IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE HIGH COURT, CAPE TOWN)

In the matter between:

and

JUDGMENT

DAVIS, J:

This is an application for summary judgment. The plaintiff institute it against the defendants for payment by each of the sum of R107 952,35, being half the debit balance of an overdraft facility granted by the plaintiff to the defendants jointly in terms of the written contract and interest thereon at the rate of 15% per annum, calculated daily and capitalised monthly from 7 May 2010 to date of payment, both dates inclusive. Plaintiff relies on certificates of balance to prove the  quantum  of the  claim,  the  amounts  appearing   in  the certificates and the calculation of interest had not been disputed.

Significantly in this regard, section 38(2)A of the Act, which was introduced into the Companies Act in 2006, waters down the scope of the prohibition to a considerable extent in keeping with modern company law. It provides that the prohibition against giving financial assistance for the purchase of shares in a company or its holding company does not apply, if the company's board is satisfied that, subsequent to the transaction, the consolidated assets of the companies, fairly valued will exceed its consolidated liabilities. Further, subsequent to providing assistance for the duration of the transaction, the company will be able to pay its debts as they become due in the ordinary course of business, and that the terms upon which the assistance will be given are approved by a special resolution of the company.

It was, however, contended that if regard was had to clause 3 of the facilities agreement, there was a set of provisions relating to loans which were interlinked. The argument ran as follows: There were two categories of loans, one to PPP and another to R J Minnaar and A J Nelson; that is the two defendants. Insofar as the latter were concerned, the facilities were broken into three, a letter of guarantee, a temporary overdraft facility and insofar as it was relevant, an overdraft facility of R160 000, which is the subject of the present proceedings. The argument, therefore, proceeded thus: all three forms of loan to the defendants form part of the same loan agreement and, therefore, once this was litigated in the George Magistrate's Court, in effect the same proceedings were again being heard; thus in two different forums.