Standard Bank of South Africa v Moeketsi and Another (2166/07) [2018] ZANWHC 53 (6 November 2018)

IN THE HIGH COURT OF SOUTH AFRICA

NORTH WEST DIVISION, MAHIKENG

CASE NO: 2166/07

In the matter between:

STANDARD BANK OF SOUTH AFRICA Plaintiff

And

JAN MOKGAKELE MOEKETSI

1st Defendant

KABELO PRUDENCE MOEKETSI

2nd Defendant

JUDGMENT.

GURA J:

Introduction

[1] The plaintiff instituted an action against both defendants in which it claims:

1.1 Payment of the sum of R311 657.47 being the balance of the principal debt together with finance charges thereon in respect of money lent and advanced by the plaintiff to the defendants pursuant to mortgage bonds no.B90872/2004 and B3951/2006 passed by the defendants in favour of the plaintiff, registered in the Deeds Registry at Pretoria on 10 August 2004 and on 10 January 2006 respectively and hypothecating as a first and second mortgage, the sum claimed now being due and payable in terms of clause 12.1 of the bond by reason of the defendant’s failure to pay on demand the instalments due under the bond.

1.2 Interest on sum mentioned in paragraph 1 at the rates of 12.70% per annum from 21 September 2007 to date of payment, the said rate/s of interest and the date/s from which such interest is payable having been determined by the plaintiff in terms of clause 3.2 of the bond, such interest to be reckoned on daily balance and capitalised monthly in arrear in terms of clause 3.4 of the bond.

1.3 An order declaring the said property executable for the said sum as contemplated by the provisions of Section 26(3) of the Constitution of the Republic of South Africa, Act 108 of 1996, the facts relied upon by the plaintiff, which facts appear from prayer 1.1 above, entitling the plaintiff to the order sought;

1.4 Cost of suit on the scale as between attorney and client in terms of clause 2.4 of the bond.

The loan agreement

[2] Around 12 July 2004 and at Pretoria the plaintiff, duly represented by an authorised representative, and the first and second defendants, both acting in their personal capacities, concluded a written agreement of loan (the “first loan agreement”), in terms whereof the plaintiff loaned to the defendants an amount of R243 000.00 (Two hundred and forty three thousand rand).

[3] A copy of the written agreement of loan consisting of the letter of grant, together with annexures thereto and terms of the condition of the loan secured by a mortgage bond, was annexed to the plaintiff’s declaration marked Annexure “A”.

[4] Around 21 November 2005 and at Pretoria the plaintiff, duly represented by an authorised representative, and the Defendants, both acting in their personal capacity, concluded a further written agreement of loan (the “second loan agreement”), in terms whereof the plaintiff loaned to the defendants a further amount of R57 000.00 (Fifty seven thousand rand).

[5] The second loan agreement consisted of a letter of grant, together with annexures thereto and terms and conditions of the loan secured by a mortgage bond. The plaintiff is unable to locate a copy of the aforesaid letter of grant, but annexed to the papers herein a copy of the written terms and conditions of the loan secured by a mortgage bond, signed by the defendants, marked Annexure “B”.

[6] The relevant express, implied or tacit terms of loan agreements are similar and are as follows:

6.1 The plaintiff loaned to the defendants the amounts as stipulated in respect of loan agreements.

6.2 The defendants are liable for interest on the principal debt, as specified in the respective loan agreements, at the variable interest rate prescribed therein (11.5% per annum at the time).

6.3 The defendants had to repay the principal debt, together with interest, in monthly instalments as specified in the respective loan agreements.

6.4 The defendants agree that certificates signed by any of the plaintiff’s mangers, whose appointment need to be proved, would on its mere production constitutes prima facie proof of the amount due to the plaintiff at any time, the fact that the debt is due and payable, the rate of interest payable and the date from which the interest is calculated.

6.5 Should the defendants fail to observe or perform any of the provisions of the loan agreements or fail to pay any sum legally claimable by the plaintiff, or fail to perform any obligation on the due date or at all, the outstanding balance due in terms of the loan agreements would become immediately due and payable in full and the plaintiff would become entitled to institute proceedings for the recovery thereof.

