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[2020] ZAGPJHC 295
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Nurcha Development Finance Proprietary Limited v Maono Construction and Property Development (Pty) Ltd and Others (47062/2018) [2020] ZAGPJHC 295 (19 June 2020)
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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 47062/2018
In
the matter between:
NURCHA
DEVELOPMENT FINANCE
PROPRIETARY)
LIMITED
APPLICANT
AND
MAONO
CONSTRUCTION AND PROPERTY
DEVELOPMENT
(PTY) LTD FIRST
RESPONDENT
HANTSI
BHETILDA MAYEZA SECOND
RESPONDENT
MAONO
HOLDINGS (PTY) LTD THIRD
RESPONDENT
JUDGMENT
Delivered:
This
judgment was handed down electronically by circulation to the
parties’ legal representatives by e-mail. The date and
time for
hand-down is deemed to be 10h00 on the 19
th
of June 2020.
TWALA
J
[1]
In this application, the applicant, a financier who advances bridging
finance and funding to emerging contractors who have secured
contracts with government institutions for the promotion and
completion of low-cost housing and infrastructure projects, seeks
the
following orders against the respondents in its amended notice of
motion:
1.1 Granting leave
to the applicant to file its supplementary founding affidavit deposed
to by Sindisa Adenford Nxusani;
1.2 Granting
rectification of the deed of suretyship signed by the second
respondent, dated 15 February 2017, alternatively 22 February
2017,
and attached to the applicant’s main founding affidavit
as annexure “SN4,1 in the following manner:
1.2.1 Where the name
National Urban Reconstruction and Housing Agency (NPC) (Registration
Number: 1995/004248/08) appears it is
replaced with Nurcha
Development Finance (Proprietary) Limited (Registration Number:
2005/014239/07);
1.3 Granting
rectification of the deed of suretyship signed by the third
respondent dated the 15 February 2017, alternatively 22
February
2017, and attached to the applicant’s main founding affidavit
as annexure “SN4.2”) in the following
manner:
1.3.1 Where the name
National Urban Reconstruction and Housing Agency (NPC) (Registration
Number: 1995/004248/08) appears it is
replaced with Nurcha
Development Finance (Proprietary) Limited (Registration Number:
2005/014239/07)
1.4 Payment in the
amount of R1 815 286.02
1.5 Interest thereon
from 1
June
2018 at the rate of 10% per annum to date of final payment
1.6 Costs of suit on
the attorney and client scale.
[2]
The first respondent is a construction and property development
company. The second respondent is the sole director of the first
respondent. The third respondent is a private and a holding company
of the first respondent. In opposition to these proceedings,
the
respondents filed their answering affidavit and supplementary
answering affidavit to the proposed amended notice of motion.
However, the second and third respondents intimated at the case
management meeting held on the 7
th
of May 2020 that
they are no longer proceeding with their opposition to the
applicant’s prayers for the rectification of the
suretyship
agreements concluded and signed by them in favour of the applicant
and are leaving the determination thereof in the
hands of the Court.
[3]
The genesis of this case is the Infrastructure and Community Facility
Programme Loan Agreement (“the loan agreement”)
concluded
by the applicant and the first respondent on the 22
nd
of February 2017
together with the deeds of suretyship signed by the second and third
respondents on the 22
nd
of February 2017 in
favour of the applicant. As a term of the agreement, the applicant
was given a power of attorney and became
the only authorised
signatory of an account opened with FNB in the name of the first
respondent (the repayment account) wherein
the Free State Department
of Human Settlement (“the Department”) will pay all money
due to the first respondent for
work done based on the construction
contract between them. Once the payment has been received in the
repayment account, the applicant
will transfer what is due to it in
terms of the loan facility and pay the balance on the account over to
the first respondent.
[4]
It is common cause that the applicant granted a loan facility to the
first respondent in terms of the loan agreement. It is
not in dispute
that on the 1
st
of June 2018, when
transacting on the repayment account, the applicant, instead of
transferring an amount of R1 815 286.02
into its own
account, it transferred the said sum of R1 815 286.02 into the
account of the first respondent. Furthermore,
it is common
cause that the respondents have on numerous occasions undertook to
pay or refund the applicant the said sum of R1 815 286.02,
however to date it has only paid a sum of R300 000 to the
applicant leaving a balance of R1 515 286.02.
