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[2019] ZAGPPHC 1103
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Investec Bank Ltd v Erf 436 Elandspoort (Pty) Ltd and Others (2517/2011) [2019] ZAGPPHC 1103 (7 March 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
Case
Number: 2517/ 2011
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
DATE:
7/3/19
In
the matter between:
INVESTEC
BANK LTD
PLAINTIFF
AND
ERF
436 ELANDSPOORT (PTY) LTD
1
ST
DEFENDANT
CECILIA
JOUBERT NO
2
ND
DEFENDANT
ERF
1081 ARCADIA (PTY) LTD
3
RD
DEFENDANT
V
AND J PROPERTIES (PTY) LTD
4
TH
DEFENDANT
REMAINING
EXTENT 764 BROOKLYN (PTY) LTD
5
TH
DEFENDANT
ERF
22 HILLCREST (PTY0 LTD
6
TH
DEFENDANT
JUDGMENT
Fabricius
J,
[1]
Plaintiff claims payment in the sum of R3, 979,184.5 0 plus interest
and costs from
the First, Second, Third, Fifth and Sixth Defendants
("Defendants"), based on a loan agreement which it
concluded on
9 February 2000 with the First Defendant ("the loan
agreement"), and various suretyships signed by the remaining
Defendants
on 4 February 2000. Fourth Defendant is not before Court
as it has been liquidated.
[2]
The parties agreed that Defendants' special plea of prescription
would
be decided separately in accordance with the provisions of Rule
33 (4), and that the other issues would be postponed sine die. An
order in this respect was granted.
[3]
The following background facts are common cause:
3.1
On 16 March 1998, the South African Rail Commuter Corporation Ltd
("SARCC") and
First Defendant, concluded a notarial lease
agreement ("the lease agreement'') in terms of which SARCC let
to the First Defendant
a certain immovable property ("the
property") for a period of 50 years, as from 1 November 199
7;
3.2
A tripartite agreement was concluded on 17 May 2000 between
Plaintiff, First Defendant and
SARCC, which provided for Plaintiff
acquiring an option to leave the property from the Corporation under
certain circumstances;
3.3
On 14 June 2000, a notarial covering bond ("the bond") was
registered by the Registrar
of Deeds over the First Defendant's
right, title and interest in, and to the lease agreement, as security
for the indebtedness
from time to time of the First Defendant to the
Plaintiff;
3.4
During January 20 0 2, SARCC cancelled the lease agreement and this
cancellation was confirmed
by a Court order dated 21 August 20 0 2;
3.5
The cancellation of the lease agreement extinguished the title of the
First Defendant, and
the real right of the Plaintiff, as mortgagor in
terms of the bond, in the lease agreement;
3.6
On 10 September 20 0 2, Plaintiff addressed a letter of demand to
First Defendant in terms
of which it stated that the cancellation of
the lease agreement constituted a breach of contract and demanded
payment of the outstanding
balance in terms of the loan, failing
which summons would be issued for the recovery of all amounts due;
3.7
First Defendant failed to comply with the demand and summons was
issued and served on the
Defendants on 21 January 2011 to claim
payment of the debt;
3 8
Prescription commenced to run on 18 September 20 0 2, which is seven
days after
the demand.
[4]
The only issue which I am called upon to decide is whether the
running of prescription
was interrupted by an express or tacit
acknowledgement of liability, as provided for in s. 14 (1) of the
Prescription
Act 68
of
1969
,
on the
part of the First Defendant, on the basis that certain payments were
effected and certain letters were addressed.
[5]
The parties are in agreement that the effect of
s. 14
(
2
) is that in
the event that it is found that the debt has not been extinguished by
prescription before 21 January 20 0 8, the Plaintiff
will have to
prove interruption of prescription during the period of 21 January
2008 and 21 January 2001 ("the relevant period").
[6]
Defendants pleaded prescription of the claim on the basis that the
applicable period
of prescription of the debt was three years, which
has already been decided by this Court and the Supreme Court of
Appeal, Plaintiff
pleaded in the replication that subsequent to 21
August 2002: (I quote):
"6.1
Plaintiff on or about 2
7
September 200 2 exercised its option
in terms of the tripartite agreement;
6.2
Plaintiff became the lessee of the property effective from 1 October
2002 by virtue
of a notarial lease agreement ("second lease
agreement'') executed at Pretoria on or about 29 September 20 0 5, a
copy of
which is annexed hereto as Annexure
"R1''.
