Oos Vrystaat Kaap Bedryf Beperk v Verster N.O and Others (3723/2006) [2006] ZAFSHC 125 (6 November 2006)

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[2006] ZAFSHC 125
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Oos Vrystaat Kaap Bedryf Beperk v Verster N.O and Others (3723/2006) [2006] ZAFSHC 125 (6 November 2006)

IN THE HIGH COURT
OF SOUTH AFRICA
(ORANGE FREE STATE
PROVINCIAL DIVISION)
Case
No.: 3723/2006
In
the case between:
OOS
VRYSTAAT KAAP BEDRYF BEPERK
Plaintiff
and
JAN
HENDRIK VERSTER N.O.
1
st
Defendant
ELIZABETH
CATHARINA VAN DER LINDE N.O.
2
nd
Defendant
(in the capacity as
Trustees of WYNDHAM TRUST,
NR
IT1900/97)
JAN
HENDRIK VERSTER
3
rd
Defendant
JUDGEMENT:
MOLEMELA, AJ
_______________________________________________________
HEARD
ON:
19 OCTOBER 2006
_______________________________________________________
DELIVERED
ON:
9 NOVEMBER 2006
_______________________________________________________
[1] This is an
application for summary judgment against the three defendants jointly
and severally. The first and second defendants
are being sued in
their capacity as the trustees of the Wyndham Trust, Nr IT 1900/1997.
For convenience I shall hereafter refer
to the first and second
defendants jointly as “the trust”.
[2] The cause of action
as stated in the summons is founded upon an agreement entered into on
7 June 2005 between the plaintiff and
the trust (“the agreement”)
as well as a deed of suretyship entered into between the plaintiff
and the third defendant on the
27
th
February 2003.
[3] In terms of the
agreement, the trust, which was at that stage involved in farming
operations, had applied for and been granted
credit facilities by the
plaintiff, a co-operative society of which both the trust and the
third defendant were members. The third
defendant had, in terms of
the above-mentioned deed of suretyship, bound himself as surety and
co-principal debtor in respect of
the trust’s indebtedness to the
plaintiff.
[4] An opposing affidavit
has been filed by the 3
rd
defendant both in his personal capacity and in his capacity as the
duly authorised trustee of the trust.
[5] The question for
determination is whether a
bona
fide
defence has been disclosed for purposes of Rule 32(3)(b) of the
Uniform Rules. Rule 32(3) provides as follows
:
“
32(3)
Upon
the hearing of an application for summary judgment, the defendant may
–
(a) give security to the plaintiff to
the satisfaction of the registrar for any judgment including costs
which may be given, or
(b) satisfy the court by affidavit
(which shall be delivered before noon on the court day but one
preceding the day on which the application
is to be heard) or with
the leave of the court by oral evidence of himself or any other
person who can swear positively to the fact
that he has a
bona
fide
defence to the action;
such affidavit or evidence shall disclose fully the nature and
grounds of the defence and the material facts
relied upon therefor.”
[6] In
view of the fact that there is a dispute as to whether the
defendant’s affidavit adequately discloses the nature and grounds
of the defence and the material facts relied upon therefor as
required by Rule 32(3)(b), I shall, quote a few paragraphs from the
defendant’s opposing affidavit.
[7] Paragraph
2 thereof provides as follows:-
“
Iedere en elke
bewering soos gemaak deur die Eiser in hulle Dagvaarding en Aansoek
om Summiere Vonnis soos aangevul deur die beëdigde
verklaring van
Petrus Barend Dippenaar word ontken, tensy sodanige bewering
uitdruklik erken word.”
[8] Paragraph
3 thereof reads as follows:-
“
Ek ontken ten
sterkste dat verdediging hierin deur die Verweerderes aangeteken is
bloot in ‘n poging om afhandeling van hierdie
aksie te vertraag.
Ek doen voorts aan die hand dat die Verweerders wel oor ‘n bona
fide verweer teen die Eiser se eis beskik en
welke vollediglik
hieronder uiteengesit word.”
