Court name
Supreme Court
Case name
Di Savino v Nedbank Namibia Ltd
Media neutral citation
[2012] NASC 3
Judge
Shivute CJ




















REPORTABLE


CASE
NO.: SA 24/2010




IN
THE SUPREME COURT OF NAMIBIA





In
the matter between:













ANTONIO
DI SAVINO






APPELLANT



and













NEDBANK
NAMIBIA LIMITED



RESPONDENT






Coram: Shivute
CJ, Mainga JA
et
Ngcobo, AJA



Heard
on
: 29/03/2012


Delivered
on
: 21/06/2012


____________________________________________________________



APPEAL JUDGMENT


____________________________________________________________







NGCOBO AJA:










Introduction



  1. This
    is an appeal against the whole of the judgment and order of the High
    Court granting summary judgment together with interest and costs
    against the appellant, Mr Antonio Di Savino. The appellant was the
    third defendant in an action instituted by the respondent,Nedbank
    Namibia Limited (the bank), against Tile and Sanitary Ware CC (the
    close corporation) and Mr Barend van den Berg, who were first and
    second defendants, respectively. In that action, the bank claimed
    that the close corporation was indebted to it in respect of monies
    lent and advanced to the close corporation as business loans and by
    way of overdraft facilities. The appellant and Van den Berg were
    sued in their capacities as sureties and co-principal debtors.







  1. All
    the three defendants filed notices to defend. Judgment has since
    been entered against the close corporation and Van den Berg and they
    do not feature in these proceedings.







  1. The
    bank filed an application for summary judgment against the
    appellant. The application was opposed by the appellant who deposed
    to an affidavit raising certain defences. The application came
    before Namandje, AJ, who
    ,
    on 24 September 2010
    ,
    granted summary judgment against the appellant in the sums of
    N$1997196
    -73,
    N$929613
    -35
    and N$1934302
    -96
    together with interest on each sum of money at the rate of 20.4% and
    costs.
    1The
    present appeal is the sequel.







  1. This
    appeal turns upon the proper interpretation of the various
    agreements that were concluded by the bank and the close corporation
    in the light of the cause of action pleaded by the bank. By way of
    background, it is therefore necessary to set out the salient
    provisions of these agreements as well as the allegations in the
    particulars of claim that are relevant for the determination of this
    appeal.






The
relevant agreements



  1. The
    appellant and Van den Berg were members of the close corporation.
    In consideration of the bank allowing the close corporation certain
    banking facilities, the appellant and Van den Berg entered into a
    written Deed of Suretyship with the bankon 27 May 2005, Annexure
    “A”. In terms clause 1 of the Deed of Surety, they
    bound themselves :






“…jointly
as well as severally, as surety and co-principal Debtor
in
solidum
for the
repayment on demand of all or any sum or sums of money which the [the
close corporation] may now or from time to time hereafter owe or be
indebted to the Bank, its successors or assigns, from whatsoever
cause and howsoever arising, as well as for the due and punctual
performance and discharge by the [close corporation] of any contract
or agreement entered into or to be entered into by the [close
corporation]…”






  1. Release
    from suretyship is an elaborate process which requires a written
    request of release from suretyship, a written acknowledgment of such
    request and a written confirmation of the termination of suretyship.
    And termination takes effect once all sums of money already due or
    accruing at the date of the receipt of notice of termination
    together with interest and costs have been paid. Clause 6 deals
    with release from suretyship and provides:







6. Upon
termination of this suretyship by notice in writing by the
undersigned as set out above you may in your entire discretion
continue any then existing facility or open a new facility with the
Debtor and any moneys paid in respect of such facility/ies by or on
behalf of the Debtor shall not affect your right to recover from the
undersigned the full indebtedness of the Debtor to you at the date of
such termination, subject to the limitation in amount aforementioned.







6.1 I/We
acknowledge that I/we shall only be released from my/our obligations
hereunder:







6.1.1 upon
written notice from me/us to the Bank or from my/our executors,
trustees or other legal representatives, as the case may be,
requesting the Bank to release me/us from this suretyship; and







6.1.2 the
Bank acknowledged in writing receipt of my written request;







6.1.3 and
the Bank in writing advised me of the amount then still outstanding
and due by the principal Debtor, for which amount I acknowledge that
I shall remain liable notwithstanding such notice of termination
until same has been paid in full by either myself and/or the Debtor
which shall only be terminated on written notice from the Bank to
me/us acknowledging that such suretyship has been terminated, but
such termination shall only come into effect when the sum or sums
already due or accruing at the date of receipt of such notice
together with interest and costs thereon have been paid.”










