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[2007] ZAGPHC 133
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Allison v Absa Bank Limited (22361/03) [2007] ZAGPHC 133 (26 July 2007)
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IN
THE HIGH COURT OF SOUTH AFRICA
TRANSVAAL
PROVINCIAL DIVISION
CASE
NO: 22361/03
NOT REPORTABLE DATE:
26/7/2007
---_.-
In
the matter between:
R D
ALLISON PLAINTIFF
and
ABSA
BANK LIMITED
DEFENDANT
AND
CASE
NO: 18117/2004
ABSA
BANK LIMITED
PLAINTIFF
and
T.
ALLISON
DEFENDANT
JUDGMENT MABUSE
A.J. [1] This is a combined judgment in respect of two matters
which, by agreement between the parties, were heard simultaneously.
/2,..The
-2 The
first matter is Case No: 22361/2003. The plaintiff in this matter is
Roger David Allison ( "Roger") and the Defendant
is Absa
Bank Ltd ("Absa"). The second matter is Case No:
18117/2004. In this matter the plaintiff is Absa Bank Ltd ("
Absa") and the Defendant is T. Allison (Theophillus").
Theophillus is Roger's son. These two matters are somehow connected.
The connection will become clearer during the course of the
judgment. It is that connection between the two matters that became
a compelling factor in the agreement to hear the two matters
at the
same time.
[2]
CASE NO: 22361/2003
The
plaintiff in this matter is an adult male farmer and businessman who
conducts his business activities on Bultfontein Farm, Solomondale,
in the district of Polokwane, Limpopo Province. On the other hand,
the defendant is Absa Bank Ltd, a company with limited liability
duly incorporated in terms of the company laws of the Republic of
South Africa
and which conducts its business from its head office located at Absa
Towers, Main Street, Johannesburg and at various other places in the
Republic of South Africa and, among others, Polokwane,
Limpopo
Province. (3)
In this action, the plaintiff has sued out summons against the
defendant and claimed payment of a total sum of R19,286,006.00
on
various grounds. According to the plaintiff, he and the defendant,
which was at the time represented by Johann Scholtz ("Scholtz"),
had concluded an agreement in terms of which he would, at the public
auction, make a bid
/3...of
not
-3 of
not more than R5,5 million; the defendant would increase his
business account overdraft facility to R 1,2 million so that he
could pay the required deposit at the auction; his two sons would
furnish security for his overdraft facility by way of
covering bonds over their farms and; finally that the defendant
would then furnish guarantees for the sum of R4,4 million for
the balance of the purchase price.
(4)
The defendant is not only defending the plaintiff's action but has
itself launched a counter-claim against the plaintiff for payment
of a sum of R1, 118,293.91; interest on the said amount reckoned
from 6 February 2004; costs of the action and other reliefs.
This counterclaim, according to the defendant, is based on a written
agreement
concluded between the defendant and the plaintiff during
February 2002 at Polokwane. According to the agreement, the
defendant
agreed to extend
certain financial facilities to the plaintiff on certain terms and
conditions. It is the defendant's case that the plaintiff
has
breached the said agreement and that, in the circumstances, it is
entitled to demand payment of the amount owed by the plaintiff
to it
in terms of the alleged
agreement.
I
will proceed to deal with the plaintiff's claim against defendant
and thereafter the defendant's counterclaim against the plaintiff. (5)
According to his testimony, on 7
November 2002, the plaintiff, accompanied by her daughter, Mandy van
Rooyen ("Mandy"),
approached a certain Johan Scholtz.
("Scholtz"), at the time the plaintiff's bank relations
manager at the defendant's
Polokwane
/4...branch
-4 branch,
for financial assistance, in order to enable him to purchase certain
properties at a public auction. These properties, which
were located
in Polokwane and to be sold at a public auction on 12 November 2002,
were sites 21951, 273 and 274, respectively known
as 107, 103 and
101 Bok Street, Polokwane (" the properties). According to the
plaintiff, the purchase price of the said properties
was
undetermined but he estimated it to be a few million rands. (6)
When he went to meet Scholtz, he had in his possession, among
others, a page of the Landbouweekblad. This page contained an
invitation or advertisement to the public of a public auction in
Polokwane of the properties, which included a silo, numerous shops
and a complex. The purpose of meeting Scholtz was to talk to him and
establish from him if the bank would be prepared to assist
him
financially in order to enable him to buy the relevant properties.
(7)
During the discussion he had with the said Scholtz, he gave a brief
recount of what in his mind would happen at the public auction
and,
at the
end of this explanation, asked Scholtz if he could, at the auction,
bid for up to R5,5 million. He explained to Scholtz that,
if he
succeeded in his bid to purchase the aforementioned properties, he
would be obliged to pay a deposit of 10% of the purchase
price, 3%
commission on the purchase price and Value Added Tax ("vat")
on the commission. After he had demonstrated to
him the projected
rental income that could be generated by the lease of the said
premises, Scholtz assured him that he could bid
for at most R6
million.
5/ At
their
-5 (8)
At their meeting on 7 November 2002, and at the instance of
Scholtz, he showed Scholtz "letters of intent"
of existing lessees on the property. These letters of
intent showed that the existing lessees had expressed their
intentions to conclude agreements of lease for further
periods of three years commencing on 1 July 2003, and that
their combined annual rental would be R59 182.68 per month at
an annual escalation
of 6.4%. His expectations were that the
lessees would bind themselves for a combined period of ten
years. Apart from the "letters of intent", the
plaintiff had shown a letter from NTK, in which NTK had indicated
that they would be prepared to rent the premises
at R50 000.00
per month. The properties that the plaintiff had purchased
consisted, among others, of a silo which he could lease out
for R100 000.00 per month. (9)
Scholtz told him that his two sons' farms and his farm were
sufficient to serve as security for the required deposit of 20%.
Details regarding his two sons' farms were available in Scholtz'
computer. Scholtz got into his computer and assured him that
he did
not foresee any problems. He told the plaintiff that "as jou
twee seuns borg teken vir jou sal ek jou rekening kan
opstoot na
R1,2 million toe." The plaintiff's bank account was at this
stage actually overdrawn. During this discussion, he
explained to
Scholtz that as it was a public auction he was going to attend, the
money should be in his account at the time he
made his bid. Scholtz
assured him that the bank would take the property he wanted to buy
as security for the 80% of the purchase price.
6/ Further
-6 (10)
Furthermore, according to him, Scholtz assured him that the
overdraft of R1.2 m would be sufficient for the 20% deposit required
and that, at the public auction, he could bid for R6 million.
Scholtz never advised or requested him to complete an application
for financial loan. He asked Scholtz whether or not a valuation of
the properties would not be required upon which Scholtz said
that he
should relax and go and buy for R6 million. Scholtz re-assured him
that everything was in order. Scholtz told him that
he, Scholtz,
would be going on holiday shortly. His daughter also offered, which
offer Scholtz rejected, her property as additional
security to
enable the bank to assist him financially. (11)
Apart from mentioning that his two sons' properties could be used as
security for the deposit, Scholtz never indicated or mentioned
any
further conditions. Before they walked out of the bank, Scholtz
reassured him again that he could buy for R6 million at the
public
auction. He would not have gone to make a bid at the auction if he
was sure that he did have the required money. (12)
On the strength of the said assurances by Scholtz and the conclusion
of the said agreement, he made a successful bid at the
public
auction. Upon the success of his bid, an oral agreement between him,
and the auctioneers, which was later reduced to writing,
and in
terms of which he purchased the properties from the NTK for the
total sum of R5,5 million, was reached. The "NTK"
only
signed the agreement on the 18th November 2002.
7/.. ..After
-7 (13)
After completion of the transaction on 12 November 2002, he drew a
cheque for the total sum of R738 000.00 in favour of
the
auctioneer, Van's Auctioneers, "(Van's)". The amount of
R738 000.00 included the 10%
deposit, the 3% commission and the 14% vat on commission. Van der
Merwe, the auctioneer, was reluctant to accept it due to the
fact
that it was not bank guaranteed. He assured Van der Merwe that he
had already made arrangements with the bank and urged him
to call
his bank manager. He took out his cell phone, called Scholtz, who at
the time was on holiday and spoke to him. He informed
Scholtz that
he had bought the property for R5.5 million and thereafter handed
the cellphone over to Ellaine Pretorius ("
Ellaine") who
continued to speak with Scholtz. It was only at this stage that he
became aware that Ellaine and Scholtz knew
each other from their
school days. After she had spoken to Scholtz, Ellaine told Van der
Merwe that he could accept the cheque.
