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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

(EASTERN CAPE DIVISION, GRAHAMSTOWN)          

                   CASE NO.: 847/2010

In the matter between:

STANDARD BANK OF SOUTH AFRICA LIMITED                                     Plaintiff

And

ASHBURY GEORGE DAVENPORT N.O.                                              1^st Defendant

CHRISTOBEL ERKSINE DAVENPORT N.O.                                      2^nd Defendant

ASHBURY GEORGE DAVENPORT N.O.                                              3^rd Defendant

CHRISTOBEL ERKSINE DAVENPORT N.O.                                       4^th Defendant

ASHBURY GEORGE DAVENPORT                                                       5^th Defendant

JUDGMENT

BESHE, J:

[1] Plaintiff in this matter which is the Standard Bank of South Africa Limited issued summons against the defendants in March 2010 seeking judgment in respect of three claims.

In respect of claim one judgment is sought for payment of a sum of R1 756 203.05, interest thereon, costs and collection commission.

Claim two is for payment of a sum of R1 371 235.44, interest thereon costs as well as the declaration of certain farms specifically executable.

Claim three is for payment of a sum of R426 332.02, interest thereon, costs and collection commission.

[2] First and second defendants are cited as Trustees of the Resolution Estate Trust (the Estate Trust). Third and fourth respondents are cited as Trustees of Resolution Farm Trust (the Farm Trust). Fifth defendant is cited in his personal capacity.      

[3] In respect of claim one, it is alleged that:

There was an agreement between the plaintiff and Estate Trust that plaintiff would make available to the estate an overdraft facility under account number […..] with a credit limit of R1 600 000.00.

Pursuant to that agreement the Estate Trust is liable to the plaintiff in the sum of R1 756 203.05 being in respect of monies lent and advanced alternatively disbursed by the plaintiff to the Estate Trust.

Farm Trust signed a Suretyship Agreement in favour of the plaintiff in terms of which it bound itself as surety and co-principal debtor in solidium with Estate Trust in respect of Estate Trust’s liability in respect of the agreement as mentioned above.    

[4] A similar surety agreement was signed by the fifth defendant. It is on the basis of the above that it is alleged that the five defendants are liable in respect of claim one.     

[5] In respect of claim two, plaintiff alleges that:

Plaintiff and the Estate Trust entered into a medium term loan agreement during 2005.

Pursuant to this agreement Estate Trust is liable to the plaintiff in the sum of R1 371 235.44 being in respect of monies lent and advanced, alternatively disbursed by plaintiff to Estate Trust.

As security for Estate Trust’s obligations to the plaintiff in this regard, the Farm Trust passed in favour of the plaintiff a continuing mortgage bond which hypothecated as a first mortgage bond the following properties:

The Farm “Droogte Vlakte” A.

The remainder of Farm “Hermanus Kraal” Annes 95.

The remainder of Farm No 100.

The remainder of Portion 5 of the Farm “Hermanus Kraaal” No 93.

The remainder of Farm “Droogte Vlakte” No 94. and

Portion 1 of the Farm “Droogte Vlakte” No 94.

During 2000 Farm Trust signed a Suretyship Agreement in favour of the plaintiff and bound itself a surety and co-principal debtor in solidium with Estate Trust’s existing, future and contingent liability.   

[6] During the same year, fifth defendant signed a suretyship agreement in favour of the plaintiff and bound itself as surety and co-principal debtor in solidium with Estate Trust in respect of debt that is the subject of claim two. Plaintiff therefore alleges that the defendants are liable in respect of claim two because they have failed to pay the indebtedness of the Estate Trust.

[7] In respect of claim three, plaintiff alleges that the third to fifth defendants’ liability arises from the following:

An overdraft facility agreement was entered into between plaintiff and fifth defendant in terms of which plaintiff undertook to lend and advance monies to fifth defendant with a credit limit of R400 000.00.

Plaintiff complied with its obligations in terms of the agreement. Fifth defendant made withdrawals from time-to-time on the overdraft account made available by the plaintiff.

As at 3 March 2009, the balance of fifth defendant’s account stood at R426 332.02.

