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[2023] ZAFSHC 13
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SB Guarantee Company (RF) Proprietary v Mahlangu (3979/2020) [2023] ZAFSHC 13 (23 January 2023)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No: 3979/2020
Reportable:
NO
Of
Interest to other Judges: NO
Circulate
to Magistrates: NO
In
the matter between:
SB
GUARANTEE COMPANY (RF) PROPRIETARY
Plaintiff
and
PETER
MAHLANGU
Defendant
(Identity
No: [....])
HEARD
ON:
27 October 2022
JUDGMENT
BY
:
MHLAMBI,
J
DELIVERED
ON:
This judgment was handed down
electronically by circulation to the parties’ legal
representatives by email and released to
SAFLI. The date and time for
the hand-down are deemed to be 12h30 on 23 January 2023.
[1]
This is an opposed application for summary judgment against the
defendant for the
payment of R 1 109 875.01. The cause of
action arose from an alleged breach by the defendant of the terms and
conditions
of a home loan agreement between the Standard Bank of
South Africa and the defendant, concluded on/or about 28 September
2017.
[2]
The defendant’s breach is stated as follows in the particulars
of claim:
“
23.
The Defendant, in breach of the terms and conditions of the Loan
Agreement (annexure POC 1), have failed to pay
the monthly
instalments due in terms thereof, which breach was material.
24.
On 10 and 29 September 2020 respectively, the bank caused a letter of
default and notice in terms of section
129 (1) (as read with section
130) of the National Credit Act (“the Default Notice”) to
be sent to the defendant’s
domicilium, mortgaged property and
residential address, informing the Defendant that, inter alia:
24.1
The Defendant had failed to make payment of the full monthly
instalment amounts
due under the Loan Agreement and was consequently
in breach of the Loan Agreement;
24.2
The Defendant were(sic) required to remedy his breach of the Loan
Agreement
by making payment of the arrears and all overdue amounts
under the Loan Agreement to the Bank (“arrears”);
24.3
Should the Defendant fail to remedy his breach of the Loan Agreement
and pay
the arrears, the Bank would be entitled inter alia, to cancel
the Loan Agreement and/or to recover from the Defendant the full
balance outstanding under the Loan Agreement together with interest
on the outstanding balance to date of final payment, as well
as any
and all legal costs and other reasonable costs incurred by the Bank
in enforcing its rights under the Loan Agreement and
recovering any
amount due and/or payable by the Defendant in terms of the Loan
Agreement.
25.
Notwithstanding the Default Notice, the defendant has failed and/or
refused and/or neglected to make payment
of the amount as set out in
the default notice.
26.
On or about
15 June 2018
the bank notified the defendant inter
alia that;
26.1
The Defendant was in breach of the Loan Agreement;
26.2
The Plaintiff was forthwith required to discharge all of its
obligations to
the Bank in terms of the Plaintiff’s guarantee,
by promptly proceeding in a competent court against the Defendant,
under
the indemnity, by calling up and foreclosing on the mortgage
bond and enforcing such other remedies as were available to the
Plaintiff
at law.
27.
A copy of the bank’s notification is annexed hereto marked
“
PoC6
”.
28.
Accordingly, on or about
15 June
2018
the Plaintiff sent a demand
for payment in terms of the indemnity to the Defendant requiring the
Defendant to pay the full amount
so
due
and payable forthwith (“
the
Plaintiff’s demand
”
).
A copy of the plaintiff’s demand is annexed here to marked
“PoC7”.
29.
Notwithstanding the Plaintiff’s demand, the Defendant has
failed and/or refused and/or neglected to
make payment of the amount
as set out in the Plaintiff’s demand, and the Plaintiff is
accordingly entitled to claim the total
of all amount owing by the
Defendant to the Plaintiff.
30.
The Defendant is presently indebted to the Bank under the Loan
Agreement, and therefore to the Plaintiff under
the indemnity, in the
amount of
R 1 109 875.01 (One million one hundred and
nine thousands and eight hundred and seventy-five and one cent
),
being the balance of the total Principal Debt, together with interest
at the rate of 8.23% per annum from 03 October 2020 to
date of
payment, as reflected on the certificate of balance annexed hereto
marked “PoC8”.”
