Court name
Supreme Court
Case number
SA 10 of 2002
Title

Grobler v Commercial Bank of Namibia Ltd (SA 10 of 2002) [2003] NASC 1 (24 January 2003);

Media neutral citation
[2003] NASC 1










CASE
NO.: SA10/2002





IN
THE SUPREME COURT OF NAMIBIA











In
the matter between :











ZACHARIAS
JOHANNES GROBLER APPELLANT








AND








THE
COMMERCIAL BANK OF NAMIBIA LTD RESPONDENT














CORAM:
Strydom, C.J., O’Linn, A.J.A. et Chomba, A.J.A.





HEARD
ON: 11/10/2002





DELIVERED
ON : 24/01/2003












APPEAL
JUDGMENT














CHOMBA, A.J.A.










By
a combined summons issuing out of the High Court and dated November
19, 1998, accompanied by particulars of claim bearing the same date,
the Commercial Bank of Namibia (“the plaintiff”) instituted a
claim for payment by Zacharias Johannes Grobler (“the defendant”)
of a sum of N$ 643,929.78 together with interest at the rate of
18.75% calculated on a daily basis and running from October 27, 1998
until full payment. Costs of the suit were also claimed. The
plaintiff further prayed to the court a quo to make an order
declaring property known as ERF No. 147, Hochlandpark (“the
mortgaged property”) situate in the Municipality of Windhoek,
Registration Division “K” and which was held by the defendant by
virtue of Deed of Transfer No. T2371/1993 executable pursuant to
mortgage bond No. B1136/1993 (“the mortgage.”)





In
elaboration of the principal claim of N$643,929.78, the plaintiff
states in the particulars of claim that on October 22, 1992 the
defendant was granted a house loan of N$269,000 by the Namibian
Banking Corporation Ltd. (“NBC”). That loan was repayable by way
of monthly instalments over a period of 20 years and was secured by
the mortgage. By a merger agreement (“the merger”) effectuated
on October 1, 1993, and entered into by the plaintiff, DEG –
Deutshe Investitions and - Entwicklungsgesellschaft mbH, NBC,
Nedcore Bank Limited and Société Financiére Pour
Les Pays D’outre – Mer, NBC sold its banking business as a going
concern to the plaintiff. The merger was effected pursuant to
Section 30 of the Banks Act, No. 23 of 1965 (the Banks Act) which,
among other things, required that the merger be approved in writing
by the Minister of Finance (the Minister). It is stated in the
amended particulars of claim that the Minister’s written approval
of the merger was given on December 9, 1993.





It
was as a result of the merger that the plaintiff felt that the right
to foreclose the mortgage had accrued to it. Therefore upon the
failure by the defendant to keep up instalmental payments of the
loaned money, it instituted this action since it was a condition of
the loan agreement between the defendant and NBC that in the event of
a breach being committed by the defendant regarding the repayment
arrangements, then payment of the balance would immediately fall due,
together with interest.





By
mutual consent of the parties hereto, the crisp issue which was
submitted for resolution by Manyarara, A.J., was whether the
plaintiff’s claim was secured by the mortgage bond, as the
plaintiff contended, or, as was contended by the defendant, whether
the mortgage bond did not accrue to the plaintiff upon the merger
with the result that the house loan which the plaintiff inherited
from NBC was not secured. For clarity’s sake, I should record
that it was accepted by the defendant that the merger did take place
premised on the Minister’s written approval. It is also necessary
to state that the application for the resolution of this issue by
Manyarara , A.J., was made pursuant to rule 33 (4) of the High Court
Rules. That rule provides as follows :-







(4) If it appears to the
court mero motu or on the application of any party that there is, in
any pending action, a question of law or fact which may conveniently
be decided either before any evidence is led or separately from any
other question, the court may make an order directing the trial of
such question in such manner as it may deem fit, and may order that
all further proceedings be stayed until such question has been
disposed of: Provided that in an action of any damages arising from
any motor vehicle accident, under any law, the court may on
application of any party, order that any questions of liability for
and the amount of any damages be decided separately unless it appears
that the questions cannot conveniently be so decided”.





