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[2022] ZALMPPHC 67
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Fedbond Nominees (Pty) Ltd v Import Export 2020 (Pty) Ltd and Another (7042/2020) [2022] ZALMPPHC 67 (2 December 2022)
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IN
THE HIGH COURT OF SOUTH AFRICA,
LIMPOPO
DIVISION, POLOKWANE.
CASE
NO: 7042/2020
REPORTABLE:
YES/NO
OF
INTEREST TO THE JUDGES: YES/NO
REVISED.
2/12/2022
In
the mater between:
FEDBOND NOMINEES (PTY)
LTD
Applicant
And
IMPORT EXPORT
2020(PTY)
LTD
First Respondent
(Reg No
2010/016816/07)
FRED VAN
HEERDEN
Second Respondent
(ID NO: [....])
JUDGMENT
This
judgment was handed down electronically by circulation to the
parties’ legal representatives by email. The date and time
for
handing down shall be deemed to be the 02
nd
of December
2022.
LITHOLE
AJ:
INTRODUCTION
1.
The Fedbond Nominees
Pty Ltd (“the applicant”) claims a money judgment from
Import Export 2020(Pty) (“the first
respondent”) and Fred
Van Heerden (“the second respondent”) based on a loan
agreement and consequent participation
mortgage bond passed in the
applicants’ favour by the first respondent. The participation
bond provides security for the
collective investments schemes as
regulated by the Collective Investment Schemes Act 45 of 2002.
2.
The applicant further
seeks an order declaring the immovable properties hypothecated in
terms of the two mortgages specifically
executable for the payment of
the sum claimed.
3.
The respondents oppose
this application on the ground that the certificate which is relied
upon by the applicant as prima facie
proof is not sufficient proof.
The respondents further opposes this application the ground that the
applicant failed to discharge
the onus to establish the amount of the
indebtedness of the respondents. They seek dismissal of the
application on those grounds.
4.
The applicant’s
relationship with the first respondent was formed by way of two loan
agreements concluded on the 13 November
2015 and 17 December 2015 for
the amounts of R20 000 000 (twenty million rands) and
R1 500 000 (one million
five hundred thousand rands)
respectively.
5.
The applicant’s
relationship with the second respondent is based on a deed of surety
that the second respondent gave in favour
of the applicant for the
first respondent.
FACTUAL BACKGROUND.
6.
The applicant approved
two loan agreements in favour of the first respondent for the amounts
of R20 million rand and the second
loan for R 1.5 million rand. The
terms of both the first and second loan agreements were agreed to by
the parties in terms of the
contracts.
7.
Both loans were issued
subject to the first respondent having to provide real security in
the form of participation mortgage bonds.
8.
The first participation
bond contains an acknowledgement by the first respondent that it was
indebted to the applicant for the principal
amount of R20 million
rand and an additional
R10
million
rand.
Portion 147 of the farm Roodekuil was especially bound in the
participation mortgage bond constituting security for the capital
and
additional amount.
9.
An additional
collateral security mortgage bond was registered by the first
respondent in favour of the applicant on the 11
th
of December 2015. In terms of this bond, a property “Verloren”
is bound as additional security for the principal and
additional
amount loaned to the first respondent.
10.
The first respondent
registered the second participation mortgage bond on the 18 February
2016 in favour of the applicant. In terms
of this bond the first
respondent acknowledged indebtedness of the principal amount of R1.5
million rand and an additional R 750 000,
00.
11.
The first respondent
thus had complied with rider to the loan agreements by registering
the two participation bonds, in terms of
which both the “Roodekuil”
and “Verloren” properties were specially bound as
security in favour of the
applicant.
12.
Among the terms agreed
upon between the parties was that the first respondent would make
payment on each loan to be paid monthly
in advance on the first day
of each month for the duration of the bond, the interest there on
would be calculated in accordance
with clause 5.1 of each bond
agreement.
13.
It was further agreed
that on the 5th anniversary of the date of the registration of each
bond the outstanding capital and any other
outstanding amount due
would be paid by the first respondent to the applicant.
