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IN THE CONSTITUTIONAL COURT OF SOUTH AFRICA
Case No:.………………… In the matter between:
MICHAL JULIUS TELLINGER ~and~
THE STANDARD BANK OF SOUTH AFRICALIMITED THE SOUTH AFRICAN RESERVE BANK THE MINISTER OF FINANCE
1st Respondent 2nd Respondent 3rd Respondent
I, the undersigned
MICHAL JULIUS TELLINGER
do hereby make oath and say that:
I am an adult male with South African Identification number 600513 5020 08 2, residing at, 17 Crescent Ave, Waterval Boven, Mpumalanga, South Africa.
I am the Applicant in this application for leave to appeal directly to this Court in terms of Rule 18 of this Court’s Rules, read with Section 167(6)(b)an (7) of the Constitution.
I bring this application in my individual and personal capacity for the reasons so set-out hereinafter.
The facts herein contained are, save where the contrary appears from the context, within my personal knowledge, to the best of my belief both true and correct, and I can and do swear positively thereto.
Where I make legal submissions, I do so, on the basis of research, my profession and experience and knowledge, as well as on the basis of legal advice I have received which I verily believe to be correct.
In substance the same I have averred in the Court below.
I have acted in my personal capacity throughout Courts below and intenddoing so with the leave of the Honourable Court.
I will also be assisted by Mr Raymondt Dicks, a legal advisor, whom has assist me in drafting this application and whom has co-researched the content under which relief is sought.
The 1st Respondent is THE STANDARD BANK OF SOUTH AFRICA LIMITED, with registration number 1962/000738/06, a limited liability company duly registered and incorporated in accordance with the company laws (Companies Act No.61 of 1973) of the Republic of South Africa and an authorised financial service provider and registered credit provider in terms of the National Credit Act' 34 of 2005 with registration number NCRCP15 and a banking company, a bank as defined in section 1 of the Bank Act, 1990 (Act 94 of 1990) with principal place of business situated at 9th Floor, 5 SIMMONDS STREET, MARSHALLTOWN, JOHANNESBURG 2000.
The 1st Respondent is sited herein as relief is sought against it for the reasons so setout hereinafter.
The 2nd Respondent is the SOUTH AFRICAN RESERVE BANK, established by Section 9 of the Currency and Banking Act, 1920 (Act No 31 of 1920) and is governed by the South African Reserve Bank Act, 1989 (Act No 90 of 1989), as amended and Section 223 to 225 of the Constitution of the Republic of South Africa, 1996; the South African Reserve Bank Act, 1991, and the regulations
framed in terms of this Act, provide the enabling framework for the Reserve Bank's operations and acts as the ‘Central Bank’ of the Republic of South Africa, with principal place of business situated at 370 Church Street, PRETORIA 0001.
The 2nd Respondent is sited herein as it, inter alia, is a body whom is concerned with the formulation, implementation of monetary policy, whom is entrusted with ensuring that the banking and financial system as a whole is sound and whom assists the South African Government, inclusive of other members of the economic community, in the formulation and implementation of macro-economic policy; and
Further the 2nd Respondent advises and oversees monetary policy, in specific, but not restricted therein, the Basel I, II and III reports; and
Further the 2ndRespondent conducts sub-functions of authority over the 1st Respondent, in this regard, the Registrar of Banks, as contemplated in section 4 of the Bank Act, 94 of 1990.
The 3rd Respondent is the Republic of South Africa, herein represented by the MINISTER OF FINANCE, acting in his official capacity, with principal place of business situated at 40 Church Square, Old Reserve Bank Building, 2nd Floor, PRETORIA, Care of The State Attorney, Johannesburg 10th Floor North State Building 95 Market Street Johannesburg.
The 3rd Respondent is sited herein as it functions as an Organ of State, with the power and responsibility which, inter alia, include state entities that aim to advance economic growth and development, and to strengthen South Africa’s democracy; and
Further, the 3rd Respondent has oversight authority, as far as these proceedings are concerned, over the South African Revenue Service and the Financial Services Board; and
Furthermore the 3rd Respondent has authority over the 2nd and 1st Respondent respectively with regard to the implementation of rules, regulations, public policy, policy and governance.
NATURE OF APPLICATION:
This is an application for direct access to the Honourable Constitutional Court in terms of Rule 11(1)(a) read together with Section 167(4)(a) of the Constitution of South Africa.
CONTENTION FOR DIRECT ACCESS:
The Honourable Judge M. M. Mabesele, sitting as a court of appeal in the South Gauteng High Court, Johannesburg under case number 13340/2011[the Court below] that was heard
and dismissed by the aforesaid Honourable Judge without reasons. Despite request during the proceedings and by written request, the said Honourable Judge remains imperceptible. The Court file to these proceeding has been annex hereto as “MT 1”.
The aforesaid appeal is in substance the same as I presented to the Court below. Annex “MT 2”, pages 385 to 392 read together with annex “MT 3” pages 393 to 460 hereto.
I therefore bring this application without the approval or support of the Court below.
This application is founded on the infringement of a right which section 38(a) of the Constitution vests in a person acting in their own interest.
I bring this application on account of;
Having leave to appeal being denied in the Court below, I am left with no other avenue in which, by right, I can see the review of the Judgment;
The matter is a;
Constitutional dispute between Organs of State established by the Constitution, performing functions under section 70(1)(b) and section 44(1)(ii) of the Constitution respectively,
of paramount public interest; and
pivotal in defining one of the most important features of our social-economical democracy; and
intrinsically and probably exclusively of a constitutional nature; and
precedent-setting for a large number of related financial operations/transactions and disclosure procedures, not-
withstanding collection procedures by the South African Revenue Service; and
precedent-setting for a large number of related matters; and
the outcome of this case will define what could be the most salient feature of our parliamentary legislative, monetary and financial democracy; and
there are issues or disputes of material facts as indicated in the Court below; and
the prospect of the Supreme Court of Appeals granting leave to appeal is uncertain; and
it would not appear that deliberations in this Honourable Court necessitate or could benefit from the Supreme Court of Appeals hearing it first; and
the Judgment of the Court below rendered by Judge M. M. Mabesele, in Case No. 13340/2011[the “Judgment”] being erroneous, without proper consideration, consultation and without reasons for finding.
I intend petitioning the Supreme Court of Appeals for leave to appeal so as to preserve my only other available avenue for redress, should this Honourable Court not accept my petition.
This matter concerns;
The constitutionality of certain rules of the National Policy and National Legislation, inter alia, The Bank Act (94 of 1990), The South African Reserve
Bank Act (90 of 1989), Deposit-taking Institutions Amendment Act (81 of 1991), Bills of Exchange Act (34 of 1964), Consumer Protection Act (68 of 2008), Cooperative Banks Act (40 of 2007), Currency and Exchanges Act (9 of 1933), Financial Advisory and Intermediary Services Act (37 of 2002), Financial Services Board Act (97 of 1990), Financial Services Laws General Amendment Act (22 of 2008), Financial Services Ombud Schemes Act (37 of 2004), Inspection Of Financial Institutions Act (80 of 1998), National Credit Act (34 of 2005), Notarial Bonds (Natal) Act, 1932, Amendment Act (57 of 1937), Prescribed Rate of Interest Act (55 of 1975), Securities Services Act (36 of 2004) the aforementioned act’s regulations and other related legislation which are excluded herein.