  1. On
    29 August 2007, the close corporation, represented by the appellant
    and Van den Berg concluded a business loan agreement with the bank
    in terms of which the bank lent and advanced to the close
    corporation a sum of N$4 000 000.00, subject to the terms and
    conditions embodied in that agreement(the first loan agreement),
    Annexure “C”. The loan was repayable monthly in arrear
    in 24 monthly instalments of N$191 579-46. In the event of the
    close corporation committing a breach of the agreement, “the
    full amount of owing in terms of [the agreement] shall forthwith
    become due and payable”. This of course was, “without
    prejudice to any other rights which might thereupon be available to
    [the bank]”. What constitutes a breach is set out in clause
    6.







  1. During
    September 2008, the bank and the close corporation, represented by
    Van den Berg, entered into an agreement in terms of which the
    overdraft facility and the loan agreement that existed at the time
    were restructured on the terms and conditions set out in that
    agreement (the restructuring agreement), Annexure “B”.
    In terms of clause 3.3 of this agreement “The Existing
    Business Loan will remain as per contract dated 29/8/2007”.
    This is probably a reference to the first loan agreement that
    existed at the time, Annexure “C”.







  1. In
    terms of this agreement, overdraft facilities are “demand
    facilities” and as such they are “without a specific
    expiry date” and they are “repayable at the bank’s
    discretion in accordance with normal banking practice”.
    Clause 4says so and provides:






“4.PERIOD/UTILISATION



4.1 The
overdraft facilities are demand facilities, granted on a fluctuating
basis, without a specific expiry date. The arrangements in respect
of each such facility are therefore subject to annual review and
continuation will depend on the prevailing circumstances. It is
however acknowledged that, being demand facilities, such facilities
are repayable at the Bank’s discretion in accordance with
normal banking practice."






  1. In
    addition, under clause 9 the bank would be “entitled to claim
    immediate repayment of all amounts owing under the facility”
    where a ground for making a demand exists and the close corporation
    fails to remedy the cause of the demand within the period stipulated
    by the bank. The grounds upon which a demand could be made are set
    out in clause 9 and those relevant to these proceedings are clause
    9.1.2 and 9.1.8 which provide:







"9. GROUNDS
FOR DEMAND







9.1 Notwithstanding
the provision as outlined, the Bank shall be entitled to claim
immediate repayment of all amounts owing under the facility if one or
more of the grounds for making demand, set out hereunder, arise and
the Borrower concerned fails to remedy the matter within the period
stipulated by the Bank at such time.







The
following are grounds for making demands, each of which is severable
and distinct from the others:













9.1.2 If
the Borrower is unable or ceases for any reason whatsoever to conduct
its business in an ordinary and regular manner; or













9.1.8 If
any material indebtedness or obligation for moneys borrowed
constituting indebtedness of the Borrower becomes due and payable
prior to its specified maturity for reason of default, or it not paid
when due."






  1. Clause
    9.2 sets out the rights of the bank in the event of a ground for
    making a demand arising and provides:








"9.2 Where
any ground for making demand arises, the Bank shall, without
diminution of any other rights which it may hereby or otherwise
acquire, be entitled to claim immediate repayment of all amounts
owing under this offer or from whatever cause arising in connection
therewith, all of which amounts shall immediately become due and
payable."






  1. Notwithstanding
    the provisions relating to the circumstances under which a demand
    may be made, clause 9.5 entitles the bank to demand the payment of
    the facility at any time and provides.







"9.5 Notwithstanding
the above, nothing herein contained shall prejudice the Bank’s
right to demand repayment of the facility at any time."






  1. Clause
    7 deals with interest applicable, and makes provision for penalty
    interest and default interest. Of relevance to this appeal are the
    provisions dealing with default interest which state:







“7.2.2 Default
interest rate:







If
the Borrower defaults in respect of any one or more of the
facilities, the Bank shall, in addition to any other rights it may
have in law, be entitled to charge for any one or more, or even all,
of the facilities afforded to the Borrower a default interest rate
equivalent to such percentage above the prime overdraft rate charged
by the Bank from time to time as would be permissible in terms of the
Usury Act 73/1968, as amended.”







  1. And
    finally, clause 5 governs the conflict between the restructuring
    agreement and any other agreement and provides:





"5. CONFLICTING
PROVISIONS



To
the extent that any of the provisions contained herein are in
conflict with any of the provisions of any agreement required in
terms hereof, including any documentation required in support of any
such agreement, whether by way of security or otherwise,
the
provisions contained in such agreement shall prevail
."(My
own emphasis)






  1. The
    final agreement that is relevant to this appeal is a further
    business loan agreement that was concluded by the bank and the close
    corporation, represented by Van den Berg, on 22 December 2008 (the
    second loan agreement), Annexure “D”. In terms of this
    agreement the bank lent the close corporation the sum ofN$2 000
    000-00, which was payable in arrear in monthly instalments of N$46
    796-13. Its terms and conditions are substantially, if not
    identical to those of the first loan agreement.