[5]
In seeking rectification of the suretyship agreements, the applicant
averred that due to a bona fide mutual error between the
parties, the
suretyship agreements did not reflect the common intention of the
parties correctly in that it erroneously reflects
the name of the
applicant’s holding company as the lender or creditor and not
the applicant. Contrary to what appears from
the suretyship
agreements, it was the common and continuing intention of the parties
that the applicant was the creditor or lender.
[6]
Although the respondents are no longer actively opposing the
rectification relief, it is worth noting their testimony in their
answering affidavit. The testimony of the respondents was that,
whilst the approval of any loan by the applicant to the first
respondent was dependant on the conclusion of the suretyship
agreements, the second and third respondents only stood surety for
loan amounts advanced to the first respondent in terms of the loan
facility agreement concluded between the applicant and the first
respondent and not for payments made in error into the account of the
first respondent.
[7]
It is now settled law that a deed of suretyship which does not comply
with the requirements of section 6 of the General Law
Amendment Act
50 of 1956 cannot be rectified so as to make it to comply. Section 6
of the Act provides as follows:
“
No
contract of suretyship entered into after the commencement of this
Act, should be valid, unless the terms thereof are embodied
in the
written document signed by or on behalf of the surety……….”
[8] In
Inventive
Labour Structuring (Pty) Ltd. V Corfe (31/2005) [2005] ZSCA 139 (18
November 2005)
the Supreme Court of Appeal stated the following:
“
Para (6)
As a general rule the determination of whether rectification of a
suretyship should be ordered or not involves a two-stage
enquiry. The
first is to determine whether the formal requirements contained in s
6 are met. The focal point at this stage is whether
the written
document, on its face, constitutes a valid contract of suretyship or
not. If it does not, the enquiry ends there. If
it does, then the
enquiry moves to the second leg which focuses on whether a proper
case for rectification has been made out. If
the answer to the latter
question is in the affirmative, an order for rectification must be
granted.”
[9] I deem it
appropriate at this stage, in order to put matters in the correct
perspective, to quote the relevant clauses of the
suretyship
agreement which read as follows:
“
1. I, the
undersigned, Hantsi Bhetilda Mayeza, identity number: [...], a
citizen of the Republic of South Africa, warranting that
I am married
out of community of property, do hereby bind myself to and in favour
of National Urban Reconstruction and Housing
Agency (NPC),
(Registration Number 1995/004248/08) (hereinafter referred to as the
“Lender”), a non-profit company
in accordance with the
Company Laws of the Republic of South Africa, and/or to anyone who
takes transfer of the Lender’s
rights under this suretyship, as
surety and co-principal debtor for full payment and performance,
jointly and severally with Maono
Construction and Property
Development (Pty) Ltd (Proprietary) Limited, Registration Number:
2007/008767/07 (hereinafter referred
to as the (“Borrower”),
a private company with limited liability incorporated in accordance
with the laws of the Republic
of South Africa, for the due payment by
the Borrower of all or any moneys which the Borrower may now or from
time to time hereafter
owe to the Lender arising from, pursuant to or
in connection with the loan agreement (as same may be amended from
time to time)
entered into between the Borrower and Lender on or
about 15 February 2017 (“the indebtedness”).
2. It is agreed
and declared that all admissions or acknowledgements of indebtedness
by the borrower or proof of claim against the
insolvent estate of the
borrower, shall be binding on me.”
[10] It is
noteworthy that the two deeds of suretyship in this case are similar
in form and substance and were signed by the second
respondent in her
personal capacity and in her capacity as director of the third
respondent authorised and empowered thereto by
the resolution of the
board of directors of the third respondent dated the 15
th
February 2017. I am
therefore satisfied that the requirements in terms s 6 of the Act
have been met in that both deeds of suretyship
ex facie constitute
the agreement between the parties.
[11] Considering the
second leg of the inquiry which is whether the applicant has made out
a case for rectification of the deeds
of suretyship, the applicant
testified that it has been sharing the occupation of its premises
together with its holding company
and they were using the same staff
members. Both the applicant and its holding company were providing
the same services as financiers
and had develop similar templates
with regard to the loan facility agreement and the attended deed of
suretyship. In error, the
employee who was tasked with the conclusion
of the agreement, utilised the deeds of suretyship meant for the
holding company instead
of that of the applicant.
