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[2012] ZAFSHC 182
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Standard Bank of SA Ltd v GH Loubser Boerdery CC (1062/2012) [2012] ZAFSHC 182 (10 August 2012)
.
Free State High
Court, Bloemfontein
Republic
of South Africa
Case
No: 1062/2012
In
the
matter between:-
THE
STANDARD BANK
OF
S
A
LIMITED
Plaintiff
and
G
H LOUBSER BOERDERY CC
Respondent (Reg No. CK200310407 04t23)
Heard
on:
14 June 2012
Coram:
Mocumie J
Judgment:
Mocumie J
Delivered
on:
10
August 2012
MOCUMIE.
J
[1]
This is an opposed application in which the
applicant seeks relief for an order in the following terms:
“1.
That
the
Applicant
be
authorised
and empowered to
perfect
its
security
in
terms of the special notarial covering bond
8N1188/2AAT in respect of forty-five dairy cows ("the cows"),
being the property
of the Respondent;
2.
That the Applicant be authorised to enter in and upon the premises of
the Respondent at the farm Goedehoop, Koppies, Free State
Province,
or any other premise of the Respondent where the cows may be found,
to exercise the rights afforded to the Applicant's
in terms of
clause 12 of Annexure “A” to the Applicant’s
founding affidavit, including the right to take and
retain possession
of the cows of the Respondent as long as the Applicant may deem fit.
3.
That the Applicant be authorised to sell and dispense of the cows by
public auction or by private treaty, or otherwise, in such
a manner
and on such terms as the Applicant may decide and to convey a valid
title to any purchasers thereof. [Deleted during
the hearing on 14
June
2013]
4.
That the Applicant be authorised to remove the cows from the premises
of the respondent referred in prayer 1 above, for the
purpose of
dealing therewith in terms of this order.
5.
Should it be necessary, that the Sheriff of the High Court be
authorised to ex*cute the terms of 1 and 4 above on behalf of
the
Applicant.
6.
That the Respondent be ordered to pay the costs of this application
on the scaie as between attorney and client.
7.
Further and/or alternative relief."
[2]
Applicant is Standard Sank of South Africa Ltd, a company duly
incorporated and registered as a commercial bank and a credit
provider as
defined
in the National Credit Act, 34 of 2005 (“the Act”), which
has its principal place of business and registered
head office at 9th
Floor,
Standard
Bank Centre, 5 Simmonds Street, Johannesburg, Gauteng Province.
Respondent is G H Loubser Boerdery CC, a close corporation,
duly
incorporated in terms of the laws of the Republic of South Africa
with registered, address, and
domicilium citandi et executandi
,
at the farm
Goedhoop,
Koppies, Free State Province.
[3]
Although denied by respondent, on the basis of absence of proof of
the agreement, applicant alleged that on 22 October 2004
the parties
entered
into an oral agreement in terms of which the respondent opened a
business current account with an overdraft facility at
the applicant.
In
terms
of this oral agreement, the amount outstanding in terms of the
aforesaid overdraft facility was repayable by respondent to
it on
demand.
[4l
On 29 November 2006 applicant, through it;s duly appointed
representative, and respondent, representative by Gabriel Hendrik
Loubser
(“
Loubser”
)
and Christina Magdalena Loubser, entered into a business term loan
agreement, (“
the business term loan
”)
attached to the papers
as
annexure “B”. The material terms of the business term
loan were the following:
“7.1
The loan facility amount paid to or on behalf of, the Respondent
was an amount of R300 000-00;
Interest
would be charged at 1% (one percent) per annum above the prime
interest rate ruling from time to time;
The
interest payable by the respondent is calculated on a daily basis
from the outstanding balance, is charged monthly in arrears
on
a
date convenient to the Applicant and was due and payable
immediately. Any interest which is unpaid on the due date, would
be
capitalised
on that date;
The
Applicant may convert the business term loan facility to one
repayable on demand if any of the following default events
occurred:
7.4.1
if the Respondent breach of any of the terms of the business loan
or any other agreement between the Applicant and
the respondent,
and the Respondent fails to remedy the breach within seven (7)
days of receiving the notice to do so;
or
7.4.2
the Respondent fails to pay any amount due in terms of clause 7
of the letter of the grant, and the Respondent fails
to remedy
the breach within seven (7) of receiving the written notice to do
so.
The
principal debt, together with interest, was repayable b the
Respondent over an initial term of eighty-four months. The minimum
monthly
instalment payable by the Respondent is calculated using a
repayment factor of 1/45
th
of the facility amount. The
minimum
monthly
instalment is R6 666-67.
A
certificate signed by one of the managers of the Applicant, whose
appointment need not proved, will, on its mere production,
be
sufficient
proof, unless the contrary is proved, of the amount of the debt at
any time, the fact that the debt is due and payable,
the
rate
of interest payable, the date from which the interest is calculated
and any other matter relating to the debt.
