2
additional defences - Court holding that further affidavits are
exceptional, that motion proceedings do not permit litigation by
instalments or repeated reconstruction of a party’s case, and that the
interests of justice, prejudice, finality and the proper administration
of justice require refusal of leave - application dismissed with costs.
JUDGMENT
M VAN NIEUWENHUIZEN, AJ:
INTRODUCTION
[1] The applicant seeks an order compelling the respondent to comply with
its alleged payment obligations in terms of a loan agreement concluded
between the applicant and the respondent on the 28th of September 2019
(“the Loan Agreement”).
[2] The applicant’s claim arises from the respondent’s failure to pay over
collected Recoverable Ceded Debts (as defined in the Loan Agreement)
to the applicant.
[3] The applicant seeks payment in the amount of R1 148 805,21, being the
amount of Recoverable Ceded Debts collected by the respondent but not
paid to the applicant, together with interest thereon at the rate prescribed
in the Loan Agreement.
[4] The respondent, in its answering affidavit, acknowledges that it owes the
applicant monies under the Loan Agreement. The respondent also raises
what the applicant terms as “meritless defences”, which it claims excuse
it from its payment obligations. It is common cause that the respondent
made a payment in the amount of R109 443,35 in January 2025 in terms
of the Loan Agreement after the proceedings commenced.
[5] The applicant argues that the respondent’s defences do not constitute
3
legally valid grounds for avoiding payment in terms of the Loan Agreement
and the applicant is entitled to claim specific performance in the form of
payment.
FACTUAL BACKGROUND
[6] The applicant’s business secures funding from individuals, companies
and trusts to provide loans for community schemes. These loans primarily
address debt problems, cashflow concerns, and finance maintenance and
capital projects.
[7] On 28 September 2019, the applicant and the respondent concluded a
written Loan Agreement in terms of which the respondent was granted a
loan facility in the amount of R5 200 000,00.
[8] The first drawdown amount of R2 600 000,00 was advanced to the
respondent on the 30 th of September 2019, and a further amount of
R300 000,00 was advanced on the 29 th of July 2020, bringing the total
amount advanced of R2 900 000,00.
[9] The “Recoverable Ceded Debts” are defined in the Loan Agreement as
the arrear levies, special levies and charges on the effective date as
indicated in Annexure “6” of the Loan Agreement , plus interest and
charges charged by the respondent monthly on these debts throughout
the duration of the Loan Agreement.
[10] The Loan Agreement states that the loan is only repayable by way of the
collection of Recoverable Ceded Debts by the respondent (from its
members – the home owners) and on payment of those collected amounts
to the applicant. Therefore, the applicant contends that the respondent’s
obligation to diligently collect these debts and promptly remit payments to
the applicant constitutes the fundamental mechanism of repayment under
the Loan Agreement , rendering these obligations essential to the very
purpose and enforceability of the contract.
4
[11] In January 2020, the respondent made an early repayment of
R1 727 504,41 which reduced the total indebtedness to R1 080 151,37 as
of January 2020.
[12] It is the applicant’s case that since the early repayment, the respondent
has collected but not paid over Recoverable Ceded Debts to the applicant
which have been steadily increasing.
[13] The applicant argues that despite multiple engagements and attempts by
the applicant to resolve the respondent’s payment failures, the respondent
has failed to remedy its breaches of the Loan Agreement and has instead
sought to oppose this matter in circumstances where it has no bona fide
defence.
THE APPLICATION FOR LEAVE TO FILE A SUPPLEMENTARY AFFIDAVIT
The applicable principles
[14] It is trite that in motion proceedings the parties are generally required to
place their entire case before the Court in three sets of affidavits, namely
the founding, answering and replying affidavits. The admission of further
affidavits is not a matter of right but lies within the Court’s discretion.
[15] In Transvaal Racing Club v Jockey Club of South Africa 1 the Appellate
Division recognised that a Court has a discretion to admit further affidavits
where the interests of justice require it. That discretion, however, must be
exercised judicially, having regard to all the relevant circumstances.