She then filled in the amount
of the cheque. (14)This
cheque was presented at the bank for payment four times. On the
first two occasions, on 15 and 20 November 2002, it was,
on each of
those two occasions, returned by the bank with the remarks "effects
not cleared." On the 26th November 2002,
it was again returned
by the bank with the remark "refer to drawer." It was
ultimately honoured by the bank on the 29th
November 2002. (15)
According to him, he and the said Scholtz, who was at all material
times acting in the course and scope of his employment with
the
defendant, had an express, alternatively tacit and further
alternatively by
8/ .implication
-8 implication,
an agreement between them that, although he could buy for at most R6
million, he could and would not make a bid of more than R5.5
million; that the defendant would increase his overdraft to R1.2
million to enable him to pay the deposit of R550 000.00,
which was 10% of the purchase price of R5.5 million,
R165 00.00 which was 3% of the purchase
price and 14% vat on the commission of 3%; that his two sons
would sign the necessary documents in order to furnish security for
the overdraft of R 1.2 million in the form of covering
bonds on their farms, and that the defendant would deliver
guarantees for the balance of R4.4. million. (16)
In a letter dated 3 January 2003, the auctioneers' attorneys
demanded delivery of the guarantees from him. He was unable
to furnish the necessary guarantees and as a consequence, the
auctioneer cancelled their
agreement and retained the sum of R555
000.00 as liquidated damages. He is of the view that he has
complied with all the terms of the agreement he concluded
with Scholtz or the defendant in that he made a bid of R5.5m
and his sons furnished security for the amount of R1.2
million. According to him, the defendant has committed breach of
contract in that, notwithstanding demand and request, it has
failed to furnish the necessary guarantees securities in respect of
the balance of the purchase price of R4.4 million. (17)
In her evidence, Mandy van Rooyen, the plaintiff's daughter
confirmed the meeting on 7 November 2002, between the plaintiff
and
9/ herself
-9 herself
on the one hand and Scholtz on the other hand. She and the plaintiff
went to the bank to ask for a loan. The plaintiff told
Scholtz that
she wanted to go and purchase a building on auction.
(18)
Scholtz looked into his computers and started a discussion about
mortgage bonds. He told her father that he could take bonds
on his
farm and on her two brothers' farms. She confirmed further that
Scholtz neither asked the plaintiff to fill in any forms
nor
mentioned any valuations of the properties. She confirmed further
that she and her father
walked out, Scholtz told the plaintiff that he could buy for R6
million. Scholtz did not tell the Plaintiff whether or not
he could
buy. (19)
During cross-examination, she conceded that the plaintiff went to
the back to establish whether or not the bank would assist
him
financially about some transaction. She conceded further that her
father went to look for Scholtz's opinion whether or not
the bank
would finance him to purchase the properties at the auction. In his
response, according to her evidence, Scholtz expressed
the
probability that the bank would assist the plaintiff and grant the
plaintiff overdraft facility. (20)
She confirmed, under cross-examination, that the plaintiff and
Scholtz discussed the issue of overdraft facility and that her
two
brothers would have to sign suretyship and also bind their
properties and finally that they discussed probable repayments.
When
it was put to her that there was no final agreement about the amount
of instalments to repay
10/ the
loan
-10
the
loan and further that no rate of interest was agreed upon between
the plaintiff and Scholtz, she merely said that she could
not
remember. (21)
Phillipus Lodewikus van der Merwe ("Van der Merwe")
testified, inter alia, that he was employed by Van's Auctioneers
("Van's") and his primary pre-occupation was to conduct
business of insolvent, liquidation and public auctions on the
instructions of the commercial banks. On 12 November 2002, and at
Nylstroom, he conducted a public auction in respect of some
immovable properties ("the properties") situated in
Polokwane. The plaintiff made a succesful bid for all the properties
at R5,5 million and, on his bid being accepted, he was obliged to
pay deposit of 10% of the purchase price, the auctioneer's
commission
and Value Added Tax ("Vat") on the auctioneer's
commission. The plaintiff paid all the aforesaid various amounts by
an
unguaranteed composite
cheque
of R738 200.00. [22]
Initially he was reluctant to accept the plaintiff's cheque as it
was one of the conditions of the auction that cheques should be
guaranteed by a bank and the plaintiff's cheque was not bank
guaranteed. As a consequence, they contacted the plaintiff's bank
manager to establish from him if they could deposit the plaintiff's
cheque in their bank account. They were assured by the relevant bank
manager of the defendant that the plaintiff's cheque would
be
honoured. He could not remember the surname of the bank manager they
spoke to. On the strengths of the assurances he had obtained
from
the plaintiff's bank
11/…manager
-11 manager,
they accepted the plaintiff's cheque. They were only able to bank
the cheque after the 14th November 2002.
The
cheque was finally honoured but only after several queries and
telephone conversations between his accountants and the bank. [23]
It transpired during the initial stages of the cross-examination,
that this witness was uncertain as to who, between him and
Elaine,
spoke to the defendant's bank manager. However the issue was
distilled when the witness admitted in the final analysis
that it
was his secretary, Elaine Pretorius, who spoke with the plaintiff's
bank manager about the cheque. It was put to him that
the relevant
bank manager would deny that he had
a
discussion with either Van's or any other person on 12 November
2002. [24]
Ellaine Pretorius, testified about the auction, and the telephone
discussion she had with Johan Scholtz ("Scholtz").
At the
time, she was employed by Van's Auctioneer's in Pretoria as an
administrative officer and had worked in that position for
four
years. She confirmed that on 12 November 2002 Van's Auctioneers
conducted a public auction of certain immovable properties
situated
in Polokwane and that the plaintiff made a successful bid for all
such properties. [25]
After the auction, she assisted the plaintiff by writing out the
cheque with which the plaintiff intended making the initial
payment.
The cheque was not bank guaranteed and as a consequence Van der
Merwe did not
12/...
.accept
-12 accept
it readily. According to their practice, when a person pays by means
of a cheque that is not bank guaranteed, they first
have to contact
the relevant bank manager to establish whether or not such a cheque
will be honoured by the said bank, if deposited.
[26]
After the plaintiff had tendered the cheque for R738 200.00 as
payment, the plaintiff himself called his bank manager, Scholtz
and
she spoke to him. She spoke to the bank manager and discovered,
during their conversation, that she knew him from their school
days.
She could not remember precisely what she discussed with the bank
manager. She reported to Van der Merwe, who decided that
he would
accept the plaintiff's cheque. They would not accept the cheque
unless it was in order. She could not recall precisely
the contents
of her report to Van der Merwe. She spoke to Scholtz after the
auction and he told her that they should
not bank the cheque. She is uncertain as to whether the cheque had
already been banked or was still to be banked at the stage
she spoke
to Scholtz. She did not speak with Scholtz on the same day of the
auction. [27]
It appeared during cross-examination that, although she was adamant
that she spoke to Scholtz, Ellaine was uncertain as to
whether or
not it was on the day of the auction or thereafter. Apart from
recalling that Scholtz told him not to bank the plaintiff's
cheque,
she was unable to remember what she further discussed with him. She
confirmed that in her presence Van der Merwe never
spoke to Scholtz.
13/...
.Theophillus
-13
[28]
Theophillus Allison ("Theophillus"), the defendant in case
NO: 18117/2004, testified in his own defence and also
in support of
the plaintiff in Case No: 22361/03. His evidence introduces the
second case, NO: 18117/2004. It will only be apposite
at this stage
to briefly set out what the said matter involved. As explained at
the outset, this is the matter in which Absa, the
plaintiff, has
sued out summons against Theophillus Allison, the defendant, for
payment of a sum of
R1,
118,293.81. The plaintiff's cause of action in this matter is
suretyship, in which the defendant had, in writing, bound himself
as
surety and coprincipal debtor jointly and severally with his
father, Roger David Allison, the
plaintiff in case no: 22361/03, in favour of the plaintiff for the
payment on demand, of any sum of money, which his father
owed or
might owe to the plaintiff for whatsoever cause. [29]
According to the pleadings, the relevant document of suretyship, was
signed by the defendant at Polokwane on the 11th December
2002. In
clause 14 of the said suretyship, Theophillus acknowledged that:
"A
certificate signed by the manager of a Bank shall be sufficient
proof of any applicable rate of interest and of the amount
owing in
terms hereof."
It
is clear from the pleadings in this matter that there was an
attempt, after the defendant had entered an appearance, by Absa
to
apply for summary
judgment against the Theophillus. The defendant opposed the
14/ .application
-14 application
for summary judgment. Seemingly the plaintiff never proceeded with
the application for summary judgment. It is, in my
view, very
crucial to refer to some of the contents of the Theophillus'
opposing affidavit as these have an important bearing on
his plea
and subsequent attempts to amend his plea. In
his opposing affidavit he stated as follows: "Dit
is korrek dat ek borgskap onderteken ten gunste van die
hoofskuldenaar, Roger David Allison en wat gedateer was 11 Desember
2002." [30]
In his plea, Theophillus acknowledged that his signature appeared on
the suretyship but denied that he signed the suretyship.
Subsequently he amended parts of his plea. In a word, he admitted,
in his amendment, that the signature on the suretyship was his
but
still denied that he signed it. [31]
He testified both in support of his father's case and also in his
defence. He signed the suretyship after he had been asked
by his
father to assist him to buy some buildings. He admitted that on 11
December 2002, he signed the original of the suretyship
which was
annexed to the plaintiff's summons. In the subsequent amendment he
denied that he had himself signed the suretyship but
acknowledged
that the signature on the said document was put by him. He had not
put up this plea in original plea because at the
time he signed the
original suretyship he did
15/ not
recall
-15 not
recall everything by reason of the fact that between the 11 December
2002 and the day on which he testified he was involved
in a motor
accident. He could still remember that he signed a bond in November
2002 to assist his father to buy some property.