How long must an affected party endure the adverse application of an unconstitutional law or the threat thereof, before that party may challenge the constitutionality of that law, and
Cost orders in respect of good faith defence litigation in constitutional matters; and
Moreover, the appeal relates to the failure by the Court below to exercise its discretion properly, in that the Court below failed to recognise;
a lawful defence,
its Constitutional impactions,
the implications of contra bonus mores,
identify the short comings of the 1st Respondent’s submissions to my defence,
applying and developing the common law,
andthe Court below erred in other aspects which are relevant and material to the reasoning to reach the conclusions set out in the Judgment.
The Judgment of Acting Judge Bava of the Court below is annex herein as “MT 1” pages 2 to 12 in the bundle.
After having heard oral argument, Judge M. M. Mabesele dismissed my application for leave to appeal with cost. Despite request for written reasons for finding at the end of the hearing, the learned Judge M. M. Mabesele indicated that there are procedures to follow, thus refusing the application aforesaid.
8.6.1 Written application was brought on 14March 2012, and to date hereof no such reasons of finding had been forthcoming. See annex “MT A1” pages 1 and 2 hereto.
The substantive reliefs that I seek from this Honourable Court in the application of leave to appeal against the Judgment are the following;
A declaration that the order of the learned Judge M. M. Mabesele, dismissing my leave to appeal in the Court below, is inconsistent with the Constitution and invalid; and
9.1.1 Should the Honourable Courtissue such declaration, the 1st Respondent shall be allowed to amend its pleadings and I be allowed to file a replying affidavit so to allow the matter to proceed on trial in the Court below.
a Declaration that, in the alternative to paragraph 9.1.1 above, that where this Honourable Court does not issue such declaration aforesaid, the matter be allowed to proceed on trial in the Court below.
An order that the 3rd and 2nd Respondent are to;-
Introduce such amendments, deemed just and equitable, to the Bank Act, (94 of 1990) and the South African Reserve Bank Act (90 of 1989)that will prevent a bank from exploiting the economic principles of ‘seignorage’, ‘securitisation’ and the ‘fractional reserve system’, and provide such safeguards and penalties appropriate to discourage further exploitation; and
Cause the implementation of such measures that will allow interested parties to use and apply the PAJA to gain access to such records held by a bank or third party whom holds possession of such information; and
That a bank causes such amendments to their loan application documents and procedures so to disclose any special future or possible benefit gained to such Securitisation scheme or alternative method of funding;
OR as the Honourable Court finds just and equitable given the circumstance of its finding; and
In the alternative to cause the 2nd Respondent, in consultation with the 3rd Respondent and other interested parties, to introduce in the National Assembly such Act presented to it in the course of these proceedings;
The actions of the 1st Respondent (banks) be declared unconstitutional, null and void and, to introduce such procedures and safeguards that will ensure that these practices are prevented or in the alternative controlled; and
That the 1st Respondent corrects my account to reflect the correct, ‘adjusted debt amount’ in accordance with what this Honourable Court finds to be unjustenrichment; and
An order that the 1st Respondent pays the cost of this application and the cost of my application in the Court below; and/ or
Such other or alternative remedy which the interest of justice may require or justify.
As set out below, it is in the interest of justice that this Honourable Court be the Court which hears and decides the merits of this case, once it reaches its conclusion that it was erroneously decided by the Court below.
In this affidavit, I intend dealing with the following: 11.1 Overview of proceedings in the Court a quo; 11.2.1 11.2.2 Chronology of Relevant Events; Overview of disputes;
11.2.3 Points raised in the Court a quo. 11.2 11.3 11.4 11.5 11.6 Introduction to business of the bank. Bank Credit. Securitisation. Seignorage. Fractional Reserve System.
11.7 11.8 11.9
Prejudice Caused to Me. Artificial Money Creation. Inference: Fiduciary
11.10 Conclusion 11.11 Prejudice 11.12 Legislative Bill introduced 11.13 Errors in legal reasoning 11.14 Conclusion and Remedies 11.15 Leave to Appeal 11.16 Declaration of Unconstitutionality 11.17 Review of the 1st Respondent's Decision 11.18 Costs. 11.19 Conclusions
OVERVIEW OF PROCEEDINGS (THE COURT A QUO):
I obtained a home loan agreement from the 1st Respondent on or about the 26th of February 2007 in the amount of R828015.00.
A continuing covering mortgage bond was registered over the property on or about the 16th of November 2007.
During November 2010 to March 2011,I sought from the 1st Respondent a settlement amount together with a certificate of balance 1 and contracts relating to the home loan agreement, the continuing covering mortgage bond, the power of attorney assigned by me (see annex “MT 1”, page 23) to the 1st Respondent to effect the registration of the bond and continuing covering mortgage bond, together with affirmation or certification that the 1st Respondent is indeed the holder of the continuing covering mortgage bond, together with such proof that it had not soldon its security and that the 1st Respondent had indeed used ‘money’ to effect the loan.
Despite the demands aforesaid, the 1st Respondent failed to address/ answer any one of the requests.
The 1st Respondent instituted motion proceedings against me in the South Gauteng High Court, Johannesburg under case number 13340/2011seeking an order in the following terms (Annexure “MT 1” pages 39 to 111 thereof);-
12.4.1 Payment of the sum of R980 111.30;
When the possessor of goods or services writes out a certificate of credit stating someone has credit for a certain amount of his goods or services, it means that that someone has a claim for that amount of those goods or services; that is, those goods or services will be given to the bearer of that certificate in the manner stated on that document. The certificate of credit is the physical evidence to prove that the possessor of the goods or services owes (is in debt to) the bearer for a certain amount of goods and/or services.
Interest on the above amount at the legal rate of 15.5% per annum a tempore morae, alternatively interest at the rate of 9% per annum from 2 February 2011 to date of payment
Cost of suit on an attorney and own client scale; Declaring that the property as 926 Somerset Extension 18, Midrand, approximately 450 square metres in extent, be (declared) executable.
I entered a defence to these proceedings, which was subsequently outright dismissed by the Honourable Justices of the court, including an application for appeal.
12.8 The defence entered by me now forms part of these proceedings and are pivotal to these proceedings.
CHRONOLOGY OF RELEVANT EVENTS
In early 2007, I wanted to buy a certain property in Midrand. I signed the offer to purchase with the estate agent as is the norm, and waited for feedback from Standard Bank the 1st Respondent herein, who was the appointed bank by the particular agent. Soon after I was granted, what is commonly referred to as a “Home Loan” by banks. Since this was an “offplan” property that was being built, it took several more months, until the end of 2007, for I was presented with the obligatory mortgage bond to sign.
