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[2013] ZAFSHC 78
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ABSA Bank Ltd v Malherbe (5077/2012) [2013] ZAFSHC 78 (16 May 2013)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No. : 5077/2012
In the matter between:-
ABSA BANK LIMITED
................................................................
Applicant
and
ROELOF CHARLES
MALHERBE
..........................................
Respondent
_____________________________________________________
HEARD
ON:
14 MARCH 2013
_____________________________________________________
JUDGMENT
BY:
RAMPAI, J
_____________________________________________________
DELIVERED
ON:
16 MAY 2013
_____________________________________________________
[1] This was an
application for summary judgment. I shall refer to the parties as in
convention because the proceedings were essentially
action
proceedings in nature. On 14 March 2013 I granted,
ex tempore,
summary judgment against the defendant. On the 19 March 2013 the
defendant filed a request for written reasons. What follows is
my
response to that request.
[2] The background of the
application revealed that the plaintiff instituted an action against
the defendant. The summons contained
two separate claims. The global
sum of the two claims together was R5 383 133,77. The
ancillary relief sought included
interest at different but specified
rates, the costs of the action, a different but specified scales,
declaring three specified
farms especially executable as well as
authorising the registrar to issue writs against such immovable
properties.
[3] The first claim was
based on a mortgage loan secured by a mortgage bond over one specific
immovable properties. The capital
amount was R2 400 000,00
and the additional amount was R480 000,00. The mortgage bond
number B13629(2008) was registered
in favour of the plaintiff at the
deeds office in Bloemfontein on 31 October 2008. The terms and
conditions of the mortgage bond
were fully set out in “anx a”
to the summons.
[4] The second claim was
based on an overdraft facility. It was also secured by a mortgage
bond over two specific immovable properties.
The capital amount was
R3 200 000,00 and the additional amount R640 000,00. The
mortgage bond was also registered at
the deeds office in Bloemfontein
on 4 March 2009 under number B1592(2009). A copy thereof was attached
to the summons as “anx
b”.
[5] The sheriff duly
served the summons on the defendant. He reacted by filing a notice of
intention to defend. The service triggered
off a prompt response from
the plaintiff. The plaintiff immediately launched the current
application for summary judgment. The
plaintiff alleged, in the
supporting affidavit that the defendant had no
bona fide
defence and that he had filed the notice to defend the action for the
sole purpose of delaying the finalisation of the matter.
[6] The defendant would
have none of that. He filed an opposing affidavit in which he set out
the grounds of his resistance. He
denied the plaintiff’s
allegations. On the contrary he alleged that he had a
bona fide
defence to the plaintiff’s claim and that he did not file the
notice of intention to defend the action for the sole purpose
of
delaying its finalisation.
[7] The defendant
acknowledge and declared himself to be truly and lawfully held and
firmly bound unto and in favour of the defendant
in the aforesaid
capital as well as additional amount – vide clause 2 read with
clause 3 “annexure a”.
[8] In terms of clause 15
“annexure a” the defendants specifically bound, as a
first mortgage and as security for the
repayment of the loan and
interest thereon, an immovable property, commonly known as
Baviaansfontein Farm, district Boshof, Province
Free State in extent
360,9283 hectares held under Deed of Transfer No T17264(2005).
[9] The bond remains in
force as continuing covering security for the capital amount, the
interest thereon and the additional amount.
Moreover, it remains as
such for each and every further sum of money in which the defendant
may, after the signing of the bond,
become further indebted to the
plaintiff – vide clause 4 “annexure a”.
[10] The bond also makes
provision for the method, manner and rate(s) to be used in order to
calculate interest on all amounts owing
or to be owed by the
defendant to the plaintiff – vide clause 7 “annexure a”.
[11] The amount(s) owing
at any time by the defendant to the plaintiff, and so secured, may be
determined and proved by a certificate
signed by any manager of the
plaintiff. Such certificate serves as
prima facie
proof of the
outstanding balance. Similarly, an averment in that certificate to
the effect that an amount as stated therein has
become due and
payable
prima facie
proves that as a fact – vide clause
9 “annexure a”.
[12] The plaintiff
averred that although it had complied with all its contractual
obligations towards the defendant, the defendant
had breached the
terms and conditions of the agreement. The essence of the breach was
that the defendant had neglected to pay the
agreed instalments and
that he was in arrears in the sum of R141 009,24.
[13] The plaintiff, as a
result of the defendant’s default, demanded the full
outstanding balance of R2 434 265,45
together with interest
thereon at the rate of 10,5% per annum calculated from 1 June 2012.
To that end the plaintiff relied on
“annexure c”, a
certificate signed by one A G Lombard in Johannesburg on 7 June 2012
in accordance with clause 9 “annexure
a”.
