First Rand Bank Limited v Autum Star Trading 242 (Pty) Ltd and Others (49059/10) [2015] ZAGPPHC 1047 (15 October 2015)

REPUBLIC OF SOUTH AFRICA

OFFICE OF THE CHIEF JUSTICE

(GAUTENG DIVISION, PRETORIA)

CASE NO: 49059/10

IN THE MATTER BETWEEN

FIRST RAND BANK LIMITED Plaintiff

and

AUTUM STAR TRADING 242 (PTY) LTD First

Defendant

JANUS ROUX Second

Defendant

JOHANN ANDRE VENTER Third

Defendant

BARBARA VENTER Fourth

Defendant

JUDGMENT

LEGODI J

HEARD ON: 13 AUGUST 2015

JUDGMENT HANDED DOWN: 15 October 2015

[1] The real issue in this matter is whether the capital amount of R4 898 001.32 plus interest at a rate of 8.25% per annum from 1 July 2015 until date of payment calculated daily and compounded monthly is due and payable. Put differently, whether at the time the plaintiff, First Rand Bank Ltd (the Bank) instituted action proceedings against the defendants, Autumn Star Trading 242 (PTY) Ltd (Autumn), Janus Roux, Johan Andre Venter and Barbara Venter, the amount so claimed was due and payable.

[2] On 8 February 2007 the Bank and Autumn concluded a written agreement in terms of which the plaintiff granted credit facility to Autumn to the tune of R9.8 million. This facility during June 2007 in a written variation agreement was increased to R10.5 million. The other three defendants in these proceedings are sued in their capacities as sureties for the debts of Autumn.

[3] At the time of the conclusion of variation agreement in June 2007, the Bank had already made about seven advance payments to and or on behalf of Autumn. Of importance, an amount of R2 020 000 was paid on the 29 May 2007 to Turquoise Moon Trading 360 (PTY) Ltd which provided guarantees on behalf of Autumn for the purchase of the immovable property described as Portion 89 (a portion of Portion 48 of the Farm Hartebeesfontein 324, JR (immovable property).

[4] The immovable property aforesaid was offered as a security for the loan/facility and as a result, a mortgage bond was registered over the immovable property in favour of the Bank to the tune of R12 million. The immovable property was to be developed for the purpose of establishing a township with about 50 units thereon which were to be sold to members of the public and the proceeds thereof to be used to liquidate Autumn's indebtedness to the Bank. For this purpose, all the proceeds of the sales were ceded to the Bank by Autumn.

[5] The background to the agreements aforesaid can be summed up as follows: Autumn made an offer to purchase the property. It was

required in terms of the offer to purchaser to submit guarantees. When Autumn could not secure guarantees, it turned to the Bank to provide guarantees. Autumn did not qualify for the guarantees. As a result, a sister company, Turguoise Moon Trading 360 (PTY) Ltd (Turquoise) was approached with clear understanding that when the loan or facility request by Autumn is approved, the Bank will refund Turquoise the said sum of R2 020 000. The following payments were made by the Bank on behalf of or at the request of Autumn:

5.1 R245 000 on 17 May 2007;

5.2 R11 140 000 on 17 May 2007;

5.3 R38 463.20 on 17 May 2007;

5.4 R2 020 000 on 29 May 2007;

5.5 R246 732.00 on 1 June 2007;

5.6 R200 000.00 on 26 June 2007;

5.7 R27 400.00 on 26 June 2007.

[6] Autumn on the other hand, made not less four payments into the facility account, some of which were used to reduce its indebtedness

to the Bank as they were never specifically withdrawn unlike the amount of R2 340 000 which was paid on 26 May 2008, but withdrawn

just before the repayment period.

[7] During 2010, the Bank instituted the present proceedings against Autumn and the other three defendants who are sued herein in their capacities as sureties. As at 21 August 2013, the facility account was in debit to the tune of R4 220 915.68. On 1 July 2015 the total amount due was calculated at R4 898 001.32 plus interest calculated at 8.5% per annum until date of payment calculated daily and compounded monthly.

