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Applicant’s claim
[2] The facts underlying the relief claimed by the applicant are largely common
cause between the parties. The applicant, a commercial bank, advanced R
12 400 000, 00 to the respondent in terms of a written loan agreement dated
23 July 2024. The respondent had to repay the loan in monthly instalments of
R 176 115, 53 over a period of 120 months.
[3] The respondent failed to pay the monthly instalments, and on 9 May 2025, the
arrears amounted to R 418 027, 38. The failure to pay the monthly instalments
is, in terms of clause 14.2.2 of the standard terms and conditions applicable to
the agreement, an event of default.
[4] Once an event of default occurs, the applicant may, in terms of clause 14.3.1,
upon notice, accelerate the amount due under the agreement. On 13 February
2025, the applicant gave written notice to the respondent of its decision to
accelerate payment of the respondent’s indebtedness under the agreement
and demanded payment of the outstanding amount of R 12 593 351, 69.
[5] The respondent did not respond to the notice and on 4 April 2025 had only paid
an amount of R 210 000, 00 in reduction of the debt. On 4 April 2025, the
applicant’s attorneys emailed a letter of demand in terms of section 345(1)(a)(i)
of the 1973 Companies Act to the email address of Mr Diwan, the director of
the respondent at the time . The letter was also served by the Sheriff at the
respondent’s registered address.
[6] Thereafter and up until 6 May 2025, the respondent made further payments of
R 236 000, 00. The further payments did not satisfy the outstanding debt, and
this application was issued during June 2025.
Respondent’s defences and discussion
[7] In opposing the liquidation application, the respondent denied allegations in the
founding affidavit with little or no justification for the denial. Mr Marques, counsel
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for the respondent, to his credit, indicated that he will not be making any
submissions in respect of the se unjustified denials . In the result, I propose to
deal very briefly with the issues raised by the denials.
Personal knowledge
[8] Karen Joanne Cawood (“Cawood”), a Commercial Recoveries Manager in the
employment of the applicant , deposed to the founding affidavit and provided
detailed facts in support of her allegation that she has the requisite personal
knowledge to depose to the affidavit on behalf of the applicant. Her averments
in this regard appear from the founding affidavit, and I do not deem it necessary
to repeat the allegations herein . The respondent denied that Cawood had
personal knowledge of the facts contained in the founding affidavit.
[9] In Firstrand Bank Ltd v Kruger and others 2017 (1) SA 533 (GJ) (“Kruger”) at
540D – F, the court stated that the following persons will ordinarily have the
requisite personal knowledge to depose to an affidavit on behalf of a credit
grantor:
”(a) the evidence of a person who exercises custody and control of the documents
in issue to introduce them into evidence through the founding affidavit provided
such allegation is made, or appears from the contents of the affidavit as a
whole, 3 and provided the agreements are attached and are alleged to be true
copies. 4 This would usually be a bank manager or an official holding the
position of a recoveries manager; 5
(b) the evidence of a person who has personal knowledge of the current status of
the credit receiver's account by reason of having access to the account and
being involved in the present management of the account or collection process,
in respect of the alleg ations contained in the founding affidavit regarding the
current outstanding balance. This would be subject to the terms of the
agreement which may permit a certificate of indebtedness to constitute prima
facie proof, provided it is signed by a design ated official at the financial
facie proof, provided it is signed by a design ated official at the financial
institution and provided further that the court is otherwise satisfied that such
person would, in the ordinary course, have personally accessed the records,
accounts and other relevant records of the respondent and provided t he
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certificate is otherwise reliable. See generally Saldulker JA in Rees para 14;
Maharaj v Barclays National Bank Ltd 1976 (1) SA 418 (A) at 424E – F; and
Wallis J (at the time) in Shackleton Credit Management (Pty) Ltd v Microzone
Trading 88 CC and Another H 2010 (5) SA 112 (KZP) para 13, approving the
requirement in Standard Bank of SA Ltd v Secatsa Investments (Pty) Ltd and
Others 1999 (4) SA 229 (C) at 235A – C that the deponent at least has personal
knowledge of certain of the relevant facts;”
[10] The facts upon which Cawood relies in support of her averment that she has
personal knowledge of the allegations in the founding affidavit fall squarely
within the test enunciated in Kruger. I am satisfied that Cawood has the
requisite personal knowledge to depose the founding affidavit.
