Standard Bank of South Africa v Infogold Investments CC and Others (25921/2017) [2023] ZAGPPHC 1202 (20 September 2023)

Key Facts

Transaction Type

Issues

• The court evaluated if the plaintiff properly delivered Section 129 notices to the defendants via registered mail, addressing disputes over postal slips lacking post office initials and relying on track and trace reports as proof.
• The court determined whether the absence of the fourth defendant's signature on the R1,355,000 loan agreement invalidated the agreement, given that three of the four members (75% interest) signed it.
• The court assessed the validity and proven quantum of the plaintiff's claim of R3,189,326.54 against the first defendant and R1,355,000 against the second to fifth defendants, including interest and costs.

Holdings

• The court found that the plaintiff complied with Section 129 of the National Credit Act by delivering notices to the defendants. Track and trace reports were deemed sufficient proof of delivery, as the absence of post office official initials on postal slips did not invalidate the evidence. Defendants' argument against despatch compliance was dismissed.
• The court confirmed the quantum of the plaintiff's claim against the defendants. The certificate of balance was accepted as prima facie proof of indebtedness, with the defendants admitting its accuracy. The third to fifth defendants remain jointly and severally liable for R1,355,000.00 as co-principal debtors and sureties.
• The court determined that the loan agreement binds the close corporation (first defendant) despite the absence of the fourth defendant's signature. Three of the four members (75% interest) signed the agreement, and their conduct made the corporation a party to the loan agreement under section 46(b)(iv) of the Close Corporations Act. The defendants' contention that the agreement was invalid due to missing signatures was rejected.

Remedies

• The first defendant is ordered to pay the plaintiff the sum of R 1 212.67 per month with effect from 16 MARCH 2017 to date of payment.
• The first defendant is ordered to pay costs as between attorney and own client.
• The first defendant is ordered to pay interest on the amount of R 3 189 326.54 at the rate of 10.50% per annum with effect from 16 MARCH 2017 to date of payment, both days inclusive.
• The third, fourth and fifth defendants are ordered to pay costs as between attorney and client.
• The first defendant is ordered to pay to the plaintiff the sum of R3 189 326.54.
• It is declared that PORTION 1 OF ERF 2[...] WOODMEAD EXTENSION 1 TOWNSHIP [...] be specially executable.
• The Registrar is directed to issue a Warrant of Execution against immovable property mentioned in paragraph 5, in terms of Rule 46(1) of the Uniform Rules of Court.
• It is ordered, as against the third, fourth, and fifth defendants, jointly and severally with the First Defendant, the one paying the other to be absolved, for: a. Payment to the First Defendant of the sum of R1 355 000.00; b. Interest on the amount of R1 355 000.00 at the rate of 10.50% per annum with effect from 16 March 2017 to date of payment.

Contract Value

Monetary Damages

Legal Principles

• The court held that track and trace reports from the South African Post Office constituted sufficient proof of delivery for section 129 notices, satisfying the burden of proof requirements under the National Credit Act. The plaintiff's compliance was affirmed despite the absence of post office official initials on postal slips.
• The court recognized joint and several liability under the suretyship agreement, where the third to fifth defendants were held liable both individually and collectively for the debt, in addition to their roles as sureties. This was based on clause 3.1 of the suretyship agreement.
• The court applied the Turquand rule, which allows a company to be bound by a contract if the signatories, holding a majority interest, acted on behalf of the company, even if not all members signed. This was used to determine that the close corporation was a party to the loan agreement despite the absence of one member's signature.
• Section 46(b)(iv) of the Close Corporations Act was invoked to establish that members with 75% interest in the close corporation could validly bind the corporation to the loan agreement through their signatures, even if not all members participated.

Precedent Name

• Sebola and Another v Standard Bank of South Africa Ltd and Another
• Venter v Kruger
• Merifon (Pty) Limited v Greater Letaba Municipality and Another

Key Disputed Contract Clauses

• Clause 3.1 of the suretyship agreement states that the suretyship applies to the signatories individually and in any combination (joint and several liability). This was central to the court's determination of liability for the third to fifth defendants.
• Clause 6.1 of the suretyship agreement caps the total amount the bank may recover from the second to fifth defendants at R1,355,000.00. This limitation was accepted by the court as part of the defendants' liability.

Cited Statute

• Close Corporations Act 69 of 1984
• National Credit Act 34 of 2005

Judge Name

Passage Text

• The track and trace reports could not have been issued without the prior despatch of documents associated with the notifications. I find that the plaintiff did deliver the section 129 notices to the defendants, as required by the Act.
• The amount of the indebtedness of the Mortgagor to the Bank at any time which is secured by this bond (including any interest and the rate at which and the period for which interest is calculable) and the fact that such indebtedness is due and payable may be determined and proved by a certificate stating the same signed by any manager or administrator of the Bank, whose appointment and authority to sign need not be proved. Such certificate shall be accepted as proof of the facts therein stated, unless the Mortgagor is able to prove the facts incorrect.
• The signatories to the home loan agreement were competent to conclude that agreement, rendering the close corporation a party to the agreement.

Damages / Relief Type

• Costs as between attorney and client for the third to fifth defendants
• Interest at 10.50% per annum on R1,355,000.00 from 16 March 2017
• Costs as between attorney and client for the first defendant
• Interest at 10.50% per annum on R3,189,326.54 from 16 March 2017
• Declaration of immovable property as specially executable
• Payment of R3,189,326.54 to the plaintiff by the first defendant
• Monthly payment of R1,212.67 by the first defendant from 16 March 2017
• Warrant of Execution issued against the declared immovable property
• Payment of R1,355,000.00 by the third to fifth defendants jointly and severally