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[2020] ZAGPJHC 226
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Standard Bank of SA Limited v Fenestration Technologies (Pty) Limited and Others (41105/2019) [2020] ZAGPJHC 226 (7 August 2020)
SAFLII
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Certain
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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Case
No.: 41105/2019
In
the matter between:
THE
STANDARD BANK OF SA
LIMITED Applicant
and
FENESTRATION
TECHNOLOGIES (PTY) LIMITED
(REGISTRATION
NO:
2003/013371/07) First
Respondent
OWEN
SEAN PRICE
(ID
NO:
[…]) Second
Respondent
LINDA
ELIZABETH PRICE
(PASSPORT
NO: […])
DATE
OF BIRTH:
[…]) Third
Respondent
JUDGMENT
This
judgment was handed down electronically by circulation to the
parties’ legal representatives by email.
Gilbert AJ
1.
The applicant instituted proceedings against the
first respondent (the principal debtor) based on five banking
facilities and against
the second and third respondents as sureties.
Full sets of affidavits were filed by all the parties together with
heads of argument
and practice notes and the matter was duly enrolled
for hearing on the opposed roll.
2.
The day before the matter was to be heard the
attorneys of record for the respondents withdrew. When the matter was
called for hearing
on the opposed roll on the morning of 4 August
2020, there was an appearance for the applicant but not for the
respondents.
3.
The applicant’s notice of motion is divided
into two parts. Part A, consisting of five claims, seeks judgment and
related
relief in respect of five banking facilities, more
particularly in respect of a business current account upon which
overdraft facilities
were advanced, a fleet management card facility,
a corporate credit card and two instalment sale agreements for
equipment. Part B
seeks relief in relation to execution against
the sureties’ immovable properties. What is before me is Part A
of the
relief.
4.
Each of the applicant’s claims are pleaded
in a similar manner in the founding affidavit:
4.1.
the conclusion of the relevant agreement is
pleaded;
4.2.
the terms of the relevant agreement are pleaded;
4.3.
performance by the applicant in terms of the
agreement is pleaded;
4.4.
the breach of the agreement by the principal
debtor is pleaded;
4.5.
demand for payment of the arrears is pleaded;
4.6.
cancellation of the agreement is pleaded;
4.7.
lastly, the full outstanding amount under each
agreement is pleaded.
5.
The applicant averred in its founding affidavit
by way of breach in respect of the overdraft facility (Claim A) as
follows:
“
47. The First
Respondent has breached the terms of the agreement by failing to make
timeous payment of the amounts due in terms
thereof. As at the 6 June
2019 the outstanding amount was R7,016,001.21 (SEVEN MILLION, SIXTEEN
THOUSAND, ONE RAND AND TWENTY ONE
CENTS)
.”
6.
There was similar pleading of the breach in
respect of the fleet management card facility (Claim B) and the
corporate credit card
facility (Claim C).
7.
No averments are made in the founding affidavit
as to the breach in respect of these facility agreements for Claims
A, B and C,
other than payment was not timeously in terms of the
relevant agreement. No averments are made as to which amounts were
not paid
timeously and why those amounts were overdue. No link is
pleaded between the averred breach by non-timely payment with a
specific
term of the many pleaded terms of the particular agreement.
8.
I raised with the applicant’s counsel that
the breach as pleaded in respect of the overdraft facility (Claim A)
did not specify
what amounts had not been timeously paid
in
terms of the overdraft facility
and which
resulted in a breach of that agreement. No specific terms of payment
in respect of the overdraft facility were pleaded
and then relied
upon by the applicant as underlying its averment of breach. Recourse
to the applicant’s demand of 19 June
2019, which is the
earliest demand found in the papers, does not assist as in that
demand, “FA4” to the founding affidavit,
the assertion is
made by the applicant that the principal debtor is already in arrears
in an amount of R7,016,001.21, which equates
to the then full balance
outstanding. That demand does not shed any light on why that amount
was in arrears as at 19 June
2019.
9.
