that the
contract was invalid. The Bank contended that the
agreement of loan
was unauthorized and void in that it did not comply with
s 3
of
the Act which sets out the objects of the Act – what it is
intended to achieve; secondly, that the agreement was in
contravention
of the provisions of
s 23
which prohibits the
investment of funds by the Bank in unlisted companies, trusts,
business undertakings or ventures without the
prior written approval
of the Minister responsible for agriculture; and, thirdly, in
contravention of s 66 of the Public Finance
Management Act 1 of 1999
(the PFMA). It contended also that despite the invalidity of the
agreement of loan, the mortgage bond
over Panamo’s property
remained valid and enforceable.
[8]
Panamo denied these contentions and pleaded that the Bank was
estopped from denying the invalidity of the agreement; alternatively

that, on the basis of the Turquand Rule, it was precluded from
denying that the Minister had given her prior written approval of
the
agreement. As I have said, the defences based on estoppel and the
Turquand Rule were abandoned at the hearing of the appeal,
and
rightly so.
[9]
And that was the background to the determination of the legal issues
by the court a quo. These were framed as follows. ‘Whether
or
not the agreement is unauthorized and thus void for . . . alleged
want of compliance with the Act and the PFMA; whether or not
the
mortgage bond concluded pursuant to the Agreement is enforceable
notwithstanding the alleged invalidity of the Agreement;  .

. . .’ The parties agreed that the Bank bore the onus of
proving that the agreement was invalid and that the bond was
enforceable.
[10]
The facts that were common cause, and that are germane to the issues
are: (a) that the Bank agreed to lend to Panamo the sum
of R52 919
845; (b) of that amount, R18 500 000 would be used for the
acquisition of two properties, as described in the stated
case; (c)
the balance of R34 419 845 would be used for township establishment
and engineering service fees, as described in the
loan agreement; (d)
the agreement was subject to a number of suspensive conditions
relating to the conclusion of further agreements,
all of which were
either fulfilled or waived; (e) at all material times the parties
intended to enter into the agreement and be
bound by it; (f) the Bank
in fact lent Panamo the sum of R18 500 000 to finance the acquisition
of the properties and undertook
to advance a further amount of R34
419 845; (g) the parties intended that the capital amount lent to
Panamo, plus interest, would
be repaid to the Bank; (h) Panamo was an
unlisted company, trust or other equivalent legal entity, business
undertaking or venture
as contemplated by s 23 of the Act; and
that (i) the agreement constituted an ‘investment’ in one
of the entities
identified in s 23. The last ‘fact’ was
qualified by a statement that Panamo did not agree that the agreement
was ‘exclusively’
an investment as contemplated in s 23.
[11]
The Bank’s contentions, set out in the stated case, were, in
summary, these.  The loan fell outside the scope of
the Act and
did not comply with the PFMA and was thus void. The fact that moneys
had been advanced pursuant to the agreement did
not affect the
validity of the agreement and the advances were
sine
causa.
The mortgage bond registered
pursuant to the agreement remained valid, having regard to its terms.
The profit sharing agreements
had not been concluded, but the
conditions of the loan agreement that they be entered into had been
waived.
[12]
Panamo contended that on a construction of the agreement and the Act
the Bank was empowered to enter into the agreement. Such
agreements
were not expressly prohibited by the Act, and there was no
numerus
clausus
of all the juristic acts that
the Bank was empowered to perform. The agreement was intended to
achieve the objects of the Act indirectly,
which was not prohibited
by the Act.  Accordingly, the agreement was not
ultra
vires
: the Bank had the power to
conclude it because indirectly it would achieve the objects of the
Act set out in s 3. I shall deal
with further contentions in respect
of the achievement of the objects of the Act, and whether the
transaction amounted to an investment,
as they are set out in the
stated case, when dealing with the legal framework within which the
validity of the loan agreement must
be determined.
[13]
Claassen J found that the loan agreement was invalid. It was not
within the power of the Bank to conclude a transaction for
the
development of a township on agricultural land. In this regard, he
relied on a decision of Bashall AJ in
Land
and Agricultural Development Bank of South Africa v Impande Property
Investments (Pty) Ltd
(GSJ case No
2010/35355, 9 April 2013) where it was found that a very similar
transaction was void since it was not in furtherance
of the objects
of the Act.
