About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Kwazulu-Natal High Court, Pietermaritzburg
SAFLII
>>
Databases
>>
South Africa: Kwazulu-Natal High Court, Pietermaritzburg
>>
2022
>>
[2022] ZAKZPHC 54
|
|
Skema Holdings Proprietary Limited and Another v Fellner-Feldegg (AR32/22) [2022] ZAKZPHC 54 (21 September 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: AR 32/22
Court
a quo
Case No.: 2082/21P
In
the matter between:
SKEMA
HOLDINGS PROPRIETARY LIMITED
FIRST APPELLANT
(REG.
NO. 1990/006817/07)
(First
respondent in court
a
quo
)
FRIEDRICH
WILHELM GERHARD WŐRNER SECOND
APPELLANT
(Second
respondent in court
a
quo)
and
ROBERT
FELLNER-FELDEGG
RESPONDENT
(Applicant
in the court
a quo)
Coram:
Madondo AJP, Koen J et Mathenjwa AJ
Heard:
9 September 2022
Delivered:
21 September 2022
ORDER
On
appeal from
the KwaZulu-Natal
Division of the High Court, Pietermaritzburg (Bedderson J) sitting as
the court of first instance:
1.
The appeal is dismissed with costs.
2.
The order of the court a quo is
supplemented by the addition of the following order:
‘
The
counter application is dismissed with costs.’
JUDGMENT
Koen
J (Madondo AJP et Mathenjwa AJ concurring)
Introduction
[1]
This is an appeal against the order of
the court a quo which granted judgement in motion proceedings in
favour of the respondent
against the appellants, jointly and
severally, for payment of the sum of €1.5 million together
with interest thereon
at the rate of 5% per annum capitalized
annually in arrears from 24 January 2017 to date of payment, an order
declaring the immovable
properties mortgaged in covering bond
B1022/2017 (the bond) executable, and costs of the application on the
attorney and client
scale including the costs of senior counsel.
Where necessary, and if required to be distinguished from any other
application, it
shall be referred to as the main application.
[2]
The
court a quo was also faced with a counter application
[1]
brought by the appellants. The court a quo seemingly proceeded on the
basis that the fate of the counter application would follow
that of
the main application. It did not issue a separate order in respect of
the counter application.
[3]
There was also an application by the
appellants to strike out certain allegations in and annexures to the
respondent’s replying
affidavit as inadmissible evidence with
costs. No separate order was made by the court a quo in respect of
this application to
strike out either.
[4]
The present appeal lies against the
whole of the judgment of the court a quo with the leave of that
court. According to the
appellants’ notice of appeal they
seek an order ‘dismissing the main application, granting the
counter application,
and the strike out application, all with costs,
including the costs of senior counsel’. The grounds in respect
of which leave
to appeal was granted by the court a quo, following
the application for leave to appeal, however only included that the
court a
quo had erred in the main application: in adopting the
interpretation of the loan agreement which it did, and in not
concluding
that agreement of loan had been varied by the exchange of
the two emails; and in respect of the counter application, in not
finding
that the respondent frustrated the sales of the properties
mortgaged in the bond. There was no reference to the application to
strike out in the application for leave to appeal.
[5]
The application to strike out
accordingly does not form part of this appeal and will not be
considered in this judgment. The counter
application, in respect of
which the court a quo made no separate order shall be considered, as
it was covered by the leave to
appeal.
The
judgment of the court a quo
[6]
It
is common cause that the amount of the judgment debt, being the
‘initial loan’ amount, of €1.5 million,
advanced in terms of the loan agreement as amended by two subsequent
addenda, together with interest thereon at the rate of 5%
per annum
capitalized annually in arrears from 24 January 2017 to date of
payment, is owing.
[2]
What is in
dispute is whether this debt had become due and payable.
[7]
The
appellants argued that on a proper interpretation of the loan
agreement, as amended by two subsequent addenda, the debt would
only
become due and payable from the proceeds of the immovable properties
which are subject to the bond, in accordance with and
to the extent
provided by clause 6.2 of the loan agreement, ‘as and when a
sale
[3]
takes place’ of
any of the properties hypothecated in terms of the bond.
[4]
Alternatively, the appellants submitted that the terms of the loan
agreement as varied by two addenda, were varied by two emails
dated
31 July 2020 and 22 October 2020 which were exchanged between the
parties. The respondent contended that the debt became
due and
payable on or before 1 March 2021, as provided in clause 5 of the
loan agreement as amended by the second addendum. The
court a quo
agreed with the contention of the respondent and rejected that of the
appellants.
Relevant
background facts
[8]
The respondent and the appellants on 18
January 2017 concluded the written loan agreement in terms of which
the respondent agreed
to lend an amount of up to €2.5 million
to the first appellant. The loan would be drawn down in two tranches
of €1.5
million (‘the Initial Loan’) and €1
million (‘the Loan Balance’). On 24 January 2017 and 27
March
2017, respectively, the first appellant advanced the Initial
Loan of €1.5 million and the Loan Balance of €1 million.
The second appellant bound himself jointly and severally as surety
and co-principal debtor in favour of the respondent for the
first
appellant’s obligations in terms of the loan agreement. The
first appellant furthermore provided security in the form
of the
bond, as required and set out in clause 6 of the loan agreement.
