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[2010] ZAGPPHC 529
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Magalieskruin Mall Investments v Izandra Trading 16 (Pty) Ltd and Another (65764/2009) [2010] ZAGPPHC 529 (24 April 2010)
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG, PRETORIA)
Case No: 65764/2009
Date heard:
22/04/2010
Date of judgment:
26/04/2010
In the matter
between:
Magalieskruin Mall
Investments
..............................................................................................................
Plaintiff
and
Izandra Trading 16
(Pty)
Ltd
........................................................................................................
First
Defendant
Linda-Ann
Mynhardt
...............................................................................................................
Second
Defendant
JUDGMENT
DU PLESSIS J:
This is an
application for summary judgment against the first and the second
defendants.
The claim against
the first defendant arises from a written lease agreement in terms
whereof the first defendant rented from the
plaintiff a business
premises in the Magalieskruin Shopping Centre. The claim is based
thereon that the first defendant is in arrears
with the payment of
monthly rentals, the arrears amounting to R182 496,04. The plaintiff
alleges that, due to the first defendant’s
default, it was
entitled to cancel and cancelled the agreement. Against the first
defendant, who has entered an appearance to defend
the action, the
plaintiff claims summary judgment for the cancellation of the
agreement, eviction of the first defendant from the
premises, payment
of the R182 496,04, interest thereon and, in terms of the agreement,
costs to be taxed as between attorney and
own client. The first
defendant did not oppose the application for summary judgment, and it
will be granted as prayed.
The claim against
the second defendant, who has also entered an appearance to defend
the action, arises from a written suretyship
in terms whereof the
second defendant bound herself as surety and co-principal debtor for
the due and proper fulfilment of the
first defendant’s
obligations under the lease agreement. Against the second defendant
the plaintiff seeks summary judgment
for payment of the amount of
R182 496,04, interest and costs. In her affidavit opposing summary
judgment the second defendant raises
essentially two defences. I
shall deal with each one in turn.
In the first place,
the second defendant contends that the written lease and the
suretyship on which the plaintiff’s claim
against her is
founded, “constitute liquid documents as contemplated” in
rule 32(2) of the Court Rules. Accordingly,
the second defendant
contends that the plaintiff should in terms of rule 32(2) have
annexed the documents to the application for
summary judgment. The
failure to do so, the second defendant further contends, renders the
application fatally defective.
The
defence is premised thereon that the two documents constitute liquid
documents. The defence can only succeed if the documents
that
referred are liquid documents. The learned author Harms
(Civil
Practice in the Supreme Court,
B8.3)
describes a liquid document as: A “written instrument... signed
by the defendant or his agent... evidencing an acknowledgement
of
indebtedness which is unconditional and ... for a fixed amount in
money”. Although, as the learned author points out,
there are
exceptions to the definition they are not now relevant. The
definition accords with the authorities and I respectfully
adopt it.
(See also the discussion in
Harms
op.
cit.
B8.25)
The two documents
that the second defendant refers to are not liquid document. They do
not evidence “an acknowledgement of
indebtedness which is
unconditional and for a fixed amount”. The second defendant’s
first defence cannot succeed.
In
the second place the second defendant contends that the deed of
suretyship constitutes a “credit transaction” and
therefore a “credit agreement” under the
National
Credit Act, 34 of 2005
(“the
NCA”). Based on that starting point, the second defendant then
raises the defence that the suretyship constitutes
an instance of
reckless credit under the NCA and also that she is over-indebted as
envisaged in the NCA. These defences are dependant
thereon that the
suretyship is a “credit transaction” and thus a “credit
agreement” under the NCA. In terms
of section 83(1) of the NCA
a court can only grant relief based on the grant of reckless credit
“in any court proceedings
in which a credit agreement is being
considered”. The same applies, in terms of section 85 of the
NCA, to relief based thereon
that the defendant is over-indebted. I
now proceed to consider whether the suretyship constitutes a “credit
agreement”
under the NCA.
Section 8(1) of the
NCA provides as follows:
“
Subject
to subsection (2), an agreement constitutes a credit agreement for
the purposes of this Act if it is—
(a) a credit
facility, as described in subsection (3);
(b) a credit
transaction, as described in subsection (4);
(c)
a credit guarantee, as described in subsection (5); o
r
(d) any combination
of the above.”
As
I understand her, the second defendant does not contend that the
suretyship is a “credit guarantee”, as described
in
section 8(5) of the NCA. In terms of section 8(5) a suretyship is a
“credit guarantee” only if it constitutes surety
for an
obligation “in terms of a credit facility or a credit
transaction to which” the NCA applies. In her affidavit
opposing summary judgment the second defendant concedes, rightly so,
that the lease agreement between the plaintiff and the first
defendant is not a “credit agreement”
1
under the NCA: Under section 8(2)(b) of the NCA an “agreement,
irrespective of its form, is not a credit agreement if it
is ... a
lease of immovable property”. It follows that the suretyship
cannot constitute a credit guarantee.
