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: 80818/15

In the matter between:

FIRSTRAND BANK LIMITED	Applicant

and

COENRAAD JOHANNES BEZUIOENHOUT N.O	First Respondent

WILLEM JACOBUS NIEUWOUD N.O	Second Respondent
(in their capacities as Trustee of the CJ BEZUIDENHOUT TRUST - Master's Ref No. IT3730/96]

JUDGMENT

MAKHUBELE AJ

Introduction

[1] In this application, FirstRand Bank Limited ("the applicant"], seeks monetary judgment against the respondents in their representative capacities as Trustees of the CJ Bezuidenhout Trust ("the Trust") and certain declaratory orders against the properties belonging to the Trust.

[2] The Notice of Motion reads as follows;

"1. That judgment be granted in favour of the Applicant against the Respondents for:-
1.1	Payment of the sum of R646 344,55;
1.2	Interest on the amount of R646 344,55 at the Applicant' s prime rate (currently 9,25% per annum compounded monthly and calculated from the 9th of April 2015 until date of payment:
1.3	Payment of the sum of R2 133 362, 43;
1.4	Interest on the amount of R2 133 362,43 at  the Applicant' s prime rate (currently 9,25%) plus 0,50% per annum compounded monthly and calculated from the 16th of April 20 15 until date of payment;
1.5	Payment of the sum of R4 708 220,34;
1.6	Interest on the amount of R4 708 220,34 at the Applicant' s prime rate (currently 9,25%) plus 2,00% per annum compounded monthly and calculated from the 1st of April 2015 until date of payment."
2. That the Respondents pay the costs of this application on the scale as between attorney and client;
3. That the following immovable property(ies) of the Respondents be declared specially executable in favour of the Applicant, namely:-
"1. Plot 672, a Portion of Plot 167 Vaal-Harts Settlement A situated of Phokwane Municipality district Vryburg Province of Northern Cape in extent 19,4369 hectares held by Deed of Transfer T1495/2008 subject to the conditions contained therein.
2. Plot 674, a Portion of Plot 167 Vaal-Harts Settlement A situated at Phokwane Municipality district Vryburg Province of Northern Cope in extent 19,9410 hectares held by Deed of Transfer Tl49512008 subject to the conditions contained therein.
3. Plot 673, a Portion of Plot 167 Vaal-Harts Settlement A situated at Phokwane Municipality district Vryburg Province of Northern Cape in extent 20,3540 hectares held by Deed of Transfer Tl495/2008 subject to the conditions contained therein. "
4. That the Registrar of this Court be authorized to issue a writ of execution/attachment in respect of the immovable property(ies) described in 3 supra as envisaged in Rule 46( 1) (a)(ii) of the Uniform Rules of Court:
5. That such further and/or alternative relief be granted to the Applicant as the Honourable Court deems fit and just"

[3] Claim 1 is constituted by the amounts indicated in prayers 1.1 and 1.2 of the Notice of Motion. It is alleged that the debt in this regard arose from a written loan agreement that was entered into between the applicant and the Trust on 25 March 2008.

[4] Claim 2 is constituted by the amounts indicated in prayers 1.3 to 1.6 of the Notice of Motion, that, according to the applicant, represent the outstanding amount under a written loan and an overdraft facility agreement that was concluded between the applicant and an entity known as Basis Agricultural Services CC (BAS) in which the first respondent is the only active member. The first respondent signed the loan agreement and overdraft facility.

[5] The alleged liability of the respondents for the debts of the BAS arises from a written Deed of Suretyship that the Trust, represented by the first respondent, executed in favour of the Applicant.

The factual matrix

[6] The facts that gave rise to the dispute are largely common cause and are summarized hereunder in chronological sequence as they appear from the founding affidavit and, save for the legal issues, in far as they were admitted or not seriously contested in the answering affidavit.
The disputes between the parties arising from the common cause facts are of a legal nature.

Claim 1

[7] On 25 March 2008 and at Christiana, the applicant and the Trust (represented by the first respondent) entered into a Loan Agreement (Agreement") in terms of which the latter procured and the former borrowed an amount of R1 300 000.00 with interest at a prime rate of 14,53 per annum.

[8] The material terms and conditions of the Agreement are recorded in Annexure CB2. Save to state that provision was made for monthly repayment and interest, breach and consequences thereof, there is nothing contentious in the agreement.

[9] The loan to the Trust was administered in the applicant's books and records under account number[…].
The Trust failed to make monthly payments in terms of the Agreement. The last payment was on November 2014, whereafter debit orders were consistently returned unpaid due to insufficient funds.

[10] In terms of the Certificate of Balance dated 29 April 2015, the outstanding amount in this account was the sum of R646 344,55 together with interest at the applicant's current prime rate of 9,253 per annum.

[11] Upon breach of the Agreement, the applicant issued a notice in terms of Section 129(1)(a) of the National Credit Act which was delivered to the Trust at its chosen domieilum citandi et executandi. The trust failed to react to the notice. It also failed to rectify its breach.

Claim 2

[12] On 12 April 201 1, the applicant , represented by its Relationship Manager, and BAS , represented by the first respondent, duly authorized , entered into a written loon agreement in terms of which the former lent to BAS an amount of R3 500 000,00 with interest at a prime rate .

[13] The material terms and conditions of the Loan Agreement (BAS Agreement") ore recorded in Annexure CB 9. Provision was made for monthly repayment of over a term of 84 months at R57 212,58 per month with interest, breach of the agreement and consequences thereof.

[14] On 15 February 2013, the parties entered into an addendum to the loan agreement which effectively changed the debit order date from the 1st day of each and every month to the 1Slh day of each and every month.

[15] The loan account was administered in the records of the Applicant under account number[…]. The payment history for the period between 12 January 2014 and April 2015 shows that the last payment was made on 15 October 2014, whereafter subsequent debit orders were consistently returned due to insufficient funds.

