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BY Aslam Moosajee AND Laurence Mort
The excipiability of unsigned home loan agreements
In the case of Standard Bank of SA Ltd v Stander and Others, the issue before the North West Division of the High Court of South Africa concerned whether an unsigned home loan agreement – which was relied upon by Standard Bank of SA Ltd (‘the plaintiff’) to enforce arrear payments against five persons (‘the defendants’) – failed to disclose a cause of action and accordingly rendered Standard Bank’s particulars of claim excipiable.
Background facts
Standard Bank had concluded a written home loan agreement in terms of which ZAR2 314 908.19 was lent and advanced to the defendants. The home loan agreement was over a period of 240 months with the initial minimum monthly repayment of ZAR23 253.93 becoming due 30 days after registration of the mortgage bond, and thereafter on the same day each month thereafter. Standard Bank contended that the defendants had failed to repay the instalments as agreed in terms of the home loan agreement, and consequently instituted an action against the defendants for their arrear payments.
In response, the first and second defendants (‘the excipients’) raised an exception on the basis that the particulars of the claim lacked the averments necessary to sustain an action. According to the excipients, the written home loan agreement was not signed by them (it was only signed by the other defendants), and as a result, they could not be deemed to be parties to the agreement. Further, it was evident from the contract itself that it was intended to be signed, and if not signed, it did not disclose a cause of action.
Standard Bank opposed the exception raised and argued that the cause of action had been established since it was pleaded in the particulars of the claim that the agreement was concluded between the plaintiff and the excipients. Standard Bank noted that in terms of Rule 18(6) of the Uniform Rules of Court, a party who relies on a contract only needs to state if it was a written contract or oral; where it was concluded; and attach a copy of the contract to the pleading.
In other words, the fact that the agreement was unsigned does not support the conclusion that the agreement is unenforceable. It was further submitted that the home loan agreement did not contain any clause requiring the agreement to be signed for it to be valid and that this issue should be raised by the excipients as a defence at trial, rather than as an exception.
The court’s findings
The High Court referenced the judgment of Vermeulen v Goose Valley Investments (Pty) Ltd in which the Supreme Court of Appeal held that “it is trite law that an exception that a cause of action is not disclosed by a pleading cannot succeed unless it can be shown that ex facie the allegations made by a plaintiff and any other document upon which his cause of action may be based, the claim is bad in law".
The High Court reiterated the trite principle in our law that the onus rests on the excipient to prove that the particulars of the claim fails to disclose a cause of action. If evidence can be led to disclose the cause of action alleged in the pleadings, then the exception should not succeed. A pleading is only excipiable, if there is no possible evidence that can be led to disclose a cause of action.
The High Court noted that the excipients did not argue that the agreement contained a clause prescribing that the contract would only be binding if signed by all the parties. Furthermore, the intention of the defendants was clear when entering into the agreement, since after it was concluded, a mortgage bond was registered wherein the excipients were mentioned with their identity numbers.
The High Court concluded that it was not appropriate at the exception to interpret the agreement between the parties – this must be decided at the trial stage. Rather, the Court must determine whether the pleadings disclosed a cause of action. The High Court held that Standard Bank had complied with the requirements of Rule 18(6) of the Uniform Rules of Court since they had attached the home loan agreement to their particulars of claim, which accordingly disclosed a cause of action. The exception was consequently dismissed with costs on scale B.
Aslam Moosajee
Executive / Dispute Resolution
Laurence Mort
Candidate Legal Practitioner / Dispute Resolution