I started to pay the home loan, which gradually increased to its full amount, until I finally took transfer of the property and rented it out. That was not what I had originally intended to do however. Intended selling the property for a small profit but the delivery took much longer than originally promised, by which time the property market had crashed and I could not even get close to the original price for it.
I continued to pay the home loan, until around October 2010, at which point I believed that I would be coming into some money that would allow me to settle the full bond. In light of this, in November 2010, I requested certain documents from the bank, like an official statement; and a settlement amount or Certificate of Balance (Page 85 to 110 of annexure “MT 1”). The communication contained in the annexures of the 1st Respondent notice of motion is incomplete as it does not contain communications I had sent to the bank prior to these proceedings.
The aforementioned was not presented by the 1st Respondent until legal proceedings commenced. Instead, after several email requests and two notarised affidavits were served on the bank requesting the documents and clarification of their actions, I was notified in an email that the bank would not produce the documents, but instead, that the case had been handed over to their lawyers. See page 83 of annex “MT 1” hereto.
13.3.1 I would like to point-out that paragraph 1 of the 1st Respondent letter does not mention the institution of legal proceedings but rather “to proceed with judgment against you” and further “… property will be sold in execution by the Sheriff.” I also would like to point out paragraph (i) to (v) under “Pros” and points (i) to (v) under “Cons”.
13.3.2 It would seem the 1st Respondent was ipso facto convinced that any other right a person might have in law was void, thus their judgment was immanent, per say, futile to defend.
I found this highly irregular and unacceptable behaviour, since I was in communication with the bank offering to settle the full bond, requesting the necessary documentation to do so. I was being prevented from doing so by the bank, who instead of simply providing the documents, chose to stop communicating with me and sued me.
The action by the 1stRespondent was premature in issuing motion procedures against me. Thus, the 1st Respondent elected to rather extend cost and interest in these proceedings rather than answer simple questions asked of it.
The proceedings premature as they were, was further ignored in the Courts below so much so the council for the 1st Respondent alluded in its argument in Court that I was selectively trying to waste the Court’s time and get out of debt.
The premises of my writings prior to the proceedings of the 1st Respondent were not taken into consideration or even given its value that I simply needed answers from the 1st Respondent so to make an informed decision to settle my bond.
It was at this stage that I also began to discover deeply troubling information suggesting that banks create money out of “thin air”,(See annex “MT 12” page 718 to 725) with clever and deceptive bookkeeping tactics (See annex Basel II report and comment by Deloitte at annex “MT 7”, pages 487 to 506), by simple debit and credit entries, and enriching themselves, or profiteering, by using the signatures of their clients on the original “promissory notes,” which are sold on the international stock/bond markets – a process that is closely guarded by the banks, and commonly known as securitisation.
I began to do extensive research and started to question certain aspects of the banking industry (See annex “MT 5” and “MT 6” hereto) and how they go about
their business. At this stage I was joined in my research by at least three other highly intelligent and capable individuals, who had similar experiences with their bank, and were finding the same evidence, including similar response by the banks to disclose this information.
Receiving this abrupt approach by the 1st Respondent, I became suspicious about some basic economic principles that simply did not make any sense to my scientific mind. The more I delved into this matter, the more sinister it seemed. Like most trusting people, I did not really give any of this much thought. I just could not imagine that the bank may possibly be doing something so scheming and convoluted. I assumed that the strictest laws and codes of conduct governed the workings of a bank that would prevent such deceptive actions and profiteering.
The simple question I posed to the 1st Respondent could not be answered by any one of the 1st Respondent’s employees or even senior staff members. As such, my concerns can be summarised as follows;-
How is it possible that banks have this seemingly bottomless pit of money, (see annex “MT 12” and “MT 13” hereto) that they are able to dip into at any time, to produce seemingly infinite amounts of money, to millions of South Africans?
How is it possible that they could boldly advertise “75 Billion Rand in Home Loans” See annex “MT 4” hereto; and sponsor a variety of cultural activities and sporting events on television, costing hundreds of millions of Rands?
Where does all that money come from – surely it cannot all come from deposits of their customers? This was concerning, as the risk involved would effectively mean that money is valued at a fraction we thought it to be. See “MT 13”, “MT 14” and “MT 15”.
Considering the above, the 1st Respondent’s financials, which are readily available from their Internet web-site, do not disclose what the 1st Respondent purports to have loaned to the home loan industry, i.e. 75 Billion Rand.
As hard as I tried to approach this paradoxical problem from every logical perspective, it just did not add up. After more research, and to my dismay, I found that my original research information about the concealed activity of the bank was mostly accurate and that it is well hidden from their good-hearted and trusting, yet ignorant clients.
Given the above, I cannot recall that this information was disclosed to mention application, or that I have signed any document relating to such disclosure with the 1st Respondent; and
Had I done so, the 1st Respondent failed to bring such information to my attention, including the Court below.
The home loan contract neither mentions the 1st Respondent’s practice of how it goes about lending money, but rather it alludes that it, the 1st Respondent, loaned sound, liquid money to me.
13.10 The information and research that I am referring to deals with aspects of law and internal banking activities that are kept out of the public domain by the bank – both consciously and maliciously (see annex “MT 17” hereto). Furthermore, the bank is being protected by law (Bank Act and annex “MT 7” hereto), not to have to disclose critical aspects of their internal activity, even when confronted by people like me in a court of law. I find this so called ‘secrecy’ of the bank to be completely unacceptable and unconstitutional in an open and free society, striving to uphold and develop common law principles. This aspect was clearly observed in the Court below, as the facts were foreign and unknown to the court thus, senior counsel representing the 1st Respondent made a mockery of me in Court, so much so that it
is recorded that senior counsel referred to me as being part of a ‘cult.’ The attorneys openly joked about it and the 1st Respondent, in their replying affidavit, referenced my defence to be ‘nonsensical’, ‘irrelevant’, ‘unintelligible’ and ‘imaginary’. These propositions were carried into the proceedings in the Court below and in selective media publications.
13.11 I realised that the most disturbing part of this, is that the entire legal system seems to be completely stacked in favour of the banks, isolated from considering my contention and defence, despite valid references to law, case law and articles on the subject matter. See annex “MT 19” and “MT 21” hereto.
13.12 And as the weeks went by and I tried to get simple documents and answers from the bank, I realised that ordinary citizens seem to have no recourse against the might of the bank, when they feel their rights have been violated. The legal costs of confronting the banks in the current legal system are far beyond most people’s capacity. I got the impression that the legal counsel was either already on the banks roll or was unwilling to assist as their potential earnings from acting on behalf of the bank could be prejudiced.
A primary example of this is that the home loan agreement, which was brought up by senior counsel during the hearing, included a clause that,
unbeknown or understood by me, attempted to enforce the automatic payment of the bank’s legal costs whether or not I won or lost the case. I find such a clause unlawful and unfair in all its applications and see it as malicious entrapment without disclosure by the 1st Respondent. See annex “MT 1” letter of demand, home loan agreement and covering bond as security.
