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[2022] ZAFSHC 118
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Standard Bank of South Africa Limited v Wolmarans N.O. and Others (3949/2021) [2022] ZAFSHC 118 (16 May 2022)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
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Policy
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No:
3949/2021
Reportable:
NO
Of
Interest to other Judges: NO
Circulate
to Magistrates: NO
In
the matter between:
THE
STANDARD BANK OF SOUTH AFRICA LIMITED
Applicant
and
CHRISTOFFEL
PETRUS WOLMARANS N.O.
1
st
Respondent
EMERENTIA
WOLMARANS
N.O.
2
nd
Respondent
TELLA
HARRIS N.O.
3
rd
Respondent
VAN
WYK WOLMARANS N.O.
4
th
Respondent
[1
st
to 4
th
respondents in their capacities as duly
authorised
trustees of the
WOLMARANS
KINDER TRUST, IT962/1998
]
CHRISTOFFEL
PETRUS WOLMARANS
5
th
Respondent
(Identity
number: [....])
EMERENTIA
WOLMARANS
6
th
Respondent
(Identity
number: [....])
CORAM
:
JP DAFFUE J
HEARD
ON
:
17 MARCH 2022
DELIVERED
ON
:
16 MAY 2022
This
judgment was handed down electronically by circulation to the
parties’ representatives by email, and release to SAFLII.
The
date and time for hand-down is deemed to be 16h00 on 16 May 2022.
I
INTRODUCTION
[1]
This is yet again another application by a registered bank and credit
provider for
payment of money due and payable which application is
resisted by the principal debtors and sureties, relying on numerous
defences
allegedly afforded them by the National Credit Act (“the
NCA”).
[1]
[2]
In casu
the matter differs from the usual applications of this
kind insofar as the bank seeks relief based on a settlement agreement
entered
into between the parties which was made an order of court.
II
THE PARTIES
[3]
The applicant is the Standard Bank of South Africa Ltd, represented
before me by Advv
P Zietsman SC and J Els, instructed by Phatshoane
Henney Inc, Bloemfontein.
[4]
The first four respondents cited in the application are the four
trustees of the Wolmarans
Kinder Trust, IT962/1998 (“the
Trust”), they being Christoffel Petrus Wolmarans, Emerentia
Wolmarans, Tella Harris
and Van Wyk Wolmarans. Christoffel Petrus
Wolmarans and Emerentia Wolmarans are cited in their personal
capacities as 5
th
and 6
th
respondents
respectively. Adv JA Augustyn instructed by HSL Du Plessis Inc of
Kroonstad, c/o Blair Attorneys, Bloemfontein appeared
before me on
behalf of the respondents.
III
THE RELIEF SOUGHT
[5]
The applicant seeks payment against the six respondents jointly and
severally based
on a second settlement agreement that was made an
order of court and in terms whereof three different account numbers
in the amounts
of R8 121 792.19, R2 098 021.87 and
R1 920 000.00 respectively, together with interest from 25
June 2021
to date of payment apply. Interest is charged at different
rates in respect of the three different accounts. Orders are also
sought
that several immovable properties belonging to the 1
st
to 4
th
respondents in their capacities as trustees of the
Trust be declared especially executable. Costs of suit on an attorney
and client
scale are sought as well.
IV
THE COUNTER-APPLICATION
[6]
The main application is not only opposed, but a counter-application
was filed containing
numerous prayers which I do not intend to quote
at this stage, save to say that the main relief sought is an order
declaring the
entire purported first and second settlement agreements
void by virtue of numerous provisions of the NCA,
inter alia
ss 89, 90, 91, 111, 116, and 124. The respondents also seek the
rescission and setting aside of the two court orders premised
upon
the settlement agreements.
V
POINT OF DEPARTURE
[7]
On 12 October 1999 the 6
th
respondent signed surety
in favour of the applicant for the 5
th
respondent’s past
and future debts.
[2]
On 12 July
2004 the Trust entered into a suretyship agreement with the applicant
in respect of the 5
th
respondent’s past
and future debts.
[3]
On 27 July
2004 the 5
th
respondent entered into a
suretyship agreement with the applicant in respect the Trust’s
past and future debts.
[4]
These
suretyships pre-date the implementation of the NCA, the commencement
date thereof being I June 2006. In any event, insofar
as the
principal debtor in respect of the two medium term loan agreements –
the second and third accounts mentioned in paragraph
5 supra - is a
juristic person, the 5
th
respondent as surety in
respect of these accounts cannot rely on the protection of the NCA.
This was correctly conceded by Mr Augustyn
on behalf of the
respondents. Notwithstanding this concession and the authorities to
be discussed
infra
,
Mr Augustyn insisted that the NCA applied to the current account
agreement entered into by the 5
th
respondent, a natural
person, in respect of the first account mentioned in paragraph 5
supra
.
On the assumption that this credit agreement falls within the ambit
of the NCA, which is correct, he submitted that the Trust
as surety
has the same defences and rights available to it under the NCA as
that afforded to the 5
th
respondent.
[8]
In my view, the point of departure that may cut right through all or
most of the defences
raised by the respondents is whether or not the
NCA is applicable
in casu
. The applicant seeks relief based on
the terms of a second settlement agreement which was made an order of
court. More is said
about this hereunder. It is also pointed
out that the Trust has four trustees and is consequently defined as a
juristic person
in the NCA. The relevant definition contained in s 1
of the NCA reads as follows:
“
'juristic
person'
includes
a partnership, association or other body of persons, corporate or
unincorporated, or a trust if-
(a)
there are three or more individual trustees; or
(b)
the trustee is itself a juristic person, but does not include a
stokvel.”
