Nedbank Limited (Pty) Ltd v Foster and Another (616/2014) [2014] ZAECGHC 44 (30 May 2014)

SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE DIVISION – GRAHAMSTOWM

NOT REPORTABLE

CASE NO: 616/2014

In the matter between:

NEDBANK LIMITED (PTY) LTD Applicant

and

GAVIN DEREK FOSTER

First Respondent

DEBRA MARGARET FOSTER

Second

Respondent

JUDGMENT

REVELAS

[1] The plaintiff bank applies for summary judgment of R799 973.23 together with interest, costs and a declaratory order that four adjoining erven in Cathcart (the property) be specially executable. The plaintiff had concluded a loan agreement with the defendants on 30 October 2008 for the sum of R1 000 000.00 to enable the defendants to purchase the property.

[2] A covering mortgage bond was registered over the property as security for the defendants indebtedness to the plaintiff in the amount of R1 750 000.00. The defendants fell in arrears with their bond repayments. In terms of the loan agreement (a credit agreement) the whole amount out outstanding would become due and payable if the defendants defaulted on their bond instalments. The plaintiff’s cause of action is verified in an affidavit filed by the plaintiff and deposed to by Ms VN Ndlovo its Manager: Recoveries.

[3] The defendants also filed an affidavit deposed to by the first defendant on their behalf, resisting summary judgment on the basis that they are not indebted to the plaintiff in the amount claimed by it, that they indeed have a bona fide defence and did not enter their notice to defend the action instituted against them purely as a delaying tactic.

[4] The defendants rely on the following averments made by the first defendant: On 23 November 2011 they concluded an agreement of sale with six persons in terms whereof they sold the property. The agreement of sale provided that the purchasers were given occupation of the property and use of the movables on it at an occupational rental of R15 500.00 per month.

[5] The plaintiff was aware of this arrangement. The agreement was however subject to the condition that the purchasers obtain the necessary funds from a financial institution to pay the full purchase price and that registration of transfer of the property takes place in their name. The purchasers paid monthly instalments in the amount of R15 500.00 (R500.00 more than the defendants were liable for) to the plaintiff. Therefore, the defendants dispute the plaintiff’s averment that the outstanding arrears on their bond account was R102 558.60 as at 13 December 2013, as stated in the plaintiff’s certificate of balance dated 7 January 2014. The purchasers gave notice in November 2013 that they were vacating the property, because they could not obtain the finance necessary to purchase the property. The defendants do not say when the purchasers stopped paying their occupational rental to the plaintiff.

[6] It is trite that the plaintiff’s certificate of balance is proof of the extent of the defendants’ indebtedness. In the absence of clear proof to the contrary, the defendants are unable to prove the extent of their indebtedness. This aspect was in any event not pursued with any vigour by them when the matter was argued on their behalf.

[7] The defendants’ second point was that the plaintiff, well-knowing that the defendants no longer lived on the property,

situated 51 Carnarvon Street, Cathcart, nonetheless dispatched in notices in terms of section 129 of the National Credit Act, 34 of 2005 (‘the Act’), to the aforesaid address. The combined summons was also served at that address. Accordingly

the defendants were unable to avail themselves of the rights accorded to consumers under the Act.

[8] The track and trace report filed in respect of the section 129 notices reflects that the notices were received at the Cathcart Post Office by a person named ‘Foster’ which could only have been one of the defendants. In any event, the chosen domicilium indicated in the loan agreement is the aforesaid address. The defendants did not notify the plaintiff of their change in address as they were required to do in terms of the credit agreement in question. Accordingly, the point raised in this regard does not constitute a bona fide defence.

