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[2015] ZAECMHC 53
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Standard Bank SA Ltd v Mbane (58/2015) [2015] ZAECMHC 53 (23 April 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN CAPE
LOCAL DIVISION - MTHATHA)
CASE NO. 58/2015
Heard on: 09 April
2015
Date delivered on:
23 April 2015
in the matter
between :
STANDARD
BANK SA
LTD
.............................................................................................................
Applicant
And
ANDILE
DOCTOR
MBANE
..........................................................................................................
Respondent
JUDGMENT
MAJIKI J:
[1] The applicant
(plaintiff) applied for summary judgment against the respondent
(defendant) for an order in the following terms:
1. Confirmation of
termination of the agreement;
2. Return of the
2013 ISUZU KB 300 CREW CAB LX with engine number 4JJ1KY9683 and
vehicle identification number ADMURCER7C4652260
(the “asset”)
to the plaintiff; and
3. Costs
[2] It is common
cause that the applicant had sold the asset to the defendant. The
parties had entered into a written agreement
in terms of which the
applicant would sell the asset to the respondent. Delivery of the
asset would be given to the respondent
but ownership would remain
with the applicant until the respondent had fulfilled all his
obligations under the agreement.
[3] The main
obligation by the respondent was the payment of R9 789.85 per month
for a period of 59 months from the date of the
agreement (24 July
2013) to 23 July 2018.
[4] The respondent
failed to pay the monthly instalments as agreed. On 2 January 2015
the total arrear amount owed by the respondent
was R51 614.91 and the
full outstanding balance was R470 127.46.
[5] With regard to
remedies in the event of a default of payment by the respondent and
or breach, the agreement made the following
express provision:
The applicant may-
18.4 at its election
and without affecting any other rights that it may have in terms of
the agreement or otherwise, recover from
the respondent payments of
all amounts owing under the agreement by adhering to the default
procedure described above.
[6] With regard to
the breach or default by the respondent on any his obligations, the
applicant in the particulars of claim averred
that the material
express alternatively tacit alternatively implied terms of agreement
were as follows:
“
the
plaintiff would be entitled to :
a. Cancel the
agreement;
b. Repossess and
sell the asset;
c. Retain all
payments already made by the defendant to the plaintiff.”
[7] The applicant
also averred that after the respondent had been in default of his
obligations arising from the agreement for a
period exceeding 120
business days, the applicant sent a letter, which was delivered to
the applicant by registered post, in compliance
with
sections 129
,
130
and
131
of the
National Credit Act 34 of 2005
. The respondent
failed to make good of the arrears or make an election of any options
provided for in the letter. In consequence
thereof the applicant
cancelled the agreement, alternatively it was cancelling the
agreement therein.
[8] The letter
referred to above is annexed to the summons, and state as follows
with regard to cancellation of the agreement.
“
If
you do not respond to this letter or pay the arrears (sic) amount
within 10 business days from date hereof, we may enforce the
agreement and approach the court to cancel the agreement and claim
damages
"
[9] The respondent
opposed the granting of summary judgment on the basis that the
agreement signed by the parties does not provide
for the cancellation
of the contract. The applicant cannot elect to cancel the contract,
as that means invoking a cancellation
clause, where there is no such
clause in the contract, it cannot be invoked. The applicant has also
failed to state from where
in contract (what clause) It bases the
claim for cancellation.
[10] During the
hearing of the application Mrs Nyobole also submitted that the
applicant is seeking confirmation of the cancellation
of the
agreement, when it had not cancelled or given notice of cancellation
of agreement between the parties.
[11]
The issue to be determined is whether the defence raised by the
respondent is good in law,
(bona fide)
as
a basis to successfully resist an application for summary judgment.
[12]
In order for the respondent to successfully resist summary judgment,
the respondent must satisfy the court by affidavit or
with leave of
the court, by oral evidence of the respondent or any other person who
can swear positively to the fact that he has
a
bona
fide
defence
to the action, disclosing fully the nature and grounds of the defence
and the material facts relied upon. According to Herbstein
and Van
Winsen on the Civil Practice of the High Courts of South Africa, 5
th
edition, vol 1 p.532 a
bona fide
defence
is disclosed if the defendant swears to a defence, valid in law, in a
manner that is not inherently or seriously unconvincing,
i.e. set out
facts that, if proved at the trial, would constitute a defence to the
plaintiffs action.
[13] Mrs Nyobole
pleaded with the court to stand the matter down, so that she could
bring the authorities she was relying on in
support of her argument.
She indeed provided me with the following authorities;
Absa Bank
Ltd v Havenga and Similar Cases 2010 (5) at 533 GNP; Absa Bank Ltd v
De Villiers and another 2009(5) SA 40.
[14]
Firstly in the
Havenga and Similar Cases,
the
issue involved the cancellation of motor vehicles’ lease and
sale on instalment of the motor vehicles concerned agreements
by
reason of
lex
commissoria.
