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[2021] ZAECMHC 25
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Business Partners Limited (Registration Number: 1981/000918/06) v Bijal Legacy (Pty) Ltd (Registration Number 2017/447387/07) and Another (5024/2020) [2021] ZAECMHC 25 (3 August 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE LOCAL DIVISION, MTHATHA
CASE
NUMBER: 5024/2020
In
the matter between:
BUSINESS
PARTNERS LIMITED
Applicant
(REGISTRATION
NUMBER: 1981/000918/06)
And
BIJAL
LEGACY (PTY)
LTD
First Respondent
(REGISTRATION
NUMBER 2017/447387/07)
ISHMAEL
OSSMANE BICA
BIJAL
Second Respondent
JUDGEMENT
MATEBESE
AJ
Introduction:
[1]
The applicant, described in the papers as a Company with limited
liability registered in terms
of the laws of the Republic of South
Africa and carrying on business at 23 Jan Hofmeyr Road, Westville,
Durban, instituted proceedings
against the respondent in which it
seeks the following relief:
1.1
As against the respondents, jointly and severally, the one paying
the
other to be absolved payment of a sums of R9,547, 860.00, R 291,
426.94 and R 5, 364, 864.51 plus interest on all such amounts
at the
rate of prime as charged by the Standard Bank of South Africa Limited
plus 1% per annum from 25 December 2019 to date of payment,
both days
included, compounded monthly;
1.2
Costs on an attorney and client scale.
1.3
As against the second respondent an order declaring the immovable
property of the second respondent described as Erf 2716 Mthatha,
Mthatha Township Extension No.12, King Sabata Dalindyebo
Municipality,
District of Mthatha in extent 7954 square metres and
held by Deed of Transfer number T308/1997 specially executable.
[2]
The application was opposed by both respondents. In opposition of the
application the respondents
relied on the following defences:
2.1
The loan agreements sought to be enforced by the applicants are a
paragon of deceipt and/or
fraud and as such the court should not
assist the applicant in enforcing same.
2.2
That it was a tacit term of the agreement that the monthly
instalments due would be repaid
from the monthly net turnover or
monthly rent of the development once completed and in business. In
essence pleading that since the
building is not complete the
instalments are, in terms of the tacit term, not yet due and payable.
2.3
That the applicant, through its representative, represented to the
respondents that the debt
shall be payable from the rental income to
be generated from the building in line with the alleged tacit term of
the agreement and
the applicant therefore, so the argument went, is
estopped from acting contrary to such representation.
[3]
During argument counsel for the respondent abandoned or at least
indicated that he no longer
pursues the first ground of opposition.
In any event, the respondent had not pointed out in the papers, and
counsel was accordingly
also unable to point the court to, any
evidence of fraud or deceipt as sought to be contended. The point was
as a result unsustainable
in any event.
[4]
Before I deal with the respondentâs contentions, above, it is
important that I give the
brief common cause background facts which I
set hereunder.
Factual
background
[5]
On 31 October 2017 the applicant and the first respondent concluded a
written loan agreement
(âthe first loan agreementâ) in terms of
which the applicant loaned to the respondent a sum of R9.3 million.
[6]
On 31 October 2017 the applicant and the first respondent concluded a
written Royalty agreement
(âthe royalty agreementâ) in terms of
which the respondent agreed to pay to the applicant royalty in the
amount of 9.82% on the
higher of the actual monthly turn over or of
the projected monthly turnover of respondentâs business with effect
from 1 June 2018.
[7]
Clause 34 of the Standard Conditions of the loan agreement provides:
â
34.
WHOLE AGREEMENT
34.1
This agreement constitutes the whole agreement between the parties.
No agreements, representations or
warranties between the parties
which are not set out in this Agreement are binding on the parties.
34.2
No representations variations, modification, consensual
cancellation., waiver of or consent to depart
from any of the
provisions of the Agreement shall be of any force or effect unless
confirmed in writing and signed by the parties.
A written
representation, variation, modification, cancellation, waiver or
consent by the parties shall be effective only in the
specific
instance and for the purpose and to the extent for which it was made
or given.â
[8]
On 8 February 2018 the applicant and the first respondent signed an
addendum to the first
loan agreement in terms of which they agreed as
follows:
8.1
that the requirement in the loan agreement for a decree of divorce as
per clause 8.4.3 be
waived.
8.2
That the requirement for approved building plans in clause 8.4.5 of
the loan agreement for
the property situate at 16 Errol Spring
Avenue, Vulindlela Heights, Mthatha, Eastern Cape be waived.
8.3
That the requirement of a short term insurance as per clause 8.3.2 be
relaxed for advance
of R1000 000.
