Bisnath N.O and Others v Absa Bank Ltd., Absa Bank Ltd. v Bisnath and Another (117/07, 674/07) [2008] ZASCA 23; [2008] 3 All SA 219 (SCA); 2008 (4) SA 92 (SCA) (27 March 2008)

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[2008] ZASCA 23
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Bisnath N.O and Others v Absa Bank Ltd., Absa Bank Ltd. v Bisnath and Another (117/07, 674/07) [2008] ZASCA 23; [2008] 3 All SA 219 (SCA); 2008 (4) SA 92 (SCA) (27 March 2008)

Links to summary

THE SUPREME COURT OF
APPEAL
OF SOUTH AFRICA
Case number: 117/07
Reportable
In the matter between :
D BISNATH NO ... FIRST APPELLANT
G BISNATH NO ... SECOND APPELLANT
D BISNATH ... THIRD APPELLANT
G BISNATH ... FOURTH APPELLANT
and
ABSA BANK LIMITED ... RESPONDENT
Case number: 674/07
And in the matter between :
ABSA BANK LIMITED ... APPELLANT
And
D BISNATH ... FIRST RESPONDENT
G BISNATH ... SECOND RESPONDENT
CORAM : SCOTT, CLOETE, PONNAN, MAYA JJA
et
SNYDERS AJA
HEARD : 13 MARCH 2008
DELIVERED : 27 MARCH 2008
Summary: Mortgage and pledge: The obligations owed by
a pledgee to the pledgor at common law in regard to fruits of the
property pledged,
are owed by a mortgagee of immovable property to
the mortgagor only where the mortgagee is in possession of the
mortgaged property.
Neutral citation: This judgment may be referred to as
Bisnath v Absa Bank Ltd
(117/07 and 674/07)
[2008] ZASCA 23
(27 March 2008).
_________________________________________________________
JUDGMENT
CLOETE JA
/
CLOETE JA
:
INTRODUCTION
[1] These two appeals involve the inter-relationship
over more than a decade between Absa Bank Ltd and its predecessors in
title on
the one hand, and Mr and Mrs Bisnath and the Gita Family
Trust (‘the Trust’), of which the Bisnaths are the trustees, on
the
other. It is unfortunately necessary that the facts be set out in
some detail. It is not necessary to differentiate between Absa
and
its predecessors so I shall refer to them as ‘the Bank’, and
where convenient in the first appeal, I shall refer to the Trust
and
the Bisnaths as ‘the appellants’. Although the Trust was
represented by the Bisnaths in their capacity as trustees I shall
refer to the Trust as if it was the litigating party.
FACTUAL BACKGROUND
[2] There has been protracted litigation involving a
property owned by the Trust, and equally protracted litigation in
respect of
nine properties owned by the Bisnaths. Orders were granted
in the Durban High Court by Niles-Dunèr J, Jappie J, Swain J, Hugo
J,
Msimang J and Radebe AJ.
[3] I shall begin with the litigation involving the
property owned by the Trust. As will become apparent, there is even a
dispute
revolving around the correct description of that property. To
avoid begging the question, I shall refer to it as ‘the trust
property’.
The trust property was registered in the name of the
Trust in 1994. A mortgage bond was registered in favour of the Bank
at that
time and a further bond two years later. In addition to the
bonds the Bisnaths executed suretyships in favour of the Bank further
securing the indebtedness of the Trust to the Bank.
[4] The Trust fell into arrears with its payments under
the bonds. The Bank issued summons under case number 8912/98 against
the Trust
as the principal debtor and the Bisnaths as sureties to
recover the amount owing by the Trust. On 8 December 1998 the Bank
obtained
default judgment against the Trust and the Bisnaths, jointly
and severally, and an order was given declaring the property
executable.
[5] After the Bisnaths failed in their attempts to sell
the trust property it was sold in execution on 4 October 2000, and
bought
in by the Bank. It was thereafter in February 2002 sold to Mr
and Mrs Durga (who were informed of the proceedings in the court
a
quo
but decided not to participate in them)
and the Trust’s account with the Bank was credited with the net
proceeds of the sale, being
R165 980,20.
