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[2017] ZAGPJHC 120
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Man Financial Services SA (Pty) Limited v Phaphoakane Transport and Another (26332/2016) [2017] ZAGPJHC 120; 2017 (5) SA 526 (GJ) (2 February 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO
: 26332-2016
DATE
:
2017-02-01
In
the matter between
MAN
FINANCIAL SERVICES SA (PTY)
LIMITED
Applicant
and
PHAPHOAKANE
TRANSPORT
First
Respondent
PHASWANA STEPHEN
RATLOU
Second
Respondent
Coram: Wepener J
Heard: 1 February 2017
Delivered: 2 February 2017
Summary: Credit –
National
Credit Act 34 of 2005
– When parties by transactio conclude a
new agreement, such new agreement may require compliance with the
provisions of
National Credit Act despite
the fact that the prior
agreement fell outside of the provisions of the Act
JUDGMENT
WEPENER
J
:
[1]
The applicant seeks payment of amounts due to it by two respondents.
The applicant and the first respondent entered into
several written
rental agreements, and the second respondent bound himself as surety
and co-principal debtor with the first respondent
in favour of the
applicant for payment of any amounts which the first respondent may
owe the applicant. Although there are
a number of issues raised
by the defendants in their affidavits and heads of argument, counsel
for the respondent ‘without
abandoning’ other issues,
only made submissions on one issue. I am of the view that the
remaining issues were not persisted
with and need not be dealt with.
[2]
At the outset of the hearing it became apparent that the sole
director of the first respondent, being the second respondent,
caused
its liquidation recently and no relief can now be granted against it
until a liquidator is appointed and joined in these
proceedings.
[3]
The first respondent was in breach of the rental agreements and they
were all cancelled and the trucks which formed the subject
matter of
the rental agreements, were returned to the applicant. Despite
this, an amount of just less than R5 million remained
outstanding and
payable to the applicant. The applicant and the two respondents
entered into negotiations for payment of the outstanding
amount.
The negotiations resulted in a settlement agreement being entered
into and the second respondent, the sole director
of the first
respondent, also representing the first respondent, signed the
agreement. The agreement stipulated payment in
several monthly
instalments and, if calculated, the amount exceeds the capital amount
of R5 million. It was therefore common
cause that the agreement
to repay includes additional fees or interest on the capital amount.
[4]
The relevance thereof is the following. When the original
agreements were entered into, the transactions did not fall
under the
provisions of the
National Credit Act, Act
34 of 2005 (the NCA), due
to the fact that the 1
st
respondent was a juristic person
as defined in
s 4(1)(a)(1)
of the NCA, and it was a large agreement
as defined in
s 4(1)(b)
of the NCA. Although there is a general
denial of this averment by the respondents, the denial is of no
significance as it
fails to set out any facts in support of the
denial.
[5]
In
Wightman t/a JW Construction vs Headfour (Pty) Limited &
Another
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA) Heher, JA said as follows at para
13 and 23:
‘
13. A real and genuine bona
fide dispute of fact can exist only where the court is satisfied that
the party who purports to raise
the dispute has in his affidavit
seriously and ambiguously addressed the fact said to be disputed . .
. A litigant may not necessarily
recognise or understand the nuances
of a bare or genuine denial as against a real attempt to grapple with
the relevant factual
allegations made by the other party. But when he
signs the answering affidavit he commits himself to its contents,
inadequate as
they may be, and will only in exceptional circumstances
be permitted to disavow them. There is thus a serious duty imposed
upon
a legal advisor who settles an answering affidavit to ascertain
and engage with the facts which his client disputes and to reflect
such disputes fully and accurately in the answering affidavit. If
that does not happen it should come as no surprise that the court
takes a robust view of the matter.’
And:
’
23. The conclusion is thus that
the court a quo should have approached the application upon the
foundation that the respondents
had failed to raise a real genuine
and bona fide dispute of fact in relation to the events from 3 –
12 July and that the
case had to be decided upon the assumption that
the appellant’s account of these events were substantially true
and correct.’
[6]
In the circumstances the allegation that the rental agreements fell
outside of the provisions of the NCA is to be accepted.
Indeed
counsel for the second respondent did not argue differently.
[7]
The issue which the second respondent persisted with was that the
applicant failed to comply with the provisions of
s 129
of the NCA in
that it failed to give notice to the respondents as required and
which notice is a prerequisite for claiming payment
from a defaulting
party under a credit agreement.
[8]
The settlement agreement entered into by the parties provides that
the first and second respondents are liable jointly and severally
for
the debt therein described. The second respondent is no longer
described or bound as surety. Under the original
agreements the
second respondent, as surety, would not have been able to rely on the
protection of the NCA due to the fact that
the agreements did not
fall under the NCA as such and a surety was also not afforded that
protection. See
FirstRand Bank Limited vs Carl Beck Estates
(Pty) Ltd & Another
2009 (3) SA 384
(T) paras 18 – 23.
