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Absa Bank and Another v Naidoo (2570/2021P) [2022] ZAKZPHC 71 (15 November 2022)

80 Reportability
Commercial Law
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Brief Summary

Execution — Exceptions to particulars of claim — Defendant's exceptions dismissed — Defendant raised two exceptions claiming lack of cause of action against her — First exception related to the first plaintiff's demand under a guarantee, asserting it extinguished the cause of action — Court held that the first plaintiff's claim against the defendant remained valid despite the demand — Second exception claimed the second plaintiff was a credit provider under the National Credit Act but failed to allege registration as such — Court found the second plaintiff's lack of registration did not preclude the first plaintiff's cause of action — Both exceptions dismissed with costs.

Comprehensive Summary

Summary of Judgment


1. Introduction


This judgment concerned two exceptions brought by the defendant to the plaintiffs’ particulars of claim on the basis that they allegedly lacked averments necessary to sustain causes of action. The matter was heard in the High Court of South Africa, KwaZulu-Natal Division, Pietermaritzburg, before Mossop J.


The parties were Absa Bank as the first plaintiff, Absa Home Loans Guarantee Company (RF) (Pty) Ltd as the second plaintiff, and Katpakarasi Naidoo as the defendant. The first plaintiff was pleaded to be a commercial bank, and the second plaintiff a ring-fenced company providing guarantees for certain obligations of the first plaintiff’s home-loan clients.


Procedurally, summons had been issued against the defendant. The defendant responded by delivering two exceptions, the first directed at the first plaintiff’s claim and the second directed at the second plaintiff’s claim. The hearing of the exceptions took place on 20 October 2022, and judgment was delivered on 15 November 2022.


The general subject-matter of the dispute was the enforceability, on the pleadings, of claims arising from a home-loan financing structure involving a mortgage loan agreement between the bank and the borrower, a related guarantee issued by the guarantee company in favour of the bank, and a related indemnity arrangement (secured by an indemnity bond) between the borrower and the guarantee company.


2. Material Facts


The court relied on a financing structure pleaded as follows. The defendant negotiated and concluded a written mortgage loan agreement with the first plaintiff. To secure the defendant’s obligations to the first plaintiff under that loan agreement, the first plaintiff required the defendant to obtain a guarantee from the second plaintiff.


Because the second plaintiff was exposed to being called upon to perform under the guarantee if the defendant defaulted, the second plaintiff concluded an indemnity agreement with the defendant. As security for the defendant’s indemnity obligations to the second plaintiff, the defendant agreed to register a sectional indemnity bond over the immovable property acquired with the loan proceeds. The pleadings alleged that the indemnity bond was duly passed in favour of the second plaintiff, that the second plaintiff provided the guarantee to the first plaintiff, and that the first plaintiff advanced the loan to the defendant.


The pleadings further alleged that the defendant defaulted on her repayment obligations to the first plaintiff. The first plaintiff made demand on the defendant, and when payment was not forthcoming, the first plaintiff made demand on the second plaintiff under the guarantee (alleged to have occurred on 10 March 2021). The second plaintiff then made demand on the defendant (alleged to have occurred approximately a week later). The pleadings did not expressly state the outcome of those demands.


In addressing the second exception, the court treated as common cause the pleaded position that the second plaintiff was not registered as a credit provider under the National Credit Act 34 of 2005.


3. Legal Issues


The central legal questions were, first, whether the first plaintiff’s particulars of claim disclosed a cause of action against the defendant despite pleading that the first plaintiff had demanded performance from the second plaintiff under the guarantee. This issue was primarily concerned with the application of legal principles to the pleaded facts, viewed through the lens of the law governing exceptions and the effect of security (in the form of a guarantee) on a creditor’s right to pursue the principal debtor.


Second, the court had to determine whether the second plaintiff’s claim was excipiable on the basis that the second plaintiff (as an alleged credit provider) was required to be registered under the National Credit Act 34 of 2005, and had not pleaded registration. This issue involved an interpretation and application of the Act, particularly sections 40(1) and 40(6)(b), the statutory definition of a credit guarantee, and the effect of the Ministerial threshold determination. This was predominantly an issue of law and statutory interpretation, applied to the pleaded nature of the second plaintiff’s business and its pleaded claim.