[6] Whilst the events set out in the previous few
paragraphs of this judgment were taking place, there was litigation
between the
Bank and the Bisnaths in respect of the properties owned
by the Bisnaths and over which the Bank held mortgage bonds. There
were
originally nine properties. The Bisnaths fell into arrears and
the bank sued for payment under case 8857/98. The arrears were
brought
up to date and the Bank did not proceed with litigation until
the Bisnaths again fell into arrears. The Bank then sued for payment
under case 957/2000. The action was defended by the Bisnaths, but
settled on 22 November 2000. In terms of the written agreement
of
settlement the Bisnaths admitted their liability to the Bank, as
claimed, and undertook to pay all outstanding arrears and thereafter,
the monthly instalments due under the bonds. The settlement agreement
contained a provision relating to consents to judgment by each
of the
Bisnaths which I shall quote at the appropriate place later in this
judgment.
[7] After the settlement three of the Bisnaths’
properties were sold and the proceeds used to discharge the amounts
outstanding
in respect of the bonds over those properties. The
balance was used to discharge the arrears on bonds registered over
other properties
owned by the Bisnaths.
[8] In September 2000 the Bank attached the remaining
six properties owned by the Bisnaths under case 8912/98 (ie the case
brought
against the Trust and the Bisnaths as sureties, referred to
in para 4 above). On 2 December 2002 the Trust and the Bisnaths
obtained
from Niles-Dunèr J, as a matter of urgency under case
number 8912/98, a rule
nisi
which
inter alia in paragraph 1(a) called upon the Bank to show cause why
the attachment of the Bisnaths’ six properties should
not be set
aside. The Bank opposed the other relief sought in this application
and filed a counter-application for an order declaring
these
properties specially executable.
[9] The return date of the rule
nisi
was extended and came before Jappie J almost a year
later on 10 November 2003. The learned judge confirmed paragraph 1(a)
of the rule
and referred certain issues for the hearing of oral
evidence. Those issues included the following:
(i) whether Bisnath instructed the Bank, represented by
Mr Payne, to allocate a payment of R65 933,25 to the account of
the Trust
(for the purposes of what follows, I shall round this
amount up to R66 000);
(ii) whether the Bank agreed to pass a credit of
R280 000 in favour of the Trust; and
(iii) whether the sale in execution of the trust
property in October 2000 should be set aside.
[10] The matter came before Swain J on 14 March 2004. On
6 April 2004 the learned judge found that the Trust had not proved
its entitlement
to a credit of R280 000. On 5 September 2006 he
determined the issues relating to the payment of the R66 000 and
the setting
aside of the sale of the trust property in favour of the
Bank. He also found in favour of the Bank on a further issue, which
was
raised after the Trust was given leave to re-open its case,
namely, that the Trust was not entitled to be credited with rentals
which
the Bank had allegedly failed to collect in respect of the
trust property, after judgment had been taken by the Bank and before
the
property was sold in execution. These latter three findings, made
under case 8912/98, form the subject matter of the first appeal
where
the appellants are the Bisnaths and the Trust. I shall discuss the
issues in more detail when I come to deal with the merits
of this
appeal, which is with the leave of Swain J.
[11] Whilst the litigation was proceeding before Swain
J, the Bank, according to it, gave the Bisnaths notice on 24 April
2006 that
it intended to apply for judgment by consent in terms of
the settlement agreement under case number 957/2000 to which I have
referred
in para 6 above. (Argument was advanced on behalf of the
Bisnaths as to whether notice was properly given to them and I shall
return
to this aspect.) Hugo J considered the Bank’s application in
chambers and on 30 May 2006 he granted judgment by consent against
the Bisnaths. In terms of that judgment, the Bisnaths were jointly
ordered to pay amounts alleged to be outstanding in respect of
each
of their six remaining properties and those properties were declared
specially executable. Pursuant to the order the six Bisnath
properties were attached by the sheriff. I pause to emphasise (for
reasons which will become apparent) that there is no attack on
the
validity of this attachment (as opposed to the order which granted
the Bank the right to do so).
[12] In terms of a notice of motion dated 15 March 2007
the Bisnaths brought urgent motion proceedings before Msimang J, who
issued
a rule
nisi
against
the Bank. I shall quote the rule later in this judgment.
[13] On the extended return day, 1 August 2007, Radebe
AJ confirmed the rule (with the exception of the paragraph that
related to
costs) and subsequently refused the Bank leave to appeal.
The second appeal, with the leave of this court, is against the order
of
Radebe AJ.
