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[2016] ZAGPJHC 123
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Firstrand Bank Ltd v Kruger and Others (2015/5890) [2016] ZAGPJHC 123; 2017 (1) SA 533 (GJ) (23 May 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 2015/5890
DATE:
23 MAY 2016
In
the matter between:
FIRSTRAND
BANK
LTD
........................................................................................................
Applicant
And
KRUGER,
NICO
..........................................................................................................
First
Respondent
KRUGER,
NICO:
NO
..............................................................................................
Second
Respondent
KRUGER,
THOMAS JOHANNES:
NO
..................................................................
Third
Respondent
HEPBURN,
DAVID:
NO
..........................................................................................
Fourth
Respondent
J U D G M E N T
SPILG,
J
INTRODUCTION
1.
During the unopposed court hearings there
were a number of applications brought on long form notice of motion
by financial institutions
against defaulting credit receivers in
relation to credit agreements for home loans and motor vehicle
finance. Previously they
all had been postponed by my brother Coppin
J in order for the plaintiff’s to file supplementary affidavits
dealing with
hearsay allegations..
2.
There were a number of other cases on the
unopposed motion roll which involved the same issue.
3.
The cases before me can be divided into
those where there is some suggestion that the deponent has personal
knowledge of certain
of the essential allegations and those where on
an overview of the founding affidavit the deponent has not set out
enough facts
to demonstrate personal knowledge.
4.
The present case is an example of the
latter.
5.
The claim was brought on notice of motion
for payment of an amount of just over R2.6 million together with
interest and the hypothecation
of the immovable property which was
provided as security for the loan. In addition the bank sought an
order rectifying the applicable
interest rate from prime less 1.25%
to prime less1%.
6.
The affidavit was deposed to a Mr Bongani
Madliwa who describes himself as a commercial recoveries manager at
the bank.
The
grounds on which the facts contained in the affidavit are said to be
admissible can be found in paragraphs 2 and 3, which read:
“
The
facts contained in this affidavit fall within my personal knowledge,
save where otherwise stated or where the contrary appears
from a
context, are true and correct.”
Where
I rely on information obtained by and from individuals, including
representatives of the applicants I believe such info to
be true and
correct.”
7.
Insofar as proof of the agreement is
concerned the deponent attached a copy of the credit facility
agreement and states that the
bank was represented by Ms Shaw and Mr
Midlane.
There
is no confirmatory affidavit filed by these officials either in
relation to the conclusion of the agreement or that they had
made a
mistake when inserting the interest rate. Furthermore the deponent
does not identify from whom he obtained any of the information
relied
upon: It is therefore not possible to ascertain which parts of the
evidence presented are within the deponent’s own
knowledge and
which was conveyed to him by his unnamed sources.
CLAIM
FOR RECTIFICATION
8.
The only statements contained in the
affidavit regarding the alleged error in determining the interest
rate are to be found in the
following paragraphs:
“
14.
The cost of credit section in the agreement erroneously records the
Concession rate as -1.25% and not 1%.
15.
However the facility graph (appearing in the agreement) correctly
records the concession rate as -1%.
16.
The actual concession rate calculated and charged on the Facility was
-1% as recorded in the Facility graph.
17.
The incorrect concession rate was occasioned by a common error of the
parties due to a mistake in the drafting and completion
of the
agreement, and the parties signed the agreement in a bone fide but
mistaken belief that it recorded the true Concession
Rate.”
9.
It is evident that only Ms Shaw or Mr
Midlane can provide direct evidence to support a rectification of the
agreement. Their affidavits
are not attached and there is no evidence
to indicate why either of the two officials was unable to depose to a
confirmatory affidavit.
10.
Moreover an allegation of fact in an
affidavit which in truth comprises no more than information that
others may have provided cannot
be elevated to real evidence simply
because the deponent, under a standardised statement at the
commencement of the affidavit,
believes it to be true and correct.
11.
The difference of .25% in the calculation
of interest affects the correct calculation of the current
outstanding amount and the
rate of interest from the date of judgment
until the judgment debt is paid either prior to a sale in execution
or pursuant to execution.
This affects both the rights of other
creditors and the rights of the debtor to receive any surplus amount
arising from a sale.