[14] The plaintiff
averred that it had duly complied with the law by sending to the
defendant the requisite notice in terms of section
129 read with
section 130,
National Credit Act, 34 of 2005
as would more fully
appear from “annexure d1 – d5”.
[15] The plaintiff
further averred that it had duly complied with the legal requisites
relating to the delivery of the notice in
terms of
section 129
as
would more fully appear from “annexure e1 – e3”.
The plaintiff added that the defendant had been in default
for at
least 20 business days
(section 130)
; that at least 10 business days
had elapsed since the requisite notice was delivered to the defendant
(section 129)
; that despite proper delivery of such notice the
defendant had failed to respond or to take any steps as suggested
therein; and
that, in the light of all this, the plaintiff was
entitled to institute these proceedings for the recovery of the debt,
in other
words, the first claim.
[16] As regards the
second claim, I do not intend to pay particular attention to the
details of specific clauses of “anx b”
save for two or
so. In terms of clause 15 “anx b” the defendant
specifically bound an immovable property commonly known
as Farm
Kwaggafontein 328, district Boshoff, Province Free State as first
mortgage bond and as security for the repayment of the
loan by way of
an overdraft facility and interest.
[17] In addition to the
aforesaid, the defendant also bound, as the second mortgage bond and
as security for the repayment of the
overdraft facility loan, another
immovable property commonly known as Farm Helpmekaar, district
Boshoff Province Free State.
[18] The comments I made
in paras [7] – [15] in respect of the first claim apply
mutatis
mutandis
to the second claim as well.
[19] The defendant
opposes the grant of a summary judgment in respect of each of the two
claims. He relied on three grounds. I now
turn to examine those
grounds.
* [20] As regards the
third ground of opposition, the defendant contented that he and the
plaintiff’s representative reached
a verbal
pactum de non
petendo
at Kroonstad during September 2012. The defendant alleged
that the agreement was that the plaintiff undertook not to enforce
its
contractual rights in terms of the loan agreement(s) by way of
legal action before 31 December 2014. The underlying idea of the
verbal pact was to afford the defendant an opportunity of settling
all the debts he owed to the plaintiff.
[21]
The defendant’s defence of verbal variation
pactum
de non petendo
was
also attacked from another front. The plaintiff’s second
challenge was that the mortgage bonds expressly prohibited any
variation of its written terms and conditions by way of an oral
agreement.
[22] On the one hand,
counsel for the plaintiff also argued that the pact between the
respondent and Mr Marx, even if was truly
concluded, an allegation
which the plaintiff persistently denied, was of no consequence in
view of the fact that the agreement
relied upon was never reduced to
writing but remained nothing more than an oral variation.
[23]
On the other hand, counsel for the defendant, argued that the
Shiffren-clause, contained in the mortgage bond on which the
plaintiff relied in rebuttal of the defendant’s
pactum
defence
was voidable on the ground of its unfairness. He then submitted that
if the defendant’s defence was rejected as null
and void on the
grounds that the
pactum
had
not been reduced to writing and signed by both parties – such a
finding would have the effect of offending public policy
as
particularly expressed in
section 33
and
34
of our constitution.
[24]
Mr Snyman heavily relied on the decision in
Nyandeni
Local Municipality v Hlazo
.
1
In
that case the question was whether the operation of the entrenched
clause, on the peculiar facts of that particular case, would
have the
effect of offending public policy as it is particularly expressed in
section 33
and
34
of the constitution of our land. Now the public
policy embodied in
section 33
concerns the right to a fair public
hearing and that embodied in
section 34
the right to a just
administrative action.
[25]
In that case of
Hlazo
supra
,
at para [126] Alkema J after considering the conflict between an
entrenched contractual clause in a written agreement protected
by the
principle of
pacta
sunt servanda
premised
on the right to freedom of contracting on the one hand versus the
right to due process of law on the other hand protected
by public
policy against abuse of due process of law concluded:
“
I therefore
believe that the facts and circumstances of this case justify the
departure from the
Shifren
principle.”
[26]
The only other case where the Shifren principle was departed from, as
far as I can ascertain, was
Miller
and Another v Dannecker
.
2
I
was also referred to that decision. In that case, as in the instant
matter, the thrust of the attack, on the entrenched clause
principle
enunciated in
SA
Sentrale Ko-op Graanmaatkskappy Bpk v Shifren en Andere
,
3
was
grounded on the argument that upholding the “shifren”
principle would offend the principle of good faith. Before
me it was
submitted that good faith was an equitable and ethical value which
requires that parties to contracts be held to their
words by
requiring them to honour their promises or undertakings and by
denying them the right to invoke the “shifren”
principle.
To let contractants off the hook by enforcing the entrenched clause
would have the effect of undermining public policy
considerations
that are constitutionally protected in
sections 33
and
34
. So went
the argument
[27]
The argument of the defendant found support in
Miller’s
decision
supra
.