4. Court’s Reasoning


The court began by restating established principles governing exceptions. It emphasised that the excipient bears the onus of showing that the pleading is excipiable; that, save for agreed facts, the parties may not introduce facts extraneous to the pleadings; that the alleged defect must appear ex facie the pleading; that the excipient must show that on every interpretation the pleading can reasonably bear no cause of action is disclosed; and that for purposes of the exception the factual averments in the pleading are assumed correct unless palpably untrue or so improbable that they cannot be accepted.


On the first exception, the defendant’s complaint was understood by the court to amount to the proposition that the first plaintiff, having demanded performance from the second plaintiff under the guarantee, thereby lost or extinguished its cause of action against the defendant. The court noted that this position was not substantiated in the exception by identifying why, in law, demand under a guarantee would have that effect.


The court applied Uniform Rule 10(1) and its rationale of convenience and avoiding a multiplicity of actions. It accepted that multiple plaintiffs may properly join in one action, even where they have different causes of action, provided their right to relief depends upon determination of substantially the same question of law or fact. The court considered that, while the first plaintiff’s claim was based on breach of the loan agreement and the second plaintiff’s claim on the guarantee/indemnity arrangements, the claims would involve overlapping factual determinations, including whether the defendant had failed to comply with her obligations.


Turning to the supposed extinguishment of the first plaintiff’s claim, the court reasoned that the purpose of security is to provide the creditor with additional recourse, not to deprive it of its existing rights against the principal debtor. On the pleaded facts, the guarantee operated as security “in addition to” the defendant’s obligations and not as a substitution for them. The court held that the first plaintiff’s rights against the defendant would typically be extinguished only by payment (whether by the defendant, the guarantor, or a third party), or by some other divesting act such as cession, none of which was pleaded. The court therefore could not accept that the mere making of demand on the guarantor terminated the bank’s right to proceed against the defendant.


The court further observed that, even if the second plaintiff had not been joined and no guarantee had been mentioned, the first plaintiff’s pleading contained the essential averments for a contractual claim: conclusion of the loan agreement, its terms, advance of the loan amount, and breach by the defendant. The joinder of the second plaintiff and reference to the guarantee did not render the first plaintiff’s cause of action incomplete.


At the same time, the court identified a pleading difficulty in the way relief was framed. It interpreted the prayer as reflecting the plaintiffs being cited as joint plaintiffs, which could imply that each might be entitled to a portion of any judgment amount. The court stated that this was likely not the pleader’s intention and that the intended formulation was probably that either the first plaintiff or the second plaintiff would receive payment of the full amount claimed. However, the court treated this as a matter of pleading clarity rather than a failure to disclose a cause of action on exception.


On the second exception, the defendant contended that the loan agreement constituted a credit agreement in terms of section 8(5) of the National Credit Act 34 of 2005 and that the guarantee was also a credit agreement (and thus the second plaintiff a credit provider obliged to register under section 40(1)). The court recorded that it was common cause the second plaintiff was not registered.


The court referred to Van Heerden v Nolte 2014 (4) SA 584 (GP) for the proposition that where a plaintiff sues to recover money owing under a credit agreement and registration is required, the failure to plead registration can render summons excipiable. In argument, counsel for the plaintiffs conceded that the second plaintiff had to be regarded as a credit provider, and the court proceeded on the assumption that this concession was correctly made.


The court then addressed the plaintiffs’ contention that, notwithstanding credit-provider status, the second plaintiff was not required to register because of sections 40(1) and 40(6)(b) of the Act. It set out the statutory scheme: registration is required if the total principal debt owed under all outstanding credit agreements exceeds the prescribed threshold, but when determining whether registration is required, any credit guarantee to which a credit provider is a party is to be disregarded. The court noted the threshold determination had been amended so that the relevant amount was R0.00.


The court analysed whether the guarantee in issue constituted a credit guarantee as defined (by reference to section 8(5)). It considered the pleaded wording of the guarantee, which recorded that the second plaintiff guaranteed due and punctual payment of sums and performance of obligations due by borrowers (including the defendant) to the lender (the first plaintiff). The court concluded that the guarantee fell within the statutory concept of a credit guarantee and thus was to be disregarded for purposes of determining whether the second plaintiff was required to register as a credit provider.