13.13 After not having any success from two notarised affidavits that were delivered to the bank during December 2010 and again in January 2011, where I requested information and documents, and after receiving a summons from the bank in March 2011, I decided to represent myself and use my case as an example to expose what many have interpreted as malicious, devious and even fraudulent activity by the bank.
I have to point out here that before and after the 1st Respondent engaged in writing to me I had corresponded with them on an on-going continued basis, whiles this continued, the 1st Respondent elected to proceed with a motion application against me.
13.14 To my horror I found out that the courts and the law was not exactly fair to a layperson, dismissing factual information and other evidence because it was not
presented according to court rules, of which a layperson has very little experience, or knowledge. To a layperson like me, it seems that the courts and judges simply dismiss arguments because they assume that I could not possibly have a solid case, even when I placed the evidence right in front of them.
13.15 The conclusive thought in these premises was simply that I had gained some benefit(a house) and to that effect I must pay, irrespective of what happens or had happened behind closed doors and irrespective of what impact it has on the ‘payback’ or ‘irregular’ manner under which the lending occurred. A crisp question in this regard would be, if the bank obtained money under activities described below, would I still be liable to pay interest? If the answer is to the positive, then the presumption or message to the public would be that to defraud someone is wrong but to gain from the proceeds are justified which would equate that crime does pay!
13.16 It became very clear to me that that the law is applied very differently to the bank as opposed to ordinary citizens. This remains a deeply troubling aspect and the main reason why I bring this application to the Constitutional Court.
13.17 It also became evident that the lawyers for the 1st Respondent, their advocates and even the Judges themselves have very little knowledge of the deeply convoluted
and secret activities of the bank. Whether they are party to selective and preferential information, or are simply uniformed by the 1st Respondent, is not known. Furthermore, the Judges of the Court below were not prepared at any occasion to test these arguments by allowing the matter to go to trial, so that evidence could be presented, tested and an informed decision made.
13.18 The Court below had failed to recognise that there exists, proportionally so, a defence that raises a new (modern) approach, consistent with developing the common law, English law of Contract and conflicting legislation. In this regard I refer the Honourable Court to annexures “MT 8”, “MT 9”, “MT 10” and “MT 11”.
13.19 In my last two hearings, the learned Judge simply accepted the 1st Respondent’s argument as gospel truth, irrespective of the many contradictions and breaches of acts which I highlighted. It was as if the 1st Respondent was always true and correct. What I said, however, must be some fabrication by an ignorant layperson with some kind of an agenda against the bank. See page 169 of “MT 1” in contrast the 1st Respondent’s arguments in the Court below and the Judgment of Acting Judge Bava.
13.20 I state that there was no intention now, or before, to run-away from an obligation to pay for something gained – this was and is not the issue at hand. The matter of fact
is that payment of compound interest on something that effectively never existed in a tangible monetary format from the inception of the home loan agreement, does not justify the extortionate interest charged and demands to be paid in liquid money. I refer the Honourable Courts attention to paragraph 13.4.1 above.
I direct the Honourable Court’s attention to annexure “MT 1” page 16, paragraph 5 under the heading “lack of defence”. The 1stRespondent’s contention remains that I have paid, then deny the loan agreement. This is not my contention or defence per-say. In this regard I refer the Honourable Court to the subheading “errors in legal reasoning” hereunder.
13.21 I state for the record that I entered these proceedings voluntarily, not because I was unable to pay the monthly bond instalments, or because I was trying to wangle my way out of a debt, nor because I am crazy – but because I believe in integrity and honesty and because I believe that an injustice needs exposure and correction.
13.22 After studying the Bills of Exchange, and realising the word “money” is just a word used by a bank in the public sector, but does not actually form part of the bank’s real business, I went to great deal of trouble to obtain two copies of an official statement from the bank in the Sandton Branch, signed and endorsed by the
assistant bank manager. Since this document falls under the definition of section 2 of the Bills of Exchange Act, I used my right to apply the aforesaid action demonstrate to the 1st Respondent what I had implied that the 1st Respondent is dealing in, i.e. negotiable instruments. The Mortgage Bond Agreement clearly stipulates that the 1st Respondent accepts payments in the form of Bills of Exchange and Promissory Notes. In this regard annexure “MT 5”, “MT 6” and the ‘Bayport’ annexure “MT 8” to “MT 10” are relevant.
13.23 On the 10th of February 2011, I meticulously followed the stipulations of section 19 and 25 of the Bills of Exchange Act, endorsed it with my signature by acceptance for value and submitted it to the bank as payment in full and final settlement. Such a transaction is described by the Act, as “irrevocable and complete upon delivery.” [See Malan on Bill of Exchange, Cheques and Promissory Notes: Fourth Edition, 2002 pages 250 at paragraph 158 Presentation for acceptance.]
13.24 The reason why I underwent the aforementioned process was to illustrate the following:
If there exists no empowering act to prescribe or regulate the issue of bills and notes, as will be shown herein, the nothing prohibits me to follow suite and do as the 1st Respondent does on a daily basis, that is
generate ‘money’ from ‘thin air’ and claiming liquidity in return thereof. The position is between the Bank Act, the South African Reserve Bank Act and Policies governing these principals.
Further, if the 1st Respondent rejects the bill of exchange, the counter would be obvious; the 1stRespondent’snegotiable instruments would also be of no value. In this regard the Honourable Court’s attention is drawn to the principles of securitisation, seignorage, fractional reserve system and the artificial money creation.
13.26 In the opposite, the argument will be, when dealing in bills of exchange, the 1st Respondent is conducting its business on the premises of having liquidity one to one or equal to the value of the bill. As will be shown herein, the 1st Respondent’s assets or liquidity, as per its financials, do not add up as it simply enters debit and credits to establish/create ‘money’.
13.27 My aforementioned illustrations were bluntly ignored, erroneously displaced or alternatively made out to be irrelevant; reasoning being that what the 1st Respondent does with my security, or whatever it does to borrow money, is of no concern to me. Therefore, they argue that I had no business in the Court below.
13.28 I see this as a blatant violation of my rights by the Court, that seems to dispense the law selectively and partially in favour of the 1st Respondent.
13.30 The proceedings before the Court below were presented with ample documents, writings and explanations. Particular reference in this regard is made to my application for leave to appeal. During these proceedings I presented the Court with a 58 page presentation, consisting of meticulous arguments, reference to law and case law. Despite this, the Court below took no less than one minute to make its Judgment. The Court below, after being presented with such representation, never asked a single question whatsoever. Senior Counsel for the 1st Respondent took no more than twenty minutes to counter my arguments, of which ten minutes was spent by said Counsel elaborating on the “nonsensical” contention of my presentation, but yet confirming that the 1st Respondent does process ‘credit’ and ‘debit’ entries to generate money out of thin air. The substance of the counter argument was clear and simple: “so what, it’s none of the Applicant’s business what the bank does behind the scenes.”