Similarly, James Brown and Hamer (Pty) Ltd v Simmons NO2 makes clear
that a litigant seeking such an indulgence must provide a satisfactory
explanation for the omission, demonstrate the materiality of the additional
1 Transvaal Racing Club v Jockey Club of South Africa 1958 (3) SA 599 (A)
2 James Brown and Hamer (Pty) Ltd v Simmons NO 1963 (4) SA 656 (A)
5
matter and satisfy the Court that its admission will not occasion undue
prejudice.
[16] The discretion is not intended to permit litigation by instalments. As was
observed in Shephard v Tuckers Land and Development Corporation
(Pty) Ltd,3 parties are expected to place their full case before the Court in
their principal affidavits. Further affidavits are permitted only where justice
genuinely require it and not where they are sought merely to improve or
reconstruct a deficient case.
The respondent’s explanation
[17] The explanation advanced by the respondent is that, after delivering its
answering affidavit, the respondent took legal advice from counsel and
were advised that there are additional defences and allegations which the
respondent should have made in its answering affidavit. The aforesaid
explanation is inadequate. The respondent does not contend that further
facts emerged after the answering affidavit had been delivered. It also
does suggest that any relevant evidence only became available
subsequently. The factual material upon which the proposed
supplementary affidavit relies was, on the respondent ’s own version,
throughout within its knowledge. The only change was that it consulted
with counsel and the legal advice thereafter received. The seeking of legal
advice from counsel cannot, without more, entitle a litigant to re-formulate
its case. Were that sufficient, motion proceedings would lose the certainty
and finality that the Rules of Court are designed to achieve.
The nature of the proposed affidavit
[18] The proposed supplementary affidavit does not merely amplify or clarify
the answering affidavit . It introduces defences which were never
3 Shephard v Tuckers Land and Development Corporation (Pty) Ltd 1978 (1) SA 173 (W)
6
previously pleaded and which are, in material respects, inconsistent with
the factual and legal position originally adopted. The respondent therefore
seeks, not to supplement its case, but to advance a different one.
[19] The aforesaid is reinforced by the broader course of the litigation.
[20] In its answering affidavit the respondent relied upon what it asserted to be
a provision of the South African Companies Act . 4 It subsequently
emerged, after the applicant had identified the issue in its replying
affidavit, that the provision relied upon does not appear in the South
African Companies Act but the provision relied upon is a provision
contained in the Indian Companies Act of 2013. The respondent offered
no explanation for this error.
[21] The respondent’s heads of argument similarly relies upon contractual
clauses which, upon examination of the agreement, forming part of the
record, does not say what the respondent states they say. The respondent
has furthermore raised additional defences in its heads of argument which
were not previously raised in its answering affidavit. The aforesaid matters
are relevant because they demonstrate that the respondent ’s case has
undergone repeated reformulation as the proceedings have progressed.
The application for leave to file a supplementary affidavit was bought only
after the deficiencies in the answering affidavit had been exposed in the
replying affidavit.
The request for further postponement
[22] During the hearing of the application the respondent went further. It raised
further issues and defences that was not raised in either in its answering
affidavit, its proposed supplementary affidavit or even in its heads of
argument. It was only after the Court raised the fact that these further
4 Act 71 of 2008
7
issues and “defences” were not raised in its answering affidavit, proposed
supplementary affidavit and has not even been addressed in its heads of
argument, that the respondent requested a postponement in order to file
yet another supplementary affidavit raising additional defences. No
explanation was furnished as to why those defences could not have been
included in the answering affidavit. It was also not suggested that they
arose from newly discovered facts or subsequent events.
[23] The request serves only to reinforce the conclusion that the respondent
has not presented a settled case but seeks successive opportunities to
reshape its defence. The Rules of Court do not contemplate such an
iterative process. The Court’s discretion to admit further affidavits exist to
avoid injustice. It does not exist to enable a litigant to refine its case
repeatedly after shortcomings have been identified by its opponent or
during argument.
