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2024
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[2024] ZAFSHC 100
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Nathane v Khoatso (4643/2023) [2024] ZAFSHC 100 (4 April 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable:
YES/NO
Of
Interest to other Judges: YES/NO
Circulate
to Magistrates: YES/NO
Case
no: 4643/2023
In
the matter between:
RAMOSTHEDI
NATHANE
Plaintiff/Applicant
and
LEBATA
KHAOTSO
Defendant/Respondent
CORAM:
HEFER AJ
HEARD
ON:
8 FEBRUARY 2024
DELIVERED
ON:
4 APRIL 2024
[1]
The maxim
ex turpi causa non oritur actio
prohibits the
enforcement of immoral or illegal contracts.
[2]
The maxim
in pari delicto potior est condictio defendentis
,
curtails the right of delinquents to avoid the consequences of their
performance or past performance of such contracts.
[3]
The
par
delictum
maxim has not in modern systems of law been universally invoked to
defeat every claim by one of two delinquents to recover what
he has
delivered under an illegal contract.
[1]
[4]
In the
Jajbhay v Cassim
-matter, Stratford CJ in principle held
that the “
public policy”
factor is to play a role
in the enforcement of illegal contracts in subsequent claims for
recovering of something delivered under
such contract (
a
restitutio in integrum
).
[5]
In this latter regard Stratford CJ, stated as follows:
“
... the rule
expressed in the maxim in
pari
delictio potior condictio defendentis
,
is not one that can or ought to be applied in all cases that is
subject to exceptions which in each case must be found to exist
only
in regard to the principle of public policy.”
[2]
[6]
The Learned Chief Justice further remark that:
“
Public policy
should properly take into account the doing of simple justice between
man and man”,
[3]
and further:
“…
a court
of law might well decide in favour of doing justice between the
individuals concerned and so prevent unjust enrichment”.
[4]
[7]
With the above remarks in mind, I now turn to the facts in the
present matter in this opposed
application for summary judgment.
[8]
Plaintiff’s claim is based on a written loan agreement in terms
of which Plaintiff loaned
an amount of R3,000,000.00 to the
Defendant, which amount to incur interests in the amount of a further
R3,000,000.00.
[9]
It is common cause that Defendant made repayments to Plaintiff in the
total amount of R1,400,000.00,
the balance of R1,600,000.00 now being
claimed by the Plaintiff.
[10]
It is further common cause, that whereas the agreement between the
parties constitute a credit agreement
in terms of the National Credit
Act 34 of 2005 (“
the NCA”
), Plaintiff was required
in terms of Section 40(1) and (2) thereof, to be registered as a
credit provider to conclude the credit
agreement and extend the loan.
The Plaintiff was not registered as such.
[11]
It is not disputed that a credit agreement entered into by a credit
provider who is required to be registered
in terms of Section 40(1)
of the NCA but who is not so registered, is an unlawful agreement and
void to the extent as provided
for in Section 89 of the NCA.
[12]
Defendant’s defence as contained in his plea is firstly that he
was and still is not liable to make
any payments or further payments
in light of the fact that the credit agreement constitutes an
unlawful agreement which is void
and that the Plaintiff knew that he
did not comply with the peremptory requirements in terms of the NCA
to provide credit, the
latter fact being denied by the Plaintiff.
[13]
Secondly, according to the Defendant’s plea, whereas the
Plaintiff’s claim apparently is based
on unjust enrichment, the
Plaintiff has failed to make the necessary allegations to sustain a
cause of action based on unjustified
enrichment.
[14]
The Defendant then also denies that the amount of R1,600,000.00 is
payable on any basis
“…
as an
acquaintance of the Plaintiff, whom the Plaintiff owns an amount of
R7,000,000.00, instructed Plaintiff to deduct the amount
of
R1,600,000.00 which the Plaintiff alleged to be due to him by the
Defendant from the amounts the Plaintiff owes his acquaintance”.
The Defendant’s
liability towards Plaintiff had therefore been expunged, according to
the Defendant.
[15]
In opposition to the application for summary judgment, the Defendant
contends that the Plaintiff’s
claim, with reference to Rule
32(9)(a) clearly falls outside the provisions of Rule 32(1) and that
the Defendant does not have
an unanswerable case.
