C of A (CIV) 1/2000
GF JJG* MEK
Sekhonyana and Mopeli v Standard Bank of Lesotho
The issue on appeal is whether the two appellant sureties should have succeeded in defeating a claim by the respondent bank on an overdraft conducted with it by the late E.R. Sekhonyana.
The appellants contended that the respondent's claim contravened the in duplum rule (the interest claimed allegedly exceeding the capital borrowed).
The appeal is dismissed. The defence was neither properly pleaded by the appellants, nor properly canvassed in evidence.
CIV/T/281/95
IN THE COURT OF APPEAL OF LESOTHO
In the matter between:
'MALEROTHOLI JOSEPHINE SEKHONYANA First Appellant
'MASENATE AGNES MOPELI Second Appellant
and
THE STANDARD BANK OF LESOTHO LTD: Respondent
3, 12 October 2000
Coram: Friedman, JA
Gauntlett, JA
Kumleben, JA
JUDGMENT
More than five years ago the respondent commercial bank sued the late Evaristus Retselisitsoe Sekhonyana ("the deceased") and the two appellants jointly and severally for payment of Ml 847 122,94 (later amended to reduce the claim by 50 lisente). The claim relates to an overdraft facility granted to the deceased by the respondent. Judgment was ultimately handed down by the High Court (Lehohla J) on 29 September 1999 against the first appellant (as the deceased's executrix) in the sum of Ml 847 122,44 and in her personal capacity (as a surety and co-principal debtor) in the sum of
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Ml million and against the second appellant (also as surety and co-principal debtor) in the sum of Ml ,2 million. The court's orders
also included interest at the rate of 18,5% per annum, orders declaring certain properties mortgaged to secure the deceased's indebtedness executable, and orders as to costs.
The appellants have appealed to this Court. On the day preceding the hearing of the appeal, a notice of withdrawal was filed by the appellants' attorneys as attorneys of record. The appeal itself was however not withdrawn. There was no appearance before us on behalf of the appellants at the hearing. Counsel for the respondent sought the dismissal of the appeal, not for default of appearance (the Court of Appeal Rules do not provide for that) but on the basis that the appeal had no merit.
We agreed with that submission. Accordingly we dismissed the appeal with costs, reserving our reasons. These now follow.
The appellants advanced (in heads of argument prepared on their behalf by senior counsel) essentially two contentions. The first (expressed as certain "preliminary submissions") was that the respondent had failed to prove that the deceased had agreed to a term (as part of the oral agreement pursuant to which the overdraft facility had been granted) permitting the respondent to capitalise interest. The respondent had also failed to put evidence before the Court (so it was contended) that the applicable interest rate under the agreement was 18,5% at all times. The second main contention was that the respondent had failed to prove that the sums it was claiming were not (at least in part) unenforceable because of what is termed the in duplum rule.
The respondent's Executive Manager (Credit), Mr. S.M. Rahlao, gave evidence. Mr. Rahlao had worked for the respondent for more than 30 years; he had personal knowledge of the account. He testified as to correspondence which passed between the deceased and the respondent in which the deceased accepted that he was heavily overdrawn and in breach of his obligations under the facility. He said that at no stage had the deceased queried the statements regularly sent to him, or disputed the demands for payment which ensued. More than this, he referred specifically in his evidence to the set of bank statements, reflecting the history of the deceased's two bank accounts with the respondent, which were submitted in evidence. He was asked at the conclusion of his evidence-in-chief:
".... are you able to comment on whether or not the figures reflected in the statements and in the letters were accurate as at the date of the statement and as at the date of any particular letter? - To the best of my knowledge they are correct.
For example when you wrote letters to Mr Sekhonyana reflecting that generally money, a sum of order of 2 million was due what steps, if any, had you taken to satisfy yourself that that sum was indeed due and owing? - Those figures are a true reflection of his account as addressed in the correspondence and both the ledger and the statement position were in agreement.
Thank you, M'Lord, 1 have no further questions."
The cross-examination which followed ranged far and wide. It, in turn, ended as follows:
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"I wish to put it to you that it is very important for the Court to know the exact amounts as to the interest and the capital, so in order to know whether the interest charged does not exceed the capital. What do you say to that? - That is important to anybody to know the amount of interest charged which I said I have stated that it can be computed.
And you have not answered. - 1 have not been requested to do so.
This is your case, nobody has to request you. You have not done so . Yes, you have not? - I have not.
Your Lordship, I think that is all from this witness, thank you." In re-examination, this followed:
"Let us get onto the question of interest and bank charges. Is the interest debited on a month to month basis and the other bank charges, is that reflected on the bank statements or not? - It is reflected on the bank statements and it is debited every month.
Debited every month and is it separated out or is it capitalised at the end of the every month? - It is debited and then that obviously
increases the balance, the outstanding balance. It is capitalised.
I think that you told His Lordship quite categorically but just let us get it clear again. Was there a query on a statement saying you charged x maloti and bank charges and this is an improper charge that you have raised? - Not
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that I know of.