Securitisation
[11] The respondent denied that the applicant is the current legal holder of the loan
agreement and averred that the applicant actively engages in the practice of
securitisation without informing consumers or obtaining their consent. Although
Abdul Aziz Boolay (“Boolay”), the respondent’s current director and deponent
to the respondent’s answering affidavit, readily admitted that he has no
personal knowledge of whether the applicant remains the legal holder of the
agreement, he insisted that the applicant must prove it is.
[12] Mr Horn, counsel for the applicant, submitted that our law does not generally
require a party to prove the negative. Should the respondent contend that the
applicant had parted with its rights under the loan agreement, it bears the onus
to prove it.
[13] I agree. The denial is without any legal foundation and is ill-conceived.
Jurisdiction
[14] Although the respondent’s registered address is situated at 52 Bloed Street,
Pretoria, Gauteng, the respondent stated that it has never conducted business
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at the address and therefore the court does not have jurisdiction to hear and
adjudicate the matter. The denial has no legal foundation. By virtue of the fact
that the respondent’s registered address falls within the area of jurisdiction of
this court, the court has jurisdiction to hear the matter.
National Credit Act, 34 of 2005
[15] The respondent averred that the National Credit Act (“the Act) applies to the
loan agreement and that the applicant’s failure to comply with the provisions of
the Act is fatal to the application.
[16] The applicant denies that the Act is applicable on the following grounds:
16.1 the respondent is a juristic person with assets or annual turnover, at the
time of concluding the loan agreement, that exceeded the R 1 million
threshold determined by the Minister, as contemplated in section
4(1)(a)(i) of the Act; alternatively
16.2 the loan agreement is a large agreement, and the respondent is a juristic
person as envisaged in section 4(1)(b) of the Act. A large agreement is,
in terms of section 9(4) of the Act, a mortgage loan agreement or credit
transaction with a principal debt in excess of R 250 000, 00.
[17] The respondent’s contention that the Act applies is clearly wrong.
[18] I pause to mention that the respondent also averred that the provisional order
was granted irregularly. This is one point that Mr Marques, to his credit, did not
pursue.
[19] I proceed to consider the substantial defences raised by the applicant in
opposition of the liquidation application.
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Notice of acceleration not properly pleaded
[20] In paragraph 30 of the founding affidavit, Cawood stated the following: “The
demand was sent by email to the address specified on the first page of the loan
agreement, in compliance with clauses 18.1.2 and 18.2.3 of the standard terms nd
conditions applicable to the loan agreement.” It is common cause that the demand
is the notice of acceleration and that it was sent to the email address that
appears as a contact on page 1 of the agreement.
[21] Clause 18.1.2 reflects the respondent’s domicilium citandi et executandi as
“the contact details specified on page 1 of this Agreement” and clause 18.2.3
read with clause 18.2 provides that any notice sent by email will be deemed to
have been duly received by the respondent on the date on which the notice
was transmitted.
[22] Notwithstanding the fact that the notice of acceleration was patently delivered
in terms of the provisions of the loan agreement, Mr Mar ques submitted that
Cawood’s failure to refer to clauses 18.2 and 18.2.3 in paragraph 19 of the
founding affidavit, prohibits her from relying on the clauses in paragraph 30.
Paragraph 18 of the founding affidav it states that the general terms and
conditions of the loan agreement are incorporated in the affidavit, and in
paragraph 19 Cawood sets out the material terms and conditions of the loan
agreement.
[23] The submission that all the terms of the agreement that the applicant relies on
in order to establish its case must be contained in one paragraph is legally
incomprehensible.
Non-payment of an amount due in terms of the loan agreement is not an event
of default
[24] Mr Marques’ submission in this regard was difficult to follow, but if I understood
him correctly, it is based on a proper interpretation of clause 14 of the loan
agreement.
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[25] It is therefore apposite to examine the clause in more detail.
“14 EVENTS OF DEFAULT
14.1 An Event of Default shall occur if any of the following events, each of which
shall be severable and distinct from the others, occurs….