The second
defendant, however, contends that the suretyship is a “credit
transaction” in its own right. She relies on
section 8(4)(f) of
the NCA that provides that an “agreement, irrespective of its
form constitutes a credit transaction if
it is” an “agreement,
other than a credit facility or credit guarantee, in terms of which
payment of an amount owed
by one person to another is deferred, and
any charge, fee or interest is payable to the credit provider in
respect of—
(i) the agreement;
or
(ii) the amount that
has been deferred.”
The
suretyship, schedule B to the lease agreement, is annexed to the
summons. In terms thereof the second defendant binds herself
as
surety and coprincipal debtor in favour of the plaintiff “for
the due and proper fulfilment of all the obligations of
the first
defendant “arising from or out of or in terms of the lease
between the plaintiff and the first defendant”.
In terms of the
suretyship no “payment of an amount owed by one person to
another is deferred”. The suretyship is in
its terms purely
accessory to the lease agreement. It was held in
First
Rand Bank Ltd v Carl Beck Estates (Pty) Ltd and Another
2009 (3) SA
984
(T)
2
and
in
ABSA
Bank Ltd v Silver Meadow Trading 169 (Pty) Ltd and Others
(NG,
Case no. 65777/2009) that in such a case the suretyship cannot
constitute a “credit agreement” if the principal
agreement to which it is accessory is not a credit agreement under
the NCA. That is so, it was further held, also when the defendant
bound himself as a co-principal debtor. The latter fact does not
change the accessory nature of the suretyship. I respectfully
agree
with those judgments and I am bound by them.
In her affidavit
opposing summary judgment the second defendant contends that payment
of an amount owed by the first defendant to
the plaintiff is deferred
in terms of the lease agreement. I shall point out in due course that
that is not so. Even if it were,
that would not have meant that the
suretyship became a “credit agreement” in its own right:
The suretyship remains
an agreement accessory to the lease. The
former cannot become a “credit agreement” in its own
right by virtue of the
terms of the lease agreement that is not a
“credit agreement”.
For her contention
that payment is deferred in terms of the lease agreement, the second
defendant relies on clause 4.1 of the lease
agreement. The clause
provides that the plaintiff is entitled "... to charge interest
on due amounts at a rate of 2% ... per
annum higher than the prime
rate that the LESSOR’S bankers charge on overdraft facilities”.
Because, so the second
defendant contends, such interest could also
be charged against her as surety and co-principal debtor, the clause
in effect provides
for a deferral of her payment obligations to the
plaintiff. In my view the reasoning if fallacious:
Clause 4.1 does not
defer payment of any amounts but provides for interest on amounts
that are already due.
In the result I
conclude that the second defendant has no defence to the plaintiff’s
claim.
In terms of the
lease agreement that the first defendant undertook to pay costs on
the scale as between attorney and own client.
The first defendant,
however, did not oppose the application for summary judgment and its
obligation to pay costs relates only
to the costs of the action,
excluding the costs of the opposition to the application for summary
judgment.
The deed of
suretyship does not contain an undertaking to pay costs on the scale
as between attorney and own client. Only the second
defendant opposed
the application for summary judgment and only she is liable for the
costs thereof, but not on the scale as between
attorney and own
client.
It might be argued
that the second defendant is by virtue of her suretyship liable for
the first defendant’s obligation to
pay costs on the scale as
between attorney and own client. In view thereof that the first
defendant did not oppose the summary
judgment and that the second
defendant did not in her own right undertake to pay costs on the
scale as between attorney and own
client, I deem it just to order the
defendants to pay costs but not on the scale as between attorney and
own client.
The following order
is made:
A Summary judgment
is granted against the first defendant as follows:
1 Cancellation of
the lease agreement.
2 Eviction of the
first defendant and/or any other company, close corporation, trust or
entity of whatsoever nature claiming occupation
of the leased
premises through the first defendant.
B Summary judgment
is granted against the first and second defendants jointly and
severally, the one paying the other to be absolved
for:
1 Payment of the
amount of R182 796,04.
2 Interest on the
amount of R182 796,04 at a rate of 15,5% per annum from 1 October
2009 to date of payment.
C The first and
second defendants are ordered, jointly and severally, the one paying
the other to be absolved, to pay the plaintiffs
costs, excluding the
costs of opposing the application for summary judgment.
D The second
defendant is ordered to pay the costs of opposing the application for
summary judgment.
B.R. du Plessis
Judge of the High
Court
On behalf of the
Plaintiff: Couzyn Hertzog & Horak
No 321 Middel Street
Brooklyn
Pretoria
Adv. J.S. Stone
On behalf of the
Defendant: EAL Muller Attorneys
c/o Sanet De Lange
Inc
1
st
Floor, Duncan Walk
Cnr Duncan and South
Streets
Hatfield
Pretoria
Adv. Van Zyl
1
And
therefore neither a “credit facility” nor a “credit
transaction”.
2
Paragraphs
18 to 24.