REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
Case Number: 080588/2024
In the matter b
In the matter between:
ANTONIO PEDRO Applicant/Plaintiff
and
JOSE CRISOTOMO PACHRCO First Respondent/Defendant
OLGA PACHECO Second Respondent/Defendant
JUDGMENT
WENTZEL -THOMPSON J
Introduction
[1] The plaintiff applies for summary judgment arising from an arrangement under
which the defendants received rental paid by tenants occupying the plaintiff ’s
immovable property in Pretoria on the plaintiff’s behalf. The defendants initially
denied substantially every material allegation concerning that arrangement.
(1) REPORTABLE: NO
(2) OF INTEREST TO OTHER JUDGES: YES
(3) REVISED: YES
______________
DATE SIGNATURE
Shortly before the application was ultimately to be heard, they sought to replace
their plea with one in which they admitted the existence of an agreement but
characterised it as a loan governed by the National Credit Act 34 of 2005 (“the
NCA”).
[2] The central question is whether the rentals received by the defendants
constituted monies entrusted to them by the plaintiff for collection, administration
and investment on his behalf, or whether those monies were lent by the plaintiff,
with the consequence, so it is argued, that the transaction was an unlawful credit
agreement because the plaintiff was not registered as a credit provider, and thus
precluded the plaintiff from recovering the monies so lent.
The factual background
[3] The plaintiff is the owner of residential property situated at 1242 Ruimsig
Crescent, Woodhill Golf Estate. On 30 August 2021, he concluded a written lease
with third-party tenants. Amongst its terms was that the rental would be paid into
a bank account belonging to the first defendant. The tenants paid a deposit of
R50 000 and thereafter monthly rental into the first defendant’s bank account as
arranged.
[4] The arrangement, so the plaintiff says, came about because he was living outside
South Africa in Mozambique and in order to transmit the funds to himself in
Mozambique would require compliance with strict South African Reserve Bank
(SARB) and South African Revenue Service (SARS) regulatory requirements.
The plaintiff had known the defendants for many years and they were close
friends. The plaintiff explains that the arrangement arose because he required
the assistance of someone in South Africa to receive and administer the rentals
generated by his South African property on his behalf.
[5] The agreement pleaded by the plaintiff was that the defendants would receive
the deposit and rentals from the plaintiff’s tenant on his behalf by way of payment
into the first defendant’s bank account, the first defendant would render accounts
into the first defendant’s bank account, the first defendant would render accounts
to the plaintiff, and they would receive R750 per month as “commission” for
performing this administrative function. In addition, the plaintiff pleads that it was
further agreed that the funds collected would be repayable to the plaintiff on
demand.
[6] At the time that the agreement was concluded, the commission constituted 1.5%
of the rental in the amount of R50 000 per month. The pleaded agreement
describes the amount of R750 per month as a monthly administration fee, not as
commission. But in the correspondence between the parties, the plaintiff refers
to this payment as “commission.”
[7] The plaintiff maintains that the arrangement was subsequently altered in October
2022. Instead of leaving the accumulated funds in an ordinary account, the
defendants were to place the monies received and thereafter received into an
interest-bearing account earning not less than 8.5% per annum. The monies and
the return earned upon were re payable to the plaintiff on 30 days’ notice.
[8] The contemporaneous evidence accords closely with that version. On 14 August
2022, the plaintiff asked the defendants to prepare a complete statement
reflecting all rentals received during the preceding 12 months, including the R50
000 tenant’s deposit, and separately to calculate their commission.
[9] The defendants thereafter produced what is headed a “STATEMENT OF
ACCOUNT - ANTONIO PEDRO”. It records the successive rental receipts, a R50
000 deposit and, by October 2022, an amount of R750 000 transferred into what
is described as an “A PRAZO” or term deposit. As at 31 May 2023 the document
recorded that R1.15 million had been received by the first defendant.
[10] This document strongly refutes the suggestion that the rental amounts paid into
the first defendant’s account constituted a loan; a borrower ordinarily does not
render the lender with an account of money loaned to him, which on the first
defendant’s version, he was free to employ for his own purposes. On the
contrary, the document emanating from the first defendant himself is entirely
consistent with an administrator or agent accounting for monies received for
another.
consistent with an administrator or agent accounting for monies received for
another.
[11] The same understanding emerges from the plaintiff’s communication of 16
February 2024. By then a South African FNB account had become available into
which the rentals could be paid directly. The plaintiff instructed that future rentals
be redirected to that account, asked the defendants to invoice him for outstanding
commission, and requested a statement documenting all rental monies
deposited into the first defendant’s personal account, including the interest
earned, followed by transfer of those monies to the designated FNB account.
[12] Nothing in that correspondence suggests that the plaintiff regarded the first
defendant as a debtor, enjoying the use of money that he had loaned to them.
He treated the first defendant as a friend who had accommodated him by
receiving and administering his rentals. He acknowledged that he owed the first
defendant commission for performing that service, while at the same time making
it clear that they were required to account to him for his rental income and its
investment return.
The pleas filed by the defendants
[13] The defendants’ original plea did not allege a loan. Apart from admitting those
allegations which appeared from the written lease itself, their plea consisted
substantially of denials and demands that the plaintiff prove his allegations.
[14] In June 2025, the defendants materially changed their stance. They filed an
amendment to their plea in which they admitted that an agreement was
concluded on 30 August 2021, but alleged that the plaintiff agreed to “loan” the
defendants the amounts paid by the lessee, that the defendants would receive
R750 per month for administering the lease payments; and that the supposed
loan carried interest at 0%.
[15] Upon that foundation, the defendants placed reliance on the NCA and contended
the alleged loan constituted a credit agreement; that the plaintiff was required to
register as a credit provider; and that because he was not registered , the
agreement was unlawful under s 89 and unenforceable. On this basis, the
defendants contended that they were not obliged to repay the so-called “loan”
amounts
defendants contended that they were not obliged to repay the so-called “loan”
amounts
[16] The plaintiff denied that any money was ever lent to the defendants. He insisted
that the rental amounts were received by them on his behalf and were to be
invested on his behalf. He also relied upon the long friendship between the
parties and the fact that he was not engaged in the business of advancing credit.
[17] In February 2025 another event occurred that has considerable bearing upon the
bona fides of the defence subsequently advanced. Shortly before the summary
judgment application was due to be heard, the defendants paid R1.1 million into
the plaintiff’s attorney’s trust account. The matter was removed to permit
settlement discussions. After crediting that payment, the plaintiff says that the
capital balance presently outstanding is R425 500.
Summary judgment
[18] Rule 32 is not intended to prevent a defendant with a genuine triable defence
from having the dispute determined in a trial after the hearing of oral evidence
that is subject to cross-examination. But neither is it intended to permit a
defendant who has no sustainable defence to postpone the inevitable by
formulating an artificial dispute with no credibility attached to it.
[19] The test remains that articulated in Maharaj v Barclays National Bank Ltd. 1The
defendant must fully disclose the nature and grounds of the defence and the
material facts upon which it rests, and those facts must disclose a defence which
is both bona fide and good in law. The court does not at the summary judgment
stage ordinarily resolve disputed factual issues on a balance of probabilities.