[own emphasis]
14.2 The Events of Default occur if the Borrower and/or Security Providers as the
case may be:
……
14.2.2 fails to pay any amount due in terms of the Agreement;
………
14.2.8 fails to comply with or maintain any of the Financial Covenants
contemplated in the Loan Schedule, provided that-
14.2.8.1 subject to clause 14.2.8.2 (Remedial Plan) below, the
Borrower shall have 30 days from the date of any written notice
given by FNB to the Borrower notifying the Borrower of such
breach, to either remedy the breach in respect of that Financial
Covenant or to provide FNB with a written remedial plan
detailing how it will remedy the Financial Covenant … (own
emphasis)
[26] The clause further provides that failure by the borrower to remedy the breach,
to provide a remedial plan, or to comply with the provisions of the approved
remedial plan shall entitle the applicant to exercise its remedies under clause
14.3, which include an acceleration notice.
[27] “Financial Covenants” is defined as “the conditions envisaged in the Financial
Covenants clause of the Loan Schedule”. I pause to mention that the loan
schedule does not contain a Financial Covenants clause.
[28] Mr Marques submitted that the loan agreement, properly interpreted, provides
that in the instance of an event of default in terms of clause 14.2.2 (failure to
pay an amount due), the applicant is compelled to comply with the provisions
of clause 14.2.8.1. It is only in the event that the borrower does not comply with
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the 30 day notice, that the applicant may exercise its right to accelerate the
amount owing.
[29] The submission is legally untenable. On a plain reading of clause 14.1, the
words “each of which shall be severable and distinct from the others” negate any
notion that the event of default pertaining to Financial Covenants is applicable
to a failure to pay and should first be exhausted before the applicant may
exercise the remedies contained in clause 14.3.
[30] When the aforesaid insurmountable difficulty was pointed out to Mr. Mar ques,
he did not refer to any legal principle to support his submission, but merely
stated that it was his instructions to make the submission. Mr. Mark ques'
conduct in this regard is unacceptable and does not meet the standards of
conduct expected from officers of the court.
Discretion
[31] The respondent submitted that the facts in casu call for a discretion to be
exercised under section 347 of the 1973 Companies Act. The circumstances
under which the discretion will be exercised were succinctly summarised in
Afgri Operations Ltd v Hamba Fleet (Pty) Ltd 2022 (1) SA 91 (SCA) , at para
[12]:
“[12] Notwithstanding its awareness of the fact that its discretion must be exercised
judicially, the court a quo did not keep in view the specific principle that, generally
speaking, an unpaid creditor has a right, ex debito justitiae, to a winding -up orde r
against the respondent company that has not discharged that debt. Different
considerations may apply where business rescue proceedings are being considered
in terms of part A of ch 6 of the new Companies Act 71 of 2008. Those considerations
are not relevant to these proceedings. The court a quo also did not heed the principle
that, in practice, the discretion of a court to refuse to grant a winding -up order where
an unpaid creditor applies therefor is a 'very narrow one' that is rarely exercised and
then in special or unusual circumstances only.” (footnotes omitted)
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[32] The respondent listed the following special and/or unusual circumstances:
32.1 the unfortunate default arose during the time when the respondent
company’s shares were in the process of being bought by a new buyer;
32.2 the bona fide new buyer was unaware of the fact that the respondent
company was in default to the applicant;
32.3 the respondent is factually solvent;
32.4 the respondent company is a going concern;
32.5 the applicant is secured to the hilt;
32.6 the respondent has immovable property which can be executed upon to
purge the debt;
32.7 the new purchaser has already authorised a debit order; and
32.8 is willing to sign a personal suretyship in his name if need be.
[33] As stated in Afgri, the applicant has a right, ex debito justitiae, to a winding-up
order against the respondent in circumstances where the respondent is unable
to discharge its debt. Most of the circumstances listed by the respondent
suggest that the applicant should have chosen an alternative method to collect
the unpaid debt. The respondent, however, failed to provide any facts
substantiating its belief that the suggested alternatives are viable options to
meet the outstanding debt.
[34] I do not understand special and unusual circumstances to mean that a debtor
may dictate to a creditor which cause of action it should utilise to collect an
unpaid debt. In my view, these alternative methods do not constitute special or
unusual circumstances.
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Appearances:
For the applicant: Adv Horn
Attorneys for the applicant: Werksmans Attorneys
For the respondent Adv Marques
Attorneys for the respondent: Liddle & Associates Inc