Gounder v Top Spec Investments (Pty) Ltd (165/07) [2008] ZASCA 52; [2008] 3 All SA 376 (SCA); 2008 (5) SA 151 (SCA) (8 May 2008)

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[2008] ZASCA 52
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Gounder v Top Spec Investments (Pty) Ltd (165/07) [2008] ZASCA 52; [2008] 3 All SA 376 (SCA); 2008 (5) SA 151 (SCA) (8 May 2008)

REPUBLIC
OF SOUTH AFRICA
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
REPORTABLE
Case
number:
165/07
In
the matter between:
KAMINTHA
GOUNDER
...
Appellant
and
TOP
SPEC INVESTMENTS (PTY) LTD
...
Respondent
CORAM
:
MPATI
DP, NUGENT, VAN HEERDEN,
CACHALIA JJA and
MHLANTLA AJA
HEARD
:
3
MARCH 2008
DELIVERED
:
8
MAY 2008
Summary:
Husband
and Wife – marriage in community of property – whether loan
agreement entered into by one spouse without written consent
of the
other falls within ambit of s 15(2)
(b)
of
Matrimonial Property Act 88 of 1984
where it incorporates agreement
to register mortgage bond over the parties’ fixed property as
security for the loan.
Neutral
citation:
Gounder
v Top Spec Investments (Pty) Ltd (165/07)
[2008] ZASCA 52
(8 May
2008)
_____________________________________________________________________
JUDGMENT
_____________________________________________________________________
MPATI
DP:
[1]
This appeal concerns the power of a party in a marriage in community
of property, to bind the joint estate without the consent
of the
other party to the marriage. The respondent claimed, by way of
application proceedings, payment of the sum of R1 140 000,00,
plus
costs, from the appellant (as second respondent) and her husband, Mr
Anand Gounder (as first respondent), to whom she is married
in
community of property, The sum claimed is made up of a loan of R1 000
000
1
together
with a raising fee of R140 000. Also claimed was payment of a penalty
raising fee calculated at 10 % per month on the loan
amount from 4
July 2006 to date of payment.
[2] The Natal Provincial
Division (Nicholson J) granted the order sought. This appeal is with
its leave. I shall, for convenience,
refer to the appellant and her
husband jointly as ‘the borrowers’.
[3]
The material facts are largely undisputed. It is alleged in the
founding affidavit, deposed to by Harry Sidney Spain (Spain),
a
director of the respondent company, that on 3 April 2006, at Verulam,
the respondent entered into a ‘written agreement’ of
loan (the
written document) with the borrowers.
2
The
written document was signed by Mr Anand Gounder (Mr Gounder) and,
ostensibly, also by the appellant. Due to an oversight, Spain
omitted
to sign the written document on behalf of the respondent. He alleges,
however, that he ‘authorised the conclusion and implementation’
of the agreement.
[4]
Pursuant to the agreement the respondent paid, by means of electronic
transfer, R999 940
3
into
the account of Attorney Veni Moodley, who received the money on
behalf of the borrowers. Attorney Moodley, in turn, disbursed
the
moneys as per instructions given to her by Mr Gounder. The loan was
repayable by no later than 3 July 2006.
[5] In terms of clause
5.1 of the written document the borrowers undertook to pay a raising
fee of R140 000 within ninety days ‘regardless
of the date of
repayment’ of the loan. That period, it is alleged, expired at the
end of June 2006. Clause 5.2 provides that the
maximum term of the
loan ‘shall not exceed 90 days’, but should this period be
exceeded a penalty raising fee of 10 % ‘will
be applied per month’.
The borrowers failed to repay the loan and raising fee by due date,
hence the institution of the claim by
the respondent.
