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[2024] ZAECMKHC 13
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Changing Tides 17 (Pty) Ltd N.O. v Pasiya and Others (62/2023) [2024] ZAECMKHC 13 (30 January 2024)
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IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE DIVISION, MAKHANDA
CASE
NO: 62/2023
Matter
heard on: 28 November 2023
Judgment
delivered on: 30 January 2024
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED.
In
the matter between:
CHANGING
TIDES 17 (PTY) LTD N.O.
Plaintiff
And
BUYISWA
GRACE PASIYA
Defendant
KPMG
(PTY) LTD
First
Third Party
ALLEN
FEW
Second
Third Party
JUDGMENT
SMITH
J
:
[1]
The plaintiff applies for summary judgment against the defendant in
the sum of R1 411 298.95,
compounded interest on that
amount and ancillary relief. It initially also sought an order
declaring erf 3[…], Queenstown
(the hypothecated property),
executable, but has since abandoned that relief and now only seeks an
order sounding in money.
[2]
The contractual relationship between the parties is regulated by an
intricate web of agreements,
indemnities, and securities, all
essentially aimed at protecting the interests of home loan funders.
The plaintiff is the South
African Home Loan Guarantee Trust,
represented by its trustee, Changing Tides 17 (Pty) Ltd 2001. During
2001 the plaintiff entered
into a Common Terms Guarantee Agreement
(the CTGA) with Blue Banner Securitization Vehicle RCI (Pty) Ltd (the
lender) in terms
of which the lender would provide loans to consumers
in South Africa against security of immovable property. The plaintiff
would
also guarantee the consumer’s obligations to the lender
in terms of home loans agreements. Home loans to consumers would be
secured by indemnity bonds registered against immovable property.
[3]
The CTGA furthermore provides that home loan agreements must provide
that the plaintiff agrees,
as guarantor, on terms and conditions set
out in the CTGA, to guarantee the consumer’s obligations to the
lender under the
home loan agreement. Consumers would also indemnify
the plaintiff and allow the registration of an indemnity bond over
the immovable
property in its favour. If the lender calls upon the
plaintiff to make payment in terms of a guarantee, the plaintiff must
assign
to the lender or its nominee all its right, title, and
interest in the relevant indemnity and the indemnity bond.
[4]
If the plaintiff is unable to assign the indemnity bond to the lender
or to procure registration
of such assignment in the Deeds Office
within a period determined by the lender, the latter may require the
plaintiff to institute
legal proceedings against the consumer and
foreclose on the indemnity bond.
[5]
The lender and the defendant concluded a home loan agreement on 20
September 2006 and on the same
day the plaintiff and defendant
entered into an indemnity agreement. In terms of the latter agreement
the defendant unconditionally
indemnified the plaintiff, inter alia,
from any loss, cost, claim, expense, or liability incurred by the
plaintiff as a result
of the defendant failing to perform any of her
contractual obligations in terms of the housing loan.
[6]
On 21 September 2006, the plaintiff issued a written guarantee in
favour of the lender and an
indemnity bond was duly registered over
the mortgaged property on 23 March 2007.
[7]
It is not disputed that the defendant fell in arrears with the
monthly payments and the lender
consequently called upon the
plaintiff to assign all it rights, title, and interest in the
indemnity bond. When the plaintiff failed
to do so timeously and
having received indemnity from the lender in respect of its costs and
expenses, the plaintiff instituted
legal proceedings for foreclosure
on the indemnity bond. It is also common cause that the plaintiff has
complied with all the relevant
provisions of the
National Credit Act,
34 of 2005
.
[8]
The defendant has filed third party notices against KPMG (Pty) Ltd
and the curator, Mr Allen Few.
However, their involvement in the
matter has no bearing on the issues that fall for decision in the
summary judgement application.
[9]
The defendant opposes the application on two grounds, namely that (a)
the plaintiff took a further
procedural step by filing an exception
to her plea and counter-claim. It is accordingly deemed to have
abandoned the application
and is consequently precluded from applying
for summary judgement; and (b) the plaintiff owed it a duty of care
to ensure that
the curator continued with monthly payments when the
mortgaged property was seized in terms of the provisions of the
Prevention
of Organized Crime Act 121 of 1998 (the POCA). Its failure
to do so has caused her to suffer damages in respect of which she has
a counter-claim against the plaintiff for an amount equal to the
arrears.
