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[2012] ZAGPPHC 162
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Friend v Sendal (A973/2010, 24425/2009) [2012] ZAGPPHC 162; 2015 (1) SA 395 (GP) (3 August 2012)
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT,
PRETORIA
(REPUBLIC OF SOUTH AFRICA)
Appeal
Number: A973/2010
Case
number: 24425/2009
Date:03/08/2012
In
the matter between:
ADRIAN
SEAN
FRIEND
.......................................................
Appellant
and
KAY
SENDAL
.........................................................................
Respondent
JUDGMENT
Handed
down - 03/08/2012
Heard
on 25 July 2012
'
Coram: Legodi J
Fabricius
J
Kubushi
J
LEGODI
J
[1]
This is an appeal against a judgment handed down by Kollapen AJ as he
then was in terms which the appellant was ordered to pay
the
respondent the sumofR620 000.
[2]
The appellant was a respondent in the court a quo and the respondent
was the applicant. The appellant was also ordered to pay
an interest
accrued on the capital amount calculated on the applicable interest
rate levied by the Standard Bank from time to time
on unsecured
overdraft facility from the 2 December 2008 to the 1 March 2009 in
the sum of R30 515.89
[3]
The appellant was further ordered to make payment to the respondent
for interest accrued on the capital amount calculated on
the
applicable interest rate levied by Standard Bank from time to time on
unsecured overdraft facility from 2 March 2009 to date
of payment.
Lastly, the appellant was ordered to pay the costs of the
application.
[4]
As a brief background leading to the application in the court a quo
against the appellant, on or about the 10th December 2006,
the
appellant in writing acknowledged that he was indebted to the
respondent in the amount of Rl 225 000. He also undertook to
pay the
said amount of Rl 225 000 in full on or before the 1st December 2007.
Lastly, he undertook to pay interest on the aforesaid
amount
calculated at prime rate charged by Standard Bank from time to time
on the unsecured overdraft facilities. The interest
was to be paid
monthly in full on or about the first day of every month commencing
on the 1 December 2006.
[5]
By the 1 December 2007, the appellant had paid portion of the capital
amount, but failed to make payment of the remainder of
the capital
amount, leaving a capital amount outstanding of R620 000.
[6]
The respondent subsequently, instituted motion proceedings against
the appellant for the payment of R620 000 plus interest.
The matter
came before Kollapen AJ as he then was and on the 15 September 2010,
he handed down judgment as indicated in paragraphs
1, 2 and 3 of this
judgment.
[7]
There were two defences that were raised by the appellant in the
court a quo. The first one was that acknowledgement of debt
in
question was a credit agreement as envisaged in the National Credit
Act. It was therefore contended on behalf of the appellant
in the
court a quo that the respondent was not entitled to institute the
application against the appellant without having given
a notice in
terms of section 129 of the
National Credit Act 34 of 2005
. Secondly,
it was argued that inasmuch as the acknowledgement of debt amounted
to a credit agreement, the agreement was null and
void as the
respondent was not registered as a credit provider.
WAS
THE RESPONDENT OBLIGED TO REGISTER AS A CREDIT PROVIDER?
[8]
The court a quo found that the acknowledgment of debt in question,
constituted a credit agreement as envisaged in
section 8(4)(f)
of the
Act. The section provides that an agreement, irrespective of its form
but not including an agreement contemplated in subsection
(2),
constitutes a credit transaction, if it is any other agreement other
than a credit facility or credit guarantee, in terms
of which payment
of an amount owed by one person to another is deferred, and any
charge, fee or interest is payable to the credit
provider in respect
of -
(i)
the agreement; or
(ii)
the amount that has been deferred.
[9]
The acknowledgement of debt referred to earlier in this judgment at
all relevant times deferred payment of the sum of Rl 225
000 to 1
December 2007, the acknowledgment of debt having been signed on the 9
November 2006. Secondly, the acknowledgment of debt
provided for
payment of an interest.
