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[2022] ZALMPPHC 68
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Fedbond Nominees (Pty) Ltd v Warmbaths Property Development (Pty) Ltd and Another (7043/2020) [2022] ZALMPPHC 68 (2 December 2022)
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IN
THE HIGH COURT OF SOUTH AFRICA,
LIMPOPO
DIVISION, POLOKWANE.
CASE
NO: 7043/2020
REPORTABLE:
YES/NO
OF
INTEREST TO THE JUDGES: YES/NO
REVISED.
2/12/2022
In
the mater between:
FEDBOND NOMINEES (PTY)
LTD
Applicant
And
WARMBATHS PROPERTY
DEVELOPMENTS (PTY)LTD
(Reg No
2001/018440/07)
First Respondent
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 2
nd
of December
2022.
LITHOLE
AJ:
INTRODUCTION.
1.
The Fedbond Nominees
Pty Ltd (“the applicant”) claims a money judgment from
Warmbaths Property Development (Pty) Ltd
(the first respondent) and
Fred Van Heerden (the second respondent) based on the loan agreement
and consequent participation mortgage
bond passed in the applicants
‘s 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
evidence is not sufficient proof
as contended. The respondent further opposes this application on 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
with costs.
4.
The applicant’s
relationship with the first respondent was formed by way of two loan
agreements concluded on the 17 April
2012 for an amount of R30
millions and additional amount of R15 millions. The second loan
agreement was concluded on the 17 October
2012 and the terms of the
agreement largely mirrored those of the first loan agreement. as a
security for the second loan, the
first respondent declared to bind
specially as participation mortgage bond, ranking
pari
pasu
mortgage bond
B28006/2012 for amounts of R30 000 000 (thirty million
rands) passed by the first respondent in favour
of the applicant (a
reference to the first participation mortgage bond), its rights,
title, and interest in the Transnet lease.
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 on the 7 and 13 November in respect of both loan
agreements.
BACKGROUND FACT
6.
The applicant approved
two loan agreements in favor of the first respondent, 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.
The first participation
bond contains an acknowledgement by the first respondent that it was
indebted to the applicant for the
principal amount of R30 million and
an additional R 15 million. An undisputed fact in relation to the
participation bond is that
the first respondents’ interest in a
deed of lease under lease number (K780/2007N) concluded between the
first respondent
and Transnet Ltd in respect of Portion 58 of the
farm ‘Het Bad number 465, Northern Province constituted
security for the
capital and additional amount.
8.
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.
9.
It was further agreed
between the parties that on the 5
th
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.
10.
The applicant contended
that the first respondent fell into arrears with payment of the
interest due. It is further alleged that
as of July 2020 the first
respondent was in arrears for R 9 325 970, 77 in relation
to the first loan and R 4 934 360,
12 in relation to the
second loan. As a result of such default the applicant alleges that
the Full indebtedness in terms of both
bonds became immediately due
and payable.
11.
The applicant
caused a letter of demand to be sent to the first respondent and the
21 July 2020 for payment of outstanding debts
in relation to both
loans in the amounts of R39 618 149, 80 and R18 503 360,
38.
12.
The first respondent
replied to such a demand on the 31 July 2020. In such response the
respondent did not deny indebtedness, did
not take issue with the
amounts claimed but rather explained as to why they were having
financial troubles.
13.
It is undisputed that
two loans were taken by the first respondent and the first respondent
fell into arrears, is thus indebted
to the applicant.
14.
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.”
15.
It is against this legal principle that this
application should be adjudicated. There common cause facts and those
facts that the
respondents cannot dispute are set out briefly below.
16.
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 the point of contention
lies in the amount that is owed.
17.
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.
18.
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.
19.
The first
respondents’ failure to adhere to the terms of the loan
agreements entitles the applicant to enforce the 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.
20.
The respondents have
not disputed indebtedness to the applicant at all but have raised
technical defenses which relate to the certificate
of indebtedness
not necessarily to the agreement between them or the fact of
indebtedness.
THE FURTHER
AFFIDAVIT
21.
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:
21.1.
The first objection was
that the applicant was not entitled to charge late payment fees VAT
inclusive
as
it had done.
21.2.
The applicant did not
exercise its discretion to adjust the rate of interest to be in line
with the reductions of the prime interest
rate in the period of April
to July 2020.
22.
The applicant did
concede that it had erroneously charged VAT to the late payment
interest fee, 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.
23.
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.
24.
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:
24.1.
The recalculation of
late payment interest fees has increased the amounts from R 724 200.
12 to R 1 336 132. 22 in
respect of the first account and
from R 393 534. 77 to R 621 023.15 in respect of the second
loan, notwithstanding the
fact that the VAT has been removed.
24.2.
The total amount in the
calculation schedule differs from the claimed amount in the notice of
motion.
24.3.
No explanation was
offered for the increase from R59 256 236.87 to
R59 873 820. 25 in the recalculation schedule.
24.4.
The recalculation
schedule increased the late payment interest under circumstances
where it is common cause that the statements
did not contain any item
with such description.
25.
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.
26.
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.
27.
