Fourie v Firstrand Bank Ltd (662/2005) [2006] ZANCHC 29 (19 May 2006)

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[2006] ZANCHC 29
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Fourie v Firstrand Bank Ltd (662/2005) [2006] ZANCHC 29 (19 May 2006)

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IN
THE HIGH COURT OF SOUTH AFRICA
(Northern
Cape Division)
Case
Nr: 662/2005
Case
Heard: 16/05/2006
Date
delivered: 19/05/2006
In
the matter:
David
Schalk Fourie Applicant / Defendant
versus
Firstrand
Bank Ltd Respondent / Plaintiff
Coram:
Kgomo JP
JUDGMENT: LEAVE TO APPEAL
KGOMO
JP:
This
is an application for leave to appeal against the judgment of
Lacock
J
dated the 7
th
October 2005 in which he granted summary judgment against the
defendant/applicant in the amount of R177 433,70 plus interest
on this amount and the costs of the opposed application which was
heard on the 30
th
September 2005. The application served before me because
Lacock
J
is on long leave and
thus not available to hear the matter, which came on a semi-urgent
basis because the plaintiff/respondent
had scheduled an auction sale
of the applicant’s property for Wednesday 17/05/2006. After
hearing argument from counsel I dismissed
the application for leave
to appeal with costs and reserve my reasons which now follow.
Lacock
J
has given a succinct
and well-reasoned judgment. No useful purpose would be served in
rehashing that judgment. Mr Fisher, for
the defendant/applicant,
has argued that
Lacock J
erred in not having found that the contract in terms of which the
defendant/applicant had to pay the plaintiff/respondent-bank
the
amount of R177 443,70 was novated. Novation, it is trite,
means replacing an existing obligation by a new one and consequently
that the existing obligation would thereby be discharged.
I
wish to add the following to my Brother’s judgment. In the
founding document, Annexure “A dated the 7
th
June 2004, through which the defendant/applicant alleges that he has
made the offer, does not stipulate how much he would pay per
month
over a period of five years. He unilaterally commenced paying
R4 000,00 per month from September 2004. It is unclear
from
the offer what would happen after the expiry of the period of five
years if there was an under-recovery or over-recovery of
the amount
owed. I am unable to understand exactly what the full terms of the
purported novated contract are and what it is alleged
that the
plaintiff/respondent was supposed to have tacitly accepted.
According
to the defendant/applicant the bank tacitly accepted the very vague
offer he has made on the 7
th
June 2004 based on the fact that he paid R4 000,00 per month
from September 2004 until January 2005 without any demur from
the
plaintiff bank. In February 2005 the defendant debtor experienced
cashflow problems as a result of which the bank called up
the
overdraft, which is the cause of action. The defendant/applicant
therefore only paid the R4 000,00 premium for five months
before defaulting on his own undertaking.
A
year after the defendant/applicant’s letter of the 7
th
June 2004 (paras 3 and 4 above) the defendant’s accountant wrote
to the bank on the 6
th
June 2005 and complained to the bank that
“tot
vandag toe nog (het Mnr Fourie) nog geen terugvoer vanaf Eerste
Nasionale Bank ontvang sou hulle die aanbod aanvaar of afgewys
het
nie.”
There could
therefore not have been any illusion at that stage in the minds of
the defendant/applicant and his accountant that
the aforesaid vague
offer had not been accepted by the bank. The accountant then went
ahead to make a fresh offer in these terms:
“Mnr
Fourie maak hiermee ‘n amptelike aanbod van R4 000,00 per
maand ter afbetaling van die oortrokke rekenig en dan vanaf
30
September 2005. Hy sal eers weer vanaf September 2005 inkomste
genereer met die aanvang van lusernseisoen.”
This
letter provoked the following reaction from the bank on the 19
th
July 2005:
“
Thank
you for your telefax of 7
th
July 2005 together with the letter from André Visagie & Kie
dated 6 June 2005 annexed.
We have made some
enquiries at the branch and the credit division from which it
transpired that the branch’s proposal to our credit
division to
convert the overdraft to a five year long term loan was not approved.
The fact that the client in the meanwhile paid
monthly instalments
merely indicates his bona fides and his ability to stick to his offer
of repayment over five years and does not
indicate the bank’s
acceptance of the offer or the concluding of a long term loan
agreement. The proposal was specifically declined
during February
2005 and a letter of demand sent on 4 March 2005. The bank
thereafter started realising security by surrendering
the policy.
