About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Kwazulu-Natal High Court, Pietermaritzburg
SAFLII
>>
Databases
>>
South Africa: Kwazulu-Natal High Court, Pietermaritzburg
>>
2016
>>
[2016] ZAKZPHC 87
|
|
Absa Bank Limited v Manyike and Others (8084/2013) [2016] ZAKZPHC 87 (6 October 2016)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN
HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: 8084/2013
In
the matter between:
ABSA
BANK LIMITED
PLAINTIFF
and
JOHN
UTUKILE MANYIKE
FIRST
DEFENDANT
NTOKOBANE
MOGOTSI
SECOND
DEFENDANT
CINDY
STELLAMOGOTSI
THIRD DEFENDANT
JUDGMENT
Date
Delivered: 06 October 2016
MBATHA
J:
[1]
The plaintiff is Absa Bank Limited, which seeks a monetary judgment
against the defendants, interest thereon, an order declaring
property
executable and an order for costs.
[2]
It is common cause that on about June/July 2007 a loan agreement was
concluded between the parties. The plaintiff lent the sum
of R1
350 000 to the defendants, the defendants undertook to
repay
the loan in specific monthly instalments and a mortgage bond was
registered over the property purchased by the defendants
as security
for their obligations in terms of the loan agreement. The property
which was purchased by the defendants from Early
Light Trading CC is
known as Erf [.....] E., KwaZulu-Natal. It is not disputed that the
defendants are in default with their payments
since December 2012.
[3]
The issues that are in dispute are as follows:
(a)
the specific terms of the agreement as between the plaintiff and the
defendants;
(b)
the amount presently owed by the defendants as per the certificate of
balance; and
(c)
the main issue being whether the advancement of the loan to the
defendants amounted
to reckless trading in terms of the National
Credit Act.
[1]
The
defendants contend that the loan advanced by the plaintiff exceeded
the value of the property in question, that the plaintiff
did not
assess their monthly affordability to pay the loan in terms of the
agreement, and that the credit was advanced recklessly
as finance was
applied simultaneously for other properties. The plaintiff bears the
onus
of proof to prove the terms of the loan agreement, the certificate of
balance and the balance outstanding. The defendants bear
the onus of
proof in so far as reckless lending is concerned. The plaintiff’s
argument is twofold in that it submits that
the provisions of the
National Credit Act are not applicable to the loan agreement between
the parties and that should the court
not accept that the contract
fall outside the provisions of the National Credit Act, it disputes
that it engaged in reckless trading
with the defendants.
[4]
To prove the terms of the agreement the plaintiff called Lynette
Prinsloo. Mr Imtiaaz Mohamed, a witness for the plaintiff,
confirmed
the certificate of balance and confirmed that as at 17 March 2016 the
defendants were indebted to the plaintiff in the
sum of R1 589 016.91
together with interest at the rate of 10.5% per annum capitalised
monthly from 18 March 2016. The
plaintiff also led the evidence of
attorney and conveyancer Mr Janse Van Rensburg of Roodepoort, whose
evidence was to describe
how he receives instructions for
registration of the bond from the plaintiff and he confirmed that he
explains the terms of the
National Credit Act to each client of the
plaintiff, the mortgage loan agreement, the repayment terms, the
interest rate, terms
of the loan and valuation. He could not recall
the defendants but confirmed that the procedure is followed in his
practice by himself
or his professional assistant, who would go and
explain to the banks’ clients the implications of the National
Credit Act,
and the entire terms of the loan agreement.
[5]
The three defendants also testified in the trial and called only one
expert witness, Mr Pardey, a valuator in support of their
case.
[6]
It is important that I should summarise from the evidence of the
defendants what led them to acquire a loan from the plaintiff.
This
will assist in understanding the defence of reckless lending which
they have raised as well as the plaintiff’s assertion
that the
contract between the parties fall outside the ambit of the National
Credit Act.
[7]
According to Mr Manyike, he learnt from one Portia Sekati, a high
ranking member of the Estates Agency Board, about a presentation
that
was to be presented by one Mr Cecil Uren in Gauteng. Manyike extended
the invitation to his friends, the second and third
defendants, Mr
and Mrs Mogotsi. The presentation was attended by about 20 to 30
people. Cecil Uren presented to them an investment
opportunity which
would enable them to get a very good return. This related to the
purchase of immovable properties in Limpopo,
KwaZulu-Natal and
Gauteng provinces. He told them about a property in Elysium,
KwaZulu-Natal, which could be rezoned and subdivided
into about ten
stands and sold at about R400 000 to R500 000 each.
This projection related to the Elysium property
that was for sale for
R1 350 000. It later on transpired that the property was
owned by Early Light Trading CC, whereby
Cecill Uren was the sole
member. It became very clear to all that this would translate to huge
profits for the investors. The investors
were informed by Cecil
Uren that they were only required to use their credit worthiness. He
would ensure that the property
is rezoned, subdivided and sold within
a period of six months. He also will service the bond for six months
by depositing a sum
of R100 000 in one of their banking
accounts. They were shown the Elysium property screen through a
projector, which was a
beautiful place with sea views.