[12] In
Tamryn
Manor (Pty) Ltd v Stand 1192 Johannesburg (Pty) Ltd (785/15) [2016]
ZSCA 147 (30 September 2016)
the Supreme Court of Appeal stated
the following:
“
Para 14 On
the face of it, there is no dispute that the written agreement
clearly identifies who the seller and the purchaser are,
as well as
what the merx and the agreed price are. These are the essential
elements of a valid contract of sale. It is not in dispute
that the
agreement for the sale of the immovable property was reduced to
writing, and duly signed by the parties. Ex facie the
written
agreement, all the statutory requirements set out in s 2(1) of the
Alienation of Land Act have been met. As a result I
find that the
agreement is formally valid. It follows ineluctably that, having
passed this hurdle, this agreement is capable of
rectification.”
[13] I am unable to
disagree with counsel for the applicant that the respondents only
dealt and concluded a facility loan agreement
with the applicant and
not its holding company. I can find no reason why the
respondents would conclude deeds of suretyship
in favour of the
holding company of the applicant when the loan facility agreement,
which makes the granting of the loan facility
dependant on the
conclusion of the suretyship agreement was concluded with the
applicant. Furthermore, I do not understand
the respondents to
be saying that they did not conclude deeds of suretyship in favour of
the applicant but that they concluded
these suretyships for loan
amounts advanced by the applicant to the first respondent and not
amounts transferred in error as alleged
by the applicant. Therefore,
the irresistible conclusion is that the applicant succeeded in making
out a case for rectification
in that the deeds of suretyship are
valid agreements and capable of rectification.
[14] I now turn to
deal with the application for the monetary claim. The applicant
averred in its founding papers that in terms
of the loan facility
agreement concluded between the parties, the first respondent ceded
its rights in and to the repayment account
opened in the name of the
first respondent to the applicant. Furthermore, the first respondent
passed and gave a power of attorney
in favour of the applicant to be
the sole signatory of the repayment account. It is a further term of
the agreement, so it is contended,
that all payments due by the first
respondent to the applicant in terms of the loan agreement would be
fully due and payable and
be effected by the Department of Human
Settlement Free State (“the Department”) on behalf of the
first respondent to
the applicant directly into the repayment
account, within ninety (90) days after each loan advance. Further, so
the argument goes,
in error, the applicant transferred the impugned
sum into the first respondent’s operating business account
which amount
the first respondent was not entitled to nor was there
any cause therefore – hence the first respondent was unduly
enriched
at the expense of the estate of the applicant.
[15] It is further
contended by Advocate Larney for the applicant that, although the
applicant did not quote any particular clause
that was breached by
the respondents in terms of the loan agreement, the facts as
testified in the founding affidavit clearly prove
a breach of the
terms of the agreement by the first respondent. The first
respondent has acknowledge its indebtedness to
the applicant and has
already made payment in the sum of R300 000 towards liquidating
its indebtedness. However, in terms
of the loan agreement, the first
respondent is to pay all amounts due and payable to the applicant
within ninety (90) days and
the first respondent has for the past two
years failed to pay the sum of R1 815 286.02. The second
and third respondents,
so the argument goes, bound themselves to and
in favour of the applicant as surety and co-principal debtors for the
full payment
and performance, jointly and severally, for the due
payment by the first respondent of all or any moneys which the first
respondent
may now or from time to time hereafter owe to the
applicant arising from, pursuant to or in connection with the loan
agreement.
[16] The respondents
submitted that the first respondent was not unjustifiably enriched by
the transfer of the said sum of R1 815 286.02
from one of
its bank account to another. The applicant, so the argument goes, was
acting in its capacity as the agent of the first
respondent when it
transferred the impugned amount from the one bank account of the
first respondent to another. Put differently,
the applicant made an
inter-account transfer between the bank accounts of the first
respondent. The applicant could, so it is submitted,
therefore not
have been impoverished for it did not transfer the impugned amount
from its own bank account in error into the account
of the first
respondent thereby enriching the first respondent. The applicant, so
it is contended, did not own these funds and
therefore could not have
been impoverished as these funds belonged to the first respondent
being payment from the Department due
to the first respondent for
services rendered in terms of a construction contract entered into
between the first respondent and
the Department.
