The KwaZulu-Natal High Court has ordered that Mountain Meadow Investments repay more than R2-million bank loan with interest and legal costs.
The company had concluded a loan agreement worth R1.8-million with Mercantile Bank, which was acquired by Capitec in 2020, recording the loan under Mercantile Bank, a Division of Capitec Bank Limited.
According to court documents, this loan was to be settled in R37, 288.02 monthly repayments over 62 months.
Fell into arrears amounting to R700k
“As security for this facility, the second respondent signed the previously mentioned deed of suretyship in favour of the applicant, limited to the amount of R1, 950 000. The loan facility was duly made available to the first respondent, who drew down against it and was thereby required to commence repaying the applicant.
“The first respondent, however, did not pay all its instalments to the applicant and fell into arrears with its obligations, which eventually reached the amount of R783, 338,23. The simple mathematical exercise of dividing the arrear amount by the amount of each instalment demonstrates that the arrear amount equates to approximately 21 unpaid monthly instalments,” reads the document.
However, Capitec had not received any payments since October 1, 2023, in excess of two years.
Mountain Meadow Investments owed Capitec R2, 098 877.35 as of February 20, 2025. On February 27, 2025, Capitec sent its lawyers formally demanding payment and placed Mountain Meadow Investments in default.
Overdraft facility
The court revealed that an overdraft agreement was also negotiated and signed. This overdraft, issued by Mercantile Bank, a division of Capitec, was for R150, 000. And it was secured by a suretyship from the second respondent limited to R1, 950 000. And it was repayable on demand.
The first respondent accepted and used the overdraft facility but later stopped making payments. The last payment was made in February 2024. The amount still outstanding is R4, 543.47.
In the ruling, the court said Capitec is entitled to recover the full amount from the two respondents. The one who pays will be able to recover from the other.
The court ordered the respondents to pay R2, 098 877.35 to Capitec. Interest on this amount will be charged at 12.50%. It will be calculated daily and compounded monthly, from February 1, 2025 until the date the full amount is paid.
The court also ordered payment of a further R4, 543.47, with interest at a higher rate of 22.10%. It is to be calculated daily and compounded monthly from February 1, 2025 until final payment.
However, the court limited the second respondent’s liability for the main capital amounts to R1.95-million. This means the second respondent cannot be held responsible for more than this amount in respect of the sums awarded.
