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[2017] ZAGPPHC 473
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Karsten v Du Bruyn NO and Others (82602/14) [2017] ZAGPPHC 473 (31 March 2017)
IN
THE NORTH GAUTENG HIGH COURT, PRETORIA
[REPUBLIC
OF SOUTH AFRICA]
31/3/2017
CASE
NUMBER: 82602/14
Not
reportable
Not
of interest to other judges
Revised.
In
the matter between:
ANDREAS
STEFAN US JACOBUS
KARSTEN APPLICANT
AND
M.DU
BRYUN N.O.
(ID
Number: …)
[In
his capacity as co-trustee of the DBF
TRUST] 1
st
REPONDENT
S.J.C.
DU BRYUN N.O.
(ID
Number:
…) 2
nd
REPONDENT
MATHYS
DU
BRYUN 3
rd
RESPONDENT
S.J.C.
DU
BRYUN 4
th
RESPONDENT
M.
DU BRYUN N.O.
([In
his capacity as co-trustee of the VAAL TRUST]
SUPPLIES
BLACK
EMPOWERMENT 5
th
REPONDENT
S.J.C.
DU BRUYN N.O.
[In
his capacity as co-trustee of the VAAL
TRUST] 6
th
REPONDENT
MARIUS
JOHANNES
FOUCHE 7
th
RESPONDENT
JUDGMENT
MAVUNDLA,
J.
[1]
The applicant brought an application, seeking an order against the
first to the fourth respondents jointly and severally for:
1.1 Payment of an amount
of R1 133 169. 39;
1.2 Interest on the above
amount calculated at 10% per annum
Alternatively 9% per
annum from 1September 2014 to date of payment;
1.3 Cots of suit;
1.4 Further or
alternative relief.
[2]
The applicant avers in his papers that the purpose of the application
is to enforce specific performance of three contracts
entered into
between the parties. He avers that the respondents failed to comply
with their obligations in terms of the agreements
and therefore
applicant is in the premises entitled in terms of the provisions of
the agreements to claim the balance of the purchase
price payable in
terms of the agreements. The applicant seeks an order compelling the
first to fourth respondents to make payment
of the balance of the
purchase price.
[3]
The first and second respondents are married to each other in
community of property and are sued in their capacity as co-trustees
of DBF Trust. The third, fourth and seventh respondents are sued in
their personal capacities, while the fifth and sixth respondents
are
sued in their respective capacity as co-trustees of Vaal Steam
Supplies Black Empowerments Trust.
[4]
In opposing the application, the respondents, raised a point
in
limine, inter alia,
contending that Ms Sibongile Selinah
Tshabalala, an adult businesswoman, is a co trustee of the Vaal
Steam Suppliers Black
Empowerment Trust, who has not been cited and
joined in these proceedings as such; the application should be
dismissed for non-joinder.
[5]
The applicant in its replying affidavit contended,
inter alia,
that the aforesaid Ms Tshabalala resigned as a trustee of Vaal
Steam Supplies Black Empowerment Trust on the 20 July 2014. In this
regard a confirmatory affidavit of Ms Tshabalala was attached as
annexure "R1".
[6]
It would seem that this application was launched on the 12 November
2014 and the founding affidavit was deposed to on the 10
November
2014. That being the position, it would seem that Tshabalala was no
longer a co-trustee as at the date the application
was launched and
therefore there was no need to have Ms Tshabalala joined in these
proceedings. Accordingly the point
in limine
must fail.
[7]
The respondents further contended,
inter a/ia,
that the
applicant was not registered as a credit provider in terms of NCA and
consequently is not entitled to the relief sought.
[8]
It is common cause that there were three corporative entities
involved namely two companies and one close corporation, which
are:
(a) Vaal Steam
Supplies (Pty) Ltd (hereinafter referred to as "Vaal Steam";
(b) The close
corporation NIASA Trading CC (hereinafter referred to as "NIASA"),
and
(c) The company
Lekoa Steam & Environment (Pty) Ltd (hereinafter referred to as
"Lekoa Steam").
[9]
It is common cause that the applicant held shares in both the
companies and 50% of the members' interest in the close corporation.