The
arguments of the parties in the High Court were centred, as indeed
they were on appeal to this Court also, on the interpretation of
Section 30 of the Banks Act, as read with Section 16 of the Deeds
Registries Act No. 47 of 1937, as amended by Section 4 of Act No. 80
of 1964(the Deeds Registries Act). For a better appreciation of the
two statutory provisions, it is necessary to reproduce the twain as
I
do hereunder:






30 (1) Two or more banking
institutions shall not amalgamate nor shall all the assets and
liabilities of any banking institution be transferred to or taken
over by any other institution except with the consent of the Minister
conveyed in writing through the Registrar, and no such consent shall
be given by the Minister unless he is satisfied that the transaction
in question will not be detrimental to the public interest.







(2) Upon coming into effect
of a transaction such as referred to in sub-section (1) -







  1. all
    the assets and liabilities of the amalgamating institutions or (in
    the case of a transfer of assets and liabilities) of the institution
    by which the transfer is effected, shall vest in and become binding
    upon the amalgamated institution or, as the case may be, the
    institution taking over such assets and liabilities;








  1. the
    amalgamated institution or (in the case of a transfer of assets and
    liabilities) the institution taking over such assets and
    liabilities, shall have the same rights and be subject to the same
    obligations as will be immediately before the amalgamation or
    transfer possessed by or binding upon the amalgamating institutions
    or as the case may be, the institutions by which transfer is being
    effected;


  2. all
    agreements, appointments, transactions and documents made and
    entered into between or executed by with or in favour of any of the
    amalgamating institutions or, as the case may be, the institution by
    which the transfer has been effected and in force immediately prior
    to the amalgamation or transfer, shall remain in full force and
    effect and shall be construed for all purposes as if they had been
    made, entered into, drawn or executed by, with or in favour of the
    amalgamating institutions or, as the case may be, the institution
    taking over the assets and liabilities in question;


  3. any
    bond, pledge, guarantee or other instrument to secure future
    advances, facilities or services by any of the amalgamating
    institutions or, as the case may be, the institution transferring
    such assets and liabilities, which was in force immediately prior to
    the amalgamation or transfer, shall remain in full force and effect
    and shall be construed as a bond, ledge, guarantee or instrument
    given to or in favour of the amalgamated institution or, as the case
    may be, the institution taking over such assets and liabilities as
    security for future advances, facilities or services by that
    institution.








3) the Registrar of
Companies, every Registrar of Deeds or Master of Supreme Court and
every officer in charge of an office in which is registered any title
to property belonging to or any bond or other right in favour of, or
any appointment of or by, or in which have been issued any licence,
other than a licence in terms of Section 228 of the Companies Act to
or in favour of, any banking institution which has amalgamated with
any other such institution or any banking institution which has
transferred all its assets and liabilities to any other such
institution shall, upon being satisfied that the Minister has under
subsection (1) consented to the amalgamation or transfer, and that
such amalgamation or transfer has been duly effected, and upon
production to him of any relevant deed, bond, certificate, letter of
appointment, licence or other document, make such endorsement thereon
and effect such alteration in his registers as may be necessary to
record the transfer thereof and of any rights thereunder to the
amalgamated institution or, as the case may be, the institution which
has so taken over the said assets and liabilities, and no transfer
duty, stamp duty, registration fees, licence duty or any other
charges shall be payable in respect of the transfer or any
endorsements or alterations so made to give effect thereto.”






Sectiion 16 “Save as
otherwise provided in this Act and in any other law, the ownership of
land may be conveyed from one person to another only by means of a
Deed of Transfer executed or attested by the Registrar, and other
real rights in land may be conveyed from one person to another only
by means of a deed of cession attested by a notary public and
registered by the Registrar. Provided that notarial attestation
shall not be necessary in respect of conveyance of a cession of real
rights acquired under a mortgage bond.”





The
defendant’s contention is that the principal Deeds Registries Act
contained two procedural requirements necessary to convey real rights
from one person to another. These were by deed of cession which
should be –



  1. attested
    by a Notary Public, and


  2. registered
    by the Registrar of Deeds.






The
amendment brought in by Act No. 80 of 1964 dispensed with requirement
(a) above in as far as rights acquired under a mortgage bond are
concerned, but requirement (b) still endures. Adverting to Section
30 of the Banks Act, he focused on that provision of it which states
:






“……….every Registrar
of Deeds …………..shall upon being satisfied that the Minister
has under subsection (1) consented to the amalgamation or transfer
and that such amalgamation has been duly effected, and upon
production to him of any relevant deed, bond, certificate, ….. or
other document, make such endorsement thereon and effect such
alteration in his registers as may be necessary to record the
transfer thereof and of any rights thereunder to the amalgamated
institution, or as the case may be, the institution which has taken
over such assets and liabilities ….”





