Berlix Investments (Pty) Ltd v Hsu and Others (187/2021) [2021] ZAFSHC 263 (20 September 2021)

IN THE HIGH COURT OF SOUTH AFRICA,

FREE STATE DIVISION, BLOEMFONTEIN

Case number: 187/2021

In the matter between:

BERLIX INVESTMENTS (PTY) LTD

Applicant

and

WEI-LUN HSU

First Respondent

AGATHA MONIQUE HSU-COLBERT

Second Respondent

REGISTRAR OF DEEDS: BLOEMFONTEIN

Third Respondent

HEARD ON:

10 JUNE 2021

JUDGMENT BY:

DANISO, J

DELIVERED ON:

This judgment was handed down electronically by circulation to the parties' representatives by email and by release to SAFLII. The date and time for hand-down is deemed to be 15H00 on 20 September 2021.

[1] The applicant seeks an order compelling the first and the second respondents to sign all the necessary transfer documents in relation to their immovable property erf 28987, Extension 166, Bloemfontein also described as 40 Pelikaan Parade, Woodland Hills in Bloemfontein and if they fail to do so, the applicant seeks an order authorising

the Registrar of this court to sign the said documents on their behalf. In the alternative, the applicant claims payment of an amount of R6 985 460.67 together with interest from 11 December 2020, failing which their immovable property be declared executable, alternatively, a payment of R6 000 000.00 and interest on the basis of unjustified enrichment.

[2] The relief sought by the applicant is premised on the first and second respondent’s failure to repay a R6 000 000.00 loan advanced in terms of a structured transaction of a suite of agreements concluded by the parties on 22 to 26 November 2019 comprising of:

2.1. A sale agreement in terms of which the respondents sold their immovable property to the applicant for a sum of R6 000 000.00;[1]

2.2. An acknowledgment debt signed in favour of the applicant pertaining to loan advanced by the applicant to the respondents for R6 000 000.00;[2]

2.3. A settlement of agreement for the repayment of the R6 000 000.00;[3] and

2.4. A continuing covering bond hypothecating the respondents’ immovable property as security for the repayment of the loan.[4]

[3] In the conclusion of the said agreements the applicant was represented by Mr Johannes Jacobus Cronje. He is the sole shareholder and director of the applicant. The first and second respondent (the respondents) are married to each in community of property, they were duly represented by the first respondent.

[4] It is common cause that during November 2019, Mr Cronje received a call from the first respondent a business acquaintance pleading for a loan. The first respondent stated he was in a financial predicament he needed a loan of R6 000 000.00.

[5] Mr Cronje explained to the first respondent that his business entities were in the business of investment and not money lending however, he could arrange the loan from the applicant provided a structured transaction of a suite of agreements (Annexure “JJ2 to JJ5”) were concluded to secure the loan.

[6] The debt is not disputed. The respondents resist the application solely on technical grounds. It is the respondents’ case that the agreements upon which the applicant relies to obtain an order effecting registration of transfer of their primary residence are unlawful and unenforceable.

[7] In their answering affidavit the respondents aver that the loan agreement is regulated by the National Credit Act, 34 of 2005 (“The NCA’’). The applicant has violated various provisions of the NCA the whole transaction is accordingly void, for the following reasons:

8.1. The applicant instituted these proceedings without having served the respondents with a written notice as contemplated in section 129 of the NCA. This application is thus premature;

8.2. Relying in De Bruyn NO and Others v Karsten 2019 (1) SA 403 SCA para [28] the respondents state that at the time the agreement was concluded the applicant was not registered as a credit provider as provided for in section 40(1) of the NCA; and

8.3. The agreement constitutes reckless credit as the applicant granted the respondents a loan without having conducted an affordability assessment of the respondents’ ability to afford the said loan as contemplated in sections 80 and 83 of the NCA.

[9] Concerning the security for the repayment of the loan, the respondents argue that it is also invalid and enforceable as it entitles the applicant to resort to parate executie. The applicant is not entitled to take the law into its hands by selling the respondents’ residential home which is worth more than the loan amount for the satisfaction of the debt without first obtaining the authorization of the court. See also Rule 46A of the Uniform Rules of Court.

[10] As regards the unjustified enrichment claim, the respondents contend that the application has not made out a case for the order it seeks. The application must be dismissed with costs.

[11] On the other side, the applicant concedes to the principles laid down in De Bruyn NO in relation to the requirement pertinent to the registration of credit providers prior to entering into credit agreements with consumers.

[12] The applicant submits that agreement upon which the applicant relies for the orders sought is the Deed of Alienation which is regulated by the Land Alienation Act[5] the NCA does not apply, however, should the court not be with the applicant in this regard, the applicant relies on National Credit Regulator v Opperman[6] and contends that the applicant is still entitled for what it performed in terms of the unlawful agreement, viz. the repayment of

R6 000 000.00 together with interest on the basis of unjustified enrichment.

[13] I’m in agreement with the respondents’ contentions on the point of the applicability of the NCA to the loan transaction. The underlying cause for the applicant’s claim is the acknowledgement of debt in terms of which the parties agreed that the applicant would loan the respondents R6 000 000.00 of which repayment is deferred for 12 months from the date of signature, the loan administration fee at R180 000 000.00 and the agreed interest rate of plus 7% per year. In terms of section 8(4) of the NCA, the terms of this agreement renders it to be subject to the NCA. In that regard, the applicant was obligated to register as a credit provider and to also conduct the affordability assessment of the respondents’ affordability to repay the loan prior to concluding the loan agreement with the respondents.[7] The whole loan transaction is unlawful, consequently void on the basis of non-compliance with the NCA.[8]

[14] I now turn to consider whether the applicant has made out a case for the alternative relief sought based on unjustified enrichment. It is trite that where a credit agreement has been declared unlawful by the court, the credit provider retains its right to claim restitution based on unjustified enrichment.[9]

[15] On the available facts, the fact that the respondents received the amount of R6 000 000.00 from the applicant meant to be a loan to assist the respondents who were in a financial dilemma is undisputed. There is no evidence that the applicant’s actions were motivated by malice or any form of turpitude. The applicant is impoverished as the loan has not been repaid while the respondents are unjustifiably enriched. I’m thus inclined to decide this point in favour of the applicant.

[16] In the premises, I hereby make the following order:

1. Judgment is granted in favour of the applicant for R6 000 000.00 with interest a tempore morae calculated from 25 November 2019 until the date of final payment.

2. The costs to be paid by the first and second respondents jointly and severally one paying the other to be absolved.

NS DANISO, J

APPEARANCES:

Counsel on behalf of Applicant:

Adv. S. Grobler SC

Instructed by:

Peyper Attorneys

BLOEMFONTEIN

Counsel on behalf of Respondents:

Adv. S. Tsangarakis

Instructed by:

Rossouws Attorneys

[1] Annexure “JJ2” of the Applicant’s Founding Affidavit.

[2] Annexure “JJ3” of the Applicant’s Founding Affidavit.

[3] Annexure “JJ4” of the Applicant’s Founding Affidavit.

[4] Annexure “JJ5” of the Applicant’s Founding Affidavit.

[5] Act No, 68 of 1981.

[6] 2013 (2) SA 1 CC.

[7] Sections 40(1) and 80 (1) of the NCA.

[8] Sections 40(4), 89(2)(d) and 89(5) (a) of the NCA.

[9] Ibid at fn 6 at paragraph 88.