[9]
The express terms of the written loan
agreement material to this judgment include the following:
(a)
The written agreement constituted the
whole agreement between the parties containing all the express
provisions agreed on with regard
to the subject matter of the loan
agreement;
(b)
No agreement varying, adding to,
deleting from, or cancelling the loan agreement, and no waiver of any
right thereunder would be
effective unless this was done in writing
and signed by or on behalf of the parties;
(c)
Clause
5.1 provided that the Initial Loan (€1.5 million) plus interest
would be repayable in an instalment of €1 million
plus
interest on or before 31 January 2022, and the balance of €500 000
plus interest in instalments of €150 000
per month commencing on
1 July 2018, and thereafter on the first of every following
month.
[5]
(d)
Clause 5.2 provided that the Loan
Balance (€1 million) plus interest would be repayable in
instalments of €150 000
per month commencing on 31 January 2018,
and thereafter on the last day of every following month.
(e)
Clause 5.3 provided that should the
first appellant default in making payment of any of the instalments
referred to in clauses 5.1.2
and 5.2 of the loan agreement, and
should such payment not be made within fourteen days of receipt of
written notice from the respondent,
the respondent would be entitled
to declare the entire loan plus interest repayable immediately
without further notice.
(f)
Clause 6.1 provided that the bond would
be registered as security for the loan.
(g)
In terms of clause 6.2 the first
appellant was obliged to ‘
use
its best endeavours to sell’
the immovable properties subject to the bond and, as and when sales
take place, to utilise a portion of the nett proceeds towards
settlement of the loan. If the Initial Loan and Loan Balance had
‘
been
drawn down, Euro 125 0000 of the nett proceeds of every sale
[had] to be paid to the [respondent] in return for [him]
releasing
the security on that Property on the basis that Euro 75 000 is
allocated to the Initial Loan and Euro 50 000 to
the Loan Balance.’
(h)
Clause 5.5 provided that to the extent
that any of the properties which are subject to the bond were sold in
terms of clause 6.2
of the loan agreement, the amounts payable to the
respondent in terms of clause 6.2 would be deemed to have settled
those instalments
covered by the payments (clause 5.5).
[10]
Two written addenda to the loan
agreement were concluded subsequently.
[11]
In terms of the first addendum signed by
the parties on 12 February 2018 clauses 5.1.2 and 5.2 of the loan
agreement were deleted
and substituted. Clause 5.1.2 henceforth
provided that the balance of €500 000 of the Initial Loan
plus interest would
be payable in instalments of €150 000
per month commencing on 1 July 2019 and thereafter on the first day
of every following
month. Clause 5.2 henceforth provided that the
Loan Balance plus interest would be repayable in instalments of €150
000 per
month commencing on 31 January 2019 and thereafter on the
last day of every following month.
[12]
In terms of the second addendum signed
by the parties concluded on 12 May 2019, clauses 5.1, 5.2 and 5.3 of
the loan agreement were
deleted and substituted with the following:
‘
5.1
The Initial Loan plus interest is repayable on or before 1 March 2021
and the Loan Balance plus interest is repayable
on or before 1 July
2022.
5.2
The interest payable on the Initial Loan and the Loan Balance must be
capitalized annually in arrear.
5.3
Should Skema fail to repay either the Initial Loan or the Loan
Balance timeously the Lender may take such
legal action as he deems
appropriate.’
[13]
On 31 July 2020 the respondent in an
email to the second appellant stated:
‘
Dear
Fred
Hopefully
things are going well.
Let
me confirm that our common understanding of the payback of the two
loans over 2,5 Mio Euro given from me to SKEMA was and is
that this
loans will be payed back from SKEMA by selling the properties.
The
2,5 Mio will not be paid back by the MINING business.
This
is already proven by my agreement to the APENDIX
[6]
of the loan contract in postponing the pay back. Understanding that
the first date was not a good timing for selling the properties.
With
best regards
Robert.’
[14]
On 22 October 2020 the second appellant
in an e-mail addressed to the respondent stated inter alia:
‘
Whilst,
I am sorry to hear that there are some delays with the SLV sale,
which has caused you certain liquidity problems, it has
always been
our understanding that the Euro 2,5m loan would be repaid from
property sales. In fact, when we needed confirmation
of this for our
Covid loan application in July, you confirmed that this was indeed
the arrangement, and that the loan would not
be repaid by the
industrial business.
During
our meeting on Tuesday, you however requested that we apply to Absa
for a loan re-advance in order to repay the Euro 1,5m
a portion of
the loan plus interest, repayable in March 2021, and that you would
be prepared to offer securities for the loan,
either in South Africa
or Germany, in addition to Absa’s first bond.
. .
.
Robert,
this is unfortunately not possible for the following reasons:
. .
.
·
Nedbank, as the company’s banker,
will not allow any new Skema Holdings loan to be repaid out of the
industrial business –
this is why they require confirmation
that your loan will be repaid from property sales and not by the
industrial business, prior
to granting the Covid loan.
·
Skema Mining Components has Neil as a
26% shareholder, and Neil is not involved in Skema Holdings.’
