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[2024] ZALMPPHC 78
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Thema v Mathonsi (HCA36/2023) [2024] ZALMPPHC 78 (30 July 2024)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
LIMPOPO
DIVISION, POLOKWANE
APPEAL
CASE NO: HCA36/2023
COURT
A QUO
CASE NO: LP/PLK/RC-347/2019
REPORTABLE:
NO
OF
INTEREST TO THE JUDGES: NO
REVISED
30
July 2024
In
the matter between:
JAMES
THEMA
Appellant
And
THABO
TIMMY MATHONSI
Respondent
JUDGEMENT
GAISA
AJ
INTRODUCTION
[1]
This is an appeal against the judgment of
Regional Magistrate Ngobeni of the Polokwane Regional Court, which
granted an order of
absolution from the instance at the close of the
Appellant's (Plaintiff's) case.
[2]
The appeal raises important questions about
the proper application of the test for absolution from the instance,
the interpretation
of contractual documents in the context of alleged
agency relationships, and the interaction between common law
principles and
statutory frameworks such as the National Credit Act.
FACTUAL
BACKGROUND
[3]
The Appellant, Mr James Thema, instituted
action against the Respondent, Mr Thabo Timmy Mathonsi, for payment
of R250,000.00 plus
interest. This amount was alleged to be the
outstanding balance on a loan of R450,000.00 that the Appellant
claims to have advanced
to the Respondent on 27 October 2015.
[4]
The Respondent denied liability, raising
various defences, including that he was acting as an agent for a
close corporation called
Mhlonhlori Business Enterprises and that the
Appellant was not entitled to charge interest as he was not a
registered credit provider.
[5]
At the close of the Appellant's case, the
Respondent applied for absolution from the instance. The court
a
quo
granted the application, finding
that the Appellant had failed to make out a prima facie case.
LEGAL
FRAMEWORK
[6]
Powers of the Appeal Court
6.1.
As
an appeal court, we are empowered to consider both questions of law
and fact. However, we must be mindful of the principle articulated
in
R
v Dhlumayo
[1]
that an appeal court should be slow to interfere with the findings of
fact made by a trial court. This principle is based
on the
recognition that the trial court has the advantage of seeing and
hearing witnesses and observing their demeanour.
6.2.
Nevertheless,
where the court of first instance has misdirected itself on the facts
or the law, or where the evidence cannot reasonably
support the
decision or is wrong, the appeal court not only has the right but
also the duty to intervene. This was emphasised in
Santam
Bpk v Biddulph
.
[2]
[7]
Test for Absolution from the Instance
7.1.
The
test for absolution from the instance at the close of the plaintiff's
case is well established. In
Claude
Neon Lights (SA) Ltd v Daniel,
[3]
the court stated:
"
When absolution
from the instance is sought at the close of the plaintiff's case, the
test to be applied is not whether the evidence
led by the plaintiff
establishes what would finally be required to be established, but
whether there is evidence upon which a court,
applying its mind
reasonably to such evidence, could or might (not should or ought to)
find for the plaintiff."
7.2.
This
test was reaffirmed in
Gordon
Lloyd Page & Associates v Rivera & Another,
[4]
where the court explained that:
"This implies
that a plaintiff has to make out a prima facie case - in the sense
that there is evidence relating to all the
elements of the claim - to
survive absolution because without such evidence, no court could find
for the plaintiff."
7.3.
The
bar for avoiding absolution is set relatively low in the plaintiff's
favour. As emphasised in
Van
Zyl N.O obo A.M v MEC for Health,
[5]
the question at this stage is "
what
might a reasonable court do
"
instead of "
what
ought a reasonable court to do"
at the close of the defendant's case.
7.4.
In
Van
Zyl N.O obo A.M v MEC for Health
[6]
the
court articulated that the threshold for avoiding absolution from the
instance is relatively low in favour of the plaintiff.
7.5.
That court
said:
"The
authorities on this point go back more than a century, and they are
clear… “(W)hen absolution from the instance
is sought at
the close of plaintiff’s case, the test to be applied is not
whether the evidence led by plaintiff establishes
what would finally
be required to be established, but whether there is evidence upon
which a Court, applying its mind reasonably
to such evidence, could
or might (not should, nor ought to) find for the plaintiff.'"
[7]
7.6.
Van
Zyl N.O
supra
also
found that "
the
enquiry here is only whether a prima facie case has been set up by
the plaintiff, the bar for the avoidance of absolution is
set fairly
low in that party’s favour.