14.
The applicant argued
that the first respondent fell into arrears with payment of the
interest due. It is further contended by the
applicant that as of
July 2020 the first respondent was in arrears for R 6 291 764.
46 in relation to the first loan
and R 340 239. 00 in relation
to the second loan.
15.
As a result of such
default, the applicant contends that the full indebtedness in terms
of both bonds became immediately due and
payable. The applicant
annexed a certificate of indebtedness in terms of which the combined
sum for both loans owing by the first
respondent to the applicant was
R 27 017 493. 66 together with interest there on calculated
at a rate of 11.28%.
16.
The applicant’s
claim for payment is premised on the following provisions of the
participation mortgage bonds:
16.1.
Clause 11.24- in the
event of the first respondents default the applicant is entitled to
claim and recover the capital amount and
all interest thereon,
together with all other amounts which might then be due to the
applicant in terms of the bond, notwithstanding
that the capital
amount or the balance thereof and or the interest thereon may not yet
have become due and payable.
16.2.
Clause 5.4.1- the
applicant is entitled to levy interest on any overdue amounts at the
maximum rate allowed by statute.
16.3.
Clause 12.1, 12.2,
12.3- the applicant is entitled to issue a written certificate of
indebtedness in which affirmed the amount of
the first respondent’s
indebtedness to it at any time, the rate of interest thereon, the
date from which such interest was
payable and the date upon which
such indebtedness became due and payable.
16.4.
Clause 12.3.4- the
contents of the certificate of indebtedness are binding on the first
respondent and constitute prima facie proof
of those contents.
16.5.
Clause 8.1.4- the
applicant is entitled to claim costs on the attorney and client scale
in any proceedings for the recovery of the
first respondent’s
indebtedness to it.
17.
The applicant has
annexed a certificate of indebtedness as well as the mortgage bonds
as supporting documents for the relief sought.
18.
The applicant caused a
letter of demand to be sent to the first respondent on the 21 July
2020. The first respondent replied to
such demand on the 31 July
2020.
Analysis
19.
The trite principle of law in motion proceedings
is that affidavits constitute both evidence and pleadings. It was
stated by Harams
JA, in the
National Director
of Public Prosecutions vs Zuma, 2009 (2) SA (SCA)
,
at paragraph 26,
that:
“
Motion
proceedings, unless concerned with interim relief, are all about the
resolution of legal issues based on common cause facts.
Unless the
circumstances are special, they cannot be used to resolve factual
issues because they are not designed to determine
probabilities. It
is well established under the Plascon-Evans rule that where in motion
proceedings disputes of fact arise on the
affidavits, a final order
can be granted only if the facts averred in the applicant’s (Mr
Zuma’s) affidavits, which
have been admitted by the respondent
(the NDPP), together with the facts alleged by the latter, justify
such order. It may be different
if then respondent’s version
consists of bald or uncreditworthy denials, raises fictitious
disputes of fact, is palpably
implausible, far-fetched or so clearly
untenable that the court is justified in rejecting them merely on the
papers.”
20.
It is against this legal principle that this
application should be adjudicated. There are common cause facts and
those facts that
the respondents cannot dispute are set out briefly
below.
21.
The facts underpinning this application
are fully set out in the founding affidavit that has been deposed to
by the applicant’s
deponent.
22.
From the assessment of
the facts before this court and the argument presented, what is clear
and undisputed is that two loans were
taken by the first respondent,
first respondent fell into arrears and is thus indebted to the
applicant.
23.
The respondents have
not disputed indebtedness to the applicant at all but have raised
defenses which relate to the interest rates
charged as well as the
VAT charged to the late payment interest fees.
24.
The respondent has not
disputed that the full capital amount of both the first and second
loans are now due and payable, nor has
it been disputed that the
first respondent over the duration of the bonds has paid only a
portion of the agreed contractual interest
and the associated fees
and charges, and that no portion of the capital loans have been
repaid. The respondent has thus fallen
into arrears in respect of
both loans.