[20] In Joob Joob Investments (Pty) Ltd v Stocks Mavundla Zek Joint Venture,2 the
Supreme Court of Appeal emphasised the other side of this principle: Summary
judgment is not properly characterised as an extraordinary remedy which courts
should approach with an inherent reluctance. Its purpose is to ensure that a
defendant with a genuine defence is not shut out, while at the same time
preventing a recalcitrant debtor with no defence from delaying enforcement of an
established obligation.
1 1976 (1) SA 418 (A) 2 2009 (5) SA 1 (SCA)
[21] These basic principles have not been altered by the amendment to Rule 32.
Tumileng Trading CC v National Security and Fire (Pty) Ltd 3confirms that the
question remains whether the defence has been genuinely advanced and
whether the material facts necessary to sustain it have been sufficiently
disclosed.
[22] It is therefore not sufficient for the defendants to have characterised their
arrangement with the plaintiff as a “loan” and to then argue that the provisions of
the NCP flow from it. A legal conclusion unsupported by the facts from which it
is said to follow does not become a bona fide defence merely because it has
been pleaded. Facts must be shown from which the court should be able at
conclude, or at the very least infer, that the arrangement between the parties in
truth and in fact constituted a loan.
[23] Was the arrangement a loan? In my view, it plainly was not. The funds did not
originate in an advance by the plaintiff to the defendants; they originated from a
rental stream from property owned by the plaintiff made by third-party tenants in
discharge of the rental obligations to the plaintiff. The defendants received those
payments because their bank account had been designated by the plaintiff, after
concluding the arrangement with the first defendant, as the account into which
the plaintiff’s rental income was to be paid.
[24] The defendants were paid R750 per month for administering those receipts; this
was the agreed remuneration for their service. It is difficult to reconcile that
feature with the proposition that the plaintiff was at the same time conferring upon
the defendants the beneficial use of increasingly large sums of money as an
interest-free loan.
[25] More fundamentally, the agreed obligations attached to the funds were
inconsistent with the ordinary incidents of a loan. The defendants were obliged
to account for what they had received, to invest the monies, to account for the
interest generated by those investments, and ultimately to transfer the
interest generated by those investments, and ultimately to transfer the
accumulated funds to the plaintiff when called upon to do so. Their own statement
of account performs precisely that function; it identifies the plaintiff by name,
3 2020 (6) SA 624 (WCC)
records the individual rentals received, records the deposit, distinguishes
between the term investment and other money on hand and totals the amount
held.
[26] The defendants’ current characterisation of the arrangement is so improbable
and commercially senseless that it falls to be rejected; it would mean that the
plaintiff, unable conveniently to receive his South African rentals in Mozambique,
asked close friends to assist him, agreed to pay them a monthly fee for doing so,
permitted them nevertheless to appropriate his accumulated rental income for
their own commercial purposes and only to repay it if demanded by the plaintiff.
And for undertaking the risk that the funds may be used for failed commercial
ventures pursued by the defendants, the plaintiff had no security and charged
them no interest.
[27] This must be viewed against the backdrop that it is the plaintiff’s case that he
wished the funds to be placed in a restricted interest bearing account precisely
because he wished to earn interest from the rental amounts saved by him. Why
on earth would he forfeit his own rental income to fund interest free the
defendant’s business ventures, which it is not even alleged, he was required to
sanction?
[28] The defendants’ counsel’s response to this was that the plaintiff agreed to this
because the parties were close friends; but not so close that the defendant’s
agreed to utilise their South African account as a repository for the plaintiff ’s
rental on a no fee basis. Quite the opposite; they admit that the plaintiff agreed
to pay them an amount of R750 per month for this service. It makes no sense at
all that the plaintiff would agree to let the defendants use the funds so deposited
for their own purposes, provided only that they returned it when requested.
[29] Indeed, the facts speak for themselves. When return of the funds were
demanded, the defendants were not in a position to repay it and could only
demanded, the defendants were not in a position to repay it and could only
transfer an amount of R1.1 million into the plaintiff’s attorney’s trust account. Why
would the plaintiff assume this risk for no interests, without security and not even
a share in the commercial venture/s pursued by the defendants with the money
he was plainly intent upon saving and earning interest. The facts above need but
to be stated out loud to know that the version proffered by the defendant is quite
preposterous.
[30] That proposition becomes still less plausible once regard is had to the October
2022 arrangement. Why would a borrower, who was supposedly entitled to use
the money in its own business, be obliged instead to place R750 000 of it into an
interest-bearing investment and account to the plaintiff for the resulting return?
The answer is apparent from the contemporaneous documents: The defendants
were not borrowers; they were agents entrusted with the plaintiff’s rental monies
for which they earned commission. Their investment obligation was an incident
of that mandate. As such, they owed the plaintiff a fiduciary duty, an obligation
that the defendants plainly breached.
The fiduciary obligations of an agent entrusted with the funds of another
[31] Where a person undertakes, as agent, to receive and administer funds belonging
to another, the relationship carries fiduciary obligations in relation to those funds.
The agent must act within the mandate, may not place himself in conflict with the
principal’s interests, may not appropriate or employ the funds for his own benefit
without the principal’s informed authority, and must render a proper account of
their receipt, administration and disposition. The fiduciary obligation is
particularly clear where the agent’s mandate is to collect money, retain an agreed
administration fee and preserve or invest the balance for the principal.
[32] Moreover, the agent is ordinarily obliged keep the principal’s money separate or
at least identifiable where the arrangement requires it, not appropriate or use the
money for the agent’s own purposes without authority, not make a secret profit,
and render a proper account to the principal. An agent entrusted with money
cannot ordinarily treat it as his own merely because it has been paid into an
account in his name.
[33] This flows from the general fiduciary nature of agency. Since Robinson v
[33] This flows from the general fiduciary nature of agency. Since Robinson v
Randfontein Estates Gold Mining Co Ltd 4 South African law has long recognised
that an agent must avoid a conflict between personal interests and the duty owed
4 Robinson v Randfontein Estates Gold Mining Co Ltd 1921 AD 168 at 177-180
to the principal, and must account for benefits or profits derived through the
agency. The fiduciary principle is not confined to trustees in the technical sense.
It arises because the agent has undertaken to exercise powers or control over
another person’s affairs or property for that person’s benefit.
[34] In Phillips v Fieldstone Africa (Pty) Ltd and Another,5 the Supreme Court of
Appeal reaffirmed Robinson and emphasised that the paradigm example of a
contractual relationship giving rise to fiduciary obligations is agency. Whether the
relationship is fiduciary, and the precise content of the duties arising from it,
depend upon the substance of the relationship and the circumstances in which
the agent was entrusted to act. Once the duty is established, however, the no-
conflict and no-profit rules are strict. A fiduciary may not appropriate for himself
a benefit acquired through or by means of the agency, and a transaction involving
such a conflict can ordinarily be validated only by the principal ’s free and
informed consent following full disclosure.
[35] Phillips is particularly instructive because the Court expressly approved the
principle, drawn from Transvaal Cold Storage Co Ltd v Palmer,6 that whenever
an agent, in the course or by means of the agency, acquires a profit or benefit
without the principal’s consent, that benefit is regarded as having been received
for the principal and must be accounted for and paid over. The agent is not
entitled to retain any profit from the agency other than the remuneration agreed
with the principal.