[9] On 1 February 2014 (after summons was issued) the defendants attempted to sell the property for a second time, by concluding an agreement of sale with two persons referred to as ‘the second purchasers’. The defendants contend that the plaintiff’s attorneys agreed in writing on behalf of the plaintiff, on 21 February 2014, ‘to accept the extinguishing of our loan from the proceeds of the sale’. The letter from the plaintiff’s attorneys on which the defendants rely, is not an acceptance of ‘extinguishing of [the] loan’. It is a letter written in the normal cause of sales transaction of immoveable property over which a bond is registered. It is clearly not a novation of the earlier agreement, because there was no agreement between the plaintiff and the new purchasers and the defendants were still in arrears as claimed in the summons issued on 20 February 2014, but signed on 29 January 2014. The defendants have not furnished any guarantees to the plaintiff’s attorneys as required in latter’s letter of 21 February 2014, to them.

[10] The plaintiff was aware of this deed of sale which had not lapsed yet (in terms of its suspensive clause), when the application for summary judgment was brought. The plaintiff did not disclose this second sale in its affidavit filed in support of its application for summary judgment. On the contrary, Ms Ndlovo stated therein that ‘to the plaintiff’s knowledge the immoveable property is currently occupied by the defendants’. This statement is factually incorrect and irresponsible in the circumstances.

[11] It is clear that the defendants’ debt was never extinguished and that the defendants are at this point still liable for repayment of the loan. They seem to be unable to repay the loan, save by selling the property. There is however, no indication that the current purchasers are able to pay the purchase price or that they took any steps to take transfer.

[12] It was submitted on the defendant’s behalf that if I decide to grant summary judgment against the defendants, I should not declare the property specially executable because such an order would be unjust and prejudicial to the defendants in the circumstances. In terms of the agreement of 1 February 2014, the two purchasers had ninety days to pay the purchase price, in other words by 2 May 2014. There is no indication on the defendants’ papers that the purchase price was paid by this date. The agreement has now lapsed and the defendants are liable to the plaintiff in the amount claimed by it in the summons.

[13] The defendants’ agreement with new purchasers is of no avail to the plaintiff if the suspensive condition therein was never met. The application for summary judgment was served on 31 March 2014, two days before the agreement lapsed on 2 May 2013. If the purchasers paid the purchase price and that fact was revealed in the opposing papers, the submission regarding the defendants’ prejudice would have had merit. As matters stand presently, the plaintiff would be prejudiced because at this point there is no agreement of sale in place.

[14] The defendants have no bona fide defence and have not shown why they are not liable to repay their debt, or why the property should not in these circumstances be

declared specially executable. However, the plaintiff was aware that the defendants were not in wilful default in that they tried since November 2011 to sell the property on two occasions, albeit unsuccessfully. The plaintiff also brought the application

before the second deed of sale had lapsed. These facts were not disclosed and should have been. As shown above, the plaintiff filed an affidavit containing the incorrect statement that the defendants were living on the property. In these circumstances the plaintiff is in my view, not entitled to a costs order in respect of the application for summary judgment or attorney and client costs as claimed in the summons.

[15] In the circumstances, the following order is made:

[16] Summary judgment is granted against she defendants in this action for:

(a) Payment of R799 973.23.

(b) Interest on the aforesaid amount at the rate of 8.50% per annum from 14 December 2013, calculated daily and compounded monthly, to date of payment.

(c) The immovable property described as […..] held by deed of transfer No T […..] is declared specially executable and, to this end, that a Writ of Execution be issued as envisaged in terms of Rule 46 (1)(a) of the Uniform Rules of Court.

(d) The defendants are to pay the plaintiff’s costs, excluding the costs pertaining to the application for summary judgment, on a scale as between party and party.

________________

E REVELAS

Judge of the High Court

Counsel for the Plaintiff: Adv M Mpahlwa

Grahamstown

Instructed by:

Bate Chubb & Dickson Inc.

c/o Netteltons Attorneys, Grahamstown

Counsel for the Defendant’s: Adv KL Watt

Instructed by: Brian Cutler Attorneys

c/o Whiteside Attorneys

Date Heard:

23 May 2014

Date Delivered:

30 May 2014