Prejudice
[24] Although the applicant prudently delivered a conditional supplementary
affidavit dealing with the new allegations, that cannot be construed as
acquiescence in the respondent ’s application. The applicant has at all
times maintained that “the respondent should not be permitted to
introduce new matter and defences after the close of pleadings” . The
prejudice lies not merely in the opportunity to answer new allegations. It
lies in being required to meet an ever -changing case, with the attendant
delay, increased costs and disruption to the orderly determination of the
dispute. If the respondent’s approach were to be sanctioned, there would
be little prospect of finality. Each newly identified weakness could be met
with a further affidavit, a further postponement, or a further re-formulation
of the defence. This is not the purpose of motion proceedings.
The request for the Court’s reasons
[25] The respondent also requested that the Court indicate its reasons before
8
judgment was delivered or any order was granted.
Conclusion
[26] Considering the matters as a whole, I am not persuaded that the interests
of justice favour the admission of the proposed supplementary affidavit
into evidence –
[26.1] the explanation for the omission is unsatisfactory;
[26.2] no new facts have emerged;
[26.3] the proposed affidavit advances materially different and
inconsistent defences;
[26.4] the respondent's conduct throughout the proceedings, including
its reliance on inapplicable, foreign statutory provisions, reliance
on contractual terms not contained in the agreement, its further
defences advanced in its heads of argument and further
defences contained in oral argument that was not raised in its
answering affidavit, its proposed supplementary affidavit or
even in its heads of argument , its application to deliver further
affidavits, and its request for a postponement to raise yet more
defences, demonstrates an attempt to reconstruct rather than
supplement its case;
[26.5] the prejudice to the applicant is manifest and the proper
administration of justice require that litigation eventually reach
finality.
[27] The application for leave to file the supplementary answering affidavit
accordingly falls to be dismissed. The request for a postponement in order
to file yet a further supplementary affidavit in order to raise further
defences not previously raised also falls to be dismissed.
9
MATERIAL BREACH OF THE LOAN AGREEMENT
[28] The applicant argues that the respondent is in breach of the Loan
Agreement in the following material respects:
[28.1] It has failed to pay over collected Recoverable Ceded Debts to
the applicant;
[28.2] It has used collected Recoverable Ceded Debts for purposes
other than paying the applicant;
[28.3] It has failed to take all reasonable steps to ensure the collection
of arrear levies on a timely basis (although no relief is sought,
against the respondent in respect of this failure).
[29] The respondent admits the first two breaches listed above, stating in
paragraph 14 of its answering affidavit that:5
“Due to miscommunication between the director and the managing agent
the arrears levy collected was not paid over to BC Funding but used for
the day to day running of the estate.”
[30] I agree with the applicant's contention that this admission, on oath, is fatal
to the respondent's entire defence. Not only does it confirm the validity of
the Loan Agreement , but the respondent also concedes the material
breaches thereof and assumes responsibility for failing to pay over to the
applicant the arrear levies collected, i.e. the Recoverable Ceded Debts.
[31] Crucially too, the respondent f ails to challenge the certificate of
indebtedness (annexed as “BC6” to the founding affidavit) which, under
clause 13 of the Loan Agreement , constitutes conclusive proof of its
5 CaseLines 002-128
10
indebtedness to the applicant.
THE RESPONDENT’S DEFENCES
[32] The respondent in its answering affidavit, raises various defences:
[32.1] The Loan Agreement is invalid;
[32.2] The wrong proceedings were instituted by the applicant;
[32.3] The in duplum Rule is applicable to the applicant's relief sought;
[32.4] The matter is one which “clamours” for business rescue;
[32.5] The matter should be referred to mediation.
[33] The aforesaid defences are dealt with hereinbelow.
The validity of the Loan Agreement
[34] The respondent disputes the validity of the Loan Agreement by:
[34.1] alleging that the board of directors of the respondent did not
have the relevant authority to conclude the Loan Agreement as
they did not obtain the consent of the home owners;
[34.2] alleging a iustus error in that the directors at the time of
concluding the Loan Agreement, were under the impression that
the interest rate contained in the Loan Agreement differed to
what it actually is.
