Standard Bank Namibia Limited v Klazen ((P) I 2180/2008) ((P) I 2180/2008) [2009] NAHC 13 (23 February 2009);

Group

Full judgment
CASE NO


CASE NO.: (P) I 2180/2008

IN THE HIGH COURT OF NAMIBIA

In the matter between:


STANDARD BANK NAMIBIA LIMITED Plaintiff


And


CORNVINUS ADRIAAN KLAZEN Defendant


CORAM: ANGULA, A.J.

Heard on: 17.02.2009

Delivered on: 23.02.209


JUDGMENT:

ANGULA, A.J.:

  1. This is an application for summary judgment. The applicant issued summons against the respondent in which it claims payment of the sum of N$92 198.27, together with interest at the rate of 24.40% per annum calculated in advance and compounded monthly from 2 July 2008 to date of payment, being monies lent and advanced by the applicant to the respondent as overdraft on the respondent’s current account, which the applicant alleges is due and payable notwithstanding demand.


  1. After the summons was served the respondent entered appearance to defend, whereupon the applicant lodged the present application for summary judgment alleging that the respondent has no bona fide defence and that appearance to defend has been entered solely to delay the matter. In his affidavit filed in opposition to the application for summary judgment the respondent denied that he does not have a bona fide defence and that he had entered appearance to defend in order to delay the matter. I should mention that the opposing appears to have been drafted by the respondent himself. I will try to summarise what is stated in the respondent's opposing affidavit. I must point out that it is not written in an easily and clearly comprehensible language. The respondent also appeared in person at the hearing of the application.


  1. Setting out the facts upon which his defence is based the respondent stated that the applicant lent him the money on terms and conditions which solely served the applicant’s interest. He went on to say that a “mutual relationship” existed between him and the members of the applicant’s management of the branch where he conducted his current account since 2000; that he has over the years built up a good credit record. He further stated that his understanding is that the relationship between him and the applicant as a service provider and banker was that they take calculated risks through open communication on equal footing brought about by their contractual relationship. The respondent stated further that while he did not deny that he was indebted to the applicant he could not recall having agreed, expressly or tacitly, to repayment terms that he regard as ill-considered and unrealistic to comply with; that he would have expected that any call up or cancellation by the applicant of the facilities he was enjoying would be communicated to him “within reason, clearly well in advance, without suffocating me, the defendant’s, economic existence”. He went on to say that contrary to his expectation the applicant unilaterally and without informing him decided to reduce the facilities, which action was verbally confirmed to him by an official of the applicant.


  1. Following that verbal communication his understanding was that he would henceforth operate the facilities within the verbally agreed approved limits, whereas the applicant viewed his conduct as a violation of the terms of the facilities. The respondent further states that “that having been allowed/extended an ‘over-the-limit credit exposure’ facility which ‘all of a sudden’ dictated such drastic action that demanded it being reduced in and on unreasonable proportions and terms which I, the defendant as client of the applicant/plaintiff found completely unacceptable and unaffordable – are draconic, unfair and discriminate in what otherwise should have been a balanced mutually consented contractual relationship”. He stated further that the conduct of the officials of the applicant amount to discrimination against him and have dehumanised him; that their actions “contradicted the principle of fairness”; that the sum total of actions amount to a “unilateral breaking of a contract on the part of the applicant/plaintiff”.


  1. It is trite that in evaluating whether the respondent has a bona fide defence the court must consider the totality of all of his allegations.


"One of the things clearly required of a defendant by Rule 32 (3) (b) is that he set out in his affidavit facts which, if proved at the trial, will constitute an answer to the plaintiff's claim. If he does not do that, he can hardly satisfy the Court that he has a defence. The sub-rule, however, requires that the Court be satisfied that there is a bona fide defence, and the qualification gives use to some difficulty. On the face of it, bona fides is a separate element relating to the state of the defendant's mind. A man may believe in perfect good faith that he has a defence, and may state honestly the facts which he relies upon, yet the law may be against him, or he may be honestly mistaken about the facts. He is bona fide, but he has no defence. Another man may make averments which, if they were true, would be an answer, in law, to the plaintiff's claim; but, to his knowledge, the averments may be false. He is not bona fide.


If, therefore, the averments in a defendant's affidavit disclose a defence, the question whether the defence is bona fide or not, in the ordinary sense of that expression, will depend upon his belief as to the truth or falsity of his factual statements, and as to their legal consequences. It is difficult to see how the defendant can be expected, in his affidavit to 'satisfy the Court' (I use the words of the sub-rule), not only that what he alleges is an answer to the plaintiff's claim, but also that his allegations are believed by him to be true. There is no magic whereby the veracity of an honest deponent can be made to shine out of his affidavit."


