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[2013] ZAWCHC 205
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Standard Bank v RJC Topping (10617/2013) [2013] ZAWCHC 205 (4 November 2013)
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE HIGH COURT, CAPE TOWN)
CASE
NUMBER:
10617/2013
DATE
:
4 NOVEMBER 2013
REPORTABLE
In the matter
between:
STANDARD
BANK
...........................................
Plaintiff
And
RJC
TOPPING
..............................................
Defendant
J U D G M E N T
DAVIS,
J
:
This is an
application for summary judgment against the defendant in the amount
of R2 500 000,00 based upon two deeds of suretyship
executed in Fish
Hoek on the 30
th
of May 2006 and the 15
th
of
March 2007. Insofar as these deeds of suretyship are concerned,
the defendant was represented by Mary Elizabeth Topping
who was
empowered in terms of a general power of attorney executed in Fish
Hoek on the 11
th
of April 2003 to represent the defendant
who therefore bound himself as a surety for a co-principal debtor
with one Jason Douglas
Sole (“the principal debtor”).
Plaintiff also claims interest and costs on an attorney and client
scale.
This
application is opposed by the defendant on a number of grounds which
can be divided into
in limine
objections and arguments based
on the merits. Insofar as the points
in limine
are
concerned these are as follows:
(i) the absence of jurisdiction based on the
fact that the defendant has not been resident in the Republic
since
2003;
(ii) non-compliance with Uniform Rule of Court
32(2) in that the affidavit relied upon by the defendant in this
case
has not been made by “a person who can swear positively to the
facts verifying the course of action in the amount”
and
(iii) non-compliance with Uniform Rules of Court 18(6)
and 32(1) in that annexure B to the plaintiff’s simple
summons,
that is the suretyship agreement of 15
th
March 2007, is
incomplete.
THE QUESTION OF JURISDICTION
Mr
Harrington, who appeared on behalf of the defendant, submitted that
this Court lacked the requisite jurisdiction to hear this
application
in terms of Section 19(1)(a) of the Supreme Court Act 59 of 1959.
Citing Erasmus,
Superior Court Practice
at A1-24, Mr
Harrington submitted that “the choice of a
domicilium
citandi executandi
within the area of jurisdiction of a High
Court is not enough to confer jurisdiction upon that court”.
In the
present case, the suretyships were signed within the area of the
court’s jurisdiction, that is in Fish Hoek.
Relying on
the decision in
Hay Management Consultants (Pty) Limited v P3
Management Consultants (Pty) Limited
2005 (2) SA 522
(SCA) Mr
Sievers, on behalf of the plaintiff, submitted that where a defendant
chose a
domicilium
for service in South Africa and undertook
that in the event of his changing his chosen domicile, he would
provide a physical address
within the Republic and agree that South
African law would then govern the agreement, this Court was clothed
with the necessary
jurisdiction.
In the
present case, on the basis of the signed suretyships, the
domicilium
chosen was an address within the Republic of South Africa. Clause
20.3 of the suretyship agreement provides that any new address
chosen
shall also be in the Republic of South Africa. Clause 23 provides
that the suretyship shall be governed by and interpreted
in
accordance with the law of the Republic of South Africa.
By contrast
Mr Harrington submitted that the plaintiff could not rely on
Hay
Management Consultants (Pty) Limited
, supra, because, in that
case, the defendant being a
peregrinus
(a company) which
remained a
peregrinus
at the time of the conclusion of the
relevant contract between the parties, it was clearly contemplated
that any possible summons
in future would be issued out of a South
African court.
In other
words, the underlying contract in
Hay
was entered into on the
basis that the
domicilium
clause was regarded as being
sufficient to constitute a consent to jurisdiction. In the
present case, Mr Harrington contended
that no such intention was
apparent from the content of the documents relied upon by plaintiff.