[9]
It is also common cause that at any time during the conclusion of the
credit agreements
featuring in the litigation between the parties,
the Trust’s annual turnover exceeded R1 million and/or its
asset value exceeded
R1 million, and therefore, based on the
definition of “juristic person” and s 4 of the NCA, this
Act is not applicable
to the credit transactions between it and the
applicant. The relevant sub-sections read as follows:
“
4
Application
of Act
(1)
Subject to sections 5 and 6, this Act applies to every credit
agreement between parties dealing at arm's
length and made within, or
having an effect within, the Republic,
except
-
(a)
a credit agreement
in terms of which the consumer is-
(i)
a juristic person whose asset value or annual turnover,
together with
the combined asset value or annual turnover of all related juristic
persons, at the time the agreement is made, equals
or exceeds the
threshold value determined by the Minister in terms of section 7 (1);
(ii)
the state; or
(iii)
an organ of state;
(b)
a large agreement,
as described in section 9 (4), in terms of which the consumer
is a
juristic person whose asset value or annual turnover is, at the time
the agreement is made, below the threshold value determined
by the
Minister in terms of section 7 (1);
(2)
For greater certainty in applying subsection (1)-
(a)
the asset value or annual turnover of a juristic person at the time a
credit
agreement is made, is the value stated as such by that
juristic person at the time it applies for or enters into that
agreement;
(b)
….
(c)
this Act applies to
a credit guarantee only to the extent that this Act applies
to a
credit facility or credit transaction in respect of which the credit
guarantee is granted;”
Sub-section 4(4) relied
upon by the respondents, reads as follows:
“
(4)
If this Act applies to a credit agreement-
(a)
it continues to apply to that agreement even if a party to that
agreement ceases
to reside or have its principal office within the
Republic; and
(b)
it applies in relation to every transaction, act or omission under
that agreement,
whether that transaction, act or omission occurs
within or outside the Republic.” (emphasis added)
As
mentioned, the 5
th
respondent in his personal capacity
entered into the current account agreement which is the subject of
the first claim –
in excess of R8 million - in the notice of
motion. The 6
th
respondent and the Trust signed suretyship
agreements in favour of the applicant for the 5
th
respondent’s debt as mentioned above. It is appropriate to
quote the definition of” “credit guarantee”
now as
it will be discussed later:
“
'credit
guarantee'
means
an agreement that meets all the criteria set out in section 8 (5)”
and ss 8(5) reads as follows:
“
(5)
An agreement, irrespective of its form but not including an agreement
contemplated in subsection (2), constitutes a credit guarantee if, in
terms of that agreement, a person undertakes or promises
to satisfy
upon demand any obligation of another consumer in terms of a credit
facility or a credit transaction to which this Act
applies.”
[10]
Insofar as the respondents are of the view that the two settlement
agreements
in casu
are to be considered against the backdrop
of the NCA and the provisions of this Act are applicable thereto, I
quote ss 8(4)(f)
which, based on a literal interpretation, suggests
that all other agreements not mentioned in ss 8(4)(a) to (e) where
payment of
amounts owing are deferred, fall within the ambit of the
NCA:
“
(4)
An agreement, irrespective of its form but not including an agreement
contemplated in subsection
(2), constitutes a credit transaction if
it is-
(a)
…;
(b)
…;
(c)
…;
(d)
…
;
(e)
…; or
(f)
any
other agreement, other than a credit facility or credit guarantee, in
terms of which payment of an amount owed by one person
to another is
deferred, and any charge, fee or interest is payable to the credit
provider in respect of-
(i) the agreement;
or
(ii) the amount
that has been deferred.”
[11]
The definition of “consumer” in s 1 of the NCA includes a
guarantor under a credit
guarantee and as shown above, a credit
guarantee is a credit agreement that meets all the criteria set out
in ss 8(5). Van der
Merwe JA pointed out in
Mostert
v Firstrand Bank
[5]
that the sub-section
includes a suretyship in respect of the obligations in terms of a
credit facility or credit transaction. Therefore,
in relying on the
wording of ss 4(2)(c) quoted above, a surety is a consumer in respect
of the credit agreement to which he/she/it
is a party, to wit the
suretyship. However, the surety is not a consumer relating to the
credit agreement in respect of which the
suretyship applies.
[12]
Several years before the judgment of the Supreme Court of Appeal in
Mostert
v Firstrand Bank,
Satchwell
J summarised the legal principles pertaining to sureties and the NCA
with respect correctly in
Firstrand
Bank Ltd v Carl Beck Estates (Pty) Ltd
.
[6]
In that case the second respondent, who bound himself as surety and
co-principal debtor for the debts of a company in favour of
the bank,
unsuccessfully relied on ss 8(5) of the NCA in opposing a summary
judgment application. The court held that no credit
was advanced to
the surety who did not become party to the credit agreement between
the bank and the first respondent. Consequently,
the surety could not
claim to be entitled to receive notice in terms of s 129 of the NCA
as he was sued as guarantor to the obligations
of the first
respondent – a juristic person – in terms of a credit
transaction to which the NCA did not apply.
[7]
During the evaluation of the parties’ submissions more will be
said in this regard.
VI
MATERIAL COMMON CAUSE FACTS
[13]
On 4 December 2018 – three and a half years ago - at Bethlehem,
the respondents as debtors
signed a written settlement agreement
incorporating a power of attorney which was thereafter signed on
behalf of the applicant
in Durban on 11 February 2019 (the reference
to 2018 is clearly a mistake).
[8]
The respondents’ financial advisor at the time, Mr Willem
Petrus Fouche, a retired bank manager who was previously in the
employ of First National Bank, co-signed as witness for them.
Reference will be made to this person again during the evaluation
of
the evidence and the parties’ submissions.
[14]
On 21 February 2019 this first settlement agreement was made an order
of court by the then Acting
Deputy Judge President MH Rampai under
case number 696/2019.
[9]
[15]
A second settlement agreement was entered into between the same
parties, signed by the debtors
on 29 September 2020 at Bethlehem and
on behalf of the applicant in Durban on 16 October 2020.
[10]
Again, as in respect of the first agreement, the respondents’
financial advisor at the time, Mr Willem Petrus Fouche, co-signed
as
witness for them.
[16]
On 12 November 2020 the second settlement agreement was made an order
of court by the Honourable
Justice PE Molitsoane under case number
4256/2020.
[11]
As was the case
when the first settlement agreement was entered into, the main
purpose was to grant extension of payment to the
debtors. After
having acknowledged their liability towards the applicant, they
undertook to reduce the outstanding balances of
the various accounts
by a minimum of 50% within six months and to settle the remaining
balances within a further period of three
months.
