Summary of Judgment

Introduction

The proceedings were an application for summary judgment brought in an action instituted by Nedbank Limited (plaintiff) against Square Metre Development (Pty) Ltd (first defendant, sued as principal debtor) and Margarethe van Rensburg, Brent van Rensburg, and Mandie Jansen (second to fourth defendants, sued as sureties).

The matter came before the North Gauteng High Court, Pretoria, after the defendants entered an appearance to defend. The plaintiff, relying on the alleged breach of a loan agreement secured by a mortgage bond, applied for summary judgment. The defendants opposed the application by filing opposing affidavits.

The general subject-matter of the dispute was the enforceability—on summary judgment—of a bank’s claim for a money judgment, ancillary relief declaring mortgaged property specially executable, and costs, in circumstances where the defendants raised defences based on (i) the alleged applicability and non-compliance with section 129 of the National Credit Act 34 of 2005, (ii) the alleged illiquidity of the claim, and (iii) the alleged invalidity of the deeds of suretyship under section 6 of the General Law Amendment Act 50 of 1956.

Material Facts

Nedbank Limited sued for payment of R718 309.39, together with interest and costs, alleging that the first defendant had failed to comply with the terms of a loan agreement secured by a mortgage bond. The second to fourth defendants were sued as sureties for the first defendant’s indebtedness.

It was common cause for purposes of the summary judgment proceedings that the defendants had entered appearance to defend and that the plaintiff’s claim was pursued as a claim for a specified monetary amount, with interest, and with execution against the mortgaged property. The plaintiff relied on the outstanding balance under the mortgage loan, stated to be claimable by way of a certificate of balance.

A dispute arose in relation to the defendants’ contention that the first defendant had three accounts with the plaintiff and that the amount claimed represented an aggregate across those accounts. The defendants contended that amounts paid into other accounts in excess of monthly obligations should have been allocated to the account on which the action was based, with the result (so they contended) that the sued-upon account would not be in arrears. The court noted, however, that the defendants did not identify the relevant payments with specificity or quantify what should have been allocated.

In resisting summary judgment, the sureties further raised a contention that the deeds of suretyship did not comply with statutory formalities because they did not expressly refer to the specific account upon which the plaintiff’s action was based. The deeds of suretyship, however, contained broad wording binding the sureties as sureties and co-principal debtors for all sums the debtor “may now or from time to time hereafter owe or be indebted” to the bank, including indebtedness arising “otherwise howsoever”.

Legal Issues

The court was required to determine, for purposes of a summary judgment application, whether the defendants had disclosed a bona fide defence (or defences) which, if proved at trial, would constitute a good defence to the plaintiff’s claim.

The central legal questions were, first, whether the National Credit Act 34 of 2005 applied to the mortgage loan advanced to the first defendant (a juristic person) such that section 129 compliance was required, and if so whether there had been compliance. This was primarily a question of law (statutory applicability), turning on the classification of the agreement and the status of the consumer.

Second, the court had to decide whether the claim was for a “liquidated amount in money” as required by Rule 32(1)(b) for summary judgment, given the defendants’ assertion that the amount was an aggregate across multiple accounts and that payment allocation was disputed. This involved the application of legal principles regarding liquidity to the pleaded basis of the claim.

Third, the court had to decide whether the deeds of suretyship complied with section 6 of the General Law Amendment Act 50 of 1956, notwithstanding the absence of an express reference to the specific account forming the basis of the action. This again was largely a question of law, applied to the wording of the suretyships.

Court’s Reasoning

On the National Credit Act point, the court considered the provisions governing the Act’s applicability to juristic persons, including the statutory exclusions and the threshold value determined by the Minister (recorded as one million rand, determined in Government Notice 713 in Government Gazette 28893 of 1 June 2006). The court further considered the classification of a mortgage agreement as a large agreement (as defined in section 9(4), as referenced in the judgment). On this basis, the court concluded that the outstanding amount was due in terms of a mortgage loan constituting a large agreement owed by a juristic person, and therefore held that the National Credit Act was not applicable to the loan advanced by the plaintiff to the first defendant. Having reached that conclusion, the court regarded it as unnecessary to decide whether section 129 had in fact been complied with.

On the contention that the claim was not liquid, the court applied the established meaning of a “liquidated amount in money” for purposes of summary judgment: an amount either agreed upon or capable of speedy and prompt ascertainment. It accepted that the plaintiff’s claim was based on the amount outstanding under a mortgage bond, and that it was claimable by way of a certificate of balance. The court held that a dispute regarding the amount outstanding does not, without more, render the claim illiquid for purposes of summary judgment.

