Tuhf Limited v Lakewood (Pty) Ltd and Others (2098/2020) [2021] ZAFSHC 41 (19 February 2021)

IN THE HIGH COURT OF SOUTH AFRICA,

FREE STATE DIVISION, BLOEMFONTEIN

Case No: 2098/2020

In the matter between:

TUHF LIMITED Applicant

and

THE LAKEWOOD (PTY) LIMITED First

Respondent

RANGASAMY GORDON PILLAY

Second Respondent

KPA STUDENT ACCOMMODATION CC

Third Respondent

CORAM:

NAIDOO, J

HEARD ON:

17 SEPTEMBER 2020

DELIVERED ON: 19 FEBRUARY 2021

[1] This matter and case number 2097/2020, were heard together. As I indicated in the latter case, the facts are very similar and the respondents raised similar defences in both matters. The second respondent is the controlling mind of the first respondent in both matters. The first respondent in case No. 2097/2020 is Emelia Court (Pty) Ltd. In this application,

the applicant seeks an order in the following terms:

“1. Payment by the First and Second Respondents, jointly and

severally, the one paying the other to be absolved, of the sum of

R9 408 404.56.

2. Interest on the amount owing to the Applicant calculated at a rate of 3.5%

above the prime rate per year calculated daily and compounded monthly in arrears (sic) from 1 May 2020 to date of final payment, both days inclusive.

3. An order declaring the following property specially executable:

3.1 Sections 1 to 48 as shown and more fully described on Sectional Plan No. SS67/1993 in the Scheme known as Lakewood, district Bloemfontein, held by virtue of Deed of Transfer ST17814/2018.

3.2 Exclusive use areas P1 –P18 being as such part of the common property, comprising the land and the Scheme known as Lakewood, in respect of the land and building or buildings situate at Bloemfontein, Mangaung Metropolitan Municipality, as shown and described on Sectional Plan No. SS67/1993, HELD BY Notarial Deed of Cession No.SK 689/2018

4. An interim interdict, pending the termination of the Applicant’s entitlement

to exercise its rights as the Cessionary of the rentals arising from the

properties as against the First Respondent in its capacity as Cedent of those rights, whether by transfer of the properties or otherwise, in terms of which:

4.1 The Second Respondent, his employees and assignees, be directed

to refrain from making any form of contact with the tenants or

occupants of the properties, whether physical or otherwise, without

the Applicant’s prior written consent [in the event of contact other

than physical contact] and without Applicant having a representative

present [in the case of physical contact];

4.2 The Second Respondent, his employees and assignees, be directed

to refrain from interfering with the Third Respondent’s management

of the properties, including its collection of rentals for and on behalf

of the Applicant, maintenance of the properties and all other action

ancillary to the enforcement of the Cession;

4.3 The First Respondent be expressly prohibited from collecting any

rentals from any of the tenants or occupants of the properties for the remaining period of which the Cession remains in operation;

4.4 The First Respondent be directed to immediately pay over to the

Third Respondent all rentals collected after the effective date of the

Cession.

5. Cost of the Application as against First and Second Respondents, on an

attorney and client scale, the one paying, the other to

be absolved.

6. Further and/or alternative relief.”

[2] The applicant is a registered financial services and credit provider, who specialises in financing the acquisition and rehabilitation of

immovable properties. The applicant and first respondent entered into a written loan agreement on 21 August 2018 and subsequently signed an addendum to the loan agreement on 21 November 2019. In terms of the loan agreement and addendum, the applicant lent and advanced an amount of Eight Million Nine Hundred and Sixty One Thousand and Nine Rand (R8 961 009.00) to the first respondent, for the purchase of a property, known as Sections 1-48 as shown and more fully described on Sectional Plan No. SS67/1993 in the Scheme known as Lakewood, district Bloemfontein, Free State Province (the property).

[3] As security for the loan, the first respondent registered a first mortgage bond over the property in favour of the applicant. As further security for the loan, a second mortgage bond was registered over the property, in favour of the applicant. The first respondent also ceded, assigned and transferred to the applicant all its rights, title and interest in any rentals due in respect of the property. In terms of the Cession, the applicant was authorised to let the property, collect rentals, evict lessees and take all steps necessary to secure the collection of rentals. The second respondent signed a suretyship

agreement in favour of the applicant, binding himself as surety for the due and proper performance by the first respondent of its

obligations to the applicant, in terms of and arising from the loan agreement.