However, that decision was overruled –
Brisley
v Drotsky
.
4
At
par [31] the SCA made the following instructive comments about the
judicial power to invalidate written contracts on the strength
of
public policy:
“
[31]
Sasfin
se
saak is 'n toepassing van die beginsel dat kontraksterme wat dermate
onbillik is dat dit in stryd is met openbare belang, om
dié
rede ongeldig is. Aangesien die verskansingsklousule op sigself nie
ongeldig is nie, vind die
Sasfin
-beginsel
geen direkte toepassing nie. Op die veronderstelling dat die
Sasfin
-beginsel
uitgebrei kan word om die afdwing van kontraksbepalings (wat nie
per
se
in
stryd met die openbare belang is nie) te verhoed,
sal
sodanige toepassing noodwendig beperk moet word tot gevalle wat
analoog is aan
Sasfin
,
synde gevalle waar die afdwinging van die verskansingsklousule so
onbillik sal wees dat dit as 'inimical to the interests of the
community' (op 8C-D) beskryf kan word.
Voorts
sal die oorwegings wat uit die volgende
dicta
van
Smalberger AR (op 9B-E) blyk, ook daarop van toepassing te wees:
‘
The
power to declare contracts contrary to public policy should, however,
be exercised sparingly and only in the clearest of cases,
lest
uncertainty as to the validity of contracts result from an arbitrary
and indiscriminate use of the power. One must be careful
not to
conclude that a contract is contrary to public policy merely because
its terms (or some of them) offend one’s individual
sense of
propriety and fairness.
In
the words of Lord Atkin in
Fender
v St John-Mildmay
1938
AC 1
(HL)
at 12:
“
...
the doctrine should only be
invoked in clear cases in which the harm to the public is
substantially incontestable, and does not
depend upon the
idiosyncratic inferences of a few judicial minds
”
...
In grappling
with this often difficult problem it must be borne in mind that
public policy generally favours the utmost freedom
of contract, and
requires that commercial transactions should not be unduly trammelled
by the restrictions on that freedom.’
”
[28] What emerges from
the
Brisley
decision
supra
was instructive in
many ways, among others:
It was held that the
“shifren principle” is trite;
That it is an
authoritative decision with binding force;
That such principle
protects both parties;
That good faith is an
ethical value in the substantive law of contracts;
That much more than lack
of good faith alone is required in the law of contracts to justify
relaxation of the principle;
That the principle is
not absolutely inflexible;
That the principle
imperils no social values.
[29] Prof Hutchinson (on
743-4) articulated the role of good faith in the law of contracts as
follows:
“
[
22]
...
'What
emerges quite clearly from recent academic writing and from some of
the leading cases, is that good faith may be regarded
as an ethical
value or controlling principle based on community standards of
decency and fairness that underlies and informs the
substantive law
of contract. It finds expression in various technical rules and
doctrines, defines their form, content and field
of application and
provides them with a moral and theoretical foundation.
Good
faith
thus
has a creative, a controlling and a legitimating or explanatory
function. It is not, however, the only value or principle that
underlies the law of contract; nor, perhaps, even the most important
one
.'”
Prof Hutchinson’s
opinion was quoted with approval by the court in
Brisley
supra
, at par [22] – vide footnote 7
supra.
[30] It follows,
therefore, that if I were to relax the “shifren”
principle, on the facts of this case, where the crux
of the attack
was launch from one front only, namely: the principle of good faith
without something more, such as fraud attributable
to the plaintiff,
I would be elevating the principle of good faith to a higher
functional sphere of operation that is not currently
recognised in
our substantive law of contract. Here I could detect nothing so
morally inequitable in the plaintiff’s conduct
that it could
only be objectively described as inimical to the interests of the
community.
[31] In the instant
matter it appears easier to appreciate how the departure from the
“shifren” principle would detrimentally
affect the
interests of the community than the enforcement thereof would. To
depart from the principle and to enforce contractual
performance by
the plaintiff, in accordance with, the terms of the oral
pactum
would have a detrimental impact on the interest of the community. If
the shifren principle were to be suddenly relaxed, on the
strength of
the peculiar facts of this particular matter, great legal uncertainty
would be created. A floodgate of endless disputes
would be opened.
Commercial instability would bedevil the business markets. A mortgage
bonds as an instrument of hypothecation
would lose its vital
significance as a real security mostly preferred in the banking
industry. There is so much to lose and so
little to gain through
relaxation of the principle in these uncompelling circumstances.
