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[2021] ZAKZPHC 41
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Grindrod Bank Limited v Craig Sutherland Steel (3999/2020p) [2021] ZAKZPHC 41 (9 July 2021)
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IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: 3999/2020p
In
the matter between:
GRINDROD
BANK
LIMITED APPLICANT
(Registration
Number: 1994/007994/06)
And
CRAIG
SUTHERLAND
STEEL RESPONDENT
(Identity
Number: 720128 5240 08 8)
JUDGMENT
Delivered
on: 09/07/2021
CHILI.
J
[1]
The applicant approached the court for entry of judgment in its
favour, as against the
respondent
[1]
,
in the
amount
of
R20,000,000.00
plus
interest
thereon
together
with costs on attorney and client scale.
It is
common cause that the respondent is indebted to
the
applicant. The amount claimed had been loaned to Willmeg Investments
(Pty) Limited (hereinafter "Willmeg"), a company
of which
the respondent is the sole director. When the loan agreement was
concluded, Willmeg was represented by the respondent and
the
employees of Willmeg
[2]
. On the
same day (the 23rd of August 2018), the respondent, acting in his
personal capacity, concluded a guarantee with the applicant
in terms
of which he undertook to settle Willmeg's indebtedness to the
applicant to the limited amount of R20,000,000.00
[3]
.
In reply to the applicant's claim, the respondent lodged a counter
application seeking an order for a stay of proceedings pending
institution of an action for
rectification
of the terms of the guarantee. At the hearing of the opposed
application it was agreed that the main issue for determination
is
the question whether disputes of fact exist that warrant referral of
the matter either for the hearing of oral evidence or for
trial.
[3]
It is not in dispute that the respondent placed his signature on both
documents relied upon by the applicant, namely, the loan agreement
and the guarantee. The purported dispute is narrowed
to
two
issues only, namely, the amount claimed and the question whether the
contents of the guarantee reflect the true intention of the
parties.
[4]
The
well-known test in relation to disputes of fact was laid down by the
Appellate Division in
Plascon-Evans
[4]
as
follows:
"It is correct
that, where in proceedings on notice of motion disputes of fact have
arisen on the affidavits, a final order,
whether it be an interdict
or some other form of relief, may be granted if those facts averred
in the applicant's affidavit which
had been admitted by the
respondent, justify such an order. The power of the court to give
such
final
relief on the papers before it is, however, not confined to such a
situation. In certain instances
the
denial
by the
respondent
of a fact alleged by the applicant may not be such as to raise a
real, genuine bona fide dispute of facts
[5]
.
If in
such a case the
respondent
has not availed himself of his right to apply for the deponents
concerned to be called for cross-examination under
Rule 6(5)(g) of
the
Uniform
Rules of Court
[6]
, and the Court
is satisfied as to the inherent credibility of the applicant's
factual averment, it may proceed on the basis of the
correctness
thereof and include this fact
among
those upon which it determines whether the applicant is entitled to
the final
relief
which he seeks
[7]
.
Moreover,
there may be exceptions to this general rule, as, for example, where
the allegations of denials of the respondent are so
far-fetched or
clearly untenable that the court is justified
in
rejecting them merely on the
papers."
In
Whiteman
[8]
the
SCA remarked
as
follows:
"[13] A real,
genuine and bona fide dispute of fact can exist only where the court
is satisfied that the party who purported
to raise the dispute has in
his affidavit seriously and unambiguously addressed the fact said to
be disputed. There will of course
be instances where a bare denial
meets the requirements because there is no other way open to the
disputing party and nothing more
can therefore be expected of him.
But even that may not be sufficient if the fact averred lies purely
within the knowledge of the
averring party and no basis is laid for
disputing the veracity or accuracy of the averment. When the facts
averred are such that
the disputing party must necessarily possess
knowledge of them and be able to provide an answer (or countervailing
evidence) if they
be not true or accurate but, instead of doing so,
rests his case on a bare or ambiguous denial the court will generally
have difficulty
in finding that the test is satisfied."
[5]
In his
answer the respondent placed into dispute the amount reflected in the
statement
of balance presented by the applicant,
without
providing
even a
single shred of evidence in support of his denial. A certificate of
balance presented by the applicant, reflects the amount
owed by the
respondent to the applicant as at 1 June 2020, to be R20,426,326.35
together with interest thereon
[9]
.