ISSUES
[14] The issues are therefore the following:
In the first appeal, where the Trust and the Bisnaths
are the appellants:
(i) whether the Trust was entitled to a credit of
R66 000;
(ii) whether the trust property was declared specially
executable; and
(iii) whether the Trust is entitled to a credit in
respect of rentals not collected by the Bank;
and in the second appeal, where the Bank is the
appellant:
(i) whether notice of intention to apply for judgment by
consent was properly given to the Bisnaths; and
(ii) whether the confirmation of the rule
nisi
by Radebe AJ should be set aside.
THE FIRST APPEAL
Credit of R66 000
[15] The appellants’ case as testified to by Bisnath
was that on 15 October 1998 the latter had agreed with Payne of the
Bank that
the proceeds of the sale of a property, the R66 000 in
question, would be credited to the bond account of the Trust. Payne
on
the other hand said that the instruction given by Bisnath at the
meeting was to credit the proceeds of the sale to the arrears in
the
bond accounts of the Bisnath properties. Payne went on to say that
had Bisnath attempted to give him an instruction to credit
the
Trust’s bond account, he would not have accepted it as that would
have resulted in the Trust’s account being R40 000
in credit,
and the other bond accounts remaining in debit. This, he said, would
not have made sense and would also have been contrary
to the Bank’s
policy to update as many accounts as possible because there were a
lot of foreclosures at the time. Payne even went
so far as to say
that Bisnath was lying about the instruction given at the meeting.
Yet Payne was never cross-examined on his version.
[16] The evidence of Bisnath was patently unacceptable,
for a number of reasons. I shall mention only two. He said that he
had not
discussed the arrears on the Bisnath properties with Payne
because no legal action had been instituted in respect of the arrears
on those properties. A return by the sheriff reflecting personal
service on him of the summons relating to the Bisnath properties,
was
put to him. That return recorded that the summons had been served on
the same date, 14 October 1998 ─ a day before the meeting
with
Payne ─ as the summons relating to the trust property. Bisnath
said, variously, that he did not recollect receiving the summons
relating to the Bisnath properties; he remembered only service of the
summons relating to the trust property; he only received one
summons;
and he received no summons in respect of the Bisnath properties.
Eventually, after several adjournments and a change of
counsel, he
was led to say (after the appellants’ case had been reopened) that
he had received two summonses ─ one relating to
the trust property
and one relating to the Bisnath properties.
[17] Pearce said in his affidavit that ‘during the
meeting [between himself and Bisnath on 15 October 1998] Mr Bisnath
and I dealt
with these two cases separately’. Pearce then went on
to relate what Bisnath had said in respect of the bonds over the
Bisnath
properties, and what he had said in respect of the trust
property. In answer to these allegations, Bisnath said in an
affidavit:
‘It is correct that the two cases were dealt with
separately.’ Bisnath could not reconcile his oral evidence that the
Bisnath
properties had not been discussed at all, with what he had
said in his affidavit.
[18] Swain J recorded in his judgment that senior
counsel representing the appellants had found himself unable to
present argument
in favour of their case on this issue. The learned
judge nevertheless analysed the evidence and weighed up the
probabilities in some
detail, and concluded that it was ‘quite
clear that Mr Bisnath has lied to the court’. I do not propose
being detained by the
arguments advanced in the heads of argument
against this finding. They were not advanced with any enthusiasm
during oral argument.
All of them are devoid of substance and none
merits detailed consideration.
Trust property declared executable
[19] As I have already said, the Bank obtained default
judgment against the Trust (as the principal debtor under the bond)
and the
Bisnaths as sureties for the debts of the Trust, on 8
December 1998 under case number 8912/98. Paragraph 3 of the relief
granted
was:
‘
An order declaring the property
described as:
Lot 2643 Reservoir Hills (Extension No. 1)
situate in the City of Durban
administrative District of Natal
Province of Kwazulu-Natal
in extent 697 Square Metres
specially executable.’
(I have
deliberately retained the paragraphing of the order for emphasis.)
The property is in fact situated in extension 7. The
appellants accordingly contended (I quote from an affidavit deposed
to by Bisnath):
‘
[T]he property, extension no. 7,
was never declared specially executable and the writ in terms of
which the sale took place . . .
was not issued in accordance with the
default judgment . . . as that declares the property described as Lot
2643 Reservoir Hills,
extension no. 1, specially executable. It is
respectfully submitted that the sale in execution of the property,
extension no. 7,
to the [Bank] was accordingly irregular and is
liable to be set aside at the instance of [the trust and the
Bisnaths].’