[8]
The gullible three defendants expressed their interest in four
properties. A Ms Debbie Mulder, who also participated at the
presentation, offered to assist them in getting finance from the
various banks, including the plaintiff, in her capacity as a bond
originator. They complied with all the minimum requirements for such
applications, by signing the relevant application forms for
loans,
signed the offer of purchase and presented proof of their income and
expenses to Debbie Mulder. This was done in respect
of all the four
properties, including the property that is the subject matter of this
action.
[9]
Finally, they learnt from Debbie Mulder that the loan applications
had been approved. It was their evidence that throughout
the entire
process they never dealt with an Absa official or any attorney
representing the plaintiff, they acted through Debbie
Mulder.
[10]
They received payments to service the loan after registration of
transfer of property to their names as promised by Cecil Uren.
The
payments were made into the second defendant’s account. As the
time went on they realised that Uren was not keeping to
his side of
the bargain as the rezoning did not take place and they were still in
possession of the purchased property. After the
expiry of the six
month period, they had no option save to service the bond.
[11]
Cecil Uren was nowhere to be found and Debbie Mulder could not assist
them. It was then that after a year or so they resolved
to sell the
property. Manyike visited the place in Elysium and found it not to be
what it was presented to them. It was valueless
land which only had a
market value of R300 000 according to a local valuator, though it had
been purchased for R1 350 000.
[12]
According to Manyike, Debbie had informed them that the bank would
send an assessor to evaluate the properties that they were
purchasing. Their view is that the bank should have not advanced the
money paid for the property, as it was a worthless piece of
land.
[13]
It is important to note that the defendants stated that they knew
that they would not have qualified to purchase the said four
properties due to their financial commitments. It is also common
cause that although they are gainfully employed, they were already
servicing their home loan bonds, motor vehicles, and they had family
commitments, including school fees for their children and
had to
cater for other incidental expenses. They believed that they will
make a quick and lucrative investment within six months
and be debt
free as promised by Cecil Uren. Their view is that it was a
commercial investment, which they undertook without any
benefit of
risk advice from the plaintiff, in particular.
[14]
It is common cause that the defendants are highly educated persons,
all three hold senior degrees, in Industrial Psychology,
a MBA degree
and a Masters Degree in Mining, respectively. They understood the
risk, according to Manyike, but believed that it
was viable enough to
proceed with it. It is difficult to understand how the defendants
armed only with their credit worthiness
expected to buy four
expensive immovable properties and dispose of them at a huge profit
within a period of six months. They should
have realised that this
was only a scam.
[15]
The plaintiff’s submission is that the provisions of section 80
and 81 of the National Credit Act do not apply to the
defendants. The
defendants had formed a partnership and as a result they fall within
the definition of a ‘juristic person’
as set out in
section 1 of the National Credit Act, which includes ‘a
partnership, association or other body of persons’.
[16]
It is trite that the requirements of a partnership are as follows:
(a)
each party must bring something into the partnership whether it be
money, labour or skill;
(b)
the business should be carried on for the joint benefit of the
parties;
(c)
the object should be to make a profit; and
(d)
the contract must be legitimate.
It
was the evidence of the second defendant that at the presentation
Debbie Mulder proposed that they invest together as co-applicants.
A
decision was taken there and then as they realised that individually
they would not succeed in obtaining the bank loans. They
identified
the property which is the subject matter of this action, processed
the loan application through Debbie jointly. Debbie
communicated
through Manyike in collecting all the requirements for purposes of
the joint loan application.
[17]
Their partnership started at that stage, when they worked through
what they refer to as their ‘credit worthiness’
and
continued with it when they jointly purchased the property and
continued to service the bond when funds were no longer forthcoming
from Cecil Uren.
[18]
The property was acquired with the joint intention to make a profit
out of the subdivided plots of the Elysium property. The
fruits of
such a joint venture as they refer to it were to be enjoyed by the
three defendants equally.
Their
application to the bank for a mortgage loan was done as a
partnership. This is evidenced from their conduct since they attended
the presentation.
[19]
It is clear from their evidence that they are not certain if Debbie
disclosed to the bank their intention to subdivide and
sell, that
Cecil Uren was to service the loan for six months, that they had not
even seen the properties they were purchasing.
They undertook to
purchase the properties which they had not inspected, and which could
have been non-existent, merely at the prospect
of making huge profits
out of them.
[20]
The defendants deny that they formed a partnership, a juristic
person, when they applied for a loan.
[21]
It is my view that when parties jointly agree to acquire immovable
properties with the intention of making profit, the elements
of a
partnership are there, irrespective that there is no express
agreement to that effect. A true consensus
ad
idem
exists through the conduct of the parties. This is inferred from
their conduct. It is my view that a tacit contract was established
between the parties as at the date of the presentation by Cecil Uren.