On the 31st of March 2020, Willmeg, represented by Mr Paul Mc Cabe,
forwarded an email to the applicant stating: 'with regards to
the
above-mentioned loan, kindly grant us relief of interest payments for
the months of April 2020 to June 2020, to be capitalized
with the
original loan capital of R20,000,000.00'. Considering financial
constraints caused by the prevailing covid-19 pandemic,
the applicant
allowed Willmeg's request and on the 3rd April 2020, forwarded a
letter to Willmeg, amending payment terms as follows:
"Where the bank
has agreed to deferred payments under the facility, the interest and
fees accrued over this period (1
April
2020 to 30
June
2020) will be capitalized on the facility. To allow for any interest
capitalization resulting from this amendment, the facility
limit
shall be increased to R20,500,000.00. From 1 July 2020 the existing
repayment terms will resume
[10]
.â
This
letter which reflects the amount owed to the applicant as at the 1st
of July 2020 to be R20,500,000.00, was duly signed by the
respondent
on the 3rd of April 2020. It is worthy to be noted that the said
letter, together with signatures thereon, comprises only
two pages.
For the respondent to now allege that the amount reflected in the
certificate of balance is in dispute, is in my view
farfetched and
unworthy to be believed. I might just add that when responding
specifically to an allegation pertaining to the amount
contained in
the certificate of balance together with the interest thereon, the
respondent stated in para 67 of his answering affidavit:
"AD PARA 28
THEREOF
67. The allegations
are accepted".
In
light of the above, I am not persuaded that a dispute exists with
regards to the amount reflected in the applicant's certificate
of
balance. In any event, the only sum claimed by the applicant is the
amount of R20,000,000.00 as reflected in the guarantee; not
the
entire amount reflected in the certificate of balance.
[6]
I now turn to deal with the argument that the guarantee does not
reflect
the true intention of the parties. The defence raised by the
respondent is that he did not read the guarantee prior to placing his
signature thereon. In amplification he states that had he read the
guarantee, he would have either refrained from signing it or insisted
on the amendments to reflect the true intention of the parties. His
version is that it was agreed that the guarantee would only be
applicable in the event of Willmeg being wound up. The key question
is whether the allegation by the respondent, that he did not
read the
contents of a guarantee before placing his signature thereon,
qualifies as a dispute of fact warranting referral of this
application either for hearing of oral evidence or for trial. It is
apposite to deal first with the events that preceded the conclusion
of a guarantee.
[7]
It is common cause that the conclusion of the guarantee was
precipitated by discussions between representatives from both sides.
The respondent himself was party to those discussions. On the
day
that followed the discussions (the 2
nd
August 2018) Mr
Simon Weare (the applicant's representative) forwarded an email to
the respondent and certain of Willmeg's employees,
setting out the
terms of lending and the proposed security described as "personal
guarantee from Craig Steel (the respondent)
for RZ0,000,000.00".
The said funding proposal was accepted by the respondent himself and
Mr Paul Mc Cabe. On 20 August 2018
Mr Weare and Mr Grant Gibson
(representing the applicant) hand delivered a letter described as an
"offer letter", containing
the terms of lending and the
security required (an amount of R20,000,000.00). At that meeting (of
which the respondent was party)
the precise terms of the guarantee
were again discussed. On 22 August 2018 Mr Weare subsequently sent
all the documents which required
signatures, including the loan
agreement and the guarantee, to the respondent and other employees of
Wilmeg. When the documents were
returned to the applicant, it
transpired that they had not been correctly signed. On 23 August 2018
the said documents were again
forwarded to the respondent and Mr
Bremner (Willmeg's employee), pointing to the errors that required
rectification by the respondent.
The respondent subsequently attended
to the said errors and returned the correctly signed documents.
[8]
No mention is made in any of the above documents, including
correspondences, of the guarantee being enforceable only in the event
of Willmeg being wound up. If such a conversation did occur
as
alleged by the respondent, the respondent would have brought that to
the attention of the applicant's representative before placing
his
signature on the loan agreement and the guarantee. I reject the
respondent's defence that he did not read the guarantee before
placing his signature thereon as false. Given the circumstances
surrounding the conclusion of both the loan agreement and the
guarantee,
coupled with the respondent's experience in businesses,
his defence that he simply placed his signature on the guarantee
without
reading it, is so untenable that it can safely be rejected on
the papers. It is raised in the tersest of terms and with no
evidence,
whatsoever, to support it. From the above it is clear, that
when negotiating the terms of both the loan agreement and the
guarantee,
the respondent was in the company of Willmeg's employees.
Nevertheless, he made no attempt at all, to file confirmatory
affidavits
of his companions.