[20] In answer to these allegations, the Bank delivered
an affidavit by Mr Marais, who had been employed in the office of the
Surveyor-General,
Kwazulu-Natal, and had thirteen years’ experience
in (in his own words) ‘the various technical aspects of the
approval of diagrams
prepared by land surveyors for certification for
use in the Deeds Office’. According to Marais, there is only one
erf 2643 in the
township of Reservoir Hills; the phrase ‘extension
7’ merely indicates that the developer developed the township in
phases and
that erf 2643 was registered when the seventh phase was
reached; and in terms of regulation 28
1
made under the Deeds Registries Act,
2
the particulars to be quoted in any deed in which land
in a township is described do not require reference to the extension
number.
This evidence was confirmed by Mr Williams-Wynn, the
Surveyor-General: Pietermaritzburg. It was not challenged by Bisnath
or anyone
else either on affidavit or in oral evidence.
[21] As Swain J correctly held, the need for a property
to be described accurately in an order declaring it executable is
obviously
to ensure that the correct property is attached and sold.
There was only one erf 2643 in the township and it was precisely
identified in the order. That erf was attached and sold.
Reference to the extension was unnecessary for the proper description
of
the erf, it created no ambiguity and it was entirely irrelevant.
Counsel representing the appellants found himself unable to argue
the
contrary but he did not abandon the point, obviously acting on
instructions. I shall return to this briefly when I deal with
the
costs of appeal.
Collection of rentals
[22] The appellants’ case is this. The Bank, according
to them, was in possession of the trust property after it was
attached. The
building on the property had been converted into a
student residence and was fully let for the academic year commencing
February
1999. Had the bank collected the rentals, the amount of the
debt for which the default judgment was granted on 8 December 1998
under
case number 8912/98 would have been extinguished and
accordingly, the property was wrongly declared executable.
[23] I shall deal first with the law, and then the
facts. There are two Transvaal cases which deal with the obligations
of a pledgee
in respect of the fruits of property pledged. In
Freeman
Cohen’s Consolidated Ltd v General Mining and Finance Corporation
Ltd
3
Innes CJ (Wessels and Bristowe JJ concurring) said:
‘
The pledgee is bound not only to
take care of the pledged property, but to render an account of any
fruits or profits derived from
it. The rule is thus expressed in the
Code
(4, 24, 1):
Ex
pignori percepti fructus imputantur in debitum, et si sufficiunt ad
totum debitum, tollitur actio et reditur pignus
.
The profits received from the pledged thing are to go in account
against the debt. If they are sufficient to wipe out the whole
of the
debt the action is at an end, and the pledge must be returned. In
commenting on that rule Grotius (
Introduction
,
3, 8, 5) says: “With respect to the fruits or profits of the
property pledged, the pledgee must give them up or carry them to
account in reduction of the debt;” and Pothier, in his treatise on
Namptissements
(sec. 35, p. 680), is to the
same effect.’
In
Judes v SA Breweries Ltd
4
Ward J said:
‘
Under the Roman-Dutch law the
pledgee has to take care of the property pledged and he must account
for the fruits (
Grotius
3.8.4;
Voet
,
XIII. 7.4). . . . According to the [C]ode IV. 24.3 the creditor is
bound to account for the fruits gathered and those which should
have
been gathered.
Donellus
“De Pignoribus et Hypothecis
,”
IX. 1. (Vol. VI., page 998) says: “
Quin
etiam judicio pignoratitio percipere eos cogitur ex fide bona, ne res
apud eum otiosa et sine fructu maneat, et debitori vacet
.”
. . . . I take the law to be that the
onus
is on the plaintiff [the
successor in title to the rights of the debtor] to show that there
has been loss incurred.’