The applicant’s counsel submitted that as
the overdraft facility was repayable on demand, that the applicant
was entitled
to call for payment of the outstanding amount in terms
thereof. But this is not what is relied upon by the applicant in its
founding
affidavit. As appears above, the applicant specifically
pleads reliance upon the failure to make timeous payment as
constituting
the breach of the agreement. It follows that for the
amount of R7,016,001.21 to have already been in arrears on 19 June
2019,
as reflected in the demand “FA4”, that something
must have happened before that date which resulted in that amount
being in arrears. In the absence of any indication on the papers that
the applicant had prior to 19 June 2019 called-up the
overdraft
facility upon reasonable demand, the factual basis for the assertion
by the applicant in paragraph 47 of its founding
affidavit
remained elusive.
10.
The applicant’s counsel submitted that this
deficiency can be addressed by the applicant instead relying upon
clause 10.1
of the Standard Terms and Conditions for the
overdraft facility and more particularly clause 10.1.1:
“
10.1 Default in
terms of this Overdraft Agreement will occur if:
10.1.1 you breach this
Overdraft Agreement,
or any agreement
between us
, and you fail to remedy the
breach within the time period specified in our written notice to
you.
”
(my
emphasis)
11.
I was also referred to clause 10.2, which
provides, in the relevant portion thereof:
“
10.2 Overdraft
facilities are repayable on demand and if you default in your
obligations under this overdraft facility we may …
…
10.2.3 terminate the
facility by giving you written notice requesting the repayment of all
amounts owing to us:
10.2.3.1 immediately;
or
10.2.3.2 on the date
stated in the notice.
”
12.
Counsel’s argument then progressed that as
the principal debtor had defaulted in respect of the other four
facility agreements
(as described in claims B, C, D and E), those
defaults constituted a cross-default in respect of the overdraft
facility and so
justified the applicant in calling up the overdraft
facility in terms of clause 10.1.1 read with clause 10.2.2..
13.
This is not the case pleaded in the founding
affidavit on the overdraft facilities. The case pleaded in the
founding affidavit is
based squarely upon the principal debtor
breaching the overdraft agreement by failing to make timeous payment
in terms of that overdraft agreement
.
There is no pleaded reliance in the founding affidavit on a
cross-default.
14.
The applicant in paragraphs 22.3, 23 and 24 of
its replying affidavit does rely upon the breach of the other
facility agreements
as a basis for calling up the overdraft.
15.
Accordingly, I am to decide whether it is
permissible for the applicant to rely upon what is set out in its
replying affidavit to
address the deficiencies in its founding
affidavit, at least in relation to the overdraft facility (Claim A)
and also claims B
and C that suffer from the same deficiency.
16.
But before dealing with this issue, it is
necessary to consider whether the applicant can rely upon a failure
by the principal debtor
to have made payment in terms of the other
banking facilities as an event of default in respect of the overdraft
facility.
17.
Although the terms of the overdraft facility
expressly provides that the applicant can do so, the defence advanced
by the respondents
is that the reason why the principal debtor was
unable to pay the arrear amounts in terms of the other banking
facilities was because
of the premature termination by the applicant
of the overdraft facility. The respondents contend that the applicant
cannot rely
upon a failure to pay the other facilities where it
caused the principal debtor not to pay the amounts outstanding on
those facilities
by its own unlawful conduct in prematurely
terminating the overdraft facility, and so depriving it of access of
funds to pay the
amounts on the other facilities.
18.
The applicant’s counsel submitted that this
assertion by the respondents in their answering affidavit is
factually unsustainable,
and false, in that the other facilities were
already in arrears before there was any termination of the overdraft
facility. As
a matter of logic, for the respondents’ opposition
to succeed on this basis it is necessary for the overdraft facilities
to have been terminated
before
the amounts in terms of the other facilities became overdue. If the
amounts under the other facility agreements were already in
arrears,
a subsequent termination of the overdraft facilities cannot be
advanced by the respondent as excusing those accounts being
in
arrears.
19.
Counsel progressed his argument that if regard is
had to the demands of 19 June 2019, the other facilities were
already in
arrears as at that date. The applicant’s demands of
19 June 2019 forewarned that if the arrears were not settled
that
inter alia
the
applicant may cancel the agreements. But those demands to not cancel
(or even suspend) the overdraft facility.
20.
The applicant also avers in paragraph 75 of the
founding affidavit the breach of the two instalment sale agreements
by the failure
to make timeous payment of specified arrear amounts in
respect of each agreement. The amounts reflected in this paragraph
accord
with those set out in the demand of 19 June 2019 relating
to the two instalment agreements. These two instalment sale
agreements were already in arrears as at 19 June 2019.