On that footing, and taking into account that the exception procedure requires acceptance of pleaded facts unless palpably untrue or improbable, the court held that it could not find the plaintiffs’ position legally meritless on the pleadings. It treated the plaintiffs as having made out, at least prima facie, a case that registration was not required given the nature of the second plaintiff’s business (providing guarantees) and the wording of the Act requiring credit guarantees to be disregarded in the registration-threshold calculation. The court therefore held that the second plaintiff’s particulars of claim did disclose a cause of action and were not excipiable on the pleaded ground.


5. Outcome and Relief


The court dismissed both exceptions.


The court ordered that both the defendant’s exceptions are dismissed with costs.


Cases Cited


Breetzke and others v Alexander and others [2015] ZAKZPHC 44; [2015] JOL 34010 (KZP).


South African National Parks v Ras 2002 (2) SA 537 (C).


First National Bank of Southern Africa Ltd v Perry NO and others 2001 (3) SA 960 (SCA); [2001] 3 All SA 331 (A).


Viljoen v Federated Trust Ltd 1971 (1) SA 750 (O).


Vermeulen v Goose Valley Investments (Pty) Ltd 2001 (3) SA 986 (SCA).


Francis v Sharp and others 2004 (3) SA 230 (C).


Voget v Kleynhans 2003 (2) SA 148 (C).


Sackstein and others NNO v Du Preez 2004 (2) SA 459 (SE).


Vitorakis v Wolf 1973 (3) SA 928 (W).


Van Oudtshoorn v Investec Bank Ltd [2011] ZASCA 205.


Van Heerden v Nolte 2014 (4) SA 584 (GP).


Determination of a Threshold for Credit Provider Registration, GN R513, GG 39981, 11 May 2016.


Changing Tides 17 (Pty) Ltd NO v Congwane [2016] ZAGPJHC 128.


Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA [2005] ZASCA 73; [2006] 1 All SA 6 (SCA).


Legislation Cited


National Credit Act 34 of 2005.


Rules of Court Cited


Uniform Rules of Court, Rule 10(1).


Held


The court held that the first plaintiff’s pleading disclosed a cause of action for breach of the loan agreement and was not rendered excipiable by the fact that the first plaintiff had demanded performance from the second plaintiff under the guarantee. The court treated the guarantee as additional security that did not, merely by demand, extinguish the bank’s claim against the principal debtor.


The court further held that, on the pleaded facts and statutory provisions relied upon, the second plaintiff’s pleading was not excipiable for failure to plead registration as a credit provider. Although the second plaintiff was treated as a credit provider, the court accepted that a credit guarantee is to be disregarded when determining whether registration is required under section 40, and the plaintiffs’ claim was therefore not shown, on exception, to lack legal merit.


LEGAL PRINCIPLES


The judgment applied the principle that an excipient bears the onus of establishing that the impugned pleading is excipiable, and must show that on every reasonable interpretation no cause of action is disclosed. In deciding an exception, a court assumes the correctness of the pleading’s factual allegations unless they are palpably untrue or so improbable that they cannot be accepted, and the court does not permit reliance on extraneous facts (save for agreed facts).


The judgment applied Uniform Rule 10(1) to confirm that multiple plaintiffs may be joined in one action, including where they have different causes of action, provided their rights to relief depend on determination of substantially the same question of law or fact, reflecting a policy of avoiding a multiplicity of actions.


The judgment proceeded on the principle that the provision of security (including a guarantee) is generally intended to give a creditor additional remedies in the event of default and does not, merely by the creditor demanding performance from a guarantor, extinguish the creditor’s claim against the principal debtor. Extinguishment would ordinarily follow from payment or another divesting act such as cession, which must be pleaded if relied upon.


In relation to the National Credit Act 34 of 2005, the judgment applied the statutory scheme that a credit provider’s obligation to register under section 40(1) depends on whether the total principal debt owed under outstanding credit agreements exceeds the prescribed threshold, and that section 40(6)(b) requires that any credit guarantee to which the credit provider is a party must be disregarded for purposes of determining whether registration is required. The judgment treated the guarantee on the pleadings as a credit guarantee as contemplated by section 8(5) and therefore within the category to be disregarded for the threshold calculation.

