Standard Bank of SA Limited v Twala Hot Spares & Filling Station (Pty) Ltd and Another (3026/22;3042/22) [2023] ZAMPMBHC 56 (27 October 2023)

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

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

(MPUMALANGA DIVISION, MBOMBELA)

CASE NO: 3026/22

(1) REPORTABLE:NO

(2) OF INTEREST TO OTHER JUDGES: NO

(3) REVISED: YES

DATE: 27/10/2023

SIGNATURE

In the matter between:

STANDARD BANK OF SA LIMITED

APPLICANT

and

TWALA HOT SPARES & FILLLING STATION (PTY) LTD

1ST RESPONDENT

PATSON NKUYUMU TWALA

2ND RESPONDENT

AND

CASE NO: 3042/22

STANDARD BANK OF SA LIMITED

APPLICANT

PATSON NKUYUMU TWALA t/a

RESPONDENT

WALA ARCONHOEK MAIN ROAD FILLING STATION

JUDGMENT

GUMEDE AJ

1. Before me are two similar applications, both involving Standard Bank as the applicant and Mr Patson Nkuyumu Twala (“Mr Twala”) as the respondent in both matters except that in the first case, Mr Twala is cited as a second respondent together with a registered

company, Twala Hot Spares and Filling Station (Pty) Ltd, in which he is a shareholder. In the second application, Mr Twala is sued in his personal capacity.

2. The applications involve instalment sale agreements concluded between the applicant and the respondents. The agreements with Mr Twala in his personal capacity are subject to the provisions of the National Credit Act (“NCA”). The NCA is however not applicable to the agreements with Twala Hot Spares and Filling Station (Pty) Ltd for reasons that the respondent in that application is a juristic person with a turnover exceeding the threshold set by the Act.[1] These agreements were concluded in September 2020, in terms of which, the applicant issued finance to the respondents, for the purchase of various assets.

3. The facts in both applications are mostly common cause. In both cases, the respondents admit that they are indebted to the applicant. They also admit that they have failed to honor the agreed payment terms in the relevant agreement but raise a defense of supervening impossibility which was allegedly occasioned by covid 19 pandemic.

4. The Respondents submit that the covid pandemic had unforeseen adverse effect on their businesses of cross border transportation of fuel, which negatively impacted their ability to comply with their contractual obligations.

5. The Respondents further submit that they have made some payments towards the arrears and have secured new business which place them in a favorable position to honor their obligations in the future. For that reason, the respondents argue that the contracts should not be cancelled but reinstated.

6. According to the applicant, the doctrine of impossibility of performance does not apply in these applications as the performance was not rendered impossible by the pandemic. Furthermore, applicant submits that the respondents were given an opportunity in terms of section 129 of the National Credit Act where applicable, to remedy the default by, inter alia, referring the matter to a debt counsellor, to develop and agree on a payment plan. The company respondent was also furnished with notices of debt (letters of demand) as well as the notices of cancellation. The respondents chose not to remedy the defaults.

7. As a result of the breach of contract as well as the failure to respond the notices of debt and cancellation notices, the applicant cancelled the agreements. The applicant contends that the belated payments which were made by the respondents after the cancellation of the agreements cannot revive the agreements. The applicant therefore seeks confirmation of the cancellation of the agreements as well as the return of the financed assets.

ISSUES FOR DETERMINATION

8. Whether the doctrine of impossibility of performance is applicable herein.

9. Whether the instalment sale agreements can be reinstated after cancellation.

APPLICABLE LEGAL PRINCIPLES

Reinstatement

10. Section 129(3) of the National Credit Act provides that subject to subsection (4), a consumer may at any time before the credit provider has cancelled the agreement, re-instate a credit agreement that is in default by paying to the credit provider all amounts that are overdue, together with the credit provider’s permitted default charges and reasonable costs of enforcing the agreement up to the time of re-instatement.

11. Subsection (4) provides that a consumer may not reinstate an agreement after it has been validly terminated in accordance with section 123.

12. In the personal application against Mr Twala, the applicant contends that it sent the required NCA termination notices to the respondent. The respondent failed to respond thereto and on 31 March 2022, the applicant proceeded to cancel the agreements.

