THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

REPORTABLE
Case no: 1054/2013

In the matter between:

FIRST NATIONAL BANK ─ A DIVISION OF
FIRSTRAND BANK LIMITED

APPELLANT

and

CLEAR CREEK TRADING 12 (PTY) LTD             FIRST RESPONDENT
LUCKY SOLOMON SELEMELA                        SECOND RESPONDENT

Neutral citation: Firstrand Bank v Clear Creek Trading (1054/2013) [2015]
ZASCA 6 (9 March 2015)

Coram:
Lewis, Willis and Mbha JJA and Van der Merwe and
Gorven AJJA

Heard:

16 February 2015

Delivered:
9 March 2015

Summary: High Court dealing with separated issue in terms of Rule 33(4) ─ no
order made separating the issues ─ issue to be determined not stated at all, let
alone with clarity and precision ─ no factual basis laid on issue sought to be
determined ─ factual matrix relevant to interpretation of contract ─ not
appropriate or possible to determine the issue.

___________________________________________________________________________

ORDER

On appeal from: North Gauteng High Court, Pretoria (Kollapen J sitting as
court of first instance)

1    The appeal is upheld.
2   The order of the court below is set aside and substituted by the following:
„No order is made on the separated issue save that the costs arising from the
separated issue shall be costs in the cause.‟
3    Each party shall pay its own costs of the appeal.

JUDGMENT

Gorven AJA (Lewis, Willis, Mbha JJA and Van der Merwe AJA
concurring):

[1] This matter concerns an issue dealt with in the North Gauteng High Court
before Kollapen J under rule 33(4) of the Uniform Rules. The issue related to
whether the provisions of the National Credit Act 34 of 2005 applied to an
agreement. This arose as follows. The appellant, First National Bank (FNB)
loaned money to the first respondent, Clear Creek Trading 12 (Pty) Ltd (Clear
Creek) against the security of a mortgage bond. The second respondent stood
surety for the due performance of the agreement by Clear Creek. FNB sued
Clear Creek for breach of the agreement and sought to foreclose on the
mortgage bond. It also sued the second respondent under a deed of suretyship.
The only defence raised in the plea was that the agreement was unlawful for two
reasons. First, certain provisions in the agreement were said to have had the
general purpose and effect of deceiving Clear Creek and so contravened

s 90(2)(a)(ii) of the Act. Secondly, it was claimed that FNB had failed to
comply with s 81(2) and (3) of the Act. The latter subsections required FNB to
properly assess Clear Creek‟s general understanding and appreciation of the
risks and costs of the proposed credit, and of its rights and obligations under the
agreement. The nett effect of the plea was that, because the agreement was
unlawful for one or both of the above reasons, Clear Creek was relieved of any
obligation to perform.

[2] The Act would ordinarily not apply to the agreement. This is made clear
in s 4(1) of the Act. The relevant parts of s 4(1) read as follows:
„(1) Subject to sections 5 and 6, this Act applies to every credit agreement between parties
dealing at arm's length and made within, or having an effect within, the Republic, except-
(a)   a credit agreement in terms of which the consumer is-
(i)   a juristic person whose asset value or annual turnover . . . at the time the agreement
is made, equals or exceeds the threshold value determined by the Minister in terms of section
7 (1);
. . .
(b)   a large agreement, as described in section 9(4), in terms of which the consumer is a
juristic person whose asset value or annual turnover is, at the time the agreement is made,
below the threshold value determined by the Minister in terms of section 7(1)‟.
Section 9(4) says that a mortgage agreement is a large agreement. It was
submitted before us that, because no evidence was led that Clear Creek had any
income at all, the agreement was not hit by s 4(1) of the Act. Clear Creek was a
juristic person. If Clear Creek had an asset value or annual turnover greater than
the threshold set by the Minister under the Act, it was excluded in terms of
s 4(1)(a)(i). If it had an asset value or annual turnover below that threshold,
s 4(1)(b) made s 9(4) applicable and mortgage bonds were excluded. So,
regardless of the asset value or annual turnover of Clear Creek, the Act did not,
by law, apply to the agreement.