[24] I respectfully adopt those passages as correctly
setting out the law in regard to pledges. It does not follow,
however, that
the same obligation in respect of fruits is imposed by
law on a mortgagee. Ex hypothesi, a pledgee is in possession of the
article
pledged; but that is most unusual in the case of a mortgage
of immovable property. There is no reason why the law should impose
the
obligations of a pledgee in regard to fruits on a mortgagee not
in possession of the mortgaged property. Professors Lee,
5
C G van der Merwe,
6
Lubbe,
7
and T J and S Scott
8
all limit the obligation of a mortgagee to account for
fruits, to that case. The view expressed by C G van der Merwe
elsewhere
9
that except in the case where a
pactum
antichreseos
is included, the
mortgagor
has to account for fruits of the mortgaged land, is,
with respect, wrong and is not borne out by the authority quoted in
support of
it, which is
Judes v SA Breweries
Ltd
. I can only assume that the learned
author intended to refer to the mortgagee and that the reference to
the mortgagor is a misprint.
But then the proposition would require
qualification. In
Judes
,
the creditor, the South African Breweries Ltd, the defendant in the
action, was in possession of the property of the debtor, Joffe,
who
had transferred the property to the Breweries ‘with authority to
collect the rents to devote the same to the payment of the
capital
amount of the loan and interest, with the right to [the Breweries] to
sue for rent or in respect of breaches of the lease
and to re-enter
in respect of the same’.
10
The Breweries were not a mortgagee. Lubbe
11
describes the relationship between the Breweries and
Joffe as
a fiducia cum creditore contracta
pursuant to which the Breweries had taken transfer of
the movable property
in securitatem debiti
.
Ward J
12
adjudicated the claims of Judes, the successor in title
to Joffe’s rights who argued that the Breweries should not have
reduced
the rent and should have collected more rent than it did, on
the basis that the Breweries had the same obligation as a pledgee to
account for fruits. The important fact, for present purposes, is that
the Breweries were in possession of the debtor’s property.
[25] So far as the onus is concerned, on basic
principles, the onus of proving that the mortgagee was in possession
of the mortgaged
property and therefore obliged to collect the
fruits, should be on the party who asserts this ie the mortgagor.
[26] The Bank relied upon the following clause in the
bond as relieving it of any liability should it fail to collect
rentals in respect
of the trust property. The clause provides:
‘
The Mortgagor(s) hereby grant(s) a
full and sufficient cession, transfer and assignment to the Bank of
his/her/its/their right, title
and interest in and to all rents and
other revenues which may accrue from the mortgaged property as
additional security for such
sums as may be claimable at any time
under this Bond, with the express right in favour of the Bank
irrevocably and
in
rem suam
to
take proceedings against tenants in default for the recovery of the
rent, and/or ejectment, to cancel or renew and enter into leases
in
such manner as the Bank shall think fit, provided, however, that such
cession, transfer and assignment shall not be acted upon
without the
consent of the Mortgagor(s) while the conditions of this Bond have
been and are being fully complied with. It is hereby
agreed that the
Bank shall be entitled to charge a commission of 5% (five per centum)
on the gross amount of all rents collected
to recover such commission
under this Bond.’
I interpret the clause to confer a right on the Bank:
(i) To take proceedings against tenants in default (for
the recovery of the rent and/or ejectment); and
(ii) to cancel or renew and enter into leases in such
manner as the Bank shall think fit.
I find in the clause no exemption from any obligation.
[27] I turn to consider the facts. The high water mark
of the appellants’ case was the following evidence in regard to the
building
on the trust property, given by Bisnath whilst being led by
the appellants’ counsel:
‘
Now, what happened after judgment
was taken about control of that building? --- We lost control of the
building.
. . .
Were you allowed to go there? --- No. They changed the
locks in the building and we were not allowed in.
Yes. And what happened to the movables in the building?
--- That was removed from the property by the bank.’
Even if this evidence is accepted at face value, it does
not establish when the Trust lost possession of the building. But
Bisnath
was such a poor witness, who changed his version in
fundamental respects and was found with every justification by Swain
J to have
lied, that I would not be prepared to accept anything he
said without corroboration; and there is none on this aspect. In
fact, the
evidence points the other way. Bisnath said in the founding
affidavit deposed to by him that:
‘
When the property was eventually
sold in execution, the [Bank] suddenly took possession thereof and
caused or allowed security guards
to prevent me from removing the
[Trust’s] goods.’
In addition, Bisnath gave the following evidence under
cross-examination by Mr Wolmarans, counsel representing the Bank:
‘
Now, from the time that judgment
was taken until the final sale notice is it correct that you were in
possession of the property?
--- In title, yes.
Yes.