[14]
Those objects are set out in s 3 of the Act:
‘
3(1)
The objects of the Bank are the promotion, facilitation and support
of—
(a)
equitable ownership of agricultural land, in particular the
increase of ownership of agricultural land by historically
disadvantaged
persons;
(b)
agrarian reform, land redistribution or development programmes
aimed at historically disadvantaged persons  . . . for the
development
of farming enterprises and agricultural purposes;
(c)
land access for agricultural purposes;
(d)
agricultural entrepeneurship;
(e)
the removal of the legacy of past racial and gender
discrimination in the agricultural sector;
(f)
the enhancement of productivity, profitability, investment and
innovation in the agricultural and rural financial systems;
(g)
programmes designed to stimulate the growth of the agricultural
sector and the better use of land;
(h)
programmes designed to promote and develop the environmental
sustainability of land and related natural resources;
(i)
programmes that contribute to agricultural aspects of rural
development and job creation;
(j)
commercial agriculture; and
(k)
food security.’
[15]
It seems apparent that the acquisition of agricultural land for the
purpose of transforming it into an urban township is not
only not
consonant with the objects of the Act, but also completely contrary
to that which the Bank is supposed to achieve.
That was the
finding of Bashall AJ in
Impande
and of Claassen J in this matter. But, contended Panamo, it was a
condition of the offer made by the Bank that 50.1 per cent of
its
shareholders would be previously disadvantaged people, and the land
acquired was agricultural. That meant that the promotion,

facilitation and support of equitable ownership of agricultural land
and the removal of the legacy of racial discrimination were
achieved
– meeting at least two of the objects of the Act. And the
investment of the funds for township establishment and
engineering
services resulted in a better use of the land, within the ambit of s
3(1)
(g)
.
[16]
These contentions were not hard-pressed on appeal. The transformation
of agricultural land to an urban township can hardly
be regarded as
use of agricultural land, and ownership of a township development
company cannot be said to give greater access
to agriculture by
historically disadvantaged people. The contention was perverse.
Counsel for Panamo sought to avoid this conclusion
by arguing that by
entering into the profit sharing agreement Panamo was contributing to
the funds of the Bank, which could then
better achieve the objects of
the Act. It was thus indirectly achieving the objects of the Act.
[17]
But that, it seems to me, is no more than making an investment –
contributing to the Bank’s funds. It is correct
that the Bank
is given the power to make investments by the Act. And an investment
need not be made in order to achieve the objects
of the Act. However,
investments by the Bank require the consent of the Minister. Section
23 of the Act, which governs investments
by the Bank, states that the
Board must adopt an investment policy, approved in writing by the
Minister. Section 23(2) provides
that: ‘The Bank may not,
without the prior written approval of the Minister, invest money in
an unlisted company, trust or
other equivalent legal entity, business
undertaking or venture.’
[18]
It was common cause in the stated case that Panamo was such an entity
and thus the Minister’s written approval was required
in order
for the investment to be made. It was implicit in the facts stated
and the arguments made that ministerial approval had
not been
granted. At the hearing counsel sought to distance Panamo from the
agreement that an investment had been made. The common
cause fact, it
was argued, was no more than a view of law.  But the argument is
in any event of no moment because even if
the transaction did not
amount to an investment it has still to be determined whether it was
within the power of the Bank.
[19]
And the question remains whether the Bank had the power to conclude
the transaction even if it did not conform with the objects
of the
Act. In my view, this question is determined by s 26 of the Act,
which deals with the conduct of business by the Bank. It
reads:
‘
(1)
The business of the Bank is to provide agricultural and rural
financial services in furtherance of the objects of the Bank
contemplated in section 3, against security or on such alternative
conditions as the Board may from time to time determine, or in
such
other manner as may be provided for by this Act.
(2) The Bank may
conduct its business by way of any operation, method or practice
envisaged in this Act or in any other applicable
law, including but
not limited to—
(a)
providing finance for the purposes
contemplated in section 3;
(b)
investing money
;
.
. .
(m)
in general, making all such advances and
performing all such acts as the Bank may by this Act or any other law
be authorized to
make or perform or which reasonably form part of or
are generally associated with agriculture or developmental financial
services.’
