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[2015] ZAGPJHC 156
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Factaprops 52 CC v Nedbank Limited (29142/2014) [2015] ZAGPJHC 156 (26 June 2015)
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG LOCAL DIVISION,
JOHANNESBURG
CASE NO: 29142/2014
DATE: 26 JUNE 2015
In the matter between:
FACTAPROPS 52
CC
..............................................................................................................
Applicant
And
NEDBANK
LIMITED
...........................................................................................................
Respondent
JUDGMENT
KATHREE-SETILOANE J
[1] Factaprops 52 CC (“the
applicant”) seeks an order for specific performance against
Nedbank Ltd (“the respondent”)
in the following terms:
‘1. Ordering the respondent to
forthwith comply with its undertaking of 21 July 2014 to pay all
outstanding rates and imposts
that are due to the City of
Johannesburg in respect of erf 159 and portion 1 of erf 161 Selby,
Johannesburg, (“the property”)
so as to enable the
conveyancer attending to the registration of transfer of the property
(Roy Stoler attorneys) (“the conveyancer”)
to obtain a
clearance certificate from the City of Johannesburg to facilitate
same;
2. directing the respondent to abide
timeously with all its obligations in terms of the agreement with the
applicant that is dated
20 November 2013 (“the loan agreement”)
when called upon to do so by the conveyancers;
3. directing the respondent to do all
acts, if any, necessary for the respondent to procure the
registration of the transfer of
the property to the applicant, the
cancellation of the existing mortgage bond over the property and the
simultaneous registration
of a fresh mortgage bond over the property
in terms of the loan agreement;
4. ordering the respondent to pay the
costs of this application.”
[2] On the 30 of July 2013, the
applicant acquired the property from Celebration Investments (Pty)
Ltd in terms of a written deed
of sale, which was concluded on 20
November 2013. The applicant applied to the respondent on the 15th of
August 2013 for a mortgage
bond with an access facility over the
property. In a letter dated, 21 October 2013, the respondent informed
the applicant that
it was in the “process of finalising the
granting of a loan”. On 29 October 2013, additional documents
were supplied
by the applicant to the respondent. On the 12 November
2013, the respondent, represented by Innocent Mnisi (“Mnisi”)
confirmed the terms of the loan in writing and that he awaited the
respondent’s final credit approval. On the 19 November
2013,
Mnisi and Claudine Van Wyk advised the applicant, in writing, that
its application for the loan had been approved. On the
20 November
2013, the applicant and the respondent entered into a written loan
agreement. Thereafter, on 26 November 2013, the
respondent appointed
Lowndes Dhlamini to attend to the registration of the mortgage bond
for the applicant. On the same day Stoler,
the conveyancer, provided
the guarantee requirements to Lowndes Dhlamini. On 5 December 2013,
the applicant issued a letter of
authority to the respondent for the
issuing of a guarantee as required by clause 13 of the loan
agreement. On 9 December 2013,
the respondent issued the guarantee.
During February 2014, Stoler expressed concern to Wingate-Pearse of
the applicant that the
sale proceeds were insufficient to cover
amounts due to the City of Johannesburg and the respondent. Then, on
the 19 February 2014,
the conveyancer had discussed this with
Fogolin, a recoveries manager of the respondent, and communicated
their concerns to Strauss
Daly (who were attending to cancellation of
an existing mortgage bond over the property in favour of the
respondent).
[3] On the 16th of April 2014, a
meeting was held amongst all the parties to attempt to ensure that
the transfer of the property
and registration of the new bond in
favour of the respondent would go ahead - Fogolin and Potgieter (head
of legal recoveries)
of the respondent, Govender and Akker of Strauss
Daly and Stoler attended this meeting. On the 22 April 2014, a
follow-up meeting
was held, which was attended by Stoler and
Wingate-Pearse of the applicant, Fogolin, Akker, Woolfson and Rodney
Beck of High Street
Auctioneers through whom the applicant had
purchased the property. Stoler informed the parties that in addition
to the R2.2 million
that the seller, Celebration Investments, owed to
the City of Johannesburg, it also owed a judgment debt of
approximately R2.5
million to Phakisa and an amount of approximately
R2 million to PG Bison. Nothing resolved at this meeting , and they
attended
another meeting on 12 June 2014.