[17] Advocate Peer
for the respondents contended further that the definitions of the
loan agreement did not give substantive rights
to the parties unless
there is a clause in the agreement which does give those rights. The
applicant was appointed in terms of
the power of attorney as an agent
to act on behalf of the first respondent and not as the owner of the
repayment account and was
therefore, not the owner of the funds paid
into the account by the Department. The repayment account was, so the
argument goes,
created as a mechanism to facilitate payment of the
debt due and owing to the applicant but did not transfer ownership of
the account
to the applicant.
[18] It was further
submitted by Advocate Peer that the applicant has failed to quote a
provision in the agreement which is alleged
to have been breached by
the first respondent and therefore the applicant has failed to prove
a breach of the agreement by the
first respondent. Furthermore, the
second and third respondents did not sign the deeds of suretyship to
cover all debts that may
be incurred in the interactions of the
parties but specific debts that may arise in relation to the loan
agreement. The applicant
avers, so it is argued, that it made payment
into the account of the first respondent in error – thus the
said error does
not arise from the loan agreement and therefore the
second and third respondents cannot be held liable for they did not
sign surety
for such a debt.
[19] To put matters
in the correct context, it is salutary to quote the relevant clauses
of the loan agreement at this point:
“
Clause 1.5
“
Ceded
Rights” means collectively, the Repayment Accounts Ceded Rights
and the Contract Income Ceded rights;
Clause 1.24
“
Irrevocable
Payment Instruction and undertaking to Pay” means a written,
irrevocable, unconditional, valid and binding payment
instruction by
the Borrower to the Employer and undertaking by the Employer, for the
benefit of and in favour of the Lender, in
the form of Annexe B to
this Agreement or such other form acceptable to the Lender, pursuant
to which the Borrower instructs and
the Employer undertakes to pay
all Contract Income which may at any time be due and payable by the
Employer to the Borrower, into
the Repayment Account;
Clause 1.45
“
Repayment
Account Ceded Rights” means all of the Borrower’s rights,
title and interest in and to the Repayment Account,
whether existing
as at the Effective Date or at any time thereafter;
Clause 1.46
“
Repayment
Account” means the bank account in the Republic of South Africa
opened in the name of the Borrower, as set out in
clauses 1.5 of the
Specific Details Schedule, being Annexe F to this Agreement, being
the only account into which all monies due
to the Borrower in respect
of the Construction Contract and the Approved Project are to be paid;
Clause 12
Payments Generally and Final Repayment
12.1 All payments
(including all interest and Fees accrued, including penalty interest,
if applicable) by the Borrower to the Lender
in terms of this
Agreement shall be:
12.1.1 fully due
and payable and effected by the Borrower to the Lender, directly into
the Repayment Account, within ninety (90)
days after each Loan
Advance;
12.1.2
………………………..
12.1.3 applied to
the indebtedness of the Borrower to the Lender and shall be
appropriated in the first instance to the payment
of any costs,
charges, or expenses or Fees then due and payable, thereafter to
interest then due and payable and finally in reduction
of the
Capital;
Clause 14
Utilisation of any Payment in terms of the Construction Contract
Any payment made
by or on behalf of the Employer to the Borrower in term of the
Construction Contract ( which it is recorded
shall be made only
into the Repayment Account in terms of the Irrevocable Payment
Instruction and Undertaking to Pay) shall be
in the following order
of preference:
14.1 firstly, to
discharge in full any amount due and payable by the Borrower to the
Lender in terms of this Agreement in accordance
with clause 12.1.3;
14.2
…………………………………..
Clause 16 Ceded
Rights
16.1 As security
for the due, proper and timeous performance and payment in full of
advances made to the Borrower, and all of the
Secured Obligations on
the terms and conditions set out in this Agreement, the Borrower
hereby:
16.1.1 Cedes to
the Lender as security for its indebtedness, all of the Ceded Rights
as continuing covering security on the terms
and conditions set forth
hereunder, which cession will remain in force and shall terminate
only upon the unconditional and irrevocable
discharge in full of all
payments and liabilities due by the borrower and the Secured
Obligations owed to the Lender.
16.1.2
………………………………..”