[32] The case of
Hlazo
supra
is distinguishable. In that case, unlike in the instant
matter, the party who involved the protection of the “shifren”
principle was the first respondent. Alkema J found that he was
actuated by an ulterior motive to do so; that his conduct was tainted
by fraudulent actions; that he had fully participated in his
workplace disciplinary proceedings; that he was fully aware of the
terms and conditions of employment and his contractual rights; that
he challenged the procedure adopted at his disciplinary hearing
for
the first time after his dismissal; and that in support of his
challenge, for the first time invoked the protection of the
“shifren”
principle. That, according to Alkema J, amounted to an abuse of the
due process of law for a morally indefensible
ulterior purpose.
[33] In the instant
matter the party who involved the protection of the “shifren”
principle was the plaintiff. There
was no suggestion let alone a
contention that he had abused a due process of law in any manner
whatsoever. There was no suggestion
that the actions of the plaintiff
or its representative, Mr Marx, were tarnished by any fraudulent
acts. Fraud is repugnant to
public policy considerations –
contra bonos mores
. The same can be said about wilful abuse of
a due process of law. It was never alleged, argued or suggested, in
this matter, that
the plaintiff’s representative expressly or
tacitly represented to the defendant that the mere conclusion of the
pact, would,
without first having it written and signed,
automatically render the entrenched clause inoperative.
[34] In the
Hlazo
case
supra
, the dice as regards the substantive merits of the
dispute, was heavily loaded against the litigant who invoked the
“shifren”
principle in a calm attempt order to protect
his alleged right to a fair public hearing. What he really wanted was
to have a public
rehearing, of precisely the same dispute, which had
already been held where the merits had already been determined.
[35] About the first
respondent’s ulterior motives in that case for invoking breach
of the entrenched clause in order to have
a second bite of the
cherry, Alkema J commented:
“
[104] The
municipal manager would get a second bite at the cherry in the hope
that he might be found not guilty, but that hope was
not
substantiated by any facts before us. Even if he were again found
guilty, the financial benefits to him are substantial, with
the added
benefit that it gave him the opportunity of seeking alternative
employment in the meantime without a tag of dismissal
from his neck.
[105] From the perspective of the
municipality, the entire exercise would be one of futility, with
great expense and inconvenience.
The procedure would serve no purpose
at all and the additional salary would be funded by the fiscus which
would recover if from
the members of the public.”
[36] By belatedly
invoking the protection of the “shifren” principle as
entrenched in a clause of his contract of employment,
the first
respondent, Mr Hlazo, was not prompted to do so by any genuine
consideration of good faith to assert any constitutional
right in
terms of
section 33
or
section 34.
He was undoubtedly actuated by bad
faith to prolong his disciplinary hearing so that he could continue
milking the public cow –
the fiscus – for as long as
possible. Clearly that was an abuse of a due process of law for an
ulterior motive and inequitable
purpose.
[37]
The “shifren” principle should only be invoked in clear,
and I may add morally clean, cases in which the harm to
the public is
substantially contestable if the principle is not relaxed –
Fender’s
case,
supra
.
5
The
present matter fails the test. The judicial power to declare
contracts contrary to public policy has to be exercised sparingly
and
only in the clearest of cases lest indiscriminate, power creates
unwelcome legal uncertainty in the law of contracts.
[38] In the instant
matter the defendant admitted that he was in breach of his
contractual obligation. Therefore, the merits strongly
favour the
applicant, a party invoking the “shifren” principle in
order to protect its legitimate right to a speedy
adjudication of the
matter. The plaintiff has no other swift procedural remedy faster
than the procedure by way of summary judgment.
That right is one of
the vital values protected by the entrenched clause. The parties so
mutually agreed right from outset of their
business relationship.
[39] The defendant has
virtually no hope that the plaintiff might lose the case on the
merits if leave to defend is granted and
the matter is allowed to go
to trial. Certainly he knows very well that he has no defence on the
merits. He has no leg to stand
on. What he wants is merely to retard
the process. The summary judgment procedure was designed to give the
plaintiff with an unanswerable
claim a speedy remedy. It would be
wrong, in my view, to slow down the speedy and due process of summary
judgment because, as it
was argued, summary judgment is a drastic
procedure which shuts the door in the defendant’s face. This
argument requires
some balancing.
[40] Denying the
plaintiff whose claim is clearly unassailable the real benefits of a
remedial procedure mutually agreed upon in
itself is a drastic
decision. Where the merits strongly favour the plaintiff
considerations of public policy militate against the
idea of giving
the defendant an opportunity of doing practically nothing meaningful
other than delaying the action. The adverse
impact of such a futile
denial of the remedy must never be ignored.
“
[2]
… Elke denkbare vertragingstaktiek is aangewend, aangehelp
deur Howe wat telkens nie die aangeleentheid op meriete wou
beoordeel
nie.”
Brisley’s
case,
supra
para [2]
This is one such case.
However, I am not prepared to tolerate undue delays and frustrate the
plaintiff.
