NBS Boland Bank Ltd v One Berg River Drive CC and Others

• Jurisdiction: South Africa
• Judge: Southwood J
• Judgment Date: 09 April 1998
• Citation: 1998 (3) SA 765 (W)
• Docket Number: 97/19700
• Hearing Date: 12 March 1998
• Counsel: JF Steyn for the plaintiff ZF Joubert (with him LGF Putter) for the defendants
• Court: Witwatersrand Local Division

Southwood J:

The plaintiff claims payment from the first and second defendants jointly and severally of the sum A of R1 788 800, interest thereon at the rate of 23,25% per annum compounded monthly from 30 June 1997 to date of payment and ancillary relief. The plaintiff's claims against the first defendant are based on two mortgage bonds registered over the fixed property which the plaintiff seeks to have declared executable. The plaintiff's B claim against the second defendant is based on a deed of suretyship. In its summons the plaintiff claimed the same amount from the third defendant also in terms of a deed of suretyship. I was informed from the Bar that the plaintiff has withdrawn its claim against the third defendant. In their plea the defendants admit the registration of C the two mortgage bonds and the existence of the deed of suretyship but deny that the defendants are indebted to the plaintiff in the amount claimed and that the first defendant is in breach of any of the terms of the two mortgage bonds. The plea does not admit that any amount is in arrears or contain a tender to pay that amount. The D principal defence raised in the plea is that clause 14 of the mortgage bonds is invalid and accordingly that the plaintiff is not entitled to claim interest at a rate of 23,25% per annum.

At the pre-trial conference the parties agreed to narrow down the issues to be tried. The relevant agreement is contained in paras 8 and 9 of the pre-trial minute and reads as follows: E

'8.

The parties have agreed that:

8.1

The legality and enforceability of clause 14 of the bond agreements; and

8.2

the enforceability of the certificate referred to in clause 7 of the bond agreements be decided separately.

9.

The parties agreed that: F

9.1

In the event of the Court finding that clause 14 of the agreement to be enforceable

9.1.1

the defendants will pay the amount as set out in the particulars of claim plus interest as claimed, less any payments made by the defendants to plaintiff subsequent thereto. G

9.1.2

Should the defendants appeal against such judgment, the defendants shall be entitled to tender payment of the full amount and should the Court of Appeal find in favour of defendants, the plaintiff shall repay to defendants the difference between the amount claimed H on the summons plus interest and the lesser amount calculated at the interest rate originally agreed upon. Such amount would include interest calculated from date of payment to date of repayment at a rate equal to such rate as would be determined on s 78(2) of the Attorneys Act trust account. I

9.2

In the event of the Court finding clause 14 of the bond agreements to be unenforceable:

9.1.2

The defendants will pay to the plaintiff such amount that may be found to be due and owing, calculated at J

Southwood J

the rates of interest as stated in the relevant bonds on the capital amounts of each bond. A

9.2.2

Should the plaintiff appeal against such judgment, the defendants will be entitled to pay the lesser amounts to plaintiff for which the defendants accept liability and submit alternative B security in respect of the balance between the higher amount claimed by the plaintiff and such lesser amount as paid by the defendants in the form of money deposited into an attorney's trust account in terms of s 78(2) of the Attorneys Act.

9.2.3

Such alternative security will be held pending the final outcome of any appeal against the C judgment to be paid to the successful party on appeal.

9.2.4

The plaintiff will consent to the cancellation of the bonds registered over the property on acceptance of the money to be paid and the provision of the alternative security in terms of paras 9.2.1 and 9.2.2. D

9.3

The agreement is without prejudice to any right of appeal against any judgment by any of the parties.

9.4

Payment and the provision of alternative security as provided for above must be made within 45 days after judgment on the dispute set out above either by way of cash or acceptable bank guarantees.' E

AT the Hearing Counsel Were Agreed that the Issue Referred to in Para 8.2 of the Pre-Trial Minute Had Fallen Away and that the Only Issue to be Decided Was that in Para 8.1. They Were Also Agreed that the Court Should Issue a F Declarator as to Whether or Not Clause 14 of the Mortgage Bonds Is Enforceable and that the Other Provisions of the Agreement Set Out in Para 9 of the Pre-Trial Minute Would come into Operation. They Informed the Court that This Would Cause NO Difficulty as the Relevant Amounts Had Already Been Calculated or Were Capable of Prompt Ascertainment. G

At the commencement of the hearing the plaintiff sought and was granted the relief sought in the notice of motion dated 4 March 1998 (substitution of the name NBS Boland Bank Ltd for the name of the plaintiff in the pleadings) and the relief sought in the notice in terms of Rule 28 dated 4 March 1998 (substitution of certain paragraphs in the particulars of claim). This relief was not opposed by the defendants. H

It should be recorded that only one witness gave evidence. Mr Fourie, who is one of the plaintiff's managers, gave evidence. This was very brief and was to the effect that the market in which the plaintiff does business is very competitive and that interest rates are determined by the cost of money and not by competition. Neither party referred to this evidence in argument. I

Save for the details of the two transactions the terms of the two mortgage bonds are identical. Each commences with the following acknowledgement of indebtedness:

'And the appearer declared the said mortgagor to be really and lawfully indebted and held and firmly bound to the NBS Bank Ltd, registration J

Southwood J

No 87,01384/cs or its assigns (hereinafter called the NBS) in the full and just sum of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (hereinafter referred to as the capital sum) arising from and being money lent and/or to be lent by the NBS to the mortgagor and which is to be advanced after registration of this bond but subject to all its terms and conditions, and also to be really and lawfully indebted and held and firm bound, in the further sum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . of (hereinafter referred to as the further sum) to cover or secure B costs and all moneys which may be paid by the NBS on behalf of the mortgagor or expended in order to protect its security from time to time in terms of the special conditions of this bond; which capital sum together with interest as hereinafter provided and all sums which may be payable under the conditions and security of this bond, the mortgagor shall be allowed, and also shall be obliged to pay or cause to be paid to the NBS at its offices in Kempton Park, or at C such other place or places as may from time to time be notified in writing by the NBS, by regular monthly instalments each of...