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[2019] ZALMPPHC 35
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Nedbank Limited v Stopforth and Others (7991/2017) [2019] ZALMPPHC 35 (1 August 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
LIMPOPO
DIVISION, POLOKWANE
(1)
REPORTABLE:
YES/
NO
(2)
INTERESTED
TO THE JUDGES: YES/
NO
(3)
REVISED
CASE
NO: 7991/2017
In
the matter between:
NEDBANK
LIMITED
PLAINTIFF
AND
CHARLES
JOSEPH STOPFORTH FIRST
DEFENDANT
AMANDA
STOPFORTH SECOND
DEFENDANT
BUBESI
INVESTMENTS 183 (PTY) LTD
THIRD DEFENDANT
Headnotes: Civil procedure –
payment of debt due and payable – whether debtor’s
compromise made “in full
and final settlement” –
had effect to extinguish debt due, absolutely whether Parole evidence
rule finds application
in casu to exclude extrinsic evidence outside
the jural act – Deed of settlement not specified if tender made
in” full
and final settlement” of the debt – issue
not content of the document per se, but true meaning thereof as it
stands
– parole or integration rule applies to nature and scope
of a given jural act, not merely admissibility or otherwise of
evidence
– parole evidence not applicable where evidence
required to throw light on true nature and scope of a given jural
transaction
and what parties intended, nor where a document contains
a mere narration of unsubstantiated allegations. Onus thrust on a
debtor
to prove that compromise made and accepted was to extinguish
indebtedness absolutely.
Held
– in casu, that the ordinary legal exceptions e.g. where
written instrument not intended to cover all the terms of the
transaction, oral evidence showing its terms not precluded-
plaintiff’s claim upheld with costs.
JUDGMENT
MG
PHATUDI ADJP
[1]
The Plaintiff in this matter instituted a civil action against the
First, Second and Third Defendants
(“the defendants”),
jointly and severally, the one paying the other to be absolved, for
payment in terms of
claim A
of an amount of
R272 740.30
,
and in respect of
claim B
, an amount of
R454 398.41
respectively plus interest on the Plaintiff’s prime lending
rate (currently 10.25%) and 10.5%, translating into 20.75% and
capitalised monthly from
19 October 2017
, to date of payment,
both days inclusive, costs of suit on attorney and client scale. The
action is defended.
BACKROUND
TO THE DISPUTE
[2]
In claim A, the Plaintiff’s claim against the Defendants is one
for a debt due. The Plaintiff
alleged in its particulars of claim
that on or about
26 March 2013
and at its business branch,
(Nedbank branch, Polokwane), entered into a partially written and
partially oral agreement for the
principal debtor (Cape Town Fish
Market Polokwane (Pty) Ltd (In Liquidation) to open cheque account
with the Plaintiff.
2.1 In
terms of the said agreement, the Plaintiff lent and advanced monies
to the principal debtor, Cape Town
Fish Market (“CTFM”)
Running
account
No: [….]
pursuant to application for services form attached as
Annexure
“A”
to the Combined Summons.
[1]
2.2 The
terms and conditions of the cheque account facility entitled the
principal debtor to operate a current
account, to which the Plaintiff
would grant overdraft facilities on the said cheque account on agreed
amounts, the Plaintiff being
obliged to honour all negotiable
instruments presented to it for payment on behalf of the principal
debtor, and that in the event
of breach of the overdraft , the said
debtor would on demand, pay the overdrawn facility, in which event
the certificate of balance
issued by a competent Manager of the
Plaintiff, would constitute
prima facie
proof of the debtor’s
indebtedness to the Plaintiff.
2.3 It
is apparent, as the Plaintiff alleged, that on or about the
18
October 2017
, the principal debtor which was by then in
Liquidation process, was not only in breach of the overdraft
facility, but also indebted
to the Plaintiff in the amount
of
R272 740.30,
plus interest at the rate applicable to it
(Nedbank.)
[3]
As to
claim
B
, it
is alleged that on
24
August 2015
the parties entered into a written Term Loan Agreement
[2]
(“the Term loan”) in the total amount of
R
996 974.28
being the Capital amount of the debt, together with interest thereon.
The Plaintiff’s claim, however, is limited to the total
balance
owing, due and payable as on
18
October 2017
in the amount of
R
454 398.41
(Claim
B).
[4]
The Plaintiff also claimed as against the First Defendant himself as
a “Surety and Co-Principal Debtor”
singuli
in solidum
for repayment on demand of all or any sum or sums of money which the
Principal Debtor may then or from time to time thereafter
be liable
to the Plaintiff. A copy of the relevant Deed of Suretyship
(incorporating cession of claims
[3]
)
is annexed to Plaintiff’s particulars of claim. The relevant
Suretyship agreement was concluded on
25
March 2013
.
[5]
Furthermore, on
15
April 2013
,
the Second and Third Defendants also bound themselves jointly and
severally as Sureties and Co-principal debtors in
solidum
for repayment of any monies which the principal debtor may from time
to time be indebted to the Plaintiff, together with interest
charged.
The relevant copies of the deeds of suretyship are marked as
annexures
“D” and “E”,
respectively,
[4]
to the
particulars of claim.
[6]
The certificates of indebtedness as envisaged in the respective Deeds
of Suretyships in respect of the
Defendants’ are attached to
the paginated index of Pleadings as
Annexures
“F1”; to “F6”
to the Combined Summons.
[5]
These are certificates of balance evincing the Defendant’s
indebtedness to the Plaintiff.
