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[2014] ZAGPPHC 379
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Destination Capital (Pty) Ltd v Xekalos and Others (45993/2013) [2014] ZAGPPHC 379 (16 May 2014)
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IN THE
GAUTENG HIGH COURT. PRETORIA
(REPUBLIC
OF SOUTH AFRICA)
Case No.: 45993/13
Date: 16 May 2014
Not Reportable
Not of interest to
other judges
In
the matter between:
DESTINATION
CAPITAL (PTY) LTD
…………………………………..………………….
Applicant
(Registration
number 2009/024384/07)
and
MICHALIS
XEKALOS
………....…………………………………………………….
First
Respondent
(Identity
Number 7[…])
AND
EIGHT OTHERS
JUDGMENT
KEIGHTLEY
AJ
[1]
This is an application for judgment to
be entered against the third and fifth respondents for payment of the
balance outstanding
on a loan in the amount of R6 361 519. 00
together with interest and costs. In addition, the applicant seeks to
declare fifth respondent’s
immovable properties executable.
[2]
Applicant's cause of action is a
suretyship agreement that third and fifth respondent, together with
seven other respondents, signed
in favour of the applica
nt for
the debts o
f an entity called Flavours of Life
Fanchising CC t/a Rhapsodies Franchising.
[3]
It is common cause that the principal
debtor has failed to pay the amount owing under the loan agreement to
which the suretyship
agreement is linked.
[4]
It is also common cause that judgment
has been entered against all but the third to fifth respondents. Both
of these latter respondents
filed notices of opposition in response
to the application for judgment against them. In addition they filed
answering affidavits,
to which the applicant replied.
[5]
By the time this matte came before the
court for hearing only the third respondent appeared at court to
advance argument in support
of his opposition; there was no
appearance by the fifth respondent. In the circumstances the
applicant seeks judgment by default
in respect of the fifth
respondent. I deal first with the defences raised by the third
respondent, before considering the question
of judgment by default
against the fifth respondent.
THIRD
RESPONDENT
[6]
The
third respondent initially raised three defences. At the hearing of
the matter third respondent confirmed that he was abandoning
his
defence based on the National Credit Act.
[1]
The third respondent's remaining defences were the following:
[24.1] First, he
contended that there was no resolution from the applicant authorising
the deponent, Mr Lebos, to depose to the
founding affidavit. I refer
to this as “the authority” defence.
[24.2] In the
second place, the third respondent averred that he had signed the
suretyship agreement as a witness and that he had
no idea that he had
signed as a surety. I refer to this as “the signature”
defence.
[7]
Dealing with the authority defence, in his answering affidavit, the
third respondent states this defence in the following terms:
“
Nowhere
in the applicant’s papers is there any resolution by the
applicant that authorise (sic) the deponent to depose to
the
applicant's founding affidavit on behalf of the applicant. The
deponent's : uthority to depose to the Founding Affidavit is
therefore not established and thus denied.”
[8]
At the hearing of the matter counsel for
the third respondent sought to argue that this passage from the
answering affidavit did
not amount to a challenge to the authority of
the deponent to depose to the affidavit on behalf of the applicant.
He submitted
that it in fact amounted to a challenge to the authority
to institute the application itself.
[9]
It seems clear to me from the extract
from the answering affidavit reproduced above that the attack was
directed squarely at the
alleged lack of authority on the part of Mr
Lebos to depose to the founding affidavit on behalf of the applicant.
In this regard
the Supreme Court of Appeal has held that:
“
The
deponent to an affidavit in motion proceedings need not be authorised
by the party concerned to depose to the affidavit."
[2]
[10]
On the basis of this authority there is
no merit in the challenge to Mr Lebos's authority to depose to the
founding affidavit. If
the third respondent wished to dispute that
the applicant had authorised the institution of the application, then
this should have
been stated clearly in his answering affidavit. He
did not do so.
[11]
In any event, and even assuming that the
answering affidavit can be read so as to give rise the to the
challenge now made by the
third respondent, the applicant attached to
its replying affidavit an extract from a resolution of the directors
of the applicant
adopted on 25 September 2013. The resolution, inter
alia, confirmed Mr Lebos's authorisation to sign all documentation
and do all
things necessary to pursue the application against, among
others, the third respondent. Counsel for the third respondent
pointed
out that the resolution was only adopted after the
application had been instituted. On this basis he submitted that
there was no
authority to institute the proceedings at the time that
the application was launched. This submission overlooks the fact that
in
paragraph 4 of the resolution it is expressly recorded that the
applicant ratifies the ac;.ons already taken by Mr Lebos and the
attorneys of record. In the circumstances, the fact that the
resolution was adopted after the application was instituted is of
no
material consequence.