  1. It
    is these agreements that are the subject of this appeal. It now
    remains to set out the bank’s cause of action as set out in
    its particulars of claim.






The
bank’s cause of action



  1. The
    bank’s cause of action is set out in paragraphs 6 and 7 of the
    particulars of claimas follows:







6. On
29 August 2008, the Plaintiff in writing confirmed the terms and
conditions of the First Defendant’s banking facilities, which
terms and conditions were accepted in writing by the First Defendant
on 1 September 2008. A copy of the letter is attached as annexure
‘B’. In terms of annexure ‘B’:







6.1 First
Defendant’s existing facilities consisting of an overdraft
facility of N$3,800,000.00 and a business loan of N$4,000,000.00 were
restructured into:







6.1.1 an
overdraft facility of N$2,000,000.00 (clause 3.2.1);







6.1.2 a
business loan of N$2,000,000.00 (clause 3.2.2);







6.1.3 First
Defendant’s existing business loan of N$4,000,000.00 dated 29
August 2007 which had an outstanding balance of N$2,307,793.58
remained in force (clause 3.3)



(hereinafter
collectively referred to as the ‘facility’).







6.2 The
overdraft facilities are demand facilities and as such repayable at
the Bank’s discretion in accordance with normal banking
practice (clause 4.1).







6.3 The
Plaintiff’s prime interest rate will apply in respect of the
overdraft facility referred to in 8.1.1 (clause 7.1.1).







6.4 The
Plaintiff’s prime interest rate less 1% will apply in respect
of the business loan referred to in 6.1.2 (clause 7.1.2).







6.5 In
the event of First Defendant’s default in respect of one or
more of the facilities, the maximum permissible interest rate in
terms of the Usury Act will apply in respect of all the facilities
(clause 7.2.2).







6.6 The
Plaintiff is in terms of clause 9.1 of annexure ‘B’
entitled to claim immediate repayment of all amounts owing under the
aforesaid banking facilities in the event of:







6.6.1 The
First Defendant is unable or ceases for any reason whatsoever to
conduct its business in its ordinary and regular manner; (clause
9.1.2) or







6.6.2 Any
material adverse change occur in the financial position of the
borrower which will, in the opinion of the Plaintiff, prevent the
First Defendant from performing or observing its obligations in terms
of annexure ‘B’ or impede its ability to do so (clause
9.1.8)







6.7 Notwithstanding
the aforesaid, the Plaintiff’s right to demand repayment of the
facility at any time was not prejudiced by the terms of annexure ‘B’
(clause 9.5).







7. The
Plaintiff is entitled to demand immediate repayment of the facility
because:







7.1 the
First Defendant is unable to conduct its business in its ordinary and
regular manner; and/or







7.2 a
material adverse change occurred in the financial position of the
First Defendant which, in the opinion of the Plaintiff, will prevent
or impede the First Defendant to perform its obligations in terms of
annexure ‘B’.







due
to the fact that the First Defendant’s Franchisor and Supplier,
Italtile Mauritius Ltd t/a the Tile Market CTM advised Plaintiff on
15 April 2009 that







(a) First
Defendant has severe cash flow problems and is unable to pay its debt
due to the Franchisor; and







(b) The
Franchisor intends to cancel first Defendant’s CTM franchise
and intends to take over the franchised business from the First
Defendant.”






  1. Based
    on these allegations, the bank advanced three claims, alleging that:






CLAIM
1
:



8. First
Defendant is indebted to the Plaintiff in respect of monies lent and
advanced by the Plaintiff to the First Defendant on a current account
no. 11000163076 in the amount of N$1,997,196.73 in respect of the
overdraft facility referred to in 6.1.1 above, which amount:







8.1 is
payable on demand;







8.2 is
hereby demanded;







8.3 is
now due and payable







8.4 by
agreement between the parties, now bears compound interest on the
daily outstanding balance due from time to time at the rate of 20.4%
per annum, (being the maximum rate permissible in terms of the Usury
Act) due to First Defendant aforesaid breach of its facility
calculated daily and compounded monthly in arrears and which interest
has been calculated and capitalised until 31 March 2009 and which
must thus still be calculated on the amount of N$1,997,196.73 from 1
April 2009 until date of payment.







