ABSA Bank Ltd v Lombard (178/2004) [2005] ZASCA 27; 2005 (5) SA 350 (SCA) (30 March 2005)

ABSA Bank Ltd v Lombard (178/2004) [2005] ZASCA 27; 2005 (5) SA 350 (SCA) (30 March 2005)

The Supreme Court of Appeal held that the lender's discretion to vary the interest rate under the loan agreement was not exercised reasonably. The evidence, including the agreed schedule of interest rates and the respondent's risk profile, established a prima facie case of unreasonableness, which the appellant failed to rebut. The lender increased the interest rate in line with rises in the prime rate but did not reduce it when the prime rate fell, despite no change or a decrease in the respondent's risk. The Court distinguished the present case from Janse van Rensburg, noting that the loan agreement did not operate as a current account with a nil balance at any stage. The Court found...

Citation
[2005] ZASCA 27
Parties
Appellant: ABSA Bank Limited; Respondent: Johannes Jacobus Izak Stephanus Lombard
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
30 March 2005
Case Number
178/2004
Procedural Posture
Civil Appeal / Appeal From Pretoria High Court Judgment
Outcome
Appeal dismissed with costs.
Judges
Scott, Streicher, Farlam, Cloete, Van Heerden
Legal Topics
Interest Rate Variation, Loan Agreement, Exercise of Discretion, Onus of Proof
Banking and Finance Civil Procedure Interest Rate Variation Loan Agreement Exercise of Discretion Onus of Proof

Case Brief

Summary, issues, holding and outcome

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Parties

ABSA Bank Limited

Appellant

Johannes Jacobus Izak Stephanus Lombard

Respondent

Procedural Posture

Civil Appeal / Appeal From Pretoria High Court Judgment

Legal Issues

  1. 1 Whether the lender exercised its discretion to vary the interest rate under the loan agreement reasonably.
  2. 2 Whether the onus of proving unreasonable exercise of discretion rested on the debtor or the lender.

Ratio Decidendi

The Supreme Court of Appeal held that the lender's discretion to vary the interest rate under the loan agreement was not exercised reasonably. The evidence, including the agreed schedule of interest rates and the respondent's risk profile, established a prima facie case of unreasonableness, which the appellant failed to rebut. The lender increased the interest rate in line with rises in the prime rate but did not reduce it when the prime rate fell, despite no change or a decrease in the respondent's risk. The Court distinguished the present case from Janse van Rensburg, noting that the loan agreement did not operate as a current account with a nil balance at any stage. The Court found...

Court Disposition

Appeal dismissed with costs.

Orders

  • The appeal is dismissed with costs.