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[2015] ZAGPJHC 201
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Gakuba v Firstrand Bank Ltd and Others (2014/42463) [2015] ZAGPJHC 201 (11 September 2015)

IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
Case
No. 2014/42463
DATE:
11 SEPTEMBER 2015
In the matter
between:
KALISA, ALFRED
GAKUBA
.................................................................................................
Applicant
And
FIRSTRAND BANK
LTD
............................................................................................
First
Respondent
ACTING SHERIFF,
SANDTON
SOUTH
..............................................................
Second
Respondent
TSENG YU
CHIU
.......................................................................................................
Third
Respondent
BEZUIDENHOUT VAN
ZYL
INC
.........................................................................
Fourth
Respondent
REGISTRAR OF
DEEDS
...........................................................................................
Fifth
Respondent
JUDGMENT
VAN DER LINDE,
AJ:
1 In this matter the
applicant seeks an order setting aside a sale in execution of
immovable property which took place on 16 September
2014. He was a
debtor of the first respondent, a bank, who as security for the
indebtedness took a mortgage bond over the property
that was sold in
execution. The second respondent is the acting sheriff who sold the
property; the third respondent is the purchaser;
the fourth
respondent is the first respondent’s attorney and the fifth
respondent is the Registrar of Deeds.
2 Ancillary relief
is also claimed. This includes the setting aside of the writ of
execution which led to the sale in execution;
and an order declaring
as valid and binding an agreement of sale concluded on the day
before, being 15 September 2014, in terms
of which the applicant sold
the property concerned to Mr JL Rutayangilana.
3 Although the
papers filed were comprehensive, the issue on which the case can be
decided is very narrow. It is simply whether
the applicant complied
with the terms of an agreement to defer the sale reached between him,
represented by his then attorney,
and the fourth respondent, the
attorney of the judgment debtor, the first respondent, in the course
of correspondence exchanged
between them.
4 More particularly,
the first respondent’s case is that it had, through its
attorney, demanded that a certain fixed amount
of the judgment debt
be paid to the fourth respondent no later than the day before the
sale in execution, and that this was not
paid. The applicant’s
case is that, although he concedes that he was obliged to pay an
amount no later than the day before
the sale in execution, that
amount had in fact not been fixed in the agreement, and that he was
free to fix the amount payable.
He fixed an amount, he says, and
paid it in time.
5 Against this
introduction it is appropriate that the background facts first be set
out. It all starts when the applicant borrowed
money from the first
respondent on 5 August 2003. In the years after that there were
amendments to the loan agreement but those
amendments do not bear on
the issues. The applicant fell in arrears in time and eventually, on
26 January 2010, default judgment
was granted against him. He never
applied to have it rescinded.
6 The default
judgment gave rise to a series of offers to settle the arrears. The
first relevant one which was accepted was on
24 July 2013 when the
first respondent recorded in an email to the applicant that they had
agreed that the applicant would pay
the arrears of R250 000 by the
26th of July 2013. The first respondent would also assist the
applicant in marketing the property
so that the applicant could
dispose of the property to pay his debt to the bank.
7 Two days later, on
26 July 2013 a new agreement was concluded after the applicant and
the first respondent had held discussions
on the 24th of July 2013.
That agreement provided for the payment of certain instalments, again
to make up the arrears. It was
no part of that agreement that the
first respondent would assist the applicant with the marketing of the
property; reference to
the first respondent’s letter of 26 July
2013 bears this out.
8 This agreement was
not adhered to by the applicant and this failure led to the first
respondent instructing the fourth respondent,
to sell the bonded
property in execution.
9 The sale in
execution was arranged for 16 September 2014. The pending sale
resulted in the applicant making fresh offers to the
first
respondent. It starts on the 4th of September 2014 when the
applicants then attorneys, Hew Inc. Attorneys, wrote to the
fourth
respondent, proposing to settle the outstanding arrears on the terms
set out in paragraph 5 of the letter.
10 These included an
initial payment of R200 000 within seven days of acceptance of the
offer, and the balance of the arrears to
be paid within 30 days after
payment of the initial R200 000. It was a term of that offer that
the first respondent would instruct
the sheriff to suspend the sale
in execution. The offer also provided that if the applicant were to
fail to adhere to this arrangement,
then the first respondent would
be at liberty to proceed with the sale in execution.
