Tuhf Limited v Esselen Street Hillbrow CC and Others (44393/2020) [2022] ZAGPJHC 566 (12 August 2022)

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

(GAUTENG DIVISION, JOHANNESBURG)

REPUBLIC OF SOUTH AFRICA

CASE NO: 44393/2020

NOT REPORTABLE’

NOT OF INTEREST TO OTHER JUDGES

REVISED

In the matter between:

TUHF LIMITED Applicant and ESSELEN STREET HILLBROW CC First Respondent 266 BREE STREET JOHANNESBURG (PTY) LTD Second Respondent 10 FIFE AVENUE BEREA (PTY) LTD Third Respondent 68 WOLMARANS STREET JOHANNESBURG (PTY) LTD Fourth Respondent HILLBROW CONSOLIDATES INVESTMENTS CC Fifth Respondent MARK MORRIS FARBER Sixth Respondent

JUDGMENT

SENYATSI J:

[1] This is an opposed application for money judgment and other relief in terms of which the applicant, TUHF Limited (TUHF) implores this court to order all the respondents to pay, jointly and severally the one paying the other to be absolved, the sum of R9 349 073.89 with interest accumulates at the rate of 2.50% above the commercial banks’ prime rate plus 1% per year, calculated daily and compounded monthly in arrears from 1 February 2020 to date of payment, both dates included. The other relief related to exercise of cession of rental from the tenants of Waldorf Heights (the immovable property) owned by the first respondent.

[2] In an alternative to [1] above, TUHF prays that the respondents be ordered to pay, jointly and severally, the

one paying the others be absolved, the sum of R9 198 953. 70 with interest calculated at the rate of 2.50% above

the commercial banks’ prime rate plus 1% per year, calculated daily and compounded monthly in arrears from 1 November

2020 to date of payment, both dates included.

[3] TUHF also seeks that the respondents be ordered to pay the costs on an attorneys and client scale as agreed to in terms of the loan agreement.

[4] TUHF is a public company with limited liability which carries out its business from Johannesburg. It is the successor- in-title of a non-profit company, Trust for Urban Housing Finance an association incorporated in terms of section 21 of the Companies Act, 1973, with registration number 1993/00217/08.

[5] The applicant converted to a private company (registration number: 2007/025898/07), which subsequently converted to a public company on 4 November 2014.

[6] The First Respondent is 28 Esselen Street Hillbrow Close Corporation without the chosen domicilium citandi et executandi within the area of jurisdiction of this Court.

[7] The Second Respondent is 266 Bree Street Johannesburg (Pty) Ltd, a private company with a chosen domicilium citandi et executandi within the are of jurisdiction of this Court.

[8] The Third Respondent is 10 Fife Avenue Berea (Pty) Ltd, a private company with a chosen address within the area of jurisdiction of this Court.

[9] The Fourth Respondent is 68 Wolmarans Street Johannesburg (Pty) Ltd, a private company with the chosen address of service of the process within the area of jurisdiction of this Court.

[10] The Sixth Respondent is Mr Mark Farber (Mr Farber), an adult male business man with the chosen address for service of the process within the area of jurisdiction of this Court.

[11] All respondents are related parties and are controlled by the Mr Faber as an ultimate beneficial owner. The sixth Respondent is the sole director or member of the first to the fifth respondents. Mr Farber is the sole shareholder of the second, third and the fourth respondents.

[12] Mr Farber represented the first to the fifth respondents in their dealings with TUHF.

[13] The second, third, fourth, fifth respondents and Mr Farber concluded written unlimited suretyship agreements for the first respondents’ indebtness in favour of the applicant.

BACKGROUND

[14] The application arises as a result of the alleged breach of the deeds of suretyship warranties contained in the deeds of suretyship agreement which was concluded between the parties on 19 October 2016 to 2 November 2016.