[20]
Section 26(3) provides that ministerial authority is required for
investing money (as well as for other acts referred to in
the
subsections I have not quoted). But written approval of the Minister
is not required for s 26(2)
(m)
.
Panamo thus argued that the loan transaction fell under that
subsection: the Bank made an advance to it which reasonably formed

part of or was generally associated with agricultural or
developmental financial services. This argument must also fail. One
cannot
read s 26(2) apart from s 26(1). The latter qualifies the acts
and transactions referred to in s 26(2): they must all be in
furtherance
of the objects of the Bank set out is s 3.
[21]
The Bank is thus obliged and empowered to use its funds only for the
purposes set out in s 3: other transactions are not within
its
powers. Its powers are conferred by the Act and it has no others. As
a public entity the Bank may do only those things that
the Act
authorizes. The loan to Panamo for the purpose of acquiring land for
the establishment of a township is clearly not authorized
by the Act.
The loan agreement is thus in contravention of the Act, and, as the
Bank contended, is invalid.
[22]
While not every contravention of a statute results in invalidity of
the contravening act or contract, where its recognition
would defeat
the purpose of the statute, the act or contract will be void. (See
Standard Bank v Estate Van Rhyn
1925 AD 266
;
Pottie v Kotze
1954 (3) SA 719
(A);
Metro Western Cape
(Pty) Ltd v Ross
1986 (3) SA 181
(A).)
But it is not necessary in this matter to consider whether the Act
intended to render the transaction invalid as the issue
is determined
by the PMFA. Sections 66 and 68 of that Act provide that where a
public institution, as the Bank is, enters into
a transaction that is
not authorized by legislation governing the institution, it will not
be bound by the transaction. Accordingly
the loan agreement between
the parties cannot be enforced. I turn then to the second issue.
[23]
The Bank may well have an enrichment claim against Panamo for the
money that it advanced pursuant to the invalid contract.
Thus while
the Bank contended for invalidity, it nonetheless argued that the
mortgage bond registered in its favour is valid and
constitutes real
security for a possible enrichment claim.
[24]
Claassen J in the court a quo concluded that the bond was valid
despite the fact that the contract pursuant to which it was
passed
was not. The bond agreement, he said (para 18), was a separate
agreement of hypothecation and its ‘validity is not
dependent
upon the validity of the anterior transaction’. A mortgage bond
is of course always accessory to an obligation,
no matter its origin.
If the obligation is unenforceable the security in respect of it is
unenforceable too. Authority for this
is to be found in
Albert
v Papenfus
1964 (2) SA 713
(E) at 717H
in fin where the court referred to the principle as ‘trite’,
and cited
Voet
46.1.9,11 (Gane’s translation vol 7 at 22 and 28). See also
Bay
Loan Investment (Pty) Ltd v Bay View (Pty) Ltd
1972 (2) SA 313
(C) at 316E-F; Badenhorst, Pienaar and Mostert
Silberberg’s The Law of Property
5
ed (2006) at 359; 17 (Part 2)
Lawsa
‘Mortgage and Pledge’ para 327;  and T J Scott and
Susan Scott
Wille’s Mortgage and
Pledge
3 ed (1987 at 6).
[25]
That does not mean that a principal obligation must exist before a
mortgage is entered into: it may be given as security for
a future
debt or as a covering bond. But when enforcement of the bond is
sought it must be in respect of a valid obligation. And
when
determining whether an obligation is secured by a bond, one must have
regard to its particular terms.
[26]
In
Impande
Bashall AJ found that the bond purportedly securing the Bank’s
obligation was invalid too. He cited the authorities referred
to
above as support for this conclusion, and found that an enrichment
claim was not covered by the terms of the bond which were
confined to
moneys borrowed and advanced.
[27]
Claassen J declined to follow this reasoning. He pointed out that
Bashall AJ in
Impande
had not been referred to the decision of
this court in
Thienhaus NO v Metje and Ziegler Ltd
1965 (3) SA
25
(A) in which it was held that a formal defect in the description
of a party (a slip of the pen that referred to an individual instead

of a company bearing his name) did not render the bond invalid. As I
have said, the question whether the bond secures a claim for

enrichment must be determined by construing the terms of the bond
itself. My colleague Gorven AJA will deal with this issue.
