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2025
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[2025] ZAFSHC 141
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Khotso v Nathane (A108/2024) [2025] ZAFSHC 141 (15 May 2025)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
NOT
REPORTABLE
Case
no:
A108/2024
Court
a quo
case no:
4643/2023
In
the matter between:
LEBATA
KHOTSO
Appellant
and
MOTSHEDI
NATHANE
Respondent
Citation:
L Khotso v M Nathane
(A108/2024) [2025]
Coram:
JP DAFFUE and NS DANISO JJ and JJ BUYS
AJ
Heard
:
29 APRIL 2025
Delivered
:
15 MAY 2025
This
judgment was handed down electronically by circulation to the
parties’ representatives by email and release to SAFLII.
The date and time for hand-down is deemed to be 16H30 on 15 MAY 2025.
Summary
:
The court
a quo
granted summary judgment relying on
relaxation of
par delictum rule
-– the plaintiff, being
the money lender, was not a registered credit provider in terms of
section 40 of the National Credit
Act 34 of 2005 (the NCA) –
held on appeal by the unsuccessful defendant that section 164(1) read
with section 89(5) of the
NCA were applicable – no case made
out for summary judgment – appeal granted.
ORDER
1.
The appeal is upheld.
2.
The order of the court a quo is set aside
and replaced with the following:
a.
the application for summary judgment is
dismissed;
b.
leave is granted to the defendant to defend
the action;
c.
the plaintiff shall pay the costs of the
summary judgment application on a party and party scale, inclusive of
the costs of opposition
thereof, counsel’s fees to be taxed on
scale C.
3.
The respondent shall pay the appellant’s
costs of the appeal,
counsel’s fees to be taxed on scale C.
JUDGMENT
Daffue
J (Daniso J and Buys AJ concurring):
Introduction
[1]
The appellant appeals against the judgment of a single
judge of this
division in terms whereof summary judgment was granted for payment of
the sum of R1 600 000 plus interest
a tempore morae
and costs of suit against the appellant, cited as defendant in the
court
a quo
.
[2]
The issue on appeal is whether the plaintiff, cited as
respondent in
this appeal, should have been successful in the summary judgment
proceedings insofar as he relied on unjustified
enrichment, having
acknowledged that the loan agreement entered into between him as
lender and the appellant as borrower was void
for non-compliance with
the National Credit Act 34 of 2005 (the NCA). This court will also
consider whether the application could
be considered at all, bearing
in mind the claims that may be adjudicated as set out in rule 32(1)
of the Uniform Rules of Court.
The
parties
[3]
The appellant in the appeal and defendant in the court
a quo
is Mr Lebata Khotso, a major male person residing in Welkom. Although
Adv N Snellenburg SC drafted the heads of argument, adv SJ
Reinders
appeared before us on behalf of the appellant on instructions of A
Podbielski Inc, c/o Honey and Partners Inc, Bloemfontein.
[4]
The respondent in the appeal and the plaintiff in the
court
a quo
is Mr Motshedi Nathane, a major male business person residing in
Roodepoort, Gauteng. He did not file a notice to oppose the appeal
and consequently, there was no appearance on his behalf before us. I
shall hereinafter refer to the parties as on appeal to avoid
confusion.
The
pleaded facts.
[5]
The following averments appear from the particulars of
claim:
a.
the respondent lent R3 000 000 to
the appellant in
accordance with a written loan agreement dated 3 May 2021 in terms
whereof they agreed that interest in the total
amount of R3 000 000
would be payable;
b.
the total amount, that is the capital of R3 000 000
and
interest of R3 000 000, would be payable in 24 equal
monthly payments of R250 000 from June 2021;
c.
the respondent complied with his obligations
and paid R3 000 000
to the appellant;
d.
the appellant made several payments from September
2021 to July 2022
in the total amount of R1 400 000;
e.
the respondent was not a registered credit
provider, but alleged that
at the time of entering into the agreement he in particular was
unaware of the illegal nature of the
agreement of which he only
became aware in June 2023;
f.
the appellant has been enriched
at the expense of the respondent in
the amount of R1 600 000 which he failed to pay to the
respondent.