[8] The defendants in their plea, during trial, and also during argument contended that the amount has not become due and payable as all suspensive conditions of the written agreement have not been fulfilled. In the defendants' written heads of argument, the

contention is articulated further as follows:

"2.13 It is submitted that if the aforesaid principles of interpretation are applied to the agreement concluded between the parties, it behoves no argument that the parties entered into the written agreement to facilitate a development and it is only thereafter that the plaintiff will be compensated for 11s part in the facilitation of the project. It was a/so clearly the intention of the parties to include suspensive conditions, which had to be fulfilled in order for the agreement not to lapse".

[9] The statement is the start of the drawn battle line between the parties which is defined, in the plaintiff's particulars of claim as follows:

"11.

The relevant express, alternatively the tacit, further alternatively the implied terms and conditions of the facility are the following:

11.1 In February 2007 the amount of the loan facility was agreed to be R9 BOO 000.00. From this amount an amount of R3 010 000.00 was allowed for the First Defendant against the security of the immovable property, and the balance of R6 790 000.00 would only be made available to the First Defendant against pre-sales, for the installation of services.

11.2 To secure the loan facility a first covering mortgage bond of R12 million had to be registered against the immovable property of the First Defendant.

11.3 The granting of the balance of the facility of R6 790 000.00 to the First Defendant was subject to certain special conditions relevant to the establishment of the township. These special conditions are therefore not applicable to the first portion of the loan, i.e. the portion of R3 010 000.00, but applicable to the second portion of the loan, namely the R6 790 000.00 which the First Defendant had to utilize for the installation of services against pre-sales.

11.4 The facility accrued interest.

11.5 All amounts advanced by the Plaintiff to the First Defendant, with interest, had to be repaid by the end of February 2009.

11.6 The Plaintiff is entitled to prove the First Defendant's indebtedness by virtue of a certificate of balance, which would constitute prima facie proof of the First Defendant's indebtedness".

[10] Furthermore, in the plaintiff s written heads, the battle line is clarified as follows:

"7.2 At the time when the plaintiff granted the loan to the First Defendant, the First Defendant was not yet the registered owner of the immovable property. The loan would be granted to the First Defendant in two stages. The first stage related to the making available of funds to the First Defendant to enable the First Defendant to acquire the immovable property, and to pay for costs and expenses relaa·ng thereto. The second stage related to township development. The amount earmarked for the second stage was to be retained and would only be made available to the First Defendant against receipt of acceptable architects/quantity surveyors certificates, determining the value of the work in progress and the sum required for completion of the project, which sums will be verified and approved by an assessor of the Plaintiff or another authorised bank official. There were also other special suspensive conditions applicable to the second stage of the loan".

[11] As correctly contended on behalf of the defendants, the critical question revolves around the validity or enforceability of the written agreements between the parties regard been had to the alleged non-fulfillment of all the suspensive conditions.

[12] I will therefore start by dealing with the applicable case laws and the principle laid down therein, the relevant clauses and lastly, the interpretation of those clauses with reference to the surrounding circumstances and insofar as it might be relevant and possible in law, the evidence of the only witness who testified in these proceedings.

THE APPLICABLE CASE LAWS AND PRINCIPLE

[13] In dealing with interpretation of a document, Harms DP as he then was, in KMPS v Securefin Ltd 2009 (4) SA 399 (SCA) at paragraph 39 stated:

"First, the interpretation or parol evidence, rule remains part of our law. However it is frequently ignored by practitioners and seldom enforced by trial courts. If a document was intended to provide a complete memorial of a jural act, extrinsic evidence may not contradict, add to or modify its meaning (Johnson v Leal 1980 (SA) 927 at 9438). Second, interpretation is a matter of law and not of fact and, accordingly, interpretation is a matter for the court and not for witnesses (or, as said in common-law jurisprudence, it is not a jury question: Hodg M Malek (ed) Phipson on evidence (16ed 2005) paras 33 -64. Third, the rules about admissibility of evidence in this regard do not depend upon the nature of the document, whether statute, contract or patent (Johnson & Johnson (Pty) Ltd v Kimberly - Clerk Corporation and Kimberley-Clerk of South Africa (Ply) Ltd 1985 (BP) 126 (A). Fourth. to the extent that evidence may be admissible to contextualize the document (since context is everything) to establish its factual matrix and purpose. or for purposes of identification. "one must use it as conservatively as possible" (Delmas Milling Company Ltd v Du Plessis 1955(3) 447 (Al at 4558-C). The time has arrived for us to accept that there is no merit in Irving to distinguish between "background circumstances" and "surrounding circumstances". The distinction is artificial and. in addition. both terms are vague and confusing. Conseguentlv. everything tends to be admitted. The terms "context" or "factual matrix" ought to suffice". The underlining is my emphasis.