This
term was alleged to be express and vesting the credit provider with a
right to cancel the agreement by reason of a breach of
the term.
Horwitz AJ emphasized that the distinction in those cases was
important for a different reason and not for the judgment
to serve as
a discourse in the law of contract. He observed that “it is a
trite principle of the law of contract that the
right of a party to a
contract, to cancel it, is not restricted to cases in which there is
such an express term: generally speaking,
in the absence of an
express term allowing for cancellation of a contract, a party may
cancel a contract by reason of the breach
of a material term by the
other party to the contract, or the breach of a term which the
first-mentioned party has by notice to
the other party made
material.”
[15]
He referred to legal representatives’ use of a singular,
computerised template as a precedent for all their matters,
on the
simple basis that one size fits all. The observation was that there
was no correlation between the terms alleged in the
founding
affidavit or particulars of claim and the actual agreement. When one
has taken to read the entire agreement and has found
that it contains
no cancellation clause at all, to allege that the agreement contains
one of the standardised, hackneyed cancellation
provisions that is
embodied in the template amounts to careless pleading. In conclusion
he stated that the nature of relief sought
is specific performance
and therefore discretionary, if the legal representatives insist upon
imposing on judges to wade through
files that contain incorrect
allegations they should not be surprised if the relief they seek does
get refused. The relief should
be refused if the agreement is alleged
to contain an
EXPRESS
(my
emphasis) cancellation provision in circumstances in which it
contains none. He qualified this though and went on to state that
“the fact that an agreement does not contain an express
cancellation provision is not to say that cancellation is therefore
never possible: the common law may well avail the credit provider.
But in that instance, the appropriate allegations must be made
in the
founding papers; not some absurd allegation, based on a template,
that the agreement contains an express provision to that
effect.”
The right to cancel an agreement arises out of an application of the
rules of law of contract.
[16] Without
analysing each and every statement that the court made in those
cases, it is clear that the court was aggrieved by
the caseless
pleading by legal practitioners, relying on precedents without making
the necessary averments in accordance with the
peculiarity of each
agreement on which the particular facts of the case arose.
[17]
In the
Devitliers
case,
the application was for a final order authorising the attachment of
the vehicle, Absa had not instituted an action for cancellation
of
the agreement, nor was it alleged that it intended instituting an
action of any kind in relation to the vehicle. The order was
refused
by the magistrate. The High Court confirmed that order on review. On
appeal to the Supreme Court of Appeal the issues in
the matter also
invoked the interrogation of the correctness of a review procedure.
[18] The Supreme
Court of Appeal did not agree with the case of the procedure used by
Absa by seeking to review the magistrate’s
decision, instead of
appealing against it. The Supreme Court of Appeal had no problem
confirming the refusal of the review application
but did not confirm
the high court’s reasons for doing so. In my view, the Supreme
Court of Appeal did not pronounce on the
magistrate’s reason
for refusing the attachment of the vehicle, instead the court stated
that the magistrate would have been
entitled to refuse to entertain
the application for the reason of the exclusion of the respondent in
the proceedings for flimsy
reasons.
[19] In my view, the
cases I have been referred to are not on point as Mrs Nyobole would
have wanted me to believe. Let me, restate
what the applicant alleged
in his particulars of claim:
“
4.
The material express alternatively tacit alternatively implied terms
of the agreement were as follows :-
4.2 The Plaintiff
would deliver the Asset to the Defendant, on the date the Agreement
was concluded alternatively within a reasonable
period thereafter:
4.3 Ownership of the
Asset would remain vested in the Plaintiff until the Defendant has
fulfilled all his obligations under the
Agreement;
4.4 The Defendant
would pay for the Asset as is set out below.
(a) An initial
payment of R0.00;
(b) Fifty nine, 59
equal instalments of R9 789.85 each at one (1) monthly intervals
beginning on 30 AUGUST 2013;
(c) A final payment
of R9 789.85 payable on 23 JULY 2018;
4.5 ...............
4.6 Furthermore, in
the event of the defendant defaulting on any of his obligations in
terms of the agreement, the plaintiff would
be entitled to
(a) cancel the
agreement
(b) repossess and
sell the asset
(c)
.............."
[20] It may be that
the applicant did not state in the most explicit terms that it was
basing its right to cancel the contract on
the application of the
rules of contract. It also did not say it was relying on the express
cancellation provision in the agreement,
rather on material express,
alternatively tacit alternatively implied terms of the agreement.
[21] The
notification letter to the respondent stated that;
“
If
you do not respond to this letter or pay arrear(s) amount within 10
business days from date hereof we may enforce the agreement
and
approach the court to cancel the agreement and claim damages. ”
[22] In the
agreement, the applicant reserved its rights, which it had under the
agreement or otherwise, to so to speak, enforce
the agreement. This
cannot in anyway be construed to compel the applicant to only elect
to enforce the agreement by asking for
an order for adherence to the
default procedure in the agreement only.