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Absa Bank and Another v Naidoo (2570/2021P) [2022] ZAKZPHC 71 (15 November 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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SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Case
No: 2570/2021P
In
the matter between:
ABSA
BANK
FIRST

PLAINTIFF
ABSA
HOME LOANS GUARANTEE COMPANY
(RF)
PTY LTD
SECOND

PLAINTIFF
and
KATPAKARASI
NAIDOO
DEFENDANT
[IDENTITY
NO: [....]]
ORDER
The
following order is granted:
Both
the defendant’s exceptions are dismissed with costs.
JUDGMENT
Mossop
J:
[1]
The defendant has delivered two
exceptions to the plaintiffs’ particulars of claim on the
grounds that they lack averments
necessary to sustain a cause of
action against her.
[2]
When the matter was argued, the
plaintiffs were represented by Mr Nair and
the
defendant by Mr Eades. Both counsel are thanked for their considered
arguments, which were of assistance to the court.
[3]
The plaintiffs have pleaded that the
first plaintiff is a commercial bank and that the second plaintiff is
a ‘private ring-fenced
company’ that guarantees the
obligations of the first plaintiff’s clients who take out loans
from the first plaintiff.
That they have a symbiotic relationship
with each other can be discerned from the similarities in their
respective names. The defendant
is a private citizen who negotiated a
loan from the first plaintiff.
[4]
The loan between the defendant and the
first plaintiff was recorded in writing in a document titled a
‘mortgage loan agreement’
(the loan agreement). As
security for her obligations to the first plaintiff arising out of
the loan agreement, the first plaintiff
required the defendant to
obtain a guarantee (the guarantee) for those obligations from the
second plaintiff. In the event of the
defendant defaulting on her
obligations to the first plaintiff, the second plaintiff was at risk
of being called upon to perform
the defendant’s obligations. It
accordingly concluded an indemnity agreement with the defendant (the
indemnity agreement).
As security for her indemnity to the second
plaintiff, the defendant agreed to pass a sectional indemnity bond
(the indemnity bond)
over the immovable property that the loan from
the first plaintiff had been used to acquire.
[5]
The indemnity bond was duly passed in
favour of the second plaintiff by the defendant and the guarantee was
provided by the second
plaintiff to the first plaintiff and the loan
was advanced to the defendant by the first plaintiff.
[6]
The defendant thereafter allegedly
defaulted on her repayment obligations to the first plaintiff arising
out of the loan agreement.
The first plaintiff made demand of her to
make payment but none was forthcoming. As a consequence, the first
plaintiff demanded
payment under the guarantee from the second
plaintiff. The second plaintiff, in turn, demanded payment from the
defendant. While
it is not explicitly pleaded, it is safe to assume
that the second plaintiff did not pay the first plaintiff nor did the
defendant
pay either the first or second plaintiffs. That led to
summons being issued against the defendant.
[7]
From the foregoing, it is evident that
the amount loaned by the first plaintiff to the defendant has been
separated from the indemnity
bond. The indemnity bond serves as
security not for the loan, as it would conventionally do, but as
security for the indemnity
agreement.
[8]
The prayer to the particulars of claim
reads, in part, as follows:
‘
WHEREFORE
the First and Second Plaintiffs prays [sic] for judgment against the
Defendant, for:’
I
shall return to the significance of this shortly.
[9]
Before
turning to consider the two exceptions, it is appropriate to briefly
restate the principles that govern the adjudication
of an exception.
In line with the principle that he who alleges must prove, the party
taking the exception bears the onus of establishing
that the pleading
objected to is, indeed, excipiable.
[1]
In establishing this, neither of the parties may adduce any facts
extraneous to what is stated in the pleadings, other than agreed

