Standard Bank of South Africa Ltd v Pool and Another (1270/2009) [2009] ZAKZDHC 42 (29 September 2009)

8

IN THE KWAZULU-NATAL HIGH COURT, DURBAN

REPUBLIC OF SOUTH AFRICA

CASE NO: 1270/2009

In the matter between:

STANDARD BANK OF SOUTH AFRICA LIMITED Plaintiff

and

JOHANNES HENDRIK JACOBUS POOL First Defendant

ANGELIQUE JANINNE POOL Second Defendant

JUDGMENT

MSIMANG, J:

[1] The plaintiff is a Bank registered as a credit provider in terms of Section 40 of the National Credit Act July 2005. On 26 January 2009 and by means of a simple summons, the plaintiff instituted an action foreclosing on a certain mortgage bond concluded between the plaintiff on the one hand and the defendants, who are man and wife, on the other, alleging that the balance of the capital amount of the bond, together with interest, had become due and payable owing to non-payment of at least one instalment.

[2] Entry of appearance by the defendants was met with plaintiff’s declaration wherein the plaintiff averred, inter alia, that -

“4 The material, express alternatively implied alternatively tacit terms of the mortgage bond are inter alia :

the defendants inter alia acknowledged that they are indebted to the plaintiff in the amount of R733 000,00, arising from and being in respect of monies loaned and advanced by the plaintiff to them; the defendants acknowledged that they are indebted to the plaintiff for interest on all amounts secured by the mortgage bond calculated in the manner and at the rate agreed upon between the defendants and the plaintiff or failing such agreement, in the manner and at the rate usually required by the plaintiff for the kind of transaction in question; the defendants were obliged to pay certain monthly instalments in reduction of the total sum owing from time to time.

……………..”

[3] Attached to the declaration is a copy of the mortgage bond upon which the plaintiff relied.

[4] The mortgage bond is couched in the usual form containing the terms creating a real right of security by the defendants in the immovable property in favour of the plaintiff as well as the terms upon which the defendants acknowledge their indebtedness to the plaintiff in the sum of R733 000,00 and in the additional sum of R183 250,00, arising from any cause, including, but not restricted to, certain causes which are specified in the document.

[5] On 8 April 2009 the defendants filed a notice in terms of Rule 23(1), averring that plaintiff’s declaration was vague and embarrassing or, alternatively, that it failed to disclose a cause of action and calling upon the plaintiff to remove the cause of their complaint within 15 days of the plaintiff’s receipt of the notice and admonishing that, should the plaintiff fail to do so, the defendants would except to the declaration.

[6] Defendants’ causes of complaint as set out in the said notice are as follows :-

“1. The plaintiff’s cause of action is for payment of the sum of R796 720,43;

Plaintiff alleges that the defendants liability rises from the mortgage bond annexed to the Declaration marked ‘SB1’ to ‘SB9’, and further that the defendants have breached the mortgage bond by failing to pay instalments due in terms of such bond; The mortgage bond annexed to the plaintiff’s Declaration in fact contains no term requiring the defendants to pay any instalment

whatsoever to the plaintiff; In the circumstances the plaintiff’s Declaration fails to disclose a cause of action; In addition to the above, the plaintiff has also pleaded that the defendants acknowledged being indebted to it as a result of money loaned and advanced by it to the defendants, and that the mortgage bond was registered as security for the defendants’ obligations in terms of such loan; The plaintiff has however failed to plead the terms of such loan agreement relied upon, allege a breach of the loan agreement, or annexe a copy of the loan agreement to the Declaration; In the circumstances the plaintiff’s Declaration is vague and embarrassing, alternatively fails to disclose a cause of action.”

[7] In response, on 23 April 2009, the plaintiff filed a reply maintaining that its declaration established a cause of action and declaring that the same was not vague and embarrassing. The message conveyed in the said response must have been evident to the defendants for, on 7 May 2009, they excepted to the declaration, citing the same grounds.

[8] Dealing with the ground that the mortgage bond annexed to the declaration contains no term requiring the defendants to pay any instalment to the plaintiff, it must be borne in mind that in paragraph 4 of the declaration that clause is preceded by the following introductory clause :-

“The material, express alternatively implied alternatively tacit terms of the mortgage bond are ……”

[9] It is trite that :-

“….. an excipient has the duty to persuade the Court that upon every interpretation which the particulars of claim can reasonably bear, no cause of action is disclosed …..” 1

[10] In paragraph 4 of the Declaration it is pleaded that the clause requiring the defendants to pay monthly instalments in reduction of the total amount owing, is expressly set out or, alternatively, implied, or, further alternatively, that it is a tacit term of the mortgage bond.