[20]
Pursuant to the conclusion of the loan agreement, the first
respondent signed and gave an irrevocable and unconditional power
of
attorney appointing the applicant as its agent in the following
terms:
“
1. Appoint
Nurcha Development Finance (Proprietary) Limited (“Nurcha”),
as our lawful agent in our name, place and stead
to sign all
documents, effect all transfers of money and do or cause to be done
all other things that may be necessary in order
to operate in all
respects and conduct all transactions pertaining to the following
bank account opened in our name:
REPAYMENT ACCOUNT
BANK: FIRST
NATIONAL BANK
BRANCH: ROSEBANK
BRANCH CODE:
253305
ACCOUNT NUMBER:
[...]
2. As fully and
effectually, for all intents and purposes, as we might or could do if
personally present and acting herein and we
hereby agree to ratify,
allow and confirm all and whatsoever that my said agent shall
lawfully do, or cause to be done by virtue
of these presents; and
3. Instruct our
said agent to:
3.1 apply all
finds from time to time to the credit of the said bank account in
extinguishing or if there are insufficient funds
to do so, reducing
by the maximum possible amount, any indebtedness which we may at any
time have or incur to NURCHA or their respective
successors in
title.”
[21]
It is trite law that in interpreting any document, the Court must
consider all the facts and the circumstances under which
such
document came into being or if it’s a contract the
circumstances under which it was concluded. However, the
starting
point remains the words used in the document, the background
facts and the intention of the parties.
[22]
In
Novartis
v Maphil
[2015]
ZASCA 111
,
the Supreme Court of Appeal stated the following:
“
[27]
I do not understand these judgments to mean that interpretation is a
process that takes into account only the objective meaning
of the
words (if that is ascertainable), and does not have regard to the
contract as a whole or the circumstances in which it was
entered
into. This court has consistently held, for many decades, that the
interpretative process is one of ascertaining the intention
of the
parties – what they meant to achieve. And in doing that, the
court must consider all the circumstances surrounding
the contract to
determine what their intention was in concluding it. KPMG, in the
passage cited, explains that parol evidence is
inadmissible to
modify, vary or add to the written terms of the agreement, and that
it is the role of the court, and not witnesses,
to interpret a
document. It adds, importantly, that there is no real distinction
between background circumstances, and surrounding
circumstances, and
that a court should always consider the factual matrix in which the
contract is concluded – the context
– to determine the
parties’ intention.
[28] The passage
cited from the judgment of Wallis JA in Endumeni summarizes the state
of the law as it was in 2012. This court
did not change the law, and
it certainly did not introduce an objective approach in the sense
argued by Norvatis, which was to
have regard only to the words on the
paper. That much was made clear in a subsequent judgment of Wallis JA
in Bothma-Botha Transport
(Edms) Bpk v S Bothma & Seun Transport
(Edms) Bpk
[2013] ZASCA 176
;
2014 (2) SA 494
(SCA), paragraphs 10 to
12 and in North East Finance (Pty) Ltd v Standard Bank of South
Africa Ltd
[2013] ZASCA 76
;
2013 (5) SA 1
(SCA) paragraphs 24 and 25.
A court must examine all the facts – the context – in
order to determine what the parties
intended. And it must do that
whether or not the words of the contract are ambiguous or lack
clarity. Words without context mean
nothing.
[29] Referring to
the earlier approach to interpretation adopted by this court in
Coopers & Lybrand & others v Bryant
[1995] ZASCA 64
;
1995 (3)
SA 761
(A) at 768A-E, where Joubert JA had drawn a distinction
between background and surrounding circumstances, and held that only
where
there is an ambiguity in the language, should a court look at
surrounding circumstances, Wallis JA said (para 12 of Bothma-Botha):
‘
That
summary is no longer consistent with the approach to interpretation
now adopted by South African courts in relation to contracts
or other
documents, such as statutory instruments or patents. While the
starting point remains the words of the document, which
are the only
relevant medium through which the parties have expressed their
contractual intentions, the process of interpretation
does not stop
at a perceived literal meaning of those words, but considers them in
the light of all relevant and admissible context,
including the
circumstances in which the document came into being. The former
distinction between permissible background and surrounding
circumstances, never very clear, has fallen away. Interpretation is
no longer a process that occurs in stages but is “essentially
one unitary exercise” [a reference to a statement of Lord
Clarke SCJ in Rainy Sky SA v Kookmin Bank
[2011] UKSC 50
, [2012]
Lloyd’s Rep 34 (SC) para 21].
[30] Lord Clarke
in Rainy Sky in turn referred to a passage in Society of Lloyd’s
v Robinson [1999] 1 All ER (Comm) at 545,
551 which I consider
useful.
