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[2017] ZAKZDHC 16
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First Rand Bank Limited v Ahmed (5400/2009) [2017] ZAKZDHC 16 (31 March 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
CASE
NO: 5400/2009
In
the matter between:
FIRST
RAND BANK
LIMITED
Plaintiff
and
PAMELA
SHEIK
AHMED
Defendant
ORDER
[1]
Judgment is granted in favour of the plaintiff as follows:
1.1 The defendant is directed to make
payment of R 955 795,81 together with interest calculated daily on
such amount at a rate of
13,4% per annum and compounded monthly from
1 March 2009 to 25 March 2009 and 12,4% from 26 March 2009 to date of
final payment,
both dates inclusive.
1.2 The defendant is directed to pay
the plaintiff’s costs of suit on an attorney and client scale.
[2]
The defendant’s counterclaim is dismissed with costs.
[3]
Paragraph (c) of the order,
[1]
being the order to declare the immovable property executable is
adjourned
sine die
.
The plaintiff is directed to serve and file a supplementary affidavit
providing an updated valuation report in respect of
the immovable
property (not more than six months’ old) and an updated
statement excluding all legal costs.
[2]
JUDGMENT
HENRIQUES
J
Introduction
[1]
This is an action against the defendant in terms of which the
plaintiff seeks a monetary judgment together with costs and an
order
declaring an immovable property executable.
Pleadings
[2]
It is common cause that the plaintiff pursuant to a mortgage loan
agreement registered a mortgage bond over the immovable property
which forms the subject matter of the action. It is further
common cause that even though the defendant applied for a loan
for
the full purchase price and transfer costs, the mortgage loan
agreement only made provision for the full purchase price.
On
13 December 2007, the plaintiff passed a mortgage bond over the
immovable property as security for the monies loaned to the
defendant
in the sum of R960 000 together with interest thereon as
covering security.
[3]
The terms of the mortgage loan agreement are essentially common
cause. It is further common cause that the defendant,
in breach
of the mortgage loan agreement, failed to pay the monthly instalments
due and made only one payment. Subsequent
to the signing of the
purchase and sale agreement and prior to the registration of the
mortgage bond, the defendant discovered
that the immovable property
had been vandalised as the seller had left the property vacant.
[4]
The defendant filed a plea and counterclaim and pleaded that
subsequent to signing the purchase and sale agreement, but prior
to
registration of the transfer and mortgage bond, she discovered that
the immovable property had been vandalised as it had been
left vacant
by the seller.
[5]
As a consequence her husband, Mr Sewpersad contacted the estate agent
as well as the transferring attorneys and bond registration
attorneys
advising them of the damages. The response from the
transferring attorneys was that the seller would make good
these
damages to the property before transfer and registration of the bond
could take place.
[6]
The defendant pleaded that she sought an undertaking from the bond
registration attorneys that the transfer would be placed
on hold
until such time as the property was restored to the condition it was
in at the time the purchase and sale agreement was
concluded. In
breach of the undertaking, the bond registration attorneys as well as
the transferring attorneys refused to place
the transfer or bond
registration on hold or delay it and instructed the defendant the day
before the transfer was to occur to
obtain an interdict to stop the
transfer and registration of the mortgage bond. The defendant was
unable to do so and as a consequence
the transfer and bond
registration went through.
[7]
The defendant pleads that she has suffered damages in the sum of R
240 000,00 as a consequence of having to effect repairs to
the
property. It is for these reasons that despite receiving the section
129 notice and being informed of the breach, she has not
made payment
of any bond instalments apart from one instalment which she made
under protest.
[8]
The defendant pleads that the summons is premature as the matter was
referred to the banking ombudsman in October 2008 and the
ombudsman
has not finally decided the issue. It is for these reasons that the
defendant pleads that she is exercising a lien over
the property
until such time as the plaintiff pays her damages or
alternatively
the damages she sustained be set off against the monthly bond
instalments. A counterclaim to that effect was delivered
simultaneously
with the plea.
[9]
When the trial commenced it was placed on record that the defendant
bore the onus to prove the defence contained in the plea
and counter
claim and the following was admitted namely:
[9.1] the terms of the loan agreement;
[9.2] that the bond was registered;
[9.3] that there was compliance with
the provisions of the National Credit Act;
[9.4] that the defendant was in breach
of the terms of the loan agreement.