[14] Wallis JA in Natal Joint Municipal Pension Fund v Endumeni Municipality 2012

(4) SA 593 SCA at para 18 in dealing with contextualization in interpreting a document or agreement stated:

"Where more than one meaning is possible each possibility must be weighed in the light of all these factors. The process is objective, not subjective. A sensible meaning is to be preferred to one that lead to insensible or unbusinesslike results or undermines the apparent purpose of the document. Judges must be alert to, and guard against, the temptation to substitute what they regard as reasonable, sensible or businesslike for the words actually used. To do so in regard to a statute or statutory instrument is to cross the divide between interpretation and legislation; in a contractual context it is to make a contract for the parties other than the one they in fact made. The 'inevitable point of departure is the language of the provision itself', read in context and having regard to the purpose of the provision and the background to the preparation and production of the document".

[15] In the defendants' written heads of argument, I was also referred to the case of Affirmative Portfolios CC v Transnet Limited tla Metrorail [2008] ZASCA 127; 2009 (1) SA 196 SCA wherein with reference to parol evidence rule, it was stated:

"The parol evidence rule applies only where the written agreement is or was intended to be exclusive memorial of the agreement between the parties. Where the written agreement is intended merely to record a portion of the agreed transaction, leaving the remainder as an oral agreement, then the rule prevents the admission only of extrinsic evidence to contradict or vary the written portion without precluding proof of the additional or supplemental oral agreement. This is often referred to as the 'partial integration' rule. A court may look to surrounding circumstances, including the relevant negotiations of the parties, in order to determine whether the parties intended a written contract to be an integration of their whole transaction or merely a partial integration. The fact that the party specifically referred to a topic or subject in the wording is generally an indication that the writing was intended to be conclusive as to that aspect of the transaction'. This point is aptly made in the following passage in Wigmore on Evidence S2430:

(3) In deciding upon this intent, the chief and most satisfactory index for the judge is found in the circumstance whether or not the particular element of the alleged extrinsic negotiation is dealt with at all in the writing. If it is mentioned, covered, or dealt with in the writing, then presumably the writing was meant to represent all of the transaction on that element, if it is not, then probably the writing was not intended to embody that element of the negotiation . ..

If it was indeed the common intention of the parties that the rates be varied the Appellant could have availed itself of the equitable remedy for rectification. In the event, however, it chose not to do so and is bound to the terms of the written agreement.

Reliance cannot be placed on the allegation in paragraph 6 of the particulars of claim to the effect that the agreement was varied tacitly or by conduct in the light of the aforegoing.

Furthermore clause 10.1 which is in effect a non-variation clause, entrenches the pricing

provisions against oral or tacit variation. The binding nature of such a provision was emphasized in SA Sentrale Ko-op Graan Maatskappy Bpk v Shifren en Andere and affirmed more recently in the case of Brisley v Drotsky".

[16] In the defendants' written heads and with regard to the intention of the parties, reference is made to the case of National Joint Municipal Pension Fund supra at 603F to 604 D wherein, is stated:

" The sole benefit of expressions such as 'the intention of the legislator, or 'the intention of the parties' is to serve as a warning to courts that the task they are engaged upon is discerning the meaning of words used by others, not one of imposing their own views of what it would have been sensible for those others to say. Their disadvantages, far outweigh that benefit, lie at opposite ends of the interpretative spectrum. At the one end, they may lead to a fragmentation of the process of interpretation by conveying that it must commence with an initial search for the 'ordinary grammatical meaning' or 'natural meaning' of the words used seen in isolation, to be followed in some instances only be resort to context. At the other they beguiles judges into seeking out intention free from constraints of the language in question, and then imposing that intention on the language used. Both of these are contrary to the proper approach, which is from the outset to read the words used in the context of the document as a whole and in the light of all relevant circumstances. That is how people use and understand a language and it is sensible, more transparent and conduces a greater clarity about the task of interpretation for courts to do the same".