[12]
[17]
Mr HSL Du Plessis, a Kroonstad attorney, came on the scene on 13
April 2021.
[13]
He was at that
stage only instructed by the 4
th
respondent. According to
his instructions the Trust denied its indebtedness in the amounts
claimed by the applicant. He confirmed
that forensic auditors had
been instructed to audit the accounts and furthermore accused the
bank of several contraventions of
the NCA. The very next day Ms Sebet
van Jaarsveld communicated with the applicant’s attorney on
behalf of 4
th
respondent without saying
a word about the alleged dispute.
[14]
Further correspondence followed between the parties and on 20 May
2021 Ms Van Jaarsveld confirmed that she was still trying to
obtain
alternative finance for the Trust and even made the following request
in respect of payment to the applicant:
“
Ons wil graag
nederig ‘n versoek rig dat indien ons die bedrag van
R2 200 000.00 teen einde Julie 2021 betaal en
sodoende die
een term loan saam met die current account finaal sluit die balans
van die term loans dan oor 7 jaar paaiemente delg.”
Again,
the applicant was requested for extension of payment in this email.
The respondents indicated that they were trying to apply
for credit
from FNB and Nedbank in order to take over the debt at a more
favourable interest rate.
[15]
[18]
On 9 June 2021 Mr Van Wyk Wolmarans, the 4
th
respondent and deponent
to the answering affidavit in this application, emailed a letter to
Mr Otto of Phatshoane Henney Inc. Cash
flow figures were attached to
the email and an extension of payment was sought.
[16]
Again, not a word was said about any dispute as stated by Mr du
Plessis, and equally important, the indebtedness and the
quantum
of indebtedness were not
disputed.
[19]
At no stage was it anticipated that the respondents, being
dissatisfied with the periods of extension
of payment granted, or any
of the other terms of the settlement agreements, would approach the
court for rescission and setting
aside of the two court orders and/or
the settlement agreements. In fact, they tried to comply with their
agreements and even paid
off substantial amounts as will be shown
hereunder.
[20]
On 16 August 2021 Mr Du Plessis made a come-back, writing a
comprehensive letter to Phatshoane
Henney Inc, relying on several
alleged defences on behalf of the respondents.
[17]
Attached to his email is a forensic audit report pertaining to the
farming activities of CP Wolmarans, the 5
th
respondent. This report
shall be dealt with again hereunder, but bright red lights attracted
my attention in the first paragraph.
I quote:
“
During the planned
agricultural production period, knowingly
November
– 2014 to January 2021
,
the Client detected and suspected several errors and financial
“irregularities” on their financial agreements /
memoranda
of agreements …..” (emphasis added)
[21]
On 26 August 2021 the applicant’s notice of motion was issued
and served thereafter. On
16 September 2021 the respondents gave
notice of intention to oppose and also filed their
counter-application.
[18]
The
replying affidavit was filed on 20 October 2021. Attached thereto is
inter
alia
a
letter of demand dated 7 April 2021
[19]
and sent per email to the respondents, informing them of their
failure to comply with the second settlement agreement and the
applicant’s intention to proceed with further action. On 2
November 2021 Mr Van Wyk Wolmarans, the deponent to the answering
affidavit, filed a further affidavit referred to as a “duplying
affidavit”.
[22]
On 13 December 2021 the applicant’s attorneys set the matter
down for hearing on 17 March
2022. Heads of arguments were
filed by the legal representatives of the parties and may I say, the
respondents’ counsel
really made a meal of it in his 70-page
heads of argument.
VII
EVALUATION OF THE EVIDENCE, AUTHORITIES AND SUBMISSIONS BY THE
PARTIES
[23]
A party who bears the
onus
in a
civil suit must discharge it on a balance of probabilities. In
opposed motion proceedings where final relief is sought, factual
disputes must be resolved by applying the well-known
Plascon-Evans
rule, whether the
onus
rests on the applicant or
the respondent.
[20]
In
casu
the
applicant seeks relief based on a settlement order entered into
between the parties which was made an order of court. Save for
some
legal argument to be entertained, there are no material factual
disputes to resolve in respect of the main application. The
respondents, who seek the setting aside of the two settlement
agreements and the two court orders issued in terms whereof these
agreements were made orders of court, raised numerous issues of a
legal and factual nature. They have literally thrown the whole
NCA at
the applicant. The applicant not only denied that the NCA is
applicable, but raised factual disputes and therefore, in
adjudicating the counter-application, the
Plascon-Evans
rule will be applied.
[24]
I intend to deal firstly with the main application where after the
counter-application will be
adjudicated.
The
main application
[25]
Two settlement agreements between the parties have been made orders
of court. Neither the order
under case number 696/2019, nor the one
under case number 4256/2020 has been rescinded. The respondents did
not apply for rescission
of these orders, incorporating the
settlement agreements previously. The first agreement was entered
into more than three years
ago and the second 18 months ago. In
Eke
v Parsons
,
[21]
Madlanga J writing for the majority, quoted with approval the
following
dictum
:
“
A compromise once
lawfully struck is very powerfully supported by the law, since
nothing is more salutary than the
settlement
of lawsuits
.”
(emphasis added)
In
casu
no
lawsuit had been instituted prior to the first settlement agreement,
but it is apparent from the document that the parties had
reached a
settlement with regard to the debtors’ indebtedness.
[22]
There is in principle no reason why parties may not compromise their
disputes before litigation is embarked upon and then request
the
court to make the settlement agreement an order of court. Insofar as
this issue may be contentious, I shall elaborate hereunder.
[26]
Once a settlement agreement has been made an order of court, it is an
order like any other and
will be interpreted like all court
orders.
[23]
Wallis JA
expressed himself in the following words in
Moraitis
Investments v Montic Dairy
,
[24]
inter
alia
relying
on
Eke v
Parsons:
“
For so long as
that order stood, it could not be disregarded. The fact that it was a
consent order is neither here nor there. Such
an order has exactly
the same standing and qualities as any other court order. It is res
judicata as between the parties in
regard to the matters covered
thereby. The Constitutional Court has repeatedly said that court
orders may not be ignored
.