The genesis of the acquisitions of the applicant's shares and
member's interest is consequential to an agreement concluded on the
12 February 2013
[1]
. In terms of
this agreement De Bruyn, the third respondent, offered the applicant
an option to purchase his interest in Vaal Steam,
Lekoa Steam and
member's interest in NIASA for the purchase amount of R2, 500 000. 00
(two million and five hundred thousand rand).
[10]
It is common cause that the purchase price was payable on the
effective date of 1 March 2013. The applicant was unable to raise
the
aforesaid purchase amount on the agreed date, thus resulting in the
payment date being extended to the 16 April 2013, as per
annexure
"JK-2". However, the applicant was still unable to raise
funds to pay the purchase price. This resulted in Du
Bruyn on the 20
March 2013 making an offer to purchase the applicant's interest in
all three entities for an amount of R2 000 000.
00 (two million
rand), per annexure JK-3, which offer was accepted by the applicant.
[11]
According to the applicant, the third respondent subsequently reneged
on the second offer and made a cash offer to purchase
the applicant's
interest in all the entities for an amount of R , 500 000. 00 (one
million, and five hundred rand). The applicant
did not accept this
third offer.
[12]
The third respondent subsequently reverted to his offer of purchase
price for the amount of R2 000 000. 00 (two million rand)
and offered
to have this amount payable in instalments;
[2]
This final offer culminated in the three agreements set out herein
below, identified as annexure "JK-5", "JK-6"
and
"JK-7" being concluded. The three agreements were
supplemented with corresponding addendum attached to annexure "JK-5",
"JK-6" and "JK-7". It is common cause that these
three agreements were concluded on the 26 April 2013. It is
on the
basis of these three agreements it is alleged by the applicant that
the respondents breached the terms of the agreements
accordingly
entitling the plaintiff to claim payment of the outstanding amount.
[13]
According to the applicant, the third and fourth respondents resolved
with each other to have their repurchased interest in
the three
entities vested in the DBF Trust:
13.1 A sale agreement of
the applicant's shares and loan account in respect of Vaal Steam was
entered into with the DBF Trust. The
obligations of the DBF Trust as
well as the third and fourth respondents personally were specifically
recorded in the agreement
attached as annexure "JK-5";
13.2 Similarly a sale
agreement of member's interest in respect of NIASA was concluded with
the DBF Trust. The obligations of the
DBF Trust as well as the third
and fourth respondents personally were specifically recorded in the
agreement attached as annexure
"JK-6";
13.3 In respect of Lekoa
Steam the DBF Trust conjointly with Vaal Steam Supplies Black
Empowerment Trust (of which the applicant
and the third respondent
are the current trustees- fifth and sixth respondents) and Marius
Johannes Fouche (seventh respondent)
purchased the applicant's shares
and loan account in Lekoa Steam. The obligations of DBF Trust as well
as the third and fourth
respondents' personally were specifically
recorded in the agreement attached as annexure "JK-7".
[14]
It is common cause that;
14.1 the third and fourth
respondents bound themselves as sureties and co principal
debtors to fulfil the obligations of the
purchasers to the seller
(the applicant) in respect of each of the agreements as per clause 16
of annexure 'JK-5" clause 16
of annexure "JK-7" read
with clause 1.9 of each annexure "JK- 5" and "JK-7".
In terms of clause 1.9
of annexure "JK-6" the third and
fourth respondents are also defined as sureties;
14.2 In terms of clause 8
of each of the addendum to annexure JK-5; JK-6 and JK-7, the
respondents undertook to register a covering
bond over the immovable
property of the third and fourth respondents in favour of the
applicant, as sureties for the due fulfilment
of the respondents'
obligations in terms of the agreements.
14.3 The third and fourth
respondents have initially failed to register the said covering bond,
but eventually effected registration
thereof in early in 2014.
[15]
it is not disputed by the fourth and fifth respondents, that the
purchase price payable by the DBF (as represented by the first
and
second respondents) and warranted by the third and fourth respondents
as sureties and co-principal debtors, as indicated in
annexure "JK-5"
was Rl.100 000.00 (one million one hundred thousand rand); in
annexure "JK-6" as R350 000.
00 (three hundred and fifty
thousand rand), and in annexure "JK-7" as R550 000. 00
(five hundred and fifty thousand rand),
thus totalling an amount of
R2 000 000.00 (two million rand).