It also compromises the certificate of
indebtedness despite the clause in the loan agreement which provided
that it constituted
prima facie
evidence
of the outstanding amount. See Senekal
v
Trust Bank of Africa Ltd
1978 (3)
SA 375
(A) at 383A-C.
12.
Adv Fine
on
behalf of the applicant has not suggested a basis upon which the
rules of evidence may be relaxed. I am unaware of any that would
allow this court to receive the statements contained in these
paragraphs into evidence. Accordingly no case is made out on the
papers for rectifying the agreement.
SUFFICIENCY
OF OTHER ESSENTIAL EVIDENCE
13.
The aspect of rectification just dealt with
also brings into focus the basic difference between allegations
pleaded in a summons
and those which must be deposed to under oath in
motion proceedings.
Default
judgment will be granted in the former case where the cause of action
is properly set out in the pleadings (subject to such
rules or
practices which require an affidavit when applying for judgment)
whereas in the latter affidavits replace both the pleadings
and the
essential evidence that would be produced at trial through leading
vive voce
evidence.
It
follows that in motion proceedings an allegation of fact can only be
made through admissible evidence contained in the affidavits
filed.
See
generally
Swissborough Diamond Mines
(Pty) Ltd and Others v Government of the Republic of South Africa and
Others
1999 (2) SA 279
(W)
at
323F-324E;
Triomf Kunsmis (Edms) Bpk v
AE & CI Bpk en Andere
1984 (2)
SA 261
(W) at 269G – H and
Foize
Africa (Pty) Ltd v Foize Beheer BV and Others
2013
(3) SA 91
(SCA) at para 30; see also illustration of hearsay in
Allpay Consolidated Investment Holdings
(Pty) Ltd and Others v Chief Executive Officer, South African Social
Security Agency, and
Others
2014
(1) SA 604
(CC) at para 94 and compare
Executive
Officer, Financial Services Board v Dynamic Wealth Ltd and
Others
2012 (1) SA 453
(SCA) at
para 16
14.
The present case also highlights the
practice of attorneys instituting claims of this nature by way of
motion rather than action
proceedings. The tendency is to apply the
same process of stereotypical allegations in a template type format
without obtaining
the real evidence from the client’s employees
or other representatives who were actually involved in the matter.
There was
even a stage where a legal typist at the applicant’s
firm of attorneys would depose to the founding affidavit.
15.
But for the application for rectification,
and provided the deponent was in custody and control of the various
documents relied
upon there may have been sufficient evidence to
prove the conclusion of the agreement, the suretyship undertakings
and the despatch
of the relevant notice under the National Credit Act
34 of 2005 (‘
the NCA’
).
16.
However with regard to the calculation of
the outstanding debt, in the present case only the certificate of
indebtedness was signed
by the deponent and there is no other
evidence indicating that he was involved in attempts to collect the
amount outstanding or
had personally engaged any of the respondents.
17.
The previous court hearing this matter
considered that the deponent to the founding affidavit did not have
personal knowledge of
all the facts relevant to the cause of action
and that essential allegations in the affidavit constituted hearsay.
In
this regard the only basis on which the deponent claimed that the
facts might be within his direct knowledge was through his
position
as a commercial recoveries manager; not that he had actually been in
involved in any attempt to recover the alleged debt
or had actually
accessed any of the bank’s records. The fact that he relied on
others to provide him with information puts
into question whether any
of the essential facts were gathered by him through personally
accessing and considering the bank’s
records of the transaction
and the debits and credits raised on the principle debtors loan
account.
18.
In
Rees and
another v Investec Bank Ltd
2014 (4) SA
220
(SCA) at para 14 the court found that the deponent , who
was the recoveries officer, had been involved in attempts to collect
the debt, had perused the file and had personally corresponded with
the attorneys representing the defendants in respect
of the
arrear account. She had also written the letters of demand and had
received responses setting out the sureties’ defences.
In the
context of the case the Supreme Court of Appeal (‘
SCA’)
held that it was unimportant that the
deponent had not been present when the suretyship agreement was
concluded.
19.
It may be said that the requirement for
summary judgment allows a degree of flexibility in regard to the
rules of evidence since
the deponent to the application for summary
judgment, in terms of rule 32(2) of the Uniform Rules of Court, is
only required to
verify the cause of action by swearing positively to
the facts.