[16] On 18 November 2014 the applicant sent a letter of demand for payment of the balance on the loan account of R 1 992 045,63. BAS failed to pay as demanded.

[17] The outstanding amount in terms of the Certificate of Balance dated 29 April 2015 was the amount of R2 133 362,43 with interest at the current prime rate of 9,25 3 plus ,0,53 per annum.

[18] Another outstanding amount in Claim 2 relates to the overdraft facility that was provided to BAS under account number […]. The written overdraft facility agreement in this regard was concluded on 1 1 November 2014.
BAS was represented by the first respondent.

[19] The terms and conditions of the overdraft facility were recorded in the written agreement (Annexure CB 14).
Annexure A to this agreement deals with the credit facilities, namely, a short term working capital facility of R4 500 000,00 that was repayable upon demand and subject to annual review.
It also made provision for a long-term loan facility of R2 192 496,00

[20] The overdraft facility was administered in the applicant's records and books under account number […].

[21] An analysis of the cheque account indicated that the turnover of the business of BAS was greatly reduced over from the months of June 2014 and by October 2014 BAS had exceeded the limits on the overdraft facility .

[22] On 18 November 2014 the applicant made a written demand to BAS for repayment of the debit balance on the overdraft account which at that stage was an amount of R4 496 103,87.
BAS failed to react positively to the demand.

[23] On 5 May 2015 the applicant's attorneys sent a demand of payment to BAS in terms of Section 69(1)(a) of the Close Corporations Act, 69 of 1984. BAS failed to comply with the demand.

[24] The overdraft facility expired on 13 August 2015 and it has not been renewed.

[25] BAS has breached the terms of the overdraft facility agreement and the outstanding amount in terms of the Certificate of Balance dated 29 April 2015 was R4 708 220,34 with interest at the current prime rate of 9,253 , plus 2.00% per annum.

Suretyship

[26] The first respondent, on behalf of the Trust, executed o Deed of Suretyship for the debts and obligations owing by BAS to the applicant. The material terms and conditions were recorded in a document entitled "Borgstelling" (Annexure CB20)
Annexure CB20 is not legible and in fact, in some parts the ink is completely off. The contents are not in dispute though and were translated into English in the Founding Affidavit. The Trust bound itself in favour of the Applicant as surety in solidum for and co-principal debtor jointly and severally with BAS for the due payment by BAS of all and any moneys owing to the Applicant from whatsoever cause.

[27] The relevant and contentious portions of the Deed of Suretyship for purposes of this judgment are the signature paragraphs. I will revert to this later on.

[28] The provisions of the National Credit Act are not applicable.

Security/Mortgage bonds

[29] The Trust is the registered owner of three immovable properties that are referred to in Prayer 3 of. the Notice of Motion. These properties are held collectively under Deed of Transfer Number Tl 495/2008.

[30] It is common cause that the Trust has caused three mortgage bonds to be registered over these immovable properties in favour of the Applicant.
Copies of the Mortgage Bonds were attached as Annexures CB 29, CB 30 and CB 31.

[31] The terms and conditions, save for the registered amounts ore similar. The Trust acknowledged its indebtedness to the applicant arising from the causes specified therein and renounced the legal exceptions non numeratae pecuniae, non causa debiti, errore calculi, revision of accounts and no value received, and the benefit of excussionis et divisionis, and the benefit of de duobus vet pluribus reis debendi.

[32] The respondents were advised about their right to have access to adequate housing, which is entrenched in Section 26(1) of the Constitution of the Republic of South Africa.
They were also advised about the procedures and circumstances under which the Court may declare an immovable property specially executable and issue a writ of execution in terms of Rule 46(1)(a)(ii) of the Uniform Rules Court.

The defences (Answering Affidavit)

[33] The respondents do not deny that the first respondent entered into the loan agreements and overdraft facility as alleged, or that the Trust is indebted to the applicant as alleged. However, they deny the authority of the first respondent to act on behalf of the Trust.

[34] With regard to Claim 1, the second respondent denies having given such authorization. This denial is not absolute. He overs that he cannot remember if he did due to passage of time and has effectively called the applicant's bluff for failing to attach a copy of the resolution that authorised the first respondent to enter into the loan agreements.

[35] A further rider to the denial of the authority of the first respondent is that the applicant is required to prove such authorisation, and if it succeeds, and the Trust is found to be legally bound by the agreement, then the Trust tenders payment of the amount in Claim 1.

[36] The respondents contend that the Deed of Suretyship is not legally enforceable because the Deed of Trust prohibits giving of surety under circumstances where it is not for the benefit of the beneficiaries.

[37] The Trust further contends that the applicant has made an election not to institute legal action against BAS, but instead has made an application for winding up. In this regard, it was submitted that it would be prejudicial to the Trust if the matters were heard separately.

[38] Furthermore, it is contended on behalf of the respondents that there is no provision in the Deed of Trust to the effect that one trustee is authorised to act alone, and as such, even if the first respondent was so authorised, the authorisation is ultra vires the Trust.

[39] The validity of the mortgage bonds are denied because of the provisions in the Deed of Trust which prohibits giving of Suretyship under circumstances where it is not to the benefit of beneficiaries and the fact that the trustees did not act jointly.

[40] On the relief claimed by the applicant, the respondents , as I have already stated, tender payment of claim 1, but only if it is found that the second respondent did in fact authorise the first respondent to enter into the loan agreement and that the Agreement is binding on the Trust.

[41] With regard to Claim 2, the respondents submit that it should be dismissed, alternatively , this matter should be referred to oral evidence on the validity of the Deed of Suretyship , and further alternatively, because it has received on offer for the purchase of the properties that belong to BAS and the first respondent in his personal capacity, these proceedings should be stayed pending finalization of the sale of the properties, whereafter the proceeds will satisfy the applicant's claim in full.

The replying affidavit

[42] The applicant reflected on the defences that were raised by the respondents with regard to the alleged unenforceability of the Agreement, the BAS Agreement, credit and overdraft facility in view of the fact that they were signed by the first respondent only.

