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[2015] ZAGPPHC 477
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Lyttleton Auto Body CC and Others v ABSA Bank Limited (70894/14) [2015] ZAGPPHC 477 (22 May 2015)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO: 70894/14
DATE:
22 MAY 2015
In
the matter between:
LYTTLETON
AUTO BODY
CC
....................................................................................
First
Applicant
ABDUL’S
AUTO ELECTRICAL
CC
........................................................................
Second
Applicant
ABDULE
KADER
MOOSA
..........................................................................................
Third
Applicant
A
nd
ABSA
BANK
LIMITED
........................................................................................................
Respondent
JUDGMENT
DODSON
AJ
Introduction
[1]
This is an application for rescission of
judgment in terms of rule 31 (2)(b), alternatively, the common law.
[2]
The judgment sought to be rescinded was
based on an overdraft facility granted in favour of the first
applicant. The second and
third applicants had bound themselves as
sureties for the overdraft.
[3]
The application was brought 8 days after
the applicants attorney became aware of the default judgment and thus
within the 20 day
period provided for in rule 31(2)(b). By the time
the matter was argued, it was also not in dispute that the applicants
had given
a reasonable explanation for their default.
[4]
The
application therefor turns on whether or not the applicants have
shown that they have a bona fide defence to Absa’s claim.
This
requires that the applicants show that they have by way of the
defence put up, raised an issue which is fit for trial.
[1]
Factual
background
[5]
At the time when the first applicant’s
members were a Mr and Mrs Lopes, an overdraft facility in an amount
of R700 000 was
granted to it by Absa. As part of the security that
Absa held for the overdraft facility there was a deposit in a money
market
account in the name of the first applicant, Lyttleton Auto
Body CC, in the amount of R200 000.
[6]
In November 2007, the third applicant,
whom I will refer to as “Moosa”, together with another
family member, purchased
the member’s interest in both the
first and second respondents from Mr and Mrs Lopes.
[7]
Moosa avers that at the time that he did
so, he was willing to assume the liability in respect of the
overdraft because of the fact
that the bank held what he considered
to be the first applicant’s deposit in the money market account
in the amount of R200
000.
[8]
On 8 July 2009, Moosa made enquiries
about the money deposited in the money market account and was
provided with a statement. The
statement revealed that on 3 June
2008, all of the funds in the account in an amount of R211 615,97 had
been paid out, leaving
a nil balance. Upon enquiry, Moosa was
informed by Absa that the money had been paid out to Mr Lopes.
[9]
Moosa insists that the funds in the
money market account were the property of the first applicant. As
evidence of this he refers
to the fact that the two statements in
respect of the account both reflect Lyttleton Auto Body CC as the
account holder.
[10]
Moosa avers further that he had brought
the amount of the overdraft down to an amount of R260 000 by June
2012. He avers that he
then -
“
again
made enquiries to [Absa] about the money that
was
paid to Mr Lopes and they informed me that they can do nothing. The
first applicant then stopped to use the [overdraft] account
any
further and informed [Absa] that they should claim the money from Mr
Lopes and that it should be enough to cover the overdraft
if the
interest is added. ”
[11]
There is a dispute between the
applicants and the respondent about the entitlement of Mr Lopes to
have received the funds from the
money market account. The applicants
rely on the account holder identified on the bank statements in
alleging that the money belonged
to the first applicant.
[12]
Absa puts up a copy of a balance sheet
purporting to be that of Mr Lopes in which he lists as one of his
investments
“
money
market Absa”
in
an amount of R200 000. They also put up the annual financial
statements of the first applicant for the year ending 28 February
2009. By contrast, these financial statements do not anywhere reflect
as one of its assets the funds in the money market account.
The
financial statements are for both the years ending 28 February 2009
and 28 February 2008, the latter preceding the date upon
which the
funds were paid out to Mr Lopes. The financial statements are signed
by Moosa, but not the accounting officer or the
other member.
[13]
The amount now claimed in respect of the
outstanding balance on the overdraft is R310 169,48.
The
parties’ contentions
[14]
Counsel for the applicants averred that
the above facts gave rise to a
bona
fide
defence.
To the extent that there was a dispute as to the ownership of the
funds in the money market account, she contended that
the applicant
had produced evidence which favoured their case over that of the
respondent. In any event, this dispute was an indication
of the
appropriateness of the matter being dealt with at a trial following
the grant of rescission.