[3]
On an analysis of the above particulars of claim, it is evident that
the plaintiff’s
claim is premised on the defendant being
indebted to the bank as at 03 October 2020 in the amount of R
1 109 875.01,
and therefore to the plaintiff in the same
amount under the indemnity agreement. The indemnity agreement
[1]
states amongst others the following:
3.1
The guarantor has provided or will provide a guarantee in favour of
the bank in terms of which the guarantor
guarantees to the bank the
fulfilment of the obligations of the borrower in terms of the loan
agreement subject to the terms and
conditions of such guarantee. As
security for among others the borrower’s indebtedness to the
guarantor in terms of this
indemnity, the borrower registered the
mortgage bond in favour of the guarantor.
[2]
3.2
The borrower acknowledges and agrees that the bank may, in terms of
the loan agreement, cede and/or delegate
(that is, transfer) any or
all of its rights and obligations under the loan agreement to any
person. If the bank seeds and/or delegates
any or all of the rights
and obligations under the loan agreement to a transferee, and a
guarantee is given to the transferee,
the parties acknowledge and
agree that the guarantor shall, if and event of the fault
occurs-exercise its rights in terms of this
indemnity against the
borrower in respect of any claims made against the guarantor by the
transferee in accordance with the terms
of the guarantee; realise the
security under the security agreements, if necessary; and pay the
transferee, in accordance with
the guarantee given to it, the amount
of its claim.
[3]
3.3
The borrower acknowledges and agrees that if in terms of the
guarantee given to the bank or the transferee,
the bank or the
transferee lodges or makes a claim against the guarantor, or the
guarantor becomes liable to pay any amount to
the bank or the
transferee, the borrower shall immediately be liable to the guarantor
in terms of this indemnity for the amount
for which the guarantor is
liable under the guarantee.
[4]
[4]
It is therefore clear that if the bank makes a claim against the
plaintiff or the
plaintiff, as guarantor, becomes liable to pay any
amount to the bank, the defendant, as the borrower, shall immediately
be liable
to the plaintiff in terms of the indemnity for the amount
for which the plaintiff is liable under the guarantee.
[5]
Ms Elsie Wall, employed as a Manager, Defended Legal, Consumer and
High Net Worth
Credit, The Standard Bank of South Africa Limited with
registered offices at 5 Simmonds Street Johannesburg, Gauteng, stated
that
she was duly authorised by the resolution of the board of
directors of the applicant, which was passed on 13 April 2022 and by
a letter of authority issued by the bank, to depose to this affidavit
on behalf of the applicant and represent the applicant in
these
proceedings.
[5]
In the ordinary
course of her duties and having regard to the applicant’s files
and records in her possession and control,
she read the respondent’s
special plea and plea and confirmed that the defences, as pleaded,
did not raise any issue for
trial.
[6]
The respondent’s special plea was based on an averment that the
respondent had fallen into arrears with his payment obligations
in
2018 which he had subsequently remedied in June 2019, causing the
applicant’s cause of action to fall way.
[7]
[6]
She stated that the applicant’s cause of action was not based
on the respondent’s
initial breach from 2018, but was instead
based on the respondent’s subsequent and consistent breach of
the agreement from
September 2019, which breach still subsisted.
[8]
From August 2019 to September 2022, the respondent made no payments
towards the accounts. All debit orders levied against the
respondent’s account were reversed.
[9]
[7]
The affidavit of Ms Wall (who is an employee of the Standard Bank),
is clear that
the action against the defendant by the plaintiff is
not based on the 2018 breach, but on the 2019 breach from September
onwards.
The bank, of its own volition, pursued steps against the
defendant and sent a default notice to him which was apparently
ignored.
The demand entitled the bank, and not the plaintiff, to
institute further legal steps against the defendant for his breach of
the
home loan agreement. Because the defendant ignored this demand,
the plaintiff fell back on the notices issued in 2018, which were
attached to the particulars of claim as POC6 and 7,
[10]
as constituting the plaintiff’s demand to entitle it to claim
against the defendant.
[8]
The bank’s written notification that the defendant was in
breach of the loan
agreement
[11]
reads as follows:
“
We
hereby notify you that the borrower is in breach of the home loan
agreement by failing to pay the monthly instalments since 2018/01/02.
Pursuant to the breach by the borrower of the home loan agreement,
the amount of R 45 294.85 is due by the borrower to us.
