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[2014] ZAGPPHC 756
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Land and Agricultural Development Bank of South Africa v Ryton Estates (Pty) Ltd and Others (33482/2010 , 42140/2010, 42146/2010, 45190/2010, 45192/2010) [2014] ZAGPPHC 756 (10 April 2014)
IN
THE HIGH COURT OF SOUTH AFRICA
/ES
(
GAUTENG
DIVISION, PRETORIA
)
CASE
NO: 33482/2010
42140/2010
42146/2010
45190/2010
45192/2010
DATE:
10/4/2014
IN
THE MATTER BETWEEN
THE
LAND AND AGRICULTURAL
DEVELOPMENT
BANK OF SOUTH
AFRICA
.................................................................
APPELLANT
(Defendant
in the court
a quo
)
AND
RYTON
ESTATES (PTY)
LTD
...................................................................................
1
ST
RESPONDENT
TWIGGY
TIMBERS (PTY)
LTD
.............................................................................
2
ND
RESPONDENT
BORK
ESTATES (PTY)
LTD
....................................................................................
3
RD
RESPONDENT
JAN
FREDERIK NELL
BRITS
.................................................................................
4
TH
RESPONDENT
GERHARDUS
LE
ROUX
.........................................................................................
5
TH
RESPONDENT
UITGEZOCHT
INVESTMENTS
CC
........................................................................
6
TH
RESPONDENT
GIDEON
WILHELMUS
BÜHRMANN
....................................................................
7
TH
RESPONDENT
(1
st
to 7
th
Plaintiffs in the court
a quo
)
JUDGMENT
PRINSLOO,
J
[1]
0n 9 March 2012 I delivered a judgment awarding certain amounts, with
costs orders, in favour of the respondents (then as plaintiffs
before
me) against the appellant, then the defendant.
[2]
The detailed judgment or so-called "test case", is the one
under case no 33482/10 featuring the first three respondents
as
plaintiffs. In the remaining judgments, featuring the other
respondents as plaintiffs, I made certain awards following
the
approach adopted in the "test case".
[3]
0n 30 May 2012 I granted leave to the appellant to appeal to the
Supreme Court of Appeal ("the SCA") on a single issue
namely whether or not the appellant, which had lent and advanced
monies to the respondent farmers over many years in a number of
different transactions, had been entitled to charge interest on
unpaid interest which was due and payable by the respondents.
The
relevant portion of the order which I made on 30 May 2012 reads as
follows:
"Dat
verlof aan die applikant toegestaan word om na die Hoogste Hof van
Appèl te appelleer teen die beslissing dat die
applikant nie
geregtig was om rente op agterstallige rente te hef nie."
[4]
The appeal, reported as
Land & Agricultural Development Bank
of South Africa v Ryton Estates (Pty) Ltd & others
2013 6 SA
319
(SCA) was upheld. At 326C the learned Judge of Appeal
said the following:
"This
judgment therefore lays down that in the absence of agreement to the
contrary,
mora
interest at the prescribed rate is payable on
unpaid interest which is due and payable."
[5]
The result of the appeal dictated that the awards I made during the
trial on the strength of calculations by experts on both
sides had to
be adjusted, firstly to accommodate the
mora
interest on
unpaid interest component, and, secondly, to cater for those
instances where the interest charged by the appellant
("the Land
Bank rates") exceeded the
mora
rate prescribed in terms
of the
Prescribed Rate of Interest Act, no 55 of 1975
.
Efforts
by the parties to recalculate acceptable amounts were unsuccessful,
and they could not reach agreement. The SCA then
decided to
refer the matter back to me.