[15]
She argued that the conduct of Absa in
paying out the money in the money market account to a person that was
not entitled to it,
gave rise to a breach of the banker-customer
contract in respect of the money market account. This, in turn, gave
rise to a claim
on the part of the applicants for damages against
Absa. That claim stood to be set-off against the claim on the
overdraft. Even
if set-off did not apply, then it at least provided
the basis for a dilatory plea so that Absa’s claim on the
overdraft would
be deferred until determination of the applicants’
claim against Absa for damages for breach of contract.
[16]
On behalf of Absa it was argued that any
claim which the applicants might have had against Absa (the existence
of which it disputes)
has long since prescribed. In any event, the
defendant contends that even if it has not prescribed, it is not
fully due and is
therefore not capable of being set off against
Absa’s claim on the overdraft.
Analysis
[17]
As
is pointed out in Amlers
Precedents
of Pleadings
[2]
-
“
A
party wishing to rely on set off must allege and prove the following:
(a)
the
indebtedness of the plaintiff to the defendant;
(b)
that
the plaintiff’s debt is also due and legally payable
(c)
that
both debts are liquidated debts...;
(d)
that
the reciprocal debt
was
owed by the plaintiff to the defendant.
”
[18]
The point at which both debts are
compliant with the above requirements is
described
as the moment of mutuality of the debts.
[3]
[19]
Viewed in isolation, the applicants’
claim against Absa (assuming that it exists), arose when Moosa became
aware of the payment
by Absa of the proceeds of the money market
account to Lopes on 8 July 2009. Viewed in isolation, this claim has
clearly prescribed.
[20]
Christie
[4]
explains the position in relation to set-off and prescription as
follows:
“
A
debt which has become prescribed since the set off occurred has
already been set off by operation of law, so the running out of
the
time for prescription is immaterial, but in contrast to other natural
obligations a debt that is already prescribed before
the necessary
mutuality of debts arises could not, under the common law, be set
off, and there is no reason to think that the
Prescription Act 68 of
1969
s10(3)
was
intended to alter this rule. ”
[21]
I agree with this analysis of the common
law and the
Prescription Act.
[22
]
Counsel for the applicant argued that
the moment of mutuality in the present matter arrived at the point in
June 2012 when the first
applicant stopped using the overdraft and
Moosa allegedly instructed Absa to claim the money from Mr Lopes.
[23]
In my view, this can by no stretch of
the imagination be described as the moment of mutuality.
Significantly, Christie points out
that-
“
For
set off to operate the defendant must be in a position to say 'the
plaintiff owes me a debt’ rather than
7
have a claim against him’.”
[24]
The moment of mutuality would only be
reached at the point when the first applicant secures judgment
against Absa on its alleged
claim for damages for breach of contract.
That is when there will be a debt that is
“
due
and legally payable”.
That
moment is yet to arrive, with the first applicant having yet to
institute proceedings against Absa, let alone obtain any judgment.
[25]
That being the case, no mutuality of
debts existed at the time when the first applicant’s alleged
claim against Absa prescribed.
[26]
In the circumstances, I am not satisfied
that the applicants have available to them any defence based either
on set off or on any
entitlement to delay Absa’s claim, pending
proof of their claim.
[27]
Moreover, the fact that the first
applicant has done nothing about pursuing its alleged claim against
Absa over a period of some
seven years is indicative that the
application is not made
bona
fide
and
is rather made with the intention of merely delaying Absa’s
claim.
[28]
I accordingly make the following order:
(1)
The application for rescission of judgment is dismissed.
(2)
The applicants are ordered to pay the respondent’s costs.
A
DODSON
ACTING
JUDGE OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION
PRETORIA
Counsel
for the applicants: ADV A VAN NIEKERK
Instructed
by: DEYSEL ATTORNEYS,
80
Lyttleton Road, Centurion,
Pretoria
Counsel
for the respondent: ADV R RAUBENHEIMER
Instructed
by: TIM DU TOIT & CO INC,
433
Rodericks Road, Lynwood,
Pretoria
Date
of hearing : 6 May 2015
Date
of judgment: 22 May 2015
[1]
PLJ
Van Rensburg en Vennote v Den Dulk
1971 (1) SA 112
(W);
Sanderson
Technitool (Pty) Ltd v Intermenua (Pty) Ltd
1980 (4) SA 573 (W).
[2]
7
th
Ed p352
[3]
See, for example,
Thorne
& Ano, NNO v The Government
1973 (4) SA 42
(T) at 45G.
[4]
The
Law of Contract in South Africa
5
th
Ed Lexis Nexis at p 497.