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[2021] ZAKZDHC 34
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Ameropa Commodities (Pty) Ltd v Charalambus (12027/2016) [2021] ZAKZDHC 34 (28 September 2021)
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IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
NOT
REPORTABLE
CASE
NO: 12027/2016
AMEROPA
COMMODITIES (PTY)
LTD PLAINTIFF
and
GEORGE
CHARALAMBUS DEFENDANT
(ID:
[…])
ORDER
The
following order is made:
1.
The
deed of suretyship executed by the defendant in favour of the
plaintiff on 16 July 2014 is rectified by
(a)
deleting
the whole of clause 5 of the standard terms and conditions of the
deed of suretyship;
(b)
deleting
the whole of clause 7.2 of the standard terms and conditions of the
deed of suretyship;
(c)
deleting
the words “the trustees for the time being of” appearing
in the first paragraph of the deed of suretyship and
replacing them
with the words “Salvage and Stockfeed Parcels CC”; and
(d)
deleting
the words “the memorandum of agreement signed by the debtor on
or about the same time as this deed of suretyship
and any renewal,
amendment or cancellation of such loan agreement” where they
appear in the first paragraph of the deed of
suretyship and replacing
them with the words “the agreements of sale between the debtor
and creditor for the sale of wheat”.
2.
Judgment
is granted in favour of the plaintiff against the defendant for:
(a)
payment
of the sum of R27 724 029.97;
(b)
interest
thereon at the prime rate of the Standard Bank of South Africa plus
2% per annum, from 1 October 2016 to date of payment;
(c)
costs
of suit on the attorney and own client scale.
3.
The
defendant’s counterclaim is dismissed with costs on the
attorney and own client scale.
JUDGMENT
OLSEN
J
[1] The
plaintiff, Ameropa Commodities (Pty) Limited, has sued the defendant,
Mr George Charalambus, for payment
of an amount of R27 724 029.97
together with interest thereon at the prime rate of the Standard Bank
of South Africa
plus two percent per annum, from 1 August 2016 to
date of payment. It is the plaintiff’s case that the amount
represents
the balance outstanding in terms of certain contracts for
the sale of wheat by the plaintiff to Salvage and Stockfeed Parcels
CC
(“SSP”), for which payment the defendant stands as
surety and co-principal debtor.
[2] The
deed of suretyship in question was drafted off a precedent and as a
result contains a number of erroneous
or inapplicable provisions with
regard to which the plaintiff seeks an order of rectification. The
defendant has raised no objection
to the rectification and
acknowledges his position as surety. The issue at trial was whether
the claim was good against SSP. SSP
is in liquidation, and was
presumably not sued in this action because it is recognised that it
is unable to pay. Mr Mark Poole,
one of the three liquidators of SSP
gave evidence. In short his evidence was to the effect that SSP,
through its liquidators, regards
the plaintiff’s claim as good.
[3] I
propose to commence with an outline of the claim and the defendant’s
response to it. In the process
I will dispose of some issues of a
peripheral nature before thereafter turning to the issues argued at
the trial once all the evidence
had been led.
THE
CLAIM AND SOME PERIPHERAL ISSUES:
[4] The
plaintiff’s claim was, in summary, pleaded as follows.
(a) During
August, September and October 2015 four contracts for the sale of
wheat by the plaintiff
to SSP were concluded. The one was for the
sale of German milling wheat and the other three for the sale of
Russian milling wheat.
The quantities involved were large: 1600 tons
in terms of each of the first two agreements, 2000 tons in respect of
the third agreement
and 3000 tons in respect of the fourth agreement
(which was concluded on 5 October 2015).
(b) The
wheat would be delivered by the plaintiff on the instructions of SSP
within a fixed time frame
into certain silos situated at a mill
operated by Prograin (Pty) Limited (“Prograin”). An
independent third party known
as a “collateral manager”
would manage the storage facility at Prograin’s premises. (The
collateral manager was
a business known as Drum Commodities. It
changed its name during the course of the events which gave rise to
this litigation but,
for the sake of convenience, I will refer to it
as “Drum”.)
(c) When
SSP wanted wheat it (or its customer Prograin) would notify the
plaintiff which would notify
Drum as a result of which the specified
quantity of wheat would be released from the silos by Drum to
Prograin.
(d) The
plaintiff would invoice SSP weekly for deliveries out of the silos
and the purchase price would be
paid within sixty (60) days of the
date of each invoice.
