KwaZulu-Natal couple's Ubuntu plea falls flat in R4m bank battle
A couple's argument that Ubuntu applies to debt has fallen flat as they try write off money due on a bond for a farm.
Image: Nicola Mawson | IOL
The spirit of Ubuntu was not enough to prevent Standard Bank from recovering more than R4 million from a KwaZulu-Natal farming couple who stood surety for their company’s debts.
This comes after the farm was sold while the company was in business rescue, but the money from the sale was not sufficient to cover all the debt owed to the bank.
In a judgment handed down in the KwaZulu-Natal High Court in Pietermaritzburg, Judge PC Bezuidenhout dismissed arguments by Allen John Immelman and Christina Marie Immelman that the bank’s claims were unenforceable under the National Credit Act (NCA).
The dispute centres around loans advanced to Chiffon Estates, a farming business that later entered business rescue after years of financial strain. The Immelmans had signed as sureties and co-principal debtors, leaving them personally exposed when the business failed.
Standard Bank claimed a combined R1.26 million on a business term loan and R2.84 million on an overdraft facility. Even after the farm was sold and the proceeds paid over, there was still not enough money to clear the debt.
Acting in person, the Immelmans argued that the loans amounted to reckless lending and that the NCA applied from the first loan in 2013 and carried through to later agreements.
Bezuidenhout rejected that defence, finding that Chiffon Estates was a “juristic person” - a business - that had entered into a large credit agreement, placing it outside the scope of the NCA.
“In the result, the provisions of the NCA cannot and do not apply to the agreement entered into between the applicant and first respondent,” the judge ruled.
The couple also took issue with how the farm was sold, complaining that it went to auction without a reserve price, which they said resulted in a lower sale price.
“There is no provision for a reserve price to be set when a property of a company which is under business rescue is sold,” the judge said.
Bezuidenhout said any unhappiness about the sale price was a matter for the business rescue practitioner, not the bank.
“The spirit of Ubuntu, in my understanding also does not provide for the writing off of debt owed,” he said.
The court granted judgment against the Immelmans jointly and severally for R1.26 million and R2.77 million, plus interest and costs, after deducting payments received after the summons was issued.
“Although one may have sympathy with defendants, the plaintiff’s claims must succeed,” Bezuidenhout said.
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