Standard Bank of South Limited v Eksteen (2020/22001) [2020] ZAGPPHC 705 (8 December 2020)

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

GAUTENG DIVISION, PRETORIA

(1) REPORTABLE: NO

(2) OF INTEREST TO OTHER JUDGES: NO

Case Number: 2020/22001

In the matter between:

STANDARD BANK OF SOUTH AFRICA LIMITED

Applicant / Plaintiff

and

JACOBUS JOHANNES EKSTEEN

Respondent/Defendant

JUDGMENT

MOKOSE J

[1] The plaintiff seeks summary judgment against the defendant for the sum of R411 307,30 together with interest and costs. The claim arose against the defendant as surety for the shortfall for a claim arising from a loan secured by a mortgage bond. The plaintiff's claim was premised on the liability of the principal debtor who has since been

liquidated.

[2] The defendant contends that in terms of the test underlying summary judgment, the defence is bona fide and the court may grant leave to defend so that a t rial court can ultimately decide the issue underlying the challenge. The defendant contends that the prevailing law expressed by the SCA in the matter of ,Antoinette Botha v Standard Bank of South Africa[1] may be departed from by this court until the SCA again considers the contentions raised therein .

[3] The facts are briefly that during May 2006 the plaintiff and Bering Homeowners 6 (Proprietary) Limited concluded a home loan agreement in terms of which Bering loaned the sum of R900 000 from the plaintiff, repayable over 240 months. The loan was secured by a mortgage bond registered over the property described as [….], The Province of Gauteng and measuring 999 (nine hundred and ninety-nine) square metres. The continuing covering bond was registered in favour of the plaintiff.

[4] On the same day that the loan agreement was signed, the defendant signed and bound himself as surety for the payment of present and future debts of any kind, arising out of the home loan and secured by the mortgage bond.

[5] It is common cause that the principal debtor was placed under final liquidation on or about 14 August 2008. The liquidators realised the property during 2010 and after the administration costs had all been paid, paid the balance to the plaintiff in reduction of the defendant's indebtedness to t he

plaintiff.

[6] On 13 February 2020, the plaintiff sent a letter to the defendant in terms of Section 72(1) of the National Credit Act 34 of 2005 per registered post to the domicilium address and last known address, to which no response was received. The plaintiff then instituted action against the defendant which was served personally on 2 June 2020. A notice to defend was filed on 8 June 2020 and the special plea was filed after a notice of bar had been served on the defendant. This in turn triggered the application for summary judgment in terms of Rule 32 of the Uniform Rules of court which was lodged on 31 August 2020.

[7] The defendant filed two special pleas, however, at the hearing indicated that he only persists with one, being the issue of prescription . The defendant argues that prescription of the claim ran from 14 August 2008 when the principal debtor was liquidated or at the very least, once the mortgage bond had been cancelled on 4 February 2010, when the property was transferred as the debt was no longer secured by the mortgage bond. As such, the plaintiff could not rely on the 30-year period of prescription applicable to debts in terms of Section 11(a)(i) of the Prescription Act 68 of 1969 ("the Prescription Act").

[8] Rule 32 of the Uniform Rules of Court was designed to prevent a plaintiffs claim, based upon certain causes of action, from being delayed by what amounts to an abuse of the court process. The procedure is not intended to shut out a defendant who can show that there is a triable issue applicable to the claim as a whole from laying his defence before the court.[2]· Corbett JA in the matter of Maharaj v Bardays Bank Ltd[3] said that firstly, an examination of whether there has been sufficient disclosure by the defendant of the nature and grounds of his defence and the facts upon which it is founded has to be made. Secondly, a consideration of whether the defence so disclosed is both bona fide and good in law must also be made.

[9] While it is not required of the defendant to give an exhaustive account of the facts in the sense of giving a preview of all the evidence, the defence must not be averred in a manner which appears in all circumstances to be vague or sketchy.