[12]
Counsel for the third respondent also
sought to argue that the attached resolution was only signed by one
director, Mr Lebos, whereas
the applicant has three directors. This,
he said, indicated that the resolution had not been properly adopted
and did not constitute
competent authorisation for the institution of
the proceedings by the applicant.
[13]
This submission does rot hold water. It
is correct that the signature of one director, Mr Lebos, appears on
the extract attached
to the applicant’s replying affidavit.
However, the signature appears to have been appended for purposes of
certifying that
the resolution set out in the annexure is a true
extract in respect of the original resolution. In other words, the
original resolution
is not before court. In addition, there is no
evidence indicating how many directors adopted the resolution, nor
how many directors
were required by the company to adopt a resolution
of this nature. In the circumstances, there is no basis on which the
competence
of the resolution can properly be challenged on the
grounds suggested by the third respondent.
[14]
For all of these reasons I find that
there is no merit in the authority defence raised by the third
respondent.
[15]
Turning to this signature defence, the
third respondent contends that he was misled by the first respondent
into signing the document
as a surety and coprincipal debtor. He
avers that the first respondent told him that he would be signing the
document as a
witness. He avers in his answering affidavit that he
was no more than an employee of Flavours of Life Franchising CC at
the time
and that he did no have sufficient capital to stand as
surety. He says that he did not read the body of the agreement before
appending
his signature to it as both the first respondent and a
woman who was representing the applicant at the time of signature
assured
him that he was required only to witness the document.
According to the third respondent he would never have signed the
document
had he known that he was binding himself thereby as a surety
and co-principal debtor.
[16]
If one has regard to the suretyship
agreement itself it is clear that the third respondent's name is
inserted in the very second
line of the first paragraph under the
heading, “SURETYSHIP”. His name is printed in capital
letters and in bold type.
The third respondent's initials appear on
this first page. They also appear on each page thereafter. Even if
the third respondent
was oblivious to his name appearing under this
heading on the first page of the agreement, his signature at the end
of the agreement
is placed above his name printed in capital letters
and in bold type and, critically, alongside his name, the words “the
surety”, appear in bold type. In addition, the third respondent
placed his signature on another page which is attached to
the
agreement. By his signature on this additional page the third
respondent certified that his attention had been drawn to and
that he
had read clause 27 of the agreement, which he understood and
accepted. Once again his signature is placed above his name
in
capital letters and bold type, and above the words “the surety”
in bold type. Clause 27 of the agreement deals with
the requisite
formalities of the suretyship agreement and in clause 27 the sureties
acknowledge that the listed formalities were
complied with.
[17]
The third respondent fails to explain
how he missed the fact that he was described as “the surety”
directly below the
spot where he appended his signature, not once,
but twice. In addition, in the applicant’s replying affidavit
both Mr Lebos
and the applicant's attorney, Ms Watson, who were
present when the surety should agreement was signed, deny that Ms
Watson advised
the third respondent that he was signing as a witness.
[18]
Counsel for the third respondent
submitted to the court that the third respondent’s signature
defence created a material dispute
of fact that warranted a referral
to oral evidence. The principles governing the power of the court to
refer a matter to oral evidence
are well established in our law.
The court has a wide
discretion in this regard.
[3]
It is required in each case to examine the alleged dispute of fact
and to determine whether in truth there is a real dispute of
fact
that cannot be satisfactorily determined without the aid of oral
evidence.
[4]
If this is not done a respondent might be able to raise a fictitious
dispute of fact and thus to delay the hearing of the matter
to the
prejudice of the applicant.
[5]
Insubstantial allegations are insufficient to raise the kind of
dispute that should be referred to oral evidence.
[6]
If the court is satisfied that there is no genuine of fact or that a
respondent’s allegations are so far-fetched or so clearly
untenable or palpably implausible as to warrant their rejection on
the papers, the court will be justified in deciding the dispute
on
the papers without a referral to oral evidence.
[7]
[19] I am satisfied
that on the facts arising in this case the third respondent's version
that he was misled by, inter alia, the
applicant’s attorney,
into unwittingly signing the suretyship agreement as a surety may
properly be rejected on the papers.
The facts set out above
demonstrate the inherent implausibility of the third respondent’s
version in this regard. Accordingly,
I am satisfied that no genuine
dispute of fact exists in respect of this issue to warrant a referral
to oral evidence. In my view
the papers before court indicate that
the third respondent knew or, at the very least, ought reasonably
to
have known that he was appending his signature as “the surety”.
In the circumstances he is bound by his signature,
and the applicant
is entitled to enforce the terms of the suretyship agreement against
him. For these reasons I conclude that there
is no merit in the third
respondent’s signature defence.
[20]
Accordingly I find that the applicant is
entitled to judgment against the third respondent.