[10]
The defendant initially also raised the defence of res judicata but -
apparently realizing that the point
was without any merit -
understandably did not pursue it during argument.
[11]
In my view the first ground can also be dismissed out of hand. After
the defendant delivered her plea
and counter-claim on 18 April 2023,
the plaintiff filed its application for summary judgment on 12 May
2023, without having taken
any further procedural steps. It filed an
exception to the defendant’s plea and counter-claim on 16 May
2023, but subsequently
withdrew it on 31 July 2023, tendering to pay
the defendant’s wasted costs. There were accordingly no legal
obstacles preventing
the plaintiff from applying for summary
judgment.
[12]
The only question that therefore remains for consideration is whether
the defendant has averred facts which,
if proved at a trial in due
course, will find a cause of action for a counter-claim against the
plaintiff or constitute a valid
defence to the plaintiff’s
claim. In this regard the defendant asserts that after the
hypothecated property was seized in
terms of the provisions of the
POCA on 30 October 2008, the court appointed curator, who had taken
control of the property, failed
to ensure that monthly payments are
maintained in terms of the home loan agreement, thereby allowing the
bond to fall into arrears.
The plaintiff owed her a duty of care to
ensure that its (and the lender’s) interest in the property was
protected and to
take reasonable steps to compel the curator to
maintain regular monthly payments. Had the plaintiff not breached its
duty of care,
the loan would not have fallen into arrears and the
lender would not have called upon it to make good on its guarantee.
As a consequence
of the plaintiff’s negligent breach of the
duty of care she has suffered damages in an amount equal to the sum
of the arrears.
[13]
The defendant’s claim is thus delictual in nature and founded
on the principles of the
Lex Aquilia.
Since she relies on an
actionable omission, she must establish wrongfulness by averring
facts which found a legal duty of care
that had been breached by
omission. She was accordingly required to show the nature of the
alleged duty of care. (
SAR&H v Marais
1950 (4) 610 (A))
[14]
It is established law that negligent causation of pure economic loss
is not prima facie wrongful. Wrongfulness
will depend on whether
public policy and constitutional norms require the imposition of a
duty of care, the breach of which would
attract legal liability for
the resulting damages. (
Fourways Haulage SA (Pty) Ltd v SA
National Roads Agency
[2008] ZASCA 134
;
2009 (2) SA 150
(SCA)) A bald assertion
regarding the existence of a duty of care is not sufficient, and it
is incumbent on the person seeking
to rely on it to aver facts that
establish the legal basis and nature of the contended duty.
[15]
While the facts averred by the defendant in her plea and
counter-claim may well establish some basis for
a claim against the
curator, she has failed to set out any facts that could establish the
nature of the duty of care which the
plaintiff allegedly owes her.
First, the terms of the indemnity agreement and the indemnity bond
concluded by the plaintiff and
defendant exclude a claim based on
delict; second, the plaintiff is not a party to the home loan
agreement concluded by the defendant
and the lender; and third,
despite the seizure of the hypothecated property in terms of the
POCA, she never lost ownership and
was accordingly not absolved from
her contractual obligations towards the lender.
[16]
To my mind, the facts averred by the defendant in her plea and
counter-claim do not support her assertion
that the plaintiff owed
her a duty of care. She has consequently failed to establish that she
has a bona fide and valid defence
to the plaintiff’s claim,
neither has she established a cause of action for her contended
counter-claim. The application
for summary judgment must therefore
succeed.
[17]
In the result there is summary judgment for the plaintiff in the
following terms:
1.
Payment of the sum of R1 411 298.95;
2.
Interest on the aforesaid sum at the rate of 7.9% per annum,
compounded monthly in arrears from 3 November
2022 to date of
payment;
3.
Costs of suit on the attorney and client scale.
JE
SMITH
JUDGE
OF THE HIGH COURT
Appearances:
Counsel
for Plaintiff:
Adv
P.I. Oosthuizen
Attorneys
for Plaintiff:
Carinus
Jagga Inc.
67
African Street
Makhanda
Counsel
for Defendant:
Adv G
Richards
Attorneys
for Defendant:
Shenxane
Inc
39
New Street
Makhanda