[43] The defences were labeled "technical" and "a further example of the abuse to which the Trust figure in South Africa gives rise to".

[44] The applicant lamented the fact that these defences were never raised since the Agreement, BAS Agreement, overdraft facility and Deed of Suretyship were signed and or executed. The respondents also failed to raise these defences even during the liquidation application that the applicant has launched against BAS.

[45] It (the Applicant), then replied as follows to the defences raised in the answering affidavit, raising the following issues, all together or in the alternative;

[46] According to the applicant, the first and second respondents did resolve that the latter would sign the various agreements, but unfortunately it was unable, despite its efforts, to locate the original or copy of the authorization resolution. Furthermore, it was submitted on behalf of the applicant that the agreements would not have referred to the authorization if it did not exist.

[47] The applicant contends that it contracted in good faith with the first respondent when the Loan Agreement and Deed of Suretyship were concluded. It was not required to enquire about issues relating to internal management of the Trust.

[48] Under the circumstances, the applicant's contention is that the first respondent had apparent or ostensible authority from the second respondent to conclude the Loan Agreement and to execute the Deed of Suretyship.

[49] The purported lack of authorization of the first respondent to conclude and execute the Loan Agreement and Deed of Suretyship was therefore ratified.

[50] According to the applicant, on a proper construction, the execution of the Deed of Suretyship is not ultra vires the Deed of Trust.

[51] The applicant went on to sketch the background facts to justify 1he conclusions it has drawn against the defences mounted in the answering affidavit.

[52] I have already referred to the Agreements, the BAS Agreement, credit (overdraft) facilities and Deed of Suretyship and the dates on which these were concluded. I have also referred to tile breach of these agreements and the steps that were taken by the applicant to recover the arrear amounts. The relevant period is from 2008 up to 201 5 when this application was launched.

[53] Other prior existing facts that were highlighted in the replying affidavit to support the argument that the respondents never raised these defences before are that;

[54] BAS was registered on 24 November 1993. It conducts milk/dairy· farming operations. On registrotion1 the first respondent, in his personal capacity became the only member and he holds 100% of the member's interest.

[55] The Deed of Trust was executed on 27 March 1996. The first respondent and his father were the initial Trustees. The first respondent and his children ore the income beneficiaries. The capital beneficiaries are his children.

[56] The first and second respondent were authorized by the Master to act as Trustees on 06 February 2008.

[57] On 15 February 2008, the first respondent, in his personal capacity, signed the Deed of Suretyship in favour of the applicant for the debts and obligations owing by BAS.
By this time, and on 08 January 200 l, he had already registered a first mortgage bond in his personal capacity over his property in favour of the Applicant under Bond No. B1433/2001.
He had also, and on 22 June 199, caused two mortgage bonds to be registered in favour of the Applicant under Bond No's B31786/99 and B123925/06.

[58] The Loan Agreement is doted 21 February 2008 and was concluded in the name of "CJ Bezuidenhout Trust" and it was signed by the first respondent "for and on behalf of CJ Bezuidenhout Trust" on 25 March 2008.

[59] The Trust executed the Deed of Suretyship on 20 April 2008 as stated in the preceding paragraphs.

[60] The second respondent is the attorney of the first respondent in his personal capacity, the Trust and BAS.

[61] BAS experienced reduced turnover during September 2014. It decided to cease trading operations and sell its assets. It endeavored to sell its property, but the sale did not go through.

[62] On 10 February 2015, the applicant's Commercial Recoveries Manager. Ms. Cornel Barnard (deponent to the applicant’s affidavit) sent an email to the first respondent and indicated that the loan agreements have been called JP. She requested that they should discuss repayment arrongemen1s to avoid legal action.

[63] She also telephoned the second respondent, who is also the attorney for the first respondent. the Trust and BAS about the matter. He advised her that the properties have been sold and that payment would be made to the Applicant from the proceeds of the sale. He requested action be held over until 20 March 2015. Ms. Barnard requested copies of the sale agreement and payment guarantees. This did not come through, prompting her to send another email on 20 March to indicate that she did not receive the documents and that if payment was not received by 5 April 2015, the Applicant was going to proceed with legal action.

[64] The respondents failed to provide payment guarantees and a copy of the sale agreement as requested. The Applicant then proceeded to send an Acknowledgement of Debt and Powers of Attorneys to the second respondent for signature. They had to be returned by 24 April 2015.

[65] The respondents did not repudiate liability. The fact that they accepted and admitted liability appears from the letter that the second respondent (in his capacity as the attorney of amongst others BAS) wrote to the Applicant on 20 April 2015 and requested further indulgence as they were anticipating that the offer to purchase that was made by the Department of Rural Development and Land Reform (DRDLR), which was also attached, would soon materialize. He also forwarded a copy of a letter of acceptance of the offer (Annexure CB37).

[66] The applicant was not satisfied with these promises, and registered its impatience by letter dated the same day (CB38). The second respondent was advised in no uncertain terms that the Applicant would proceed with legal action to collect the debt in its books.

[67] A notice in terms of Section 129(1) (a) of the National Credit Act was served on the trust on 11 May 2015 as indicated already.

[68] The parties were involved in further negotiations with regard to an extension of time to allow the respondents and BAS to settle the debts. These negotiations and offers of settlement did not bear fruit and subsequently a liquidation application was launcl1ed against BAS on 18 August 2015.

[69] This application and another one against the first respondent in his personal capacity were launched en 09 October 2015 and another one against the first respondent. The cause of action against the first respondent and allegations in support thereto are similar to what has been stated in 1he founding papers in this matter.

[70] judgment against the first respondent in his personal capacity was issued by Judge Mabuse on 11 April 2016.

[71] BAS has filed an answering affidavit in the liquidation application and has effectively admitted the allegations with regard to the liability of the Trust on the basis of the Loan Facility and Deed of Suretyship , The replying affidavit in the liquidation application was filed or-1 3 November 2015.

