Absa Bank Beperk v Mbuli (3097/05) [2005] ZAGPHC 55 (16 May 2005)

THE HIGH COURT OFSOUTH AFRICA(TRANSVAAL PROVINCIAL DIVISION)REPORTABLEDate:12, 16 May 200516/5/2005Case No.: 3097/2005In the matter between:ABSA BANK BEPERKAPPLICANTandREUBEN JOHNSON MBULI FIRST RESPONDENTSummary Judgment-facts relied on not amounting to a pactum de non petendo-oral variation of contract accordingly not permitted in the light of SA Sentrale KO-op Graanmaatskappy BpkvShifren en Andere1964(4)SA 760(A); BrisleyvDrotsky 2002(4) SA l(SCA) and HNR Properties and AnothervStandard Bank of SA Ltd 2004(4) SA471(SCA).Van Rooyen AJ[1] This is an application for summary judgment on a loan for a house, secured by amortgage bond in favour of the applicant ("the bank").Execution of the bond is soughttopay the debt, which had, according to the summons, been in arrears since the 14thDecember2004.[2] The respondent filed an affidavit in which he explained that he and a Mr Smith, headof the applicant's credit division, had entered into an oral agreement on the17thSeptember 2004, after respondent had lost his job. It is alleged that it was "decided" thatthe respondent would sell some motor vehicles so as to satisfy the more urgent debts,which the respondent had with the applicant. On this occasion it was agreed, on the2recommendation of a Mr Smith from the Bank, that a recovery plan be implemented. Option 1: applicant obtaining a better paying job so that he could honour his

obligations in terms of the mortgage bond. Should this fail, the option 2 was that respondent was to sell the property so as to attract the highest bid and then pay his debts. It is alleged that it an express, implied, alternatively tacit agreement was reached that the applicant waived or suspended all its rights to sue or call for immediate performance on the bond.[3] In the light of this alleged agreement the respondent proceeded to apply for senior positions with the hope of securing a position and paying his debts. He attached 8 applications for top posts (from Deputy Director to Deputy Director-General) in the civilservice, which fell within the range of his doctor's degree in law. He also sent post-dated cheques for R6125,00 for 21 December 2004,20 January 2005, 1 March 2005, 1 April 2005 and 2 May 2005 to the Bank. Respondent referred to these cheques in an undated letter and stated that he had been unable to pay the down payments as a result of high electricity and water accounts for October and November 2004. The letter is stated to have been sent on 9 December 2004. It was stated in the letter that the cheques were "guaranteed and there may be a need to convert to stop order method as soon as the bank and the respondent may agree." The payments included an additional amount to take care of arrears. When he realized that a considerable period had lapsed and that he

could no longer rely on the first option, he decided to implement option 2. However, before he could pursue this avenue the applicant, without prior notice, served summons on the respondent on the 8thFebruary 2005.[4] When the summons was served, respondent stopped payment of the last four cheques, the first being that for 20 January 2005.3[5]Mr Leopeng,for the respondent, argued that apactum de non petendohad been entered into between the Bank and the respondent and that such an oral contract was compatible with the provisions in the contract, which permitted amendment "in writing" in clause 8. He referred me to a judgment of Ntsebeza AJ inMiller and Another NNOvDannecker2001(1) SA 928(C). In the latter judgment special weight was given to the judgment of Hiemstra J inImpala DistributorsvTaunus Chemical Manufacturing Co1975(3) SA 273(T) where it was held that apactum de non petendodid not amount to a variation or a waiver which is required to be in writing by the contract, but co-existed with a contract in the sense that it merely suspended the enforceability of a contract for aspecified period or the occurrence of some contingency.[6] In theMillerjudgment Ntsebeza AJ placed reliance on the approach of Seligson AJ inDistrict Bank LtdvHoosain and Others1984(4) SA 544(C) where it was held that although the details set out in the answering affidavit in a summary judgment matter

might be vague, "despite the baldness and ineptness of the allegations made, ... the defendants have raised a triable and arguable issue as to the plaintiff's entitlement to sue for recovery of the debt at the time when it did." (at 550A). Ntsebeza AJ also held that "if nothing else, the defendantin casuwould successfully hold the plaintiffs to thepactumon the grounds that the agreement must be taken to have been entered into in good faith." [7] The reference to good faith in theMillerjudgment was overruled by the Supreme Court of Appeal inBrisleyvDrotsky2002(4) SA I(SCA). Otherwise the importance of the basic rule against oral amendment, where it is prohibited in the contract, was emphasized in the light ofSA Sentrale KO-op Graanmaatskappy BpkvShifren en Andere1964(4) SA 760(A). That the Supreme Court of Appeal has, however, not4abandoned the role of apactum de non petendo,appears fromHNR Properties andAnothervStandard Bank of SA Ltd2004(4) SA 471(SCA) where ScottJA,at para [19]states the following after having referred to theShifrenandBrisleyjudgments of theCourt:" Courts have in the past, often on dubious grounds, attempted to avoid theShifrenprinciple, where its application would result in what was perceived to be a harsh result. Typically, reliance has been placed on waiver and estoppel. No doubt in particular circumstances a waiver of rights under a contract containing a