[6]
The learned Judge of Appeal puts it as follows at 326E G:
"It
follows that the appeal must succeed. However, although the
Land Bank rates applied in the appellant's aforesaid
recalculations
were mostly lower than the prescribed rate, they did during some
periods exceed the prescribed rate. The appellant
accepts that
it is only entitled to
mora
interest calculated at the lower
of the applicable Land Bank rate and the prescribed rate from time to
time. At the hearing
of the appeal this court requested the
appellant to recalculate all the loans
in accordance with this
approach
, on the understanding that the parties could reach
agreement in this regard. The parties were however unable to
reach such
agreement. In the result the matter should be
referred back to the court
a quo
for determination of the
amounts, if any, payable by the appellant
in accordance with this
judgment
. Since it accepts liability in principle for
repayment in all the matters, save for Uitgezocht and Bührmann,
the appellant
did not appeal against the orders of the court
a quo
in respect of interest on judgment debts and costs. In
consequence these orders must stand." (Emphasis added.)
[7]
In my view, the phrase, "in accordance with this approach,"
clearly has to do with the finding that the appellant
is only
entitled to
mora
interest calculated at the lower of the
applicable Land Bank rate and the prescribed rate from time to time.
Similarly,
the phrase "in accordance with this judgment" has to do
with the main principle laid down, namely that, in
the absence of
agreement to the contrary,
mora
interest at the prescribed
rate is payable on unpaid interest which is due and payable.
Nothing more.
Identifying
the dispute between the parties
[8]
Because the parties could not agree on the appropriate recalculated
awards to be made, the "rehearing" came before
me on an
opposed basis a few days ago, on 31 March 2014. As they
did during the trial, Mr Beckerling SC,
assisted by
Mr Sawyer, appeared for the appellant and Mr Arnoldi SC
for the respondents.
[9]
In my judgment after the trial, I said the following in paragraph 118
thereof:
"Ander
begrippe wat gereeld hulle verskyning maak in die stukke is 'Nominal
Annual Compounded Monthly' ('NACM') en 'Nominal
Annual Compounded
Annually' ('NACA').
Ek
het reeds vroeër daarop gewys dat die verweerder in Junie of
Julie 1999 begin het om rente maandeliks te kapitaliseer ('NACM')
waar dit voorheen jaarliks gekapitaliseer is ('NACA'). Dit is
gemene saak dat die maandelikse kapitalisering nadelig inwerk
op die
boer of lener se posisie, met die gevolg dat die rentekoers (destyds
van ongeveer 19%) met twee punte (na ongeveer 17%)
verminder is om
die nadelige effek van die maandelikse kapitalisering teen te werk."
[10]
The experts engaged throughout by the respective parties to do
calculations and recalculations as the demand occurred, were
Mr Strydom ("Strydom") for the appellant and Mr
Whelpton ("Whelpton") for the respondents.
[11]
0ne of the issues before me during the trial, which I decided against
the respondents, was whether or not Whelpton was entitled,
for
purposes of his calculations, to consistently apply the original
margin between the prevailing prime rate and the Land Bank
rate
agreed upon between the appellant and the borrower, even where the
Land Bank rate varied from time to time in terms of the
contract
between the parties. For example, the initial margin agreed
upon between the appellant and the first three respondents
was
3,05%. This approach, of consistently maintaining the margin,
became known, in the trial before me, as "die treinspoor
benadering". In my judgment, I held that there
was no basis for this approach, and the result was, for obvious
reasons, a limiting effect on the amount initially claimed.
[12]
In an effort to arrive at a realistic result, I requested a
calculation involving the experts applying the actual rates applied
by the appellant at the relevant time (and not the rate reduced by
the favourable margin less than prime because it is common cause,
that, especially during later stages, the appellant's rates at times
equalled prime and even exceeded that) and my request to counsel
was
recorded in the following terms:
"
HOF
:
Het mnr Whelpton ooit 'n berekening gemaak
op die ware koerse wat
toegepas is
, soos wat mnr Strydom ... (tussenbeide)
MNR
BECKERLING
: Hy het mnr Strydom se koers bevestig,
mnr Strydom se berekenings bevestig.
HOF
:
Nee ek verstaan dit maar het mnr Whelpton ooit 'n berekening gemaak
wat afwyk van die treinspoor?
MNR
BECKERLING
: Nee, edele, hy het nooit 'n treinspoor ...