But, so argued the second respondent’s counsel, the new
agreement falls within the provisions of
the NCA, at least as far as
the second respondent is concerned, as the exclusions contained in
s
4
of the NCA regarding a juristic person are not applicable to the
second respondent and the applicant had failed to comply with the
provisions of the NCA as far as the second respondent is concerned.
The issue that was argued before me was whether the provisions
of the
NCA and specifically
s 129
apply to the settlement agreement not
describing the second respondent as surety, and who, in that
capacity, would not have been
able to rely on the protection of the
NCA, but that he would be able to rely thereon as a principal debtor.
[9]
The settlement agreement, in my view, ended the relationship between
the parties as far as the rental agreements and suretyships
were
concerned and a new relationship commenced. The agreement reads
that it is in full and final settlement of the applicant’s
claims against the first and second respondents with regard to the
rental agreements in question. The agreement was consequently
a
transaction in the legal sense. In
Gollach & Gomperts
(1967) (Pty) Limited vs Universal Mills & Produce Co (Pty)
Limited & Others
1978 (1) SA 914
(A) Miller, JA said at 921
as follows:
‘
It is necessary to consider
whether the agreement concluded at the end of the meeting on 20 July
1972 when appellant agreed to pay,
and the Group to accept, R10 000
“in full and final settlement . . .”, was a transactio in
the sense of that word as
used in the Roman-Dutch law and applied in
South Africa. In
Cachalia vs Harberer & Co
.,
1905 T.S. 457
at p. 462 Solomon, J., accepted the definition of transactio given by
Grotius, Introduction 3.4.2., as
“
an
agreement between litigants for the settlement of a matter in
dispute”.
Voet, 2.15.1., gives a somewhat wider
definition which includes settlement of matters in dispute between
parties who are not litigants
and later, at 2.15.10., he includes
within the scope of transactio, agreements on doubtful matters
arising from uncertainty of
pending conditions “even though no
suit is then in being or apprehended”. (Gane’s
trans.,vol. 1, p. 452.) The
purpose of a transactio is not only to
put an end to existing litigation but also to prevent or avoid
litigation. This is
very clearly stated by Domat, Civil Law
vol. 1, para. 1078, in the passage quoted in
Estate Erasmus vs
Church,
1927 (T.P.D. 20 at p. 24 . . . .’
[10]
It is also settled law that a transaction can be entered extra
judicially as have been held in
Gollach
at p 922. The
general principle in our law is that such a transaction or compromise
terminates the parties’ original
rights and obligations and
gives rise to new rights and obligations under the new agreement.
See
Road Accident Fund vs Ngubani
2008 (1) SA 432
(SCA).
‘Unless reserved in the compromise, parties thereto are
precluded from enforcing the rights and obligations
arising from the
compromised claim,’ per Jafta, JA in
Ngubani
at
para 12.
The
learned judge continued and said:
‘
In
Hamilton vs Van Zyl
1983 (4) SA 379
(E) the court said at 383 (E – H):
“
A compromise need not necessary
however follow upon a disputed contractual claim. Any kind of
doubtful right can be subject
of a compromise . . . Delictual claims
are, for example, frequently the subject of a compromise. Nor
need the claim be even
prima facie
actionable in law. A valid
compromise may be entered into to avoid even a clearly spurious claim
and defendants frequently, for
various reasons, settle claims which
they know or believe the plaintiff will not succeed in enforcing by
action.
An agreement of compromise in the
absence of an express or implied reservation of the right to proceed
on the original cause of
action, bars the bringing of proceedings
based on such original cause of action . . . Not only can the
original cause of action
no longer be relied upon, but a defendant is
not entitled to go behind the compromise and raise defences to the
original cause
of action when sued on the compromise.’
[11]
It is thus the second respondent’s case that the law of
suretyship does not apply as the second respondent’s obligation
arises as a principal in the settlement agreement. In
Carter
Trading (Pty) Limited vs Blignaut
2010 (2) SA 46
(ECP) Van Der
Bijl, AJ held that an acknowledgment of debt entered into between
parties, satisfied the requirements of
s 8
of the NCA and that this
was a credit agreement for purposes of the NCA and that compliance
with the provisions of the NCA was
necessary. Relying on
GrainCo (Pty) Limited vs Broodryk NO & Andere
2012 (4) SA
517
(FB) counsel for the applicant argued that the NCA would not be
applicable because the underlying causa of the acknowledgment or
settlement agreement was not money lending but a damages claim.
The
court held that it could not have been the intention of the
legislature that a settlement agreement based on a damages claim,
which allowed for extended payment with interest, to fall under the
provisions of the NCA.