[10]
The court a quo therefore correctly found that the acknowledgement of
debt was a credit agreement as envisaged in
section 8
(4)(f). The
court a quo also found that the acknowledgement of debt was not a
'credit agreement between parties dealing at 4arm's
length' to which
the Act applies.
[11]
Counsel for the appellant in his written heads of argument took the
point as follows:
"It
was never in dispute that the acknowledgement of debt was an
agreement as contemplated in
section 8(4)(f)
of the
National Credit
Act 35 of2005
, the "NCA " and the court a quo indeed found
accordingly in consequence it carried with it an obligation on the
part
of the respondent to be registered as a credit provider in terms
of
section 40
of the NCA. It being common cause that the respondent
had never been registered as a credit provider, the appellant
contended that
the acknowledgment of debt was void".
[
12] The appellant did not seem to want to pursue the point that the
respondent did not give a notice in terms of
section 129
before the
institution of the application against the appellant in the court a
quo. I want to assume that this is so, because the
respondent had in
any event later given such a notice. The appellant took no step to
resort to any remedy under
section 129.
[13]
The issue around
section 40
prompts one to raise a question whether
the respondent was obliged to register as a credit provider for the
one transaction that
he had concluded with the appellant? A credit
provider in respect of a credit agreement is in terms of
section 1
defined as:
the party who supplies goods or
services under a discount transaction, incidental
credit agreement or instalment
agreement,
(b)
the party who advances money or
credit under a pawn transaction;
(c)
the party who extends credit
under a credit facility;
(d)
the mortgagee under a mortgage
agreement;
(e)
the lender under a lease;
(f)
the lessor under a lease;
(S)
the party to whom an assurance
or promise is made under a
credit guarantee;
(h)
the party who advances money or credit to another under any other
credit agreement;
or
(i)
any other person who acquires the rights of a credit provider under a
credit
agreement after it has been entered into. "
[14]
It is clear from the definition that with the acknowledgment of debt
concluded between the appellant and the respondent, the
respondent
does not fall within the categories as set out in the definition
above.
[15]
True, the acknowledgement of debt in question, is a credit agreement
as envisaged in
section 8
(4)(f). But, that did not automatically
make the respondent to be a credit provider who was obliged to
register in terms of
section 40.
Simply put, the respondent was not a
credit provider as defined; and that makes sense as it would appear
from the provisions of
the Act discussed hereunder.
[16]
Section 40
deals with registration of credit provider and of
relevance provides as follows:
"40.
Registration of credit providers.-(l) A person must apply to be
registered as a credit provider if
(a)
that person, alone or in conjunction with any associated person, is
the credit provider under at least 100 credit agreements,
other than
incidental credit agreements; or,
(b)
the total principal debt owed to that credit provider under all
outstanding credit agreements other than incidental credit
agreements, exceeds the threshold prescribed in terms of
section
42(1).
(2)
In determining whether a person is required to register as a credit
provider-
(a)
the provisions of subsection (1) apply to the total number and
aggregate principal debt of credit agreements in respect of which
that person, or any associated person, is the credit provider;
(b)
each associated person that is a credit provider in its own name and
falls within the requirements of subsection (1) must apply
for
registration in its own name;
(c)
a credit provider that conducts business in its own name at or from
more than one location or premises is required to register
only once
with respect to all of such locations or premises; and
(d)
(3)
A person who is required in terms of subsection (I) to be registered
as a credit provider, but who is not so registered, must
not offer,
make available or extend credit, enter into a credit agreement or
agree to do any of those things.
(4)
A credit agreement entered into by a credit provider who is required
to be registered in terms of subsection (1) but who is
not so
registered in terms of this section, may voluntarily apply to the
National Credit Regulator at any time to be registered
as a credit
provider. "
[17]
It looks like subsection (l)(a) envisages a situation where a person
frequently provides credit or concludes credit agreements
as defined.
For such a person to be obliged to register as a credit provider, the
subsection must have contemplated a situation
where he or she, either
alone or in conjunction with any associated person, will conclude
credit agreements of under at least 100.