facts.
[2]
It follows that the
defect in respect of which the exception is raised must appear from
the pleading to which objection
is
taken.
[3]
In discharging the onus that the excipient bears, it has the duty to
persuade the court that upon every interpretation that the
pleading
can possibly bear, no cause of action is disclosed.
[4]
Finally, ‘[f]or the purpose of deciding an exception a court
must assume the correctness of the factual averments made in
the
relevant pleading, unless they are palpably untrue or so improbable
that they cannot be accepted’.
[5]
[10]
The first ground of exception taken by
the defendant is directed at the first plaintiff. The substance of
the complaint is that
the first plaintiff, having received the
guarantee from the second plaintiff, subsequently made demand of the
second plaintiff
for it to honour its obligations arising therefrom
after the defendant had defaulted on her repayment obligations to the
first
plaintiff. In doing so, so it is submitted, the first plaintiff
failed to disclose a cause of action against the defendant. Why
this
is legally so, is not identified in the exception. The thrust of the
exception appears, therefore, to be that the simple act
of making
demand of the second plaintiff extinguished the first plaintiff’s
cause of action against the defendant.
[11]
Uniform rule 10(1) reads as follows:
‘
Any
number of persons, each of whom has a claim, whether jointly, jointly
and severally, separately or in the alternative, may join
as
plaintiffs in one action against the same defendant or defendants
against whom any one or more of such persons proposing to
join as
plaintiffs would, if he brought a separate action, be entitled to
bring such action, provided that the right to relief
of the persons
proposing to join as plaintiffs depends upon the determination of
substantially the same question of law or fact
which, if separate
actions were instituted, would arise on each action, and provided
that there may be a joinder conditionally
upon the claim of any other
plaintiff failing.’
The
philosophy behind the rule appears to be that of convenience to
litigants and the desire to avoid a multiplicity of actions.
[12]
More
than one plaintiff being joined in an action is accordingly
contemplated and permitted. The fact that one plaintiff may not
share
a cause of action with another plaintiff is of little or no
consequence. Plaintiffs with different causes of action resulting
in
separate claims may join in one summons and may even claim relief
alternatively.
[6]
The only
requirement is that the plaintiffs’ right to relief must be
‘dependent upon the determination of substantially
the same
question of law or fact’.
[7]
[13]
The two plaintiffs have different causes
of action: the first plaintiff’s cause of action is based upon
a breach of the loan
agreement, and the second plaintiff’s
cause of action is based upon the issuing of the guarantee, the
provisions of the indemnity
bond and the underlying indemnity
agreement. However, the determination of these separate causes of
action will, in essence, involve
a consideration of the same facts
and whether the defendant has failed to comply with her obligations
to the first plaintiff will
be a common consideration in both causes
of action.
[14]
The first plaintiff has pleaded that it
made demand of the second plaintiff on 10 March 2021. The second
plaintiff has pleaded that
it made demand of the defendant a week
later. Nothing further is pleaded concerning the outcome of such
demands.
[15]
If
the first exception is to be upheld, I must find that the mere act of
calling upon the second plaintiff to perform in terms of
the
guarantee automatically terminated any rights that the first
plaintiff had to proceed against the defendant. I am not able
to come
to that conclusion as I do not understand that to be the law.
The
purpose of providing security is to cover a creditor in the event of
default by its debtor.
[8]
Creditors
seek security for debts owed to them in order to ensure that they
have more than one option as to who they may proceed
against in the
event of the debtor defaulting, and not to forego any rights that
they may have against the original debtor. The
security put up is in
addition to the obligations assumed by the defendant, not in place
thereof. The fact that the second plaintiff
agreed to provide a
guarantee as a form of security but apparently did not honour its
undertakings relating thereto accordingly
does not mean that the
first plaintiff forfeited its claim against the defendant. To find
that this is the case would be grotesque.
The first plaintiff’s
claim against the defendant could therefore only be extinguished by
payment, whether by the second
plaintiff or by the defendant (or a
third party for that matter), or by some other act which divested the
first plaintiff of that
cause of action, such as a cession. None of
these events have been pleaded.
[16]
Had the second plaintiff not been cited
and had there been no mention of the guarantee in the particulars of
claim, a perfectly
acceptable cause of action is made out against the
defendant by the first plaintiff: it has pleaded the conclusion of a
loan agreement,
the terms thereof, the advancement of the loan amount
to the defendant and the breach of the terms of the loan agreement by
the
defendant. The joinder of the second plaintiff and the reference
to the guarantee does not change the completeness of the case pleaded

