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[2021] ZAGPJHC 708
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The Industrial Development v Zhigang (24972/2020) [2021] ZAGPJHC 708 (19 July 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
CASE
NO:
24972/2020
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED.
In
the matter between:
THE
INDUSTRIAL DEVELOPMENT
Plaintiff
Versus
ZHIGANG
QU
Defendant
JUDGMENT
MATOJANE
J
Introduction
[1]
The Plaintiff issued summons against the
defendants on 10 September 2020 for the payment of the amount of R4
460 085.04 in respect
of the alleged indebtedness to the Plaintiff of
Afri-Greenerwood (Pty) Ltd (“the Company”). The
defendants jointly
and severally guaranteed the due and proper
performance of obligations due to the Plaintiff by the Company and to
pay on demand
the guaranteed amount to the Plaintiff.
[2]
The defendants have taken exception to
the
Plaintiff’s particulars of claim on the basis that the
Plaintiff’s particulars of claim lack the averments necessary
to sustain a course of action against the defendants. I shall refer
to the parties as they appear in the main action.
[3]
The defendant prays for an order in the following terms:
1.
That the defendant’s exception be upheld with costs
2.
The Plaintiff’s particulars of claim are set aside
3.
Further or alternative relief
Background
[4]
On 17 February 2014 the Plaintiff and the Company concluded a written
Short Form Loan
Agreement in terms of which the Plaintiff provided a
loan facility to the Company for plant and equipment and working
capital.
At the same time, the Plaintiff and the Company
contemporaneously entered into a Subordinated Loan Agreement in terms
of which
the Plaintiff provided a loan facility to the third party
for the purpose of purchasing new plant and equipment.
[5]
On 24 October 2014, the Plaintiff and the defendants entered into a
written Guarantee
Agreement. Clause 2 of the Master Terms and
Conditions states as follows:
"2
INTRODUCTION
The Borrower is obligated
to IDC in respect of the Guaranteed Liabilities.
2.2 The Guarantors know
and understand the full terms and conditions of the Guaranteed
Liabilities.
2.3 The Guarantors have
agreed to guarantee the due, proper and punctual performance by the
Borrower of the Guaranteed Liabilities
and to pay the Guaranteed
Amount, subject to the remaining terms of this Agreement."
[6]
Clause 3 of the Master Terms and Conditions states as follows:
"GUARANTEE
With effect from the
Effective Date, the Guarantors hereby, irrevocably and
unconditionally guarantee, as a primary obligation,
in favour of IDC,
the due, proper and punctual performance by the Borrower of the
Guaranteed Liabilities including the full, prompt
and complete
payment of all the Guaranteed Liabilities when and as the same shall
become due whether or not any or all of the Guaranteed
Liabilities
are enforceable against the Borrower, and undertakes to IDC that each
time a Guarantee Claim Notice is delivered to
the Guarantors, the
Guarantors shall within 3 (three) business days after receipt thereof
pay all sums claimed in such Guarantee
Claim Notice."
[7]
Clause 1.1.8 of the Master Terms and Conditions define "Guaranteed
Liabilities"
as follows:
"Guaranteed
Liabilities" means all present and future moneys and liabilities
(whether actual or contingent and whether
owed jointly or severally
or in any other capacity whatsoever) which are now, or which may
hereafter become, owing to by the Borrower
to IDC in terms of the
Finance Documents together with all damages and all costs, charges
and expenses incurred by IDC in connection
with a breach by the
Borrower of its obligations under the Finance Documents and which IDC
is entitled to recover from the Borrower
in terms of the Finance
Documents, including all items which would be Guaranteed Liabilities
but for the winding-up, absence of
legal personality or incapacity of
the Borrower or any statute of limitation and a reference to a
"Guaranteed Liability"
shall be to any one or more of the
"Guaranteed Liabilities" as the context requires;"
[8]
The Plaintiff alleges that it advanced the loan funding to the
Company in terms of the Short
Form Loan Agreement and the
Subordinated Loan Agreement and the Company has defaulted on its loan
repayments on both the capital
amount and interest to the total
amount of R4 460 085.04.
The exception
[9]
The defendants' exception at paragraph 3 reads
In terms of clauses 2, 3,
4, 5.3, 6.1 to 6.3, 9 and 10.1.read with 10.1.3,10.1.5, 10.1.6 and
10.1.7 and clause 10.2 of the Guarantee
Agreement, and clauses
1.1.5,1.1.6,1.1.8,1.1.11and 1.1.15 thereof, the liability of the
Defendants to the Plaintiff is for the
liability to the Plaintiff of
the Company in respect of the Loan Agreement concluded or to be
concluded between the Company and
the Plaintiff on or about the date
of signature of the Guarantee Agreement by the party last signing the
Guarantee Agreement. 4.
