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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, PRETORIA)

 

Case No.: 24123/29

14/10/2019

 

In the matter between:

 

JACOB JOHANNES FRANCOIS BOTHA                                                Appellant/Applicant

(Identity Number: [….])

and

AVERGE TECHNOLOGIES PTY LIMITED                                          Respondent

(Registration Number: 2011/124452/07)

JUDGMENT -APPLICATION FOR LEAVE TO APPEAL

 

Date of hearing:       04 October 2019

Delivered on:                        _

 

CONSTANTINIDES AJ :

1.         The Applicant for leave to appeal, (the Defendant in the main action) (hereinafter referred to as "Botha") was unsuccessful in defending an application for summary judgment which was launched by the Respondent, Averge Technologies (Proprietary) Limited (hereinafter referred to as "Averge"), on 10 July 2019.

 

The Applicant has launched an Application for leave to appeal against the whole judgment of Constantinides AJ, which was handed down on 10 July 2019 on the following grounds:

1.         The Honourable Judge erred in finding that the respondent had advanced an amount of R3 420 000.00 (“the amount” to Mastercoms Proprietary Limited ("Mastercoms") on or about 31 October 2016 in terms of the loan agreement as alleged by the respondent, for the following reasons:

1.1.      The Honourable Judge erred in not considering that the respondent had not provided the Court with any evidence indicating that the respondent had actually advanced the amount in respect of the loan agreement;

1.2.      The Honourable Judge erred in finding that the amount reflected in the appellant's financial statements was advanced in respect of the loan and ignoring evidence from the appellant that the amount recorded in the financials was paid to Mastercoms pursuant to invoices rendered by the appellant to the respondent for services rendered;

1.3.      The Honourable Judge erred in not considering the appellant's defence that Mastercoms had not received the amount from the respondent in respect of the loan agreement, but in respect of invoices rendered by the appellant to the respondent;

1.4.       The Honourable Judge erred in finding that the appellant had a defence and then dismissing the appellant's bona fide defence only on the view that the defence was vague and therefore not sustainable;

1.4.1.        In doing so, the Honourable Judge erred in that she failed to properly apply the principles enunciated in the judgments referred to in the appellant's heads of argument, but in particular to:

1.4.2.        Maharaj v Barclays National Bank Limited 1976 SA 418 (A) 422;

1.4.3.        Gilinsky v. Superb Launderers and Dry Cleaners (Pty) Ltd 1978 (3) SA 807 (CJ 807;

1.4.4.        Estate Potgieter v. Elliot 1948 (1) SA 1084 ©; and

1.4.5.        Herb Dyer (Pty) Ltd v. Mahomed 1965 (1) SA 31 (T).

 

1.5.       The Honourable Judge's decision to dismiss the appellant's evidence in the form of invoices (as suspect), without proffering a reasonable explanation, was irrational:

1.5.1.         In so doing, the Honourable Judge failed to properly apply the principles enunciated in the judgments referred to in the appellant's heads of argument, but in particular to:

1.5.1.1.          Breitenbach v Fiat SA (Edms) Bpk 1976 (2) SA 226 (T); and

1.5.1.2.          Marsh v Standard Bank of SA Ltd 2000 (4) SA 947 (W) 949;

1.6.       The Honourable Judge erred in not accepting that the appellant has set out a bona fide defence which:

1.6.1.        Could only be proved at trial through oral testimony; and

1.6.2.        Which if proved at Court, would constitute an answer to the respondent's claim.

2.         The Honourable Judge further erred in finding that the appellant's spouses consent is not required for him to execute the suretyship in favour of the respondent (in terms of section 15(2)(h) of the Matrimonial Property Act 88 of 1984 (“the Matrimonial Property Act”) by virtue of the fact that the Honourable Judge was of the view that the suretyship was executed in the appellant's ordinary course of business in terms of section 15(6) of the Matrimonial Property Act, without there being evidence before the court.

2.1.      The Honourable Judge's error lies in that the determination of whether the suretyship was executed in the ordinary course of the appellant's business can only be determined by the trial court after having considered the oral testimony regarding the circumstances under which the suretyship was executed.