(tussenbeide)
HOF
:
En op sy enkelvoudige rente basis met aparte kolomme en so meer soos
wat hy getuig het, aan die hand van die
ware koerse wat toegepas
is
, (tussenbeide)
MNR
BECKERLING
: Nee, edele.
HOF
:
'n Berekening gedoen?
MNR
BECKERLING
: Nee, edele. Mnr Whelpton het net sy
berekening is treinspoor, met ander woorde jy begin by daardie die
rente marge
wat hy by aanvang bepaal en dan soos 'n treinspoor soos
prima facie
op en af gaan bereken hy hom. Dit is die een
inset. Sy ander inset is hy sê ek kapitaliseer nooit
rente nie.
Met ander woorde asof die ou my nou betaal en of hy
my nie betaal nie, ek werk net uit op kapitaal.
HOF
:
Ek verstaan daardie punte en ons gaan nog baie daaroor praat wanneer
ons betoog Maandag, maar ek stel belang daarin en ek
het dit op
kamers ook aan u en mnr Arnoldi genoem dat in geval dit vir my van
belang blyk te wees, wanneer ek hierdie uitspraak
moet oorweeg in 'n
beraming deur mnr Whelpton as hy nog beskikbaar is op sy begrip van
enkelvoudige rente maar waar hy
die ware koerse wat inderdaad
gevra is
soos ons sien in aanhangsel A tot die deskundiges se
notule, gebruik en ek het gewonder of mnr Arnoldi dit kan probeer
reël
as mnr Whelpton nog beskikbaar is.
MNR
ARNOLDI
: Dit gaan nie 'n probleem wees nie.
MNR
BECKERLING
: U edele ek kan voorstel miskien mnr Strydom kan
dit ook doen. Hulle kan, die twee van hulle kan bymekaar kom.
HOF
:
Dit sal nog beter wees dan weet ons wat hulle – of hulle op 'n
gesamentlike syfer kan uitkom." (Emphasis
added.)
[13]
Having found that the "treinspoor" approach was wrong, I
came to the conclusion, and I am still of the same view,
that the
correct approach would be to recalculate on the basis of the true
rates applied by the appellant. I assumed
that Whelpton
would work on his simple interest basis and Strydom on some form of
compound interest basis.
[14]
The result produced by the experts was the "oornag berekening"
to be found in volume 3, p306 of the record.
What is of
relevance for present purposes, is column 2 (Strydom's
calculation involving "partial compounding") and
column 3
(Whelpton's calculation, applying the true Land Bank rates but on a
simple interest basis).
[15]
The figures which I adopted, after much agonising and questioning
about the thorny issue of compound interest versus simple
interest,
for purposes of my judgments in all the cases, were those in
column 3, less payments which had already been made
by the
appellant following the concession about various irregularities
described in the judgment.
[16]
It is common cause that the results contained in columns 2 and 3 are
products of correct calculations by the two experts, barring,
of
course, their different assumptions on which they worked.
[17]
0f significance, in my view, is the fact that the true rates applied
by the appellant (Land Bank), and as foreshadowed in the
"oornag
berekening" are those reflected in annexure "A" to be
found in the record volume 3 p308 309.
This is common
cause between the parties.
What
is even more significant, in my view, for present purposes, is that
it is common cause that these rates are NACM rates and
not NACA
rates.
Moreover,
what is also common cause is that Whelpton, correctly in my view,
performed his calculations, resulting in the figures
contained in
column 3, on the basis of these NACM rates but Strydom, for some
reason, which remains unexplained, conducted
his calculations, for
purposes of column 2, on the basis of NACA rates.
This
development took everybody, including the appellant's own counsel, by
surprise because all concerned were under the impression
that the
only difference between the results in column 2 and those in column 3
arises from the fact that Strydom made provision
for interest on
arrear interest and Whelpton did not.