[36] The strictness of the rule was again emphasised in Volvo (Southern Africa) (Pty)
Ltd v Yssel. 7 Nugent JA reaffirmed Robinson and Phillips and held that money
secretly earned in breach of a fiduciary duty must be disgorged. The obligation
is not avoided because the fiduciary acted honestly, because the principal
suffered no demonstrable loss, or because the fiduciary contends that the
suffered no demonstrable loss, or because the fiduciary contends that the
opportunity or benefit would not otherwise have accrued to the principal. What
matters is that the fiduciary used a position of trust to advance his own interests
in conflict with those which he was obliged to protect.
5 2004 (3) SA 465 (SCA) paras 27 and 30-32 6 1904 TS 4 at 20 7 2009 (6) SA 531 (SCA) at paras 13-20
[37] The fiduciary obligation is accompanied by a substantive duty to account. In
Watson v Sachs and Another,8 the Appellate Division dealt directly with an
agent’s obligation to account to the principal. The Court recognised that an agent
may incur a fiduciary duty to account to the principal and held, on the facts, that
the agent could retain only the agreed commission. The balance received in the
course of the agency was subject to the obligation of accounting to the principal.
[38] The modern appellate authorities have placed the duty to account on an equally
firm footing. In Scholtz and Another v De Kock NO and Others,9 the Supreme
Court of Appeal reiterated that the existence, nature and scope of a fiduciary duty
depend upon the facts and, importantly, upon the terms of the mandate. The
Court distinguished the mere receipt of money from receipt pursuant to a
mandate. Where the mandate entrusts one party with another ’s affairs or
property, the mandate may itself give rise to the obligation to account.
[39] Most recently, in Walker and Another v Schabort Potgieter Attorneys Inc and
Others,10 the Supreme Court of Appeal affirmed that an agent must account for
all that he knows and has done in execution of the mandate and in relation to the
principal’s property; it endorsed the principle that the agent must keep the
principal’s property separate from his own, deliver to the principal that which
belongs to the principal, and provide a proper accounting of receipts,
disbursements and the ultimate balance.
[40] These principles are clearly relevant to the present dispute. If, as the plaintiff
alleges, the defendant’s mandate was to receive rentals belonging to the plaintiff,
deduct an agreed administration fee of R750 per month, and thereafter preserve
or invest the balance for the plaintiff’s benefit, the defendant occupied the
position of an agent entrusted with his principal’s money. The funds did not
thereby become available for the defendant’s unrestricted personal use. Subject
thereby become available for the defendant’s unrestricted personal use. Subject
to the precise terms of the mandate, he was obliged to administer them in the
plaintiff’s interests, not to place himself in conflict with those interests, not to
8 1994 (3) SA 655 (A) 9 [2024] ZASCA 132 paras 16-17 10 [2025] ZASCA 154, 2026 (2) SA 113 (SCA)
derive an unauthorised personal benefit from them, and to account fully for their
receipt and disposition.
[41] On that footing, the defendant’s alleged use of the accumulated rentals to finance
his own business ventures would amount, prima facie, to conduct inconsistent
with the fiduciary obligations attaching to the mandate unless he establishes that
the plaintiff freely and knowingly authorised that use after proper disclosure.
Phillips makes clear that informed consent is the recognised answer to an
otherwise impermissible conflict; a bare assertion of permission must therefore
be assessed against the terms of the mandate, the contemporaneous
communications and the inherent probabilities.
[42] There is also an important distinction between an agent entrusted to administer
another’s funds and a borrower. Had the parties agreed that the plaintiff was
advancing the rentals to the defendant as a loan, ownership of the money and
the defendant’s entitlement to use it would ordinarily follow the incidents of that
debtor-creditor relationship. But if the true mandate was instead to collect,
administer and invest the plaintiff’s money, the defendant’s obligation was
fiduciary and accounting in character.
[43] Where A asks B to collect rentals on A’s behalf, deduct an agreed administration
fee and invest the balance for A, as was the case in the matter before me, B is
not ordinarily being advanced money for B’s own use. B is administering A’s
money pursuant to a mandate. This is precisely why duties of good faith, proper
administration and accounting arise.
[44] The law is clear: The agent must be able to explain what money was received,
what deductions were authorised, where the balance was placed, what income
or interest was earned, and what ultimately happened to it. If the agent
deliberately appropriated the funds to finance his own business activities, without
the principal’s informed consent, that would ordinarily amount to a breach of
mandate and of fiduciary duty.
mandate and of fiduciary duty.
[45] There is also an important consequence of misappropriation of funds entrusted
by a principal to an agent. Where it is common cause that money belonging to
the principal was received by the agent for a defined purpose, and the agent
admits that the money was thereafter used for some other purpose, the agent
cannot normally answer the claim merely by asserting that the principal verbally
authorised that use. An alleged permission to use large amounts of the principal’s
money for the agent’s own ventures, particularly without interest or meaningful
commercial return, would need to be assessed against the objectively proved
relationship, contemporaneous communications and the inherent probabilities of
such an arrangement being genuine.
[46] Thus, if the true agreement was that the defendant would collect South African
rentals, retain R750 per month as an administration fee and place the balance in
an interest-bearing investment for the plaintiff, the first defendant’s appropriation
of those funds to finance his own ventures would be difficult to reconcile with the
obligations of an agent or fiduciary. A claim that the plaintiff instead permitted
him to use the accumulated rentals as interest-free working capital would need
to be evaluated against the first defendant’s clear fiduciary relationship with the
plaintiff and the commercial probabilities of such a relationship.
[47] What appears ultimately to have happened is that the defendants failed to
preserve the distinction between money received on behalf of their friend and
their own funds, and appropriated monies entrusted to them. That subsequent
appropriation cannot retrospectively transform the clear mandate pursuant to an
obvious contract of agency into a loan; a person cannot convert another’s money
into borrowed money merely by using it as his own.
The National Credit Act
[48] The allegation that the arrangement between the parties constituted a loan and
not that of a principal and agent, and the reliance on the National Credit Act was
clearly an afterthought. In their initial plea, the word “loan” was not mentioned.
But as if it were not enough for the defendants to contend that the amount owing
But as if it were not enough for the defendants to contend that the amount owing
was a loan and acknowledging that they had an obligation to repay it, instead
they placed reliance on the National Credit Act to allege that the loan itself was
unlawful because the plaintiff was not registered as a credit provider, and thus
that the plaintiff was not entitled to restitution.
[49] The defence raised by the defendants is thus that, not only was the money
loaned to them interest free, but they had no obligation to repay it. This , in the
circumstances of the matter before me constitutes an unconscionable defence,
particularly as it is raised against a once good friend.
[50] It is for this reason that, although the defendants made a payment into the
plaintiff’s attorneys trust account, this payment was made without prejudice and
was not intended for onward payment to the plaintiff, demonstrating a bona fide
intent to repay what had allegedly been loaned to the them.
[51] In any event, the reliance on the NCA is entirely misconceived as I will
demonstrate below.
[52] First and foremost, the Act regulates credit agreements; it does not convert every
obligation to repay or account for money into a credit agreement.
[53] Section 4(1) provides, subject to specified exclusions, that the NCA applies to
every credit agreement between parties dealing at arm’s length and made within,
or having effect within, the Republic.
[54] Section 8 then identifies the agreements which constitute credit agreements. Of
relevance to the defence raised is section 8(4)(f), which encompasses an
agreement, other than a credit facility or credit guarantee, in terms of which
payment of an amount owed by one person to another is deferred and a charge,
fee or interest is payable to the credit provider in respect of the agreement or the
amount deferred.