Gorven
AJA (Lewis, Pillay and Willis JJA and Schoeman AJA concurring)
[28]
The mortgage bond in this matter was registered pursuant to the loan
agreement. The issue is whether it is enforceable in the
face of a
finding that the loan is void. All mortgage bonds are accessory to
another obligation, as the authorities cited above
show. This is
because the fundamental nature of a mortgage bond is the provision of
security for an underlying obligation. In
Kilburn
v Estate Kilburn
,
[1]
this court held as follows:
‘
The
settlement of a security divorced from an obligation which it secures
seems to me meaningless. It is true that you can secure
any
obligation whether it be present or future, whether it be actually
claimable or contingent. The security may be suspended until
the
obligation arises, but there must always be some obligation even if
it be only a natural one to which the security obligation
is
accessory.
.
. .
It
is therefore clear that by our law there must be a legal or natural
obligation to which the hypothecation is accessory. If there
is no
obligation whatever there can be no hypothecation giving rise to a
substantive claim.’
And
in
Lief
NO v Dettmann
,
[2]
Van Wyk JA said:
‘
.
. . real rights, however, can only exist in respect of a debt,
existing or future, and it follows that they cannot be divorced
from
the debt secured by them’.
[29]
It is clear that the bond was initially passed to secure the
performance of Panamo under the loan. Its terms make it accessory
to
the loan. Once the loan is set aside as invalid, unless the bond is
accessory to a different obligation than the loan, it must
suffer the
same fate as does the loan and be subject to cancellation. However,
even though the loan is void, this does not in itself
mean that there
is no obligation secured by the bond.
[30]
The Bank says that it has a claim for unjust enrichment under one of
the
condictiones
.
No such finding can be made on this issue here. I assume, for the
purposes of deciding the question, that such a claim is valid.
An
enrichment claim gives rise to indebtedness. I know of no reason why
a mortgage bond cannot secure a debt arising from an enrichment

claim.
[3]
Indeed, no argument
was advanced before us why a debt of that nature cannot be covered.
The question is whether that kind of debt
is secured by this
particular bond.
[31]
In the first place, the bond is a covering bond. A covering bond may
provide security for more than one specific debt. The
bond may
therefore afford security for more than obligations arising under the
loan. It is not necessarily extinguished merely
because the loan is
void. It complies with the formalities required by s 51 of the
Deeds Registries Act
[4]
for those covering future indebtedness. The nature of the bond thus
does not exclude the possibility that an enrichment claim may
be
covered.
[32]
In the preamble, the passing of the bond is said to have given
expression to an undertaking. This undertaking was by Panamo
to pass
a ‘continuous covering bond as security for [Panamo’s]
liability towards the Land Bank for whatsoever reason’.
[5]
It therefore goes further than one to pass a bond to cover
indebtedness under the loan and, indeed, under only some form of an

agreement. It is stated in the broadest possible terms. The preamble
therefore describes the circumstances under which the bond
came into
existence.
[33]
Clause 2.1 provides that the bond affords continuing covering
security for four distinct and separately stated categories of
debt:
(a) money borrowed and advanced; (b) money to be borrowed and
advanced; (c) money that the Bank may from time to time in
the future
lend and advance to Panamo; and (d) in general, for any existing or
future debt that Panamo owes or may owe to the Bank.
On a
straightforward reading of this clause, the fourth category gives
expression to the undertaking referred to in the preamble:
to pass a
bond which will cover ‘liability towards the Land Bank for
whatsoever reason’. Once again, this clause does
not restrict
the cover to indebtedness arising from the loan agreement or some
other agreement.
[34]
Clause 8 concerns the circumstances under which the Bank is entitled
to have the mortgaged properties declared executable.
It is headed
‘Default’ and reads, in its material parts, as follows:
‘
Should
the Mortgagor be in breach of or fail to comply with any written
agreement or agreements between the Mortgagor and the Land
Bank in
respect of any amounts secured by this bond, or should the Mortgagor
be in breach of or fail to comply with any of the
terms and
conditions of this bond or should the Mortgagor, at the request of
the Land Bank, fail to pay to the Land Bank any sum
which the Land
Bank may lawfully claim, or should the Mortgagor fail to meet any
obligation or commitment to the Land Bank on the
expiry date thereof
. . . the Land Bank shall be entitled to institute legal action for
the  recovery of all such amounts
and have the property
mortgaged in terms of this bond declared executable.’
