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[2012] ZAECPEHC 58
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ABSA Bank Ltd v Boshoff (2410/2012) [2012] ZAECPEHC 58 (28 August 2012)
IN THE HIGH COURT OF
SOUTH AFRICA
(EASTERN CAPE, PORT
ELIZABETH)
CASE NO: 2410/2012
Date
Heard: 21 August 2012
Date
Delivered: 28 August 2012
NOT / REPORTABLE
In the matter between:
ABSA BANK LIMITED
.......................................................................................
Applicant
and
MARK GEORGE BOSHOFF
.........................................................................
Respondent
___________________________________________________________________
JUDGMENT
___________________________________________________________________
GOOSEN, J:
This is an application
for summary judgment in which the plaintiff alleges that it entered
into a mortgage loan agreement with
the defendant to finance the
purchase of an immoveable property being Erf 7792, Motherwell, Port
Elizabeth. A mortgage bond was
passed in favour of the plaintiff and
registered against the property. It is alleged that the balance of
the principal debt,
together with finance charges as at 28 May 2012,
is an amount of R185,597.55. The plaintiff also claims interest on
the balance
at the rate of 8.65% per annum and seeks an order
declaring the property executable.
The defendant opposes
the application for summary judgment and has filed an opposing
affidavit setting out the essential basis
of his defence. It is not
disputed that the plaintiff and the defendant entered into a loan
agreement and that the plaintiff
advanced monies in terms of such
loan agreement to the defendant. Defendant’s counsel sought to
make something of the fact
that the advanced money was apparently
paid to a third party but did not, appropriately, press the issue.
It is also not in dispute
that the defendant is obliged to make
payment of monthly payments in redemption of the loan payable to the
plaintiff and that
in this regard the defendant has fallen into
arrears. It is accordingly not disputed that the defendant is
entitled to claim
payment of the full balance due to it in terms of
the agreements and as secured by the mortgage bond. There are no
issues in
dispute in respect of formal compliance with the
provisions of the National Credit Act.
The defendant resists
summary judgment however on the basis of the allegation that the
loan finance and the mortgage bond were
entered into by him pursuant
to an illegal investment scheme and, accordingly, that the
obligation sought to be enforced by the
plaintiff arises from such
illegal scheme. It is also suggested that by granting the orders
sought by the plaintiff the property
rights of persons who are not
parties to the action may be affected and accordingly, in the
absence of such parties, it is not
appropriate to grant the relief
sought. Defendant’s counsel sought to rely heavily upon a
judgment of the Free State High
Court in a matter of
Ditshego &
Others v Brusson Finance (Pty) Limited & Others
(an
unreported judgment under case number 5144/2009, delivered on 22
July 2010) in which Jordaan J made certain findings in respect
of an
investment scheme operated by Brusson Finance (Pty) Limited which
was found to be illegal. It was suggested in argument
that the
scheme operated by Brusson Finance (Pty) Limited in that matter is
exactly the same scheme as is relevant in this matter
and
accordingly that the judgment of Jordaan J is relevant in relation
to the description of the scheme as well as its lawfulness.
I shall
return to this aspect hereunder. First it is necessary to outline
the basis of the defendant’s defence as disclosed
in the
opposing affidavit to which he has deposed.
The defendant says that
during March 2008 he came to hear about what he described as
“
an
excellent investment opportunity”
.
This involved a scheme operated by Brusson Finance CC
1
(hereinafter referred to
as Brusson). Brusson apparently advertised loan finance which could
be made available to home owners
in financial distress. Such loan
finance provided by Brusson would be made available against the
security of the home owner’s
property. The defendant was
presented with two agreements. The one involved an offer to purchase
a residential property. It was
explained that the defendant as an
investor in the scheme he would make an offer to purchase a
residential property owned by
a home owner seeking loan finance,
that the purchase price would be financed by way of a loan agreement
with a financial institution
secured by a mortgage bond. The
investor would enter into a further agreement of sale of the
property in terms of which the investor
would sell, by way of an
instalment sale agreement sell the property back to the home owner.
The home owner would remain in occupation
of the property and would
be obliged to pay monthly occupational interest, payable to Brusson
who would act as the investor’s
agent. From the proceeds of
these instalments Brusson would pay the mortgage payments due to the
financing bank and the investor
would receive a small commission.
Although this is the
description given of the investment scheme the transactions actually
entered into by the defendant differ.
In this instance the investor
purchased a residential property from home owners, who were
allegedly themselves investors in the
scheme, and then on-sold the
property to a director of Brusson rather than back to the original
home owner.
As indicated the
defendant contended that the investment scheme is illegal, based
upon a finding by the Free State High Court.
The defendant further
contended that Brusson has been liquidated and that various actions
and proceedings are pending in the
Gauteng High Court in relation to
the scheme. It was suggested that in those proceedings the question
as to the validity of the
mortgage bonds, based upon a consideration
of reckless credit, was being raised and for that reason it was
necessary in this
instance to investigate the issue of reckless
credit.
The defendant’s
reliance upon the judgment of the Free State High Court is
misplaced. In that matter former home owners
who had sought loan
finance from Brusson made application to set aside, as illegal, the
transactions in terms of which they were
divested of ownership of
their property. The court, after finding that particular aspects of
the scheme rendered it illegal,
set aside those transactions and
ordered restitution to the home owner. Significantly however
restitution was ordered on a basis
that recognised, and indeed
protected, the rights of the bond holder who had, by way of a loan
agreement, furnished the finance
by which the investor had purported
to purchase the home owner’s property. Although the judgment
is clear about the features
of the investment scheme which are
unlawful it does not in any manner suggest that the obligations that
arise from the mortgage
loan agreement are not enforceable by the
bond holder. Thus whilst the judgment suggests that features of the
investment scheme
operated in this matter which bear a resemblance
to that which applied in the Free State may be a doubtful legality,
the judgment
is not authority for the proposition that the bond
holder’s rights cannot be enforced against the defendant
investor in
this instance.
