THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

REPORTABLE
Case number:  165/07

In the matter between:

KAMINTHA GOUNDER
Appellant

and

TOP SPEC INVESTMENTS (PTY) LTD
Respondent

CORAM:

MPATI DP, NUGENT, VAN HEERDEN,

CACHALIA JJA and MHLANTLA AJA

HEARD:

3 MARCH 2008

DELIVERED:
8 MAY 2008

Summary:
Husband and Wife – marriage in community of property – whether loan
agreement entered into by one spouse without written consent of the other falls within
ambit of s 15(2)(b) of Matrimonial Property Act 88 of 1984 where it incorporates agreement
to register mortgage bond over the parties’ fixed property as security for the loan.

Neutral citation:
Gounder v Top Spec Investments (Pty) Ltd (165/07) [2008] ZASCA
52 (8 May 2008)
_____________________________________________________________________

MPATI DP:

[1] This appeal concerns the power of a party in a marriage in community of property, to
bind the joint estate without the consent of the other party to the marriage.  The respondent
claimed, by way of application proceedings, payment of the sum of R1 140 000,00, plus
costs, from the appellant (as second respondent) and her husband, Mr Anand Gounder (as
first respondent), to whom she is married in community of property,  The sum claimed is
made up of a loan of R1 000 0001 together with a raising fee of R140 000.  Also claimed
was payment of a penalty raising fee calculated at 10 % per month on the loan amount
from 4 July 2006 to date of payment.

[2] The Natal Provincial Division (Nicholson J) granted the order sought.  This appeal is
with its leave.  I shall, for convenience, refer to the appellant and her husband jointly as ‘the
borrowers’.

[3] The material facts are largely undisputed.  It is alleged in the founding affidavit,
deposed to by Harry Sidney Spain (Spain), a director of the respondent company, that on 3
April 2006, at Verulam, the respondent entered into a ‘written agreement’ of loan (the
written document) with the borrowers.2  The written document was signed by Mr Anand
Gounder (Mr Gounder) and, ostensibly, also by the appellant.  Due to an oversight, Spain
omitted to sign the written document on behalf of the respondent.  He alleges, however,
that he ‘authorised the conclusion and implementation’ of the agreement.

[4] Pursuant to the agreement the respondent paid, by means of electronic transfer,
R999 9403 into the account of Attorney Veni Moodley, who received the money on behalf of
the borrowers.  Attorney Moodley, in turn, disbursed the moneys as per instructions given
to her by Mr Gounder.  The loan was repayable by no later than 3 July 2006.

Although the written document reflects the sum to be advanced as R1 400 000,00, the actual amount lent
and advanced was R1 000 000.
The written document reflects the names of Anand Gounder and Kamintha Gounder (the appellant) as the
other parties to the loan agreement.
The respondent deducted R60 from the loan amount for bank charges for a speedy transfer.

[5] In terms of clause 5.1 of the written document the borrowers undertook to pay a
raising fee of R140 000 within ninety days ‘regardless of the date of repayment’ of the loan.
That period, it is alleged, expired at the end of June 2006.  Clause 5.2 provides that the
maximum term of the loan ‘shall not exceed 90 days’, but should this period be exceeded a
penalty raising fee of 10 % ‘will be applied per month’.  The borrowers failed to repay the
loan and raising fee by due date, hence the institution of the claim by the respondent.

[6] Annexed to the founding affidavit, in addition to the written document, is a Power of
Attorney to register a mortgage bond, signed by Mr Gounder and, ostensibly, by the
appellant in favour of Attorney Moodley.  The Power of Attorney refers to ‘the attached draft
Mortgage Bond’ (also annexed to the founding affidavit), which was to be registered over
the borrowers’ fixed property as security for the loan.  The appellant describes the property
in her answering affidavit as ‘my home at 10 Paradise Drive, Orient Heights,
Pietermaritzburg’.  The amount intended to be secured by the draft covering bond attached
to the founding affidavit was R2 500 000 and an additional sum of R625 000.

[7] In clause 4.1 of the written document reference is made to ‘registration of transfer of
the Property’ and to ‘a certificate of balance due by the Borrower in terms of this
Agreement’.  Spain explains that the wrong standard form was used when the agreement
was concluded and that no property was in fact to be sold and transferred.  The correct
form, he says, would have provided for a mortgage bond ‘to be registered over the
[borrowers’] immovable property as security for the loan’.  Spain submits, however, that
nothing turns on the fact of the use of the wrong form for the loan agreement as it is not
relevant to the loan, but only to the security for the loan.

