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[2010] ZAWCHC 335
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Minnaar and Another v Nedbank Limited (9512/2010) [2010] ZAWCHC 335 (21 October 2010)
IN THE HIGH COURT OF
SOUTH AFRICA
(WESTERN CAPE HIGH
COURT, CAPE TOWN)
CASE
NUMBER: 9512/2010
DATE: 21 OCTOBER 2010
In
the matter between:
ROELOF
JOHANNES MINNAAR
…...........................................
1
st
Applicant
ALAN
GEORGE NELSON
….......................................................
2
nd
Applicant
and
NEDBANK
LIMITED
…..................................................................
Respondent
JUDGMENT
(Application for
Leave to Appeal)
DAVIS,
J
:
This is an application
for leave to appeal against the judgment of this Court of 25 June
2010 in which summary judgment was granted
in favour of the
plaintiff. The defendants have now approached the Court for leave to
appeal either to the Supreme Court of Appeal
or alternatively to a
Full Bench of this Division.
The
issue which, of course, will determine an evaluation of this case,
turns on that which is required of the defendant in his,
her or its
affidavit, that is what facts have to be shown in an opposing
affidavit to stave off the granting of summary judgment.
In
Maharai
v Barclays National Bank Limited
1976(1)
SA 418 (A) at 426,
Corbett
.
JA (as he then was), in his typically lucid fashion, set out the
position thus:
"Where
the defence is based upon facts in the sense that material facts,
alleged by the plaintiff in his summons or combined
summons are
disputed, or new facts are alleged constituting a defence, a court
does not attempt to decide these issues or determine
whether or not
there is a balance of probabilities in favour of the one party or
the other. All that the court inquires into
is (a) whether the
defendant has "fully" disclosed the nature and grounds of
his defence and the material facts upon
which its founded and (b)
whether on the facts so disclosed, the defendant appears to have, as
to either the whole or part of
the claim, a defence which was both
bona
fide
and
good in law. If satisfied on these matters, the court must refuse
summary judgment either in whole or in part."
In
other words the affidavit deposed to by defendants in a case like
the present, must demonstrate the
bona
fides
of
the defence. Therefore, the defendant has, on affidavit, to show the
existence of a triable issue, based upon a dispute which
is
bona
fide
and
which cannot be considered to be contrived merely for the purpose of
postponing the inevitable.
In
this case, the defendant put up three defences. In the first place
the defendant contended that there was a set off which would
operate
so as to ensure that the amounts claimed could in any event be set
off against these other claims set out in the affidavit
and to which
I shall make reference. Secondly, defendants allege a contravention
of section 38(1) of the Companies Act of 1973
and thirdly, they
allege
lis
pendens,
that
is that the facility agreement which was the basis of plaintiff's
cause of action, is already the subject of pending proceedings
in
the George Magistrate's Court. Each of these defences has to be
evaluated for the prism of the law outlined above.
I
turn to the first defence of set off. As Mr
Kruqer
,
who represented the plaintiffs correctly submitted, it is trite that
set off operates in the event of reciprocal debts between
the same
parties. In this particular case, the defendants aver that plaintiff
was obliged to set off against their liabilities
as contained in the
so called facility agreements, dividends received in respect of
claims against the liquidated company. In
my view, on no basis could
this be considered to be a
bona
fide
defence.
It is clear that on the basis of the opposing affidavit in which Mr
Minnaar, who deposed to that affidavit, states:
"The
afore-mentioned dividends and amounts received by the plaintiff must
be set off against the plaintiff's claim."
There is no legal basis
in my view, by which these alleged amounts should be set off against
amounts contained in the facilities
agreement.
Insofar as section 38(1)
of the Companies Act is concerned, the averment is made in an
opposing affidavit (which is characterised
by considerable vagueness
and imprecision). The essential averment suggests that the
defendants addressed their concern with
regard to section 38(1) of
the Companies Act with managers of the plaintiff, who advised that
plaintiff had a method of structuring
the purchase of the shares of
the company in such a way that it would not amount to a
contravention of section 38. Thereafter
the affidavit sets out the
background to the transaction and avers that the monies which flowed
from the facility agreement,
in effect were raised in the name of a
company. The loan monies were then used directly by the two
defendants to purchase shares
in the company and accordingly the
transaction fell foul of section 38(1).
Apart
from the obvious observation that there is always a level of
curiosity in the manner in which those indebted seek, after
having
been lent the money which they cannot repay, to invoke a section of
the Companies Act of which they were allegedly concerned
earlier,
there is a legal problem which confronts the defendants. It is this:
In order to show that this is a
bona
fide
defence,
the defendants have to show that a contravention of the section is
such that at trial it would become a triable issue
on the basis of
the law. But as Mr
Kruger
correctly
points out in his submissions, section 38(2A), which has watered
down the scope of section 38(1), now provides that:
"The general
prohibition against financial assistance by a company for the
purposes of the shares, does not apply if:
(a)(i) the company's
board is satisfied that subsequent to the transaction, the
consolidated
assets of the company
fairly valued will be more than its consolidated liabilities;
(a)(ii) that subsequent
to providing the assistance
and for the duration of
the transaction, the company
will be able to pay its
debts as they become due in
the ordinary cause of
business, and that;
(b) the terms upon which
the assistance is to be
given, is sanctioned by
a special resolution of its
members."
On the papers before me,
there is no averment at all that the board of the company was not
satisfied, that the company was solvent
and liquid, subsequent to
the transactions in terms of which the alleged financial assistance
was rendered by the company. There
is, in other words, no averment
which can be said to suggest that there has been a contravention of
section 38 of the Companies
Act when account is taken of the
operative section, that is section 38(2A).
I
turn,
therefore, to the third and final defence The question is raised by
the defendants that plaintiff is also the plaintiff
in the action in
the Magistrate's Court in George, whilst only the first defendant
and his wife are parties in the Magistrate's
Court's action and not
the second defendant. The relevant liability is alleged to flow from
the same agreement which is annexed
to the summons in the present
case. It may be, and it is difficult to ascertain given that the
defendant failed to attached the
summons and particulars of claim in
the Magistrate's Court's action to support its contention of
lis
pendens,
that
the cause of action is a suretyship by the first defendant for the
obligations of the company. It is suggested that the validity
of the
facilities agreement insofar as clauses 3.1.1, 3.1.2, 3.2.1 and
3.2.2 are not inextricably linked with the overdraft facility
which
is the subject of the present proceedings. But that is difficult to
ascertain, given that the claim in the present case
is based on the
same contract as the claim in the action before the Magistrate's
Court, and given that there is a clear possibility
on these papers,
that what is claimed in the Magistrate's Court, George, may well
include the liabilities which are said to arise
in the present
dispute. I cannot, on the basis of proceedings brought in a summary
judgment application, reject defendants' contention
that
Us
pendens
may
well be operative in the present case.
Given
the findings to which I have now arrived, there is absolutely no
reason why this matter should trouble the Supreme Court
of Appeal.
There is a crisp issue of determination and that is whether another
court would find that the claims brought in the
present dispute and
the dispute before the Magistrate's Court are such that this would
justify the defence of
lis
pendens.
In
other words to summarise: in my view there is no reasonable prospect
that another court would come to a conclusion different
from this
Court on the first two defences of set off and a breach of S 38(1)
the Companies Act. For this reason, therefore,
LEAVE
TO APPEAL IS GRANTEDIN RESPECT OF THE DEFENCE OF
LIS
PENDENS
TO
THE FULL BENCH OF THIS DIVISION. COSTS
TO
STAND OVER.
DAVIS,
J