‘
Loyalty
to the text of a commercial contract, instrument, or document read in
its contextual setting is the paramount principle
of interpretation.
But in the process of interpreting the meaning of the language of a
commercial document the court ought generally
to favour a
commercially sensible construction. The reason for this approach is
that a commercial construction is likely to give
effect to the
intention of the parties. Words ought therefore to be interpreted in
the way in which the reasonable person would
construe them. And the
reasonable commercial person can safely be assumed to be unimpressed
with technical interpretations and
undue emphasis on niceties of
language.’
[31] This was
also the approach of this court in Ekurhuleni Metropolitan
Municipality v Germiston Municipal Retirement Fund
[2009] ZASCA 154
;
2010 (2) SA 498
(SCA) para 13. A further principle to be applied in a
case such as this is that a commercial document executed by the
parties with
the intention that it should have commercial operation
should not lightly be held unenforceable because the parties have not
expressed
themselves as clearly as they might have done. In this
regard see Murray & Roberts Construction Ltd v Finat Properties
(Pty)
Ltd
[1991] ZASCA 130
;
1991 (1) SA 508
(A) at 514B-F, where
Hoexter JA repeated the dictum of Lord Wright in Hillas & Co Ltd
v Arcos Ltd
[1932] UKHL 2
;
147 LTR 503
at 514:
‘
Business
men often record the most important agreements in crude and summary
fashion; modes of expression sufficient and clear to
them in the
course of their business may appear to those unfamiliar with the
business far from complete or precise. It is accordingly
the duty of
the court to construe such documents fairly and broadly, without
being too astute or subtle in finding defects.’
[23] The fundamental
question to be determined in this case is whether the applicant is
entitled to the funds paid into the repayment
account. It is not in
dispute that at the conclusion of the loan agreement, the first
respondent, in terms of the conditions thereof,
gave a power of
attorney to the applicant to operate the repayment account.
Furthermore, the first respondent gave the employer,
which is the
Department, an unconditional and irrevocable payment instruction and
undertaking to pay all moneys due to it in terms
of the construction
contract into the repayment account. In a document marked as annexure
H to the loan agreement which was an
instruction to the bank
appointing the applicant as the sole operator and or signatory to the
account as empowered by the power
of attorney, it was stated at
paragraph 3.3.2 that the applicant shall apply all funds standing to
the credit of the repayment
account to extinguish, or reduce by the
maximum possible amount any indebtedness which the first respondent
may have or incur to
the applicant.
[24] It is
noteworthy also that in the irrevocable payment instruction given to
the Department, the first respondent acknowledged
that it had
provided security in terms of which the applicant agreed to advance
bridging finance to it and that the instruction
to the Department and
the bank may only be changed with the written consent of the
applicant. Furthermore, the applicant has testified
in its founding
papers that it would not have advanced the finance to the first
respondent had it not been provided with security
as provided for in
the agreement which security includes the cession of rights in the
repayment account.
[25] I find myself
in agreement with the respondents that the definitions in the loan
agreement do not on their own create substantive
rights between the
parties. However, considering the factual background and the wording
and context of the loan agreement and all
its annexures in this case,
I cannot but find that there was a cession of rights of the first
respondent to the applicant in terms
of clause 16 of the agreement
empowering the applicant to be the sole signatory to and operate the
repayment account, to apply
the funds standing to the credit of the
repayment account to extinguish the indebtedness of the first
respondent to the applicant
or to reduce such indebtedness to a
maximum should the funds be insufficient to extinguish the
indebtedness. I do not agree that
the repayment account was just a
mechanism of payment between the parties and no substantive rights
may arise therefrom.
[26] According to
the language used in the loan agreement and its annexures, which are
commercial documents executed by the parties
with a clear intention
that they should have commercial operation, the common thread in
these documents is a clear and unambiguous
intention of the parties
that the applicant has the sole responsibility to operate the
repayment account as security for the amounts
loaned or advanced by
it to the first respondent. I am therefore unpersuaded by the
contention that the applicant was not entitled
to the impugned amount
as it was in the account of the first respondent and the applicant
was only acting in its capacity as an
agent of the first respondent.
As long as there is an indebtedness in extant by the first respondent
in favour of the applicant,
in my respectful view, the applicant is
entitled to money standing to the credit of the repayment account to
the extent of that
indebtedness.