[6] Annexed to the
founding affidavit, in addition to the written document, is a Power
of Attorney to register a mortgage bond, signed
by Mr Gounder and,
ostensibly, by the appellant in favour of Attorney Moodley. The Power
of Attorney refers to ‘the attached draft
Mortgage Bond’ (also
annexed to the founding affidavit), which was to be registered over
the borrowers’ fixed property as security
for the loan. The
appellant describes the property in her answering affidavit as ‘my
home at 10 Paradise Drive, Orient Heights,
Pietermaritzburg’. The
amount intended to be secured by the draft covering bond attached to
the founding affidavit was R2 500 000
and an additional sum of R625
000.
[7] In clause 4.1 of the
written document reference is made to ‘registration of transfer of
the Property’ and to ‘a certificate
of balance due by the
Borrower in terms of this Agreement’. Spain explains that the wrong
standard form was used when the agreement
was concluded and that no
property was in fact to be sold and transferred. The correct form, he
says, would have provided for a mortgage
bond ‘to be registered
over the [borrowers’] immovable property as security for the loan’.
Spain submits, however, that nothing
turns on the fact of the use of
the wrong form for the loan agreement as it is not relevant to the
loan, but only to the security
for the loan.
[8]
Mr Gounder
did
not depose to an answering affidavit. Instead, he gave notice, in
terms of Rule 6(5)(d)(iii)
4
of the
Uniform Rules, that he intended to apply for the dismissal of the
application at the hearing of the matter on the grounds that
ex
facie
the
founding affidavit, material disputes of fact existed and that
therefore application proceedings were inappropriate. He was,
however,
not present, nor was he represented, at the hearing of the
matter before Nicholson J.
[9]
The appellant denies that she appended her signature to the written
document and Power of Attorney to pass a mortgage bond over
her home
to secure the loan. She raises, like Mr Gounder, but as a point
in
limine
,
the issue of the respondent having proceeded by way of motion when he
should have proceeded by way of an action. She states that
the matter
required extensive, in-depth and thorough investigation, which would
require a substantial period of time, if she was
‘to be allowed the
right to properly ventilate the matter’ and defend herself. The
appellant contends that when commencing the
motion proceedings the
respondent knew that she denied that she signed the documents
concerned and thus should have foreseen that
‘critical triable
disputes would arise’.
[10]
Much as it is preferable that claims like the present one should be
instituted by way of an action, a claimant is not barred
from
instituting a claim by way of notice of motion. The latter proceeding
is pursued at a claimant’s own peril should a factual
dispute arise
which turns out to be incapable of being resolved on the papers; the
risk being a dismissal of the application should
the court, in the
exercise of its discretion, decide not to refer the matter for trial,
nor direct that oral evidence be placed before
it.
5
In the
present matter, however, it seems to me that the only possible
dispute of fact was the question whether or not the appellant
signed
the written document and the Power of Attorney to register a mortgage
bond. These being motion proceedings, it must be accepted
that the
appellant did not sign the documents and the matter must be decided
on that basis.
6
[11] The respondent was
well aware of this position. Spain says the following in the founding
affidavit:
‘
. .
. I understand that the Second Respondent [appellant] denies that she
signed the agreement and contends that someone else had
done so.
Whatever the position may be in this regard I am advised and
respectfully submit that in terms of
section 15
of the
Matrimonial
Property Act, No 88 of 1984
[Mr Gounder] had the power to enter into
the loan agreement and to bind the joint estate without the consent
of the [appellant].’
It seems plain,
therefore, that the respondent was well aware of the risk attendant
upon his proceeding by way of motion and narrowed
down the issues to
a reliance on
s 15
of the
Matrimonial Property Act (the
Act), the
relevant provisions of which provide as follows:
’
15
Powers
of spouses.
–
(1)
Subject to the provisions of subsections (2), (3) and (7), a spouse
in a marriage in community of property may perform any juristic
act
with regard to the joint estate without the consent of the other
spouse.
(2) Such a spouse shall
not without the written consent of the other spouse –
(a)
alienate, mortgage,
burden with a servitude or confer any other real right in any
immovable property forming part of the joint estate;
(b)
enter
into any contract for the alienation, mortgaging, burdening with a
servitude or conferring of any other real right in immovable
property
forming part of the joint estate;
. . .