"
This is reinforced when it is noted that the relevant question is
"
what
might a reasonable court do
"
at the close of the plaintiff’s case, as opposed to "
what
ought a reasonable court to do" at the close of the defendant’s
case
’
[8]
[8]
Principles of Agency Law
8.1.
The principles of agency law are relevant
to the Respondent's defence that he was acting as an agent for
Mhlonhlori Business Enterprises.
For an agency relationship to exist,
there must be:
8.1.1.
an agreement between the principal and the
agent;
8.1.2.
authority given by the principal to the
agent to act on the principal's behalf;
8.1.3.
the agent's intention to act on behalf of
the principal.
8.2.
As
established in
Noordkaap
Lewendehawe Ko-operasie Bpk v Schreuder
,
[9]
the onus of proving the existence of an agency relationship rests on
the party alleging it. Furthermore, the mere mention of a
third party
in a contract does not automatically create an agency relationship or
absolve the signatory from personal liability.
The court must
consider all the surrounding circumstances to determine whether an
agency relationship exists.
[10]
[9]
The National Credit Act
9.1.
The National Credit Act 34 of 2005 (NCA)
requires credit providers to register if they enter into a specified
number of credit agreements
or if the principal debt owed exceeds a
prescribed threshold.
9.2.
Section 40(1) of the NCA, as amended,
requires registration for any person or entity that is the credit
provider under at least
100 credit agreements, other than incidental
credit agreements, or if the total principal debt owed under all
outstanding credit
agreements exceeds the threshold prescribed in
terms of section 42(1).
9.3.
The threshold amount was reduced to nil
(R0) effective 11 May 2016. However, this amendment only applies to
credit agreements entered
after that date.
9.4.
It
is important to note that, as held in
Opperman
v Boonzaaier
,
[11]
non-compliance with the NCA's registration requirements does not
automatically render a credit agreement void. The court must consider
the circumstances of each case to determine the appropriate remedy.
[10]
Issues for Determination
The
main issues for determination in this appeal are:
10.1.
whether the court
a
quo
erred in granting absolution from
the instance;
10.2.
whether the Appellant established a
prima
facie
case;
10.3.
whether the court
a
quo
misdirected itself regarding the
agency argument;
10.4.
whether the court
a
quo
erred in its approach to the credit
provider issue.
ANALYSIS
[11]
The Prima Facie Case
11.1.
From my review of the record, it is evident
that the Appellant led the following evidence:
11.2.
He testified that on 27 October 2015, the
Respondent signed an acknowledgement of debt in his favour for
R450,000.00 plus interest
at 15.5% per annum, payable by 31 October
2015. This acknowledgement of debt was attached to the particulars of
claim.
11.3.
He testified that he paid the R450,000.00
to the Respondent in cash.
11.4.
When the Respondent failed to pay by 31
October 2015, they verbally agreed in January 2017 that the
Respondent would make monthly
payments of R50,000.00 until the debt
was settled.
11.5.
Between January and December 2017, the
Respondent only paid R73,000.00. They then agreed this amount would
be allocated to interest.
11.6.
In December 2017, they signed a revised
agreement reducing the capital amount to R400,000.00 to be paid in
monthly instalments of
R50,000.00 from January 2018.
11.7.
The Respondent made further payments
totalling R150,000.00 between February and August 2018.
11.8.
The Respondent has since failed to pay the
remaining balance of R250,000.00.
11.9.
If accepted, this evidence relates to all
the elements of the Appellant's claim. It establishes the existence
of a contract (the
acknowledgement of debt), its material terms (the
loan amount, interest rate, and repayment terms), and its breach
(failure to
repay the full amount).
11.10.
The court
a
quo
appears to have been swayed by two
main factors in granting absolution:
11.10.1.
the possibility that the Respondent was
acting as an agent for Mhlonhlori Business Enterprises; and
11.10.2.
the Appellant's admission that he was not a
registered credit provider.
11.11.
With respect, the court
a
quo
erred in its approach to both these
issues.
[12]
The Agency Argument
12.1.
Regarding the agency argument, the court
was required to consider the evidence in the light most favourable to
the Appellant at
the absolution stage. The Appellant testified that
he dealt with and lent money to the Respondent personally. He
explained that
while the Respondent mentioned Mhlonhlori, the
Respondent told him to "leave Sibongile out since when he wanted
money, it
was the Defendant who was going to pay".
12.2.