The
Respondent will pay all fees, costs and charges referred to in the
business term loan, including legal costs on an attorney
and
client
scale.
[5]
On 16 September 2008 the parties again entered into another
agreement, a written agricultural production loan agreement (“the
agricultural
production
loan agreement”). A copy thereof is appended to the paginated
papers as annexure “D”.
[6]
The material terms of the agricultural production loan agreement
were following:
The
principal debt or credit limit available by the Respondent at the
inception of the afore-said agreement was an amount of
R1
million;
Interest
could be charged by the Applicant at a variable interest rate
linked to the prime interest rate by a margin of 0.75%
above
the
prime and was therefore subject to change;
The
term of the afore-said agreement was twelve mobths;
The
loan amount was repayable, in full, from the first crops proceeds
or was to be reduced as the proceeds from the sale of
the
crop
were received;
The
agricultural production loan agreement could not be carried over to
the next year and had to be fully repaid by
31 August 2009
;
The
respondent would be in default of the aforesaid agreement if it
failed to make payement, in full, on or before the payment
date
of
any amount owing by it.
[7]
In its founding affidavit applicant alleged that it complied with
the aforesaid agreements and respondent breached the agreement
by
faliling to
make
any necessary payments to it after due demand. In respect of:
the
oral agreement, the respondent is owing the amount of R161 492, 37
plus interest, calculated at the rate of 13.5% per annum,
calculated
daily and compounded monthly in arrears, from 25 Septemeber 2011 to
date of final payment to the applicant. A copy
of
the certificate of balance is appended to the papers as annexure
“F”.
the
business term loan, respondent is owing an amount of R235 857. 89
plus interest calculated at a rate of 10.5% per annum,
calculated
daily and compounded monthly in arrears, from 25 Septemeber 2011. A
copy of the certificate of balance is appended
to
the papers as annexure “C”.
the
agricultural production loan, respondent is nowing an amount R71
676. 82 plus interest at a rate of 11.25 per annum, calculated
daily
and compounded monthly in arrears, from 25 September 2011 to date
of the final payment to the applicant. A copy of the
certificate
of balance is appended to the paper as annexure “E”.
Applicant
alleged that respondent was currently indebted to it in the amount of
R479 522.09.
[8]
As security for payment by respondent to applicant of all monies
due, by respondent to applicant in general, the Notarial Bond
(annexure “A”)
was
registered in the Bloemfontein Deeds Registry on 18 January 2007.
[9]
The express terms of the Notarial Bond are:
The
respondent acknowledged and declared that it was indebted to the
Applicant in the amount of R3000 000-00 (Three Hundred
Thousand
Rand);
The
respondent renounced all benefits from the legal exceptions,
including
non numeratae
pecuniae, non causa debiti, errore
calculi,
revision
of accounts, no value received, excussion and division,
de
duobus vel pluribus reis debendi,
and
all other legal
benefits
and exceptions with the force, meaning and effect whereof it
declared itself to be fully acquainted;
The
Respondent hypothecated to and in favour of the Applicant
forty-five dairy cows at R7 000-00 (Seven Thousand Rand) per
cow
in general;
The
Respondent declared and acknowledged that the notarial bond is
continuing covering security for all and any sums of monies
that
may now or in future be due, owing and payable by the Applicant
from the Respondent from whatsoever cause arising.
The Respondent
consented to attorney and client costs in the event of it breaching
the notarial bond.” (Own emphasis)
[10]
The Notarial Bond further provides
inter alia
as
follows:
In
the event of the Respondent failing to pay any amount payable under
the notarial bond on the due date or commit a breach
of
any
term of the condition of the notarial bond, then in such event the
Applicant would, without prejudice of any other right
or remedy
which
the Applicant has in terms of the notarial bond or other wise,
being entitled to:
19.3.1
to claim and recover from the Respondent the full amount of the
Respondent's indebtedness towards the Applicant;
19.3.2
to enter any premises occupied by the Respondent and to take
possession of any time of the assets thereof decribed in
the
notarial
bond;
19.3.3
to keep the aforesaid assets as security for payment of the amounts
outstanding by the Applicant to the Respondent and
to
keep
same in its possession as long as the Applicant may deem it
necessary; (Own emphasis)
19.3.4
to sell assets by way of public auction, or otherwise in the sole
discretion of the Applicant deems necessary.”
[11]
In his answering Loubser, on behalf of respondent,
denied
that there was an oral agreement entered into in terms of which
respondent opened a business current account with an
overdraft
facility at applicant. Respondent further denied owing any amount
in terms of this alleged oral agreement.
denied
that the certificate of balance constitutes sufficient proof of the
indebtedness and that the applicant has provided
any proof
of
the amount of R300 000-00 or how was it taken up.
denied
that it is in breach of the agricultural production loan agreement
and challenges the certificate balance.
