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[2022] ZAGPJHC 637
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Spar Group Limited v Meadowview Trading 147 CC t/a Meyerton Spar and Tops (2022/013036) [2022] ZAGPJHC 637 (5 September 2022)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
Case
No: 2022/013036
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED
NO
In
the matter between :
THE
SPAR GROUP LIMITED
Plaintiff/Applicant/Appellant
and
MEADOWVIEW
TRADING 147 CC
t/a
MEYERTON SPAR AND TOPS
Defendant/Respondent
JUDGMENT
STRYDOM
J
[1]
This is an urgent application in which the
applicant seeks leave to perfect its security in terms of two General
Notarial Bonds
(“the Bonds”) registered in favour of the
applicant during 2014 and 2017 respectively.
[2]
The court already ruled that the
application was sufficiently urgent to be heard in urgent court and
nothing further needs to be
stated in this regard.
[3]
The only issue that remains for decision is
whether the court should exercise its discretion in favour of the
applicant by granting
it leave to perfect the Bonds.
[4]
Being an urgent application, I do not
intend to give a full judgment but will, in brief terms, state the
reasons for my decision.
[5]
It is common cause that the respondent was
indebted to the applicant in an amount well over R2 million and that
the applicant in
terms of an acceleration clause claimed the full
outstanding debt which included arrear and current debts.
[6]
It is also further not disputed that since
the calling up of the debt the respondent has paid the arrear amount
of approximately
R1 million as well as further amounts. The
respondent however remains indebted to the applicant in an amount of
more than R1 million.
[7]
It is further common cause that the
respondent is indebted to its landlord in an amount of approximately
R700,000. The landlord
undertook not to exercise a hypothec securing
the arrears.
[8]
On behalf of the applicant it was argued
that the respondent was trading under insolvent circumstances and the
possibility exists
that a liquidation application can be brought by a
creditor. If granted it would mean that the security of the applicant
in terms
of the two bonds would be lost. The applicant would become a
concurrent creditor in the liquidated estate.
[9]
On behalf of the applicant it was also
pointed out that the current lease which the respondent has with its
landlord expired on
30 November 2019 and that, since then, it has
occupied the leased premises on a month-by-month basis.
[10]
On behalf of the applicant it was argued
that the applicant is entitled to an order granting it leave to
perfect upon the Bonds
by virtue of the operation of the perfection
provisions thereof, having been triggered by the respondent’s
conduct. This
is what the parties agreed to and this should be
enforced.
[11]
The respondent argued that the enforcement
of the Bonds would amount to an order for specific performance of the
Bonds and this
court should exercise its discretion against making
such an order of specific performance. For this submission, the
respondent
relied on the fact that substantial payments were made
since the total debt was called up, that the landlord would not
exercise
its hypothec and that ordering specific performance will be
unduly harsh under the circumstances of the case.
[12]
It was further argued on behalf of the
respondent that the terms of the Bonds were unconscionable and
contra
bonos mores
and should not be enforce
for this reason.
[13]
The court has been referred to various
cases dealing with the discretion which could be exercised in matters
pertaining to the perfection
of notarial bonds. The respondent
referred the court to
Dev Bank of South
Africa Ltd v Van Rensburg NNO
2002 (5)
SA 425
(SCA) where it was acknowledged that a bond holder who applies
for leave to attach the hypothecated goods in terms of a perfection
clause is in effect asking for specific performance. It was found
that as in other cases where specific performance is sought the
court
had a discretion whether or not to grant the order.
[14]
This view that it was a discretionary issue
was also stated by Grosskopf J (as he then was) in
Intl
Shipping Co (Pty) Ltd v Affinity (Pty) Ltd
1983
(1) SA 79C.
In this case reference was made to an unreported judgment
delivered on 15 April 1982 by Didcott J in
Barclays
National Bank Ltd and Another v Natal Fire Extinguishers
Manufacturing Co (Pty) Ltd and others (D)
.
With reference to this judgment the court commented as follows:
“
In
the last mentioned case Didcott J stressed, however, that the Court
retain a discretion to grant an order of this type, which
is an order
for specific performance. I venture to suggest that, in ordinary
circumstances, the Court would require cogent considerations
to
exercise its discretion adverse to the mortgagee. There is, after
all, no other remedy, such as a claim for damages available
to him.
And whereas the Court may well consider it is desirable to enforce
every detailed provision of the notarial bond like the
present one,
the Court would in my view be reluctant to deny the mortgagee all
claims to security under the bond if it is sought
to be enforced
prior to the mortgagee’s insolvency.”
[15]
The very same issue became the subject
matter of a decision by Harms JA in
Contract
Forwarding (Pty) Ltd v Chesterfin (Pty) Ltd and others
[2003]
1 All SA 267
(SCA) where at paragraph 10 it was found as follows:
“…
I
also do not understand the reference to the court’s discretion.
Although aware of dicta by Didcott J to the effect
that there is
a discretion, I cannot see how a court, in the exercise of its
discretion, can refuse an order to an applicant who
has a right to
possession of a pledged article to take possession. The
principles relating to the limited discretion to refuse
specific
performance apply only where the creditor has another remedy, such as
a claim for damages, at its disposal. A claim for
damages cannot
replace a claim for real security. In the absence of a conflict with
the Bill of Rights or a rule to the contrary,
a court may not under
the guise of the exercise of a discretion have regard to what is fair
and equitable in that particular court’s
view and so dispossess
someone of a substantive right.”
[16]
As was stated by Harms JA, the applicant in
this matter does not have an alternative remedy for damages and, even
if it did, such
a claim cannot replace its claim for real security
over the respondent’s movable property as was agreed between
the parties.
[17]
I am in agreement with this
ratio
that the discretion should only be exercised in a
case of specific performance where another remedy exists.
[18]
It was argued on behalf of the respondent
that such alternative remedy in fact does exist in ordering lesser
performance than is
provided for in the Bonds. On the facts of this
matter I am not satisfied that such alternative remedy does exist. No
evidence
was placed before the court to make a finding on the extent
of the value of the movable property over which the Notarial Bond was
registered. A lesser remedy than that what was asked for is
accordingly not available to the applicant and therefore not an
alternative
remedy.
[19]
I am further of the view that the
respondent did not show that the terms of the Bonds are contrary to
public policy. In coming to
this conclusion the court followed the
ratio
in
Juglal NO and Another v Shoprite
Checkers (Pty) Ltd t/a OK Franchise Division
2004
(5) SA 248
(SCA). In this judgment Heher JA’s findings made it
abundantly clear that perfection provisions in notarial bonds are
indeed
lawful and enforceable.
[20]
In my view the respondent has failed to
convince this court that the Bonds should not be perfected. The
respondent has not demonstrated
that the probabilities show that the
enforcement provisions will be implemented in an unconscionable,
immoral manner and/or constitute
illegal conduct.
[21]
In my view the applicant has made out a
case for the relief which it seeks and the court makes an order in
terms of the draft order
which was provided to court by the
applicant, this order will be marked with an “X”.
RÉAN
STRYDOM
JUDGE
OF THE HIGH COURT
GAUTENG
DIVISION
JOHANNESBURG
Date
of hearing:
30 August 2022
Date
of Judgment:
05 September 2022
Appearances
For
the Applicant:
Adv. D. Van Niekerk
For
the Respondent:
Adv. L Hollander