Turning to the substantive defence suggested by the defendants (misallocation of payments across multiple accounts), the court treated the “gravamen” of the defence as being that payments made were allocated to other accounts but should have been allocated to the account sued upon. The court emphasised that, although a defendant resisting summary judgment is not required to plead with the precision of a plea, the defendant must set out the facts relied upon with sufficient clarity to enable the court to determine whether a defence has been disclosed that would constitute a good defence if proved at trial.

Applying that principle, the court found that the defendants did not identify the payments relied upon, nor did they quantify the amounts allegedly misallocated. The court also considered the reference to an annexed account statement (annexure “C”) and observed that it showed that even that account was in arrears and that payments were sporadic and did not bring the account up to date. The court regarded this as undermining, rather than supporting, the defendants’ only possible defence.

On the suretyship point, the court considered the argument that the suretyships did not comply with section 6 of the General Law Amendment Act 50 of 1956 because they did not expressly refer to the account underpinning the action. The court examined the wording of the suretyships, which covered all sums owed by the debtor to the bank “now or from time to time” and arising from various sources “otherwise howsoever”, including legal costs and incidental charges. It held that the account upon which the claim was based fell within this description. The court also relied on authority holding that even the absence of the name of the principal debtor and incorporation by reference to another agreement does not necessarily render a deed of suretyship invalid under section 6, and concluded that there was no substance in this defence.

Having rejected the defences raised, the court concluded that summary judgment should be granted.

Outcome and Relief

The court granted summary judgment against the defendants jointly and severally, the one paying the others to be absolved.

The court ordered payment of R718 309.39, together with interest at 14.15% per annum calculated daily from 2 January 2009 to date of payment.

The court further ordered that the mortgaged property described in the order be declared specially executable for the sums and costs.

Costs were awarded on the scale as between attorney and client, to be taxed, together with Sheriff’s charges and collection commission as provided for in the mortgage bond.

Cases Cited

Lester Investments (Pty) Ltd v Narshi 1951 (2) SA 464 (C)

Fatti’s Engineering Co (Pty) Ltd v Vendick Spares (Pty) Ltd 1962 (1) SA 736 (T)

Botha v W Swansen & Company (Pty) Ltd 1958 (2) PH F 85 (CPD)

Commercial Bank of Namibia Ltd v Trans Continental Trading Namibia 1992 (2) SA 66 (NmHC)

Breytenbach v Fiat 1976 (2) SA 226 (T)

Industrial Development Corporation of South Africa (Pty) Ltd v Silver 2003 (1) SA 365 (SCA)

Legislation Cited

National Credit Act 34 of 2005

General Law Amendment Act 50 of 1956

Government Notice 713 in Government Gazette 28893 of 1 June 2006 (threshold value determination under section 7(1) of the National Credit Act 34 of 2005)

Rules of Court Cited

Uniform Rule 32(1)(b)

Held

The National Credit Act 34 of 2005 was held to be inapplicable to the mortgage loan at issue, which the court treated as a large agreement involving a juristic person, with the result that it was unnecessary to determine compliance with section 129.

The plaintiff’s claim, founded on the outstanding balance under a mortgage bond and claimable via a certificate of balance, was held to be for a liquidated amount in money for purposes of summary judgment, and the defendants’ dispute about allocation of payments did not render the claim illiquid.

The defendants were held not to have disclosed a bona fide defence with sufficient factual particularity, because they did not identify or quantify the payments allegedly misallocated, and the account statement relied upon did not support the contention that the relevant account was not in arrears.

The deeds of suretyship were held to comply with section 6 of the General Law Amendment Act 50 of 1956, and the absence of an express reference to the specific account sued upon did not invalidate them, given their broad terms and the authority relied upon.

LEGAL PRINCIPLES

A credit agreement involving a juristic person may fall outside the operation of the National Credit Act 34 of 2005 depending on the statutory exclusions and the classification of the agreement, including where the agreement is treated as a large agreement and the statute excludes such agreements involving juristic persons as contemplated in the provisions referenced by the court.

For purposes of Uniform Rule 32(1)(b), a “liquidated amount in money” includes an amount that is agreed or capable of speedy and prompt ascertainment; a dispute about the correctness of the amount outstanding does not, in itself, render a claim illiquid where the claim is founded on an instrument such as a mortgage bond and is claimable by way of a certificate of balance.

A defendant resisting summary judgment must disclose the material facts underlying the alleged defence with sufficient clarity to enable the court to assess whether, if proved at trial, it would constitute a good defence; merely stating the nature of a defence (such as payment or misallocation) without identifying and quantifying the factual basis may be insufficient.

A deed of suretyship drafted in broad terms to cover all present and future indebtedness of a debtor to a creditor may satisfy the requirements of section 6 of the General Law Amendment Act 50 of 1956, and the absence of an express reference to a particular account (or, as noted in the authority relied upon, even certain identifying details) does not necessarily invalidate the suretyship where the obligation is otherwise adequately described.