[4] At the meeting held on 12 June
2014, Fogolin informed those present that the respondent might be
prepared to pay R1.4 million
towards the outstanding rates and taxes,
which the Celebration Investments owed to the City of Johannesburg,
to procure a clearance
certificate. Potgieter said that he would
attempt to prevail on the City of Johannesburg to reduce the
indebtedness owed by Celebration
Investments. Potgieter met with a
representative of the City of Johannesburg on 24 June 2014, but the
City of Johannesburg refused
to reduce the debt. On the 26 June 2014,
Fogolin informed Stoler that the City would not budge, and that he
had requested the respondent’s
property finance division to
structure the loan agreement at a lower rate than the prime lending
rate agreed with the applicant,
so the loan could be increased by
R500 000.00 without prejudicing the applicant. Fogolin said that the
additional R500 000.00 could
then be used as part of the payment that
the respondent would make to procure the clearance certificate from
the City of Johannesburg.
[5] On 14 July 2014, Fogolin informed
Stoler in an e-mail that the respondent’s property finance
division was still considering
the matter. Then on 21 July 2014
Phakisa, a judgment creditor of the seller, attached the property and
Fogolin informed Govender
and Akker of Straus Daly in an e-mail, sent
also to Stoler, Potgieter and Van Reenen of High Street Auctioneers,
that the respondent
had made a decision to advance the rates and
taxes to finalise the transaction. Shortly before Stoler received
Fogolin’s
email of 21 July 2013, in which the respondent
undertook to pay the outstanding rates and taxes on the property, he
learnt from
Celebration Investments that Phakisa had attached the
property pursuant to the judgment debt. Stoler then informed Fogolin
of the
attachment in a letter dated 22 July 2014. Fogolin asked
Stoler to try and uplift the attachment on the same day.
[6] On 24 July 2014, the respondent,
without any prior communication or notice to the applicant, informed
the applicant, in a letter
of the same date, that it had decided to
withdraw the loan in terms of clause 2 and 11 of the loan agreement.
The applicant’s
attorneys (KWP Attorneys) immediately addressed
a letter to the respondent in which it requested the respondent to
indicate which
specific sections of the loan agreement the it relied
on. The letter of KWP Attorneys, which was written on behalf of the
applicant,
was not answered directly by the respondent. Instead on 25
July 2014, the respondent (Le Roux) informed the applicant that
“[t]he
facility under contract number 30146390 has not been
approved by the bank’s credit committee”. On the same
day, the
applicant wrote to the respondent demanding written
undertakings from the respondent that it would abide by its
obligations under
the loan agreement.
[7] Finally, on 6 August 2014, the
conveyancer procured a settlement with Phakisa and the attachment was
up-lifted. On the 23rd
of September 2014, Le Roux on behalf of the
respondent deposed to an answering affidavit stating, inter alia,
that the applicant
was in default of the loan agreement due to its
failure to lodge valuations in the deeds office, which failure he
alleged entitled
the respondent to elect to cancel the agreement.
[8] The applicant contends in its
founding affidavit that: (a) its rights embodied in the agreement and
in the undertaking to pay
the outstanding rates to the City of
Johannesburg are contractual and entitle the applicant to exact
performance from the respondent
in terms thereof; (b) the
respondent’s repudiation of the agreement through its purported
withdrawal from the loan is an
act of interference with the
applicant’s contractual rights; and (c) the applicant has no
other satisfactory remedy available
to it. With reference to the
purported withdrawal, by the respondent, of the loan, on 24 July 2014
(the initial purported withdrawal
thereof), the applicant contends
that this was not in accordance with the exercise of a discretion in
terms of either clause 2
or 11 of the loan agreement. It contends
further that the respondent’s statement that the facility was
not approved was
manifestly false in view of the prior
incontrovertible facts and documents attached to the founding
affidavit, in which it was
made clear by the respondent that the loan
had been approved. Accordingly, it submits that the respondent’s
decision to resile
from the loan was unlawful and contrary to the
terms of the agreement by which it was bound.