[4] The loan was to be repaid in monthly instalments of an estimated amount of R116 563.00. The first respondent failed to pay to the applicant the instalments due in terms of the loan agreement, as

amended by the Addendum, and, by May 2020, fell into arrears in excess of R827 070.76. As a result, the applicant exercised its option to declare all amounts owing to it in terms of the loan agreement, immediately due and payable. The applicant called upon the first respondent, in writing, to cure the breach of the loan agreement, but received no response from the first defendant. A letter of demand was addressed to the first respondent, in February 2020, demanding payment of the full amount due and payable to the applicant. No response was received to this letter, which resulted in the launching of this application.

[5] The respondents admit the loan agreement, the registration of the mortgage bonds, the suretyship agreement and that they did not pay the instalments due in terms of the loan agreement. The respondents have raised a number of defences in this matter. The second respondent alleges that he has been in the business of, inter alia, providing accommodation to (mainly) students at tertiary institutions in Bloemfontein. The loan relevant to this matter was used to purchase the property, for the purpose of renting the flats to students. The respondents allege that as the property was intended for student accommodation, the National Student Financial Aid Scheme (NSFAS) would pay the rentals in respect of students who were granted financial assistance. The applicant was well aware of this. These payments would usually be made during the period February to April each year, and the first respondent could only pay the instalments due in terms of the loan agreement after receipt of the monies from NSFAS.

[6] The respondents assert that the applicant knew that the income

generated from the student accommodation was for a period of ten (10) months each year. In spite of this, and knowing that the first respondent would only receive payment after February 2020, the applicant exercised its rights in terms of the loan agreement. In addition the applicant also exercised its rights in terms of the Cession, by appointing the third respondent as managing agent to conclude lease agreements with tenants and collect rentals. In addition, the Universities, in 2019, changed their payment policies and instead of paying the rentals directly to the landlords, paid the rent to the students who were then required to pay the landlords. The students cancelled their lease agreements and moved to other accommodation. The first respondent was effectively prevented from earning an income. These factors, together with the national lockdown due to the Covid-19 pandemic, made the first respondent’s performance in terms of the contract impossible, and consequently its obligations in terms of the loan agreement were extinguished.

[7] Another defence raised by the respondents is that the applicant registered a second bond over the property in the amount of One Million Three Hundred and Twenty Nine Thousand and Seventy Seven Rand (R1 329 077.00). This amount would be utilised to pay the instalments due by the first respondent and another two entities, one of whom was Emelia Court (Pty) Ltd (the first respondent under case 2097/2020), until the first payment was received from NSFAS or the Universities. The respondents allege that this amount was never advanced to the first respondent. The respondents’ duty to

perform in terms of the contract had, therefore not arisen, as the applicant failed to perform in terms of the contract. It is also the respondents’ version that in view of the defences it raised, the amount claimed by the applicant is wrong.

[8] In reply, the applicant specifically referred to the terms of the loan

agreement and Addendum thereto, to dispute the validity of the defences raised by the respondents. It pointed out that the loan agreement makes no provision for instalments to be paid for only ten months of the year, for the period from February to April each year. The applicant also asserts that the loan agreement contains a “non-variation” clause, which specifies that it was the whole agreement between the parties. The terms of the loan agreement were never amended (other than by the Addendum).

[9] The applicant explains that the first respondent failed to make payments in terms of the loan agreement and when it fell into arrears it applied for an additional facility to capitalise the arrears that had accumulated on the loan account, and to normalise the account. The applicant granted this request and increased the initial loan by an amount of R886 051.00. The initial loan was for an amount of R8 074 958.00. A mortgage bond (the first bond) in the amount of R12 112 437.00 was registered over the property, in favour of the applicant. After the Addendum to the loan agreement was signed in November 2019, the amount of the loan was increased to R8 961 009.00. A second mortgage bond (the second bond) was registered over the property to secure the additional amount by

which the initial loan was increased. The second mortgage bond was registered in the amount of R1 329 077.00.