20.
Nonetheless a body of case law has built up
in summary judgment proceedings which accept that where a person is
in control of the
relevant files and is directly involved in the
matter at hand, whether having engaged the defendant directly or by
correspondence
without come-back, then that person qualifies to
depose to an affidavit verifying the facts.
21.
This approach, in respect of proving the
documents relied upon, is consistent with the situation where a
subpoena
duces tecum
is
served only on the person who has custody and control of the files of
a legal entity is called on to produce them in trial proceedings.
In
such a case the documents on production in court by the person
subpoenaed become evidence of what they purport to be although
not as
to truth of content.
[1]
22.
In
Barclays
National Bank Ltd. v. Love
,
1975
(2) SA 514
(D) at pp. 516H-517A Miller J at the time said in relation
to an affidavit supporting summary judgment:
'We
are concerned here with an affidavit made by the manager of the very
branch of the bank at which overdraft facilities were enjoyed
by the
defendant. The nature of the deponent's office in itself suggests
very strongly that he would in the ordinary course of
his duties
acquire personal knowledge of the defendant's financial standing with
the bank. This is not to suggest that he would
have personal
knowledge of every withdrawal of money made by the defendant or that
he personally would have made every entry in
the bank's ledgers or
statements of account; indeed, if that were the degree of personal
knowledge required it is difficult to
conceive of circumstances in
which a bank could ever obtain summary judgment. It goes without
saying that a manager of a bank who
claims to have personal knowledge
of the extent to which a client has overdrawn his account must needs
rely upon the bank records
which show the amounts paid into his
account and the amounts withdrawn by the client.''
23.
It appears that the underlying premise of
cases dealing with the adequacy of such affidavits in summary
judgment proceedings is
both the reliability and probative value of
the evidence of the bank official, who by reason of the duties he or
she is obliged
to perform would in the ordinary course acquire
personal knowledge of the current status of the credit receiver’s
account
as well as have accessed the relevant bank records while
performing such duties, and the reliability of the bank’s
records (by which I include the record of transactions on the account
and the credit receiver’s file records) and their probative
value.
24.
Self-evidently
these line of cases commenced well before the introduction of the Law
of Evidence Amendment Act 45 of 1998. Section
3 of the Act, and in
particular for present purposes section 3(1) (c). The section has at
its core base for the reception of what
would otherwise constitute
hearsay, the reliability and probative value of the evidence sought
to be tendered
[2]
.
In
my view summary judgment cases are therefore of assistance in
determining the extent to which hearsay evidence ought to be admitted
in the present type of application where the respondent, despite
being served, has not challenged the averments thereby rendering
the
nature of the proceedings unopposed for the purposes of section
3(1)(c)(i) and where all the other factors to be taken into
account
under sub-section (3) have already been positively dealt with, albeit
in another context, in the summary judgment cases
cited. Clearly I do
not suggest that the same holds good in opposed matters or where the
papers themselves put the probative value
of the evidence or its
reliability into doubt, as arises in the present case by reason of
the order sought for rectification.
25.
Under the exceptions to the hearsay rule
the inherent difficulties of producing every individual who dealt
with the credit
receiver and made each entry reflected in the
account in question would in my view, together with the other
factors already
mentioned regarding probity and reliability, entitle
an applicant credit grantor seeking judgment in an unopposed
matter
to rely on;
a.
the
evidence of a person who exercises custody and control of the
documents in issue to introduce them into evidence through the
founding affidavit provided such allegation is made, or appears from
the contents of the affidavit as a whole
[3]
,
and provided the agreements are attached and are alleged to be true
copies
[4]
. This would usually be
a bank manager or an official holding the position of a recoveries
manager
[5]
;
b.
the evidence of a person who has personal
knowledge of the current status of the credit receivers’
account by reason of having
access to the account and being involved
in the present management of the account or collection process,
in respect of the
allegations contained in the founding affidavit
regarding the current outstanding balance.
This
would be subject to the terms of the agreement which may permit a
certificate of indebtedness to constitute
prima facie
proof
provided it is signed by a designated official at the financial
institution and provided further that the court is otherwise
satisfied that such person would, in the ordinary course, have
personally accessed the records, accounts and other relevant records
of the respondent and provided the certificate is otherwise reliable.