(5)
The consent required for the performance of the acts contemplated in
paragraphs
(a)
,
(b)
,
. . . of subsection (2) shall be given separately in respect of each
act and shall be attested by two competent witnesses.
. . .
(9) When a spouse enters
into a transaction with a person contrary to the provisions of
subsection (2) or (3) of this section, or
an order under
section 16
(2), and –
(a)
that person does
not know and cannot reasonably know that the transaction is being
entered into contrary to those provisions or that
order, it is deemed
that the transaction concerned has been entered into with the consent
required in terms of the said subsection
(2) or (3), or while the
power concerned of the spouse has not been suspended, as the case may
be;
. . . .’
The respondent
accordingly relies on the provisions of
s 15(1)
and (9)(a) of the
Act. With regard to the latter subsection, the respondent alleges
that it did not and could not reasonably have
known that the
agreement ‘was being entered into’ without the appellant’s
consent.
[12]
Merely
to complete the history of the matter, I may mention that on 3 April
2006 Mr Gounder called at the offices of Attorney Veni
Moodley to
sign the written document and Power of Attorney. Jelisha Mathura, a
secretary in the employ of Attorney Veni Moodley,
says the following
in a confirmatory affidavit attached to the founding affidavit:
‘
. .
. The First Respondent
[Mr
Gounder] was alone and he signed the said documents in my presence.
On requesting the signature of his wife, the Second Respondent
[the
appellant], he informed me that she was waiting in the car outside as
she had hurt her foot or was unwell and could not climb
the stairs to
our offices. He offered to take the documents to the car for her to
sign and thereafter to bring the documents back
to us.
The First Respondent then
left and returned soon thereafter with the documents purportedly
signed by the Second Respondent. I asked
him if she had signed the
documents and he confirmed that she had.’
[13]
The appellant contends that ‘the intended or purported transaction’
was one contemplated by either
s 15(2)
(a)
or
15
(2)
(b)
of the
Act, which Mr Gounder could not enter into without her written
consent ‘attested to by two competent witnesses in accordance
with
s 15(5)’.
7
anc" HREF="#sdfootnote7sym">
7
For
the contention that the transaction was one contemplated by either
s 15(2)
(a)
or
(b)
of the
Act, the appellant relies on what she says is the respondent’s own
version, viz that the loan agreement it intended to enter
into with
her and Mr Gounder ‘incorporated an agreement to mortgage my home’.
[14]
It will by now have become obvious that the registration of the
mortgage bond over the appellant’s ‘home’ did not proceed.
It
is therefore not necessary to consider the provisions of
s 15(2)
(a)
in
detail. This section prohibits,
inter
alia
,
the alienation or mortgaging of immovable property forming part of
the joint estate without the consent of the other party to the
marriage in community of property. The issue, it seems to me, is
whether the loan agreement is one contemplated by
s 15(2)
(b)
of
the Act.
[15]
Counsel for the appellant contended that it is. He submitted that the
clear distinction drawn by the Legislature between the
actual
mortgaging or burdening of immovable property in
s 15(2)
(a)
and
‘any contract for’ such activity fortifies his contention.
Counsel argued further that the wording of
s 15(2)
(b)
is
wide and inclusive in and of itself, and that as a remedial provision
should be interpreted as widely as the wording permits. Reliance
on
this last submission was sought in the minority judgment of Streicher
AJA in
Amalgamated
Banks of South Africa Bpk v De Goede en ‘n Ander
.
8
[16] It is true that in
the founding affidavit Spain avers that the written document
evidencing the loan agreement was the incorrect
form and that the
correct form would have provided for a mortgage bond to be registered
over the borrowers’ immovable property
as security for the loan.
But the respondent does not rely on such a ‘correct form’ for its
claim, nor does it seek rectification,
or to prove terms of the loan
agreement outside of the written document. The form it relies on,
i.e. the written document, makes
no reference whatsoever to a
mortgage bond to be registered over the immovable property of the
borrowers.
[17]
But more importantly, a court is not entitled to import words into a
statute that do not appear in it if the meaning intended
by the words
actually used is clear and unambiguous.
