IN
THE HIGH COURT OF SWAZILAND
Held
at Mbabane Civil Case No. 36/2004
In
the matter between
STANDARD
BANK SWAZILAND LTD Plaintiff
Vs
CARR
CORP INVESTMENTS (PTY) LTD
T/a
CLEOPATRA'S and the NILE 1st Defendant
SHAYNE
CARR 2nd Defendant
ISABEL
CARR 3rd Defendant
Coram
JACOBUS P. ANNANDALE, ACJ
For
Plaintiff Mr. Motsa
For
Defendants Ms Nkambule
JUDGMENT
23
JUNE 2004
This
is an opposed application for summary judgment.
2
Standard
Bank Swaziland Ltd (the Bank) sued the respondents jointly and
severally in an action in respect of monies lent and advanced, said
to be due and owing but unpaid. Two banking accounts are held by the
first respondent (the company) with the Bank, in respect of both
Cleopatra's and the Nile - each being an operative business account.
The second and third respondents are sureties and co-principal
debtors of the company.
The
first claim of E70 014.68 relates to the "Nile" account and
the second claim of E110 556.91 to the "Cleopatra's"
account. Both claims include prayers for interest at 5% above prime
rate a tempore morae and costs on the scale of attorney and own
client including collection commission.
Following
a notice to defend by the defendants, the Bank filed its declaration
in which the information relevant to its claim is spelled out in
detail. Briefly, the facts are said to be as follows:
On
the 6th June 2003 the Bank and the first defendant, represented by
Mrs. Carr, entered into a loan agreement of E250 000, repayable over
36
3
months
in instalments of E11 422.61. This loan attracted interest at prime
plus 5%. The terms and conditions are incorrectly stated to be set
out in annexure "A", whereas it is actually reflected in
"B". The covering letter of the 6th June 2003 incorporates
by reference form 39220, which in turn sets out the Bank's "General
Terms and Conditions applicable to Term Loans".
Specifically,
under clause 5 thereof, the Bank has the right to convert the loan to
one repayable on "written demand'5, inter alia if the borrower
defaults in the repayment on the due date of any amount due under the
loan agreement or breaches any term or condition of the loan
agreement.
The
loan agreement itself further provides for conversion of the loan to
one repayable on "written demand" if there is a material
deterioration in the defendant's financial position, also if there
are insufficient funds for repayment in two consecutive months on the
current account, when the loan may be called up and full payment
demanded.
On
the same date as the E250 000 loan, a further E40 000 was made
available by the Bank as an overdraft facility of E40 000,
essentially on the same conditions.
4
The
Deed of Suretyship annexed to the declaration is comprehensive with
all the usual provisions. Specifically, the second and third
defendants stand unlimited surety and co-principal debtors for debts
of the first defendant company, with renunciation of the benefits of
excussion and division, the authentica si qua mulier and
senatusconsultum velleianum insofar as the (female) third defendant
is concerned, notarially explained to her, and the further
renouncements of all other benefits and legal exceptions that could
or might be raised or pleaded by the surety in answer to any claim by
the Bank under the suretyship. Also, clause 12.2.1 provides that the
suretyship shall be fully enforceable against the surety regardless
of any breach of contract on the part of the Bank or the Debtor. It
is a moot point whether this clause is enforceable or not. For the
reasons leading to the outcome of the matter it is not necessary to
determine the validity of this clause.
Clause
19 provides that a certificate of balance as to the amount owing to
the Bank by the debtor and/or surety, the fact that it is due and
payable, the interest rate and date from which it is reckoned shall
be binding on the surety and shall be prima facie proof of the facts
stated therein.
5
Such
certificates were filed by consent at the hearing, verifying the
claimed outstanding balances in each of the two trading accounts held
by the company with the Bank.
Also
annexed to the plaintiff's declaration are the aforementioned deeds
of cession and hypothecation. The latter has it explicitly recorded
that upon default of payments, the Bank may forthwith claim payment
of all due amounts over and above the calling up of the hypothec. The
amount is limited to E250 000 to cover the principal sum of
indebtedness plus an additional sum of E62 500 to cover all further
costs and expenses incidental to recovery of its money, including
costs on attorney and own client scale and collection commission. The
deed identifies the three defendants as the mortgager, with Mr. and
Mrs. Carr as the duly authorised directors of the first defendant
company.
