IN THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE PROVINCIAL DIVISION, CAPE TOWN
CASE NO:  7580/2020
DATE:  2020.12.04
In the matter between:
MERCEDES‑BENZ FINANCIAL SERVICES
(SOUTH AFRICA) (PTY) LIMITED	Applicant
and
NEGATU INVESTMENTS CC	First Respondent
TSAHAI NEGATU 		Second Respondent

JUDGMENT
(APPLICATION FOR SUMMARY JUDGMENT)

DAVIS, J: 
This is an application for summary judgment in terms of which the plaintiff seeks delivery of a motor vehicle pursuant to the cancellation of an instalment sale agreement.  It appears that before me the plaintiff only seeks confirmation of termination of the agreement, the return of the vehicle, with costs.  Whatever contractual damages may flow from this dispute was not an issue with which this Court had to concern itself.  

It appears that the first defendant does not dispute that an agreement was entered into, that plaintiff delivered the vehicle, that the first defendant is still in possession of the vehicle and that monthly payments have not been paid by it.  

The second defendant does not dispute that there is a suretyship which it entered into in favour of plaintiff.  

Defendant, in its opposing affidavits, denied plaintiff’s entitlement to cancel the agreement on essentially three grounds: 

1.	They claim that it is the plaintiff’s fault for the fact that the monthly instalment amounts were not deducted from the first defendant’s banking account in terms of the payment instruction.  

2.	First defendant contends further that plaintiff failed to provide the first defendant with a notice calling upon it to remedy this breach prior to plaintiff cancelling the contract.  

3.	The defendants contend that the first defendant tendered to pay in terms of the agreement but was unable to perform due to the conduct of plaintiff.  

Turning to the principles of summary judgment, which are well known, it is important to note that although rule 32 of the Uniform Rules of Court have been amended, this has not changed the nature of the burden on a defendant to demonstrate that he or she has a bona fide defence to the action and what is required in respect of the content of the opposing affidavit.  In short the basic principles dealing with summary judgment continue to apply.  Thus, in Breitenbach v Fiat (SA) (Edms) Bpk 1976(2) SA 226 (T), Colman, J set out the fundamental requirements which still apply: 

1.	Defendant must set out in his affidavit facts which, if proved at trial, will constitute an answer to the plaintiff’s claim.  If he or she does not do so then that party can hardly satisfy the Court that it has a defence.  

2.	The defence must be bona fide in the sense that it will suffice if the defendant swears to the defence valid in law in a manner which is not inherently and seriously unconvincing.  

3.	The statement of material facts relied upon by the defendant must be sufficiently full to persuade the Court that what the defendant has alleged, if it is proved at the trial, will constitute a defence to the plaintiff’s claim.  If the defence is averred in a manner which appears in all the circumstances to be needlessly bald, vague or sketchy, this will constitute material for the Court to consider in relation to the requirement for bona fides.  

4.	Even if the defendant’s affidavit does not measure up fully to these requirements the Court can exercise the discretion and refuse summary judgment.  The discretion, however, has to be exercised cautiously because it shouldn’t deprive the plaintiff of summary judgment when he or she ought to have that relief.  

See also for a more recent exposition Joob Joob Investments (Pty) Ltd v Stocks Mavundla Zek Joint Venture 2009(5) SA 1 (SCA) at 11–12.  

Perhaps I should add one additional factor to the legal matrix which is central to this case, namely a dictum which is derived from Arend and Another v Astra Furnishers (Pty) Ltd 1974(1) SA 298 (C) at 304A:
	“The Court must be apprised of the facts upon which the defendant relies with such completeness as to be able to hold that if these statements of fact are found at the trial to be correct, judgment should be for the defendant, and that the defendant’s defence appears to be a bona fide one...  Accordingly, if for instance the statements of fact are equivocal or ambiguous or contradictory or fail to canvass matters essential to the defence raised, then the affidavit does not comply with the rule.”

With these legal aspects in mind I turn now to deal with the defences which have been offered by the defendants.  

1.	The payment instruction: 

The first defendant mandated and authorised plaintiff to deduct from its bank account the monthly instalment by way of a debit order.  This instruction was in writing and was signed on behalf of the first defendant as appears from the record.  