[15]
On 16 November 2020 the appellants’
attorney, Mr. David Warmback, in an e-mail to the respondent
commented as follows regarding
the repayment of the Initial Loan and
the Loan Balance and the due dates of such repayment:
‘
The
second addendum provides that the Initial Loan (Euro 1.5m) plus
interest on the Initial Loan is repayable on or before 1 March
2021
and the Loan Balance (Euro 1m) plus interest on the Loan Balance on
or before 1 July 2022. It is therefore the Euro
1.5m plus the
capitalised interest on the Euro 1.5m which is due by 1 March 2021.
. .
.
In
the event of Skema not being able to pay you timeously, and you do
not conclude a further addendum to the Loan Agreement, you
will be
entitled to call up the Bond and proceed against the properties.
The properties would be the subject of an auction
sale. In the
event that your claim exceeds Euro 3 000 000, being the sum of the
capital amount and additional amount covered
by the Bond, you will
still be entitled to proceed legally against Skema for any shortfall.
I
understand from my client that it intends selling a number of
properties as soon as possible to assist you with your interest
issue
with the German tax authorities, and our client is fairly confident
of achieving this by 1 March 2021, based on feedback
from agents.
The
balance of Euro 1m (ie Loan Balance) plus interest on the Loan
Balance is due to be paid by Skema to you on or before 1 July
2022.’
[16]
On 24 November 2020 Mr Coetzee, another
of the appellants’ attorneys, addressed an e-mail to the
respondent in response
to the respondent’s enquiry in respect
of Mr Warmback’s e-mail of 16 November 2020 stating:
‘
1.
I am back from leave and David Warmback has passed on to me your
email of 19 November
2020 for reply.
2.
You are correct that the loans are repayable in Euros and that the
exchange which
would apply will be the rate applicable at the time of
repayment.
3.
Quite simply, as a result of the weakening of the Rand against the
Euro, it is
going to be necessary for Skema to sell more properties
to repay the loans plus capitalised interest. Skema is however not
precluded
from selling its properties at a predetermined price. . .’
The
principal issue
[17]
As will be apparent from the above, the
principal issue in this matter is whether the sum of €1.5
million claimed by the respondent
fell due for payment on 1 March
2021. The respondent contends that on a proper interpretation
of the terms of the loan agreement,
the addenda and the bond, and
having due regard to the conduct of the parties during and subsequent
to the conclusion of the agreements,
the payment claimed was due and
payable on 1 March 2021.
Discussion
The
principles governing the interpretation of a written loan agreement
[18]
Bothma-Batho
Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
[7]
held
that:
‘
Whilst
the starting point remains the words of the document, which are the
only relevant medium through which the parties have expressed
their
contractual intentions, the process of interpretation does not stop
at a perceived literal meaning of those words, but considers
them in
the light of all relevant and admissible context, including the
circumstances in which the document came into being. The
former
distinction between permissible background and surrounding
circumstances, never very clear, has fallen away. Interpretation
is
no longer a process that occurs in stages but is “essentially
one unitary exercise”.’ (footnote omitted)
[19]
More
recently in
Capitec
Bank Holdings v Coral Lagoon Investments 194 (Pty) Ltd
[8]
it was said, specifically in regard to a written contract, the
requirement of contextualising the words used, and the application
of
the parol evidence rule, that:
‘
[39]
In the recent decision of
University of Johannesburg v Auckland
Park Theological Seminary and Another (University of Johannesburg)
,
the Constitutional Court affirmed that an expansive approach should
be taken to the admissibility of extrinsic evidence of context
and
purpose, whether or not the words used in the contract are ambiguous,
so as to determine what the parties to the contract intended.
In a
passage of some importance, the Constitutional Court sought to
clarify the position as follows:
“
Let
me clarify that what I say here does not mean that extrinsic evidence
is always admissible. It is true that a court’s
recourse to
extrinsic evidence is not limitless because ‘interpretation is
a matter of law and not of fact and, accordingly,
interpretation is a
matter for the court and not for witnesses”. It is also true
that “to the extent that evidence
may be admissible to
contextualise the document (since “context is everything”)
to establish its factual matrix or
purpose or for purposes of
identification, one must use it as conservatively as possible”.
I must, however, make it clear
that this does not detract from the
injunction on courts to consider evidence of context and purpose.
Where, in a given case, reasonable
people may disagree on the
admissibility of the contextual evidence in question, the unitary
approach to contractual interpretation
enjoins a court to err on the
side of admitting the evidence. There would, of course, still be
sufficient checks against any undue
reach of such evidence because
the court dealing with the evidence could still disregard it on the
basis that it lacks weight.
When dealing with evidence in this
context, it is important not to conflate admissibility and weight.”
.
. .
[43]
. . . If then, on this view, a written contract has a plain meaning
and the writing is the exclusive memorial of the contract,
the parol
evidence rule excludes extrinsic evidence that would alter, add to or
vary that plain meaning.’ (footnotes omitted)
The
interpretation of the written loan agreement
[20]
Turning then to an application of the
above principles to the facts, the plain meaning of the express
wording of clauses 5, as amended,
and 6, which was never amended, of
the loan agreement should be taken as the point of departure. Regard
should be had to the facts
and circumstances, to the knowledge of the
respondent and the appellants, under which the loan agreement and
addenda thereto were
concluded, and their intention in exchanging the
emails relied upon by the appellants.
