Nedbank Ltd v Khoza
| Jurisdiction | South Africa |
| Judge | BE Leech AJ |
| Judgment Date | 17 May 2019 |
| Docket Number | 31321/2018 |
| Hearing Date | 14 May 2019 |
| Court | Gauteng Local Division, Johannesburg |
Leech AJ:
INTRODUCTION
The applicant, Nedbank Limited, is a public company and a commercial bank, duly registered and carrying on business as such. It is also a registered credit provider for purposes of the National Credit Act, 34 of 2005 (the NCA).
During 2009 the applicant concluded a written loan agreement (the Agreement) with the first respondent, Mr Chilton Dumisani Khoza, for the loan by the applicant to the first respondent of an amount of R7 600 000. The loan was extended to the first respondent for purposes of facilitating the purchase by the first respondent of a property in Hurlingham, Johannesburg (the Property). It is common cause between the Parties that this was indeed what the loan was used for and that the first respondent paid an additional amount of R2 million by way of a deposit on the purchase price.
As security for the loan the first respondent registered a first covering mortgage bond over the Property in favour of the applicant in the capital sum (the Mortgage Bond). The applicant was also provided with a cession and pledge by the first respondent of all right title and interest in and to a share portfolio account (the Cession) and a deed of suretyship executed by the second respondent in favour of the applicant for an amount up to the capital amount (the Suretyship).
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The applicant alleges that the first respondent has breached the Agreement and that an Event of Default has occurred as contemplated under the Agreement. The applicant contends that as a consequence of the breach or Event of Default the full amount outstanding under the Agreement has become due and payable, together with interest as calculated under and in terms of the Agreement.
Having made demand upon the respondents inter alia as required under the NCA without its claim having been satisfied, on 24 August 2018 the applicant caused a Notice of Motion to be issued out of this Court in which it sought as against the respondents, jointly and severally, an order in the following terms:
Payment of the outstanding amount under the Agreement, being R6 660 958.30,
Payment of interest on the above amount at the prime lending rate of the interest charged by the applicant from time to time less 1%, calculated on a daily basis on the outstanding amount and compounded monthly in arrears from 2 May 2018 to date of final payment,
Declaring the Property to be specially executable,
Directing the Registrar of this Court to issue a Writ of Execution in the terms set out in sub-paragraphs 1 to 3 above,
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Declaring that the applicant is entitled to execute on the Cession in satisfaction of the judgment debt, interest and costs, and
Costs of the application on the attorney and client scale.
The application was opposed by the respondents, who filed an answering affidavit in opposition, to which the applicant replied. Thereafter heads of argument were filed on behalf of the applicant, the matter was set down for argument, heads of argument were filed on behalf of the respondents, and the matter was argued before me.
I am of the view that the applicant is entitled to succeed in its application for the relief sought and in what follows I set out the reasons for my so finding.
In their answering affidavit the respondents made reference to and attached correspondence reflecting various settlement negotiations that took place as between the Parties and their representatives. The applicant objected to the inclusion of these references and gave notice that they wished to have the references and the attached documentation struck out of the answering affidavit. That application to strike was also opposed by the respondents and, in consequence, was argued before me together with the main application.
I am of the view that the reference to the settlement negotiations and the associated documentation falls to be struck from the papers. This judgment also sets out my reasons
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for upholding the application to strike out. It is with this interlocutory application to strike that I deal first.
THE APPLICATION TO STRIKE OUT
It is appropriate that I deal first with the application to strike out, given that the outcome of this application determines the evidential material that is properly before me and on which I am required to base my decision.
It is common cause that the negotiations in question were held between the Parties and their representatives with a view to resolving the dispute between them and satisfying the applicant's claims. In the answering affidavit the first respondent says as much. The material to the inclusion of which in the answering affidavit the applicant objects are either allegations pertaining to what was discussed and the outcome of the settlement negotiations or correspondence and documentation that passed between the Parties and their representatives in the course of these negotiations.
Ms Pillay, who appeared on behalf of the respondents, submitted that the respondents alleged that these negotiations were not carried on in good faith. Upon inquiry, however, she acknowledged that the respondents accepted that the applicant entertained the negotiations with the genuine intent of reaching a settlement of the dispute, but that the terms they insisted on were onerous and unacceptable to the respondents. The applicant's refusal to relax the terms they stipulated is what the respondents consider to have been a
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manifestation of bad faith, but this does not detract from the fact that the settlement negotiations constituted a genuine attempt to settle.
As a matter of public policy parties to a dispute must be afforded every latitude to try and settle the dispute between them. In furtherance of and in order so as to promote this policy the content of those negotiations are protected from disclosure except where it is necessary to prove any settlement agreement reached, or with the consent of both parties, or otherwise in very limited circumstances.
[20] In argument, both counsel accepted as correct the formulation in The South African Law of Evidence (2 ed, 2010 at 703) that a statement which forms part of genuine negotiations for the compromise of a dispute is inadmissible as privileged. This is so, irrespective of whether or not the words 'without prejudice' have been used. There are two essential requirements. First is the existence of the dispute. Secondly, is that the statement is part of negotiations for the settlement or compromise of such dispute (Millward v Glaser 1950 (3) SA 547 (W) at 554; Gcabashe v Nene 1975 (3) SA 912 (D) at 914E; Jili v South African Eagle Insurance Co Ltd 1995 (3) SA 269 (N) at 275B; Lynn & Main Inc v Naidoo and Another 2006 (1) SA 59 (N) para 22). [1]
The respondents do not suggest that the allegations pertaining to and the correspondence emanating from the settlement negotiations fall into any of the recognised categories of exception that would allow their introduction into evidence. In the circumstances, they are inadmissible and ought not to have been included at all. [2]
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It follows that the application to strike out the inadmissible contents of the answering affidavit must succeed and accordingly I rule in favour of the applicant as follows:
The applicant's application to strike out material from the answering affidavit, contained in the Applicant's Notice in terms of Rule 6(15) dated 4 February 2019, is upheld;
The following paragraphs in the respondents' answering affidavit of 20 January 2019 are inadmissible and are struck out:
paragraphs 44 – 46, 48 – 60, and 72.2 – 72.4, and
annexures "AA9" and "AA11" – "AA23";
The respondents are to pay the applicant's costs consequent upon the application to strike out on the scale as between attorney and client.
The merits of the main application thus fall to be determined without reference to the inadmissible portions of the answering affidavit and annexures thereto.
THE COMMON CAUSE FACTS
The conclusion of the Agreement and of the associated security in the form of the Mortgage Bond, the Cession, and the Suretyship are all common cause between the Parties. So too are the terms of those instruments, inasmuch as those terms are all contained in writing and the relevant documents are admitted.
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It is also common cause that the Property is not the first respondent's primary residence, in circumstances where it is presently an unfinished building site that is not inhabited by the first respondent. In his answering affidavit the first respondent alleges that he resides at another property situate in Bramley, Johannesburg.
Subsequent to the conclusion of the Agreement the first respondent caused a perimeter wall to be built around the Property. The relevance of this lies in the fact that the first respondent alleges that he informed his personal banker of the construction of this wall. The personal banker, an employee of the applicant, offered no objection and did not require that the first respondent seek permission in writing from the applicant before proceeding to do so.
In 2012 the first respondent was informed that due to the ingress of water into the foundations of the existing buildings on...
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