[9] The respondent alleges in support
of its opposition to the application for specific performance, that
in terms of the loan agreement
which it entered into with the
respondent, they agreed that that:
(a) the respondent would lend to the
applicant, and the applicant agreed to borrow from the respondent the
capital sum of R5 328.000,00
subject to the terms and conditions
contained in the loan agreement;
(b) provided that the applicant
complied with all of its obligations in terms of the loan agreement,
that the capital would be advanced
by the respondent to the applicant
or on its behalf, on or after the commencement date, as follows:
(i) R5 267.000,00 for the purchase of
Property One, i.e. the property described as Erf 159 and Portion 1 of
Erf 161, Selby on registration
of the mortgage bond that the
respondent required as security for the loan;
(ii) R60 739,00 for the respondent’s
service fee on registration of the mortgage bond/s that it requires
as security for the
loan.
(c) The applicant agreed to provide the
respondent with the following security for its obligations to the
respondent under the loan
agreement:
(i) registration by the respondent of
the first covering mortgage bond in the amount of R5 328 000,00 plus
an additional sum of
R1332 000,00 for securing certain costs and
disbursements which the respondents may pay, incur or make in favour
of the respondent
over Property One;
(ii) registration by the applicant of a
first covering mortgage bond in the amount of R5 million plus an
additional sum of R1 250
000,00 for securing certain costs and
disbursements which the respondent may pay, incur or make in favour
of the respondent over
Property Two;
(d) In terms of the provisions of the
loan agreement an event of default would occur inter alia in the
event that the applicant
breaches any provision of the loan
agreement, the mortgage bond or any other agreement with the
respondent. On the occurrence of
an event of default or on the
happening of any other event, which is material the respondent has
the right to cancel the loan agreement.
[10] The respondent contends that the
applicant further agreed that it would be obliged to inter alia
provide the respondent with
a valuation from a valuer nominated by
the respondent in terms of which Property One is valued at no less
than R11.2 million and
Property Two is valued at no less than R10
million and compliance by the applicant with any conditions which may
be imposed by
the respondents valuer.
Relying on clause 2 of the loan
agreement, the respondent submits that it has reserved the right to
cancel the loan agreement and
withdraw from the loan at any time
before the commencement date, if in its discretion there is inter
alia a change of circumstances,
which might prejudice the respondent,
its rights or its security or materially alter the risk relating to
the loan. It contends
further that in terms of clause 13.2.1 of the
loan agreement, the applicant was obliged to provide the respondent
with a valuation
report from a valuer nominated by the respondent in
terms of which Property One is valued at no less than 11.2 million,
but according
to the valuation provided by the applicant, Property
One was only valued in the amount of R8.9 million. The valuation of
Property
One, it contends, did not meet the requirements as set out
in the loan agreement, as it required a valuation in the amount of
R11,2
million. In addition, it contends that the applicant failed to
allow unfettered access to Property Two in order to allow the
respondent’s
valuer to conduct the valuation.
[11] The respondent contends that on a
proper construction of the loan agreement and in circumstances where
the respondent is to
advance money to the applicant, the respondent
is entitled to cancel the loan agreement where the valuation provided
by the applicant
in respect of Property One was not sufficient, and
where no valuation in respect of Property Two could be conducted. It
argues
that the determination of the value of Property One and
Property Two is crucial to safeguarding the respondent’s risk,
as
it cannot be expected to advance money to the applicant without
sufficient value being found in Property One and Property Two.
[12] The respondent takes issue with
the literal interpretation, which the applicant places on the words
“before lodgement
of documents in deeds office” in the
heading of clause 13.2.1 of the loan agreement. The effect of a
literal interpretation,
it argues, is that the documents contemplated
in clause 13.2.1 can be produced at any time before lodgement in the
Deeds Office.
This interpretation, it contends, negates the fact
that lodgement in this matter is impossible as the required
valuations have
neither been obtained nor tendered. It argues that in
the circumstances of this matter, the applicant cannot produce the
required
valuations as Property One was only valued in the amount of
R 8,9 million and no valuation was obtained in respect of Property
Two. It further contends that the valuations are a pre-requisite or
pre-condition of the loan agreement, since the loan agreement
cannot
be implemented until the valuations have been provided. Only once the
required valuations have been obtained, can the next
step be taken to
register the mortgage bonds as security over Property One and Two. It
contends that without the required valuations
and the subsequent
registration of the mortgage bonds, the loan amount cannot be
advanced. In this regard, it points out that in
terms of clause 8 of
the loan agreement, the applicant agreed to register, in favour of
the applicant, first mortgage bonds over
Property One and Two.
