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[2013] ZAKZDHC 56
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Buckle v Hudson (9031/2012) [2013] ZAKZDHC 56 (15 October 2013)
IN
THE HIGH COURT OF SOUTH AFRICA KWAZULU NATAL - DURBAN
CASE
NO: 9031/2012
In
the matter between:
PAUL
BUCKLE
Plaintiff
and
CATHY
MARY HUDSON
Defendant
JUDGMENT
K
PILLAY J
[1]
The Plaintiff instituted action for an amount of R45 000.00 together
with interest arising out of a loan agreement. The parties
have
agreed on the quantum being R97 485.55. The Plaintiff no longer
pursues, rightly so, the rate of interest set out in the loan
agreement.
[2]
The facts giving rise to this claim are as follows.
[3]
According to Plaintiff, he leased the Defendant’s property at
35 Kirkiington Estate (the property) during July 2008. He
then
decided to purchase the property and accordingly made an offer of
R3.8 million. However, the Defendant still owed R550 000.00
on the
Bond. The Plaintiff purchased curtains from the Defendant for an
amount of R100 000.00 thus leaving a shortfall of R450
000.00.
[4]
To address the shortfall, the parties entered into two loan
agreements for R280 000.00 and R170 000.00. The R170 000.00 loan
was
repaid. To secure the outstanding loan of R280 000.00 the Defendant
put up another property, situate at 20 Peatties Lake (the
log cabin),
as security. The Plaintiff testified that clause 5.3 of the agreement
entered into in respect of the log cabin, simply
meant that if the
log cabin was not sold by 1 May 2011, which is the due date for the
payment of the loan, then he would take ownership
of the property at
R1.00 or the advance could be settled in cash. It did not mean that
the Defendant no longer had to repay the
difference if the property
was sold for less.
[5]
In fact, it was emphasized that should the log cabin be sold for R350
000.00 (the price at which Defendant alleged it was valued),
the
surplus after the R280 000.00 plus costs were settled, would then be
paid over to the Defendant.
[6]
He stated that as a businessman (Plaintiff is the Head of Merchant
West Asset Finance) it would be ludicrous to lend a person
a sum of
money, interest free, and not expect to get at least the full capital
repaid in full. The log cabin was eventually sold
for about R235
000.00.
[7]
The Plaintiff was then referred to an e-mail dated 20 November 2011
which he confirmed he received from the Defendant wherein
she states
that she realised that she had to sell the log cabin and that any
shortfall that resulted would be for her account.
He says that it is
clear that she accepted, as at that date, that she would be liable
for the shortfall if the log cabin was sold
for less than the loan
amount.
[8]
He was asked to comment on a letter dated 7 March 2012 sent to him by
the Defendant’s attorneys wherein the following
was stated:
“
Our
client explained to the writer that when she signed this
agreement
accompanied by her sister Anick Hewitt it was agreed between the
parties, and correctly recorded in the agreement
,
that
if our client had not paid the loan to your client by the 1st May
2011 in cash then your client would take ownership of the
log cabin
and that would be in full and final settlement of the loan.
”
[9]
He disagreed with the contents and stated it differed from the e-mail
of 20 November 2011. The reason he attributed to the difference
was
that the Defendant would by then have known that the offer for the
log cabin was less than the loan amount and there would
therefore be
a shortfall. The Plaintiff was not seriously challenged in
cross-examination,
[10]
The Defendant testified that the Plaintiff felt comfortable in
lending her the amount of R280 000.00, because an estate agent
had
indicated that the log cabin would fetch an amount of R350 000.00.
Her understanding of Clause 5.5 of the agreement, was that
the log
cabin would be security for the R280 000.00 loan; that the Plaintiff
would take ownership of the log cabin on 1 May. If
the log cabin was
sold for more than R280 000.00, she would be entitled to keep the
balance.