The date of signature of the Guarantee
Agreement by the party last signing the Guarantee Agreement is 24
October 2014 (page 4 of
the Guarantee Schedule). 5. Accordingly, the
liability of the Defendants to the Plaintiff is for the liability to
the Plaintiff
of the Company in respect of the loan Agreement
concluded on or 6. The Short Form Loan Agreement was concluded on 17
February 2014,
being the date of the signature on behalf of the
Plaintiff (page 21of annexure B).
[10]
The defendants' exception asserts that the guarantee agreement does
not cover the Short Form
Loan Agreement and the Subordinated
agreement because they were not concluded on or about the Signature
Date of the Guarantee Agreement.
[11]
Clause 1.1.11 of the Master Terms and Conditions define "Loan
Agreement" as follows:
"Loan Agreement"
means the loan agreement concluded or to be concluded between the
Borrower and IDC on or about the Signature
Date;."
[12]
Clause 1.1.15 of the Master Terms and Conditions define "Signature
Date" as follows:
"Signature Date"
means the date of signature of this Agreement by the Party last
signing;."
[13]
The defendants contend that the liabilities incurred under the Short
Form loan Agreement and
the Subordinated Loan Agreement are not
guaranteed liabilities because the agreements were not concluded on
or before 24 October
2014, which is a signature date.
[14]
On the other hand, the Plaintiff contends that the material date in
terms of the Guarantee Agreement
is the effective date, which is the
inception date of the continuing covering security provided by the
defendants. The Plaintiff
relies on clause 3 of Part 2 of the
Guarantee Agreement, which reads:
“
GUARANTEE
With effect from the
Effective Date, the Guarantors hereby and unconditionally guarantee,
as a primary application, in favor of
IDC the due, proper and
punctual performance by the Borrower of the Guaranteed Liabilities"
…
[15]
Clause 5 of Part 2 of the Guarantee Agreement provides that:
" DURATION
This Guarantee is a
continuing covering security and will commence on the Effective Date
and be and remain in force until the Release
Date."
[16]
The Plaintiff submits that the Short Form Loan Agreement and the
Subordinated Loan Agreement
fall under the Guarantee Agreement and as
such, the defendants are liable for the Plaintiff’s claim as
set out in the particulars
of claim.
Discussion
[17]
In considering an exception, a Court commences from the premise that
the allegations contained
in the particulars of claim are correct and
then considers the pleadings as a whole. No facts outside those
contained in the pleadings
can be brought into issue. An Excipient
will have to show that the pleading is excipiable on every possible
interpretation that
can reasonably be attached to it, wherefore the
onus rests upon the Excipient. See
McKelvey v Cowan NO
1980
(4) SA 525
(Z) at 526
[18]
An exception founded upon the contention that a plea lacks averments
necessary to sustain a cause
of action is designed to obtain a
decision on the point of law which will dispose of the case in whole
or in part and avoid the
leading of unnecessary evidence
[1]
.
[19]
The purpose of an exception is to protect litigants against claims
that are bad in law. An exception
on this ground can only succeed if
the claim is bad in law, not that it may be better in law. In
Vermeulen
v Goose Valley Investments Ltd v Blacher
[2]
Marais JA stated:
It
is trite law that an exception that a cause of action is not
disclosed by a pleading cannot succeed unless it be shown that
ex
facie
the allegations made by a plaintiff and any document
upon which his or her cause of action may be based the claim
is
(not
may be) bad in law.
[20]
An exception is generally not the appropriate procedure to settle
questions of interpretation
because, in cases of doubt, evidence may
be admissible at the trial stage relating to surrounding
circumstances which evidence
may clear up the difficulties
[3]
.
[21]
The question of the interpretation of a contract can properly be
decided on exception if the
contract is unambiguous so that evidence
is not admissible for its interpretation
[4]
.
[22]
It seems to me that the interpretation put forward by the defendants
is not the only possible
interpretation. The interpretation proffered
by the Plaintiff cannot be dismissed as implausible. I am not
persuaded that the requirement
of unambiguity is satisfied. A trial
judge will likely have the benefit of a comprehensive argument and
the leading of evidence.
Consequently, the exception falls to be
dismissed with costs.
Conclusion
[23]
In the result, the following order is issued:
“
The
exception is dismissed with costs.”
K
E MATOJANE
JUDGE
OF THE HIGH COURT,
GAUTENG
LOCAL DIVISION,
JOHANNESBURG
Appearances
Counsel
for Applicant:
Advocate
R Kayingo
Attorney
for Applicant:
Mothle Jooma
Sabdia Inc
Counsel
for Respondent:
Advocate L Hollander
Attorney
for Respondent:
Allan Levin & Associates
[1]
Alphina
Investments Ltd v Blacher
2008 (5) SA 479
(C) at 483B.
[2]
2001
(3) SA 960
(SCA) at 965
[3]
Murray
& Roberts Construction Ltd v Finat Properties (Pty) Ltd 1991 (1)
SA 508 (A)
[4]
Sacks
v Venter 1954 (2) SA (W) at 429.