[16]
The respondents contended that the covering bond which was registered
against the third's and fourth's respondents primary
residence during
2014 was either void as a result of non-compliance with the NCA,
alternatively, if not, which is denied, then
the underlying
indebtedness never materialised as a result whereof the mortgage bond
served no purpose and or is without any force
or effect.
[17]
The respondents further contend that, even if it is decided by the
Court that none of the three agreements are void for the
reasons
submitted herein above, then:
17.1 the agreements
(annexures "JK5", "JK6" and "JK7") are
credit agreements in terms of the NCA;
17.2 the applicant is a
credit provider in terms of NCA;
17.3 the applicant failed
to conduct an assessment in terms of s80(1)(a) of the NCA and for
that reason the three agreements are
all reckless credit agreements;
17.4 the applicant was
aware of the fact that the DBF Trust's only income at all times was
an amount of R12 000. 00 that it derived
from a lease agreement and
that it could never have afforded the monthly instalments payable in
terms of the three agreements;
17.5 the agreements
cannot in the premises be enforced against the first to fourth
respondents.
[18]
It is common cause that the purchase price of R2 million was payable
as follows: a deposit of R500 000. 00 payable on signing
of the
agreements, and the remaining balance of R1 500 000. 00 (one million,
five hundred thousand rand) was payable in instalments
of R30 000. 00
(thirty thousand rand) per month plus interest calculated at 2% on
current prime rate, as per the schedule attached
to the papers; vide
paginated 43, 53,
et
63, 64.
[19]
According to the applicant, which is not denied by the respondents,
as at the 1 September 2014, the respondents made payment
in respect
of the purchase price (excluding interest) in an amount of R866 830.
61 ( eight hundred and sixty-six thousand, eight
hundred and thirty
rand and sixty-one cent). According the applicant the outstanding
balance is an amount of R l 133 169. 39 (one
million one hundred and
thirty thousand rand and thirty nine cent). This is also not disputed
by the respondents.
[20]
The issue to be determined is whether the agreements are contrary to
the provisions of the
National Credit Act
and should be
declared null and void and unenforceable, as contended for by the
respondents.
[21]
The
National Credit Act
in section 1 defines:
"credit” to
mean,
inter alia,
"(a) deferral of payment of money owed
to a person or a promise to defer such payment”;
"credit facility"
to mean an agreement that meets all the criteria set out in section
8(3) ; and
a "credit guarantee"
to mean an agreement that meets all the criteria set out in section
8(5).”
[22]
Section 8 provides as follows:
"(1) Subject to
subsection (2), an agreement constitutes a credit agreement for the
purposes of this Act if it is-
(a)
A credit facility, as described in subsection (3);
(b)
A credit transaction, as described in subsection (4);
(c)
A credit guarantee, as described in subsection {5); or
(d)
Any combination of the above.
(2)
(3) "An agreement,
irrespective of its form but not including an agreement contemplated
in subsection (2) of section 4 (6)
(b), constitutes a credit facility
if, in terms of that agreement-
(a) A credit
provider undertakes-
(i)
…
(ii)
either to
(aa) defer the consumer's
obligation to pay any part of the costs of goods or services, or to
repay to the credit provider any part
of an amount contemplated in
subparagraph (i); or".
[23]
In my view, the parties, agreed to have the obligation of the
respondents, to pay the outstanding balance of the purchase price,
deferred and paid in instalments, including interest. This therefore
brings the three agreements within the ambit of the NCA;
vide
Potgieter v Olivier
2016 (6) SA 272
(GP) at 274 paras [11] -[12].
[24]
The NCA further provides,
inter alia,
that:
"s8(5)
An agreement, irrespective of its form but not including an agreement
contemplated in subsection (2), constitutes a
credit guarantee if, in
terms of that agreement, a person undertakes or promises to satisfy
upon demand any obligation of another
consumer in terms of a credit
facility or a credit transaction to which this Act applies."
[25]
It is common cause that the fourth and fifth respondent stood surety
and caused a bond to be registered, albeit belatedly,
to stand as a
collateral security. In my view, this also brings the three
agreements within the purview of the NCA.
