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[2010] ZAWCHC 531
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Praesidium Capital Management (Pty) Ltd v Kay-Davison (17332/2010) [2010] ZAWCHC 531 (8 November 2010)
IN THE HIGH COURT
OF SOUTH AFRICA
(WESTERN CAPE HIGH
COURT, CAPE TOWN)
CASE
NUMBER
:
17332/2010
DATE
:
8
NOVEMBER 2010
In the matter between:
PRAESIDIUM
CAPITAL MANAGEMENT
(PTY)
LIMITED
….......................................................................................
Plaintiff
and
CHARLES
STUART MAC KAY-DAVIDSON
….............................................
Defendant
JUDGMENT
DAVIS,
J
:
This is an application
for summary judgment which has been opposed. Briefly, plaintiff's
claims arise against the defendant pursuant
to a series of loans
made by GBS Mutual Bank ('GBS') to Sapphire Finance (Pty) Limited
('Sapphire') during the period from June
2004 to June 2006. The
loans were recorded in a series of acknowledgments of debt which
were executed by Sapphire in favour of
GBS. According to defendant,
it is an important feature of this case, particularly given the
application for summary judgment,
that neither plaintiff or
defendant was a party to the loans. The plaintiff sues as cessionary
of GBS' claims. Defendant, in
turn, is sued on the basis of being
liable as a surety in respect of Sapphire's debts.
The dispute, in effect,
turns on six acknowledgements of debt being:
1. An acknowledgment of
debt for R1 000 000,00 on 10 June 2004.
2. An acknowledgement of
debt in the amount of R2 000 000,00 on 20 August 2004.
3. An acknowledgement of
debt in the amount of R500 000,00 on 28 April 2005.
4. An acknowledgement of
debt in the amount of R1 000 000,00 on 1 August 2005.
5. An acknowledgement of
debt in the amount R500 000,00 on 7 February 2006, which was payable
on 20 February 2006.
6. An acknowledgement of
debt for R500 000,00 on 6 June 2006
The aggregate total of
these amounts is R5 500 000,00.
The plaintiff avers that
the full amount which is owing and payable by the defendant is in
the amount of R3 175 243,07, this being
the difference between an
amount of R3 575 243,07, which it alleges was owed by Sapphire as at
1 April 2009, shortly before the
plaintiff acquired the rights of
GBS against Sapphire and the defendant and an amount of R400 000,00
paid by the defendant on
1 June 2009.
The
defendant's role in these transactions is described in the
particulars of claim as follows. On 12 May 2004 and at Cape Town,
defendant, acting personally in writing, bound and interposed
himself as surety for and co-principal debtor
in
solidum
with
Sapphire for its indebtedness generally to GBS, including any
existing future and contingent indebtedness owed by Sapphire
to GBS.
This suretyship was regarded as the first deed of suretyship.
The material and express
terms of this first deed of suretyship provided that the amount that
GBS would be entitled to recover
from the defendant there under,
would be limited to R1 000 000,00, together with costs of recovery
on the attorney and client
scale, including collection commission.
No cancellation or variation thereof would be of any force and
effect unless recorded
in writing and signed by and on behalf of GBS
surety, and the first deed of suretyship would remain in force as a
continuing
suretyship subject to further terms thereof.
The particulars of claim
then set out in identical format, save of course for the dates on
which the contracts were concluded,
a further series of suretyships;
a second, third and fourth deed of suretyship which, in effect, have
been the subject matter
of this claim by plaintiff.
Defendant resists
summary judgment essentially on two basis:
1. Defendant argues that
plaintiff has not established, as it is required to do, that its
deponents have personal knowledge of
the balance owing by Sapphire
under the loans, both at the time that the plaintiff acquired those
claims and presently, that
is after the collection of Sapphire's
book debts in due course of its liquidation.
2. There is a material
defence to the claims based essentially on prescription.
To this I shall return
presently.
Mr
Blumberq
.
who appeared on behalf of the defendant, raised a further defence.