In
concluding the second lease agreement Plaintiff was represented by
John Witter and Elizabeth van der Walt and SARCC by Jack Prentis;
6.3
during or about the latter half of 2002 and at Pretoria, Plaintiff (
represented by
Pierre Els and/ or Anneli Maritz and / or Wessel
Oosthuizen) and First Defendant (represented by Pierre Joubert)
concluded an oral
agreement with the following material explicit
alternatively tacit further alternatively implied terms:
6.3.1
the parties would endeavour to dispose of the rights flowing from the
second lease agreement to a potential
purchaser and in the event of
such sale materialising, the proceeds thereof would be utilised in
fulfilling First Defendant' s
loan obligations;
6.3.2
First Defendant would continue collecting rental from sub-tenants of
the property and servicing its obligations
in terms of the loan.
6.4
during or about mid- 20 0 3 and at Pretoria, Plaintiff (represented
by Pierre Els and/ or
Wessel Oosthuizen and First Defendant
(represented by Pierre Joubert) substituted the oral agreement
aforesaid with a further oral
agreement with the following material
explicit alternatively tacit further alternatively implied terms:
6.4.1
Plaintiff would assist First Defendant in fulfilling its loan
obligations by collecting and appropriating
rentals received from
sub-tenants of the property (whether in terms of existing subleases
with First Defendant or subleases to
be concluded in future by
Plaintiff) in reduction of First Defendant' s loan obligations;
6.4.2
should Plaintiff dispose of its rights flowing from the second lease
agreement, the net compensation received
would also be utilised in
reduction of First Defendant's loan obligations.
7
.1
Rentals were collected from sub-tenants - subsequent to conclusion of
the oral agreements
with First Defendant (as set out in paragraphs 6
.3 and 6.4 above-) First Defendant having done so until about June 20
0 3 and
Plaintiff thereafter until May 2008.
7.
2 First Defendant continued paying
monthly instalments on the loan until about June 2003;
7
.3 Plaintiff on a monthly basis
allocated the net proceeds of rentals collected to the loan in
reduction
thereof and for the benefit of First Defendant."
[7]
Plaintiff also pleaded that it received certain amounts, pursuant to
the
disposal of its rights arising from the second lease agreement to
Johnny Prop
(Pty)
Ltd and allocated those amounts to the First Defendant's loan on 29
June 2009 and 1 July 2009. It also pleaded that the facts
relied upon
that I have quoted from the replication constitute the execution of
the oral agreements as alleged in par. 6.3 and
6 .4. Furthermore,
First Defendant as represented by Mr Pierre Joubert, participated in
the execution of the oral agreements and
supported Plaintiff in
performing its obligations.
[8]
It was furthermore pleaded that First Defendant, again represented by
Pierre Joubert, admitted liability for the debt on various occasions
by way of letters dated between
7
May 2003 and 21 May
2007. Seven of these letters were annexed to the application.
[9]
It was accordingly pleaded that the First Defendant's conduct as set
out, constituted
acknowledgements of liability as envisaged in terms
of
s. 14
(1) of the
Act,
and insofar as prescription
may have commenced during September 20 0 2, it was interrupted by
express or tacit acknowledgements
of liability on the part of the
First Defendant, on the dates that each of the payments referred to
above effected, and on the
dates when each of the letters referred
to, was addressed.
[10]
Defendants’ argument was to the following effect:
10.1
None of the letters on which Plaintiff relied and which were annexed
to the replication, were written
during the relevant period;
10.2
The only pleaded payments which were effected during the relevant
period were rental payments
by subtenants to the Plaintiff during May
2008 and two payments on 29 June 2009 and 1 July 2009 by Johnny Prop
(Pty) Ltd to the
Plaintiff, pursuant to the disposal of the
Plaintiff's rights arising from the second lease agreement with
SARCC.