[13] In furtherance of its contention
relating to the applicant’s non-compliance with clause 13.2.1
of the loan agreement,
the respondent contends for an alternative
construction of the loan agreement entitling it to cancel the loan
agreement if sufficient
value could not be found in the properties. I
am of the view that by construing the loan agreement in this manner,
the respondent
attempts to elevate the term of the agreement
requiring the provision valuations, by the applicant to the
respondent, prior to
lodgement of documents at the Deeds Office into
a condition precedent for the continued existence of the agreement.
This, in my
view does not provide a defence to the application for
specific performance, because on a proper interpretation of clause
13.2.1
of the loan agreement which gives effect to it’s plain
meaning, the documents listed thereunder only have to be provided to
the respondent “before lodgement of documents in deeds office”.
This is acknowledged by the respondent in paragraph
9.7 of the
answering affidavit. More importantly, the applicant abides by the
loan agreement, and has tendered compliance with
all its obligations,
which includes providing the respondent with the valuations which are
required in terms of clause 13.2.1 of
the loan agreement. It is
notable that the respondent does not allege that documents have been
lodged in the Deeds Office. Nor
does it allege that prior to
cancelling the loan agreement, it put the applicant on notice to
produce the valuations or allow its
valuator unfettered access to the
properties to obtain the valuations. In the circumstances, the third
attempt by the respondent
to cancel the loan agreement is not
sustainable in law.
[14] A further defence raised by the
respondent is that the loan agreement precludes reliance by the
applicant on the undertaking
given by Fogolin in the email of 21 July
2014 that the respondent has resolved to advance the rates and taxes
amount owing by the
seller of the property to the City of
Johannesburg in order to finalise the transaction. The respondent
relies for this defence
on clause 18.8 of the standard terms and
conditions in which the parties agreed that the agreement constituted
the whole of the
agreement between the parties relating to the
subject matter and that no amendment, alteration, addition, variation
or consensual
cancellation thereof would be of any force or effect
unless reduced to writing and signed by the parties. However, whereas
clause
18.8 is concerned with the loan agreement and more
specifically with the money to be lent by the respondent to the
applicant in
terms thereof and the mortgage bond to be registered
over the property as security therefore, the undertaking by the
respondent
to advance the rates and taxes owing to the City of
Johannesburg is not. On the contrary, the undertaking is concerned
entirely
with the registration of the transfer of the property to the
applicant, and only incidentally to the cancellation of the
respondent’s
first mortgage bond over the property and the
registration of a new mortgage bond in favour of the respondent.
Accordingly, I find
that the undertaking made by Fogolin, on behalf
of the respondent, in the e-mail dated 21 July 2014, that the
respondent has “made
the decision to advance the rates and
taxes amount owing in order to finalise this transaction” is
not subject to the provisions
of the standard terms and conditions of
the loan agreement and does not offend against any of the provisions
therein. Accordingly,
the respondent’s objection based on
clause 18.8 of the general terms and conditions similarly does not
constitute a valid
defence to the relief sought by the applicant in
the application.
[15] A further defence to the relief
sought by the applicant in relation to the “undertaking”
given in the letter, dated
21 July 2014, is that it was a business
decision made by the respondent in order to finalise the transaction.
The respondent contends,
in this regard, that Celebration
Investments, in conjunction with the respondent, agreed to conclude
the offer to purchase the
property with the applicant. In order to
enable the transaction to proceed, the respondent made the decision
to advance the amount
owed in respect of rates and taxes for and on
behalf of Celebration Investments. Accordingly, it contends that the
decision taken
was not taken in favour of or for the benefit of the
applicant and the applicant, therefore, has no basis to seek an order
against
the respondent to pay the outstanding rates and taxes that
are due to the City of Johannesburg in respect of the property, as no
undertaking was given in favour of the applicant that it can enforce.