On the contrary, the relevant
sureties were concluded by the
defendant’s agent, neither without defendant’s
knowledge and/or consent and despite
a wholesale absence of authority
to do so.
At no stage
could it be said defendants possessed the same level of knowledge and
intent as the defendant had possessed in
Hay
. But this
submission, as is apparent from its summation, is dependent upon the
applicability of the suretyship agreement
to plaintiff’s
claim. In turn, the question of the validity of the suretyships
so signed goes to the merits of the
defendant’s defence.
If the suretyship applies in this case, then the jurisdictional point
must fail, but, on its own,
it cannot be a sufficient basis to resist
this application because it has to be tested in terms of a defence on
the merits; that
is the validity of the suretyship agreement to the
particular claim.
Accordingly I
am unable to determine this point
in limine
without a
consideration of the substantive questions to which I shall turn
presently.
UNIFORM
RULE OF COURT 32(2)
:
This rule of
Court requires a deponent to an affidavit in support of a summary
judgment to be a person “who can swear positively
to the facts
verifying the cause of action and the amount”. In other
words, it is generally required that these facts
must be within the
deponent’s personal knowledge. See Erasmus
op cit
at B1-215 and the cases cited therein. In addition the mere
assertion by way of a reproduction of the wording of the rule
is
insufficient, unless there are good grounds for believing that the
deponent fully appreciated the meaning of these words.
Information
by way of belief on the part of the deponent will be insufficient to
grant an order for summary judgment. See
Erasmus at B1-215 and
the authorities cited therein. In this case the deponent to the
plaintiff’s affidavit, one Neliswa
Reuben, describes herself
“as a manager legal in the plaintiff’s national home
loans credit control department”.
Reuben avers that she
is employed by the plaintiff in “the section dealing with the
monitoring of bond repayments and the
failure to make such payments”
and furthermore that she “has access to the records of the
principle debtor’s
home loan account with the plaintiff”.
Mr
Harrington, in order to support his submission that there has been
non-compliance with the Rule, noted that she failed to make
mention
whatsoever of any knowledge, personal or otherwise, of the actual
cause of action in this case, namely the deed of suretyship
signed by
the defendant’s late mother in terms of a general power of
attorney issued in her favour. In other words,
defendant’s
argument runs thus: although the deponent may profess to have
knowledge of the principal debtor’s account
(Mr Sole’s
account), she does not even refer to nor does she have personal
knowledge of the deed of suretyship relied upon
by the plaintiff.
In Mr
Harrington’s view the plaintiff’s difficulty is
compounded by the contents of the simple summons where the plaintiff
is described as carrying on business at its regional home loan office
in Cape Town while the deponent to an affidavit confirms
that she is
in fact employed in the plaintiff’s national home loan credit’s
control department. In the circumstances,
it did not follow
that the plaintiff’s representative at national level would
necessarily have personal knowledge of events
taking place at the
regional level.
In this
connection a considerable debate ensued during the hearing as to the
applicability of the judgment in
Absa Bank Limited v Le Roux and 2
Others
(Case number 5842/13); judgment in the Western Cape High
Court). Binns-Ward, J, who refused summary judgment for lack of
compliance with Rule 32(2), reasoned as follows at para 15:
“
In the result
it follows on the construction of the sub rule given in
Maharaj
that unless it appears from a consideration of the papers as a whole
that the deponent to the supporting affidavit probably did
have
sufficient direct knowledge of the salient facts to be able to swear
positively to them and verify the cause of action, the
application
for summary judgment is fatally defective and the court will not even
reach the question whether the defendant has
made out a
bona
fide
case.”