The
evidence
[10]
The plaintiff called no witnesses and the defendant called Mr
Sewpersad the defendants’ common law husband to testify.
[11]
Even though the bank official and the person from the bond
registration attorneys were subpoenaed to testify by the defendant,
the defendant chose not to lead their evidence and graciously made
such witnesses available to the plaintiff. The plaintiff
elected not to call them. The defendant’s husband
testified that he dealt with all matters on behalf of the defendant
and liaised with the relevant banking officials. He testified that
the plaintiff gave an undertaking that the bond would not be
registered until the property was restored to the same condition it
was in at the time of conclusion of the purchase and sale agreement.
[12]
During the course of argument, however
Mr Chetty
who appeared
for the defendant submitted that the pleadings were defective in
light of the fact that the loan agreement was not
put up and that the
plaintiff relied on the registration of the bond for its cause of
action. He made reference to the fact that
the terms as pleaded in
the summons and the declaration were not contained in the actual
covering bond annexed to the papers and
it must have been contained
in the loan agreement which was not put up.
[13]
These submissions flew in the face of what was placed on record at
the commencement of the trial. The terms of the loan agreement
and
the fact that the defendant was in breach thereof was not placed in
dispute. What was placed in dispute was the fact that a
certificate
could be put up by a manager evidencing the amount owing. It was also
not in dispute that the plaintiff had complied
with the provisions of
section 129.
Mr Chetty
submitted however, that in addition to
complying with the provisions of section 129, the plaintiff was
compelled in terms of the
loan agreement to comply with the
provisions of clause 4.26 which required the plaintiff to give the
defendant written notice to
remedy the breach within 10 days failing
which they would institute an action.
[14]
In addition the defendant admitted that if the summons was premature
then they accept that the counterclaim and plea would
also be
premature. The defendant also challenged the terms of para 4.6 of the
particulars of claim.
[15]
During the course of argument
Mr Chetty
acknowledged that for
the purposes of the plea and counter claim should I find that the
summons was not premature, then for the
purposes of the plea and
counterclaim one must accept that a valid loan agreement exists and
further that the bond was validly
registered.
Issue
[16]
The issue for determination in this matter is whether or not the
plaintiff through its employees gave an undertaking not to
register
the bond until such time as the property had been restored to the
condition it was in at the time of signature of the
purchase and sale
agreement.
Analysis
[17]
The plaintiff, the bond holder’s claim arises from the
defendant’s breach of the mortgage loan agreement. The terms
of
the loan agreement are common cause and it is also common cause that
the defendant made only one payment towards the mortgage
bond. It is
also common cause that the monies were advanced and the mortgage bond
was registered over the immovable property which
served as security
for the monies loaned.
[18]
It is not disputed that the plaintiff complied with its obligations
in terms of the mortgage loan agreement. The defendant
accepts that
the monies were loaned and advanced but submits that the bond ought
not to have been registered. Even though
the defendant denies
that a certificate (clause 4.6 of the declaration) was agreed to, it
cannot be disputed that this is the amount
that is presently owing in
terms of the loan agreement and the loan agreement came into
existence. The defendant’s defence
is that the bond ought not
to have been registered as there were defects in the immovable
property.
[19]
The defendant’s witness who is her husband confirmed during his
evidence that he was at all times liaising with the transferring
attorneys and not the bond registration attorneys. It was apparent
that he did not understand the difference between the bond
registration attorneys and the transferring attorneys. This is clear
from his evidence.
[20]
Moreso, he acknowledged that he was advised by the transferring
attorneys to obtain an interdict to prevent the transfer from
going
through. On his own version, he was in Underberg on 10 December 2007
when he was advised of this by the transferring attorneys
and in his
view, it was too late to do anything about this. However, this
evidence is contradicted by his later evidence during
the course of
the trial.
[21]
It was apparent that when the defects in the property were noted by
the defendant and her husband, he contacted the transferring
attorneys and the estate agent. They facilitated negotiations between
him and the seller in terms of which the seller was to make
good the
damages. In fact, the defendant’s witnesses’ evidence is
that he was contracted to do the electrical repairs
and was paid for
this and also further repairs. These monies, for the cost of the
repairs, were reimbursed to him from the monies
due to the seller.