[23] Furthermore, in
the particulars of claim the applicant averred that it cancelled the
agreement alternatively it was cancelling
the contract therein. The
issue of the applicant not first cancelling the agreement with the
consumer cannot arise under these
circumstances.
[24] During the
hearing of the application Mr Kunju on behalf of the applicant
submitted that the point raised on behalf of the
respondent does not
constitute a triable defence. The applicant elected to cancel the
agreement, which is an option availed to
it by the principles of the
law of contract. The respondent was given due notice of cancellation.
[25] According to
Christie’s Law of Contract in South Africa, 5
th
edition at page 538, material breach of an essential term and
repudiation ail entitle the other party to cancel the contract. The
act of cancellation may be performed by the innocent party himself,
without the assistance of the court, in which case, technically,
a
subsequent court order would simply confirm the cancellation that he
had already carried out, but a claim for cancellation (that
is,
asking the court to cancel) is normal and the desirability of having
an order of cancellation so that the status of the contract
is not in
doubt is well recognised.
[26] At page 539,
the said authors state that notice of cancellation must be clear and
unequivocal, but need not correctly identify
the cause of action. It
takes effect from the time it is communicated to the other party. If
it has not previously been communicated,
it takes effect from service
of summons or notice of motion, unless the contract prescribes a
particular procedure, such as notice,
and notice of cancellation may
be implied from the service of a summons claiming damages.
[27]
The innocent party’s choice is subject to what is usually known
as the doctrine of election. Enforcement and cancellation
being
inconsistent with each other or mutually exclusive the innocent party
must make his election between them. The doctrine is
stated by
Watermeyer AJ in
Segal v Mazzur
1920 CPD 634
, 644
- 645
“
Now,
when an event occurs which entitles one party to a contract to refuse
to carry out his part of the contract, that party has
a choice of two
courses.. He can either elect to take advantage of the event or he
can elect not to do
so.
He
is entitled to a reasonable time in which to make up his mind, but
when once he has made his election he is bound by that election
and
cannot afterwards change his mind. Whether he has made an election
one way or the other is a question of fact to be decided
by evidence.
If
}
with the knowledge of the breach, he does an unequivocal act which
necessarily implies that he has made his election one way, he
will be
held to have made his election that way; this is, however not a rule
of law, but a necessary inference of fact from his
conduct:
See
Croft v Lumley
[1858] EngR 626
;
(1858) 6 HLC 672
at page 705
Per Bramwell
B; Angehrn and Piel v Federal Cold Storage
Co.
Ltd
1908 TS 761
at
page 786 per Bristowe J”
[28]
In
Shingadia v Shingadla 1966 (3) SA24R at 25R-
26A
the
court held that summary judgment should not be granted when any real
difficulty as to a matter of law arises, but if the court
is
satisfied that the defence is unarguable, judgment will be granted.
This was put differently and concisely in
Joob
Joob Investments (Pty) Ltd vs Stocks Mavundla Zek Joint Venture 2009
(5) (1) SCA
at
page
11,
courts
have over time been trusted to ensure that a defendant with a triable
issue is not shut out.
[29]
I am in agreement with Mr Kunju’s submission that the legal
defence raised is not triable. In
M ah a raj v
Barclays National Bank Limited 1976(1) SA 418
at
426
it
was held that
on
top of the examination of whether there has been a disclosure by the
defendant of the nature and grounds of his defence and facts
upon
which it is founded, the further consideration is that such defence
must be both
bona fide
and
good in law. In the exercise of my discretion on whether to grant the
summary judgment or not, I have also taken into account
that the
amount of arrears due by the respondent as reflected in the
certificate of balance. In January there were more than R47
000.00,
which is equivalent to more or less a period of five months. The
respondent has not even addressed this issue or indicated
how he
intends to bring the account up to date.
[30]
In my view, the defence raised by the respondent is not
bona
fide
and
summary judgment ought to be granted.
In the result,
1. The order
confirming the termination of the agreement is hereby made.
2. The respondent is
hereby ordered to return the 2013 ISUZU KB 300 CREW CAB LX with
engine number 4JJ1KY9683 and vehicle identification
number
ADMURCER7C4652260 to the applicant.
3. The respondent is
hereby ordered to pay the costs.
B MAJIKI
JUDGE OF THE HIGH
COURT
Counsel for the
plaintiff: Mr V. Kunju
Instructed by:
Messrs K B Mabanga Incorporated
No. 14 Park Road
MTHATHA
Counsel for the
defendant: Mrs Nyobole
Instructed by: L P
Mvulana Attorneys
Office No. 330-332,
3
rd
Floor
ECDC Building
MTHATHA