[11] In Administrator (Transvaal) v Industrial & Commercial Timber & Supply Co Ltd 2 Wessels ACJ made the following remarks regarding an implied term of a contract :-

“It is clear law that the Court will not presume that a term or condition is implied in a contract or grant unless the contract itself and the surrounding circumstances clearly show that both parties must have entered into the transaction on the understanding that the implied term formed part of the contract or grant.”

[12] The Honourable Acting Chief Justice referred to the exposition of the rule in a number of English decisions, concluding that the exposition of the rule in those decisions has been accepted by the then Appellate Division. One of the expositions of the rule referred to with approval by the Acting Chief Justice was the one of Scrutton, LJ, in the English case of Reigate v Union Manufacturing Co., where the exposition was set out as follows :-

“A term can only be ‘implied’ if it is necessary in the business sense to give efficacy to the contract. That is if it is such a term that it can confidently be said that at the time the contract was being negotiated someone had said to the parties ‘what will happen in such a case’ they would both have replied ‘of course so and so will happen: we do not trouble to say that it is clear’. Unless the Court comes to some such conclusion and that, it ought not to imply a term which the parties themselves have not expressed.” 3

[13] This formulation of the rule has since been accepted in the subsequent decisions of the courts of this country. 4

[14] Returning to the facts of the present case, from the context of the mortgage bond, it is evident that there is an amount owing to the plaintiff by the defendants, that the balance owing attracted interest in the manner and at the rate agreed upon between the parties, that the defendants were expected to repay the amount owing and that the security over immovable property was created in favour of the plaintiff in respect of that amount.

[15] It is therefore clear from the mortgage bond itself that, at the time of the negotiations, had the parties been asked whether the capital amount would be repaid in instalments, their response would have been in the affirmative. This term is necessary in the business sense to give efficacy to the mortgage bond. I have accordingly been driven to the conclusion that paragraph 3 of the particulars of claim is susceptible to the interpretation that includes that implied term and therefore that the defendants’ exception based on this ground is bad.

[16] It is true that, in its declaration, the plaintiff has pleaded that the defendants acknowledged their indebtedness to it in the mortgage bond in the amount claimed in the summons and that the said amount is in respect of monies loaned and advanced by the plaintiff to the defendants.

[17] It is also true that, in its declaration, the plaintiff has not pleaded the term of the antecedent loan agreement between the parties. The reason why the plaintiff has not done so is clear, namely, that in this action it has decided to rely on the acknowledgment of indebtedness by the defendants as contained in the mortgage bond.

[18] That it is entitled to do so is clear from the following passage quoted from the decision in Thienhaus, NO v Metje & Ziegler Ltd and another :-

“Clearly a mortgage bond can be utilized both as an instrument of hypothecation and as a record of the terms and conditions of the obligation in respect of which the hypothecation is to create a security; in addition it is a matter of common and usual custom in the drafting of bonds to incorporate therein an unqualified admission of liability by the mortgagor. The reason therefor is, however, certainly not that such an acknowledgment is required for the validity of the bond as a means of creating a real right by hypothecation in favour of the creditor. The origin and the prime purpose of the custom is the facilitation of the obtaining of a quick and easy remedy, such as provisional sentence, against the mortgagor in case of his default.” 5

[19] It must therefore follow that defendants’ exception based on this ground must also fail.

Defendants’ exception is accordingly hereby dismissed with costs.

For the Plaintiff: Adv. D Ramdhani (instructed by Strauss Daly Incorporated)

For the Defendant: Adv. S Hoar (instructed by McKenzie Dixon Attorneys)

Date of hearing: 25 August 2009

Date of Judgment: 29 September 2009

1 Francis v Sharp and others 2004(3) SA 230 (C) at 237 G;

2 1932(AD) 25 at 31;

3 Ibid. at 32-33;

4 See, for example, Wilkens NO v Voges 1994(3) SA 130 (AD) at 142 C-E; Standard Bank of SA Ltd v Durban Security Glazing (Pty) Ltd 2000(1) SA 146 (D) at 161 G-H;

5 1965(3) SA 25 (AD) at 31.