The immovable property

[7] At all relevant times hereto the defendants became and remained the owners of the following property:

Erf 7812 Mabopane Unit M Township

Registration Division J.R.,Province of North West

Measuring 308 square metres

Held by Deed of Transfer T104860/04

(Hereinafter referred to as “the property”)

The mortgage bonds

[8] On or about the 10 August 2004 the defendants caused a first mortgage bond, Bond number B90872/04, to be registered as continuing covering security in favour of the plaintiff over the immovable property of the defendants referred to in paragraph 7 supra. A copy of the mortgage bond was annexed to the applicant’s papers as Annexure “C”.

[9] On or about 10 January 2010 the defendants caused a second mortgage bond, Bond number B003951/06, to be registered as continuing covering security in favour of the plaintiff over the immovable property of the defendants referred to on paragraph 6 supra. A copy of the mortgage bond was annexed o the applicant’s declaration marked Annexure “D”.

[10] The salient terms of the aforesaid mortgage bonds are similar and provides as follows:

10.1 In terms of the first mortgage bond the defendants declared themselves to be lawfully indebted and bound to the plaintiff in the sum of R243 000.00 together with the additional amount of R60 750.00 in respect of money lent and advanced to the defendants by the plaintiff.

10.2 In terms of the second mortgage bond the defendants declared and themselves to be lawfully indebted and bound to the plaintiff in the sum of R57 000.00 together with the additional amount of R14 250.00 in respect of money lent and advanced to the defendants by the plaintiff.

10.3 The defendants waive any right to rely on any of the legal exceptions non numeratae pecuniae, non causa debiti, errore calculi,deduobus vel pluribus res debendi.

10.4 The defendant agreed that certificate signed by any of the plaintiff’s managers, whose appointment need not be proved, would on its mere production constitute prima facie proof of the amount due to the plaintiff at any time, the fact that he debt is due and payable, the rate of interest payable and the date from which the interest is calculated.

10.5 Should the defendants fail to observe or perform any of the provisions of the mortgage bonds or fail to pay any sum legally

claimable by the plaintiff, or fail to perform any of the obligations on the due date or at all, all amounts secured by the mortgage bonds would become immediately due and payable in full and the plaintiff would become entitled to institute proceedings for the recovery thereof and for an order declaring the mortgaged property executable.

[11] The plaintiff complied with its obligations in terms of the agreements of loan by inter alia advancing to the defendants the amounts stipulated therein and referred to herein. On the other hand, the defendants acted in breach

of their obligations in terms of the loan agreements.

11.1 The defendants failed to pay the amounts due to the plaintiff, and have persisted with such breach, notwithstanding demand in terms of the provisions of the loan agreements.

11.2 In the premises all amounts secured by the mortgage bonds became due and payable and plaintiff became entitled to institute proceedings for recovery thereof and an order declaring the mortgage property executable.

11.3 On or about 21 September 2007 the defendants indebtedness to the plaintiff amounted to R311 557.47 together with interest at the rate of 12.7% per annum calculated from 21 September 2007 to date of payment, as appears from a certificate of balance dated the 21st of September 2007,signed by a manager of the plaintiff.

The National Credit Act.

[12] The plaintiff has complied with the provisions of the National Credit Act, Act 34 of 2005 as amended, in particular sections 129(1) and 130(1)(a) thereof. A copy of the notice dispatched to the defendants was attached to the summons as Annexure “F1”. The defendants have been in default for more than 20 (Twenty) days in respect of their obligations towards the plaintiff, prior to plaintiff instituting action against them, and more than 10 (ten) days have lapsed since delivery of the notice in terms of section 129 of the National Credit Act.

[13] In the section 129 notice the plaintiff proposed to the defendants that they refer the loan agreements to a debt councillor, alternative dispute resolution agent, consumer court or ombudsman with jurisdiction, with the intention that the parties resolve any dispute under the agreement or develop and agree on a plan to bring the payments under the agreement up to date.