The
defendant then argued that the recordal referred to in that
provision should be read as the necessary registration required under
Section 16 of the Deeds Registries Act. He went on to state that
since the plaintiff had conceded that it had not produced the
mortgage bond to the Registrar so that the latter could endorse
thereon and effect such alteration in his registers as might have
been necessary to record the transfer thereof and the rights under
that bond, the said rights had not passed or been conveyed to the
plaintiff. Both in the court a quo and in this court the
plaintiff’s counsel cited the case of ABSA BANK LTD VS VAN
BILJON AND ANOTHER 2000(1) SA 1163 (W) in support of the plaintiff’s
case. The ratio decidendi in that case is that where
institutions merge or one institution transfers its assets to
another and the deed of amalgamation or transfer, as the case may
be, has been approved by the Minister as required by Section 54 of
the Banks Act No. 94 of 1990 of South Africa, then the rights and
liabilities of the amalgamating institutions or transferor
institution are to be deemed as being those of the product of the
amalgamation or the transfer transaction. Further that case held
that the amalgamated institution or transferee institution shall,
upon the effectuation of the merger or transfer as required by the
said Banks Act, have the same rights and be subject of the same
obligations as will be immediately before the amalgamation or
transfer possessed by or binding upon the amalgamating institutions
or the institution by which the transfer is effected. In short the
effect of the ABSA case is that by operation of law the one
institution is substituted for the other in terms of all real rights
(and indeed all obligations.) Manyarara, A.J., accepted the
plaintiff’s counsel’s submissions and determined this case in
consonance with the ABSA case, supra, as the corresponding provisions
of section 30 of the Banks Act of Namibia are in pari materia with
those of section 54 of the Banks Act of South Africa.





No,
argued the defendant. He criticized the ABSA trial judge, Robinson,
A.J., for, as he claimed, having misconstrued the provisions of
Section 54 of the Banks Act of South Africa. He cited many South
African cases which he felt supported his own interpretation on the
basis already indicated herein. I find it unnecessary to refer to
any of them as in my view ABSA was correctly decided as I shall
presently show. Moreover none of them has contradicted the ratio
decidendi in ABSA.





I
shall start with considering section 16 of the Deeds Registries Act.
Its opening words are “Save as otherwise provided by
this Act and any other law…….”
These words are
instructive.





In
the first place, I am of the view that the word “and” between
“this Act” and “any other law” should be read as “or”,
because I opine that it was not intended to convey the idea that the
Deeds Registries Act together with any other law may
provide other methods of transferring real rights from one person to
another vis-a-vis the method provided by Section 16. According to
section 16 itself the method whereby such transfer is effected is by
a deed of cession registered by the Registrar. However the opening
words to section 16 have the effect of putting one on enquiry to
scrutinize the Deeds Registries Act and other statutes with a view of
ascertaining whether that Act or such other statutes provide for
other methods of conveying rights in land, or indeed of conveying
land itself. In the present case, the issue is whether there are
other methods of conveying real rights created by a mortgage bond and
therefore I shall not concern myself with searching for alternative
methods of conveying land. This immediately leads me to section 30
of the Banks Act as it was the one chosen by the plaintiff and those
other institutions which merged with it to produce the plaintiff.
The question in the event is whether that section provides for a
method of transferring real rights from one person to another other
than by means stated in section 16 of the Deeds Registries Act.





Subsection
(1) of section 30 provides in effect that there can be no properly
constituted amalgamation or transfer of assets and liabilities
between institutions unless such amalgamation or transfer is
sanctioned in writing by the Minister if he is satisfied that the
amalgamation or transfer is not detrimental to the public interest.
The approval must be conveyed through the Registrar of Banks. In
casu it is common cause that all the requirements of subsection (1)
were complied with.





The
next crucial provisions are to be found in subsection (2) of section
30. The opening words of this subsection are equally critical as
glossing over them can lead to a misunderstanding of the consequences
in the four paragraphs into which the subsection is broken. The
words are - “Upon coming into effect of a transaction such as (is)
referred to in subsection (1) ….” It is especially emphasized
that these words state expressly that the transaction referred to in
subsection (1) has come into effect. The four paragraphs into which
the subsection is broken indicate the consequences of a properly
consummated amalgamation or transfer. Paragraph (a) states that all
assets and liabilities of the amalgamating institutions or those of
the transferor institution shall vest in and become binding upon
the amalgamated institution or transferee institution respectively.