(e) Certain
quantities of wheat were delivered following the regime but not all
of it was paid for.
In support of the claim the plaintiff annexed to
its particulars of claim a copy of the statement reflecting each
unpaid invoice,
illustrating that as at 31 May 2016 the amount owing
by SSP to the plaintiff was R26 405 500.99. Another
annexure to
the particulars of claim was a document titled
“Confirmation of Debtor Balance as at 31 May 2016”, which
reflected
the same amount as owing and as having been audited by both
parties. The document was signed on behalf of the plaintiff by its
chief financial officer and on behalf of SSP by the defendant himself
in his capacity as member of it.
[5] Copies
of each of the contracts were put up with the particulars of claim.
Each of them recorded that the contact
person for SSP was a Mr Johan
Pottas, who was called as a witness by the plaintiff. Mr Pottas was
in fact the manager of the mill
owned by Prograin. It is unsurprising
that he was the contact person nominated on behalf of SSP. The
defendant was the
de facto
single member of SSP, and the
director and the controlling mind of Prograin. The convenience of the
delivery of the wheat into
Prograin’s silos lies in the fact
that Prograin would be buying the wheat from SSP, milling it and
selling the flour on to
its customers at a profit. And on the
evidence led at trial it is Mr Pottas (if not on occasions the
defendant himself) who would
initiate a request to be made by SSP to
the plaintiff for a delivery of wheat to Prograin from the silos
under Drum’s control.
If the plaintiff was satisfied that the
account or credit limit was under control (the credit limit had
recently been increased
to USD1,7 million), or if a payment was then
made to bring the credit limit under control, the plaintiff would
authorise the delivery
which would be made by Drum to Prograin.
[6] The
contracts contained subsidiary provisions regarding,
inter alia
,
storage costs and interest charges, the latter being somewhat complex
in nature, and not exactly the same from one contract to
the next. It
seems that the price per ton of the wheat stipulated in each contract
was formulated as something of a base price.
Storage charges in the
Durban Harbour, where the wheat was landed, were exorbitant. If the
wheat was not removed from the harbour
to the silos on Prograin’s
premises in the time frame set by the contract the effect would be a
de facto
increase in the price of the wheat generated by
debits in respect of storage charges and interest. This rate of
interest was different
to the one charged on unpaid invoices in
respect of the wheat deliveries made by Drum into the Prograin mill.
All of these charges
were reflected on invoices, just as were the
charges for wheat at the contract price per ton. Neither the invoices
nor the monthly
statements received by SSP were queried. The
plaintiff’s claim is confined to wheat deliveries up to 10
August 2016 and contractual
charges of the kind just discussed up to
July 2016. None of these charges, which were clearly listed in a
schedule prepared by
Mr Hamman, who was at the material time the
chief finance officer of the plaintiff, was challenged in evidence
and no argument
was made that the rate of interest claimed by the
plaintiff on the outstanding balance was incorrect. I accordingly do
not need
to concern myself with an intricate analysis of the
accounting for the plaintiff’s claim. This approach is
fortified by SSP’s
financial statements for the four month
period ending June 2016 which reflect a balance owing to the
plaintiff which coincides
with the certificate (referred to above)
signed by the defendant.
[7] The
defendant’s plea was in large measure an exercise in
obfuscation. In the plea the defendant admitted
that the parties
“purported” to conclude the agreements relied upon by the
plaintiff, but at the Rule 37 conference
it was accepted that the
agreements were concluded. However the defendant pleaded that they
were
contra bonos mores
because they purported to incorporate
certain standard form terms (the precise nature of which is
irrelevant), but in the same breathe
contradicted or undermined what
the defendant contended were rights which SSP would obtain under
those standard terms. This point
(that the agreements were
unenforceable for being
contra bonos mores
) was not conceded
during the Rule 37 conference, but it was not dealt with in evidence
nor pursued by the defendant at trial.
[8] It
was then pleaded that 3000 tons of the wheat which was the subject of
one of the contracts between the plaintiff
and SSP was in fact
subsequently sold to an entity known as “Sesfikile” with
the result that some R11 million fell
to be deducted from the
plaintiff’s claim. Why this was so was not revealed in the
plea. The defendant was asked when led
in evidence to discuss certain
transactions in which Sesfikile was involved, but his explanation did
not tie in at all with the
proposition that any transactions between
the plaintiff and Sesfikile, or, more pointedly, Sesfikile and
Prograin, had any impact
whatsoever on the plaintiff’s claim
against SSP, which, as regards wheat deliveries, was confined to
wheat actually delivered
into the Prograin mill.