The Respondent signed the acknowledgement
of debt in his personal capacity. Based on this evidence, a court
could or might find
that the contract was personally between the
Appellant and Respondent.
12.3.
The fact that some references to Mhlonhlori
were made in later documents does not negate the possibility of
personal liability.
At most, it raises a triable issue to be resolved
after hearing all the evidence. It was premature for the court
a
quo
to conclude at this stage that the
Appellant had contracted with Mhlonhlori rather than the Respondent.
12.4.
Furthermore, as established in
Noordkaap
Lewendehawe Ko-operasie
supra
,
the Respondent is responsible for proving the existence of an agency
relationship. At the absolution stage, the Respondent had
not yet
presented evidence to discharge this onus. The court erred in drawing
inferences favourable to the Respondent without hearing
his evidence.
[13]
The Credit Provider Issue
13.1.
Regarding the credit provider issue, the
court erred in two respects. First, it is not clear that the
National
Credit Act applied
to this transaction, which appears to have been a
once-off loan rather than the Appellant's regular business. Second,
even if the
Act did apply, non-compliance would not automatically
invalidate the entire agreement. At most, it might affect the
Appellant's
ability to charge interest.
13.2.
The court
a
quo
should have considered the
principles established in
Opperman v
Boonzaaier
supra
,
which require a nuanced approach to the consequences of
non-compliance with the NCA. The appropriate remedy, if any, should
be
determined after hearing all the evidence and considering the
case's specific circumstances.
13.3.
More fundamentally, the court's role at the
absolution stage is not to make final determinations on such legal
issues. The question
is whether there is evidence upon which a court
might find for the plaintiff. Here, such evidence existed in the form
of the signed
acknowledgement of debt and testimony about subsequent
agreements and payments.
CONCLUSION
[14]
I am mindful that absolution from the
instance should be granted sparingly. It deprives the plaintiff of
the right to have all the
evidence heard and tested. As noted in
Van
Zyl
supra,
it is particularly problematic where the defence relates to matters
peculiarly within the defendant's knowledge.
[15]
In this case, the Respondent's version of
events and explanations for the various documents has not yet been
heard. It would be
in the interests of justice for the trial to
continue and all evidence to be presented before a final
determination is made.
[16]
For these reasons, I find that the court
a
quo
erred in granting absolution from
the instance. There was sufficient evidence upon which a court,
applying its mind reasonably,
could or might find for the Appellant.
The defences raised by the Respondent are matters to be determined
after hearing all the
evidence.
[17]
This judgment reminds us that absolution
from the instance is an extraordinary remedy that should be granted
sparingly, particularly
where critical aspects of the defence fall
within the defendant's peculiar knowledge.
[18]
It also reinforces the principle that
procedural rules should be interpreted and applied in a manner that
promotes, rather than
frustrates, the attainment of substantive
justice.
ORDER
[19]
In the result, the following order is made:
19.1.
The appeal is upheld.
19.2.
The order of absolution from the instance
is set aside.
19.3.
The matter is remitted to the Regional
Court for the trial to continue.
19.4.
Costs of the appeal are to be costs in the
cause.
GAISA
AJ
ACTING
JUDGE OF THE HIGH COURT
POLOKWANE;
LIMPOPO DIVISION
I
concur
NAUDE-ODENDAAL
J
JUDGE
OF THE HIGH COURT
POLOKWANE:
LIMPOPO DIVISION
APPEARANCES
FOR
THE APPELLANT
:
MR GSC MOHLABI
INSTRUCTED
BY
:
GSM MOHLABI INC. ATTORNEYS
FOR
THE RESPONDENT
:
ADV MOYA
INSTRUCTED
BY
:
MPHELA MOTIMELE ATTORNEYS
DATE
OF HEARING
:
10 MAY 2024
DATE
OF JUDGEMENT
:
30 JULY 2024
[1]
1948
(2) SA 677 (A)
[2]
2004
(5) SA 586
(SCA)
at
paras [5], [6], [8], [9], [18].
[3]
1976
(4) SA 403
(A)
at
409G-H
[4]
2001
(1) SA 88
(SCA) at para [2]
[5]
[2023]
1 All SA 501 (WCC)
[6]
[2023]
1 All SA 501 (WCC)
[7]
Van
Zyl N.O
supra
at para [9]
[8]
Van
Zyl N.O
supra
at paras [10] and [11]
[9]
1974
(3) SA 102
(A)
[10]
Noordkaap
supra
110
[11]
2013
(5) SA 1
(CC) at paras [1]. [9] and [18]