[3] In clause 1 of the agreement, which is headed „Introduction‟, the
following phrase is found:
„This agreement is governed by the National Credit Act 34 of 2005 (“the Act”).‟
There are also various references to provisions of the Act in other clauses. For
example, there is a provision for administration charges to be imposed if letters
are written in terms of Part C of Chapter 6 of the Act.1 Also, collection charges
are limited to those allowed in Part C of Chapter 6. It also provides that if the
agreement is being reviewed in terms of s 86 of the Act, FNB can give notice to
terminate the review in the prescribed manner. Any increases in fees or charges
prescribed by the Act are binding and FNB is authorised to transmit to or obtain
from the credit bureau all data relating to Clear Creek‟s credit profile as
permitted in terms of the Act. If Clear Creek furnished FNB with incorrect
information, Clear Creek may be denied the protection afforded by the Act. The
agreement is clearly generated by FNB in a standard form.

[4] At the commencement of the trial, the parties agreed to deal with whether
the Act was applicable to the agreement as a separate issue in terms of
rule 33(4). This appears to have been an informal agreement because the only
indication in the record to this effect appears in the judgment of the court below.
After the issue was dealt with, the following order was granted:
„The provisions of the National Credit Act 34 of 2005 are applicable in respect of the home
loan agreement entered into between the plaintiff and the first defendant on 13 February
2008.‟2
It is this order which is appealed against, with leave of the court below.

[5] The law has long been settled that parties may incorporate legislation into
their agreement in certain circumstances. This court held as much in Tuckers
Land and Development Corporation (Pty) Ltd v Kruger,3 where it said –

1 This refers to s 129 of the Act where the consumer is in breach.
2 FNB was also ordered to pay the costs relating to the issue.

„There is no doubt that parties to a contract may by reference incorporate appropriate
statutory provisions therein so as to make them binding upon them as terms of the contract.‟
The important qualification in this dictum is introduced by the word
„appropriate‟. This necessarily implies that some statutory provisions cannot be
incorporated by way of agreement between the parties. Although there is no list
of those provisions, it seems that those that attempt to bind non-consenting third
parties would not be competent. In addition, those provisions that seek to bind
third parties whose powers are derived from the legislation itself cannot be
made applicable.4 The reason for this is obvious; obligations may not be
imposed on others without their consent and the machinery of the State cannot
be burdened by matters to which it is not intended to apply.

[6] As regards the Act, two examples suffice. Section 129 envisages that a
matter can be referred, inter alia, to a consumer court. This is defined in the Act
to include a tribunal which is, in turn, a body established by s 26 of the Act.
Section 86(10) provides for the involvement of the National Credit Regulator
which is established by s 12 of the Act. It would seem clear that entities
established by the Act and empowered to give effect to it, are not capable of
dealing with an agreement to which the Act would otherwise not apply. If they
were to do so, they would be acting ultra vires the powers conferred on them by
the Act. This would, in turn, mean that those parts of the Act which involve
such bodies cannot be made applicable by agreement.

[7] The law is not settled as to the effect of attempting to make legislation as
a whole applicable to an agreement if certain parts of the legislation cannot be

3 Tuckers Land and Development Corporation (Pty) Ltd v Kruger 1973 (4) SA 741 (A) at 745F-G.
4 H C J Flemming  Krediettransaksies (1982) at 31, says that parties cannot change the jurisdiction of the courts,
create offences, bind third parties or suspend or amend the provisions of other legislation by agreeing to
incorporate legislation in their agreement. My summary of the following passage:
„Die partye kan nie die jurisdiksie van die howe wysig nie en kan nie misdade skep nie. Artikel 23 van die
Kreditooreenkomstewet geld dus nie as die wet by ooreenkoms van toepassing gemaak is nie. Die partye kan nie
derde partye bind of die bepalings van ander wetgewing opskort of wysig nie.‟

invoked. If the whole of an Act cannot be made to apply to an agreement, it may
be necessary for parties to specify which provisions are to apply. Because of the
view that I take of the matter, however, it is not necessary to decide this point
and I specifically decline to do so.