[7]
The Defendants, in their particulars of defence (Plea) admitted to a
number of allegations as contained
in claim A, except that they are
in breach of the overdraft facility which was allegedly overdrawn,
and therefore not indebted
to the Plaintiff in the amount of
R
272 740.30
plus interest thereon as alleged.
[8]
The First Defendant in its Plea, specifically pleaded in defence that
an amount of
R800 000.00
was paid to the Plaintiff in “full and final settlement”
of all amounts due and payable by the Defendants, jointly
and
severally, to the Plaintiff. The alleged discharge emanated from an
agreement the parties entered into on
23
June 2017.
[6]
The said agreement appears to be a “
Deed
of Settlement”
signed by Plaintiff, the Defendants and the Principal Debtor (Cape
Town Fish Market). I shall revert to consider and analyse this
agreement which invariably, forms the subject matter of the dispute
in these proceedings as to its true meaning, and what the parties
intended when they concluded its terms.
[9]
At the commencement of the trial, Counsel for the Defendants, Mr
Diamond, raised a preliminary point
of law predicated upon the
principle of the “
parole evidence rule”
or the
integration rule
in terms of which he contended that the
Plaintiff was precluded to adduce extrinsic evidence outside the
“Deed of settlement”
it relied upon to found its claim
against the Defendants. I shall return to this aspect later in the
course of this judgment to
examine in detail the application or
otherwise of this rule in the present instance, even though I have
already made a preliminary
adverse finding against its application to
the facts at issue without providing the full reasons. This approach
was purely to have
permitted the hearing of evidence and also to
dispose of the matter on the merits and not piece-meal or on
technicalities.
THE
LEGAL ISSUE:
[10 The
question for determination is whether the terms and conditions set
out in the deed of settlement if fulfilled,
constituted a valid
discharge of the defendant’s indebtedness to the Plaintiff in
“
full and final settlement”
thereof.
[11] For the
sake of convenience and brevity, it suffices to mention that in the
said Deed of settlement
[7]
the
Defendants jointly and severally “acknowledge their
indebtedness to Nedbank” in respect of the following debts,
namely; -
11.1 In the amount
of
R546 263.17
plus interest at
11.50%
reckoned
from
15 March 2017
, being for
Medium Term Loan agreement
(No: 100149002)
and;
11.2 In the amount of
R963 093.81
, plus interest at prime rate amounting to
21%
reckoned from
15 march 2017
daily compounded monthly, being
for the Current Account
(No: [….]).
Added together, the total
amount of alleged indebtedness as indicated above, translate to
R1 509 356.98
which the Plaintiff claim is owing,
due and payable by the Defendants jointly and severally in
solidum
.
[12] Of
significance, the parties furthermore agree “that
R800 000.00
,
will be paid towards the account mentioned in
paragraph 1.1
and
1.2
supra
, on or before
30 September 2017
”.
(Clause 2.1 of the Deed of settlement).
[13]
Furthermore, it was also agreed that should any amount/s and/or
undertaking referred to in paragraph 2 of the said
deed not be paid
or complied with on due date (30 September 2017) then and in such
event, the full amounts without any right of
set-off for any reason,
of the amounts due in terms of both the Medium Term Loan (“the
Loan”) and the current account
(overdraft facility) and
interest thereon, “
would immediately become due, owing and
payable.”
[14] It is
common cause that the Deed of Settlement was concluded and signed by
the parties on
23 June 2017
, being the date on which the party
last to sign appended his/her signature on the deed instrument, the
defendants having initially
signed it on
03 April 2017.
(Some
two (2) months and three weeks before
23 June 2017
).
[15] It is
also common cause that the First Defendant on
11
September 2017
tendered
payment of
R800 000.00
into the trust account of Nelis Britz attorneys apparently being for
the benefit of Cape Town Fish Market.
[8]
(CTFM). It appears from a copy of the letter dated
11
September 2017
issued by Nelis Britz attorneys on behalf of the Defendants and
directed to the Plaintiff’s Recovery Manager that the tendered
payment was made in “full and final settlement”
[9]
of all amounts owed by the Defendants. This was allegedly done
pursuant to the deed of settlement concluded by the parties as
indicated elsewhere in this judgment.
[16] It is
this payment allegedly made in “full and final settlement”
that is vehemently disputed by the
Plaintiff. It was on a
consideration of this dispute of fact which prompted this court to
have called for oral evidence to determine
the status of the Deed of
settlement referred to and also to establish what the parties
intended when they concluded the settlement
agreement and what its
consequence is.
[17] The
Plaintiff in its letter dated
03 November 2017
issued by Mr
Marlize Smit, Recoveries Manager, indicates the Third Defendant’s
indebtedness which is covered by a mortgage
bond of
R 550 000
.
00
over a certain immovable property situated on
Portion 8 (Ptn
of Ptn2) of Erf 563 Flimedia Township, North West,
for which the
Third Defendant, represented by the First Defendant signed a deed of
suretyship. It was indicated in the letter that
Cape Town Fish Market
still then owed
R272 740.30
(which is overdrawn overdraft
on the Current account) and the amount of
R454 398.41
.
(the loan debt). A reading of this response suggest that the
Plaintiff did not regard the partial payment made of
R800 000.00
as a discharge of all defendants’ indebtedness allegedly made
in “full and final settlement”. I propose to revert
to
this aspect once I have embarked on analysing the evidence.
