About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2017
>>
[2017] ZAGPJHC 326
|
|
Hlano Investments (Pty) Ltd v Investec Bank Limited (31648/2016) [2017] ZAGPJHC 326 (1 November 2017)
HIGH
COURT OF SOUTH AFRICA
(GAUTENG
LOCAL DIVISION, JOHANNESBURG
Case
No: 31648/2016
In
the matter between:
HLANO
INVESTMENTS (PTY)
LTD
Plaintiff
and
INVESTEC
BANK
LIMITED
Defendant/Excipient
Case
Summary
:
Practice –
Pleadings – Exceptions on grounds that particulars of claim bad
in law and vague and embarrassing –
Exceptions dismissed.
JUDGMENT
MEYER,
J
[1] The defendant, Investec Bank Ltd
(Investec), raised four exceptions against the summons of the
plaintiff, Hlano Investments
(Pty) Ltd (Hlano), asserting that the
particulars of claim lacked averments necessary to sustain an action
and that the particulars
of claim are vague and embarrassing.
Investec did not persist in its first exception.
[2] By the nature of exception
proceedings the correctness of the facts averred in the particulars
of claim must be assumed (see
for example
Trustees, Two Oceans
Aquarium Trust v Kantey & Templer (Pty) Ltd
2006 (3) SA 138
(SCA) paras 3-10;
Stewart & another v Botha &
another
[2008] ZASCA 84
;
2008 (6) SA 310
(SCA) para 4).
[3] According to the particulars of
claim Investec and Hlano Financial Services (Pty) Ltd (the principal
debtor) concluded an original
loan agreement on 3 November 2010 and a
re-stated loan agreement on 22 August 2011. In terms of the
original loan agreement
Investec lent and advanced the sum of R150
million to the principal debtor and in terms of the re-stated loan
agreement an additional
sum of R50 million (the loan agreements).
[4] Hlano is the sole shareholder in
the principal debtor. It is also a party to the loan
agreements. It bound itself
as guarantor/surety to Investec for
whatever sums were owing by the principal debtor in terms of the loan
agreements. On
3 November 2010, Investec and Hlano also
concluded a written cession and pledge in security (the deed of
cession and pledge) in
terms whereof Hlano pledged in favour of
Investec the entirety of its shareholding in the principal debtor
(the HFS shares) and
it ceded in favour of Investec the rights in its
shareholder loan claims against the principal debtor.
[5] The principal debtor breached the
terms of the loan agreements by failing to pay certain instalments
due in terms thereof.
In consequence, on 20 August 2013,
Investec demanded payment of the sum of R69 055 174.49 from the
principal debtor, and on 10
September 2013, it demanded payment from
Hlano of the accelerated amount then due and owing in terms of the
loan agreements.
The demand was for payment of the sum of R195
666 334.14.
[6] Clause 8 of the deed of cession
and pledge affords Investec the right, on the occurrence of an ‘Event
of Default’
by the principal debtor, to realise the ‘Secured
Property’ constituted by Hlano’s HFS shares and
shareholder’s
loan claims. Those rights are defined in
clause 8 (the realisation rights) and entitle Investec, at its
election, to give
effect to the provisions of clause 8 and, in doing
so, to either sell the HFS shares and shareholder’s loan claims
by public
auction, or at a fair value by private treaty, or to take
over for itself all or some of the ‘Secured Property’ at
fair value (clause 8.1.4).