13.31 I urged the Court that I did not want anything extraordinary, but simply wished the Court to recognise the severe complexity of the matter. This was not a simple case that could be concluded in a motion court and I asked to be granted my constitutional right to a fair trial. I repeated several times that only in a trial we
could call upon expert witnesses to be cross-examined, and to verify allegations that the bank has acted in bad faith, with malicious intent, and that their contracts are cunningly structured to entrap unwitting customers. Using these negotiable instruments, which are disguised as mere “agreements”, the banks profiteer from their customers while, in fact, they have no locus standi; and they are in breach of a long list laws, Acts, policies and codes of conduct.
13.32 The relevant points posed by me, which were ignored by the Court below, are as follows:
The 1stRespondent’s employee, Mr Joop Dekker whom disposed of i) a founding affidavit and later ii) an answering affidavit on behalf of his employer, was found to be without proper authority by the learned Judge Bava of the Court below. Thus the 1st Respondent was ordered in a Judgment to obtain supportive documents/ affidavit to confirm that Mr Dekker had the appropriate authority to dispose of the said affidavits. Thus, it was required that minutes of meetings and a certification of appointment, signed by the Directors of the 1st Respondent, be presented to confirm the appointment and authority of Mr Dekker. No such documents were presented, other than an affidavit by the 1st Respondent’s attorney stating that Mr Dekker had such authority. Unless the said
attorney is also a Director of the 1st Respondent, the affidavit cannot hold or be construed to be authority for Mr Dekker to act on behalf of his employer, the 1st Respondent. This point was erroneously ignored in the Court below.
The bank blatantly lied in court and misrepresented the facts about a number of points:
that I was given a ‘Certificate of Balance’ when I requested it;
that the 1st Respondent presented at least five different affidavits by people other than Joop Dekker. The only other affidavit presented was a one-pager by Mr Aslam Moosajee, attorney to the 1st Respondent;
I presented a detailed description of how securitisation works and how the bank sells its rights and therefore loses all rights to the property by selling the ‘note’;
the home loan contracts of the 1stRespondent do not indicate or mention that the 1st Respondent loans to the Applicant ‘money’; e.g. “We, the Standard Bank of South Africa
Limited do hereby loan to the Applicant an amount of Rx". The wording is a clever masquerade avoiding the use or mention of actual “liquid money”; and instead makes reference to, “an amount of; “the sum of”; “a credit of”; but never actually calls it money per say.
Senior Counsel for the1st Respondent admitted in Court that they accept payment in the form of bills of exchange and promissory notes as stipulated in the covering bond.
The admittance of the 1st Respondent that they do not have vaults of physical money, indicative that the 1st Respondent had acquired what it loaned through other means, thus giving preference to my avertments in these proceedings;
The 1st Respondent admitted that they do deal in securitisation, supporting my avertments that it not the business of the bank to deal in securitisation with its own securities/ loans.
The Judge of the Court below failed to apply his mind to the matter. More so, due to the nature and application of the
defence raised by me, despite there being reasonable prospect that the 1st Respondent was not as forthcoming as required in practice, avertments by the 1st Respondent giving advance to my contention and the impairment by the Court below to test my contention in an opposed setting, I was severely prejudiced and damaged by the judgement.
OVERVIEW OF DISPUTES:
Prior, during and after the Court procedures below, I experienced a great deal of bias, prejudice, humiliation and unease. These were not reassuring, especially considering that matters like these attract such high cost that its almost imposable to acquire counsel and attorneys to act on one’s behalf. This point is extended where consideration is given that the plaintiff, in the majority of cases, had already suffered financial hardship; to have his or her matter heard and argued adds to this financial burden. In short, I have experienced the following;
Being ignored by the presiding Judge to such extent that the matter was almost concluded, e.g. postponement of the matter with both trial date and costs that were preferential to the 1st Applicant. Had I not verbally interjected, the matter would have continued as if I was a persona non grata.
I was present in Court, while both Judge and Counsel discussed the merits and nature of the case. I was in totality ignored, as if my presence was not welcome in the Court.
When postponement dates were discussed, I was not given the opportunity, nor asked if I was in agreement to such dates. It was concluded without a glance in my direction.
The most humiliating experience of all was during the brief appearance in the Motion Court before Judge Berochovitz. The presiding Judge mocked my clothing by commenting that I looked like a “mechanic from Mpumalanga.” This comment was received by the copious counsel present in court as the best joke that the day could harvest.
My presence before the Courts below contained end-to-end obstacles of prejudice, demeaning comment and blatant disregard of my rights to voice a defence.
I was left with an immediate impression that my defence would not receive appropriate consideration, almost as if I was precluded from the very start of the proceedings.
It became apparent, and regrettably so, that this forum was avoided by laypersons, for the reasons aforesaid, where money prevents them from pursuing justice; and by the intimidating nature and conduct of the Court and its representatives.
Having considered my fullest right to represent myself in these proceedings; not to cause or bring about additional financial burden upon myself, and notwithstanding that there has been so much reluctance from attorneys and counsel to assist me due to the nature of my defence, I was content to enforce my rights of self-appearance, relying on the constitutional principal of audi alteram partem.
Regrettably, the fanciful principals of such rights where short lived, as it would seem that Judges were only entertaining my presence because they were duty bound. It seems to me that the result was a pre-determined outcome. One that was clearly oblivious and insensitive to the international and local financial crises, not questioning aspects of my defence so to gain clarity, insight or investigate further the probability of a valid defence.
An aspect I had observed in the Court below was that much attention was given to Counsel, especially senior counsel, as was the case in my matter. I bow to the fact that such calibre has much knowledge of proceedings in court and the law, and to
the fact that senior counsel was chosen to represent the bank in such a simple motion hearing. This however does not suggest that the presiding Judge should be guided by counsel, nor take lead from counsel, where this was most certainly the case during my hearings. It is the function of a Judge to act as umpire, to consider all the facts so presented, and investigate or research further if there are imbalances, more so if the subject matter is foreign, technical or a subject matter unfamiliar as was the case here.
In the matter of Inzinger v Hofmeyr and Others 2 para 4 “An exception that a pleading is vague and embarrassing strikes at the formulation of the cause of action and its legal validity. It is not directed at a particular paragraph within a cause of action but at the cause of action as a whole, which must be demonstrated to be vague and embarrassing.” Consistently, [a vagueness amounting to embarrassment and embarrassment in turn resulting in prejudice must be shown.]
The question however arises to whom the prejudice leans; thus an evaluation is required to determine the facts. It follows that a Constitutional right, in this regard section 25 of the Constitution,
Inzinger v Hofmeyr and Others (7575/2010)  ZAGPJHC 104 (4 November 2010) ~ The Principles Relating To Exceptions. Also see Jowell v Bramwell-Jones and others 1998  SA 836 W at 905E-H ~ “I must first ask whether the exception goes to the heart of the claim and, if so, whether it is vague and embarrassing to the extent that the defendant does not know the claim he has to meet…”
finds proper foundation as per First National Bank of SA Limited t/a Wesbank v Commissioner for the South African Revenue Services and Another; First National Bank of SA Limited t/a Wesbank v Minister of Finance 3para 32.