Swain J
Sorry, what was that,
Mr Bisnath? --- In title. It was still registered in my name.
Mr Wolmarans asked you whether you were in possession of
the property, whether you held it, occupied it. --- Yes. But, my
lordship,
I think it might be clear to quote that I personally didn’t
occupy the property.’
[28] I therefore conclude that the appellants did not
establish that the Bank ever took control of the trust property, much
less when
that occurred. It is accordingly unnecessary to deal with
the other and numerous unsatisfactory features of Bisnath’s
evidence.
It only remains for me to add that counsel for the
appellants readily admitted the problems which he had on this aspect
of the first
appeal although, again, no concessions were made.
Costs
[29] The Bank asked that the appellants be ordered to
pay the costs of the first appeal on the scale as between attorney
and client.
I have no hesitation in acceding to the request. The
appeal was plainly without merit and the conduct of the appellants in
pursuing
it, vexatious, particularly in regard to the credit of
R66 000, and also frivolous in regard to the description of the
trust
property in the order declaring it to be specially executable.
THE SECOND APPEAL
[30] I turn to consider the second appeal against the
confirmation by Radebe AJ of the rule
nisi
granted by Msimang J. The rule reads as follows:
‘
THAT a rule
nisi
do issue calling upon the
[Bank] to show cause, if any, on or before the 5
th
April 2007 at 09H30 a.m. or so
soon thereafter as the matter may be heard why an order should not be
granted in the following terms:
(a) That pending the final determination of this
application:
(i) the writs of attachment and execution against the
[six Bisnath properties] are stayed;
(ii) all proceedings to execute the judgement under
[case 957/2000] granted on 30
th
May 2006 [by Hugo J] are stayed;
(b) That the judgment granted in favour of the plaintiff
against the first and second defendants on 30
th
May 2006 [by Hugo J] be and is hereby set aside;
(c) That it is declared that the amounts which appear in
the schedule [to the Bisnaths’ founding affidavit] are the amounts
owing
in respect of the mortgage bonds over the properties listed in
the annexed schedule [ie the Bisnath properties];
(d) That the plaintiff is ordered to cause and allow the
mortgage bonds registered over all of the properties listed in the
annexed
schedule to be cancelled against payment of the outstanding
amounts owing in respect of the mortgage bonds;
(e) That the plaintiff is ordered to accept guarantees
for payment of such outstanding amounts issued in a form and manner
which is
consistent with usual conveyancing practice;
(f) That the [Bank] is ordered to pay the [Bisnaths’]
costs of this application on the scale as between attorney and
client.’
Msimang J also ordered that para 2(a) of the rule would
operate as an interim order with immediate effect pending the return
day.
[31] Paragraph 2(a) of the rule was an interim order and
required no confirmation. Radebe AJ however said in the course of her
judgment
that:
‘
For the reason that the correct
procedure as laid down by law was not followed when the [Bank] sought
and obtained the writs of attachment
and execution against the
[Bisnaths’ properties], I do not think such writs ought to stand.’
This statement by the learned judge creates the
impression that she intended to set the writs aside. In view of the
protracted litigation
in this matter and the conduct of the Bisnaths
over the last ten years it is desirable to deal directly with the
learned judge’s
view. There was no basis for it, although the
mistake was understandable given the convoluted history of the
litigation. The learned
judge relied on a concession made by the
Bank’s attorney that the writs issued by the Bank during September
2002 under case number
8912/98 were wrongly issued. Those writs were
set aside by Jappie J on 10 November 2003 when he confirmed paragraph
1(a) of the rule
nisi
issued
by Niles-Dunèr J on 2 December 2002. The learned judge confused
these writs with the writs referred to in para 2(a) of the
rule
issued by Msimang J which she confirmed. There was never any attack
on the validity of these latter writs
─
as
opposed to the validity of the judgment of Hugo J on 30 May 2006 on
which they were based, and which I shall now consider.
Notice: consent to judgment
[32] Counsel for the Bisnaths
submitted in his practice note and heads of argument that his clients
had not received any notice of
the Bank’s intention to apply for
judgment in terms of the settlement agreement entered into under case
number 957/2000 on 27 November
2000. I have referred to the
settlement agreement in para 6 above. It contained the following
clauses:
‘
7. First and
Second Defendant [the Bisnaths] agree to sign a Consent to Judgment
in this matter which the Plaintiff [the Bank] undertakes
not to use
provided the First and Second Defendant pay all amounts specified in
this settlement agreement.