25.
The first
respondent’s failure to adhere to the terms of the loan
agreements entitles the applicant to enforce its right to
claim
accelerated payment of the full amounts due and owing. The
respondents do not dispute that the applicant is entitled to orders
declaring the mortgaged properties to be specifically executable for
payment of the sums due and lastly that despite demand neither
of the
respondents have cured the first respondent default.
26.
The respondents raised
in its answering affidavit an issue with the certificate of
indebtedness, claiming that the applicant had
applied the wrong
interest rate and had incorrectly added VAT to late payment interest.
27.
The applicant conceded
in reply that it had indeed erroneously charged VAT on late payment
interest and charged the interest at
a rate not agreed to by the
parties.
28.
The applicant thus went
and redo the calculation to determine the true amount owing and the
respondents now deem it fit to file
a further affidavit. An opposed
application for leave to file a further affidavit must first be
determined by the court.
THE FURTHER
AFFIDAVIT
29.
In the answering
affidavit of the respondents, an attack was launched at the evidence
in proof of indebtedness of the respondents
to the applicant that
being the certificate of indebtedness. The respondents raised
objections to the said certificate, those being
that:
29.1.
The parties had agreed
to interest being charges at a rate 12.20% as opposed to the 12.53%
used by the applicant.
29.2.
The third objection was
that the applicant was not entitled to charge late payment fees VAT
inclusive
as
it had done.
30.
The applicant did
however concede that it had erroneously charged VAT to the late
payment interest fee and the interest charged
in accordance with the
initial certificate is not at the agreed amount, and thus elected to
recalculate the amount it claims is
outstanding and annex a new
certificate of indebtedness. In its recalculation of the outstanding
amount, the applicant is levying
in respect of all defaults a penalty
interest rate of 2% and has been calculated VAT excluded.
31.
The applicant annexed a
new certificate of indebtedness, in terms of which the respondents
are owing more than the amount claimed,
however the applicant has
further indicated that it is willing to forgo the excess so as not to
prejudice the respondents.
32.
The respondents contend
that by virtue of the recalculation of the outstanding amounts, and
annexing of a new certificate it amounts
to a new version on the
following grounds:
32.1.
The recalculation saw
the finance charges increase from R13 339 224, 56 to
R13 555 849, 33 in relation to the
first account and from
R876 830, 85 to R888 254, 67 in relation to the second
account.
32.2.
The recalculation saw
an increase of late payment interest from R459 195, 63 to R
814 078, 14 in respect of the first
account and from R18 807,
58 to R 51 719, 95 in respect of the second account,
notwithstanding the fact that the VAT
has been removed.
33.
The respondent alleges
that the replying affidavit introduces “new issues”,
those being that:
33.1.
The founding affidavit
did not contain any indication as to how the claimed amount of R
27 017 493 was calculated and
what fees were debited from
time to time.
33.2.
The recalculation
schedule purports to represent the difference between the debt and
credits in the applicant’s statements
and recalculated amounts.
33.3.
The total amount in the
calculation schedule differs from the claimed amount in the notice of
motion.
33.4.
No explanation was
offered for the increase from R 27 017 493, 6 to
R27 304 837, 37 in the recalculation schedule.
33.5.
The recalculation
schedule increased the finance charges under circumstance where the
applicant conceded to incorrectly charging
higher interest at 12.53%
instead of 12.20%.
33.6.
The reworking increased
the late payment interest under circumstances where it is common
cause that the statements did not contain
any item with such
description.
34.
The court has
considered each of the grounds as listed by the respondent
individually to properly ascertain if any prejudice shall
be suffered
by the respondents if even one of them is found to be valid.
35.
When I consider the
ground that no calculation was in the founding affidavit as opposed
to the reply, it is neither her nor there.
The parties had agreed in
terms of the mortgage bonds that the applicant is entitled to issue a
written certificate of indebtedness
which certificate is binding on
the respondent and constitutes prima facie proof of the contents.
36.