The
fact that the appellant's counsel did not know that Strydom had
adopted the NACA rates is illustrated in the following exchanges
between the appellant's counsel and Strydom while the latter was
giving evidence (record volume 6 p683):
"Edele
die som wat laasnag vir u gedoen is, is op hierdie manier gedoen.
Die Whelpton(?) manier.
Ja
dit is in terme van my versoek gister? --- Ja edele.
MNR
BECKERLING
: En die enigste verskil tussen hierdie som en
dit is op bl 62(D1) en 62(a) in die ry 3, in ry 2 is die feit
dat mnr
Whelpton nie rente bereken het op enige agterstallige en
uitstaande rente nie. Dit is die enigste verskil tussen u som
en
die een wat sy edele aangevra het? --- Ja edele.
HOF
:
Dit is nou die derde kolom op 62(a)?
MNR
BECKERLING
: Dit is die derde ry, is die een wat u edele
aangevra het en die tweede rytjie is mnr Strydom se som. Die
enigste verskil
tussen 2 en 3 is dat 3 nie enige rente op uitstaande
agterstallige rente in ag neem nie. Dit is die enigste verskil
..."
It
is common cause that Strydom's decision to employ the NACA rates led
to a bigger discrepancy (lower rewards for the respondents)
between
Strydom's figures and Whelpton's figures. I will revert to
this state of confusion at a later stage.
[18]
After the SCA had decided the only issue before it, and the only
issue in respect of which leave to appeal was sought and granted,
and
the only issue mentioned in the notice of appeal, namely "that
in the absence of agreement to the contrary,
mora
interest at
the prescribed rate is payable on unpaid interest which is due and
payable" (the reported judgment at 326C), the
learned Judges of
Appeal requested the parties to recalculate all the loans "in
accordance with this approach" which,
as I have explained,
caters for the fact that the Land Bank rates applied at times
exceeded the prescribed interest rate, and,
"in accordance with
this judgment", which, as I explained, only has a bearing on the
finding of the SCA on the only issue
before it,
supra
.
[19]
Both parties instructed their experts, Whelpton and Strydom, to
recalculate, to provide for
mora
interest on overdue interest
and also to take into account instances where the Land Bank rate
exceeded the prescribed rate.
[20]
Whelpton, again applying the NACM rates as he should have, delivered
a bundle of calculations to be found at pp82 to 118 of
the trial
bundle compiled for purposes of the "rehearing".
Understandably,
the awards which I had made were significantly reduced because of the
finding of the SCA about
mora
interest on unpaid interest.
For example, the award of R3 265 054,91 to the first three
respondents now has to
be reduced to an amount of R2 237 853,49.
I
add that, in a few instances in respect of the smaller claims, the
replacement awards proposed by Whelpton are slightly higher
than
those I awarded and the reason for this, so I was informed by
counsel, is the fact that in those instances the farmer (the
particular respondent/plaintiff) paid the debt in advance so that he
must now also get the benefit which arises from that.
[21]
I return briefly to the confusion,
supra
, about the basis on
which Strydom had performed his calculations. It turned out, as
I have mentioned, that Strydom, after
all, employed the NACA rates
and not the NACM rates as requested.
In
its notice of appeal, the appellant proposes certain figures based on
Strydom's calculation, already making provision for
mora
interest on overdue interest, and, as pointed out, based on the NACA
rate. I was informed that during the hearing before
the
SCA, counsel for the respondents, answering a query from his
opponent, after the recalculation had been ordered, indicated
that,
in principle, he had no difficulties with the figures proposed by the
appellant, still believing that the only difference
between the two
experts was the
mora
interest factor. It is clear,
from the exchanges between the appellant's counsel and Strydom,
supra
, that the appellant's counsel was also under the
impression that that was the situation. Consequently, there was
a mutual
misunderstanding of the true state of affairs.
From
my debate, during the rehearing, with counsel for the appellant, it
appears that the appellant is now relying on the alleged
"concession"
made by counsel for the respondents before the SCA and the appellant
appears to adopt the stance that the
respondents are bound by the
figures proposed by the appellant barring an adjustment in respect of
the instances where the Land
Bank rates exceeded the prescribed
rates.