3.           The Honourable Judge further erred in rejecting the appellant's defence under section 15(2)(h)) of the Matrimonial Property Act on the view only that the appellant had acted ma/a fide in raising the defence, without the Honourable Judge having evidence to reach her conclusion.

3.1.      The Honourable Judge's reasoning for the aforesaid view was that the appellant had executed the suretyship in favour of the respondent and him raising the defence in terms of section 15(2)(h) of the Matrimonial Property Act was ma/a fide.

3.2.      The Honourable Judge's error lies in that she overlooked the fact that the defence raised by the appellant was good in law and if proved, would not only constitute an answer to the respondent's claim, but it would vitiate the claim.

 

4.          The claim relates to an action which was instituted against the Botha by way of a combined summons for payment of the amount of R4 956 376,44 together with interest thereon based on the repayment of a written Loan Agreement which was duly signed by Jacob Johannes Francois Botha ("Botha"),Botha was a Director of Mastercoms (Pty) Limited ("Mastercoms") to whom the Respondent had advanced the loan. On the same day that the Loan Agreement was signed, Botha executed a Deed of Suretyship in favour of Averge, on the 26^th April 2019 and bound himself as surety and co-principal debtor with Mastercoms for fulfilment of its obligations in terms of the Loan Agreement.

5.          Mastercoms failed to repay the loan and interest on/or before 20 February 2019 and Averge instituted an action against Mastercoms and Botha based the claim on the Deed of Suretyship that he signed and on the Loan Agreement.

6.          Averge sought the following relief in the application for summary judgment:

6.1.       Payment of the sum of R4 956 376,44;

6.2.       Interest on the loan amount of R3 420 000.00 calculated at the rate of 19% per annum from 13 March 2019 to date of final payment alternatively, interest on the loan amount of R3 420 000.00 at the rate of 10% per annum calculated a tempore morae to date of final payment;

6.3.       Costs of suit.

 

7.          The application for summary judgment was opposed by Botha wherein he set out his defences as follows:

7.1.       Botha confirms that the payment of the sum R3 420 000.00 was paid by Averge to Mastercoms but same was not in relation to a loan but in respect of "engineering consultancy services and sales commission"; and

7.2.       Botha stated that the Deed of Suretyship that he signed was "void ab initio"[1] due to the fact that he is married in community of property and did not receive the consent of his spouse to conclude the Deed of Suretyship.

 

8.          What is relevant is the fact that Botha did not deny that he entered into an Agreement on behalf of Mastercoms and bound himself as surety.

9.          If one has regard to the Loan Agreement marked "A" and attached as an annexure to the Particulars of Plaintiff's Claim, clause 1 on page 2 of the Loan Agreement states the following:

"1.     LOAN

 

The Lender provided the Borrower with a loan in the sum of R3420,000 (three million four hundred and twenty thousand Rand ('the loan amount7 on the terms set out hereunder ('the loan’)

 

DISBURSEMENTS OF FUNDS

 

It is specifically recorded that the loan amount was made available by the lender to the borrower on 31/10/16 (the 'disbursement date,. (Emphasis added)

 

 

10.        It was argued in the Heads of Argument that:

10.1.    the disbursement date was 31 October 2016 and the date of signature of the Agreement was 26^th April 2018;

10.2.    and that the basic wording of the Agreement referred to the past tense, being that the Loan had already been advanced when the Agreement was recorded years later. {emphasis added)

11.       Counsel for Botha argued that the Loan Agreement did not state that the amount was physically advanced and paid to Mastercoms.

12.       The Financial Statements which were attached to the Plaintiff's particulars of claim were signed by Botha as being in order in his capacity as the Director. Item 12 on paginated page 40 of the Financial Statements included an item No. 12 with the amount of R3 000 420.00 which included the "trade payable" regarding Averge Technologies.