[10] Immediately after the arrears were capitalised as mentioned, the first respondent fell into arrears again and a portion of the increased facility was withheld by the applicant. This was an amount of R170 000.00 which was allocated for payment of outstanding utilities and other Municipal charges. The applicant contends that the first respondent attempts to create the incorrect impression that

a further loan was granted to the first respondent, and that in spite of the mortgage bond being registered over the property, the further loan was not advanced to the first respondent. The applicant points out that this is not true. Two letters were addressed to the legal representatives of the first respondent, explaining the position with regard to the increased facility and the registering of a further mortgage bond. The initial loan amount, the increased facility as well as the breakdown of the additional amount was clearly explained in those letters.

[11] The first respondent clearly raises the defences I mentioned, in an attempt create factual disputes, which are purported to be bona fide disputes of fact. In accordance with the well-established rule in the case of Plascon Evans, a final order will only be granted in favour of the applicant in motion proceedings, where the facts stated by the respondents, together with their admission of the facts alleged by

the applicant justify such final order. [Plascon Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984(3) SA 623 (A)]. The court in Plascon Evans in stating the general rule, referred to the case of

Stellenbosch Farmers' Winery Ltd v Stellenvale Winery (Pty) Ltd 1957 (4) SA 234 (C) at 235E - G, where the court stated the rule as follows:

"... where there is a dispute as to the facts a final interdict should only be granted in notice of motion proceedings if the facts as stated by the respondents together with the admitted facts in the applicant's affidavits justify such an order... Where it is clear that facts, though not formally admitted, cannot be denied, they must be regarded as admitted."

Plascon Evans was followed, re-stated and applied in a number of cases by the Supreme Court of Appeal (SCA), and more recently in Media 24 Books (Pty) Ltd v Oxford University Press Southern Africa (Pty) Ltd 2017 (2) SA 1 (SCA) as well as by the Western Cape High Court in Mouton v Park 2000 Development 11 (Pty) Ltd 2019 (6) SA 105 (WCC).

[12] Where the dispute of fact is not bona fide or genuine, the court will, therefore be justified in disregarding or ignoring it and may decide the matter on the facts as averred by the applicant. Neither party requested that the matter be referred for the hearing of oral evidence, so the court must confine

itself to the evidence as contained in the affidavits before it to determine if the disputes raised by the first respondent are genuine disputes of fact and whether they are bona fide. A perusal of the loan agreement and Addendum, and particularly the payment terms, indicates that the loan was to be repaid in 180 monthly instalments estimated to be an amount of R105 037.00 each. The estimated date for payment of the first instalment was 10 December 2018. After the facility amount was increased, the revised monthly instalment was R116 563.00

[13] A perusal of the transaction history of the first respondent’s loan account indicates that since the registration of the first bond, the debit orders presented for payment against the loan account were returned unpaid. However, it appears payments were made of the arrears for December 2018, and for January and February 2019. The debit orders in respect of March and April 2019 were paid. From May 2019, there appear to be no payments made, until the arrears were capitalised in October 2019. The first respondent’s account fell into arrears again from November 2019 to May 2020. This application was launched in June 2020.

[14] The first respondent admitted that a Certificate of Balance, signed by a functionary of the applicant would constitute prima facie proof of the amount it owed to the applicant. The latter attached such a certificate (titled Certificate of Indebtedness) to its Founding Affidavit. The first respondent in its Answering Affidavit disputes the amount claimed by the applicant, alleging that the amount is incorrect, given all the defences it raised

[15] Part of the loan agreement has a section titled “Special Conditions Module”. Clause 43 is headed “Pre-Registration Conditions”, and the relevant provisions provide:

“Prior to the registration of the Mortgage Bond –

43.1 The Borrower will procure and submit to the Lender –

43.1,4 Proof that a specific, dedicated business account has been opened to,

exclusively, accommodate all financial transactions (including the

monthly loan instalment) relevant to the Property

Clause 44 thereof bears the heading “Student Accommodation”. The relevant portions of clause 44.1 read:

“The Parties record that:

44.1.1 The building situated on the property will be used for, inter alia, the

purpose of providing rental accommodation to the student market, in

terms of agreements entered into with students in their individual

capacities (“the Rental Enterprise”):