He submitted that the particulars of claim were excipiable
for want
of necessary averments, alternatively for being vague and
embarrassing. In his view, the plaintiff effectively had lumped
the
six loans together and claimed an aggregate balance. This, he
submitted, overlooked that each loan was a single and separate
cause
of action and for this submission he relied, for authority, on
Standard
Bank of South Africa Ltd v Oneanate Investments (Pty) Ltd
1
995(4) SA 501 (C) 546E-H.
Mr
Blumberq
submitted
that to sue on a loan, the party had to allege and prove that the
payment of the loan was due. This required setting
out when the
amounts loaned fell due for repayment. With one exception, the terms
of the acknowledgements of the debt did not
provide when repayment
was to be made. The particulars were, in effect, silent on this
matter. In Mr
Blumberq
's
view, as a result of the manner in which plaintiff had treated the
loans and particulars, a series of central questions had
not been
addressed, including:
1. What were the
repayment terms of each loan?
2. What amounts have
already been repaid in respect of each loan?
3. Have any of the six
loans been repaid in full, if so, which? In his view it appeared
that capital payments around R2 million
were made before April 2009.
To which loans were these payments applied.
4. In respect of the
loans that have not been settled, what portion of the loans
constitutes capital and what portion interest?
It appears that this
range of issues were raised as a further alternative to the two
defences that I have mentioned, namely the
lack of personal
knowledge on the part of the deponents and secondly the issue of
prescription.
It
is perhaps necessary, although trite, to set out the test for
summary judgment in order to evaluate this rather hotly contested
application. In
Maharai
v Barclays National Bank Ltd
1976(1)
SA 418 (A) at 426A,
Corbett
.
JA (as he then was), said the following:
"[o]ne of the ways
in which a defendant may successfully oppose a claim for summary
judgment, is satisfying the
Court
by affidavit that he has a
bona
fide
defence
to the claim. 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, the Court does not attempt to decide these
issues or to determine whether or not there is a balance of
probabilities in favour of the one party or the other.
All
that the Court enquires into
is:
whether defendant has
"fully" disclosed the nature and grounds of his defence
and the material facts upon which it
was founded,
whether
on the facts so disclosed, the defendant appears to have, as to
either the whole or part of the claim, a defence which
is both
bona
fide
and
good in law.
If
satisfied on these matters, the Court must refuse summary judgment
either wholly or in part, as the case may be. The word 'fully'
as
used in the context of the Rule (and its predecessors), have been
the cause of some judicial controversy in the past. It connotes,
in
my view, that while the defendant did not deal exhaustively with the
facts in the evidence, relied upon to substantiate them,
he must at
least disclose his defence and the material facts upon which it is
based with sufficient particularity and completeness
to enable the
Court to decide whether the affidavit disclosed a
bona
fide
defence
... At the same time the defendant is not expected to formulate his
opposition to the claim with the
precision
that would be required
of
a plea; nor does the Court examine it by the standards of pleading."
(My emphasis).
More
recently in
Joob
Joob Investments v Stocks Mavundla Zek
2009(5)
SA 1 at 12 (SCA),
Navsa
,
JA, in emphasising the test as articulated by
Corbett
.
JA in
Maharai
.
noted that this judgment emphasised there must be an examination of
whether firstly there had been sufficient disclosure by
the
defendant of the nature and grounds of the defence and the fact upon
which it was founded, and secondly, that the defence
had to be both
bona
fide
and
good in law. Thus:
"A
Court which is satisfied that this threshold has been crossed, is
then bound to refuse summary judgment.
Corbett
,
JA also warned against requiring of a defendant the precision
apposite to pleadings, however, the learned judge was equally
astute
to ensure that recalcitrant debtors pay what is due to a creditor."
With this test in mind,
and it is important to emphasise its core principles in the
evaluation of the facts of this case, I can
now turn to what are in
effect three sets of defences that have been raised.