Were you ever approached by Mr Sekhonyana with a query on any one of the entries on the bank statements? - Never."
The respondent then closed its case. The appellants called a Ms. E.C. van der Linde, an accountant - not a chartered accountant - who had performed what she described as an arithmetical calculation in relation to the deceased's bank accounts. It was a very simple one: she totalled his deposits, subtracted his cheques written and ascribed the difference to interest and bank charges. Under cross-examination, she was taken to a representative bank statement. This followed:
"These are the normal sort of entries you would expect on a bank statement, are they not? - Yes.
You cannot say whether the commissions are properly charged, whether the bank charges are properly raised or not, that was not your mandate. - No.
And there is also interest at the end of each month. - Yes.
Interest on the outstanding balance which is then capitalised the following month, is it not? - Yes.
This is typically the way that a bank statement operates, is it not? -Yes."
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She confirmed twice in her subsequent evidence that capitalisation in this way at month's end is what she would expect; she suggested no irregularity. There was no re-examination.
The appellants' plea is a bare denial. Its essence is that the respondents must prove their assertion that they are indebted in the amount of Ml 847 122,96 or any other.
In the light of the evidence set out above, there is no merit in the "preliminary submission" summarised in paragraph [4]. I turn now to consider the in duplum defence.
The nature of this defence is explored at length in Standard Bank of SA Ltd. v Oneanate Investments (Pty) Ltd 1998 (1) SA 811 (SCA). The key inquiry here is: was it raised?
The answer is clear: it was not raised on the pleadings. This Court has repeatedly warned that pleadings serve an important purpose, and that (save where technicality intrudes) parties will be held to them. Most recently in Frasers Lesotho Ltd v Hata Buthe (Pty)Ltd C of A (CIV) 21 of 1998 (delivered on 16 April 1999) we said this:
"Lesotho's High Court Rule 22 (3) requires a defendant squarely to state which facts in the Declaration he does not admit, and to what extent. He must in addition "clearly and concisely state all material facts on which he
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relies". It has been stated often enough that the requirement of a rule in terms such as these is to enable each side to come to trial prepared to meet the case of the other (see Benson and Simpson v Robinson 1917 WLD 126), and to enable the court to isolate the issue it is to adjudicate upon (Robinson v Randfontein Estates Gold Mining Co Ltd 1925 AD 173 at 198). The cause of action or defence must appear clearly from the factual allegations made (Dun & Bradstreet (Pty) Ltd v SA Merchants Combined Credit Bureau (Cape) Ltd 1968 (1) SA 209 (C) at 224). It is in particular wrong to direct the attention of the other party to one issue and then attempt to canvass another (Imprefed (Pty) Ltd v National Transport Commission 1993 (3) SA 94 (A) at 107-108)."
It is not enough that counsel for the appellants put a question which may or may not have foreshadowed reliance on the rule to the respondents's witness. No attempt was made thereafter to amend the plea, whether before the trial court or us. Nor was there in any event an adequate probing of the question in evidence.
A comparable situation recently arose in F & I Advisors (Edms) Bpk v Eerste Nationale Bank van SA Bpk 1999 (1) SA 515 (SCA). There are points of difference on the facts, but the applicable principles are, in my respectful view, clearly and correctly stated. At 523C the court noted that the Plea in that matter (as is the case here) contained not so much as a hint of the in duplum defence. The court concluded (at 525 E-F, my translation):
"Naturally a court will not order interest in conflict with the in duplum rule if the breach is clear, as little as a court will order the payment of an usurious
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rate of interest in such circumstances. This however does not mean that a court must mero motu initiate a search to ascertain whether
such a rule has been contravened. The court also will not act on the basis of mere suspicion (cf Senekal v Trust Bank of Africa 1978 (3) SA 375 (A) at 386H)".
In the present case, as I have noted, the defence was not pleaded. The evidence unsurprisingly establishes that the factual basis for the defence was not investigated. What however was before the court was evidence establishing the oral agreement relating to the overdraft facility pleaded by the respondent, and (with explicit reference to the bank statements submitted in evidence) the total indebtedness.
The appellants (in the heads of argument filed on their behalf) attempted to contend that the admissions of liability by the deceased were not admissible against them. This is the consequence (so it was argued) of the fact that no privity of interest existed between them and the deceased. The proposition is untenable. They were sureties and co-principal debtors in respect of the deceased. The terms of the agreements which rendered the appellants sureties and co-principal debtors make express provision for proof of indebtedness as against the principal debtor to serve as proof against them. The simple point is in any event that the respondent proved in evidence the terms of the agreement on which it relied and the extent of the deceased's indebtedness under it. It could do so without being dependent on the deceased's admissions of liability.
For these reasons the appeal was dismissed with costs.
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J.J. GAUNTLETT
JUDGE OF APPEAL
I agree
G.Friedman
M.E. Kumleben
Delivered this 13th day of October, 2000
For Respondent: Adv. P. Fischer
