Absa Bank Ltd v Erasmus

• Jurisdiction: South Africa
• Judge: Moosa J
• Judgment Date: 14 June 2006
• Citation: 2007 (2) SA 545 (C)
• Docket Number: 9644/2004
• Counsel: P de B Vivier for the plaintiff. Defendant in person.
• Court: Cape Provincial Division

Moosa J:

Introduction

[1] The plaintiff instituted action against the defendant for: (a) payment of the sum of R696 133,48; (b) H interest at the rate of 15,5% from date of service of summons to date of final payment; (c) an order that the mortgaged property be declared executable; and (d) costs of the action on an attorney and client scale. The defendant opposed the action and counterclaimed the sum of R6 634 000 as damages. The defendant is not legally represented and conducted his own defence. I

Pleadings

[2] The plaintiff's case is based on money lent and advanced on an overdraft facility that is secured by a covering bond over the defendant's farm. The defendant pleaded that plaintiff fraudulently, firstly, converted J

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a loan on a first mortgage bond, at an interest rate of not less than 17%, to a loan on an overdraft A facility to enable it to impose a higher interest rate; secondly, included a costs clause of R52 000 without his knowledge and consent; and thirdly, effected withdrawals, payments and unauthorised debits without his knowledge and consent. During the course of the trial defendant introduced a further defence of prescription. He alleged B that plaintiff's claim became prescribed by effluxion of time.

[3] The defendant's counterclaim is based on pain and suffering, ill-health, emotional stress, financial ruin, domestic problems, loss of his multimillion project and blacklisting of his name, which all resulted from the fraudulent conduct of plaintiff. The plaintiff denied these allegations, and more particularly denied that C its conduct was directly or indirectly the cause of defendant's problems. The plaintiff furthermore disputed that defendant suffered any damages and pleaded that, if defendant succeeds in establishing such damages, plaintiff denies that there is a causal connection between the breach of contract alleged by him and such D damages and/or that plaintiff is responsible or liable for the payment thereof. The defendant's counterclaim constitutes both the elements of a contractual liability and that of a delictual liability.

The onus E

[4] It is not disputed by the parties that the onus is on the plaintiff to prove the nature and the terms of the contract and the amounts claimed; while the onus is on the defendant to prove breach on the grounds of fraud, the causal connection and damages. The onus to prove the special defence of prescription is also on the defendant. At the Rule 37 conference the parties agreed that the plaintiff would start with the F presentation of its case, but it reserved the right of rebuttal. [1]

Facts that are common cause

[5] It is common cause that early in December 1997 defendant applied to plaintiff for a loan of R260 000 to purchase a farm. This application was approved on 30 December 1997. The plaintiff G confirmed in writing that an amount of R260 000 was made available to defendant to purchase the farm known as Weltevreden and situate in the district of Laingsburg. The loan was subject to the normal conditions of the bank, amongst others that a covering bond in an amount of R260 000 shall be registered over the property in favour of plaintiff. [2] H

[6] It is common cause that on 12 January 1998 defendant applied for the opening of a current cheque account and completed an application form in respect thereof. [3] It is also common cause that on 30 January 1998 defendant executed a power of attorney to register a covering bond I

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and simultaneously initialled a draft covering bond which formed an annexure thereto. [4] These A documents were executed and initialled at the offices of and in the presence of the conveyancer, S J Terblanche.

[7] The objective evidence is that the covering bond was registered on 12 June 1998. [5] The proceeds of the covering bond were made available to the defendant on 15 and B 17 June 1998, in the form of overdraft facilities, to pay the purchase price of the farm. It is not disputed that the proceeds were in fact used to effect payment of such purchase price. The evidence is not on all four squares with the allegations in paras 7 and 8 of plaintiff's particulars of claim. However, not much turns on the difference since plaintiff has accepted the objective evidence to which I have already alluded. C

Allegations of fraud

[8] Defendant in his plea and counterclaim makes serious allegations of fraud against the plaintiff. Before dealing with the specific grounds of fraud, I think that it is only prudent to make D certain general observations relating thereto. The allegations of fraud are regarded by our courts in a very serious light. They are not easily made as they are difficult to prove. [6] There is a duty on the person who makes such allegations to prove them. In the present case, besides the ipse dixit of defendant, there is no other evidence to substantiate the allegations of fraud. E Moreover, the objective evidence does not support such allegations. The uncontroverted evidence is that plaintiff confirmed the approval of the loan in writing, subject to the normal terms and conditions, amongst others, the registration of a first covering bond. Defendant alleged that it was a term of the agreement that the interest would not exceed 17% per annum. It was also agreed that there would be a F structured monthly repayment plan. These allegations are not supported by the terms of the bond.

[9] Pursuant to the approval of the loan, defendant executed a power of attorney to register a bond and initialled a draft bond document. The bond was registered in the deeds office. The proceeds thereof, in the form of overdraft facilities on the cheque account of G defendant, were paid to cover the purchase price of the property over which the bond was registered. The defendant admitted that these payments were used to cover the purchase price. [7] The bank statement of defendant reflected these payments. [8] The bond provides that interest shall be calculated at the rate or rates agreed upon H between the parties in writing from time to time, and in the absence of such agreement, it shall be determined in accordance with the rate or rates which the bank levies against the particular transaction. There is no stipulation in the bond that the

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interest rate shall not exceed 17% per annum. The bond also covers an additional amount of A R52 000 in respect of costs. The defendant also denied that he ever agreed to such a term.

[10] In...