Firstrand Bank Limited Trading t/a First National Bank v Gootspa Investments (Pty) Ltd and Others (30727/2015) [2018] ZAGPJHC 597 (24 August 2018)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NO: 30727/2015

FIRSTRAND BANK LIMITED TRADING INTER ALIA AS FIRST NATIONAL BANK Applicant and GOOTSPA INVESTMENTS (PTY) LTD First Respondent MOYO ZOO LAKE (PTY) LTD Second Respondent MOYO AT THE PIER (PTY) LTD Third Respondent MOYO OPERATIONS (PTY) LTD Fourth Respondent MOYO MELROSE ARCH (PTY) LTD Fifth Respondent MOYO CRAFT (PTY) LTD Sixth Respondent MOYO MARKETING (PTY) LTD Seventh Respondent MOYO PRODUCTIONS (PTY) LTD Eighth Respondent MOYO RETAIL (PTY) LTD Ninth Respondent PHILIP OSTRIN Tenth Respondent JASON BRADLEY LURIE Eleventh Respondent

JUDGMENT

BESTER AJ

[1] The first to ninth respondents, together with two companies not party to this application, Moyo Fountains (Pty) Ltd (“Fountains”) and Moyo at Spier (Pty) Ltd (“Spier”), formed part of a chain of restaurants trading under the Moyo banner. The first to eleventh respondents stood surety for the debts of Fountains and Spier, as well as the debts of the first to fifth respondents.

Fountains and Spier were finally wound up in 2014.

[2] The applicant has already obtained judgment against the first to ninth and eleventh respondents. It now also seeks judgment also against the tenth respondent. He is a founding partner of the Moyo Group, and a director and shareholder of the various companies constituting the group.

[3] The tenth respondent does not dispute that the applicant granted the various credit facilities to the principal debtors, and admits that he had stood surety for their debts.

[4] The applicant relies on a certificate of balance to establish the amount owed to it by each of the seven principal debtors. It is entitled to do so in terms of the written credit facility agreements previously concluded with each of the principal debtors.

[5] The tenth respondent raised three defences to the application. Firstly, the respondent contends that the applicant has launched this application against him only for the recovery of the debts of Fountains and Spier.

[6] The sole basis of this defence is a reliance on the wording of paragraph 17 of the founding affidavit. In this paragraph, the deponent to the founding affidavit, under the heading “Purpose of this application”, states that the applicant seeks to recover monies from the first to eleventh respondents as sureties and co-principal debtors for Fountains and Spier. From this, the respondent argues, it can be concluded that the applicant does not seek judgment against him for the debts owed by the first to fifth respondents.

[7] In the replying affidavit, the applicant takes issue with this approach, and itemises the instances in the founding affidavit from which it is evident that the applicant claims payment of all seven debts. This includes the following:

a) The notice of motion seeks judgment in respect of all seven debts, individually claimed.

b) The founding affidavit sets out the seven credit facility agreements individually.

c) The applicant made demand for payment from the respondent in respect of all seven debts.

d) The applicant specifically sets out the breach of the facility agreement by all seven principal debtors, and conclude that the seven debtors are therefore indebted as claimed.

e) Each of the suretyships is pleaded with reference to surety being stood for the debts of all seven principal debtors.

f) The certificate of balance stipulates the balance owing for each of the seven debts.

[8] Mr Pincus SC, who appeared for the tenth respondent, accepted that the items highlighted in the replying affidavit do in fact appear in the founding affidavit and notice of motion. However, he criticised the applicant’s approach, arguing that the applicant ought to have supplemented its papers in order to also claim the other five debts, instead of dealing with the issue in reply. I do not agree. This is not a case of the applicant seeking to bolster an incomplete case in its founding affidavit by presenting further evidence in its replying affidavit. What it had done, is to highlight, with reference to evidence already contained in the founding affidavit, that the applicant has set out its claims against the tenth respondent in respect of all seven debts in its founding papers.

[9] The respondent’s reliance on the wording of paragraph 17 of the founding affidavit, in isolation, is a narrow and opportunistic reading of the papers. It is evident that the paragraph does not correctly encapsulate the extent of the case set out by the applicant in the founding papers.

[10] The tenth respondent has at all times known what case he has to meet. He answered to the whole of the founding affidavit in his answering affidavit. It cannot reasonably be suggested that he had been taken by surprise by these claims, because they already appear in the notice of motion, which is the first document he would have had sight of in this application. He can also not argue that the relief sought in the notice of motion is not supported by the evidence in the founding affidavit; as it evidently is. But for the two challenges to the certificate dealt with below, he admitted all the facts alleged in the founding affidavit and necessary for the applicant to prove its case against the tenth respondent. This first argument accordingly does not constitute a defence.

[11] The tenth respondent raised two challenges to the certificates of balance. He claims that the applicant could only charge interest on the debts at its prime interest rate plus 1% in terms of the facility agreements, and not at its prime rate plus 2% per annum, as it had done. On this basis, he claims that the amounts set out in the certificates are incorrect.

[12] The applicant, in an attempt to avoid a dispute in respect of the interest rate, attached seven certificates of balance to its replying affidavit, in respect of the seven debts, where the interest had been calculated at the lower rate contended for by the tenth respondent. The applicant states in reply that it is willing to forego the additional interest, and that it limits its claim to the reduced amounts as evidenced by the certificates in reply.