But what is
sufficient knowledge? The debate to unlock this question has
perennially turned on the meaning and scope of
dicta
of
Corbett, JA (as he then was) in
Maharaj v Barclays National Bank
Limited
1976 (1) SA 418
(A) at 423 E-H. In this connection
the learned judge of appeal said the following:
“
The mere
assertion by a deponent that he “can swear positively to the
facts” (an assertion which merely reproduces the
wording of the
Rule) is not regarded as being sufficient, unless there are good
grounds for believing that the deponent fully appreciated
the meaning
of these words .. In my view this is a salutary practice. While
undue formalism in procedural matters is always
to be eschewed, it is
important in summary judgment applications under Rule 32 that in
substance the plaintiff should do what is
required of him by the
Rule. The extraordinary and drastic nature of the remedy of
summary judgment in its present form has
often been judicially
emphasised ... The grant of the remedy is based upon the
supposition that the plaintiff’s claim
is unimpeachable, that
the defendant’s defence is bogus or bad in law. One of
the aids to ensuring that this is the
position is the affidavit filed
in support of the application and to achieve this end it is important
that the affidavit should
be deposed to either by the plaintiff
himself or by someone who has personal knowledge of the fact”.
423 E-H.
But a careful
examination of this passage reveals that it says far less than might
and has been claimed. In order to understand
what Corbett, JA
had in mind, there is a need to look at the facts of
Maharaj
,
supra
. In that case, the personal knowledge required to
substantiate the basis of an
oral
agreement of overdraft,
clearly required some greater knowledge than would be the case when a
standard written contract forms the
basis of the cause of action.
It was critical for Corbett JA to consider carefully where the
assistant to the branch manager
had acquired sufficient knowledge of
the defendant’s financial standing with the bank and the state
of his current account
to determine the parameters of an oral
agreement. The following passage in the judgment is
instructive:
“
This is to
some extent reinforced by the fact that in para 4 of his opposing
affidavit .. the defendant merely puts in issue the
deponents ability
to depose to the oral agreement of overdraft entered into with the
manager, Mr Rees: he does not deny that deponent’s
ability to
speak of the current state of his (the defendant’s) account.
Moreover the affidavit does not specifically
allege that Mr Mason was
not present when the arrangements were made or that he could not have
acquired firsthand knowledge of
the arrangements in the course of his
duties, e.g., from discussions with the defendant himself.
Finally it appears from
the rest of defendant’s affidavit that
the real dispute relates not to the fact that the overdraft
facilities were granted
him but to the amount, if any, actually owed
by him on overdraft”.
For this
reason, it is important that the judgment in
Maharaj
be read
in its proper factual context so as to gain a proper understanding of
the scope of any guidelines provided in the judgment
for determining
the precise meaning of Rule 33(2). Two further observations are
necessary. Firstly, in
Joob Joob Investments v Stocks
Mavundla Zek
2009 (5) SA 1
(SCA) at para 32 Navsa, JA said:
“
The rationale
for summary judgment proceedings is impeccable. The procedure
is not intended to deprive a defendant with a
triable issue or a
sustainable defence of her/his day in court. After almost a
century of successful application in our courts,
summary judgment
proceedings can hardly continue to be described as extraordinary.
Our courts, both of first instance and
at appellate level, have
during that time rightly been trusted to ensure that a defendant with
a triable issue is not shut out.
In the
Maharaj
case Corbett, JA was keen to ensure first an examination of whether
there have been sufficient disclosure by the defendant of the
nature
and grounds of his defence and the facts upon which is founded.
The second consideration is that the defence so disclosed
must be
both
bona fide
and
good in law. A court which is satisfied that this threshold has
been crossed is then bound to refuse summary judgment.
Corbett,
JA also warned against requiring of a defendant, the precision
apposite to pleadings. However the learned judge
was equally
astute to ensure that recalcitrant debtors pay what is due to a
creditor”.
This
dictum
highlights two features:
(a)
In contrast to the
dicta
in
Maharaj
supra, summary judgment should not be considered to be an
extraordinary procedure.
(b)
A balance must be struck between ensuring
that a recalcitrant debtor pay what is due to a creditor and that a
debtor with a
bona fide
and
good defence should not precluded from access to justice.