Notwithstanding demand having been made by plaintiff for payment from fifth defendant, the latter has failed to pay the said amount to the plaintiff.     

[8] Plaintiff further alleges that Farm Trust executed an unlimited deed of suretyship in favour of the plaintiff and bound itself as surety and co-principal debtor in solidium with fifth defendant for fifth defendant’s liability in respect of claim three.

[9] Accordingly plaintiff seeks judgment against first to fifth defendants in respect of claim one and two and third to fifth defendants in respect of claim three.

[10] Plaintiff also alleges that notices in terms of Section 129 (1) of National Credit Act 34 of 2005 (the Act) were delivered to the Estate Trust, Farm Trust and fifth defendant as required by the Act.

[11] To this end, copies of Section 129 (1) notice sent by registered post to:

(i) The Trustees of Resolution Estate Trust,

(ii) Trustees of the Resolution Farm Trust, and

(iii) Fifth defendant Ashbury George Davenport.

[12] In their plea defendants admit the agreements as alleged by the plaintiff. They admit their indebtedness as alleged by the plaintiff.

[13] Defendants however deny that Farm Trust, Estate Trust and fifth defendant were in mora or in default as contemplated in Section 129 and 130 of the Act. It is denied that valid notices in terms of Section 129 of the Act read with Section 130 was given to the two Trusts and fifth defendant by the plaintiff. Defendant’s reason for contending that plaintiff did not cause to be delivered valid notices in terms of Section 129 of the Act is the following:

The Farm Trust as a surety, selected Resolution Farm Grahamstown a domicilium citandi et executandi so did fifth defendant.

They deny that the Estate Trust selected PO Box 54 Grahamstown as a proper address for service.

Defendants do however admit that pursuant to the suretyship by Resolution Estate Trust in favour of the plaintiff, they chose PO Box 54 Grahamstown 6140 as the address to which notices in respect of the loan may be delivered or sent.

[14] Defendants deny that fifth defendant selected the post box address as his domicilium address.

[15] From the minutes of a conference held in terms of Rule 37 it transpires that defendants made the following admissions:

First, third and fifth defendants are the same person cited in different capacities.

Second and fourth defendants are the same person.

[16] What remained in dispute was whether plaintiff complied with Section 129 of the Act or not and whether the defendants were in mora or not and thus whether their indebtedness was due, owing and payable when the notices in terms of Section 129 were sent.

[17] It appears to be common cause that prior to the issue of summons in March 2010 the plaintiff sought and obtained judgment by default for the same cause of action against the defendants which was subsequently rescinded on the 25 February 2010.

[18] Summons in the present matter was issued on the 25 March 2010.

[19] In respect of the aspect that is in issue between the parties, plaintiff annexed as B1 to B3, copies of notices in terms of Section 129 (1) of the Act dated 25 February 2010.

Annexure B1 is addressed to:

The Trustees

Resolution Estate Trust

PO Box 54,

Grahamstown.

Annexure B2 is addressed to:

The Trustees

Resolution Farm Trust

PO Box 54,

Grahamstown.

Annexure B3 is addressed to:

AG Davenport

PO Box 54,

Grahamstown.

The notices are dated 25 February 2010. In addition plaintiff led the evidence of Mr Steven Murray Van Zyl the Post Master and Branch Manager of the Grahamstown Post Office. Mr Van Zyl testified that registered letter notifications were issued by the post office concerned by placing them in the relevant post box either on the day of receipt from the person posting the items or on the following morning. The registered letter notifications to the abovementioned addressees are dated 2 March 2010.

[20] Defendants’ case in this regard as articulated by fifth defendant is that he was out of town, (Grahamstown), at the time of the posting of the notices. He therefore did not collect his mail for a period of time and therefore did not get to see the notice until it was late for him to take advantage of options suggested in the notice.

[21] Mr Davenport testified further in any event the address to which the notices were sent is not the address chosen by the defendants as their domiciluim citandi. He stated that the address chosen in respect of the three agreements is Resolution Farm Grahamstown.

[22] Mr Davenport’s evidence is in keeping with defendants’ plea.