In my view that must be
so. There is no suggestion on the papers that the plaintiff was in
any manner aware of the terms of the
investment scheme nor is there
any suggestion that the plaintiff or any of its representatives
approved any feature of the Brusson
investment scheme. The
particular transactions engaged in in this matter indicate the
contrary. In the first instance the defendant
purchased an
immoveable property from the sellers of that property. Loan finance
was obtained from the plaintiff in order to
finance the purchase
price. A mortgage bond was entered into and registered against the
property in order to secure the plaintiff’s
interests in
securing repayment of the loan. The defendant then entered into an
agreement with Brusson Finance in terms of which
Brusson acted as
its agent for the collection of occupational interest in respect of
the property and, as its agent, made payment
of the monthly mortgage
bond instalments. The defendant also entered into an instalment sale
agreement in respect of the property
in terms of which it sold the
property in instalments to a director of Brusson upon certain terms
and conditions. What bearing
that agreement could have upon the
defendant’s obligation to make payment of the mortgage bond
instalments due to the plaintiff
is nowhere explained on the papers
and there is accordingly no reasonable or
bona fide
legal
basis set out in the defendant’s opposing papers upon which it
can be said that the defendant may avoid liability
to the plaintiff
on the basis of the transactions relevant to the investment scheme.
The defendant’s
opposing papers set out vague allegations as to the fact that there
are other proceedings pending in the
Gauteng High Court relating to
the Brusson investment scheme. It is for instance suggested that
proceedings are under way in
which the defendant is a party in which
the investors seek some form of restitution in respect of their
involvement in the scheme.
A bald allegation of this nature does not
establish a
bona fide
defence. The defendant is represented
by a firm of attorneys based in Gauteng. If indeed there are
proceedings involving the
defendant and the plaintiff in which the
question as to the enforceability of the plaintiff’s rights as
against the defendant
are at issue then such evidence ought to have
been properly placed before this court. The failure to do so and the
defendant’s
reliance upon a vague allegation of some form of
pending proceedings reflects poorly on the defendant.
A defendant who seeks to
resist an application for summary judgment must satisfy the court
that the facts alleged if proved at
trial will constitute an answer
to the plaintiff’s claim. Whilst it is not necessary to
formulate the basis of the opposition
with precision (see
Maharaj
v Barclays National Bank Ltd
1976 (1) SA 418
(A) at 426 C –
D;
First National Bank of South Africa Ltd v Myburgh
2002 (4)
SA 176
(C) at 184 C), it is nevertheless necessary that the basis of
the defence alleged must be sufficiently clear to enable the court
to conclude that a defence has been set out which if proved at trial
would constitute a good defence to the claim (
Barclays Western
Bank Ltd v Bill Jonker Factory Services (Pty) Ltd
1980 (1) SA
929
(SE) at 933).
In my view it does not
appear from a consideration of the defendant’s opposing
affidavit that the defendant has a
bona fide
defence to the
plaintiff’s claim.
A final aspect raised in
argument was that of an alleged non-joinder. It was argued that in
the event that judgment is granted
and the court authorises
execution against the immoveable property that such execution would
necessarily impact upon the property
rights of former home owners
who may have been divested of their property rights by operation of
the investment scheme. This
ground of opposition was not raised in
the defendant’s opposing papers and appears to have been
seized upon belatedly as
an argument to be advanced from the Bar.
Even assuming that the argument ought to be considered, it does not
avail the defendant.
It is common cause on the papers that the
immediate former home owners from whom the defendant purchased the
property are themselves
alleged investors in the investment scheme.
There is nothing in the papers to indicate who the original home
owners were and
whether the property is now being occupied by those
home owners or others who are in a position of tenants in relation
to the
defendant who is the registered owner of the immoveable
property at issue in this matter. Whilst it may be so that the
operation
of an illegal investment scheme which has had the effect
of divesting persons of their ownership of residential property and
may well have thereby prejudiced them, the issue of redress for such
persons is not at issue in this matter. The plaintiff has
a valid
and unanswered claim against the Defendant and it is entitled to
judgment. In the light of the security it holds it is,
in the
circumstances of this matter, also entitled to an order permitting
execution against the property.
In the result summary
judgment is granted against the defendant and the following orders
will issue:
The defendant is ordered
to pay to the plaintiff the sum of R185,597.55;
The defendant is ordered
to pay interest on the aforesaid sum at the rate of 8.65% per annum,
from 29 May 2012 to date of payment
thereof;
The hypothecated
property, being Erf 7792, Motherwell, situated in Nelson Mandela Bay
Municipality, division of Uitenhage in the
province of the Eastern
Cape is declared executable; and
The defendant is ordered
to pay plaintiff’s costs of suit on the scale as between
attorney and client.
__________________________
G GOOSEN
JUDGE OF THE HIGH
COURT
APPEARANCES
:
FOR THE PLAINTIFF
:
Mr Richards, instructed by
McWilliams & Elliot
Inc.
FOR THE DEFENDANT
:
Mr Marais, instructed by
Du Toit’s
Attorneys, c/o
Heine Ungerer Attorneys
1
The
Defendant refers in his affidavit to Brusson Finance CC whereas the
copies of the agreements all refer to Brusson Finance
(Pty) Ltd. I
shall assume in Defendant’s favour that the reference to a
close corporation is an error.