11 The fourth
respondent reverted on 4 September 2014 saying that it would take
instructions; but having taken the instructions,
the fourth
respondent wrote back on 8 September 2014 in a letter marked “Without
Prejudice”, saying that the first
respondent was not prepared
to accept the offer. In fact, the first respondent demanded payment
of the full amount due and payable
in terms of the facility, failing
which it would proceed with the sale in execution.
12 The letter
however contained a counter-offer in the following terms:
“3. In the
event that your client is not a position to perform as per paragraph
2 supra, our client is willing, entirely without
prejudice to any of
its rights which remain strictly reserved, to afford your client 3
(three) months within which to liquidate
the full amount due and
payable, the first instalment to be made within 7 days from date
hereof, and all subsequent payments to
be made on the 1st day of each
and every successive month in liquidation of the amount due and
payable.”
13 On the next day,
9 September 2014, the fourth respondent wrote to the applicant’s
attorneys advising that the total amount
due and payable was R3 023
042.19 as of 9 September 2014.
14 The response of
the applicant’s attorneys came on 10 September 2014. In that
letter they wrote amongst other things as
follows:
“3. We further
confirm that our client has agreed to liquidate the total amount of
R3 023 042,19 within 3 months as counter-proposed
by your client.
4. Our client
further advises us that he will pay the first instalment within 7
(seven) days from the 9th September 2014 directly
into the account of
your client and we will forward you proof of that payment (SWIFT
copy) as soon as our client furnishes us with
the same.
5. The balance of
the remaining debt will be settled within the stipulated time frame.
6. With regard to
the foregoing and our client’s commitment to liquidate the
debt, it is our client’s instruction to
request confirmation,
in writing, from you that the proposed sale by auction scheduled for
the 16th September 2014 will be postponed/suspended
until the expiry
of the 3 months period.”
15 The first
respondent argues that this letter did not constitute an unqualified
acceptance of the first respondent’s offer,
because the letter
proposes that the applicant would pay the first instalment within
seven days from the 9th of September 2014,
whereas the first
respondent had demanded that it be paid within seven days of the 8th
of September 2014.
16 Further, the
first respondent’s offer of 8 September 2014 did not say
anything about the account into which the first instalment
had to be
paid, and the applicant’s attorney’s letter of 10
September 2014 proposed that the first instalment would
be paid
directly into the account of the first respondent.
17 Next, on 11
September 2014, two letters were written by the fourth respondent to
the applicant’s attorneys. One of them
dealt with the
substance of the applicant’s letter of 10 September 2014. Two
paragraphs of that response are important:
“2. Entirely
without prejudice to any of our client’s rights, which remain
strictly reserved, kindly be advised that
the sale in execution of
the immobile (sic) property in question, better known as Erf 3….
S…… Ext 2…
Township, scheduled to take place on
16 September 2014 will be cancelled on payment of the first
instalment on or before the 15th
of September 2014. The aforesaid
must be read in conjunction with our letter dated 8 September 2014,
the terms and conditions
of which are to be incorporated herein
mutatis mutandis. It must furthermore be borne in mind that the
amount due and payable
bears interest and, as such, the amount of the
final instalment will be communicated to you in due course.
3. Further to the
aforesaid, all payments are to be made directly into our trust
account, the details of which are as follows:
Bank: First Rand
Bank Ltd
Branch No.: 2……..
Account No. 6………..
Payment ref: M…………”
18 The second letter
of 11 September 2014 by the fourth respondent to the applicant’s
attorneys reads as follows:
“1. The
telephonic conversation between our Mr Van der Merwe and your Mr
Mhango this afternoon refers.
2. Kindly be advised
that the “SWIFT” code of First Rand Bank Ltd is
FIRNZAJJXXX.”
19 The fourth
respondent (Mr van der Merwe) says nothing about the contents of the
telephone conversation referred to in this letter.