There is no requirement
in terms of the agreements for the applicant to have to show the
manner of calculation, but only to produce
the said certificate. If
the respondent disputes the evidential value of the said certificate,
it is upon the respondent to state
in reply why there should be no
value attached to it.
37.
The respondent disputed
the VAT added to the late payment interest as well the 12.53% rate at
which the finance charges were calculated.
Thereby requiring the
applicant to remove the VAT and apply the rate at the agreed rate.
The applicant seems to have done one better
and charged even less in
terms of interest. Therefore, does the respondent suffer any
prejudice on this ground? I think not.
38.
The respondents raise a
ground to file a further affidavit based on what it perceives the
recalculation schedule purport. And further
that the amounts in the
schedule differ from that which is claimed in the notice of motion
with no explanation for same.
39.
The applicant has
explained that the increase in late payment interest of 2% charged
from 2019 as well as inaccuracies in the calculation
of interest in
certain of the earlier months which had been rectified are
responsible for the increase in amounts owed.
40.
Notwithstanding that on
proper calculation the respondents are indebted for more than that
which is claimed, the applicant chose
not to amend its pleadings but
to forgo the excess.
41.
The respondent is thus
not prejudiced by the difference in amount owed to the amount
claimed. If the respondent were claiming that
it in fact owed less
than what has always been claimed by the applicant, it had the
opportunity to prove that in their answering
affidavit but chose not
to.
42.
The respondent does not
even at this stage propose to prove that the applicant is incorrect
but to only question the explanation
already given. That which the
respondent wanted corrected in terms of the certificate of
indebtedness has been corrected, it just
seems that the respondent is
disappointed that the applicant went through its accounts with a
fine-tooth comb and found that it
had under billed the respondent
even on the lesser interest rate.
43.
This then goes to the
issue of the increased finance charges after the interest rate was
lowered. It should be noted that the interest
rate was lowered even
further than the agreed amount to 11.28%.
44.
The deduction that the
court can make here is that the respondent hoped that the claimed
amount would reduce by the exclusion of
VAT and calculation of
interest at a lesser rate. When such a scenario does not play out as
planned and hoped for, the respondent
offers more questions which the
applicant is not in terms of their agreement bound to give
explanation to.
45.
The general rule is
clear, only three sets of affidavits should be filed in any
application, however as the respondent correctly
stated, the court
has the discretion to allow for further affidavits to be filed where
necessary. The court is not bound to only
permit the three affidavits
as some flexibility should also be permitted.
46.
I am at pains trying to
find what is exceptionally new from the reply of the applicant other
than the fact that the interest charged
is even less than that which
was agreed by the parties.
47.
I thus find no reason
to allow the respondent to file a further affidavit.
EVIDENTIAL VALUE OF
THE CERIFICATE OF INDEBTEDNESS
48.
The claim of the
applicant is proved by a certificate of indebtedness which the
applicant has annexed to its heads after having
recalculated that
which it claims is truly owed to it.
49.
In terms of the
agreement entered by the parties, a certificate of indebtedness shall
serve as prima facie proof of the outstanding
amount. There is no
requirement upon the applicant to show manner of calculation of the
outstanding amount. Simply put, the mere
production of the
certificate serves as prima facie proof of the debt.
50.
The onus lies on the
respondent to cast doubt on the evidential value of the certificate.
The respondent has pointed out in the
answering affidavit that there
are some errors in the calculation of the indebtedness done by the
applicant
51.
As alluded
supra
the applicant conceded in reply that it had made such errors. The
applicant then sat down and recalculated that which is owed minus
the
addition VAT and excess interest rate. Although the applicant has
stated that on the recalculation amount has increased but
the
applicant is willing to forgo that which is more than that which is
claimed.
52.
The question now is,
has the respondent managed to disturb the prima facie evidential
value of the certificate so much so that it
is no longer sufficient
proof of the indebtedness of the respondent.
53.
Does the initial
calculation at the incorrect interest rate and the inappropriately
added VAT render the certificate undependable
to the court. Not
losing sight of the fact that the errors have been corrected.