[14] There is no matter arising under the home loan agreements that is pending before a debt councillor, an alternative dispute resolution agent, consumer court or ombudsman with jurisdiction and this matter has not been brought before the Court in circumstances envisaged in section 130(3)(c) of the National Credit Act. The defendants rejected the plaintiff’s proposals in that they dispute the validity of the loan agreements.

[15] To the plaintiff’s knowledge.

15.1 the property sought to be declared executable was not purchased by means of or with the assistance of a state subsidy;

15.2 the debt was incurred by the defendants for the purpose of purchasing the property and the property is their primary residence;

15.3 the defendants have been in arrears since September 2007 and remain in arrears. It is unlikely that the defendants will have means of satisfying the arrear amount within a reasonable period of time, without the plaintiff having to execute against the property.

15.4 the defendants have been in arrears since September 2007 and remain in arrears. It is unlikely that the defendants will have means of satisfying the arrear amount within a reasonable period of time, without the plaintiff having to execute against the property.

15.5 The plaintiff did draw the defendants’ attention to the provisions of Section 26(1) and 26 (3) of the Constitution of the Republic of South Africa, which accords to everyone the right to have access to adequate housing and not to be evicted from their home without an order of Court made after considering all the relevant circumstances.

15.6 should the defendants claim that an order for execution against the property will in the circumstances infringe their right/s under section 26 of the Constitution, it is incumbent on the defendants to place relevant information supporting such a claim before the Court.

The defendants’ plea

[16] The defendants admit that on or about 10 August 2004, a mortgage bond with the defendant as mortgagors and plaintiff as mortgagee was registered as alleged therein. The defendants plead that the mortgage property as described and evaluated by the plaintiff’s assessor and the seller (who subsequently advised the defendants and plaintiff thereon) does not reconcile with the description of the property as described in the mortgage bond referred to in the declaration marked as Annexure “A”. The seller is Maropeng Ephraim Motshegoa and Kesia Dolly Motshegoa, fully described in the offer to purchase which was attached to the defendants’ plea marked as Annexure e MOE1.

[17] The defendants plead that the mortgage bond was entered into as a result of a mutual mistake. The defendants and plaintiff have been under bona fide believe that the property presented to the defendants and plaintiff by the seller, evaluated by plaintiff’s authorised assessor and eventually bonded under the mortgage bond correctly reflected the mortgage property. In the circumstances, the defendants pleads that the alleged mortgage bond is of no legal force and effect.

[18] In relation to the second bond the defendants admit that on or about 10 January 2006, a mortgage bond with the defendants as mortgagors and plaintiff as mortgagee was registered as alleged therein. The defendants plead that the mortgaged properly as described and evaluated by the plaintiff’s assessor and the seller (who subsequently advised the defendants and plaintiff thereon) does not reconcile with the declaration as annexure marked “B”. The seller is Maropeng Ephraime Motshegoa and Kasia Dolly Motshegoa who are fully described in the offer to purchase which was attached as annexure marked “MOE1”.

[19] The defendants plead that the mortgage bond was entered into as a result of a mutual mistake. The defendants and the plaintiff have been under a bona fide believe that the property presented to the defendants and plaintiff by the seller, evaluated by plaintiff’s authorised assessor and eventually bonded under the mortgage bond correctly reflect the mortgaged property. In the circumstances, the defendants plead that the alleged mortgage bond is of no legal force and effect. It was not necessary for the defendants to refer the loan agreement to a debt councillor as the dispute between the plaintiff and defendants related to the validity of the contract and not creditworthy of the defendants.

[20] Alternatively, the defendants plead that in the event of this Court finding that there was no mutual mistake as detailed above, then the defendants plead that the mortgage bond agreement referred to herein is a reckless agreement as described in the National Credit Act 34 of 2005.

[21] The defendants plead that they will be prejudiced if the Court grants an order declaring the mortgaged property described in the mortgage bond specifically executable without alternative accommodation, as the mortgaged property is utilised as a residential dwelling by the defendants. The defendants do not have an alternative accommodation for themselves and their four daughters. Accordingly, the defendants prayed that the plaintiff’s claim be dismissed with costs and the mortgage bond agreement is set aside as having no legal force and effect.

The defendants’ claim in reconvention.