[9] The
defendant’s plea (and his excipiable counterclaim which was not
pursued at trial) made reference
to the fact, which was uncontested,
that Drum’s records showed that at the time when deliveries to
SSP were stopped because
payments due by SSP to the plaintiff were
not being made, more or less 4500 tons of wheat ought to have been in
the Prograin silos,
a figure above the capacity of those silos. The
relevance of that allegation to the plaintiff’s claim is not
apparent from
the plea. It is however raised by way of an attempt at
excusing the defendant’s signature to the certificate of the
amount
owing as at 31 May 2016. In the plea the allegation that the
certificate was signed by the defendant is denied, and it is stated
“in amplification of such denial” that Mr Hamman (of the
plaintiff) furnished the defendant with the stock report from
Drum
which reflected that some 4500 metric tons of wheat were in the
silos. It is said that the defendant signed the certificate
based on
this misrepresentation, as in fact it turned out that some 4000
metric tons or so had been stolen from the silos. The
logic of this
was not explained in the plea, and neither did it emerge from the
evidence. One would have thought that if more wheat
was in the silos
than ought to have been there, considering the plaintiff’s
claim as to how much wheat was moved from the
silos into Prograin’s
mill, one could argue that there was reason to query the level of
off-take contended for by the plaintiff.
Here the opposite was the
case. Taking into account the off-take contended for by the plaintiff
there should have been much more
wheat left in the silos than was
actually there. Although the defendant’s evidence on the
subject was not perfectly clear,
as I understood it the issue of the
belief that there was some 4500 tons available in the silos did not
arise in connection with,
or affect his decision to sign, the
certificate acknowledging the amount due (and thereby acknowledging,
inter alia
, the amounts of wheat delivered from the silos to
Prograin). He was negotiating a sale of Prograin and the presence of
that quantity
of wheat in Prograin’s silos was apparently a
matter of some importance to the proposed buyer. I must confess to
having found
it difficult to follow this aspect of the defendant’s
evidence. Perhaps what he wanted to say was something he was
reluctant
to say directly: that he was happy to sign the certificate,
there being nothing wrong with it, so long as the sale went through
because he could pay the plaintiff out of the proceeds; but he would
not have signed the certificate if he did not believe that
the sale
would go through, and that was the connection between the
representation that there was some 4500 tons of wheat on the
site and
the fact that he signed the certificate.
THE
PRINCIPAL DEFENCE: PROOF OF DELIVERY OF WHEAT
[10] A
lot of evidence was led, and there was excessive cross-examination of
witnesses, because the defendant went
to trial hoping that the
plaintiff would be unable to prove its case. This applies especially
to the issue as to whether the plaintiff
had delivered the quantities
of wheat into the Prograin mill which are reflected in its account of
how its claim against the defendant
is comprised. The plaintiff has
not claimed for the price of wheat bought by SSP which was not
delivered into the Prograin mill
because SSP was unable to service
its account.
[11] One
would have thought that the fact that all of the invoices and all of
the statements were presented to
SSP without any complaint that the
wheat deliveries reflected therein had not been made would have been
sufficient to persuade
the defendant that it was futile to defend the
claim against him on the footing that the wheat deliveries were not
made. SSP’s
acceptance of the accuracy of the claims set out in
the commercial documents sent to it is reflected in its own financial
statements
for the four month period ending June 2016.
[12] Asked
in cross-examination why the defendant approached the case upon the
footing that the plaintiff must
prove delivery of the wheat, the
defendant said that he had received advice that a release note issued
by Drum (reflecting the
transfer of wheat from the silos to the
Prograin mill) does not constitute proof of delivery; that there is
in fact no proof of
delivery; that Mr Pottas (representing Prograin)
had to have “signed for delivery into the mill”, and that
the absence
of such signatures meant that the wheat should be
regarded as not having been delivered. (The issue as to the origin of
the advice
was not pursued.)
[13] When
wheat was delivered the plaintiff would of course issue an invoice to
SSP. When asked what happened upon
the issue of such an invoice the
defendant stated that SSP would then generate an invoice directed at
Prograin, Prograin would
pay SSP and SSP would pay the plaintiff.