Paragraph (b) says that the amalgamated institution or transferee
institution shall have the same rights and be subject to the same
obligations as those which the amalgamating institutions or

transferor institution had immediately prior to the amalgamation
or
transfer. As for paragraph (c) it provides that all
agreements, appointments, transactions and documents made or entered
into between or executed by, with or in favour of any amalgamating
institutions or transferor institution and in force immediately prior
to the amalgamation or transfer, shall remain in force and effect
and shall be construed as if they were made, entered into, with or
in favour of the amalgamated institution or transferee institution.

Paragraph (d) has the effect that any bond or any other instrument
therein mentioned and referable to the amalgamating institutions or
transferor institution and which were in force immediately prior to
the amalgamation or transfer shall remain in force and shall be
construed as an instrument given to or in favour of the amalgamated
institution or transferee institution as the case may be.
(all
emphases supplied)





Pausing
there for a moment, there can be no doubt that the provisions in
subsection (2) have the cumulative effect that when an amalgamation
(in casu referred to as a merger) is consummated, the institution
emerging in consequence thereof shall, by operation of section 30 of
the Banks Act, be substituted for the amalgamating institutions or
transferor institution, as the case may be. In the result all assets
and liabilities owned by the latter vest in and become binding upon
the former and consequently the former takes over the same rights
and becomes subject to the same obligations which the latter had
immediately prior to the amalgamation. Equally all agreements and
other matters mentioned in paragraphs (c) and (d) are transferred
from one to the other.





The
defendant urged it upon the court that the mutations enacted by the
various paragraphs of subsection (2) do not take effect until the
action contemplated by subsection (3) is taken. Let us look more
closely at that subsection to ascertain whether that is so.





In
its skeletal form the bare essentials of that subsection are the
following :






  1. satisfaction
    by the Registrar that the Minister has consented to the
    amalgamation/transfer


  2. the
    amalgamation or transfer having been duly effected.


  3. the
    deed, bond, etc relevant to the amalgamation/transfer having been
    produced to the Registrar.






When
the foregoing essentials exist, then the Registrar shall -



  1. make
    an endorsement on the deed, bond, etc, as the case may be to -


  2. effect
    an alteration in his register in order to -


  3. record
    the transfer of the deed, bond, etc, and the rights under the deed,
    bond, etc



It
is to be observed that the subsection talks about the amalgamation or
transfer having been duly effected. In this part of the
section the word “effected” has the meaning of “the purpose of
the amalgamation or transfer having been achieved”. In the latter
part of the subsection the word “effect” is again used in the
phrase “…………… the Registrar shall ………… make such
endorsement and effect such alterations ……….” In this latter
part the word effect has a different connotation, namely “to cause
to be made.”


The
provisions in paragraphs (a) to (d) of subsection (2) of section 30
are crucial. I have declared that there is no doubt that subsection
(2), when looked at in isolation, has the meaning that upon an
effective amalgamation or transfer coming into existence, the
amalgamated or transferee institution respectively steps into the
shoes of the amalgamating institutions or transferor institution. As
can be seen from what I have stated in the immediately preceding
paragraph, subsection (3), in fact recognizes, or perhaps you may
even say, confirms, that the amalgamation or transfer has been duly
effected. It is consequently my considered view that subsection (3)
does not have the effect of postponing the consequences of the action
taken under subsection (1), which consequences are set out in
subsection (2). If a postponement of consequences was contemplated
by the legislature it must have used clear words of importing such
postponement.





Statutes
are replete with words of postponement. The legislature would, for
instance have used the words, “ subject to the provisions of ” or
words to that effect, as the opening words to subsection (2). But
as we have seen subsection (2) opens with the words – “ upon
coming into effect of a transaction such as is referred to in
subsection (1)…..……..” That phrase does not connote
deferment of the consequences of the action taken under subsection
(1). What it means is that after the action taken under subsection
(1) has been accomplished then the consequences stated in paragraphs
(a) to (d) would follow. By parity of reasoning if the legislature
had intended subsection (3) to have an overriding effect on the
events described in the four paragraphs of subsection (2), clear and
appropriate words expressing such intent would have been employed.
As can be seen from the list of the essential elements of subsection
(3), the essence of that subsection is no more than one of
affording the Registrar of Deeds a chance to update his records
once a deed, bond, or as the case may be, which is the subject of a
consummated amalgamation or transfer, is produced to him. Moreover
in his submissions the defendant has argued that the act of
producing the bond or any other instrument mentioned therein is
obligatory. On a proper reading of subsection (3) I do not see any
obligatoriness in this regard.