[22] The parties are referred to as in convention. The defendants’ claim in reconvention reads:

22.1 On or about 10 August 2004, plaintiff and defendant registered a mortgage bond in the office of the registrar of deeds, Pretoria in respect of the immovable property more fully described in annexure marked “A” referred to in the plaintiff’s declaration.

The material express alternatively tacit further alternatively implied terms of the aforementioned mortgage bond was as follows:

(a) The plaintiff would deliver a written statement reflecting debt repayment by the defendants;

(b) The plaintiff would deliver written notice to the defendants on variation of finance charges;

(c) The aforementioned statement would correctly reflect the identity and description of the defendants.

22.2 At all material times the plaintiff had in its possession the correct documentation describing and identifying the defendants.

22.3 The plaintiff has neglected and failed to describe the second defendant correctly in the bank statements delivered to the defendants, as a result thereof the second defendant failed to secure a home subsidy from her employer, which she qualified for had the plaintiff correctly identified her on the bank statement. Copy of the plaintiff’s statement is attached as annexure marked “MOE 2”

22.4 As result of the plaintiff’s conduct the defendants suffered damages in the sum of R 100 000.00, being the monthly home subsidy the second defendant would have received from her employer.

22.5 Plaintiff has failed, neglected and / or refused to make payment of the sum of R 100 000.00 referred to above, in the premises, the plaintiff is liable to pay the defendants an amount of R100 000.00

WHEREFORE defendants claim judgement against the plaintiff as follows:-

1. Payment of R 100 000.00

2. Interest of the aforesaid amount

3. Costs of suit on an attorney and client scale

The plaintiff’s plea to the claim in reconvention.

[23] Amongst others, the plaintiff denied the allegations contained in paragraph 4 of the defendants’ claim in reconvention. (The said paragraph 4 is paragraphs 22.3 to 22.6 of this judgment). The plaintiff specifically denied that:

“23.1 the plaintiff caused any failure to secure a home subsidy by the second defendant;

23.2 the defendants suffered any damages as alleged or otherwise;

23.3 plaintiff caused the defendants to suffer damages as alleged;

23.4 the plaintiff is liable towards the defendants in the amount claimed or any other amount.

The plaintiff therefore admits its refusal to pay defendants the amount of R100 000.00 or any other amount but pleads that it is justified in its refusal to do so.

WHEREFORE the plaintiff prays that the defendants’ claim in reconvention be dismissed with costs, to be taxed on an attorney and client scale.”

Analysis of evidence by Court

[24] In this case there are at least three clearly distinguishable agreements or contracts. The first is between the sellers of the house (Maropeng Ephraim Motshegoa (2) Kesia Dolly Motshegoa and their agent (Mr Tlhabane) (“the first agreement”). The second contract is between the defendants and the sellers of the house (“the second agreement). Finally, the third contract was between the defendants and Standard Bank (“the third agreement”).

[25] The latter is under challenge by the defendants who aver that the validity of that agreement is tainted because the contracting parties suffered from a mutual error at the time of signing the third agreement. Therefore, argues the first defendant, there was no consensus between the parties due to the mutual error. The mutual error was about the actual description of the property, especially the correct size of the yard.

[26] The bank (plaintiff) came into contact with the house buyers (the defendants) when the latter applied that the bank should finance their property (house). The bank was not and is still not a party to the second agreement. At the time when the defendants were shown the house and its yard, and eventually took the decision to buy it by signing the purchase agreement (Annexure Moei) the bank was not in the picture.

[27] My view therefore is that when the defendants approached the bank for a loan, the mutual error, if any, between the house sellers or their agent and the defendants, had already occurred. The fact is, when the property was pointed out to the defendants, the site size was exactly the same as at date of trial of this case. The property yard was already protruding into a vacant site at their back yard. This “vacant site” has now turned out to be someone’s property. By implication, the protruding part of the defendant’s yard was not legally authorised nor approved by the authorities.