[16]
Defendant contends that he has a good defence to Plaintiff’s
claim with reference to –
(i)
In terms of the NCA, the agreement is void to the
extent provided for
in Section 89(5) and the Court should make a just and equitable
order;
(ii)
The Plaintiff has not pleaded a cause of action based
on unjustified
enrichment;
(iii)
The Plaintiff is not entitled to recover anything from the Defendant
because Plaintiff knew that he did not comply with the peremptory
requirements in terms of the NCA to provide credit; and
(iv)
The Defendant does not owe the Plaintiff the balance, because of
arrangement with the acquaintance, referred to above.
[17]
The Defendant then further contends that with reference again to the
provisions of Section 89(5) of the NCA,
the Plaintiff is not entitled
to any repayment of the loan or repayment of the outstanding balance
on several grounds, which include:
(i)
In addition to the Plaintiff not being registered
as a creditor
provider, the Plaintiff has failed to make any assessment prior to
advancing the credit to the Defendant to determine
whether the credit
would constitute reckless credit or not which would have rendered the
credit agreement unlawful in any event;
(ii)
The interest rate levied on the principal amount, contravened
the
provisions of Section 105(1) of the NCA; and
(iii)
Part of the payments made included interest.
Discussion
:
Unjustified
enrichment
:
[18]
Mr
Naidoo
appearing for the Plaintiff, referred me to several
authorities in which it was held that a party who wants to claim
restitution
of money paid in pursuance of an unlawful agreement
cannot do so under the agreement but must make use of an action based
on unjustified
enrichment.
[19]
In
National
Credit Regulator v Opperman and Others
[5]
,
the Constitutional Court confirmed that the enrichment action
relevant to a matter, as the present, is the
c
ondictio
ob turpem vel iniustam causam and that the requirements are inter
alia that ownership must have passed with the transfer
and such
transfer must have taken place in terms of an unlawful agreement.
[20]
In addition to the above, the Plaintiff must allege and prove that
the Defendant was unjustly enriched.
[6]
[21]
I am satisfied that the necessary allegations in respect of the claim
based on unjustified enrichment had
been made in the Particulars of
Claim and that any submissions to the contrary do not hold water.
Summary
judgment in enrichment actions
:
[22]
Mr
Snellenburg
SC
appearing on behalf of the Defendant, referred me to the matter of
Leech
and Others v Absa Bank Ltd
[7]
in support of his contention that summary judgment is not viable in
an enrichment action. However, that matter is distinguishable
from
the present in that in the
Leech
-matter,
with reference to the relevant enrichment actions, it was open to
plead and rely on non-enrichment as a defence and which
on the facts
in that matter needed to be proven at trial.
[23]
In the present matter however, it is common cause that the Defendant
has received the amount of R3,000,000.00
from the Plaintiff of which
only R1,400,000.00 had been repaid by the Defendant to the
Plaintiff. For more than a year prior
to the institution of the
action, the Defendant simply ceased to make any further payments in
terms of the agreement.
[24]
As to the remaining R1,600,000.00 it is Defendant’s case that
the Defendant’s purported liability
to the Plaintiff has been
expunged in that:
“…
the
acquaintance of the Plaintiff, whom the Plaintiff owes an amount of
R7,000,000.00, instructed the Plaintiff to deduct the amount
of
R1,600,000.00 allegedly to be due to him from the amount the
Plaintiff owes the acquaintance.”
[25]
It must however be considered whether the Defendant has met the
peremptory requirements of Rule 32(3)(b)
in showing that the
Defendant has a
bona fide
defence to the action and has,
through his affidavit, disclosed “
fully the nature and
grounds of the defence and the material facts relied upon therefor”
.
[26]
Long before the present amended Rule 32(3) came into operation, Milne
JP in the matter of
Caltex
Oil SA Ltd v Webb and Another
[8]
,
said as follows:
“
What is necessary,
if the Court is to refuse summary judgment under the subrule, is that
it should be satisfied that there has been
presented by the
defendant, where the defence is based on facts, all the material
facts upon which his defence is founded and that
they appear to
disclose a
bona fide
defence.”