[35] The respondent, however, makes concessions throughout its answering
which effectively acknowledge the validity of the Loan Agreement . For
example, the respondent acknowledges that arrear levies should have
been paid to the applicant but that they were not due to a
11
“miscommunication and that “the error will not be repeated”.6
[36] The respondent also says that the “outstanding loan of R2 760 302,74 of
BC Funding can easily be repaid when the legal actions are finalised and
the money received” . The legal action s in this context refers to the
litigation that the respondent is obliged to commence against its home
owners for the payment of arrear levies and charges (which, in turn,
become the Recoverable Ceded Debts).
[37] Importantly, the respondent’s initial early repayment of R1 727 504,41 to
the applicant in or during January 2020, and its further payment after the
application had been instituted of R109 443,35 confirms its
acknowledgment of the validity of the Loan Agreement and its obligations
thereunder.
[38] The respondent alleges that the Loan Agreement is invalid as it was
concluded “without the consent of the home owners as required by section
180 of the Companies Act 71 of 2008”.
[39] The respondent's position on the invalidity of the Loan Agreement is
fundamentally flawed for the following reasons:
[39.1] Section 180 of the South African Companies Act (71 of 200 8)
regulates “adjudication, hearings before the companies tribunal”
and contains none of the borrowing power provisions alleged by
the respondent in its answering affidavit;7
[39.2] My attention was drawn to the fact that the respondent relied on
section 180 of the Indian Companies Act, 2013 rather than the
South African Companies Act by the applicant’s counsel who
6 Paras 14 and 15 of the answering affidavit, CaseLines, 002-128
7 Annexure “RA3” to the replying affidavit
12
argued that he delved into the matter. It emerged that the
respondent relied on section 180 of the Indian Companies Act ,
2013 which section of the Indian Companies Act deals with
“restrictions on powers of board ”. Section 180 (1)(c) of the
Indian Companies Act reads as follows:
“1. The board of directors of a company shall exercise
the following powers only with the consent of the
company by special resolution, namely:-
…
(c) to borrow money, where the money to be
borrowed, together with the money
already borrowed by the company will
exceed aggregate of its [paid up share
capital, free reserves and securities
premium], apart from temporary loans
obtained from the company’s bankers in
the ordinary course of business.
Provided that the acceptance by a banking company,
in the ordinary course of its business, of deposits of
money from the public, repayable on demand or
otherwise, and withdrawal either by cheque, draft,
order or otherwise, shall not be deemed to be a
borrowing of monies by the banking company within
the meaning of this clause.”
The same wording as in this section appears in paragraph 9 of
13
the respondent’s answering affidavit.8
[39.3] The respondent’s memorandum of incorporation (“MOI”) gives
extensive powers to the board of directors to take decisions on
behalf of the respondent, as evidenced by the relevant part of
the MOI.9
[39.4] Under section 61(1) of the South African Companies Act 71 of
2008 “the business and affairs of a company must be managed
by or under the direction of the board, which has the authority to
exercise all the powers and perform any of the functions of the
company, except to the extent that this act or the company's
Memorandum of Incorporation provides otherwise”; and
[39.5] Significantly, the signatories of the Loan Agreement ,
representing the respondent, warranted that they were
authorised to enter into the Loan Agreement and bind the
respondent to its terms and conditions.
[40] The respondent furthermore challenges the validity of the Loan
Agreement alleging a mistake in that its “then directors” were under the
mistaken belief at the time of entering into the Loan Agreement, that the
interest rate in terms of the Loan Agreement was 2% per year (not per
month). One can infer that the respondent is attempting to rely on the legal
defence of iustus error to escape its obligations under the Loan
Agreement. It is also significant to note that the deponent to the
answering affidavit was not a director at the time and the allegations
deposed to by her does not fall within her own personal knowledge.
[41] A party to an agreement who raises the defence of a mistake and wishes
8 CaseLines 002-127
9 Annexure “RA5” to the replying affidavit
14
to escape contractual liability must prove not only that the mistake is
material but also that it is reasonable.
[42] The alleged mistake of the respondent is not reasonable (or even
plausible) considering that:
[42.1] at paragraph 1 of the directors’ resolution an interest rate of 2%
per month is expressly recorded as being applicable to the Loan
Agreement;
[42.2] in an email dated 28 November 2023, authored by the managing
agent of the respondent, a proposed agenda item is recorded
which is the “reduction in the current interest rate of 2% per
month, compounded and calculated monthly”.