[18]
SURVEY OF THE EVIDENCE: (PLAINTIFF)
18.1 The Plaintiff
in an endeavour to establish its claims against the Defendants,
called two witnesses to testify, namely,
Messrs Dirk Jooste
and
Victor Lamue.
18.2 Mr Jooste, in
summation, testified that, he is a Credit Manager within the
Plaintiff’s employment, in particular,
operating Limpopo and
Mpumalanga Provinces. He is responsible for credit management of the
Defendant’s banking accounts and
sureties. His role is one of
managing clients’ accounts which are in financial distress.
18.3 He testified
that it came to his attention during or on
28 December 2016
,
that a business entity known as Cape Town Fish Market (Polokwane),
(“CTFM”) had closed shop or ceased trading, and
that the
Plaintiff also closed its overdraft facility granted to it.
18.4 Pursuant to
the closure of CTFM a round of negotiations ensued with the Defendant
whose purpose was to discuss the restoration
of the closed overdraft
facility linked to the current account and also the repayment of the
existing debt in respect of the Medium
Term Loan Agreement (“the
loan”). The teleconference was held in this regard on
17
January 2017
.
18.5 The proposal
further was that First Defendant should bring his restructuring
repayment plan to liquidate his business
indebtedness on or before
28
February 2017
, and also to sign a surety to secure the debt as
one of the pre-conditions to reinstate the cancelled overdraft
facility.
[19] Pursuant
to the telephonic conversation of
17 January 2017
, both the
Plaintiff’s Business Manager and credit Risk Manager, issued a
letter dated
18 January 2017
to the directors of yet another
company apparently owned by the First Defendant (Invirocon (Pty) Ltd)
in connection with the distressed
overdraft facility. In this letter,
Invirocon was notified that Nedbank has reinstated its overdraft
limit of
R390 000.00
as per outstanding exposure on
Current Account
No: [….]
dated
17 January 2017
,
which was approved on
28 February 2017
, by which time a
repayment plan of the full outstanding exposure of CTFM should have
reached the Plaintiff.
[20] This
letter, I must point out immediately, was handed up in evidence with
the defence Counsel’s consent marked
as
Exhibit A.
[21] The next
round of the meeting was a follow up held on
09 March 2017
whose purpose according to this witness, was to enquire further about
the defendant’s due debt.
[22] It was
at this meeting where discussions were held around how the First
Defendant were to settle its debts. A prior
meeting was actually
scheduled on 28 February 2017, both of which were to negotiate
repayment structure plan to be proposed to
the Plaintiff’s
credit risk managers. On the
09 March 2017
, the First
Defendant was introduced to
Mr Victor Lamue
attached to
Nedbank. In all these meetings, according to Jooste no firm payment
arrangements were reached, with the result that
the Defendant’s
accounts were handed over to the risk department for recovery
measures.
[23] Mr
Jooste testified further that in the latter meeting where Mr Lamue
was also present
(09 March 2017)
, the First Defendant proposed
an offer to pay
R800 000,00
towards a reduction of the
capital debt.
[24] This
payment, if acceptable, would have been an interim payment of the
debt which in all, amounted to
R1.5 million,
speaking roundly,
which in essence represented the Defendants’ indebtedness to
the Plaintiff.
[25] The
witness, in addition, testified that pursuant to the meeting of
09
March 2019,
whose purpose was
inter
alia
to
restructure the Defendant’s repayment plan and to consider the
First Defendant’s proposals, the following terms and
conditions
were formulated in response to the First Defendant’s
proposals;
[10]
-
“
following the
meeting between the client, credit risk and RC on 09 March 2017, only
the accounts in the name of Cape Town Fish Market
Polokwane (Pty) Ltd
to be legal coded and DCAR’ end to the legal DCAR with all
remaining accounts to be managed by Credit
Risk under the Credit Risk
DCAR. Basis for this approach is to accommodate the client in his
intended full repayment of the exposure
in the name of Cape Town Fish
Market Polokwane (Pty) Ltd of which agreement has already been
reached(sic) to reduce with R800 000.00
(sic) exposure by end
September 2017 on voluntary consents to adjustment basis. Repayment
arrangements for the remaining +-R700 000.00
(sic) will be
negotiated and contracted with the client and/or sureties.”
[26]
Following this email
(Exhibit “B”)
as alluded to,
Martin Adams issued an email dated 16 March 2017 directed to Dirk
Jooste, Doreen Van Staden which, in brief, confirmed
the agreement
reached with the First Defendant as a sequel to the meeting held on
09 March 2017. In it, it was agreed that “Group”
will be
dual managed by Recovery and Risk by moving CTFM to recoveries
department, and the rest of the entities remaining at risk,
and that
no accounts will be closed until September where it was agreed with
client “
to
reduce
the exposure with
R800 000.00
by end of September 2017.”
[27]
Furthermore, Adams also intimated that “
no excess will be
allowed on all credit base account managed in the Risk entities, and
client to make provision for all debit orders
presented for payment”.
In addition, Adams according to
Exhibit “B
”
(dated 16 March 2017)
recommended dual management of the
entity of CTFM Polokwane to Recoveries, until end of September 2017,
when we will have a clear
view forward on the group.”
[28] Mr
Jooste testified further, that the First Defendant had the initial
two (2) account debts, secured as it were
by sureties, and that to
his knowledge the
R800 000.00
was tendered as a reduction
of the Capital debts.