You issued a guarantee
in our favour guaranteeing the borrower’s obligation to us
under the home loan agreement, and you are
required to proceed in any
competent court against the borrower for payment of the full amount
so due by the borrower as well as
to take steps to foreclose under
the mortgage bond and to realise any other security held.
We hereby
unconditionally indemnify you for all loss, liability, damage, claim,
cost or expense which you may incur in taking such
action.
We remind you of your
obligation to forthwith pay to us all of the proceeds you receive
from or on behalf of the borrower.”
[9]
The plaintiff’s demand dated 15 June 2018 to the defendant
[12]
reads as follows:
“
Dear
customer
1.
We refer to the indemnity agreement you signed
in favour of the SB Guarantee Company (RF) (
the
Guarantee Company
), when you
concluded your home loan agreement with Standard Bank under the above
home loan account number [....].
2.
In terms of the indemnity, you indemnified the
guarantee company from any claims which may be made against it by
Standard Bank,
under a guarantee which the guarantee company provided
to Standard Bank for the payment of your debts under the loan
agreement.
3.
You are currently indebted to Standard bank
under the loan agreement in the sum of
R
1 051 213.31.
4.
Standard bank has requested the guarantee
company to proceed against you for recovery of the amount due, and to
pay the amounts
recovered from you to Standard bank.
5.
The Guarantee Company therefore demands that
you immediately settle the amount due to it by making payment thereof
into the following
account: Standard bank Home loans (Account)
Account number [....] branch code [....] reference
[....].
Should you fail to pay
the amount due to the Guarantee Company as demanded above, the
Guarantee Company will institute legal proceedings
against you, and
will in such legal proceedings (and pursuant to the mortgage bond
registered in favour of the guarantee company
over your property)
seek an order declaring your property specially executable.
[10]
The request to the plaintiff by the bank was two-fold: Proceed in any
competent court against
the defendant for the payment of the full
amount so due and to take steps to foreclose under the mortgage bond.
On consideration
of these two letters of 15 June 2018, it would seem
that the plaintiff was of the view that the amount due was R 1
051 213.31
[13]
which had
to be recovered from the defendant for onward transmission to the
bank.
[14]
Should the defendant
fail to pay the amount due to the plaintiff as the guarantee company,
legal steps would be taken for the recovery
thereof. Nowhere in the
letter was it mentioned that the defendant was in arrears in the
amount of R 45 294.85, which was
due and payable; on receipt of
which it would be paid to the bank forthwith.
[11]
The demand notice speaks of R1 051 213.31 and not of
R1 109 875.01 as indicated
in the particulars of claim. The
particulars of claim stated that the defendant failed to pay the
amount as set out in the plaintiff’s
demand, which failure
entitled the plaintiff to claim the total of all amounts owing by the
defendant to the plaintiff.
[15]
This information is inaccurate and confusing.
[12]
In his answering affidavit, the respondent stated that he was, as of
19 June 2019, up to date
with his payments under the home loan
agreement and that the applicant had not in its particulars of claim,
alleged a new breach
that could sustain a cause of action as stated
in his plea and special plea. If the applicant’s action was not
based on the
2018 breach, then the applicant had not alleged in his
particulars of claim that it received a new notice from the bank
after June
2019, alleging a breach of the home loan agreement and
instructing the applicant to institute action against him. That was
the
only way under the common terms agreement, the mortgage bond and
the indemnity agreement that the applicant would acquire a right
of
action or a cause of action against him.
[16]
This constituted a triable issue especially when viewed in the light
that the applicant admitted that its cause of action did not
arise in
2018 but only in September 2019. As of June 2019, the home loan
account was up to date and the applicant could not issue
summons as
at that date.
[17]
[13]
In his special plea, the defendant pleaded that the demand
notice
[18]
was sent to an old
address when the plaintiff fully knew at the time, that he resided on
the property that is the subject matter
of this case. He admitted
that he was in arrears in 2018. He negotiated with the bank and paid
an amount of R48 000.00 in
March 2019 and cleared all arrears on
18 June 2019 when he made a payment of R95 600.00 as advised. He
pleaded that the plaintiff
did not have a cause of action against the
defendant as the breach of 2018 had been cured. The plaintiff, in
order to institute
an action against him, had to receive a notice
from the bank for any subsequent breach of the home loan agreement by
him.
[19]
[14]
As succinctly set out by Mr Mazibuko on behalf of the applicant, the
central issue is whether
the plaintiff has a right of action against
the defendant at this stage.