15.2.2 The Court below had not given proper thought to paragraph 15.1 aforementioned. Had it done so, it would have come to the realisation that a plea, however vague or embarrassing, waivers on prejudice. Should the subject matter be property, the prejudice weighs heavier where such property could be deprived.
Consideration therefore should have been more focused on an enquiry to the merits of my defence as opposed to its outright dismissal without due consideration.
I placed sufficient evidence before the Court below, so as to shift the probability to that of a proper defence. Therefore, I have dispensed properly and correctly with the required facta probanda.
First National Bank of SA Limited t/a Wesbank v Commissioner for the South African Revenue Services and Another; First National Bank of SA Limited t/a Wesbank v Minister of Finance (CCT19/01)  ZACC 5; 2002 (4) SA 768; 2002 (7) BCLR 702 (16 May 2002)
From the records of the Court below, it would become apparent that the 1st Respondent had not properly set aside the allegations made against it. It held that the loan agreement and continuing mortgage bond acted as a proverbial shield against my defence.
The 1st Respondent had caused the registration a Covering Bond, which included an ‘Acknowledgement of Debt’. In accordance with the findings of Thienhaus v Metje and Ziegler Ltd 4, the court pointed out that, in practice, mortgage bonds serve three purposes, viz, [a] to create a security interest, [b] to record the details of the obligation secured, and to [c] create a contractual debt. Williamson’ JA explained (at 31):~ “clearly a mortgage bond can be utilised both as an instrument of hypothecation and as a record of the terms and conditions of the obligation in respect of which the hypothecation is to create a security; in addition it is a matter of common and usual custom in the drafting of bonds to incorporate therein an unqualified admission of liability by the mortgagor. The reason therefore is, however, certainly not that such an acknowledgment is required for the validity of the bond as a means
Thienhaus v Metje and Ziegler Ltd, 1965 (3) SA 25 (A).
of creating a real right by hypothecation in favour of the creditor. The origin and the prime purpose of the custom is the facilitation of the obtaining of a quick and easy remedy, such as provisional sentence, against the mortgagor in case of his default”;[isn’t this case in favour of the banks?]
In conjunction, section 90 of the National Credit Act 5, prohibits any contract to contain an ‘acknowledgement of debt’;- Section 90(1) read with (2)(a)(i), (ii) (b)(i) and (c)(i);
Furthermore the inclusion of an ‘acknowledgement of debt’ in the mortgage bonds, signed and authorised by an agent of the 1st Respondent, on behalf the ‘power of attorney’ defeats the ends of justice and is a direct contravention of the Consumer Affairs (Unfair Business Practice) Act, 1988 and the Consumer Protection Act 6;
Submission is also made that reliance by the 1st Respondent on its home loan agreement is, in
National Credit Act (34 of 2005) Consumer Protection Act (68 of 2008)
Substantial submissions where made from the inception of the proceedings in the Court below that the 1st Respondent had acted irregularly, which actions were in-consistent with Contract Law and business ethics.
Having regard to the above, I submit that the United States of America Statute, “Truth in Lending Act 7” gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling, regulates certain credit card practices, and provides a means for fair and timely resolution of credit billing disputes. With the exception of certain high-cost mortgage loans, TILA
The Truth in Lending Act (TILA) of 1968 is United States federal law designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed. The Truth in Lending Act was originally Title I of the Consumer Credit Protection Act, Pub.L. 90-321, 82 Stat. 146, enacted June 29, 1968. The regulations implementing the statute, which are known as "Regulation Z", are codified at 12 CFR Part 226. Most of the specific requirements imposed by TILA are found in Regulation Z, so a reference to the requirements of The TILA usually refers to the requirements contained in Regulation Z, as well as the statute itself. From TILA's inception, the authority to implement the statute by issuing regulations was given to the Federal Reserve Board. However, on July 21, 2011, TILA's general rule making authority was transferred to the Consumer Financial Protection Bureau, which was established on that date pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act which was enacted in July 2010. The Federal Reserve will retain some limited rule making authority under TILA for loans made by certain motor vehicle dealers, and for certain other provisions. References: Dlabay, Les R.; Burrow, James L.; Brad, Brad (2009). Intro to Business. Mason, Ohio: South-Western Cengage Learning. p. 469.ISBN 9780538445610. Reverse Mortgages, Retrieved December 20, 2011. Truth in Lending Handbook, Office of Comptroller of the Currency, Administrator of National Banks, December 2006.Truth in Lending Act Legislative History Law Librarian's Society of D.C.
does not regulate the charges that may be imposed for consumer credit. Rather, it requires uniform or standardized disclosure of costs and charges so that consumers can shop around. It also imposes limitations on home equity plans that are subject to the requirements of Sec. 226.5b and certain highercost mortgages that are subject to the requirements of Sec. 226.32. The regulation prohibits certain acts or practices in connection with credit secured by a consumer's principal dwelling.
Having regard to the above, the Court below had condoned the 1st Respondent’s actions, despite such actions being contra bona mores, prejudicial (see paragraph 15.2 above) and removes all common law defences I could raise. This is evident in the proceedings before this application.
The Uniform Rules of Court, rule 32(2) make provision for “…, together with an affidavit made by himself or by any other person who can swear positively to the facts verifying the cause of action and the amount, if any, claimed and stating that in his opinion there is no
bona fide defence to the action” and that;” ~ “… notice of intention to defend has been delivered solely for the purpose of delay.” and further “… If the claim is founded on a liquid document a copy of the document shall be annexed to such affidavit …”
In the matter of FirstRand Bank Ltd v Beyer 8 after an analysis of Rule 32(2) of the Uniform Rules of Court clearly shows that the court, before it can grant summary judgment, must, from the facts set out in the verifying affidavit itself, be able to make a factual finding that [a] the person who deposed to the affidavit was able to swear positively to the facts alleged in the summons and annexures thereto and [b] be able to verify the cause of action and [c] the amount claimed, if any, and be able to [d] form the opinion that there was no bona fide defence available to the defendant, and that the [e] notice of intention to defend was given solely for the purpose of delay.
Juristic entities, like that of the 1stRespondent, whom authorise employees to dispense and swear to the correctness of avertments in an affidavit are to state how it obtained such authority. It follows that such authority must also be annexed to such affidavit. In this instance the Respondent had failed, neglected and/ or refused
FirstRand Bank Ltd v Beyer 2011 (1) SA 196 (GNP).
to address this requirement despite a ruling by the learned Judge Bava that it need to comply with this requirement;
The 1st Respondent had as stated herein, presented supporting affidavits, which I submit, are unsupportive as to the requirements to prove or disprove such appointments and authority. The Court below had failed to thoroughly examine this point and had, per-say, accepted the 1st Respondent’s contention as per Advocate Shem Symon, that it had filed such supporting affidavits.