[72] The applicant submitted that these technical defences relating to lack of authority and unenforceability of the Deed of Suretyship were only raised in 1he answering affidavit in this application. It is common cause that it was filed on 26 November 201 6.

[73] The winding up application was due to be heard on 30 May 201 6, however, a notice of withdrawal of opposition was filed by the second respondent on 16 May 2016. A provisional winding up order was granted on 31 May 201 6.

[74] The applicant is adamant that the loan agreement between it and the Trust is legally valid and binding and that the conditional tender of payment made by the respondents in respect of Claim l is improper and or invalid. The mortgage bonds that the respondents are asking to be cancelled as part of the tender provide security not only for the Loan Agreement, but also for other debts of the Trust arising from the Suretyship.

[75] The applicant contends that the fact that the respondents were willing to settle the debt with the proceeds of sale of the property is indicative of ratification of authority of the first respondent.

The fourth set of affidavits

[76] On 30 January 2017, the Respondents filed a Notice for leave to supplement their answering affidavit.

[77] The founding affidavit was deposed by the second respondent, in his capacity as a joint Trustee of the Trust.

[78] He stated that the reason for the affidavit was to confirm that he had, as a matter of fact not signed any resolution or granted any form of authorisation to the first respondent on 25 March 2008 to conclude the loan agreement in Claim 1.

[79] He alleged that on that day, being a Tuesday, he, like any other Tuesdays, was working in Leeudoringstad. He attached a copy of a bank cheque ·that he drew for an amount of R 120,00 at the Leeudoringstad First National Bank branch to pay for petrol at Aznip Motors.

[80] He alleged fur1her that he was there from morning until midday at least and would not have been bock to provide any authorisation In writing to the first respondent in Christiaana, He is adamant that he never signed any business related transaction.

[81] On why this information was not mentioned in the answering affidavit, the second respondent stated that his memory was triggered by the current Counsel for the applicant, who, upon accepting the brief and perusing it over the weekend of 13 January 2017, asked him where he was on 25 March 2008 , and whether he had any form of an old diary that he used to record his whereabouts.

[82] After confirming that 25 March was a Tuesday, he then knew that he would have been at Leeudoringstad. He searched for a copy of his cheque. Counsel then proceeded to draft this application to supplement the answering affidavit.

[82] The applicant filed a further affidavit to reply to the respondents' affidavit seeking leave to supplement their answering affidavit. It raised on objection about the procedure for filing of affidavits beyond the third set.

[83] On the merits of the affidavit of the second respondent, the applicant alleged that the respondents signed and executed a Cession of Insurance Policy on 30 July 2013 at Christiana. A copy of the policy was attached.
The content of this Insurance Policy is not material for present purposes but the point that was being made is that 30 July 2013 was also a Tuesday. This, according to the applicant means that the second respondent can be at any place on a Tuesday.

[84] The applicant also attached a copy of the final winding up of BAS that was issued on 20 June 2016.

[85] In reply, the second respondent put a further spanner on the issue of what his Tuesday routine is by stating that in fact, the documents that were allegedly signed by him on 30 July 2013 at Christiana were not signed on that day. They were pre-prepared. He received them on 08 August 2013 and he signed them at his offices at Wolmaranstad. He recalls this date because he wrote a letter from his offices on this date in the presence of the person who handed him the policy documents to sign. He did not notice that it had been recorded that he supposedly executed the documents on 30 June 2013.

[86] In terms of Rule 6(5)(e), and by agreement between the parties, the affidavits referred to above were admitted as the fourth set of affidavits.

Issues for determination

[87] The hearing of 1his matter extended over two days. Almost at the end of the hearing, Counsel for the both parties made some concessions and admissions with regard to the issues that were argued from the commencement of the hearing.

[88] It will serve no purpose for me to deal with issues that have since become academic due to the concessions, admissions and having been abandoned.

[89] I deem it necessary though to summarize, without going into details , the issues for determination that were identified in the initial heads of argument that were filed on behalf of the both parties, the supplementary heads of argument and also set out the outstanding issues that I am still required to decide.

[90] The main defence raised in the answering is that the Trust is not bound by the loan agreements and Deed of Suretyship that was signed by the first respondent because the Trustees failed to act jointly.

[91] The initial heads of argument that were filed on behalf of the applicant (dated 20 July 2016) addressed these defences and the following submissions were made; namely;
(a)	the actions of the first respondent were ratified,
(b)	he had ostensible authority and;
(c)	because the applicant contracted in good faith with the Trust, the Turquand rule was applicable.

[92] Mr. Meintjes submitted that ratification has retrospective effect. He referred to Smith v Kwononqubela Town Council 1999 (4) SA 947 (SCA)

[93] He also referred to various authorities for the submission that though express notification may be a requirement , ratification may take place in its absence.
He cited several cases where the principal was held to have ratified even where he has remained silent.

[94] He submitted that the facts and evidence in the record relating to the background and circumstances under which the loan agreements and Deed of Suretyship were signed prove beyond reasonable doubt that the second respondent or the Trust ratified his actions.

[95] He referred to the matter of Mineworkers Union, v JJ Prinsloo 1948 (3) SA 831 (Al for the submission that the applicability Turquand Rule is part of our Company Low.

[96] He submitted that the first respondent had ostensible authority to conclude the loan agreements and enter into the Deed of Suretyship on behalf of the Trust.

[97] On the conditional tender to pay the amount in claim 1, Mr. Meintjes submitted that this was not a defence, and furthermore, the condition attached to it for cancellation of the bonds was not possible because the bonds in question had secured other debts, not just the ones in question.

[98] The respondents have also raised a defence to the effect that the mortgage bonds and Deed of Suretyship were ultra vires the Deed of Trust because they were not for the benefit of the Trust beneficiaries.