8.5 The
Defendants are now jointly and severally liable to pay the Plaintiff.







CLAIM
2



9. First
Defendant is further indebted to the Plaintiff in respect of monies
lent and advanced by the Plaintiff to the first Defendant on the
Business Loan Account number 13290010920 referred to in 6.1.3 in the
amount of N$929,613.75, a copy of which loan agreement entered into
between the parties on 30 September 2007 is annexed hereto marked
annexure ‘C’, which amount the Defendant are now jointly
and severally liable to pay to the Plaintiff with further compound
interest thereon calculated at 20.4% per annum, calculated daily and
compounded monthly in arrears.







CLAIM
3:



10. First
Defendant is further indebted to the Plaintiff in respect of monies
lent and advanced by the Plaintiff to the First Defendant on a
Business Loan Account number 13290016767 referred to in 6.1.2 in the
amount of N$1,934,302.96, a copy of the loan agreement entered into
between the parties on 22nd December 2008 is annexed
hereto marked annexure ‘D’, which amount the Defendant
are now jointly and severally liable to pay to the Plaintiff with
further compound interest thereon calculated at 20.4% per annum,
calculated daily and compounded monthly in arrears.”






  1. It
    is these allegations that formed the basis of the application for
    summary judgment which was resisted by the appellant.






Grounds
of attack in the High Court



  1. In
    the court below, the appellant resisted summary judgment on the
    ground that (a) he had been released from suretyship; (b) the close
    corporation was still conducting its business and he was not aware
    of any adverse material change in its financial position; and (c)
    the loan advanced under the first loan agreement “has almost
    been paid”. The High Court dealt with (a) and (c) and
    concluded that they do not establish a bona fide defence,
    and, in the exercise of its discretion granted summary judgment. It
    did not deal with ground (b) and nothing was said about this ground
    either in the appellant’s heads of argument or in oral
    argument.







  1. In
    this Court, Mr Heathcote, who,together with Ms Schneider,appeared
    for the appellant, raised further grounds that were neitherset out
    in the opposing affidavit nor advanced in the High Court. He
    contended that summary judgment should have been refused because
    there was no valid power of attorney; the allegations made in the
    affidavit in support of the applications for summary judgment are
    not adequate and do not comply with the Rules; the particulars of
    claim do not support the relief sought; and, the particulars of
    claim do not sustain a claim for default interest. And as will
    appear below, he advanced an entirely new argument in support of the
    defence based on release from suretyship.







  1. Understandably,
    Mr Barnard who appeared on behalf of the bank resisted any reliance
    on a ground that was not advanced in the opposing affidavit. He
    submitted that the opposing affidavit does not comply with the
    provisions of Rule 32(3)(b) which require the opposing affidavit to
    disclose fully the nature and the grounds of the defence as well as
    the material facts relied upon. He argued that the new ground of
    defence should have been set out in the appellant’s affidavit.
    These submissions must be considered in the light of the
    requirements of Rule 32(3)(b) as well as the principles governing
    summary judgment.






Principles
governing summary judgment



  1. One
    of the ways in which the defendant may successfully avoid summary
    judgment is by satisfying the court by affidavit that he or she has
    a bona fide defence to the action. The defendant would
    normally do this by deposing to facts which, if true, would
    establish such a defence. Under Rule 32(3)(b) the affidavit must
    “disclose fully the nature and grounds of the defence and the
    material facts relied upontherefor”. Where the defence is
    based upon facts and the material facts alleged by the plaintiff are
    disputed or where the defendant alleges new facts, the duty of the
    court is not to attempt to resolve these issues or to determine
    where the probabilities lie.







  1. The
    enquiry that the court must conduct is foreshadowed in Rule 32(3)(b)
    and it is this:first, has the defendant “fully”
    disclosedthe nature and grounds of the defence to be raised in the
    action and the material facts upon which it is founded; and
    ,second,
    on the facts disclosed in the affidavit, does the defendant appearto
    have, as to either the whole or part of the claim, a defence which
    is
    bona
    fide

    and good in law.
    2
    If the court is satisfied on these matters, it must refuse summary
    judgment, either in relation to the whole or part of the claim, as
    the case may be.







  1. While
    the defendant is not required to deal “exhaustively with the
    facts and the evidence relied upon to substantiate them”, the
    defendant must at least disclose the defence to be raised and the
    material facts upon which it is based “with sufficient
    particularity and completeness to enable the Court to decide whether
    the affidavit discloses a
    bona
    fide
    defence.”3
    Where the statements of fact are ambiguous or fail to canvass
    matters essential to the defence raised, then the affidavit does not
    comply with the Rule.
    4







  1. Where
    the defence is based on the interpretation of an agreement, the
    court does not attempt to determine whether or not the
    interpretation contended for by the defendant is correct. What the
    court enquires into is whether the defendant has put forward a
    triable and arguable issuein the sense that there is a reasonable
    possibility that the interpretation contended for by the defendant
    may succeed at trial, and, if successful, will establish a defence
    that is good in law.
    5Similarly,
    where the defendant relies upon a point of law, the point raised
    must be arguable and establish a defence that is good in law.