[55] In Asmal v Essa,11 the Supreme Court of Appeal explained that the charge, fee
or interest contemplated by s 8 is consideration payable by the borrower to the
provider for the use of credit. The existence of such consideration is an important
feature distinguishing the transaction contemplated by s 8(4)(f).
[56] On the defendants’ own pleaded version, the supposed loan carried 0% interest.
No charge or fee was payable by them to the plaintiff for the alleged extension of
No charge or fee was payable by them to the plaintiff for the alleged extension of
credit. The only fee pleaded is the R750 per month, but that travelled in precisely
11 2016 (1) SA 95 (SCA)
the opposite direction: it was payable by the plaintiff to the defendants for
administering the rental payments. It therefore cannot constitute a charge or fee
payable to a credit provider within s 8(4)(f).
[57] The defendant’s argument thus must fail. First, the transaction was in truth not a
loan at all. Secondly, even the defendants’ pleaded “loan” is an unsecured
interest-free arrangement which they have not shown to satisfy the requirements
of s 8(4)(f).
[58] The defendants relied upon the fact that the plaintiff was not registered as a credit
provider. Had this genuinely been a credit agreement to which the NCA applied,
that would have been a serious matter. Since May 2016 the prescribed threshold
under s 42(1) has been R0, with the result that registration under s 40 is no longer
confined to persons who habitually conduct a credit business. Government
Notice 513 of 11 May 2016 fixed the registration threshold accordingly.
[59] The Supreme Court of Appeal made the position clear in Du Bruyn NO and
Others v Karsten.12 Where the NCA applies and the statutory registration
requirement is triggered, it does not matter that the transaction is once-off or that
the lender does not ordinarily participate in the credit industry. Du Bruyn
accordingly prevents the plaintiff from succeeding merely by saying that he was
not a moneylender. But it does not assist the defendants unless they first
establish that the transaction was a credit agreement to which the NCA applies.
They have not been able to establish this as the loan on their version did not
carry interest.
[60] There is however, a further difficulty with the defendants’ argument.
[61] Section 4(2)(b)(iv)(aa) provides that parties are not dealing at arm’s length where
they are not independent of one another and consequently do not necessarily
strive to obtain the utmost possible advantage from the transaction.
[62] The statutory language substantially reflects the description of arm ’s-length
[62] The statutory language substantially reflects the description of arm ’s-length
dealing in Hicklin v Secretary for Inland Revenue,13 namely that independent
12 2019 (1) SA 403 (SCA) 13 1980 (1) SA 481 (A)
parties ordinarily strive to secure the utmost possible advantage for themselves.
The enquiry is factual and contextual.
[63] In Du Bruyn the SCA rejected reliance upon an allegedly familial relationship
because the objective circumstances showed that the parties were nevertheless
independently pursuing their respective commercial interests. Conversely, in
Allied Steelrode (Pty) Ltd v Dreyer 14 the SCA held that an interest-free loan made
as a gesture of friendship, in circumstances in which the lender was not seeking
the maximum commercial advantage, was not an arm’s-length transaction for
purposes of the NCA.
[64] The plaintiff and defendants were longstanding friends. The arrangement was
born of that friendship and of the plaintiff’s practical difficulty in dealing with South
African rental income while living abroad. The plaintiff was not bargaining
commercially with the defendants as a lender seeking a return from borrowers.
[65] Indeed, the defendants’ own case that the supposed loan bore no interest at all
reinforces, rather than undermines, that conclusion. If their characterisation of
the transaction as a loan were correct, its interest-free character and the close
pre-existing friendship would provide substantial support for the conclusion that
it was not an arm’s-length credit transaction in the statutory sense.
[66] It is, however, unnecessary to finally to rest the decision upon s 4. The more
fundamental conclusion is that there was no extension of credit at all
[67] The defendants’ reliance upon ss 40 and 89 therefore cannot assist them. Those
provisions operate only once there is a credit agreement governed by the Act.
[68] Section 40 requires registration where the statutory criteria are satisfied. Section
89(2)(d) renders unlawful a credit agreement entered into by a credit provider
who was required to be registered but was not registered, while s 89(5)
prescribes the consequences of an unlawful agreement
14 [2023] ZASCA 181
[69] National Credit Regulator v Opperman15 concerned those consequences. The
Constitutional Court confirmed the invalidity of the former s 89(5)(c), which had
effectively deprived an unregistered lender of restitution without judicial
discretion. The case proceeded, however, upon an actual loan constituting a
credit agreement and an obligation to register. It does not apply where the
underlying transaction is a credit agreement at all.
Bona fides of the defence
[70] I remain mindful that summary judgment is not determined on credibility and the
probabilities. Improbability alone ordinarily does not justify rejecting a properly
disclosed factual defence.
[71] But this case goes further than improbability. The defendants have not disclosed
the material factual incidents of the loan which they allege. They do not explain
when the plaintiff became obliged to advance the money to them, what
entitlement they acquired to use it, why they were nevertheless obliged to
account for it, why they were paid R750 to administer it, why R750 000 was
placed on investment for the plaintiff, or why the interest earned upon that
investment belonged to the plaintiff.
[72] The defendant’s conduct after the institution of the action is also relevant, not as
an independent basis for liability, but in evaluating whether the subsequently
formulated defence was and is genuinely advanced. In February 2025, the
defendant’s paid R1.1 million after the matter had been enrolled for summary
judgment. The payment led the plaintiff to remove the matter to explore the
possibility of settlement.
[73] Thereafter, and immediately before a later hearing, the case was reformulated
as an interest-free loan rendered unlawful by the NCA. The chronology does not
create liability where none exists, but it is legitimately considered together with
the absence of the factual allegations required to substantiate the argument that
the arrangement between the parties was one of loan and not agency.
15 2013 (2) SA 1 (CC)
[74] None of the terms of the supposed loan are pleaded: When was it concluded,
where was it concluded and what were the terms of repayment. The
contemporary evidence, including their own statement, describes an altogether
different relationship.
[75] I am therefore not persuaded that the defendants have disclosed a bona fide
defence within the meaning of Rule 32(3)(b). More importantly, the facts which
they themselves advance do not disclose a defence good in law under the NCA.
Disputes of fact, the rejection of an untenable version on affidavit and bona fides
[76] It is well established that motion proceedings are ordinarily ill -suited to the
resolution of genuine disputes of fact. Where final relief is sought and a material
factual dispute arises, the court generally proceeds on the facts stated by the
respondent together with those facts in the applicant’s affidavits which the
respondent admits. That principle emerges from the oft quoted passage in
Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd,16 but is subject to an
important qualification, and that is that a court is not bound to accept allegations
or denials which are so far-fetched or clearly untenable that they may properly
be rejected on the papers alone.
[77] This qualification is not a licence to decide ordinary credibility disputes on
affidavit. In National Director of Public Prosecutions v Zuma,17 the Supreme
Court of Appeal cautioned that a court may not simply decide a factual dispute
according to which version it considers more probable. However, departure from
the respondent’s version is justified where it consists of bald or uncreditworthy
denials, raises a fictitious dispute, or is palpably implausible, far-fetched or so
clearly untenable that rejection on the papers is warranted.