[43] The applicant argued that the caveat subscriptor doctrine in our law finds
applicability and is the principle that reaffirms that the person (or persons)
who puts his/their signature to a document knows what this document
contains and therefore will be bound to the document.10
[44] The caveat subscriptor Rule has long been one of the cornerstones of the
South African Law of Contract – over a century ago, in Burger v Central
South African Railways, Chief Justice Innes expounded the seminal
statement of the Rule as follows: “It is a sound principle of the law that a
man, when he signs a contract, is taken to be bound by the ordinary
meaning and effect of the words which appear over his signature”.11
[45] The respondent's position on invalidity is contradictory to the common
cause facts on the papers.
10 ABSA Bank Ltd v Trzebiatowsky and Others (2240/2010) [2012] ZAECPEHC 13; 2012 (5) SA
134 (ECP) (23 February 2012) at para 25
11 Burger v Central South African Railways 1903 TS 571
15
The correct legal proceedings
[46] The respondent contends that this matter should be referred to trial as
there are disputes of fact that exist between the parties.
[47] In Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 12 the court
held that the respondent who raises a dispute of fact must show that there
is a real, genuine or bona fide dispute based on the material facts.
[48] Despite alleging “multiple disputes of fact” the respondent, in its
answering affidavit, makes multiple bald denials and fails to specify and
provide details of the alleged disputes of fact.
[49] In Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 13 the
Appellate Division ( now known as the Supreme Court of Appeal )
summarised the ways in which a dispute of fact arises : A real, genuine,
and bona fide dispute of fact can exist only where the Court is satisfied
that the party who purports to raise the dispute has in his affidavit seriously
and unambiguously addressed the facts said to be disputed. There will of
course be instances where a bare denial meets the requirements because
there is no other way open to the disputing party and nothing more can
therefore be expected of him. But even that may not be sufficient if the
fact averred lies purely within the knowledge of the averring party and no
basis is laid for disputing the veracity or accuracy of the averment. When
the facts aver red are such that the disputing party must necessarily
possess knowledge of them and be able to provide an answer (or
countervailing evidence ) if they be not true or accurat e but, instead of
doing so, rests his case on a bare or ambiguous denial the Court will
generally have difficulty in finding that the test is satisfied. I say “generally
12 Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 115 (T)
13 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 ZASCA 51; 1984 (3) SA 623
(A) at 634E-635C
16
because factual averment seldom stands apart from a broader matrix of
circumstances all of which needs to be borne in mind when arriving at a
decision”.
[50] In Hyprop Investments Ltd and Another v NCS Carriers and Forwarding
CC and Another 14 the Court summarised the principal ways in which a
dispute of fact arises, as enunciated in Room Hire, as follows:
[50.1] Where the respondent denies all material allegations and
produces, or will produce, positive evidence by deponents or
witnesses to the contrary;
[50.2] Although admitting the applicant’s evidence, the respondent
may allege other facts which the applicant disputes;
[50.3] Where the respondent claims lack of knowledge and puts the
applicant to the proof but produces evidence, or indicates that
he intends leading evidence, to demonstrate the unreliability of
the applicant's averments and that certain essential facts are
untrue.
[51] The respondent has not shown any real, genuine or a bona fide dispute
of material fact that would justify the referral of this matter to trial. Its
blanket, non-specific, vague and unsubstantiated denials throughout its
answering affidavit do not constitute genuine disputes of fact. Further, its
odd reliance on inapplicable/fictitious provisions of the South African
Companies Act, admission of its indebtedness to the applicant and
contradictory averments regarding the validity of the Loan Agreement
altogether demonstrate the lack of a bona fide defence.
[52] The respondent has admitted to the applicant's underlying claim namely
14 Hyprop Investments Ltd and Another v NCS Carriers and Forwarding CC and Another 2013 (4)
SA 607 (GSJ) at 78
17
that it collected Recoverable Ceded Debts but did not pay them over to
the applicant as required by the Loan Agreement.
[53] In the circumstances, application proceedings are appropriate for the
determination of this matter. There is no genuine dispute of fact,
alternatively, any dispute of fact is capable of resolution on the papers by
this Court.