[11]
She was referred, to her e-mail to the Plaintiff dated 20 November
2011 wherein she stated 7
then
realised that I had to sell Peatties Lake and
,
whatever
shortfall
was
for
my account
This e-mail was sent before the sale of the log cabin. Her
explanation of this e-mail was that what she
“heard”
and what she “
signed"
were two different things. It was put to her that the plain meaning
of the words in her e-mail did not support her present explanation
of
the words in question.
[12]
It also emerged that the aforesaid e-mail does not appear on the list
of discovered documents. It was suggested to her that
this omission
was deliberate as the contents of the said e-mail would be
detrimental to her defence. She gave a vague response
about why the
aforesaid e-mail was not disclosed. During her testimony she stated
that it was her understanding that no interest
was payable until she
was referred to clause 6.2, which provided for interest.
[13]
This was highlighted to demonstrate that there was dissonance in what
she thought she had agreed to and what was in fact agreed
upon.
Questioned by the Court as to what the Plaintiff understood he would
get from the sale of the log cabin, her response was
that the
Plaintiff understood he would receive R280 000.00.
[14]
She also conceded that she did not, at any stage, tell the Plaintiff
that he had to take transfer of the log cabin. It would
appear that
the Defendant places some reliance on Clause 3 of a mandate agreement
which made reference to the sale of the log cabin.
The Defendant
agreed that the mandate agreement was separate from the loan
agreement.
[15]
That concluded the evidence for the Defendant.
[16]
It is common cause or not in dispute that:
a)
The Defendant did not repay the loan amount of R280 000.00 by 1 May
2011, being the due date;
b)
The log cabin was sold and realized a net amount, after commission,
of R235 000.00 which was paid to the Plaintiff thus leaving
a
shortfall of R45 000.00;
c)
It was agreed between the parties that interest would be payable at
the rate of R15.5% per annum.
[17]
The issue in this case is the interpretation to be afforded to clause
5.5 of the loan agreement This clause is set out as follows:
“
Should
20 Peatties Lake not be sold by the 1st of May 2011 the lender shall
take ownership of the aforementioned property at R1.00
(One Rand) or
the advance can be settled in cash.
"
[18]
Clause 2.1.5 of the loan agreement which falls under the heading
“
Interpretation*
defines "
the
capitar
as R280 000.00 (Two Hundred and Eighty Thousand Rand only) It is also
instructive to set out Clause 5.3 of the loan agreement.
"It
is recorded that Cathy is in the process of arranging for the sale of
20 Peatties Lake and it is agreed that the Lender
shall be pay the
proceeds of this sale “R280 000” into the Lenders account
48 hours after it shows in Cathy’s
account.
”
[19]
It is clear from this clause that what was envisaged was that the
sale of the log cabin would generate no less than the R280
000.00
which was the outstanding amount of the loan.
[20]
The Plaintiff submits that clause 5.5 is plain and unambiguous in
that it creates a very simple contractual consequence namely
that if
the loan was not repaid on the due date then the Plaintiff would take
ownership of the log cabin as security. The alternative
to that was
that if the Defendant did not want the Plaintiff to take the log
cabin, then she had to settle the advance (R280 000.00)
in cash.
[21]
The construction placed by the Defendant on the aforementioned clause
is somewhat different. The Defendant contends that the
clause,
sensibly interpreted, meant that once the Plaintiff took ownership of
the log cabin on 1st May 2011, her indebtedness to
him would be
discharged in its entirety.
[22]
The recent case of
Natal
Joint Municipal Pension Fund v Endumeni Municipality
1
aptly illustrates the present state of the law on the construction of
documents,
“
Interpretation
is the process of attributing meaning to the words used in a
document, be it legislation, some other statutory instrument,
or
contract, having regard to the context provided by reading the
particular provision or provisions in the light of the document
as
a
whole
and the circumstances attendant upon its coming into existence.
