About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2023
>>
[2023] ZAFSHC 316
|
|
Moloi v Firstrand Bank Limited t/a First National Bank and Others (2073/2019) [2023] ZAFSHC 316 (8 August 2023)
IN THE HIGH COURT
OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Case No.: 2073/2019
REPORTABLE: YES/NO
OF
INTEREST TO OTHER JUDGES: YES/NO
CIRCULATE
TO MAGISTRATES: YES/NO
In
the matter between:
KEABETSWE
SUZAN MOLOI
Applicant
and
FIRSTRAND
BANK LIMITED t/a
1
st
Respondent
FIRST
NATIONAL BANK
JOFANI
DISTRIBUTORS CC
2
nd
Respondent
FANI
PETROS MOLOI
3
RD
Respondent
CORAM:
VAN
RHYN, J
HEARD ON:
4 AUGUST 2023
DELIVERED ON:
8 AUGUST 2023
[1]
This is an
application by Mrs. K S Moloi, (the “applicant”) for
leave to appeal against
the
judgment by Khooe, AJ, delivered on 17 April 2023. The application
for leave to appeal is opposed by FirstRand Bank Limited t/a
First
National Bank, the first respondent.
[2]
A directive was issued that the
parties are to submit Heads of Argument in respect of the application
for leave to appeal. Heads
of Argument on behalf of the applicant was
filed on 31 July 2023 and Heads of Argument on behalf first
respondent on 2 August 2023.
[3]
The salient facts are as follows: During May 2019 the first
respondent instituted action (as the
plaintiff in the main action),
against the second respondent, Jofani Distributors CC (“Jofani
Distributors”) as first
defendant and Mr. F P Moloi as the
second defendant. Mr. Moloi is cited as the third respondent.
The first respondent’s
claim was based upon a written loan
agreement and a written facility agreement concluded with Jofani
Distributors and four (4)
written deeds of suretyship, annexures PC5,
PC6, PC7 and PC8, appended to the summons. The four (4) suretyship
agreements are signed
by Mr. Moloi.
[4]
In terms of the aforesaid deeds of suretyship, Mr. Moloi bound
himself in favour of Jofani Distributors
as surety
in solidum
and as co-principal debtor, jointly and severally with Jofani
Distributors, for due payment of the monies owed by Jofani
Distributors
to the first respondent.
[5]
The first respondent applied for judgment by default against Jofani
Distributors and Mr. Moloi
subsequent to the failure by these
respondents to enter appearances to defend the main action.
[6]
It is common cause that the applicant was not cited as a party to the
main action and that, as
such the summons was not served upon her.
Default judgment, in terms of the provisions of Rule 31(5), was
granted against
Jofani Distributors and Mr. Moloi jointly and
severally, the one to pay the other to be absolved in the sum of
R126 961.42
(claim 1) and in the amount of R1 264 366.55
(claim2) with interest and costs on 17 October 2019.
[7]
On 15 September 2022 the applicant applied for an order rescinding
the judgment by default against
Mr. Moloi. It is furthermore
common cause that the applicant is married in community of property
to Mr. Moloi. It is
against the refusal to rescind the default
judgment that the applicant now seeks leave to appeal.
[8]
The grounds for the application for leave to appeal are set out in
the application for leave to
appeal and can concisely be summarized
as follows:
8.1. the court
a
quo
lost sight of the accessory nature of the suretyship
agreements concluded between the first respondent and Mr. Moloi and
erred
in finding that
annexures PC7 and PC8
clearly state that the sureties were given by Mr. Moloi in the
ordinary course of his trade and business
with the result that
consent of the applicant was not required;
8.2.
The court
a quo
erred in finding that two of the
suretyship agreements are valid even though they were signed by Mr.
Moloi and not by both the
applicant and Mr. Moloi;
8.3
The court
a quo
erred in finding that the applicant provided
consent to Mr. Moloi to enter into the suretyship agreements without
written proof
of such consent;
8.4
The court
a quo
erred by not finding that annexures PC5 and PC
6 bear no relevance to the matter at hand;
8.5
The court
a quo
erred in not finding that, on the basis that
Mr. Moloi and the applicant are married in community of property, the
applicant should
have been joined as a party in the main action;
8.6
The court
a
quo
erred in finding that section 17(5) of the Matrimonial Property
Act
[1]
(the “MPA”)
is applicable to the facts of this matter.
[9]
In her application for rescission of the default judgment, the
applicant alleged that default
judgment was granted erroneously by
the court on 17 October 2019. Applicant relied upon the provisions of
Rule 42(1)(a) for her
application for rescission. Mr. Phalatsi,
appearing on behalf of the applicant, argued that on the basis that
the applicant and
Mr. Moloi are married in community of property, the
action should have been instituted against both spouses unless
section 17(5)
of the MPA is applicable.