He was prepared to
sign the bond only if his father was going to get the property. [32]
He had no intention to sign a bond for an unlimited amount. He was
prepared to sign the bond for only 20% of the R5.5 million.
He
signed the bond at the offices of some attorneys next to Absa
Building in Polokwane. He did not remember whether or not there
was
someone with him when he signed the document. He remembered however,
that a secretary put the papers down and he signed them.
The
documents
that he signed were never explained to him. He was at all material
times under an impression that he signed a bond on
his property to
assist his father to purchase some properties. [33]
A certain E. L. Mynhaardt ("Mynhaardt") whose evidence
related to events that took place in January 2002
testified
on behalf of the plaintiff, Roger Allison. He had become used to the
plaintiff since August 2002 by reason of some work
that he did for
the plaintiff. They were friends but not very close friends. As a
result of their relationship, he gave the plaintiff
advice from time
to time. [34]
The plaintiff apprised him of a particular problem he had and which
problem involved the defendant. After the plaintiff had
outlined the
16/ problem
-16 problem
to him and informed him, among others, that the defendant was
unwilling to furnish him with some guarantees in respect of
certain
properties he had purchased, he, Mynhaardt, advised the plaintiff to
approach NTK's attorneys and ask for an extension
of the time within
which to deliver the guarantees. [35]The
Plaintiff himself made an appointment with NTK's attorneys for a
particular day. On that appointed day, he accompanied the
plaintiff
to the offices of NTK's attorneys in Nylstroom where they had a
meeting with one Butch Scheepers, NTK's attorneys and
Johan
Breytenbach of NTK. At this meeting, the said Scheepers impressed
upon them the urgency of the matter and the serious problems
that
NTK had with the Landbank. [36]
They asked for an extension of 30 days to deliver the guarantees or
to find alternative financing. Again Breytenbach explained
to them
this time that the situation was very serious and that they were
obliged, as a consequence, to submit daily reports to
the Landbank.
They did not grant an extension for a specific period but indicated
that they would review the situation daily. They
however reached an
agreement that they would advise Landbank daily about the steps the
plaintiff was taking to secure the guarantees. [37]
He also advised the plaintiff to set up an appointment with the
defendant and speak to someone in a senior position about the
problem. Plaintiff managed to secure an appointment. He accompanied
the
17/ plaintiff
-17 plaintiff
to Absa Polokwane where they saw and spoke to Jacobs. He became the
plaintiff's spokesman and explained the plaintiff's
problem to
Jacobs. Among others, the three of them discussed the shops, their
turnover and the rental of the silos and they worked
out some
figures.
[34]
During this process Jacobs expressed dissatisfaction with the
turnovers of the shops and silos and indicated that they could
not
cover the monthly instalment required to service a loan of R5.5
million. He also requested
them to draw the plaintiff's income and expenditure account for a
period of 10 years prior to the date they came to see
him. During
their discussion Jacobs indicated to them that Absa could consider
processing the issue of guarantees at local level.
He was involved
with the plaintiff in the preparation of his income and expenditure
statement. After this had been done and it
had been handed to Jacobs
he was
satisfied
that the plaintiff's problems would be resolved. He advised the
plaintiff to deliver this income and expenditure account
at that
branch. [38]
According to his evidence, Johannes Breytenbach was the group
secretary, a position he had held since 2003, of the NTK and
stationed in Nylstroom. He testified further that he was the minute
secretary of NTK and also kept their records. He was responsible
for
the assets of NTK and a compliance officer in terms of the
Co-operative and Companies Acts,
and finally for the sale and purchase of the company's immovable
assets, which specific work he already had performed for
a period of
ten years.
18/ He
was
-18
[39]
He was present on 12 November 2002 at an auction where the plaintiff
made a successful bid for certain properties for R5.5
million plus
vat. This auction was conducted by Van's Auctioneers on behalf of
NTK. After the Roger had succeeded in bidding for
the properties, he
signed an agreement of sale on the same day as a purchaser and he
(the witness) signed it on behalf of NTK as
the seller only on 18
November 2002, having had a grace of seven (7) days before he could
sign the agreement. The purpose of the
grace was to give some of the
people who had attended the auction and who would have wanted to
make a better bid, to buy the property.
The same agreement that was
entered into on 18 November 2002 was cancelled on 22 February 2003,
even then,
after they had had discussions with the plaintiff who, at the time,
was assisted by Mynhaardt, when the plaintiff could not
comply with
some of its terms. [40]
The result of the discussion between them on the one hand and the
plaintiff and Mynhardt on the other hand was that the plaintiff
was
granted an extension of the period within which to comply with the
terms of the agreement of sale concluded on 18 November
2002 to 23
January 2003. At the cancellation of the said agreement, the
plaintiff forfeited the whole amount that he had paid as
deposit as
liquidated damages, in keeping with some of the terms and conditions
of the agreement of sale. The plaintiff was notified
of the
cancellation of the agreement by a registered letter of the 20
February 2003.
19/ He
had
-19 [41]
He had good knowledge of the properties. He would have sold the
properties for more than the R5.5 million. NTK was compelled
by the
circumstances to accept a bid of R5.5 million. Ordinarily the
properties could have sold for anything between R7million
and R10
million. [42]
During cross-examination he testified further that he did not know
the monthly premiums payable in respect of the property
nor did he
know how much would have been required monthly for the maintenance
of the premises. He conceded that if a private person
were to run a
business from the silo he would require staff. There were other
costs attached to the grain that could be stored
e.g. conservative
costs, to protect grain from being devoured by pests. [43]
According to the enquiries he had made at their offices, based on
the insurance portfolio of the property, the replacement
value of
the buildings and the plot was more or less R30m. These premises
would secure a combined monthly rental of R105 000.00
of which
R55 000,00 would be secured from private tenants from whom
rental was collected by an estate agency appointed for
that purpose,
while the rest would have been generated by NTK. If the silos were
loaned out, they would generate income of R400 000.00
annually.
He was later recalled to the witness box. During this stage, he read
into the record a document called "Service
Management Data
Sheet" This is the document that one John Grobbelaar, sent by
e-mail to Jan Horn on 6 December 2002.
20/...
..At this
-20 [44]
At this stage of the proceedings, the Counsel for the plaintiff in
Case NO: 22361/2003 informed the Court that the plaintiff
has
amended his pleadings and accordingly given notice to that effect.
In Case NO: 22361/2003 the plaintiff amended his particulars
of
claim whereas in Case NO: 18117/2004 the defendant sought to amend
his plea. Counsel for Absa had no objection to Roger's amendment
and
accordingly, the Court granted the amendment. There was however an
objection to the amendment by Theophillus on the grounds
that the
contemplated amendment would have amounted to a withdrawal of an
admission. By reason of this objection, Theophillus had
to testify
in support of his application for an amendment. [45]
In support of his application for an amendment of his plea,
Theophillus, the defendant, testified that his father asked him
to
help him buy a building and needed his farm. He testified further
that in his original plea, he had admitted that on 11 December
2002,
he signed the original deed of suretyship. In the contemplated
amendment he denied that he signed the deed of suretyship
on 11
December 2002. This was not his original defence. The reason he did
not originally advance this defence was that he could
not remember
everything that he had to put-down because of a serious motor
accident in which he was involved in the
intervening
period and subsequent loss of memory.
[46]
As far as he could recall, he signed a bond in order to assist his
21/..
.. father
-21 father
to buy some property. He had no intention to sign an unlimited
security. He was under an impression that he was only signing
for
20% of R5.5 million. He signed this documents at the offices of a
Henstock & Van der Heever. The papers were never explained
to
him. Their secretary merely put the papers down and he signed them.
He did not remember that anybody was present when he signed.
[47]
Under cross-examination, he testified that he did not deny that he
signed a document relevant to this matter on 11 December
2002 and
added that he could not remember the date on which he signed the
document. He admitted that he had no grounds to deny
that he signed
the
suretyship on 11 December 2002. He admitted further that his
evidence in support of his application for amendment was in many
material respects at variance with his contemplated amendment. The
plaintiff in Case No: 22361/2003 and the defendant in Case
18117/2004 closed their cases at this stage, whereafter ABSA in case
no: 22361/2003 applied unsuccesfully for absolution from the
instance against the plaintiff; judgment with costs in respect of
its counterclaim against the plaintiff; and judgment against
the
defendant in case no: 18117/2004. [48]
It is only apposite to commence with the defendant's counterclaim
against the plaintiff in case no:22361/2003 for Absa's case
against
Theophillus in case no: 18117/2004 was concluded once Theophillus
concluded his evidence and Absa's Counsel in the same
case indicated
22/ that
they
-22 that
they would lead no evidence in support of their case against him.