[9] What
follows after paragraph 3 can be summarized as follows:-
(i) that the 3
rd
defendant entered into the agreement in his capacity as the trustee
of the trust;
(ii) that he had
previously entered into a similar agreement in his own personal
capacity;
that the agreement is to
be read in conjunction with “the statutes” of the plaintiff
company;
that in terms of the
statutes there was an arrangement in terms of which the trust would,
be entitled to the value of certain amounts
which would grow in
value from time to time as a result of purchases made by the trust
and delivery of harvests by the trust, which
amounts would stand as
a loan account in favour of the trust as against the plaintiff;
that this arrangement
was applicable to all members of the plaintiff;
that in terms of the
statutes the credit accruing to the trust would, upon cessation of
farming operations or liquidation of the
trust, be utilised for
payment of any amount that might be owed to the Plaintiff by the
trust;
that the statutes were
applicable to both the third defendant and the trust as members of
the plaintiff;
that due to the fact
that the trust had not been a member of the plaintiff for a long
time, it had not yet become entitled to a
credit loan account;
that the last delivery
of products by the trust from farming operations was done before 30
June 2005 and that no products had been
delivered by the trust since
30 June 2005;
that the total loan
accounts owed by the plaintiff and its holding company to the 3
rd
defendant amounted to a total of R257 497,58;
that in terms of the
statutes the plaintiff should have utilised the credit of R257
497,58 to settle any amounts owed by “the
member” to the
plaintiff;
that the third defendant
ceased farming operations in 2003 and the trust in September 2005;
that when he terminated
his involvement in farming operations for own account, the amount
due to him was retained due to his suretyship;
that when the trust
stopped its farming operation he had instructed one Ms Van Huyssteen
of the plaintiff to utilise his personal
credit loan account for
purposes of liquidating the trust’s indebtedness towards the
plaintiff;
that Ms van Huyssteen
had undertaken to make enquiries and confirm the value of his loan
account and the utilisation thereof;
that Ms van Huyssteen
had never reverted to him;
that he is entitled to
receive payments of the values of his loan account so as to utilise
it to liquidate the trust’s indebtedness
or his own indebtedness
arising from his suretyship;
that he, in his personal
capacity, has a counterclaim against the plaintiff.
[10] It has been argued
on behalf of the plaintiff that:-
(i) the trust has not
raised any
bona
fide
defence whatsoever;
(ii) none
of the defendants has disputed any indebtedness as it had not been
averred that the amount claimed was wrongly calculated,
that
purchases were not made, that wrong debits appeared on the statement,
or that credits were not reflected or that interest was
incorrectly
calculated;
the third defendant was
bound by the clause, in the agreement, that provided that the
statements submitted by the plaintiff would
serve as conclusive
proof of indebtedness unless objected to within three months from
date of receipt of the statement;
that the defendants had
not attached the statutes, which meant that fundamental facts had
not been placed before the court, thus
impacting negatively on the
defendants’
bona
fides.
that the defence of
set-off could not apply as it had been waived in terms of the
agreement.
[11] It
was argued on behalf of the defendants that:-
(i) the trust had
disputed indebtedness and that its denial was supported by the
annexures attached to the opposing affidavit;
(ii) that
the plaintiff had, in its dealings in with the defendants, not made
any distinction between the trust and the third defendant;
(iii) that the agreement
incorporated the statutes and consequently the provision in the
statutes regarding utilisation of credits
to settle outstanding
balances had to be adhered to.
[12] Although the
defendant’s affidavit is somewhat confusing towards the end one
cannot say it is completely lacking of the material
facts relied upon
with regards to the
bona
fide
defence that is being raised. What comes out very clearly is the
defence of a set-off. Although there is no express denial of
indebtedness,
a denial can be gathered towards the end of the
opposing affidavit. In this regard it is to be borne in mind that
“affidavits
in summary judgment matters are customarily treated
with a certain degree of indulgence.” (see
KOORNKLIP
BELEGGINGS (EDMS) BPK v ALLIED MINERALS LTD
1970 (1) SA 674
C at 678. In
HERBERT
v STEELE
1953 (3) SA 271
at 274 the learned judge had the following to say:
“
Her affidavit is very cryptic and
leaves much to be desired, but it has been held that the affidavit
under Rule 21 should not be looked
at with the same strictness as a
pleading. It is enough if an intention to set out what would be a
defence can be gathered from its
terms.”
[13] The defendants are
bound by the terms of the agreement. Clause 7 and 8 thereof provide
that if an objection has not been lodged
within three months of
receipt of a statement reflecting an amount that is owed, then that
statement shall constitute conclusive
proof of indebtedness. In the
case of
BEKKER
& ANOTHER v OOS-VRYSTAAT KAAP KOöPERASIE BPK
2000 (3) ALL SA 301
it was held that such a clause was valid.
Insofar as the defendants have at no stage disputed the amounts
reflected in the statements
dispatched in the statements dispatched
to them, then such statements are acceptable as conclusive proof of
their indebtedness.
[14] With regards to the
defence of set-off, it was argued that the defendants had, in terms
of clause 4 of the contract, waived such
a defence. I was duly
referred to the judgment of Lichtenburg, J in
HERRIGEL
NO v BON REAS CONSTRUCTION
1980 (4) SA 669
(SWA). I agree with the aforesaid judgment.
However, what is distinguishable in principle between the aforesaid
case and the present
is the fact that the agreement entered into by
the parties must in this instance be considered in conjunction with
the statutes of
the plaintiff. Section B of the statutes provides as
follows:
“”
I
the undersigned being the Applicant whose details are set ou
t
in paragraph A hereinabove, hereby apply for credit facilities
subject to the conditions mentioned hereunder, and the provisions
of
the company’s statute (as amended from time to time) and client
financing policy (as amended from time to time)”.