[12]
Respondent further raised a point
in limine
that
applicant had not established a right to perfect its security, in
that the alleged indebtedness
of
the respondent has not been endorsed by any court of law by means of
a judgment or otherwise.
“1(1) If
Notarial bond hypothecating corporeal movable property specified and
described in the bond in a manner which redners
it eardily
recognised, is registered after the commencement of this Act
in accordance with the
Deeds Registries Act, 1937
, such property
shall-
(a) subject
to any encumberance resting upon it on the date of registration of
the bond; and
(b) notwithstanding
the fact that it has not been delivered to the mortgagee
be
deemed to have been pledged to the mortgagee as effectually as if it
had expressely been pledged and delivered to the
mortgagee.”
[16]
Harms JA referring to the work of Joubert (ed)
LAWSA
17
1
st
reissue para [517] in
Contract
Forwarding 9pty) Ltd v Chesterfin (Pty) Ltd
and
Others
2003
92) SA 253
(SCA) at 257E-H recently restated the law governing the
hypothecation of movable property fro security as follows:
“
The
holder of a general notarial bond does not enjoy a real right of
security in the assets subject to the bond. There is
nothing
to prevent the owner from dealing with and disposing of the assets
subject to the bond, or of bonding them to
another
creditor. The creditor cannot prevent the alienation or pledge of
the assets subject to the bond, cannot follow up
the
property in the hands of the acquirer and cannot prevent a
judicial attachment. The rights of the bondholder are of
importance
mainly upon insolvency . The bondholder is not a secured creditor
and is entitled to a preference over the
concurrent
creditors of the insolvent only with respect to the proceeds of
the assets subject to the bond. In order for such
a
right afforded to a creditor in terms of a notarial bond to be
registered as a real right actual possession of movable
assets
is a prerequisite, such a creditor must perfect its notarial bond
by taking physical possession of such assests
encumbered.
A
perfection clause entitles the holder of the bond to take
possession of the movables over which the bond had been
registered.
Such a clause amounts to an agreement to constitute a pledge and
will be enforeced at the instance of the
bondholder,
whereupon the creditor obtains a real right of security...”
[17]
Mr Els, on behalf of the respondent, submitted that the diary cows
concerned are readily identifiable as prescribed in s 1(1)
of the
Act,
thus,
there was no need for applicant to perfect its security. He submitted
further that Clause 13.3 of the Notarial Bond stated
that before
applicant
could invoke any of its right in terms of the Notarial Bond it must
have called upon respondent to deliver the dairy cows.
Absent
such
request the application ought to be dismissed.
[18]
Both counsel referred to
Die Standard Bank van Suid-Afrika en
Hendrik Christiaan Calitz
unreported judgment of Wright J
delivered
on 13 April 2000 in support and against the submission that it was
preremptory for the applicant to have requested respondent
to
deliver
the disputed dairy cows first before initiating these proceedings.
[19]
Mr Els urged me to follow the
Standard Bank v HC Calitz
matter as it was on all fours of this case. I cannot agree with him.
[20]
The
Standard Bank v HC Calitz
-case
is distinguished on the basis that applicant in that matter sought he
relief to perfect it security
without
any notice to respondent which was correctly described as a draconian
step to take and not to be condoned by courts. Secondly,
the
facts of the
Standard Bank v HC Calitz
case are different from the facts of this case.
[20]
Clause 13.1-13.3 of the Notarial Bond in this case provides:
“
Die
bank mag sonder benadeling van enige ander regte-
13.1
Die regte uitoefen wat ingevolge hierdie verband aan hom verleen is
met inbegrip van, maar nie beperk nie tot, daardie regte
was in 12
hierbo vermeld is-
13.1.1.
Of asonderlik of gesamentlik of in sodanige tye wat die bank geskik
nrag vind;
13.1.2.
self of deur middle van enige direkteur, bestuurder, beampte,
werknemer, diena ar.agent of onafhanklike kontrakteur deur
hom vir
hierdie doel be
noem;
13.1.3.
in afsonderlike regsgedinge(synde die verbandgeweer hiermee afstand
doen van die reg om te pleit dat sodanige regte tydens
een geding
uitgeoefen
moes gewees het);"
13.2
onverwyld op aanvraag enige koste of uitgawes wat redelikerwys by
die uitoefening van enige sodanige regte aangegaan is,op
die
verbangewer
verhaal;
13.3
indien die verbandgewer weier om op aanvraag besit van die bates
oor te gee,by enige bevoegde hof aansoek doe nom 'n
bevel vir die
lewering van
sodanige
bates."