[6]
The following averments are contained in the plea:
a.
in the event of an unlawful credit agreement,
the court must in terms
of s 89(5) of the NCA make a just and equitable order, including but
not limited to an order that the credit
agreement is void as from the
date thereof;
b.
the appellant was not liable to make further
payments to the
respondent in light of the unlawful agreement;
c.
it is denied that the respondent was unaware
of the illegal nature of
the agreement at the time of entering into it;
d.
the respondent failed to make the necessary
allegations to sustain a
cause of action based on unjustified enrichment;
e.
the agreement contravened the provisions of
s 105(1) of the NCA
insofar as the interest rate levied contravened the maximum rate that
might be charged and furthermore, part
of the payments made included
interest at a rate in contravention of the maximum rate;
f.
an acquaintance of the respondent
instructed him to deduct the amount
of R1 600 000 allegedly owed by the appellant to him in
partial settlement of the
respondent’s debt owed to that
acquaintance in the amount of R7 million.
[7]
In the respondent’s affidavit in order to verify
the cause of
action, he made the following allegations:
a.
the appellant was unjustly enriched at his
expense as he had received
an amount of R3 000 000, but failed to repay this amount;
b.
at the time of entering into the agreement
the parties were unaware
that it was invalid and since the respondent has become aware of the
invalidity, he abandoned any claim
in respect of interest;
c.
the appellant bore the onus to prove that
he had not been
unjustifiably enriched.
[8]
In the answering affidavit the appellant made the following
allegations:
a.
in relying on s 89(5) of the NCA, the court
has to make a just and
equitable order which may include that the contract is void, that the
respondent’s action should be
dismissed and/or that the
respondent should be entitled to restitution
, ie
payment of
the balance of the capital that had not been repaid;
b.
the determination to be made by the court
must be based on the
justice and facts of the individual case, public policy
considerations and a balancing of these factors against
each other;
c.
the summary judgment application was an abuse
of process;
d.
the loan agreement must be declared void,
which may justify a
dismissal of the respondent’s action, and/or an order that the
respondent is not entitled to any performance
, ie
payment of
the balance under the agreement;
e.
the respondent has not properly and fully
pleaded a cause of action
for recovery of the R1 600 000 on the basis of unjustified
enrichment;
f.
the only just and equitable order
to be granted in terms of s 89(5)
would be that the contract is void and the respondent not entitled to
repayment of the loan or
repayment of the outstanding balance;
g.
the payments already made to the respondent
included interest at a
rate contravening the maximum rate that might have been charged;
h.
the appellant has not been enriched at the
expense of the respondent
who was not impoverished in the amount of R1 600 000;
i.
consequently, the application
for summary judgment should be
dismissed, leave be granted to him to defend the action, that the
respondent should pay the costs
of the application on a scale as
between attorney and client and furthermore, that the action be
stayed until payment of the appellant’s
taxed costs.
The
judgment of the court a quo
[9]
The court
a quo
dealt with the principles applicable to
summary judgment procedure as well as s 89(5) of the NCA and the
par
delictum
rule. It did not agree with Mr Snellensburg’s
submission that the court could only make an order based on
unjustified enrichment
after hearing evidence during a trial.
According to the court
a quo,
it was undisputed that the
balance of the loan in the amount of R1 600 000 had been
received by the appellant. Consequently,
the court was in a proper
position to decide which order was just and equitable.
[10]
The court
a
quo
dealt with Mr Snellenburg’s submission pertaining to the
excessive interest charged and stated the following:
[1]
‘
If [it] was to be
taken as a determining factor in holding that the Plaintiff is not
entitled to restitution, it will effectively
mean that the Plaintiff
is penalised in not receiving the outstanding balance of the capital
loan amount, although interest does
not even form part of the present
claim.’
[11]
In
concluding as it did, the court
a
quo
erred. It was not for the appellant to provide any particulars in
respect of interest allegedly forming part of the payments made
as
set out in paragraph 40 in the judgment. It is apparent from the loan
agreement that the full amount of R6 000 000
would be paid
in 24 equal instalments of R250 000 in respect of the capital
and interest. Obviously, this meant that the amount
paid over to the
respondent included illegal interest. The court
a
quo
relied on the relaxation of the
par
delictum
rule explained nearly a century ago in
Jajbhay
v Cassim
,
[2]
a judgment followed in numerous judgments ever since. In the exercise
of its discretion the court
a
quo
granted summary judgment based on the simple justice between man and
man principle and the relaxation of the
par
delictum
rule.