This is normal practice and authorized in terms of the Deed of
Cession and Assignment. During November 2004 our credit
division
instructed the branch that the conversion of the debt to a loan
account would be considered once certain information has
been
provided by the client. In the meanwhile the client was required to
deposit sufficient funds every month to cover the loan
installment of
R4 300,00. Upon receipt of the information during February 2005
a decision was taken by our credit division
not to approve the
conversion of the overdraft to loan account.
We are not in a
position to reconsider the client’s proposal and confirm that the
debt will not be converted into a five-year loan.
In the
circumstances please put the Defendant to terms to enter an
Appearance to Defend, alternatively please apply for Default
Judgment.”
From
what has gone before I cannot discern any proper offer being made by
the defendant/applicant and less still is there any manifestation
of
a tacit acceptance of the offer on the part of the bank. In short, a
consensus ad idem
between the parties was lacking. In
Joel
Melamed and Hurwitz v Cleveland Estates
[1984] ZASCA 4
;
1984 (3) SA 155
(A
) at
164G – 165F
Corbert JA
(as he then was) held:
“
As
to tacit contracts in general, in
Standard
Bank of South Africa Ltd and Another v Ocean Commodities Inc and
Others
1983
(1) SA 276
(A
) it
was stated (at 292B - C):
"In
order to establish a tacit contract it is necessary to show, by a
preponderance of probabilites, unequivocal conduct which
is capable
of no other reasonable interpretation than that the parties intended
to, and did in fact, contract on the terms alleged.
It must be proved
that there was in fact consensus ad idem. (See generally
Festus
v Worcester Municipality
1945 CPD 186
at
192 - 3;
City of
Cape Town v Abelsohn's Estate
1947 (3) SA 315
(C
)
at 327 - 8;
Parsons
v Langemann and Others
1948 (4) SA 258
(C
)
at 263;
Bremer
Meulens (Edms) Bpk v Floros and Another
,
a decision of this Court reported only in Prentice Hall
,
1966 (1) A36
;
Blaikie-Johnstone
v Holliman
1971 (4) SA 108
(D
)
at 119B - E;
Big
Dutchman (South Africa) (Pty) Ltd v Barclays National Bank Ltd
1979 (3) SA 267
(W
)
at 281E - F;
Muhlmann
v Muhlmann
1981 (4) SA 632
(W
)
at 635B - D.)"
This
is the traditional statement of the principle, as is borne out by the
cases cited; and it was accepted as being correct by appellant's
counsel. The correctness of this general formulation has nevertheless
been questioned on the ground that it would appear to indicate
a
higher standard of proof than that of preponderance of probability as
regards the drawing of inferences from proven facts (see
Christie
The Law of Contract in South Africa
at 58 - 61; cf also
Fiat
SA v Kolbe Motors
1975 (2) SA 129
(O
)
at 140;
Plum v
Mazista Ltd
1981 (3) SA 152
(A
)
at 163 - 4;
Spes
Bona Bank Ltd v Portals Water Treatment South Africa (Pty) Ltd
1983 (1) SA 978
(A
)
at 981A - D). In this connection it is stated that a court may hold
that a tacit contract has been established where, by a process
of
inference, it concludes that the most plausible probable conclusion
from all the relevant proved facts and circumstances is that
a
contract came into existence (see Plum's case supra at 163 - 4). It
may be that in the light of this the principle as quoted above
from
Standard Bank of
SA Ltd v Ocean Commodities Inc
(supra) requires reformulation. In this regard, however, there is
this point to be borne in mind. While it is perfectly true that
in
finding facts or making inferences of fact in a civil case the court
may, by balancing probabilities, select a conclusion which
seems to
be the more natural or plausible one from several conceivable ones,
even though that conclusion is not the only reasonable
one,
nevertheless it may be argued that the inference as to the conclusion
of a tacit contract is partly, at any rate, a matter of
law,
involving questions of legal policy. It appears to be generally
accepted that a term may not be tacitly imported into a contract
unless the implication is a necessary one in the business sense to
give efficacy to the contract (see
Van
den Berg v Tenner
1975 (2) SA 268
(A
)
at 276H - 277B and the cases there cited). By analogy it could be
said that a tacit contract should not be inferred unless there
was
proved unequivocal conduct capable of no other reasonable
interpretation than that the parties intended to, and did in fact,
contract on the terms alleged.”