[29] On being
asked by the court by way of clarity seeking question as to the
effect of the payment the First Defendant
made towards the debts
owed, and whether it was accepted by Nedbank as “full and final
settlement” thereof, his answer
was in the negative describing
it as a “down payment” only and that the Defendants were
still being liable to pay roughly
+-R 709 000.00
due by
them.
[30] Jooste
also testified that since
09 March 2017
meeting, no further
formal meetings were held with the Defendant around the settlement of
all outstanding debts. This witness was
cross-examined quite
extensively, as to the subject matter of how the debt was to be paid,
and if the
R800 000.00
tendered was a down payment or
not. What remains, however, was that no agreement was reached by the
parties at that meeting, so
the evidence unfolded.
[31] Next to
testified
Mr Victor Lamue (Lamue).
His evidence can be briefly
summarised as follows: -
31.1 He is a Senior
Manager, at Nedbank, responsible for recoveries of financially
distressed accounts.
31.2 Jooste would
transfer to him CTFM’s account as and when the Defendant did
not make firm repayment arrangements
of the debt due to Plaintiff as
per meeting held on
09 March 2017
amounting to approximately
R1.5 million.
31.3 Lamue further
testified that the amount of
R800 000.00
offered by the
Defendants in Settlement of the debt was merely for part payment of
the
R1.5 million’s
total debt exposure for which the
Defendant (Charles Stopforth) could not make a definite repayment
commitment. would be invoked
into novation or set-off of the debt
mentioned in
paragraphs 1.1 and 1.2
thereof as a result of
which could not have superseded the entire capital debt.
31.5. Lamue testified
further that the aforesaid tendered payment was not in “full
and final settlement” as contented
by the Defendants, but was
only towards a full discharge of the entire debt due. He mentioned
further that there remained the balance
of the exposure in the amount
roughly of
R700 000.00
or so.
31.6 The witness
denied the contents of the letter issued by the Defendant’s
attorneys dated
11
September 2017
in terms of which the Plaintiff was “advised” that the
payment of
R800 000.00
was made in “full and final settlement” of all amounts
owed by the Defendants. He instead referred us to a copy of
an email
dated
06
October 2017
in which he confirmed that payment was “not in full and final
settlement”, but simple down payment. If it was full
and final
settlement it would have stated it.
[11]
31.6 His evidence
as aforementioned
[Para
31.6]
was previously corroborated by Plaintiff’s attorneys Baloyi
Swart & Associates Incorporated in a letter addressed to
Defendant’s attorneys Nelis Britz dated
10
November 2017
,
[12]
in which it was recorded that the payment of
R800 000.00
was “not in full and final settlement of the debt”. I
shall revert to deal in full detail the contents of this letter
and
its effect in the course of this judgment.
31.7 The witness in
support of his evidence in this regard, again referred to the
contents of an email addressed by one Marlize
Smit dated
16
August 2017
addressed to Stopforth.
[13]
The purpose of this email was to confirm that the assets of CTFM were
sold to Krygkor (Pty) Ltd the proceeds out of which were
provisionally distributed by Sechaba Trust subject to further
finalization by the Master of the High Court of the administration
of
its insolvent estate. Furthermore, the witness in the same email
referred us to various amounts of debt associated with the
Defendant’s existing indebtedness.
That,
in a nutshell, was Lamue’s evidence-in-chief and further
evidence around whether or not the said payment was in full
discharge
of the debt was raised during cross-examination, and for which he
remained firm denying that indeed it was not. It was
at this stage
that the Plaintiff closed its case.
THE
DEFENDANT’S EVIDENCE:
[32] On 20
February 2019 the First Defendant (Stopforth) took a stand to testify
briefly as follows: -
32.1 He informed
certain officials of Nedbank(Plaintiff) that CTFM was experiencing
financial distress and contemplated closing
shop in the middle of
December 2016, so as to commence liquidation procedures. For that
purpose, he set an appointment with Mr
Neels Lombard, an official of
Nedbank, who proposed to see Stopforth early January 2017. A
teleconference was subsequently held
between him and certain
officials of the Plaintiff bank, at which occasion he advised them of
closure of business of his CTFM in
Polokwane.
32.2 Stopforth testified
that the said officials were anxious to know how he intended to
liquidate the arrear amounts in respect
of which his business outlet
(CTFM) was still indebted to the Plaintiff (overdraft facility and
the loan debts)
32.3 Stopforth
testified that neither he, his companies, nor co-defendants were able
to pay in full settlement the Plaintiff’s
claims. He stated
that the purpose of the meeting/s he has held with the relevant
Nedbank officials was purely to negotiate and
reach a settlement in
terms of which part payment could be reached. According to him no
further agreements were reached excepting
the Deed of Settlement
which he thought was aimed to resolve and bring the matter to a
finality.
32.3 The witness
proceeded to testify that his communication with Jooste and Lamue can
be corroborated by his bookkeeper, one Mr
Kirsten. I must remark
though in passing that Mr Kirsten was not called by Stopforth to
testify in corroboration of these allegations.
32.4 Be that as it
may, Stopforth went on to testify in an effort to show that he was a
man of straw, how the funds in his
home mortgage bond were depleted
as he still endured a burden of about R5 Million home loan debt.
32.5 According to
the witness a further meeting was held on 28 February 2017. Present
at the meeting were himself (Stopforth),
Ferdinand Kirsten, Dirk
Jooste, Doreen Van Staden and Martin Adams. The minutes of that
meeting were recorded in an email dated
and transmitted to Stopforth
on
01
March 2019
.