13. In his answering affidavit, the respondent admits these allegations but contends that his failure to pay was not willful but due to the aforesaid supervening impossibility.

14. The difficulty with the respondent’s contention is that he was given an opportunity to renegotiate the payment terms. The respondent failed to take up the various options as set out in section 129(1)(a) of the NCA.

15. In the premises, the agreement between the parties was validly cancelled by the applicant on 31 March 2022 and in terms of section 129(4) of the NCA, agreements can no longer be reinstated.

16. It is trite that the agreements with the juristic respondent[2] were also validly cancelled on 31 March 2022 in terms of common law, by virtue of the notice of cancellation. Likewise, these

agreements can no longer be reinstated.[3]

Impossibility of performance

17. Impossibility of performance is a legal concept which allows a party to be released from a contract if unforeseen circumstances prevent the performance of that contract.

18. In Transnet t/a National Ports Authority v Owner of mv Snow Crystal, the court held that as a general rule, impossibility of performance brought about by vis major will excuse performance of a contract, but will not always do so. In each case it is necessary to look to the nature of the contract, the relation of the parties, the circumstances of the case, and the nature of the impossibility invoked by the respondents, to see whether the general rule ought, in the particular circumstance of the case to be applied.

19. In this case, the respondent contends that it acquired the assets, which are commercial vehicles, for the purposes of transportation of fuel within the Republic of South Africa and Mozambique. The respondents further contend that as a result of the covid pandemic, there were restrictions on cross border transportation, resulting in respondents defaulting on the monthly payments to the applicant.[4]

20. The difficulty with the respondents’ contention is that, these agreements were concluded in September 2020. The covid pandemic had already had its biggest impact in March until May 2020, during the Level 5 (hard) lockdown.

21. The respondents failed to provide reasons why they entered into agreements during lockdown[5] when the boarders were already closed, if they now complain that the closed boarders prevented their performance under these agreements.

The boarders had been closed since March 2020.

22. The respondents also fail to disclose when the alleged restrictions on fuel cross border transportation were lifted.

23. The respondents argue that in the case of Freestone Property Investments (Pty) Ltd v Remake Consultants and Another[6], the court upheld a reliance on covid 19 pandemic as a supervening impossibility. That case involved a lease of commercial

premises in a shopping centre where both parties could not comply with their respective obligations in terms of the lease agreement.

Due to the supervening impossibility that was found to exist as a result of the covid lockdown, the lessor was excused from tendering

occupation and lessee from paying rent. For that reason, the defence of supervening impossibility was upheld.

24. The current cases are distinguishable from Freeston Property Investments in that they involved the instalment sale agreements where the applicant has already fulfilled its obligations by placing the respondents in possession of the sold items. The respondents retained possession of the sold items but failed to comply with their

obligations. There is no evidence in these cases, that the respondents’ inability to pay the applicant, stems from the covid pandemic.

25. In Hennops Sports (Pty) Ltd v Luhan Auto (Pty) Ltd[7], the court held that a commercial impossibility does not give rise to the principle of supervening impossibility. A party cannot be discharged from performing a contract simply because it is non-profitable for that party.

26. In my considered view, the respondents who concluded instalment sale agreements in September 2020, during the height of lockdown are not excused from paying the agreed monthly instalment to the applicant, for reason that the very same lockdown made it impossible for them to perform under these agreements. The applicant was entitled to cancel the agreements.

27. In the result, I make the following order:

28. In case number 3026/2022 against Twala Hot Spares and Filling Station (Pty) Ltd:

1. The cancellation of the Instalment Sale Agreements 049799660002 and 049799660003, between the parties are confirmed.

2. The respondents are ordered to return to the applicant the sold items, to wit, 2020 GRW Aluminium 50000LT 4 Comp Tank, Chassis number A[...] as well as a 2020 GRW Aluminium 50000LT 4 Comp Tank, Chassis number A[...].

29. In case number 3042/22 against Patson Nkuyumu Twala t/a Twala Acornhoek Main Road Filling Station:

1. The cancellation of the Instalment Sale Agreements 68941277003, 68941277005, 68941277006 and 68941277007 between the parties are confirmed.