[27]
Binns-Ward J, has had the opportunity as one of the first Courts
after the amendments to Rule 32 came into
effect during July 2019, to
consider the provisions of the “
new”
Rule, in
Tumileng
Trading CC v National Security and Fire (Pty) Ltd
[9]
.
In respect of what is required for a Defendant to meet the
requirements of Rule 32(3), he
inter
alia
said as follows:
“
However, our
procedure, by contrast, even in its amended form, remains true to
that in which summary judgment was originally introduced
in the
English civil procedure in the mid-19
th
century. Rule 32(3), which regulates what is required from a
defendant in its opposing affidavit, has been left substantively
unamended in the overhauled procedure. That means that the test
remains what it always was: has the defendant disclosed a
bona
fide
(i.e. an apparently genuinely advanced, as distinct from sham)
defence? … A defendant is not required to show that its
defence is likely to prevail. If a defendant can show that it has a
legally cognisable defence on the face of it, and that the defence
genuine or
bona
fide
,
summary judgment must be refused.”
[10]
[28]
In respect of the
bona fide
requirement, Binns-Ward J
continued as follows:
“
The assessment of
whether a defence is
bona
fide
is
made with regard to the manner in which it has been substantiated in
the opposing affidavit, viz. upon a consideration of the
extent to
which the ‘nature and grounds of the defence and the material
facts relied upon therefor’ have been canvassed
by the
deponent. That was the method by which the court traditionally
tested, insofar as it was possible on paper, whether the
defence
described by the defendant was contrived, in other words, not
bona
fide
.”
[11]
[29]
I can, with respect towards Binns-Ward J, not think of a better
description of these principles under discussion.
[30]
In the present matter, the defence raised by the Defendant in respect
of the alleged expunction of the debt
by the agreement with the
alleged acquaintance, do not however meet such requirements. It is
not supported with material facts
relating to the identity of the
acquaintance nor the date when such agreement had allegedly been
concluded. In fact, the same goes
for the Defendant’s purported
defence that part of the payments made by the Defendant to the
Plaintiff, included interests
on the main amount. The affidavit lacks
particularity in respect of both the defences as raised by the
Defendant. These facts are
not even contained in the plea filed by
the Defendant.
[31]
In that respect, the present matter is distinguishable from the
Leech
-matter in that I am not satisfied that there exists a
reasonable likelihood that the Defendant may be excused from
effecting repayment
on grounds of non-enrichment.
Section
89(5) of the NCA and the
Par Delictum
Rule
:
[32]
It is common cause that the loan agreement between the parties is not
valid due to the non-fulfilment of
the provisions of
inter alia
Section 40(1) and (2) of the NCA. The provisions of Section 89(5) of
the NCA then comes into play in terms of which the Court must
make an
order which is just and equitable, including but not limited to an
order that the agreement is void as from the date the
agreement was
entered into.
[33]
I cannot agree with Mr
Snellenburg SC
’s submission that
a Court can only make such an order after hearing evidence during
trial. It is undisputed that the balance
in the amount of
R1,600,000.00 had been received by the Defendant from the Plaintiff.
The Court is already at this stage in the
position to decide which
order is just and equitable.
[34]
Mr
Snellenburg SC
is however correct in his submission that
the Court has a wide unfettered discretion to make such an order that
is just and equitable.
[35]
In the matter of
Afrisure
and Another v Watson and Another
[12]
,
to which Mr
Naidoo
inter
alia
referred me to, the Supreme Court of Appeal confirmed that the
principles enunciated in the
Jajbhay
-matter
have been considered and applied in many cases for example,
Visser
and Another v Rossouw and Another NNO
1990 (1) SA 139
(A)
and
Klokov
v Sullivan
2006 (1) SA 259
(SCA)
.
[36]
In a more recent matter relied upon by Mr
Snellenburg
SC
,
Blacher
v Josephson
[13]
,
the Court also said the following:
“
[35]
Thus, just as the
ex turpi
principle serves to defeat a
contractual claim arising from, or in terms of, an unlawful contract,
the
per delictum
rule may do so in respect of an enrichment
action which is resorted to in place thereof. But the important
qualification to the
operation of the
per delictum
rule in
enrichment actions is that pursuant to the decision in
Jajbhay
(Jajbhay v Cassim
1939 AD 537
at 545, 547-548) it has been attenuated
by the recognition of an equitable discretionary power of the court,
so that it may do
‘simple justice between man and man’.”