The
two deeds of cession records the cession of all rights, title and
interest that the two directors have in their company, in favour of
the Bank.
The
first defendant company, which operated two current accounts held
with the Bank, first defaulted in making payments at the end of
August
6
2003,
some three months after receiving the credit facilities. The
plaintiff claims that by the 1st January 2004 the non-payments
amounted to El10 556.91 and E70 814.68, respectively with regard to
the Cleopatra's and Nile accounts held with the Bank, with the
amounts being inclusive of interest at prime plus 5%.
The
plaintiff's declaration confirms the claim of El81 371.59 in total,
plus the same rate of interest as from the 15th January 2004, against
the three defendants, jointly and severally, payment by one to
absolve the other, with liability of the two directors in terms of
their suretyship. The plaintiff further sought an order to have the
Deed of Hypothecation declared executable in favour of the Bank, and
costs on the scale of attorney and own client.
The
plaintiff's declaration was followed by an application for summary
judgment with the same prayers, save the omission of the prayer for
the Deed of Hypothecation to be declared executable. The Bank's
"Manager (of) managed accounts", one Allister Ryan, deposed
to the affidavit in support of the summary judgment application, and
not Lynette Groening as stated in the notice of the application.
Nothing turns on this
7
anomaly
and it was not argued either. It causes no prejudice and it has the
appearance of a mistake in the drafting of the notice. Greater care
is expected in the preparation of pleadings than the example at hand.
Nevertheless, the essential averments of his verification of the
cause of action and the amount claimed is stated, as well as his
belief that there is no defence to the claim and that notice to
defend has been filed solely for purposes of delaying the action.
In
the face of the clearly and comprehensively pleaded case of the
applicant, the second respondent, Shayne Carr, filed his affidavit
resisting summary judgment. He denies Ryan's averment that the
appearance to defend is to delay the action and sets out what his
defence is perceived to be. He does not deny the contract with the
Bank and provision of credit facilities but he does deny its
entitlement to claim the amount claimed and also that the
hypothecated property be declared executable. As already indicated
above, the application for summary judgment does not contain a prayer
for the hypothecated property to be declared executable, as was the
position in both the summons and the declaration.
8
He
pleads that 'the plaintiff has failed to perform its part of the
contract in that the defendants did not receive the full benefit of
the credit facilities as per the agreement' (my underlining).
He
goes on to state (in paragraph 8) that '(on) several occasions prior
to the institution of this action I had informed the plaintiff...
that the defendants were not satisfied with the plaintiff's failure
to perform as per the agreement and that we insisted upon the
plaintiff's performance. Alternatively, we requested that the
agreement be amended by recalculating the monthly installment (sic)
in accordance with the sums actually received by the defendants'.
It
is this which is held out as a bona fide defence to the claim.
Stripped
of all niceties and subterfuge camouflage, the respondent in fact
says that yes, we did take up the loan, as it is set out in the
papers, but since we did not avail ourselves to the maximum or full
ceiling amount, notwithstanding our undertaking to repay as per the
contractual agreement, we actually do have a defence to the claim
despite our continued failure to repay.
9
The
acknowledged agreement between the parties is clear: the Bank was to
provide money to the company and the company had to repay in monthly
instalments. Money was actually used by the company, and this is
reflected in the statements of account, filed with the declaration.
By January 2004, some six months after the date of contract, the Nile
current account of the respondent company had an debit balance of
almost E71 000, inclusive of E8 258.75 interest. The Cleopatra's
account had a debit balance of over 110 000, inclusive of E11 340.28
interest. By then, more than E180 000 of the initially available
funds had been withdrawn.
It
appears that the respondents are dissatisfied with the attitude of
the Bank, by not releasing further monies to the full extent of the
credit that was granted, but still being required to repay the agreed
amounts every month. Extracts of a "Detail Account Enquiry"
in respect of each account were filed as annexures to the plaintiff's
declaration. It indicates the activities on each account. The
agreement between the parties is clear and unambiguous: each and
every month the company had to repay an amount of E 11 423.61 in
respect of the E250 000 loan. Two such repayments are shown on the
Cleopatra's account. Virtually the only credit entries on the Nile
account are
10
due
to unpaid cheques, reversed by the Bank. The respondents most
certainly did receive the benefit of money made available by the
Bank. In turn, it did not adhere to the agreement to make good by
repaying the agreed amounts. Put otherwise, the respondents seem to
want the bank to first advance further amounts, until the maximum or
full loan has been released, before it wants to make further
repayments. Until then, the Bank is expected not to call up the loan.