(Obviously the payment elements in this account of the system became
problematic.) When
asked whether there was any verification of
invoices reflecting deliveries of wheat to SSP the defendant conceded
that SSP would
ask Prograin if the wheat had been received. He
accepted that Mr Pottas would have verified the deliveries on each
occasion.
[14] According
to the defendant Drum issued monthly audit reports of its receipts
and deliveries of wheat which
appear in the bundle of documents to
which the defendant was referred. These coincide with the plaintiff’s
billings, and
no disputes were raised as to the accuracy of the
records of deliveries into the Prograin mill.
[15] The
plaintiff produced the so-called “release instructions”
sent by the plaintiff to Drum authorising
releases of wheat to
Prograin. Each release authorisation followed a request by SSP for
such a release and the plaintiff’s
agreement to make the
release which, as mentioned earlier, would only be made after
considering the state of SSP’s account
with the plaintiff. Each
of these was copied to Mr Pottas who explained in evidence that the
release instructions were copied to
him so that he could know that
the authorisation had in fact been given. He would then be able to
put in motion the process of
delivery of the wheat from the silos
into the mill for him to produce the product which Prograin would
sell. Mr Pottas’s
evidence was absolutely clear. There was no
occasion when he received a release instruction, but did not receive
the wheat to which
it related.
[16] What
I have said hitherto under the present heading is on its own decisive
of the issue as to whether the
wheat in question was delivered to
Prograin (and accordingly to SSP). The evidence is overwhelming.
There is no need for me to
reproduce in this judgment an account of
the other evidence led in this case, and especially that elicited in
cross-examination,
which canvassed in some detail the various
processes followed and the documents generated in respect thereof,
concerning wheat
deliveries. Aside from the evidence I have just
referred to, the evidence of Mr Hamman and, up to a point, Mr Poole
also went to
this issue. So did the evidence of a Ms Aldworth who was
at the material time employed by Drum as the contract manager for,
inter alia
, the management of the silo facility at Prograin,
and the movements of wheat in and out of the silo system. I have
considered all
of that evidence and see nothing which contradicts the
conclusions reasonably to be drawn from the documents, and the
evidence
of Mr Pottas and the defendant himself.
[17] Mr
Mohamed, who appeared for the defendant, confronted with all this
evidence, took refuge in an argument
that the evidence to which I
have referred, even that from the defendant, was not sufficient for
the plaintiff’s purposes
because the plaintiff had not complied
with the best evidence rule.
[18] Ms
Aldworth canvassed the question of how transfers of wheat from the
Prograin silos into the Prograin mill
were handled. One Seggie was
employed by Drum to actually manage the silos. (Ms Aldworth was not
on site.) He would be told what
wheat to release to Prograin. He
would make the release in conjunction with Mr Pottas, the mass of the
wheat delivered being measured
by a scale built into the delivery
mechanisms which transported the wheat from the silos into the mill.
Having done this Mr Seggie
would record in a book the details of the
transfer which had taken place. As I understand the argument, besides
the fact that,
according to the defendant, Mr Seggie should have been
called, the book in question would have been the so-called “best
evidence”
of the deliveries.
[19] This
argument has no merit at all. If the “best evidence rule”
means what counsel argued it to
mean, then the correct course would
have been to object to evidence which undermined the operation of the
rule. That was not done,
and one wonders about the footing on which
counsel might have presented an objection to his own client’s
concessions.
[20] For
present purposes it is sufficient to say that the position with
regard to the best evidence rule is as
stated by Conradie J in
Welz
and Another v Hall and Others
1996 (4) SA 1073
(C) at 1079 C-D.
‘
As far as the best
evidence rule is concerned, it is a rule which applies nowadays only
in the context of documents and then only
when the content of a
document is directly in issue. It does not apply where the document
serves to record a fact capable of being
proved outside the document.
It provides that the original of the document is the best evidence of
its contents.’
(See
also
S v B M
2014 (2) SACR 23
(SCA) at para 33.)
The
content of the book used by Seggie was not an issue in the trial. The
issue was whether or not the wheat was delivered. If he
could have
been found (apparently he was “on the run” in connection
with missing wheat) Seggie could have confirmed
or denied the
assertion by Pottas that all the wheat was delivered. The fact that
he would have turned to his book to see what
he had recorded in order
to deal with such questions did not make the book a document the
contents of which were an element of
the plaintiff’s cause of
action.