44.1.2 the rental income generated from the Rental Enterprise contemplated in

44.1 above is restricted to 10 (ten) monthly payments coinciding with the

months in the academic calendar in the case of the individual students;

44.2 The Lender requires the Borrower to open a separate bank account into

which all renal (sic) proceeds deriving from the Rental Enterprise will

be deposited (“the Reserve Account”) (separate to the account

contemplated in 43.1 above), and to submit proof to the Lender that the Reserve Account has been opened. The Borrower undertakes to ensure that the balance to the credit of the Reserve Account is sufficient to settle the total of both the monthly instalments payable in respect of this loan facility and the operating expenses associated with the Rental Enterprise for a period of (2) two months.

44.2.2. If -

44.2.2.1 the amount in the Reserve Account is insufficient to meet the Borrower’s obligations contemplated in 44.2 above, the Borrower will immediately deposit from alternative own resources the amount required to keep the balance in the Reserve Account sufficient to meet the Borrower’s obligations contemplated in 44.2 above.”

[16] When the abovementioned provisions are given their ordinary meaning, as the rules of interpretation in law require, a few observations and remarks can be made:

16.1 The provision of accommodation to students and the collection of rental in respect thereof is referred to as the Rental Enterprise. The first respondent was required to open a business banking account, prior to registration of the mortgage bond, to accommodate all the financial transactions relevant to the property.

16.2 The parties acknowledged in the Special Conditions Module that the income generated from the Rental Enterprise is restricted to ten (10) months per year, coinciding with the academic calendar of the students. For the purpose of monitoring those funds, the first respondent was required to open a separate bank account, referred to as the Reserve Account, into which all rental income from the Rental Enterprise would be deposited. The first respondent was obliged to ensure that the balance to the credit of the Reserve Account was an amount sufficient to settle the monthly instalments payable in terms of the loan agreement and the operating

expenses of the Rental Enterprise, for a period of two months.

16.3 An important provision is that if the amount in the Reserve Account is less than the amount I have mentioned in 16.2 above, the first respondent was required to deposit, from its own resources, such amount as was necessary to maintain the funds in the Reserve Account at a level sufficient to service the loan repayments and the operating expenses of the Rental Enterprise for two months. This, in my view, was clearly designed to cover the two months not covered by the rental income, which would only be generated for 10 months.

[17] If one examines the assertion of the first respondent that the applicant knew that it would only receive an income for 10 months and would therefore not be able to pay the instalments for the remaining period of two months, it is unclear whether the first respondent is suggesting that the applicant waived payment of the instalments for two months not covered by the rental

income. If that is the suggestion, it is clear that such an assertion cannot be sustained. Apart from the fact that the loan agreement sets out the position clearly, it would make no financial sense for the applicant, a credit and financial services provider, to forego payments of instalments for two months. The first respondent makes no mention of the provisions of clauses 43.1.4, 44.2 and 44.2.2.1. which I have set out above, nor does it attempt to grapple with the import and impact of these clauses. It is untenable to read clause 44.1 in isolation, as the first respondent has done.

[18] The first respondent makes the bald allegation that the universities changed their payment policies, in terms of which they made payments directly to the students. It is unthinkable that this would not have been communicated in advance to landlords such as the first respondent, for example, by way of a letter. Apart from alleging that several consultations were held with the universities to resolve the matter, the first respondent provided no further details or confirmation that such a situation did in fact arise. It makes no mention of how it funded the Reserve Account as it was obliged to do, or what alternative arrangements it made to fulfil its obligations in terms of the loan agreement, knowing that it would not be

receiving the expected income. If the rental income was its only source of income, the question arises, how the first respondent

agreed to a term of the agreement, which required it to use its own resources to maintain the amount in the Reserve Account at the required level. It seems to me that the approach of the first respondent was to proverbially sit on its hands and shrug its

shoulders about its inability to perform in terms of the loan agreement.

[19] I turn now to the defence that a “further loan” was approved, for which security was registered, but that applicant did not advance the loan to the first defendant. Clause 4 of the Addendum provides in clear and unambiguous terms that “The Parties hereby agree to amend the First Agreement by deletion of the following clauses set out in clause 4.2 and the insertion of the clauses listed 4.3 below.”