[10] The respondent contends that Section 11(d) of the Prescription Act is applicable. He explains that the mortgage bond which secured the debt in relation to the immovable property was cancelled. The applicant's security in the form of the mortgage bond over the immoveable property fell away with the sale of the property and the resultant transfer. Accordingly, the application of the mortgage bond cannot continue to exist without the object of security being the property. In view of the fact that Section 11(d) is applicable, the claim of the plaintiff has accordingly prescribed.

[11] The plaintiff, on the other hand, is of the view that the cancellation of the mortgage bond did not have a bearing on the prescription period applicable. The character of the debt was not changed by the cancellation of the mortgage bond. As such, the prescription continued to run beyond the contended three-year period for a period of thirty years.

[12] Section 11 of the Prescription Act provides for periods of prescription of debts as follows :

"11. The period of prescription of debts shall be the following:

(a) thirty years in respect of-

(i) any debt secured by a mortgage bond;

(ii) ……..

(b) ………

(c) ………

(d) save where an Act of Parliament provides otherwise, three years in respect of any other debt. "

[13] The court's attention was brought to the matter of Oliff v Minnie[4] which is on all fours with the matter in casu, in which a mortgaged property was sold in execution. The amount realised at the sale was not enough to discharge the debtor ' s indebtedness. The creditor then sued the debtor on the debt underlying erstwhile bonds. The defendant raised a defence of prescription and contended that the debt had changed its character as from the date of the sale in execution as the bond had 'ceased to be a mortgage bond and merely became an acknowledgment of debt'.

[14] The Provincial Division of the High Court accepted that the claim would have prescribed only after thirty years had the bond retained its original character and function. It reasoned further that once the mortgaged property had been sold in execution, it was released from the operation of the mortgage bond and the claim then mutated into a mere acknowledgment of debt.

[15] On appeal, the decision was reversed. The court held that the bond did not cease to be one just because it had become valueless as security. It reasoned that the class of the written instrument upon which the action was founded determines the prescription period that Is applicable. Furthermore, there was no basis upon which the classification should alter mid-stream if the subject matter should perish. Prescription is not concerned with security.[5]

[16] The defendant was of the view that the matter of Investec Bank Limited v Erf 436 Elandspoort (Pty) Limited and Others[6] correctly supports his contention. The issue was whether the thirty-year prescription period provided for in Section 11(a)(i) of the Prescript ion Act in respect of any debt secured by a mortgage bond is applicable to the debt . If not, then the debt would have prescribed three years after the debt became payable unless prescription was interrupted in terms of the Prescription Act The judge in the court a quo upheld the special plea of prescription against the bank' s claim. The SCA confirmed the court a quo's decision and held that if the bond is cancelled before the debt is settled and the security ceases to exist, then the debt is no longer secured and the prescription period changes to three years as it is with an unsecured debt. It was of the view that the loss of security through the cancellation of the mortgage bond may have a bearing on the prescription period applicable to a debt Initially secure by the bond.

[17] The legal principle espoused in the Oliff matter (supra) was amplified in the recent case of Botha v Standard Bank of South Africa Limited[7] where the SCA held that the court a quo correctly held that the Investec matter did not overrule the principles espoused in Oliff. Tuchten J had correctly held that he was bound by the Oliff matter. Accordingly, the court held that where a debt secured under the agreement was a mortgage bond, the thirty-year prescription period was applicable.[8]

[18] The respondent recognises that Oliff was decided prior to the current Constitutional dispensation. He contends further that Botha followed the reasoning in this case without having regard to the tenets of statutory interpretation and that Section 11 of the Prescription Act should be interpreted in accordance with the Constitution. He further contends that the meaning attached to Section 11(a)(i) in Oliff has

the effect of preventing the dispute (the liability of the respondent as a surety) being resolved inter partes by the application of the law.