[78] Where one draws the line was explained by Cameron JA in Fakie NO v CCII
Systems (Pty) Ltd. 18 Conflicting affidavits are ordinarily an unsuitable means of
Systems (Pty) Ltd. 18 Conflicting affidavits are ordinarily an unsuitable means of
resolving genuine factual disputes, but courts must equally guard against a
respondent defeating otherwise competent relief by raising a fictitious dispute or
16 1984 (3) SA 623 (A) 17 2009 (2) SA 277 (SCA) at para 26 18 2006 (4) SA 326 (SCA) at paras 55-56
putting forward a palpably implausible version. An uncreditworthy denial or
palpably implausible version may accordingly be rejected without recourse to oral
evidence. The threshold nevertheless remains a high one- the version must be
such that it can confidently be characterised on the papers as demonstrably and
clearly unworthy of credence.
[79] In Wightman t/a JW Construction v Headfour (Pty) Ltd and Another 19 it was held
that a dispute is not genuine merely because a respondent formally denies an
allegation. The respondent must seriously and unambiguously engage with the
fact said to be disputed. Where the matter lies peculiarly within the respondent’s
own knowledge and the respondent is able to provide a substantive answer, a
bare or ambiguous denial may fail to raise a real, genuine and bona fide dispute.
In determining that question, the court considers the denial against the broader
factual matrix and the objective material before it.
[80] This principle is not confined to bare denials. In Buffalo Freight Systems (Pty) Ltd
v Crestleigh Trading (Pty) Ltd and Another,20 the Supreme Court of Appeal
endorsed the use of a robust, common -sense approach, even where the
respondent had provided a detailed version, where that version was wholly
fanciful and untenable. The Court itself rejected an alleged oral arrangement
which it regarded, viewed against the objective circumstances and the
contradictory versions advanced by the respondent, as inherently highly
improbable.
[81] There is nevertheless a material distinction between saying that a version is
improbable and saying that it is so inherently improbable that it does not
genuinely raise a factual dispute at all. The former ordinarily requires oral
evidence. The latter may, exceptionally, be rejected on affidavit. The judicial
enquiry is therefore not whether the applicant’s version appears more probable,
but whether the respondent’s version remains one which could reasonably be
but whether the respondent’s version remains one which could reasonably be
accepted after the objective facts, contemporaneous documents, internal
19 2008 (3) SA 371 (SCA) at paras 12-13 20 2011 (1) SA 8 (SCA)
consistency of the version and the respondent’s ability to explain matters within
his own knowledge are considered.
[82] However, some caution is required in applying these principles in proceedings
under Rule 32. Summary judgment is not a trial on affidavit; nor does it constitute
motion proceedings. In Maharaj, Corbett JA held that where the defence
depends upon disputed facts, the court does not determine those disputes or
decide where the balance of probabilities lies; the question is whether the
defendant has fully disclosed the nature and grounds of the defence and the
material facts upon which it rests, and whether those facts, if established, would
constitute a defence which is bona fide and good in law. That approach was
reaffirmed by the Supreme Court of Appeal in Joob.
[83] The court should accordingly not reject a defence under Rule 32 merely because,
upon a comparison of probabilities, the plaintiff’s version seems considerably
more likely. If the defendant has disclosed a coherent factual case which, if
proved at trial, would constitute a defence, summary judgment must ordinarily be
refused.
[84] But the requirement of bona fides in Rule 32 should not become illusory; a sham
defence, an unexplained bare denial of matters peculiarly within the defendant’s
knowledge, or a version which is demonstrably fanciful when measured against
undisputed objective facts may fail to satisfy Rule 32(3)(b) at all. Joob itself
emphasises that the procedure exists to prevent sham defences from delaying
enforcement of worthy claims, while safeguarding genuine triable issues.
[85] Thus, the jurisprudence established by Plascon-Evans, Fakie and Wightman
remains useful in the present context, not because the Court is entitled to conduct
a trial of probabilities in summary-judgment application, but because it assists in
determining whether what is presented as a factual defence is genuinely and/or
bona fide advanced. A version which is merely unlikely must be left for trial; a
bona fide advanced. A version which is merely unlikely must be left for trial; a
version which is so internally contradictory, inconsistent with incontrovertible
contemporaneous documents, unsupported on matters peculiarly within the
defendant’s knowledge, or commercially fanciful that it cannot reasonably be
regarded as genuinely advanced, may properly be held not to constitute a bona
fide defence.
[86] In my view, this approach is applicable to the defence presently advanced by the
defendants in the matter before me.
[87] The plaintiff’s case is that the first defendant, with the involvement of the second
defendant, was entrusted to receive rental income in South Africa on the
plaintiff’s behalf, retain an agreed administration fee of R750 per month and,
ultimately, invest the accumulated rentals in an interest-bearing account for the
plaintiff’s benefit. The defendants do not deny the existence of an oral agreement
or their entitlement to the R750 monthly administration fee. Their amended case
is instead that the plaintiff agreed to lend both defendants all of the rental monies
received, at zero interest, while simultaneously paying them the administration
fee for allowing his income to be deposited into the first defendant’s bank
account.
[88] The commercial improbability of this version, standing alone, would not justify its
rejection. Courts do not rewrite unusual bargains simply because they appear
improvident; nor may a court at summary-judgment stage prefer the plaintiff’s
version merely because it appears commercially more sensible.
[89] But commercial probability is not irrelevant when it forms part of a broader
objective and undisputed factual matrix. The defendants’ version must be
considered together with the fact that the original lease directed the tenants to
pay the rentals into the first defendant’s account, that the first defendant was to
account monthly, that the defendants were remunerated specifically for
administering the rental receipts , that the pleaded later arrangement
contemplated investment of the accumulated rentals; and that the plaintiff could
call for payment of the monies upon notice. The documentary schedule further
reflects the rental stream accumulating through the identified account over an
extended period.
extended period.
[90] Against that background, the defendants’ assertion that the same funds were,
from inception, an interest-free loan to them raises a significant question of bona
fides. It is one thing to allege that the plaintiff subsequently agreed that the first
defendant might temporarily use some of the accumulated monies for a particular
business venture; it is another to allege that the very arrangement under which
the defendants were paid to administer the plaintiff’s rental income was, from the
outset, in substance an open-ended, interest-free loan of all rentals to both
defendants.
[91] In deciding whether that version crosses the threshold from improbability into
untenability, I consider it important that the relevant facts lie overwhelmingly
within the defendants’ own knowledge. If there was such an unusual loan
agreement, the defendants were parties to it and were capable of explaining
when and why it was concluded, how the amount of the loan was to be
determined, when repayment would fall due, what purpose the monies were to
serve, why the plaintiff agreed to forego any return on substantial sums, how the
monthly administration fee fitted with the alleged loan, and why the
contemporaneous dealings continued to treat the monies as rentals to be
administered and accounted for. Wightman makes clear that where such matters
are peculiarly within a respondent’s knowledge, a court is entitled to expect
serious and unambiguous engagement rather than assertion of a label that
provides an alternative characterisation of the arrangement.
[92] The absence of those particulars is particularly material in summary judgment:
The defendants were not required to prove the alleged loan; they were, however,
required to disclose the material facts which made it a bona fide defence. Calling
the arrangement a “loan agreement” does not itself establish bona fides if the
factual content necessary to explain such an agreement are absent.