by the first plaintiff insofar as itself is concerned.
[17]
But the particulars of claim are not
beyond criticism. From the particulars of
claim,
and particularly from the prayer thereto referred to earlier, it is
clear that the plaintiffs are cited as joint plaintiffs.
This is
expressly permitted in terms of Uniform rule 10(1). On the pleadings
as they now stand, each plaintiff would be entitled,
in the event of
the claim succeeding, to a portion of any judgment amount awarded
against the defendant. I am sure that this was
not the pleader’s
intention: what surely was intended was that either the first or the
second plaintiff should receive payment
in the full amount claimed.
This has not been pleaded. That, however, does not mean that no cause
of action has been made out against
the defendant by the first
plaintiff.
[18]
I cannot in the circumstances find that
no cause of action against the defendant has been pleaded by the
first plaintiff. The first
exception must thus fail.
[19]
The
second ground of exception is directed at the second plaintiff. The
defendant asserts that the loan agreement concluded between
herself
and the first plaintiff constituted a credit agreement in terms of
section 8(5) of the National Credit Act 34 of 2005 (the
Act).
[9]
The defendant further alleges that the guarantee given by the second
plaintiff to the first plaintiff is also a credit agreement
in terms
of section 8(1) of the Act. Thus, the defendant concludes that the
second plaintiff is a credit provider and is obliged
to be registered
as a credit provider in terms of the provisions of section 40(1) of
the Act. There are no allegations that it
is so registered and
therefore the second plaintiff has not disclosed a cause of action
against the defendant.
[20]
It is common cause that the second
plaintiff is not registered as a credit provider in terms of the Act.
[21]
In
Van
Heerden v Nolte
,
[10]
Murphy J stated as follows:
‘…
the
defendant has contended that where a plaintiff sues contractually to
recover money owing under a credit agreement, and the principal
debt
is in excess of R500 000, he or she is obliged to make the allegation
in his or her particulars of claim that he or she is
registered as a
credit provider. I agree. The failure to plead such facts renders the
summons excipiable for want of necessary
averments on which to found
a contractual cause of action.’
[11]
[22]
In his heads of argument, Mr Nair, who
appears for the plaintiffs, conceded that the second plaintiff must
be regarded as being
a credit provider. I shall assume that this
admission is correctly made. Mr Nair, however, submitted that
notwithstanding this
admission, the second plaintiff did not have to
register as a credit provider because of the provisions of sections
40(1) and 40(6)
(b)
of
the Act.
[23]
Section 40(1) of the Act reads as
follows:
‘
A
person must apply to be registered as a credit provider if the total
principal debt owed to that credit provider under all outstanding

credit agreements, other than incidental credit agreements, exceeds
the threshold prescribed in terms of section 42 (1).’
[24]
Section 40(6)
(b)
of the Act reads as follows:
‘
When
determining whether, in terms of subsection (1), a credit provider is
required to register:
‘
(a)
…
(b)
any credit
guarantee to which a credit provider is a party is to be
disregarded.’
[25]
Section 42(1) of the Act provides as
follows:
‘
The
Minister, by notice in the Gazette, must determine a threshold for
the purpose of determining whether a credit provider is required
to
be registered in terms of section 40 (1).’
[26]
On
11 May 2016, the Minister of Trade and Industry changed the threshold
amount from R500 000 to R0.00.
[12]
[27]
It must consequently be considered
whether the guarantee put up by the second plaintiff is a credit
guarantee as contemplated by
the Act. A credit guarantee is defined
in section 1 of the Act as being:
‘
an
agreement that meets all the criteria set out in section 8(5)’.
[28]
Section 8(5) reads as follows:
‘
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.’
Subsection
2 is of no relevance and consequently does not apply.
[29]
The guarantee provided by the second
plaintiff to the first plaintiff provides, in part, as follows:
‘
In
accordance with, and subject at all times to the terms of the
Agreement, with effect from the date of registration of the relevant

Indemnity Bonds, granted by the Borrowers, in respect of the Accounts
listed in Annexure A hereto, to the Guarantee SPV, the Guarantee
SPV
guarantees the due and punctual payment of all sums and the
performance of any other obligations which are now and which may