[19] Counsel for the respondent argued that Section 11 does not provide for a prohibition of a change in classification of the debt. Therefore, the change in classification may occur. He is of the view that the interpretation of a statute should include a wider legal and jurisprudential context so as to not only give effect to the purpose of the legislation but also the sense, spirit, ethos, morality and fundamental principles of the Prescription Act and the Constitution. He relies on an unreported matter of Dulabh v Dulabh from the Eastern Cape, former King William's Town Division.[9]

[20] The general approach when interpreting statutes ls trite. The defendant contends that it is the ordinary function of the courts to interpret legislation . However, when words are unclear or ambiguous in respect of a certain situation, then the statutory construction or the interpretation of legislation 'comes to the fore'.

[21] The proper approach to statutory interpretation was considered in the SCA matter of Natal Joint Municipal Pension Fund v Endumeni Municipality[10] in which the court said the following :

"Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the documents as a whole and the circumstances attendant upon its coming into existence. Whatever the nature of the document, consideration must be given the language used In the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. Where more than one meaning is possible each possibility must be weighed in the light of all these factors. The process is objective , not subjective. A sensible meaning is to be preferred to one that leads to insensible or unbusinesslike results or undermines the apparent purpose of the document. Judges must be alert to, and guard against the temptation to substitute what they regard as reasonable, sensible or businesslike for the words actually used. To do so in regard to a statute or statutory instrument is to cross the divide between interpretation and legislation; in a contractual context it is to make a contract for the parties other than the one they in fact made. The inevitable point of departure is the language of the provision itself, read in context and having regard to the purpose of the provision and the background to the preparation and production of the document."

[22] Where the wording is not clear, either ambiguous, misleading or vague and would lead to absurd results, a court may deviate from the literal meaning to ascertain the intention of the legislature. That is not so ln the matter in casu. I disagree with Counsel for the respondent who is of the view that the purposive approach to interpreting Section 11 would arrive at a different interpretation of the section and find that the matter prescribed after 3 years.

[23] I am of the view that Section 11 of the Prescription Act is clear. Where a debt is secured by a mortgage bond, the prescription period applicable to the debt is 30 years.

[24] To avoid summary judgment being granted, a respondent must disclose facts which, if proved at trial, will constitute a defence to the applicant's claim. The court must consider whether the defence is good in law and whether it is bona fide . If it is reasonably possible that the defendant has a good defence, the court must refuse to grant the summary judgment and grant the defendant leave to defend the matter.

[25] Having considered the submissions by Counsel, I am satisfied that the defence carries no reasonable possibility of eventually succeeding. The defendant has failed to set our "fully" the nature and grounds of his defence. The defendant has failed to establish a bona fide defence or one which would qualify as good in law. Accordingly, the following order is granted:

Summary judgment is granted against the defendant for -

(i) payment in the sum of R411 307,30;

(ii) interest on the sum of R411 307,30 at the rate of 17% per annum from 10 January 2020 to date of payment;

(iii) costs of suit.

Judge of the High Court of South Africa

Gauteng Division, Pretoria

Electronically submitted

Delivered: this judgment was prepared and authored by the Judge whose name is reflected and is handed down electronically by circulation to the parties/ their legal representatives by email and by uploading it to the electronic file of this matter on Caselines. The date for hand-down is deemed to be 8 December 2020 .

Appearances

For the Applicant:

Adv M Rakgoale

instructed by

Vezi de Beer Incorporated

For the Respondent:

Adv FJ Labuschagne

EY Stuart Incorporated

Date of Hearing: 20 November 2020

Date of Judgement: 8 December 2020

[1] (445/2018) [2019] SASCA 108 dated 6 September 2019

[2] Majola v Nitro Securitisation I (Pty) Ltd 2012 (1) SA 226 (SCA)

[3] 1976 (1) SA 418 (SCA)

[4] 1953 (1) SA 1 (A)

[5] Oliff v Minnie (supra) at 3C to 4A

[6] (1029/ 2016) [2107) ZASCA 128 dated 29 September 2017

[7] 2019 (6) SA 388 (SCA)

[8] Botha v Standard Bank Limited (supra) at para 30

[9] (14/1996) at paragraphs 47 to 58

[10] (920/2010) 2012 ZASCA 13 dated 15 March 2012