Investec Bank Ltd v Roberts and Another (4177/2011) [2013] ZAWCHC 25 (18 February 2013)

IN THE HIGH COURT OF SOUTH AFRICA

(WESTERN CAPE HIGH COURT, CAPE TOWN)

CASE NO. 4177/2011

“NOT REPORTABLE”

In the matter between:

INVESTEC BANK LTD ..............................................................................................................Plaintiff

And

RONALD SURESH KEVIN ROBERTS .........................................................................First Defendant

TRACEY-ANN ROBERTS ........................................................................................Second Defendant

JUDGMENT: 18 FEBRUARY 2013 R. M. NYMAN A.J. [1] Pursuant to the institution of legal proceedings regarding the defendants’ default under a loan agreement and accompanying

mortgage bond, the parties concluded a deed of settlement which was made an Order of Court on 30 August 2011. [2] In terms of the deed of settlement, the defendants acknowledged their indebtedness to the plaintiff in the amount of R2 451 224.55 and agreed to pay off the monthly bond instalments in the sum of R18 250.16 on or before the 30th of every month. The defendants agreed further, to pay the arrears and two monthly instalments amounting to the sum of R304 752.77 in five equal payments of R50 000.00 each on 27 August 2011, November 2011, February 2012, May 2012 and August 2012 respectively and a final payment of the full outstanding arrears on or before 27 November 2012. [3] The deed of settlement stipulates that in the event of the defendants committing any breach in terms of the agreement, the

plaintiff shall be entitled, on 5 (five) days’ notice to the defendants: “to apply for Judgment for the then outstanding balance under the Agreement of Loan and Mortgage Bond, together with interest and legal costs as specified in the summons and an order declaring [the immovable property] Executable'. [4] The defendant failed to make payments in terms of the deed of settlement and on 30 July 2012, the first defendant sent an email to the plaintiffs attorney proposing a settlement of the arrears in instalment, with the first instalment in the sum of R50 000.00 to be paid on or before 20 September 2012. This proposal was accepted by the plaintiff by way of a reply that the plaintiffs attorney sent to the first defendant on 30 July 2012. [5] In consequence of the defendants’ failure to make payment of the first instalment in the sum of R50 000.00 on 20 September 2012, on 29 October 2012 the plaintiff launched an application for judgment in terms of Uniform Rule 41(4). [6] The first defendant delivered his answering affidavit on 7 November 2012 and supplementary answering affidavit on 8 November 2012. On 8 November 2012 the second defendant delivered an affidavit contending that she had not received service of the application because she no longer resided with the first defendant.

JUDGMENT: 18 FEBRUARY 2013

R. M. NYMAN A.J.

[1] Pursuant to the institution of legal proceedings regarding the defendants’ default under a loan agreement and accompanying

mortgage bond, the parties concluded a deed of settlement which was made an Order of Court on 30 August 2011.

[2] In terms of the deed of settlement, the defendants acknowledged their indebtedness to the plaintiff in the amount of R2 451 224.55 and agreed to pay off the monthly bond instalments in the sum of R18 250.16 on or before the 30th of every month. The defendants agreed further, to pay the arrears and two monthly instalments amounting to the sum of R304 752.77 in five equal payments of R50 000.00 each on 27 August 2011, November 2011, February 2012, May 2012 and August 2012 respectively and a final payment of the full outstanding arrears on or before 27 November 2012.

[3] The deed of settlement stipulates that in the event of the defendants committing any breach in terms of the agreement, the

plaintiff shall be entitled, on 5 (five) days’ notice to the defendants:

“to apply for Judgment for the then outstanding balance under the Agreement of Loan and Mortgage Bond, together with interest and legal costs as specified in the summons and an order declaring [the immovable property] Executable'.

[4] The defendant failed to make payments in terms of the deed of settlement and on 30 July 2012, the first defendant sent an email to the plaintiffs attorney proposing a settlement of the arrears in instalment, with the first instalment in the sum of R50 000.00 to be paid on or before 20 September 2012. This proposal was accepted by the plaintiff by way of a reply that the plaintiffs attorney sent to the first defendant on 30 July 2012.

[5] In consequence of the defendants’ failure to make payment of the first instalment in the sum of R50 000.00 on 20 September 2012, on 29 October 2012 the plaintiff launched an application for judgment in terms of Uniform Rule 41(4).

