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[2024] ZAECMKHC 140
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Land and Agricultural Development Bank of South Africa v Kinros Estates (Pty) Ltd and Another (Leave to Appeal) (218/2023) [2024] ZAECMKHC 140 (25 November 2024)
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IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN CAPE
DIVISION, MAKHANDA)
Not
Reportable
CASE
NO. 218/2023
In the matter between:
THE LAND AND
AGRICULTURAL DEVELOPMENT
BANK OF SOUTH AFRICA
Applicant
and
KINROS ESTATES (PTY)
LTD
(Registration
number: 2018/261040/07)
First respondent
PIETER JOHANNES
GERHARDUS MOOLMAN
(Identity
number:
8[...])
Second respondent
JUDGMENT
LAING J
[1]
This is an unopposed application for leave
to appeal against a portion of the judgment and the whole of the
order handed down on
6 August 2024. The background facts appear
therefrom and will not be repeated, save to mention that the matter
pertains to the
appellant’s attempt to enforce the terms and
conditions of a loan agreement previously concluded with the first
respondent
for the purchase of immovable properties.
[2]
The agreement was signed on 9 October 2018
at the appellant’s provincial offices by its representative, Mr
Zilindile Makapela.
It was witnessed by a further representative, Mr
Reynier Kapp. The court found that the conclusion of the agreement
did not comply
with the appellant’s delegation of powers and
was unauthorized. Consequently, it was deemed void and unenforceable.
[3]
The appellant based its application for
leave to appeal on a limited set of grounds. It argued that the court
erred in finding that
Mr Makapela, as a Class B signatory, was the
only representative to have signed the agreement and that Mr Kapp
merely signed as
a witness. In that regard, the appellant contended
that Mr Kapp, being a Class C signatory, was properly authorized and
the fact
that he signed in the space demarcated for a witness was
irrelevant. The court should have found, based on the evidence, that
the
agreement fell within the ambit of section 26 of the Land and
Agricultural Development Bank Act 15 of 2002, that the delegation
of
powers required the agreement to be signed by a Class B and a Class C
signatory, that this is what took place, and that the
agreement was
valid and enforceable.
[4]
The main issue for determination is whether
the grounds mentioned by the appellant are persuasive enough to allow
the court to grant
the leave sought. The relevant principles are
discussed, briefly, below.
[5]
In
terms of
section 17(1)(a)
of the
Superior Courts Act 10 of 2013
,
leave to appeal may only be given where a judge is of the opinion
that the appeal would have a reasonable prospect of success,
or there
is some other compelling reason why the appeal should be heard. The
provisions in question were interpreted to mean, in
S
v Smith
,
[1]
that more is required to be established than the mere possibility of
success, that the case is arguable on appeal, or that the
case cannot
be categorized as hopeless.
[2]
The inclusion of the words ‘only’ and ‘would’
has been held to have made the threshold for the granting
of leave
higher than what it was previously under the Supreme Court Act 59 of
1959. In
Pretoria
Society of Advocates v Nthai
,
[3]
the court held that there must now be a measure of certainty that
another court will differ from the court in relation to whose
judgment leave to appeal is sought.
[4]
[6]
The
crux of the application for leave pertains to the appellant’s
delegation of powers. In that regard, the appellant asserted
that the
loan agreement was not a ‘loan and/or facility agreement within
the borrowing limits agreement with any counterparty’.
[5]
It was unnecessary for the chief financial officer (‘CFO’)
and a Class A signatory to have signed. The agreement was,
instead, a
document that fell into another category, i.e. a loan agreement
concluded under section 26 of Act 15 of 2002.
[6]
It was necessary only for a Class B and a Class C signatory,
alternatively two Class C signatories, to have signed.
[7]
The appellant made an averment to that
effect in its founding affidavit. The respondents raised the question
of the validity of
the loan agreement in their answering affidavit,
contending that it lacked proper authorization no matter what
category of document
it comprised. The appellant did not, in reply,
strongly refute the appellant’s contentions, but merely argued
that the fact
that Mr Makapela had signed the agreement did not
invalidate it or render it unenforceable; the principle of
pacta
sunt servanda
should apply.