[18]
Further, subsection (2)(a) seems to make it even clearer. In
determining whether a person is required to register as a credit
provider, subsection 1 applies to a total number and aggregate
principal debt of credit agreements in respect of which a person
or
any associated person is a credit provider. (Underlining is my own
emphasis).
[19]
Subsections 1(a) and (2)(a) of
section 40
appear to contain the
closest provisions relevant to the respondent in the present case;
and I am satisfied that they do not support
the notion that the
respondent was under an obligation to register as a credit provider.
[20]
Counsel for the appellant strongly argued for an obligation to
register as a credit provider based on the provisions of
section 40(1
)(b) quoted earlier in paragraph 16 of this judgment. According to
him, subsection (l)(b) envisages inclusion of a single credit
transaction in respect of which the amount owed exceeds R500 000
referred to in
section 42(1)
of the Act. Remember, the amount in
terms of the agreement concluded between the appellant and the
respondent is Rl 225 000. Based
on all of this, we were urged to find
that the court a quo should have found that the transaction was
unlawful and void in terms
of
section 40(4)
read with the provisions
of
section 89.
[21]
I do not understand the provisions of section (l)(b) as referring to
a single principal debt exceeding the threshold or to
a single credit
outstanding agreement in respect of which the amount exceeds the
threshold as it was the case here.
[22]
The provisions of subsection 40(1 )(b) should be interpreted as they
read. It is "the total principal debt and under all
outstanding
credit agreements " that bring in an obligation to register as a
credit provider. It is the respondent's frequency
of providing
credits under subsection
40(1
)(b) that is envisaged. If this was not so, the subsection could
simply have been couched to read as follows:
"Registration
of credit providers. - (1) a person must apply to be registered as a
credit provider if-
(a)
............................. or
(b)
the principal debt owed to that credit provider under credit
agreement, other than incident credit agreements, exceeds the
threshold prescribed in terms of
section 42(1).
[23]
I think for the argument raised on behalf of the appellant, the
purpose or object of the Act is also an aspect that should
not be
overlooked. Its main purpose is in terms of
section 3
to promote and
advance the social economic welfare of South Africans, promote a
fair, transparent, competitive, sustainable, responsible,
efficient,
effective and accessible credit market and industry and to protect
consumers. (The underlined words are my own emphasis).
[24]
Therefore, subsection (l)(b) of
section 40
must be seen as having
been directed at those who are in credit market and or industry or at
those who intend to participate in
the credit market and or industry.
The respondent in this once off transaction, cannot be seen as
participating in the credit market.
[25]
Section 2
of the Act requires one to interpret the provisions of the
Act in a manner that gives effect to the purpose set out in
section
3
, bearing in mind that the purpose of the Act is also to protect the
consumers. In the circumstances of the case, I cannot therefore
agree
that the transaction is covered under subsection (l)(b) of
section
40.
[26]
The suggestion that
section 89(4)
read with subsection 2(d) makes it
clear that there was an obligation on the part of the respondent to
register as a credit provider
despite the fact that it was a single
transaction, ought to be rejected. For subsection (4) to be
applicable, there must have been
an obligation to register as a
credit provider. The respondent was unregistered and was not required
to register in terms of the
Act for the reasons already set out
above.
[27]
There is another provision that has been raised by the respondent's
counsel in his written heads of argument. In terms of subsection
(4)
of
section 40
, a credit agreement entered into by a credit provider
who is required to be registered in terms of subsection (1), but who
is not
so registered, is an unlawful agreement and void to the extent
provided in
section 89.
Section 89
deals with unlawful credit
agreements. Remember, the issue of unlawful agreement, is the
contention by the appellant, although
he did not initially
specifically refer to
section 89.
Counsel for the respondent referred
us to the provisions of
section 89(5)
which of relevance, provide as
follows:
"89.
Unlawful credit agreements -(1)
................................................
(2)
(3)
(4)
................................