8. The terms and conditions of this
settlement agreement shall be supplementary to the terms and
conditions of the mortgage bonds
and the mortgage loan agreements
upon which the Plaintiff’s cause of action against the Defendants
is based. Nothing herein contained
shall be construed as a novation
or waiver of any of the terms and conditions contained in the said
mortgage bonds or mortgage loan
agreements. In particular, should
First and Second Defendant fail to pay any single amount either in
terms hereof or in terms of
any mortgage bond, on due date, then the
Plaintiff shall be entitled to declare the Defendants’ total
indebtedness to the Bank
to be immediately due owing and payable and
to apply to the Registrar of the High Court for judgment in
accordance with the Consent
to Judgment.
9. It is specifically agreed that
should the Defendants default by the failure to pay any ongoing
monthly instalment in respect of
any particular mortgage bond . . .
then prior to making application for judgment, Plaintiff will provide
the Defendants with fourteen
days notice of their failure to pay any
particular instalment and of the Plaintiffs’ intention to apply for
judgment should the
instalment not be paid within fourteen days. Such
notice shall be sent to the Defendants by registered post at PO Box
65037, RESERVOIR
HILLS, 4091 which address the Defendants appoint as
the address at which they will accept any notice in connection with
this clause.
Any notice sent in terms of this clause will be deemed
to have been received by the Defendants within three days after date
of posting.’
[33] In his founding affidavit, Bisnath specifically
dealt with the consents to judgment and submitted that the Bank was
not entitled
to lodge them. He gave two reasons for this. Neither
involved an assertion that proper notice had not been given. In the
answering
affidavit, the deponent on behalf of the Bank said:
‘
Notice was given to both the
[Bisnaths] and to their attorney of the decision by the [Bank] to
apply for judgment under the Bisnath
bonds in accordance with the
settlement agreement. See annexures “E1” and “E2”.’
Annexure E1 comprises a copy of a telefax sent to a firm
of attorneys, Shamin Rampersad & Associates, and a copy of a
letter sent
to the Bisnaths; and annexure E2 is a copy of that
letter. Both were dated 24 April 2006, and the letter was addressed
to the Bisnaths
at P O Box 65037, Reservoir Hills 4091 (the address
stipulated in the settlement agreement). In the replying affidavit
Bisnath said,
in response to these allegations:
‘
Save for alleging that the [Bank]
was obliged in terms of the provisions of paragraph 9 of the
Settlement Agreement to give both [the
Bisnaths] notice by registered
post, it is apparent from Annexure “E1” that the letter was not
despatched by registered mail.
Attorney S Rampersad was not the
[Bisnaths] Attorneys of record in that matter.’
The replying affidavit studiously refrains from dealing
with annexure E2, the letter addressed to the Bisnaths themselves.
Had there
been a point to take in that regard, I have no doubt that
it would have been taken. Every other point, good and bad, has been
during
the course of this litigation. Counsel for the Bisnaths said
that it was his express instruction that the notice had not been
received.
But in view of the contents of the affidavits, which I have
set out, it was not open to counsel to make the positive submission
that
his clients did not receive any notice of the Bank’s intention
to apply for judgment.
Remainder of the rule
nisi
[34] It was the Bisnaths’ case that the Bank was not
entitled to lodge the consents to judgment because they had been
prevented
from discharging the full amount of their liability under
the mortgage bonds due to the Bank’s own actions. Those actions
consisted,
according to the Bisnaths, in the Bank’s refusal to
cancel the bonds against tenders by the Bisnaths to pay the balance
of the
capital advanced and interest owing in respect of each bond.
If this contention is incorrect, paragraphs 2(b) to (e) of the rule
nisi
confirmed by
Radebe AJ fall to be set aside.
[35] Each of the bonds registered over the Bisnaths’
properties is a covering bond and contains a clause in the following
terms:
‘
This Bond shall be a continuing
covering security to the aggregate amount of the Capital, the
additional sum and any interest becoming
owing to the Bank in terms
of Clause 3, for all and any sum or sums which shall now or may in
the future be owing to or claimable
by the Bank from whatsoever cause
arising, for money lent and advanced or which may hereafter be lent
and advanced by the Bank, and
for future debts generally including
any payments made by the Bank under the provisions of this Bond, and
generally any indebtedness
to the Bank from whatsoever cause arising.
