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[2018] ZASCA 53
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Shaw and Another v Mackintosh and Another (267/17) [2018] ZASCA 53; 2019 (1) SA 398 (SCA) (29 March 2018)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 267/17
In
the matter between:
JOHN ANTHONY
SHAW
1
st
APPELLANT
WADE
GRAHAM
TAYLOR
2
nd
APPELLANT
and
GLENN
WILLIAM
MACKINTOSH
1
st
RESPONDENT
MABILI
SEARCH & SELECTION (PTY)
LTD
2
nd
RESPONDENT
Neutral
Citation:
Shaw
& another v Mackintosh & another
(267/17)
[2018] ZASCA 53
(29 March 2018)
Coram:
Shongwe ADP and Wallis, Dambuza and
Mathopo JJA and Davis AJA
Heard:
22 February 2018
Delivered:
29 March 2018
Summary:
National Credit Act
34 of 2005 (the NCA) – co-principal debtors – whether
transaction is a credit guarantee in terms
of s 8(5) of the NCA
– whether credit provider required to register in terms of s 40
of the NCA.
ORDER
On
appeal from
: The
Gauteng Local Division, Johannesburg (Tsoka, Makume & Wepener JJ,
sitting as court of appeal):
The
appeal is dismissed with costs.
JUDGMENT
Mathopo
JA (Shongwe ADP and Wallis, Dambuza JJA and Davis AJA concurring):
[1]
This appeal concerns the proper interpretation of s 8(5) of the
National Credit Act 34 of 2005 (the NCA). The question
is whether the
effect of that section is to exclude the transaction between the
appellants, Messrs Shaw and Taylor, and the first
respondent, Mr
Mackintosh (the respondent), which is described below, from the ambit
of the NCA. If it does, then the judgment
granted in Mr Mackintosh’s
favour by the Gauteng Local Division, Johannesburg (Georgiades AJ)
and upheld on appeal by the
full court of that division (Tsoka J,
with Makume and Wepener JJ concurring), must stand. If it does not,
then the appellants invoke
the provisions of the NCA to avoid
liability to Mackintosh. The present appeal is with the special leave
of this Court.
[2]
In about 2009, Mackintosh lent Mabili Search & Selection (Pty)
Limited (Mabili) an amount of R2 million. During October
2012 the
parties signed a written acknowledgement of debt (the agreement) in
terms whereof Mabili as the debtor acknowledged its
indebtedness to
Mackintosh as the creditor in the sum of R2 million payable over
a period of twelve months from the date of
advancing the said amount.
It was a term of the agreement that the sum of R2 million would
attract interest at the rate of
R50 000 per month with effect
from October 2012 until the date of final payment. It was further
agreed that should the debtor
make a part payment of the capital to
the creditor (Mackintosh), the interest payable would be pro-rated.
Mabili further acknowledged
being indebted to Mackintosh in the sum
of R100 000 representing interest for the months of August and
September 2012.
[3]
When Mabili defaulted on its repayments in terms of the agreement,
Mackintosh obtained default judgment against it. It is common
cause
that Mabili was subsequently liquidated. Invoking the provisions of
clause 5 of the agreement, Mackintosh sued the appellants
as
sureties.
[4]
In view of the amount involved and Mabili’s turnover, it was
common cause that, insofar as Mabili was concerned, the agreement
fell outside the area of operation of the NCA. The dispute between
the parties was whether their relationship was governed by the
NCA.
Clause 5 of the agreement reads as follows:
‘
THE
SURETYSHIP
Shaw
and Taylor hereby:
5.1
Bind themselves jointly and severally unto and in favour of
Mackintosh as joint and several
co-principal debtors with Mabili for
the repayment of any amounts which now are, or which may hereafter
become owing by Mabili
to Mackintosh from whatsoever cause (including
without limitation the Admitted Debt); and
5.2
Waive the benefits of excussion, division and cession of action.’
[5]
Mackintosh alleged that the agreement arose as a result of a loan
granted to Mabili and not to the appellants during 2009. He
submitted
that the effect of clause 5 of the agreement was to constitute the
appellants as sureties for Mabili’s indebtedness.
He contended
that the agreement between himself and the respondents was a credit
guarantee as defined in the NCA and was excluded
from the operation
of the NCA by s 8(5) thereof, because it was a credit guarantee
in respect of an agreement that was not
itself subject to the NCA.
[6]
The appellants argued that the agreement was a stand-alone credit
agreement falling within the ambit of the NCA and that clause
5 did
not constitute them as sureties because they became parties to the
agreement as co-principal debtors in respect of the Admitted
Debt as
defined in clause 2.1.1 of the agreement. In support of their
argument, they relied on clause 2.1.3 which described them
and Mabili
as ‘the Debtors’. They further contended that the
agreement between them and Mackintosh was not a credit
guarantee, but
a credit transaction as defined in s 8(4)
(f)
of the NCA and that there had been no compliance by Mackintosh with
his obligations under the NCA. They alleged that the failure
of
Mackintosh to register as a credit provider in terms of the NCA
rendered the agreement between them void.
[7]
The argument in the high court, both at first instance and on appeal,
proceeded on the basis that the key issue was whether
the effect of
clause 5 of the agreement was to constitute the appellants as
sureties. Following this approach both courts held
that they were. In
view of the attitude I take of this matter, it is unnecessary for me
to consider whether their conclusion on
this issue was correct. For
the purposes of this appeal I will accept that the appellants became
co-principal debtors with Mabili
for the repayment of the admitted
debt. The proper question we are called upon to decide is whether the
contract between them and
Mackintosh was a credit guarantee in terms
of s 8(5) of the NCA, in which event it is an agreement to which
the NCA does not
apply, or a credit transaction in terms of s 8(4)
(f)
as they contended.