Clause 4.2 lists the portions of the initial loan agreement to be deleted, namely Part A, Part B, Part F, Part G and Part I, and clause 4.3 lists exactly the same portions of the loan agreement with amended figures.

[20] The initial Facility Amount, under Part A was R8 074 958.00. The disbursement of that amount is reflected to be R7 916 625 payable in respect of the purchase price of the property and R158 333.00 in respect the initiation fee. The amended Part A reflects the Facility amount to be R8 961 009. The disbursement of that amount is reflected as

R7 916 625.00 in respect of the purchase of the property, R175 707.00 for the initiation fee, R668 491.00 for the capitalisation of arrears, R30 186.00 for legal/conveyancing costs

and R170 000.00 for the first respondent’s liability for utility charges. Similarly the amended schedules reflect revised

amounts for the monthly instalments, interest, and other charges which are not necessary to mention here.

[21] The aspect of security, under Part I requires detailed mention, in view of the defence raised by the first respondent. Part I, which is headed “Security Provided” is itemised in Table form to reflect the agreement of the parties, as follows:

“1. The First Mortgage Bond registered and the Second Mortgage Bond to be

registered over the following Property –

Sections 1 -48 as shown and more fully described on Sectional Plan No.

SS67/1993, in the scheme known as LAKEWOOD in respect of the land

and building or buildings situated at BLOEMFONTEIN, together with

Exclusive Use Areas Parking’s P1 to P18 .

2. 2.1 The First Mortgage Bond registered for an amount of - R 12 112 437

together with an additional 30% provision for

contingent costs

R 3 633 731

2.2 The Second Mortgage Bond to be registered

for an amount of -

R 1 329 077

together with an additional 30% provision for

contingent costs

R 398 723

3. The Borrower will use its best endeavours to ensure that the following

unlimited Suretyships are passed in favour of the Lender, namely, by-

Rangasamy Gordon Pillay Identity Number: 740620 5154 083”

[22] From what I have set out above, it is abundantly clear that the initial loan amount was increased to accommodate the capitalisation of the arrears. Clause 4 specifically records that the parties agree that the first loan agreement was to be amended as I have set out. The amount reflected above matches exactly the amount for capitalisation of arrears, which was debited against the first respondent’s loan account. There can similarly be no doubt that the security being provided for such increased facility was a second mortgage bond in the amount of R1 329 077.00. In addition, the first respondent claims that the “further loan” of R1 329 077.00 was to enable three entities to pay up the arrear instalments owed to the

applicant. There is simply no such arrangement agreed upon anywhere in the Addendum.

[23] The first respondent gives no details of how such an arrangement came about, who represented the parties in concluding such an arrangement and when this was done. It is worrisome that the first respondent puts forth a defence that bears no reality to the written agreement between the parties, particularly as it was legally represented in this litigation. Even from a cursory reading of the provisions of the Addendum, which I have mentioned, it would have been apparent to the trained legal eye that such a defence was untenable, unsustainable and false. The court can only conclude that the first respondent was being disingenuous and opportunistic in proffering such a defence.

[24] It is perhaps opportune to deal now with the defence of impossibility. With reference to the cases, the court in Transnet Ltd v MV Snow Crystal 2008(4) SA 111 (SCA), at para 28, sets out the general principles applicable to such defence:

“As a general rule impossibility of performance brought about by vis major or casus fortuitus will excuse performance of a contract. But it 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 defendant, to see whether the general rule ought, in the particular circumstances of the case, to be applied'. The rule will not avail a defendant if the impossibility is self-created; nor will it avail the defendant if the impossibility is due to his or her fault. Save possibly in circumstances where a plaintiff seeks specific performance, the onus of proving the impossibility will lie upon the defendant.”

(vis major = an act of God: casus fortuitus = an accidental occurrence)

[25] As a starting point, the onus rests on the first respondent to prove impossibility of performance in terms of the contract. The mortgage bond was registered in November 2018, and the repayments were to commence in December 2018. The debit orders for December 2018, January 2019 and February 2019 were returned unpaid. However, the arrears were paid subsequently, presumably by a direct deposit into the account. The arrears for December 2018 were paid on 20 December 2018 and the arrears for January and February 2019 were paid on 21 February 2019. The instalments for March and April 2019 were paid in full, via debit order. The first respondent

does not deal with this at all. The amount of the arrears for January and February 2019 that was paid was R112 048.56 for each month. Therefore a total of R224 097.12 was paid on 21 February 2019. There must also have been sufficient funds in the first respondent’s bank account to meet the debit orders for March and April 2019. The first respondent ought to have explained how such large sums of money were available for that period.