[23] In the alternative defendants plead that the plaintiff approached the court prematurely in that the peremptory ten business days as required in terms of Section 130 (1) (a) had not elapsed after the delivery of the Section 129 notices when the defendants approached the court for an order to enforce the agreements sued upon.

[24] The two provisions in question provide as follows:

Section 129. Required procedures before debt enforcement.-(1) If the consumer is in default under a credit agreement, the credit provider –

(a) may draw the default to the notice of the consumer in writing and propose that the consumer refer the credit agreement to a debt counsellor, alternative dispute resolution agent, consumer court or ombud with jurisdiction, with the intent that the parties resolve any dispute under the agreement or develop and agree on a plan to bring the payments under the agreement up to date; and

(b) subject to section 130(2), may not commence any legal proceedings to enforce the agreement before –

(i) first providing notice to the consumer, as contemplated in paragraph (a), or in section 86(10), as the case may be; and

(ii) meeting any further requirements set out in section 130. 

Section 130. Debt procedures in a Court.-(1) Subject to subsection (2), a credit provider may approach the court for an order to enforce a credit agreement only if, at that time, the consumer is in default and has been in default under that credit agreement for at least 20 business days and –

(a) at least 10 business days have elapsed since the credit provider delivered a notice to the consumer as contemplated in section 86(10), or section 129(1), as the case may be.  

[25] On the undisputed evidence of the plaintiff, letters in terms of Section 129 of the Act where addressed to the defendants’ on the 2 March 2010. The said letters were posted by pre-paid registered post on the 2 March 2010. On the 3 March the post office concerned issued notices to the defendants through PO Box 54 that the three registered items were awaiting collection at the Grahamstown post office. The items were only collected on the 26 March 2010 following a final notification from the post office. In the meantime, on the 25 March 2010, plaintiff had issued summons in respect of this case.

[26] In respect of claim one, no domiciium citandi is recorded in the agreement.

[27] In respect of the surety agreement in favour of the plaintiff for the Estate Trust debt, the address of the surety, which is the Resolution Farm Trust on whose behalf Davenport signed as a trustee, the “Street Address” of Surety Company is given as Resolution Farm Grahamstown. So is the case in respect of claim two. However in respect of the agreement for the medium term loan – (claim two) – signed by Davenport as a trustee for Resolution Estate Trust – the address chosen as the adress to which notices in respect of the loan may be delivered or sent is:

PO Box 54

Grahamstown

6140

[28] It must be borne I mind that first, third and fifth defendants are the same person (Ashbury George Davenport) cited in different capacities. Second and fourth defendant is Mr Davenport’s wife Christobel Erksine Davenport. The three Section 129 notices were sent to the domicilium citandi chosen by Mr Davenport in his capacity as the trustee of Resolution Estate Trust (Estate Trust) together with his wife as well as trustees of Resolution Farm Trust (the Farm Trust).

[29] Can it be said in the circumstances that the notice to collect the registered items (Section 129 notices) does constitute evidence that plaintiff complied with the requirement to notify the defendants that they are in default and of the options open to them as required in Section 129 of the Act? In my view evidence shows that there was compliance with Section 129. The blame for the failure by the defendants to collect the registered items cannot be placed at the doorstep of the plaintiff. (See Kubyane v Standard Bank of South Africa 2014 (3) SA 56 CC paragraph 31 and 39).

[30] It is my finding therefore that plaintiff did cause to be delivered to the defendants valid notices in terms of Section 120 of the Act.

[31] Did the plaintiff fall foul of Section 130 of the Act by approaching the court prematurely? Summons was issued on the 25 March 2015. Notices in terms of Section 129 were delivered on the 3 March 2015. At the time of the issuing of the summons more than ten days had elapsed since the delivery of the Section 129 notice to the defendants.         

[32] Section 130 also requires that the consumer must have been in default under the credit agreement for at least twenty business days. From the Section 129 notices as well as from the particulars of claim, the defendants have been in default since the 25 February 2009. This has been the case even at the time of the issue of the summons issued in respect of the same claims as in this matter that was issued in August 2009. As indicated earlier, a judgment that was granted pursuant to the 2009 summons was rescinded. There can be no question therefore that the defendant had been in default under the credit agreements for more than twenty days.