[17] Having cited these authorities, the defendants' counsel further in the written heads of argument drew the court's attention to the case of Department v Trustee Group International 2013 (6) SA 520 (SCA) wherein, the court in dealing with interpretation of written documents as enunciated in KPMG and National Joint Municipal Pension Fund at 326 A-C stated:

"These case make it clear that interpreting any document the starting point is inevitably the language of the document, but it falls to be construed in the light of its context. the apparent pumose to which it is directed and the material known to those responsible for its production. Context the purpose of the provision under consideration and background to the preparation and productions of the document in question are not secondary matters introduced to resolve linguistic uncertaintv, but fundamental to the process of intemretation from the outset.

[18] The underlining is my emphasis and this in my view, should be the theme in dealing with the dispute in the present case. I do not think the advancement of the funds by way of a credit facility is a problem. That is the essence of any loan or credit facility, subject of course, to the limit of such a facility. The limit in this case was according to the BankR3 010 000.00. What appears to be a problem in the present case is to draw a distinction between the repayment period and the source to meet obligations in terms of the facility agreement to ensure repayment. Put differently, whether failure to sell the 50 stands, the proceeds of which had been ceded to the plaintiff and from which payments to liquidate Autumn's indebtedness to the Bank, was to be made, rendered the repayment date moot. It rendered it moot in the sense that, if the stands are not sold by the repayments date, the entire agreement ceases to exist for non-fulfillment with the suspensive conditions for repayment.

REPAYM ENT

[19] In clause 4 of the agreement a distinction seems to be made between 'outstanding balance' and 'full outstanding balance', and repayment thereto. The 'full outstanding balance' is to be paid as per the attached 'Release Schedule' whilst the 'outstanding balance' is to be repaid 'within the repayment period reflected in the facility schedule'. Because of the importance of clause 4, I find it necessary to repeat it in its entirety herein:

"4. REPAYMENTS

4. 1 The outstanding balance on your facility, being that portion of the loan amount and Interim Facilitv already advanced by us to you or on your behalf and which is owing together with any other amounts, including interest and costs owing to us at any time ("outstanding balance"/. shall be repaid in the manner set out in this clause.

4.2 The outstanding balance shall be repaid within the Repayment Period reflected in the Facilitv Schedule as follows:

INTERIM FACILTY

The Interim Facility shall be repaid on receipt of the VAT refund or within 4 (four) months of date of advance of the funds, whichever

occurs first, however no later than expirv of the repavment period.

AD HOC REPAYMENT PER RELEASE SCHEDULE OF THE FULL OUTSTANDING BALANCE

-RESIDENTIAL DEVELOPMENTS

The full outstanding balance shall be repaid as per the attached Release Schedule.

INTEREST CAPITALISED UP TO A MAXIMUM AMOUNT

Interest shall be charged daily on the loan amount advanced and capitalized up to a maximum amount ("maximum capitalised amount') and thereafter, interest shall be payable monthly on the loan amount advanced.

4.3 Unless your repayments are ad hoc, the first repayment must be paid:

4.3.1 if the Loan amount is advanced on or before the 151 of the month, on the

Repayment due date, in the first month after the advance; and

4.3.2 if the Loan amount is advanced after the 151 day of the month, on the Repayment due date, in the second month after the advance.

4.4 Subsequent repayment must be made on the Repayment Due Datels, of each and every succeeding month during the currency of the loan facility.

4. 5 You will pay all amounts payable by you to us without any set-off, withholding or deduction of any nature in the currency of the Republic of South Africa.

4.6 Unless your repayments are only ad hoc, we shall have the right at any time to increase the repayments so as to ensure that the outstanding balance is repaid within the agreed period.

4. 7 You may authorise us to debit the bank account nominated by you in writing from time to time with all amounts that might become due by you in terms of this agreement".