[16] The decision to pay the rates and
taxes, it contends, was made by the respondent in favour of
Celebration Investments and not
the applicant, in an attempt to
finalise the transaction and on the clear understanding that the
rates and taxes would only be
paid in the event that the transaction
was capable of being proceeded with, but the transaction could not be
proceeded with, as
the applicant had not complied with the terms of
the loan agreement. I am unable to accept that the undertaking was
made entirely
for the benefit of Celebration Investments, because
without the undertaking the sale of the property to the applicant
would have
fallen through, with no benefit to either the applicant or
the respondent. It follows, therefore that the undertaking had to
have
been made for the benefit of both the applicant and the
respondent. This much is evident from the allegation in the Founding
Affidavit
that, on 26 June 2014 Fogolin informed Stoler that because
the City of Johannesburg was not prepared to reduce the indebtedness
of the R2.2 million owed to it by the seller (Celebration
Investments):
‘[Fogolin] had requested the
respondent’s finance division to restructure the loan agreement
at a lower interest rate
than that agreed with the applicant. The
agreed rate was the prime lending rate but Fogolin proposed that by
reducing it to prime
less one percent, the amount of the loan could
be increased by approximately R500 000.00 without prejudicing the
applicant, which
additional amount could be used as part of the
payment that the respondent would make to procure a clearance
certificate from the
City of Johannesburg.’
Crucially, the respondent has failed
to respond to this allegation in its answering affidavit. In the
circumstances, I find that
there is no valid defence raised by the
respondent to the application for specific performance.
[17] The applicant’s right is
that embodied in the loan agreement, and the undertaking of 21 July
2014 to pay the outstanding
rates and taxes owing to the City of
Johannesburg. The respondent’s repudiation of the agreement
through its withdrawal of
the loan is clearly an interference with
applicant’s right as referred to above. In addition, the
applicant has no alternative
remedy available to it, because the only
way in which the transaction can proceed, is if a clearance
certificate is issued by the
City of Johannesburg. As indicated, the
respondent undertook to pay the seller’s indebtedness to the
City of Johannesburg
so that a clearance certificate can be issued,
its existing bond cancelled, and a new bond registered over the
property. It is
precisely because the respondent already has an
interest in the property, and agreed to pay the seller’s
indebtedness to
the City of Johannesburg that prevents the applicant
from procuring other funding for the transaction. In the
circumstances, I
am of the view that the applicant has no alternative
remedy but to seek the Court’s assistance to enforce its rights
against
the respondent in terms of the undertaking and the loan
agreement. Accordingly, the applicant is entitled to the relief
sought
in prayers 1, 2, 3, and 4 of the notice of motion.
[18] In the result, I make the
following order:
1. The respondent is ordered to
forthwith comply with its undertaking of 21 July 2014 to pay all
outstanding rates and imposts that
are due to the City of
Johannesburg in respect of erf 159 and portion 1 of erf 161 Selby,
Johannesburg, (“the property”)
so as to enable the
conveyancer attending to the registration of transfer of the property
(Roy Stoler attorneys) to obtain a
clearance certificate from the
City of Johannesburg to facilitate same;
2. The respondent is directed to abide
timeously with all its obligations in terms of the agreement with the
applicant that is dated
20 November 2013 (“the loan agreement”)
when called upon to do so by the conveyancers;
3. The respondent is directed to do all
acts, if any, necessary for the respondent to procure the
registration of the transfer of
the property to the applicant, the
cancellation of the existing mortgage bond over the property and the
simultaneous registration
of a fresh mortgage bond over the property
in terms of the loan agreement;
4. The respondent is ordered to pay the
costs of this application.
KATHREE-SETILOANE
JUDGE OF THE HIGH COURT OF SOUTH
AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
COUNSEL FOR THE APPLICANT: I MILTZ
SC
INSTRUCTED BY: KWP ATTORNEYS
COUNSEL FOR THE RESPONDENT: HJ
SMITH
INSTRUCTED BY: CLIFF DEKKER HOFMEYR
INC
DATE OF HEARING: 8 JUNE 2015
DATE OF JUDGMENT: 26 JUNE 2015