To do so is inconsistent with s 165(5) of the Constitution, which
provides that an order issued by a court binds all people to
whom it
applies.
The
necessary starting point
in this case was therefore
whether
the grounds advanced by the applicants justified the rescission
of
the consent judgment. If they did not, then it had to stand and
questions of the enforceability of the settlement agreement
became
academic.” (Footnotes omitted and emphasis added)
The
honourable judge continued later as follows:
“
There are two
difficulties with this statement. First, the distinction it draws,
between judgments 'not passed on the merits of
a dispute' and other
judgments, lacks any foundation in our jurisprudence. There is
no difference in law between an order
granted in the case of a
default judgment; an order pursuant to a
settlement
prior to the conclusion of opposed proceedings
;
or the order in a judgment pronounced at the end of a trial or
opposed application. As the Constitutional Court has said, it is
an
order 'like any other'. Second, the proposition is overbroad
and inconsistent with the authorities discussed above. Were
it
correct, a material, but non-fraudulent, misrepresentation justifying
rescission of the agreement of compromise would also justify
the
rescission of the judgment granted pursuant to that compromise, but
that is not the case. Its defect lies in approaching the
question
from the direction of the agreement instead of from the direction of
the judgment. The latter is the correct approach,
because the
judgment operates as res judicata and precludes a claim based on the
agreement.
Unless
and until the judgment has been set aside, there can be no question
of attacking the compromise agreement
.
It follows that the
necessary
starting point for the enquiry must be whether there are grounds upon
which to seek rescission of the court order
.
Only then can there be any issue regarding the rescission of the
compromise.” (Footnotes omitted and emphasis added)
[27]
A settlement order changes the status of the rights and obligations
between parties and save
for litigation that may be consequent upon
the nature of the particular order, such order brings finality to the
lis
between the parties. As
explained by Madlanga J: “the
lis
becomes
res
judicata
(literally,
‘a matter is judged’.)”
[25]
[28]
In
Ratlou
v Man Financial Services
the
Supreme Court of Appeal recently dealt with the possible
applicability of the NCA to settlement agreements. I quote:
[26]
“
[21]
A purposive interpretation and not a literal interpretation of s
8(4)
(f)
of the NCA is required because it is quite clear that the NCA was not
aimed at settlement agreements. Its application to them will
have a
devastating effect on the efficacy and the willingness of parties to
conclude settlement agreements and thereby curtail
litigation.”
In
Ratlou
the debtor defaulted in
respect of certain lease agreements entered into in respect of trucks
and trailers whereupon the goods were
repossessed and sold.
Thereafter the debtor and the surety entered into a settlement
agreement – an acknowledgement of debt
- with the credit
provider in respect of the shortfall. The NCA did not apply to the
underlying agreements – these being
large transactions - and
consequently also not to the suretyship.
[27]
The court held that the legislature never had the intention to apply
the NCA to all settlement agreements in terms which accord
with the
determination of credit transactions.
[28]
[29]
Mr Zietsman, although conceding factual differences, requested the
court to deal with the matter
in casu
in the same manner as
was done by the Supreme Court of Appeal in
Ratlou.
In
Ratlou
the NCA did not apply to the original credit agreements and
consequently, the court held that both the principal debtor and the
surety, a natural person, were bound by the terms of the settlement
agreement. Reliance was placed on ss 8(4)(f). The 5
th
respondent is a surety for the Trust’s indebtedness in respect
of the medium term loans and based on
Ratlou
he shall be bound
in respect of these debts as agreed to in the settlement agreements.
The current agreement concluded by the 5
th
respondent with
the applicant, to wit account number [....], in respect of which an
amount of over R8 million is claimed, falls
within the ambit of the
NCA. This is common cause. However, the Trust as a juristic person is
a surety for this claim in favour
of the applicant.
[30]
The respondents’ contention that the application should be
dismissed due to foreseen factual
disputes does not hold water. We
are dealing with two settlement agreements which were made orders of
court. These court orders
are still
in esse
. There are no
factual disputes in this regard. As the applicant relies on existing
court orders, incorporating settlement agreements,
it is entitled to
relief unless these orders as well as the settlements agreements
could be set aside based on the allegations
in the counter-claim.
Wallis JA made it clear in
Moraitis supra
that the starting
point in disputes as
in casu
is whether there are grounds to
rescind the court order. The issues raised by the respondents are
based on questions of law which
can be adjudicated upon the papers
and the factual disputes that have arisen involve the adjudication of
the counter-application.
[31]
The defence of
functus
officio
can
only relate to the second settlement agreement and the court order
issued as a result. It is the applicant’s case that
the
respondents failed to comply with that order. It is important to note
that the second settlement agreement specifically empowers
the
applicant to obtain judgment in the event of the respondents failing
to comply with the agreement. It reads: “The bank
may proceed
to obtain judgment against the debtors for the full outstanding
balance as per paragraphs 4.1 to 4.14 above”.
[29]
Bearing in mind the
dictum
in
Eke
v Parsons
which
I quoted above, there is just no basis for an argument that the court
that granted the second order became
functus
officio,
preventing
this court from dealing with the present application. Clearly, this
litigation is consequent upon the nature of the particular
order. Mr
Zietsman submitted that the present application was also required to
obtain judicial oversight insofar as the applicant
seeks an order
declaring the various immovable properties specially executable.
According to him, although the applicant obtained
the right to sell
the immovable properties as is apparent from the power of
attorney
[30]
attached to the
second (and the first) settlement agreement, it was decided to
request a declaratory order to ensure that judicial
oversight is
achieved. I am satisfied that the previous order, allowing a specific
mode of liquidating the Trust assets, cannot
stand in the way of this
court considering whether the properties should be declared specially
executable in accordance with rule
46A. The defence is not
meritorious and therefore rejected.
[32]
If one considers the amounts involved, there can be no doubt that the
Trust, represented by its
trustees, conducts business on a grandiose
scale. After the recent sale of two farms, the trustees in their
representative capacities
are still the owners of 14 immovable
properties in the district of Bethlehem, in extent in excess of 4 000
hectares and which
according to their estimation are worth over R60
million.