[8] I turn now to consider the rule under which the matter was dealt with.
Rule 33(4) reads as follows:
„If, in any pending action, it appears to the court mero motu that there is a question of law or
fact which may conveniently be decided either before any evidence is led or separately from
any other question, the court may make an order directing the disposal of such question in
such manner as it may deem fit and may order that all further proceedings be stayed until
such question has been disposed of, and the court shall on the application of any party make
such order unless it appears that the questions cannot conveniently be decided separately.‟
What is clear from a straightforward reading of the rule is at least the following.
The court may of its own volition consider whether an issue may conveniently
be decided separately from other issues in the action. If this is the case, the court
may make an order. The order must direct the disposal of that issue in a manner
deemed appropriate by the court. The court should also make a corresponding
order staying further proceedings until the issue in question has been resolved.
If the issue can conveniently be decided separately and one or both parties make
an application, the court must make the orders referred to in the last two
sentences.

[9] The process of dealing with a matter under rule 33(4) was clarified in
Denel (Edms) Bpk v Vorster:5
„Rule 33(4) of the Uniform Rules - which entitles a Court to try issues separately in
appropriate circumstances - is aimed at facilitating the convenient and expeditious disposal of
litigation. It should not be assumed that that result is always achieved by separating the
issues. In many cases, once properly considered, the issues will be found to be inextricably

5 Denel (Edms) Bpk v Vorster 2004 (4) SA 481 (SCA) para 3.

linked, even though, at first sight, they might appear to be discrete. And even where the
issues are discrete, the expeditious disposal of the litigation is often best served by ventilating
all the issues at one hearing, particularly where there is more than one issue that might be
readily dispositive of the matter. It is only after careful thought has been given to the
anticipated course of the litigation as a whole that it will be possible properly to determine
whether it is convenient to try an issue separately. But, where the trial Court is satisfied that it
is proper to make such an order - and, in all cases, it must be so satisfied before it does so - it
is the duty of that Court to ensure that the issues to be tried are clearly circumscribed in its
order so as to avoid confusion.‟
Another helpful guideline is found in ABSA Bank Ltd v Bernert:6
„It is imperative at the start of a trial that there should be clarity on the questions that the
court is being called upon to answer. Where issues are to be separated rule 33(4) requires the
court to make an order to that effect. If for no reason but to clarify matters for itself a court
that is asked to separate issues must necessarily apply its mind to whether it is indeed
convenient that they be separated, and if so, the questions to be determined must be expressed
in its order with clarity and precision.‟

[10] These principles did not inform the approach adopted in the court below.
Rule 33(4) refers to a „question of fact or a question of law‟ in a pending action.
This must surely mean an issue which arises on the pleadings. If an issue not
dealt with in the pleadings is specified for decision under rule 33(4), it amounts
to a request that a court give an opinion on a matter not in issue on the pleadings
and which cannot dispose of an aspect in issue between the parties. This cannot
be what is intended by the rule. In the present matter, the issue placed before the
court for decision was not raised on the pleadings by either party. FNB pleaded
what it averred were the material terms of the agreement. It did not plead that
the Act was applicable. The only tangential reference was in the term
concerning interest which, it was pleaded, „may be varied in the discretion of
the plaintiff, subject to the provisions of the applicable Act‟. The plea simply

6 ABSA Bank Ltd v Bernert 2011 (3) SA 74 (SCA) para 21.

„noted‟ the contents of the paragraph which pleaded the terms. This amounts to
an admission that those are the material terms. No additional terms were
pleaded as being material to the dispute between the parties. In particular, it was
not averred that it was a term of the agreement that the Act applied to it. It must
have been considered that, because Clear Creek relied on provisions in the Act
to found defences to the claim, there was an implicit averment to that effect.
Whilst this problem is not, in and of itself, fatal to the procedure adopted, it is
indicative of a failure to properly apply the rule.