[26]
Section s40 of the Act provides,
inter alia,
that:
"1" A person
must apply to be registered as a credit provider if-
(b) the total principal
debt owed to that credit provider under all outstanding credit
agreements, other than incidental credit
agreements, exceed the
threshold prescribed in terms of section 42(1)." The prescribed
threshold is R500 000. 00
[27]
In my view, the three agreements must be seen not in isolation and
independent from each other, but as a collective. After
the deposit
in the amount of R500. 000. 00 was paid, the composite outstanding
amount was the amount of Rl 500 000. 00 (one million,
five hundred
thousand rand}. The composite outstanding amount was therefore more
than the threshold of R500. 000. 00 referred to
in s42(1) of the Act.
[28]
I am in agreement with the view expressed in the matter
Van
Heerden v Nolte
2014 (4) SA 584
(GP) at 587G, a view also shared
by the Court in
Potgieter v Olivier
2016 (6}SA 272 (GP) at 274
at 278E, that if the total principal debt exceeds R500 00, the Act
requires the credit provider to register.
[29]
It is common cause that the applicant failed to register as a credit
provider, at the conclusion of the three agreements on
26 April 2013,
but only applied to be so registered on 23 October 2013, and was
eventually so registered on 27 November 2013; vide
annexure JK11.
[30]
Section 40(4) provides that: "A credit agreement entered into by
a credit provider who is required to be registered as
a credit
provider In terms of subsection (1) but who is not so registered is
an unlawful agreement and void to the extent provided
for in section
89." It is common cause that the three (3) agreements were
entered into on 26 April 2013, approximately seven
(7) months before
the applicant's registration as credit provider, and approximately
six(6) months before he applied to be registered
as such.
[31]
In terms of s89 "(2) Subject to subsection (3) and (4), a credit
agreement is unlawful if-
"(d) at the time the
agreement was made, the credit provider was unregistered and this Act
requires that credit provider to
be registered."
In casu,
there was a belated registration as a credit provider, by the
applicant, which registration is well beyond the prescribed period,
thus making the agreements open to be declared
void ab initio.
(Section 89(5) reads:
'If a credit agreement
is unlawful in terms of this section, despite any provision of
common-law, any other legislation or any provision
of an agreement to
the contrary, a court must order that-
(a)
The credit
agreement is void as from the date the agreement was entered into;
(b)
The credit
provider must refund to the consumer any money paid by the consumer
under the agreement to the credit provider, with
interest calculated
–
(i)
At the arte set
out in that agree net; and
(ii)
For the period
from the date on which the consumer paid the money to the credit
provider, until the date the money is refunded to
the consumer; and
(c)
All the
purported rights of the credit provider under that credit agreement
to recover any money paid or goods delivered to, or
on behalf of, the
consumer in terms of that agreement are either-
(i)
Cancelled, unless
the court concludes that doing so in the circumstance's would
unjustly enrich the consumer; or
(ii)
Forfeit to the
State' if the court concludes that cancelling those rights in the
circumstances would unjustly enrich the consumer.")
[32]
Whether the National Credit Act is applicable to an agreement, would
depend on the circumstances of that particular case, inclusive
of the
manner the parties conducted themselves to each other;
vide Voltex
(Pty) Ltd v Chenleza
CC
And Others
2010 (5) SA 267
(KZP)
at 271C-D and the author therein cited
Bridgeway Ltd v Markam
2008(6) SA 123 (W).
[33]
In deciding whether in the circumstances of a particular case the NCA
applies, the court must take into account the fact that
the purposes
of the Act is to protect the consumer
Voltex (Pty) Ltd v Chenleza
CC And Others (supra)
at 271 B-C, however, without losing sight
of the fact that it needs to balance the interest of both the
consumer as well as that
of the credit provider;
Desert Star
Trading v No 11 Flamboyant Edleen
2011 (2) ALL SA 471
(SCA) at
474 e-h.
[34]
As pointed out herein above, the parties entered into three
agreements. However, these must be read together as one composite
agreement. This can be gleaned from the addendum attached to the
respective agreements. It is only one addendum setting out the
manner
of payment of the total outstanding amount of R 1 500 000. Therefore,
in my view, the credit agreement between the parties
was a once off
transaction.