[15]
He submitted that on 15 June 2018,
[20]
the bank notified the plaintiff that the defendant was in breach of
the loan agreement by failing to pay the monthly instalments
since
2018/01/02 and that the amount due by the defendant was R 45 294.85.
As the plaintiff had issued the guarantee in favour
of the bank, he
was required to proceed in any competent court against the defendant
for payment of the full amount so due by the
defendant as well as to
take steps to foreclose under the mortgage bond and to realise any
other security held. Mr Mazibuko argued
and stated in his heads that
the plaintiff demanded payment from the defendant of the amount of R
1 051 213.31 and notified
the defendant that legal
proceedings will be instituted if such an amount was not paid. By
virtue of the notice given to the plaintiff
by the bank on 15 June
2018, the plaintiff’s right of action became perfected.
[16]
Mr Mazibuko contended that the defendant’s contention that the
plaintiff could not rely
on that notification given by the bank to it
in June 2018 to claim amounts arising out of his breach of the
agreement which occurred
after the 2018 breach, was misguided as the
plaintiff assumed the right of action in June 2018 when it was
notified of the plaintiff’s
breach by the bank. The judgment of
SB
Guarantee Company (RF) (Pty) Ltd vs. Bloemfontein Celtic Football
Club (Pty) Ltd,
[21]
on
which the defendant relied, did not assist the defendant. The facts
in that case were distinguishable to the present matter.
In contrast,
there was no evidence on the papers in that matter to show that the
bank had notified SB Guarantee in writing that
it should make
payments to it, owing to the debtor’s breach of the home loan
agreement. The court concluded as follows in
that case:
“
in
the absence of the required written demand for payment, in particular
that the Plaintiff has not shown that Standard Bank notified
the
Plaintiff in writing to make any payments, it cannot be found that
the Defendant is liable towards Plaintiff and in effect,
that as
correctly pointed out by Mr Reinders, assisted by Mr Greyling on
behalf of the Defendant, the amount as claimed or any
other amount is
due and payable by the Defendant toward Plaintiff. For that reason,
the application for summary judgment cannot
succeed the Defendant
does have a bona fide defence to Plaintiff’s claim”
[22]
[17]
Mr Mazibuko submitted that the plaintiff’s right of action
originated from the following
agreements: the loan agreement which
was subject to the provision of a guarantee to the bank in terms of
which the plaintiff agreed
to pay the amount owing in terms of the
loan agreement; the indemnity agreement which indemnified the
plaintiff against any claim
by the bank under the guarantee; the
covering continuing mortgage bond over the immovable property in
favour of the plaintiff,
and the common terms agreement concluded
between the bank and the plaintiff.
[18]
The common terms guarantee agreement stipulates amongst others that:
1.
In consideration for each debtor granting the indemnity and the
mortgage bond to the guarantor,
and with effect from the date of
registration of the relevant mortgage bond granted by each debtor to
the guarantor over the property
purchased by that debtor pursuant to
the home loan agreement, the guarantor guarantees, subject to the
terms and conditions of
the common term agreement, the due and
punctual payment of all sums now and subsequently due by each debtor
to the creditor pursuant
to each debtor’s individual home loan
agreement, which guarantees the creditor accepts.
[23]
2.
If the creditor (the bank) gives written notice to the guarantor that
and an individual debtor
has breached any of its obligations under
its relevant home loan agreement, then the guarantor shall forthwith
discharge all of
its obligations to the creditor in terms of the
relevant guarantee by complying with its obligations in clause
4.1.
[24]
The written notice to
the guarantor shall contain written details of the breach, the
identity of the defaulting debtor, and the
full amount owing by the
relevant debtor to the creditor under the relevant home loan
agreement, provided that on receipt of such
notice the guarantor
shall be obliged to forthwith discharge all of its obligations to the
creditor and assume that such notification
is true and correct in
every respect.
[25]
3.
The creditor shall not be obliged, before exercising any of its
rights under this common
terms agreement and or any guarantee to make
any demand or take any action or obtain judgment in any court against
the debtor or
make or file any claim in the winding up, the solution,
sequestration, administration, business rescue or curatorship of the
debtor.