The defendant's evidence in case no: 22361/2003 concerned
only that
particular case. [49]The
defendant's counterclaim against the plaintiff was for payment of a
sum of R1, 118,293.81. This amount also constitutes
the subject
matter of the claim by Absa against Theophillus in case no:
18117/2/2004. The defendant's counterclaim is based on
a written
contract entered into during February 2002 between it and the
plaintiff. According to this written agreement, which was
called
overdraft facilities, the defendant extended overdraft facilities to
in respect of bank account no: 1006010101 on certain
terms and
conditions.
[50]
It was agreed between plaintiff and the defendant, inter alia, that
the defendant would debit the plaintiff's aforementioned
account
with compound interest on the daily debit balances; that the
overdraft limit on the said account would be R410 000.00;
that the
amount the plaintiff owed to the defendant in respect of the said
account would become payable on demand by the defendant
and finally
that any amount due and payable by the plaintiff to the defendant
would be proved by the mere production of a certificate
signed by
defendant's manager and that it would
not be necessary to prove the appointment and authority of such a
manager. Such a certificate, it was agreed further between
the
parties, would serve as prima facie proof of the facts it contained.
Such a
23/
…certificate
-23
certificate
was indeed attached to the defendant's counterclaim. According to
certificate, the amount that was due and payable by
the plaintiff to
the defendant on 5 February 2004 was R1, 118,293.81 together with
interest at prime plus 8%. The plaintiff's reaction
to this claim
was, as demonstrated in his plea, to admit the overdraft facility
that the defendant extended to him but to deny
that the parties
concluded any agreement as alleged. [51]
The defendant led the evidence of its witnesses, the first of whom
was one Johan August Scholtz, ("Scholtz") a bank
relations
officer since 1998 employed at Hans van Rensburg Street Branch,
Polokwane. According to his testimony he has, ever since
November
2002, been handling the plaintiff's bank account at their Polokwane
branch. From time to time during the 18 months he
was the
plaintiff's relations manager, he had some consultations with him
with regard to the overdraft facilities on his bank account.
The
plaintiff's financial position was
reviewed annually. For that purpose, the bank would require cash
flow statements and a balance sheet. A client or customer would
also
be
contacted
if his bank balance should exceed his overdraft limit if the
customer had not made proper arrangements. [52]
He had contact with their clients on two fronts. During the
execution of his duties, he would report to a Hans Jacobs, who
was
his regional manager. He had no authority to grant overdraft
facilities. He showed an internal document that showed their
authorities and the extent of such authorities for various
categories of bank officials. According to that
24/.
..document
.
-24 document,
he had no authority to grant in whatever capacity, overdraft
facilities. In fact, according to him, even Jacobs, the regional
manager, had no such authority to grant overdraft facilities.
Overdraft facilities are, by their practice or rule, only considered
and granted by their credit division which is based in Pretoria. In
the premises, a branch cannot authorise overdraft facilities.
[53]
Applications with regard to long term loans, such as for purposes of
purchasing buildings, are handled by their commercial
property
financing sector, called CPF. As a branch they facilitate
applications for such loans by furnishing CPF with all the requisite
details. When it comes to applications for long term loans, the
branch will handle the applicant's application at its initial stages
because of its unique relationship with a client. The branch
consults with a client over his application, establishes the nature
of the transaction and makes an appointment for client with CPF.
Staff members at CPF will come to the branch on an appointed day
and
interview the applicant. To complete a valuation, this section will
visit an applicant and the commercial property to glean
more
information. Once this section has the complete details, they will
then pass the application to the credit section for consideration.
Valuation of the property is an integral part of the application. No
long term loans of R5 million could be made and granted without
the
valuation of the property and
accompanied by an application for such a loan.
[54]
From past transactions, the plaintiff knew his authority fully well.
In
25/ the
past
-25
the
past, the plaintiff conducted credit transactions that required to
be referred to the CPF. In such instances, he would undertake
to
come back to the plaintiff with the results of such application. He
gave an example of a past credit transaction which was turned
down.
He went back to the plaintiff and reported to him about the failure
of his application. He gave three examples of such past
credit
transactions which
demonstrated unequivocally that the plaintiff was at all material
times aware that he had no authority to grant any overdraft
facilities. [55]
The first of these examples was the plaintiff's request that his
overdraft facilities should not be reduced as that would have
affected his cash flow. He referred this request to the credit
section who turned down the plaintiff's request. He advised the
plaintiff of the credit section's decision. On being informed of the
decision of the credit section, the plaintiff came up with
another
suggestion that the overdraft facility be reduced by R1000.00. He
duly conveyed the plaintiff's request to the credit
section. Credit section turned down the plaintiff's second request
too. He dutifully conveyed the credit section's decline
of his
second request to him. [56]
The decision whether or not to reduce his the plaintiff's overdraft
facility was taken not by the plaintiff's branch but by
the credit
section. Secondly and to demonstrate the extent of the branches'
authority in overdraft facilities, he referred to a
letter dated 18
April 2001 by one De Vries, the plaintiff's former relations manager
to the credit section. To
26/…this
letter
-26 this
letter was attached a copy of a letter from a firm of attorneys who
requested, on behalf of the plaintiff, a discharge of the
mortgage
bond. In the said letter the said De Vries conveyed to the credit
section, the plaintiff's request for the discharge of
the mortgage
bond or part of his land. Attached to this letter was a note from
credit section in which further requirements in
order to enable that
section to properly consider the plaintiff's requests, were set out. [57]
Thirdly, on 21 June 2001 he
sent a letter to PSBCS, the credit section of the defendant in
Pretoria in which he furnished them with the plaintiff's further
background information, in particular, his farming activities,
history about the plaintiff's bank account and the fact that the
plaintiff's bank account has a history of dishonoured cheques. There
were instances when the plaintiff would exceed his overdraft
limits.
[58]
When they received the plaintiff's cheques in such instances where
there was no sufficient money in the plaintiff's bank account,
he
would call the plaintiff, advise him of the situation and ask him to
make a deposit sufficient to cover the amount of the cheque.
He had
no authority to honour the plaintiff's cheques where there is no
sufficient money in the plaintiff's account. His duty,
in the
circumstances, was either to dishonour the cheque or refer it to the
credit division to decide. [59]
The plaintiff's cheque would be dishonoured in the event of the
plaintiff's failure to make an appropriate and sufficient deposit
to
cover
27/ the
amount
-27 the
amount of cheque. In the event of the bank having to dishonour the
plaintiff's cheque, he would advise him that their credit
division
has given instructions that his cheque should be dishonoured. [60]
All the plaintiff's applications for overdraft facility had to be
approved by his seniors. He had no authority to evaluate
commercial
properties. The conduct of the plaintiff's account was taken into
consideration. This involved the regularity or irregularity
of
dishonoured cheques. The plaintiff's account was reviewed annually.
The plaintiff's would be required to indicate whether or
not he
preferred to retain the same overdraft limit should be reduced. The
limit is ultimately determined by
the
bank. [61]
The plaintiff is brought under no illusion that the decision to
grant his application could be made there and then by the branch.
There is in place a system that has to be followed. Where a customer
applies to increase his overdraft facility or keep it at the
same
level the branch must, a month before the expiry of the current
overdraft facilities, obtain the customer's financial statement
and,
in some instances, his cash flow statement which are discussed with
the customer. In fact these statements would normally
constitute the
basis of any motivation to the credit division. [62]
As soon as the customer has submitted all the necessary documents
and information to him, he will then advise the customer
that all
such documents and details will be forwarded, with his motivation,
to
28/…the
credit
-28 the
credit section, who will consider the application and make a
decision. He will never bring a customer under an impression that
he
has the authority to approve, or that he approves, the application
for a financial loan or that the customer already has the
facility
he applies for. [63]
He confirmed the interview of 7 November 2002 between him and the
plaintiff in the presence of the plaintiff's daughter. The
plaintiff
visited him at their branch. During the interview the plaintiff, who
at that stage had only had a tear sheet of the auctions
from the
Landbouweekblad, advised him that NTK building would be auctioned
off on 12 November 2002 and furthermore that he had
interest in
purchasing the building. The plaintiff had come to the bank to
establish the possibility of the bank assisting him
financially. The
plaintiff furnished him verbally with certain additional
information. Among others he mentioned to him that, according
to
information in his possession, the value of this property was
between R6 million and R8 million. [64]
In addition, the plaintiff verbally gave him an estimate of the
rental. He in turn told the plaintiff that, on the strength
of the
verbal information the plaintiff had furnished him, the bank would
consider the possibility of financing 75% of the property
but it was
for him late at that stage for any financial assistance as valuation
of the property itself would only be furnished
after a week. He also
advised the plaintiff that the process was rather protracted as
numerous documents would have to be obtained.