[6] The first defendant delivered his answering affidavit on 7 November 2012 and supplementary answering affidavit on 8 November 2012. On 8 November 2012 the second defendant delivered an affidavit contending that she had not received service of the application because she no longer resided with the first defendant.

[7] At the hearing of the application before Ndita J on 16 November 2012, the application was postponed for hearing on the semi-urgent roll on 30 January 2013, with a time-table for the filing of further papers. The Order contains the following directions:

“3. The Second Defendant shall, to the extent that she elects to bring any interlocutory notice/s and/or application/s, deliver the said notice/s and/or application/s on or before Wednesday, 5 December 2012 (provided that where any particular interlocutory application

requires the prior delivery of a notice, the said interlocutory application may be brought after this date, provided that the required notice has been delivered on or before this date)"

4. The Second Defendant shall deliver her Answering Affidavit within 10 court days of Plaintiffs full compliance with any interlocutory

notice/s and/or order/s of this Court, save that in the event that the Second Defendant does not deliver any interlocutory notice and/or application on or before the date stipulated at paragraph 3 above, the Second Defendant shall file her Answering Affidavit on or before Friday, 14 December 2012.

[8] On 23 November 2012 the plaintiff delivered its replying affidavit to the answering and supplementary affidavits.

[9] On 4 December 2012 the second defendant delivered an application in terms of Rule 35(13) requesting that the discovery procedures provided for in Rule 35, shall apply to the Rule 41(4) application.

[10] On 5 December 2012 the second defendant delivered a notice in terms of Uniform Ruie 35(12).

[11] On 20 December 2012 the plaintiff delivered a notice in terms of Uniform Ruie 30(2)(b) requiring the defendants to withdraw their notices on the ground that the notices constitute an abuse of process. In consequence of the defendants’ failure to withdraw the notices, on 16 January 2013 the plaintiff brought an interlocutory application in terms of Uniform Rule 30(1), on an urgent basis, to set aside the Uniform Rule 35 notices.

[12] Thereafter, the defendants delivered their answering affidavit together with a counter-application to plaintiff’s Uniform Rule 30 interlocutory application, requesting compliance with the Uniform Rule 35(12) notice.

[13] At the hearing of the Uniform Rule 30(1) interlocutory application on 22 January 2013, Rogers A J made the following Order:

“1. The application by Investec, dated 16 January 2013, is postponed for hearing with the application in terms of Ruie 41(4) on the

semi-urgent roll on 30 January 2013.

2. The counter application of Mr and Ms Roberts, dated 18 January 2013, is postponed for hearing with the application in terms of Rule 41(4) on the semi- urgent roll on 30 January 2013.

3. Should Mr and/or Ms Roberts seek a postponement, they must bring an application for such postponement timeously.

4. The order, dated 16 November 2012, remains of full force and effect.

5. Mr and Ms Roberts file their Heads of Argument in the application in terms of Rule 41(4) by no later than 25 January 2013.

6. Costs stand over for determination at the hearing of the aforesaid applications. ”

[14] On the day following the date of the Order, the defendants launched a conditional application to postpone the proceedings on 30 January 2013 in the event that the interlocutory application in terms of Uniform Rule 30 is successful. The reason proffered for such conditional postponement is to grant the second defendant leave to deliver her answering affidavit to the Uniform Rule 41(4) application.

[15] At the hearing of the proceedings before me, I considered the following issues:

[16.1] The Uniform Rule 41(4) application;

[16.2] The Uniform Rule 35 interlocutory application together with the Rule 30 interlocutory application and counter-application;

[16.3] The application for postponement.

Uniform Rule 41(4) application

[16] The defendants’ first defence is that the plaintiff had not complied with the National Credit Act 34 of 2005 (“NCA”)

because he had not received the section 129 notification letter, as originally alleged in his answering affidavit in opposition to the plaintiff’s summary judgment application launched prior to the conclusion of the deed of settlement. In my view, this defence is devoid of merit because the plaintiff' alleged non-compliance with the NCA had become moot, given that the dispute in the summary judgment proceedings had become settled in terms of a deed of settlement agreement that was made an Order of Court.

[17] Mr Cutler, appearing for the defendants, submitted that a settlement agreement is an “incidental credit agreement' as defined in section 1 of the NCA and therefore the agreement has to comply with the procedures stipulated in the NCA. I am in agreement with the submission made by Mr Olivier, on behalf of the plaintiff, that a settlement agreement cannot be defined as an incidental agreement because no “account was tendered for goods and service” as defined in section 1.

