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[2024] ZAECMKHC 132
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ABSA Bank Limited v Ntlonze (1415/2024) [2024] ZAECMKHC 132 (3 September 2024)
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IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, MAKHANDA)
CASE
NO: 1415/2024
Date
Heard: 20 August 2024
Date
Delivered: 03 September 2024
In
the matter between:
ABSA
BANK LIMITED
PLAINTIFF
and
THEMBALIHLE CLAUBUS
NTLONZE
DEFENDANT
(Identity Number:
5[…])
JUDGMENT
MULLINS
AJ
[1]
Alleging that the Defendant was in breach of the terms of a credit
agreement, in that
he was in arrears with regard to the monthly
repayments (in respect of a motor vehicle), the Plaintiff issued
summons for:
(a)
Cancellation of the contract;
(b)
Return of the goods;
(c)
Leave to prove damages (in due course);
(d)
Costs as between attorney and client, (as provided for in the
contract).
[2]
The Defendant defended the action pleading:
(a)
Supervening impossibility of performance;
(b)
An incorrect calculation of the arrears;
(c)
An intervening event of impossible performance.
[3]
On receipt of the plea the Plaintiff applied for summary judgment,
which is opposed
by the Defendant (the “new” rule 32
being of application).
[4]
In its affidavit the Plaintiff states:
(a)
On his own version the Defendant is in arrears and is accordingly in
breach;
(b)
Between May 2020 to July 2020 the Defendant had been afforded a three
month “holiday”
when it became apparent that the
so-called hard lockdown imposed during the height of the Covid-19
pandemic was not going to be
lifted;
(c)
Between August 2020 and December 2021 no payments were received;
(d)
After the lockdown was officially lifted in April 2022 the Defendant
had made only sporadic
payments;
(e)
The lockdown did not qualify as supervening impossibility of
performance in that subjective
difficulty in complying with the terms
of a contract was no defence in law. Compliance with the terms
of the contract had
to be objectively impossible;
(f)
The fact that the Defendant did not “intentionally,
deliberately or wrongfully
default” (as pleaded by the
Defendant) was no defence in law;
(g)
The contract is silent on the question of force majeure and therefore
the common law applied;
(h)
On his own version, if supervening impossibility of performance
applied, the contract was
terminated and the Defendant was obliged to
return the vehicle, which he had failed to do.
[5]
In his opposing affidavit the Defendant repeats, to a large extent,
the contents of
his plea. Thus:
(a)
He alleges that the Covid-19 pandemic amounted to supervening
impossibility of performance
in that he was denied the opportunity of
making a living;
(b)
The Plaintiff had not adduced any evidence which confirmed his (the
Defendant’s) financial
predicament;
(c)
Despite the lockdown he had made substantial payments, which he
details;
(d)
He was not in wilful default of his obligations;
(e)
The Plaintiff had failed to offer him a payment plan in respect of
the arrears.
[6]
The Defendant’s case boils down to this: The vehicle was
purchased to
be used as a taxi. As the Covid-19 pandemic had
prevented him from earning a living it was not his fault that he fell
into
arrears and he was therefore not in breach of contract.
[7]
In argument Mr
Marais
, who appeared for the Plaintiff,
referred me to a number of judgments on the point, many of which deal
with the economic hardship
which was experienced as a result of the
lockdown.
[8]
In
Nedbank
Ltd
v
Mathebula
[1]
the facts are remarkably similar. The defendant financed the
purchase of two vehicles which he intended to use as taxis.
He
fell into arrears and was in due course sued by the bank. His
defence was that as a result of the national lockdown he
was unable
to ply his trade and that this amounted to supervening impossibility
of performance which prevented him from complying
with his
contractual obligations and he was, therefore, not in breach.
[9]
In a very helpful summary of the law on the point the learned judge
rejected the defence
and granted judgment for the plaintiff.
Quoting
Freestone
Property Investment (Pty) Ltd
v
Remake
Consultants CC
[2]
the
following was stated (at para 22):
“
The declaration of
the state of disaster and the continued effect of the Covid-19
pandemic may have resulted in a dramatic decline
in custom but does
not afford a defence.”
[10]
It is important to bear in mind that the test for supervening
impossibility of performance is
an objective test, not subjective
one. To quote from
Freestone
again (at para 20):
“
The event may
[3]
also render performance absolutely or objectively impossible.
The fact that
vis
major
or
casus
fortuitus
had made it uneconomical for a party to carry out its obligations,
however, does not mean that performance has become impossible.”