[26] As I indicated, the first respondent does not substantiate the alleged change by the universities in their payment policies or offer any proof, for example by way of correspondence addressed to it in this regard, when this change occurred and whether any payments were received at all for 2019. The first respondent also does not deal fully, or at all, with the steps that it took to mitigate the consequences of its alleged predicament. There is also no plausible explanation for its failure to pay the

instalments for November and December 2019, after the arrears were capitalised. Similarly there is no explanation for the failure to pay the instalments from January 2020. According to the version the first respondent tendered, it ought to have received payment of rentals, at least for February and March 2020.

[27] The applicant exercised its rights in terms of the Cession, only with effect from 1 February 2020, after the first respondent failed to pay the instalments due for November and December 2019. The instalments from January 2020 onwards were also not paid. The National Lockdown took effect only from 27 March 2020, At worst, the rentals for February and March 2020 ought to have been paid. The first respondent is also silent on this aspect.

[28] In my view, therefore, the respondents failed to discharge the onus on them to show any impossibility of performance. The applicant’s enforcement of the Cession was the result of the first respondent’s

failure to adhere to the terms of the loan agreement. Therefore any inability to perform in terms of the loan agreement was due to the fault of the first respondent. The defence of impossibility is, in these circumstances, not available to the first respondent. I cannot find that such defences or issues raised by the first respondent are

genuine disputes of fact or bona fide. The version tendered by the first respondent is untenable and justifies this court’s rejection of it on the papers.

[29] I deal now with the relief sought by the applicant for an interim interdict. It is well established in our law that in order for this relief to be granted, the applicant must establish a clear right, he must show harm or injury which has actually occurred or is reasonably apprehended and that there is no other remedy available to him. In this matter, the applicant’s

version is that it appointed the third respondent as Management Agents to manage the property and collect rentals from tenants. To this end, a representative of the third respondent, a Ms Denise Viljoen, scheduled a meeting with the second respondent and the tenants to discuss the Cession.

[30] She was the only female amongst a group of men. It seems that she was made to feel very uncomfortable and unsafe, so that she had to move the meeting outside. Several young men apparently surrounded her and intimidated her, making it impossible to hold the intended meeting. The applicant alleges that these men are associates of the second respondent. As she left, Ms Viljoen noticed that one of the tyres of her vehicle had been slashed The respondents deny such interference or intimidation, and the second respondent also denies that he knows such people or that they acted on his instructions. Other than this bare denial, nothing was placed before the court to explain the sequence of events on the day in question, nor did the second respondent deal with the applicant’s assertion that Ms Viljoen was intimidated and that one of her tyres had been damaged. What is clear, is that the applicant was prevented from giving effect to a validly concluded cession, by what appears to be unacceptable/ criminal conduct.

[31] The applicant’s version is that it was unable to collect any rentals and the first respondent has made no payments in respect of the instalments due. In order to enforce the Cession, the applicant may well have to incur further costs in providing security in order to preserve the property and exercise its rights in terms of the Cession. The applicant has established a clear right and, from what I have outlined, it has suffered harm and continues to do so as a result of people acting on behalf of either the first or second respondent. An interdict is clearly the last resort, and in the circumstances, it is the only remedy in this matter. The applicant conceded that the first respondent is still responsible for the maintenance of the property,

and will have to be given access to the property for this purpose. It is necessary for an interdict to be granted in order that the applicant may enforce the Cession against the first respondent, and in order that the presence of the second respondent and the representatives of the first and second respondent do not hamper the applicant in the exercise of its rights.

[32] In considering the submissions of both parties regarding the prayer to declare the property specially executable, the court is obliged to consider the provisions of Uniform Rules 46 and 46A. It is correct that the property is registered in the name of a legal entity, and as such the property cannot be regarded as the primary residence of the legal entity. However, there are students occupying the property, and appear to spend 10 months of the year in occupation. Although the applicant alleges that the occupancy rate is low, it would have been useful for information regarding how many students are in occupation to have been furnished to the court.