[33] After the parties had addressed me on the merits of the three claims, before I could render judgment, defendants moved for an application to re-open their case and lead further evidence. On the date when the application for re-opening of defendants’ case was scheduled to be heard, Ms Carruthers for the defendants sought a postponement in order for her to obtain certain documents (source documents) from the plaintiff. When it turned out the said documents were discovered by the plaintiff, I turned the application for a postponement down.

[34] I must mention that when the matter first served before me on the 24 November 2014 a date when the trial was scheduled to proceed, a similar application for a postponement was made so that defendants can obtain proof of the fact that the plaintiff did not have the standing to enforce the claims. This, in view of the fact that it had ceded the claims to a third party. I did not accede to the application for reasons that I gave at the time.

[35] The reason I did not find my way clear to acceding to the second application for a postponement is because of:

(i) the need for finality in judicial proceedings and

(ii) the fact that this was not a live issue before me and therefore immaterial.

All other aspects not having been placed is issue, the only issues before me were whether there was:

(i) compliance with Section 129 of the Act alternatively

(ii) whether defendants’ debts were due and payable.

[36] An attempt was previously made by the defendants to withdraw admissions made by them and introduce the securitization defence. This application was unsuccessful before Plasket J.

[37] I do not think it is necessary to deal with the application to re-open defendants’ case in a separate judgment. That application is dismissed for the following reasons:

The defendants admitted that Estate Trust, Farm Trust and fifth defendant were indebted to the plaintiff in the amounts claimed, their denial was as regards being in mora. Their plea in this regard is dated 9 July 2013. As indicted earlier, in 2014 an application was made to withdraw the admissions and amend defendants’ plea. The application did not succeed.

The application for postponement that served before me in November 2014 was to enable  defendants to obtain the “Bloomberg’s report” from the USA that will show that the debts in question have been ceded to a third party or “securitized”. And for purposes of subjecting the agreements to a handwriting expert to prove that they have been manufactured because plaintiff no longer has the original agreement because of the “securitization”. Thirdly the postponement was sought so that the original loan agreements can be obtained from the plaintiff. I dismissed the application and gave reasons at the time as indicated earlier.

[38] From affidavits filed in support of the application to re-open defendants’ case, it transpires that the defendants are in possession of an audit report that is researched on the “Bloomberg online data base”. A document from Certified Forensic Loan Auditors which includes an affidavit deposed to by Mr Michael Carrigan, a citizen of the USA who described himself as a Certified Mortgage Securitization Auditor / Bloomberg Specialist, is attached to the application. Upon a reading of the affidavit and document entitled BLOOMBERG SEARCH SECTION, I did not come across any evidence that the loan agreements in question were ceded to a third party. The document seems to explain how securitization works in general. In one of the paragraphs the document – Bloomberg Search Section – and not the affidavit, the following appears:

“The Standard Bank of South Africa Limited has a “correspondent lender” that originated mortgage loans. These loans, in turn may have been sold and transferred to “federal approved securitization” trust named the Standard Bank of South Africa / Taipei CBO Series 2001.”

[39] This is not the only difficulty for the defendants. Their biggest hurdle is the fact that this was not pleaded. Their indebtedness was admitted. In my view introducing evidence relating to securitization will serve no purpose and will therefore be immaterial and irrelevant.

[40] The reason cited by the defendants why securitization was not pleaded initially is that they only became suspicious that the loan documents were manufactured in November of 2013. Their suspicion was raised by differences observed between copies of the loan agreements and “wet ink” versions thereof. In my view, two years down the line, this is still nothing but a mere suspicion. What is apparently impugned in the documents is the form or format of the documents. For example spacing of letters, words and paragraphs. As opposed to the content thereof.

[41] I am only dealing with the issue of securitization to determine whether it is material to the issues. I am not persuaded that it is. That is over and above the fact that I am not persuaded that there is evidence that suggests that the loan agreements in question were securitized.  