Ideny that the facts referred to in 1stRespondent’s particulars of claim [annex “MT 1” page 16”] are within the personal knowledge of Mr Joop Dekker. Emphasis is made that under these premises, Mr Dekker does not and cannot have knowledge, nor could he comment on i) the avertments made in my pleadings, or ii)the nature of my defence. The Court below had erred to give proper consideration to this fact. Had it investigated or given proper thought to the representation, it would have come to a different finding.
The standard terms and conditions of the 1stRespondent declares the renouncement of all benefits from the exceptions, which might or could have been pleaded in so far as it places
a bar to any claim/ defence that I could have under the loan agreement/ mortgage bond. These presences are in contravention of Section 90 of the National Credit Act, 2005, Section 90(1) read with (2)(a)(i), (ii) (b)(i) and (c)(i). I was therefore barred from raising and entering a plea to this exception, although I haves how n proper grounds of profiteering. The Court below had erred by not taking cognisance thereof.
I submit, given the principles of Securitisation, Seignorage, the Fractional Reserve System and other processes that derive from bank processes, including loan contracts, are legally and civilly prejudice, harmful, and amount to unjust enrichment that causes financial hardship which in turn causes the arbitrary deprivation of ownership, or continued ownership of land and housing.
If, for reasons of operating in law and rules of civil procedure I have failed to follow proper service or notice, or to have given my defence proper, I submit that a failure to do so should have been met by an enquiry conducted by the Court below so to determine the precise contention. I make the latter point as my defence is not common, it is technically difficult and would seem to go against the common practice of raising a defence. For this reason alone, an outright dismissal was not warranted by the Court below irrespective of its misgivings or presentation.
I submit further that the High Court has an obligation in terms of the Constitution to develop the common law, not to be blindsided by new principles and, where appropriate, it is required to adjudicate proper on matters by having sufficient knowledge of the matter it is to preside over. The Court below could not have taken proper knowledge or enquiry of the 58 page presentation made to it by me, which included reference to law, case law and avertments of profiteering, contraventions of law and errors contained in the 1st Respondent’s submissions. Instead, the court presented its Judgment directly and in no less than one minute after the matter was heard.
The Court below heard arguments made by the 1st Respondent’s counsel, that I belong to some kind of “cult” that holds some kind of grudge against the bank and all of banking as a whole. It was also alleged that other matters, where similar defences where raised, but not adjudicated on, thus res judicata, were of the same “cult”. These avertments have no place before a Court, were unsubstantiated and irrelevant. Such avertments were designed and uttered to deceive the Court that my defence was “nonsensical”, “irrelevant” and “fanciful”. We cannot know whether the Court below had taken cognisance of these avertments, or whether it placed evidential weight to these avertments, because the learned Judge did not provide a written Judgment with reasoning. Within these confines I believe that the learned Judge was persuaded by these avertments.
I learned that counsel for the 1st Respondent gained his reputation as a specialist in banking law. If this is factual, it is submitted that counsel erred in his duty to the Court below. Counsel should have been very knowledgeable of securitisation, seigniorage and the fractional reserve system; therefore his election to mount a defence of “nonsensical”, “irrelevant” and “fanciful” was in conflict with the prescribed code of conduct. Counsel would thus have assisted the 1st Respondent in deceiving Court below.
In this regard I refer the Court’s attention to the appropriate paragraphs of the 1st Respondent’s replying affidavit:
Ad paragraph 18, “tirade of unintelligible allegations”;
Ad paragraph 7, “nonsensical and fanciful”;
Ad paragraph 8, “theoretical defences” and [lack of] “factual foundation”;
Ad paragraph 10, “fanciful and dishonest” and “bizarre and outrageous contentions”.
The 1st Respondent tried to turn me in to an ignorant, mindless individual trying desperately to wangle his way out of debt. I submit that my defence and these proceedings
contain no such motivation. The defence is based on sound principles of law, supported by common law principles, legislation, public policy and more so a principle that the actions of the 1st Respondent are against the moral fibres of a democratic society where rights are protected by guarantee in the pre-amble to the Constitution.
It is humbly submitted that, where rights are circumvented, prejudiced and profiteered on, it does become my business, and the business of the Court below. Such violation of rights cannot be ignored or played off as “fanciful” cult-type mala fides merely because the defence is not pleaded correctly, represented by expensive lawyers using intimidating tactics, or the lack of correct attire. A representation/ defence is valued for its impact/ value or weight it might have on the proceedings; in this case a summary judgment.
One cannot lend that which one does not possess. If one does, but acquired it through another process e.g. securitisation, seigniorage or the fractional reserve system, the action is therefore simulated, and the lender becomes an “intermediary” or “broker”. Such relationship embodies the moral, ethical and fiduciary right of disclosure.
If one cedes, gives as security, or sells the contractual rights to another, as this case implies, the 1st Respondent cannot be the “Applicant” in a motion proceeding. It would lack the appropriate locus standi. In the alternative if the 1st Respondent had disposed of its security and had been given the authority to act on such legal action by such third party,
the 1st Respondent did not include such authority in its founding affidavit. In such event it is contested that the 1st Respondent would, in any event, be entitled to be a party to the proceedings. As per the definition of “business of the bank” in the Bank Act, the 1st Respondent would be precluded from acting as such. Notwithstanding this fact, the 1st Respondent would still be acting as ‘intermediary” in these proceedings.
I submit that the learned Judge Mabesele erred in finding that my submissions in paragraphs 1 and 2 had nothing to do with the loan agreement, as it has everything to do with the home loan agreement. I make this submission based on the following facts; If it is alleged that a company acted irregularly in liquidation proceedings, the alleger can apply for the “corporate veil to be pierced”. In these premises, I pleaded irregularity and, in addition, unjust enrichment (profiteering) and contravention of the Bank Act. Reasonable doubt was raised, having these facts investigated or researched by the learned Judge; it would have become very apparent that both these paragraphs had everything to do with the loan agreement because its very notation or existence was to deceive me.
A further finding by the learned Judge Mabesele that what the bank does with its documents should not be the concern of the respondent” is as follows: I humbly submit that it has everything to do with the matter, in particular where I mounted evidence that the 1st Respondent had securitised the debt. It therefore lacked the appropriate right (locus standi) to bring these proceedings. I would like to point-out to the Honourable Court that I
had pleaded the aforementioned, and the 1st Respondent through its answering affidavit, failed to properly answer this averment.
During the application for leave to appeal, the 1st Respondent, represented by Advocate Shem Symon, persisted to ridicule and belittle my representation and mentioned that the 1st Respondent does in fact conduct its business by virtue of entering “debit” and “credit” entries. He further conceded that the bank does deal in securitisations, and further that these dealings have nothing to do with me, it is of no concern, and is irrelevant. He further stated that what was important was the fact that his client, the 1st Respondent is the victim here and was prejudiced by these proceedings.