FIFTH
RESPONDENT
[21]
As far as the fifth respondent is
concerned, I am likewise satisfied that the applicant is entitled to
judgment against him. There
is no merit in his defence that he did
not read th^ terms of the suretyship agreement before signing them
and, for this reason,
that he mistakenly believed that the terms were
different. I am satisfied that the applicant has demonstrated that
there is no
factual or legal merit in this defence.
[22]
Furthermore, his defence that he was
placed in an unfair position because his home language is not English
also falls to be rejected.
Although the fifth respondent asserts
rather vaguely that he is “of Austrian descent”, the
facts show that he has been
active as a businessman in South Africa
for at least seventeen years. His answering affidavit was written in
English and he appears
to have deposed to it without the necessity of
translation. This defence is patently unmeritorious. In my view, the
fifth respondent
has no defence to the applicant's claim against him.
[23] The applicant
seeks to have two immovable properties owned by the fifth respondent
declared to be specially executable. In
addition to fifth respondent
signing as a surety under the suretyship agreement, he agreed to the
registration of a surety bond
in favour of the applicant against each
of these properties. It is common cause that neither of these
properties is the fifth respondent’s
primary residence. They
appear to have been bought by him as investment prop rties. In the
circumstances, there is no reason why
the applicant should not be
entitled to exercise its rights under the surety bonds in respect of
these properties.
[24] In the
circumstances I make the following order:
[24.1] Third and
fifth respondents are liable, jointly and severally with the
remaining respondents, any one or more paying the
others to be
absolved, to pay to the applicant:
[24.1.1]
The sum of R 6 361 519. 00;
[24.1.2]
Interest thereon at the rate of 8% per month, compounded
monthly from 31st of May 2013 to date of payment, both days
inclusive;
[24.1.3] Costs of
suit on the scale as between attorney and client.
[24.2] The following
property is declared specially executable:
[24.2.1] Section No.
25 as shown and more fully described on sectional plan No SS 346/91
in the scheme known as The Courtyard in
respect of the land and
building or buildings situate at Sandown Township, Local Authority:
City of Johannesburg of which section
the floor area, according to
the said sectional plan is 37 (Thirty Seven) square metres in extent:
and
[24.2.2] An
undivided share in the common property in the scheme apportioned to
the said section in accordance with the participation
quota as
endorsed on the sectional plan: and
[24.2.3]
An exclusive use area described as parking bay P13 measuring 10 (ten)
square metres being as such part of the common property
comprising
the land and the scheme known as the courtyard in respect of the land
and building or buildings situated at Sandown
Township, Local
Authority: City of Johannesburg as shown and more fully described on
sectional plan No SS 346/91.
[24.3] The following
property is declared specially executable:
[24.3.1]
Section No. 62 as shown and more fully described on sectional
plan No SS 346/91 in the scheme known as The Courtyard in respect of
the land and building or buildings situate at Sandown Township, Local
Authority: City of Johannesburg of which section the floor
area,
according to the said sectional plan is 37 (Thirty Seven) square
metres in extent: and
[24.3.2] An
undivided share in the common property in the scheme apportioned to
the said section in accordance with the participation
quota as
endorsed on the s ctional plan: and
[24.3.3] An
exclusive use area described as parking bay P27 measuring 13
(thirteen) square metres being as such part of the common
property
comprising the land and the scheme known as the courtyard in respect
of the land and building or buildings situated at
Sandown Township,
Local Authority: City of Johannesburg as shown and more fully
described on sectional plan No SS 346/91.
R M KEIGHTLEY
ACTING JUDGE OF
THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
DATE OF HEARING 8
MAY 2014
DATE OF JUDGMENT 16
MAY 2014
APPLICANT’S
COUNSEL MS R STEVENSON
INSTRUCTED BY
MARTINI-PATLANSKY ATTORNEYS
3
rd
RESPONDENT’S COUNSEL: A J SWANEPOEL
INSTRUCTED BY JAY
INCORPORATED
5
th
RESPONDENT’S COUNSEL: NO APPEARANCE
[1]
Act 34 of 2005
[2]
Ganes v Telecom Namib'- Ltd
2004 (3) SA 615
(SCA) at [19]
[3]
Lombaard v Droprop CC
2010 (5) SA 1
(SCA) at 10A-D
[4]
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at
634/
[5]
Peterson
v Cuthbert & Co Ltd
1945 AD 420
at 428
[6]
King
William’s Town Transitional Local Council v Border Alliance
Taxi Association (BATA)
2002 (4) SA 152
(E) at 157/-J
[7]
Administrator,
Transvaal v Theletsane
[1990] ZASCA 156
;
1991 (2) SA 192
(A) at 197A-B