29/ The
plaintiff
-29 [65]
The plaintiff advised him that he did not have an amount he could
use as his own contribution. He asked him if the bank would
consider
assisting him if he had any additional security. He informed the
plaintiff that the branch would be prepared to consider
additional
finance if the plaintiff offered security. The plaintiff offered his
sons' properties as security and his daughter,
who was present with
her father, offered, in addition, her own property as security. He
assured the plaintiff that the bank could
accept the two properties
as security in respect of his personal account. In addition, he told
the applicant that it was not possible
or advisable for him to send
the application to their relevant section if it did not have all the
relevant details. [66]
On a financial loan of R5.5. million, the plaintiff would have been
obliged to refund it in monthly instalments of R95 558.00
per month
over a period of ten years or R85 645.00 per month over a period of
fifteen years. There was no complete discussion of
the amount the
plaintiff wanted to loan. He would have required a valuation of the
commercial property, a valuation of the plaintiff's
sons' properties
and finally the plaintiff's financial statements in order to enable
him to process the plaintiff's application
for financial assistance. [67]
Further information required for the commercial property would have
been the lease agreements, zoning certificates, municipal
rates and
taxes and a complete background of the activities for the kind of
business that would be conducted in the premises. He
denied that he
30/ told
-30 told
the plaintiff and his daughter that he could go and bid for R6
million. At the time the plaintiff consulted with him in the
presence of his daughter, he was not authorised to make a statement
or promise of that nature. He denied further that, on that
particular day and at that particular consultation, he granted the
plaintiff an overdraft of R1.2 million provided his two sons
stood
as sureties for him and further mortgaged their immovable properties
as further security and denied further that he informed
the
plaintiff that he could dispense with valuation of his two sons'
properties. [68]
He himself was not qualified to make any evaluations of the
plaintiff's sons' properties while he was speaking to the plaintiff
in his office. He did not know the properties and never visited them
for whatever purpose. There was no valuation of the relevant
properties in his system. He could not grant overdraft facilities
without reverting to their credit division as he would have been
dismissed from his work. [69]
He has never in the past granted overdraft facilities to any
customer without following the normal bank's procedures. It is
highly unlikely that the plaintiff could have thought that he had
been granted credit facilities. He had in the past handled many
of
the plaintiff's transactions. The plaintiff was in the
circumstances, aware that every credit facility application had to
be
referred to their credit section. During the consultation, he
indicated to the plaintiff that he would be going on leave.
31/ Under
-31 [70]
Under cross-examination he admitted that he was a relations
manager and that he was the plaintiff's first contact at the
bank.
On 7 November 2002, the plaintiff came to him and told him that he
had seen an advertisement of a public auction and wanted
to find out
if the defendant could assist him financially. He and the plaintiff
worked out some figures in particular the estimated
instalment that
would be required if he bought for R5.5 million. [71]
He denied however that he had looked into the computer for both his
sons' details. He denied that he assured the plaintiff
that he could
buy for R6.6 million as the granting of such a facility was the
domain of the credit division. He could not remember
what was
discussed about the auction. [72]
PETRO MARITA JOUBERT, the defendant's second witness,
testified that he was employed at the defendant's Pretoria North
branch. Her main pre-occupation
was to analyse medium business
enterprises. According
to her testimony, only when a bond is registered and lodged at their
securities section in Kempton Park do the particulars
of a customer
appear in their computer system. This system operates through the
whole country. The particulars of a customer will
not be available
if no mortgage bond is registered in the name of a customer. This
system, albeit now universal in South Africa
at all the defendant's
branches, was not
available in the year 2002 and particularly on 7 November 2002.
Accordingly no details of the plaintiff's two sons would have
been
available in their system as at 7 November 2005.
32/...
.Johannes
-32
[73]
JOHANNES ADAM JACOBS testified,
among others, that he was Scholtz's senior. While Scholtz was a bank
relation officer, he was a cell manager at the Pietersburg
Commercial Bank which included the whole of Limpopo Province. He was
acquainted with all the authorities Scholtz had. According
to his
testimony, Scholtz had no authority to grant overdraft facilities.
Scholtz's main function was to prepare and to forward
applications for facilities to their credit division on behalf of
customers. [74]
Scholtz had no authority whatsoever in respect of accounts that
exceed their credit limits. Such accounts were monitored daily
and
those accounts in which customers exceeded their limit would be
reported to the credit division who would decide as to what
should
be done. There was
no way Scholtz could authorise payment of a cheque if, by doing
that, the limit of the relevant account would be exceeded. He
himself had no power to authorise any credit facilities. [75]
Both of them had neither express nor, for that matter, any tacit
mandate to consider and authorise long term applications for
financial loans. Applications for long term loans are, according to
the defendant's practice, handled and approved by a special
section
of the bank. The function of a branch, in such circumstances, is
merely to gather more information from the customer, to
prepare the
necessary application and to
forward it with all the supporting documents to the CPF section,
their credit division, in Pretoria who will then consider the
application and decide. At their respective levels neither of them
has any mandate to
33/...
.issue
-33
issue
guarantees, this being the task of their mortgage bond
administration section.
[76]
During cross-examination, he testified further that the document
that contained a list of bank officials and their various
mandates
was an
internal
document and that it was never shown to the bank's customers nor
were the contents thereof disclosed to the bank's customers.
He admitted
that the bank's customers had no way of knowing the mandates or
limits on the mandate of the various bank officials. The
bank
cleared the plaintiff's cheque for R738 000.00, despite the
fact that no overdraft facilities were in place, that it
exceeded
Samantha Claassens' mandate and finally, Scholtz's instructions that
it should not be honoured until
overdraft
facilities were in place. [77]
Not all the evidence led on behalf of the plaintiff is relevant for
his matter. In the circumstances and in its attempts to
properly
decide on the issues at hand it will be important for this Court to
confine itself to the evidence that impacts directly
on the events
of 7 November 2002, for this is the date on which the plaintiff's
cause of action arose. The court does not hereby
imply that the
evidence that does not relate to the events of 7 November 2002 has
no bearing on the matter nor does it mean that
such evidence is
discarded for want of relevance. [78]
The plaintiff's cause of action arose, to be specific, on the 7
34/ November
-34 November
2003 when he had an interview with Scholtz. The plaintiff has not,
in his pleadings, mentioned this date specifically however
this was
the predominant date in the trial. According to the plaintiff, his daughter
and Scholtz, 7 November 2002 is the date on which the interview
during which the alleged agreement between the plaintiff
on the one
hand and Scholtz on the other hand was reached. In the whole of the
evidence there is no evidence that, apart from the
7 November 2002,
the plaintiff and Scholtz ever met again about the same subject of 7
November 2002. The following transpired in the plaintiff's
evidence-
inchief:
"Nou
mnr Allison,
dit is gemene saak,
en dit is ook so
erken
op die pleitstukke dat op 7
November
2002 is U na, het u 'n vergardering of
gesprek
gehad met mnr Scholtz van die verweerder, van Absa, in sy
kantoor,
kan u dit onthou Ek kan dit onhou. Ek en my dogter was
daar." Consequently,
in order to establish whether or not an agreement was formed between
the plaintiff and, as represented by Scholtz,
on 7 November 2002,
recourse should be had to the evidence of the plaintiff, his
daughter Mandy and Scholtz. [79]
It is trite that, in terms of our law, he who asserts must prove the
facts which form the basis of his claim. In the first
place it is of
paramount importance to note that the plaintiff relies on an oral
agreement. The duty lies on the plaintiff to prove,
not only the
existence of an agreement but also its terms; see Stocks &
Stocks (Pty) Ltd v T J Daly & Sons (Pty) Ltd
1979(3) SA 754(A) at p764 where Corbett JA, in
35/ .considering
-35 considering
the duty cast on a party who relies on a contract, stated that:
" but
nevertheless in
each case the essential dispute revolves around the
terms of the contract of sale and" the general rule is that the
plaintiff must prove the terms of his contract". See also
Kriegler v The Minitzer and Another 1949(4) SA 821 at 827. [80]
The plaintiff testified, among others that: "Die
doel van my besoek was, ek het 'n nota of 'n berig in die
Landbouweekblad gekry van 'n veiling in Polokwane wat die
silo's betrokke by was en 'n klomp winkels, 'n kompleks en ek wou
die bank aanvra of hulle nie vir
my geld sou leen vir die
koop van die gebou. " It
is not in dispute between the parties that on 7 November 2002 there
was an interview between the plaintiff on the one hand and
Scholtz
on the
other hand nor is it in dispute that at such interview, the
plaintiff represented himself while Scholtz was a representative
of
the defendant. It is also not in dispute that the interview between
the plaintiff and Scholtz centred around financial assistance
by the
defendant to the plaintiff. What however seems to be the parties'
battleground is whether or not any legally binding relationship
ensued from such an interview. Did the discussions that the parties
had on 7 November 2002 result in any agreement as alleged by
the
plaintiff? Were the discussions between the parties conducted in
such a way as to lead one to an unequivocal inference that
the
parties expressly or tacitly concluded any agreement?
[81]
As indicated earlier, the only evidence upon which reliance should
be
36/ placed
-36 placed
in order to decide the issue is the evidence of all the people who
were present at the discussions of 7 November 2002.