The payment instruction reflects the details of the First Bank account to be 4046776728.  The problem is that the last digit is incorrect.  This was filled in presumably by the first defendant but now that defendant seeks to suggest that he somehow must be excused from making payment.  

As Mr Jonker submitted on behalf of the plaintiff, given the principle of caveat subscriptor, namely that a person who signs the contract is taken to be bound by the ordinary meaning and effect of the words which appears over his signature, there does not appear to be a huge amount of merit with regard to this case.  On its own, this clearly cannot be a bona fide defence as I have set it out, but this defence is linked to a further question.  That is the question of notice and the concomitant duty which might then have been imposed upon the plaintiff.  

I turn in order to apply these principles to clause 4 of the standard terms and conditions of the agreement entitled, “The implications of default, non‑payment and breach.”

“4.1	If you or us (defaulting party) commits any breach of this agreement and fails to remedy such breach within 7 (seven) business days (notice period) of written notice requiring the breach to be remedied, then the party giving the notice (aggrieved party) will be entitled at its option: 

4.1.1	to claim immediate specific performance of any payment of the defaulting party’s obligation under this agreement with or without claiming damages... 

4.1.2	to cancel this agreement,  with or without claiming damages, in which case written notice of the cancellation shall be given to the defaulting party and the cancellation shall take effect on the giving of the notice.  Neither party shall be entitled to cancel this agreement unless the breach is a material breach.  A breach will be deemed to be a material breach if: 

4.1.2.1	It is capable of being remedied but is not so remedied within the notice period, or

4.1.2.2	It is incapable of being remedied or is not remedied within the notice period and payment in money will compensate for such breach but such payment is not made within the notice period.” 

Clause 4.1 of the agreement is therefore a clause upon which Mr Kotze, who appeared on behalf of the defendant, relied.  He submitted that this requires in peremptory terms the issuing by the aggrieved party of a notice to remedy an alleged breach within the notice period of seven days.

Furthermore, relying on clause 4.1.2.1, Mr Kotze submitted that this clearly stipulated that the agreement can only be cancelled by the aggrieved party if the defaulting party fails to remedy its breach within the notice period of seven days.  

Clause 4.4.1 of the agreement, in his view, then provides that the breach will occur if payment under the agreement is not made punctually.  

Clause 4.5 then contains a second notice period of five days, and stipulates that if the breach in question is not remedied within that period the applicant shall have the right referred to in clauses 4.1 and following.  

Mr Kotze turned to the affidavit in support of the application for summary judgment, where the applicant relies on letters of demand sent to the respondent on 17 December 2019, which the plaintiff claims constituted a notice‑of‑breach cancellation as contemplated in clause 4 of the agreement.  That letter reads thus, insofar as it is relevant: 

“You are indebted to our client in respect of your commitment on the abovementioned account for the arrears amount of R499 283.35, together with interest thereon at the rate of 12% per annum calculated daily and compounded monthly in arrears from 5 December 2019 to date of payment, both dates inclusive.  We are instructed that as at 5 December 2019 you were in arrears in respect of the vehicle and finance account and that you have been so in arrears for at least 20 business days at date hereof.  You are accordingly in default of your obligations and breach of the agreement.  Unless the aforesaid amount of R499 283.35 is paid or suitable arrangements are made to settle the aforesaid amount within 10 (ten) days of receipt of this letter of demand, we have instructions to proceed without further notice to you.” 

Mr Kotze submitted that, although the letters of demand purportedly claimed payment of outstanding arrears, the amount claimed in fact constituted the full capital amount due under the agreement – that is R499 283.35 – in circumstances where the letter indicated that the first respondent had only been in arrears for some 20 business days.  Therefore he submitted that the applicant was in fact claiming accelerated payment of the capital amount, to which it was not entitled until it had validly cancelled the agreement, which in turn it could only validly do once it had complied with the notice requirement, to which I have made reference, by informing the first defendant of its breach and providing it with an opportunity to make payment of the arrears amount within the notice period.  