[99] Mr Meintjes submitted that there was no merit in this defence because the funds were utilized for the farming operations of BAS, where the first respondent, who is a beneficiary of the Trust was the sole member.
He referred to the case of lnvestec Bank Bpk v Scholz NO (3056(2011), (3057/2011) , (3058/2011) ZAFSHC 208 ( 15 December 2015) where the same defence was dismissed.

[100] The next submission related to the complaint about the prejudice that the respondents would suffer if this matter and the liquidation application against BAS were heard separately , The basis of the objection is that the Applicant made cm election not to institute legal action against BAS.

[101] There is no merit in the complaint. In any event, it is clear from the answering affidavit in the fourth set of affidavits that the liquidation proceedings have been finalized. BAS has been finally wound up.

[102] The last submission related to the request to stay these proceedings pending finalization of the sale of property belonging to BAS and the first respondent in his personal capacity.

[103] As Mr. Meintjes correctly pointed out, this is not a defence and in anyway BAS has already been wound up.

[104] These are the submissions that the respondents should have dealt with when the hearing commenced, but instead, as it will appear hereunder, more technical or rather legal arguments were raised.
The respondent is entitled to raise legal issues at any point. That is not the problem. The problem is that some of the issues raised would have been properly ventilated by filing (with leave of the court) further affidavits.
The respondents did file further affidavits, but only dealt with the issue of the resolution of 2008 that the second respondent purportedly gave the first respondent.

[105] I did not have sight of the initial heads of argument that were filed on behalf of the respondents because they were not made available to me.
What was presented to me is the supplementary heads of argument dated 24 January 2017.

[106] The respondent 's counsel, Mr. Nieuwenhuizen, raised points in limine that were summarized as follows in the Practice Note;
"1. Whether the Applicant has disclosed a cause of action in relation to its claim 2 (" No cause of action");
2. Whether the CJB trust had capacity to enter into the agreements ("Trust capacity");
3. Whether the Suretyship and mortgage bonds were ultra vires the trust deed ("Ultra vires");
4. Whether the First Respondent's lack of authority can be cured by the Turquand rule, ostensible authority or ratification (" the TOR questions") .

[107] At the commencement of the hearing, Counsel for the applicant handed in supplementary heads of argument (37 pages), with a bundle of authorities consisting of 374 pages of copies of judgments, extracts from legal books, statutes and other documents. He explained that this was intended to deal with the respondents' supplementary heads of argument dated 24 January 2017.

[108] On the next day, not to be outdone, the respondents' counsel handed in yet another set of supplementary heads of argument that according to him became necessary as a result of the applicant's supplementary heads of argument that were handed in at the commencement of the hearing as I have indicated above.

[109] Although helpful, handing in voluminous documents during the course of a hearing does not only contribute to delayed judgments but has a negative effect on the smooth running of the hearing because the opponent is entitled to reply and may, in this regard be compelled to request that the matter should stand down for him to consider the new material.

[110] Because of the manner in which the issues were raised and abandoned, I do not think it is necessary for me to deal with the issues that were abandoned.

Submissions and defences/ arguments that were abandoned and or conceded
[111] On the second day of hearing, and just before Mr. Nieuwenhuizen commenced with his submissions, the following concessions were made.

[112] The applicant abandoned its reliance on ostensible authority and the Turquand Rule.

[113] The respondents conceded and abandoned , and the court was requested to ignore the argument that Section 6 of the General Laws Amendment Act , Act 50 of 1956 (GLAA) requires that the authority as a matter of statutory law be in writing.

[114] The respondents agree, (and they never intended to orgve ) that the blanks in Annexure CB 20 (the Deed of Suretyship) are not a term of the agreement.

What is left of the dispute?

[115] The applicant's Counsel indicated that h$ persist with "Ratification".

[116] The respondents' Counsel indicated that he persists with the point in limine that the applicant did not make a case for ratification in the ·founding papers. The applicant must stand or fall by its founding affidavit.

[117] Mr. Nieuwenhuizen indicated that in the event that the court dismisses the point in limine, the respondents would rely on the submissions that appear in the "Second set of supplementary heads of argument" dated 03 March 2017. The headings in the heads of argument were phrased in poetic words ("Time is on my side", The common curse of mankind, folly and ignorance, be thine in great revenue,).
This was obviously intended to lighten the mood, but by this time, and in the midst of trying to understand the reasons for the sudden change of attitude , the concessions and abandonments of defences, the court had already lost its sense of humour .

[118] The respondents' alternative arguments are:
(a)	The capacity of the trust to conclude the agreements in question in view of the prohibition clauses in the Deed of Trust
(b)	Questions relating to ratification;
(i)	There can be no ratification of an invalid act.
(ii)	Ratification must occur within a reasonable time.
(iii)	Ratification must occur with full knowledge.
(iv)	Exclusion of parole evidence to prove ratification
(c)	Referral of the question of "Authority" to oral evidence.

[119] I commend both Counsel for the extensive heads of argument and legal authorities. Each and every disputed issue was supported by case law, not just recent but also how the principles have been applied over the years.
I will not be able to refer to all the authorities that have been cited.

[120] The parties agreed from the start that for purposes of expediting the hearing, Counsel for the applicant would first make submissions with regard to whether the applicant has made out a case for Claim 2 in the Founding papers.

[121] I deem it necessary to refer briefly, to the Deed of Suretyship and the Deed of Trust before I deal with the oral submission presented by the both Counsel.

Deed of Suretyship

[122] It is common cause, as I have already stated, that only the first respondent signed this document on behalf of the Trust, purportedly in terms of a resolution. A certified copy was purportedly attached.
the certified copy of the resolution.

[123] The respondent's contention is that this dispute con only be resolved by referral to oral evidence. The applicant contends that this is not necessary it relies on ratification, the Turquand rule and ostensible authority to cure this defect. The reliance on the lat1er was abandoned as I have stated above.

