Says no to application for summary judgment – and the matter ‘could have been solved by mediation’.
Absa’s bookkeeping was in ‘disarray’ and littered with discrepancies, said the Johannesburg High Court last week as it dismissed the bank’s attempt to attach a property in settlement of a R6.7 million loan from three respondents.
Dismissing the application for summary judgment, Judge NS Kruger said Absa’s “one hand is unaware of what the other is doing,” adding that the matter could have been solved by mediation. The matter must now go to trial.
Absa’s accounting was all over the place, with multiple conflicting statements of accounts.
Gola Trading and Projects signed a mortgage-backed business loan agreement in 2021 for a loan of R5.6 million, secured by a property. This was in addition to a further amount of R1.12 million owed to the bank. Two other respondents provided limited guarantees for the loan amount.
In the event of a breach of the agreement, Absa had the right to call up the loan and attach the property.
The bank issued summons in July 2023 claiming an arrears of R434 324, representing five missed instalments.
Absa claimed it had notified Gola of its default, cancelled the loan facility and a disputed “2019 agreement,” and demanded immediate repayment of all outstanding amounts.
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Actual arrears amount?
Absa’s particulars of claim stated that as at 23 May 2023, Gola owed R5 276 441.91, supported by a certificate of balance from the bank’s recovery department.
Gola denied the existence of a “2019 agreement” and disputed the alleged arrears, citing a loan statement from 6 June 2023 showing arrears of R184 909, not R434 324.
Gola made payments of R90 000 in June and August 2023, and on 7 September 2023 paid another R194 015.
A statement received on 6 September 2023 showed arrears of R165 591.97.
A subsequent statement on 19 September 2023 reflected a credit balance of R119 339.06, indicating the arrears had been settled.
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Absa’s attorneys requested a monthly instalment of R85 000 for October 2023, which was duly paid.
A statement dated 10 October 2023 showed no arrears. However, on 2 November 2023, Absa’s attorneys claimed the account was in arrears by R312 714.
The respondents denied this, arguing that Absa’s acceptance of payments after the supposed cancellation of the agreement and the credit balance in the account suggested the contract was either not cancelled or had been reinstated.
Absa approached the court in November 2023 for summary judgment, claiming R5.2 million with interest from all three respondents, and a request that the property be attached.
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It furnished a supporting affidavit that acknowledged errors in the bank statements as a failure to reflect the correct arrears.
A corrected statement dated 30 October 2023 showed a closing balance of R5 million as at 9 October 2023.
A “recalculation document” dated 1 November 2023 claimed a recalculated balance of R5 million with an instalment due of R2.18 million.
The claimed arrears drifted from nil to hundreds of thousands of rands in a matter of months, with Absa admitting at one stage that some amounts paid were not reflected in the account statements.
“In their affidavit resisting summary judgment, the defendants assert that the application for summary judgment and the supporting affidavit does not properly disclose the events that transpired between the parties and fails to demonstrate it is certain whether anything is due and how much is due in relation to the amount claimed and the calculation thereof,” says the judgment.
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Inconsistent bank statements
Gola and the other respondents pointed to Absa’s inconsistent bank statements and that correspondence failed to establish the debt or its calculation with any certainty.
The fact that Absa’s attorneys continued to request instalment payments suggested the contract remained active and had not been cancelled. No notice of breach had been received prior to the alleged cancellation, nor did the contract contain a breach clause.
The respondents also proposed mediation to resolve the matter, but Absa refused.
There were multiple options available to the bank in the event of a breach, yet the bank chose the most severe remedy in calling up the loan and then going to court.
The court found that the matter warranted a full trial due to the discrepancies in Absa’s financial records and the lack of clarity in the contract cancellation process, and the potential reinstatement of the contract.
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Don’t assume your bank’s figures are correct
“The case highlights the importance of challenging the bank’s calculations,” says consumer legal advisor Leonard Benjamin.
“Proceedings involving the enforcement of home loans give rise to both legal and financial issues. They are equally important, but most defendants blindingly accept the bank’s calculations.
“However, the banks make mistakes,” he adds.
“For instance, they use the wrong interest rate, or they debit charges to the account that they are not entitled to, such as untaxed legal fees.
“Importantly, the arrears amount they are claiming is very seldom correct.
“Unfortunately, few defendants possess the documents they need to effectively dispute the financial aspects of the claim, but they can use the court rules to obtain them before they file their plea.”
This article was republished from Moneyweb. Read the original here.