Under Section C of the
agreement, dealing with the applicable conditions, clause 1.2
provides as follows:
“
The provisions of the company’s
statute and client financing policy as amended and applied from time
to time form part of this agreement
as if specifically incorporated
and repeated therein, and to which provisions I bind myself.”
[15] It has been averred
by the defendant that the statutes provide that when a member ceases
to engage in farming operations or is
sequestrated/liquidated, any
credit accruing to such a member should be utilised to liquidate that
member’s debt. Save to assert
that the statutes had not been
annexed to the defendants’ opposing affidavit, this averment was
not denied by the plaintiff. In
any event as the statutes had been
incorporated into the parties’ agreement, the plaintiff also had a
responsibility to ensure
that they are attached to its summons.
[16] Insofar as the
agreement states that it will be applied subject to the statutes, the
agreement does not in my view take precedence
over provisions of the
statute. The two documents therefore exist side by side and
consequently the clause regarding waiver exists
side by side with the
clause providing that a member’s credits should be utilised in
liquidation of such a member’s outstanding
debt. The facts of this
case are thus clearly distinguishable from those in the case of
Herrigel. This then means that the third
defendant’s defence of a
set-off can be regarded as a
bona
fide
defence. In this regard it is to be borne in mind that in a summary
judgment application a defendant only needs to satisfy the court
that
he has a
bona
defence and need not prove his defence.
[18] The question now is
whether the trust has disclosed a
bona
fide
defence seeing that it was the 3
rd
respondent who had the credits and not the trust. It has been argued
on behalf of the defendants that usage of the same account
number for
the trust and the third respondent in all the statements and in all
the certificates of indebtedness serve to show that
the plaintiff in
its dealings with the defendants did not distinguish between the
trust and the third defendant. This argument is
not without merit.
The statements are the documents on which the claim is based. They
reflect the same number for both the trust
and the third defendant.
The same applies to the certificates of indebtedness. Considering
that both the trust and the third defendant
were members of the
plaintiff, I find myself having a doubt as to whether the plaintiff,
in its dealings with the defendants, made
any distinction between the
trust and the third defendant. Obviously if such a distinction was
not made then I would have to accept
that the defendant’s averment,
viz that his own credit could be used to liquidate the trust’s
indebtedness, constitutes a
bona
fide
defence of a right of set-off.
[19] I therefore consider
the present case to be one where the court has to exercise its
judicial discretion and refuse summary judgment.
[20] I
make the following order:
Summary judgment is
refused;
First, second and third
defendants are granted an opportunity of defending the action;
Pleadings to be
exchanged as if the notice of appearance to defend was filed on the
date of this order.
Costs reserved for
consideration at the trial.
[20] Authorities
considered:
DISTRICT BANK
LTD v HOOSAIN AND OTHERS
1984 (4) SA 544
(C);
MAHARAJ v
BARCLAYS NATIONAL BANK LTD
1976 (1) SA 418
(A) 426 D;
GILINSKY AND
ANOTHER v SUPERB LAUNDERERS AND DRY CLEANERS (PTY) LTD
1978 (3) SA 807
(C) 810 A;
AREND
& ANOTHER v ASTRA FURNISHERS (PTY) LTD
1974 (1) SA 298
(K) 304A;
BREITENBACH v
FIAT SA (EDMS) BPK
1976 (2) SA 226
(T) 228 E – 229 A;
STANDARD
MERCHANT BANK LTD v ROWE AND OTHERS
1982 (4) SA 671
(W) 680 G – H;
MARSH AND
ANOTHER v STANDARD BANK OF SA LTD
2000 (4) SA 947
(W);
BEKKER v
OOS-VRYSTAAT KOöP BPK
2000 (3) ALL SA 301
(A);
SOUTHERN CAPE
LIQUORS (PTY) LTD v DELIPCUS BELEGGINGS BK
1998 (4) SA 494
(K) 501;
HERRIGEL NO v
BON ROADS CONSTRUCTION (PTY) LTD AND ANOTHER
1980 (4) SA 669
(SWA);
NICHAS &
SON (PTY) LTD v PAPENFUS
1969 (2) SA 494
O at 496 E – H;
NICHAS &
SON (PTY) LTD v PAPENFUS
1970 (2) SA 316
O at 319 H;
INTERNATIONAL
SHIPPING CO LTD v F C BONNET (PTY) LTD
1975 (1) SA 853
D at 854 F;
BOWMAN NO v
HOWE
1980 (2) SA 226
(W) at 229 A – C.
TRINITY
ENGINEERING (PVT) LTD AND ANOTHER v ANGLO-AFRICAN SHIPPING CO (PVT)
LTD
1986 (1) SA 702
at 705 A.
The Law of
South Africa,
Christie, 5
th
edition, page 477.
___________________

M. B. MOLEMELA, AJ
/em