[20] The underlining in the quotation is my emphasis. In clause 4.1 repayment of 'that portion of the loan amount' and 'interim facility' being the 'balance outstanding' is envisaged. 'That portion of the loan amount' is repayable within the Repayment Period reflected in the Facility Schedule. Whilst the interim facility or loan is repayable on receipt of the VAT refund or within four months of the date of advance of the funds, whichever occurs first, it must however be paid, no later than expiry of the repayment period like the repayment period of 'that portion of the loan amount' set out in terms of the facility schedule. Clause 4.1 relates to amounts advanced by the plaintiff to Autumn or on its behalf 'including interest and costs owing to the Bank. They all constitute

'outstanding balance' as contemplated in clause 4.1. The conditions for the repayment of the amounts so advanced other than the 'interim facility', which relates to VAT are found in the facility schedule and also in the drawn down schedule. Clause 2 of the agreement deals with the drawdowns.

[21] In terms of the drawdown schedule, it was a condition that the amount of R2 020 000.00 was to be refunded to Turquoise which provided guarantees on behalf of Autumn for the purchase of the property. The repayment period for this amount was 14 months and later changed to 13 months from June 2007. The repayment period is contemplated in the facility schedule read with clause 4.2. The amount of R676 200.00 was reserved for the VAT payments. This amount was in terms of the drawdown schedule read together with clauses 1.2 and 4.2 under INTERIM FACILITY repayable within 4 months of date of advance of the funds for or on receipt of the VAT refund whichever occurs first, but no later than expiry of the repayment period as in the facility schedule read together with the first sentence of clause 4.2. Furthermore, in terms of the drawdown schedule, the amounts of R530 000 and R248 000 were respectively made to be available upon registration of the mortgage bond against receipt of invoices acceptable to the Bank and upon receipt of acceptable invoices for professional and management fees. Three such payments were made together with the refund of the guarantees in the sum of R2 020 000 for the purchase of the property as indicated in paragraph 5 of this judgment. These amounts included interest and other costs. They form the basis of the Bank's claim against Autumn and the other defendants, which is pleaded as quoted in paragraph 9 of this judgment.

[22] In paragraph 13 of the particulars of claim, the plaintiff pleaded that: "All the suspensive conditions relating to that portion of the loan which was advanced to the first defendant were fulfilled". The defendants both in their plea, and in their written heads and also as argued by their counsel, took a swipe at the pleaded particulars quoted earlier in this judgment. In paragraph 2.42 of the written heads, the attack is articulated as follows:

"It is abundantly clear from annexure "A", Special Conditions, that no distinction whatsoever is drawn to the extent that cerlain suspensive conditions were applicable to a cerlain porlion of the agreement and other suspensive conditions applicable to a different porlion of the agreement. In fact, it is expressly provided that the suspensive conditions apply to the entire facility as defined in clause 1.1..."

[23] In paragraph 2.22 of the written heads, the defendants dealing in with the "INTERIM FACILITY" under clause 4.2 and quoted earlier in paragraph 19 of this judgment, contended:

"The only distinction that is in fact drawn in the aforesaid clause is between "facility" and "interim facility". The interim 'facility however, has nothing to do with the funds advanced for the acquisition of the immovable property, but relates to an amount of R676 200. 00 for value added tax due in respect of the entire development".

[24] I cannot completely agree with this statement insofar as it seeks to suggest that clause 4.1 of the agreement by 'outstanding balance' refers only to the "interim facility". It does not. Instead, it refers to outstanding balance which is composed of 'that portion of the loan amount and Interim Facility... advanced 'including interest and costs owing .: .' The period within which these amounts must be repaid is clearly spelled out in the drawdown schedule and the facility schedule read with clause 4.2.

[25] Inasmuch as counsel for the defendants submitted that every single suspensive condition applied to the entire agreement and that there were no two stages of the facility, further closer look at clause 4.2 is necessary. "AD HOC REPAYMENTS PER RELEASE SCHEDULE OF THE FULL OUTSTANDING BALANCE -RESIDENT/AL DEVELOPMENT'', followed by 'The full outstanding balance shall be repaid as per the attached Release Schedule' is significant. The Release Schedule refers to a list of units of up to 50 each at a selling price of R334 040.00. The units were to be sold through which the loan facility or advances made in the completion of the development and establishment of the township were to be funded. Reference to the drawdown schedule and conditions thereof, is necessary. An amount of R5 760 000 out of the facility and before increase of the facility from R9 BOO 000 to R10 500 000 in June 2007 was allocated on a condition stated as follows:

'To be retained and paid in draws against receipt of an acceptable Architects/Quantity Surveyors Certificate determining the value of the work in progress and the sum required for completion of the project which sum will be verified and approved by our assessor or other authorised Bank Officials. The costs incurred for the certificates shall be for your account". want to believe that this is a standard condition in every building project or development and or establishment of a township.