[41] I am satisfied, on
the peculiar facts, that the plaintiff did not invoke the “shrifen”
principle with dirty hands
or for any ulterior motive for the
inequitable purpose of denying the defendant the right to have this
dispute decided in a fair
public hearing before the court. On the
contrary I believe, and it is a very firm belief, that the defendant
has no
bona fide
defence. I am convinced that he merely
invoked the “shifren” principle for no legitimate purpose
of asserting his right
to a fair public hearing but rather for the
sole ulterior purpose of frustrating the plaintiff’s legitimate
efforts of speedily
vindicating his rights thereby delaying the
inevitable day of judgment. Such practically purposeless delay will
certainly have
financially detrimental impact on the plaintiff and
the relaxation of the principle would devalue the mortgage bond as an
instrument
of hypothecation to the dismay of the commercial world at
large.
[42]
The crux of the defendant’s defence here was that the
plaintiff’s action was prematurely instituted. Accordingly
the
defendant put up the defence that the plaintiff’s claims had
not yet become due and payable at the time the action proceedings
commenced on the 14
December
2012. This was also a technical and not a substantive defence. It
follows therefore that the defendant does not deny that
he is truly
and lawfully indebted to the plaintiff in respect of each claim and
that he is in breach in respect of each agreement.
[43] On behalf of the
plaintiff it was submitted that the version of the respondent was not
only improbable but also untrue. Counsel
for the plaintiff argued
that it was ridiculous and unthinkable that a bank manager would,
after three consecutive crop failures,
still give the defendant two
more years to repay the debt.
[43] In developing that
argument further, counsel critically pointed out that the defendant
did not disclose an important aspect
as to how he planned to plant or
to have his next crops financed in view of his recent natural
disasters.
[45]
The defendant’s defence of verbal variation
pactum
was
challenged on two distinct fronts. The first was lack of full
disclosure of the material facts relied upon.
6
Where
does he hope to get the money from to sustain such costly farming
operations if he hardly has any to pay the plaintiff? I
now proceed
to examine the defendant’s opposing affidavit to determine
whether it complies with full disclosure requirements.
[46] He did not make any
attempt to say that he intended to pay on the next crop harvest. He
quickly jumped the gun. He chiefly
cultivated maize and sunflower. He
did not say whether the plaintiff had undertaken to finance him one
more time in connection
with the planting of the next crops. The
prospects of him again receiving finance from the plaintiff
realistically appeared to
be extremely poor. His financial crisis
was, by his own say-so, not something knew. It started three years
ago. It was certainly
worsening. He has already started accusing the
plaintiff for this rapid deterioration of his financial state of
affairs. His allegation
that the plaintiff was also to blame because,
as he claimed, it gave him reckless credit ruined any chance he might
have had of
successfully applying to the plaintiff for further
finalising.
[47] He estimated that
his input costs for the current production season 2012/2013 would be
approximately R8 million. From the maize
harvest and the sunflower
harvest he expected to generate an income of R4,8 million and R7,6
million respectively. The expected
turn-over for the current
production season was thus R12,4 million. Therefore, the defendant
expected to make a clean profit of
R4,4 million at the end of the
current production season.
[48] Now, such a profit
margin sounds like a melodious song to the ears. However, the
question which remains unanswered is where
will the very huge amount
required to finance his farming operations come from. This is a
crucial aspect of the plaintiff’s
concern. This is
understandable. The recent history of the defendant’s farming
operations gives the plaintiff reasonable
cause to be really
apprehensive. Put differently, the defendant requires about R8,0
million loan to finance the planting of the
crops this season alone.
He failed to disclose where he reasonably hoped to get such money
from.
[49] If the plaintiff
were to give a further credit of that huge magnitude, the defendant’s
indebtedness to the plaintiff,
would astronomically rise to a figure
well in excess of R12,4 million. That financial crisis of the
defendant would certainly get
even bleaker if the plaintiff’s
undisputed second claim of R3,84 million is also taken into account.
In such a scenario the
defendant would later complain, and rightly
so, that the plaintiff had contravened
section 81(2)
again by giving
him a further reckless credit.
[50] If the plaintiff
were to give the respondent no such finance the defendant’s
would find it very difficult, if not impossible,
to successfully
apply and obtain a substantial loan of R8 million from another credit
provider. His creditworthiness has been greatly
impaired by the
aforesaid catastrophic natural misfortunes. His ability to raise
further loans, if he still has any, is now very
limited because he
has already bonded his three farms to the plaintiff as real security.
[51] To this already
desperate financial situation of the defendant, with no immediate
prospects of improvement, another unfavourable
factor must also be
taken into account. He experienced complete failure of crops in three
years running. The first and third failures
were due to severe
drought whereas the second was due to severe flooding. No-one can
rule out the possibility of yet another similar
natural disaster this
season or the next. Such a possibility would probably not have
escaped undetected and unappreciated by a
banker asked to give an
extension in the circumstance such as these.
