Nedbank Limited v Spannenberg

• Jurisdiction: South Africa
• Judge: R.C.A. Henney J
• Judgment Date: 03 April 2014
• Citation: 2014 JDR 0762 (WCC)
• Docket Number: 5434/2011
• Court: Western Cape High Court, Cape Town

Henney, J:

Introduction:

[1]

The Plaintiff's claim against the Defendants is for payment of the sum of R1 596 587,27 plus interest thereon. In addition, the Plaintiff seeks an order declaring the Defendants immovable property (which is their home and place of residence) specifically executable and costs.

2014 JDR 0762 p2

Henney, J

[2]

The Plaintiff's claim as set out in the Particulars of Claim is based on the following:

(a)

A written loan agreement ("the second further bond agreement") concluded on 10 December 2007, as subsequently restructured ("the restructured agreement") on 23 June 2008, entered into between the Plaintiff and the Defendants.

(b)

The fact that the Defendants are in arrears with their monthly repayments due in terms of the said second further bond agreement.

[3]

To this the Defendants raised in essence two defences namely that:

(a)

The underlying agreement, or scheme, which gave rise to the signing of the second further bond agreement (annexure A) was void as being in contravention of section 38 of the Companies Act 61 of 1973 ("the Companies Act") applicable at that time. Therefore the said agreement upon which Plaintiff sought to rely was unenforceable.

(b)

The second defence was that the credit advanced in terms of the third home loan agreement amounted to reckless credit as envisaged in terms of Section 80 of the National Credit Act 34 of 2005 (NCA).

2014 JDR 0762 p3

Henney, J

[4]

During the trial the evidence mainly focused on the defence in terms of the Companies Act.

[5]

It emerged after having heard the evidence of the First Defendant that no case was made out by the Defendants in respect of the second defence. Mr Warner appearing on behalf of the Defendant conceded this, and in my view correctly so. This judgment will therefore only deal with the defences in terms of section 38.

[6]

Background Facts

During September 2005 the First Defendant (who is, and was married in community of property to the Second Defendant) was employed as the branch manager of the Cape Town branch of Airoad Express ("the Company"). He had been so employed since about 2000. He was approached by the director and shareholder of Airoad Express, Mr Mentrup ("Mentrup"), to buy shares in terms of which he would acquire 25,1% shareholding in the company for an amount of R1 079 000,00.

[7]

First Defendant who at that stage only earned R10 500,00 per month, was not able to afford to pay for the shares. He was informed by Mentrup that he had made arrangements with Bruce Potgieter ("Potgieter"), a business manager in the employ of the Plaintiff, who were the bankers of Airoad

2014 JDR 0762 p4

Henney, J

Express, to facilitate a process whereby he (the First Defendant) would be able to purchase the shares.

[8]

This process is set out in a document drafted by Potgieter. The purpose of the document that was drawn up by Potgieter and/or signed by the area credit manager of the Plaintiff, Mr L Nel, and recommended by the Area Credit Manager of the Plaintiff, G Gouws, was to review the financial position of Airoad Express. According to the document, it was also to approve a request of R1 079 000,00, a medium term loan for First Defendant who at that stage, was not a client of Nedbank.

[9]

In the document titled "APPLICATION FOR FACILITIES" relating to the financial position of Airoad Express (page 9 document) [1] , the Plaintiff's representative states under paragraph 2:

"We have been requested to provide medium term loan finance of R1, 079K in the name of K. Spannenberg [2] to enable the purchase of 25,1% shareholding in Airoad Express (Pty) Ltd".

Then further on the same page it is stated:

"C Spannenberg has been with Airoad Express (Pty) Ltd for the past five years and is employed as the Cape Town Branch Manager. The

2014 JDR 0762 p5

Henney, J

Board's turnover in 2000 amounted to R10K per month, which has grown to R140K per month. Currently …."

[10]

Then further … "Customers that have previously dealt with Airoad Express (Pty) Ltd [were] forced elsewhere as a result of non BEE compliance include Ellerines who has 500 stores nationally. Ellerines gave notice to Airoad Express (Pty) Ltd two years ago that they would channel their distribution elsewhere should they not be BEE compliant by February 2006."

On page 10 of the report [3] it is further stated by Potgieter:

"In support of the requested MTL [4] we will be provided with R476K tangible security (variation agreement) that will be raised via available security in Spannenberg's Cape Town property.