[33] The court does not have a proper valuation of the property before it. It seems that an internal valuation of the property was conducted by the applicant, which yielded an amount of Thirteen Million Six Hundred and Eighty Three Thousand Seven Hundred and Ninety Three Rand and Sixty Nine Cents (R13 683 793.69). The property was mortgaged in favour of the applicant, and the total of the two mortgage bonds over the property amounts to R13 441 514.00. No details are available about what amounts, if any, are currently owed by the first respondent in respect of rates, taxes and utilities. The amount claimed at the time of launching this application is R9 408 404.56. In my view, it would be prudent to set a reserve price for the sale in execution. However the determination of the amount of the reserve price can only be made when the details I have mentioned are furnished to the court.

[34] With regard to costs, the applicant seeks an order for costs on the scale as between attorney and client. Clause 38.1.3 of the loan agreement provides, inter alia, that the Borrower (first respondent) will pay all charges and expenses of whatever nature, where the Lender (applicant) endeavours to secure fulfilment of any of the obligations in terms of the agreement, on an attorney and own client scale. The applicant, as indicated, seeks costs on the attorney and client scale. The first respondent did not dispute this, nor did Mr

Coetzee address the court on the issue of costs, other than to seek an order dismissing the application with costs. Although the award of costs is within the discretion of the court, in the absence of any challenge or submissions from the first respondent, the court takes cognisance of the provisions of the agreement, which was duly signed by an authorised representative of the first respondent, as well as the order sought by the applicant.

[35] In the circumstances, the following order is made:

35.1 Payment by the first and second respondents, jointly and severally, the one paying the other to be absolved, of the amount of Nine Million Four Hundred and Eight Thousand Four Hundred and Four Rand and Fifty Six Cents (R9 408 404.56);

35.2 Interest on the amount owing to the applicant calculated at a rate of 3.5% above the prime rate of interest per year, calculated daily and compounded monthly in arrear from 1 May 2020 to date of final payment, both days inclusive;

35.3 The prayer to declare, specially executable, the immovable property described as Portion 5 of Erf 1702, Bloemfontein, district Bloemfontein, Province of the Free State, held by virtue of Deed of Transfer T12210/2019, is postponed pending the filing of an affidavit by the applicant, with supporting documents, indicating the amount of the valuation of the property, the amount

owed by the first respondent in respect of rates and taxes and any other amount to be taken into consideration for determining the reserve price to be set;

35.4 An interim interdict is granted, pending the termination of the applicant’s entitlement to the exercise of its rights as the Cessionary of the rentals arising from the property, as against the first respondent in its capacity as Cedent of those rights, whether by transfer of the property or otherwise, in terms of which:

35.4.1 the second respondent, his employees and assignees, are

directed to refrain from making any form of contact with the

tenants or occupants of the property, whether physically or

otherwise, without the applicant’s prior written consent (in the

event of contact other than physical contact) and without the

applicant having a representative present (in the case of physical

contact);

35.4.2 the second respondent, his employees and assignees, are

directed to refrain from interfering with the third respondent’s

management of the property, including its collection of rentals for

and on behalf of the applicant, and all other actions ancillary to the

enforcement of the Cession;

35.4.3 the first respondent is expressly prohibited from collecting any

rentals from any of the tenants or occupants of the property for the

remaining period during which the Cession remains in operation;

35.4.4 the first respondent is directed to immediately pay over to the third

respondent all rentals collected after the effective date of the

Cession;

35.5 Costs of the application are awarded against the first and second respondents, the one paying, the other to be absolved, on the scale as between attorney and client.

S. NAIDOO, J

On behalf of Applicant: Adv. CD Pienaar

Instructed by:

McIntyre Van Der Post

12 Barnes Street

Westdene

Bloemfontein

(REF: AAT279/Elene)

On behalf of 1st to 4th

Respondents:

Adv. R Coetzee

Instructed by:

Steenkamp & Jansen Inc

Hydro Office Park

100 Kellner Street

(REF: R Coetzee)