[93] What I need to ask is whether the facts disclosed by the defendants are
sufficiently complete, coherent and objectively sustainable to constitute a bona
fide defence. If they are, however improbable I may consider them, the matter
must go to trial. If, however, the alleged interest-free loan is no more than a
must go to trial. If, however, the alleged interest-free loan is no more than a
conclusion superimposed upon objective facts inconsistent with it, is
inadequately particularised on matters peculiarly within the defendants ’
knowledge, and is contradicted by contemporaneous documentation to such an
extent that it can confidently be characterised as fanciful or clearly untenable,
then Fakie, Wightman and Buffalo Freight would support my view that the mere
assertion of a factual dispute should not be permitted to defeat summary
judgment, unless it is shown to both bona fide and genuine.
[94] I therefore do not reject the defendants’ version merely because an agreement
under which the plaintiff lent substantial and progressively accumulating rental
receipts to the defendants without interest may appear commercially improbable;
an unusual or even improvident bargain is not for that reason alone incapable of
proof, and summary judgment is not a mechanism for resolving ordinary disputes
of probability.
[95] However, where the cumulative effect of the objective and undisputed factual
evidence, when read to together with the defendants’ own version of events and
its own documentation, renders the defendants version so unplausible as to
border on the ridiculous, such a defence should not be permitted to defeat an
application for summary judgment.
[96] The undisputed facts are that the defendants were entrusted with the collection
and administration of the plaintiff’s rentals, the monies were initially paid into the
first defendant’s account, the defendants were remunerated at R750 per month
for administering the funds so deposited and the arrangement contemplated that
the accumulated funds would be placed in an interest -bearing investment
(although this may have sublimely have been disputed.)
[97] But what the defendants themselves recognise is that they were required to
account for rental income deposited into the first defendant’s account. Against
that background, where their assertion that those same monies were in truth lent
to both of them at no interest is not accompanied by a satisfactory account of the
ordinary incidents of the alleged loan, on ordinary summary judgment principles,
it should be rejected and not be permitted to prevent the plaintiff obtaining
summary judgment. This is particularly so as no detail is provided as to when
and in what circumstances the loan was agreed, why the plaintiff would forego
and in what circumstances the loan was agreed, why the plaintiff would forego
the investment return otherwise contemplated, what entitlement the defendants
had to use the funds for their own purposes, how and when repayment was to
occur, and how the continuing administration fee was reconcilable with their
alleged status as borrowers. Those matters were peculiarly within the
defendants’ knowledge and called for the full and particular disclosure required
by Rule 32.
[98] When the defendants’ failure to provide that explanation is considered together
with the contemporaneous documents and the fiduciary character of the mandate
under which the monies were received, I am satisfied that the alleged interest-
free loan is not merely the less probable of two competing versions, but it is so
lacking in a coherent factual foundation, and so inconsistent with the objective
features of the parties’ dealings, that it does not constitute a real, genuine and
bona fide dispute requiring determination by oral evidence.
[99] Applying the caution required by Maharaj and Joob, but also the principles in
Fakie, Wightman and Buffalo Freight, I am satisfied that I am not obliged to permit
an otherwise established claim to proceed to trial merely because the defendants
have attached the label “loan” to the very funds which they were entrusted and
remunerated to administer for the plaintiff.
[100] In these exceptional circumstances, the version proffered by the defendants that
the arrangement constituted a loan and that the NCA applied may properly be
rejected as so palpably implausible and clearly untenable that it could not be
genuinely advanced and is not bona fide. This is precisely the sort of defence
that the case law makes clear is postulated solely for the purposes of delay and
that should not be permitted to defeat summary judgment.
The second defendant’s liability
[101] A discrete issue arises concerning the liability of the second defendant. The
plaintiff seeks judgment against both defendants jointly and severally, but the
documentary trail shows that the rental payments were not initially made into an
account held jointly by them. The lease agreement itself stipulated that the
rentals were to be paid into the account of the first defendant, and the particulars
of claim expressly allege that the tenants performed by paying the rentals into
of claim expressly allege that the tenants performed by paying the rentals into
the first defendant’s bank account.
[102] The payment schedule is consistent with that allegation. The account into which
the rentals were paid during the period from September 2021 until January 2024
was account number 1550949012. The earliest entries expressly identify that
account with the first defendant, Jose Crisostomo Pacheco. There is no evidence
before the Court establishing that this was a joint account held by both
defendants. The fact that some later payment references contained the plaintiff’s
name does not alter the identity of the receiving account.
[103] The position changed during 2024. From February 2024 the payment schedule
reflects rentals being paid into a different account, number 63081307217,
identified with Ms Olga V S Chambal. The documentary material also records the
plaintiff’s instruction that future rentals were to be paid into an FNB account
capable of receiving rand-denominated income.
[104] That later account is not the account of the second defendant, Olga Pacheco. It
is identified in the schedule as belonging to Olga V S Chambal. The papers
therefore do not establish that, in 2024, the rentals were redirected into an
account held by the second defendant. What they establish is that the rentals
ceased to be paid into the first defendant’s account and were thereafter paid into
an account associated with Olga Chambal.
[105] The plaintiff’s case against the second defendant accordingly does not rest upon
proof that the rentals were paid into her bank account. The particulars instead
allege that, on about 30 August 2021, the plaintiff concluded the oral
arrangement with both the first and second defendants. Although several of the
pleaded terms refer specifically to the first defendant receiving the rentals into
his account and rendering the monthly account, the plaintiff further pleads that
he could call upon “the defendants” to pay over the money and that the agreed
monthly administration fee was payable to “the defendants”.
[106] The pleaded October 2022 amendment is expressed even more directly against
both defendants. The plaintiff alleges that “the defendants” would take all rental
both defendants. The plaintiff alleges that “the defendants” would take all rental
monies received and invest them in an interest-bearing account, and that the
plaintiff could call upon all money which “the defendants received and then
invested on his behalf”. The particulars then plead that “the defendants received”
the deposit and rentals and were jointly indebted to the plaintiff.
[107] Importantly, the second defendant does not seek to distance herself from the
underlying arrangement. On the contrary, in the amended plea, the defendants
expressly allege that a loan agreement was concluded between the plaintiff and
both defendants, under which the plaintiff would lend to “the defendants” the
rental amounts received from the tenants. They further allege that “ the
defendants” would receive R750 per month for administering the lease payments
and that the alleged loan carried interest at 0%.
[108] In argument the defendants’ case was that the oral agreement was a loan
agreement under which the plaintiff would loan the rentals to both defendants,
who would in turn receive the agreed administration fee. The second defendant’s
affidavit resisting summary judgment likewise presents the defence as one
shared by herself and the first defendant.
[109] The consequence is that the second defendant’s potential liability does not
depend upon whether the rental monies physically passed through her personal
account. The plaintiff pleads that she was a co-contracting party to the mandate,
while she herself pleads an alternative joint loan agreement in which she was
one of the borrowers. Her own pleaded case therefore places her squarely within
the transaction.
[110] The fact that the rentals were initially paid into the first defendant ’s account
remains relevant. It may affect the evidential enquiry as to who physically
received, controlled or appropriated the monies. But it does not, by itself,
establish that the second defendant had no contractual liability where both the
plaintiff’s case and the defendants’ own pleaded version identify her as a party
to the oral agreement.