[11]
An example of objective impossibility of performance is the total
destruction of a building,
which is the subject of a lease agreement,
by fire. As the landlord is no longer able to provide the
lessee with the building
the lessee is excused from paying the rent.
By operation of law the lease terminates.
[12]
In the present matter the contract which the parties concluded was
for the purchase by the Defendant
of a motor vehicle in accordance
with a credit agreement. The contract is silent on the purpose
for which the vehicle was
purchased. The fact that, due to
circumstances completely beyond his control, the Defendant’s
taxi business became
uneconomical is irrelevant. If this was
the basis for supervening impossibility of performance it would open
the floodgates,
as it were. By way of example, (and persisting
with the flood theme), if a bridge is washed away and the Defendant
is no
longer able to transport his passengers to the other side of
the river, thereby severely affecting his income, would he be able
to
plead supervening impossibility of performance? Clearly not.
[13]
Another judgment dealing with the economic effect of the hard
lockdown is
Hennops
Sport
(Pty) Ltd
v
Luhan
Auto (Pty) Ltd.
[4]
This
involved the lease of premises in order for the lessee to operate a
motor vehicle dealership. Understandably, the lockdown
had a
major impact on the dealership’s profitability and it fell into
arrears. When sued for arrear rental the lessee
pleaded
supervening impossibility of performance and was successful in the
court
a
quo
.
On appeal it was held that the defence was not available. The
court stated as follows (at para 9):
“
[9]
The pith of this appeal and the legal question in it is whether
supervening impossibility
of performance occurred in respect of the
lease agreement entered into between the appellant and the
respondent. Laden in this
appeal is also the question whether
COVID-19 restrictions in terms of the regulations imposed by the
Government during the relevant
times constitutes supervening
impossibility proper in respect of a lease agreement. In our view,
the apt name for the doctrine
of supervening impossibility is the
doctrine of frustration. It is apt in our view because veritably,
what happens or should happen
is the frustration of the terms of the
agreement of whatever nature as between the parties. The dictionary
meaning of the word
frustration is an act of hindering someone’s
plans or efforts. On the other hand, the word impossible when used as
a noun,
it means that something that cannot be done; and as an
adjective, it means not capable of occurring or being accomplished or
dealt
with.”
[14]
In essence, what the court found was that there was nothing to
prevent the performance of the
contract. The premises remained
available to the lessee, who remained in occupation. On the
question of the financial
implications of the lockdown the court had
this to say (at para 22):
“
[22]
Commercial impossibility does not give rise to the principle of
supervening impossibility. A party cannot
be discharged from
performing a contract because it is non-profitable for that party. In
due course, in this judgment, this Court
shall revert to this issue
when discussing the impact of COVID-19.”
[15]
Another difficulty facing the Defendant in the present matter is that
his arrears are not confined
to the limited period of the hard
lockdown. Despite making some payments subsequent thereto he
remains substantially in arrears.
Admittedly the amount of the
arrears is in dispute, but as the Plaintiff is not seeking a monetary
judgment at this stage, this
is of no moment.
[16]
During his argument, Mr
Kwitshana
, for the Defendant, conceded
that what the Defendant really wanted was a “payment plan”.
[17]
Finally, it is significant that at no stage, not even during argument
before me, did the Defendant
tender the return of the vehicle.
It is axiomatic that, for the defence of supervening impossibility of
performance to succeed,
the vehicle would have to be returned to the
Plaintiff. The failure to undertake to do so is fatal to the
Defendant’s
case.
[18]
In the circumstances I am satisfied that the Plaintiff has made out a
case for summary judgment
and make the following order:
(a)
Confirmation of the cancellation of the agreement;
(b)
Return of the
2019 TOYOTA QUANTUM 2.5 D-4D SESFIKILE 16S
with
engine number
2[…]
and chassis number
A[…]
;
(c)
Leave to prove damages;
(d)
Costs on the scale as between attorney and client.
NJ
MULLINS
ACTING
JUDGE IN THE HIGH COURT
DATE:
APPEARANCES:
Plaintiff:
Adv.
Marias
MCWILLIAMS & ELLIOT
INC
(Ref: M.Marais)
C/O HUXTABLE ATTORNEYS
(Ref: O. Huxtable)
Defendant:
Adv. Kwitshana
T.MNYAKA & CO
(Ref: ZF/C/V/062)
C/O YOKWANA ATTORNEYS
[1]
[2024] ZAGPPHC 621
[2]
2021 (6) SA 470 (GC)
[3]
If I am not mistaken, the word “may”
should read “must”.
[4]
[2022] ZAGPPHC 953