(5)
If a credit agreement is unlawful in terms of this section, despite
any provision of common
law, any other legislation, or any
provision of an agreement to the contrary, a court must
order
that-
(a)
the credit agreement is void as form the date the agreement was
entered into;
(b)
the credit provider must refund to the consumer any money paid by the
consumer under that agreement to the credit provider,
with interest
calculated-
(i)
at the rate set out in that agreement; and
(ii)
for the period from the date on which the consumer paid the money to
the credit provider, until the date the money is refunded
to the
consumer; and
(c)
all the purported rights of the credit provider under that credit
agreement to recover any money paid or goods delivered to,
or on
behalf of, the consumer in terms of that
agreement are either
(i)
cancelled, unless the court concludes that doing so in the
circumstances would unjustly enrich the consumer; or
(ii)
forfeit to the State, if the court concludes that cancelling those
rights in the circumstances would unjustly enrich the consumer
".
[28]
I did not find it necessary to deal with the provisions of
subsections (2) and (3) of
section 89.
It suffices to mention that
the appellant could not be seen as a consumer referred to in these
subsections including subsection
( 4) . I am therefore satisfied that
section 89
is not applicable in the present case. Whilst the
agreement between the appellant and respondent is a credit agreement
as envisaged
in
section 8(4)
(f) of the Act, the respondent was not
obliged to register as a credit provider in terms of
section 40
for a
once off transaction. I do not think it could ever have been the
intention of the law makers. I now turn to deal with the
other issue
that was raised and strenuously argued before us by counsel on behalf
of the appellant.
WHETHER
THE APPELLANT AND THE RESPONDENT WERE DEALING AT AN ARM'S LENGTH?
[29]
The issue was raised with regard to the applicability or otherwise of
the
National Credit Act to
the acknowledgement of debt in question.
Section 4
of the Act deals with the application of the Act to credit
agreements. Of relevance to the issue raised in the present case, it
reads as follows:
"4.
Application of Act - (I) Subject to the provisions of sections 5 and
6, this Act applies to every credit agreement between
parties at
arm's length and made within or having an effect within, the Republic
except -
(a)
....
(i)
(ii)
(Hi)
(b)
....
(c)
....
(d)
....
(2)
For greater certainty in applying subsection (I) -
(a)
....
(b)
In any of the following arrangements, the parties are not
dealing
at arm's length:
a)....
do....
(Hi)
a credit agreement between natural persons who are in a familial
relationship and-
(aa)
are co-dependent on each other; or (bb) one is dependent upon the
other; and
(iv)
any other arrangement-
(aa)
in which each party is not independent of the other and consequently
does not necessarily strive to obtain the utmost possible
advantage
out of the transaction; or
(bb)
that is of a type that has been held in law to be between parties who
are not dealing at arm's length;"
[30]
I had difficulties in understanding the dispute around this issue. I
am saying this because if the acknowledgment of debt in
question
amounts to
a
credit agreement as the court a quo had found that the provisions of
section (8), (4)(f) were applicable to the acknowledgment
of debt,
the Act should therefore be found to be applicable. For example,
provisions of section 129, although I am not making a
definite
finding in this regard for the reason that the appellant ultimately
gave notice in terms of section 129. The provisions
of section 40 are
however not applicable to the agreement for the reasons stated
earlier in this judgment.
[31]
It does not matter whether or not the parties were dealing at arm's
length. It would still not have been necessary to register
as a
credit provider in terms of section 40. It looks like the issue was
intended to advance the argument that the acknowledgement
of debt
should have been seen in the context of the alleged oral agreement.
[32]
However, for the purpose of the issue under discussion, it suffices
to mention that the Act is in any event applicable by virtue
of the
acknowledgment of debt having been found to be a credit agreement in
terms of section 8(4)(f). In other words, it is a credit
agreement
for the purpose of the Act. But as I said, it did not mean the
respondent was under an obligation to register as credit
provider. In
any event, I am satisfied that the court a quo correctly found that
the parties were not dealing at arm's length with
each other.