[11] A further departure from the rule is that no order was made at all. The
court below simply allowed the matter to proceed on the basis that the issues
had been separated. On my reading of the rule, unless an order is made, the
court is required to deal with the action as a whole. Apart from being a
requirement in the rule, the fashioning of an order would sharpen the focus of
the enquiry as to whether the issue specified can conveniently be decided
separately. It also assists in defining the precise ambit of the enquiry to be
undertaken.

[12] The simple issue placed before the court below was whether the
provisions of the Act applied to the agreement. This formulation gave rise to a
number of difficulties, only one of which needs mention. A corollary of
invoking s 81(2) and (3) of the Act in defence to the claim is that sections 6(a)
and 78(1) cannot apply to the agreement. Section 6(a) provides that part D of
Chapter 4 of the Act, under which s 81 falls, does not apply where the consumer
under a credit agreement is a juristic person. Section 78(1) echoes this
exclusion. A simple order that the Act applies to the agreement then leads to an
anomaly where one has to pass over those sections and, therefore, apply the Act
selectively. This gives no clarity to the question of whether the respondents are
entitled to rely on a defence based on s 81 of the Act.

[13] In my view, the procedure adopted in the court below was not competent
under rule 33(4). The failure to make any order and the failure to specify an
issue with clarity combined to render the approach incompetent. I do not say
that in every case procedural shortcomings will have this result. At a certain
point, however, procedural shortcomings cross the line and result in a procedure
not being competent under the rule. It is not possible to specify in general terms
where that line will be crossed. Each case must be judged on its own merits.

[14] This may be considered to be an unduly formalistic approach to adopt. In
this case, however, the failure to address the matter properly under rule 33(4)
led to an even more substantial difficulty. This impacted on the ability of the
court to arrive at a proper conclusion on the issue.

[15] I refer in this regard to the manner in which the issue was ventilated in
the court below. In doing so, the parties failed to place agreed facts before the
court by way of rule 33(1) or to lead any evidence. This was clearly felt keenly
by the court below which, in its judgment, set out supposed common cause
facts. Some of these were challenged by FNB in its heads of argument on
appeal. There is no indication in the record that any facts were accepted as
being common cause. The facts set out by the court below appear to have been
gleaned from parts of the pleadings and, principally, from the plea. The failure
to present the court with agreed facts or with evidence means that no facts were
placed before the court which bore on the issue. FNB submitted before us that
this was not necessary because the issue involved the interpretation of an
agreement and that accordingly no evidence was necessary.

[16] This court recently dealt with the approach to take in interpreting
documents in Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun
Transport (Edms) Bpk,7 in these words:
„Whilst the starting point remains the words of the document, which are the only relevant
medium through which the parties have expressed their contractual intentions, the process of
interpretation does not stop at a perceived literal meaning of those words, but considers them
in the light of all relevant and admissible context, including the circumstances in which the
document came into being. The former distinction between permissible background and
surrounding circumstances, never very clear, has fallen away. Interpretation is no longer a
process that occurs in stages but is “essentially one unitary exercise”.‟
Harms DP had paved the way for this approach in KPMG Chartered
Accountants (SA) v Securefin Ltd & another 2009 (4) SA 399 (SCA) para 39:
„First, the integration (or parol evidence) rule remains part of our law. However, it is
frequently ignored by practitioners and seldom enforced by trial courts. If a document was
intended to provide a complete memorial of a jural act, extrinsic evidence may not
contradict, add to or modify its meaning (Johnson v Leal 1980 (3) SA 927 (A) at 943B).
Second, interpretation is a matter of law and not of fact and, accordingly, interpretation is a
matter for the court and not for witnesses (or, as said in common-law jurisprudence, it is not a
jury question: Hodge M Malek (ed) Phipson on Evidence (16 ed 2005) paras 33 - 64). Third,
the rules about admissibility of evidence in this regard do not depend on the nature of the
document, whether statute, contract or patent (Johnson & Johnson (Pty) Ltd v Kimberly-
Clark Corporation and Kimberly-Clark of South Africa (Pty) Ltd 1985 BP 126 (A) ([1985]
ZASCA 132 (at www.saflii.org.za)). Fourth, to the extent that evidence may be admissible to
contextualise the document (since “context is everything”) to establish its factual matrix or
purpose or for purposes of identification, “one must use it as conservatively as possible”
(Delmas Milling Co Ltd v Du Plessis 1955 (3) SA 447 (A) at 455B - C). The time has arrived
for us to accept that there is no merit in trying to distinguish between “background
circumstances” and “surrounding circumstances”. The distinction is artificial and, in addition,
both terms are vague and confusing. Consequently, everything tends to be admitted. The
terms “context” or “factual matrix” ought to suffice. (See Van der Westhuizen v Arnold 2002