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 material errors in the calculation of the indebtedness done
by the applicant, thus substantially
affecting that which is claimed.
The respondent has however failed in its answering affidavit to
tender any amount which it alleges
it owes.
28.
The applicant has in
reply admitted to only having erred by charging VAT on the late
payment interest fees, and has done a recalculation,
which
recalculation instead of decreasing the amount owed increased the
amount from a total of R59 256 236, 87 to R63 645 880.
45.
29.
As alluded, the
applicant counsel has argued that the recalculation amount has
increased but the applicant is willing to forgo that
which is more
than that which is claimed. The applicant explained that the
difference is brought about by the fact that a proper
recalculation
from when the loans were taken was done and all factors considered
the applicant found that the respondent was indebted
for more.
30.
The question that the
court must now deal with is, whether there was a need under the
circumstances for the respondent to file a
further affidavit.
31.
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.
32.
The question is, has
something unexpected arisen from the applicant’s replying
affidavit to which the respondent should have
the opportunity to
answer to, and the answer is in the negative.
EVIDENTIAL VALUE OF
THE CERIFICATE OF INDEBTEDNESS
33.
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.
34.
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.
35.
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
36.
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.
37.
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.
38.
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.
39.
The respondents do not
dispute that the certificate of indebtedness produced and attached to
the founding affidavit that it complies
with the requirements of the
two participations. The challenges to the certificate raised by the
respondents arises from the terms
of the bonus themselves. The
respondents have not introduced any factual evidence in rebuttal of
the prima facie status of the
certificate of indebtedness.
40.
In N
edbank
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.”
41.
There is undoubtedly a
conflict between the two certificates presented to the court. The
question however is, is the conflict so
severe that it is sufficient
to destroy or detract from the evidential value.
42.
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.
43.
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.
44.
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.
45.
This court agrees with
Bester AJ As he held in the FirstRand Bank LTD
2018
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.”
46.
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 the notice of
motion.
47.
This court therefore
find that the additional affidavit is not permissible in the
premisses,
find that
the applicant has not introduced a new matter in reply.
QUANTIFICATION OF
THE CLAIM
48.
The capital amount that
is owed to the applicant it's common cause between the parties, that
which places in at odds is the interest
rate payable on the late
payment interest.
49.
The respondent has
raised an issue, that being the refusal of the applicant to exercise
its discretion to reduce the interest rate
on the bonds in accordance
with the alterations on the repo rate.
50.
What the respondents
failed to acknowledge or understand is that the manager and behalf of
the applicant has discretion as to whether
to increase or decrease
the rate of interest in terms of Clause 5.1.1of the bonds. The
manager exercised his discretion and decided
not to decrease the rate
of interest even considering the lowered repo rate.
51.
There is absolutely
nothing that forces the manager to reduce the interest rate because
of the dropping repo rate. The manager acted
within his powers and
information available to him to decide not to reduce the interest
rate.
52.
There is further no
duty for the applicant to explain to the respondent at the time of or
any time after informing them that the
interest rate shall not be
reduced in line with the repo rate. The applicant performed its part
by fore warning the respondent
that no reduction should be expected,
if the respondent had any complaint regarding such a decision, the
complainant ought to have
raised it at the time they were formally
informed of the decision.
53.
The respondent clearly
understood the terms of the agreement between them and the applicant
at the time they accepted the applicant’s
decision to exercise
it discretion as communicated. It cannot conceivably serve as a
defense to the applicant’s claim for
judgment against the
respondent now, given the fact that it was a term agreed to.
54.
This application is
heard together with the matter between applicant and Import export
2020 and Fred Van Heerden under case number
7042/2020. It was
accepted by both counsel that what is decided on the matter under
case no 7042/2020 will then have to be the
order in this matter.
Facts of the case are the same only the first respondent is different
from the other matter.
FINDINGS
55.
This court, therefore,
find that the applicant has presented sufficient evidence to prove it
entitlement to the monies so claimed.
56.
The respondents have
failed to put forward any amount which they claim is owed to the
applicant. They have admitted indebtedness
yet failed to state the
extent thereto.
57.
The applicant has a
duty to prove that the respondent is indebted to it and for how much.
The applicant has presented to the court
a certificate of
indebtedness which in terms of the agreement between the parties
shall be prima facie proof of the debt.
58.
In the premises, the
applicant has proven its entitlement to the prayers so listed in
paragraph 1 to 4, of the notice of motion
with costs, including the
costs of senior counsel.
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 Respondent succeeds and the
following
order is made:
2.1. Payment
of the sum of R 59 256 236,87 which amount is to be paid by the first
and second respondents jointly and
severally, the one paying the
other to be absolved;
2.2. Interest
on the amount of R 59 256 236,87 at the rate of 10,28% per annum;
2.3.
Declaring that the first respondent’s right, title and interest
in and to the Notarial Deed of Lease K780/2007L
concluded between
Transnet Limited and the first respondent in respect of the property
situated at Portion 58 (portion of portion
2) of the farm Het Bad
number 465 Registration Division K.R. Northern Province measuring
3,1743 hectares is specially executable
for payment of the aforesaid
sums;
2.4. 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