[26] The condition quoted above, should be seen in the context of a close connection between 'AD HOC REPAYMENTS PER RELEASE SCHEDULE OF THE FULL OUTSTANDING BALANCE" and the "-RESIDENTIAL DEVELOPMENT" in clause 4.2 quoted in paragraph 19 of this

judgment. What is clear is that the facility or advances were to be made in stages, at least two, for different purposes. That can be deduced from the drawdown schedule and clauses 4.1 and 4.2. Stage one being acquisition of the property and refund in the amount of R2 020 000 for the guarantees given by Turquoise and stage two, retention of R5 760 000 on condition and for the purpose quoted in paragraph 25 above.

[27] As indicated earlier, the pre-sales of the units were to be the source through which to liquidate the Autumn's indebtedness to the Bank. But whatever happens, any advances made to Autumn or on its behalf had to be repaid within 13 months from June 2007 as per facility schedule read together with clause 4. I am therefore satisfied that the facility was in stages and that the agreement as a whole did not cease to exist for non-compliance with the suspensive conditions closely connected to the sales of the units, completion of the development and establishment of the township. Autumn failed to repay the amounts advanced to it within the repayment period. The amount advanced became due and payable upon the expiry of the repayment period.

SEVERANCE

[28] Even if I was to be wrong with the finding above, there is another difficulty for the defendants. Clause 25 of the agreement deals with 'SEVERITY' and it reads"

"25.1 Each provision in this agreement is severance from all others. notwithstanding the manner in which thev mav be linked together or grouped grammatically, and if in terms of any judgment or order, any provision, phrase, sentence, paragraph or clause is found to be defective or unreasonable for any reason, the remaining provisions, phrases, sentences, paragraphs and clauses shall nevertheless continue to be of full force. In particular, and without limiting the generalitv of the aforeqoing. we both acknowledge our intention to continue to be bound bv this agreement notwithstanding that any provision may be found to be unenforceable or void or voidable. in which event the provision concerned shall be severed from the other provisions, each of which shall continue to be of full force". (My emphasis).

[29] Initially, during oral argument, counsel for Autumn and other defendants suggested that clause 25 was only applicable to a judgment or order of court. However, this contention is not pursued in the written heads of argument and in my view, correctly so. The contention is now made as follows:

"2.32 It is submitted that reliance by the plaintiff upon severability clause is without merit and immediately begs the question - what specific provisions should be, according to the plaintiff severed from the body of the agreement? Keeping in mind that the funds were made available to the first defendant in terms of the Facility Schedule and made subject to the fulfillment of all suspensive conditions".

[30] In paragraph 2.31 of the defendants' written heads and in dealing with clause 25, the defendants, inter alia, stated:

"Dunng argument it was submitted on behalf of the plaintiff that clause 3.2 dealt with hereinabove, may be severed from the body of the agreement and thus separately relied upon. The submission, it is submitted contracts, however, the case pleaded in paragraph 11 and 13 of the declaration in which the plaintiff pleads the terms or the agreement and alleges that all suspensive conditions relating to that "portion" of the loan which was advanced to the First Defendant, were fulfilled".

[31] The Bank did not plead that all suspensive conditions have been fulfilled as suggested in paragraph 2.32 of the defendants' written heads of argument quoted above. What is pleaded with reference to fulfillment of suspensive conditions is captured simply in paragraph 13 of the particulars of claim as follows:

"All the suspensive conditions relating to that portion of the loan which was advanced to the First Defendant were fulfilled". 'To that portion of the loan' is a term used in clause 4.1 of the written agreement. To suggest that the Autumn pleaded all suspensive conditions of having been fulfilled is with respect, to read 'all' in isolation and also to ignore 'that portion of the loan'.