[31]
The total debt of
the respondents was in excess of R19.8 million at the time that the
first settlement agreement was entered into.
[32]
This amount was quite significantly reduced upon the sale of two
farms as the total debt
ex
facie
the
second agreement was just less than R12 million. The total amount
claimed in these proceedings is R12 139 814.06 plus
interest on the different accounts.
[33]
The
counter-application
[33]
Insofar as the counter-application is concerned, the respondents (the
applicants in the counter-application:
the debtors) can only succeed
based on the applicant’s version (the respondent in the
counter-application: the bank) together
with the facts in the
respondents’ version that are admitted by the applicant,
bearing in mind
Plascon-Evans
. I am satisfied that there is no
reason to reject the applicant’s version for purposes of
adjudicating the counter-application.
That being the case, it should
be the end of the respondents’ counter-application. However, I
feel obliged to deal with the
respondents’ version. Before I
deal with any of the submissions made pertaining to the NCA or
factual disputes raised, it
is apposite to point out some of the
material averments of the respondents that are so far-fetched and
improbable that they may
safely be rejected. I agree with the
applicant that some averments are blatantly dishonest and made to
cloud the issues. I mention
the following:
33.1
The forensic audit report by Mr A Pretorius dated 11 August 2021 was
attached
to the applicant’s founding affidavit. I mentioned it
above. This is astonishing, bearing in mind the ongoing relationship
between the parties during this entire period as will be explained
herein, the settlement agreements entered into, the down-payments
and
the offers to pay mentioned above.
33.2
According to the 4
th
respondent, speaking for
himself and the other respondents, they were never aware of the
provisions of the NCA until alerted thereto
by Mr Du Plessis after
the second settlement agreement was enter into. At best for them,
this is highly improbable, but rather
dishonest as stated on behalf
of the applicant. The respondents entered into numerous credit
agreements over the years. There is
no reason to do a research in
respect of all the credit agreements before the court. A few examples
will do to show that the NCA
is clearly referred to in these
agreements.
[34]
33.3
If they haven’t read the credit agreements, their financial
advisor,
Mr Fouche, the retired bank manager who assisted them when
both the settlement agreements were entered into and who signed as
witness,
as well as the person that tried to arrange credit for them,
Ms Sebet van Jaarsveld, who both must also have a solid knowledge of
the NCA and its strict requirements, would in all probabilities have
explained the legislative issues to them.
33.4
The latest credit agreement entered into is the current account
agreement of
20 November 2017 between Mr CP Wolmarans, the 5
th
respondent, and the
applicant.
[35]
Mr Pretorius
stated in his report in respect of the farming activities of Mr CP
Wolmarans that financial irregularities and errors
were detected in
respect of the period November 2014 to January 2021. Clearly, he was
provided with wrong information. The impression
is created that the
agreed limit on the 5
th
respondent’s
current account was a mere R7.7 million in respect of the 2015
agreement, whilst it is apparent that on 9 November
2017 the limit
was increased to R12 490 000.00.
[36]
Also, the medium term loan no 25-294-586-7 does not even feature in
any of the two settlement agreements, but two different credit
agreements referred to as medium term loans. The applicant made the
point with conviction that the respondents were dishonest when
they
made their allegations.
33.5
Clearly, the respondents are not in a financial position to service
their debts;
they had to sell two farms to reduce the debts as
mentioned above and they intend to sell two further farms in the hope
of settling
the applicant’s debt
in toto
.
33.6
They alleged that upon payment of the proceeds of the sale of their
two farms
the balances on the accounts were not reduced, whilst I
indicated above how the applicant’s total claim was in fact
reduced
after the first and before the second settlement agreement
was entered into. The applicant used the proceeds of the sale to
reduce
the largest debt, to wit the current account in the name of
the 5
th
respondent. Nothing turns on the complaint that
the proceeds were not used to settle the medium term loans as the
trustees of the
Trust remain liable for all the debts, to wit the
medium term loans and the current account, either as principal
debtors or as
sureties.
33.7
They repeatedly stated that they were induced to sign unlawful
agreements and
that they did not have the luxury of a legal
representative’s advice, but failed to take the court in their
confidence to
explain what was Mr Fouche’s role who strangely
enough was not called upon to depose to a confirmatory affidavit.
33.8
The respondents made allegations on wrong agreements when dealing
with the
Trust’s medium term loans which they stated were for
R2 million and R3.5 million respectively, whilst the correct loan
amounts
were R4.8 million granted in December 2016 and R3.5 million
in respect of the 2013 agreement, the terms of which were amended in
2014.
[37]
33.9
The respondents’ version that they did not receive any letter
of demand after
failing to comply with the second settlement
agreement is false according to the applicant. Demands were sent on 7
April 2021 by
email to Mr Fouche and the 4
th
,
5
th
and 6
th
respondents.
[38]
The demand was also served by the sheriff as shown.
[34]
It is appropriate to remind the reader that a court should not
rubber-stamp any agreement placed
before it. As Madlanga J put it in
Eke
supra
,
[39]
a court must be satisfied that the order to be made is competent and
proper - it should not be mechanical in its adoption of the
terms of
a settlement agreement. An agreement unrelated to litigation may not
be made an order of court, the reason being that
parties contracting
outside the context of litigation may not approach the court and
request that the agreement be made an order
of court. The court
referred to the example of two merchants that entered into an
ordinary commercial agreement and then jointly
approached the court
to have it made an order of court to provide an effective remedy
against possible breach of contract which
the court declined to do in
Hodd v
Hodd: D’Abrey v D’ Abrey.
[40]
The Constitutional Court also held that the agreement to be made an
order of court shall not be objectionable and its terms must
be
capable from a legal and practical point of view of being included in
a court order, ie its terms must accord with both the
Constitution
and the law and must not be at odds with public policy. Finally, the
agreement must also hold some practical and legitimate
advantage.
[41]
The court also accepted the inherent power of the courts to protect
and regulate their own process as provided for in s 173 of
the
Constitution.
