In a summary judgment application, there's no room for improvisation. The court is not there to hear your side of the story - it's there to see your proof. If you want to stand a chance, you need to lay your defence out with surgical precision: every fact, every document, every ounce of evidence must be on the table.
Courts expect defendants to fully disclose their defence in their pleadings, not spring it later in an affidavit. If you are raising a new issue, you must amend your plea - no shortcuts. This is the unforgiving terrain of Rule 32. And yet, in Firstrand Bank Ltd v Na-Myns Boerdery and Harrisdale Boerdery, the defendants stumbled at every turn. They raised defences that were not pleaded, failed to back up their claims with evidence, and relied on vague arguments about fairness and public policy - none of which held up under scrutiny. The result? A swift and decisive ruling against them. This case is not just a judgment - it is a warning.
Background facts
In the twin matters of Firstrand Bank Ltd v Na-Myns Boerdery (Pty) Ltd and Firstrand Bank Ltd v Harrisdale Boerdery (Pty) Ltd, Judge Williams delivered a judgment highlighting the intersection between summary judgment proceedings and the procedural obligations on defendants, particularly in respect of pleading and bona fide defences.
The plaintiff, FirstRand Bank Ltd, sought summary judgment in respect of overdraft facilities extended to the first defendants - Na-Myns and Harrisdale, respectively, with claims amounting to approximately ZAR1,9 million and ZAR1,49 million. The second to fourth defendants in each case had bound themselves as sureties. Notably, Springfit Estates (Pty) Ltd ("Springfit") was a surety to both Na-Myns and Harrisdale. The main issue before the court was whether the defendants had disclosed a bona fide defence sufficient to resist summary judgment.
The facility agreements concluded between Na-Myns and Harrisdale were materially similar. The facility agreements stipulated repayment on demand, annual reviews, and interest at the Plaintiff's prime rate, with penalty interest applicable for exceeding the limits. Default events included non-payment, insolvency of a surety, or exceeding the overdraft limit without approval. Of particular relevance was a certificate clause, which stipulated that a general manager's certificate of indebtedness would serve as prima facie proof of liability.
Firstrand alleged multiple breaches, including failure to pay, overextension of the facilities, and the liquidation of a co-surety, Springfit. As a result, the Firstrand sought ZAR1,922,579.54 plus interest from Na-Myns and ZAR1,498,068.48 plus interest from Harrisdale.
The defendants pleaded general denials in their plea, contested the court's jurisdiction, the validity of agreements, and the alleged breaches. In opposing summary judgment, the defendants raised several contentions in their affidavits: (i) they claimed that they were up to date with payments when the facilities were called upon; (ii), they argued that the plaintiff had incorrectly classified them as part of a group structure; (iii), they contended that any excess on the facilities was solely due to the accumulation of interest after the call-up: (iv), they alleged that the plaintiff had acted unreasonably and unfairly in calling up the facilities; and (v), they maintained that the plaintiff already had sufficient security in the assets of Springfit.
Court's analysis
The court observed that the defences raised in the affidavits resisting summary judgment had not been pleaded. Citing Absa Bank Ltd v Meiring, the court held that a defendant must amend its plea before introducing new defences. In the absence of the defendants amending their pleas, or at the very least filing notices of intention to amend their pleas, their opposition to summary judgment should fail.
The court nonetheless proceeded to deal with the defences raised by the defendants in the opposing affidavits, namely that the defendants failed to provide proof that they remained compliant with payments. The agreements explicitly allowed the plaintiff to review and call in facilities at its discretion. The court dismissed claims made by the defendants against the plaintiff for unreasonableness or unfairness.
The defendants argued that enforcing the agreements would be against public policy. The court referred to the decision of the Constitutional Court in Beadica 231 CC v Oregon Trust, where it was emphasised that fairness is a factor but cannot override clear contractual obligations without strong justification. The court could not find compelling grounds to invalidate the plaintiff's enforcement of the agreements.
The defendants claimed that Springfit's assets provided adequate security. However, they failed to provide material evidence to support this assertion, undermining their argument.
The defendants also belatedly claimed that the plaintiff's interest charges constituted penalty interest. Under the Conventional Penalties Act, a debtor must prove that a penalty is excessive, which the defendants failed to do. The court also found that since the issue had not been pleaded or raised in affidavits, the plaintiff had been prejudiced in addressing it.
Judgment
The court concluded that, despite having regard to the impermissible defences raised, the defendants failed to raise a triable issue or disclose a bona fide defence. Consequently, summary judgment was granted in favour of the plaintiff. In accordance with the terms of the facility agreements, which expressly provide for costs on an attorney and client scale, the court awarded costs against the defendants on that basis.
Implications of the ruling
This case highlights the importance of proper pleading in summary judgment proceedings. Defendants must ensure that any defences they wish to rely upon are included in their initial response; otherwise, their credibility may be compromised. The judgment also reinforces the principle of pacta sunt servanda (contractual obligations should be honoured), affirming the enforceability of contractual terms, particularly in financial agreements, unless there is a compelling public policy reason to set them aside.
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