Having
regard to
Lacock
J
’s judgment, and what
has been said above together with the facts of this matter I cannot
perceive how the defendant, who bears
the onus to prove the
novation, can ever hope to establish at the principal hearing that a
new contract has been entered into between
the parties. In
Woolfsons
Credit (Pty) Ltd v Holdt
1977 (3) SA 720
(N
) at
724D-G Leon J stated:
“
In
considering the defence (of novation) raised it is relevant to point
out that the onus lies on the defendant to prove that he
is likely to
succeed in the principal case. (
Union
Share Agency & Investment Ltd. v Spain
,
1928 AD 74
at p.
78;
Galaun v
Newton
,
1961 (1) SA 405
(D
)
at p. 409G - H;
Rich
and Others v Lagerwey
,
supra at p. 759H;
Basinghall
Investments
,
supra at pp. 113E and 124A.)
Moreover
in the principal case the onus will lie upon the defendant to
establish the defence of novation. Clear and cogent proof of
such
novation would be required in view of the fact that it involves a
waiver of rights. (
Marendaz
v Marendaz
,
1953 (4) SA 218
(C
)
at pp. 226 - 227.) Where an intention to novate is sought to be
established by implication the intention must be "clear and
unequivocal" because it is more likely that a creditor, who has
an existing enforceable right, will intend, when he enters into
any
new arrangement in regard thereto, to reinforce rather than destroy
that right and accept something else in its place. (
Trust
Bank of Africa Ltd. v Dhooma
,
1970 (3) SA 304
(N
)
at p. 307D - G.)”
The
evidence produced by the defendant/applicant is of such a flimsy
nature and does not even begin to measure up to the requirements
set
out in the quoted cases, with which I respectfully agree.
The
other aspects on the merits by Mr Fisher have been sufficiently dealt
with by
Lacock J
or are peripheral and inconsequential and need no further
examination.
The
defendant/applicant’s application is out of time by several
months. The applicant pleads something close to impecuniosity
for
his default. It does appear to me that the defendant/applicant has
fallen on some hard times because he experienced some poor
harvests.
His failure to keep up with the payment of a paltry R4 000,00
per month that he set himself is strongly indicative
of his
financial doldrums. I therefore accept his explanation and condone
his failure to lodge this application timeously. However,
the
condonation does not detract from the fact that there are no
reasonable prospects of a successful appeal and that another Court
is highly unlikely to come to a different conclusion than the one
reached by
Lacock J
.
On
5 May 2006 the defendant/applicant brought a defective application
for condonation for the late filing of his application for
leave to
appeal whereas no application for leave to appeal had yet been filed
or delivered. The respondent/plaintiff brought an
application to
set aside this irregular procedure in terms of Rule 30 of the Rules
of Court. The latter application was equally
flawed and there was a
mutual simultaneous withdrawal by each party of his/its application
and costs were reserved.
Counsel
agreed that these applications (para 11) were deadlocked, as none of
the parties was successful, and that there should accordingly
be no
order as to costs in that regard. I agree. Where a disputed
application is settled on a basis which disposes of the merits
except in so far as costs are concerned, the court should not have
to hear evidence to decide the disputed facts in order to decide
who
is liable for costs, but the court has, with the material at its
disposal, to make a proper allocation as to costs.
Jenkins
v SA Boilermakers, Iron and Steel Workers and Shipbuilders
Society
1946 WLD
15
;
Gamlan
Investments (Pty) Ltd v Trillion Cape (Pty) Ltd
1996 3 SA 692(C)
700G-H;
First National bank of Southern Africa Ltd t/a Wesbank v First
East Cape Financing (Pty) Ltd
1999 4 SA 1073
(SE) 1079G-I
.
ORDER
:
It
was for the aforegoing reasons that the application for leave to
appeal by the defendant/applicant (Mr David Schalk Fourie) was
dismissed with costs on 16/05/2006.
As
regards the applications by each one of the parties on the 5
th
May 2006 it is ordered that each party will bear his/its own costs.
________________________
F
D KGOMO
JUDGE
PRESIDENT
NORTHERN
CAPE DIVISION
For
the Applicant/Defendant: Adv P U Fischer
Instructed
by: Attorney Theunissen
For
Defendant/Applicant: Adv C Botha
Instructed
by: Duncan & Rothman