9
The
function of a court is to interpret and apply the law. The language
of the statute ‘must neither be extended beyond its natural
sense
and proper limits in order to supply omissions or defects, nor
strained to meet the justice of an individual case’.
10
The
provisions of
s 15(2)
(b)
are
quite clear. Though not absolute because of the provisions of subsec
(9), they prohibit the entering into a contract for the alienation,
mortgaging, etc. of a real right in immovable property forming part
of a joint estate without the requisite consent of the other
spouse.
Closer to home, it prohibits Mr Gounder from doing what he purported
to do, viz: to enter into an agreement to pass and register
a
mortgage bond over the fixed property without the appellant’s
written consent. The subsection does not prohibit one spouse from
entering into a loan agreement without the consent of the other. That
is permissible in terms of
s 15(1).
[18]
The fact that the ‘correct form’, referred to by Spain, would
have provided for a mortgage bond to be registered over the
borrowers’ immovable property as security for the loan does not
mean that only one agreement was intended. There were two separate
agreements, one a loan agreement and the other an agreement to secure
the loan with a mortgage bond. And the validity of the loan
agreement
did not depend on the validity or otherwise of the agreement to
register the mortgage bond. Put simply, a declaration of
invalidity
in respect of the agreement relating to the registration of a
mortgage bond will not, for that reason, result in the loan
agreement
becoming invalid. It is separate from, and independent of, the
agreement to register a mortgage bond, although it is the
causa
for
the latter agreement.
[19]
It follows that the loan agreement is not one contemplated in
s
15(2)
(b)
of the
Act. Its validity did not depend upon the consent of the appellant,
written or otherwise s (15(1)). This conclusion renders
it
unnecessary for me to consider the other submissions relating to the
provisions of
s 15(9)
(a)
of
the Act, which both counsel so eloquently advanced.
[20]
In the alternative, the appellant averred that the transaction was a
credit agreement as contemplated by
s 15(2)
(f)
11
anc" HREF="#sdfootnote11sym">
11
of the
Act, with the same consequences, i.e. the requirement of her written
consent, attested to by two competent witnesses in accordance
with
s
15(5)
, was not complied with. That line of attack was correctly
abandoned in this Court.
[21]
One last aspect in this matter requires attention. In her answering
affidavit the appellant raises the question of the penalty
stipulation in the written document. She says:
‘
In
any event the alleged penalty fee is unduly onerous, excessive and
unreasonable. I contend that the penalty constitutes a penalty
stipulated in terms of section 3 of the Conventional Penalties Act No
15 of 1962, is completely out of proportion to the prejudice
suffered, and submit that the penalty ought in any event to be
reduced to an amount being just and equitable, even if applicable.’
In
this Court, counsel for the appellant advanced no argument in support
of the averments or contentions made in the appellant’s
answering
affidavit on this issue.
[22]
Section 3 of the Conventional Penalties Act provides:
‘
3.
Reduction of excessive penalty.
-
If upon the hearing of a claim for a penalty, it appears to the court
that such penalty is out of proportion to the prejudice suffered
by
the creditor by reason of the act or omission in respect of which the
penalty was stipulated, the court may reduce the penalty
to such
extent as it may consider equitable in the circumstances: Provided
that in determining the extent of such prejudice the court
shall take
into consideration not only the creditor’s proprietary interest,
but every other rightful interest which may be affected
by the act or
omission in question.’
[23]
It will be recalled that the written document provides for the
application of a penalty raising fee of 10 % per month. The court
a
quo
granted
an order in terms of which the appellant and Mr Gounder are to pay to
the respondent, jointly and severally, R100 000,00 per
month from 4
July 2006 to date of payment of the amount claimed (being
R1 140 000,00). This means that as at the date of
hearing
of this appeal (3 March 2008) the penalty alone would have totalled
more than double the amount of the loan. That seems to
me
prima
facie
out
of proportion to whatever prejudice the respondent may have suffered
as a result of the borrowers’ breach (failing to repay
the loan on
due date).