subsequently become due to the Lender, by the Borrowers in respect of
the Accounts listed in Annexure A hereto …’
The
reference to ‘Lender’ is a reference to the first
plaintiff and the reference to the ‘Guarantee SPV’
is a
reference to the second plaintiff. The defendant’s account is
included in Annexure A to the guarantee.
[30]
From the foregoing, the guarantee is a
security guarantee contemplated by the Act.
[31]
Based on the allegations in the
particulars of claim, the argument was advanced by Mr Nair that the
only business that the second
plaintiff has is that of providing
guarantees to the first plaintiff in respect of its clients. However,
in accordance with the
Act, the value of these guarantees are not to
be utilized to calculate whether the second plaintiff has exceeded
the threshold
value imposed by the Minister of Trade and Industry for
registration as a credit provider. If the value does not exceed the
value
of R0.00, so the argument went, the second plaintiff is not
required to register.
[32]
As a matter of mathematical certainty,
R0.00 does not exceed R0.00: it equals it, but it does not exceed it.
[33]
The
manner in which home loans are now granted has taken on a different
form compared to the direct, traditional way that they were
dealt
with in the not too distant past. The method used in this matter now
appears to be a rather common way of granting such loans,
as other
financial institutions have also adopted the same methodology. The
only matter that I have found that deals with this
type of
arrangement is
Changing
Tides 17 (Pty) Ltd NO v Congwane
.
[13]
That was a matter where default judgment was sought by the plaintiff.
A similar scheme was employed to that employed in this matter.
The
judgment records that both the credit provider and the guarantee
company were credit providers, and I assume by that it is
meant that
both were duly registered in terms of the Act, unlike this case where
the second plaintiff is not so registered. It
accordingly does not
address the question of registration.
[34]
An
exception, properly taken, may provide a useful mechanism to filter
out cases that lack legal merit.
[14]
I cannot find that this matter lacks legal merit.
On
the face of it, a case has been made out that the second plaintiff is
not required to register because of the nature of its business
and
the wording of the Act. I cannot find that such argument is so
palpably untrue or improbable that it cannot be accepted. I
must
therefore find that a cause of action is pleaded in respect of the
second plaintiff.
[35]
In the result, the second exception must
also fail.
[36]
I accordingly make the following order:
1.
Both the defendant’s exceptions are dismissed with costs.
MOSSOP
J
APPEARANCES
Counsel
for the plaintiffs
:

Mr J. E. Nair
Instructed
by:                                            :

Johnston and Associates
2
nd
Floor
81
Richefond Circle
Ridgeside
Office Park
Umhlanga
Rocks
Counsel
for the defendant
:

Mr D. W. Eades
Instructed
by

:

Larson Falconer Hassan
Parsee
Incorporated
93
Richefond Circle
Ridgeside
Office Park
Umhlanga
Rocks
Date
of Hearing

:
20 October 2022
Date
of Judgment

:
15 November
2022
[1]
Breetzke
and others v Alexander and others
[2015]
ZAKZPHC 44 para 10;
[2015] JOL 34010
(KZP);
South
African National Parks v Ras
2002 (2) SA 537
(C) at 541-542.
[2]
First
National Bank of Southern Africa Ltd v Perry NO and others
2001
(3) SA 960
(SCA);
[2001] 3 All SA 331
(A) para 6.
[3]
Viljoen
v Federated Trust Ltd
1971
(1) SA 750
(O) at 754
;
Vermeulen v Goose Valley Investments (Pty) Ltd
2001 (3) SA 986
(SCA) para 7.
[4]
Francis
v Sharp and others
2004
(3) SA 230
(C) at 237G.
[5]
Voget
v Kleynhans
2003 (2) SA 148
(C) para 9.
[6]
Sackstein
and others NNO v Du Preez
2004 (2) SA 459
(SE) at 462C-D.
[7]
Vitorakis
v Wolf
1973
(3) SA 928
(W) 931 at 931E-F.
[8]
Van
Oudtshoorn v Investec Bank Ltd
[2011]
ZASCA 205 para 32.
[9]
It
is pleaded that the first plaintiff is registered in terms of the
Act.
[10]
Van
Heerden v Nolte
2014
(4) SA 584
(GP) para 17.
[11]
This
judgment was delivered prior to the amendment of the threshold
amount by the Minister on 11 May 2016.
See
para 26 supra.
[12]
Determination
of a Threshold for Credit Provider Registration, GN R513,
GG
39981,
11 May 2016.
[13]
Changing
Tides 17 (Pty) Ltd NO v Congwane
[2016]
ZAGPJHC 128.
[14]
Telematrix
(Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards
Authority SA
[2005] ZASCA 73
;
[2006] 1 All SA 6
(SCA) para 3.

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