[35]
But for the full bench judgment to which I am beholden, I would have
found that the applicant was obliged to register as a
credit
provider, and having failed to do so in time, the agreements were
unlawful and void in terms of s89(2). The full court in
this
division, held in the matter of
Friend v Sendai
2015 (1)
SA 395
(GP) that s40 (1)(b) must be seen as having been directed at
those who are in credit market and or industry or at those who
intended
to participate in the credit market industry and not in
once-off transaction.
[36]
Consequently, on the strength of the binding authority of the
Friend
full bench decision
(supra)
over this Court, I am obliged
to therefore find that the applicant, notwithstanding the fact that
it thought otherwise, was not
obliged to register as a credit
provider. That being the position, I conclude that section 89 does
not apply and therefore the
agreements are not tainted by any
illegality or voidness and find that the agreements were valid and
lawful. The counter application
of the respondents therefore stands
to be dismissed.
[37]
The respondent has raised a further defence of reckless credit, as an
alternative, in the event this court decides that the
agreements are
not void, that the applicant is a credit provider in terms of the
NCA, but failed to conduct an assessment in terms
of s80(1)(a) of the
NCA and the three agreements were therefore reckless credit
agreements.
[38]
The respondents further averred in their papers that the applicant
was aware that the DBF Trust's income at all relevant times
was an
amount of R12 00. 00 that it derived from a lease agreement, and that
it could never have afforded the monthly instalments
payable in terms
of the three agreements annexures "JKS", "JK6"
and "KJ7".
[39]
With regard to the defence of reckless credit, it is apposite to cite
in detail from the matter of
SA Taxi Securitisation v Mbatha
2011
(1) SA 310
(GSJ) at 318 where the Court held as follows:
"VI The defence of
'reckless credit'
The provisions of the NCA
concerning reckless credit "39" Section 80 of the NCA
provides:
'(1) A credit agreement
is reckless if, at the time that agreement was made, or at the time
when the amount approved in terms of
the agreement is increased...--
(a) The credit
provider failed to conduct an assessment as required by section
81(2), irrespective of what the outcome of
such an assessment might
have concluded at the time; or
(b) The credit
provider, having conducted an assessment as required by section
81(2), entered into credit agreement with the
consumer despite the
fact that the preponderance of information available to the credit
provider, indicated that-
(i) The consumer did not
generally understand or appreciate the consumer's risks, costs or
obligations under the proposed credit
agreement; or
(ii) Entering into the
credit agreement would make the consumer over indebted.'
[40]
Section 80(2) provides that a determination of recklessness must be
made based upon the circumstances that prevailed at the
time that the
credit agreement was entered into, and not at the time when the
determination is made."
[41]
When regard to the genesis of the relationship between the parties is
had, the credit agreement concluded between the parties,
was in
effect a buy back by the respondents of their shares and interest
initially sold to the applicant, vide paras [9] et [10]
supra.
The
relevant businesses were never effectively transferred to the
applicant. The respondents were dully legally represented, and
were
at all relevant times aware of the financial wellness of the
respective business entities, of which the third respondent was
its
alter ego. It was therefore imperative, in my view, for the
respondents to have made a full disclosure of their financial
capacity without the applicant having to conduct an assessment as
required by s81.
[42]
In the result, in my view, the alternative defence of reckless credit
must fail.
[43]
In the premises the following order is made against the first to the
fourth respondents jointly and severally, the one paying
the other to
be absolved for:
1.1 Payment of an amount
of R1 133 169. 39
1.2 Interest on the above
amount calculated at 9% per annum from 1 September 2014 to date of
payment;
1.3 Costs of suit,
including the costs occasioned by the counter application, which is
dismissed.
__________________
M.
MAVUNDLA
JUDGE
OF THE HIGH COURT
DATE
OF JUDGMENT : 31/3/2017
APPLICANT'S
ADV : MR. C.M. RIP with MR. J. DE BEER
INSTRUCTED
BY : FOUCHE ATTORNEYS.
1
st
to 4
th
RESPONDENTS' ADV : ADV: P. NEL
INSTRUCTED
BY : MEISE NKAISENG INC
[1]
A copy of which was attached as annexure "JK-1".
[2]
Vide annexure "JK-4".