[21]
The terms of clauses 5.1, 5.2 and 5.3 of
the loan agreement as amended by the second addendum, in the context
of the loan agreement,
are clear and unambiguous. They do not lend
themselves to the appellants’ interpretation that the loans
would be paid only
from the proceeds of the sale of the immovable
property subject to the bond, and only as and when a sale takes
place. If that was
so, then there would have been no need for the two
amendments to clause 5 which were introduced by the addenda.
[22]
As regards the addenda, the appellants
knew that the first appellant was experiencing cash flow problems
which would make payment
of the first instalment on the date
initially fixed in the loan agreement problematic. Such knowledge was
conveyed by the second
appellant to the respondent. It was in those
circumstances and with that knowledge that the parties concluded the
first addendum
in terms of which the payment date of the first
instalment in respect of the Initial Loan was extended from 1 July
2018 to 1 July
2019, and the payment date of the first instalment in
respect of the Loan Balance was extended from 31 January 2018 to 31
January
2019. The first addendum simply extended the commencement
dates for payment of the instalments by one year. Consistent with the
initial terms of the loan agreement which provided that repayments
would be due by specific dates, repayment in terms of the first
addendum would still be due on specified dates.
[23]
The first appellant failed to pay the
monthly instalments of €150 000 which fell due in terms of
the first addendum when
agreed. Its inability and failure to pay was
within the knowledge of the appellants and the respondent. In
addition, the second
appellant informed the respondent that the first
appellant’s cash flow problems had not been resolved, and that
the first
appellant would be unable to pay the further monthly
instalments. The second appellant, who had the best knowledge of the
first
appellant’s financial situation, prepared a further
addendum and proposed a repayment date of 1 March 2021 for the
Initial
Loan. It is in that context, with knowledge of the
aforementioned facts, that the parties concluded the second addendum.
[24]
The second addendum dispensed with the
payment of monthly instalments, and provided for the repayment of the
Initial Loan in full
on or before a specified date (i.e. 1 March
2021) and the repayment of the Loan Balance in full on or before a
specified date (i.e.
1 July 2022). Again, consistent with what had
happened in the past, specific dates for payment were fixed. There
would have been
no need to do so if the time for payment would be
determined in terms of the provisions of clause 6.
[25]
Thus the initial provisions of the loan
agreement and the addenda, all provided that the obligation to repay
the loan had to occur
by fixed future dates expressly agreed upon
between the parties. Repayment was always time-based, not event
based. Clause 5.3 (as
amended) expressly provided that should there
be a failure to repay the Initial Loan or the Loan Balance timeously,
the respondent
could take such legal action as he deems
appropriate.
[26]
In each instance, the addenda were
concluded to extend the due dates for repayment of the Initial Loan
and the Loan Balance. In
paragraph 21 of their answering affidavit,
the second appellant tellingly states:
‘
Furthermore,
the effect of the addenda was to extend the time for repayment.’
This
statement carries the implied admission that there was a fixed time
for repayment of the loan, in other words a fixed due date.
On the
appellants’ version, there would be no need to extend these
dates for payment as the loan agreement had no specific
dates for
repayment of the loans.
[27]
On 22 October 2020, which is after the
conclusion of the second addendum, the second appellant in his e-mail
to the respondent confirmed
that the Initial Loan of €1.5
million plus interest was ‘repayable in March 2021.’
[28]
On 16 November 2020 the appellants’
attorney, Mr Warmback, in his e-mail recounted the terms of the loan
agreement as amended
by the addenda, and clearly expressed a
conclusion, denoted by the introductory words ‘It is therefore.
. .’, when
explaining:
‘
It
is therefore the Euro 1.5m plus the capitalised interest on the Euro
1.5m which is due by 1 March 2021.’
[29]
Mr Warmback’s e-mail of 16
November 2020 was also addressed to
inter
alia
the second appellant and the
appellants’ attorney of record, Mr Coetzee. On 24 November 2020
Mr Coetzee addressed an e-mail
to the respondent in response to the
respondent’s enquiry in respect of Mr Warmback’s e-mail
of 16 November 2020. Mr
Coetzee did not distance the appellants from
the statements in Mr Warmback’s e-mail regarding the due dates
for repayment
of the Initial Loan and the Loan Balance.
[30]
The appellants’ interpretation of
the agreement is accordingly also not supported by the evidence as to
how the obligations
in terms of the agreement were viewed and
implemented by the appellants and their attorneys.
[31]
Indeed, the above evidence and the
conduct by the appellants and their attorneys, are diametrically
opposed to the appellants’
now reliance on clause 6.2 of the
Loan agreement, that payments would only fall due from the proceeds
of sales of the immovable
properties subject to the bond, and its
corollary, that in the absence of any such sales, notwithstanding the
best endeavours of
the first appellant, no payment would be due to
the respondent. Such an interpretation is furthermore in direct
conflict with the
clear express terms of clauses 5.1 and 5.3 (as
amended), as well as the contents of the e-mail addressed by the
appellants’
attorney, Mr Warmback to the respondent on 16
November 2020, and the second appellant’s e-mail of 22 October
2020 to the
respondent. The appellants’ interpretation would
render clauses 5 and 6 mutually exclusive and destructive, and would
render
clauses 5.1, 5.2 and 5.3 (whether in the original or as
amended) unnecessary. That would violate the basic principle of
interpretation
that the preferred interpretation of a written
agreement must account for all the words in the document.