  1. But
    the failure of the affidavit to measure up to these requirements
    does not in itself result in the granting of summary judgment. The
    defect may, nevertheless be cured by reference to other documents
    relating to the proceedings that are properly before the court.
    6In
    Sand
    and Co. Ltd v Kollias
    the
    court held that the principle that is involvedin deciding whether or
    not to grant summary judgment is to look at the matter “at the
    end of the day” on all the documents that are properly before
    the court.
    7







  1. This
    approach to the opposing affidavit in summary judgment is a
    recognition of the drastic nature of the remedy of summary judgment.
    It offends against the fundamental right of a litigant to have
    access to court and be heard. Its aim is to protect the plaintiff
    against a defendant who has no
    bona
    fide

    defence and who has entered appearance to defend to delay the
    recovery of the debt and whose conduct thus amounts to an abuse of
    the process of court. But it “was never intended to replace
    the exception as a test of one or other of the parties’ legal
    contentions; nor to provide the plaintiff with a unilateral
    advantage of the preview of defendant’s evidence.”
    8







  1. But
    where the opposing affidavit does not satisfy the requirements of
    Rule 32(3)(b), the court has a discretion under Rule 32(5) whether
    or not to refuse summary judgment.
    9This
    discretion must be exercised with due regard to the drastic nature
    of the procedure of summary judgment. In
    Arend
    and Another v Astra Furnishers (Pty) Ltd
    ,Corbett
    J put the matter thus:







In
my view, an important factor to be taken into account by the Court in
determining how to exercise its discretion is the consideration that
the procedure of summary judgment constitutes an extraordinary and
very stringent remedy: it permits a final judgment to be given
against a defendant without a trial. It is designed to prevent a
plaintiff having to suffer the delay and additional expense of the
trial procedure where the defendant's case is a bogus one or is bad
in law and is raised merely for the purpose of delay, but in
achieving this it makes drastic inroads upon the normal right of a
defendant to present his case to the Court.”
10









  1. This
    of course must not be understood as minimising the importance of
    complying with Rule 32(3)(b). For the court to consider whether the
    facts alleged by the defendant constitute a good defence in law and
    whether the defence appears to be bona fide, the court must
    be appraised of the facts upon which the defendant relies. It is for
    this reason that the Rule prescribes that the nature and grounds of
    the defence and the material facts relied upon therefor must be
    fully disclosed in the affidavit. In addition, the contents of the
    affidavit will enable the court to decide whether or not to exercise
    its discretion to refuse summary judgment.







  1. The
    importance of raising all possible defences in the opposing
    affidavit or in the trial court to the administration of justice
    cannot be gainsaid. It gives the court of first instance the
    opportunity to consider the grounds of attack and, if the matter
    should come on appeal, this Court will have the benefit of the views
    of the trial court. It exposes arguments to scrutiny and reveals
    their strength or weakness. It provides the parties with the
    opportunity to reassess their respective positions and consider
    whether or not to take the matter on appeal. This may help to avoid
    an unnecessary appeal. This process is not only vital to the proper
    administration of justice but is also vital to the development of
    coherent jurisprudence.







  1. It
    is in this context that the question whether the appellant may raise
    the new defences for the first time on appeal must be considered.






Raising
new defence on appeal



  1. As
    a general matter the appeal court is disinclined to allow a party to
    raise a point for the first time on appeal because having chosen the
    battle-ground, a party should ordinarily not be allowed to move to a
    different terrain. However, the court has a discretion whether or
    not to allow a litigant to raise a new point on appeal. In the
    exercise of its discretion, the appeal court will have regard to
    whether: the point is covered by the pleadings; there would be
    unfairness to the other party; the facts upon which it is based are
    disputed; and the other party would have conducted its case
    differently had the point been raised earlier in litigation
    .11
    In
    Cole
    v Government of the Union of SA, supra,

    Innes J, as he then was, put the matter thus:







The
duty of an appellate tribunal is to ascertain whether the Court below
came to a correct conclusion on the case submitted to it. And the
mere fact that a point of law brought to its notice was not taken at
an earlier stage is not in itself a sufficient reason for refusing to
give effect to it. If the point is covered by the pleadings, and if
its consideration on appeal involves no unfairness to the party
against whom it is directed, the Court is bound to deal with it. And
no such unfairness can exist if the facts upon which the legal point
depends are common cause, or if they are clear beyond doubt upon the
record, and there is no ground for thinking that further or other
evidence would have been produced had the point been raised at the
outset.”