54.
The respondents do not
dispute that the certificate of indebtedness produced and attached to
the founding affidavit as annexure
“N” complies with the
requirements of the two participations. The respondents have not
introduced any factual evidence
in rebuttal of the prima facie status
of the certificate of indebtedness.
55.
In
Nedbank
Ltd V Schoeman No obo Maluti Trust 2016 JDR 1146(GJ)
,
the court said:
“
The
respondent makes each of these claims and raises each of the factual
dispute by asserting that the certificate of balance contains
a
mistake and is therefore not sufficiently reliable as proof of any
indebtedness. Yet they rely on the same certificate as a prima
facie
indication that any debt owing to the bank was ceded to the third
party. …. Confronted by this challenge the bank
explained the
in the replying affidavit that reference to the green house in the
certificate was inconsequential mistake and out
of caution, the bank
produced and attached another ‘fresh certificate’,
confirming and updating the first.”
56.
There is undoubtedly a
conflict between the two certificates presented to the court. The
question however is that, is the conflict
so severe that it is
sufficient to destroy or detract from the evidential value.
57.
If that which was
complained of in the initial certificate has been removed and the
interest rate upon which the respondent is charged
is even less than
that which is agreed, the proper calculation on such beneficial terms
amounting to more than what was hoped for
does not conceivably amount
to a disturbance of the value on the document.
58.
The allegation that
interest is charged at 11.28% as opposed to 12.20% is a prejudice
that is suffered and accepted by the applicant.
If the prejudice were
suffered by the respondent, the court would have a different view on
the issue.
59.
The certificate in its
original form and in the corrected form comply with the prerequisite
for a certificate of indebtedness in
terms of the contractual
agreement between the parties, all allegation that ought to be made
are made. Save for the administrative
or clerical error, which was
then remedied by the second certificate, no other mistake was noted.
60.
This court agrees with
Bester AJ As he held in the FirstRand Bank LTD
018
JDR 2038
that:
“
It
is not a new case in reply to relinquish a portion of the interest
claimed. The introduction of the certificate in reply is therefore
not an attempt to introduce new material that ought to have been in
the founding affidavit, rather it simply constitutes prima
facie
evidence of what the amount of the debits are if the lower interest
rate is applied. The applicant is entitled to forsake
the additional
interest and then claim the lesser amount in the circumstances the
application to strike out must fall.”
61.
The applicant herein
has similarly not gone and introduced new material but have simply
done the calculation as it ought to have
been done from the start.
Evidently the applicant forgoes the excess and maintains a claim for
that prayed for in prayer 1.
CALCULATION OF THE
OUTSTANDING AMOUNT
62.
As alluded supra, the
applicant had erroneously calculated the amount owed by applying the
incorrect interest rate and applying
VAT where it ought not.
Responsibly, the applicant accepted that it made an error and
corrected it.
63.
The respondent now
pleads that the applicant has again applied the incorrect interest
rate at 11.28% as opposed to 12.20%. The applicant
has applied an
interest rate at 1.08% less than what the respondent argues it ought
to charge at and the respondent wants to rely
on this advantage to it
to rubbish the certificate of indebtedness and pray for a dismissal
of the whole claim.
64.
The applicant has
rightly pointed out that the respondent has not once tendered any
payment of whatever reduced amount they contend
they in fact owe.
They submit that the whole claim should be dismissed.
65.
This position is simply
not tenable, a dismissal of the claim would mean that the applicant,
whom the respondent acknowledges they
are indebted to would have lost
all money to the respondent and the respondents exonerated from
having to pay back even a cent
of that which is owed.
66.
The respondent in its
admission to indebtedness just grandstands that the applicant’s
calculation must be wrong, however does
not make any effort to show
that which it deems would be the correct calculation. The respondent
is thus looking to clutch at any
reed to draw it out of the river of
debt it finds itself.
67.
After looking at the 2%
rate at which interest was charged on overdue payments, it is again
the applicant who is in fact charging
less than what it is entitled
to charge and the respondent complaining about same.