[32]
Clause 6, in its original form without
any amendment, always remained a part of the loan agreement. If the
appellants’ version
was correct, there would have been no need
to re-negotiate new dates for payment, as was done in the first and
second addenda.
It would mean that on the appellants’ version,
the two addenda were negotiated and concluded for no reason
whatsoever. That
would, with respect, be an absurd interpretation.
Clearly the purpose of the addenda, on each occasion, was to extend
the due dates
fixed for repayment of the Initial Loan and the Loan
Balance. On the appellants’ interpretation there would
have been
no need to extend the dates for payment.
[33]
If the appellants’ version is
correct then repayment of the loan was conditional upon the sale of
the immovable properties
subject to the bond, and if there were no
such sales, or insufficient sales to settle the loan there would be
no due date of repayment,
no obligation to pay the outstanding
balance, the loan would accordingly never be repayable, and the
respondent would not be entitled
to enforce payment of the balance of
the loan. That would offend against the following basic principle of
our law that:
‘
A
sensible meaning is to be preferred to one that leads to insensible
or unbusinesslike results or undermines the apparent purpose
of the
document.’
[9]
The
appellants’ interpretation would not make business sense.
Accordingly, it cannot be sustained.
[34]
In
summary, the correct legal position was that the Initial Loan had to
be repaid on or before 1 March 2021 and the Loan Balance
on or before
1 July 2022 Pending payment, the first appellant’s indebtedness
was secured by the bond registered over the
immovable properties. As
and when the immovable properties were sold, a portion of or the
entire proceeds of such sale would be
utilised towards part
settlement of the first appellant’s obligations arising from
the €2.5 million loan advanced by
the respondent to the first
appellant, as the value of the respondent’s security would be
reduced by the release of individual
subdivisions transferred to
purchasers. Such an interpretation would make business and commercial
sense, because if the indebtedness
was reduced on the sale of each
unit and the obligation to make payment was left entirely to a fixed
due date, then the first appellant
might no longer have those funds
available when the due date arrives. The fact that the proceeds of
the sale of the immovable properties
would be used towards settlement
of the first appellant’s indebtedness to the respondent, would
not however detract from
the first appellant’s obligation to
repay the full Initial Loan on or before 1 March 2021 and the Loan
Balance on or before
1 July 2022. Such an interpretation gives
certainty to the parties and business efficacy to the loan
agreement.
[10]
The
appellants’ contention that the loan agreement was varied
by the exchange of the emails of 31 July 2020 and 22 October
2020
[35]
The contents of these emails have been
set out in paragraphs 13 and 14 above.
[36]
In the alternative to the interpretation
that the loan agreement provided for repayment in accordance with
clause 6, the appellants
argued that the exchange of these e-mails
between the respondent and the second appellant on 31 July 2020 and
22 October 2020 varied
the terms of the loan agreement to provide
that repayment of the loan agreement would only fall due from the
proceeds of the sales
of the immovable properties,.
[37]
The first conceptual difficulty with
this argument is that if clause 6 meant what the appellants say it
did, there would be no need
for a variation. And if it is accepted
that a proper interpretation of the loan agreement accords with that
which the court a quo
had found, then the variation would in fact
require that the provisions of clause 5 of the loan agreement, as
amended by the two
addenda, were effectively to be deleted from the
loan agreement and/or ignored.
[38]
Insofar
as the alleged variation would amount to a deletion of the dates
fixed for repayment by clause 5 of the loan agreement as
amended, it
would amount to a waiver of those rights. The appellants would bear
the onus to prove the waiver.
[11]
Whether there is a waiver, is invariably a question of fact.
[12]
[39]
The
appellants focused mainly on whether such variation or waiver of the
terms of the loan agreement complied with the non-variation
provision
in the loan agreement requiring it to be written and signed by the
parties thereto. They relied on the provisions of
section 13(3) of
the Electronic Communications and Transactions Act (the Act)
[13]
read with various definitions in the Act, notably the definitions of
‘electronic communication’, ‘data message’,
‘electronic signature’, and ‘transaction.’
Section13(3) of the Act provides:
‘
(3)
Where an electronic signature is required by the parties to an
electronic transaction and the parties have not agreed on the
type of
electronic signature to be used, that requirement is met in relation
to a data message if –
(a)
a method is used to identify the person and to
indicate the person's approval of the information communicated;
and
(b)
having regard to all the relevant circumstances at
the time the method was used, the method was as reliable
as was
appropriate for the purposes for which the information was
communicated.’
[40]
The respondent however contended that
the exchange of the e-mails was not an ‘electronic transaction’
as contemplated
in section 13(3) of the Act, as, and because the
parties, or certainly the respondent, in exchanging the e-mails,
neither contemplated,
nor intended that such exchange would
constitute a transaction or an agreement varying or waiving the
repayment terms of the loan
agreement.
[41]
It
is clear from the established facts that the purpose of the
respondent’s e-mail of 31 July 2020 was not to vary or waive
the terms of the loan agreement but to provide confirmation,
following a request by the appellants, that the loan forming the
subject of the loan agreement would not be repaid by Skema Mining,
but by the first appellant from the sale of the property it owns.