[37]
Certain grounds have been advanced in argument on behalf of the
Defendant why the Plaintiff is not entitled
to any repayment of the
outstanding balance.
[38]
The first ground is that the interest rate levied on the principal
amount of credit, contravened the provisions
of Section 105(1) of the
NCA. It was argued that it is the Plaintiff’s conduct that is
relevant when the Court makes a determination.
[39]
If the interest rate levied was the only basis for the agreement to
be unlawful and void, it might then be
said that it will not be just
and equitable to order restitution of the balance in favour of the
Plaintiff. But it is not necessarily
so. It might be indicative that
the Plaintiff was trying to collect more interest than he was
entitled to. But it is also so that
the interest which was to be
accrued was agreed upon between the Plaintiff and the Defendant. If
was to be taken as a determining
factor in holding that the Plaintiff
is not entitled to restitution, it will effectively mean that the
Plaintiff is penalised in
not receiving the outstanding balance of
the capital loan amount, although interest does not even form part of
the present claim.
[40]
As already stated, the Defendant failed to provide any particularity
of which amounts of interests allegedly
formed part of the payments
made. Not in his plea nor in his affidavit in opposition to the
summary judgment application.
[41]
The further facts relied upon by the Defendant, namely that the
Plaintiff has failed to make any assessment
prior to the advancing of
the credit, to determine whether the credit would constitute reckless
credit, if it is to be accepted
to be true, is indeed a factor which
the Court should frown upon. But in the same breath the Court should
also take into consideration
that the Defendant has received a
benefit in that he received the loan amount in any event. The fact
remains, the Defendant was
enriched at the expense of the Plaintiff.
[42]
It can also not be held as contended on behalf of the Defendant, that
because the Defendant denies that the
Plaintiff was unaware of the
provisions of the NCA, the conclusion can be drawn that the Plaintiff
intentionally contravened the
provisions of the NCA. Of relevance,
also in this regard, is the fact that the Defendant has failed in
totality to place the material
facts before Court in his answering
affidavit. The absence of knowledge by the Plaintiff stands as a bare
denial.
[43]
Taking into consideration as referred to in
Fourlamel
(Pty) Ltd v Maddison
[14]
as well as
Soil
Fumigation Services Lowveld CC v Chemfit Technical Products (Pty)
Ltd
[15]
,
I have no doubt that the Plaintiff has an unanswerable case against
Defendant based on the Defendant being unjustifiably enriched
at the
expense of the Plaintiff.
[44]
Even if it is to be accepted that the Plaintiff was not free from
turpitude, in the exercise of my discretion,
I find that the
relaxation of the
par delictum
rule, as affirmed in the
Jajbhay
-matter, is justified in the present matter in bringing
about simple justice between man and man.
Order
In
the result I grant summary judgment against Defendant for:
1.
Payment of the sum of
R1,600,000.00
.
2.
Interest
a tempore morae
on the above amount.
3.
Costs of suit.
HEFER
AJ
Appearances
on behalf of the Plaintiff:
Adv K
Naidoo
Instructed
by: Lovius Block Attorneys
Bloemfontein
On
behalf of Defendant:
Adv N
Snellenburg SC
Instructed
by: Podbielski Incorporated
c/o
Honey Attorneys
Bloemfontein
[1]
Jajbhay v Cassim
1939 AD 537
at 543.
[2]
supra
p. 544.
[3]
p. 544.
[4]
p. 545.
[5]
2013 (2) SA 1
(CC)
[6]
Albertyn v Kumalo 1946 (WLD) 529 at 535.
[7]
1997 (3) All SA 308 (B).
[8]
1965 (2) SA 912
(NPD) at 916
[9]
2020 (6) SA 624 (WCC)
[10]
p. 632, par. [13].
[11]
p. 635, par. [25].
[12]
2009 (1) All SA 1 (SCA)
[13]
2023 (3) SA 555 (WCC)
[14]
1977 (1) SA 333 (A)
[15]
2004 (6) SA 29
(SCA)