Mr Mhango, the
then attorney for the applicant, did not depose to an affidavit. No
one knows what was said during that conversation,
but the reference
to “SWIFT” harks back to the applicant’s attorney’s
letter of 10 September 2014 in which
in paragraph 4 it was said, “…
we will forward you proof of that payment (SWIFT copy) as soon as our
client furnishes
us with the same.” That undertaking was in the
context of the offer to pay the amount directly into the account of
the first
respondent; on the 11th of September the fourth
respondent’s letter explicitly required that the payments, all
of them, be
made directly into the fourth respondent’s trust
account.
20 There was no
recorded response to the fourth respondent’s substantive letter
of 11 September 2014. However, two days letter
there came an email
on Saturday, 13 September 2014 at 18h46 from the applicant’s
attorney to the fourth respondent. It reads
as follows:
“Find attached
hereto SWIFT copies evidencing proof of payment of the first
instalment. Kindly contact your bank and instruct
them to the
release of the money from the bank’s suspense account into your
trust account, accordingly.
We further advise
you that our client has finalised the deal to sale (sic) the property
through private treat at a high price than
the amount owing to the
bank (sic). Our client will be in the country on the 15th of
September 2014 to sign the sale agreement.
We have instructions
to make an undertaking that the balance of the amount owing to the
bank will be paid directly from the proceeds
of the sale to your
trust account before the balance thereof is paid to our client.
From the foregoing
and the first instalment having been paid directly to your account,
we seek your confirmation that the auction
for our client’s
property, scheduled for the 16th September 2014, be cancelled and/or
suspended as per your letter of the
11th September 2014.”
21 Some comments are
apposite in relation to this email. First, the first instalment was
not paid to the fourth respondent but to
the first respondent; and
the fourth respondent was requested to instruct the first respondent
to release that instalment into
the fourth respondent’s trust
account.
22 Second, an
undertaking was given that the balance of the amount owing would be
paid direct to the fourth respondent’s trust
account, and
therefore not to the first respondent, as was the case with the first
instalment.
23 It follows that
if the applicant must be considered as having accepted the fourth
respondent’s substantive letter of 11
September 2014, and if an
agreement thus came into existence on those terms, then on the face
of it there was non-compliance with
the requirement that the first
instalment be paid into the fourth respondent’s trust account.
There may also have been non-compliance
concerning the amount of the
first instalment, and this is an issue to which I return below.
24 In my view an
agreement did came into existence on those terms. This is evidenced
by the fact that the first instalment was being
paid by the applicant
without him having rejected the substantive content of the fourth
respondent’s letter of 11 September
2014. The conduct of
payment is consistent only with an acceptance of the terms of the
offer last conveyed. Mr Makgato for the
applicant did not contend
otherwise.
25 The fourth
respondent responded on Monday 15 September 2014 at 09h20 in an email
in which the following was said:
“From a
perusal of the attachment we are unable to ascertain the exact amount
that will be paid into our trust account, kindly
advise. It must
furthermore be borne in mind that the transfer of the money, as per
the “SWIFT” transaction takes
2 to 3 working days. …
We await to hear from you as to the amount transferred.”
26 This enquiry
probably arises from the fact that the documents that were attached
to the 13 September 2014 email appeared to indicate
that the amount
that was being paid was US$10 000. That roughly represented R100
000.
27 The applicant’s
attorneys responded to this email, saying that US$20 000 “was
transferred to your trust account on
Friday”. Further, “…
in terms of our understanding, the transfer takes effect immediately
and reflects into
the bank’s suspense account a few minutes
after it has been transferred. It is up to the recipient or
beneficiary of the
amount transferred to request their bank to
release the money transferred into the relevant account. The
transferred money does
not go directly into the beneficiary’s
account because of anti-money laundering laws.”
28 The letter went
on to say:
“From the
foregoing it is our prayer that the scheduled auction of the tomorrow
(sic) be suspended as all steps have been
taken to ensure that the
amount owing to your client is paid within the three months agreed
period.”
29 This email
elicited a response from the fourth respondent dated 15 September
2014 which was sent by fax. The relevant portion
of this letter read
as follows:
“2. It was a
specific requirement that the first instalment of R1 007 680,73 be
made on or before the 15th September 2014
(in order to liquidate the
full amount due and payable in terms of the facility over three
months). Your client’s “SWIFT”
payment of US$20 000
does not equate to R1 007 680,73, taking into consideration the
current exchange rate between the Rand and
the Dollar. It must
therefore be borne in mind that the payment of US$20 000 does not
reflect in our trust account we presume
due to exchange control
regulations.”