Deed of Trust

[124] The responden1s contends that even if it may be found that the first respondent was duly au1horised to aci on behalf of the Trust, he Deed of Suretyship is not legally enforceable because it is ultra vires the provisions of clauses 7,3 and 7.4.14

[125] Clause 7.3 reads as follows;

"Die trustees is geregtig on enige handeling hoegenaamd te verrig wat hulle in hulle diskresie noodsaaklik en/of bevorderlik vir die behoud of groei van di kapitaal van die trust en in belong van die begunstigdes ag an sal vir die doel namens die trust enige handeling mag verrig wat ‘n ten volle handelingsbevoegdigde natuurlike person ten opsigte van sy eie sake mog verrig, dog met uitsondering van die magte aan hulle verleen in subpar. 7.4. 14.,  tensy sodaniqe waarborq ten behoewe van n bgunstigde gegee word;” (respondents' emphasis)

[126] The powers of the trustees appear from clause 7.4. Clause 7.4.14 reads as follows;
“ die nakoming van die kontrakte of verpligtings van enige person of maatskappy teen vergoeding of gratis te waarborg as borg en mede-hoofskuldenaar en om vir die doel bates van die trust as sekuriteit te verpand; " (respondent' s emphasis)

[127] I will now proceed to deal with the points in limine.

Whether the applicant has disclosed a cause of action in relation to its claim 2

[128] The parties are in agreement that there is ample authority to support the principle that for the Trust to be bound by the actions of one Trustee, there must be a resolution of both Trustees authorizing the first respondent to sign the Loan Agreement and execute the Deed of Suretyship.

[129] As indicated in the preceding paragraphs, the 9pplicant contends that it contracted with the respondents in good faith and would not have known that its internal arrangements were not complied with. Secondly, and on the basis of the background facts, the actions of the first respondent were ratified.

[130] The complaint of the respondents with regard to the two issues raised by the applicant to overcome the lack of authority is that the case in this regard was only made out in reply, and not in the founding papers. Mr Nieuwenhuizen referred to several authorities with regard to the well known principle that an applicant is not permitted to make out a new grounds of the application in the relying affidavit.

[131] In response, Mr. Meintjes argued that the facts raised in the replying affidavit were reproduced from the founding affidavit and supplemented by the admissions made by the respondents in the liquidation proceedings of BAS.
Furthermore, ratification can only be raised in reply (Hyde Construction CC v Deuchor Family Trust 2015 (5) SA 388 (WCC).

[132] The replying affidovi1 did not raise new facts. The applicant reproduced the existing facts from the founding affidavit.

[133] I deem it necessary at this stage before I deal with the merits of the alleged ratification to re-iterate the principles on which founding papers should be evaluated.

[134] The founding papers in an application are not the equivalent of a declaration in proceedings by way of action. What might be sufficient in a declaration to foil an exception, would not necessarily, in motion proceedings be sufficient to resist an objection that a case has not been adequately made out. The founding papers take the place not only of the declaration but also of the essential evidence that would be led at o trial, If the facts that are necessary for determination of the issues in the applicant's favour are absent from the founding papers, an objection that the founding papers do not support the relief claimed, is sound: see Hart v Pinetown Drive-Inn Cinema (Pty) Ltd 1972(1) SA 464 (D) at 469 C - E, which was approved, inter alia, in Swissborough Diamond Mines (Pty)  Ltd and Others v Government of the Republic of South Africa and Others 1999(2) SA 279 (T) at 323 G - J .

[135] Facts may be either primary or secondary. Primary facts are those capable of being used for the drawing of inferences as to the existence or non-existence of other facts. Such further facts, in relation to primary facts, are called secondary facts. Secondary facts, in the absence of the primary facts on which they are based, are nothing more than a deponent's own conclusions and accordingly do not constitute evidential material capable of supporting a cause of action:
see Radebe and Others v Eastern Transvaal Development Board 1988 (2) SAT 785 (A) at 793 C - E; Die Dros (Pty) Ltd and Another v Telefon Beverages CC and Others 2003(4) SA 207 (CJ at 217 B - E.

[136] A party to motion proceedings who bears the onus is required to set out the evidence on which it relies to discharge such onus: Swissborough Diamond Mines (Pty) Ltd supra at 323 F - 325 C; Academy of Learning (Pty) Ltd v Hancock and Others 2001 (1) SA 94 1 (C) at 955 H-I

[137] The fact that answering and replying papers have been filed, do not preclude an objection in limine that the founding papers contain insufficient information to sustain the relief claimed: Hart supra at 465 E -G.

[138] The question then is whether, the facts that the applicant relies on to invoke ratification of authority principle were in fact raised in the founding papers.

[139] I dealt extensively with the content of the replying affidavit and also made reference in the annexures referred thereto. I am satisfied that the replying affidavit is in fact a detailed exposition of the founding papers.

[140] The remaining question in this regard is whether the applicant was entitled to attach the record in the liquidation proceedings in its replying affidavit and whether this constituted new cause of action on ratification.

[141] The liability of 1he Trust for debts of BAS is based on the Deed of Suretyship executed by the first respondent on its behalf in favour of the applicant.

[142] The introductory pads of the founding affidavit with regard to Claim 2 (Paragraphs 18-36) deal with the background facts relating to how the debt arose.

[143] In response to paragraphs 18-36, the Trust (in paragraph 16 of the answering affidavit) admitted the agreement between the applicant and BAS but denied the liability of the Trust thereof because in its view the Suretyship is not legally enforceable.

[144] Furthermore, the Trust pleaded that the applicant has elected not to pursue the institution of legal action for payment of the applicant's claim against BAS but has instead instituted winding up proceedings under case number 67038/2015. It also disclosed the contents of the applicant's replying affidavit in that application, in particular the fact that the applicant resisted its contention that it should have instituted legal proceedings to claim payment of the debt.

[145] In its replying affidavit in this matter, the applicant then attached a copy of the notice of motion and founding affidavit in the winding up (liquidation) application.