An
evaluation of the appellant’s submissions
[12]
Rule 32(1) sets out the type of claims that may be adjudicated in
summary
judgment procedure. These claims are:
‘
(a) on
a liquid document;
(b) for a
liquidated amount in money;
(c) for
delivery of specified movable property; or
(d) for
ejectment;
together with any claim
for interest and costs.’
[13]
In his heads of argument Mr Snellenburg strenuously submitted
that the
application for summary judgment should not have been
entertained by reason of s 164(1) read with s 89(5) of the NCA.
Section 164(1)
reads as follows:
‘
Nothing in this
Act renders void a credit agreement or a provision of a credit
agreement that, in terms of this Act, is prohibited
or may be
declared unlawful
unless a court declares that agreement or
provision to be unlawful
.’ (emphasis added)
Section 89(5) reads as
follows:
‘
(5) If a credit
agreement is unlawful in terms of this section, despite any other
legislation or any provision of an agreement to
the contrary, a court
must make a just and equitable order including but not limited to an
order that-
(a) the
credit agreement is void as from the date the agreement was entered
into.’
[14]
The respondent did not identify the enrichment action relied upon,
although
this in itself is not a requirement. It could only be the
condictio ob turpem vel iniustam causam
. The requirements for
the enrichment action applicable
in casu
are the following:
a.
ownership must have passed with the transfer,
or on the facts of this
case, money has been paid over to the other party;
b.
the transfer (or payment) must have taken
place in terms of an
unlawful agreement; and
c.
the
plaintiff must tender the return of what they have received.
[3]
Bearing in mind the
general principles pertaining to enrichment, the plaintiff should
have alleged that he was impoverished and
the defendant enriched as a
result.
[15]
The
Constitutional Court in
Opperman
[4]
continued as follows:
‘
In
order to be successful, ordinarily the party who claims on the basis
of unjust enrichment must be free of turpitude and show
that he or
she has not acted dishonourably. This is the
par
delictum
rule.
The underlying principle is that the law should discourage and deter
illegality; it should not render assistance to those
who defy it.’
[16]
It was submitted on behalf of the appellant that the respondent had
to verify
his cause of action under oath, but failed to do so bearing
in mind that the cause of action verified must be in respect of a
complete
cause of action. The respondent failed, as submitted, to
plead the
facta probanda
which identified the issues upon
which he would seek to rely and on which evidence would be led in
intelligible and lucid form allowing
for the defendant to plead
thereto. In fact, so it was argued, the respondent never qualified
for summary judgment as a result
of an incomplete pleaded cause of
action.
[17]
The appellant submitted that the respondent did not seek an order in
terms
of s 89(5) read with s 164 of the NCA. The respondent did not
allege that because the loan agreement was unlawful as he was not
registered as a credit provider in terms of s 40(1) and (2) of the
NCA, he was entitled to the relief contained in s 164(1) read
with s
89(5) and consequently, that a just and equitable order should be
made. When the scheme of the NCA is considered,
parties trying
to circumvent the provisions thereof may be prevented from claiming
what is allegedly due to them, even on the basis
of unjustified
enrichment. It is clear that the respondent did not seek an order to
declare the loan agreement void. It was for
the court to make such a
declaration based on the
facta probanda
and verifying of the
cause of action under oath presented to it. Only once such order is
made, the further provisions of s 89(5)
are activated and become
relevant.
[18]
Even if the
respondent were to seek an order of unlawfulness, he would not be
entitled to summary judgment, bearing in mind rule
32(1) quoted
above. In
Nature’s
Choice (Pty) Ltd v Ballendene
[5]
summary judgment was granted for payment of the capital of R800 000
lent and advanced by an unregistered lender. The facts
are not
similar to the facts
in
casu
as
no mention is made of any interest charged or claimed. The court
incorrectly referred to s 189(5) of the NCA. There is no such
a
section. However, the court never considered s 164(1) or the
rationale for the statutory provision contained therein. The same
applies to the court
a
quo in casu
.
I do not know whether Mr Snellenburg drew the court
a
quo
’s
attention to s 164(1) and argued same, but it is apparent from the
judgment that this statutory provision was ignored.
If the court
a
quo
’s
judgment is analysed properly, it failed to recognise that s 89(5) is
only activated once a declaration of unlawfulness
is made in terms of
s 164(1).