[52] As I was drafting
this judgment, there were already media reports circulating about the
floods in the Eastern Cape. That cannot
be treated as a remote
possibility bearing in mind the recent disaster the defendant has
experienced. Such reports would not sound
well to the defendant.
[53] The first loan bears
interest at a rate of 9% per annum which is calculated daily and
compounded monthly. Suppose the loan
generated interest at a simple
and not compound rate, the accrued interest from 15 September 2012
until 31 December 2014 would
be well over R540 000,00. By then
the defendants effective indebtedness to the plaintiff, in respect of
the first claim alone,
would have increased to over a staggering
figure of R3 million. Probabilities aside, these are financial
realities of the matter.
Show me one naïve banker who would give
such a long extension of 27 months to a customer in a financial
crisis like the one
the defendant faces.
[54]
It is so that the defendant was not required to exhaustively deal
with the facts and the evidence he relied upon to substantiate
them.
He was, nonetheless required to adequately disclose his defence and
the material facts on which it is premised with sufficient
particularity and completeness to enable me to decide whether his
opposing affidavit discloses a
bona
fide
defence
–
MAHARAJ
supra
,
at 426D.
[55]
In my view the averments in the defendant’s affidavit were so
devoid of sufficient completeness and particularity, so
riddled with
vagueness and improbabilities and so remote from commercial realities
of the banking world, that I have no hesitation
to make an adverse
finding that he dismally failed to comply with the requirements of
the rule. I would, therefore, uphold the
plaintiff’s first
contention. On account of the vagueness of the alleged verbal
variation pact, I would find that defendant
has failed to satisfy me
that he indeed has a
bona
fide
defence
which is good in law.
* [56] As regards the
first ground of objection, the defendant contended that the plaintiff
had failed to comply with the peremptory
provisions of
rule 32(2)
Uniform Rules of Court when launching the current application for
summary judgment. The objection was raised in
limine.
[57]
The rule provides that the plaintiff can apply for summary judgment
on a liquid document or for a liquidated amount in money.
The
contention of the defendant was that no liquid document supported the
plaintiff’s claim. In brief rule 32(2) requires,
inter
alia,
that
where a plaintiff’s claim is founded on a liquid document, such
document must be attached to an affidavit in support
of his
application for summary judgment. In practice the deponent would
refer to a liquid document in an affidavit and attached
it thereto.
Together with the liquid document attached to it, an affidavit is
then annexed to a notice of an application. This
is but one way of
complying with the rule. But it is by no means the only way.
[58] In the case where
the manager’s certificate or certificate of balance had already
been attached to the summons as an
annexure to the particulars of
claim, the subsequent application for summary judgment cannot be
dismissed on the ground that no
certificate of balance was physically
annexed to it. I am of the view that there would be proper compliance
with the rule in such
circumstances. It would serve no practically
useful purpose to again attach a copy of a liquid document, which is
already on court
file, to a subsequent application for summary
judgment.
[59] The defendant
further objected to plaintiff’s application for summary
judgment because, as he contended, no document
labelled “anx c”
was attached to the summons. I had occasion to peruse the court
record. The perusal thereof indicated
that a certificate of balance
marked “annexure c” was in fact attached to the
plaintiff’s particulars of claim
– vide page 61 of the
record. The defendant did not venture to argue that, according to his
perusal of the court record,
that particular page was something else
and not a certificate of balance, marked “annexure c”.
Moreover it was not
his case that after he had discovered that there
was no “annexure c” attached to the copy of the
particulars of claim
served on him, he ever called upon the plaintiff
to provide him with the missing annexure and that despite that
request the plaintiff
failed to do so.
[60] The defendant’s
contention that the copy of the summons served on him did not contain
“annexure c” was clearly
inconsistent with the sheriff’s
return. The sheriff indicated precisely what annexures he served on
the defendant personally
on 28 January 2013. Among those annexures,
he specifically referred to “annexure c”. Again it was
not his argument
that he ever pointed out to the sheriff, at any
stage, that the copy of the summons served on him was defective.
[61]
It was submitted on behalf of the defendant that, at best, the
plaintiff’s first claim was based on a liquidated claim
in
money since the continuing covering bond “annexure a”
itself did not constitute a liquid document within the meaning
of the
rule. That the bond document
per
se
does
not constitute a liquid document is undoubtedly correct.
7
However,
the bond document was not the sole basis of the first claim. The bond
document (annexure a) was substantially amplified
by the certificate
of balance (annexure c). The latter, unlike the former, was a
perfectly liquid document. It derived its liquid
character from
clause 9 of “annexure a”.
[62]
It was an express term upon which the parties had agreed that such a
certificate (annexure c) would
prima
facie
constitute
proof of the defendant’s indebtedness to the plaintiff.
