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[2013] ZAECPEHC 4
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ABSA Bank Ltd v Swart and Others (3753/2011) [2013] ZAECPEHC 4 (31 January 2013)
IN THE HIGH COURT OF SOUTH AFRICA
(EASTERN CAPE DIVISION – PORT
ELIZABETH)
CASE NO: 3753/2011
DATE HEARD: 27/11/2012
DATE DELIVERED:
31/01/2013
In the matter between
ABSA BANK LIMITED
..................................................................................
PLAINTIFF
and
CHRISTO ALBERT SWART
..............................................................
1
ST
DEFENDANT
JOHAN GEORG MULLER
.................................................................
2
ND
DEFENDANT
HAROLD HENRY LARSEN
...............................................................
3
RD
DEFENDANT
JARL IVAR JOHNSON
......................................................................
4
TH
DEFENDANT
MIRANDA CORNELIA LAKE
............................................................
5
TH
DEFENDANT
JUDGMENT
________________________________________________________________
ROBERSON J:-
[1] This is an application for summary
judgment. The plaintiff instituted action against the defendants for
payment based on deeds
of suretyship, in terms of which they bound
themselves as sureties and co-principal debtors for payment of any
sums of money owing
to the plaintiff by Erf 1109 Marina Martinique CC
(now in liquidation), the principal debtor (the CC). With the
exception of the
first defendant, the suretyships signed by the
defendants were subject to certain limitations of the amount
recoverable by the
plaintiff. The obligations of the CC to the
plaintiff arose in terms of a mortgage loan agreement.
[2] The second defendant has consented
to judgment and this judgment is in respect of the first, third,
fourth and fifth defendants.
[3] Two defences were raised in the
opposing affidavit, which was deposed to by the first defendant: (i)
rectification and (ii)
conduct on the part of the plaintiff causing
prejudice to the defendants.
[4] The first defendant first set out
the background which led to the granting of a loan to the CC, and the
conclusion of the suretyship
agreements. The first defendant and one
Lottering were the members of the CC, which owned certain immovable
property on which luxury
apartments were to be built, in four phases.
Negotiations were initiated with First Rand Bank (FRB) for the
granting of a loan
of R40 million to finance the first phase. The
loan was granted by FRB on condition,
inter alia
, that a
certain number of sales had to be concluded before funds would be
made available. However, FRB’s representative informed
them
(presumably the members) that FRB had a discretion to advance certain
funds before the contemplated sales figures had been
achieved. When
the available funds were depleted, they were assured by FRB that they
could continue with building. However, a few
days before registration
of a bond in favour of FRB was to take place, they found out that FRB
had no intention to advance funds
prior to the contemplated sales
figures being achieved. By this time the builder was owed
approximately R6 million and it appeared
that the development would
collapse.
[5] Against this background, they
approached the plaintiff and negotiated with Mr Hein Swanepoel,
general manager of the plaintiff’s
commercial property
department in Port Elizabeth. Within a few days a mortgage loan in
excess of R100 million was approved. The
plaintiff indicated that it
would advance R15 million once the required documents were signed.
The plaintiff required personal
suretyships from the first defendant
and Lottering. At the last moment Lottering refused to sign as
surety, causing a crisis because
money was owed to the contractor.
The plaintiff agreed to accept other personal suretyships, which were
then provided by the defendants.
Swanepoel repeatedly assured the
defendants that the plaintiff would not act against them before the
mortgaged property had been
sold in execution and only if there was
still a balance owing. Swanepoel also said that the plaintiff would
closely monitor the
debt against the value of the mortgaged property
and would foreclose immediately if it thought there was a risk that
the security
would be inadequate to cover the amount owing on the
mortgage loan agreement. Acting on these assurances, the defendants
signed
the suretyships.
[6] The first defendant stated that he
had been advised that the defendants have a claim for rectification
of the suretyships, to
include “these terms mentioned by Mr.
Swanepoel”. At the time, because of the financial crisis, there
was no time for
the defendants to negotiate and alter the standard
forms which they signed. The plaintiff successfully applied for the
liquidation
of the CC and instituted action against the defendants
without first complying with the oral terms alluded to.
[7] With regard to the defence of
prejudicial conduct on the part of the plaintiff, the first defendant
stated that the plantiff
had sold the property for R30 million. He
qualified this statement by saying that the property was nominally
sold by the liquidator
of the CC, but said that all negotiations were
conducted by the plaintiff. He attached to his affidavit certain
e-mails sent by
a Mr. Faure Mould, an accountant negotiating on
behalf of the purchaser, to the representative of the purchaser, and
to officials
of the plaintiff. One of the e-mails indicated that a
Mr. Leon Steunenberg represented the plaintiff with regard to the
proposed
sale and that he required certain information from the
purchaser. A further e-mail was from Mould to the second defendant,
informing
him that the offer to purchase had expired but the parties
were still pursuing the sale, and that this information had been
given
to Steunenberg.
[8] The first defendant stated that
the sale price was far below the market value, and attached to his
affidavit a valuation of
the property for R65 million. He further
stated that in selling the property at such a low price the plaintiff
breached its duty
of good faith towards the sureties and that they
should therefore be released from their obligations in terms of the
suretyships.
RECTIFICATION
[9] In
Soil
Fumigation Services v Chemfit Technical Products
2004
(6) SA 20
(SCA) at paragraph [21] Brand JA said the following
(authorities omitted):
“
It
is a settled principle that a party who seeks rectification must show
facts entitling him to that relief ‘in the clearest
and most
satisfactory manner’ …………. In
essence, a claimant for rectification must prove that
the written
agreement does not correctly express what the parties had intended to
set out therein. In the opposing affidavit there
is no suggestion
whatsoever of any common intention different from the one recorded in
clause 1 of the credit agreement. Consequently,
the argument based on
rectification cannot succeed.”