[10]
On behalf of the applicant it is argued that the 3 jurisdictional
facts for Rule 42(1)(a) to find application
have been established:
namely the default judgment was “erroneously granted” as
she was not cited as a party. Secondly,
it was granted in her
absence, and thirdly, the applicant is affected by the judgment for
purposes of Rule 42(1)(a). Mr. Phalatsi
contends that it is not
necessary for the applicant to raise anything further apart from the
above mentioned 3 jurisdictional facts.
It is therefore not necessary
for the applicant to indicate what her defence to the first
respondent’s claim is as same will
be revealed during the
trial. Taking into consideration the abolition of marital power and
the grave consequences of the judgment
against Mr. Moloi, the
applicant now faces the possibility of losing her 50% ownership in
the communal home without having the
right to present her grievances
to court.
[11]
The loan agreement in respect of claim 1 was concluded on 5 April
2016 between the first respondent and Jofani
Distributors. Mr. Moloi
in his capacity as the sole member of Jofani Distributors acted on
its behalf. On 18 June 2018 the first
respondent and Jofani
Distributors, again represented by Mr Moloi, entered into a written
facility agreement which formed the basis
of claim 2 in the main
action.
[12]
In commercial transactions it is common for one contracting party,
such as a commercial bank, to require
from the other party to provide
personal suretyship as security for the performance of the
obligations under the agreement. Whilst
the person providing the
suretyship often have no objection to signing the suretyship
agreement in order to benefit from the underlying
contract, it often
occurs that in cases where the surety is married in community of
property, opposition comes from the other spouse.
Mr. Moloi did not
defend the action instituted by the first respondent and was not a
party in the application for rescission of
the default judgment.
[13]
The four (4) suretyship agreements appended to the main action bore
the signature of Mr. Moloi who bound
himself as said. Two (2) of the
suretyship agreements, annexure PC 5 and PC 6 furthermore were
co-signed by the applicant as the
spouse of the surety. Mr. Phalatsi
however explained that PC5 and PC6 are not in respect of Jofani
Distributors, but its predecessor
as is evident from the registration
number. In respect of annexure PC7, signed by Mr. Moloi
on 5 April 2016 as surety,
clause 37 reads as follows:
“
Marital
status – if I/we am/are married in community of property, I/we
confirm that I/we have obtained the required consent
from my/our
spouse to enter into this suretyship.”
[14]
In respect of PC8, signed by Mr Moloi on 14 April 2016, clause 37
provides as follows:
“
37
Marital Status – I/we confirm that this suretyship is given by
me/us in the ordinary course of my/our profession, trade
and that
I/we am/are involved in the management/business of the debtor. I/we
declare that if I/we am/are married in community of
property the
consent of my spouse is/are not required or the required consent has
been given.”
[15]
The marital power of a husband was abolished by the MPA resulting
that spouses married in community of property
have the same powers
regarding the disposal of assets of the joint estate, the contracting
of debts which lie against the joint
estate and the management of the
joint estate. However, the law does not provide free reign to any
spouse acting on his own and
imposes limitations where the well-being
of the joint estate is involved. Section 15(2)(h) of the MPA
specifically provides that
a person married in community of property
may not, without the written consent of the other spouse bind him- or
herself as surety.
[16]
Section 15(6) of the act however creates an exception
and allows such a spouse to sign a suretyship in the ordinary
course
of that spouse’s business, without the necessity to obtain
spousal consent. A spouse married in community of property
can
therefore be bound to a suretyship even though he/she was unaware of
the dealings of his/her spouse or disagreed.
[17]
In
Strydom
v Engen Petroleum Limited
[2]
the Supreme Court of Appeal dispelled any doubt on the interpretation
of section 15(2)(h) of the MPA read with section 15(6) as
to when a
spouse will be bound to a suretyship. The facts in the
Strydom
v Engen
-
case are as follows: Mr. Strydom, who was a director of a company,
signed an unlimited personal suretyship in favour of Engen
for the
debts of the company to Engen. The company was later liquidated.
Engen obtained judgment against Mr. Strydom in the High
Court based
on the suretyship. Mr. Strydom appealed the judgment to the Supreme
Court of Appeal on the basis that he was married
in community of
property and his wife had refused her consent to him signing the
suretyship. The appeal was unsuccessful, the Supreme
Court of Appeal
concluding that Mr. Strydom was a director of the company and worked
at the very core of the business. He was unable
to show that the
suretyship was not executed in the ordinary course of his business,
trade or profession at the company and that
section 15(6) did not
apply. In other words, the suretyship was not invalid simply because
his wife had not consented to it.