68.
The provision of 5.4.1
provides for interest to be borne at the maximum rate allowed by law.
That maximum rate is higher than 2%
per annum, as the statute
provides for 3.5% per annum.
69.
The respondent suffers
no prejudice by the application of a lesser interest rate to the
overdue amounts and in any case, even if
that 3.5% interest rate is
to be applied the applicant is only interested in the amount claimed
and nothing more.
APPLICANTS’
FAILURE TO REDUCE INTEREST RATE
70.
The other issue that
the respondent has canvased is the applicant failure or rather
exercise of its discretion not to reduce the
interest rate in line
with the repo rate in April, May, and July of 2020.
71.
The respondent
themselves have quoted clause 5.1.1 of the mortgage bonds which
clearly states that ‘the manager on behalf
of the applicant
shall be entitled
in
its discretion to increase or decrease the rate of interest
payable
by the respondent at any time during the currency of this bond when
there has been a change in the repo rate by the South
African Reserve
bank.’
72.
I draw emphasis to the
underlined words. The applicant had discretion in terms of the
mortgage agreed to by the parties. The applicant
was never expected
to give reasons or tender explanation because it chose to exercise
that discretion. The letter informing the
respondent of the decision
taken in the exercise of the applicant discretion was more than
sufficient.
73.
This court thus find
that the applicant has discharged the onus upon it and proven that
the first respondent is indebted to it for
the amount claimed being R
27 017 493, 66 (twenty-seven million and seventeen thousand
four hundred and ninety-three
rands and sixty-six cents).
74.
The applicant having
relied on the mortgage bonds and loan agreement, seeks an order
declaring immovable property specifically bonded
to the mortgages
specifically executable.
75.
The respondent has not
disputed the agreements nor the contents of same, thus admitting that
the applicant is entitled to an order,
should the court find that it
so fitting declaring the two immovable properties immediately
executable.
LEGAL COSTS
76.
The respondent alleges
that the applicant ought not to have included legal fees in its
re-calculation as same is not authorized
by the agreement. It seems
the respondent also missed the part where the applicant directs it to
the provision in terms of the
mortgage wherein it is entitled to
claim costs.
77.
In terms of clause
8.1.4 the applicant is entitled to costs on an attorney and client
scale. The respondent’s contention is
thus misguided and
unfounded.
the OrdeR
1.
The respondents’ application for leave to introduce a further
affidavit is dismissed
with costs, the costs shall include the costs
of senior counsel.
2.
The Applicant’s claim against the Respondents succeeds and the
following
order is made:
2.1.
Directing the first and second respondents, jointly and severally,
the one paying the other to be absolved, to
pay to the applicant the
sum of R 27 017 493,66;
2.2. Interest
on the amount of R 27 017 493,66 at the agreed rate of 11.28% per
annum;
2.3.
Declaring the immovable property, being the remaining extent of
portion 147 of the Farm Roodekuil 496, registration
division K.R
Limpopo Province, to be specially executable for payment of the sums
set out in paragraphs 1 and 2 above;
2.4.
Declaring the immovable property situated at portions 1 to 27, 30,
58, 109 to 113, 116 to 123, 155, 190 and 196
of the Farm Verloren 787
registration division K.R Limpopo Province to be specially executable
for payment of the sums set out
in paragraphs 1 and 2 above;
2.5. Costs of
suit on the attorney and client scale.
TC
LITHOLE
ACTING
JUDGE
LIMPOPO
DIVISION OF THE HIGH COURT
POLOKWANE
APPEARANCES
On
behalf of the Applicant:
with:
Adv A R G MUNDELL SC
Instructed
by:
CARVAHO Inc ATTORNEYS .
On
behalf of the 2
nd
respondent: Adv H F OOSTHUIZEN SC
Instructed
by: FRONEMAN ROUX AND STREICHER ATTORNEYS .
DATE
OF HEARING
: 17 AUGUST 2022
DATE
OF JUDGMENT : 02 December 2022