Therefore, the onus of proving the contrary squarely rested
upon the
defendant. He unsuccessfully tried to show that the plaintiff had
failed to comply with clause 9. Since he has failed
to do so, the
prima
facie
proof
tendered by the plaintiff became conclusive proof, not only of the
averments contained in the certificate, but also of the
legal nature
of the document itself.
[63]
It was submitted on behalf of the plaintiff that the defendant’s
objection was really nothing more than the proverbial
storm in a tea
cup. I also think so. I am, therefore, persuaded to find that “anx
c”, on which the plaintiff relied
in support of the first
claim, was a perfectly valid liquid document and that it was
correctly served on the defendant. I would,
therefore, dismiss the
preliminary objection. In my view the point, raised
in
limine
,
was not well taken.
[64] The plaintiff relied
on the second certificate of balance “anx h” in support
of the second claim. In this regard
there was no dispute in
connection with the sheriff’s service of that certificate. The
only complaint raised by the defendant
here was that “anx h”
was not a liquid document and that it was not attached to the summary
judgment application. I
have already entertained, considered and made
findings on both aspects of the defendant’s argument in respect
of the first
claim. By those comments and findings I abide. The
objection dismissed.
* [65] As regards the
second ground of opposition, the defendant contended that the
plaintiff had failed to plead that it had complied
with the
peremptory provisions of section 81(2)
National Credit Act, 34 of
2005
when it concluded the first loan agreement with the defendant.
The plaintiff’s failure to comply with such imperative
statutory
provisions, so contended the defendant, rendered the
transaction whereby the loan(s) was given a reckless credit.
[66]
Section 81(2)
, Act
No. 34 of 2005 reads:
“
(2)
When a determination is to be made whether a credit agreement is
reckless or not, the person making that determination must
apply the
criteria set out in subsection
(1)
as
they existed at the time the agreement was made, and without regard
for the ability of the consumer to risks, costs or obligations
under
the proposed credit agreement; or 20
(a)
meet
the obligations under that credit agreement; or
(b)
understand
or appreciate the risks, costs and obligations under the proposed
credit agreement, at the time the determination is
being made.”
[67] The words or phrase
reckless credit are defined in section 1 as follows:
“
(1)
A
credit
agreement is reckless if, at the time that the agreement was made, or
at the time when the amount approved in terms of the
agreement is
increased, other than an increase in terms of section 119(4)-
(a)
the
credit provider failed to conduct an assessment as required by
section 81(2), irrespective of what the outcome
of
such
an assessment might have concluded at the time; or
(b)
the
credit provider, having conducted an assessment as required by
section 81(2), entered into the credit agreement with the consumer
despite the fact that the preponderance of information available to
the credit provider indicated that-
(i) the consumer did not generally
understand or appreciate the consumer’s (ii) entering into that
credit agreement would
make the consumer over indebted.”
[68] Where a court is
satisfied that a credit provider has recklessly given credit to a
consumer, relief may be granted to such
an over-indebted consumer in
terms of section 83(2).
Section 83(2)(a)
provides:
“
83
(2)(a)
setting
aside all or part of the consumer’s rights and obligations
under that agreement, as the court determines just and
reasonable in
the circumstances;..”
Section 83(2)(b)
provides:
“
83
(2)(b)
suspending
the force and effect of that credit agreement in accordance with 45
subsection (3)(b)(i).”
[69] The defendant’s
contention was that the plaintiff was prohibited in terms of section
81(2) from concluding a credit agreement
with him, as he did, by way
of a mortgage bond because, as he contended, the plaintiff did not
first take reasonable steps to assess
his credit profile in respect
of:
his general
understanding and appreciation of the risks as well as the costs of
the proposed credit agreement, his rights and
obligations under the
proposed credit agreement;
his debt repayment
history as a consumer under past credit agreements;
his existing financial
means, projects and obligations.
[70] The defendant
alleged that, as far as he could remember, the plaintiff had never
asked him to provide any documentary proof
of his income before the
first credit agreement was concluded.
[71] The defendant’s
second defence, which was also technical and not substantive in
nature, was that in its particulars of
claim the plaintiff did not
allege that the credit facility given to him, was not reckless
credit. The objection was raised to
an application for summary
judgment. Where a summons is defective, an objection to it is raised
by way of an exception. In this
instance, however, the defendant did
not pertinently allege that the summons was excipiable for want of
the necessary averments
as one would have expected.
[72] The alleged
commercial transaction which the defendant characterised as credit
recklessness was premised on the allegation
that the plaintiff never
verified the defendant’s income before credit was given to the
defendant. On the one hand the defendant
emphatically stated that
“
the
applicant never requested me to furnish it with any documentation
pertaining to and in support of my income”.