  1. In
    my view, this principle is of general application and is applicable
    in the case of an appeal against an order granting summary judgment.







  1. In
    Arend
    and Another v Astra Furnishers (Pty) Ltd
    ,supra,
    the court was concerned with, among other questions, the question
    whether it is open to the defendant in an application for summary
    judgment to advance points not taken in the opposing affidavit. One
    of the points taken was that the plaintiff’s particulars of
    claim did not disclose a cause of action. The court held that it
    has been generally accepted that a defendant may attack the validity
    of the application for summary judgment on any aspect.
    12
    It went on to hold:







Where
the attack is upon the ground that the plaintiff's particulars of
claim do not substantiate a valid cause of action, then, in my view,
this is not strictly a defence and it does not fall within the ambit
of Rule 32(3)(b) regarding the defendant's obligation fully to
disclose his defence. It raises rather the question as to whether
plaintiff has complied with Rule 32(1) and (2) relating to the
requirements of an application for summary judgment. Accordingly, I
hold that a defendant in summary judgment proceedings is not
precluded from raising issues relating to the validity of the
plaintiff's application merely because he has not referred to these
matters in his opposing affidavit.”










  1. It
    seems to me that in the case of summary judgment, which is a drastic
    remedy, as a general matter, a court should be slow in disallowing
    the new point. This is apparent from theprinciples governing
    summary judgment that are set out above. There may of course be
    circumstances where the court will, in the exercise of its
    discretion, refuse to permit the defendant to raise a new defence.
    This will ordinarily be the case, for example, where it appears to
    it that the defendant is clasping at straws. This may be indicative
    of the fact that the defence is an afterthought and that the
    defendant has no bona fide defence and the new defence has
    been advanced in an attempt to delay the payment of the plaintiff’s
    claim. There is no suggestion that this is the case here.







  1. Accordingly
    I hold that the appellant is not precluded from raising points that
    he seeks to raise in this Court merely because they were neither
    raised in his opposing affidavit nor raised in argument in the court
    below. These points are covered by the particulars of claim and the
    agreements annexed to the particulars of claim. However, I am far
    from being satisfied that there is any merit in the attacks on the
    power of attorney, and those based on the ground that the
    allegations made in the affidavit in support of summary judgment are
    not adequate and do not comply with the Rules. However, in the view
    I take of the matter, it is not necessary to reach any firm
    conclusion on these grounds.







  1. It
    now remains to apply these principles governing summary judgment to
    this appeal.






Does
the opposing affidavit pass muster



  1. The
    opposing affidavit is a wholly unsatisfactory document. It is not a
    model of clarity. Mr Heathcote very properly conceded that “the
    appellant’s opposing affidavit is not exemplary in its
    clarity”. It is inelegantly drafted and pays little attention
    to the requirements of Rule 32(3)(b). The appellant alleges that
    the close corporation “is still conducting business and [he]
    is not aware of any material adverse change which occurred in the
    financial position of the [close corporation]”. He does not
    set out the material facts relied upon for this allegation. In
    addition, he alleges that the loan advanced under the first loan
    agreement, Annexure “C” “has almost been repaid”.
    The material facts relied upon for this allegation are not set out.







  1. One
    of the grounds upon which the appellant resisted summary judgment
    appears from paragraph 6 of his opposing affidavit which reads as
    follows:







6.1 Plaintiff
furthermore acted totally in conflict with the agreements –
Annexures ‘B’ (dated 29/8/08) and ‘D’ (dated
22/12/08) to my prejudice without consulting me and having signed by
me and therefore I am in addition released from liability under the
‘suretyship’, which I cannot be held liable for anymore.







6.2 Plaintiff
has totally restructured the whole banking facility with first and
Second Defendant as per Annexures ‘B’ and ‘D’
without my knowledge and/or without my consent.”







  1. These
    paragraphs are not a model of clarity. But viewing the affidavit as
    a whole and in the light of the particulars of claim and the
    annexures, this is what they appear to convey: The bank and the
    close corporation represented by Van den Berg concluded a
    restructuring agreement which restructured the banking facilities
    without the appellant’s consent and to his prejudice. As a
    result of this, he is released from suretyship. These paragraphs,
    however, do not set out how the appellant was prejudiced by the
    restructuring of the banking facilities.







  1. Viewing
    the matter “at the end of the day” and in the light of
    all the documents that are properly before the court and the new
    argument that has been advanced in this Court, I consider that the
    affidavit just passes muster.







  1. What
    must be considered in this appeal are two arguments advanced in this
    Court, namely, first, that the particulars of claim do not establish
    a claim for default interest; and, second, the appellant’s
    contention that he has been released from the suretyship agreement.
    The question is whether these arguments establish bona fide
    defences to the bank’s claims. It will be convenient to
    deal with the argument based on release from suretyship first.