[22]
However, things appeared to have unravelled in regard to the repairs
to the alarm system and the roof. Issues arose between
the parties as
a consequence of which the defendant then took the stance that the
transfer must be stopped. At all times, contrary
to what was put to
Ms Suleman, he was liaising with the transferring attorneys and the
estate agent and not the bond registering
attorneys. In addition, he
chose not to call Mrs Logie Budram to confirm his version relating to
the plaintiff giving an undertaking.
[23]
Even though the defendant’s witness appears to have contacted
the bond registering attorneys, Vanidha Naik & Associates,
the
response from the bond registration attorneys was to contact the
transferring attorneys. The transferring attorneys according
to the
witness refused to stop the transfer. However, this is contradicted
by his evidence that he was told that should he wish
to stop the
transfer, he had to obtain a High Court interdict to do so.
[24]
It also appears to be common cause on the papers that the defendant
and her husband took occupation of the premises to prevent
further
vandalism to the property. In addition, the defendant acknowledges
that he took money from his business and injected it
into the
property to make it what he termed “habitable”. He also
appears to have accepted that he was required to make
payment in
terms of the mortgage loan agreement as one payment was made.
[25]
His version that this was done only on the advice of the transferring
attorneys can safely be rejected. The witness and the
defendant are
fully aware of the implications of accepting the monies and signing
the mortgage loan agreement. In fact, an acknowledgement
of this
appears to be the fact that after the transfer had been registered,
the defendant and her common-law husband instituted
an action against
the seller for the balance of the monies owing in respect of making
good the damages.
[26]
Ms Suleman, a conveyancing attorney of some 10 years’
experience confirmed that the mortgage bond was registered to serve
as security for the monies loaned. In addition she acknowledged
that in terms of the
voetstoots
clause in the purchase and
sale agreement the purchaser takes the property as is. The
function of the bond registering attorneys
is to register the
mortgage bond. Ms Suleman testified that once the mortgage loan
agreement is signed and registration of
the bond goes through, then
the plaintiff has performed in terms of the obligation and the
purchaser is liable to comply with the
terms of the mortgage loan
agreement. In addition there is no obligation on the bond
registering attorneys to prevent the
registration of transfer going
through and the registration of the bond going through under these
circumstances.
[27]
It was put to Ms Suleman during the course of her evidence that the
facts of this matter are such that the defendant had instructed
not
to proceed with the registration of the mortgage bond until such time
as the issues in relation to the defects to the property
was sorted
out. She submitted that under those circumstances it would then
be obligatory for the bond registration attorneys
not to proceed with
the registration of the mortgage bond until such time as instructions
were given to it to do so. What
was not put to Ms Suleman was
the fact that on the facts of this matter the defendant was liaising
with the transferring attorneys
who had indicated to him that if he
wanted to stop the transfer of the immovable property and
registration of the mortgage bond,
he had to obtain a court
interdict.
[28]
During the course of the trial the plaintiff elected not to call any
witnesses and the defendant called her common law husband
to testify
only. Logie Budram who is employed by the plaintiff and Dylan
Naik were made available to the plaintiff to be
called as witnesses.
However the plaintiff declined to do so.
[29]
Given the evidence presented in totality and the version presented by
the defendant, I am unable to accept that the plaintiff’s
representative gave an undertaking to stop the registration of the
bond and thus owed the defendant a duty not to proceed to register
the bond.
[30]
It must also follow that I do not agree with the submission that a
certificate of balance was not agreed to by the defendant.
It is not
in dispute that the loan agreement was signed by the defendant and
therefore
caveat subscriptor
would apply. In addition the
defendant acknowledged she was in breach of the home loan agreement
as she had only effected one payment
and had failed to pay any
further monthly instalments and further acknowledged receipt of the
section 129 letter.
[31]
As regards the defence that the summons and counterclaim is
premature, it is evident from the pleadings that the Banking
Ombudsman
dismissed the complaint on 16 July 2008. The defendant
indicated that she was entitled to make further representations which
she
has done. The issues which have been referred to the Ombudsman
are contained in para 23
[3]
.
One of the issues is the very same as the one which this Court has to
decide is whether an undertaking was given by the plaintiff.
The
second relates to the failure to include the transfer costs in the
amount of the monies advanced in terms of the loan agreement.