[11]
As far as the "acknowledgement of liability" in
s. 14
(1)
of the
Act
was concerned, it was emphasized that
s. 14
(1) refers to an actual "acknowledgement of liability", and
not just of indebtedness. It is only the former that would
suffice to
interrupt prescription. To interrupt prescription on this basis, the
acknowledgement must amount to an admission that
the debt is in
existence and that he or she is liable therefore. What was required
was an admission of a
present
liability. A mere
acknowledgement that a debtor incurred an obligation was not
necessarily tantamount to an acknowledgement of
liability.
See:
Agnew
v Union
and
South
West Africa
Insurance
Company
ltd
1977 (1)
SA
617
(A) at
623A,
Benson
v
Walters
1984 (1)
SA
73
(A)
at
86H
to
87B
and
Road
Accident
Fund
v
Mothupi
2000 (4)
SA
38
(SCA) par.
[38].
[12]
In the light of these authorities, it was contended that an
acknowledgement of a potential liability
if certain conditions would
be fulfilled, was similarly not sufficient to interrupt prescription.
[13]
Although
s. 14
(1) contemplated an acknowledgement of liability by
the debtor, or his duly authorized agent to the creditor or his duly
authorized
agent,
payments to the lessor by the supplier of goods leased to the lessee,
will only amount to acknowledgement of liability for
purposes of
interruption of prescription if the lessor (creditor) is able to
prove that the supplier of goods made the payments
as agent on behalf
of the lessee (debtor), and that it was not sufficient that payments
were made in respect of the indebtedness
of the lessee under the
lease.
See:
First
Consolidated
Lease
Incorporation
(Pty)
Ltd
v
Servic
SA
(Pty) Ltd
1981 (4)
SA
381
{W)
at 383F to 384E.
[14]
It was contended that the party alleging an interruption of
prescription by an acknowledgement
of liability must be able to show
when the acknowledgement was made, failing which it would not be
possible to say when prescription
would commence to run afresh
pursuant to
s. 14
(
2
). See:
Cape
Town
Municipality
v Allie
N.O
1981 (2)
SA
1
(C)
at
7F
to G.
The enquiry to decide
whether there has been acknowledgement of liability so as to effect
interruption of prescription is a factual
one with regard to the
intention of the debtor. It needs to be established whether the
debtor intended to admit that the debt was
in existence and that he
was liable therefor. This test however is objective, and a Court must
be satisfied that the objective
indicia
justify the
subjective intent which is imputed to the debtor.
[15]
With reference to the evidence given by Mr Oosthuizen, who was
referred to in the replication,
and the documentary evidence relied
upon, it was submitted that an oral agreement between Plaintiff and
the First Defendant was
concluded between 13 June 200 3 and 1 July
2003, in the following terms:
15.1
The First Defendant would not be obliged to continue to pay any
monthly instalments as
provided for in the loan agreement (as it had
done until 9 June 2013)
15.2
the First Defendant would cease collecting rental from sub-tenants of
the property;
15.3
the First Defendant would provide the Plaintiff with copies of all
the existing sublease
agreements and pay the deposits held in terms
of the existing sublease agreements to the Plaintiff;
15.4
the Plaintiff would collect rental from all existing sub-tenants;
15.5
the Plaintiff would conclude sublease agreements in respect of the
property as and when
vacancies arise at market related rentals;
15.6
the Plaintiff would attempt to dispose of its rights arising from the
second lease agreement ( which
was in the process of being concluded)
at a market related purchase consideration;
15.7
the First Defendant would not be entitled to conclude any sublease or
sale agreements on behalf of
the Plaintiff;
15.8
the Plaintiff would credit the First Defendant's loan account from
time-to-time with the net rental
collected (after the deduction of
expenses relating to the management of the property);
15.9
in the event that the Plaintiff is able to dispose of its rights
arising from the second lease agreement, it would credit the First
Defendant' s loan account with the purchase consideration;
15.10
in the event of a surplus following the disposal of the Plaintiff's
rights arising from the second lease
agreement ( i.e. the purchase
consideration in terms of the envisaged sale / cession agreement
exceeds the outstanding indebtedness
in terms of the loan agreement),
the Plaintiff would be entitled to such surplus;
15.11
in the event of a shortfall following the disposal of the Plaintiff'
s rights arising from the second lease
agreement (i.e. the
outstanding indebtedness in terms of the loan agreement exceeds the
purchase consideration in terms of the
envisaged sale / cession
agreement), the First Defendant would be liable to make payment of
such shortfall to the Plaintiff.