[7] Clause 8.1.4 of the deed of
cession and pledge has a further provision which reads thus:
‘
For
the purposes of this Clause, the fair value of any Secured Property
will be the value agreed in writing between the Lender and
the
Pledgor or, failing agreement within ten Business Days after delivery
of a notice to the Pledgor stating that the lender exercises
its
rights under this Clause 8.1, the value determined by an independent
accountant agreed to by the Lender and the Pledgor (or,
failing
agreement within 5 Business Days, appointed, at the request of either
Party, by the President of the Southern African Institute
of
Chartered Accountants, or the successor body thereto), which
independent accountant shall act as an expert and not as an
arbitrator,
shall be instructed to make his determination within ten
Business Days and shall determine the liability for his charges
(which
shall be paid accordingly), provided that if a determination
is manifestly unjust and a court exercises its general power, if any,
to correct such determination, the Parties shall be bound thereby;’
[8] And clause 9 of the deed of
cession and pledge provides as follows:
‘
Subject
to the Credit Agreement, the Lender shall apply the net proceeds of
all amounts received pursuant to the sale or other realisation
of the
Secured Property under this Agreement (after deducting all properly
evidenced costs and expenses reasonably incurred by
the Lender in
relation to that sale or realisation, including brokerage fees and
legal fees) in reduction or discharge of the Secured
Obligations, in
such order and in such manner as the Lender deems fit. Any
amount remaining thereafter shall be paid to the
Pledgor within 15
Business Days of the Final Discharge date and, pending such payment,
shall be deposited by the Lender in a call
account nominated by the
Lender.’
[9] Hlano’s case is that
Investec elected to exercise the realisation rights in terms of
clause 8 of the deed of cession and
pledge and, having so elected, it
further elected to acquire the entirety of the Secured Property (the
HFS shares and the shareholder’s
loan claims). It is
required, in terms of clause 8.1.4(c), to take it over ‘at a
fair value’. The allegations
in the particulars of claim
are that, despite Investec’s elections, it failed to determine
the ‘Fair Value’ of
the Secured Property and it failed to
‘set-off’ that ‘Fair Value’ against the sums
owing to it by the principal
debtor.
[10] The presently relevant part of
the particulars of claim reads thus:
’
18.
In or about June 2015 the defendant, represented by Brett Copans, and
further authorised representatives, elected to exercise
the rights
afforded the defendant in terms of clause 8.1 of the “
cession
and pledge”
.
19.
In exercising that election, the defendant decided, as contemplated
in clause 8.1.4(c) of the “
cession
and pledge”
to
take over all of the plaintiff’s shareholding and shareholder’s
claims in and against HFS.
20.
Despite the exercise by the defendant of its election as pleaded in
paragraphs 18 and 19 above, and the communication of that
election to
the plaintiff, the defendant has now, in affidavits exchanged in Case
No: 15/23138, denied that it has exercised those
elections.
21.
Given the current denial by the defendant of the exercise of its
rights under clause 8.1 of the cession and pledge (including
clause
8.1.4 thereof) there exists a dispute between the plaintiff and the
defendant as contemplated in Section 21(1)(c) of the
Superior Court
Act, 10 of 2013 which entitles the plaintiff to the declaratory
relief it claims.
22.
The plaintiff and the defendant have not agreed on the ‘fair
value’ of any Secured Property’ as contemplated
in
paragraph 8.1.4(c) of the cession and pledge.
23.
The defendant has not delivered to the plaintiff a notice recording
that the defendant exercises its rights under clause 8.1
of the
cession and pledge as contemplated in clause 8.1.4(c) of the cession
and pledge.
24.
In the premises, and as is contemplated in clause 8.1.4(c) of the
cession and pledge, the value of the “Secured Property”
is to be determined by an independent accountant agreed to by the
plaintiff and the defendant alternatively appointed at the request
of
either party by the president of the Southern African Institute of
Chartered Accountants or any successive body.
25.
The defendant, as surety for the obligations of HFS to the plaintiff,
as pledgor of the pledged shares, as cedent of the ceded
shareholder
loan claims and as beneficiary of the rights afforded by clause 9 of
the cession and pledge, is unaware of the extent
of the indebtedness
of HFS to the defendant.
26.
It was a tacit or implied term of the deed of surety furnished by the
plaintiff to the defendant . . . , the original and re-stated
loan
agreements and the cession and pledge that the defendant would render
to the plaintiff a full account of the indebtedness
of HFS to the
defendant in the event that:
26.1
the defendant demanded payment from the plaintiff of the amount
allegedly then due and owing by HFS;
26.2
the defendant exercised its realisation rights as contemplated in
clause 8 of the cession and pledge.
27.
Despite demand, the defendant has failed to render any account to the
plaintiff of the indebtedness of HFS to the defendant.’