In
order to properly analyse the situation and to come to a reasonable
conclusion flowing from what transpired on that particular
day, it
will be wise for the court to have regard to the purpose with which
the plaintiff went to the defendant; what the plaintiff
had in his
possession when he went to the defendant; the nature of the
discussions between the plaintiff and the defendant; the
standard
procedure that the defendant followed at the time in such instances;
the authorities of the various bank officials; the
past
practices between the plaintiff and the defendant; the credibility
of the witnesses and finally the surrounding circumstances. [82]
It must be borne in mind that the court has, in some instances,
referred to the defendant where and when it should have referred
to
Scholtz, because it has accepted that at all material times, Scholtz
was representing the defendant. In his own evidence, the
plaintiff
went to the defendant on 7 November 2002 to establish whether or not
the defendant could
assist him financially. There is no evidence suggesting that his
visit to the defendant on that particular day had been pre-arranged
nor is there any evidence whatsoever that there had been a
discussion prior to 7 November 2002, of any financial assistance
between
the parties. [83]
The evidence does not indicate that the defendant knew that the
plaintiff would call in at the bank on that particular day,
and in
particular, about the issues that form the nucleus of this matter.
No evidence exists
37/ on
the basis
-37
on
the basis of which this court can conclude that the defendant knew
that the plaintiff would be coming on that particular day.
In short,
the evidence
is conclusive that the plaintiff's intention to go to the defendant
on that particular day was to investigate the possibility
of the
defendant assisting him financially and presumably what he had to do
in order to properly apply for a loan. In his evidence
in chief, he
testified as follows:
" Die
doel van
my
besoek
was om ek wou by die bank aanvra of hulle
nie vir my geld sou leen vir die verkoop van die gebou." [84]
During cross-examination, the plaintiff testified further as
follows: "
So you expected Mr Scholtz there and then that day to make a
ruling,
either
approving or disapproving your loan As I said to you it is not an
expectation. I just
went there to just find out if the bank would be
prepared
to help me. It was not an expectation and once he agreed, that is
what I acted on",
The
parties seem to be ad idem in their evidence that on 7 November 2007
the plaintiff did not formally apply for a loan. In his
evidence
while he confirmed the discussion of 7 November 2002 between him and
the plaintiff,
Scholtz testified further that: "Die
klient het
my
gevra
wat ek dink die kanse is dat hy moontlik finansiering kan kry
hiervoor. "
[85]
I wish at the outset to refer to the lapidary of Davis A.J.A in
Pillay v Krishna and Another 1946 AD 946 at 951:
38/..lt consequently
-38
"It consequently
becomes necessary at the outset to deal with the basic rules
which govern the incidence of
the
burden of
proof
the onus probandi
for upon them the decision of
this
case must ultimately
rest.
And it
should
be
noted immediately that this is a
matter of substantive law and not a question of evidence; Tregea and
Another v. Godart and Another (1939,
A.D.
16, at p. 32). The
first principle in regard to the burden of
proof
is thus stated in the Corpus
Juris: "Semper necessitas probandi incumbit
illi
qui agit" (D. 22.3.
21).
If one person claims something from another in a Court of law, then
he has to satisfy the Court that he is entitled to it." [86]
In my view, although the parties were engaged in a discussion the
purpose of which was to establish the possibility of the
bank
assisting the plaintiff
financially, these discussions did not lead to an agreement. It is
highly unlikely, considering the purpose with which
he went to the
bank and the nature of the documents that he had, that the plaintiff
could have thought that there was an agreement
between him and the
defendant. [87]
It seems to this court that the parties were talking past each
other. While in his mind the plaintiff thought that he was busy
making an application for financial loan and Scholtz was approving
it, Scholtz in his mind thought the plaintiff was merely testing
the
waters. This is the inference that this court can make, in the light
of the divergent evidence placed before this court. I
am unable to
fathom out the basis on which the plaintiff thought that an
agreement had been concluded between him and Scholtz.
39/...
.At the
-39
[85]
At the time the plaintiff had a discussion with the defendant, he
had in his possession a tearsheet of the Landbouweekblad,
which had
an advertisement of a public auction of certain immovable properties
in Polokwane. This evidence is also confirmed by
Scholtz's evidence.
"Die Klient het slegs die
advertensie van die veiling gehad van die Landbouweekblad' .
It
is not in dispute that this advertisement contained certain
information which
became the core of further discussions between the parties. Certain
details were furnished orally by the plaintiff. The importance
of
what the plaintiff had in his possession when he went to see Scholtz
will become clearer and be placed in a better perspective
when I
deal with the defendant's standard final procedure. For now it is
important to bear in mind that when he went to see the
defendant,
the plaintiff had in his possession a page of the Landbouweekblad
that contained an advertisement of a public auction
and a piece of
paper which contained some projected figures. [86]
All the discussions conducted between the parties were oral. The
only object that was on paper was the advertisement in the
Landbouweekblad itself and a piece of paper. A tear sheet of the
Landbouweekblad and an impromptu discussion do not seem to be
sufficient to secure the plaintiff financial loan. Over and above,
it is quite clear
from the evidence of both the plaintiff and Scholtz that something
more than the advertisement and a discussion with Scholtz
was
necessary before he could get any finance from the defendant.
40/ Both
-40
[87]
Both of them agree that the plaintiff never completed any
application for a loan. An application seems to be the first step
that the plaintiff should have taken in order to get financial
assistance from the defendant. It is clear from the evidence both
by
the plaintiff and the defendant that it was common cause that it was
standard procedure that an application should have been
made. The
plaintiff is of the view that it was up to Scholtz to make him to
apply for a loan. The plaintiff admitted previous practices
in terms
of which certain transactions he concluded with Scholtz could only
be finalised by Scholtz's seniors. He acknowledged further
that
Scholtz had limited authority and that even the authority he had did
not allow him
to
grant overdraft facilities and loans. [88]
In his evidence, Scholtz outlined the extent of his mandate, the
procedures that a customer who requires financial assistance
from
the bank
has to follow, the past transactions that he conducted with the
plaintiff and also the events of 7 November 2002. All these
are
equally of paramount importance and it is for the court to utilise
them as tools in arriving at the appropriate decision. [89]
Scholtz has no mandate to grant overdraft facilities. Both the
plaintiff and Scholtz knew this very well. Scholtz had in his
possession at all times an internal document which clearly set out
not only the extent of his mandate but also the extent of the
mandate of even some of his seniors. It is highly unlikely that he
could have deliberately ignored his mandate and granted the
plaintiff a loan of R6 million. If he had no authority to
41/ grant
-41
grant a loan of R50 000,00,
surely
he could not have had any authority to grant a loan of R5,5 million.
[90]
It was not necessary that Scholtz should have mentioned the fact
that he had no authority to grant a loan or overdraft facility
nor
was it necessary that he should have exhibited his mandate to the
plaintiff. In my view, it is sufficient if he collected,
from the
plaintiff, all the relevant information with the full knowledge that
he would forward it to the relevant section. The
fact that no
mention of Scholtz's authority was made is indicative of the fact
that the plaintiff and Scholtz never discussed issues that
would have obliged Scholtz to question himself whether or not he
could have authority to do what the plaintiff would have asked
him
to do. At any rate the plaintiff knew or ought to have known from
past transactions that Scholtz did not have the authority
to
conclude transactions of a kind and magnitude that form the subject
of this matter. [91]
A series of documents contained in bundle "C" clearly
indicate a flurry of activity that radiated from Scholtz's
office
following the meeting of 7 November 2002. On 18 November 2002,
Scholtz wrote a memorandum to Van Rensburg in which he motivated
the
granting of overdraft facility to the plaintiff. Among others, he
reported the following, in the said memorandum: "
Klient moet egter voor of op 19/11/2002 die deposito sowel as agente
kommissie betaal andersins sal die koop gekanselleer
word en klient
beboet word. Die bedrag beloop R738 100.00 en benodig klient
oorbrugging hiervoor en vandaar ook die aansoek."
42/...ln
my view
-42
[92]
In my view, the contents of this memorandum clearly establish a
number of very important aspects of the case. In the first
place
they confirm a meeting of 7 November 2002 between the plaintiff and
Scholtz. They confirm further that a discussion centred
around
financing took place at such a meeting that even though the
plaintiff does not seem to have made a formal application for
overdraft facilities, this document indicates quite convincingly
that attempts were made to get him such facilities, finally, and
which is of paramount importance, it not only proves that there was
no agreement between the plaintiff and the defendant about
overdraft facility
on 7 November 2002 but also that Scholtz had to direct the
plaintiff's request for overdraft facilities to his seniors.
If
Scholtz had the authority to grant overdraft facilities, there would
have been no need for him to send a memorandum to his seniors. [93]
According to Scholtz, there is a system in situ which any
applicant for a loan has to follow. In his capacity as a bank
relation manager, all that he is called upon to do is to
assist a
customer to complete an application for loan, to advise a customer
on the nature of the supporting documents to be submitted
with such
an application for a loan and to forward the application to the
relevant section for consideration. Applications for
loans are
forwarded to their credit section.
[94]
Where a person applies for financial loan in order to buy commercial
property, such an application would be referred to the
appropriate
section of the bank. According to Scholtz, it is the credit
section's duty to either
43/ ..turn
-43 turn
down or approve such an application or to call for more details in
order to enable it to decide. In practice, a branch manager
is never
required to decide on an application for financial loan. In the
premises, it is highly unlikely that the branch manager
could have
usurped the powers or authorities of other sections of the bank.