The Bank may advance further sums or may readvance to the
Mortgagor(s) under security
hereof such sums or portions thereof as
may have been previously repaid . . .'.
Bisnath said in his replying affidavit in the
proceedings which led to the first appeal that this clause, correctly
interpreted, refers
only to indebtedness arising out of or in
connection with the loan which the bond secures and in the
alternative, that the clause
is vague and unenforceable. Not
surprisingly, counsel for the Bisnaths did not attempt to argue
either point. Counsel correctly and
readily agreed that the plain
meaning of the clause was that the bonds were not limited to securing
payment of the balance of amounts
advanced in respect of each bond
plus interest due. They cover, in addition, ‘future debts
generally’ and ‘generally any indebtedness
to the Bank from
whatsoever cause arising’. There is nothing vague about that.
[36] Bisnath also said in his replying affidavit that
the clause quoted in the previous paragraph of this judgment was
‘contrary
to public policy and void’. This contention was also
not advanced by counsel representing the Bisnaths. Counsel was quick
to point
out in oral argument that covering bonds have been
recognised in our law for at least one hundred years
13
and specific provision for them is made in the Deeds
Registries Act.
14
[37] In the present matter, the Bank was fully entitled
to refuse to cancel the bonds over the Bisnaths’ properties against
a tender
that the amount then outstanding in respect of each bond be
paid. The bonds provided security for the Bisnaths’ indebtedness to
the bank in their capacity as sureties for the amount owing by the
Trust, up to the amount of each bond. The amount owing by the
Trust
was in dispute because of the Bisnaths’ contentions in respect of
the R66 000 dealt with earlier in this judgment, and
their claim
for a credit of R280 000 allegedly due to the Trust which Swain
J dismissed and against which there has been no
appeal.
[38] The Bank asked for the costs of the appeal to be
awarded to it on the scale as between attorney and client. Clause 5
of the settlement
agreement provides:
‘
First and Second Defendant agree
to pay attorney and client costs incurred by the Plaintiff in the
above matter as taxed or agreed
on demand.’
It seems to me that this clause may well be limited to
costs already incurred prior to the settlement agreement. But I find
it unnecessary
to decide the point as a punitive award of costs is
amply justified. The opposition to the appeal was patently without
merit and
vexatious.
ORDER
[39] The following order is made:
(1) The first appeal under case number 117/07 is
dismissed with costs which are
to be taxed on the scale as between attorney and client
and paid by the Trust and each of the Bisnaths jointly and severally.
(2 ) (a) The second appeal under case number 674/07 is
upheld with costs, which are to be taxed on the scale as between
attorney and
client and paid by the respondents jointly and
severally.
(b) The order of the court below is set aside and the
following order substituted:
‘
The rule
nisi
is discharged. The applicants
are ordered jointly and severally to pay the respondent’s costs.’
______________
T D CLOETE
JUDGE OF APPEAL
Concur: Scott JA
Ponnan JA
Maya JA
Snyders AJA
1
The
regulation provides (to the extent relevant):
‘
28(1) In any deed wherein land is described,
the following particulars shall be quoted:
(a) The name of the registration division, administrative district
and province in which such land is situated, or, in the case
of land
situated in a township, the registration division concerned,
administrative district, the name of such township and the
province:
and
(b) the registered number (if any) of such land.’
2
47
of 1934.
3
1907
TS 224
at 226.
4
1922
WLD 1
at 8.
5
An
Introduction to Roman-Dutch Law
5
th
ed p 199 n 5 and Lee and Honoré
The
South African Law of Property, Family Relations and Succession
1
st
ed para 246.
6
Sakereg
2
nd
ed p 635.
7
17
LAWSA (Re-issue) para 472 p 387.
8
Wille’s
Mortgage and Pledge
3
rd
ed 140.
9
Lee
and Honoré
The South African Law of
Property, Family Relations and Sucession
2
nd
ed para 457 and
Wille’s
Principles of South African Law
9
th
ed p 637.
10
Page
3.
11
loc.
cit. n16.
12
Page
8, part of which has been quoted above.
13
Rooth
& Wessels v Benjamin’s Trustee and the Natal Bank Ltd
1905 TS 624
at 629-630.
14
Sections
50(2), 51(1) and 52.