7 Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk 2014 (2) SA 494 (SCA)
para 12.

(6) SA 453 (SCA) ([2002] 4 All SA 331) paras 22 and 23, and Masstores (Pty) Ltd v Murray
& Roberts Construction (Pty) Ltd and Another 2008 (6) SA 654 (SCA) para 7.)‟

[17] In the present matter, evidence of „relevant and admissible context,
including the circumstances in which the document came into being‟ seems to
me to be crucial. This is particularly so because of the anomaly I have pointed
out above. The anomaly places a question mark over whether any consideration
at all was given by either party to those parts of the document which refer to the
Act. The circumstances as to how the document came to take the form it did
seem to me to be highly relevant, particularly since what was signed by Clear
Creek appears to be a standard form document.

[18] In addition to the serious procedural shortcomings, therefore, it is my
opinion that the issue could not have been properly decided on the basis on
which it was dealt with in the court below. In the circumstances, the court below
should have declined to grant any order on the issue placed before it and made
the costs relating to the ventilation of that issue costs in the cause. All of this
means that the appeal should succeed.

[19] As regards the costs of the appeal, both parties argued the matter as if the
court below could deal with the issue despite the lack of factual material placed
before it. Neither FNB nor the respondents raised the procedural lacunae
mentioned above. No party sought to lead evidence or agree a stated set of facts
under rule 33(1). Only counsel appointed as amicus curiae by the court
expressed any reservations as to whether a finding could properly have been
arrived at in the circumstances. We are grateful to him for the contribution made
to the hearing in this and the substantive areas argued before us.

[20] In the result, the following order issues:

1    The appeal is upheld.
2   The order of the court below is set aside and substituted by the following:
„No order is made on the separated issue save that the costs arising from the
separated issue shall be costs in the cause.‟
3    Each party shall pay its own costs of the appeal.

______________
T R Gorven

Acting Judge of Appeal

Appearances
For Appellant:
A Gautschi SC (with him M Reineke)

Instructed by:
Strauss Daly Incorporated, Sandton and Bloemfontein

For Respondent:

B Lesomo of Seokane Lesomo Incorporated, Sandton
c/o Ramothello Raynard & Tsotetsi Incorporated,
Bloemfontein

Amicus Curiae:
N Snellenburg
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE
SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

9 March 2015

STATUS

Immediate

Please note that the media summary is for the benefit of the media and
does not form part of the judgment.

FIRST NATIONAL BANK v CLEAR CREEK TRADING (1054/2013)
[2015] ZASCA 6 (9 March 2015)

The SCA today upheld an appeal by First National Bank against an order
in the North Gauteng High Court, Pretoria, declaring that the provisions
of the National Credit Act 34 of 2005 were applicable, by agreement
between the parties, to a contract to which they would ordinarily not
apply. The matter was dealt with as a separated issue under Rule 33(4).
No order was made specifying the issue to be considered. No agreed facts
were stated and no evidence was led.
The SCA held that the provisions of Rule 33(4) had not been properly
applied. In addition, facts concerning the circumstances in which the
agreement was concluded were relevant to a determination of the issue. It
upheld the appeal and, ordering each party to pay its own costs of the

appeal, substituted the order of the court below with one that no order
was made on the separated issue and that the costs relating to that issue
would be costs in the cause.