[18]
Mr. Tsangarakis, counsel on behalf of the first respondent,
furthermore relied on the judgment in
Zake
v Nedcor Bank Ltd and Another
[3]
pertaining to the purpose of section 17(5) of the Matrimonial
Property Act in cases where the creditor who deals with spouses who,
unbeknown to the creditor were married in community of property after
a particular transaction was concluded. Mr. Phalatsi
submitted
that in the matter at hand the applicant and Mr. Moloi were married
on 9 September 1994, a date prior to the conclusion
of the loan
agreement, the facility agreement and the suretyship agreements. Mr.
Phalatsi therefore argued that as a result of
the marriage in
community of property the applicant should have been joined in the
main action.
[19]
However, with a few exceptions, all the liabilities of
either spouse, whether incurred before or during the marriage
and
whatever the source of the liability become the joint liability of
both spouses, that is, they fall into the community
[4]
.
During the existence of the community, a creditor can recover
his/her debts by levying execution on the assets of the joint
estate.
The applicant failed to set out any facts or evidence in her founding
affidavit in the Rule 42(1)(a) application why section
17(5) of the
MPA is not applicable to the facts of this matter.
[20]
Section 17(5) of the MPA provides that:
“
W
here
a debt is recoverable from a joint estate, the spouses who incurred
the debt or both spouses jointly may be sued therefor,
and were a
debt has been incurred for necessaries for the joint household, the
spouses may be sued jointly or severally therefor.”
This
section is intended to protect creditors against spouses who try to
avoid liability on the basis of arrangements between them
of which
creditors are unaware. It allows creditors to sue spouses
jointly and severally and in their own name without joining
the other
spouse.
[5]
[21]
I am of the view that the court
a quo
adequately dealt with
the issues raised by the applicant and the first respondent and came
to the conclusion that the order, granted
by Daffue J, was not
granted erroneously. Two (2) of the suretyship agreements were signed
by Mr Moloi (annexure PC7 and PC8) and
clearly provides that the
suretyship was given by Mr Moloi in the ordinary course of his trade,
profession or business and
that the consent of the applicant was
therefore not required. I therefore agree with the finding by Khooe,
AJ that the first respondent
was entitled to issue summons against
Jofani Distributors and Mr. Moloi only, notwithstanding the fact that
Mr. Moloi is married
in community of property to the applicant.
[22]
The
legislation dealing with the circumstances upon which leave to appeal
may be granted is set out
in
section 17
(
2
a2a2a">
1)
of the
Superior Courts Act 10 of 2013
which provides as follows:
"
Leave
to appeal may
only
be given
where
the
judge or judges concerned are
of
the
opinion
that-
(a)(i)
the appeal
would
have a
reasonable
prospect of
success
;
or
(ii)
there
is
some
other
compelling
reason why the
appeal
should be heard
,
including
conflicting
judgments on
the
matter
under
consideration
;
[Emphasis
added]
[23]
I
n
applications
of
this
nature,
the test which was applied previously,
was
whether
there
were
reasonable
prospects
that another court “
may
”
come
to
a
different conclusion.
[6]
What emerges from
section 17
(1)
is
that
the
threshold
to
grant a party
leave
to
appeal has been raised.
It
is
now
only granted
in
the
circumstances set out and
is
deduced
from the words
'
only
'
used
in
the
said section.
[7]
[24]
I have considered the application for default
judgment, the application in terms of the provisions of
Rule
42(1)(a)
, the judgment of Khooe AJ, the application for leave to
appeal and the submissions on behalf of the parties and
I
am of the view that the prospects of success on appeal are extremely
remote and that no realistic chance of success exists.
[25]
I therefore make the following order:
1.
The application for leave to appeal is
dismissed with costs.
VAN RHYN, J
On
behalf of the Applicant:
MR.
N W PHALATSI
Instructed
by:
N
W PHALATSI ATTORNEYS
BLOEMFONTEIN
On
behalf of the First Respondent:
ADV.
S TSANGARAKIS
Instructed
by:
SYMINGTON
DE KOK ATTORNEYS
BLOEMFONTEIN
[1]
Act
88 of 1984.
[2]
2013
(2) SA 187(SCA).
[3]
1999
(3) SA 767 (SE).
[4]
De
Wet NO v Jurgens
1970 (3) SA 38
(a) at 46 and 47.
[5]
Zake
v Nedcor Bank (supra).
[6]
Commissioner
of Inland Revenue v Tuck
1989
(4)
SA
888
(T)
at
890.
[7]
The
Mont Chevaux Trust v Tina Goosen &
18
Others
2014 JDR 2325
(LCC)
at
para
[6].