I
am prepared to assume that Mr
Kantor
,
who appeared on behalf of the plaintiff, is correct when he
submitted, employing a decision in
Nedcor
Bank Ltd v Behardinq
2000(1)
SA 307 (C) at 311C, that:
"Although the
deponent is a legal advisor, one must also bear in mind that since
it would appear that the claim against the
respondent had been
established by reference to the books of account and records of the
applicant, the legal advisor is probably
in as good as a position as
anyone else to swear to the facts of the case."
I leave open for more
careful consideration the question as to whether this formulation is
applicable to the particular facts
of the case where a cession has
taken place and further whether the standard formulation which is
present in most affidavits
deposed to a summary judgment, that is
that the deponent avers that he or she has personal knowledge of the
balance owing, is
indeed a legal requirement.
I
turn, therefore, to deal with the core defence which was raised,
that is of prescription. Mr
Blumberq
submitted
the defence of prescription is a genuinely triable one and that it,
therefore, fits in with the test for summary judgment
as I have
outlined it. It appears that this submission was predicated on the
following:
1.
The defendant's obligation of the surety was accessory to Sapphire's
principal obligation under the loan. Therefore, the defendant
may
raise any defence which Sapphire has against the plaintiff,
including prescription. If it is genuinely in dispute, whether
or
not the loans against Sapphire, which the plaintiff acquired have
now prescribed, this would unquestionably constitute a
bona
fide
defence
in the hands of the defendant and would thus justify the dismissal
of the application. In Mr
Blumberq
's
view, the agreement between GBS and plaintiff of 19 May 2009, did
not change the accessory nature of defendant's liability.
It did not
found any independent cause of action which was separate and
distinct from the suretyships to which I have already
made mention.
On the contrary, it preserved the plaintiff's rights "to pursue
the defendant under his suretyship, although
it placed certain
limitations on the enforcement thereof"."
2.
Prescription in respect of the loans underlying an acknowledgement
of debt, with one exception, commenced running on the respective
dates of the acknowledgement. Mr
Blumberg
made
his submission on the basis that five of the six acknowledgements of
debt, to which reference has been made, did not provide
a time for
the repayment of the loan. Where there is no agreement as to the
time for the repayment of the loan, the loan must
be considered at
common law, to be "repayable on demand"."
In
this connection
Selekowitz
,
J, in the
Oneanate
,
supra, at 546-547, in a very careful and considered judgment, said
the following:
"A loan without
agreement as to a time for repayment, is in common law repayable on
demand. Although by no means linguistically
clear, the phrase
"payable on demand" is used in this context in our law to
mean that no specific demand for repayment
is necessary and the debt
is repayable as soon as it is incurred. When suing for repayment,
there is no need to alleged a demand
and such a demand is not part
of the plaintiff's cause of action."
This
approach has been followed in this Division, and, correctly so, in
Stockdale
& Another v Stockdale
2004(1)
SA 68 (C) at para 15, where
Traverso
.
AJP (as she then was) said:
"It
is a general rule of law that in all obligations in which a time for
payment is not agreed, the debt is due forthwith.
However, it is
also clear that this may be qualified in the light of the particular
circumstances of the case.
Voet
12.1.19
says that in the case of a loan, the consumption where no time for
repayment has been fixed, the money must be repaid
not forthwith,
but after the passage of a moderate time, so that in the meantime
the borrower will have been able to enjoy at
least some advantages
out of the loan and the use of the money."
Section
12(1) of the Prescription Act, which is clearly of relevance to
defendant's defence, provides that prescription commences
to run as
soon as the debt is due. If the law, as set out in
Stockdale
and
Oneanate
is
correct, as the parties did not agree on a date for repayment,
prescription must be deemed to commence as soon as the loan
was
concluded and, therefore, the debt was incurred. To the argument
that this would place a party such as plaintiff in jeopardy,
the
answer is
clear: the contract
could have been drafted differently, the creditor could have
protected itself by way of a difference set of
contractual
provisions. That did not occur and, therefore, the parties must be
deemed to be bound by that which was agreed and
by the law which was
clearly application to such a situation.