[8]
The NCA applies in respect of three kinds of agreements, namely a
credit facility, a credit transaction or a credit guarantee.
A credit
guarantee is defined in s 1 as being an agreement meeting the
criteria set out in s 8(5). That section reads
in material part
as follows:
‘
An
agreement, irrespective of its form . . . constitutes a credit
guarantee if, in terms of that agreement, a person undertakes
or
promises to satisfy upon demand any obligation of another consumer in
terms of a credit facility or a credit transaction to
which this act
applies.’
If
the agreement between the appellants and Mackintosh is a credit
guarantee as defined, it does not fall within the NCA because
s 4(2)
(c)
provides that:
‘…
(c)
this
Act applies to a credit guarantee only to the extent that this Act
applies to a credit facility or credit transaction in respect
of
which the credit guarantee is granted.’
If
the appellants bound themselves in terms of a credit guarantee as
defined, the credit transaction in respect of which the credit
guarantee was granted was the transaction between Mabili and
Mackintosh. If the NCA does not apply to the credit transaction, it
cannot apply to the credit guarantee.
[9]
It is apparent that the question in this case is answered by
determining whether the agreement between the appellants and
respondent
was a credit guarantee and then whether the credit
transaction between Mabili and Mackintosh falls within the NCA. These
questions
falls to be answered by applying the ordinary provisions of
statutory interpretation stated in
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA) para 18 to s 8(5) and then determining whether
the agreement between the appellants and Mackintosh falls within that
section.
[10]
I turn to consider the relevant provisions of the agreement. An
essential precondition to the operation of s 8(5) of NCA
is that
it applies to the obligations of another. The language of the
section, refers both to an undertaking and a promise to satisfy
the
obligation of another. It makes no reference to a suretyship or
guarantee or any similar word. In terms of clause 5 of the
agreement
the appellants, as joint and co-principal debtors, with Mabili in
terms of clause 2.1.3, undertook or promised to pay
on demand the
Admitted Debt owed by Mabili to Mackintosh as detailed in clauses
3.1, 3.1.1, 3.1.2 and 3.1.3 of the agreement. It
must be stressed
that Mabili, and only Mabili, was the debtor in respect of the
Admitted Debt. The loan was granted pursuant to
an oral agreement
which was concluded between Mabili and Mackintosh. The purpose of the
acknowledgement of debt which the appellants
signed, was to arrange
how the amount owing to Mackintosh was to be repaid. As debtors the
appellants undertook to settle the admitted
indebtedness to
Mackintosh in terms of the provisions of clause 6 of the agreement
which provides as follows:
‘
6.
The Debtors hereby undertake to settle the admitted indebtedness to
Mackintosh as follows:
6.1.1
the Debtors will make payment to Mackintosh of the monthly
instalments that becomes due between the signature date and the
date
upon which the Admitted Debt is discharged in full; and
6.1.2
the Debtors undertake to settle the full Admitted Debt on or before
the end of March 2013.’
[11]
When Mabili defaulted with its repayments and was subsequently
liquidated, Mackintosh invoked the provisions of clause 7 of
the
agreement and sued the appellants on the basis of clause 5 of the
agreement. Clause 7 provides as follows:
‘
7.
BREACH
7.1
Should the Debtors default in the due performance of any of their
obligations in terms of this Agreement, all of which are material,
including in particular if any payment is not made on due date, then:
7.1.1
Mackintosh may in is sole discretion proceed against the Debtors on
the basis of this Agreement, or on the basis of the underlying
causes
of action; and
7.1.2
the full balance of the Admitted Debt shall immediately become due,
owing and payable by the Debtors to Mackintosh.’
[12]
It is clear that the appellants were not granted any loan nor was any
credit advanced to them and neither were they parties
to the
historical agreement between Mabili and Mackintosh concluded in 2009.
Their involvement only arose when they undertook or
promised to pay
on demand the admitted indebtedness of Mabili to Mackintosh. The
agreement expressly stated that the sum of R2 million
was
advanced to Mabili and not the appellants. That brings the
obligations of the appellants squarely within the language of s 8(5).
However, s 4(2)
(c)
of the NCA provides that this Act applies to a credit guarantee only
to the extent that this Act applies to a credit facility or
credit
transaction. Mackintosh was not a credit provider in terms of s 40 of
the Act. He was not in the business of providing credit.
The
agreement was a once-off transaction and not falling within the ambit
of the provisions of the NCA Act. It was rightly not
suggested that
the arrangement could be both a credit guarantee and a credit
transaction in terms of s 8(4)
(f)
of the NCA (see
JMV
Textiles v De Chalain Spareinvest
2010 (6) SA 173)
(KZD). The agreement between appellant and
Mackintosh thus falls outside of the scope of the NCA. For these
reasons the appeal
must fail.
[13]
The appeal is dismissed with costs.
________________________
R
S Mathopo
Judge
of Appeal
APPEARANCES:
For
appellant:
J J Meiring
Instructed
by:
Fullard
Mayer Morrison Inc, Johannesburg
Lovius
Block, Bloemfontein
For
respondent: D Mahon
T
Moretlwe
Instructed
by:
Harris
Billings Attorneys, Fourways
Honey
Attorneys Inc, Bloemfontein