UMMI Properties (Pty) Ltd v ABSA Bank Limited (71053/2016) [2023] ZAGPPHC 38 (23 January 2023)

80 Reportability

Banking and Finance

Brief Summary

Summary Judgment — Application for summary judgment — Applicant sought payment of R1 016 066.29 from respondent following mortgage loan agreements — Respondent resisted summary judgment on grounds of prescription, estoppel, and existence of bona fide defences — Court held that respondent raised triable issues and had a bona fide defence, thus warranting leave to defend the claim.

Comprehensive Summary

Summary of Judgment

1. Introduction

The matter concerned an application for summary judgment brought in terms of Rule 32 of the Uniform Rules of Court. The applicant, UMMI Properties (Pty) Ltd, sought judgment against the respondent, ABSA Bank Limited, for repayment of amounts deducted from its bank account after the expiry of a mortgage loan term, together with interest and costs.

The proceedings arose within an action under case number 71053/2016, in which UMMI (as plaintiff in the action) claimed repayment of R1 016 066.29 allegedly collected by ABSA after the relevant loan period ended. The application for summary judgment was opposed by ABSA (as defendant in the action), which contended that it had raised defences giving rise to triable issues.

The general subject-matter of the dispute was whether ABSA was entitled to continue debiting monthly instalments after the loan term had ended, and whether ABSA’s stated defences (including lis pendens, prescription, and estoppel) were sufficient to defeat summary judgment.

2. Material Facts

UMMI and ABSA concluded two mortgage loan agreements relating to properties described in the summons. The first agreement was a bond finance facility of R10.5 million, commencing on 20 December 2002, with terms accepted on 4 February 2004. The material terms included that interest would be 1.5% below the prime overdraft interest rate quoted by ABSA from time to time; ABSA reserved rights to increase the rate if the account fell into arrears; and ABSA could review the interest rate after 24 months (on written notification). Repayment was over ten years in equal monthly instalments.

A year later, following a substantial once-off payment, the parties restructured the facility into a second loan agreement for R3 966 384.00, for a ten-year period commencing on 26 January 2004, accepted by UMMI’s representative. The second agreement similarly provided for interest at 1.5% below prime, contained provisions dealing with interest-rate review and increases in defined circumstances, and authorised ABSA to collect monthly instalments by debit order from UMMI’s bank account. It also included a variation permitting ABSA, on 30 days’ written notice, to vary the rate to align with what it regarded as the ruling mortgage rate, subject to a restriction that this would not be exercised before the expiry of 24 months from registration of the bond.

The first repayment under the restructured loan commenced on 1 April 2004, and the ten-year period terminated on 1 April 2014. After April 2014, ABSA nevertheless continued to deduct monthly instalments by debit order from UMMI’s bank account until summons was issued, collecting a total of R1 016 066.29 during that post-term period.

UMMI demanded that ABSA cease making the deductions and previously launched a separate application under case number 54941/2015. In the present action and summary judgment proceedings, UMMI’s claim (as characterised by the court) was that the loan term was ten years, the agreement expired on 1 April 2014, and ABSA had no contractual basis to extend the loan term unilaterally by continuing debits beyond that date.

In opposition, ABSA asserted various defences, including that there were disputes of fact requiring trial; that claims framed as overpayment (including by reference to condictio indebiti) had prescribed; and that UMMI’s conduct and documents (including audited financial statements) supported an estoppel and demonstrated continuing indebtedness. The court also took into account ABSA’s position in its own papers that the debt had been extinguished on 8 June 2016, which the court regarded as materially undermining ABSA’s assertion that UMMI remained indebted.

3. Legal Issues

The central legal question was whether ABSA had disclosed a bona fide defence (or triable issues) sufficient to defeat UMMI’s application for summary judgment under Rule 32. This was primarily an inquiry into the application of law to the pleaded and admitted facts in the summary judgment context, and whether ABSA’s opposing affidavit set out material facts which, if proved at trial, would constitute a valid defence.

Within that overarching enquiry, specific subsidiary questions arose from ABSA’s opposition, including whether the matter was lis pendens by reason of the earlier proceedings under case number 54941/2015, and whether the claim (to the extent characterised as an overpayment or restitutionary claim) was defeated by prescription. The court also had to evaluate whether ABSA’s reliance on estoppel-type contentions and alleged acknowledgments of indebtedness raised genuine, trial-worthy disputes in response to UMMI’s pleaded cause of action.