[111] Thus, it is clear that the second defendant’s liability arises from the pleaded
allegation that she was jointly party to the mandate, reinforced by her own
pleaded case that the plaintiff lent the rentals to both defendants.
The amount claimed
pleaded case that the plaintiff lent the rentals to both defendants.
The amount claimed
[112] The notice of motion initially sought payment of R1 525 500. It also sought
contractual interest at 8.5%, together with further relief.
[113] The capital amount was reduced when the defendants paid R1.1 million in
February 2025 into the plaintiff’s attorney’s trust account . The plaintiff expressly
credits that payment against the R1 525 500 and identifies the remaining capital
amount as R425 500.
[114] That amount is liquidated. Its ascertainment requires no investigation or
accounting. It is obtained by simple subtraction from the capital amount claimed
and verified in the summary judgment proceedings. It falls squarely within Rule
32(1)(b).
[115] The plaintiff is therefore entitled to summary judgment for R425 500.
The claim for a statement and debatement of account
[116] A distinction should be drawn between the liquidated capital claim and the
plaintiff’s claim for a statement and debatement of account. Rule 32(1) permits
summary judgment only on a liquid document, for a liquidated amount in money,
delivery of specified movable property or ejectment, together with interest and
costs.
[117] A claim compelling a defendant to render and debate an account does not itself
fall within those categories. Summary judgment should therefore not be granted
for that form of relief merely because the capital claim is suitable for summary
adjudication.
The claim for interest
[118] The plaintiff also claims contractual interest at the rate of 8.5% per annum. That
claim requires separate consideration from the capital amount. In the affidavit
supporting summary judgment the plaintiff says that, on 1 October 2022, the
parties orally amended their agreement. The terms of that amendment were that
the defendants would take the monies already received, together with future
rentals received under the lease, and invest them in an interest-bearing account
yielding not less than 8.5% per annum. He further says that he could call for
repayment on 30 days’ notice, whereupon the defendants were obliged to pay
over all money received together with interest at 8.5%.
[119] The statement of account furnished by the defendants and relied upon by the
plaintiff records that, as at 31 May 2023, R1.15 million had been received. More
importantly, the statement reflects a transfer of R750 000 on 1 October 2022,
and at its foot records R750 000 as a term deposit (“deposito a prazo”), with a
further R350 000 held at call and the R50 000 tenant’s deposit, producing the
total of R1.15 million. This contemporaneous statement is consistent with the
plaintiff’s evidence that the arrangement changed on 1 October 2022 from the
mere collection of rentals to the investment of the accumulated funds.
[120] The defendants’ answer is not that the agreed investment rate was some figure
other than 8.5%. Their amended case is fundamentally different; they allege that
the rentals constituted an interest-free loan to both defendants, carrying interest
at 0%. For the reasons already given, I have rejected that version as not
constituting a bona fide defence. Once that version is rejected, there is no
competing factual version directed specifically at the 8.5% rate alleged by the
plaintiff.
[121] I am therefore satisfied that the plaintiff has adequately established, for purposes
of Rule 32, the contractual obligation to account for the monies entrusted to the
defendants together with interest at 8.5% per annum from 1 October 2022. That
conclusion does not, however, mean that interest may simply be calculated on
R1 525 500 from 1 October 2022. The capital sum did not exist in that amount
on that date. It accumulated progressively as further rentals were received.
[122] The original notice of motion seeks interest on all money received by the
defendants at 8.5% per annum from 1 October 2022 until payment. Properly
understood, the contractual arrangement requires the rate to operate upon the
money actually held by the defendants from time to time. On 1 October 2022 the
accumulated amount placed into the term investment was R750 000. Thereafter
accumulated amount placed into the term investment was R750 000. Thereafter
additional rentals were received monthly. Those later amounts could only attract
interest from the dates upon which they were received and became subject to
the investment obligation.
[123] There is a further difficulty with the quantified interest figure of R186 497.09
contained in the original papers. The supporting affidavit reproduces that amount
as a component of the total indebtedness, but does not provide a calculation
showing how it was derived. No schedule before me identifies the capital balance
attracting interest during each period, the number of days for which the
respective amounts attracted interest, or the calculation which produces R186
497.09.
[124] This does not, in my view, defeat the claim for interest. The contractual rate and
the dates and amounts of the rental receipts are objectively ascertainable from
the documents. What is inappropriate is to grant judgment for an unexplained
lump sum said to represent accrued interest. The preferable course is to
formulate the order so that interest is calculated mechanically upon the capital
actually held from time to time.
The effect of the R1.1 million payment
[125] The position changed materially in February 2025. The supplementary affidavit
records that, following approaches by the defendants’ attorneys on about 7
February 2025, R1.1 million was paid as “part payment of the amount that was
due and owing to the applicant”. The plaintiff thereafter expressly appropriated
the payment against capital, deducting R1.1 million from R1 525 500 and
identifying the remaining capital as R425 500.
[126] That appropriation has a material bearing upon the plaintiff’s claim for interest.
Whatever contractual interest had accrued upon the R1.1 million before its
payment remained accrued, but contractual interest could not thereafter continue
to run on capital which had been paid. To permit interest at 8.5% to continue on
the original R1 525 500 after payment of R1.1 million would compensate the
plaintiff for being kept out of money which he had already received.
[127] The draft order proposed by the plaintiff therefore cannot be granted in its present
form. It seeks payment of the reduced capital of R425 500, but simultaneously
seeks contractual interest on the original R1 525 500 from 1 October 2022 until
seeks contractual interest on the original R1 525 500 from 1 October 2022 until
date of payment. Those two propositions are inconsistent. Once the R1.1 million
was appropriated to capital, interest on that portion ceased to run upon payment.
[128] There is also no basis for awarding contractual interest at 8.5% and, for the same
period and upon the same indebtedness, a second layer of mora interest. The
object of interest is compensatory. Where the parties have agreed upon the rate
applicable to an outstanding debt and that contractual rate continues until
payment, a further award of mora interest over the same period would amount to
double compensation. The plaintiff must therefore receive the contractual interest
proved, not contractual interest supplemented by a second interest charge upon
the same capital.
[129] I accordingly find that the plaintiff has established the contractual rate of 8.5%
per annum but not the lump-sum interest calculation appearing in the summons.
The appropriate order is one which applies that rate to the capital actually
outstanding from time to time, taking account both of the progressive receipt of
rentals after 1 October 2022 and the subsequent R1.1 million part payment.
Jurisdiction
[130] The original special plea challenged this Court’s jurisdiction. That defence has
no merit. The plaintiff states that the agreement was negotiated and concluded
in Johannesburg and that its breach occurred there. The defendants’ special plea
identifies no contrary jurisdictional fact capable of displacing the Court ’s
jurisdiction. A failure formally to plead the conclusion that the Court possesses
jurisdiction does not deprive a superior court of jurisdiction where the underlying
jurisdictional facts establish it.
Conclusion
[131] The essential premise of the defendants’ defence is that money which they
received as their friend’s rental income somehow became money lent to them.
[132] That proposition is contradicted by the reason the arrangement was created, by
the payment to the defendants of an administration fee, by their obligation to
account, by their own statement of account, by their investment of R750 000, by
their obligation to account for the investment return, by the plaintiff’s instructions
their obligation to account for the investment return, by the plaintiff’s instructions
concerning transfer of the money, and ultimately by the substantial payment
made after proceedings had been instituted.