non-variation clause may not involve the violation of theShifrenprinciple, for example, where it amounts to apactum de non petendoor an indulgence in relation to previous imperfect performance”11Reference is made to Hutchinson 'Non- variation Clauses in Contract: Any Escape from the Shifren Straightjacket' (2001) 118SALJ720.[8] What appears clearly from theHNR Propertiesjudgment is that an oral variation ofan installment clause would be in conflict with theShifrenprinciple - see para [20]. InRosebank Mall (Pty) LtdvCradock Heights (Pty) Ltd2004(2) SA 353(W) CilliersAlrejected the argument that a clause in a contract amounted to apactum de non petendo:" The appellants sought to rely on the provisions of clause 6 as containing apactum de non petendo.This clause is aimed - however legally ineffective it may be - at an adjustment of the rights or obligations of parties in circumstances set out therein.It does not contain any undertaking not to sue in respect of any liability which does accrue as a result of a breach.The contention based on an allegedpactum de non petendotherefore cannot succeed." (emphasis added)[9] I am not convinced that the arrangement of the Respondent with the Bank in thepresent matter amounted to apactum de non petendo.The arrangement is clearly aimedat variation of the installments and obtaining some form of indulgence as to the non-payment of such payments.

Even if it is accepted that the bank official assisted theRespondent in working out a plan as to how payment could be achieved, there is noindication that the bank was undertaking not to sue him. The acceptance of the Decembercheque, also does not amount to a waiver of past errors. The Respondent had not paid his5installments in October and November 2004. Any payment after that simply amounted to the paying of an installment, although it was obviously not sufficient to cover the lapses in the previous two months. There is also no indication that the Bank accepted the installment plan set out in the 9 December letter of the respondent. He, in any case, cancelled the January cheque on his own version. As rightly argued byMr Harms,the excuse for canceling the January cheque in the light of the summons is questionable since the summons was only served on Respondent on 8 February 2005. The cancellation, in any case, seems to be in conflict with the Respondent's statement in the 9 December letter thatthe -"above- mentioned payments are guaranteed". If "guaranteed"he would not have been able to cancel the cheques.[10] I have considered the argument that the response in a summary judgment need not be that explicit and well-founded. As long as it is arguable in a trial, it should suffice (see the remarks of Seligson AJ quoted above). However, to my mind, the arrangements made do not

justify an inference that the bank had undertaken not tosue.At the most the arrangements amounted to an interim variation of the instalments and an indulgence in this respect.The application is allowed with costs on the scale of attorney and client. The immovable property mortgaged is declared executable so as to pay the debt of R609327,19 plus interest at the rate of 11%per annum, monthly calculated and capitalized, as from 14 December 2004 to date of payment.JCW van Rooyen .Acting Judge of the High Court 16 May 20056For the Applicant:adv CHarmsFor the Respondent:adv PM Leopeng

THE HIGH COURT OF

SOUTH AFRICA

(TRANSVAAL PROVINCIAL DIVISION)

REPORTABLE

Date:12, 16 May 2005

16/5/2005

Case No.: 3097/2005

In the matter between:

ABSA BANK BEPERK

APPLICANT

and

REUBEN JOHNSON MBULI

FIRST RESPO

NDENT

Summary Judgment-facts relied on not amounting to a pactum de non petendo-oral variation of contract accordingly not permitted in the light of SA Sentrale KO-op Graanmaatskappy BpkvShifren en Andere1964(4)SA 760(A); BrisleyvDrotsky 2002(4) SA l(SCA) and HNR Properties and AnothervStandard Bank of SA Ltd 2004(4) SA471(SCA).

Summary Judgment

-

facts relied on not amounting to a pactum de non petendo

oral variation of contract accordingly not permitted in the light of SA Sentrale KO-op Graanmaatskappy Bpk

v

Shifren en Andere

1964(4)

SA 760(A); Brisley

Drotsky 2002(4) SA l(SCA) and HNR Properties and Another

Standard Bank of SA Ltd 2004(4) SA

471

(SCA).