There
are other circumstances referred to but these do not bear on the
issue at hand.
[35]
It can therefore be seen that the defaults cited above comprise four
distinct categories: (a) a breach or failure to comply
with a written
agreement; (b) a breach or failure to comply with a term of the bond;
(c) a failure to pay on demand any sum which
the Bank may lawfully
claim; and (d) a failure to meet an obligation by the expiry date. If
the bond is construed to cover only
debts arising from an agreement
of sorts, the third of these categories is redundant. The first, a
failure to comply with the terms
of a written agreement, would cover
all circumstances in which the security may be invoked. The second
basis, concerning the terms
of the bond, would also be unnecessary. I
can conceive of no circumstance in which a further category of
default could arise. But
the failure to pay any sum which the Bank
may lawfully claim is set up in addition to these first two. There is
a presumption against
superfluity in construing documents.
[6]
The inclusion of this category shows conclusively that a basis exists
for invoking the security which need not arise from an agreement
or
even the terms of the bond. The security afforded by the bond thus
clearly covers a lawful claim by the Bank which falls outside
of the
terms of any agreement or the bond.
[36]
In addition, clause 15 is phrased widely. It hypothecates the
properties as ‘security for the proper and timeous payment
of
the capital sum or any part thereof plus interest and other money
recoverable in terms of this bond or which may at any time
become
owing or payable to the Land Bank from whatsoever cause . . .’.
Once again, a number of distinctive categories are
mentioned. The
first, timeous payment, arises from the loan or any other agreement.
The second is money recoverable under the bond.
The third is ‘other
money . . . which may at any time become owing or payable from
whatsoever cause’. This category
is stated to be an alternative
to money recoverable in terms of an agreement or the bond.
[37]
The three clauses dealt with above pertinently afford the security
under the bond to indebtedness other than that arising from
an
agreement and the bond. They would clearly cover a debt arising from
an enrichment claim. Reading these together with the preamble,
which
deals with the circumstances in which the bond came into existence,
it would thus require clear wording to exclude recovery
of a claim
under one of the
condictiones
.
[38]
It must therefore be considered whether any of the terms of the bond
do exclude such a debt. In this regard, clauses 2.2 to
2.4, 3, 5, 6
and 13, which might indicate the contrary, shall be considered in
turn.
[39]
Clauses 2.2 and 2.3 deal with the primary source of indebtedness
envisaged: the loan. This is natural and understandable but
does not
function to exclude the broad fourth category in clause 2.1 dealt
with in paragraph 6 above. In passing, clause 2.2 is
clearly tailored
to ensure that the bond complies with the provisions of s 51(1)(
b
)
of the Deeds Registries Act.
[7]
Clause 2.4 provides security for costs incurred in the preservation
and realisation of the hypothecated properties. This applies
to the
security and is not dependent on the nature of the claim.
[40]
Clause 3 provides that ‘the causes of said debt and this bond
may emanate from one or more of the following’. Clause
1
contains a declaration of indebtedness in the sum which is stated to
be ‘the capital sum emanating from one or more of
the
hereinafter mentioned causes of debt . . .’. This spells out
what is meant in paragraph 1. It primarily relates to the
loan. It in
no way qualifies the cover of the bond where it is said to go beyond
the first three categories in clause 2.1.
[41]
In addition, clause 3.1 is to the following effect:
‘
All
amounts whatsoever already owed or may be owed hereafter in terms of
advances, cash credit accounts, fixed loans, credit, promissory

notes, loan agreements, instalment sale agreements, lease agreements,
other agreements, any facilities granted to the Mortgagor’.
The
clause specifically differentiates between advances and a number of
agreements, including loan agreements. In other words it
covers
advances made outside of agreements as well as those made pursuant to
them. It is clear that the moneys forming the basis
for the
enrichment claim were advanced; they were simply advanced without
there being a legal basis for doing so.
[42]
Clause 5 regulates the terms of advances. They should only be
disbursed if the terms and conditions of an agreement have been
met.