The
learned judge referred to the heading of the NCA where it was made
apparent that the Act was intended for money lending and
credit
granting in the ordinary sense of the word and not for extended
payment of damages.
This
matter is distinguishable from the matter before me. The matter
before me does not concern the payment of damages.
It concerns
the ordinary granting of credit, albeit by way of transactio.
[12]
The penultimate authority relied upon by the applicant is
Ribeiro
& Another vs Slip Knot Investments 777 (Pty) Limited
2011 (1)
SA 575
(SCA) where it was held at para 13 that the obligations of the
sureties under a former agreement and those under a later agreement
were interdependent, and that a later agreement was in substance an
agreement to guarantee the principal debtor’s obligation
under
the initial loan agreements and did therefore not fall under the NCA.
[13]
The
Ribeiro
principles cannot be applied in this matter.
Firstly, the question of transactio did not arise in
Ribeiro
.
Indeed the court found that regard must be had to the intention of
the parties when entering into the later agreement.
In
Ribeiro
it was specifically recorded that a later agreement ‘does not
constitute a novation of the initial loan agreements’.
See
Ribeiro
at para 10.
It
was also agreed and accepted that the obligations as accepted by the
sureties in terms of the new agreement have as the origin
the initial
undertakings and obligations attributable to the sureties in the
initial loan agreements. It also referred to
the outstanding
loan amount under the initial agreement. These are strong
indications that the relationship as guarantors
of a debt falling
outside the provision of the NCA was to be inferred. The court
held at para 13 that:
‘
To this I wish to add that the
parties “specifically recorded” that the agreement “does
not constitute a novation
of the initial loan agreements” and
that “the obligations and undertakings as accepted by the
sureties in terms of
the agreement have as their origin the initial
undertakings and obligations attributable to the sureties in the
initial loan agreements.”
The fact that the parties also
recorded that “the agreement shall be the sole record of
subject matter contained in it”,
- a point that the
respondents relied upon to avoid the consequences of the initial
agreements - does not detract from
the fact that the parties
explicitly intended not to extinguish, but rather confirm the
obligations arising from the initial agreements.
The obligations
under the loan agreements and those under the new agreement were thus
interdependent.’
But
these specific facts are absent in the present matter. In this
matter there was indeed a transactio without reservation
of the terms
of the original agreement and the principles expounded in
Ribeiro
do not find application. [14] The final authority relied upon by
counsel for the applicant is
Hattingh vs Hattingh
2014 (3) SA
162
(FB). There two brothers entered into an agreement, which
ended their long business relationship. One brother remained
indebted to the other and undertook to pay off the debt in
instalments. Ordinarily the agreement would have fallen within the
ambit of the NCA. But Van Zyl, J found that the agreement was
not covered by the provisions of the NCA. The learned
judge
found that the purpose of the NCA, being to cover ordinary commercial
transactions, which are to be governed and which on
the facts of that
matter, was not the case with the two brothers who ended a long
business relationship. He found that it
could not have been
intended for it to fall under the provisions of the NCA. The
factual finding in
Hattingh
cannot apply in this matter.
[15]
Having come to this conclusion, I am of the view that a settlement
agreement constitutes a new credit agreement within the
meaning of
the NCA. The applicant was consequently obliged to comply with
the provisions of
s 129
of the NCA and give prior notice to the
respondents before instituting action.
[16]
There was one other issue. The applicants sought to have the
agreement made an order of court. The agreement itself
provides
that it may be made an order of court. The second respondent did not
make submissions to the contrary.
[17]
The second respondent was entitled to oppose these proceedings
because the plaintiff failed to comply with the provisions of
s 129
of the NCA.
For
these reasons the following order is made:
1. Against the first respondent (in
liquidation): the application is postponed
sine die
.
2. Against the second respondent:
2.1 The settlement agreement annexed
as annexure JN13 to the founding affidavit is made an order of court;
2.2 The application is postponed
sine
die
.
3. The applicant may not set this
matter down until:
3.1 It has complied with the
provisions of
s 129(1)(a)
as read with
s 130
of the
National Credit
Act 2005
; and
3.2 It has upon completion of the
remedies referred to in
s 129(1)(a)
of the NCA, if resorted to or
otherwise, become entitled to resume its application.
4. The applicant is to pay the second
respondent’s costs incurred in opposing this application.
Counsel
for the Applicant: C van der Merwe
Attorneys
for the Applicant: Marianne Pretorius Attorneys
Counsel
for the Respondent: D.D. Swart
Attorneys
for the Respondent: Salome le Roux Attorneys
……………………………
..
WEPENER
J
JUDGE
OF THE HIGH COURT
DATE
:
…………..…