It is not open now for
the plaintiff in the case of summary judgment, to contend that the
parties tacitly agreed that the loans
were not due and payable. If
that is the case, it is certainly not a position that can be argued
at the stage of summary judgment.
In addition, the plaintiff did not
plead this particular averment. It avoided, therefore, a central
allegation - that is when
was each loan to be repaid. As cessionary,
the plaintiff is not in a position to confirm any unexpressed
component of the consensus
between GBS and Sapphire, as it is a
stranger to these arrangements.
Accordingly,
if the dates of each of the principal debts is examined, save for
one, they prescribed three years after the relevant
acknowledgement
of debt and on the following dates: 10 June 2007, 20 August 2007, 28
April 2008, 1 August 2008 and 9 June 2009.
The one exception was a
loan which was embodied in Annexure PC1E. In terms of clause 3 this
loan of R500 000,00 was to be paid
on 20 February 2006.
Prima
facie
this
loan would seem to have prescribed on 20 February 2009.
The question which may
be asked, on the papers, is whether the running of a prescription
was either interrupted by an acknowledgement
of liability in terms
of section 14 of the Prescription or suspended in terms of section
13(g) thereof by plaintiff proving a
claim against Sapphire in
liquidation. It might be because of the manner in which plaintiff
has pleaded its case, there is no
clarity as to which loan
repayments were made by Sapphire. If Sapphire made payments in
settlement of two of the six loans only,
these payments cannot serve
to interrupt prescription in respect of the other four, nor from the
papers is it known when any
such payments were made. Hence date on
which prescription, if interrupted, commenced to run afresh in terms
of section 14(2),
remains uncertain.
Plaintiff
contended that the May 2009 agreement, to which I have already made
reference, served to interrupt the running prescription
in respect
of the principal debt. As Mr
Blumberq
submitted
correctly, there are two difficulties with this submission:
1. It is open to more
than one interpretation and the question of whether it constitutes
an unequivocal acknowledgement by the
defendant that he is liable to
the plaintiff for the full amount claimed, has to be answered in the
light of the background circumstances.
That would require evidence
of a kind which is not available in summary judgement.
2.
By 27 may 2009, five of the six loans have already
prima
facie
prescribed,
save that which is recorded in PC1F.
Mr
Kantor
submitted
that the affidavit opposing summary judgment fell short insofar as
the
bona
fides of the defence
are
concerned. It raised the question of acknowledgement of
indebtedness, but then stopped short when this occurred. In his
view, this was not surprising and was no doubt done advertently, as
such a denial would ring hollow and untrue in light of the
correspondence between the parties which was provided as an annexure
to the particulars of claim and in which the existence of
the debt
is dealt with as a given by both parties. The affidavit had,
therefore, been carefully crafted to avoid dealing with
this issue
on a factual basis, despite having raised it as an issue in the
abstract.
I
remain unconvinced that this criticism can be sustained in respect
of the issue of prescription. Prescription is raised clearly
in the
opposing affidavit. Recall that the defendant does not have to deal
exhaustively with the facts and the evidence relied
upon to
substantiate its defence at this stage. The question on these
papers, is whether there is an issue which is triable in
the manner
set out in the
Maharai
case.
On the facts so disclosed, is there a defence which is both
bona
fide
and
good in law; that is: if these material facts are proved to be the
case, is there a defence which is justifiable in terms
of the law
which must be applied to it?
There is, however, in my
view, sufficient particularity provided in the opposing affidavit to
support a conclusion that the threshold
has been crossed and that a
triable issue has been raised by the defence to justify a refusal of
summary judgment.
There was some argument
on the part of defendant as to the question of costs, but I do not
consider that it would be appropriate
to make any such order in this
case.
In the result, summary
judgment is refused. Plaintiff is granted leave to proceed by way of
an action against the defendant. Costs
are to stand over.
DAVIS,
J