See: Breitenbach v Fiat SA (Edms) Bpk 1976 (2) SA 226 (T) at 227 - 228


  1. As can be seen from the respondent’s affidavit, he stated categorically that he does not dispute his indebtedness to the applicant. That would be the end of the matter. However, he went on to lay out a string of contentions which he apparently believed to constitute a defence to the applicant's claim. It is therefore necessary to consider whether those contentions individually or collectively constitute a defence. During the argument I enquired from the respondent that in view of his admission under oath that he does not deny his indebtedness to the applicant, what then was his defence? He responded that his defence is the unfair treatment that was meted out to him by the applicant. It is a strange defence, I must confess.


  1. The respondent’s first defence appears to be that he did not have knowledge that he would be called upon to repay the amount lent to him, which he would consider unrealistic to pay. In my view the respondent is hardly bona fide neither is he candid about the facts preceding the applicant’s calling up the facilities. It is unlikely that the applicant would simply out of the blue decide to call up the facilities without the respondent being in contravention of the terms upon which the facilities were extended to him. The respondent does not say how much the overdraft limit was when it was granted to him; whether he has been servicing the facilities; what amount he was called upon to pay which he found to be unrealistic; whether the applicant knew what was his monthly income. Even if the respondent believed that the applicant had agreed to take a calculated risk in lending the money to him, I do not think the respondent was bona fide in expecting that the applicant would not call up the facility if the risk was increasing and becoming unmanageable or to such an extent that the applicant might suffer loss.


  1. As to the allegation that the respondent expected to be informed in advance, it would appear from his own version that he was verbally informed by the officials of the applicant. During his submissions, before me, the respondent stated that he had previously worked for a banking institution for a considerable period of time. I would therefore expect him to be fully aware about the procedure and workings of banks such as the, in particular if a customer defaults or fails to service his overdraft facility that the bank would call up such facility. It is common practice by banks that when an account becomes delinquent the bank manager would normally write a letter or call the account holder in to advise that the account is overdrawn and what arrangements the account holder would make to bring the balance within the agreed limit. It will be extraordinary that this did not happen in the instant matter. In any event, when the respondent applied for the overdraft facilities, he tacitly agreed to be bound by the applicant’s practice with regard to calling up of the facility in the event of the facility not being properly managed.


  1. Again for those reasons I do not think that the respondent was bona fide. I find that there is no substance in the respondent’s contention that he did not expect the applicant to unilaterally call up the facilities. I however feel that I should deal with the legal position pertaining to the bank’s right to call up the overdraft facilities.


  1. In Trust Bank of Africa Ltd v Senekal 1977 (2) SA 587 (N) at 601 the court held that:


As regards the capital amount thereof (the principal debt) it would normally (in the absence of agreement as to a specific duration of the facility) be repayable either on demand or after reasonable notice to customer.



The legal position, as I understand it, is that all overdrafts are repayable on demand. However, where an overdraft is withdrawn notice must be given. This principle has been derived in our law from the English banking practice. The Appellate Division of South Africa, in the matter of Volkskas Beperk v Van Aswegen 1961 (1) SA 493 (A) at 496 referred with approval to the English case of Rouse v Bradford Banking Company [1894] AC 586 at 596, where the following was stated:


It is not necessary to consider what the rights of the bank were with regard to their debtors when they had agreed to an overdraft. The transaction is of course of the commonest. It may be that an overdraft does not prevent the bank who has agreed to give it from at any time giving notice that it is no longer to continue, and that they must be paid their money. This I think at least it does; if they have agreed to give an overdraft they cannot refuse to honour cheques or drafts, within the limit of that overdraft, which have been drawn and put in circulation before any notice to the person to whom they have agreed to give the overdraft that the limit is to be withdrawn. That effect I think it has in point of law; whether it has more than that in pot of law it is unnecessary to consider. Even if it has no greater effect in point of law it is obvious that neither party would have it in contemplation that when the bank had granted an overdraft it would immediately, without notice, proceed to sue for the money; and the truth is that whether there were any legal obligation to abstain from so doing or not, it is obvious that, having regard to the course of business, if a bank which had agreed to give an overdraft were to act in such a fashion, the results to its business would be of the most serious nature. It may be therefore that the parties simply contracted upon the basis of that state of things, that there was a legal right throughout for the bank at any time to sue for the money.