This is a clear indication that the plaintiff knew
that in order to
secure financial assistance from the
defendant,
an application for such a loan had to be completed. [95]
There is no evidence on record that the defendant had agreed to
advance the sum of R6 million on the understanding that bonds
over
the plaintiff's two sons, would be passed later nor is there
any evidence for that matter that indicates clearly that the bank
would have been prepared
to advance money to the plaintiff without
following the bank's normal procedures.
[96]
The procedure referred to above involved having to pass mortgage
bonds on the plaintiff's two sons' properties. As at 12
November 2002 this had not been done. There was no way the plaintiff
could, on 7 November 2002, be brought
under an impression that he
already had a loan when no mortgage bonds had been passed over his
sons' properties. According
to the defendant's evidence, valuation of the properties on auction
and of the plaintiff's two sons' properties, submission of
the plaintiff's own financial statements, cash flow statement, lease
agreement, business plan and
clearance certificates are an integral
part of the bank's procedure.
44/ There
-44 [97]
There is neither evidence on record nor is there any indication that
the defendant had agreed to dispense with its normal procedures.
Compliance with these requirements would have been a clear
indication of what transpired at their meeting. The fact that the
plaintiff
had not been asked to submit the documents mentioned above
clearly indicates that the plaintiff and the defendant did not
conclude
an agreement.
[98]
For a binding contract to come into existence, it is important that
the parties' duties and rights, in other words, what performance
will be due by the parties, should be clearly set out, whether in
writing or orally.
"It is generally
accepted that agreement or consensus is the basis of contractual
liability. This means that
for a
valid
contract
to come into
existence,
the parties must have a
common
intention or will to bring about certain legal consequences, i.e.
the
creation of obligations. This implies not only that the parties, as
we have
seen, must be ad idem to be juridically
bound and
thus
to create
obligations, but also that they must be
in agreement as
to
the content of these obligations. i. e
as regards
the nature of the performance that will be due, and finally the
agreement must be a
conscious
one
between
the parties, in other words, they must be aware of such agreement".
See
p.384 of Introduction to South African Law and Legal Theory by W J
Hosten et al. [99]
Such an agreement would have created a duty for the plaintiff to
refund the loan of R5,5 million. In view of the fact that
sum of
R5,5 would
45/...
have
-45 have
been quite substantial, the parties would have agreed that the
plaintiff should refund it in certain instalments. Clearly there
is
no evidence on record that the parties had agreed that the plaintiff
should repay the said amount of R5,5 million, the rate
at which and
the instalments in which the said amount had to be repaid.
[100]
The plaintiff himself did not give any evidence as to the amount he
had agreed to pay to refund the loan of R5.5 minion. According
to
the plaintiff the agreement that he concluded with the defendant did
not, in the absence of any evidence from him, create any
obligation
from him. A
contract may therefore be defined as follows: "In
hierdie stadium kan
volstaan
word met die stelling dat 'n kontrak 'n afspraak
is, gemaak met die bedoeling om
'n verbintenis of verbintenisse in die lewe te roep." See
Kontraktereg en Handelsreg by De Wet and Yeats.
10.p.6 [101]
Although not all contracts create obligations for all the parties,
like for instance, the contract of donation, the contract
that the
Plaintiff relies on in this instance is a type of a contract that
creates obligations. "We
have
seen
that the performances to which parties bind themselves may consist
in giving something, doing something, not doing something
or
suffering something to de done. From what we have said with
regard
to
offer
and
acceptance, it is clear that no contract comes into being unless it
is clear what
performance will
be due by the debtor under the contract, this idea
is expressed in the
rule that for a contract to arise, the performances
46/ due
must
-46
due
must be determined or at least determinable". See
Introduction to South Africa Law and Legal Theory by W J Hosten
p.399. [102]
An obligation to refund the money loaned should not be implied. As
it is an essential element of a loan agreement, the parties
must
agree that the party that receives money as a loan, such as the
present one, shall be obliged to refund it. The obligation
must come
into existence as a result of an agreement between the parties. "Now
it is needless to
say that a
court
should be very slow to imply a
term
in
a contract which is not to be found there " See
Union Government
(Minister of Railways) v. Faux, Ltd 1916 A.D 105 at p. 112. [103]
According to the defendant, the plaintiff would have been obliged to
pay R95 558.00 per annum over ten years to refund
a loan of
R5.5 million and R85 645.00 to refund the same amount of loan
over fifteen years. Had it been the parties' intention
that the
plaintiff would return the said amount of R5.5 million, it is
difficult to understand why that was not made a term of
the
agreement. There is, in my view, no evidence that the parties had
agreed on the terms of the alleged agreement. "If
parties agree upon all the terms of
a
contract which
is a
unique one
according to its own terms, there is no doubt that
they agree upon some
legal relationship". See
The Principles of the Law of Contract, page 45, 6th Edition,
by A J Kerr.
47/..
.It is the
47
[104]
It is the defendant's view that, even if it can be found that the
plaintiff and the defendant had indeed concluded an agreement
of
loan of the sum of R6 million such an agreement, would in any event
have been conditional. The parties' agreement would have
depended on
a fulfilment of a condition. This condition would, according to the
evidence by both parties, have been the registration
of mortgage
bonds over the plaintiff's two sons' properties in order to
constitute security for the refund of the alleged loan.
[105]
If the Court were to accept that the parties have concluded a
conditional agreement, a duty would be cast upon the plaintiff
to
prove that the condition had been fulfilled on the date of the
auction.
"On
the view of the case to which I have come. I need only to
deal with the onus upon one of its aspects. That the onus was
really on the Plaintiff to show that this condition precedent had
been fulfilled is clear." See
Trollip v African Timbers 1946 A.D. 1063 at p.1070 .
No
contract comes into being if a condition precedent to such a
contract, has not been fulfilled.
[106]
"In
order
to establish a
tacit (implied) contract it is necessary to show, by a preponderance
of probabilities, unequivocal conduct which is capable of
no other
reasonable interpretation than
that the
parties intended to, and did in fact, contract on the terms alleged.
It must be proved that there was in fact consensus ad idem."
See
Standard
Bank of S.A Ltd and Another v Ocean Commodities Inc and Others
1983(1) S.A. 276(A) at 292B.
48/.. .Again
48
[107]
Again, the defendant's evidence is that the plaintiff has, from the
past, known that certain procedures had to be followed
before any
financial loan could be approved and that Scholtz always had, in the
past, to refer such matters to the relevant sections.
The plaintiff
never mentioned these practices in his evidence. Nowhere in his
evidence does he testify about past practices between
him and the
defendant. He did not even show a pantomime of eloquent surprise
that on 7 November 2002, he was, according to his
own evidence,
granted a huge loan without having to follow the procedures he knew.
It would seem that, it would have been preposterous
that the
plaintiff could be granted a loan in manners that did not comply
with ordinary known procedures. [108]
Now I wish to turn to Mandy's evidence. The importance of Mandy's
evidence is that it supports the plaintiff that on 7 November
2002,
there was a meeting between her father and Scholtz at which meeting
there was a discussion about money. My understanding
is that this is
not in dispute. In my view this was not the only purpose she was
called as a witness in support of her father's
case. She was a key
witness in the sense that she was present during the entire
discussions in Scholtz's office. (109)
Her evidence, in my view, does completely serve the purpose for
which it was presented, that is to support the plaintiff's
evidence.
She prevaricated in her evidence. For instance, at the beginning of
her evidence when she was asked why the plaintiff
went to the
meeting with Scholtz, she testified "We went to Mr Scholtz's
office to ask for a loan, for an auction that we wanted
to go to". Under cross-examination she testified
49/... that the
49 that
the plaintiff "went to see Mr Scholtz with the objective to
see whether the bank would probably assist you with this
transaction". She admitted that:
"
And you wanted, your father wanted to obtain an opinion from
Scholtz in that regard". In
my view the fact that she oscillates in her evidence in this
manner
indicates her uncertainty regarding the purpose of their visit to
the bank.
(110)
She demonstrates her inability to testify about what the plaintiff
told Scholtz. This in my view was a very crucial point.
This would
have better placed
the court in a position to establish the subject that was discussed
between the plaintiff and Scholtz, i.e. whether the plaintiff
indeed
applied for a loan or merely sought Scholtz's opinion. She testified
as follows in her evidence chief:
"Can
you remember what Mr Allison ask Mr Scholtz yes.
"
Ja, tell the Court He asked for, that he wanted to go and purchase
this building on the auction,FB and yes, that is what he asked him" Nowhere
does she say, the plaintiff in addition, asked the bank or Scholtz
to grant him a loan in order to purchase the building
on auction.
50/...
Finally
50 (111)
Finally she did not remember some of the most essential parts of the
discussion between the plaintiff and Scholtz, e.g. whether
or not
any agreement on the monthly repayment instalments and also on the
interest rate that the bank could charge on the loan
of R6 million
had been discussed. In my view, her evidence does not add any
significant value to the plaintiff's case. It falls
seriously short
of supporting the plaintiff's case and the court finds it difficult
to rely on it. [112]
The evidence of the plaintiff and his
witnesses is in many respects incredible. It is riddled with
improbabilities and inconsistencies.
