Capitec v Mountain Meadow

Loan defaults: Capitec Bank Limited v Mountain Meadow Investments (Pty) Limited (D3133/2025) [2026] ZAKZDHC 3

The Applicant, Capitec Bank Limited (“Capitec”), acquired Mercantile Bank in 2020, and subsumed its assets and liabilities in the process. In August 2022, the First Respondent, Mountain Meadow Investments (Pty) Limited (“Mountain Meadow”), concluded a written loan agreement for R1.8 million and an overdraft agreement for R150,000 with “Mercantile Bank A Division of Capitec Bank Limited”. The Second Respondent, Jivesh Rajendran Pather (“Pather”), signed a deed of suretyship in favour of the Capitec, limited to R1,95 million, to secure these facilities.

Mountain Meadow defaulted on its obligations and did not make any payments since October 1, 2023. By February 2025, the they owed R2,098,877.35 on the loan and R4,543.47 on the overdraft. Capitec placed the respondents in mora and subsequently launched this application when payment was not forthcoming.

The Legal Issues
The court was asked to decide several key questions:
i. Whether Capitec was correctly cited given the acquisition of Mercantile Bank.
ii. Whether the deponent to the founding affidavit possessed sufficient personal knowledge of the facts.
iii. Whether Capitec’s attorneys were authorised to bring the application.
iv. Whether the loan agreement and deed of suretyship physically existed and were properly concluded.
v. Whether the certificate of balance was validly signed by a manager of Capitec.
vi. Whether the National Credit Act (“NCA”)¹ applied, specifically regarding defences of reckless credit and over-indebtedness.

Arguments
Capitec argued that Mercantile Bank is now a division of Capitec and that all contractual obligations were met. Regarding the NCA, Capitec contended that it did not apply because Mountain Meadow is a juristic person with an asset value or turnover exceeding the R1 million threshold; consequently, the accessory suretyship was also exempt from the NCA.

Mountain Meadow and Pather filed what the judge termed a “parsimoniously worded” answering affidavit that largely consisted of simple denials. They challenged the deponent’s authority and personal knowledge. Notably, they denied the existence of the loan agreement and suretyship while simultaneously arguing they were over-indebted because of those very agreements. They also claimed Capitec granted reckless credit, which is a violation of the NCA.

Decision
The court granted judgment in favour of Capitec for both claimed amounts, together with interest,. The court held that deponents who act for corporate entities may rely on company records as a source of personal knowledge, and the actions of attorneys who signed the notice of motion sufficed to establish authority in the absence of a formal challenge under Uniform Rule 7(1).

The court also rejected the respondents’ denial of the existence of the contracts as a mere stratagem to create a dispute of fact, since the respondents digitally signed the documents and admitted that the documents formed part of the application. In addition, section 4(1)(a) of the NCA excludes credit agreements where the consumer is a juristic person above the prescribed threshold of R1 million. As Mountain Meadow had assets in excess of R3 million, the NCA did not apply to the loan, with the result that the accessory deed of suretyship also fell outside the Act because the principal debt did not constitute a credit agreement under the NCA.

Author’s Opinion
The court’s decision is a significant affirmation of the principle that technical defences cannot be used to avoid clear contractual liabilities when the underlying facts are indisputable. The court correctly identified that the respondents’ answering affidavit was structured more like a plea in a trial rather than a factual formulation required for motion proceedings. By identifying the logical contradiction in the respondents’ version, which involved denying the existence of a contract while at the same time asserting over-indebtedness based on that contract, the court upheld the integrity of the requirement of bona fides in litigation.

The application of the NCA threshold was also legally sound. The NCA seeks to balance the interests of consumers and providers, but it intentionally excludes large juristic persons because they are considered less vulnerable to exploitation. The court correctly applied the principle of accessoriness, and noted that a surety cannot claim NCA protections if the principal debt itself is exempt.

In my opinion, the court’s findings were appropriate. The respondents attempted to hide behind the NCA’s consumer protections, which were never intended for juristic entities of their size. The court’s dismissal of the challenge to the litigation manager’s authority and the certificate of balance prevents the use of minor administrative technicalities to stifle legitimate debt recovery. Ultimately, the judgment upholds the sanctity of contractual commitment, which is a recognised and quite trite principle of public policy in our law.

You can read the full Capitec Bank Limited v Mountain Meadow Investments judgement here.