[8]
The provisions of section 26 of Act 15 of
2002, read with section 3, seem to be wide enough to permit the
appellant to assert that
the loan agreement fell into the category
alleged. Consequently, there appears to be a basis for the appellant
to contend that
the signatories in question were sufficient. This
attracts, of course, the question of whether the fact that Mr Kapp
signed in
the space demarcated for a witness meant that he signed
merely in that capacity and not as a signatory under the delegation
of
powers.
[9]
In
AB
and another v Pridwin Preparatory School and others (Equal Education
as amicus curiae)
,
[7]
the Supreme Court of Appeal dealt with the right of a private school
to terminate a contract with the parents of learners. Cachalia
JA set
out some of the most important principles arising from the case law
regarding the relationship between private contracts
and the control
thereof by the courts through the instrument of public policy,
underpinned by the Constitution. With reference
to the decision in
Barkhuizen
v Napier,
[8]
the learned judge confirmed that public policy demands that contracts
freely and consciously entered must be honoured. Cachalia
JA went on
to state:
‘…
a
court will use the power to invalidate a contract or not to enforce
it, sparingly, and only in the clearest of cases in which
harm to the
public is substantially incontestable and does not depend on the
idiosyncratic inferences of a few judicial minds…’
[9]
[10]
The
delegation of powers clearly intended senior officials of the
appellant to exercise oversight regarding the conclusion of a
loan
agreement. Presumably this would be to minimize the appellant’s
risk. Both Mr Makapela and Mr Kapp were involved in
the conclusion of
the agreement in the present matter. There is no provision in the
delegation of powers that expressly required
the agreement to have
been witnessed, and it is possible to contend that Mr Kapp’s
signature, wherever it was placed, met
the stipulated oversight
requirements. Based on the principles summarized in
Pridwin
,
[10]
it could indeed be argued that the agreement was properly authorized.
[11]
Consequently,
the court accepts that the appeal would have a reasonable prospect of
success. If the amount at stake is considered,
too,
[11]
as well as the respondents’ technical defence in the face of
its concession that the funds had been received but not repaid,
then
the court is of the view that the relief sought must be granted.
[12]
The following order is made:
(a)
leave to appeal to a full bench of the
Eastern Cape Division is granted; and
(b)
costs are those in the appeal.
JGA LAING
JUDGE OF THE HIGH
COURT
APPEARANCES
For the
applicant:
Adv Van Schalwyk
Instructed
by:
Leahy Attorneys Inc.
2
nd
Floor Parc Nouveau Building
225
Veale Street
Brooklyn, Pretoria
Tel:
012 346 4243
E-mail:
denis@leahyattorneys.co.za
siobhan@leahyattorneys.co.za
REF: D
Leahy/SH/L327
c/o
Wheeldon, Rushmere & Cole Inc.
Matthew Fosi Chambers
119
High Street
Makhanda
Tel: 046 622 7005
Ref: M Van der
Veen/Todd/S25476.
Date
heard:
18 November 2024.
Date
of delivery of judgment:
25 November 2024.
[1]
2012
(1) SACR 567 (SCA).
[2]
At
paragraph 7, with reference to
S
v Mabena
2007 (1) SACR 482
(SCA), at paragraph 22.
[3]
2020
(1) SA 267 (LP).
[4]
At
paragraph 5, with reference to
Mont
Chevaux Trust v Goosen
2014 JDR 2325 (LCC), at paragraph 6.
[5]
The
document is listed at item 3 of the appellant’s delegation of
powers.
[6]
It
was alleged to have fallen under item 15.
[7]
[2019]
1 All SA 1 (SCA).
[8]
[2007] ZACC 5
;
2007
(5) SA 323
(CC), at paragraphs [57] and [87].
[9]
Pridwin
,
at paragraph [27]. The learned judge referred to the decision in
Sasfin
(Pty) Ltd v Beukes
1989 (1) SA 1
(A), at 9C- D.
[10]
In
this division, Smith J (as he was then) cited the decision with
approval in
Nelana
v Interim Chairperson of the Board: Buffalo City Metropolitan
Development Agency Board and others
(4027/2022) [2023] ZAECMKHC 25 (7 February 2023), at paragraph [19].
[11]
The
appellant alleged that the first respondent owed, on 31 August 2022,
the sum of R 24,475,284.