The
second appellant in his email of 22 October 2020 confirmed that
Nedbank had required confirmation, prior to granting the Covid
loan,
that the source for repayment of the loan would be from property
sales, and not from the industrial business. The respondent’s
email of 31 July 2020 simply provided the confirmation requested by
the appellants. The email went no further, and was not intended
to
convey any more than that. In the words of the second appellant in
his replying affidavit in the counter application:
[14]
‘
[50]
Nedbank was simply asking for confirmation of what the correct
position was.
[51]
I telephoned the (respondent) prior to him sending the email
of 31 July 2020 and at the time he was driving somewhere
in northern
Germany, according to him. I explained the position to him and asked
him simply to confirm what is in fact the truth
of the matter.
[52]
He had no objection to doing so and that was the genesis of
his email of 31 July 2020.’
[42]
The
aforesaid is dispositive of the appellants’ contention that a
variation was effected by the exchange of the emails. It
is
accordingly not necessary to consider further the provisions of the
Act, or the decisions in inter alia
Spring
Forest Trading 599 CC v Wilberry (Pty) Ltd t/a Ecowash
,
[15]
or
Borcherds
v Duxbury,
[16]
or
Global
& Local Investment Advisors (Pty) Ltd v
Fouché
.
[17]
[43]
There
was no evidence that the respondent transmitted the e-mail of 31 July
2020 with the intention to vary the terms of the loan
agreement by
effectively waiving compliance with the provisions of clause 5
thereof. As was said in
Sonfred
(Pty) Ltd v Papert
[18]
‘
It
is . . . axiomatic that a person is not bound by the mere fact that
his signature appears upon a document of debt. The chief
significance
of a signature to a document of obligation is that it is evidence of
the fact of consent by the signatory, and in
order that he may be
bound it is necessary that he shall have affixed his signature with
the intention of binding himself.’
[44]
If the intention was to amend the dates
for repayment fixed in the second addendum, then the emails would
have said so. To the contrary,
in his e-mail of 31 July 2020, the
respondent specifically referred to the addendum to the loan
agreement in terms whereof he agreed
to postpone repayment of the
loan, as the first date for repayment was not ‘good timing for
selling the properties.’
In his e-mail of 22 October 2020 the
second appellant expressly confirmed that the €1.5 million
portion of the loan plus interest
(in other words the Initial Loan
plus interest) was repayable in March 2021. Shortly after the
exchange of the emails, the appellants’
attorney, Mr Warmback,
on 16 November 2020 confirmed that the Initial Loan was repayable on
or before 1 March 2021 and the Loan
Balance on or before 1 July 2022
(as agreed in the second addendum). These facts are inconsistent with
the parties intending to
achieve a variation to the express terms of
the loan agreement. Had the parties intended to vary the loan
agreement as contended
by the appellants, then they would have
concluded an addendum to that effect, as with the previous two
addenda which were concluded
when they contemplated and intended to
change the dates for repayment of the loan, or at the very least,
they would have said that
the provisions of clause 5 were varied or
waived.
[45]
The appellants have failed to establish
a variation of the terms of the loan agreement by the exchange of the
emails.
The
exceptio non adimpleti contractus
[46]
There was also some suggestion that the
appellants were excused from making payment of the loan because the
respondent had failed
to co-operate, and had indeed frustrated the
sale of the subdivisions subject to the bond. Invoking the
exceptio
non adimpleti contractus
the
argument would be that the appellants would therefore be excused from
making payment.
[47]
Having
concluded above that the loans were repayable on fixed dates, in
accordance with the provisions of clause 5 as amended by
the addenda,
this argument must fail, as the due date for repayment of the loans
had no reciprocal connection to the properties
being sold, or their
sale allegedly being frustrated. The first appellant’s
obligation to repay the Initial Loan was neither
conditional upon,
nor undertaken in exchange for the respondent consenting to the
release of the immovable properties from the
bond.
[19]
That ends this enquiry.
[48]
In any event, the argument must also
fail because as a matter of fact, the respondent had not frustrated
the sale of the subdivisions.
This will be considered in more detail
below when dealing with the appellants’ counter application.
The
counter application
[49]
The
appellants launched a counter application in which the following
relief was claimed:
[20]
‘
[1]
The Applicant is ordered to comply with clause 6.2.2 of the loan
agreement a copy of which is annexure
‘RF1’ to the
founding affidavit by releasing his security on each property sold as
contemplated in that clause on payment
of the nett proceeds of the
sale until the full amount of the loan amount and lawful interest
thereon is paid to him on the basis
that:
[a]
Each such property may be sold for not less than R 2 million (or such
lesser amount as may be agreed to in
writing by the Applicant);
[b]
an amount equivalent to Euro 75,000 of each such sale shall be
allocated to the initial loan referred to therein
until payment in
full thereof together with any lawful interest, and the balance of
the said proceeds up to the amount of Euro
125 000 shall be allocated
to any loan balance owing to the Applicant until payment in full
thereof together with any lawful interest.
[2]
The Applicant is ordered to pay the Respondents’ costs of the
counter application, including
the costs of senior counsel.