[42]
[35]
The respondents did not seek the rescission of either the first or
second order on the basis
that these orders could not be issued in
the absence of a
lis
between them. The aspect
was consequently not properly canvassed. I accept that parties cannot
and should not be allowed to ask
the court as a matter of cause to
make their commercial agreements court orders in line with the
example reflected in
Eke
v Parsons
above.
This is not the function of the court. In
casu
the matter is about on
all fours with the facts in
Growthpoint
Properties Ltd v Makhonya Technologies (Pty) Ltd and Others
.
[43]
The respondents breached the various underlying agreements and fell
in arrears with payments. It is not clear what else was in
dispute,
but fact of the matter is that they settled the disputes and
applicant allowed the respondents further time to settle
the debts. I
am satisfied that I am now called upon to grant orders flowing from
the second court order and therefore the
dictum
of the Constitutional
Court does not come into play at this stage. The scenario might have
been different if an objection was raised
at the stage when the
parties requested the court to make the settlement agreement an order
of court. Whatever the situation, there
is no justifiable ground to
rescind any of the two orders.
[36]
The respondents averred that the application was prematurely issued
insofar as the applicant
failed to issue a notice in terms of as 129
of the NCA. In
Eke v Parsons
the defendant also raised this
point, but the High Court dismissed it as well as all his other
defences. The same defences were
then relied upon in his application
for leave to appeal to the Constitutional Court. Although limited
success was achieved, that
court did not grant leave to appeal in
respect of the s 129 defence. The facts in
Eke v Parsons
differ from those
in casu
as in that case the plaintiff again
brought an application for summary judgment after the defendant had
reneged on the settlement
agreement which was made an order of court.
In casu,
there was no prior litigation between the parties who
then agreed in the second settlement agreement that the applicant may
proceed
with further action in the event of the respondents’
failure to comply and after 7 days’ written notice. The s 129
defence is obviously only available to the 5
th
and 6
th
respondents. Although a strong argument may be made out that no
notice as contemplated in s 129 was required, I would rather err
on
the side of caution and not grant orders against the 5
th
and 6
th
respondents at this stage.
[37]
More often than not, debtors confronted with claims for payment of
their debts raise the reckless
credit defence. In many of these
instances the debtors who obtained credit to buy luxury vehicles or
homes and/or for substantial
farming operations, insist on keeping
possession of the goods whilst relying on a defence of reckless
credit. One would have thought
that the defaulting debtors would do
the right thing,
i.e.
to return the goods if they are not in a
financial position to pay the debts and then raise the defence of
reckless credit. I still
have to come across the last-mentioned
situation.
In casu
it is not the respondents’ case that
reckless credit was provided when the underlying agreements were
entered into. They
aver that when the settlement agreements were
entered into, the applicant was obliged to conduct the same credit
analysis as was
required when the respondents applied for credit
initially. This is really a fanciful argument without any substance.
Again, it
is reiterated that neither of the two settlement agreements
are credit agreements within the ambit of the NCA.
[38]
Issues raised pertaining to “a supplementary agreement”
referred to in ss 89 and
91 of the NCA must also be considered. The
purpose of the provision in s 89(2) that a credit agreement is
unlawful if it is a supplementary
agreement or document prohibited by
s 91(a) is clear. A consumer should not be required or induced by a
credit provider to enter
into a supplementary agreement, to wit a
separate agreement that contains a provision that would be unlawful
if it was included
in the credit agreement. The Supreme Court of
Appeal dealt with this aspect in
National
Credit Regulator v Lewis Stores (Pty) Ltd.
[44]
I quote:
“
Section 90(2)
lists a number of provisions which would be unlawful if they were
contained in a credit agreement and s 91 is directed
at preventing a
credit provider from circumventing the provisions of s 90 by
recording provisions which would be unlawful if included
in a credit
agreement in a separate supplementary agreement or unilateral
document signed by the consumer.”
Again,
the settlement agreements are not subject to the NCA. These
agreements did not supplement any terms of the original credit
agreements, but were entered into some time thereafter in order to
provide extension of payment. The first agreement made it clear
that
the parties “have reached a settlement with regard to the
indebtedness of the Debtors to the Bank” and the second
agreement confirmed that the parties “have reached a new
settlement with regard to the indebtedness of the Debtors.”
[45]
[39]
There is no substance in the argument that ss 4(4) applies
in
casu
. Firstly, the only agreement that could possibly be effected
is the current account agreement. Even so, a literal interpretation
would lead to a conclusion that parties to a credit agreement that
are in dispute about, for example an outstanding balance due
before
or after action was instituted for payment, would never be able to
settle their dispute in a settlement agreement as those
in casu
and to have that made an order of court if they so wish, unless there
is compliance with the NCA. In my view the legislature did
not have
in mind such unbusinesslike consequences. The context of the
provision and purpose of the legislature point in an opposite
direction. I am satisfied that the same approach adopted in
Ratlou
supra
pertaining to ss 8(4)(f) should apply in this respect.
[40]
The respondents also averred that they could not
validly have renounced the benefits of the common law exception,
errore
calculi
.
[46]
This allegation is again based on the NCA which is not applicable.
Nothing more needs to be said, save perhaps that the calculations
provided by Mr Pretorius are clearly incorrect. This evidence was
merely presented in a last-ditch attempt to oppose a water-tight
case, a
mala
fide
attempt
to create a factual dispute as alleged by the applicant.
[41]
Relying on the common cause fact that the current account agreement
entered into by 5
th
respondent is an agreement as
contemplated in ss 4(2)(c), the respondents averred that the NCA
applies to all the credit guarantors
(or sureties) who bound
themselves to the applicant for this debt. This is incorrect insofar
as the Trust is concerned for the
reasons mentioned above. Nothing
further needs to be said. The 6
th
respondent bound herself
jointly and severally with all the other debtors in the settlement
agreements to pay what is due to applicant
.
Insofar as I
indicated
supra
that no order shall be made against the 5
th
and 6
th
respondents at this stage, it is not necessary to
debate this issue any further.