[133] The later appropriation or use of the funds by the defendants could not change
their juridical character. If A entrusts money to B to hold, administer and invest
for A, B does not transform himself into A’s borrower by taking the money and
using it for his own purposes.
[134] Nor does the NCA provide a refuge for such conduct. The statute regulates
credit; it does not convert an obligation to account for and restore another
person’s money into an unlawful loan.
[135] Even on the defendants’ own pleading, their alleged loan was interest free. The
R750 was not consideration payable by them for credit but remuneration payable
to them for administering the plaintiff ’s rentals. The essential requirement
identified in s 8(4)(f) and Asmal v Essa is therefore absent.
[136] I accordingly find that the defence raised by the defendants was and is neither
bona fide in the sense required by Rule 32 nor good in law. The plaintiff has
established his entitlement to summary judgment in respect of the liquidated
balance of the capital amount.
[137] The plaintiff also claims mora interest from date of demand. That claim must be
distinguished from his claim to the contractual investment return. Under the oral
agreement the plaintiff was entitled to call for payment of the monies held by the
defendants upon 30 days' notice. The October 2022 amendment did not alter
that mechanism. It provided that, following such notice, the defendants were
obliged upon expiration of the 30-day period to pay over the monies received
together with the interest contemplated by the amended agreement.
[138] The agreement therefore did not stipulate a fixed calendar date upon which
repayment would become due. The defendants' mora was consequently mora
ex persona. Where no date for performance is fixed, the debtor is placed in mora
by a proper demand and falls into mora upon failing to perform within the period
stipulated by that demand or contract. Mokala Beleggings (Pty) Ltd v Minister of
Rural Development and Land Reform and Crookes Brothers Ltd v Regional Land
Claims Commission21 confirm that distinction.
[139] The plaintiff relies upon demands made during February and May 2024. The
founding papers specifically establish that on 10 May 2024 the plaintiff
demanded payment of the deposit, rentals and accrued interest. Since the
agreement afforded the defendants 30 days within which to comply with a call for
payment, mora did not arise merely upon the making of that demand. It arose
upon expiration of the contractual 30-day period without payment. In the absence
of sufficiently clear evidence enabling me to determine an earlier date by
reference to the February demand, I adopt the expiry of the 30 -day period
following receipt of the 10 May 2024 demand as the commencement of mora.
[140] From that point the juridical basis upon which interest is recoverable changes.
Until repayment became due, the defendants' obligation was to preserve and
invest the plaintiff's monies in accordance with the October 2022 arrangement.
Once the plaintiff called up the funds and the contractual period for payment
expired, the defendants were no longer entitled to retain the capital for
investment. Their continued retention constituted default in payment of a
monetary obligation. Mora interest thereafter compensates the plaintiff for being
deprived of the use of his money. Thoroughbred Breeders' Association and Steyn
NO22 establish that such interest constitutes damages flowing from delayed
payment and does not require proof of the actual investment return which the
creditor would have earned.
[141] The subsequent payment of R1.1 million in February 2025 did not place the
defendants in mora; they were already in mora. Its effect was instead to reduce
the capital upon which mora interest thereafter accrued. Mora interest
accordingly runs on the capital then outstanding from expiry of the contractual
30-day demand period until receipt of the R1.1 million payment, and thereafter
30-day demand period until receipt of the R1.1 million payment, and thereafter
only upon the unpaid balance of R425,500 until final payment. This both
compensates the plaintiff for delayed payment and avoids an impermissible
21 Thoroughbred Breeders' Association of South Africa v Price Waterhouse [2001] ZASCA 82; 2001
(4) SA 551 (SCA); [2001] 4 All SA 161 (A). See also Steyn NO v Ronald Bobroff & Partners [2012]
ZASCA 184; 2013 (2) SA 214 (SCA)
22
double recovery of contractual investment return and mora interest for the same
capital and period.
Order
[142] In the result, I make the following order:
1. Summary judgment is granted in favour of the plaintiff against the first
and second defendants, jointly and severally, the one paying the other
to be absolved, for payment of R425,500.00.
2. The first and second defendants are ordered, jointly and severally, the
one paying the other to be absolved, to pay contractual interest at the
rate of 8.5% per annum on the sum of R750,000.00, calculated from 1
October 2022 to 4 July 2024.
3. The payment of R1,100,000.00 received into the trust account of the
plaintiff’s attorneys in February 2025 is recorded as a part payment of
the defendants’ capital indebtedness and has been taken into account
in determining the outstanding capital amount of R425,500.00 awarded
in paragraph 1.
4. The first and second defendants are ordered, jointly and severally, the
one complying the other to be absolved, within 30 days of this order, to
render to the plaintiff a full account, supported by the relevant bank and
investment statements, reflecting:
4.1 all rental monies and other amounts received by them on behalf
of the plaintiff from 1 October 2022 until the date upon which the
tenants ceased making payments to them;
4.2 the dates upon which those monies were received;
4.3 the bank accounts or investments into which those monies were
deposited or invested;
4.4 all interest or other investment returns actually earned upon those
monies; and
4.5 all amounts deducted from those monies and the basis for each
such deduction.
5. The defendants shall debate the account referred to in paragraph 4 with
the plaintiff within 30 days after delivery of the account.
6. Following the statement and debatement of account, the defendants
shall pay to the plaintiff:
6.1 any interest or investment return shown to have been earned
upon rental monies received after 1 October 2022;
6.2 provided that no amount shall be recoverable under paragraph
6.1 to the extent that it constitutes interest upon the R750,000.00
for the period in respect of which contractual interest has already
been awarded under paragraph 2; and
6.3 any other amount shown upon the debatement to be due to the
plaintiff which has not already been included in the capital amount
awarded under paragraph 1.
7. The first and second defendants are ordered, jointly and severally, the one
paying the other to be absolved, to pay mora interest at the prescribed
rate of interest applicable from time to time:
7.1 on the capital amount then owing to the plaintiff, from 5 July 2024
until the date upon which the payment of R1,100,000.00 was
received into the trust account of the plaintiff’s attorneys; and
7.2 on the remaining capital amount of R425,500.00, from the date
upon which the payment of R1,100,000.00 was received into the
trust account of the plaintiff’s attorneys to date of final payment.
8. For the avoidance of doubt:
8.1 the award of contractual interest at 8.5% per annum under
paragraph 2 is confined to the R750,000.00 identified in the
contemporaneous statement of account as having been placed in
the term investment;
8.2 no fixed rate of 8.5% per annum is awarded in respect of rental
monies subsequently received, save to the extent that the
statement and debatement of account establishes that such
interest or return was actually earned;
8.3 the plaintiff shall not recover both contractual interest and mora
interest upon the same capital amount in respect of the same
period; and
8.4 the plaintiff shall not recover, through the statement and
debatement of account, any amount already included in the
capital judgment or interest awarded under this order.
9. The defendants shall pay the costs of the summary judgment application
on scale B
WENTZEL-THOMPSON J
JUDGE OF THE HIGH COURT
JOHANNESBURG
Date of the hearing: 28 July 2026
Date of the judgment: 1 September 2026
For the Plaintiff:
For the Defendants:
Adv. JRS Karuaihe instructed by
Mosima Attorneys
Weavind &Weavind
Attorneys