[32] The severability is clearly pleaded. What is referred to as the balance of R6 790 000 is what was referred to in the drawdown schedule as an amount of R5 760 000 calculated before the facility was increased to R10 500 000. Therefore, inasmuch as the defendants might want to suggest that severability was not pleaded, that can be inferred or implied in paragraph 11 of the particulars of claim. In any event, the fact that reference to clause 25 was not specifically made, cannot be a bar for reliance on it. It should be entitled to rely on every term of the agreement unless specifically pleaded otherwise to exclude any such a term.

[33] Context with regard to severability in the present case, is also important. Firstly, without funding for the purchase price of the property, the contract would not have been concluded. The granting of a loan to purchase the property could also not have taken place, without fulfillment of standard relevant suspensive conditions thereto. For example, registration of the mortgage bond in the amount of R12 000 000 in favour of the Bank, the valuation of the immovable property, which value was found to have been overrated, and further securities required by the Bank such as the signing of suretyship, cession and pledge in favour of the plaintiff conditions relevant to the acquisition of the property and funding thereof.

[34] The context is, inter alia:

34.1 Autumn identified a land on which it wanted to develop and establish

a township or residential area consisting of just over 50 units or stands;

34.2 Autumn did not have money to buy the land and to develop and establish the proposed township;

34.3 It then approached the Bank for funding and a process of negotiations

started, of importance, unfolded as follows:

34.3.1 On the 22 November 2006 Autumn addressed a letter to the plaintiff asking for a funding regarding the property in question on which it made an offer to purchase on 21 January 2005 and was struggling to get funding for the purchase price. As a result, the seller gave Autumn a notice to give the guarantees by not later than Friday of that week of 21 November 2006. The total amount of the guarantee was indicated in the letter as R2 066 000;

34.3.2 Around late November 2006, Autumn provided the Bank with a breakdown of the entire costs for the project including the net profit. The gross income to be derived from the project was estimated at R17 500 000 with total expenses of R10 028 000 and thus making a net profit of R7 472 000.

34.3.3 On 21 December 2006 Autumn signed what is referred to as 'Indicative Term Sheet'. In it, the facility applied for was R10 500 000 the term of repayment being 14 months. Other defendants bound themselves as sureties and that the property had to be valued for R4.5 million and R14 619 057 on completion and compliance by Autumn of such conditions as might be imposed by the valuator, and the registration of mortgage bond in the amount of R12 000 000 and that non-refundable fee was payable. These are suspensive conditions for any facility loan on the purchase of immovable property and construction of a structure thereon, it being either for residential or business purposes.

Furthermore, in the Indicative Term Sheet, it is provided that 65% of the land value will be made available on registration of the bond over the property in question, provided that these advances are made towards the project, against valid invoices. This appears to be in line with the conditions under 'Drawdown Schedule' referred to earlier in this judgment. It is furthermore indicated in the document under discussion that the guarantee will be issued to enable Autumn to acquire the property in question and the value of guarantees was stated as R2 020 000. The facility was limited to R9 800 000, which in June 2007 was varied back to the initial estimated amount of R10 500 000. These events accord with the signed agreement of 8 February and 21 June 2007.

34.3.4 On 20 December 2006 the second defendant on behalf of Autumn wrote to the Bank, of relevance, it was recorded in afrikaans as follows:

"Die voorworde vir die fasiliteit bespreking en vrae

1. Die voorwoorde moet gedeel word in katagore;

Eerstens; voorwaardes vir die waarbog vir die koop van grand

Tweedens: Voorwaardes vir die ontwikkering

2. Kosts; administrasie fooie van 2.5% in total (ingesluit is B. T W en kostes) is aanvaabaar vir dus ...

3. Reutewoers waarborg; sal nooit meer wees as prima min 1%".

What is quoted above is, in my view, in line with clause 4.1 and at the risk of repetition, but, for its importance, it reads:

"4.1 The outstanding balance on your facility being that portion of the loan amount and Interim Facility already advanced by us to you or on your behalf and which is owing together with any other amounts, including interest and costs owing to us at any time ("outstanding balance') shall be repaid in the manner set out in this clause".

[35] In my view, there can be no question about two stages of the facility. As indicated in the matter of Dexgroup cited and quoted in part in paragraph 17 of this judgment, in interpreting any document 'the starting point is inevitably the language of the document, but it falls to be construed in the light of its context, the apparent purpose to which it is directed and the material known to those responsible for its production. Context, the purpose of the provision under consideration and background to the preparation and productions of the document in question are not secondary matter introduced to resolve linguistic uncertainty, but fundamental to the process of interpretation from the outset'.