13.       In Annexure "D" (paginated page 42) which was Mastercoms' Financial Year End Statement for the year the 28^th February 2018 {in paginated page 57) interest is reflected under 2018 in the amount of R230 514.00 to Averge.

 

The argument that the Deed of Suretyship Is void ab initio

 

14.        Botha in relation to his defence of the Deed of Surety stated that: "my wife did not sign it so now I am not responsible anymore". Averge's Counsel countered the aforesaid submission with reference to section 15l6] of the Matrimonial property Act wherein it states that:

"Should the suretyship be furnished in the ordinary course of a person's business then such surety is deemed valid."

15.        It was argued that it is inconceivable the payments received "for services rendered and payments received in 2016 would be reflected in the statements of a financial year that ended 28 February 2017 and 28 February 2018”.[2]

16.        The invoices which were attached by the Respondent provided no basis or any explanation as to what services were rendered and how these figures were computed. The invoices were vague.

17.        Botha is referred to as ("the surety'' on the face of the Loan Agreement and it is stated that he is married in community of property on the Loan Agreement which was entered into between Mastercoms and Averge. However, Mastercoms' Counsel stated in argument that in terms of 15(2)(h) of the Matrimonial Act:

 

"2.     Such spouse shall not without the written consent of the other spouse-

(h)       bind himself as surety".

 

In terms of Section 15(6) of the Matrimonial Act :

 

"Should a suretyship be furnished in the ordinary course of a person's business then such a suretyship is deemed valid even if the spouse consent was not given."

"          In the case of Ockie Strydom v. Engen Petroleum[3] the Supreme Court of Appeal dispelled with any doubt of the deportation of Section 15(2)(h) read with section 15(6) as to when a spouse will be bound to a surety even though he/she was unaware of the dealings of his I her spouse. In this case the defence was raised that the Appellant's wife had refused to consent to the signing of the Deed of Surety and therefore the deed was invalid by virtue of provisions of section 15(2)(h).

 

The SCA held the question that had to be decided what constitutes acting in the ordinary course of one's profession, trade or business. The answer to the question, the SCA stated that the determination of whether a person acted in the ordinary course of his/her business was a question of fact that must be judged objectively with reference to what was expected of a businessman/businesswoman.

The SCA held that section 15(2) does not apply if the Act in question is performed in the ordinary course of the spouse's business, trade of profession. Therefore, it is not enough for the person seeking to rely on section 15(2)(h) to say that they were married in community of property and their spouse did not consent to the suretyship. “[4]

18.        Based on the submissions made to me I was satisfied that Botha at all times had acted in the course and scope of his business, trade or profession as he was authorised in terms of a Resolution to sign a Loan Agreement. The Resolution adopted by the Board of Directors of Mastercoms in his capacity as Director of the Company he was authorised to sign all documentation and do all things and take all steps necessary to give effect to the resolution relating to the loan agreement. On the same date the Deed of Suretyship was entered into by Botha for performance of Mastercoms of which Botha is a Director.[5] The Resolution of Mastercoms is marked annexure “A2”.

19.        Paragraph 10 on page 7 of the Particulars of Claim states:

"The Defendant is executing the Deed of Surety in the ordinary course of his profession or trade as Director of Mastercoms"

Botha in the affidavit opposing summary judgement failed to deny or dispute the aforesaid statement and merely stated that because he is married in community of property and his spouse did not co-sign the Deed of Surety, this renders the Deed of Surety void ab initio.

 

20.        Paragraph 8.1 of the Loan Agreement reads as follows:

"8.1       Borrower warrants that it is a juristic person …

8.2         The surety warrants that it is the beneficial owner of 50% (fifty percent) of the issued share capital in the borrower ('the shares? and that there is no restriction on the cession of shares as more fully described in annexure "B" hereto.

8.3         As security for the performance of the borrower's obligations, the surety hereby irrevocably cedes its right, title and interest in respect of the shares in the borrower as set out in annexure "B"."

 

21.        Botha signed on behalf of Averge and then also signed on the same day in his capacity as surety. Objectively viewed the deed of suretyship was concluded in the normal course of business.