[8] Mr Gounder did not depose to an answering affidavit.  Instead, he gave notice, in
terms of Rule 6(5)(d)(iii)4 of the Uniform Rules, that he intended to apply for the dismissal of

The subrule provides:

‘Any person opposing the grant of an order sought in the notice of motion shall –

. . .

the application at the hearing of the matter on the grounds that ex facie the founding
affidavit, material disputes of fact existed and that therefore application proceedings were
inappropriate.  He was, however, not present, nor was he represented, at the hearing of the
matter before Nicholson J.

[9] The appellant denies that she appended her signature to the written document and
Power of Attorney to pass a mortgage bond over her home to secure the loan.  She raises,
like Mr Gounder, but as a point in limine, the issue of the respondent having proceeded by
way of motion when he should have proceeded by way of an action.  She states that the
matter required extensive, in-depth and thorough investigation, which would require a
substantial period of time, if she was ‘to be allowed the right to properly ventilate the matter’
and defend herself.  The appellant contends that when commencing the motion
proceedings the respondent knew that she denied that she signed the documents
concerned and thus should have foreseen that ‘critical triable disputes would arise’.

[10] Much as it is preferable that claims like the present one should be instituted by way
of an action, a claimant is not barred from instituting a claim by way of notice of motion.
The latter proceeding is pursued at a claimant’s own peril should a factual dispute arise
which turns out to be incapable of being resolved on the papers; the risk being a dismissal
of the application should the court, in the exercise of its discretion, decide not to refer the
matter for trial, nor direct that oral evidence be placed before it.5  In the present matter,
however, it seems to me that the only possible dispute of fact was the question whether or
not the appellant signed the written document and the Power of Attorney to register a
mortgage bond.  These being motion proceedings, it must be accepted that the appellant
did not sign the documents and the matter must be decided on that basis.6

[11] The respondent was well aware of this position.  Spain says the following in the

(iii)
if he intends to raise any question of law only he shall deliver notice of his intention to do so,
within the time stated in the preceding sub-paragraph, setting forth such question.’
Tamarillo (Pty) Ltd v B N Aitken (Pty) Ltd 1982 (1) (SA) 398 (A) at 430G-431A.
Plascon-Evans Paints (Ltd) v Van Riebeeck Paints (Pty) Ltd 1984 (3) 623 (A) at 634G-635C;  Ngqumba en
‘n ander v Staatspresident en andere, Damons NO en andere v Staatspresident en andere, Jooste v

founding affidavit:
‘. . . I understand that the Second Respondent [appellant] denies that she signed the agreement and contends
that someone else had done so.  Whatever the position may be in this regard I am advised and respectfully
submit that in terms of section 15 of the Matrimonial Property Act, No 88 of 1984 [Mr Gounder] had the power
to enter into the loan agreement and to bind the joint estate without the consent of the [appellant].’

It seems plain, therefore, that the respondent was well aware of the risk attendant upon his
proceeding by way of motion and narrowed down the issues to a reliance on s 15 of the
Matrimonial Property Act (the Act), the relevant provisions of which provide as follows:
’15 Powers of spouses. –
(1)
Subject to the provisions of subsections (2), (3) and (7), a spouse in a marriage in community of
property may perform any juristic act with regard to the joint estate without the consent of the other spouse.
(2)
Such a spouse shall not without the written consent of the other spouse –
(a)
alienate, mortgage, burden with a servitude or confer any other real right in any immovable
property forming part of the joint estate;
(b)
enter into any contract for the alienation, mortgaging, burdening with a servitude or conferring
of any other real right in immovable property forming part of the joint estate;
. . .
(5)
The consent required for the performance of the acts contemplated in paragraphs (a), (b), . . . of
subsection (2) shall be given separately in respect of each act and shall be attested by two competent
witnesses.
. . .
(9)
When a spouse enters into a transaction with a person contrary to the provisions of subsection (2) or
(3) of this section, or an order under section 16 (2), and –

(a)
that person does not know and cannot reasonably know that the transaction is being entered
into contrary to those provisions or that order, it is deemed that the transaction concerned has
been entered into with the consent required in terms of the said subsection (2) or (3), or while
the power concerned of the spouse has not been suspended, as the case may be;

. . . .’

Staatspresident en andere 1988 (4) SA 224 (A) at 259C-263D.

The respondent accordingly relies on the provisions of s 15(1) and (9)(a) of the Act.  With
regard to the latter subsection, the respondent alleges that it did not and could not
reasonably have known that the agreement ‘was being entered into’ without the appellant’s
consent.