8.4
That the addendum agreement shall not be regarded as a novation of
the loan agreement and
that all terms and conditions contained in the
loan agreement shall remain of full force and continue to be binding
on the parties
unless specifically amended.
[9]
On 25 May 2018 the applicant and the first respondent signed another
addendum to the first
loan and the royalty agreement (âthe second
addendum to the loan and the first addendum to the royalty
agreementsâ) in terms
of which they agreed to amend the date of the
first instalments on both agreement to 1 March 2019.
[10]
On 27 March 2019 the applicant and the first respondent again
concluded another written addendum (âthe
third addendum to loan and
second addendum to royalty agreementsâ) to both the loan and the
royalty agreement in terms of which
they amended the date of first
instalment in both the loan and royalty agreements, as amended by the
second addendum to loan and
first addendum to royalty agreements, to
1 June 2019.
[11]
On 18 February 2019 the applicant and the first respondent concluded
a second written loan agreement
(âthe second loan agreementâ) in
terms of which an amount of R 270 000.00 was loaned to the first
respondent by the applicant.
The amount was, in terms of the
agreement payable in monthly instalments of R 6 856.23 with
effect from 1 March 2019.
[12]
On 31 October 2017 the second respondent and the applicant concluded
a suretyship agreement for the capital
sum of R11.8 million plus and
additional sum of R2, 360, 000.00 in terms of which the second
respondent stood surety for the above
amounts owed by the first
respondent to the applicant. A surety bond B9/2018 was registered by
the second respondent for the above
amounts over Erf 2716 Umtata,
Umtata Township Extension Number 12, King Sabata Dalindyebo
Municipality, Province of Eastern Cape,
In extent 7945 square metres
(âthe Propertyâ).
[13]
The respondents failed to make payments as and when they fell due in
terms of the agreements. This resulted
in the institution of these
proceedings in which the applicant seeks the relief in paragraph 1
above.
[14]
It is important to state that none of the terms of the written
agreements, including the addenda thereto,
were placed in dispute by
the respondents. Neither did the respondent contend for a different
interpretation of any of the terms
of the written agreements.
[15]
Instead, the respondents argued that there exists a tacit term to the
effect that the monthly instalments
due would be repaid from the
monthly net turnover or monthly rent of the development once
completed and in business.
[16]
I deal with the respondentsâ points in turn hereunder starting with
the alleged existence of a tacit
term.
The tacit term
[17]
The respondents relying on an email dated 19 June 2017 from one
Patrick Swartz of the applicant contended
that there exists a tacit
term of the agreements in terms of which the monthly instalments due
would be repaid from the monthly net
turnover or monthly rent of the
development once completed and in business.
[18]
The email reads:
â
Hi Lilo
Herewith QS
costing.
Based on 2
students per room, the gross income is R272 000pm (less 20%
expenses) therefore the net income is R217 600.
A loan of R21m
over 10 years will cost R260 515.
We therefore need
to reduce the cost of the project.
Please advise
Kind regardâ
[19]
On a reading of the email nothing supports the respondentâs
contention therein. In my view the email
only contains advice to the
respondents to reduce the cost of the project based on âQS
costingâ.
[20]
I therefore find the respondentâs contention to be without merit.
[21}
Furthermore, a tacit term is an unexpressed provision of a contract
inferred by a court from the express
terms of the contract and the
surrounding circumstances.
[1]
[22]
The present state of our law is that the usual test for the existence
of a tacit term is that of an interfering
bystander who asks what is
to happen in the particular situation and receives the answer: âOf
course X will be the position. It
is too obvious to us to say so.â
[2]
[23]
In the present case, were the parties to be confronted with the above
question in relation to the due
date of the first instalment, they
would obviously refer the âbystanderâ to the provisions of the
contract and the addenda.
[24]
It follows therefore that there is no room for the tacit term
contended for by the respondents. The parties
have expressed
themselves in writing on the issue and no tacit or implied terms can
be invoked to contradict what they have expressly
agreed upon.
[25]
Accordingly the respondentsâ contention in this regard falls to be
rejected.
Estoppel
[26]
The respondents contend that the applicant represented to them that
the monthly repayment of the capital
amount and any other amount that
may be owing and payable pursuant to the various agreements shall be
made from the monthly net rent
or net turnover of the development
once the development is complete and occupied by rent payers and that
any date set for the commencement
of repayment of instalments shall
be subject to the completion of the development and resultant
occupation by rent payers.
[27]
The respondents argue that applicant is estopped from denying the
truthfulness of its representations
prior to the conclusion of the
agreements and post the conclusion of the agreement.