The requested MTL to be paid over a five year period. Spannenberg's cost to company earnings will be increased to meet this monthly instalment (additional R22K per month). We will register a bond over Spannenberg's property but will only place reliance on this security at 80% of the valuation current outstanding back with ABSA amount to +- R110K."

2014 JDR 0762 p6

Henney, J

[11]

Then on page 11 [5] Potgieter of the Plaintiff makes the following recommendations:

"Given the satisfactory conduct of the group together with the acceptable trading results in February 2005 reflecting on going profitability with retained earnings of R1,5 million would fully recommend continuation of facilities as currently extended including request for MTL finance of R1,079K and R570K RHL in the name of Spannenberg against variation agreement over the equity available in the RHL as security for the requested MTL.

In view of the run debt would further recommend key man insurance together with contingent liability cover be made a condition of facilities extended?

In the same document later on the same page the credit manager Nel of the Plaintiff in paragraph 3 comments … "The MTL will be at 44% tangibly secured given the fact that the company will be increasing Spannenberg's package to include the repayment, affordability is not the question. Spannenberg's bond will be taken over from ABSA, the variation agreement must be drawn up to secure the available equity in support of the MTL".

2014 JDR 0762 p7

Henney, J

[12]

To give effect to the intention of the parties, which was to enable the First Defendant acquire the shares in the company, the following transactions took place:

12.1

The First Defendant after being contacted by one of the Plaintiff's representatives on 17 September 2005 signed an "Application for Home Loan".

12.2

On 17 October 2005 the First Defendant met with Potgieter in Mentrup's office at the premises of Airoad Express and signed a medium term loan agreement in his name for R1 079 000,00 in order to buy shares in Airoad Express ("the first medium term loan"). He also signed as director of Airoad Express (although he was as yet at that stage neither a shareholder nor director of the company) a notification of cession of the loan funds.

12.3

At the same meeting he also signed a Deed of Suretyship in terms whereof he bound himself as surety and co-principal debtor to Plaintiff for the repayment by Airoad Express of all monies owed by Airoad Express.

12.4

According to a debit order authority given to the Plaintiff by Airoad Express and on the written instructions of Mentrup, the monthly repayments in respect of the first medium term loan agreement for

2014 JDR 0762 p8

Henney, J

R1 079 000,00 would be deducted from the bank account of Airoad Express held at the Plaintiff bank.

12.5

Thereafter, on 18 October 2005 a day after the signing of the medium term loan, Airoad Express and Mentrup sold to the First Defendant 25,1% of the shares in Airoad Express for a purchase price of R1 079 000,00 [6]. On 30 November 2005 the First Defendant's gross monthly salary was increased from the previous monthly gross of R10 583,00 to R55 000,00.

12.6

From the salary advice of the First Defendant the monthly instalment due to the Plaintiff in respect of the medium term loan was deducted from the R55 000.00 monthly salary. The first such deduction, from his November salary, was R24 338,55 [7] and the monthly instalment was then debited from Airoad Express's account on or about 7 December 2005. This continued until February 2007 and during this time all monthly instalments continued to be debited from the bank account of Airoad Express.

12.7

The First Defendant on 5 December 2005 signed a Housing Loan Agreement with the Plaintiff ("the bond agreement") with account number 863121000101. In terms of this agreement a mortgage bond in the amount of R576 000,00 would be registered over the

2014 JDR 0762 p9

Henney, J

Defendants' immovable property known as Erf 6270 Parow situated at 33 Jansen Street, Parow. From this amount it was agreed that R457 115,71 was to be retained, as security for the first medium term loan (R1 079 000,00), the balance was to be used to settle the Defendants' previous bond with Absa on the property mentioned above and for the payment of conveyancer's fees. According to Potgieter the monthly repayment amount was calculated on the basis of the monies drawn from the medium term loan account and as such, until the security component was used/withdrawn, the Defendants did not pay for same on a monthly basis. These monthly repayments were debited from First Defendant's account at Standard Bank.

12.8

On 9 February 2007, the Defendant signed a further Agreement of Loan constituting a housing loan under the same account number with the Plaintiff. In terms of this further bond agreement a mortgage bond in the amount of R224 000,00 was to be registered over the Defendants' property. R217 630,45 of this amount was to remain in the account as further security for the first medium term loan. [8]

12.9

On 15 March 2007, the First Defendant, at the request of Potgieter, authorised the transfer of R679 000,00 from the bond account to the

2014 JDR 0762 p10

Henney, J

credit of the account of Airoad Express [9] . The...