See
generally Salduker JA in
Rees
at
para 14;
Maharaj v. Barclays National
Bank Ltd
1976 (1) SA 418
(AD) at 424E-F
and Wallis J (at the time) in
Shackleton
Credit Management (Pty) Ltd v Microzone Trading 88 CC
2010
(5) SA 112
(KZP) at para 13 approving the requirement in
Standard
Bank of SA Ltd v Secatsa Investments (Pty) Ltd and Others
1999
(4) SA 229
(C) at 235A – C that the deponent at least has
personal knowledge of certain of the relevant facts;
c.
the evidence of a person who positively
attests that notice was properly sent to the respondent under either
section 129(1) or section
86(10) of the NCA.
26.
In the present case the deponent while
having the trappings of authority in the department does not claim to
have been personally
involved in the process of recovering the debt,
let alone having personally accessed the bank’s records,
accounts or other
relevant documents. As stated earlier the deponent
left it unclear as to what he personally did and what information was
provided
to him by others or from where they in turn might have
sourced it.
ORDER
27.
Accordingly the papers are not in order and
the applicant is obliged to file and serve on the respondents a
supplementary affidavit
(or set of affidavits);
a.
by a person who has been involved directly
in the recovery of the alleged debt from the respondents and who
confirms the current
status of the debt;
b.
which also contains either direct evidence
dealing with the aspect of rectification by the bank officials
involved, failing which
evidence that complies with the requirements
for admissibility under the Civil Proceeding Evidence Act 25 of
1965, the
Electronic Communications and Transactions Act 25 of 2002
or the Law of Evidence Amendment Act 45 of 1998 (as the case might
be);
c.
by the responsible person at the
applicant’s firm of attorneys who can attest that the section
120 notices were written and
despatched to the sheriff;
d.
The matter is postponed sine die.
SPILG,
J
DATE
OF JUDGMENT: 23 May 2016
REVISED:
25 May 2016
FOR
APPLICANT: Adv V Fine
Jason
Michael Smith Inc
FOR
RESPONDENT: Unopposed
[1]
In
S. v Volschenk,
1970 (3) SA 502
(T) at 505 Boshoff J (at the time)
said:
"A
banker's books are from their very nature at best only secondary
evidence of the original transactions from which they
are compiled
and which they purport to reflect. On the general principles
relating to the law of evidence, the contents of a
banker's books
cannot be used testimonially in a court of law unless the contents
thereof have been properly proved with the
evidence of the person or
persons who have direct knowledge of the transactions reflected
therein."
Section
28 of the Civil Proceedings Evidence Act, 25 of 1965 in regard to
entries in banker’s books does not assist because
the bank is
a party to the proceedings. . The discretionary provisions of
section 34(1)(a)(ii) read with subsection(2) might
have
application provided the foundation for its reception both under
this Act and, in the case of electronic data, section
15(1) or
(4) the
Electronic Communications and Transactions Act 25 of 2002
.
[2]
Section
3(1)(c) of the Law of Evidence Amendment Act 45 of 1998 provides:
3
Hearsay evidence
(1)
Subject to the provisions of any
other law, hearsay evidence shall not be admitted as evidence at
criminal or civil proceedings,
unless-
…
.
(c)
the court, having regard to-
(i)
the nature of the proceedings;
(ii)
the nature of the evidence;
(iii)
the purpose for which the evidence is tendered;
(iv)
the probative value of the evidence;
(v)
the reason why the evidence is not given by the person upon whose
credibility the probative value of such evidence depends;
(vi)
any prejudice to a party which the admission of such evidence might
entail; and
(vii)
any other factor which should in the opinion of the court be taken
into account,is of the opinion that such evidence should
be admitted
in the interests of justice.
[3]
Love
at
517A. Approved in respect of summary judgment proceedings in
Maharaj
v. Barclays National Bank Ltd
1976
(1) SA 418
(AD) at 424B-D
[4]
See
rule 6(5)(b) and see also
Chiloane
v Maduenyane
1980
(4) SA 19
(W) at 20H-21A
[5]
Rees
at
para 14;