[28] Consequently, the bank was not acting under any mutual error when it entered into the contract with the defendants. The bank sourced the actual description and size of this property from the Deeds Office. It merely supplied that information (from the Deeds Office) to the defendants. The bank cannot have the third contract declared invalid and suffer such tremendous loss because of the alleged unauthorised extension of the site into another person’s property. The Court is dealing with fore closure in this case. The certificate of balance has not been challenged. The defendants last serviced their bond(s) in January 2008. That is their last payment.

[29] The defendants blame the bank in that its assessor, failed to measure the size of the property. The defendants hold the view that if the bank assessor had measured the yard when he was at the property for an assessment, the real truth about the size of the yard would have been revealed, and the defendants would not have agreed to buy the property. Unfortunately for the defendants, when the assessment of the property was made, they had already taken a decision to buy the property as it was. Secondly, the assessor made the assessment solely for the purpose of advising the bank whether it has sufficient security for the loan. The assessor could not have influenced the defendants’ decision to buy.

[30] I do appreciate that the defendants do find themselves in the most difficult situation because they have been instructed, by the neighbour at the back to remove the protruding part into the property at the back. This will involve huge costs. The garages and any structures which they had put up on the offending 87 square metres will have to be demolished and the soil will have to be rehabilitated. They have to break down part of the protruding wall. They will have to rebuild for themselves a new wall at the backyard. Clearly, someone has to pay for these expenses. Unfortunately however, the bank is not a party to all this.

[31] I am satisfied that the plaintiff has discharged the onus resting upon it. Its claim (in convention) has to succeed. However, Mr Shepherd for the bank urged the Court to postpone, sine die, prayers 3 and 4 and to give judgment for the plaintiff on prayers 1, 2 and 5 only. Lastly, the plaintiff’s claim falls within the jurisdiction of the magistrates’ court. Costs will have to be on the scale of the magistrate’s court as well.

Defendants’ claim in reconvention

[32] The defendants claim R 100 000.00 against the plaintiff because, so runs the argument, the bank made an error about the personal particulars of the second defendant as a result of which her application for a housing subsidy was rejected by her employer. The defendants want to recoup this loss of R100 000.00 being the value of the subsidy she would have received but for the conduct of the bank

[33] The defendants did not tender any oral or documentary evidence to prove how they arrive at R100 00.00. None of the relevant documents from her employer’s personnel (human resource) section were produced which would have been of value to this Court, e.g. the letter rejecting the second respondent’s application for a subsidy; the rate at which this benefit is payable to officers (employees); whether or not such benefit is taxable and if taxable, the rate at which it is being taxed.

[34] The defendants’ case rests on the evidence of the first defendant only. I am therefore not satisfied that the defendants have proved their case on a balance of probabilities. In the result, the claim in reconvention falls to be dismissed.

Order

[35] Consequently, the following order is made:

35.1 Judgment is granted against the defendants, jointly and severally, the one paying the other to be absolved, for:

35.1.1 Payment of the amount of R778 965.74 (Seven Hundred and Seventy Eight Thousand Nine Hundred and Sixty Five Rand and Seventy Four Cents);

35.1.2 Interest on the amount of R778 965.74 (Seven Hundred and Seventy Eight Thousand Nine Hundred and Sixty Five Rand and Seventy Four Cents) at the rate of 9, 5% per annum calculated from 31 January 2018 to date of payment;

35.1.3 Costs of the suit on an attorney and client scale, such costs to be on the magistrates court scale.

35.2 The defendants’ claim in reconvention is dismissed with costs, such costs to be on the magistrates Court scale.

35.3 The remainder of the relief claimed as against the defendants, as per prayers 3 and 4 of the plaintiff’s declaration, is postponed sine die.

SAMKELO GURA

JUDGE OF THE HIGH COURT

NORTH WEST DIVISION

APPEARANCES:

DATE OF HEARING:

20 MARCH 2018

DATE OF JUDGMENT:

06 NOVEMBER 2018

COUNSEL FOR PLAINTIFF: ADV M T SHEPHERD

COUNSEL FOR DEFENDANTS: MR JAN MOKGELE MOEKETSI

ATTORNEYS FOR PLAINTIF: GIELE BENADE ATTORNEYS

ATTORNEYS FOR DEFENDANTS: PERSONALLY