The law
including the interpretation of Rule 33(2), is surely required to be
construed, if at all possible, with contemporary, economic
and
financial reality. In this case, when dealing with the
financial sector, courts should be wary of embracing a rigid
formalism which relationship to commercial and financial reality is
so tenuous as at best to be coincidental. This concern
was
clearly in the mind of Van Heerden, AJ (as she then was) in
Standard
Bank of South African Limited v Secatsa Investments (Pty) Ltd and
Others
1999 (4) SA 229
(C) at 235A-B:
“
It is clear
from the case law that firsthand knowledge of every fact which goes
to make up the plaintiff’s cause of action
is not required and
that where the plaintiff is a corporate entity the deponent may well
legitimately rely for his or her personal
knowledge of at least
certain relevant facts and his or her ability to swear positively to
such facts on records in the company’s
possession”.
This judgment
was delivered some 14 years ago. How much more so is it
applicable when it must be common knowledge that credit
departments
of national banking institutions have become more centralised, as
technology develops exponentially. Contrast further
present banking
operations to those that operated some 40 years ago when
Maharaj
were decided in which the branch was the centre of the credit
world! To circumvent what he saw as a major problem with Rule
33(2) and credit transactions, Binns-Ward, J provided a novel and
imaginative suggestion in his instructive judgment as to the
provisions of information in the required affidavit by reference to
the Electronic Communications and Transaction Act 25 of 2002
(see
paras 20 to 21 of the judgment).
I remain
uncertain as to whether that which Binns-ward, J proposes as forming
part of the supporting affidavit for summary judgment
will cure what
the learned judge perceives as the present problem as opposed to an
interpretation based on sound commercial reality
and the facts of a
particular case and where the threshold for meeting the test in Rule
32 may be less onerous. In
other words, in
Maharaj
the court dealt with an oral contract. Clearly more knowledge
was required of the existence and details thereof than
is the case
with a standard contract which was signed by parties in good faith,
and where the threshold for meeting the test set
out in the Rule 32
may be less onerous.
Be that as it
may, these paragraphs cited from the judgment in
Le Roux
supra
are
obiter
. The essential finding in the
Le Roux
case is distinguishable from the present case. In
Le Roux
the limit of the suretyship was different and significantly less than
the amount set out in the simple summons. One of the
defendants
had provided an unlimited amount guaranteed in the surety and this
was not specified Binns-ward, J correctly observed:
“
The deponent
carelessly purported to confirm the inaccurate content of a
carelessly drafted summons”. (at para 9)
In the
present case the cause of action is stipulated as the payment of an
amount of R2.5 million being the amounts due in terms
of the two
deeds of suretyship. They are attached to the summons.
They are both duly signed. The deponent, Ms
Reuben, confirms:
(1)
The cause of action. The cause of
action is the suretyship. That is plainly ascertained from the
summons and the attached
documents. It does not require any
further knowledge.
(2)
The amount claimed is set out in the
summons.
These are the
core facts underpinning the plaintiff’s claim. Of course,
the defendant now develops his defence in an
opposing affidavit.
But the case of the plaintiff is clear and simple. Ms Reuben
had access to the records of
the principal debtor’s home loan
account with plaintiff. This information was available to her
in that she was part
of the home loans credit control department.
She had access to the information that the principal debtor was
liable in the
sum of R2 693 278.17 (I leave aside the further
question as to whether documents provided by plaintiff were signed in
Cape Town
which would have given Ms Rueben greater physical access to
this information).
The
primary debt being due and payable, the suretyships, which were
signed, are now triggered. Unless one conflates
the question of
the merits of the defence which is raised against the application for
summary judgment with the initial conclusion
based upon the summons
and the attached suretyships, there has been compliance of Rule
33(2). The Rule requires a verification
of the cause of action
and the amounts so claimed. Both of these aspects are of a
nature which Ms Reuben would have been
able to confirm. There
is no basis to sustain the second point
in limine
.