On the other hand that
emphatic denial was preceded by a doubtful sentence:
“
As far as I
can remember…”
[73] Seeing that the
defendant himself is obviously uncertain as to the actual facts which
immediately preceded the conclusion of
the credit agreement, his
allegation that the plaintiff never requested him to furnish any
written proof of his income seemed rather
questionable. The aforesaid
doubtful introductory words in my view drastically diminish the
substance of his objection based on
the alleged credit recklessness.
[74] As if the
afore-going down-grading of his own defence was not bad enough, the
defendant rounded off his ill-conceived contention
by stating:
“
8.2.4. The
possibility therefore exists that the relevant mortgage agreement (in
any event) amounts to the Applicant’s granting
of reckless
credit, which possibly should be investigated during the trial of the
action under discussion;…”
[75]
To resist an attack by way of a summary judgment, the respondent was
required to aver arguable facts which might constitute
plausible
defence.
8
In
my view the defendant failed to aver arguable facts from which I can
determine in terms of section 81(2),
National Credit Act, 34 of 2005
that the plaintiff, as a credit provider, neglected to take
reasonable steps to make proper assessment of the defendant’s
creditworthiness and in particular his financial ability to repay the
loan in accordance with the criteria as prescribed in the
section.
[76] The defendant’s
contention was grounded on some vague illegations of credit
recklessness. The defendant failed to put
up a possible defence. I
can only grant leave to defend, by virtue of an arguable defence and
not a remotely fanciful possibility.
In this matter I am not
persuaded that the mortgage bond on which the claim is based was
tantamount to a credit agreement tainted
by credit recklessness.
[77] In the light of the
aforegoing conclusion, I would dismiss the defendant’s defence
of credit recklessness. In the circumstances
the defendant is not
entitled to any order in terms of
section 83(2)
National Credit
Agreement. Again it must be pointed out that this defence just like
the previous defence did not go to the merits
of the matter. What is
more, it was very poorly articulated in the opposing affidavit. If
such averments can be held to constitute
an answer to the plaintiff’s
claim, then the speedy remedy by way of summary judgment may as well
be held to be obsolete.
[78]
Mere repetition of the factors referred to in the relevant section
without elaborating as to how the credit providers violation
of each
of those factors directly affected the defendant, without disclosing
cogent reasons as to precisely when the defendant
became aware of the
plaintiff’s prohibited conduct and without explaining why the
defendant had taken no meaningful practical
steps, before the
plaintiff instituted these proceedings, to seek the relief he now
seeks - only demonstrates, in my view, lack
of
bona
fides
on
the part of the defendant.
[79] Apart from the bold
accusations that the plaintiff contravened
section 81
, he failed to
show the extent of his over-indebtedness at the time(s) the plaintiff
gave him reckless credit as he alleged. He
admittedly received the
notice in terms of
section 129
in respect of each claim months before
the plaintiff instituted these proceedings on 14 December 2013.
Notwithstanding such an
opportunity, he apparently did not seize the
moment to approach a debt counsellor, debt reviewer or onbudsman to
complain about
the reckless credit given to him.
[80] In the
circumstances, I am satisfied that the alleged credit recklessness
cannot be successfully relied upon as the basis of
the defendant’s
arguable defence to the action. The defendant’s affidavit
failed to adequately disclose the nature
and grounds of such defence
and the material facts relied upon in support thereof. I would,
therefore, dismiss the defendant’s
second ground of opposition.
[81] These then are the
reason for the
ex
tempore order I make on 14 March 2013.
_________________
M. H. RAMPAI, AJP
On
behalf of applicant: Adv. P. J. Heymans
Instructed
by:
E
G Cooper Majiedt Inc
BLOEMFONTEIN
On
behalf of respondent: Adv. C. Snyman
Instructed
by:
Graham
Attorneys
BLOEMFONTEIN
/eb
1
Nyandeni
Local Municipality v Hlazo
2010
(4) SA 261
(ECM).
2
Miller
and Another v Dammecker
2001
(1) SA 928
(C) at par [17].
3
SA
Sentrale Ko-op Graanmaatkskappy Bpk v Shifren en Andere
1964
(4) SA 760
(A).
4
Brisley
v Drotsky
2002
(4) SA 1
(SCA) at par [13].
5
Vide
footnote 7.
6
Maharaj
v Barclays National Bank Ltd
1976
(1) SA 418
(A) at 426A.
7
Erasmus
– Superior Court Practice, B
1
– 210 (par headed subrule 1(a) read with page B1 – 65
(passage preceding footnote 1).
Nedcor
Bank Ltd v Lisimfo 61 Trading (Pty) Ltd
2005
(2) SA 432
(C) at 435F – 437G.
8
Van
Niekerk
et
alie:
“
Summary
Judgment – A Practical Guide” p 9 – 8 especially
par 9.5.1.3.