22.        Counsel for Botha could not provide an explanation as to why the balance sheets wherein amounts were reflected in trade receivables/trade payable regarding the related parties Averge Technologies, (3 873 274) in 2018 and then in 2017 (3 420 000) and could not explain why interest was reflected next to the entry "Averge Technologies" in 2018 (page 15 of the Notes annexed to the Financial Statements of Mastercoms Limited).

23.        The Court concluded that the Suretyship Agreement was signed by Botha in the normal course of business and Botha's defence that Mastercoms had not received the amount from the Respondent in respect of the Loan Agreement was bald, vague and sketchy with vague invoices attached with no proper substantiation. Botha has not set out "fully" the nature and grounds of his defence as required by uniform Rule 32(3).

24.        Counsel for Botha Argued that there was no indication that he had signed the deed of suretyship in his capacity as director. However if one has regard to the face of the Loan Agreement it reflects the names of The Respondent (Averge Technologies), and Mastercoms Pty Ltd represented by Botha in his capacity as director of the company, duly authorised by a resolution which is attached as "A2" and Jacob Johannes Francois Botha married in community of property, who is reflected as "the Surety". There is also a notation that "(collectively the "Parties" and "Party" shall constitute either of them)". The Deed of suretyship was signed by Botha on the same day as the Loan agreement. (emphasis added)

25.        In the case of Arend v. Astra Furnishers (Pty) Limited (1) SA 849 (C) and Van Wyngaardt NO v. Knox 1977 (2) SA 636 (T) in regard to the grant of leave in cases where summary judgment has been granted, it should be borne in mind that the purpose of summary judgment is to enable a plaintiff with a clear case to obtain swift enforcement of a claim against a defendant who has no real defence to that claim. It is a procedure that is intended "to prevent sham defences from defeating the rights of parties by delay and at the same time causing great loss to plaintiffs who were endeavouring to e!7force their rights." If a Court hearing an application for summary judgment is satisfied that the defendant has no bona fide defence to a plaintiff's claim and grants summary judgment as a consequence, it should be slow thereafter to grant leave to appeal, less it undermine the very purpose of the procedure (Majola v. Nitro Securitisation 1 (Pty) Ltd 2012 (1) SA 226 (SCA) at 232 F – H)[6].

26.      The Superior Courts Act 10 of 2013 has raised the bar for granting leave to appeal in the case of The Mont Chevaux Trust (IT2012/28) v Tina Goosen & 18 Others, Bertelsmann J held as follows:

"It is clear that the threshold for granting leave to appeal against a judgment of a High Court has been raised in the new Act The former test whether leave to appeal should be granted was a reasonable prospect that another court might come to a different conclusion, see Van Heerden v Cronwrlght & Others 1985 (2) SA 342 (T) at 343 H. The use of the word "would" in the new statute indicates a measure of certainty that another court will differ from the court whose judgment is sought to be appealed against."

 

27.       Based on the aforesaid, I am not persuaded that the appeal would have a reasonable prospect of success or that there is some other compelling reason why the appeal should be heard. The decision sought on appeal does not fall within the ambit of Section 16(2)(a) and the decision sought to be appealed does not dispose of all the issues in the case or that the appeal would lead to a just and prompt resolution of the real issues between the parties.

28.         I am satisfied that Botha will not have any reasonable prospects of success if leave to appeal is granted; there is no other compelling reason why the appeal should be heard; this matter does not involve an important question of law and the administration of justice does not require that this appeal be heard.

 

 

ORDER

 

The application for leave to appeal is dismissed with costs.

 

 

H CONSTANTINIDES

Acting Judge of High Court

Gauteng Division

Pretoria

14 October 2019

 

Attorneys for the Appellant: Werksmans Attorneys

Email: kmotshwane@werksmans.com

 

Counsel for the Appellant:          Adv. S Mathiba

 

Attorneys for Respondent:         C Rossouw Attorneys (Ref: Christoff Loch)

Email: christoff@crda.co.za

 

Counsel for the Respondent: Adv. S M Van Vuuren

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