The
ground based on release from suretyship



  1. The
    appellant contended that he has been released from suretyship
    because (a) he entered into an oral agreement with the bank in terms
    of which he was released from future obligations under the
    suretyship; and (b) the bank entered into the restructuring
    agreement with the close corporation without his consent and to his
    prejudice, and, by operation of law, the appellant is released from
    suretyship. In the view I take of the matter, it is only necessary
    to consider the second leg of the ground based on released.







  1. In
    developing this argument, Mr Heathcote submitted that the
    restructuring agreement constitutes a material variation of the
    terms of the repayment of the business loan advanced under the first
    loan agreement that was signed by the appellant. This material
    variation, it was argued,which is prejudicial to the
    appellant,operated to release the appellant from his obligations
    under the suretyship. In the alternative, and if the loan
    agreements are applicable, Mr Heathcote submitted that the bank
    should have based its causes of action in relation to claims 2 and 3
    on the applicable loan agreements.







  1. MrHeathcotesubmitted
    that the restructuring agreement constitutes a material variation
    that is prejudicial to the appellant in at least one fundamental
    respect; it alters the terms of repayment of the loans. It does
    this by converting the loans into demand facilities and make them
    payable on demand. He submitted that under clause 9.5 of the
    restructuring agreement, the bank has the “right to demand
    repayment of the [loans] at any time” regardless of whether or
    not the close corporation is in breach of the terms of the loan
    agreements. This is a material departure from the loan agreements
    which provide that the loans are repayable in monthly instalments
    and that the full amount owing only becomes due and payable upon a
    breach of the loan agreements, he argued.







  1. In
    support of this contention he relied upon the decision in
    Brinkman
    v McGill
    13
    where the court held that a material variance in the payment of the
    principal debt will operate as a release of the surety if such
    variance has taken place without the consent and knowledge of the
    surety. In addition
    ,
    we were also referred to the decision in
    Minister
    of Community and Development v SA Mutual Fire & General
    Insurance Co Ltd
    14,
    where
    the court upheld the argument that a departure from the terms of
    payment under a building contract without the consent of the surety
    and that is prejudicial to the surety operated in law to discharge
    the surety from all liability under the deed of suretyship.







  1. These
    submissions are premised on the assumption that the restructuring
    agreement overrides the loan agreements. But clauses 3.3 and 5 of
    the restructuring agreement, on their face, appear to suggest that
    the provisions of the first and second loan agreements continue to
    govern the loans despite the provisions of the restructuring
    agreement. If that is what they convey, then what remains is the
    appellant’s alternative argument, namely, if the loan
    agreements are applicable, then the bank’s causes of action
    under claims 2 and 3 arise, not from the restructuring agreement as
    the particulars of claim allege, but under the first and second loan
    agreements, respectively. The particulars of claim do not allege a
    breach of the loan agreements. In that event, the particulars of
    claim do not disclose a cause of action inrespect of claims 2 and 3,
    it was submitted.







  1. Now
    these submissions on behalf of the appellant raise questions of the
    interpretation of the restructuring agreement and the loan
    agreements. If the restructuring agreement alters the terms of the
    payment of the loans as Mr Heathcote contended, the question that
    arises is whether this operates in law to release the appellant from
    the suretyship. On the other hand, if the restructuring agreement
    does not govern the repayment of the loans and the loan agreements
    apply, then the question that arises is whether or not the
    particulars of claim sustain a cause of action in respect of claims
    2 and 3. These submissions raise difficulties of interpretation of
    agreements and issues of law. They raise triable issues in
    relation to claims 2 and 3 in respect of which the appellant should
    be granted leave to defend.







  1. It
    now remains to consider the ground for resisting claim 1 which is a
    claim for repayment of overdraft under the restructuring agreement.
    The appellant contented that the particulars of claim do not lay a
    foundation for claiming the default interest which is claimable
    under clause 7.2.2 of the restructuring agreement. Both counsel
    approached the matter on the footing that the amount of N$1997196-73
    claimed under claim 1 includes default interest. If that is so, the
    appellant submitted, in the absence of the allegation that the close
    corporation has defaulted “in respect of anyone or more of the
    facilities” as contemplated in clause 7.2.2,the particulars of
    claim do notdisclose the basis for claiming default interest.


  2. Mr
    Barnard accepted, correctly in my view, that for the bank to claim
    the default interest, the particulars of claim must allege that the
    close corporation has defaulted as contemplated by clause 7.2.2.
    All that the particulars of claim allege in relation to default
    interest is that in the event of the close corporation defaulting in
    respect of one or more of the facilities, the maximum permissible
    interest rate payable under the Usury Act will apply, but there is
    no allegation that the close corporation has defaulted as
    contemplated by clause 7.2.2. The defence raised against claim 1
    is, in my view, not bad in law.