21.
Based upon the material that appears from the
affidavits, the principal debtor was already in arrears as at 19 June
2019 on
the remaining facilities. And as the overdraft facility was
only terminated on 24 July 2019, that termination could not have
caused the other facilities to be in arrears.
22.
This also demonstrates the falsity of the
respondents’ factual averment in paragraph 24 of their
answering affidavit that
“
[w]hen the
Applicant demanded that the First Respondent should settle the
amounts outstanding in respect of the further accounts
held by the
First Respondent with the Applicant, the Applicant was in breach of
the tacit Overdraft Agreement… in that it
unlawfully
terminated the First Respondent’s overdraft facility”.
The overdraft facility was only terminated on
24 July 2019. Demand has already been made in 19 June 2019. And so
when demand was
made, the overdraft facility not yet been terminated.
23.
I am persuaded that the papers read as a whole
establish that there had been breaches of the other facility
agreements that were
not caused by a termination of the overdraft
facility and the respondents’ factual contention to the
contrary is to be rejected.
24.
Accordingly the cross-default relied upon by the
applicant in its replying affidavit to trigger the calling-up of the
overdraft
in terms of clause 10.1.1 has been factually established
and is legally sustainable.
25.
The issue that then remains is whether I in my
discretion should permit the applicant to address the identified
deficiencies in
its founding affidavit, particularly in relation to
its entitlement to call up the overdraft facilities, by reference to
what is
contained in the replying affidavit and by making use of such
other material as can be extracted from the various annexes to their
affidavits.
26.
It is trite that the court has a discretion in
this regard. The submissions made on behalf of the applicant as to
why this discretion
should be exercised in its favour were that:
26.1.
the relevant facts are before the Court and
enable the Court to make a determination, notwithstanding what the
applicant’s
counsel described as the clumsy pleading by the
applicant of its case in its founding affidavit;
26.2.
it is clear on the facts that the other
facilities were in arrears. This is especially so in respect of
the two instalment
sale agreements where express reference is made in
the founding affidavit to the arrear amounts outstanding on those two
agreements.
As this appears in the founding affidavit, this then
would constitute factual material contained in the founding affidavit
to support
the applicant’s reliance upon cross-default in terms
of clause 10.2.1 and that recourse need not be had to the
replying
affidavit or the annexes to find the facts to sustain a
cross-default;
26.3.
there is no suggestion of any cognisable defence
to a case of cross-default. To the contrary, as appears above, the
reason advanced
by the respondents why the remaining accounts
were in arrears is to be rejected as factually incorrect. There
is no indication
from the papers that if the applicant had expressly
asserted reliance upon clause 10.2.1 in its founding affidavit,
rather than
in its replying affidavit, that some other defence might
have materialised in the answering affidavit.
27.
The
starting point is that an applicant is required to make out its case
in its founding affidavit, as it is the founding affidavit
that sets
out the case which the respondents are required to meet.
[1]
28.
An
applicant is required in motion proceedings to supply both the
pleadings and the evidence in its founding affidavit.
[2]
29.
In
Shakot
Investments (Pty) Ltd v Town Council of the Borough of Stanger
1976
(2) SA 701
(D), Miller J stated:
[3]
“…
In proceedings by
way of motion the party seeking relief ought in his founding
affidavit to disclose such facts as would, if true,
justify the
relief sought and which would, at the same time, sufficiently inform
the other party of the case he was required to
meet. If the founding
affidavit is allowed to be supplemented by adding further facts in a
replying affidavit, the consequence
would often (but not necessarily
always) be that a fourth and possibly also a fifth set of affidavits
would be required –
a situation the development of which the
Court would not lightly be disposed to facilitate or encourage…
In consideration of the question
whether to permit or to strike out additional facts or grounds for
relief raised in the replying
affidavit, a distinction must,
necessarily, be drawn between a case in which the new material is
first brought to light by the
applicant who knew of it at the time
when his founding affidavit was prepared and a case in which facts
alleged in the respondent’s
answering affidavit reveal the
existence or possible existence of a further ground for the relief
sought by the applicant. In the
latter type of case the Court would
obviously more readily allow an applicant in his replying affidavit
to utilise and enlarge
upon what has been revealed by the respondent
and to set up such additional ground for relief as might arise
therefrom…
It is one thing to say that an
applicant might or ought, by careful consideration of a piece of
information conveyed by the respondent
before commencement of
proceedings to have made certain deductions therefrom which would or
might have led him to investigate and
discover further facts relative
to his claims; it is, however, an entirely different thing to say
that the applicant knew all the
relevant facts when he commenced
proceedings but for some unexplained reason omitted to state or rely
on them in his founding affidavit
– it is when that may
properly be said of an applicant, that the rule against the
introduction will otherwise than in very
exceptional cases be
strictly applied against him.”