The third
point
in limine
, is that defendant contends that the document
attached to the plaintiff’s simple summons as annexure B was
incomplete. Accordingly
any reliance placed thereon by the plaintiff
is unsustainable. In this regards, it is noted that the
document is reflected
in the plaintiff’s index as spanning from
pages 11 to 14 of the bundle, which page numbers correspond to the
franked page
numbers appearing at the top right hand corner of the
document itself.
However, if
regard is had to the bottom right hand corner of the document, it is
apparent that the suretyship is a six page document,
not a four page
document. In other words, the plaintiff has failed to attach
two pages (pages 4 and 5) of the suretyship.
In the
circumstances, the defendant contends that, to the extent that the
plaintiff may have sought to rely on annexure B to the
summons as
being a liquid document as envisaged by Rule 32(1)(a), an incomplete
document which was attached does not comply with
the Rule.
Rule 18(6)
requires that a plaintiff who, in her pleading relies upon a contract
to state whether the contract is written or oral
and when and whereby
and whom it was concluded and, if the contract is written, a true
copy thereof or the part relied upon in
the pleading shall be annexed
to the pleading. The present action was instituted by way of a
simple summons. A simple
summons does not constitute a pleading
and accordingly it is doubtful whether Rule 18(6) is of application.
See
Icebreakers 83 v The Medicross Health Care Group
2011 (5)
SA 130
(KZN).
Furthermore
in
Absa Bank Limited v Van Rensburg and Another
(2012; WCC
case number 16071/12) Griesel, J on behalf of a full bench, noted at
paragraph 16:
“
[I]t should no
longer be required of a plaintiff who in applying for default of
summary judgment as a matter of course to hand in
the original
document unless called for by the presiding judge where circumstances
so require. In my experience, this practice
has fallen into
disuse in this division. Secondly to the extent that Rule 18(6)
requires of a plaintiff relying on a written
document to annexure a
true copy thereof or of a part relied on in the pleading it would be
incongruous to have a more onerous
requirement in respect of a simple
summons ;in other words it should be open to a plaintiff who relies
on portion only of a voluminous
written agreement only to attach such
portion to the summons and not the whole document.
Apart from the authority
and precedents referred to above, there are important considerations
of principle and policy supporting
such an approach. In this
regard, it should be borne in mind that the purpose of a simple
summons is not merely to inform
the defendant of the nature of the
claim being instituted by the plaintiff, but also and perhaps more
importantly to enable a court
to decide whether judgment should be
granted”.
It does not
appear, on the basis of this judgment, that a party who in his
pleading relies on a contract should annexe the entire
contract as
opposed to the part upon which he, she or it relies. In the
present matter even without the two pages missing,
plaintiff has a
cause of action and accordingly this third point
in limine
also stands to be dismissed.
On this
basis, I must turn to the substantive issues which have been raised
by the defendant. It is trite law that what is required
of a
defendant in terms of Rule 32 the defendant sets out in his or her
affidavit facts which if proved at the trial will constitute
an
answer to the plaintiff’s claim. (Erasmus at B-221;
B-222)
All that is
required in this case is for the court to determine whether the
defendant has set out the following:
(1)
the nature and grounds of his or her
defence.
(2)
On the facts so disclosed, does the
defendant appear to have, either as a whole or in part a defence
which is
bona fide
and
good in law.
(3)
In addition it is also been held that “it
will be sufficient if the defendant swears to a defence valid in law
in a manner
which is not inherently or seriously unconvincing”.
Expressed differently, are there averments in his or her affidavit
of
a nature that raises a reasonable possibility that the defence he or
she advances may succeed at trial? See Erasmus at
B1-224 and
the authorities referred to at footnote 3.
Viewed with
this context, there are two issues which require examination.
In the first place, the defendant has contended
that it is highly
doubtful that the holder of the defendant’s general power of
attorney, that is the defendant’s aged
mother, possessed the
requisite capacity to contract at the time of signing the suretyships
in question.