Van Rooyen AJ

[1] This is an application for summary judgment on a loan for a house, secured by a

mortgage bond in favour of the applicant ("the bank").

Execution of the bond is sought

to

pay the debt, which had, according to the summons, been in arrears since the 14

th

December

2004.

[2] The respondent filed an affidavit in which he explained that he and a Mr Smith, head

of the applicant's credit division, had entered into an oral agreement on the

17

September 2004, after respondent had lost his job. It is alleged that it was "decided" that

the respondent would sell some motor vehicles so as to satisfy the more urgent debts,

which the respondent had with the applicant. On this occasion it was agreed, on the

2

recommendation of a Mr Smith from the Bank, that a recovery plan be implemented. Option 1: applicant obtaining a better paying job so that he could honour his obligations in terms of the mortgage bond. Should this fail, the option 2 was that respondent was to sell the property so as to attract the highest bid and then pay his debts. It is alleged that it an express, implied, alternatively tacit agreement was reached that the applicant waived or suspended all its rights to sue or call for immediate performance on the bond.

recommendation of a Mr Smith from the Bank, that a recover

y plan be implemented. Option 1

: applicant obtaining a better paying job so that he could honour his obligations in terms of the mortgage bond. Should this fail, the option 2 was that respondent was to sell the property so as to attract the highest bid and then pay his debts. It is alleged that it an express, implied, alternatively tacit agreement was reached that the applicant waived or suspended all its rights to sue or call for immediate performance on the bond.

[3] In the light of this alleged agreement the respondent proceeded to apply for senior positions with the hope of securing a position and paying his debts. He attached 8 applications for top posts (from Deputy Director to Deputy D

irector-General) in the civil

service, which fell within the range of his doctor's degree in law. He also sent post-dated cheques for R6125,00 for 21 December 2004,20 January 2005, 1 March 2005, 1 April 2005 and 2 May 2005 to the Bank. Respondent referred to these cheques in an undated letter and stated that he had been unable to pay the down payments as a result of high electricity and water accounts for October and November 2004. The letter is stated to have been sent on 9 December 2004. It was stated in the letter that the cheques were "guaranteed and there may be a need to convert to stop order method as soon as the bank and the respondent may agree." The payments included an additional amount to take care of arrears. When he realized that a considerable period had lapsed and that he could no longer rely on the first option, he decided to implement option 2. However, before he could pursue this avenue the applicant, without prior notice, served summons on the respondent on the 8

February 2005.

[4] When the summons was served, respondent stopped payment of the last four cheques, the first being that for 20 January 2005.

3

[5]

Mr Leopeng,

for the respondent, argued that a

pactum de non petendo

had been entered into between the Bank and the respondent and that such an oral contract was compatible with the provisions in the contract, which permitted amendment "in writing" in clause 8. He referred me to a judgment of Ntsebeza AJ in

Miller and Another NNO

Dannecker

2001(1) SA 928(C). In the latter judgment special weight was given to the judgment of Hiemstra J in

Impala Distributors

Taunus Chemical Manufacturing Co

1975(3) SA 273(T) where it was held that a

did not amount to a variation or a waiver which is required to be in writing by the contract, but co-existed with a contract in the sense that it merely suspended the enfor

ceability of a contract for a

specified period or the occurrence of some contingency.

[6] In the

Miller

judgment Ntsebeza AJ placed reliance on the approach of Seligson AJ in

District Bank Ltd

Hoosain and Others

1984(4) SA 544(C) where it was held that although the details set out in the answering affidavit in a summary judgment matter might be vague, "despite the baldness and ineptness of the allegations made, ... the defendants have raised a triable and arguable issue as to the plaintiff's entitlement to sue for recovery of the debt at the time when it did." (at 550A). Ntsebeza AJ also held that "if nothing else, the defendant

in casu

would successfully hold the plaintiffs to the

pactum

on the grounds that the agreement must be taken to have been entered into in good faith." [7] The reference to good faith in the

judgment was overruled by the Supreme Court of Appeal in

Brisley

Drotsky

2002(4) SA I(SCA). Otherwise the importance of the basic rule against oral amendment, where it is prohibited in the contract, was emphasized in the light of

SA Sentrale KO-op Graanmaatskappy Bpk

1964(4) SA 760(A). That the Supreme Court of Appeal has, however, not

4

abandoned the role of a

pactum de non petendo,

appears from

HNR Properties and

Another

Standard Bank of SA Ltd

2004(4) SA 471(SCA) where Scott

J

A

,

at para [19]

states the following after having referred to the

Shifren

judgments of the

Court:

" Courts have in the past, often on dubious grounds, attempted to avoid theShifrenprinciple, where its application would result in what was perceived to be a harsh result. Typically, reliance has been placed on waiver and estoppel. No doubt in particular circumstances a waiver of rights under a contract containing a non-variation clause may not involve the violation of theShifrenprinciple, for example, where it amounts to apactum de non petendoor an indulgence in relation to previous imperfect performance”11Reference is made to Hutchinson 'Non- variation Clauses in Contract: Any Escape from the Shifren Straightjacket' (2001) 118SALJ720.