What
the respondents now want is to renege on the agreement and have the
repayments adjusted to the level of money withdrawn, recalculated to
lesser amounts. That was not what they contracted. There is also no
plea of error calculi.
What
the court is to determine is whether the opposing affidavit, filed by
the second respondent with the bald statement that the Bank failed to
perform and that the respondents did not receive the full benefit of
the credit facilities, could constitute a valid defence to the claim.
The affidavit disclosing a valid defence need not be as specific as a
proper plea. It is necessary to bear in mind what Harcourt AJ said in
Fashion Centre and Another v Jasat 1960(3) SA 221 (N):
11
"One
must remember that summary judgment is a drastic and extraordinary
remedy involving the negation of the fundamental principle audi
alterant partem, and resulting in final judgment which is normally
only granted in clear cases, and not where there is any doubt, in
which latter event leave to defend ought to be given."
Also,
if it is reasonably possible that the plaintiff's application is
defective or that the defendant has a good defence, the issue must be
decided in favour of the defendant (see Mowscheson & Mowscheson v
Mercantile Acceptance Corporation of SA LTD 1959(3) SA 362 (W)).
As
shown above, the plaintiff's declaration is as comprehensive and
detailed as it could be. It clearly and precisely sets out the
particulars of the parties. Copies of the written contracts, deeds
and relevant documentation is annexed to it, with full reference to
the applicable aspects in the declaration. The plaintiff shows that
the defendant company utilised a substantial sum of money, made
available due to the plaintiff's performance under the contract. The
nature, grounds and the extent of the action is fully indicated and
motivated, leaving no doubt about the claim for a liquid amount of
money. If the respondents wanted to plead the exceptio non adimpleti
contractus, as
12
it
seems from a reading between the lines, it is properly disposed of by
the declaration, from which it is clear that indeed the Bank lent and
advanced the money it now claims back. To foresee a possibility that
at a trial it may be found that the plaintiff did not perform under
the loan agreement would require more than a strong imagination. It
is also not alleged that the defendant company did not receive the
money that is claimed. The breach by the respondent is fully alleged
and substantiated.
One
also has to bear in mind that it was expressly stated in the contract
that it remains within the sole discretion of the Bank to recall the
loan at any time after it was granted. In the present matter, the
discretion has not been frivolously exercised - the respondents did
not repay in accordance with the agreement. The Bank was entitled to
sue for cancellation immediately after the second non-payment was
established, at minimum. It chose not to do so forthwith, and it
indulged a period of reprieve.
In
the present circumstances, I hold the firm view that there is no
doubt that the first respondent company has breached the terms of its
loan agreement and that there is no triable defence. The second and
third respondents are liable in solidum as sureties and co-principal
debtors of the
13
first
respondent. There is no bona fide defence to the application for
summary judgment. Any borrower of money is at liberty to request its
Bank to ameliorate repayment amounts and schedules but a refusal of
such indulgence is not subject to judicial review. The purported
defence, if it is to be termed as such, might have had an impact on
their ability to make lesser repayments on the loan and to prolong
the agony, so to speak, but it is not a defence to the claim at all.
In
the event, there is no reason to refuse the application and it is
ordered that summary judgment be entered against the three
respondents, jointly and severally, the one to pay the other
absolved, as prayed for in the application for summary judgment. In
respect of claim 1 - The Nile, payment of the sum of E70 014.68 and
in respect of claim 2 - Cleopatra's, El 10 556.91. Both claims shall
attract interest at 5% above the prime rate of interest, a tempore
morae to date of final payment, with costs of suit on the attorney
and own client scale, including collection commission.
As
noted above, the application does not continue to seek a declaration
to declare the movable property hypothecated under Deed No. 472/2003
to be executable, and it is for that reason that it is not so
ordered.
14
The
applicant remains at liberty to seek such further relief in the event
that it becomes necessary to do so.
JACOBUS
P. ANNANDALE
ACTING
CHIEF JUSTICE
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