[11] Hlano claims certain declaratory
relief, including declaratory orders that Investec had exercised its
realisation rights in
terms of clause 8 of the deed of cession and
pledge and that it had elected to take over the entirety of the
Secured Property,
as contemplated in clause 8.1.4(c). It also
seeks from Investec a statement and debatement of account to
determine what amount,
if any, is owing to it by Investec as a
‘balance’ as contemplated in clause 9.
[12] The second exception raised by
Investec, as formulated in its exception, was firstly that because
Hlano has pleaded that Investec
exercised its election under clause
8.1 of the cession and pledge (in paragraph 18 of its particulars of
claim) and that Investec
denies having exercised the election and has
not given it notice of the exercise of its election (in paragraph
20), ‘. .
. it is unclear on what basis the plaintiff alleges
that the election was exercised’. The complaint was
further that
‘. . . the plaintiff does not plead how the
defendant communicated with the plaintiff, whether it did so orally
or in writing,
who communicated on behalf of the defendant, to whom
the communication was made, when the communication was made or what
the contents
of the communication was’ and that it ‘. . .
is further unclear whether the alleged communication is the same
event
or a different event to the alleged exercise by Capons in June
2015 of an election on behalf of the defendant’. There
is
no merit in these objections.
[13] Clause 8.1 of the deed of cession
and pledge provides Investec with the exclusive election whether to
invoke the realisation
provisions of clause 8 and, once it had done
so, to determine which of the realisation processes contemplated in
clause 8.1.4 are
to be exercised. It is alleged in paragraphs
18 and 19 of the particulars of claim that Investec elected to
exercise its
rights in terms of clause 8.1 and that it elected, in
terms of clause 8.1.4(c) to take over the secured property at fair
value.
It is pleaded in paragraph 20 of the particulars of
claim that Investec communicated those elections to Hlano. What
is pleaded
in paragraph 23 is that Investec ‘has not delivered’
to Hlano ‘a notice recording that [it] exercises its rights
under clause 8.1 of the cession and pledge as contemplated in clause
8.1.4(c) of the cession and pledge’. Furthermore,
there
is no obligation that I am aware of on a party to aver by whom, to
whom and in what form an election, such as the one under
consideration, was communicated.
[14] Investec further argues that the
delivery of a notice to Hlano stating that Investec exercises its
rights under clause 8.1
is a requirement for the exercise of the
realisation rights. There is no allegation in the particulars
of claim, it argues,
that Investec exercised its realisation rights
by delivery of such notice. It relies on the further provision
in clause 8.1.4
of the deed of cession and pledge, which I have
quoted in paragraph 7 supra, in support of this argument.
[15] I agree with Hlano that this
objection has not been pertinently raised in the exception delivered
by Investec in terms of rule
23 of the Uniform Rules of Court.
Furthermore, the question whether the giving of written notice is a
condition for the exercise
of the realisation rights raises the
proper interpretation of clause 8.1.4. That contractual
provision must be interpreted
in accordance with the established
principles of interpretation. (See
Natal Joint Municipal
Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) para
18;
Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun
Transport (Edms) Bpk
2014 (2) SA 494
(SCA) para 12.)
Interpretation is now ‘essentially a unitary exercise’.
‘The “inevitable point
of departure is the language of
the provision itself”, read in context and having regard to the
purpose of the provision
and the background to the preparation and
production of the document’.
[16]
Hlano’s opposing contention is that upon a proper
interpretation of clause 1.1.4 of the deed of cession and pledge the
provision relating to the delivery of a notice does not escalate the
delivery of such notice to a precondition for exercising the
realisation rights. It has, in my view, not been established
that clause 8.1.4 of the deed of cession and pledge cannot reasonably
bear the meaning contended for by Hlano. That clause gives rise
to difficulties of interpretation and (this being an exception)
cannot be construed without the benefit of evidence relating to the
full factual matrix. The opposing contentions on the
proper
interpretation of that provision satisfy me that at least two
possible meanings are available on the language used.
In my
view the proper meaning of clause 8.1.4 should only be determined
after the hearing of evidence at the trial. (See
Belet
Cellular v MTN Service Provider
(936/2013)
[2014]
ZASCA
181
(24
November 2014), paras 11-12.)