[33]
In as much as counsel for the appellant sought to persist with the
argument in this regard during his oral argument, it might
be
necessary to
take
it a step further. For this purpose, the provisions of subsections
(2)(b)(iv)(aa) and (bb) are important.
[34]
One can say the respondent and the appellant were in a familial
relationship with each other. The acknowledgement of debt instead
of
being entered into between the respondent and Celtic Group, was on
the appellant's version, concluded between the two of them
allegedly
'hastily' so.
[35]
Judging by what the appellant said in his e-mails to the respondent,
it was almost like saying to the respondent, "I am
dependent on
you". For example, in the e-mail that was sent on the 12
November 2008, to the respondent, the appellant expressed
himself as
follows: "/ am now stuck in more trouble than before, as not
only have I stuffed up my personal finances with building
that stupid
house. I have ended up with this entire bill on my own shoulders ...
/
can get my hands on some money now, but it means I would have to cash
in my policies ... pensions and such, which as you aware
currently
have greatly reduced values .. but im(sic) kind of in a situation now
where if I could somehow get this whole tacky back
door deal rid of
it would be worth it ... so let me pay you the 1/3 portion that I owe
and be done with this thing? Being 200 000
I
am after all be the guy that worked out a deal that you could sell
your shares with bargaining power and not as a dismissed director..
Kay ... / have done enough now and you are kicking a guy that is down
.. so this doesn't tally up with the meeting you and I had
where we
agreed that we should walk out of this as gentlemen and not spend the
rest of our lives bickering... "
[36]
The respondent made several concessions to accommodate the appellant
throughout in the payment of the outstanding amount. He
did not
appear to be waiting to strive to obtain the utmost possible
advantage out of the transaction at the expense of the appellant.
The
language or choice of words in the e-mails that form part of the
record of the proceedings, in my view, suggests parties who
were not
dealing at arm's length. I do not find it necessary to go into the
details of the e-mails. If they were not dealing at
arm's length, the
provisions of the Act were not applicable to them irrespective
whether or not the transaction amounted to credit
agreement as
envisaged in section 8(4)(f) of the Act.
WHETHER
THE APPELLANT WAS ENTITLED TO PLEAD FACTS OUTSIDE THE ACKNOWLEDGMENT
OF DEBT?
[38]
Counsel for the respondent in his written heads of argument raises
the issue as follows:
"Whether
Friend's contentions pertaining to the alleged underlying agreement
and the alleged breach thereof and his contention
that the AOD did
not reflect the true contention of the parties constituted a defence?
"
[39]
"AOD" quoted above refers to acknowledgement of debt. I
could not have raised the issue much better. As correctly
pointed out
by counsel on behalf of the respondent, the intention of the parties
is clearly and unambiguously contained in the
acknowledgement of
debt. For example, clauses 1.10, 2 , 3 and 4 read as follows:
"1.10
Acknowledge that I am indebted to KAYSENDEL (the Creditor) in the sum
of Rl 225 000,00 (One million two hundred and twenty
five thousand
rand only).
2.
I will pay the aforesaid amount as follows:
2.1
The full amount of Rl 225 000,00 will be settled on or before 1
December 2007;
2.2
I will pay interest on the aforesaid amount, calculated at the prime
rate charged by Standard Bank from time to time, on unsecured
overdraft facilities. The interest will be paid monthly, in full, on
or before the first day of every month commencing on 1 December
2006.
3.
If anyone interest payment is not paid on due date, the full balance
outstanding will immediately become due and payable and
the Creditor
will be entitled to proceed against me without notice for recovery
thereof
4.
