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[2013] ZAFSHC 232
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Absa Bank Limited v Haynes N.O. and Others (3619/2013) [2013] ZAFSHC 232 (12 December 2013)
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IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No: 3619/2013
In
the matter between:-
ABSA
BANK LIMITED
…..........................................................................................
Applicant
(REGISTRATION
NUMBER: 1986/004794/06)
and
RENE
HAYNES N.O.
…....................................................................................
1
st
Respondent
RONALD
PATRICK HAYNES N.O.
…..........................................................
2
nd
Respondent
ANTHONY
DE VILLIERS N.O.
….................................................................
3
rd
Respondent
(In
their capacities as Trustees for
THE
SONSKYN TRUST IT[…])
RONALD
PATRICK HAYNES
…....................................................................
4
th
Respondent
(IDENTITY
NUMBER: 6[…])
RENE
HAYNES
…..............................................................................................
5
th
Respondent
(IDENTITY
NUMBER: 6[…])
HEARD
ON:
5 DECEMBER 2013
JUDGMENT
BY:
DAFFUE, J
DELIVERED
ON:
12 DECEMBER 2013
INTRODUCTION
[1]
Absa Bank Ltd, the applicant in these proceedings, seeks summary
judgment against the first three respondents in their representative
capacities as trustees of Die Sonskyn Trust IT[…], jointly and
severally for:
“
1.
Payment of the amount of R302 079.19;
2.
Interest on the aforesaid amount of R302 079.19 at the rate of
8.50% per annum, calculated and capitalized monthly from
23 July 2013
to date of payment, both dates inclusive;
3.
An order declaring the following property specially executable:
CERTAIN:
ERF […], D[…], DISTRICT D[…], FREE STATE
PROVINCE
HELD
BY DEED OF TRANSFER NO. T[…]
4.
An order in terms of which the Registrar is authorised and directed
to issue a writ of execution against the immovable property;
5.
Costs on an attorney and client scale to be taxed;
6.
Further and/or alternative relief.”
[2]
The application is opposed by the three respondents. It was
argued before me on 5 December 2013 whereupon judgment was
reserved.
Adv Rautenbach appeared for applicant and Adv Le Roux for
respondents.
THE
ISSUES
[3]
In a founding affidavit filed in support of the application for
summary judgment, Mr Vilakazi of the applicant alleged as follows
in
paragraph 3 thereof:
“
I
confirm that the Respondents are indebted to the Applicant on date of
application
for
default judgment
in the amount of R302 079.19 (THREE HUNDRED AND TWO THOUSAND AND
SEVENTY NINE RAND AND NINETEEN CENTS) together with interest
@ 8.50%
per annum calculated and capitalized monthly from 23 July 2013
on
grounds as defined in the particulars of claim
.”
(emphasis added.)
[4]
Applicant elected to make use of a combined summons (form 10) and
particulars of claim annexed thereto. In paragraph 8
of the
particulars of claim reference is made to respondents’
liability for payment “
in respect
of a
mortgage loan
with account number 8[…]”
.
There is no indication whether this loan agreement was in writing or
concluded orally. No loan agreement is attached
to the
particulars of claim, but applicant elected to rely on a registered
mortgage bond registered in its favour for R300 000.00
which it
attached to the particulars of claim.
[5]
Two points
in limine
were raised in the answering affidavit filed on behalf of
respondents, the first that the underlying loan agreement secured by
the mortgage bond was not attached to the particulars of claim and
furthermore that the requirements of Rule 32(2) and Rule 18(6)
of the
Uniform Rules of Court were not complied with in that the applicant’s
deponent could not under the circumstances verify
the cause of
action, including every element of the cause of action.
Therefore the application for summary judgment was defective
and
should be dismissed. The second point
in
limine
relates to the reference to
default judgment instead of summary judgment in paragraph 3 of the
founding affidavit. I am of
the view that this is clearly a
typographical error and am not prepared to dismiss an application
upon such a formalistic defect.
When I indicated my view to Ms
Le Roux she conceded that she could not make any meaningful
submissions to persuade me otherwise.
For purposes of this
judgment I shall not consider this any further.
[6]
Respondents made averments pertaining to the merits of their defence
as well. This
inter alia
relates to the fact that the trust has been placed under debt review
in terms of the National Credit Act, 34/2005 (“NCA”)
by
the local magistrate’s court and that in terms of the
magistrate’s court order, payments in accordance with the
distribution scheme, less certain administrative costs, have been
made to applicant regularly over a period of approximately four
years
prior to the institution of the present action against them.