[16]
It was therefore submitted that all the further conduct of the First
Defendant after the conclusion
of their second oral agreement, must
be interpreted in light of the terms of the second lease agreement.
Until the disposal of
the Plaintiff's rights arising from the second
lease agreement occurred, it would be unclear whether there would in
fact be a surplus
or shortfall. Also, all possible acknowledgements
by the First Defendant after the conclusion of the second oral
agreement were
acknowledgements of a
potentia
l liability if
certain conditions would be fulfilled. It was however also conceded
that all payments by the First Defendant to the
Plaintiff between 18
September 2002 and 9 June 2003 amounted to express acknowledgements
of liability which interrupted the running
of prescript ion. It was
also conceded that two of the letters attached to the replication,
namely those dated
7
May 2003 and 13 June 20 0 3
amounted to express acknowledgements of liability which interrupted
the running of prescription. The
submission therefore was that
prescription commenced to run afresh on 13 June 2003 pursuant to the
provisions of
s. 14
(2) of the
Act.
[17]
Mr Oosthuizen, who gave evidence, conceded that there was no
contractual nexus between the First
Defendant and the sub-tenants
after 1 July 2003, when Plaintiff was substituted for the First
Defendant as sub-lessor. The tenants
of the property during the
relevant period had in any event concluded sublease agreements with
the Plaintiff. There was no evidence
whatsoever that any sub-tenants
acted as agents on behalf of the First Defendant when complying with
their contractual obligations
in terms of the various sublease
agreements. This was the contention on behalf of the Defendants and I
agree therewith. Also, Johnny
Prop (Pty) Ltd similarly did not act as
an agent on behalf of First Defendant when complying with its
contractual obligations in
terms of the cession and assignment
agreement.
[18]
The other letters that the Plaintiff relied upon, either referred to
a potential liability if
certain facts were realized, or did in any
event not amount to an acknowledgement of debt. In addition, there
was no indication
whatsoever that anyone acted on behalf of the First
Defendant in any particular context referred to in those letters. I
agree that
this submission is justified by the evidence and the
wording of those particular letters.
[19]
I do not agree with Plaintiff's contention that every payment of
rental collected and paid into
the loan account, which payments were
made in agreement with First Defendant constituted an admission of
liability and therefore
interrupted prescription. It was contended
that it was irrelevant whether the sub-tenants were "agents"
of First Defendant
or not. I do not agree with this contention, nor
with the submission that this followed merely upon the fact that the
parties devised
a mechanism for settlement of the debt after First
Defendant had admitted liability.
[20]
Quite apart from anything else, it is clear that none of the letters
relied upon by Plaintiff,
and which were attached to the replication,
were addressed during the relevant period. The implication was that
Plaintiff had to
prove an acknowledgement of liability in the form of
a payment by - or on behalf of the First Defendant, which it had
failed to
do for the reasons that I have mentioned and upon which the
Defendants relied.
[21]
The
result is
that
Plaintiff
has
failed
to
prove
an
acknowledgement
of liability
which interrupted
the running of prescription after 13
June 2003. It follows
that
the
special
plea
of
prescription
must
be upheld
and
that the Plaintiffs claim be dismissed
with costs.
JUDGE
H.J FABRICIUS
JUDGE
OF THE HIGH COURT GAUTENG DIVISION, PRETORIA
Case
number: 2517 / 20 11
Counsel
for the Plaintiff:
Adv F.
J. Erasmus SC
Adv C van Eetveldt
Instructed
by:
VDT Attorneys Inc
Counsel
for the Defendants:
Adv H. F. Oosthuizen SC
Instructed
by:
Nothling Attorneys
Date
of Hearing:
18 - 22 February 20 19
Date
of Judgment:
7
March 2019 at 10:00