30 The letter
concluded by saying, “… we hold instructions to proceed
with the sale in execution of the immovable property
scheduled to
take place tomorrow morning at 11h00.”
31 This fax elicited
an email response from the applicant’s attorneys dated 15
September 2014 at 15h06. The email said amongst
other things:
“We recall
that your letter of 8th September 2014 did not specify any particular
amount to be paid within seven days. Your
letter indicated that your
client is ready to afford our client three months and on that basis,
our client paid the amount he had
in good faith.”
32 The letter went
on to say that the applicant had concluded a sale agreement which if
performed, would guarantee payment to the
first respondent of the
full balance within the three month period afforded.
33 At 15h51 on the
15th of September 2014 the fourth respondent replied by email. The
relevant part for present purposes of the
email read as follows:
“At the outset
we wish to place on record that our letter addressed to you dated 8
September 2014 is clear with reference
to the re-payment terms, to
wit that our client would cancel the sale in execution on payment of
the total amount due and payable
in terms of the facility in
‘instalments’, the first instalment to be paid on before
the 15th of September 2014, and
all subsequent instalments to be paid
on or before the 1st day of each and every successive month in
liquidation of the debt, over
a period of 3 (three) months. It
follows that your client had to effect equal monthly instalments in
order to liquidate the debt
over a three month period – your
client was never afforded a moratorium of three months within which
to settle the debt.
The Oxford Dictionary defines instalment as
follows: ‘a sum of money due as one of several equal payments
for something,
spread over an agreed period of time.’”
34 Further letters
were exchanged on that day, but they rendered no result. The letter
the sale in execution proceeded on 16 September
2014.
35 I now come back
to the two respects in which, at least prima facie, the applicant had
failed to comply with the agreement contained
in the substantive
letter of the fourth respondent off 11 September 2014. It is
necessary to consider those aspects closer so
as to come to a firm
conclusion on them.
36 The first issue
relates to the manner of payment of the first instalment. It is
trite that a creditor may direct the debtor
that the former requires
discharge of the obligation in a particular way at a particular time.
In the said letter, the fourth
respondent explicitly stated that all
payments were to be made “directly into our trust account”.
37 The applicant’s
attorney’s email of 13 September 2014 conveyed that a payment
had been made by or on behalf of the
applicant into the account of
the first respondent. That payment, standing on its own, therefore
did not serve to discharge the
obligation. However, the obligation
could conceivably only be considered to have been discharged if the
applicant’s attorney’s
instruction to the fourth
respondent to instruct the first respondent to pay the money over to
the trust account of the fourth
respondent, was permissible in a
contractual sense. By that I mean to convey that ordinarily a
creditor is obliged to cooperate
with the debtor for the debtor to
discharge its obligations to the creditor.
38 I doubt however
whether that principle would extend to include entitling a debtor to
expect of a creditor to assist the debtor
in discharging an
obligation which the debtor would have been able itself to have
discharged, without the assistance of the creditor.
Put differently,
the principle that the creditor is obliged to cooperate would extend,
in my view, only to those respects in which
the debtor is unable
itself to discharge its obligation without the creditor’s
assistance.
39 The payment of 13
September 2014 therefore did not discharge the applicant’s
obligation to pay the first instalment, whether
by the 13th of
September 2014 or by the 15th of September 2014. On this basis
alone, in my view, the applicant had failed to comply
with the
agreement between him and the first respondent, and the first
respondent was entitled to have proceeded with the sale
in execution
on the 16th of September 2014.
40 The second issue
concerns the size of the first and subsequent instalments. I have
quoted above the contents of paragraph 3
of the fourth respondent’s
letter of 8 September 2014, repeated here for ease of reference:
“3. In the
event that your client is not a position to perform as per paragraph
2 supra, our client is willing, entirely without
prejudice to any of
its rights which remain strictly reserved, to afford your client 3
(three) months within which to liquidate
the full amount due and
payable, the first instalment to be made within 7 days from date
hereof, and all subsequent payments to
be made on the 1st day of each
and every successive month in liquidation of the amount due and
payable.”