[14]
I shall revert to deal with the relevance of this email shortly in
this judgment. What is of importance, however, is that mentioning
by
him that all CTFM’s accounts had to be referred to the
recoveries section of the bank.
32.6 The bottom
line being the watermark of his evidence was that no definite
restructuring and repayment plan had been reached
particularly during
the meeting held on
28 February 2017
, even though he made
alternative proposals, for instance, to recall his investments,
dispose of Third Defendant’s assets,
including an offer to pay
the
R800 000.00
referred to in full settlement and thus
the discharge of the two outstanding debts, (Overdraft and Medium
Term Loan account), which
Nedbank allegedly accepted. According to
him there were no further subsidiary talks or agreements outside
these discussions.
32.6 Stopforth,
mentioned further that he then instructed his attorneys to advance
the
R800 000.00
on or before
30
September 2017
which he did. But, his attorneys in their letter to Plaintiff’s
attorneys dated
04
September 2017
were “perplexed” by the demand that he must provide
Nedbank with his “settlement proposal with(sic) regards to
the
shortfall amounts.”
[15]
32.6 According to
the witness the Deed of settlement for what it was, was never made an
order of court.
32.7 On being asked
by the court as to whether was there anywhere within the four corners
of the Deed of Settlement where
it was expressly recorded that the
payment of
R800 000.00
before
30 September 2017
if
effected, would constitute a valid discharge of the whole of the
Defendant’s indebtedness to the Plaintiff, the witness
merely
relied on his interpretation of
paragraph 4.6
of the deed as
his answer.
32.8 On that score,
that was the conclusion of his testimony-in-chief, where after
cross-examination ensued.
32.9 The bulk of
cross-examination conducted by Mr Steyn, the Plaintiff’s
counsel, was meant to show that although several
meetings referred to
earlier were held, at the end, the payment made, was not in “full
and final settlement” of the
whole debt exposure.
[33] Next to
testify on
13 March 2019
for the Defendants was Mr
Willem
Ferdinand Kirsten(“Kirsten”).
He testified as
follows; -
33.1 He is an Accountant
and knew the Stopforth as his former client and was present with him
in the meetings held in Polokwane
Nedbank premises on
28 February
and
17 March 2017
, respectively.
33.2 In the first meeting
(28 February 2017) discussions with Plaintiffs’ officials was
to negotiate a settlement of Stopforth’s
liabilities to the
bank, and it was where he offered to pay R800 000.00, which
offer Jooste said would refer to Nedbank’s
Lamue for
consideration.
33.3 The latter
meeting (09 March 2017) he had a meeting again with Lamue, and Adams,
but was uncertain if Jooste was also
present where, once again, the
offer made was discussed, and a draft agreement was to be drawn and
referred to Nedbank for consideration.
This was the last meeting he
attended absent the entire episode.
33.4 He also painted a
bleak financial status of the CTFM and other financial liabilities
Stopforth was exposed to, which invariably
set him up squarely in a
sequestration path. It was for that reason that he thought that the
R800 000.00 tendered was meant
to fully discharge his
liabilities.
33.5 Under
cross-examination, he confirmed that no firm agreement was reached in
the meeting of 28 February 2017. Again, he
conceded that it was never
specifically stated that the tender made was meant to be a full
discharge of his indebtedness.
33.6 He also
conceded that in the two previous meetings where he was involved,
Nedbank did not agree to write off the balance
on the other debt
portfolios.
33.7 He also
confirmed in evidence that the balance due on the entire debt was
about R1.5 million at the time, and that there
was no indication that
such debt would be written off as a “bad debt”. That
concluded cross-examination, and with no
re-examination, the
Defendants closed their respective cases.
COMMON
CAUSE FACTS:
[34] From the
totality of the evidence so far adduced the following facts are
common cause; -
34.1 That, the
Plaintiff entered into certain agreements with CTFM Polokwane (in
liquidation), the principal debtor, in terms
of which it opened a
cheque account with overdraft facility, and also a written
Medium-term Loan Agreement (“the agreements”)
full
details whereof are better circumscribed in Paragraphs 3 and 10 of
the Plaintiffs’ particulars of claim. Both these
exposures are
not in dispute regard being had to the Defendant’s plea in
general.
34.2 The Defendants
signed and entered into a Deed of Suretyship as co-principal debtors
jointly and severally for the due
fulfilment of all obligations of
the principal debtor. The defendants, however, deny their liability
thereunder.
34.2 The principal
debtor has been liquidated a fact which is admitted by the Defendants
in their plea. The liquidation was
occasioned by failure on the part
of the principal debtor to have made prompt regular payments on dates
as and when payments became
due and payable.
34.4 As a result,
the Plaintiff and First to Third Defendants entered into a Deed of
settlement
(Annexures “S1”)
which was finally
concluded on
23 June 2017
being the date on which the last
party signed the relevant instrument.
34.5 In it, the
First and Second Defendants indubitably admitted their indebtedness
in their personal capacities jointly and
severally to the Plaintiff
for the written Loan and overdrawn Current Account. For the sake of
completeness, the indebtedness admitted
is one referred to in
paragraphs 1.1 (Loan debt) and paragraph 1.2 (overdrawn Current
Account). of the relevant deed document.
34.6 Further that,
on 11 September 2017 the Defendants paid an amount of
R800 000.00
towards settlement of the principal debtor’s outstanding
accounts, which amount was accounted for by the Plaintiff on
02
September 2017.