[17] The third
exception raised is that the particulars of claim do not disclose a
dispute between the parties entitling Hlano to
the declaratory relief
that it claims in terms of
s 21(1)(c)
of the
Superior Courts Act 10
of 2013
. This objection is clearly factually incorrect.
First, there is the factual allegation that Investec has elected, in
terms of clause 8.1.4(c) of the deed of cession and pledge, to take
over the entirety of Hlano’s shareholding and shareholder’s
claims in and against the principal debtor. Second, when
considering whether an exception should be upheld, the pleading
is
considered as a whole and one does not read paragraphs in isolation.
(See
Nel and Others NNO v McArthur
2003 (4) SA 142
(T) at
149F.) It is clear from the particulars of claim as a whole and
the declaratory relief sought that Hlano contends
that Investec
exercised its realisation rights and acquired the shareholding and
shareholder’s claims. Third, the averment
is pertinently
made that, despite that election, Investec now disputes that it had
done so.
[18] The fourth
exception is that Hlano ‘does not plead the legal basis upon
which it relies for the contention that it is
entitled to a statement
of account’. In
Rectifier and Communication Systems
(Pty) Ltd v Harrison and Others
1981 (2) SA 283
(C), at 286D-H,
Watermeyer JP said the following:
‘
The
action for an account is well known to our law and circumstances in
which it can be claimed have been laid down in a number
of cases.
In
Maitland
Cattle Dealers (Pty) Ltd v Lyons
1943
WLD 1
MILLIN J at 19 said:
“
nobody
is entitled to sue at common law for an account unless the person
sued stands in a fiduciary relationship to him, or some
statute or
contract has imposed upon him the duty to give an account”.
Likewise
in
Victor Products (SA) (Pty) Ltd v Lateulere Manufacturing (Pty)
Ltd
1975 (1) SA 961
(W) at 963 Moll J said:
“
The
right at common law to claim a statement of account is, of course,
recognized in our law, provided the allegations in support
thereof
make it clear that the said claim is founded upon a fiduciary
relationship between the parties or upon some statute or
contract
which has imposed upon the party sued the said duty to give an
account. Allegations which do no more than to indicate
a debtor
and creditor relationship would not justify a claim for a statement
of account.
Erasmus
v Slomowitz (1)
1938 TPD 236
at 239;
Maitland
Cattle Dealers (Pty) Ltd v Lyons
1943
WLD 1
at 19. See also
Doyle
and Another v Fleet Motors PE (Pty) Ltd
1971
(3) SA 760
(A) where HOLMES JA at 762 discuss what the practice
should be not only in regard to what either side must prove in an
action
for a statement of account, debatement thereof and payment of
the amount found to be due, but also in regard to what degree of
accounting is required and whether the debate of an ordered account
must in the first instance take place between the parties.”
(Also
see
ABSA
Bank Bpk v Janse van Rensburg
2002
(3) SA 701
(A), para 15.)
[19]
In the present case Hlano’s allegations in its particulars of
claim do more than to indicate a debtor and creditor relationship.
It avers that Investec’s obligation to render an account flows
from a tacit or implied term of the loan agreements, the deed
of
suretyship and the deed of cession and pledge once it had demanded
payment from it and had exercised its realisation rights
as
contemplated in clause 8 of the deed of cession and pledge.
Whether the contracts should be construed in that way and
such an
obligation to account on the part of Investec be imported, are
matters that
should also only be
determined after the hearing of evidence at the trial.
[20]
Finally the matter of costs. Hlano requests a punitive costs
order on the attorney-and-client scale.
I
am, however, not persuaded that the circumstances of this case
warrant a deviation from the general principle that costs should
follow the event, on the party-and-party scale.
[21] In the result the following order
is made:
The
exceptions are dismissed with costs.
P.A. MEYER
JUDGE OF THE HIGH COURT
Date of hearing: 8 June 2017
Date of judgment: 1 November 2017
Counsel for the plaintiff: ARG Mundell
SC
Instructed by: Meiring and partners
Inc, Bryanston
C/o
Sithatu and Stanley Attorneys, Selby
Counsel for the defendant/excipient:
MM Antonie SC
Instructed by: Werksmans Attorneys,
Sandton