[42] Added to these reasons, the application for the re-opening of defendants’ case is dismissed because of the need for finality in judicial proceedings.

[43] It is for the abovementioned reasons that I have come to the conclusion that plaintiff’s action must succeed and that judgment should be granted in plaintiff’s favour.

[44] Accordingly the following order will issue:

Claim 1

Judgment is granted in favour of the plaintiff against first to fifth defendants jointly and severally the one paying the other to be absolved for:

(a) Payment of the sum of R1 756 203.05;

(b) Interest thereon at the rate of Prime plus 1.5% (i.e. 15.5%) per annum up to R1 600 000.00, thereafter Prime plus 4.5% (i.e. 18.5%) per annum above R1 600 000.00 (One Million Six Hundred Thousand Rand) calculated daily and compounded monthly in arrears from the 25^th day of February 2009 to date of payment, both days inclusive;

(c) Costs on an attorney and client scale;

(d) Collection Commission.

Claim 2

Judgment is granted in favour of the plaintiff against first to fifth defendants jointly and severally the one paying the other to be absolved for:

(a) Payment of the sum of R1 371 235.44;

(b) interest thereon at the rate of Prime (i.e. 14.0%) per annum, calculated daily and compounded monthly in arrears from the 25^th day of February 2009 to date of payment, both days inclusive;

(c) Costs on an attorney and client scale;

(d) Collection Commission;

(e) An order declaring specifically executable:

(i) The Farm “Droogte Vlakte” A – Number 96, Makana Municipality, Division Albany, Province of the Eastern Cape in extent 877.1301 ha held by Deed of Transfer No T027397/2006;

(ii) The remainder of the Farm “Hermanus Kraal” Annex No 95, Makane Municipality, Division Albany, Province of the Eastern Cape in extent 664.6688 ha held by Deed of Transfer No T027397/2006;

(iii) The remainder of the Farm No 100, Makane Municipality, Division Albany, Province of the Eastern Cape in extent 109.7695 ha held by Deed of Transfer No T027397/2006;

(iv) The remainder of Portion 5 of the Farm “Hermanus Kraal” No 93, Makane Municipality, Division Albany, Province of the Eastern Cape in extent 327.3449 ha held by Deed of Transfer No T027398/2006;

(v) The remainder of the Farm “Droogte Vlakte” No 94, Makane Municipality, Division Albany, Province of the Eastern Cape in extent 331.4494 ha held by Deed of Transfer No T027398/2006;

(vi) Portion 1 of the Farm “Droogte Vlakte” No 94, Makane Municipality, Province of the Eastern Cape in extent 955.5614 ha held by Deed of Transfer No T027398/2006;

Claim 3

Judgment is granted in favour of the plaintiff against third to fifth defendants jointly and severally the one paying the other to be absolved for:

(a) Payment of the sum of R426 332.02;

(b) Interest thereon at the rate of Prime plus 7.9% (i.e. 21.9%) per annum up to R400 000.00, thereafter Prime plus 8.0% (i.e. 22.0%) per annum above R400 000.00 (Four Hundred Thousand Rand), calculated daily and compounded monthly in arrears from the 25^th day of February 2009 to date of payment, both days inclusive;

(c) Cost on an attorney and client scale;

(d) Collection Commission.

The defendants are ordered to pay the costs of the application to re-open their case on an attorney and client scale jointly and severally the one paying the other to be absolved.

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N G BESHE

JUDGE OF THE HIGH COURT

APPEARANCES

For the Plaintiff           :               Adv: DH De La Harpe           

Instructed by                :               NEVILLE BORMAN & BOTHA

                                                22 Hill Street

                                                GRAHAMSTOWN

                                                Tel.: 046 – 622 7200

                                                Ref.: Ms Bosman/Cornelia

           

For the Defendants      :               Adv: Carruthers

Instructed by                :              CARRUTHERS ATTORNEYS

                                                4 Heythrop Drive

                                                Linkside

                                                PORT ELIZABETH

                                                Tel.: 041 – 373 3812

                                                Ref.: Ms Carruthers    

 

Date Delivered             :           27 October 2015

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