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[2016] ZAGPPHC 244
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Investec Bank Limited v 367\4 Nieuw Muckleneuk (Pty) Ltd and Others; In re: Investec Bank Limited v Swart and Others (38642/2011; 3811/2011) [2016] ZAGPPHC 244 (20 April 2016)
REPUBLIC OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
DATE
:
20/4/2016
CASE
NO
: 38642/2011
Not
reportable
Not of interest to
other judges
Revised.
In
the matter between:
INVESTEC
BANK
LIMITED FIRST
PLAINTIFF
And
ERF
367\4 NIEUW MUCKLENEUK (PTY)
LTD FIRST
DEFENDANT
ERF
245 WATERKLOOF (PTY)
LTD SECOND
DEFENDANT
EQUILAND
(PTY)
LTD THIRD
DEFENDANT
LOUIS
GABRIEL PHILIPPUS
SWART FOURTH
DEFENDANT
ERF
364 WATERKLOOF (PTY)
LTD FIFTH
DEFENDANT
AND
In Re
Case
no: 38811/2011
INVESTEC
BANK LIMITED
(REGISTRATION
NUMBER :1969/004763/06)
And
LOUIS
GABRIEL PHILLIPUS
SWART FIRST
DEFENDANT
ERF
245 WATERKLOOF (PTY)
LTD SECOND
DEFENDANT
EQUILAND
(PTY)
LTD THIRD
DEFENDANT
ERF
367\4 NIEUW MUCKLENEUK (PTY)
LTD FOURTH
DEFENDANT
ERF
245 WATERKLOOF (PTY)
LTD FIFTH
DEFENDANT
JUDGMENT
Heard
on: 14 March 2016
Date
of Judgment: 20 April 2016
LEGODI
J
[1]
The loan agreement concluded on 6 July 2004 between the Plaintiff,
Investec Bank Limited (Investec) and Erf 367\4 Nieuw Muckleneuk
(Pty)
Ltd (Muckleneuk) in respect of which the fourth defendant, Louis
Gabriel Phillipus Swart (Swart) bound himself as a surety
for the
debt of Muckleneuk, became the subject of the dispute before me.
[2]
The dispute arises from the question whether the manner in which
plaintiff (Investec) pleaded its cause of action made the provisions
of the National Credit Act 34 of 2005 (the Act) applicable to the
loan agreement in question and thus obliging Investec to give
a
notice of its intention to institute the present action as
contemplated in section 129 of the Act.
[3]
Two actions were instituted by Investec against Swart. In the one
other matter under case number 38811\2011 Swart is sued as
a
principal debtor with other entities as sureties for his debts. In
that case, it is acknowledged that Investec was obliged to
give a
notice to Swart as envisaged in Section 129 of the Act. However, due
to the fact that such a notice was given by not using
the chosen
address, it was concluded that the above mentioned case, which was
meant to be heard together with the present action
under case number
38642/201, ought to be postponed sine die to allow Investec to give
such a notice afresh as envisaged in section
130(4) (b) (i) and (ii)
which provides that in any proceedings contemplated in this section,
if the court determines that the creditor
provider has not complied
with the relevant provisions of this Act, as contemplated in
subsection (3) (c), the court must adjourn
the matter before it; and
make an appropriate order setting out steps the credit provider must
complete before the matter may be
resumed. I do so later at the
conclusion of this judgment.
[4]
Coming back to the question under consideration, Investec in its
summons, inter alia, pleaded:
" The Plaintiff
confirms that it has complied with the terms of
Section 129
,
130
and
86
(10) of the
National Credit Act, Act
34 of 2005 and as proof
thereof the registered letters with proof of delivery thereof and
directed at the Defendants are attached
hereto as
Annexure"
, "G",
"H",
"/" and "J".
The Plaintiff
further confirms that the First Defendant signed an admission of
liability and offer
to pay in terms of Section
57
of Act 32 of 1944 as well as consent to judgment and order
for instalments in terms of Section 58 of Act 32 of 1944. These
documents
are attached hereto
as
Annexures "K"
and "L".
The Plaintiff further
confirms that at all relevant times the First, Second, Third, and
Fifth Defendants were duly represented by
the Fourth Defendant who
was authorised to act on their behalf in terms .of Resolutions passed
by each of the respective companies
in this regard. Copies of these
Resolutions are attached hereto
as
Annexure "M", and
"N" "O",
and "P".