[24]
In
Smit
v Bester
12
this
Court held that it could
mero
motu
reduce
the penalty amount when it
prima
facie
appears
from the pleadings that the penalty amount is out of proportion to
the prejudice suffered by the creditor.
13
It was
also held in that case that where a court is concerned with a penalty
under s 3 of the Conventional Penalties Act, the onus
is on the
debtor to show that the penalty is disproportionate to the prejudice
suffered by the creditor and that it should thus be
reduced, and to
what extent. When the debtor
prima
facie
proves
that the penalty should be reduced then there is an onus on the
creditor to rebut, so as to refute the
prima
facie
case
of the debtor.
14
[25]
In the present matter counsel for the respondent conceded that the
stipulation in the loan agreement constitutes a penalty as
contemplated in the Conventional Penalties Act. The respondent merely
denied in the replying affidavit that the penalty is out of
proportion to the prejudice it suffered. That, in my view, is
insufficient to persuade me not to reduce the penalty amount. Counsel
for the respondent submitted that should the penalty be struck out
the ordinary rate of
mora
interest
should apply. I intend to make such an order.
[26]
The following order is made:
1. The appeal succeeds
only to the extent that paragraph (b) of the order of the court below
is set aside and substituted with the
following:
‘
(b)
Payment by the respondents, jointly and severally, to the applicant,
of interest on the capital sum, calculated at the rate of
15.5 % per
annum from 4 July 2006 to date of payment.’
2. The appellant is to
pay the costs of the appeal.
L MPATI DP
CONCUR:
NUGENT JA
VAN HEERDEN JA
CACHALIA JA
MHLANTLA AJA
1
Although
the written document reflects the sum to be advanced as R1 400
000,00, the actual amount lent
and advanced was R1 000 000.
2
The
written document reflects the names of Anand Gounder and Kamintha
Gounder (the appellant) as the
other parties to the loan agreement.
3
The
respondent deducted R60 from the loan amount for bank charges for a
speedy transfer.
4
The
subrule provides:
‘
Any person opposing the grant of an order
sought in the notice of motion shall –
. . .
(iii) if he intends to raise any question of law only he shall
deliver notice of his intention to do so,
within the time stated in the preceding sub-paragraph, setting forth
such question.’
5
Tamarillo
(Pty) Ltd v B N Aitken (Pty) Ltd
1982 (1) (SA) 398 (A) at
430G-431A.
6
Plascon-Evans
Paints (Ltd) v Van Riebeeck Paints (Pty) Ltd
1984 (3) 623 (A) at
634G-635C;
Ngqumba en
‘
n ander v Staatspresident en andere, Damons
NO en andere v Staatspresident en andere, Jooste v Staatspresident
en andere
1988 (4) SA 224
(A) at
259C-263D.
7
See
subsection (5) above, para 11.
8
1997
(4) SA 66
(SCA) at 81J-82C.
9
L
C Steyn
Die Uitleg van Wette
5ed (1981) p 14-16.
10
Compare
Union Government v Thompson
1919 AD 404
at 425;
R v
Tebetha
1959 (2) SA 337
(A) at 346.
11
Up
until 31 May 2006 section 15(2)
(f)
prohibited the entering by
a spouse, as a credit receiver, without the
written consent of the other spouse, into a credit agreement as
defined in the Credit Agreements Act, 1980 and to which the
provisions
of that Act apply in terms of s 2 thereof. Section
15(2)
(f)
was substituted by
s 172(2)
of the
National Credit
Act 34 of 2005
with effect from 1 June 2006. Whether or not the
transaction might well fall within the ambit of
s 15(2)
(f)
as
substituted is not in issue; the amendment was not retrospective and
is thus not applicable in the present case.
12
1977
(4) SA 937
(A).
13
At
942H.
14
At
942D-F. See too
Magna Alloys and Research (SA) (Pty) Ltd v Ellis
[1984] ZASCA 116
;
1984 (4) SA 874
(A) at 906B-F.