[35] It was
this payment which is and remaining the subject matter of the dispute
whether in terms of subject-matter
settlement the said payment
constituted a valid discharge of the Defendants’ indebtedness
is in fact the nuts of the dispute
as formulated in
paragraph 10
,
above.
[36] The
Plaintiff’s contention in the main is that the “Deed of
settlement” concluded by the parties
was no more than an
interim payment towards settlement of the principal debtors’
whole indebtedness already alluded to herein,
and that further
arrangements will be made after the amount of
R800 000.00
was paid in respect of the balance then due and owing.
The Defendants,
conversely, submitted that the foregoing proposition is untenable it
being contended that the payment advanced on
1 September 2017
which was due and payable in terms of the deed instrument signed was
in fact intended to be a settlement of all debt in “full
and
final settlement” thereof. This is where the battle lines are
drawn.
[37] Before I
weigh up to assess the veracity of these mutually opposing
contentions, I consider it expedient to deal
with and dispose of the
issue of whether or not the Parole evidence rule finds application in
these proceedings and if so, extrinsic
evidence should have found to
preclude the Plaintiff from leading such extraneous evidence outside
the “Deed of settlement”
under consideration.
PAROL
EVIDENCE RULE;
[38] Parole
evidence or the integration rule as it is otherwise generally known
in our law, provides that “
where
a jural act is incorporated in a document, it is not generally
permissible to adduce extrinsic evidence on its terms.”
[16]
Properly interpreted the
extrinsic evidence rule is to the effect that no evidence may be
given to alter the clear and unambiguous
meaning of contract,
regardless of whether written or verbal. The process of
interpretation involved is embodying the terms and
conditions of a
jural act in a single memorial, hence the integration of the
transaction constituted by scattered parts into an
integral
documentary unity.
[39] That
said, the consequence of those disregarded parts in their original
and in choate shape produce no jural effect
as they are substituted
by a single embodiment of the transaction, which then renders all
other utterances of the parties on the
subject legally immaterial for
the purposes of establishing what are the terms of their act.
[40] To that
extent, it is clear that the rule may serve two possible purposes,
namely;
40.1 To show terms
different to those contained in the document with a view to
determining what the terms of a particular transaction
are; or
40.2 to show the
true meaning of the terms contained in the document.
In
issue therefore is not the content of the document per se, but the
true meaning thereof, as it stands,
[41] The
extrinsic evidence rule comprises two distinct rules, namely the
integration rule which applies to the former
position, and the
interpretation rule, which applies to the latter position in this
present instance.
[17]
[42] On
proper analysis the parole evidence rule is clearly one of
substantive law applying to the nature and scope
of a given jural
transaction and not just merely the admissibility or otherwise of
evidence, it is for that reason that a few exceptions
to the general
rule excluding parole evidence exist.
[18]
[43] One of
the exceptions are, for instance, where a written contract is not
intended to cover the terms of the transaction
lock, stock, and
barrel in which event evidence of further oral terms is not
precluded.
[19]
[44] The rule
therefore does not apply, in my view, where evidence is required to
throw a better light on the true nature
of a transaction such as the
“Deed of settlement”
in casu
and what was intended
by the parties regarding the part payment made by Stopforth pursuant
to the said jural instrument.
Furthermore,
the rule cannot apply to a document which contains a mere narration
of an unsubstantiated allegation, for instance,
that the payment made
in casu
was in “full and final settlement” of the
whole of the Defendant’s indebtedness to the Plaintiff, when
nowhere
on the document relied upon was such a recordal inscribed by
the parties.
[45] For all
the considerations a foregoing, and for the reasons advanced herein,
I did not hesitate to make a finding
[Paragraph 9 above] that parole
evidence rule and/or the integration rule did not have room in the
present proceedings as the exceptions
alluded to, weighed heavily
against its application as evidence
viva voce
was essential to
determine the true intention of the parties and the actual meaning of
the contentious parts of the settlement
deed.
LEGAL
PRINCIPLE:
[46] The
starting point perhaps is to examine the legal meaning of tender made
in “full and final settlement”
which, needless to say, is
the hard core of the dispute in the present proceedings. It is
generally accepted that “the acceptance
by a creditor of a
tender made in full and final settlement may, depending on the
circumstances, amount to a settlement of the
debt.” The reason
is that the meaning of expression “in full and final
settlement” depends on the context in
which it is used.”
[20]
The debtor may therefore
raise the compromise as a complete answer to a claim for the balance
of the alleged debt.
[21]
However, it is incumbent for the defendant or debtor to allege and
prove the compromise lest in the event of a doubt, the construction
unfavourable to the defendant/debtor of the tender or offer will
prevail. Should the Plaintiff/Creditor however accept the tendered
compromise it shall have accepted the full and final discharge of all
otherwise due indebtedness.
[22]
The remedy therefore is to sue for the debt owing, due and payable.
ANALYSIS
OF THE EVIDENCE:
[47] Having
dealt with trite principle applicable in compromises of this nature,
I now proceed to evaluate the evidence
in relation to the facts in
this matter taking into account Counsel’s submissions. Counsel
for the Defendants, Mr Diamond
submitted that there is no evidence of
the existence of further outstanding debts or ancillary agreement
with the Deed of settlement
given also the integration rule to prove
further parallel agreement.