The question arises as to what can be done by the Bank if an advance
is made which does not comply with clause 5. It does
not mean that
money has not been advanced. It is still an advance, but the advance
contravenes clause 5 of the bond. It should
therefore not have been
made because this clause regulates how advances should be disbursed
and when they can be claimed. Since
such a payment has no lawful
basis, a claim for repayment would have the character of the
enrichment claim relied on by the Bank
in this matter. This does not
mean that advances made in conflict with this clause do not qualify
as advances. It simply sets out
when an advance has been made
pursuant to a lawful underlying causa under the bond.
[43]
The concluding sentence of clause 5 incorporates the terms and
conditions of the loan into the bond. It may be asked how terms
and
conditions of an invalid agreement can be so incorporated. The simple
answer is that because the loan is a nullity, its terms
are not
incorporated. The terms of the bond stand alone, unaugmented by those
of the loan. Many of the provisions of the bond do
not apply because
the loan is void and no other agreements between the parties exist.
That would also be the position if the loan
had been valid and all
liability under it had been discharged but an enrichment claim
remained.
[44]
Clause 6  deals with the mechanism for the calculation of
interest. It requires a written agreement where a particular
basis
and rate of interest is claimed. This does not mean that a debt free
of interest is not secured by the bond. In any event,
it may well be
that, even if no agreement provided for interest, the common law
relating to when and how much interest accrues
on a debt would
apply.
[8]
It is not necessary
here to determine whether this is so or not. At worst for the Bank,
this clause does not provide a basis for
excluding an enrichment
claim.
[45]
Clause 13, the acceleration clause, clearly envisages an agreement.
Acceleration does not apply to an enrichment claim. The
fact that
such a claim is not susceptible to acceleration does not exclude it
from the cover of the bond. As mentioned earlier,
it is
understandable and appropriate that most of the clauses in the bond
deal with agreements and the basis on which it affords
security in
relation to agreements.
[46]
The bond is not a model of clarity. However, construing it as a
whole, I can find no basis for limiting the broad, all-encompassing

language contained in the preamble, clause 2.1, clause 8 and clause
15. I disagree with the submission that the bond must suffer
the same
fate as the loan. In my view, the bond affords security for a claim
for moneys due under one of the
condictiones
.
[47]
The second question was therefore correctly answered in favour of the
Bank by the court below. There is no basis for an order
declaring
that the bond is not enforceable due to the invalidity of the loan if
the Bank has a claim against Panamo for unjust
enrichment.
[48]
Accordingly, the appeal is dismissed with costs, including those
occasioned by the use of two counsel.
_____________________
CH
Lewis
Judge
of Appeal
_____________________
T
R Gorven
Acting
Judge of Appeal
APPEARANCES
For
Appellant: J Roos SC (with him J K Berlowitz)
Instructed
by: Harris Billings Attorneys, Johannesburg
Honey Attorneys,
Bloemfontein
For
Respondent: V Maleka SC (with him P Seleka)
Instructed by:
Mkhabela Huntley Adekeye Inc, Johannesburg
McIntyre & Van
der Post, Bloemfontein
[1]
Kilburn
v Estate Kilburn
1931 AD 501
at 505-6.
[2]
Lief
NO v Dettmann
1964 (2) SA 252
(A) at 259.
[3]
Silberberg
above
at 359.
[4]
Deeds Registries Act 47 of 1937
.
[5]
I
have not used the same formatting as in the bond when quoting from
it.
[6]
National
Credit Regulator v Opperman & others
2013
(2) SA 1
(CC) para 99;
African
Products (Pty) Ltd v AIG South Africa Ltd
2009
(3) SA 473
(SCA) para 13.
[7]
This requires that ‘
a
sum is fixed in the bond as an amount beyond which future debts
shall not be secured by the bond’.
[8]
F
D J Brand 9
LAWSA
2 ed para 213, says: ‘Interest which the defendant may have
received on a sum of money paid to him or her
indebite
is
apparently not regarded as fruit and need not be restored.’ In
footnote 4 on that page he goes on to say: ‘The
issue of
interest actually received by the defendant should not be confused
with the question whether the defendant is liable
for interest
a
tempore morae
.
The basis for the claim of
mora
interest
is not enrichment but compensation paid to the plaintiff for the
loss that the plaintiff suffered through being deprived
of the use
of his or her money. Accordingly, liability for
mora
interest
is determined by the legal principles regarding
mora
interest
in general and not by the law of enrichment.’