[22]
This clause is couched in permissive language. Especially if read
with clause 12 of the same Notarial Bond, it gives applicant
several
options
to
exercise upon respondent's failure to comply with the terms and
conditions of the agreements including requesting respondent
to
deliver the
hypothecated
assets. But, it definitely does not prescribe that applicant must
first request respondent to return the hypothecated
assets. The
request
is but one of the options which applicant could have exercised and it
chose not to but opted for the court route which is
just as
permissible.
[23]
To that extent, in terms of the Notarial Bond in this case applicant
was not obliged to request respondent to deliver the cows
first
before it
approached
the court. There is simply no peremptory provision to that effect in
the Notarial Bond in this case unlike in the Standard
Bank v HC
Calitz
matter.
[24]
Mr Zietsman referring to the Supreme Court of Appeal case of lkea
Tradinq Und Desiqn AG v BOE Bank Ltd 2045 Q) SA 7 (SCA) submitted
that
the forty five dairy cows, referred to in the Notarial Bond,
were,without specific identification mark or number and thus not
readily identifiable
as
prescribed by section 1(1) of the Act to the extent that one was not
able to distinguish them from the rest of the other dairy
cows on
respondent's
property.
[25]
In lkea Tradinq above at 12F - D para [10] and [1 1] the Supreme
Court of Appeal stated: "The test for determining whether
an
item is 'readily
recognisable'from
the bond in terms of s 1(1) ...is whether third parties can
deterrnine the identity of each asset without regard
to extrinsic
evidence.
This is essential. ..., to avoid fraud and controversy, and leaves no
room for conflict... "
[26]
The dairy cows in dispute are identified on the Notarial Bond as
forty five dairy cows without any specific reference to any
distinct
features or
description.
ln my view, this lack of clear and specific distinction of the
particular forty five dairy cows in dispute on the Notarial
Bond or
other wise
made
it virtually impossible to separate them from others if attached by
other creditors or to trace them in the event that they
were removed
from
where
they were. In my view, the description of the forty five dairy cows
in dispute does not satisfy the provisions of sectionl
(1) Even if
lmay be
wrong
on this, respondent has, in any event and over and above clause
3.3.1, also encumbered all its movable assets in terms of
clause
3.3.2 of
the
Notarial Bond. The fifty five dairy cows automatically fall
thereunder.
[27]
The argument that the dairy cows were milked every day and if
removed from their environment, might suffer stress and not
be as
productive
as
they should be, which will result in hardship for respondent and
others affected such as employees and that its business can
close
down if
applicant
is allowed to perfect its security cannot stand. I find it highly
improbable that applicant can insist to take possession
of the dairy
cows
only
to let them die from stress or rack of proper care at the risk of
forfeiting what is due to it. Neither can I disregard the
clear
intention between
the
parties to be bound by the terms and conditions agreed upon in the
event of failure to comply with any such terms and conditions
by any
party.
Contrary to what was strenuously suggested on behalf of respondent,
the circumstances of this case are totally different
from the harsh
circumstances
which prevailed in Havnes v Kinq williamstown Municipalitv
1951 (2)
SA 371
(A).
[28]
I am satisfied that applicant has proven its case on a prima facie
basis that the amounts, referred to in the certificates
of balance as
per
annexures
"C" ,"E" and "F" to the founding
papers, are in fact due to applicant. Appiicant has further
proven
that !t complied with the aforesaid
agreements
and that respondent breached the agreements by failing to make
necessary payments to applicant after due demand by applicant.
The
reasons respondent has advanced why it failed to comply with the
clear terms of the agreements are not relevant at this stage,
in this
type of
proceedings.
[29]
I am bound to follow the Supreme Court of Appeal's decision of
Contract Forwardinq Ltd
referred to above where the
Court stated that
applicant
in a situation such as this is in the same position as any other
creditor and has no better rights than other creditors
unless and
except if it
establishes
its rights by taking possession of the hypothecated assets.
[30]
This begs the question. lf applicant in this case is prevented from
exerting its rights in terms of a clear and unequivocal
agreement
between it
and
respondent what other options does it have? None.
[31]
ln the circumstances, I am of the view that applicant is entitled to
the relief sought based on the agreement between the parties
as per
clause
9.9.3
of the Notarial Bond:
“to
keep the aforesaid assets as security for payment of the amounts
outstanding by the Applicant to the Respondent and to
keep same
in
its possession as long as the Applicant may deem it necessary...”
[32l
l am furthermore satisfied that applicant has established a right to
the relief it seeks. lts security needs protection.
l33l
lnsofar as costs are concerned there is no reason why the genera rule
applicable to costs should not app|y'. ln the instance,
I make the
following
order:
ORDER:
"The application is
granted with costs”
On
behalf of applicant: Adv P Zietsman SC
lnstructed
by:
Matsepes
lnc
BLOEMFONTEIN
On
behalf of Respondent: Adv J Els
Instructed
by:
Rosendorff
Reitz Barry
BLOEMFONTEIN