[42]
The respondents failed to prove that the two court orders should be
rescinded and also that the
two settlement agreements should be set
aside. They, after being assisted by a former bank manager who is
supposed to know the
NCA and any defences available to debtors,
entered into the agreements. They failed to show that they have
bona
fide
defences to the applicant’s claims. They failed to
show that they are entitled to rescission of judgment, either in
terms
rule, 31, rule 42 or the common law. Their version is
improbable and far-fetched, but in any event, bearing in mind
Plascon-Evans
, they failed to show that the applicant’s
version stands to be rejected as far-fetched and/or improbable and/or
false. They
are not entitled to any relief. Their reliance on any of
the other sections of the NCA, not specifically dealt with, is
without
substance. They are also not entitled to discovery at this
stage of the proceedings.
[43]
Even if the respondents were entitled to rescission of the court
orders on any of the grounds
relied upon, the settlement agreements
remain in place. There is just no justification for an order in terms
whereof the settlement
agreements should be rescinded and set aside.
The applicant’s counsel submitted that even if the court orders
are rescinded,
the applicant is still entitled to judgment in terms
of the prayers contained in the notice of motion based on the second
settlement
agreement that remain
in esse
.
[44]
I was concerned that the applicant had adopted a process of entering
into settlement agreements
with the respondents in the absence of a
lis
between them and in doing so intended to circumvent the
provisions of the NCA and in particular s 129 thereof, being a
compulsory
pre-debt enforcement process. This aspect may give rise to
different and contrasting views as is evident from the arguments of
counsel in this case. Mr Augustyn on behalf of the respondents made
it clear that s 129, read with s 130, was compulsory and that
the
entering into of the settlement agreements should be regarded as
“debt enforcement” steps. I disagree as it happens
each
and every day that creditors grant extension to debtors to settle
debts that had become due and payable. He perhaps intended
to submit
that the applications to obtain the two court orders should be
regarded as debt enforcement steps. He also submitted
that the
present application is a debt enforcement mechanism and that a s 129
notice should have been served which the applicant
failed to do. Fact
of the matter is that I have decided not to make a definite ruling in
this regard and consequently no orders
will be granted against 5
th
and 6
th
respondents.
[45]
Finally, I decided to grant a suspension of execution in line with Mr
Zietsman’s alternative
submission. Also, in fairness to the
trustees, bearing in mind the apparent total value of all the
immovable properties, the outstanding
debt in relation to such value
and the equity in the farms, the significant down-payments made since
the first court order, the
present marketing by the trustees of two
further farms, the proceeds of which they believe may be sufficient
to settle the applicant’s
debt in full, and finally, insofar as
the farms Uitkijk and the Remainder of the farm Mullersvlei are
considered the primary residences
of the 4
th
,
5
th
and 6
th
respondents, these two
immovable properties shall be excluded from the order to be issued.
I exclude these properties in the
exercise of my discretion
notwithstanding my understanding of the legal principles that these
properties are not to be considered
primary residences of the
judgment debtors, being the trustees in their representative
capacities as such of the Trust, the owner
of the properties.
[47]
Rule 46A applies whenever an execution creditor seeks to execute
against the residential property of a judgment debtor,
ie
the primary residence of
the judgment debtor. In such a case judicial oversight is required
and the provisions of sub-rules 8 and
9 kick in to ensure fairness.
VIII
CONCLUSION
[46]
I conclude that based on the reasoning above, the applicant has made
out a proper case for the
relief sought in the notice of motion,
subject to the suspension of the execution until 31 July 2022 and the
exclusion of the two
farms that are regarded as the primary
residences of the respondents. No reserve price needs to be set
insofar as the remainder
of the immovable properties are not the
primary residences of the judgment debtors. The respondents’
claims as contained
in the counter-application are devoid of any
merit and shall be dismissed with costs.
IX
ORDERS
[47]
The following orders are issued:
In
respect of the main application
(1)
Judgment is granted against the first to fourth
respondents jointly and severally, the one paying the other to be
absolved, in the
following terms:
1.1
IN RESPECT OF ACCOUNT NUMBER [....]:
1.1.1
Payment of the amount of
R8,121,792.19
;
1.1.2
Payment of interest on the aforesaid amount at the rate of 13.05% per
annum calculated from
25 June 2021
to date of payment, both
days included.
1.2
IN RESPECT OF ACCOUNT NUMBER [....]:
1.2.1
Payment of the amount of
R2,098,021.87
;
1.2.2
Payment of interest on the aforesaid amount at the rate of 7.50% per
annum calculated from
25 June 2021
to date of payment, both
days included.
1.3
IN RESPECT OF ACCOUNT NUMBER [....]:
1.3.1
Payment of the amount of
R1,920,000.00
;
1.3.2
Payment of interest on the aforesaid amount at the rate of 8.45% per
annum calculated from
25 June 2021
to date of payment, both
days included.