[12] Merely to complete the history of the matter, I may mention that on 3 April 2006 Mr
Gounder called at the offices of Attorney Veni Moodley to sign the written document and
Power of Attorney.  Jelisha Mathura, a secretary in the employ of Attorney Veni Moodley,
says the following in a confirmatory affidavit attached to the founding affidavit:
‘. . . The First Respondent [Mr Gounder] was alone and he signed the said documents in my presence.
On requesting the signature of his wife, the Second Respondent [the appellant], he informed me that she
was waiting in the car outside as she had hurt her foot or was unwell and could not climb the stairs to our
offices.  He offered to take the documents to the car for her to sign and thereafter to bring the documents
back to us.
The First Respondent then left and returned soon thereafter with the documents purportedly signed by the
Second Respondent.  I asked him if she had signed the documents and he confirmed that she had.’

[13] The appellant contends that ‘the intended or purported transaction’ was one
contemplated by either s 15(2)(a) or 15(2)(b) of the Act, which Mr Gounder could not enter
into without her written consent ‘attested to by two competent witnesses in accordance with
s 15(5)’.7  For the contention that the transaction was one contemplated by either s 15(2)(a)
or (b) of the Act, the appellant relies on what she says is the respondent’s own version, viz
that the loan agreement it intended to enter into with her and Mr Gounder ‘incorporated an
agreement to mortgage my home’.

[14] It will by now have become obvious that the registration of the mortgage bond over

See subsection (5) above, para 11.

the appellant’s ‘home’ did not proceed.  It is therefore not necessary to consider the
provisions of s 15(2)(a) in detail.  This section prohibits, inter alia, the alienation or
mortgaging of immovable property forming part of the joint estate without the consent of the
other party to the marriage in community of property.  The issue, it seems to me, is whether
the loan agreement is one contemplated by s 15(2)(b) of the Act.

[15] Counsel for the appellant contended that it is.  He submitted that the clear distinction
drawn by the Legislature between the actual mortgaging or burdening of immovable
property in s 15(2)(a) and ‘any contract for’ such activity fortifies his contention.  Counsel
argued further that the wording of s 15(2)(b) is wide and inclusive in and of itself, and that
as a remedial provision should be interpreted as widely as the wording permits.  Reliance
on this last submission was sought in the minority judgment of Streicher AJA in
Amalgamated Banks of South Africa Bpk v De Goede en ‘n Ander.8

[16] It is true that in the founding affidavit Spain avers that the written document
evidencing the loan agreement was the incorrect form and that the correct form would have
provided for a mortgage bond to be registered over the borrowers’ immovable property as
security for the loan.  But the respondent does not rely on such a ‘correct form’ for its claim,
nor does it seek rectification, or to prove terms of the loan agreement outside of the written
document.  The form it relies on, i.e. the written document, makes no reference whatsoever
to a mortgage bond to be registered over the immovable property of the borrowers.

[17] But more importantly, a court is not entitled to import words into a statute that do not
appear in it if the meaning intended by the words actually used is clear and unambiguous.9
The function of a court is to interpret and apply the law.  The language of the statute ‘must

1997 (4) SA 66 (SCA) at 81J-82C.
L C Steyn Die Uitleg van Wette 5ed (1981) p 14-16.

neither be extended beyond its natural sense and proper limits in order to supply
omissions or defects, nor strained to meet the justice of an individual case’.10  The
provisions of s 15(2)(b) are quite clear.  Though not absolute because of the provisions of
subsec (9), they prohibit the entering into a contract for the alienation, mortgaging, etc. of a
real right in immovable property forming part of a joint estate without the requisite consent
of the other spouse.  Closer to home, it prohibits Mr Gounder from doing what he purported
to do, viz: to enter into an agreement to pass and register a mortgage bond over the fixed
property without the appellant’s written consent.  The subsection does not prohibit one
spouse from entering into a loan agreement without the consent of the other.  That is
permissible in terms of s 15(1).

[18] The fact that the ‘correct form’, referred to by Spain, would have provided for a
mortgage bond to be registered over the borrowers’ immovable property as security for the
loan does not mean that only one agreement was intended.  There were two separate
agreements, one a loan agreement and the other an agreement to secure the loan with a
mortgage bond.  And the validity of the loan agreement did not depend on the validity or
otherwise of the agreement to register the mortgage bond.  Put simply, a declaration of
invalidity in respect of the agreement relating to the registration of a mortgage bond will not,
for that reason, result in the loan agreement becoming invalid.  It is separate from, and
independent of, the agreement to register a mortgage bond, although it is the causa for the
latter agreement.

[19] It follows that the loan agreement is not one contemplated in s 15(2)(b) of the Act.
Its validity did not depend upon the consent of the appellant, written or otherwise s (15(1)).
This conclusion renders it unnecessary for me to consider the other submissions relating to
the provisions of s 15(9)(a) of the Act, which both counsel so eloquently advanced.