(See also
Levin
v Zoutendijk
1979 (3) SA
1145
(WLD) at 1147H-1148B.)
[10] As was submitted on behalf of the
plaintiff, the opposing affidavit did not state precisely which
clauses of the suretyships
were to be rectified, and what clauses
were to be included or substituted. There was simply a reference to
loosely described assurances
on the part of Swanepoel. The
suretsyships were signed on various dates: three were signed in Port
Elizabeth, one in Jeffreys Bay,
and one in George, but the first
defendant did not state where and when the assurances were given.
There was no mention of an antecedent
agreement between the
parties incorporating these terms and
evidencing a common intention. There was no clear reference to a
common intention at all.
On the contrary the first defendant stated
that there was no time to negotiate and alter the terms of the
standard form deed of
suretyship. This suggests rather that the
omission of the terms was not the result of a mistake. There was no
suggestion in the
opposing affidavit that it was agreed that these
terms, although agreed upon, would not be recorded in the written
agreement. Further,
the averment that there was no time to negotiate,
is contradicted by the dates on which the suretyships were signed.
The first
one was signed on 18 May 2007, the second one on 23 May
2007, and the other three more than a month later, during which
period
there would have been time to negotiate. In any event, it is
clear from the affidavit that the first defendant was always prepared
to provide a personal suretyship, and the other sureties were
procured following Lotter’s refusal to be a surety.
[11] As was further submitted, the
assurances given by Swanepoel, if included as terms, would have the
effect that material portions
of the suretyships would have to be
rectified. For example: the clauses providing for individual and
joint liability; the clause
providing for the discretion of the
plaintiff,
inter alia
to determine the extent, nature and
duration of any facility or other advance to the CC; the clause
providing that the suretyships
were to be a continuing covering
security; the clause that the suretyships comprised the entire
agreement and the plaintiff would
not be bound by any undertakings,
representations or warranties not expressly recorded; and the clause
in which the defendants
confirmed that
the suretyships were in
accordance with the agreement with the plaintiff, and were not, as a
result of a common mistake, not representative
of their true
intentions. The opposing affidavit did not deal in any manner with
these clauses, for example how they came to be
recorded and how they
were to be rectified to bring them in line with the terms contended
for.
[12] In the result, in my view, the
affidavit fails to set out sufficient facts to support a defence of
rectification.
[13] It was submitted on behalf of the
defendants that a defence of a misrepresentation inducing the
agreements could be read into
the opposing affidavit. The immediate
difficulty with that argument is the clause in the suretyships,
already mentioned above,
that the plaintiff would not be bound by any
undertakings, representations or warranties not expressly recorded.
There was no suggestion
of a fraudulent misrepresentation by
Swanepoel. It follows that no facts were set out to support a defence
on this ground.
CONDUCT CAUSING PREJUDICE
[14] The agreement of sale of the
property between the purchaser and the CC, reflected that the CC was
represented by Punithan Quentin
Naidoo in his capacity as liquidator,
appointed by the Master. As accepted by the defendants, the plaintiff
did not sell the property.
The alleged prejudicial conduct was that
“all negotiations were done by ABSA Bank”. In my view
this averment falls
far short of supporting this defence. It is very
widely stated and does not specify precisely what took place between
the plaintiff
and the purchaser or the purchaser’s
representatives, and in my view does not detract from the legal
position that only the
liquidator had the authority to conclude the
sale agreement. If the defendants based this allegation on the
contents of the e-mails
referred to above, then in my view their
allegation was speculative. The e-mails show that Mould was in direct
contact with the
plaintiff’s officials and that the plaintiff
was kept informed of developments and probably consulted. I do not
think that
one can infer from this that the plaintiff controlled and
dictated the terms of the sale agreement. The defendant relied on the
case of
Nedfin Bank v Muller and Others
1981 (4) SA 229
(D).
In this matter damages claimed by the plaintiff from sureties were
reduced because the plaintiff had failed to obtain a fair
price for
leased property which it had recovered following cancellation of the
lease with the principal debtor. In my view this
case does not assist
the defendants because the plaintiff bank was the seller of the
property, and decided the value of the property
and what purchase
price to accept.
[15] Once again the defendants set out
insufficient facts to support this defence.
[16] In summary, I am of the view that
it is not possible to determine from the facts stated in the opposing
affidavit that the
defendants have a bona fide defence to the action
and the application for summary judgment must succeed.
[17] Summary judgment is granted
against the first, third, fourth, and fifth defendants as follows:
[17.1] Against the first defendant for
payment of R39 377 337.91
[17.2] Against the third defendant for
payment of R6 789 337.00
[17.3] Against the fourth defendant
for payment of R4 257 725.00
[17.4] Against the fifth defendant for
payment of R2 134 826.00
[17.5] Payment of interest on the
amount due by each defendant at the rate of 10,5% per annum,
capitalised monthly, from 1 December
2010 to date of payment, both
days included.
[16.7] Payment of the costs of the
action as between attorney and client.
[16.8] Payment of the costs of the
application for summary judgment.
______________
J M ROBERSON
JUDGE OF THE HIGH COURT
For
the Plaintiff: Adv A. Beyleveld SC, instructed by Sanderbergh Nell
Haggard, c/o McWilliams & Elliott Inc., Port Elizabeth
For
the Defendant: Adv M. Beneke, instructed by Goldberg & Victor
Attorneys, Port Elizabeth