[3]
The Respondents are awarded further, other or alternative relief.'
[50]
The appellants advanced as the basis for
their counter application, that the respondent has frustrated the
sale of the properties,
specifically, that the respondent had refused
to agree to the sale of the properties below a certain price.
[51]
The
answering affidavit is however very sparse on identifying the factual
evidence on which reliance would be placed to support
this relief. We
were referred only to some general allegations with reference to
certain ‘correspondence.’ For example,
in paragraph 28 of
the answering affidavit, the second appellant simply states:
[21]
‘
Moreover,
as is reflected in the correspondence, the Applicant has frustrated
sales by refusing to agree to the proposal by SKEMA
that it reduces
the prices of the property. In this regard SKEMA was attempting to
use its “
best endeavours
” to facilitate as many
sales as possible by lowering the price.’
[52]
The
correspondence on which reliance is seemingly placed by the
appellants is attached to the end of the answering affidavit as
annexures. But there are no allegations in the body of the affidavit
seeking to explain the relevance of this correspondence, or
setting
out on which parts thereof reliance is placed. Such an approach,
referring simply to the factual basis for relief claimed,
‘as
reflected in the correspondence’ without identifying the
particular contents relied upon is irregular. It is not
permissible
for a deponent simply to annex documentation to his papers without
identifying the portions of such documentation upon
which reliance is
placed.
[22]
Courts and
opposing litigants are not required to trawl through lengthy
annexures to an affidavit to identify what might or might
not be the
relevant allegations upon which reliance might be placed and which
they would be required to address.
[53]
The aforesaid defect notwithstanding, on
being invited nevertheless to point to the relevant parts of the
correspondence on which
reliance was placed, counsel referred to the
following:
(a)
In the email from Mr Warmback dated 16
November 2020 he recorded that:
‘
I
understand from my client that it intends selling a number of
properties as soon as possible to assist you with your interest
issue
with the German tax authorities, and our client is fairly confident
of achieving this by 1 March 2021, based on feedback
from agents.’
(b)
In the email from Mr Coetzee dated 24
November 2020 he recorded that
‘
.
. . It is going to be necessary for Skema to sell more properties to
repay the loans plus capitalised interest. Skema is however
not
precluded from selling its properties at a predetermined price. . .
Finally, I am instructed that you advised Fred that you
are prepared
to reduce the interest rate on the loans if he agreed not to sell the
properties. However, as pointed out to you,
it would not be possible
for the company to repay the loans plus capitalised interest unless
it sells the properties so your proposal
would not make any sense.’
(c)
In the email of 8 January 2021 addressed
to the second appellant the respondent stated that in 2015 he had
paid R4 560 000 for portion
14 and that he was very unhappy
‘
with
the current “Black Friday” deal indicating sites for sale
at 2.000.000 ZAR (excl VAT) each. This clearly demonstrates
that we
paid far too much for our site and that now a very different customer
profile is being targeted too.’
(d)
Finally reliance was placed on a draft
order which the respondent had proposed to resolve the counter
application.
[54]
The aforesaid portions quoted from email
correspondence does not establish a frustration of sales. The
respondent was unhappy about
the prices charged for the properties,
but it did not go beyond that.
[55]
As regards the respondent’s
proposed alternative draft order to resolve the counter application,
the draft order annexed to
his replying affidavit was not annexed as
a concession of the relief claimed by the appellants in their counter
application. Indeed
the respondent in the replying affidavit
expressly records in regard to the draft order proposed by him that:
‘
My
consent to the grant of the abovementioned Draft Order and the terms
of the Draft Order are not to be construed as an admission
by me of
the Respondents’ [that is, the appellants in the appeal]
interpretation of the agreements and the mortgage bond.’
The
respondent prayed that no cost order should be made in respect of the
appellants’ counter application if his proposal
was to be
adopted.
[56]
As already pointed out earlier, no order
was made by the court a quo in respect of the counter application,
whether as claimed by
the appellants, or suggested by the respondent
as a possible compromise. The appellants however, as part of the
relief on appeal,
pray for an order ‘granting the
counter-application . . . with costs.’ They have not sought an
order in respect of
the order proposed as a compromise of the counter
application by the respondent, with no order as to costs. The issue
for determination
in the appeal before us is accordingly purely
whether, as a matter of law, the appellants had established that they
were entitled
to an order in terms of the relief claimed in their
counter application.
[57]
The loan agreement did not contain any
provision that the respondent had to agree on the price at which
properties included in the
bond could be sold. They could be sold by
the first appellant in its discretion at whatever price. If the
payment of €125
000 per sale required to be paid for the release
of individual properties from the bond were not paid, the respondent
would not
have been obliged to release the property from the bond,
but that is a different issue. Indeed sales at a price of R2 million
per
property would at the present exchange rate not result in
sufficient gross, leave aside nett, proceeds being realized to cover
a payment of €125 000 per property. Obviously the position might
change depending on the Rand/Euro exchange rate as it has
fluctuated
from time to time.