41 The first
question to ask is whether the reference to “3 (three) months”
is a reference to calendar months or to
30 day periods. In my view
it is in fact a reference to calendar months, because the subsequent
part of the sentence refers to
the subsequent payments having to be
made on the first day of “each and every successive month”.
That would indicate
that the months that follow upon the month in
which the first instalment is to be made, are calendar months. And
since ordinarily
the use of a word more than once in close proximity
would suppose that the same meaning is to be attached to it in both
instances,
the first reference to “months” ought also to
be considered as a reference to calendar months.
42 On this basis
then there were three calendar months within which to have liquidated
the full amount due and payable: September,
October and November.
Since the first instalment was required to be made within seven days
of 8 September 2014 (therefore by the
15th of September 2014), that
left two calendar months, being October and November, within which to
pay the balance.
43 The next question
is whether the three instalments were required to be equal. The
answer to that question is in my view that
the first two instalments
were required to be equal, but that the third instalment, being the
final instalment, would be adjusted
to incorporate the interest that
would have run up on the reducing balance of the capital amount in
the meantime.
44 First, this
follows from the contents of paragraph 2 of the fourth respondent’s
substantive letter of 11 September 2014,
the last sentence of which
reads as follows:
“It must
furthermore be borne in mind that the amount due and payable bears
interest and, as such, the amount of the final
instalment will be
communicated to you in due course.”
45 Clearly what was
intended when paragraph 3 of the fourth respondent’s letter of
8 September is read with paragraph 2 of
the fourth respondent’s
letter of 11 September 2014, is that there would be, at the very
least, payments on each of the 1st
of October and the 1st of
November.
46 Second, the final
instalment, that of the 1st of November, could not be determined in
advance, and would have to be calculated
later, for a specific reason
mentioned in the letter: namely that the reducing balance was bearing
interest. In other words, the
implication is that the author
considered that were it not for the interest factor, it would not
have been necessary to defer the
determination of the amount of the
final instalment. And the author must have reasoned that were it not
for the interest issue,
it would have been unnecessary to defer
fixing the final instalment because it would have been the same as
the previous two.
47 The result is
therefore that on a proper interpretation of paragraph 3 of the 8
September 2014 letter of the fourth respondent,
read with paragraph 2
of the 11 September 2014 letter of the fourth respondent, the
agreement required that the outstanding amount
of R3 023 042,19 be
paid in three instalments, the first two of which would be equal, and
the third of which would be equal to
each of the two instalments that
preceded it, plus such interest as will have accrued on the
outstanding balance, calculated as
from the 10th of September 2014.
48 The first payment
by the applicant of some R200 000 was therefore substantially less
than R1 007 680,73, which represents a third
of the capital amount as
of 9 September 2014.
49 In this respect,
too, the agreement was not complied with and the first respondent was
therefore entitled to have proceeded with
the sale in execution.
50 If the agreement
was in fact not established on the first respondent’s version,
which is of course the procedurally preferred
version, then at best
for the applicant there was no binding agreement to defer the sale in
execution. The does not spell relief
in terms of the notice of
motion.
51 In view of the
conclusion to which I have come, it is not necessary to deal with the
striking out application. As regards the
costs reserved in respect
of the rule 7 application, they should follow the event. I am not
persuaded that a special order is
warranted.
52 In the result I
make the following order:
1. The application
is dismissed with costs, including the reserved costs of the rule 7
application.
WHG VAN DER LINDE
ACTING JUDGE OF THE HIGH COURT
For the Applicant: Adv. MC Makgato
Instructed by: Brian Kahn Inc.
Umlilo House
2 Burnside Island
410 Jan Smuts Avenue
Craighall Park
Johannesburg
Tel. 011 – 577 5600
Ref: B Kahn/K Naidoo/K1214
For the First Respondent: Adv. A
Lamprecht
Instructed by: Bezuidenhout Van Zyl
& Associates Inc.
Unit 2, Surrey Square on Republic
Cnr Surrey Avenue & Republic
Road
Ferndale, Randburg
Tel. 011 – 789 3050
Ref: Mr G van der Merwe/MAT28026
Date argued: 3 September 2015
Judgment delivered: 11 September
2015