Whatever the nature of the document, consideration must be
given to
the language used in the light of the ordinary rules of grammar and
syntax; the content in which the provision appears;
the apparent
purpose to which it is directed and the material known to those
responsible for its production. Where more than one
meaning is
possible each possibility must be weighed in the light of all these
factors. The process is objective, not subjective
.
A
sensible meaning is to be preferred to one that leads to insensible
or unbusinesslike results or undermines the apparent purpose
of the
document Judges must be alert to, and guard against, the temptation
to substitute what they regard as reasonable, sensible
or
businesslike for the words actually used. To do so in regard to a
statute or statutory instrument is to cross the divide between
interpretation and legislation; in a contractual context it is to
make a contract for the parties other than the one they in fact
made
.
The
‘inevitable
point of departure is the language of the provision itself, read in
context and having regard to the purpose of
the provision and the
background to the preparation and production of the document
[23]
It is clear from the above that this court should interpret the
impugned clause in the context of the contract as a whole and
in a
manner which yields businesslike and sensible results.
[24]
In my view, the clause in question is clear and unambiguous. As
correctly submitted it creates a very simple contractual consequence.
That consequence is that if the loan was not repaid on the due date
then the Plaintiff would take ownership of the log cabin. The
alternative to that is the advance, could be settled in cash.
[25]
There is no reference in the clause to the effect that the
indebtedness of the Defendant shall be discharged in full if the
Plaintiff took the log cabin as security. As aptly held by the
Supreme
Court of Appeal
in
HNR
Properties CC and Another v Standard Bank of SA Ltd
2
"It
is therefore not permissible to import into the writing, whether by
reference to background or surrounding circumstances
or any other
source, an intention to release which is otherwise not ascertainable
from the actual language of the document relied
upon. If the position
were otherwise the very object of the requirement of writing would be
frustrated
."
The
Defendant, as Plaintiff submits, has neither sought rectification nor
contended for an implied or tacit term to that effect
[26]
In my view the interpretation contended for by the Plaintiff gives
business efficacy to the clause and yields commercially
sensible
results. In fact on the undisputed evidence of the Plaintiff, if the
log cabin was sold for more than R280 000.00, any
surplus over that
amount would be credited to the Defendant. From a business
perspective it could hardly make sense for the Plaintiff
then to be
liable for any shortfall if the log cabin were sold for less than
R280 000.00. It is not in dispute that the whole purpose
of the loan
to the Defendant was that the Plaintiff would be repaid the monies
loaned, it is clear to this Court that the log cabin
was indeed
intended to be regarded as security for payment and not a substitute
for repayment of the full amount of the loan.
[27]
I accordingly hold that the plain meaning of the impugned clause,
considered in the above context, gives effect to the Plaintiff’s
interpretation and must therefore be favoured. Correctly argued,
there is no ambiguity and consequently no need to resort to extrinsic
evidence to resolve any difficulties in interpretation.
[28]
In view of the amount of this claim, I have not been persuaded that
the Plaintiff is entitled to costs on the High Court scale
or even on
the Regional Court scale.
[29]
I therefore grant judgment against the Defendant as follows:
a)
Payment of the sum of R97 485.55;
b)
Interest thereon from 25 June 2013 to date of payment at the rate of
15.5% per annum;
c)
Costs of suit on the Magistrate’s Court scale.
K
PILLAY J
Date
of Judgment: 15 October 2013
Plaintiffs
Counsel: Advocate A Boulle
Instructed
By: Larson Falconer Hassan Parsee Inc
Plaintiff’s
Attorneys
2nd
Floor, 93 Richefond Circle
Ridgeside
Office Park
Umhlanga
(Ref:
P Falconer/dr/lm/17B093022)
Defendant’s
Counsel: Advocate C Jaipal
Instructed
By: L Swart & Company Incorporated
Defendant’s
Attorneys
227
Mathews Meyiwa Road
Morningside
Durban
(Ref:
KS/AH/01/Hudson)
1
2012 SA 593
at 603 para 18
2
2004(4)
SA 471 SCA Para 16