In the additional heads of argument which the
defendant presented on the day of hearing this appeal he purported to
argue that when a banking institution has extended a loan secured by
a mortgage to a person and then later that bank transfers its
business to another bank, the latter bank only inherits a personal
right to the loan money. He submitted that at common law the real
right in the loan is transferable only upon registration of a deed of
cession in the Deeds register. He recognised that under section 30
of the Banks Act, the deed of cession has been dispensed with so
that a transfer is accomplished only upon the Minister giving his
written consent. However he asserted that even in the last mentioned
situation the proof of such transfer has to be submitted to the
Registrar of Deeds for registration. In other words, so the
defendant’s argument goes, it is only by that act of registration
that the real rights in the mortgage are transferred.





In
commenting on this argument
I must
acknowledge that it is a well established principle of construction
that a statute is not to be taken as effecting a fundamental
alteration in the common law unless it uses words that point
unmistakably to that conclusion: per Devlin J, as he then was in
National Assistance Board Vs Wilkinson (1952) 2 QBD 648 at
page 661. The question therefore is whether Section 30 of the Banks
Act has used words which were clearly intended to alter the common
law position by dispensing with registration.





My
reading of subsection (2) of section 30 is that a clear language has
been used to show that the Banks Act has altered the course of the
common law. In paragraph (a) that section provides for “all assets
and liabilities;” in paragraph (b) it refers to “the same
rights and obligations;” paragraph (c) concerns “all agreements,
appointments, transactions and documents;” while paragraph (d)
embraces “any bond, pledge guarantee, any other instrument.”
All these things change hands from the transferor institution to the
transferee institution without exception. Paragraph (b) is
particularly instructive. It says that the transferee institution
shall have the same rights and be subject to the same obligations as
the transferor had immediately before the change over. My immediate
comment on this provision is to underscore the words “same rights”
and “same obligations.” These words in themselves signify a
departure from the common law. If that was not so then the
transferee or amalgamated institution would not have the same rights
or same obligations if paragraph (b) followed the common law. In
other words if the defendant’s contention was correct that section
30 of the Banks Act only served to transfer the personal right in
the loan money while the real right therein remained to be
transferred through the common law mechanism, then the question of
the transferee or amalgamated institution inheriting the same rights
and same obligations would be heretical.





Looked
in another way, in casu the rights which NBC had vis-a-vis the house
loan were both personal, by virtue of the fact of loaning and
borrowing on the part of NBC and the defendant respectively, and
real, by virtue of the securement of the loan by the mortgage bond.
According to paragraph (b) all those rights were transferred. The
same can be said about the assets which the NBC had before the
merger. These were real as well as personal. The agreements and
other instruments mentioned in that subsection were possibly equally
dichotomous.





In
the event I feel satisfied on a balance of probabilities that the
Banks Act has used amply clear words to show that it has effected a
departure from the common law principle which postulates that real
rights can be transferred only upon registration. In fact I dare say
that the common law principle is now codified and encapsulated in
section 16 of the Deeds Registries Act, Act No. 47 of 1937 as
amended by Act No. 80 of 1964.





In
the final analysis, after a critical scrutiny of section 30 of the
Banks Act, I feel satisfied that it has provided an alterative method
of conveying a real interest in a secured loan, such as the interest
created by the mortgage bond executed by the defendant in favour of
NBC. That interest was duly transferred to the plaintiff upon the
effectuation of the merger when the Minister approved the merger on
December 9, 1993. I accordingly find as a matter of law that the
house loan which was granted to the defendant and was secured by the
mortgage bond continued to be a secured loan when it changed hands
from NBC to the plaintiff.





I
would consequently dismiss the appeal with costs.





The
following orders consequently follow :






  1. The
    appeal is dismissed


  2. The
    Appellant shall pay the Respondent’s costs including those of two
    counsel who appeared for the Respondent.




3. This matter is
remitted to the court a quo to dispose of whatever



issues may be
outstanding.















________________



CHOMBA, A.J.A.






















I
agree











______________


STRYDOM,
C.J.








I
agree











_______________


O’LINN,
A.J.A.














APPELLANT
APPEARED IN PERSON





COUNSEL
FOR RESPONDENT : MR. T.J. FRANK, S.C.


ASSISTED
BY: MS. S. VIVIER


(P.F.
KOEP and Co.)