[26]
[19]
Was the plaintiff’s right of action perfected by the notice
delivered on 15 June 2018? The answer,
in my view, is in the
negative. As of 19 June 2019, the defendant was not in arrears with
his payment as confirmed by Ms Elsie
Wall. The bank, though not
obliged in terms of the common terms agreement, initiated recovery
steps on 8 September 2020 against
the defendant in accordance with
the provisions of the National Credit Act. This step was necessitated
by the defendant’s
breach of the loan agreement. Were there no
breach of the home loan agreement, neither the defendant nor the
plaintiff would have
been liable to the bank under the contracts
between the parties.
[20]
The bank, on 8 September 2020, may have chosen not to send a demand
notice to the defendant.
Instead, it may have relied on the guarantee
given by the plaintiff and notified the plaintiff in writing to make
any payments
to it. The plaintiff, if so required, would have
proceeded against the defendant under the indemnity.
[27]
The plaintiff’s action against the defendant could only be
triggered by a written notification by the bank to the plaintiff.
No
such written notification was made by the bank to the plaintiff to
show that the defendant was in arrears in the amount of R
157 329.14
as of 3 October 2020
[28]
or
any other period after 19 June 2019.
[21]
The common terms agreement provides that each guarantee is a
continuing security and shall remain
in force notwithstanding any
fluctuation in or extinction for any period whatsoever of any amounts
owing to the bank by the defendant
or any intermediate payment of any
such debts. This agreement and each guarantee shall continue to apply
to the remaining balance
of the amounts owing to the bank by the
defendant until such amounts have been finally, unconditionally- and
irrevocably extinguished
in full.
[29]
[22]
Having considered the above, I am in agreement with the decision
in
SB Guarantee
[30]
and conclude that in the absence of a written notification to the
plaintiff to make payments, the defendant cannot be held liable
towards the plaintiff. The summary judgment application cannot
succeed as I find that the defendant has a bona fide defence to
the
plaintiff’s claim.
[23]
I therefore make the following order:
Order:
1. The application for
summary judgment is dismissed.
2. Leave is granted to
the defendant to defend the action.
3. Costs will be costs in
the main action.
MHLAMBI,
J
On
behalf of the plaintiff:
Adv. MS Mazibuko
Instructed
by:
Honey Attorneys
Honey
Chambers
Northridge
Mall
Kenneth
Kaunda Road
Bloemfontein
On
behalf of the respondent: Mr
Peter Mahlangu
Instructed
by:
In Person
57
Karas Avenue
Roodia
Sasolburg
[1]
Page 72 of the indexed
papers.
[2]
Clause 2.2 of the
indemnity agreement.
[3]
Clause 2.4 of the
indemnity agreement.
[4]
Clause 3.2 of the
indemnity agreement.
[5]
Paragraphs 1.4 and 1.2
of the affidavit in support of the application for summary judgment.
[6]
Paragraph 4 of the
affidavit in support of the application for summary judgment.
[7]
Paragraph 5.1 and 5.2 of
the affidavit in support of the application for summary judgment.
[8]
Paragraph 6.1 of the
affidavit in support of the application for summary judgment.
[9]
Paragraph 6.3 of the
affidavit in support of the application for summary judgment.
[10]
Paragraphs 27 and 28 of
the Particulars of Claim.
[11]
PoC6
d
ated
15 June 2018.
[12]
POC7
on page 103 of the Indexed Papers.
[13]
Clause 3 of POC7.
[14]
Clause 4 of POC7.
[15]
Paragraph 29 of the
particulars of claim.
[16]
Paragraph 11 of the
Answering Affidavit.
[17]
Paragraph 14 and 16 of
the Answering Affidavit.
[18]
Poc7.
[19]
Paragraph 8 of the
defendant’s plea.
[20]
POC6 on page 102 of the
Indexed Papers.
[21]
[2021] ZAFSHC 166
[22]
Paragraph 38 of the
judgment.
[23]
Clause 3.1 of the
Agreement; Paragraph 18.1 of the Particulars of Claim.
[24]
Clause 5.1 of the
Agreement; Paragraph 18.7 of the Particulars of Claim.
[25]
Clause 5.2 of the
Agreement; Paragraph 18.8 of the Particulars of Claim.
[26]
Paragraph 5.4 of the
Agreement.
[27]
Clause 4.1 of the Common
Terms Guarantee Agreement.
[28]
Paragraph 34.6 of the
particulars of claim.
[29]
Clause 11.2 of the
Common Terms Guarantee Agreement.
[30]
Supra.