UKRAINIAN
WHEAT:
[21] The
plaintiff’s particulars of claim assert that wheat was
delivered in terms of the contracts pleaded.
As a matter of fact a
quantity of the wheat delivered under one of the contracts for wheat
of Russian origin was in fact wheat
of Ukrainian origin. That this
was the case was not pleaded, although the documents I have mentioned
reflecting wheat deliveries
openly recorded that the wheat in these
instances was of Ukrainian origin, but nevertheless allocated to the
contract in question
for wheat of Russian origin.
[22] The
defendant did not plead, even in the alternative, that if the
plaintiff proved delivery of the quantities
of wheat, some of it was
of Ukrainian origin and accordingly not in accordance with what the
contract required. On occasions during
the course of evidence
reference was made to the Ukrainian deliveries without any point
being made that such deliveries were irrelevant,
considering the
plaintiff’s pleadings, or that the evidence was objectionable
in any respect. The defendant himself said
that it may have been
agreed to deliver Ukrainian wheat instead of Russian wheat, which
merely elicited a question in re-examination,
as to whether the
defendant had signed an amending agreement to that effect.
[23] As
the mode of business already described in this judgment illustrates,
SSP delivered the Ukrainian wheat
it received from the plaintiff to
Prograin, which in turn milled the product and sold the resultant
flour. No complaints were made,
whether as to the quality or origin
of the wheat, or as to its allocation to the contract for Russian
wheat. It was not put to
any of the plaintiff’s witnesses
(including Mr Pottas) that the delivery of Ukrainian wheat could not
satisfy an obligation
to deliver wheat of Russian origin, nor that,
in the case of Mr Pottas, that he ought to have raised a complaint.
The defendant
himself had every opportunity to state that wheat of
Ukrainian origin could not substitute for wheat of Russian origin
under the
contract, but he gave no such evidence.
[24] For
the first time in argument counsel for the defendant asserted that
the plaintiff had failed to prove performance
under the contract for
Russian wheat to the extent that such performance involved the
delivery of Ukrainian wheat; and that to
succeed in respect of that
portion of its claim which related to the delivery of Ukrainian
wheat, the plaintiff ought to have pleaded
and proved a written
variation to the contract in question. (The contracts each contained
so-called non-variation clauses.)
[25] The
learned authors of Christie’s The Law of Contract in South
Africa, 6
ed at 427 describe the judgment of Claassen J in
Van Diggelen v De Bruin
1954 (1) SA 188
(SWA) at 192 –
193 as an “admirable summary of the law” on the question
as to whether performance, to be valid,
must be exactly in the manner
specified in the contract, or whether it may be made in some
equivalent manner that is equally effective.
Van Diggelen’s
case involved a tender of alternative performance by a
contracting party which was rejected by the other one. The issue was
whether
the tender coincided with the provisions of the contract.
Against that background the learned Judge set out the proper approach
to a dispute as to whether the equivalent performance was
permissible. And so, for instance, the first step in approaching such
a question would be considering the surrounding circumstances taking
into consideration “everything which can give a clue
to the
intention of the parties”. How would the parties have reacted
if this question had been specifically contemplated
by them before
the contract was concluded? If there is no clear answer the
presumption is that precise performance (
in forma specifica
)
is required. There is no need in this judgment to give a full account
of the judgment in
Van Diggelen
, save to mention that the
learned Judge observed that “the Court’s paramount
concern is always, within the frame-work
of the law, to do justice
between man and man.”
[26] In
this case, because the point raised in argument was not dealt with in
the pleadings, and indeed was not
raised during the course of
evidence, one is left to deal with the argument that deliveries of
the wheat of Ukrainian origin did
not meet the requirements of the
contract, by judging the matter, so to speak,
ex post facto
,
having regard to the conduct of the parties in connection with such
deliveries.
[27] Requests
for deliveries from the silo to the Prograin mill emanated from SSP
(almost certainly at the request
of Prograin and Mr Pottas) or from
Prograin on behalf of SSP. In the instances now under consideration
those requests (in whatever
terms they may have been stated)
generated deliveries of Ukrainian wheat and documentation which
reflected the origin of the wheat.
The allocation of such deliveries
to the contract for Russian wheat was quite clear. The rate per ton
for such wheat was in accordance
with that contract for Russian
wheat. The deliveries were accepted and no protest was made
concerning the origin of the wheat or
the charge made for it.