Just prior to the institution of the action in the High
Court
applicant caused a notice in terms of section 86(10) of the NCA to be
dispatched to respondents in terms whereof the debt
review was
terminated based on respondents’ alleged non-compliance.
Thereupon respondents again applied to the magistrate’s
court
for an amendment of the debt review order and for it to resume.
It is alleged by respondents that they have been complying
with the
magistrate’s orders and performed their obligations towards
applicant in terms thereof. An issue that will
be considered
briefly is whether a trust can apply for debt review and if not, what
the effect thereof is on these proceedings.
[7]
Applicant has failed to file the required affidavit in accordance
with the practice of this division in support of its request
that the
immovable property be declared specially executable. In such
affidavit aspects such as the respondents’ payment
history, the
amount in arrears, whether the property is the respondents’
primary residence and any other information considered
relevant must
be set out.
THE
POINT
IN LIMINE
[8]
The failure to attach the underlying loan agreement to the
particulars of claim and the alleged defect in the applicant’s
founding affidavit will be considered now.
[9]
Mr Rautenbach submitted during oral agreement that it was not a
requirement in this division for a written loan agreement to
be
attached to the particulars of claim if a plaintiff’s claim is
based on money lent and advanced. He mentioned that
he was
aware of many instances in this division where judgments by default
or summary judgment have been granted in matters where
plaintiffs
attached to their pleadings and relied on registered mortgage bonds
only. This is a matter of great concern to
me. An
argument might have been accepted in the past that it was not
required to attach written loan agreements to simple
summonses (where
Form 9 is used) in accordance with Rule 17, unlike the situation
where combined summonses are used in which cases
the provisions of
Rule 18 clearly apply. There was a stage in our history that it
was accepted by some to be the correct
legal position, the reason
being that a simple summons was not regarded as a pleading and Rule
18 applies to pleadings only.
[10]
A plaintiff’s cause of action in a claim based on money-lending
is not the registered mortgage bond, which is nothing
more but proof
that the applicant’s claim has been secured by way of a
mortgage bond over the immovable property of the debtor.
Klerck
NO v Van Zyl and Maritz
1989 (4) SA
263
(A) at p 275G – 276G is relatively recent authority for a
well-known principle that the loan agreement and not the mortgage
bond is the basis for a money-lending claim and the following
dictum
at 276A is apposite:
“
If
there is no valid principal obligation for the mortgage bond to
secure, there can be no valid mortgage bond and no real right
of
security in the hands of the mortgagee.”
The
court relied on the judgment of
Kilburn
v Estate Kilburn
1931 AD 501
where
the following was said at 505 – 506:
“
It
is therefore clear that by our law there must be a legal or natural
obligation to which the hypothecation is accessory.
If there is
no obligation whatever there can be no hypothecation giving rise to a
substantive claim.
Such
mortgage bond should be attached to the papers if the plaintiff
requires an order in terms whereof the immovable property is
to be
declared specially executable.
[10]
Rule 18(6) reads as follows:
“
A
party who in his pleading relies upon a contract shall state whether
the contract is written or oral and when, where and by whom
it was
concluded, and if the contract is written a true copy thereof or of
the part relied on in the pleadings shall be annexed
to the
pleading.”
[11]
As mentioned at a stage in our history there was a school of thought
advocating that a simple summons was not a pleading and
therefore it
was not required of the plaintiff to attach the document(s) relied
upon for his cause of action. The plaintiff
was merely required
to set out his cause of action in concise terms without attaching
documents in support of the claim.
However the most recent
authority is to the effect that also in the case of a simple summons,
the document(s) relied upon for the
cause of action must be attached
thereto, otherwise the summons would not disclose a cause of action.
See:
Absa Bank Limited v Studdard and Another
(2011/24206)
[2012] ZAGPJHC 26 (13 March
2012); 2012 JOL 28604
;
Standard
Bank of South Africa Ltd v Dawood
2012 (6) SA 151
(WCC) paras [6] – [7] and the Full Bench
decision in
Absa Bank v Janse van
Rensburg and Another
2013 (5) SA
173
(WCC) at paras [11] – [15].