4. Court’s Reasoning

The court began by restating the summary judgment framework under Rule 32, including that the applicant must identify the point of law and facts relied upon, and that summary judgment is an extraordinary and stringent remedy requiring strict compliance with the rule’s prerequisites. The court referred to authority to the effect that the plaintiff bears the onus of showing that the defendant does not have a defence on the merits, and that a defendant resisting summary judgment must at least disclose a defence and the material facts upon which it rests, sufficient to enable the court to determine whether it is bona fide.

In addressing the applicable approach, the court referred to the principle that courts have a discretion to be exercised judicially when considering summary judgment, and that summary judgment is appropriate where a plaintiff has made out an unanswerable case and the defendant’s opposition amounts to delaying tactics. The court noted that, in exercising that discretion, it is required to consider the matter together with the documents properly before it.

Turning to the facts and pleaded defences, the court held that UMMI’s cause of action remained undisputed. The court characterised UMMI’s case as straightforward: the parties concluded a ten-year loan, it expired on 1 April 2014, and ABSA continued debiting UMMI’s account for more than two years thereafter, collecting R1 016 066.29, without advancing a justification in the opposing papers that answered this claim. The court accepted UMMI’s contention that the loan term was fixed and that, while interest could vary, ABSA did not thereby acquire a right unilaterally to extend the contract term so as to generate additional repayments and interest beyond the agreed ten years.

The court rejected ABSA’s lis pendens defence on the basis that the other proceedings involved different causes of action and different relief, and accordingly did not bar the present claim. The court further found that ABSA’s assertions that UMMI was aware it remained indebted were untenable in light of ABSA’s own averment that the debt had been extinguished on 8 June 2016; on the court’s reasoning this made the alleged continuing indebtedness defence “non-sensical” and factually incorrect.

On prescription, the court stated a general principle that prescription begins to run only when the creditor is in a position to enforce the right in law, and not necessarily when the right arises. The court referred in this context to academic commentary cited in the judgment. This formed part of the court’s broader conclusion that the defences advanced did not constitute bona fide defences capable of being sustained at trial, as they did not provide a substantive answer to the pleaded claim relating to post-term debits.

Having considered the pleaded basis of the claim and the opposing affidavit, the court concluded that ABSA had not raised bona fide defences or triable issues warranting leave to defend, and that summary judgment should therefore be granted.

5. Outcome and Relief

The court granted summary judgment in favour of UMMI Properties (Pty) Ltd against ABSA Bank Limited. The order recorded that summary judgment was granted with costs.

The summary judgment application sought payment of R1 016 066.29, interest at 10.25% per annum a tempore morae from 29 September 2016 to date of payment, and costs on the attorney-and-client scale, together with further or alternative relief. The operative order, as framed in the judgment, granted summary judgment and awarded costs.

Cases Cited

Breitenbach v Fiat SA (Edms) BPK 1976 (2) SA 226 (T)

Gull Steel (Pty) Ltd v Rack Hire BOP (Pty) Ltd 1998 (1) SA 679 (O)

Maharaj v Barclays Ltd 1976 (1) SA 418 (A)

Legislation Cited

Prescription Act 68 of 1969

Rules of Court Cited

Uniform Rules of Court, Rule 32

Held

The court held that the respondent had not disclosed a bona fide defence or triable issues sufficient to resist summary judgment. The applicant’s cause of action—premised on the ten-year loan term having ended on 1 April 2014 and the respondent continuing to debit the applicant’s account thereafter—was treated as unanswered on the respondent’s papers.

The court further held that the defence of lis pendens failed because the other proceedings relied upon involved different causes of action. The court also regarded the respondent’s stance that the applicant remained indebted as incompatible with the respondent’s own averment that the debt was extinguished on 8 June 2016. In relation to prescription, the court applied the principle that prescription begins to run when a creditor is in a position to enforce the right in law.

On these bases, summary judgment was granted with costs.

LEGAL PRINCIPLES

The judgment applied the principle that summary judgment is a stringent and exceptional remedy and requires strict compliance with Rule 32. In that context, the plaintiff bears an onus to demonstrate that the defendant has no defence on the merits, while a defendant opposing summary judgment must disclose a defence and set out the material facts relied upon so that the court can assess whether the defence is bona fide and trial-worthy.

The judgment further applied the principle that a court has a judicial discretion in summary judgment proceedings and must consider the matter and all documents properly before it, granting summary judgment where the plaintiff has made out an unanswerable case and the defence appears to be raised to delay.

On prescription, the judgment applied the general proposition that prescription runs from the point at which the creditor is able to enforce the right in law, rather than necessarily from the moment the right arises.