This
attitude is misplaced. It is clear that the respondents'
counsel was, quite understandably, under a
bona fide
misapprehension. Moreover, once the experts got together after
the parties were ordered to recalculate, and it emerged for
the first
time that the appellant was insisting that NACA should be the basis
for calculation, the respondents sent comprehensive
supplementary
heads of argument to the SCA explaining their attitude, and
illustrating why NACM (applied in terms of the "oornag
berekening") ought to be the basis for calculation.
In addition, attached to these supplementary heads of argument
was a bundle of correspondence exchanged between the parties
reflecting details of discussions about these two methods of
calculation
following the instruction to recalculate.
Included
in the bundle of correspondence is a letter from Whelpton to the
respondents' attorney dated 27 May 2013, part of which
reads as
follows:
"The
overnight calculations were done on the basis of simple interest at
the actual rates applied by the Land Bank on that
account (NACM
rate).
The
recalculations by Land Bank in terms of my understanding of the
instructions of Supreme Court of Appeal at the hearing of the
appeal
on 20 May 2013 are based on incorrect assumptions.
Land
Bank have calculated interest on the NACA rate in contrast with the
overnight calculations which were calculated at the NACM
rate."
0n
3 June 2013, Whelpton also wrote the following letter to the
respondents' attorney:
"I
had a discussion with Pieter Strydom today regarding the
recalculations.
We
are in agreement that the overnight calculation done for the North
Gauteng High Court in case no 33482/2010 was in fact done
on the NACM
rate.
Your
instructions were to use the same calculation (NACM rate) and
calculate interest on unpaid interest from the instalment date
where
such interest was due, to date of payment of the unpaid interest, at
the rate of 15,5% or the rate applied by the Land Bank
on the
account, whichever is the lowest.
According
to Mr Strydom his instructions are to calculate interest on the NACA
rate but with the rate exceptions for interest on
arrear interest as
indicated above. This is the same calculations attached to
their pleas, with only the rate adjustment
of the lowest of 15,5% or
Land Bank rate on arrear interest amounts.
We
agree on the amounts calculated on both sets of instructions.
Therefore, if he uses the NACM rate, our calculated amounts
correspond."
With
all this having been placed before the SCA, before that court made
its order, the apparent suggestion on behalf of the appellants,
if I
understood it correctly, that the SCA explicitly referred the figures
submitted by the appellant in its notice of appeal for
recalculation
(thereby, in effect, preferring the NACA basis to the NACM basis) is
misplaced and wrong: the issue of NACA versus
NACM never came before
the SCA, neither was it mentioned in the judgment and neither could
it have been, because it did not form
part of the narrow issue
appealed against. I have illustrated what is meant, in my
view, with the expressions "in
accordance with this approach"
and "in accordance with this judgment" – the reported
judgment at 326F G.
Paragraph
3 of the order of the SCA simply reads as follows:
"All
the matters are referred back to the High Court for determination of
the amounts payable by the appellant in accordance
with this judgment
and of costs, where applicable."
[22]
It is further common cause that:
1.
the recalculations by Whelpton and Strydom are correct, on the
assumptions they applied; and
2.
when Strydom does a recalculation on the assumptions applied by
Whelpton (including NACM) he arrives at the same result.
[23]
I add that, at the commencement of the rehearing before me, the
appellant made submissions on the strength of a substantive
application (launched a few days earlier) asking for leave to the
appellant to re open its case and to cause Strydom again
to give
evidence. The declared aim of this exercise was an attempt by
Strydom to persuade me to opt for the NACA option as
opposed to the
NACM option, as I did when delivering the judgment. The
application was opposed. The effect, if the
new evidence were
to be received and adopted, would have been that I would have been
called upon to amend my own judgment.
This I cannot do, if only
because I am
functus officio
. In any event, I stand by
my decision that the basis for the calculation ought to be the NACM
rates, being the true rates
debited by the appellant and which
decision, in any event, did not form the subject of the appeal before
the SCA.