Similarly, in the matter of Standard Bank of SA Ltd v Oneanate Investments (Pty) Ltd 1995 (4) SA 510 (C), the court stated the following:



"It is often pointed out that, once having agreed to allow its customer to overdraw, the bank cannot simply refuse to honour cheques issued by the customer before he receives notice that his facilities are to be withdrawn. (See, for example, Paget (op cit at 183); Ellinger (op cit at 477).) That issue relates to the discontinuance or withdrawal of overdraft facilities and it has no bearing upon the fact that a loan on overdraft is repayable without specific demand. When the customer requests an overdraft he must be taken to know that the loan is repayable on demand and that if he wishes to repay the loan at a later fixed date or only after receipt of notice of repayment from the bank, he must conclude the necessary agreement with the bank to vary the common law that a loan without an agreed date of repayment is repayable on demand without specific notice.

I accept that where, for example, a businessman seeks an overdraft from his bank he will often intend to use the overdraft facility to fund his business on an ongoing basis and that it could not be said that he intended the loan to be repayable on demand. It may well be that in such circumstances it can be established that the parties varied the usual role but each such case will have to be decided on its own facts. In my view it cannot, as a general rule, be said that either by necessary implication or in order to ensure business efficacy the grant of an overdraft in circumstances such as those just described must necessarily involve the recognition of a tacit term that the bank will give its customer specific notice before requiring repayment. The customer may feel that he requires such notice in order to efficaciously conduct his own business, but such a term is hardly necessary for the proper conduct of the banking relationship between the parties to the loan. As Millin J observed in Rapp and Maister v Aronovsky 1943 WLD 68:


'It has often been pointed out that it is not sufficient to show that the term would be highly reasonable or convenient to one or other or even both of the parties. The cases show that the Court has to be continually on its guard against being persuaded to introduce a term which, on analysis of the argument, appears to be no more than a term which would make the H carrying out of the contract more convenient to one of the parties or to both of the parties and might have been included if the parties had thought of it and if they had both been reasonable.'


(At 74-5.)"



  1. I do not understand the respondent’s complaint that he was not given notice. His complaint appears to be that all of a sudden he was required to reduce the amount he was allowed “over the limit exposure” in what he considers to be unreasonable proportions which was unaffordable to him. In a nutshell, he considered the applicant’s demand to be unreasonable. The applicant’s demand might have been unfair or unreasonable but in my view that does not absolve the respondent from the repayment of the debt which is, on his own admission, owed to the applicant. In other words, the respondent might be bona fide in his view but his view hardly amounts to a defence.


  1. The respondent’s contention that he was discriminated against by the applicant has no basis. He does not state on what basis he was being discriminated against, for instance, that similar unpaid or unserviced overdraft facilities of other customers of the applicant were not called up. In any event, in my view even if the respondent could pinpoint in what respect he was being discriminated against, that would not constitute a defence.


  1. Finally I have to consider the respondent’s all-encompassing contention that the entire applicant’s conduct constituted a unilateral breach of the contract between them. It is trite law that the overdraft facilities the bank entered to a customer, like in the instant matter, is a contract of loan; it is a lending of money by the bank to the customer.


See: Trust Bank of Africa Ltd supra


It goes without saying that one of the obligations of the borrower is to repay the money lent to him by the bank. Should the customer of the bank fail to repay the overdraft or exceed the limit the bank has the right to demand payment. In my view it would be unrealistic, if not absurd, to expect the bank to enter into negotiations and agree with the customer whether the bank should sue the customer for the money owed and if no such agreement were reached the bank would be held to be acting unfair or unreasonable if it proceeded to sue for the payment of its money. As was stated in the authorities already referred to, the applicant has a legal right throughout to sue for the payment of its money at any time. The applicant did not need an agreement or consensus or permission from the respondent before it could sue for the money admittedly owed by the respondent. In my view the applicant did not act unfair or unreasonable in suing for the payment of its money. In any event even if I had arrived at such a conclusion this being not a court of equity, that is a court that is authorised to apply equity as opposed to law, it would not constitute a defence against the applicant's claim.


  1. I have therefore arrived at the conclusion that none of the contentions advanced by the respondent constitutes a bona fide defence, whether individually or cumulative.


  1. In the result I make the following order:


[15.1] Summary judgment in the sum of N$92 198.27 is granted against the respondent;


[15.2] Respondent is ordered to pay interest at the rate of 24.40% on the sum of N$92 198.27 from 2 July 2008 to date of payment;


[15.3] Costs of suit;


[15.4] Further and/or alternative relief.




__________________________

ANGULA, A.J.






ON BEHALF OF THE APPLICANT: MRS SCHIKERLING


Instructed by: Etzold-Duvenhage




ON BEHALF OF THE RESPONDENT: In Person

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