[13] The tenth respondent took issue with this approach, and delivered an application to strike out the certificate provided in reply, as well as all the paragraphs in the replying affidavit dealing with the certificate. The application is based on the contention that this constitutes new matter which the applicant is not entitled to raise in the reply.

[14] Mr Ströbl, for the applicant, argued that the reliance on a lower interest rate is not a different case, but merely a claim for a lesser amount. He pointed out that it is trite that a party can always obtain judgment for an amount less than what originally claimed for, without that being regarded as a variance of its cause of action.

[15] The respondent does not dispute the principal debts (subject to his third defence dealt with below), but only the interest payable thereon. Thus the debts claimed from him remain the same, with only a lower interest rate now being claimed. I agree with Mr Ströbl’s submission that it is not a new case in reply to relinquish a portion of the interest claim. The introduction of the certificate in reply are therefore not an attempt to introduce new material that ought to have been in the founding affidavit; rather, it simply constitutes prima facie evidence of what the amounts of the debts are, if the lower interest rate is applied. The applicant is entitled to forsake the additional interest and claim the lesser amount. In these circumstances the application to strike out must fail.

[16] Mr Pincus SC conceded that, if the strike out fails, the certificate is unassailable, subject to the third defence dealt with below. In these circumstances it is not necessary to consider which party is correct with regard to the interest rate, and it is thus not necessary to consider the interest clauses contained in the facility agreements.

[17] The final defence put up by the tenth respondent is an attack on the certificate on the basis that not all payments had been taken into account. The facts upon which the tenth respondent relies for this challenge are, in summary, the following:

a) During December 2014 the Moyo Group had a number of functions and this income would have found its way into the Moyo Group bank accounts.

b) The applicant should have received a number of payments as a result of the various business rescue plans in place in respect of the principal debtors.

c) The applicant would have been entitled to receive full value of its claims in the liquidation against Fountains and Spier.

d) The applicant had already obtained judgment against the other respondents under this application, and presumably steps would have been taken to execute on those judgments, which should have realised funds collected by now.

[18] The tenth respondent makes no claim of any specific amounts that had been paid to the applicant but not taken into account in calculating the outstanding debt. On his own version, he is merely speculating. He states that he has not been involved in the affairs of the Moyo Group for some time, and that he does not have access to their financial records.

[19] A certificate of balance is prima facie proof of the amount owing by the debtor.[1] A creditor relying on a certificate of balance need not present evidence in support of the certificate.[2] Ultimately, what must be decided is whether the prima facie evidence provided by the certificate has been so disturbed by evidence put up by the debtor as to prevent it becoming sufficient

proof of the creditor’s claim.[3]

[20] In this matter the tenth respondent has in fact not put up any evidence to measure up against the prima facie evidentiary value of the certificate. As already pointed out, he has done no more than speculate. His allegations are that payments have been made, and he bears the onus to do prove them.[4] His failure to do put up such evidence is fatal to his defence. It cannot be said that there is a bona fide dispute between the parties on whether or not payments have been taken into account in the balances certified.

[21] I conclude that the tenth respondent has not disturbed the prima facie evidentiary value of the certificates, so that the certificates may be regarded as conclusive proof of his indebtedness.

[22] The applicant is contractually entitled to recover the costs of litigation for purposes of recovering debts from the tenth respondent on the attorney and own client scale.

[23] I raised with Mr Ströbl the inappropriateness of having included the documents that the applicant provided to the tenth respondent under rule 35(12), and the voluminous calculations in support of the certificate presented in reply. He assured me that the taxing master shall be alive to these unnecessary costs.

[24] In the result, I make the following order:

a) The tenth respondent’s application to strike out is dismissed with costs.

b) The tenth respondent shall pay to the applicant, jointly and severally with the other respondents, for payment of the sums of:

i) R1 190 178,87

ii) R732 020,53

iii) R538 877,95

iv) R467 261,03

v) R662 290,53

vi) R741 909,41

vii) R414 445,27

c) The tenth respondent shall further pay to the applicant, jointly and severally with the other respondents, interest on each of the above amounts at the Firstrand Bank prime lending rate plus 1% per annum, calculated daily and compounded monthly in arrears, calculated from 1 August 2017 to date of payment.

d) The tenth respondent shall pay the costs of this application on the scale as between attorney and own client, jointly and severally with the other respondents.

______________________________________

A Bester

Acting Judge of the High Court of South Africa

Gauteng Local Division, Johannesburg

Heard: 15 August 2018

Judgment: 24 August 2018

For the Applicant: Adv W Ströbl

instructed by: Jason Michael Smith Incorporate

For the Tenth Respondent: Adv SP Pincus SC

instructed by: Mouyis Cohen Inc.

[1] Bank of Lisbon International Limited v Venter en ‘n Ander 1990 (4) SA 463 (A) at 481 G – H, 482 A – E and 483 A – G.

[2] Bank of Lisbon supra at 482 F.

[3] Senekal v Trust Bank 1978 (3) SA 375 (A) at 383 B.

[4] Pillay v Krishna and Another 1946 AD 946 at 956; SA Taxi Securitisation (Pty) Ltd v Mbatha and two similar cases 2011 (1) SA 310 (GSJ) in [16].