  1. As
    I have pointed out above, the opposing affidavit just passes muster.
    But viewing the opposing affidavit as a whole and, in particular,
    the allegation that the bank concluded the restructuring agreement
    to the prejudice of the appellant taken together with the
    particulars of claim and the relevant agreements, I am satisfied
    that it appears to raise a bona fide defence and that it has
    disclosed this defence and the material facts upon which it is
    founded with just – and only just – sufficient
    particularity and completeness in order to comply with Rule
    32(3)(b).







  1. Apart
    from this, having regard to the difficulties of interpretation and
    law points raised, I am unable to say that the bank’s case is
    unanswerable and that there is no reasonable possibility that
    defences raised by the appellant are good in law. In these
    circumstances, this is an appropriate case for the exercise of the
    discretion in favour of refusing summary judgment.







  1. It
    follows, in my view that the appellant is entitled to be granted
    leave to defend.






Costs



  1. It
    now remains to consider the question of costs. The costs of the
    application for summary judgment should no doubt be left for
    determination by the trial court. What remains are the costs in
    this Court. The issue of costs is a matter that is within the
    discretion of the court. Ordinarily costs should follow the result
    unless there are circumstances that justify a departure from this
    rule. I think those circumstances exist here.







  1. The
    appellant has succeeded on arguments that were not raised in the
    court below. It may well be that had the High Court been presented
    with these arguments, it would have exercised its discretion in
    favour of the appellant. This would have rendered this appeal
    unnecessary and the costs of the appeal would have been avoided.
    And it may well be that if the appellant had fully set out the
    nature and the grounds of his defence as well as the material facts
    upon which these defences are based, the application might have
    taken a different course. We are left to speculate.







  1. In
    all the circumstances, I think the appellant though successful, must
    pay the bank’s costs.







  1. In
    the event, the following order is made;









      1. The
        appeal is allowed;











      1. The
        appellant is ordered to pay the respondent’s costs, which
        costs shall include the costs of one instructing and one
        instructed counsel;











      1. The
        order of the High Court is set aside and is replaced by the
        following order:








Summary
judgment is refused and the third defendant is granted leave to
defend the action. The costs of the application for summary judgment
are left over for determination by the trial court.”














________________________


NGCOBO,
AJA











I
agree.














________________________


SHIVUTE,
CJ











I
also agree.














________________________


MAINGA,
JA































COUNSEL
ON BEHALF OF THE APPELLANT:


Assisted
by:



Mr
R Heathcote


Ms
H Schneider



INSTRUCTED
BY:



F
Erasmus & Part.











COUNSEL
ON BEHALF OF THE RESPONDENT:


INSTRUCTED
BY:



Mr
TA Barnard


Koep
& Part.







1
The order does not order the appellant to pay these sums of money
jointly and severally with the close corporation and Mr van den
Berg. In addition, there is discrepancy between the order made by
the Court and the order issued by the Registrar of the High Court.




2Maharaj
v Barclays National Bank Ltd
, 1976(1) SA 418 (A)at 426A-C




3Maharaj
v Barclays National Bank
, supra, at 426C-D




4Arend
and Another v Astra Furnishers (Pty) Ltd
, 1974(1) SA 298(C) at
304A-B




5Shingadia
v Shingadia,
1966(3) SA 24(R) at 26A-B; Tesven CC and
Another v South African Bank of Athens,
2000(1) SA 268 (SCA) at
para 26; Shepstone v Shepstone, 1974(2) SA 462(N) at 467A;
Marsh and Another v Standard Bank of SA Ltd, 2000(4) SA
947(W) at 949 para 3




6Sand
and Co. Ltd v Kollias,
1962 (2) SA 162 (W) at 165; Maharaj v
Barclays National Bank Ltd, supra,
at 423H




7Sand
and Co. Ltd v Kollias, supra,
id.




8Edwards
v Menezes
1973 (1) SA 299 (NC) at 304F-G




9Maharaj
v Barclays National Bank Ltd
, supra, at 425H; Tesven
CC and Another v South African Bank of Athens
2000 (1) SA 268
(SCA) at para 26.




10At
304F-G




11Cole
v Government of the Union of SA
1910 AD 263 at 272-273;
Paddock Motors (Pty) Ltd v Igesund 1976(3) SA 16(AD) at
23; Ministry of Regional and Local Government and Housing v
Muyunda
, 2005 NR 107 (LC) pp 110 -111.




12P
314A - C




13
1931 AD 303 at 315




14
1978 (1) SA 1020 (W) at 1023A-1024D