[4]
30.
As appears from the analysis above, the
deficiency in the founding affidavit is the applicant relies upon an
inadequately pleaded
breach or basis of cancellation for calling-up
the overdraft facility. The basis relied upon in the replying
affidavit is different,
being cross-default under clause 10.1.2. The
factual material to sustain the cross-default is found in the
founding affidavit,
particularly in relation to the arrear amounts on
the two instalment sale agreements. It is not so much a question of
new facts
being set out or relied upon in the replying affidavit but
of a species of breach that was not asserted in the founding
affidavit.
31.
Although the applicant only in reply relies upon
cross-default, the respondents did not, despite opposition, seek to
strike out
reliance upon the cross-default.
32.
The respondents did have an opportunity to
address the factual assertions supporting the cross-default,
including the arrear amounts
on the two instalment sale agreements
and did so by contending, incorrectly on the facts, that the failure
to pay those amounts
was because of the termination of the overdraft
facility.
33.
For the
court to approach the matter on the basis that only the founding
papers must be considered to see whether the applicant
discloses a
cause of action, and reference must not be had to the further
affidavits, may be misplaced, at least where there is
no real
conflict of fact on the papers.
[5]
I make no definitive finding in this respect but only express
hesitation. As set out above, the respondents’ version as to
why the arrear amounts on the two instalment sale agreements were not
paid can be rejected, and so there is no real conflict of
fact on the
papers. This then facilitates the court in its discretion to have
regard to what is set out in the replying affidavit,
and indeed in
all the affidavits, for purposes of ascertaining whether a sufficient
cause of action has been made by the applicant.
34.
What also weighs heavily upon me is that there is
no denial that monies were lent and advanced by the applicant to the
principal
debtor under the various facilities, and that they had not
been repaid. Should the court not exercise its discretion in favour
of the applicant, the applicant would have to initiate proceedings
afresh, but this time perhaps taking more care in the drafting
of its
founding affidavit. In my view to penalise the applicant for an
absence of exactitude in its founding affidavit in circumstances
where the respondents have not intimated any substantive defence
cannot be in the interests of any of the parties. Interest will
have
continued to accrue on the outstanding amounts, and this too cannot
be in the interests of the respondents. Further legal
proceedings
together with the costs and delay attendant thereupon should in these
circumstances be avoided.
35.
The “clumsiness”, as the applicant’s
counsel described the applicant’s pleading of its case, is
regrettable.
(I interject that there is no indication that the
applicant’s counsel was responsible for settling the
applicant’s
papers). It appears that the founding affidavit was
a product of “cut-and-paste” from precedent, with a
replication
of that material across the five claims making up the
founding affidavit, with little attention to adapting that material
to the
task at hand. The same can be said of series of demands and
cancellation letters annexed to the founding affidavit, which
conflate
material relevant to the principal debtor with that relevant
to the sureties.
36.
This clumsiness in pleading resulted in an
unnecessary burden for the court, and is to be avoided. Nonetheless
with the industriousness
of applicant’s counsel coupled with
the court’s exercise of its discretion, as described above, a
sufficient case has
been made out on the papers to enable judgment to
be granted in favour of the applicant in respect of Part A of the
notice of motion.
37.
An order is granted as follows:
1.
Claim A:
Business Current Account – 023298316
1.1.
The respondents are ordered, jointly and
severally, the one paying the other to be absolved, to pay and cause
the Applicant to be
paid the sum of R7,016,001.21;
1.2.
Interest on the sum of R7,016,001.21 at the rate
of 13,330% per annum calculated daily and compounded monthly in
arrears from 25 May
2019 to date of payment in full;
1.3.
Costs on an attorney and client scale;
2.
Claim B:
Fleet Management Card Facility – 17537517
2.1.