[12]
In casu
applicant elected to make use of a combined summons and in such cases
the legal position has always been clear. If the written
underlying agreement is not attached to the particulars of claim,
such pleading shall in terms of Rule 18(12) be deemed to be an
irregular step and the opposite party shall be entitled to act in
accordance with Rule 30. Furthermore it is not necessary
for a
party to apply Rule 30, but he may sit back and when confronted with
an application for summary judgment object to the validity
of such
application. An applicant who verifies a cause of action in his
particulars of claim whereto the written underlying
loan agreement is
not attached cannot be heard to say that the verifying affidavit
complies with Rule 32(2). There is no
basis on which such a
deponent can attest to the correctness of the allegations set out in
the particulars of claim if the necessary
document that ought to be
relied upon, is not attached to the particulars of claim. It is
inconceivable that a deponent who,
ex
facie
the documents before me, is not
even aware of the existence of the written loan agreement, can “
swear
positively to the facts”
within
the meaning of Rule 32(2).
[13]
In
Gulf Steel (Pty) Ltd v Rack-Rite
Bob (Pty) Ltd and Another
1998 (1)
679 (O) at 683I – 684B the court, in view of the fact that
summary judgment procedure is an extraordinary and drastic
remedy
closing the doors of the court for a defendant finally, stated the
following:
“
In
view of the nature of the remedy of summary judgment, the Court must
be satisfied that a plaintiff who seeks summary judgment
has
established its claim clearly on the papers and that the defendants
have failed to set up a bona fide defence as required in
terms of the
Uniform Rules of Court. There are accordingly two basic requirements
that the plaintiff must meet, namely a clear
claim and pleadings
which are technically correct before the Court. If either of these
requirements is not met, the Court is obliged
to refuse summary
judgment. In fact, before even considering whether the defendant has
established a bona fide defence, it is necessary
for the Court to be
satisfied that the plaintiff's claim has been clearly established and
its pleadings are technically in order.
Even if a defendant fails to
put up any defence or puts up a defence which does not meet the
standard required of a defendant to
resist summary judgment, summary
judgment should nevertheless be refused if the plaintiff's claim is
not clearly established on
its papers and its pleadings are not
technically in order and in compliance with the Rules of Court.”
See
also
Absa Bank Limited v Coventry
1998 (4) SA 351
(N) at 353 and 354 and the authorities referred to.
[14]
Although I am of the view that the court in
Gulf
Steel
has
put the bar a bit too high for a plaintiff, and although I reject
reliance on unnecessary formalism, the underlying principles
set out
by the court should be applied
in casu
.
[15]
I am in respectful agreement with the following views of Wallis J (as
he then was) in
Shackleton Credit
Management (Pty) Ltd v Microzone Trading 88 CC and Another
2010 (5) SA 112
(KZP) at para [25], criticising the approach of
Blieden J in
Standard Bank of South
Africa Ltd v Roestof
2004 (2) SA
492
(W):
“
Insofar
as the learned judge (Blieden J) suggested that a defective
application can be cured because the defendant or defendants
have
dealt in detail with their defence to the claim set out in the
summons, that is not in my view correct. That amounts
to saying
that defects will be overlooked if the defendant deals with the
merits of the defence… The fact that they
set out that
defence does not cure the defects in the application, and to permit
an absence of prejudice to the defendants to provide
grounds for
overlooking defects in the application itself seems to me unsound in
principle. The proper starting point is
the application.
If it is defective, then
cadit
quaestio
.”
[16]
Mr Rautenbach submitted that the court is entitled to grant summary
judgment based on the mortgage bond attached to the applicant’s
papers and thereby ignoring the absence of the loan agreement.
He was apparently unaware of the authorities quoted herein,
several
of which have been relied upon by Ms Le Roux in her helpful heads of
argument and oral argument which is much appreciated.
[17]
As indicated,
supra
,
when a mortgagor causes a mortgage bond to be registered in favour of
the mortgagee he does so to give effect to an antecedent
agreement
between them which may be either in writing or verbal in terms of
which the mortgagor bound himself to grant to the mortgagee
as
security for a debt, a real right in the hypothecated immovable
property. In
Absa
Bank v Janse van Rensburg
,
supra
,
at paragraph [12] the full bench accepted the statement in Erasmus,
Superior
Court Practice
,
at B1-124 that if a copy of the written agreement on which the cause
of action is based is not attached to the simple summons,
even it is
not a pleading, the summons would not disclose a cause of action.
The learned authors relied on the judgment of
Wepener J in
Studdard
,
supra
as
authority, which judgment was referred to with approval in
Absa
Bank v Janse van Rensburg
.