[28]
When asked to point to the representations, respondentsâ counsel
could only direct the court to the
email dated 19 June 2017, quoted
above, and to no other representations, written or otherwise.
[29]
I have stated herein above that what is alleged by the respondents is
not borne out by the email. On
any interpretation, the email does not
support the respondentsâ contention.
[30]
In essence what the respondents seek to do is to rely on alleged
representations which are inconsistent
with the express terms of the
agreement, and which are not written and signed by both parties.
[31]
This is contrary to clause 34 of the agreement quoted above, which
requires that for such representations
to be binding they must be in
writing and signed by both parties.
[32]
When parties impose restrictions on their own power to vary a
contract, as they did through clause 34,
they do so to achieve
certainty and avoid later disputes. The obligation to reduce any
representations to writing and have them signed
was aimed at
preventing disputes regarding such representations and the terms
thereof. Our courts have confirmed the efficacy of
clauses like
clause 34 of the agreement in casu.
[3]
[33]
For the reason that the respondents have failed to prove any
representations as envisaged in clause 34
of the agreement, i.e.
representations that are in writing and signed by both parties, the
respondentsâ contention that the applicant
made representations as
alleged falls to be rejected.
[34]
It follows that the respondentsâ estoppel point must accordingly
fail.
[35]
It is not in dispute that the first respondent failed to pay the
instalments due in terms of the agreement
when they fell due. In
fact, the first respondent conceded that it never made any payments
to the applicant in terms of the loan
agreements.
[36]
Clause 27 of the loan agreements provides that in the event of
failure to pay any instalment due to balance
on the loan agreements
or any other instrument of debt concluded by the parties becomes due
and payable.
[37]
It follows therefore that as soon as the first respondent defaulted
on its instalments the whole debt
under the loan and the royalty
agreements became due and payable as provided for in the agreements.
[38]
In terms of the suretyship agreement the second respondent is jointly
and severally liable with the first
respondent for the amounts due in
terms of the loan and the royalty agreements.
[39]
The applicant has, in terms of clause 25 of the agreements, submitted
a certificate of balance by its
manager as prima facie proof of the
amount due and payable under the agreements. The respondents sought
to challenge the certificate
of balance on the basis that it is not
evidence of neither money lent and borrowed nor money due to the
applicant by the respondents.
[40]
This argument was not pursued by the respondents. In any event
,
same had no merit especially regard being had to the fact that
the respondents did not dispute that the agreements were concluded,
that monies were advanced by the applicant to the first respondent
and that the first respondent failed to pay the monthly instalments
when they fell due. There was also no challenge to the amounts
reflected in the statement or certificate.
[41]
In the circumstances I find that the applicant has made out a case
for the relief sought in the Notice
of Motion.
[42]
It was common cause or at least undisputed that the property, which
is the subject matter of these proceedings
is a commercial property
and that the provisions of rule 46A do not find application.
Costs
[43]
Both parties argued, in the event they are successful, that costs be
awarded on an attorney and client
scale as provided for in the
agreement. I find no reason to conclude differently.
[44]
In the result I make the following order:
1.
The respondents are ordered and directed to pay the applicant the
total sum of R15, 204 151.45 (Fifteen
Million Two Hundred and
Four Thousand One Hundred and Fifty One Rand Forty-Five Cents)
jointly and severally the one paying the other
to be absolved.
2.
The respondents shall pay interest on the said amount at the rate of
prime as charged by the Standard Bank
of South Africa plus 1% from 25
December 2019 to date of payment, both days included, such interest
to be compounded monthly.
3.
The immovable property described as Erf 2716 Mthatha, Mthatha
Township extension Number 12, King Sabata
Dalindyebo Municipality,
District of Mthatha, in extent 7954 square metres and held by Deed of
Transfer Number T308/1997 is declared
specially executable.
4.
The respondents shall pay the costs of this application on an
attorney and client scale.
Z.Z.
MATEBESE
ACTING
JUDGE OF THE HIGH COURT
APPARANCES:
For
the applicant: Adv De la
Harpe SC
For
the respondents: Adv Koroma
Date
Heard: 22 July 2021
Delivered:
03 August 2021
[1]
Alfred Mc Alpine & Son (Pty) Ltd v Transvaal Provincial
Administration
1974 (3) SA 506
(A); South African Maritime Safety
Authority v McKenzie
2010 (3) SA 601
(SCA) para.11
[2]
McKenzie supra para.12
[3]
Spring Forest Trading CC v Wilberry (Pty) Ltd t/a Ecowash and
Another
2015 (2) SA 118
(SCA) para.13 and the authority
referred to therein.