In Mr Kotze’s view, neither the summons nor the affidavit filed in support of this application disclosed a valid cancellation of the agreement and by necessary implication failed to disclose a valid basis on which the applicant is entitled either to accelerated payment of the full capital amount or to the return of the vehicle.  In his view, cancellation of contracts on the basis of a lex commissoria, cannot be achieved in the manner in which the plaintiff sought to achieve it.  

It was trite law, he submitted, that the mere fact that a debtor is in mora does not entitle the creditor to rescind the contract without first having provided the debtor with a reasonable opportunity to perform.  So much is apparent from the seminal judgment in Nel v Cloete 1972(2) SA 150 (A) at 160.  In addition Mr Kotze referred to a passage from LAWSA Volume 9 at para 393:

“It is often stipulated that if the debtor should fail to comply with certain provisions of the contract, the creditor will be entitled to rescind the contract, provided the creditor gives the debtor a stated number of days notice in writing of the intention to do so.  This notice must not be confused with the notice of rescission in the excepted sense.  It does not create a right to rescind but lays down the manner in which the right of rescission (already existing by reason of the lex commissoria) should be exercised.  However, the stipulation does not have the affect of affording the debtor an extra period within which to purge any mora.”

Therefore, according to the defendants’ argument the first defendant’s tender of payment of the arrear amount was stymied by the plaintiff’s refusal to provide the first defendant with its banking details, and this constituted a further basis on which the application should be dismissed.  

The first time that the plaintiff provided banking details after repeated requests from the first defendant’s attorneys, was on 6 January 2020, at which stage the first defendant was told that payment could not be effected by it until a final payment arrangement had been accepted.

This submission appears to rely on an email sent by plaintiff’s attorney, Tinto Law (the relevance of which I shall refer to in a moment) on 6 January 2020, in which the following appears: 

“We confirm that the final payment arrangement is required to be accepted by our client prior to payment being effected herein.  Trusting that you will find the above in order and look forward to hearing from you.” 

In addition the email supplied plaintiff’s banking details.  

I have now referred to the identity of Tinto.  There was some confusion as to whether Tinto or Strauss Daly, the firm which had generated the letter of 17 December 2019, were acting on behalf of plaintiff.  

Whatever the debate and the merits about the confusion created by the plaintiff employing two sets of attorneys, the letter of 17 December 2019 did put defendant to terms.  The problem of the correct banking details did not exonerate the defendant from fulfilling its contractual obligations to pay.  

The obligation to ensure that payment was made had to rest upon the first defendant.  It remained upon the first defendant to pay in terms of the contract into which it had entered.  

It therefore must follow that the first defendant had a duty to ensure that the monthly instalments were deducted from its bank account, failing which to ensure that the plaintiff was paid in some other acceptable manner.  

Clauses 6.1 to 6.3 of the agreement clearly obliges the first defendant to pay “without any deduction free of exchange and set‑off and that it may not withhold payment for any reason whatsoever.”  

Once the first defendant failed to pay the monthly instalment it was in breach of the agreement and plaintiff then did have the right to trigger the rights which it enjoyed in terms of the lex commissoria pursuant to clause 4.1.  It is also common cause that the first defendant did not pay the arrear amount when summons was issued on 23 June 2020.  It was only thereafter that the agreement was cancelled.  

This becomes particularly relevant in the light of the letter of 17 December 2019 and the clear point in the email of 6 January 2020 in which the first defendant was advised of the banking details.  

It is common cause that the first defendant did not make any payment after receipt of this email.  It appears to justify this failure by contending that the email contained a condition for any payment, namely that the final payment arrangement had to be acceptable to the plaintiff before payment could be made, but there is nothing in the email which suggests that the plaintiff would refuse to accept any payment or that the first defendant was prevented from making payments.  The email on 6 January 2020 did not on any plausible reading give the first defendant “a free pass.”  

If there is a tender which had to be made by the first defendant, this would be unconditional in the sense that it had to ensure that it would fulfil its obligations.  An unconditional tender would have meant a tender to pay all the arrear amounts and to continue paying the instalments in terms of the agreement.  No such unconditional tender was made.  In a letter on 28 January 2020 a further proposal was made by the first defendant which again is evidence that it did not make any unconditional tender, as it was required to do. 
 