(2)
The following immovable properties of the First to
Fourth Respondents in their capacities as trustees of the Wolmarans
Kinder Trust,
IT 962/1998 are declared specially executable:
2.1
The Farm T [....]1 [....], district Bethlehem, Province Free State
In extent 288,6442 (two
hundred and eighty-eight comma six four four two) hectares
Held by Title Deed No T
[....];
2.2
The Farm E [....] [....], district Bethlehem, Province Free
State,
In extent 343,7577 (three
hundred and forty-three comma seven five seven seven) hectares,
Held by Title Deed No T
[....];
2.3
The Farm M[....] [....], district Bethlehem, Province
Free State,
In extent 171,3064 (one
hundred and seventy-one comma three zero six four) hectares,
Held by Title Deed No T
[....];
2.4
The Farm C [....]1 [....], district Bethlehem, Province Free
State;
In extent 42,8266
(forty-two comma eight two six six) hectares,
Held by Title Deed No T
[....];
2.5
The Farm H [....] [....], district Bethlehem, Province
Free State,
In extent 86,9836
(eight-six comma nine eight three six) hectares,
Held by Title Deed No T
[....];
2.6
Remainder of the Farm D [....] R[....] [....], district
Bethlehem, Province
Free State,
In extent 135,6861 (one
hundred and thirty-five comma six eight six one) hectares,
Held by Title Deed No T
[....];
2.7
Portion 2 of the Farm B [....] [....], district Bethlehem,
Province Free
State,
In extent 3024 (three
thousand and twenty-four) square meters,
Held by Title Deed No T
[....];
2.8
The Farm E [....] [....], district Bethlehem, Province Free
State,
In extent 142,8624 (one
hundred and forty-two comma eight six two four) hectares,
Held by Title Deed No T
[....];
2.9
The Farm S [....] [....], district Bethlehem, Province Free State,
In extent 42,8266
(forty-two comma eight two six six) hectares,
Held by Title Deed No T
[....];
2.10
Portion 1 (Eureka) of the Farm D [....] R[....] [....],
district Bethlehem, Province
Free State,
In extent 135,5876 (one
hundred and thirty-five comma five eight seven six) hectares,
Held by Title Deed No T
[....];
2.11
Portion 4 of the Farm B [....] [....], district Bethlehem,
Province Free State,
In extent 80,4600 (eight
comma four six zero zero) hectares,
Held by Title Deed No T
[....];
2.12
Remainder of the Farm C [....]2 [....], district Bethlehem,
Province Free State,
In extent 288,6465 (two
hundred and eighty-eight comma six four six five) hectares,
Held by Title Deed No T
[....]
(3)
The Registrar of the High Court is authorised and
directed to issue a Writ of Execution against the aforesaid immovable
properties.
(4)
The order declaring the immovable properties
specially executable is suspended until 31 July 2022, where after the
Sheriff of the
Court shall be entitled to immediately proceed with
execution in the event of the respondents failing to settle the money
judgment
in paragraph 1 above.
(5)
Costs of suit on attorney and client scale.
In
respect of the counter-application:
(6)
The respondents’ counter-application is dismissed with costs.
J
P Daffue J
On
behalf of the Applicant:
Advv P Zietsman SC and J Els
Instructed
by:
Phatshoane Henney Inc
BLOEMFONTEIN
On
behalf of the Respondents: Adv JA Augustyn
Instructed
by:
Blair Attorneys
BLOEMFONTEIN
[1]
34 of 2005
[2]
Annexure “RA5”, p551
[3]
Annexure “RA6”, p 563
[4]
Annexure “RA7”, p 571
[5]
2018 (4) SA 443
(SCA) para 28
[6]
2009 (3) SA 384
(TPD) paras 16 -24
[7]
Ibid
:
para 24
[8]
Annexure
“FA2” p 65 and further
[9]
Annexure
“FA3” pp 102 and 103
[10]
Annexure
“FA4”, p 104 and further
[11]
Annexure
“FA5”, pp 141/2
[12]
Paras 5.1.1 & 5.1.2 of annexure “FA4”, p 108
[13]
Founding affidavit: annexure “FA10”, p 155 -157
[14]
Ibid
:
p 158
[15]
Annexure
“RA9”, p 583
[16]
Annexure
“FA17”, p 166 & also “FA18” &
“FA19”, pp 167 -170
[17]
Annexure
“FA27”, pp 187 – 190
[18]
P
208 and further
[19]
P
581/2; the same document appears as annexure “FA6” on p
144 and as is apparent it was also served on the respondents
by the
sheriff: pp 145 - 150
[20]
Heidi
Nicole Koch NO & another v Ad hoc Central Authority for the
Republic of South Africa & another
(188/2021)
[2022] ZASCA 60
(26 April 2022) para 49; Pennello v Pennello
2004
(3) SA 117
(SCA) para 39
[21]
2016
(3) SA 37
(CC) para 22
[22]
Para 3 of annexure “FA2”, p 68
[23]
Ibid
:
para 29
[24]
2017 (5) SA 508
(SCA) para 10
[25]
Ibid:
para
31
[26]
2019
(5) SA 117
(SCA) para 21; also,
Investec
v Roberts & another
[2013]
ZAWCHC 25
(18 February 2013) paras 16 & 18
[27]
Ibid
:
paras 12 & 22
[28]
Ibid
:
paras 24 & 27
[29]
Clause
6.3, p 114
[30]
Annexure “FA4” and pp 126 – 138 in particular
[31]
Para
2 of the notice of motion: pp 9 -12 and
answering
affidavit: para 14.3, p 242 & para 16.14, pp 260 - 262
[32]
Founding affidavit: annexure “FA2”, pp 65 - 86
[33]
Para 1 of notice of motion, p 8, read with certificates of balance:
pp 181 - 184
[34]
Answering affidavit, annexures “VW5”, the one medium
term loan, “VW7”, the current account agreement,
pp 354
& 380
[35]
Replying affidavit: annexure “RA1”, p 485
[36]
Answering affidavit: para 10, p 234 & replying affidavit: para
10, p 464 & “RA1”, p 485; answering affidavit:
para
7, pp 230/1 and replying affidavit: para 14, pp 470/1 & “RA1”
[37]
Answering affidavit: para 10, p 235 and replying affidavit: para 10,
pp 464/5 & “RA2”, “RA3” &
“RA4”,
pp 507 – 550; and see also para 30, p 482
[38]
Annexure “FA6.1”, p 143/4 also attached as “RA8”,
p 581/2 as well as proof of service by the sheriff,
annexures
”FA6.2” – “FA6,7”, pp 145
- 150
[39]
Eke v
Parsons supra:
para
25
[40]
1942 NPD 138
[41]
Ibid
para 26
[42]
Ibid
para 27
[43]
2013
(JDR) 0391 (GNP)
[44]
2020
(2) SA 390
(SCA) at 394 I
[45]
“FA2” & “FA4” on pp 68 & 106
[46]
Answering affidavit p ……. &
inter
alia
“
FA4”
on p 117
[47]
Rule 46A and the following judgments with which I respectfully
agree:
Investec
Bank Ltd v Fraser NO and Others
2020
(6) SA 211
(GJ) paras 68 – 70 and the unreported judgment,
Nedbank
Ltd v Bestbier and Others
(Scholtz
Intervening) (12654/18) ZAWCHC 107 delivered on 17 September 2018