[18] Another reason why, to my mind, this contention does not stand up to scrutiny is because the deed of settlement agreement was made an Order of Court and a court order can, by no means, be defined as a credit agreement (See: Investec Bank (Mauritius) Limited v Leo Gerard Mohan, Case No: 6713/2010, unreported judgment.)

[19] The defendants’ second defence is that the undertaking that he had made in his email dated 30 July 2012 to effect payment in terms of a new time-table, was dependent on him receiving incoming funds, which funds he had not received. In consequence, it is the defendants’ contention that they were not in breach of the settlement agreement.

[20] In my view, the correspondences exchanged between the plaintiffs attorney and the first defendant, do not support the first

defendant’s contention that the repayment proposal was conditional upon him receiving funds. The plaintiff gave to the defendants an indulgence to pay the arrears in terms of a new schedule of payment and the defendants once again, failed to effect payment as agreed. Plaintiffs attorney stated unequivocally in his email dated 30 July 2012 that his client accepted the first defendant’s repayment proposal “ without waiving any of its rights in terms of the deed of settlement'. The email furthermore states that “all the remaining terms of the deed of settlement (excluding clauses 3.1 and 3.2 as these clauses are amended by your offer below) remain valid, binding and enforceable".

[21] The third defence proffered by the defendants is that “there is at least a 32.45% likelihood' that the loan agreement and/or mortgage bond has been securitised. The process of securitisation entails a lender ceding its claims

under a loan for payment, to a special purpose vehicle. The lender then has funds available to make new loans. It is the defendants’

contention that the plaintiff lacks standing given the probability that the loan agreement has been securitised.

[22] The plaintiff has denied that the loan has been securities. To my mind, the defendants’ defence, amounts to speculation and therefore has no merit. In any event, as correctly submitted by Mr Olivier, the contention regarding the possible securitisation of the loan is a defence that relates to the original cause of action which has now been settled and made an Order of Court. For these reasons, I should grant the plaintiff the relief sought in the Uniform Rule 41(4) application.

Uniform Rules 35 and 30 interlocutory applications and counter-application

[23] In their Uniform Rule 35(12) notice the defendants request the following:

“With reference to the Replying Affidavit deposed to by Michelle Nainkin on 23 November 2012: the “documentation under my' control” referred to at paragraph 3 thereof."

[24] Paragraph 3 of the replying affidavit reads:

“The facts herein are within my personal knowledge unless the contrary appears from the context, and are both true and correct. Where I rely on information conveyed to me by other or information appearing from documentation under my control, I verily believe same to be true unless stated otherwise."

[25] Uniform Rule 35 (12) stipulates that:

“Any party to any proceeding may at any time before the hearing thereof deliver a notice as near as may be in accordance with Form 15 in the First Schedule to any other party in whose pleadings or affidavits reference is made to any document or tape recording to produce such document or tape recording for his inspection and to permit him to make a copy or transcription thereof Any party failing to comply with such notice shall not, save with the leave of the court, use such document or tape recording in such proceeding provided that any other party may use such document or tape recording."

[26] Form 15 reads as follows:

“TAKE NOTICE that the plaintiff (or defendant) requires you to produce for

his inspection the following documents referred to in your (declaration or

plea, or affidavit)"

[27] Uniform Rule 35(12) and Form 15 requires the listing of a document of which specific reference was made to in an affidavit or pleading. From a plain reading of paragraph 3 of the replying affidavit, no reference is made to a document or tape and therefore Uniform Rule 35(12) does not find application. In Penta Communication Services (Pty) Ltd \/ King and Another 2007 (3) SA 471 (C) at para 21, Bozalek J stated that:

“The provisions of Rule 35(12) exist for a specific purpose, and it is not a mechanism whereby a litigant can go behind the words of an affidavit or pleading and argue that, although there is no direct or even indirect reference to a document/s, such documents would in the ordinary course of events exist and must, if in the possession of the opposing party, be produced for inspection.

[28] I should therefore uphold the plaintiff’s interlocutory application in terms of Uniform Rule 30, and dismiss the defendants’

counter-application. In my view the use of this procedure in circumstances where it is clearly not appropriate, is unreasonable

and constitutes an abuse of process. To my thinking, I should make a costs order on a scale as between attorney and own client.