[27] In
Absa Bank
Limited v Baugarten NO and others [2017] ZAFSH 111 (29 JUNE 2017)
the
court stated the following:
“
It
has been established law that four requirements, at the very least,
must be met for an enrichment liability to arise. Firstly
the
defendant must be enriched; secondly the plaintiff must be
impoverished; in the third place the defendant must be enriched
at
the expense of the plaintiff; and lastly, the defendant’s
enrichment must be unjustified or sine causa.”
[28] It follows that
the ineluctable conclusion is that the applicant was entitled to the
impugned amount which according to the
testimony of the applicant is
equal to the amount it advanced to the first respondent. There was no
cause for the applicant to
make a payment in the said sum of
R1 815 286.02 to the first respondent since in terms of the
loan agreement there was
an indebtedness due to it by the first
respondent in the said sum of R1 815 286.02 and it was
entitled to appropriate
this amount to itself. The applicant or its
estate has been impoverished by the transaction whilst the first
respondent has been
unduly and unjustifiably enriched thereby. The
respondent does not dispute that it received the money but alleges
that it has been
engaging the applicant with regard to arrangements
as how it purports to pay back the money and has since paid a sum of
R300 000
towards liquidating its indebtedness to the applicant.
It is my respectful view therefore that the requirements of the
conditio
sine causa have been met.
[29] As it appears
above, rectification of the deeds of suretyship concluded between the
parties has been ordered by this Court.
There is no merit in the
argument that the second and third respondents did not sign surety
for payments made in error but for
debts that arose from the loan
agreement. Put differently, the second and third respondents are not
responsible as sureties for
any other interactions between the
parties except for debts that arise from the loan agreement. It was
agreed and declared by the
parties in paragraph 2 of the deeds of
suretyship, which are similar in form and substance that all
admissions or acknowledgements
of indebtedness by the first
respondent shall be binding on the surety. The first respondent has
testified that it has been negotiating
to pay back the money and has
so far paid a sum of R300 000 towards liquidating its
indebtedness to the applicant. The irresistible
conclusion is that
the first respondent has by conduct acknowledged its indebtedness to
the applicant and therefore both sureties
are jointly and severally
liable, the one paying the other to be absolved, to pay the applicant
the said sum of R1 815 286.02
with interest minus whatever
has been paid by the first respondent towards liquidating its
indebtedness to the applicant.
[30] I find it
unnecessary to deal with the issue of the alternative claim of the
applicant since the determination of the main
claim is dispositive of
the whole matter. Furthermore, I can find no reason why the costs in
this matter should not follow the
result in both applications. The
scale to be applied has been incorporated and agreed upon in the loan
agreement as being between
attorney and client and I have no reason
to decide otherwise.
[31] For the above
reasons, I make the following order:
1.
Leave is granted to
the applicant to file its supplementary founding affidavit deposed to
by Sindisa Adenford Nxusani;
2. Rectification of
the deed of suretyship signed by the second respondent, dated 15
February 2017 is granted in the following manner:
2.1 Where the name
National Urban Reconstruction and Housing Agency (NPC) (Registration
Number: 1995/004248/08) appears it is replaced
with Nurcha
Development Finance (Proprietary) Limited (Registration Number:
2005/014239/07);
3. Rectification of
the deed of suretyship signed the third respondent dated 15 February
2017 is granted in the following manner:
3.1 Where the name
National Urban Reconstruction and Housing Agency (NPC) (Registration
Number: 1995/004248/08) appears it is replaced
with Nurcha
Development Finance (Proprietary) Limited (Registration Number:
2005/014239/07)
4. The respondents
are to pay the applicant the sum of R1 515 286.02 jointly
and severally the one paying the other to
be absolved;
5. The respondents
are liable to pay the applicant interest on the sum of R1 815 286.02,
jointly and severally the one
paying the other to be absolved, from 1
June 2018 at
the rate of 10% per annum to date of final payment
6. Costs of suit on
the attorney and client scale.
________________
TWALA
M L
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION
Date
of hearing: 5
th
June 2020
Date
of Judgment: 19
th
June 2020
For
the Applicant: Adv. E Larney
Instructed
by: DMO Attorneys
Tel:
011 463 6693
For
the Respondents: Adv. Y Peer
Instructed
by: Zikhali Inc
Tel:
010 110 8725