[28] That
being the case, SSP must be taken to have accepted as sufficient and
proper the delivery of Ukrainian
wheat as an equivalent to Russian
wheat under the contract, and it must be concluded that as a matter
of probability the contract
permitted such equivalent delivery. That
outcome strikes me as the only one which fulfils the goal mentioned
in
Van Diggelen’s
case, that, within the frame-work of
the law, the court should be concerned to do justice between the
contracting parties.
THE
NATIONAL CREDIT ACT NO. 34 OF 2005
:
[29] In
its particulars of claim the plaintiff relied solely upon the four
agreements pleaded, each of which provided
for payment within sixty
(60) days from date of invoice. Each agreement was accordingly a
credit agreement as defined in
s 8(4)
of the
National Credit Act. The
plaintiff then pleaded that SSP was a juristic person whose asset
value and/or annual turnover at the time of conclusion of the
sale
agreements exceeded R1million, as a result of which the provisions of
the Act do not apply to the sale agreements, and consequently
to the
suretyship relied upon in suing the defendant. Those allegations were
denied.
[30] It
is argued on behalf of the defendant that given that compliance with
s 129
of the Act was not proven, this action must fail.
[31] As
I understand it, the principle argument is based upon the proposition
that although the plaintiff did not
base its claim on a “credit
facility”, there is evidence from both the plaintiff and the
defendant that such a credit
facility had been granted, and the
plaintiff had not proved that when the facility was granted, SSP’s
turnover or asset value
exceeded R1million. I assume that what
counsel for the defendant is referring to is the fact that at a
certain stage SSP had a
credit limit of USD 700 000, which was
subsequently increased to USD 1.7million.
[32] A
credit facility is defined in
s 8(3)
of the Act, and its primary
feature is that it involves a credit provider undertaking to supply
goods or services to the consumer,
or at the direction of the
consumer. That implies an agreement which obliges the credit provider
to do so. The credit limit was
mentioned in evidence only for the
purpose of explaining that the plaintiff would not supply goods if
the credit limit had been
exceeded. The question as to whether the
plaintiff was actually obliged to allow purchases up to the credit
limit, upon the footing
that it had, as the section requires,
“undertaken” to do so, was not pursued or elucidated in
any way.
[33] Given
the basis upon which the plaintiff sued (ie relying on four credit
agreements of the type contemplated
in
s 8(4)
of the Act), if the
defendant wished to assert that in fact the plaintiff’s claim
was to enforce the provisions of a credit
facility as defined in
s
8(3)
of the Act, that had to be pleaded, and the allegation made that
at the time when the so-called credit facility was granted, the
defendant had neither a turnover nor an asset value in excess of
R1million; and that, for want of compliance with
s 129
of the Act
with regard to the claim to enforce a credit facility, the actions
have to fail. That was not pleaded. And indeed, the
proposition was
not canvassed in evidence.
[34] The
notion that SSP’s credit limit would have been set at USD
700 000, let alone at USD1.7 million,
if it did not have a
turnover of at least R1 million per year is so improbable that it can
safely be discarded. However there is
in fact evidence as to the
situation at the time the defendant now contends is material. Mr
Hamman identified the first grant of
credit to SSP in April 2014
which was based on SSP’s audited financial statements for the
year ending February 2013 and management
accounts as at 31 December
2013. The limit is recorded as R7 million which was presumably the
equivalent of the USD 700 000
limit that was mentioned in
evidence. With his counterclaim the defendant put up what he said to
be all of the contracts concluded
between the parties since April
2014. In April alone SSP bought some R5.8 million worth of wheat from
the plaintiff. The notion
that it did so, or would have been allowed
to do so, if it had a turnover of less than R1 million per year is
beyond comprehension.
[35] Counsel
for the defendant has also attempted an argument based on the
proposition that the agreements relied
upon by the plaintiff are
incidental credit agreements. His assertion seems to be that the
provisions of
s 4
of the Act (dealing with the applicability of the
provisions of the Act to a credit agreement when the consumer is a
juristic person)
do not apply to incidental credit agreements. No
authority is cited for that proposition. Counsel did not explain his
assertion
to that effect by argument as to the proper construction of
the relevant provisions of the Act. I am unable to discern from a
reading
of the Act that there is any basis upon which to argue that
the restrictions upon the applicability of the Act to juristic
persons
do not apply in the case of incidental credit agreements.