" Courts have in the past, often on dubious grounds, attempted to avoid the

principle, where its application would result in what was perceived to be a harsh result. Typically, reliance has been placed on waiver and estoppel. No doubt in particular circumstances a waiver of rights under a contract containing a non-variation clause may not involve the violation of the

principle, for example, where it amounts to a

or an indulgence in relation to previous imperfect performance

”

1

Reference is made to Hutchinson 'Non- variation Clauses in Contract: Any Escape from the Shifren Straightjacket' (2001) 118

SALJ720.

[8] What appears clearly from the

HNR Properties

judgment is that an oral variation of

an installment clause would be in conflict with the

principle - see para [20]. In

Rosebank Mall (Pty) Ltd

Cradock Heights (Pty) Ltd

2004(2) SA 353(W) Cilliers

Al

rejected the argument that a clause in a contract amounted to a

pactum de non petendo:

" The appellants sought to rely on the provisions of clause 6 as containing apactum de non petendo.This clause is aimed - however legally ineffective it may be - at an adjustment of the rights or obligations of parties in circumstances set out therein.It does not contain any undertaking not to sue in respect of any liability which does accrue as a result of a breach.The contention based on an allegedpactum de non petendotherefore cannot succeed." (emphasis added)

" The appellants sought to rely on the provisions of clause 6 as containing a

pactum de non petendo.

This clause is aimed - however legally ineffective it may be - at an adjustment of the rights or obligations of parties in circumstances set out therein.

It does not contain any undertaking not to sue in respect of any liability which does accrue as a result of a breach.

The contention based on an alleged

therefore cannot succeed." (emphasis added)

[9] I am not convinced that the arrangement of the Respondent with the Bank in the

present matter amounted to a

The arrangement is clearly aimed

at variation of the installments and obtaining some form of indulgence as to the non-

payment of such payments. Even if it is accepted that the bank official assisted the

Respondent in working out a plan as to how payment could be achieved, there is no

indication that the bank was undertaking not to sue him. The acceptance of the December

cheque, also does not amount to a waiver of past errors. The Respondent had not paid his

5

installments in October and November 2004. Any payment after that simply amounted to the paying of an installment, although it was obviously not sufficient to cover the lapses in the previous two months. There is also no indication that the Bank accepted the installment plan set out in the 9 December letter of the respondent. He, in any case, cancelled the January cheque on his own version. As rightly argued by

Mr Harms,

the excuse for canceling the January cheque in the light of the summons is questionable since the summons was only served on Respondent on 8 February 2005. The cancellation, in any case, seems to be in conflict with the Respondent's statement in the 9 December letter that

the -"above- mentioned payments are guaranteed". If "guaranteed"

he would not have been able to cancel the cheques.

[10] I have considered the argument that the response in a summary judgment need not be that explicit and well-founded. As long as it is arguable in a trial, it should suffice (see the remarks of Seligson AJ quoted above). However, to my mind, the arrangements made do not justify an inference that the bank had undertaken not tosue.At the most the arrangements amounted to an interim variation of the instalments and an indulgence in this respect.The application is allowed with costs on the scale of attorney and client. The immovable property mortgaged is declared executable so as to pay the debt of R609327,19 plus interest at the rate of 11%per annum, monthly calculated and capitalized, as from 14 December 2004 to date of payment.

[10] I have considered the argument that the response in a summary judgment need not be that explicit and well-founded. As long as it is arguable in a trial, it should suffice (see the remarks of Seligson AJ quoted above). However, to my mind, the arrangements made do not justify an inference that the bank had undertaken not to

sue.

At the most the arrangements amounted to an interim variation of the instalments and an indulgence in this respect.The application is allowed with costs on the scale of attorney and client. The immovable property mortgaged is declared executable so as to pay the debt of R609

327,19 plus interest at the rate of 11

%

per annum, monthly calculated and capitalized, as from 14 December 2004 to date of payment.

JCW van Rooyen .

Acting Judge of the High Court 16 May 2005

6

For the Applicant:

adv CHarms

For the Respondent:

adv PM Leopeng