[24]
After an adjournment during the rehearing, I was informed by counsel
that the application to re open the case was being
abandoned by
the appellant.
The
order and costs
[25]
In all the circumstances, I am satisfied that the calculations by
Whelpton, making due provision for the directives laid down
by the
SCA, and using the NACM rate, are to be preferred ahead of the
Strydom calculations based on NACA.
[26]
The costs of the rehearing should follow the result.
[27]
The costs of the abortive application to re open the appellant's
case should also follow the result.
[28]
During the hearing, counsel suggested that I need not revisit each of
the separate judgments which I handed down so that I
will only order
the replacement figures in respect of each of those cases.
I
add that in one instance, the claim of Brits, the third of three
awards made to him by me (record p827) in the amount of R46 476,62,
falls away altogether because, so I was informed by counsel,
Whelpton's recalculations indicated that this claim fell away because
of the effect of the judgment of the SCA.
[29]
I make the following order:
1.
The case of Ryton Estates (Pty) Ltd & two others v Land Bank,
case no 33482/2010:
1.1
the award of R3 265 054,91 is reduced and replaced with the amount of
R2 237 853,49;
1.2
the existing orders in respect of interest,
mora
date and
costs, including the costs of two counsel and the qualifying and
other fees of the experts Whelpton and Roodt are re-affirmed.
2.
The case of Gerhardus le Roux v Land Bank, case no 42140/2010:
2.1
the award of R9 418,90 is increased and replaced with an amount of
R10 298,96;
2.2
the award of R2 480,41 is replaced with an amount of R2 563,86;
2.3
the award of R19 996,36 is replaced with an amount of R23 139,74;
2.4
the award in respect of interest and costs, including the costs of
two counsel and the qualifying and other expenses of the
experts
Roodt and Whelpton are reaffirmed.
3.
The case of Jan Frederik Nell Brits v Land Bank, case no 42146/2010:
3.1
the award of R98 594,92 is reduced and replaced with an award of
R58 853,21;
3.2
the award of R53 705,33 is replaced with the reduced figure of
R52 711,85;
3.3
the award of R46 476,62 falls away;
3.4
the orders in respect of interest and costs, including the costs of
two counsel and the qualifying and other expenses of the
experts
Whelpton and Roodt are reaffirmed.
4.
The case of Gideon Wilhelmus Bührmann v Land Bank, case no
45190/2010:
4.1
the award of R17 946,69 is reduced and replaced with the amount of
R13 592,49;
4.2
the award relating to costs including the costs of two counsel and
the qualifying and other expenses of the expert witnesses
Roodt and
Whelpton is reaffirmed.
5.
The case of Uitgezocht Investments Bk and Gideon Wilhelmus Bührmann
v Land Bank, case no 45192/2010:
5.1
the award of R87 071,41 is increased and replaced with the amount of
R101 874,67;
5.2
the awards as to interest and costs including the costs of two
counsel and the qualifying and other expenses of the experts
Roodt
and Whelpton are reaffirmed.
6.
The appellant is ordered to pay the costs of the rehearing which will
include:
6.1
the costs of the application to lead further evidence;
6.2
the costs of senior counsel;
6.3
the costs of the expert Whelpton, who is declared a necessary
witness, and which costs will include preparation, consultations,
discussions with the opposing expert, qualifying fees, reservation
fees and attendance to court proceedings, including the proceedings
at the SCA.
W
R C PRINSLOO
JUDGE
OF THE GAUTENG DIVISION, PRETORIA
33482-2010
HEARD
ON: 31 MARCH 2014
FOR
THE APPELLANT: T W BECKERLING SC ASSISTED BY M J SAWYER
INSTRUCTED
BY: EDWARD NATHAN SONNENBERGS INC
FOR
THE RESPONDENTS: A F ARNOLDI SC
INSTRUCTED
BY: SCHALK BOTHA ATTORNEY