[146] The applicant alleged that the averments in the founding affidavits in both applications are similar and the same annexures were attached and referred to.

[147] It is clear from a reading of the affidavits filed in this matter that the issue of liquidation of BAS was not introduced for the first time in the replying affidavit. The applicant was entitled, in reply, to place the issues in a context.

[148] Accordingly, there is no merit in the allegation that a new case was made in the replying affidavit.

[149] I am satisfied that there is no merit in the point in limine that the applicant has tailed to establish a course of action for ratification 1n tt1e founding papers.
There is a factual basis for reliance on ratification; the question is whether on the common cause facts, there has, indeed been ratification.

[150] In this regard, one has to keep in mind that as the applicant is seeking final relief in motion proceedings, such relief may be granted only if those facts averred in the applicant's affidavit which have been admitted by the respondents, together with the facts alleged by the Respondent, justify such final relief: Plascon Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984(3) SA 623 (A) at 632 H-I.

[151] Counsel for the applicant submitted that since all facts, except for the resolution to authorise the first respondent to oc1· on behalf of the Trust, are common cause, then this matter must be adjudicated in accordance with these principles (Plascon Evans).

[152] I came across a recent judgment of the Supreme Court of Appeal in the matter of Moraitis Investments (Pty) Ltd v Montic Dairy (Pty) Ltd as I was finalizing this judgment that in my view, disposes of several disputes in this matter, in particular; whether there is a genuine dispute of lack of authority, and if so, whether it can be resolved on these papers or a referral to oral evidence.

[153] Mr. Nieuwenhuizen criticised the applicant's Counsel for what he referred to as "inferential reasoning" when the latter sketched and sought to rely on background facts such as circumstances under which the loan agreements and Deed of Suretyship were concluded, the fact that the defences were never raised by the respondents before, the liquidation application and all acknowledgement of debts and assurances that payment would be made.

[154] The challenge in the Moraitis case was about the authority of one Trustee to conclude a settlement agreement on behalf of the Trust and another company without authority of his co-trustees as provided for in the deed of trust. The trustee who signed the settlement agreement disputed that he was so authorised and this placed the validity of the settlement agreement that he had concluded in jeopardy.

[155] The SCA indicated that the real question was whether there was a genuine dispute about lack of authority, which if so, would be resolved by referral to evidence. The onus to prove lack of authority is on the party who alleges so.

[156] This was a family trust and family business. The court took into account the business association between the parties, the affidavits filed in other mothers and basically background facts relating to prior dealings between the trust and the business associates (the respondents) to come to the conclusion that there was no genuine dispute of lack of authority. The defence of lock of authority was dismissed.

[157] Without unnecessarily burdening the body of this judgment, I deem it necessary to reproduce o few paragraphs to illustrate the point. I hove omitted the footnotes. It should however be noted tha1 the SCA referred to most of the authorities that Counsel for the both parties in the matter before me relied on for their submissions.

[32] This is a substantial body of evidence that casts doubt on the claim that Mr Moraitis was not authorised by his co-trustees to negotiate a settlement of the disputes in which they and he were;. embroiled, and to cause the resultant agreement to be made an order of court. It is plain that he was the driving force behind all the litigation and acted on behalf of the Moraitis Trust and Moraitis Investments in instituting, conducting and, in the case of the liquidation application, settling the litigation. He is equally the driving force behind the present litigation. Accepting that his actions in all these matters were duly authorised by his co-trustees the inevitable question is how that authority was conferred in those instances and what difference there was between them and the present one. There is nothing to indicate that there was any difference.

[33] The issue can be summed up in a single stark question. In executing the settlement agreement Mr Moraitis said expressly that he was authorised to represent 'his' trust. In his affidavit he said that he was not so authorised. Why should we believe that he was lying when he signed the settlement agreement, but telling the truth in his affidavit? Counsel was unable to provide an answer to that question. That brings us back to the point at which this analysis commenced, namely that the onus rested on the Moritis Trust to prove that Mr Moraitis lacked the authority to conclude the settlement agreement on its behalf and to agree to its being made an order of court. In the absence of any attempt to explain the workings of the trust or how issues of authorisation had been dealt with in the past, or any of the matters highlighted by Mr Kebert, that onus was not discharged.

[34] At the risk of being accused of heaping Pelion upon Ossa, there is merit in the criticism that the statements by Mr Moraitis are, in the absence of a full explanation of precisely how the trust operated and how the relevant decisions were taken, assertions of a legal conclusion rather than factual evidence in regard to authority. The question whether a person was authorised to act on behalf of another is ordinarily a question of fact involving the drawing of inferences or conclusions from primary facts in the context of legal principle. Lord Wright said in his speech in Caswell v Powell Duffryn Associated Collieries Ltd:
'Inference must be carefully distinguished from conjecture or speculation. There can be no inference unless there are objective facts from which to infer the other facts which it is sought to establish ... But if there are no positive proved facts from which the inference can be made, the method of inference fails and what is left is mere speculation or conjecture.'
The absence of any information concerning the process followed when these different pieces of litigation were instituted and conducted and the extent of the knowledge of the trustees concerning them, as well as the general manner of conducting the business of the trust, leads to the conclusion that there is an absence of facts from which to draw the inference that the claims by Mr Moraitis to have lacked authority in this specific instance are correct.