[5]
The underlining is my emphasis. What is quoted above was repeated in
Investee's declaration and in paragraph 37 thereof, it
was pleaded:
"37.2. The
written admission of liability and offer to does not constitute
a
novation of any existing agreement or debt between the parties.
[6]
Based on the pleaded admission of liability, consent to judgment and
offer to pay, counsel for Swart contended that the provisions
of the
Act have been made applicable to the agreement. I understood this to
suggest that the loan agreement which was not subject
to the
provisions of the Act have been made to be so applicable by having
pleaded admission of liability, consent to judgment and
offer to pay
in the liquidation of the debt.
[7]
The submission was made without any evidence being led. For the
following reasons, I cannot agree with the submission:
7.1. It was made clear in
paragraph 37.2 of the declaration that an admission of liability and
offer by Swart did not constitute
novation of the existing agreement
between the parties.
7.2. The loan agreement,
suretyship and covering mortgage bond executed on 11 March 2005 under
bond number 8032937/05 were pleaded
in the declaration.
[8]
There was another point taken by counsel on behalf of Swart. That is,
Investec was only entitled to claim the arrear amount
as there is no
acceleration clause in any of the written agreements relied upon, so
was the contention. I had difficulties in understanding
the gist of
the submission especially seen in the light of clause 9 of the
covering bond which reads:
"9.1
The capital
or balance thereof, and other moneys which may then be claimable or
secured under this bond, and in terms of any and
all bonds passed by
the Mortgagor in favour of the Bank over the mortgaged property,
shall become due and payable forthwith and without the
Mortgagor having been specifically placed in default. whether the due
date
thereof shall have arrived or not. in the
event of a failure by the Mortgagor
to timeously make
any payment or perform any obligation in terms of this bond or comply
with any demand made by the Bank or in any
manner breach any facility
granted by the Bank or obligation owed to the Bank
.
9.2 Should the
provisions of 9. 1 become applicable, the Bank is
further
entitled and
is
hereby authorised to surrender any policy or
policies of assurance which is\are ceded or made payable to the Bank
as
collateral security and to appropriate the surrender value
on account of the amount owing to the Bank or secured under this
bond.
"
[9]
There can be no question that in the event of a breach, in
particular, failure to pay monthly instalments as stipulated in
clause 2.14 of the loan agreement, "the capital or balance
thereof and other moneys which may be claimable ... shall become
due
and payable forthwith ..."
[10]
Furthermore, in terms of the Standard terms and Conditions" in
an annexure to the loan agreement; and in particular clause
7.1.7
thereof, should any event occur in respect of a surety, which would
constitute an act of default in respect of the borrower.
then and in
such event Investec will have the right to claim repayment of all
amounts owing or claimable by Investec in terms of
the loan agreement
together with finance charges thereon. and to have the property
declared executable. In my view, failure by
the principal debtor
constituted "any event" in respect of a surety, which
resultantly constituted
"an act of default in respect of the
borrower''.
Therefore, there can be no merit to the suggestion
that only the arrears have become due and payable for lack of
acceleration clause.
[9]
Section 4 deals the application of the Act and insofar as it might
still be relevant to the issue whether the loan agreement
is a credit
agreement that falls to be dealt with in terms of section 129 of the
Act or not, I deal with the issue as follows:
Section 129 deals with
the procedures required to be followed before institution of legal
proceedings based on a credit agreement.
Subsection (1) (a) thereof
provides that if the consumer is in default under a credit agreement,
a credit provider may draw the
default to the notice of the consumer
in writing and propose that the consumer refer the credit agreement
to a debt counsellor,
alternative dispute resolution agent, consumer
court or ombudsman with jurisdiction, with the intent that the
parties resolve any
dispute under the agreement or develop and agree
on a plan to bring payment under the agreement up to date and (b) (i)
(a) creditor
provider may not commence any legal proceedings to
enforce the agreement before first having provided such a notice to
the consumer.