I FUTHER agree that, should I fail to make payments in terms of this
offer the Creditor may at its option and without notice
to me apply
for:
4.1
Judgment in the Magistrate's Court for the amount of the outstanding
balance of the debt in terms of this acknowledgment together
with
costs and the costs of a Request for Judgment and
4
An Order in the said Magistrate ys Court for payment thereof in
accordance with this offer "
[40]
The appellant sought to suggest that the acknowledgement of debt was
linked to an oral agreement in terms of which the respondent
is
alleged to have made an undertaking to this effect:
"14.1
The Applicant would leave Celtic on a "clean break19 basis,
without further ado, and that the sale of shares transaction
would
follow smoothly.
14.2
The Applicant would return all the documents removed from Celtic's
Durban office which I have referred to in paragraph 9 above.
14.3
The Applicant would return the laptop belonging to Celtic.
14.4
The Applicant would not disturb or approach any of Celtic's staff
members.
14.5
The Applicant would not interfere with, or approach any of Celtic's
customers or suppliers.
14.6
The Applicant would not conduct any business similar to that of
Celtic in Zambia. "
[41]
The respondent is said to have breached one or more of these
undertakings. Based on the breach, it was suggested that the
appellant was not obliged to pay the respondent.
[42]
As a brief background set out by the appellant in his answering
affidavit, the respondent was one of the shareholders in Celtic
Group
of Companies. The appellant was also one of them. The respondent sold
his shares in the Celtic Group to a third party. It
is alleged that
Celtic Group intended to give the respondent an ex gratia payment
following the sale of his shares to a third party.
It is alleged that
the ex gratia payment was hastily embodied in the form of an
acknowledgement of debt in the appellant's name.
(The underlining is
my own emphasis).
[43]
Remember, the aim and effect of the parole evidence rule is to
prevent a party to a contract which has been integrated into
a single
and complete written agreement from seeking to contradict, add to or
modify the written agreement by reference to extrinsic
evidence and
in that way to redefine the terms of the contract. (See Johnson v
Leal
1980 (3) SA 927
(A) at 943B).
[44]
It is exactly what the appellant sought to do which is prohibited by
the rule. For example, he sought to suggest in the court
a quo that
it was actually not him who was liable to the respondent in terms of
the acknowledgment of debt, but rather the Celtic
Group. On the other
hand he suggested that it was not only him who was liable to the
respondent, but that other two shareholders
were also liable and that
he was only liable to the one third of the amount thereof.
[45]
Whatever circumstances under which he had signed the acknowledgment
of debt, whether 'hastily' so or not, he had made himself
liable to
the respondent in terms thereof. Whatever arrangements he might have
made with Celtic Group and or with other shareholders
thereof, it had
nothing to do with the respondent. There is nothing in the
acknowledgment
of debt which suggests any connection between the signing thereof by
the appellant and the fact that it was conditional
on certain
undertakings been fulfilled or complied with.
[46]
I am satisfied that the court a quo correctly refused to consider the
appellant's defence beyond the acknowledgement of debt.
Therefore,
the other defence relating to dispute of facts ought to be rejected
on the basis that there was just no defence in law
to exonerate the
appellant based on the alleged oral agreement.
[47]
Consequently, the appeal is hereby dismissed with costs.
M
F LEGODI
JUDGE
OF THE HIGH COURT
I,
AGREE
H
J FABRICIUS
JUDGE
OF THE HIGH COURT
I,
AGREE
E
M KUBUSHI
JUDGE
OF THE HIGH COURT
APPELLANT'S
ATTORNEYS
..................................
RESPONDENT'S ATTORNEYS
VAN
DER WESTHUIZEN ATTORNEYS
.................
LINDSAY KELLER ATTORNEYS
Landmark
Building
..........................................
c/o
FRIEDLAND HART SOLOMON NICOLSON
1st
Floor, The
Link
......................................................
4-301
& 6-102 Momentum Office Park
13
Umgazi Road
........................................................
97
Steenbok Avenue
MENLO
PARK, PRETORIA
........................................
MONUMENT
PARK, PRETORIA
TEL:
012 424 6500
.....................................................
TEL
NO. 012 429 0200
REF:
CEL 1/0035-2641/MZ
.........................................
REF:
Mr Painter