Citibank NA v Thandroyen Fruit Wholesalers CC and Others

• Jurisdiction: South Africa
• Citation: 2007 (6) SA 110 (SCA)

Citibank NA v Thandroyen Fruit Wholesalers CC and Others
2007 (6) SA 110 (SCA)

2007 (6) SA p110

Citation	2007 (6) SA 110 (SCA)
Case No	287/06
Court	Supreme Court of Appeal
Judge	Scott JA, Nugent JA, Heher JA, Maya JA and Hancke AJA
Heard	May 10, 2007
Judgment	May 28, 2007
Counsel	J J Gauntlett SC (with E L Law) for the appellant; N Singh SC for the respondents

Flynote : Sleutelwoorde C

Contract — Terms of — Validity of — Clause in agreement permitting creditor to sell D property of debtor and keep any amount in excess of agreed amount by which debt to be deducted, or bear loss of any shortfall, not being contrary to public policy. E

Practice — Judgments and orders — Judgment on confession in terms of Rule 31(1) of Uniform Rules of Court — Must be founded on cause of action contained in summons or notice of motion. F

Headnote : Kopnota

Rule 31(1) of the Uniform Rules of Court provides that a defendant may confess in whole or in part 'the claim contained in the summons'. In terms of s 1 of the Supreme Court Act 59 of 1959 'civil summons' is defined as including, inter alia, a notice of motion. Therefore, in motion proceedings, in order to comply with Rule 31(1), the confession must be to the claim contained in the G notice of motion. If the claim is founded not on the relief claimed in the summons or notice of motion but on a settlement agreement, Rule 31(1) cannot be applied. (Paragraph [8] at 113H - J.)

A clause in an agreement which provides that the creditor may sell property belonging to the debtor and keep any amount in excess of the amount of the agreed amount by which the debt is to be reduced, or bear the loss of any shortfall, is not contrary to public policy. (Paragraphs [13] and [14] at 115H - 116H.) H

Cases Considered

Annotations

Reported cases

Barbour v Herf1986 (2) SA 414 (N): referred to I

Bock and Others v Duburoro Investments (Pty) Ltd2004 (2) SA 242 (SCA) ([2003] 4 All SA 103): referred to

Eastwood v Shepstone 1902 TS 294: dictum at 302 applied

Graf v Buechel2003 (4) SA 378 (SCA) ([2003] 2 All SA 123): referred to

Iscor Housing Utility Co and Another v Chief Registrar of Deeds and Another1971 (1) SA 613 (T): referred to. J

2007 (6) SA p111

Montesse Township and Investment Corporation (Pty) Ltd and Another v Gouws NO and Another1965 (4) SA 373 (A): A dictum at 380 in fine applied

Sasfin (Pty) Ltd v Beukes1989 (1) SA 1 (A): dicta at 8J - 9A and 16B applied

Total South Africa (Pty) Ltd v Bekker NO1992 (1) SA 617 (A): dictum at 626I - J applied

Vogel NO v Volkersz1977 (1) SA 537 (T): dictum at 548F applied.

Rules Considered

Rules of Court B

The Uniform Rules of Court, Rule 31(1): see The Supreme Court Act and the Magistrates' Courts Act and Rules (Juta 2006) at 51.

Case Information

Appeal from a decision in the Durban and Coast Local Division (Balton J), rescinding a judgment granted in favour of the appellant and dismissing the appellant's counter-application for judgment in C money in terms of Rule 31(1) of the Uniform Rules of Court. The facts appear from the judgment of Scott JA (the remainder of the Court concurring).

J J Gauntlett SC (with E L Law) for the appellant.

N Singh SC for the respondents. D

Cur adv vult.

Postea (May 28).

Judgment

Scott JA:

[1] On 7 February 2005 the appellant, to which I shall refer as the Bank, sought and was granted judgment by Nicholson J in E the High Court, Durban, against the first, second, fourth and fifth respondents in terms of a confession to judgment as contemplated in Rule 31(1). The respondents (including the third respondent) subsequently applied for the rescission of the judgment together with certain ancillary relief. The Bank opposed the rescission and filed a F counter-application in terms of which (as amended) it sought, first, that the judgment be varied by the substitution of a lesser amount and, second, in the event of the judgment being rescinded, that a fresh judgment be granted in the same (lesser) amount. The matter came before Balton J who granted the application for rescission of judgment and dismissed the counter-application, with costs. The Bank appeals with G the leave of the Court a quo.

[2] Before dealing with the issues raised in this Court, it is necessary to sketch the events forming the background to the dispute. The facts are largely common cause. H

[3] Some time prior to 4 December 2003 the first, second and third respondents applied in the High Court, Durban, for an order interdicting the Bank from instituting liquidation proceedings against them. The matter was settled and on 4 December 2003 a written agreement of settlement was entered into between the Bank and all five respondents. The fourth respondent is Mr Ronnie I Thandroyen who is a member of the first and second respondents. The latter are close corporations which carry on, or formerly carried on, business in the fresh produce trade. The fifth respondent is Ms Logarani Thandroyen who is a director of the third respondent which is a private company. J

2007 (6) SA p112

Scott JA

[4] The terms of the agreement which are material for present purposes were the following: A

(a)

The first, second, fourth and fifth respondents (but not the third respondent) acknowledged that they were jointly and severally liable to the Bank in the sum of R2 175 000.

(b)

The Bank was authorised to sell certain immovable property belonging to the fourth and fifth respondents. Pending transfer of the property into the purchaser's name, and as from B 31 January 2004, the Bank was to pay the necessary rates and taxes and other levies imposed on the property. The Bank was also to pay all the costs of marketing the property.

(c)

Upon registration of transfer of the property into the name of the purchaser, or upon the expiry of 38 months from the C signing of the agreement, whichever was the sooner, the debt was to be reduced by the sum of R1 100 000.

(d)

Any amount realised from the sale in excess of the sum of R1 100 000 would be for the benefit of the Bank and any shortfall would be borne by the Bank. D

(e)

The capital of the debt was repayable by way of instalments of:

(i)

R20 000 on 31 December 2003;

(ii)

R20 000 on 31 January 2004;

(iii)

R150 000 on or before 29 February 2004; E

(iv)

R25 000 per month thereafter.

All payments were to be paid into a specified account of the Bank.

(f)

The first, second, fourth and fifth respondents were all to sign a 'consent' to judgment (in terms of Rule 31(1)) in F respect of their joint and several liability to the Bank for the capital...