I am unable to agree with
these submissions for the following reasons;
47.1 According to
Stopforth he and the officials of Nedbank referred to held a
teleconference during early January 2017 to discuss
how he could
settle his debt. Accepting for a moment that perhaps that was so, and
given the fact that he in fact advanced payment
of an amount of
R800 000.00 as he did before 30 September 2017, it remains quite
obscure as to why the “Deed of settlement”
did not in
fact specifically record that the tender or compromise made was in
“full and final settlement” of the entire
exposure. This
deed was signed subsequently on
03 April 2017
, last party
signed on
23 June 2017
, being the effective date. What
paragraph 2 (2.1) recorded was to the following effect; -
“
2.
The parties agree to the following terms and conditions:
2.1
That R800 000.00, will be paid
towards the account
mentioned in paragraph 1.1 and 1.2 supra on or before 30 September
2017.”
47.2 It is not in
dispute that the accounts mentioned covered by the said amount are
the Medium Term Loan (1001 149 0002)
and the Current Account ([….]
Furthermore, it was also
specifically recorded that the amount of the Defendant’s
indebtedness to the Plaintiff “
will at any time be
determined by a written certificate/s signed by any manager of
Nedbank”
which certificate will upon the mere production
thereof be binding, and be
prima facie
proof of the contents
thereof (Paragraph 4.1, Annexures “S1”). Most
significantly, it was recorded and agreed in paragraph
4.4 that “this
agreement does not constitute a novation of any of Nedbank’s
rights.”
This clause, therefore,
meant that this “Deed of settlement “or any of its terms
and conditions was not intended by
the parties as a substitution of
new contract in place of old one.
47.3 From the
evidence presented it seems plain that between 17 January 2017 and 09
march 2017, the parties were still locked
in the settlement
negotiations to mitigate the Defendants’ over indebtedness. I
agree with Stopforth’s evidence that
no cogent agreement had
been reached as to how to restore their liquidity hence a firm
undertaking was required of him as to how
to settle his accounts with
the bank moving forward.
47.4 The reason for
this observation was that if indeed no agreement was reached on his
alleged settlement proposals, then
the “Deed of settlement”,
if accepted by the creditor as a compromise debt, would have
specifically recorded that the
tender was made in “full and
final settlement” in respect of the accounts mentioned in it.
This was not done. As already
indicated above, (paragraph 46) the
debtor who wish to rely on a compromise has the burden thrust on
him/her to allege and prove
the existence of a validly discharged
tender extinguishing further liability.
47.5 From the
contents of Exhibit “B” being an email addressed to the
internal recovery officials dated 17 March
2017 from Jooste to Adams,
Ms Doreen Van Staden, Smit and Lamue, pursuant to CTFM’s
liquidation process in February 2017,
it is clear, once again, that
the Defendants remained indebted to the Plaintiff in relation to all
exposures aforementioned. For
that purpose, Stopforth’s
exposures were referred to recoveries and were legal coded. The
objective being to accommodate
him to “
reduce exposure with
R800 000.00 by end of September 2017 on voluntary consent to
judgment basis. Repayment arrangements for
the remaining +-
700 000.00 will be negotiated by RC with the client and/or
sureties.”
47.6 A closer
examination presupposes that Stopforth on behalf of CTFM still and
remained indebted to the Plaintiff in respect
of other accounts. The
foregoing observation is fortified by the contents of the email
(Exhibit “B”) dated 16 March
2017 from Adams to Jooste
and copied to Van Staden regarding CTFM. Its purpose was to confirm
inter alia that its account would
be moved to the recoveries
department while other exposures remained at risk unit, and that no
accounts would be closed until September
where “
it was
agreed with client to reduce the exposure with R800 000.00 by
end of September 2017”
. With this in mind, it follows that
the R800 000.00 tendered was as agreed, “to reduce the
exposure.” It comes,
therefore, as no surprise that the deed
recorded as already shown in paragraph 2 (2.1) that “the
R800 000.00, will be
paid towards the accounts “referred
to in paragraphs 1.1 and 1.2 thereof.
47.7 Another reason
to hold that the tendered amount of R800 000.00 could not have
been made or acceptance as “full
and final” discharge of
Defendants’ debts is evinced by the contents of Plaintiff’s
letter addressed to Nelis
Britz Attorneys dated
03
November 2017
.
[23]
In it, the bank again disclosed the
Third
Respondent’s
covering
bond held by it, and the “outstanding balances on the accounts
of CTFM as at 18 October 2017,” in respect of
the current
account and Medium Term Loan, and thus called for the full proceeds
of the sale. (Third Defendants’ assets).
47.8 In the light
of these considerations, I find the evidence of both Jooste and Lamue
as supported by a trail of undisputed
documentary evidence, to be
true, credible and reliable in all material respects. On the
contrary, I view the evidence of both
Stopforth and Kirsten in a dim
light, although Kirsten had conceded that no agreement was reached
with Stopforth to write off his
debts as “bad debts”.
This concession alone gives credence to both Jooste and Lamue’s
evidence as not only being
inherently probable, but truthful.
47.9 Defendant’s
attorneys wrote a letter dated
05
October 2017
[24]
addressed to Nedbank’s Regional Manager Recoveries seeking to
deny that the amount paid as a settlement was never intended
to be
regarded as a “down payment”, but rather as a full
discharge of the debt.
In its response through
Lamue by email dated
06 October 2017,
it was categorically
denied that the said payment would be accepted “not in full and
final settlement”, but a “simple
down payment”.
47.10 To
crown
it
all, the Plaintiff’s attorneys again in a letter addressed to
the Defendant’s attorneys dated
10
November 2017
,
denied that the tender the Defendants made was not in full discharge
of their liability.