[10]
Based on the provisions of section 129, the contention that section
129 is applicable to the loan agreement under consideration,
must be
seen in the context of the provisions of section 4 of the Act. The
provisions of the Act, are in terms of section 4 applicable
to every
credit agreement except inter alia, where the consumer is a juristic
person whose asset value or annual turnover, together
with the
combined asset value or annual turnover of all related juristic
persons, at the time of the agreement is made, equals
or exceeds the
threshold value determined by the Minister in terms of section 7(1)
or in terms of subsection (1) (b) if a large
agreement as described
in section 9(4), in terms of which the consumer is a juristic person
whose asset value or annual turnover
is, at the time the agreement is
made, below the threshold value determined by Minister in terms of
section 7(1).
[11]
Counsel for Investec strongly argued that the loan agreement was a
large agreement, as envisaged in section 4(1) (b) and as
such did not
fall to be dealt with in terms of Section 129. Swart did not appear
to differ in this regard. What appears to be the
contention is put as
follows in his written heads of argument submitted at the request of
the court:
"10. The question
is thus- Is the NGA applicable to the written documents, titled;
admission of liability and attached
as
Annexure "T"
and\or are these documents,
a
credit transaction?
11. Section 8(1) (a)
and 8(4) of the NGA find application and is
quoted hereinafter
for convenience:
8.
Credit agreements
(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);
(4)
An agreement, irrespective of its form but not including an agreement
contemplated in subsection (2), constitutes
a
credit
transaction if it
is-
(a)
a
pawn transaction or discount transaction
(b)
an incidental credit agreement, subject to section 5(2); (c0 an
instalment agreement;
(C)
an instalment agreement;
(d)
a
mortgage agreement or secured loan;
(e)
a
lease; or
(f)
any other agreement, other than
a
credit facility or credit
guarantee, in terms of which payment of an amount owed by one person
to another
is
deferred, and any charge, fee or interest
is
payable to the credit provider in respect of
(i)
the agreement; or
(ii)
the amount that
has
been deferred.
12. We submit that the
agreement (Annexure “T”)
may be classified under
8(4) (c), (d), of the NGA, and the NGA therefore finds application.
13. Section 4(b) of
the NGA on which the Plaintiff relies is not applicable because the
Fourth Defendant
is
not
a
juristic person, but quoted
herein for convenience:
4.
Application of Act
(1)
Subject to sections
5
and 6, this Act applies to every credit
agreement between parties dealing at arm's length and made within, or
having an effect within,
the Republic, except-
(b)
a large agreement, as described in Section 9(4), in terms of which
the consumer is a juristic person whose asset value or annual
turnover is, at the time the agreement is made, below the threshold
value determined by the Minister in terms of section 7(1);"
[12]
I must immediately say, whilst admission of liability is pleaded,
that, in my view, was superfluous in that, it did not replace
the
credit transaction or agreement which is specifically pleaded both in
the summons and declaration. Therefore, to seek to rely
on the
pleaded admission of liability and thus find an application of the
provisions of the Act, in my view, amount to taking technical
issues
which have no significant bearing on the plaintiff s main cause of
action based on the loan agreement.
[13]
Section 8 of Part C deals with the classifications and categories of
credit agreements. It is not clear from the quotations
above whether
the applicability of sectioning 8(1) (a) and 8(4) of the Act as
suggested in paragraph 11 of the quotation , refers
to the admission
of liability and attached as Annexure "T" or to the loan
agreement. In the preceding paragraphs of the
judgment, I dealt with
the reasons why the provisions of the Act are not applicable to the
loan agreement and why the pleaded admissions
of liability did not
replace the loan agreement and the covering mortgage bond.
[14]
Consequently an order is hereby made as follows:
14.1. Judgment is granted
under case number 38642\2011 against the fourth defendant, Mr Louis
Gabriel Phillipus Swart in the sum
of R1 207 482.43.
14.2. Interest on the
amount of R1 207 482.43 at the rate of 8% per annum calculated from
14 April 2011 to date of final payment.
14.3. Costs of suit on
attorney and client scale.
14.4. Case number
38811/11 is postponed sine die to enable the plaintiff in that case
to give a notice as envisaged in section 129
of the Act within 14
days from date hereof and costs in the case aforesaid reserved.
____________________
MF LEGODI
JUDGE OF THE HIGH
COURT
For
the Applicant: Adv
Instructed
by: MCMENAMIN VAN HUYSTEEN & BOTE INC
For
the Fourth Defendant: Adv MT SHEPPARD
Instructed
by: PRINSLOO INCORPORATED