[19]
I am
satisfied that the court
a
quo
could not consider the matter based on so-called simple justice
between man and man and the just and equitable principle. It should
not have endeavoured to consider a relaxation of the
par
delictum
rule during the summary judgment proceedings. This should have been
left for the trial court to adjudicate eventually. I am in
respectful
agreement with the judgment of Boruchowitz J in
Leech
and Others v ABSA Bank Ltd.
[6]
The respondent’s turpitude and other factors will be
relevant and to be considered by the trial court after discovery
and
cross-examination of the parties and the respondent in particular. It
is not necessary to speculate what may happen in such
a case, but the
intentional contravention of the NCA may well be an aspect to be
fully canvassed during cross-examination. The
underlying principle
pertaining to the
par
delictum
rule as discussed in
Opperman
supra
[7]
is that the law should discourage and deter illegality and should not
render assistance to those who defy it. In my view, if the
court
a
quo
’s
judgment is allowed to stand, a wrong message would be sent out,
ie
that unregistered credit providers who contravene the NCA may
eventually find themselves in a better position than a person who
abides by the law and complies with all registration requirements.
[20]
In the circumstances I am satisfied that it was not correct to make a
mere
mathematical calculation by subtracting the R1 400 000
paid by the appellant from the R3 000 000 capital lent
to
him to arrive at the sum of R1 600 000. When the appellant
made the payments, they were intended to provide for capital
and
excessive interest and were in fact accepted on that basis. There can
be no doubt about that. The effect hereof is that the
respondent
received an undisclosed amount of interest unlawfully. The respondent
should have tendered the interest unlawfully agreed
upon and received
in order to have complied with the third requirement of the
particular enrichment action. He did not plead compliance
with such
requirement. I am satisfied that the appellant’s disclosed
defence was not only
bona fide,
but also good in law. The
court
a quo
erred in not coming to the same conclusion and if
it did, it was bound to refuse summary judgment. I am satisfied that
it could
not be found that the respondent had an unanswerable case.
[21]
The appellant’s counsel submitted in the heads of argument that
summary
judgment should have been refused with punitive costs on the
attorney and client scale and that the action be stayed pending
payment
of the taxed costs. When I requested Mr Reinders’
response in this regard during oral argument, he immediately conceded
that
at best for the appellant, party and party costs should be
awarded in respect of the summary judgment application and that no
order
should be made pertaining to the stay of the action as provided
for in rule 32(9)(a). His concession was properly made and there
is
no reason to dwell further on this topic. An appropriate order will
be made.
Conclusion
[22]
The successful appellant is entitled to the costs of the appeal. The
respondent
should not have embarked upon summary judgment
proceedings. I considered whether it would not be fair to order the
costs of those
proceedings to be costs in the main action, but based
on the findings herein, I am satisfied that the respondent shall pay
those
costs.
Order
[23]
The following order is made:
1.
The appeal is upheld.
2.
The order of the court
a
quo
is set aside and replaced with the
following:
a.
the application for summary judgment is
dismissed;
b.
leave is granted to the defendant to defend
the action;
c.
the plaintiff shall pay the costs of the
summary judgment application on a party and party scale, inclusive of
the costs of opposition
thereof, counsel’s fees to be taxed on
scale C.
3.
The respondent shall pay the appellant’s
costs of the appeal,
counsel’s fees to be taxed on scale C.
JP
DAFFUE J
I
concur
NS
DANISO J
I
concur
JJ
BUYS AJ
Appearances
For
appellant:
Adv
SJ Reinders (the heads having been drawn by
Adv
N Snellenburg SC)
Instructed
by:
A
Podbielski Inc
c/o
Honey & Partners Inc
Bloemfontein
For
the respondent:
No
Appearance
[1]
Record p 45: judgment para 39.
[2]
1939 AD 537
at 544 & 545, 549-557 and 558.
[3]
See
National
Credit Regulator v Opperman
2013 (2) SA 1 (CC) para 15. It is recorded that the court in
Opperman
declared
s 89(5) as it read at the time unconstitutional whereafter the
legislature amended the section to read as it now reads
and quoted
above.
[4]
Ibid
para 16.
[5]
(2020/1935) [2021] ZAGPJHC 756 (22 July 2021).
[6]
[1997] 3 All SA 308
at 314, 315 & 316 e.
[7]
Loc
cit
at
para 17 and further; see also
Afrisure
CC and Another v Watson NO and Another
[2008] ZASCA 89
;
2009 (2) SA 127
(SCA) at para 39 and further.