In
Moosa and Others NNO v
Hassam and Others NNO
2010 (2) SA
410
(KZP)
Swain
J correctly stated the law in para [18] concerning a party’s
failure to annex a copy of the written agreement relied
upon to the
particulars of claim as required by Rule 18(6):
“
The
written agreement is a vital link in the chain of the respondents'
cause of action against the applicants… In the
absence
of the written agreement the basis of the respondents' cause of
action does not appear
ex
facie
the
pleadings.”
[18]
I agree with the view of Davis AJ in
Absa
Bank v Nicholas and Another
19942/2011, 18243/2011
[2013] ZAWCHC 58
(20 February 2013) where it
was found in paragraph [10] that although the courts in
Absa
Bank v Janse van Rensburg
and
Absa
bank v Studdard
were seized with
applications for default judgment and not summary judgment, these
judgments were authority for the general proposition
that where a
plaintiff’s cause of action is based on a written document, a
copy thereof is required to be attached to the
simple summons in
order for the summons to disclose a cause of action. Even more
so in my view, a copy of the written document
should also be attached
to the particulars of claim when combined summons is issued.
The court is duty bound to refuse judgment
in the event of
non-compliance. Without having had the opportunity to consider
the relevant underlying agreement, it would
be impossible for a court
to satisfy itself whether or not judgment should be granted.
[19]
In casu
the attached mortgage bond refers in several paragraphs to the
written agreement(s) entered into between the parties indicating
inter alia
that aspects such as repayment of the loan, interest and breach of
contract are set out in these documents. I am not prepared
to
grant relief without having had sight to these underlying
agreement(s). Mr Rautenbach has requested me not to be too
formalistic but to consider whether the defence raised was
bona
fide
or not. He submitted that
the applicant was entitled to terminate the debt review insofar as
respondents paid about R28.00
per month less to applicant than was
ordered by the magistrate’s court and therefore there was
substantial non-compliance
with the order which entitled applicant to
take steps in terms of section 86(10) of the NCA. His request
should not be acceded
to as it would fly in the face of cogent
authority.
[20]
Consequently the point
in limine,
to wit that there is no compliance with Rule 32(2) due to the
underlying loan agreement not being attached to the particulars of
claim and the consequent defectiveness of the affidavit intended to
verify the cause of action which was improperly pleaded, should
be
upheld. Therefore the application for summary judgment should
be dismissed.
THE
MERITS OF THE OPPOSITION
[21]
For the reasons set out herein it is not even necessary to consider
the defence on the merits. Mr Rautenbach argued that Die
Sonskyn
Trust could not apply for debt review in terms of section 86 of the
NCA because of its status as a juristic person for
purposes of the
Act. He did not rely on any authority for this submission and
the argument was also not dealt with in his
heads of argument.
Ms Le Roux argued that even if that was the position, the
magistrate’s court did in fact issue an
order and also the
revised order referred to above and as long as a court order stands,
it should be accepted as correct.
In fact, applicant accepted
instalments in terms of the magistrate’s court’s order
for a period of nearly four years
without complaining and/or
objecting to the validity of the order.
[22]
It is unnecessary to deal any further with the merits of the
opposition, save to say that even if the point
in
limine
was not good, I would probably
have exercised my discretion in accordance with Rule 32(5) under the
circumstances in favour of
respondents and refused summary judgment
based on the regular payments received by applicant over the years
without objection and
lack of proof as to what amount is in arrears
at this stage.
COSTS
[23]
If summary judgment applications are dismissed, courts generally
order the costs to be costs in the main action. However
in
casu
it is apparent that nothing that
may happen during the trial between the parties can have an effect on
the pleadings with which
I am confronted. The applicant’s
application for summary judgment is totally defective and I would not
grant summary
judgment even if the application was unopposed.
Consequently there is no reason why respondents should not be awarded
costs.
ORDER:
[24]
Therefore the following orders are made:
1.
The
applicant’s application for summary judgment is refused with
costs.
2.
Respondents
are given leave to defend the main action.
J.P.
DAFFUE, J
On
behalf of applicant: Adv J.S. Rautenbach
Instructed
by:
E
G Cooper Majiedt Inc
BLOEMFONTEIN
On
behalf of first, second
and
third respondents: Adv L le Roux
Instructed
by:
Jordaans
Rijkheer Attorneys
BLOEMFONTEIN