2. The respondents are ordered to return to the applicant the sold items, to wit, 2020 GRW Aluminium 50000LT 4 Comp Tank, Chassis number A[...], 2020 Mercedes Benz Actros 2645LS/33, chassis number A[...], 2020 Mercedes Benz Actros 2645LS/33, chassis number A[...] and 2020 Mercedes Benz Actros 2645LS/33, chassis number A[...]

30. In respect of both the above applications:

1. The respondents are ordered to pay cost

2. Upon the return of each of the vehicles described in paragraph 30 subparagraph (2) and 31 subparagraph (2) above:

2.1 The applicant shall, within 10 business days from the date of receiving return of the vehicle, give the respondents written notice:

(a) setting out the estimated value of the returned vehicle;

(b) informing the respondents that it intends to sell the returned vehicle as soon as practicable for the best price reasonably

obtainable; and

(c) informing the respondents that the price obtained for the returned vehicle upon its sale may be higher or lower than the estimated

value.

2.2 The applicant shall sell the returned vehicle as soon as practicable for the best price reasonably obtainable.

2.3 After selling the returned vehicle, the applicant shall:

(a) credit or debit the respondents with a payment or charge equivalent to the proceeds of the sale less any expenses reasonably incurred by the applicant in connection with the sale of the goods; and

(b) give the respondents a written notice stating the following:

(i) the settlement value of the agreement immediately before the sale;

(ii) the gross amount realised on the sale;

(iii) the net proceeds of the sale after deducting the applicant’s permitted default charges, if applicable, and reasonable costs allowed under paragraph (a); and

(iv) the amount credited or debited to the respondents’ account.

2.4 The notice referred to in paragraph 2.3(b) above shall state that:

(a) If the respondents dispute the amount of the proceeds of the sale or any other charges or expenses incurred, they may engage directly with the credit provider in relation thereto.

(b) If the engagements referred to in (a) do not yield, from the respondents’ perspective, the desired result, they may, refer

the dispute to the Tribunal or submit a complaint in terms of section 136 of the NCA to the National Credit Regulator.

2.5 If an amount falls to be credited to the respondents’ account which exceeds the settlement value immediately before the sale of the returned vehicle, the applicant must remit such excess amount to the respondents together with the notice referred to in paragraph 2.3(b) above.

2.6 If an amount is credited to the respondents’ account which is less than the settlement value before the sale, or an amount is debited to the respondents’ account, the applicant may demand payment from the respondents of the remaining settlement value in the notice referred to in paragraph 2.3(b) above.

2.7 If the respondents fail to pay the amount demanded in terms of paragraph 2.6 above within 10 business days of receiving such demand, the applicant may commence proceedings against the respondents for any outstanding damages.

2.8 The respondents shall pay interest at the rate applicable to the credit agreements, on any outstanding amount demanded by the applicant in terms of paragraph 2.7 above, from the date of the demand until the date of payment of the outstanding amount.

2.9 In the notice referred to in para 2.4, the respondents must also be notified, if applicable, that if there is a dispute in relation to any of the matters set out in 2.5-2.8, the mechanisms referred to in 2.4(a)–(b) are at their disposal.

3. Part B of the application is postponed sine die.

4. The applicant shall aver and prove in its action for any outstanding damages in terms of Part B of the application, that it has complied with the requirements set out in paragraph 2 above.

Z GUMEDE

ACTING JUDGE OF THE HIGH COURT OF SOUTH AFRICA

MPUMALANGA DIVISION, MBOMBELA

This judgment was handed down electronically by circulation to the parties and/or parties’ representatives by email. The date and time for hand-down is deemed to be 27 October 2023 at 10:00.

APPEARANCES

For the applicant: CL MARKRAM JOOSTE Instructed by: STRYDOM BRITZ MOHULATSI INC, PRETORIA For the Respondent: KGAMA SHAI Instructed by: VUSI SEGODI ATTORNEYS, MBOMBELA Date of hearing: 25 MAY 2023 Date of judgment: 27 OCTOBER 2023

[1] Sections 6 & 7 of the NCA

[2] Twala Hot Spares and Filling Station PL

[3] Fa, para 15.10 and 15.11

[4] AA, para 6

[5] In September 2020

[6] 2021 (6) SA 470 (GJ)

[7] 2022 JDR 3763 (GP), para 23-24