[15] The loan agreement provided that the first respondent would be in breach thereof in the event that the First Respondent caused an event of default and failed to remedy it. The applicant is, in such event entitled to accelerate and declare all amounts owing in terms of the loan agreement immediately due and payable.

[16] In terms of the loan agreement the first respondent would trigger an event of default, inter alia, if:-

16.1. any written warranty made by the first respondent or any surety is breached; and

16.2. the first respondent or any surety, breached or repudiated or evidences an intention to repudiate any of the provisions of the loan agreement or the security to which it is a party, and fails to remedy any such breach within any applicable notice or cure period calling upon it to do so.

[17] As security for and in respect of the due and punctual performance by the first

respondent of its obligations of whatsoever nature in terms of the loan agreement, the first respondent would:-

17.1 register a mortgage bond over an immovable property for an amount of R14 971 050. 00 together with an additional 30% provision for contingent costs (“the mortgage bond”)

17.2 ensure that the sureties pass in favour of the applicant written unlimited suretyship agreements

[18] In terms of the suretyship agreements the sureties warranted that the suretyship agreements would in all respects be valid and binding (“the warranty”)

[19] In terms of the mortgage bond the parties agreed, amongst others, that in the event of a default, the first respondent ceded it right to rental income at the immovable property and the applicant may recover and receive all rent income and fruits from the immovable property (“the cession provision”).

[20] On 2 March 2020, due to the alleged events of default arising in terms of the loan agreement the applicant issued an application under case number 7843/2020 in this court (“the first application”).

APPLICANTS CASE

[21] TUHF avers that on 26 August 2020 in answer to the first application, the respondents filed a supplementary answering affidavit (“supplementary answering affidavit”) in terms of which the respondents declared under oath, inter alia, that the suretyship agreements passed by the second, to fifth respondents are void in

terms of section 45(6) of the Companies Act 2008 (“the Companies Act”) and not complaint with section 46 of the Companies Act.

[1] See Cilliers, Loots, Nel: Herbstein & Van Winsen: The Civil Practice of the High Courts of South Africa, 5th Edition, Juta, Volume 1 at p310

[2] See Mark & Kantor v Van Diggelen 1935 TPD 29 AT 37; Van As v Appollus 1993(1) SA 606 (C) at 608J- 609a

[3] See Pretorius v Barkley East Divisional Council 1914 AD 407 at 409; Milford’s Executor v Edben’s Executor 1917 AD 682; Le Roux v Le Roux 1967 (1) SA 446 (A)

[4] See Marks & Kantor v Van Diggelen supra at 33

[5] See Mark v Kantor supra at 29

[6] See Osman v Hector 1933 CPD 503

[7] See Osman v Hector supra at 508

[8] See Michael v Lowenstein 1905 TS 324 at 328; Les Marquis (Pty) Ltd v Marchand 1989 (2) SA 651 (T) at 658D; Yekelo v Bodlani 1990 (3) SA 970 (T) AT 973d; Friedrich Kling GmbH v Continental Jewellery Manufacturers; Guthmann v Wittenauer GmbH v Continental Jewellery Manufacturers 1993 (3) SA 76 (C) at 83 D

[9] See Van As v Appollus supra 610D

[10] See Dreyer v Truckers Land and development Corporation (Pty) Ltd 1981 (1) SA 1219 (T) at 1231; Sikatele v Sikatele [1996] 1 Alll SA 445 (Tk)

[11] [2001] 4 All SA 315 (A) at [16] to [17]

[12] See Stellenbosch Farmers Winery Ltd v Stellenvale Winery (Pty) Ltd 1957 (A) SA 234 (C) at 235

[13] See Plascon-Evans Paints Ltd v Van Riebeck Paints (Pty) Ltd [1984] 2 All SA 366 (A)

[14] See Soffiantin v Mould [1956] 4 All SA 171 (E)

[15] Supra at 235 E-G

[16] [1911] HCA 46; (1911) 13 CLR 35 at 91

[17] 1999 (2) 555 (SCA) at 565E