[58]
Sales were not being frustrated, but the
transfer of individual properties unless ‘Euro 125 000 of the
nett proceeds of every
sale must be paid to the Lender [ie the
respondent] in return for the Lender [ie the respondent] releasing
the security on that
Property’, might have become a problem for
the first appellant if the properties were not released from the
security afforded
by the bond. But that would be as a result of the
appellants having anticipated a more lucrative market for the
properties, to
leave sufficient nett proceeds upon transfer of
individual properties to cover payments of €125 000 per
property. What the
appellants more correctly might possibly have
wanted to achieve, is not that sales would be permitted at R2 million
(or a lesser
amount as may be agreed), but that the amount required
to be paid to the respondent in respect of the transfer of individual
properties,
for those properties to be released from the operation of
the bond, be reduced to below €125 000 per property.
[59]
That is however not what the counter
application sought to achieve. Indeed, paragraph [1][b] of the
counter application essentially
repeated the terms of clause 6.2.2 of
the loan agreement. And that is not surprising, because to compel the
respondent, in the
absence of the respondent voluntarily agreeing to
accept a lesser payment in respect of the transfer of each property
for the release
of the security afforded by that property for the
outstanding indebtedness of the appellants to the respondent, would
amount to
the court making an agreement for the parties and foisting
it upon the parties. That a court will not do.
[60]
The appellants had failed to put up
evidence that the respondent had frustrated sales which, in law,
would entitle them to any relief
in terms of the counter application.
The counter application accordingly fell to be dismissed with costs.
Order
[61]
The following order is granted:
1.
The appeal is dismissed with costs.
2.
The order of the court a quo is
supplemented by the addition of the following order:
‘
The
counter application is dismissed with costs.’
KOEN
J
APPEARANCES
For
the appellants: Mr
G Harpur SC
Instructed
by: Shepstone
& Wylie
Pietermaritzburg
jmanuel@wylie.co.za
For
the respondent: Mr
G M E Lotz SC
Instructed
by:
Hay
and Scott Attorneys
Pietermaritzburg
paul@hayandscott.co.za
[1]
The relief claimed in the counter application is set out in para 49
below.
[2]
To date the appellants have not made any payment towards settlement
of their admitted liability in the sum of €2.5 million
to the
respondent.
[3]
It
is significant that the reference is to the sale of the property,
and not the transfer thereof.
[4]
A
slightly nuanced interpretation was also at one stage contended for,
namely that even if the loan amount was due on the specific
dates
contended for by the respondent, that what would be due would only
be the portion due by that date from proceeds that might
have been
realized from the sale of properties, and hence if none had been
sold, no payment would be due, even if the date for
payment had
arrived. This argument will suffer the same fate as that which
determines whether the payments were due in the first
place.
[5]
These
payments in respect of the balance of the initial loan were dealt
with in clause 5.1.2.
[6]
This
could only have referred to the addenda as there is no other
‘appendix’ to the loan agreement.
[7]
Bothma-Batho
Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
[2013] ZASCA 176
,
2014
(2) SA 494
(SCA) para 12.
[8]
Capitec
Bank Holdings Limited and another v Coral Lagoon Investments 194
(Pty) Ltd and others
[2021] ZASCA 99
;
2022 (1) SA 100
(SCA);
[2021] 3 All SA 647
(SCA),
citing
University
of Johannesburg v Auckland Park Theological Seminary and another
[2021] ZACC 13
;
2021 (6) SA 1
(CC);
2021 (8) BCLR 807
(CC).
[9]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2012] ZASCA 13
,
2012 (4) SA 593
(SCA),
[2012] 2 All SA 262
(SCA)
para 18.
[10]
Mittermeier
v Skema Engineering (Pty) Ltd
1984
(1) SA 121
(A) at 128A – B.
[11]
Borstlap
v Spangenberg en andere
1974
(3) SA 695 (A).
[12]
Laws
v Rutherford
1924
AD 261.
[13]
Electronic Communications and Transactions Act 25 of 2002
.
[14]
I.e. the second respondent’s (in the court a quo) replying
affidavit of 9 June 2021.
[15]
Spring
Forest Trading CC v Wilberry (Pty) Ltd t/a Ecowash and another
[2014]
ZASCA 178, 2015 (2) SA 118 (SCA).
[16]
Borcherds
and another v Duxbury and others
[2020] ZAECPEHC 37, 2021 (1) SA 410 (ECP).
[17]
Global
& Local Investments Advisors (Pty) Ltd v Fouché
[2019]
ZASCA 8, 2021 (1) SA 371 (SCA).
[18]
Sonfred
(Pty) Ltd v Papert
1962
(2) SA 140
(W) at 145.
[19]
See
ESE
Financial Services (Pty) Ltd v Cramer
1973
(2) SA 805(C)
at 809D–E and
Grand
Mines (Pty) Ltd v Giddey N.O.
[1998] ZASCA 99
,
1999 (1) SA 960
(SCA) at 965E–I
.
[20]
I.e. the respondents’ (in the court a quo) notice of counter
application of 5 May 2021.
[21]
I.e.
the respondents’
(in
the court a quo)
notice
of counter application of 5 May 2021.
[22]
Derby-Lewis
and another v Chairman, Amnesty Committee of the Truth and
Reconciliation Commission, and others
2001
(3) SA 1033
(C) at 1052C-E,
Minister
of Land Affairs and Agriculture and others v D & F Wevell Trust
and others
[2007] ZASCA 153
;
2008 (2) SA 184
(SCA) para 43.