The in duplum Rule
[54] The respondent contends that pursuant to the in duplum Rule, the amount
of interest due in terms of the Loan Agreement cannot exceed the capital
amount of the loan.
[55] The applicant argues that it , however, is not claiming the entire loan
indebtedness in the application, nor interest, but only the amount of
R1 073 208,95 as at 10 March 2025, being the unpaid Recoverable
Ceded Debts collected by the respondent.
[56] The in duplum Rule, therefore, finds no application to the applicant’s claim
and does not constitute a valid defence for the respondent. It is entirely
irrelevant in the context of this application.
Business rescue
[57] The respondent suggests that business rescue proceedings would be
appropriate in place of the current proceedings. This suggestion is
misconceived and irrelevant to the present application – the respondent
has not alleged or placed any evidence before this Court to show that it is
“financially distressed” as defined in section 128(1)(f) of the Companies.15
15 Act 71 of 2008
18
[58] It is inappropriate for the respondent to allege that business rescue
proceedings are required in order for it to repay its loan to the applicant.
This defence too must fail.
Mediation
[59] The respondent seeks that the matter does not proceed to a hearing until
mediation has run its course, and that mediation could “resolve the
matter”.
[60] The applicant argues that the introduction of Rule 41A of the Uniform
Rules of Court, which came into effect on 9 March 2020, brought about a
new focus on mediation as an alternative method of dispute resolution. In
terms of Rule 41A, parties are now required to contemplate mediation and
the possibility of settlement before launching into any new litigation
proceedings, making this voluntary process a mandatory consideration
when litigating.
[61] On 30 January 2025, the applicant’s attorneys served a notice in terms of
Rule 41A on the respondent’s attorney. In terms of this notice, the
applicant opposed the referral of this matter to mediation because the
applicant has already provided the respondent with several opportunities
to remedy its breaches (to no avail). Also, the applicant argues that the
matter is simply one of non-payment and not susceptible to mediation and
should mediation proceedings commence the applicant will continue to be
financially prejudiced.
[62] The applicant argued that it has complied with its obligations in terms of
Rule 41A (and cannot be compelled to mediate this matter). In any event,
the respondent did not respond to the applicant’s Rule 41A notice. Finally,
as recorded in the Rule 41A notice, the applicant has already engaged in
extensive attempts to resolve the matter amicably with the respondent as
detailed in its founding affidavit, to no avail.
19
CONCLUSION
[63] The applicant has established:
[63.1] the existence of a valid Loan Agreement;
[63.2] the respondent’s material breaches of the Loan Agreement by,
inter alia failing to pay over to the applicant the collected
Recoverable Ceded Debts;
[63.3] the absence of any genuine dispute of material facts that would
justify a dismissal of the application or referral to trial;
[63.4] the applicant’s right to enforce the Loan Agreement and claim
specific performance.16
[64] The respondent’s admissions and conduct, including its payment of
R109 443,35 to the applicant after institution of the application , confirms
its acknowledgment of the validity of the Loan Agreement and its
obligations thereunder.
[65] Accordingly, the respondent’s defences are without merit and appear to
be designed to delay or avoid its contractual obligations. Its answering
affidavit contains demonstrable contradictions and falsehoods that
severely undermine its credibility.
[66] The applicant has established a right to specific performance and its
entitlement to the relief sought in its Notice of Motion.
16 Farmers’ Co-op Society (Reg) v Berry 1912 AD 343 at 350; Kloofzicht Property (Pty) Ltd and
Others v Beryl Property (Pty) Ltd (20008/2022) [2023] ZAGP JHC 1157 (12 October 2023) at
12
21
HEARD ON: 16 March 2026
DATE OF JUDGMENT: 30 July 2026
FOR APPLICANT: Adv K Naidoo
INSTRUCTED BY:
Eversheds Sutherlands (SA) Inc.
Ref: R Thackwell
Email: robthackwell@eversheds-sutherland.co.za
FOR RESPONDENT: Adv K Mothiba
INSTRUCTED BY:
KWA Attorneys
Ref: L Kriel
Email: lindi@kw.co.za