The conduct of the defendants in forming a partnership is
clear,
unequivocal and unambiguous. It is clear from the evidence before the
court that they acted as partners, irrespective that
this was not
expressly stated.
[22]
Our law recognises reasoning by inference in civil cases. The first
stage is to decide on the preponderance of probabilities,
what is the
conclusion to be drawn from the facts. Lastly, in deciding whether a
contract has been proved, it is to decide how
the proved facts,
namely, the conduct of each party, the surrounding circumstances must
have been interpreted by the other. The
discussions between the
parties are relevant, their working together in processing the
applications for a loan, their contributions
through their
credit worthiness and the prospects of getting a financial reward and
the legitimate purchase of property shows to
me to be the more
probable and logical inference that a tacit partnership agreement had
been formed.
[23]
I do not agree with the submission made by the counsel for the
defendants that a partnership should have had a name and that
the
defendants should have verbalised their intention to form a
partnership agreement. I am of the view that the plaintiff has
succeeded in proving that the defendants were a partnership and
therefore excluded in terms of the National Credit Act. The
defendants
have not shown a contrary intention.
[24]
I rely on the well-known definition by De Villiers JP in
Joubert
v Tarry & Co
[2]
at page 279 where he states that:
‘
Where
all the four essentials are present in the absence of something that
the contract between the parties is not an agreement
of partnership,
the court must come to the conclusion that it is a partnership
.’
A
similar view was held by the Appellate Division in
Purdon
v Muller
[3]
where the court held that where
Pothier’s
four requirements for a partnership are shown to be present, the
court will find a partnership established unless such a conclusion
is
negated by a contrary intention disclosed on a correct construction
of the agreement between the parties.
[25]
In
Pezzutto
v Dreyer & Others
,
[4]
the court held that for a partnership to come into existence there
must be an agreement to that effect between the contracting
parties.
In determining whether an agreement constitutes a partnership the
court will have regard, inter alia, to the subsistence
of the
agreement, the circumstances in which it was made and the subsequent
conduct of the parties.
[26]
The fact that the parties regard themselves as partners, or referred
to themselves as such, is not necessarily decisive to
create a
partnership agreement, but what is important is that the
essentialia
of a partnership should be present.
[27]
The cases that counsel for the defendants has referred me to on this
aspect confirm what are the essentials of a partnership
agreement, in
particular the case of
Edward
Graham Richard Hughes v Malcom Berwyn Ridley & Others
,
case number 6550/2008 (12 June 2009), delivered by AJP Levinsohn in
the High Court Of KwaZulu-Natal, Pietermaritzburg.
[28]
In the second judgment that he referred me to delivered by Tshabalala
JP in
Celeste
Bushnell v Karen Robert & Another
,
case number 6482/2008, High Court of South Africa, Durban and Cost
Local Division, (09 July 2008) it refers to a written agreement
between the parties and the principle of
uberima
fides
between the parties. It is with respect, not stating that a
partnership agreement should always be in writing.
[29]
Accordingly, I find that a partnership agreement was formed by the
defendants. In the light thereof I find that it is a juristic
person,
which is excluded in terms of the National Credit Act. Therefore, it
cannot avail itself to the defences of reckless lending
as envisaged
in terms of section 80 and 81 of the National Credit Act.
[30]
I am satisfied that the plaintiff discharged its
onus
of
proof in proving the balance outstanding on the amount owing and that
it is entitled to the relief sought in the particulars
of claim.
[31]
Accordingly, I make the following order that judgment be granted
against the first and second defendants, jointly and severally,
the
one paying the other to be absolved for:
(a)
Payment of the sum of R1 619 527;
(b)
Interest on the sum of R1 619 527 at the rate of 8.50% per
annum, as from 07 June
2016 to date of final payment;
(c)
An order declaring the immovable property Erf [.....] E.,
Registration Division ET, Province
of KwaZulu-Natal, in extent 1,3024
(one comma three zero two four) hectares, held by deed of transfer
No.T52642/07, executable;
(d)
Cost of suit on an attorney and client scale.
__________________
MBATHA
J
Date
of hearing
:
22
September 2016
Date
delivered
: 06
October 2016
Appearances
:
For
the Applicant
:
Adv S
Hoar
Instructed
by
: GEYSER,
DU TOIT, LOUW & KITCHING
PINETOWN
INC ATTORNEYS
7
Greathead Lane
Pinetown
For
the Respondents
:
Mr T
Lesomo
Instructed
by
: SEOKANE
LESOMO INC ATTORNEYS
No 37
Wierda Road West
Wierda
Valley
Sandton
[1]
Act 34 of 2005
[2]
1915 TPD 227
[3]
1961 (2) SA 211
(A)
[4]
[1992] ZASCA 46
;
1992 (3) SA 379
(A)