Application for conditional postponement

[29] Given that I have upheld the Uniform Rule 30 application, I now have to consider whether I should postpone these proceedings and grant leave to the second respondent to deliver her answering affidavit.

[30] It is trite that a court has a discretion to refuse a postponement and that such discretion must be exercised in a judicial manner, and not exercised capriciously or upon any wrong principle, but for substantial reasons (See: Erasmus Superior Court Practice Service 34, 2009, B1-p3Q6). In Madnitsky v Rosenberg 1949 (2) SA 392 (A) at 399 the Court expressed the view on the circumstances when proceedings should be postponed:

“No doubt a court should be slow to refuse to grant a postponement where the true reason for a party's non-preparedness has been fully explained, where his unreadiness to proceed is not due to delaying tactics, and where justice demands that he should have further time for the purpose of presenting his case. In the present case, however, it cannot be said that those requisites were satisfied and, in all the circumstances, I am not prepared to hold that the trial Judge did not exercise his discretion judicially."

[30] In my view, in terms of the Order given by Ndita J, the second defendant had to deliver her answering affidavit by 14 December 2012 because her interlocutory application in terms of Uniform Rule 35 cannot be regarded as a proper application, given my findings that it constituted an irregular step and also an abuse of process.

[31] In circumstances where the plaintiff had, in its interlocutory application in terms of Uniform Rule 30, clearly explained to the second defendant in what respect her application constituted an irregular step, she had sufficient time to deliver an answering affidavit, which she failed to do. I also take into account that the second defendant made full use of the opportunity to ventilate her defence in her opposition to the Uniform Rule 30 interlocutory application. For these reasons, I should not postpone the proceedings.

[32] I take note that paragraph 10 of the deed of settlement stipulates that in the event of any breach in the payments set" out in paragraphs 3 and 4 of the deed of settlement, the plaintiff’s recourse against the second defendant is strictly limited to her interest in the unit defined in paragraph 1.1. The remainder of paragraph 10 sets out the nature of the limitation in greater detail. However, the deed of settlement does not contain a paragraph 1.1. Consequently, I am unable to include this provision in the Order.

[33] For these reasons, I make the following Orders:

[1] Defendants pay to Plaintiff an amount of R2 324 038.13, plus interest at the rate of the Investec prime rate (currently 8,5% per year), less 1,6%, calculated daily and compounded monthly, from 25 October 2012 to date of payment.

[2] The following immovable properties consisting of units are declared executable:

[2..1] Section No 107 as shown and more fully described on Sectional Plan No SS459/1997, in the scheme known as West Side Studios in respect of the land and building or buildings situate at Cape Town, in the City of Cape Town, of which section the floor area, according to the said sectional plan, is measuring 150 square metres in extent; and an undivided share in the common property in the scheme apportioned to Section No 107 in accordance with the participation quota as endorsed on the said sectional plan.

Held by Deed of Transfer No ST10179/2004, subject to the conditions therein contained.

[2.2] Section No 24 as shown and more fully described on Sectional Plan No SS459/1997, in the scheme known as West Side Studios in respect of the land and building or buildings situate at Cape Town, in the City of Cape Town, of which section the floor area, according to the said sectional plan, is measuring 12 square metres in extent; and

an undivided share in the common property in the scheme apportioned to Section No 24 in accordance with the participation quota as endorsed on the said sectional plan.

Held by Deed of Transfer No ST10179/2004, subject to the conditions therein contained.

[2.3] Section No 33 as shown and more fully described on Sectional Plan No SS459/1997, in the scheme known as West Side Studios in respect of the land and building or buildings situate at Cape Town, in the City of Cape Town, of which section the floor area, according to the said sectional plan, is measuring 10 square metres in extent;

an undivided share in the common property in the scheme apportioned to Section No 33 in accordance with the participation quota as endorsed on the said sectional plan.

[3] Defendants pay Plaintiff’s costs, including the costs of the application in terms of Uniform Rule 41(4) and costs reserved therein.

[4] Defendants’ notice in terms of Uniform Rule 35(12), as well as their Notice of Motion and application, dated 4 December 2012, are set aside with Defendants to pay Plaintiff’s costs of the application to set same aside, including all costs reserved therein, on a scale as between attorney and own client.

[5] Defendants’ counter-application is dismissed with costs.

[6] Defendants’ conditional application for postponement is dismissed with costs.

R.M. NYMAN, AJ

ACTING JUDGE OF THE HIGH COURT