The evidence of the defendant
is as clear as crystal that there was no agreement between it and
the plaintiff and that it was therefore
not obliged to furnish the
plaintiff with any guarantees. The plaintiff did not dispute the
defendant's evidence about the existence
of a procedure that the
defendant follows in respect of its customers who require financial
assistance nor did the plaintiff dispute
the defendant's evidence
that Scholtz had no authority to grant loans and overdraft
facilities. [113]
There remains the question whether or not the defendant should be
estopped from denying his authority to bind the defendant.
The
plaintiff holds the view that Scholtz made a representation to the
plaintiff while he was acting within the course and scope
of his
employment with the defendant and that the plaintiff relied on it .
Scholtz represented to the plaintiff, it is argued by
the
plaintiff's counsel, that he had the authority to bind the bank in
other, in other words, that he had the authority to grant
a
51/ loan
51 loan
of R6 million and should therefore be estopped or the defendant
should, in the circumstances, be estopped from denying such
authority. (114)
The plaintiff acknowledges the existence of the internal document
that determined the authorities of Scholtz and Jacobs. The
plaintiff's view on the internal document is that he was not aware
of it. It was argued further on behalf of the plaintiff that
granting loans and issuing guarantees was the normal course of the
defendant and the plaintiff acted reasonably in believing that
the
manager had given him the approval to purchase at the auction.
(115)
The general rule to establish agency by estoppel was laid down in
Monzali v Smith A.D.382 at 385. "To
establish
agency
by estoppel there are two requisites: first, the principal
sought to be bound must represent by his words or conduct that the
person professing to bind him has authority to do so,
and secondly,
that the person to whom the profession is made acts on the
faith of the representation of his prejudice"
In
the Monzali case, the court approved the following passage from
Strachan v Blackheard & Son 1910 A.D at p. 288 by
De Villiers C.J. "
To prove a course of dealing which would stop a
principal from denying an authority which, in fact he never
conferred on his agent and which could not be legally implied from
the
nature of the agency, it is not sufficient to
52/ show
52 show
that the course of dealings was of such a nature
that it could reasonably have been expected to mislead, and that it
did in fact mislead
him.
" These
requirements set out in Monzali's case were increased in NBS Bank
Ltd v Cape Produce Co. (Pty) Ltd and Others 2002(1) SA 396 SCA at
412C-E. In the NBS Bank Ltd case,
which was approved in Glofinco v Absa Bank Ltd t/a United
Bank 2002(6) S.A. 470 SCA, the court
set out
"the
requirements
for holding a
principal
liable on the basis of
the
ostensible authority
of its
acknowledged agent"
as
follows.
"(1) A representation
by words or conduct.
(2) Made by [the principal]
and not merely by [the agent] that he had the authority to act as
he did. (3)
A representative in a
form that [the
principal] should reasonably have expected
that
outsiders
would act on the strength of
it. (4)
Reliance by [the third party] on that representation. (5)
Reasonableness of such reliance (6)
Consequent prejudice to [third party)" (116)
It
is important to bear in mind that:
"A representation must
be noted in the words or conduct of the
principal himself and not merely in that of
his
agent. Assurances by
an agent as
to the existence or extent
of his
authority are therefore of no consequence when it comes to the
representation of the principal inducing
53/ a
third party
53 a
third party to act to his detriment" See Glofinco case
at p. 480 par [13] Agency by estoppel can only be raised against the
principal and not the agent. Plaintiff's
counsel has, in his
argument, based his "agency by estoppel" on the
representation made by Scholtz. In his heads of argument
he states
that: "Daar
word aan die hand gedoen dat daar wel 'n voorstelling
'representation'
deur Scholtz was, wat opgetree het in die loop van sy
diensbestek
by die verweerder, waarop die eiser gesteun het, en wat nadeel
vir hom veroorsaak het." (117)
In the first place, Scholtz has denied that he told the plaintiff
and his daughter that he could go and buy for R6 million.
Even if
that were so, these words cannot be imputed to the defendant. In the
circumstance, the plaintiff cannot rely on Scholtz's
words to hold
the defendant liable on the basis of agency by estoppel. In my view,
the plaintiff has another problem.
" Where
it is sought to
hold a
man
bound as
a principal
in a
particular
transaction, it is sufficient on the rule enunciated by Stratford JA
in Monzali's case (above) to show that his conduct
in the past has
been such as
to
lead any reasonable person, acting with due prudence and discretion,
to believe that the
agent had actual authority in the particular transaction (my
underlining)
There must, however, be strong evidence that a
person
who has no authority has some authority which can be implied from
previous transactions which have come to the notice of
the
particular individual seeking to hold another liable as
a principal."
54/
…See Mercantile
54
See
Mercantile of South Africa by Phillip Millin and George Wilie 17th
Edition, edited by J-F Coaker and W.P. Schutz, p367. (118)
I have already dealt with previous transactions in the preceding
paragraphs. In conclusion the plaintiff has failed to establish
sufficient ground for his reliance on agency by estoppel.
Finally,
it is equally important to consider the nature and extent of
Scholtz's authority. "The
appointment by
a
bank
of
a branch
manager implies representation to the outside world. The
presentation
to the knowledge of
the
bank, is that the branch manager is empowered to represent the bank
in the sort of
business
(and
transactions) that a
branch
of
the
bank and its manager would ordinarily conduct." See
Glofinco's case p. 481C-D. See also G-H where the court stated that:
"A branch manager clearly does not have, nor can reasonably
be believed
by anyone to have, a free hand to bind the bank at will. His
authority to do so is not unlimited both as to the
nature and the extent of the business he purports to transact
in the bank's name. " (119)
The question whether or not Scholtz has a duty of care to the
plaintiff will depend on whether or not the parties had concluded
any agreement. In my view, as there was no valid agreement or no
agreement at all concluded between the parties on 7 November 2002
or
any subsequent date, no duty of care arose for the defendant.
55/ The
Plaintiff
55 [120]
The plaintiff did not dispute the defendant's evidence that the
history of past transactions between the defendant and him
showed
clearly that Scholtz referred such transactions to his seniors for
their sanctions. There is,
in my view, no basis upon which this court can reject the
defendant's evidence. In fact it was never suggested by the
plaintiff
that the defendant's witnesses were less than candid. In
the end, I accept the evidence of the defendant as being the more
probable
of the two versions. [121]
On the balance of probabilities I am not satisfied that the
plaintiff has proved the existence of a contract between him and
the
defendant and consequently his claim against the defendant cannot
succeed. On the other hand, I am satisfied that the defendant
has
succeeded in proving its counter-claim against the plaintiff in Case
22361/03 and, as plaintiff in case NO: 18117/2004, its
claim against
the defendant in that case. [122]
At the beginning of the trial, it was agreed between the parties
that in Case No: 22361/2003, the merits should be separated
from
quantum and that trial of the matter should only proceed on the
merits.
Accordingly
I make the following order:
A.
IN CASE NO: 22361/2003 1.
The plaintiff's claim against the defendant is dismissed. 2.
Judgment on the merits is granted in favour of the defendant in
respect
of
its counterclaim against the plaintiff.
56/...The
plaintiff
56
3.
The plaintiff is ordered to pay the costs of the action, including
the costs of two counsel.
B.
IN CASE NO: 18117/2004 [1].
Judgment is granted against the defendant in favour of the Plaintiff
for
payment
of a sum of R1,350,000.00.
-
[2] The defendant is ordered to pay the plaintiff's costs of the
action, including the costs of two counsel.
[3].
The defendant's application to amend his plea is dismissed.
C.
IN RESPECT OF BOTH CASES 22361/2003 AND 18117/2004 [1].
The Plaintiff in Case No: 22361/2003 and the Defendant in Case NO:
18117/2004
are ordered, jointly and severally the one paying and the other to
be absolved, to pay to Absa Bank Ltd ,in accordance
with the orders
in A[2] and B[1] above, the amount of Rl,350,000.00. [2].
The Plaintiff in Case NO: 22361/2003 and the Defendant in Case NO:
18117/2004, are ordered, jointly and severally the one paying
and
the other to be absolved, to pay interest on the said amount of R1
,350,000.00 ( One Million Three Hundred and Fifty Thousand
Rands)
together with interest thereon at the prime interest rate charged by
ABSA Bank Limited from time to time together with 8
(eight)
percentage points to be added to such prime rate, interest to be
calculated monthly on the day to day balance as from 9
September
2005 to date of payment.
/57.....
APPEARANCES
Plaintiff's
Attorneys Plaintiff's Counsel
Defendant's
Attorneys Defendant's Counsel
Date
delivered
-57
MABUSE
AJ :
ATTORNEY COETZER :
ADVOCATE I M BREDENKAMP :
ROOTH & WESSELS :
ADVOCATE J L VAN DER MERWE : ADVOCATE N J LOUW: 2007.07. 26