[25]
By the
same token, the outstanding debts were again clearly delineated
according to different exposures, the total then amounted
to
R
727 138.71
as at
10
November 2017
.
This figure did not take into account the part payment made.
47.11 In his response
after being informed of the sale of CTFM’s assets and that he
received dividends, Stopforth in his email
dated 11 July 2017 to
Marlize Smit, appears to confirm that the “sale of equipment
(if any profit) and the rest, I must make
due from own funds”.
The “rest” he refers to means, in my opinion, the rest of
the monies still outstanding in
respect of the two other exposures.
He, therefore, conceded his further indebtedness to Plaintiff.
47.12 Lastly but not
least, there is one other aspect that I wrestled with as I evaluated
the existence of the debt and how the
Stopforth and his attorneys has
handled his affairs. This calls for a brief comment. In its letter
dated 04 September 2017, another
set of the defendant’s
attorneys, VZLR attorneys addressed a letter to the Plaintiff’s
attorneys in which they are
“perplexed”
by the request made that Stopforth must attend to
the “Shortfall
amounts.”
It is still not clear
from the evidence as to why Neliz Britz Attorneys could have decided
to commit the funds kept in its trust
account to effect payment on
behalf of Stopforth when there was no settled intention by the
parties to resolve the matter in the
manner their client alleged was
the case. If the parties had a union of the minds to the payment made
in “full and final
settlement”, then needless to mention,
it should have been so recorded in
forma specifica.
[48] Counsel
for the Plaintiff Mr Steyn, contended and correctly so in my view,
that the “deed of settlement”
was concluded as an interim
payment or even so-called “down payment” not to have
finally discharged the debt in its
entirety. I agree that the advance
payments made was merely “towards the accounts referred to in
paragraphs 1.1 and 1.2 thereof.
The deed of settlement makes
reference to “this agreement” in paragraphs 4.2; 4,4; 4,5
and 4,6, thereof, and thus could
not have been made a novation of
Nedbank’s rights either.
[49] For all
the reasons proffered herein, I am satisfied that the Plaintiff has
established its claim against the Defendants
on a balance of
probabilities and its claim should therefore succeed.
In consequence I make an
order as follows.
CLAIM
A
1.
The
Defendants jointly and severally the one paying the others absolved
are ordered to pay the sum of
R272 740.30
to the Plaintiff;
2.
Interest on
the said amount at the Plaintiff’s prime lending rate
(currently 10.25%), from time to time, plus 10.5%, thus
20.75% per
annum, calculated on a daily balance and capitalised monthly,
calculated from 19 October 2017, to date of payment, both
days
inclusive;
3.
Costs of
suit on attorney and client scale, to be taxed;
CLAIM
B
1.
The
Defendants jointly and severally the one paying the others absolved
are ordered to pay to the Plaintiff Payment of the sum of
R454 398.41
;
2.
Interest on
the said sum at the Plaintiff’s prime lending (currently
10.25%), from time to time, plus 1%, thus 11.25% per
annum,
calculated from
19
October 2017
,
to date of final payment, both days inclusive;
3.
Costs of
suit on attorney and client scale, to be taxed;
MG
Phatudi
Acting
Deputy Judge President
Limpopo
Division, Polokwane
REPRESENTATIVES:
1.
Counsel for
the Plaintiff
: Adv. W. Steyn
Instructed
by
: Baloyi Swart & Associates Inc
Centurion
2.
Counsel for
the Defendants : Adv. G.J Diamond
Instructed
by
: Du Toit Swanepoel; Steyn & Spruyt
Attorneys,
Polokwane
3.
Dates
heard
: 19 & 20 February 2019 and
13 March 2019
4.
Date handed
down
: 01 August
2019
[1]
“
Cheque Account application form,” Index
Pleadings, pp 13-23
[2]
Index Pleadings, Annexure “B”, PP 30-37
[3]
Annexure “C” [Ibid pp 40 42]
[4]
Ibid pp 44 -50
[5]
Pp 53 -58, Index Pleadings
[6]
Annexure “S”, Index pleading, pp 71 - 75
[7]
Annexure “S1”, PP 71 Paginated Pleadings
Index
[8]
Paginated Index Bundle “B” P54, Defendants
Discovered Documents
[9]
Ibid p55
[10]
Exhibit “B” Supplementary Discovered
Affidavit by V. Lamue; Bundle 3 pp210 -213
[11]
Paginated Bundle 2, p132
[12]
Ibid p 148
[13]
Ibid p 152
[14]
Paginated Bundle 4, p350 -351.
[15]
Paginated Bundle 2, p118 – 119.
[16]
“
Principles of Evidence,” Schwikkard &
Van der Merwe (4
th
Edition) 2016; p40. See also KPMG C.A. (SA) v Secure fin and Another
2009(4) SA 399 (SCA).
[17]
Ibid p41.
[18]
Vide, “The law of Contract in South Africa: p200
et seq. Christie & Bradfiel.
[19]
Johnston v Leal
1980 (3) SA 927
(A) at 944 B – C.
[20]
“
Ambler’s Precedents of Pleadings” _
Harms: 7
th
Edition p375
[21]
Karson v Minister of Public Works
1996 (1) SA 887
E.
[22]
Absa Bank v Van der Vyver N.O [2002] 3 All SA 425
(SCA).
[23]
Paginated Bundle “B: P71 – “Defendants’
Discovered documents.”
[24]
Ibid p132.
[25]
Ibid p148 -149.