[35] The situation of Moraitis Investments can be dealt with fairly simply. Authority to represent it could emanate from two sources. There could be a decision by its sole shareholder, the Moraitis Trust, that it should conclude the agreement, or there could be a decision taken by its two directors, Mr Moraitis and Mr Kebert. In order to succeed in establishing its case Moraitis Investments had to prove that neither source of authority was present when the settlement agreement was concluded. It did not discharge that onus on either ground. The same evidence that indicated that Mr Moraitis had authority to represent the Moraitis Trust served to indicate that he had authority to represent the trust in its capacity as sole shareholder of Moraitis Investments in concluding the settlement agreement. In addition he and Mr Kebert were the two directors of Moraitis Investments. The suggestion that. because he did not say, when signing the agreement, that he was doing so in that capacity, Mr Kebert's manifest agreement to the settlement agreement can be disregarded, is without merit. The agreement did not need to be signed by both directors in order to bind the company. It sufficed if it was signed by one of them with the authority of the other. If Mr Moraitis lacked authority Mr Kebert would have known and intervened. The only inference from his not doing so was that he confirmed that Mr Moraitis had the authority that he warranted he had, to represent Moraitis Investments in concluding the settlement agreement. The objection of lack of authority in this regard must be rejected."

Trust capacity: the prohibition clauses

[158] The respondents contend that even if it may be found, as I have done, that the first respondent had the necessary authority (by ratification) to bind the Trust, the Trust cannot be bound because the loan agreements were not for the advantage or benefit of the Trust beneficiaries.

[159] The applicant argued that there is no merit in this submission because in as far as the funds were utilized for the business operations of BAS, the Trust beneficiaries benefitted because the first respondent is the sole shareholder of BAS.

[160] The applicant's Counsel argued that the only real question is whether there is a provision in the Deed of Trust that prohibits the Trustees from borrowing money or to encumber trust property.

[161] The answer is that there is none and that there is no obligation on financial institutions to enquire if the proceeds of money lent is for the benefit or advantage of the trust beneficiaries. He referred to the matter of Investec Bank Bpk & Andere v Scholtz NO [2011] ZAFSHC 208 (15 December 201 1 at para. 37) for the submission that if financial institutions were required to do this , it would dampen business dealings.

[162 The first respondent is a trustee and beneficiary of the Trust. He is also the father of the other beneficiaries. The funds secured by the Deed of Suretyship were utilized for the business operations of a company (BAS) of which he is the sole (active) shareholder. All these background facts lead to one conclusion in my view, and that is, the agreements and Deed of Suretyship were concluded for the benefit of the trust beneficiaries.

Referral to trial

[163] The request in this regard is intended to "ensure that all admissible evidence is placed before court to enable a proper interpretation of the trust deed ..".

[164] The alleged disputes in the deed of trust relate to whether the respondents, as trustees, had authority to bind the trust as a surety to anyone than a trust beneficiary.

[165] I do not think that there is a genuine dispute with regard to this issue and because of the view I have taken with regard to relevance of background or surrounding facts on the question of ratification, there is no point in referring this matter to trial.

[166] The background or surronding facts in as far as the issue of whether there is a benefit for the trust beneficiaries have been repeated throughout this judgment, and include the fact that BAS is a business vehicle for the farming operations of the first respondent, who is both a trustee and beneficiary of the trust. There is no complaint from the other beneficiaries. If they are, I am of the firm view that ratification would also apply here.

Conclusion

[167] Consequently, make the following order;

[168] The points in limine raised by the respondents with regard to;

(a)	Whether the Applicant has disclosed a cause of action in relation to its claim 2;
(b)	Whether the CJB trust had capacity to enter into the agreements ;
(c)	Whether the Suretyship and mortgage bonds were ultra vires the trust deed); and
(d)	Whether the First Respondent's lack of authority can be cured by the Turquand rule, ostensible authority or ratification

are dismissed.

[169] Judgment is granted in favour of the applicant in terms of the Notice of Motion as follows;

[169.1] Payment of the sum of R646 344,55;
[169.2] Interest on the amount of R646 344,55 at the applicant's prime rate (currently 9,253 per annum compounded monthly and calculated from the 9th of April 2015 until date of payment;
[169.3] Payment of the sum of R2 133 362,43;
[169.4] Interest on the amount of R2 133 362,43 at the applicant's prime rate (currently 9,253) plus 0,503 per annum compounded monthly and calculated from the 16th of April 2015 until date of payment;
[169.5] Payment of the sum of R4 708 220,34;
[169.6] Interest on the amount of R4 708 220,34 at the applicant's prime rate (currently 9,253) plus 2,003 per annum compounded monthly and calculated from the 1st of April 2015 until date of payment."
[169.7] The following immovable property(ies) of the respondents are declared specially executable in favour of the applicant, namely:-
1.	Plot 672, a Portion of Plot 167 Vaal-Harts Settlement A situated at Phokwane Municipality district Vryburg Province of Northern Cape in extent 19,4369 hectares held by Deed of Transfer Tl 495/2008 subject to the conditions contained therein.
2.	Plot 674, a Portion of Plot 167 Vaal-Harts Settlement A situated at Phokwane Municipality district Vryburg Province of Northern Cape in extent 19,9410 hectares held by Deed of Transfer Tl 495/2008 subject to the conditions contained therein.
3.	Plot 673, a Portion of Plot 167 Vaal-Harts Settlement A situated at Phokwane Municipality district Vryburg Province of Northern Cape in extent 20,3540 hectares held by Deed of Transfer
[169 .8] The Registrar of this Court is authorized to issue a writ of execution/attachment in respect of the immovable property(ies) described in 3 supra as envisaged in Rule 46(1 )(a)(ii) of the Uniform Rules of Court;
[169.9] The Respondents are ordered to pay the costs of this application on the scale as between attorney and client.

MAKHUBELE AJ
ACTING JUDGE OF THE HIGH COURT

Date of hearing: 28/02 & 02 /03 I 2017
Judgment delivered on: 30 June 2017

APPEARANCES

APPLICANT:		ADVOCATE L MEINTJES

INSTRUCTED BY:	RORICH WOLMARANS & LUDERITZ INC
BROOKLYN, PRETORIA

RESPONDENTS:	ADVOCATE HP VAN NIEUWENHUIZEN

INSTRUCTED BY:	TALJAARD NIEUWOUDT & VAN TONDER ATTORNEYS
C/0 CHRISTO COETZEE ATTORNEYS
HATFIELD, PRETORIA.