Secondly,
defendant contends that the holder of the defendant’s general
power of attorney, being the defendant’s aged
mother, was never
authorised by the defendant to encumber his estate by signing the
suretyships. The authority conferred
by the power of attorney
is limited by its own wording to the extent that it excludes the
authority to conclude suretyships which
are the subject matter of the
present dispute.
The question
of whether the defendant limited the general power of attorney
because he never authorised the encumbering of his estate
by way of
the signing of the suretyship is a key concern. The further
question then concerns the state of mind of the defendant’s
aged mother and her capacity to contract; that is, had the defendant
limited the general power of attorney as alleged? Further
should it be found that the defendant’s mother lacked the
requisite capacity to contract, it would follow that this finding
would constitute a sufficient defence to the plaintiff’s claim.
Defendant
contends that the authority conferred by the power of attorney was
limited by its own wording to the extent that it would
seem to
exclude the authority to conclude suretyships. The face of the
document is headed “general power of attorney”
as opposed
to “power of attorney in respect of a specific act” and
records further, defendant’s mother is hereby
appointed “for
managing and transacting business in the Republic of South Africa ..
with full power and authority from me
.. and in my name .. and for my
account and benefit and on my behalf”.
Mr Harrington
contends that these words cited are consistent with a general power
of attorney granting broad powers unrelated to
specific
transactions. Despite being headed general power of attorney,
that is despite the broad powers referred to in paragraphs
1 to 17 of
this general power of attorney, without expressly saying so, the
document proceeds, in his view, to limit the ambit
of authority
conferred to the more specific Acts listed therein. See
paragraphs 1 – 17. Hence the authority conferred
on the
defendant’s mother by the power of attorney was limited to the
authority conferred in respect of specific acts and
matters listed in
these paragraphs.
Although the
last paragraph of the power of attorney, being paragraph 17, was
headed “general”, Mr Harrington submitted
that this
provision was also limited by the contents of the preceding
paragraph, that is 1-16, due to the fact that the opening
sentence
records that the authority conferred is “to do, perform,
execute and suffer any
such
act, deed, matter or thing
whatsoever”. (My emphasis)
The word
“such”, in his view, qualified the words listed
thereafter to the acts, deeds, matters or things listed in
paras 1 –
16 of the general power of attorney. That being the case, the
general power of attorney was limited to the
powers specifically
listed in the earlier paragraphs. Mr Harrington thus submitted
that, in order to ascertain whether the
general power of attorney
authorised defendant’s mother to sign the suretyship, it
becomes necessary to examine these paragraphs
for the source of the
authority to enter into the suretyships.
If the power
of attorney does not expressly confer on the defendant’s
mother, whether directly or indirectly, the power to
bind the
defendant as surety for the debts of the third party, the suretyships
may then be unenforceable as against the defendant.
To an
extent these defences are related and raise the following concerns:
(1)
Does the general power of attorney bear the
weight for authorising the suretyships?
(2)
Did the defendant’s mother have the
necessary capacity to understand that which she signed and
accordingly the obligations
that she incurred on behalf of the
defendant.
If
defendant’s mother did not comprehend the nature of that which
she signed or that the authority given to her was sufficiently
restrictive, these are issues that can only be determined at trial.
I am unable to conclude that either of these questions
is so
inherently unconvincing that it stands to be rejected summarily as
neither being good in law nor
bona fide
.
FOR THESE REASONS THEREFORE THE APPLICATION FOR SUMMARY JUDGMENT MUST
DISMISSED. THE DEFENDANT IS THEREFORE GRANTED LEAVE
TO DEFEND
THE ACTION. THE COSTS OF THE APPLICATION FOR SUMMARY JUDGMENT
SHALL BE COSTS IN THE CAUSE IN THE ACTION.
DAVIS, J