[32]
In my view the latter is not a live issue which results in the
summons being premature. As I am of the view that on the evidence
presented, no undertaking was given by the plaintiff not to proceed
with the bond registration. On the defendant’s
version,
all the evidence points to the defendant allowing the transfer to go
through and the bond to be registered as a consequence
of the advice
he was given by the transferring attorneys. In addition he was
advised to obtain an interdict to stop the transfer.
The defendant
was content to allow the transfer to go through when he was
reimbursed for the damages, it was only when the transferring
attorneys were not able to facilitate the seller paying for the
damages that the defendant wanted the undertaking to stop the
transfer.
[33]
In addition on the evidence, it would also appear that the
defendant’s husband utilised monies from his business to make
good the damages and the defendant has not suffered any damages.
It is correct that the plaintiff’s case essentially
is
unchallenged. The crux of the issue which this court has to
decide is whether the plaintiff owed either an express, implied,
or
tacit duty contractually to the defendant not to register the
mortgage bond.
[34]
Having regard to the witnesses’ evidence presented, it is clear
that the defendant liaised with the transferring attorney
who in turn
facilitated negotiations between the seller and the defendant to make
good damages to the property. In fact the
defendant was
reimbursed for costs of certain repairs. Having regard to the
documents put up by the defendant, it is clear
he was told on 10
December that if he wanted to stop the transfer from proceeding, he
would have to interdict the transfer.
In addition the defendant
was aware that his rights of recourse lay against the seller and/.or
the transferring attorney.
[35]
What is further noteworthy about the matter is that the transferring
attorneys appear to have been liaising constantly with
the
defendant’s husband. The transferring attorneys, Mooney
Ford & Partners are not a party to the proceedings.
The
order to declare the immovable property executable
[36]
At the hearing of the matter in September 2015 the plaintiff’s
counsel handed up exhibit “E” which are the
bank
statements for the period through December 2012 to 25 July 2015.
Having regard to such printout it would appear that
legal fees and
legal costs have been debited to the mortgage bond account. It
is for these reasons that the order in paragraph
3 will have been
issued. In addition the exhibit “D”, which is the
valuation report, renovations commenced to
the immovable property and
the valuator had regard to the old valuation as internal access to
the premises was only gained on 26
November 2007. From the
evidence presented at the trial it is evident that the renovations
which the defendant’s husband
testified to may be complete at
this point in time and an updated valuation accompanied by an
affidavit of the valuator is necessary
for such relief.
Conclusion
[37]
For the reasons aforementioned in the judgment I grant the following
orders. Judgment is granted in favour of the plaintiff
as follows:
37.1 The defendant is directed to make
payment of R 955 795,81 together with interest calculated daily on
such amount at a rate
of 13,4% per annum and compounded monthly from
1 March 2009 to 25 March 2009 and 12,4% from 26 March 2009 to date of
final payment,
both dates inclusive.
37.2 The defendant is directed to pay
the plaintiff’s costs of suit on an attorney and client scale.
[38]
The defendant’s counterclaim is dismissed with costs.
[39]
Paragraph (c) of the order, being the order to declare the immovable
property executable is adjourned
sine die
. The plaintiff
is directed to serve and file a supplementary affidavit providing an
updated valuation report in respect of
the immovable property (not
more than six months’ old) and an updated statement excluding
all legal costs.
___________________
HENRIQUES
J
Case
Information
Date
of argument
:
26
August 2013 & 7,8 September 2015
Date
of judgment
:
31
March 2017
Appearances
Counsel
for Plaintiff
:
Adv.
U. Lennard & A. Escott-Watson
Instructed
by
:
Glover
Incorporated
Suite
905, 9
th
Floor
Old
Mutual Building
300
Anton Lembede Street
Durban
Docex
252, Durban
(Tel)
031-301 1539
Ref:
Mat 18444/KZN
Counsel
for Defendant
:
Mr
T. Chetty
Instructed
by
:
Theyagaraj
Chetty Attorneys
296
Randles Road Sydenham
(T)
031-208 0527
(F)
031-208 0527
Ref:
Mr T. Chetty
[1]
Pg 4, pleadings index.
[2]
Having regard to exhibit “E” legal costs have been
debited to the mortgage bond account.
[3]
Page 42 of
indexed pleadings