Nothing prevented the first defendant from making such an unconditional tender and this therefore becomes a particularly problematic issue insofar as this case is concerned, namely there was a letter sent on 17 December 2019 in which the first defendant was told to remedy its breach.  It did not do so.  The question therefore arises as to whether this was sufficient in law to ultimately justify the conduct that was pursued by the plaintiff.  

Parties who reduce their agreement to writing run the risk that by accident or design the agreement may not give full expression to their common intention. 

There was a debate raised on the part of Mr Jonker on behalf of the plaintiff that even if the agreement contained a lex commissoria, and even if this Court was to read the letter of 17 December 2019 as falling short of a notification pursuant to clause 4.1, there was a residual basis in the contract which preserved the rights of the plaintiff in terms of the common law.  

“In terms of 4.3 the aggrieved party’s remedies in terms of clause 4 are without prejudice to any other remedies to which the aggrieved parties may be entitled in law.” 

I need to qualify this particular submission because it appears to me that on its own it may run counter to fundamental legal principle.  As Van der Merwe, Van Huyssteen, Reinecke and Lubbe, Contract: General Principles (4th Ed) at 299 states:
“Roman‑Dutch Law did not provide sufficient opportunity for cancellation of the contract on the ground of mora.  South African Courts then turned to English Law and adopted the doctrine of time is of the essence of the contract.  In the result cancellation of the contract for mora debitoris need no longer be based on the expressed lex commissoria.  A right to cancel is also recognised where the debtor is in mora and the nature and circumstances of the contract make prompt performance of great importance to the contractants (or, as it is often said, “time is of the essence of the contract.”)  The urgency of performance may be apparent; in light of the circumstances, the contract may concern a performance which is subject to price fluctuations or it may relate to goods such as foodstuffs or articles or fashions which have a limited durability or attractiveness in the market or may be of a speculative or a commercial nature, as has been said that the right to cancel in instances such as these results from a tacit lex commissoria.”

Christie’s Law of Contract (7th Ed) at 595 also weighs in: 
“A debtor under a contractual obligation to perform within an unspecified reasonable period may genuinely believe the time to be longer than the creditor believes to be and to inflict cancellation damages or any other consequences of mora on the debtor without warning, simply because the Court subsequently agrees with the creditor’s estimate of what was a reasonable time, seems unnecessarily hard.  It is no hardship on the creditor expected to protect its own interest by warning the debtor that in its view the reasonable time has run out or is about to run out especially in light of when time is of the essence of the contract so that its running out can be expected to activate the creditor.” 

The reality in this particular case is that whatever the merits of the argument that the contract expressly left intact plaintiff’s common law remedy, in addition to the express provisions of the lex commissoria, the fundamental proposition which must be followed in this case is that to return to the letter of 17 December 2019 the defendants were put on notice.  The fact that their only justification is that somehow the banking details that they provided are incorrect, can never be a justification in law for not fulfilling obligations in terms of the contract.  

It is correct that the letter talks of paying the full amount, or suitable arrangements being made.  That in turn would have triggered by a defendant, who is committed to pay, an unconditional tender.  As I indicated that did not occur, neither on 6 January 2020 nor in terms of the letter of 28 January 2020.  

Accordingly on the law relating to mora debitoris the defendants were put to time to pay and they sought a range of unsustainable legal justifications to prevent payment of in terms of the contract, where they were manifestly obliged to pay.  
In short, the various defences which were put up, the payment instruction coupled to the arguments with regard to the notification have absolutely no merit and cannot be regarded as sufficient to sustain the bona fide defence, and accordingly the defendant must be found to have failed to disclose a bona fide defence.  
IT FOLLOWS, THEREFORE, THAT THE PLAINTIFF IS ENTITLED TO SUMMARY JUDGMENT FOR THE RETURN OF THE VEHICLE IN TERMS OF THE NOTICE OF APPLICATION FOR SUMMARY JUDGMENT, WHICH WOULD INCLUDE COSTS.  

………………………………….…..
DAVIS, J
JUDGE OF THE HIGH COURT
DATE:  4 DECEMBER 2020……