[36] It
is beyond doubt that when the four contracts pleaded by the plaintiff
were concluded, the annual turnover
of SSP exceeded the sum of R1
million. The amounts involved in those four contracts themselves give
the lie to any contrary argument.
So too do the financial statements
of SSP as at June 2016 to which the defendant was referred in
evidence. They illustrate that
not only SSP’s turnover, but
also its asset value, must have exceeded R1 million at all material
times.
[37] There
is no merit in the contention that the plaintiff’s failure to
comply with
s 129
of the Act is an obstacle to judgment in favour of
the plaintiff in this action.
COSTS:
[38] Clause
3.4 of the deed of suretyship provides that the defendant must pay
all costs “whatever (on an
attorney and own client scale)
relating to any claim or proceedings arising out of or in connection
with this suretyship …”.
That clause obviously covers
the plaintiff’s claim against the defendant.
[39] As
for the counterclaim, whatever its meaning and intent, it purported
to have been a claim of SSP which had
been ceded to the defendant. I
cannot say that it constitutes proceedings “in connection with”
the suretyship. However
costs were incurred in dealing with the
counterclaim. The making of it, and not pursuing it, presumably
because it was recognised
that it had no merit, is litigious conduct
of a kind which deserves sanction. I gained the clear impression that
the defendant
was a despondent witness, and that he made the
concessions he did because he could not bring himself openly to deny
under oath
what was perfectly obvious. The validity of the
plaintiff’s claim was only challenged in August 2016 when an
application
was made to wind up SSP. It is difficult to resist the
conclusion that, right up to trial, the defence of the claim and the
delivery
of a counterclaim were designed to gain time. It is both
convenient and justified to grant the costs of the counterclaim on
the
same scale as must be allowed in the case of the claim.
INTEREST:
[40] The
plaintiff has claimed interest on the capital sum running from 1
August 2016. However the certificate
of balance reflecting that same
capital sum records that the balance is fixed as at 30 September
2016. I propose to grant interest
to run from 1 October 2016.
[41] Counsel
accepted during argument that any order for interest I make would be
subject to the limits set by
the
in duplum
rule.
The
following order is made.
1. The
deed of suretyship executed by the defendant in favour of the
plaintiff on 16 July 2014
is rectified by
(a) deleting
the whole of clause 5 of the standard terms and conditions of the
deed of suretyship;
(b) deleting
the whole of clause 7.2 of the standard terms and conditions of the
deed of suretyship;
(c) deleting
the words “the trustees for the time being of” appearing
in the first paragraph
of the deed of suretyship and replacing them
with the words “Salvage and Stockfeed Parcels CC”; and
(d) deleting
the words “the memorandum of agreement signed by the debtor on
or about the same
time as this deed of suretyship and any renewal,
amendment or cancellation of such loan agreement” where they
appear in the
first paragraph of the deed of suretyship and replacing
them with the words “the agreements of sale between the debtor
and
creditor for the sale of wheat”.
2. Judgment
is granted in favour of the plaintiff against the defendant for:
(a) payment
of the sum of R27 724 029.97;
(b) interest
thereon at the prime rate of the Standard Bank of South Africa plus
2% per annum, from 1 October
2016 to date of payment;
(c) costs
of suit on the attorney and own client scale.
3. The
defendant’s counterclaim is dismissed with costs on the
attorney and own client
scale.
OLSEN
J
Date
of Hearing: 02,
03, 04, 05 & 06 August 2021
Date of Judgment:
28 September 2021
For the
Plaintiff: Ms
L Mills
Instructed
by: Hayes
Incorporated
Plaintiff’s
Attorneys
(Ref.:
HX1161)
(Email:
hugo@themis.co.za)
c/o
Shepstone & Wylie
24
Richefond Circle
Ridgeside
Office Park
Umhlanga
Ridge
Durban
(Ref:
JCS/mr/Haye35375.3)
(Tel:
031 – 575 7000)
(Email:
smith@wylie.co.za)
For
the Defendant: Mr R
Mohamed
Instructed
by: Motala
& Associates
Defendant’s
Attorneys
104
Windmill Road
Musgrave
Durban
(Ref:
G Charalambus12027/16 M Motala)
(Tel:
082 726 1290)
(Email:
motalaassociates@gmail.com)