Bank shown up in appeal ruling

The Polokwane High Court didn’t buy Nedbank’s attempt to claim more than the R800 000 it agreed to in terms of a settlement agreement with the liquidated Cape Town Fish Market Polokwane.

The case originally went the way of the bank, but was overturned last month on appeal.

When the Cape Town Fish Market (CTFM) in Polokwane was placed in liquidation in 2017, it ended up owing Nedbank nearly R1.5 million under a term loan and a current account.

Three parties signed sureties for the loans – Charles and Amanda Stopforth and Busesi Investment 183, the defendants in the case.

They signed a deed of settlement with the bank to make payment of R800 000 on or before September 30, 2017, in which case Nedbank would forego any legal action against them for the debt.

Nedbank claimed this was just part-payment and that it was entitled to claim the balance outstanding.

Different understanding

The defendants had a completely different understanding of the agreement: that the R800 000, which was paid before the due date, was in full and final settlement of any and all claims against them.

Much of the bank’s argument hinged around the meaning of the word “towards”.

The deed of settlement contained the following clause: “That R800 000.00, will be paid towards the accounts mentioned [in preceding paragraphs] on or before 30 September 2017.”

It was clear from this wording, argued Nedbank, that the R800 000 payment was part-payment towards the full amount outstanding.

Not so, said the defendants – and the full bench of the court agreed.

Advocate George Diamond, for the defendants, argued that the deed of settlement was explicit enough, and the bank was attempting to claim more than was agreed.

Settlement

“The purpose of the settlement was to afford the defendants the opportunity to pay a lesser amount than the amount due in terms of [the agreement] on or before 30 September 2017 to avoid paying the total indebtedness due and payable,” reads the judgment.

The only circumstance under which the bank was entitled to bring legal action for recovery of the full outstanding loans was in the event the R800 000 was not paid on or before the due date.

The court ruled that the bank could easily have included a clarifying clause in the settlement agreement if the R800 000 was considered a part payment towards the total indebtedness.

“The construction placed on the deed of settlement by [Nedbank] that its purpose was to make provision for part payment of the total indebtedness cannot be accepted,” reads the judgment.

“The contents of the deed of settlement considered as a whole does not support such a contention. No provision is made when the balance will be paid and the conditions in terms whereof future payments are to be made.

“It is improbable that a prominent financial institution, like [Nedbank], will simply allow the balance outstanding to remain unresolved when [Nedbank] which, bargaining from a position of strength, could have included terms and conditions pertaining to future payment of the outstanding balance in the deed.”

The previous court ruling in favour of the bank was set aside and the action was dismissed with costs against the bank.

This article first appeared on Moneyweb and was republished with permission.

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