[20] In the alternative, the appellant averred that the transaction was a credit agreement
as contemplated by s 15(2)(f)11 of the Act, with the same consequences, i.e. the
requirement of her written consent, attested to by two competent witnesses in accordance
with s 15(5), was not complied with.  That line of attack was correctly abandoned in this
Court.

[21] One last aspect in this matter requires attention.  In her answering affidavit the
appellant raises the question of the penalty stipulation in the written document.  She says:
‘In any event the alleged penalty fee is unduly onerous, excessive and unreasonable.  I contend that the
penalty constitutes a penalty stipulated in terms of section 3 of the Conventional Penalties Act No 15 of 1962,
is completely out of proportion to the prejudice suffered, and submit that the penalty ought in any event to be
reduced to an amount being just and equitable, even if applicable.’

In this Court, counsel for the appellant advanced no argument in support of the averments
or contentions made in the appellant’s answering affidavit on this issue.

[22] Section 3 of the Conventional Penalties Act provides:
‘3.  Reduction of excessive penalty. -  If upon the hearing of a claim for a penalty, it appears to the court that
such penalty is out of proportion to the prejudice suffered by the creditor by reason of the act or omission in
respect of which the penalty was stipulated, the court may reduce the penalty to such extent as it may
consider equitable in the circumstances:  Provided that in determining the extent of such prejudice the court
shall take into consideration not only the creditor’s proprietary interest, but every other rightful interest which
may be affected by the act or omission in question.’

Compare Union Government v Thompson 1919 AD 404 at 425; R v Tebetha 1959 (2) SA 337 (A) at 346.
Up until 31 May 2006 section 15(2)(f) prohibited the entering by a spouse, as a credit receiver, without the
written consent of the other spouse, into a credit agreement as defined in the Credit Agreements Act, 1980
and to which the provisions of that Act apply in terms of s 2 thereof.  Section 15(2)(f) was substituted by s
172(2) of the National Credit Act 34 of 2005 with effect from 1 June 2006.  Whether or not the transaction
might well fall within the ambit of s 15(2)(f) as substituted is not in issue;  the amendment was not
retrospective and is thus not applicable in the present case.

[23] It will be recalled that the written document provides for the application of a
penalty raising fee of 10 % per month.  The court  a quo granted an order in terms of which
the appellant and Mr Gounder are to pay to the respondent, jointly and severally, R100
000,00 per month from 4 July 2006 to date of payment of the amount claimed (being
R1 140 000,00).  This means that as at the date of hearing of this appeal (3 March 2008)
the penalty alone would have totalled more than double the amount of the loan.  That
seems to me prima facie out of proportion to whatever prejudice the respondent may have
suffered as a result of the borrowers’ breach (failing to repay the loan on due date).

[24] In Smit v Bester12 this Court held that it could mero motu reduce the penalty
amount when it prima facie appears from the pleadings that the penalty amount is out of
proportion to the prejudice suffered by the creditor.13  It was also held in that case that
where a court is concerned with a penalty under s 3 of the Conventional Penalties Act, the
onus is on the debtor to show that the penalty is disproportionate to the prejudice suffered
by the creditor and that it should thus be reduced, and to what extent.  When the debtor
prima facie proves that the penalty should be reduced then there is an onus on the creditor
to rebut, so as to refute the prima facie case of the debtor.14

[25] In the present matter counsel for the respondent conceded that the stipulation in
the loan agreement constitutes a penalty as contemplated in the Conventional Penalties
Act.  The respondent merely denied in the replying affidavit that the penalty is out of
proportion to the prejudice it suffered.  That, in my view, is insufficient to persuade me not
to reduce the penalty amount.  Counsel for the respondent submitted that should the
penalty be struck out the ordinary rate of mora interest should apply.  I intend to make such

1977 (4) SA 937 (A).
At 942H.
At 942D-F.  See too Magna Alloys and Research (SA) (Pty) Ltd v Ellis 1984 (4) SA 874 (A) at 906B-F.

an order.

[26] The following order is made:
1.
The appeal succeeds only to the extent that paragraph (b) of the order of the court
below is set aside and substituted with the following:

‘(b)
Payment by the respondents, jointly and severally, to the applicant, of interest
on the capital sum, calculated at the rate of 15.5 % per annum from 4 July
2006 to date of payment.’
2.
The appellant is to pay the costs of the appeal.

L MPATI DP
CONCUR:

NUGENT JA
VAN HEERDEN JA
CACHALIA JA
MHLANTLA AJA