Request
for a stay of proceedings
[9]
The respondent requested a stay of proceedings on the basis that he
intends bringing an action for rectification. It is worth mentioning
that the issue before me is not a request for rectification
per
se, but a stay pending an action for rectification. The question
for determination therefore is whether there are any prospects of
success in the proposed rectification action or application, that
justify a stay of the present application. The five factors the
applicant has to prove in a rectification application are:
(a) that an
agreement
inter
parties
had been reduced to
writing;
(b) that the
written document does not reflect the true intention of the parties -
this requires that the common continuing
intention of the parties, as
it existed at the time when the agreement was reduced to writing, be
established;
(c) an intention by
both parties to reduce the agreement to writing;
(d) a mistake
in drafting the document which mistake could have been the result of
an intentional act of the other party or
a bona fide common error;
and
(e)
the
actual wording of the
true
agreement
[11]
.â
The
respondent's case rests on the averment that the contents of the
guarantee do not reflect the true intention of the parties. If
it
did, so the argument goes, it would contain a clause stipulating that
the guarantee would only be applicable in the event of Willmeg
being
wound up; hence a request for the inclusion of clauses of 27 and 28
to read:
"27. The
guarantee will only be applicable in the event of Willmeg being wound
up.
28. The applicant
will not otherwise then in the event of Willmeg being placed under
winding up, be entitled to invoke a guarantee."
[10]
Except for his say so, the respondent advanced no evidence whatsoever
in support of an averment that it was agreed
during the course of
discussions, that the guarantee would only be applicable in the event
of Willmeg being placed in liquidation.
It was sufficiently
established that the respondent was at all times in the company of
Willmeg's employees when the terms of both
the loan agreement and the
guarantee were discussed. If there was a semblance of truth in his
version he would have been expected
to identify the individuals who
participated in the discussions as Ms Mthethwa did, and the roles
they played. A mere averment that
"it was agreed that the
guarantee would only come into force if Willmeg is liquidated"
and without more, is nothing but
a bald averment without supporting
facts. In light of the above I am not persuaded that a case has been
made out for a stay of proceedings
pending institution of an action
for rectification.
[11]
I am satisfied that the applicant succeeded in proving its claim
against the respondent
and for that reason I make the following
order.
Order.
1.
Judgment is entered for the applicant against the respondent, in the
amount of R20,000,000.00 plus interest thereon
at the prime interest
rate of (currently 7.25%) plus 5%, calculated daily and compounded
monthly, from 1 June 2020 to date of payment,
both days inclusive.
2.
The respondent is to pay the costs of the application on attorney and
client scale.
3.
The respondent's counter application is dismissed with costs.
Chili
J
Appearances
Counsel
for the applicant: Adv.
AJ Boulle
Instructed
by: Edward
Nathan Sonnenbergs Inc
Email:
alombard@ensafrica.com
Ref:
A Lombard/0477348
C/O
Mason Incorporated
Third
floor
Fedsure
House
251
Church Street
Pietermaritzburg
Tel:
033 345 4230
Fax:
033 342 4734
Email:
naven@masoninc.co.za
Ref:
PK Coetzee/nm/15/E012/033
Counsel
for the respondent: Adv.
D W Eades
Instructed
by: Schoerie
& Sewgoolam Incorporated
Kelvin
House
181
Burger Street
Pietermaritzburg
Tel:
033 845 9300/033 845 9330
Fax:
086 607 0112
Email:
rikesh@ss-inc.co.za
/
rikesh@skinc.co.za
Ref:
Mr Sewgoolam/pd/S621L
Date
of hearing: 02
February 2021
Date
of judgment: 09
July 2021
[1]
Mr
Craig
Sutherland
Steel, in his personal capacity.
[2]
See "Term Loan Agreement,"
annexure
FA2 at pages 22 thorough 29 of the indexed papers.
[3]
See para 1 of the guarantee, annexure FA1at pages 16 through 20 of
the indexed papers.
[4]
Plascon-Evans
Paints
v Van Riebeeck
Paints
1984
(3) 623 at 634 H to
365.
[5]
See
Room
Hire
Co
(Pty)
Ltd
v
Jeppe
Street
Mansions
(Pty)
Ltd
1949 (3) SA 1155
(T} at 1163-5;
Da
Mata v Otto NO
1972
(3) SA 858
{A) at 882 D - H.
[6]
See
Petersen
v Cuthbery
&
Co
Ltd
1945
AD 420
at 428.
[7]
See
Rikhoto
v East Rand Administration Board
&
Another
1983
(4} SA 278
(W) at 283 E-H.
[8]
Whiteman
t/a JW Construction v Headfour (Pty) Ltd and Another
2008
{3) SA 371
(SCA}
at 375 para 13.
[9]
See annexure FA9 at page 65 of the indexed papers.
[10]
See para 1.5 of annexure FA4 at pages 31 and 31A.
[11]
See LTC Harms
Amler's
Precedents
of
Pleadings
6 ed
(2003)
p
298-299 and the
cases
there cited.