[36] What is stated in paragraphs 34 and 35 above, serve to resolve the linguistic uncertainty which might be there in clauses 4.1 and 4.2 of the written agreement. In addition, there are other surrounding circumstances. The defendants did make payments into the facility after the last funds were advanced to it. The facility was activated on the 17 May 2007. By 29 May 2007 a total amount of R2 314 603.20 was already paid out of the facility to or on behalf of Autumn. Interest started to accrue and charged on the outstanding debit amount on 31 May 2007. The first deposit in the amount of R2 340 000 by Autumn into the facility account was on the 26 May 2008. During that time, the facility was in debit to the tune of R3 139 115.80. Upon payment of R2 340 000 the debit balance was reduced to R799 115.80. The R2 340 000 did not stay for long in the account. It was withdrawn on 18 July 2008 and thus bringing back the debit balance to R3 179 404.42. Thereafter, four payments were made into the account: R30 000 on 2 June 2009, R50 000 on 4 September 2009, R44 205.64 on 15 September 2009 and R500 000 on 21 September 2009. When the latter payment was made, the debit balance on the account was R3 546 527.61. With the payment of R500 000, it got reduced to just above R3 000 000. The plaintiff as said earlier in this judgment, instituted the present proceedings during 2010 and as on the 15 July 2015 the capital amount outstanding was R4 898 001.32. The figure is not in dispute.

[37] The point is, despite the defence which is now been raised, the defendants started to repay the outstanding balance on 2 Jun 2009. They must have known that it has become due and payable. I say so, because none of the defendants took the witness stand to explain why they made the four payments after the expiry of the repayment period if they were of the view that the agreement as a whole has fallen by the way side due to non-fulfillment of all the suspensive conditions. I may add that when payment in the amount of R2 340 000 was made on 24 May 2008, Autumn was not obliged to make such payment, neither was the amount due and owing when the R2 340 000 was withdrawn on the 18 July 2008. It would only have become due and payable on the 21 July 2008 being the expiry of the repayment period as per clause 4.1 and 4.2 read together with the extended period for 13 months with effect from June 2007 in terms of the variation agreement. The withdrawal appears to have been well timed to have taken place few days before the expiry period of the repayment.

[38] Having regard to the facts which contextualize the words used in the agreement and the surrounding circumstances, I am satisfied that there were two stages of the facility which were severable from each other as envisaged in clause 25 and also as intended by the parties.

[39] Consequently judgment is hereby granted as follows:

39.1 Judgment is hereby granted with costs against the defendants in the sum of R4 898 001.32 the one paying the other to be absolved;

39.2 Payment of interest at a rate of 8.25% per annum from 1 July 2015 until date of payment, calculated daily and compounded monthly;

39.3 The property known as Portion 89(a portion of Porion 48) of the Farm Hartebeesfontein 324 JR, Province of Gauteng in extent 2,1414 hectares and held by the First Defendant under deed of transfer

T0669296/2007 is declared specially executable.

____________________________________________

M F LEGODI

JUDGE OF THE HIGH COURT

FOR THE PLAINTIFF:

ADV. MP VAN DER MERWE SC

INSTRUCTED BY: TIM

DU TOIT & CO. INC.

433 Rodericks Road

Cnr Rodericks Road & Sussex Ave. Lynnwood, PRETORIA

TEL: 012 470 7777

REF: J NELIA ENGELBRECHT/cs

FOR THE DEFENDANTS:

ADV. J A VENTER

INSTRUCTED BY:

1st & 2nd DEFENDANTS ATTORNEYS: 3rd & 4th BOTHA ATTORNEYS

446 Cameron Street

Cnr Charles & Cameron Streets Brooklyn, PRETORIA

TEL: 012 346 3111

REF: W BOTHA/R2016/vjvv

3rd & 4th DEFENDANTS ATTORNEYS : SENEKAL SIMMONS INC.

c/o MP KOEKEMOER

6 Ayton Street Clydesdale,

PRETORIA TEL: 012 343 1348 REF: JIH/Levs/KA8926