The respondents are ordered jointly and severally,
the one paying the other to be absolved, to pay and cause the
applicant to be
paid the sum of R138,735.84;
2.2.
Interest on the sum of R138,735.84 at the rate of
12,25% per annum calculated daily and compounded monthly in arrears
from 6 June
2019 to date of payment in full;
2.3.
Costs on an attorney and client scale;
3.
Claim C:
Corporate Credit Card – 4215769730028365
3.1.
The respondents are ordered jointly and severally,
the one paying the other to be absolved, to pay and cause the
Applicant to be
paid the sum of R30,103.70;
3.2.
Interest on the sum of R30,103.70 at the rate of
23,35% per annum calculated daily and compounded monthly in arrears
from 10 May
2019 to date of payment in full;
3.3.
Costs on an attorney and client scale;
4.
Claim D:
Instalment Sale Agreement – 40205916 0004
4.1.
Confirmation of cancellation of the agreement
entered into between the applicant and the first respondent attached
to the Applicant’s
founding affidavit as annexure ‘FA20’;
4.2.
The sheriff of, or his lawful deputy are
authorised, directed and empowered to attach, seize and hand over to
the Applicant the
assets being:
4.2.1.
Description:
SBZ140 CNC MACHINE 9.7MTR and DOUBLE MITRE SAW 7.5MTR;
4.2.2.
Serial
Number: 40799 and 1040099180.
4.3.
Damages are postponed
sine
die
;
4.4.
In the event of there being a shortfall after each
asset has been repossessed and sold and there being a balance
outstanding by
the respondents to the applicant, the applicant is
granted leave to approach the Court on the same papers, duly
supplemented, for
payment of the difference between the balance
outstanding and the amount for which the asset has been sold and/or
the value of
the asset;
4.5.
Costs of suit on the scale as between attorney and
client;
5.
Claim E:
Instalment Sale Agreement – 40205916 0005
5.1.
Confirmation of cancellation of the agreement
entered into between the applicant and the first respondent attached
to the Applicant’s
founding affidavit as annexure ‘FA21’;
5.2.
The sheriff, or his lawful deputy is authorised,
directed and empowered to attach, seize and hand over to the
applicant the assets
being:
5.2.1.
Description: 1 NEW VERTICAL CNC MACHINING CENTRE
ALU RANGER 4221 ONE R;
5.2.2.
Serial Number: 17.642.001.
5.3.
Damages are postponed
sine
die
;
5.4.
In the event of there being a shortfall after each
asset has been repossessed and sold and there being a balance
outstanding by
the respondents to the applicant, the applicant is
granted leave to approach the Court on the same papers, duly
supplemented, for
payment of the difference between the balance
outstanding and the amount for which the asset has been sold and/or
the value of
the asset;
5.5.
costs of suit
on the scale as between attorney and client;
6.
Part B of the notice of motion is be
postponed
sine die
.
______________________
Gilbert
AJ
Date
of hearing: 4 August 2020
Date
of judgment: 7 August 2020
For
the Applicant: J C Viljoen
Instructed
by: Stupel & Berman Inc.
For
the Respondents: No appearance
(Heads
of argument prepared by B C Stoop SC, on instructions of
Molenaar & Griffiths (North) Inc).
[1]
Titty’s
Bar and Bottle Store (Pty) Limited v ABC Garage (Pty) Limited
1974
(4) SA 362
(T) at 369A/B.
[2]
Transnet
Limited v Rubenstein
2006
(1) SA 591
(SCA) at para 28;
Minister
of Land Affairs and Agriculture v D & F Wevell Trust
2008
(2) SA 184
(SCA) at para 43.
[3]
F
rom
704G to 705C and 706I to 707B (with emphasis added).
[4]
Cited
with approval in
Finishing
Touch 163 (Pty) Ltd v BHP Billiton Energy Coal South Africa Ltd
2013
(2) SA 204
(SCA) at para [26].
[5]
See
Valentino
Globe BV v Phillips and Another
[1998] ZASCA 43
;
1998
(3) SA 775
(SCA) at 779E-780C (as subsequently applied in
Contract
Employment Contractors (Pty) Limited v Motor Industry Bargaining
Council and others
2013 (3) SA 308
(C), qualifying
Hart
v Pinetown Drive-in-Cinema
1972 (1) SA 464
(D).