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[2010] ZAGPJHC 175
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Luxottica South Africa (Pty) Ltd v Stanley Building Investments (Pty) Ltd and Another (20303/10, 20304/10) [2010] ZAGPJHC 175 (10 September 2010)
SOUTH GAUTENG HIGH COURT,
JOHANNESBURG
REPUBLIC OF SOUTH AFRICA
Case
Nos. 20303/10 and 20304/10
Date:10/09/2010
In
the two matters between:
LUXOTTICA
SOUTH AFRICA (PTY)
LTD
.......................................................
Applicant
and
STANLEY
BUILDING INVESTMENTS (PTY) LTD
.............................
First
Respondent
INVESTEC
BANK
LTD
...................................................................
Second
Respondent
JUDGMENT
MEYER,
J
[1] These
two cases – 20303/10 and 20304/10 – came before me in the
unopposed motion court. Provisional sentence is
in each instance
claimed against the first respondent on a covering mortgage bond.
The second respondent is cited by reason of
its interest as the
holder of mortgage bonds enjoying a preferent ranking to those held
by the applicant.
[2] An
action for provisional sentence is founded on a liquid document.
1
My concern was whether the covering mortgage bond on which
provisional sentence is sought in each case complies with the
requirement
of liquidity. This requirement was formulated as follows
in
Rich v
Lagerway
:
2
‘
If the document
in question, upon a proper construction thereof, evidences by its
terms, and without resort to evidence extrinsic
thereto, ... an
unconditional acknowledgment of indebtedness in an ascertained amount
of money, the payment of which is due to
the creditor, it is one upon
which provisional sentence may properly be granted.’
[3] There appears in each
covering mortgage bond a declaration of
‘...
the Mortgagor to be truly and lawfully indebted and held and firmly
bound to and in favour of ...’
the plaintiff in the sum of
‘the
capital’
- R640, 000.00 in the covering mortgage bond on which provisional
sentence is claimed under case no. 20303/10 and R9, 754, 531.00
in
the covering mortgage bond on which provisional sentence is claimed
under case no. 20303/10 –
‘...
arising from a consideration set out in the recital.’
A wide variety of possible causes of indebtedness or considerations
are recorded in the recitals of each covering mortgage bond,
including ‘
a
direct or indirect liability incurred by the Mortgagor individually
or jointly with others
’,
‘
moneys
lent and advanced
’,
‘
drafts
or bills of exchange
’,
‘
any
suretyship, guarantee or indemnity signed by the Mortgagor in favour
of the Mortgagee, or given by the Mortgagee for and on
behalf of the
Mortgagor
’,
‘
any
payment made by the Mortgagee pursuant to
’
each bond, ‘
including
future debts generally from whatsoever cause arising
’.
[4] When each covering
mortgage bond is read as a whole and interpreted,
3
it becomes clear that an acknowledgment in an ascertained amount of
money is not what was intended. Each covering mortgage bond
records
that it was given as a continuing covering security for all and any
sum or sums of money which might then or in the future
be owing to or
claimable by the plaintiff from any cause mentioned in each
instrument and any other cause of whatsoever nature,
and that each
covering mortgage bond is to remain of full force and effect until
cancelled in the deeds registry notwithstanding
any fluctuation in,
or temporary extinction of, the first defendant’s indebtedness
to the plaintiff from time to time. The
first defendant, in other
relevant provisions of the covering mortgage bond on which
provisional sentence is claimed under case
no. 20303/10, expressly
acknowledges its indebtedness to the plaintiff for indeterminate
amounts up to specified maximums of R640 000.00
together with
interest thereon, which is referred to as ‘the capital’
and of R160 000.00, which is referred to
as ‘the
additional sum’,
4
and the first defendant, in other relevant provisions of the covering
mortgage bond on which provisional sentence is claimed under
case no.
20304/10, expressly acknowledges its indebtedness to the plaintiff
for indeterminate amounts up to specified maximums
of R9, 754, 531.00
together with finances charges thereon (‘the capital’)
and of R2, 438, 632.75 (‘the additional
sum’). An
acknowledgment of indebtedness, not in an ascertained amount of
money, but up to a specific sum, does not render
the instruments
liquid.
5
[5] It further becomes clear
upon a construction of the covering mortgage bonds that the apparent
unconditional acknowledgments
of indebtedness relating to the capital
sums and interest or finance charges thereon were made in respect of
indeterminate amounts
which might or might not already have been
advanced and to advances which the plaintiff could make in the
future. The extent of
any indebtedness at the time of the execution
of the instruments cannot be ascertained
ex
facie
the
covering mortgage bonds.
[6] A covering mortgage bond
in which the acknowledgment was given in consideration of an
undertaking by the mortgagee to make future
advances could be liquid.
The connection between the admission or acknowledgment and the
concomitant obligation of the mortgagee
must appear
ex
facie
the
instrument.
6
An undertaking of an unconditional obligation on the part of the
plaintiff does not, however, appear
ex
facie
the
instruments under consideration. The acknowledgments can therefore
also not be said to have been made
in
consideration
for the plaintiff’s undertakings to make future advances or to
comply with certain obligations. The apparent unconditional
acknowledgment of indebtedness is, on my interpretation of each
covering mortgage bond, no more than ‘merely a conveyancing
form’
7
or ‘ceremonial admission’.
8
[7] I
am accordingly of the view that each covering mortgage bond does not
comply with the requirement of liquidity and that provisional
sentence in each case is incompetent.
[8] In
the result the following order is made:
1. The application for
provisional sentence in case no. 20303/10 is refused and no order as
to costs is made.
2. The application for
provisional sentence in case no. 20304/10 is refused and no order as
to costs is made.
P.A.
MEYER
JUDGE
OF THE HIGH COURT
10
September 2010.
1
A concise and, in my respectful view, correct exposition of the
relevant legal principles and references to decided cases are
to be
found in FR Malan
et al
:
Provisional Sentence on Bills
of Exchange, Cheques and Promissory Notes
(Butterworths), at p 16
et seq
.
2
1974 (4) SA 748
(A), at p 754.
3
Boshoff AJP in
Harrosmith
v Ceres Flats (Pty) Ltd
1979
(2) SA 722
(TPD), at p 732E, said this: ‘Whether or not a
clear and unconditional acknowledgement of debt, sufficient to
support
an interlocutory judgment of provisional sentence, is
contained in an instrument is in each case essentially a matter of
construction.’
4
The additional sums in both covering
mortgage bonds
inter alia
include ‘... such other costs, charges, life assurance or
endowment premiums, expenses and future debts generally ...’
5
Harrowsmith v Ceres Flats (Pty) ltd
1979 (2) SA 722
(T), at p 745;
Barclays Western Bank Ltd v
Pretorius
1979 (3) SA 637
(N),
at pp 650 – 651;
Wollach
v Barclays National Bank Ltd
1983
(2) SA 543
(A), at p 552F - H.
6
Wolach v Barclays National Bank
Ltd
1983 (2) 543 (A), at p 556A
and at pp 556E – 559D, and
Inlestone
v Pereira
1939 WLD 55
, at pp 64
– 65.
7
Per Bristow J in
Standard Bank
v Perl
1904 TS 768
at p 770.
8
Per Didcott J in
Barclays
Western Bank Ltd v Pretorius
1979
(3) SA 637
(NPD), at p 642F – H.