I have stated before why these proceedings are contested, thus I will not reiterate, other than to point-out that the 1st Respondent openly admitted that it does deal in “debit” and “credit” entries [see Fractional Reserve System herein],and in securitisation. Neither of these points were elaborated on, nor extended by the 1st Respondent’s counsel. The learned Judge did not ask any qualifying questions to the averment of the 1st Respondent in this regard. By the 1st Respondent’s own admission, it had confirmed by my notion in defence, a point that the learned Judge either ignored, failed to take into consideration or was oblivious to. Given this fact, the learned Judge should have considered the grounds of my application against the facts, having regard to the avertments of the 1st Respondent.
In conclusion, I submit that when the learned Judge announced his findings, he did so by pulling a paper from his table and commenced reading from it. The impression was clearly that the Judgment was already written or pre-prepared prior to the matter being finally argued by the parties. This impression was also noted by several other people in court, including Mr Sing from the Human Rights Commission, whom was observing the hearing.
It is improbable that full consideration to all the facts contained in my representation could have been considered by the learned Judge; it is also inconceivable that, given the circumstances, a proper finding could have been made where the matter is one of a pivotal economic and technical nature.
I did not ask in any one of these proceedings to have the case dismissed against the 1st Respondent. I simply requested, given the merits of the defence, for the matter to go to trial so it could be considered on evidence and statement of witnesses. A trial being denied, under these presents, offends the underlining principle of the audi alteram partem rule so incorporated in the Constitution.
I submit hereinafter a summary of contraventions made by 1st Respondent:
Failure to disclose documents which the 1st Respondent is obliged to do in terms of the National Credit Act read with the 1st Respondent’s PAJA declaration;
Prejudice caused by the actions of the Court below by belittling me, ousting my arguments and rejecting my evidence in Court without examination;
Failure by the 1st Respondent to produce evidence as to the appointment and authorisation of Joop Dekker causing prejudice by the reliance on anill-founded affidavit;
The Court below, by ignoring this fundamental requirement, caused me prejudice to present proper evidence: in that the Court below relied on evidence that bridges hearsay.
The Court below caused me prejudice by not applying its mind to the facts so dispensed with; had proper legal investigation or enquiry been done in conjunction with the development of common law (contract law), the facts would not of been as alien as the 1st Respondent made it out to be;
The Court below failed to give effect to the protection granted to debtors in terms of section 90 of the National Credit Act; which specifically disallows contractual terms and obligations/ conditions that cause financial prejudice and arbitrary displacement of property;
The 1st Respondent, in dealing in improper financial schemes, had indeed induced financial displacement and prejudice by purporting that it had provided tangible value in liquid money in exchange for repayment of tangible liquid money, with the added burden of excessive interest. The 1st Respondent had at all material times been fully aware, or could have been aware, or should have been aware, that it does not have, or own such tangible liquid money, under which its claim is brought;
That the 1st Respondent entered into an agreement with me, where it, at all material times had known, or should have known that it was entering into an illiquid agreement, fully knowledgeable of the profiteering/ fraudulent consequences and subsequent financial prejudice it would place on me; and
That the 1st Respondent had knowledge or could have foreseen that their power of attorney could and would be used to sign the document “continuing mortgage bond,” which imposes severe underlying financial and civil prejudice; and
That the 1st Respondent had knowledge or could have foreseen that their power of attorney could and would be used in the process of
securitisation or security to fund and/ or stand as security for creating their own loan; and
That the 1st Respondent had knowledge or could have foreseen that their power of attorney would be used, in due course to fund my home loan; and
That the 1st Respondent acted as “intermediary” or “broker” as the case might be, therefore disallowing any actions I could have taken against them in terms of these premises, thus causing me financial prejudice; and
That the 1st Respondent had knowledge or could have foreseen that their power of attorney/ or loan agreement will be used in the secret application of financing through the likes of securitisation and/ or fractional reserve system and/ or seigniorage. Such funding would generate income that could have benefited my financial position, but was not disclosed and was deliberately withheld from me, thus causing me financial prejudice; and
That the 1st Respondent had knowledge or could have foreseen that their power of attorney/ home loan agreement will be used in generating
funding or funds without my knowledge, permission or explicit consent; and
That the 1st Respondent had knowledge or could have foreseen that their power of attorney would be used to generate a loan with benefits of selfenrichment (undue enrichment) had failed and/ or neglected to disclose this fact, therefore causing me financial prejudice.
The 1st Respondent misrepresented itself, on the premise of the loan agreement, that it is the holder (in liquid form of money) and is both willing and able to ‘lend’, where at all material times it was aware or should have been aware that this averment is untrue, misrepresented or faculty false;
In addition to the aforementioned, the 1st Respondent placed audio visual and print media advertisements into the market where it purports to be the lender of money and giver of mortgage loans, where the contrary is true. This false impression led me to believe that I was, in fact, coerced into taking my business to 1st Respondent as it was one of only a limited few that has such ability.
The 1st Respondent misrepresented itself before the Court below when it elected to plea in its answering affidavit, that it does not understand my defence. It was fully aware or should have been aware, that the proper authoritive person should have acted on the 1st
Respondent behalf. Such person should rightfully have known and disclosed that it was acting in such securitisation transactions and/ or fund/ financial principles as per annexure “MT 5” and “MT 6”. The 1st Respondent therefore had caused undue, unnecessary court procedures causing financial prejudice and the withholding of proper adjudication.
Given the facts aforesaid the 1st Respondent had acted in such manner and in such context that it is in breach of its fiduciary responsibility toward me.
Having regard to the principles of Seignorage and the Fractional Reserve System, the 1st Respondent is in breach of the in duplum rule, as its interest is based on illiquid accounting entries that are not backed by any liquid, sounding in money, in its so-called loan to me.
Considering the aforementioned, the 1st Respondent caused me irrevocable prejudice as I completed my yearly account based on liquid money for presentation to the South African Revenue Service based on the loan agreement. The facts now indicate that same was never liquid.
The principles of cession and other undue financial trading of my security caused me prejudice as I do not know who the holder of my bond is, or the whereabouts of the security. Questions arise such as: is such entity sound in business or liquid to the extent that my property might be under risk of liquidation or other contractual obligation?
POINTS RAISED IN THE COURT A QUO:
I have raised the following points as per annex “MT 2” page 385 to 392 read with “MT 3” pages 393 to 460;
INTRODUCTION TO BUSINESS OF THE BANK
The Bank Act, Act 94 of 1990 specifically excludes the bank from engaging in securitisation where it is the holder of such security or has a vested interest in such security. The latter averment was emphasised by notice in the Government Gazette [No. 30628, Volume 511, January 2008] which amends the Bank Act by changing the “business of a bank” ~ [Section 1, “definition”] to exclude securitisation from the “business of the bank”.
Furthermore a Bank is precluded from using its client’s ‘deposits’ for loans and are furthermore restricted in how it utilises its “allocated capital and reserve funds” and other funds in terms of sections 70(2), 70(2A) and 70(2B). These prescriptions follow through and are further defined in the South African Reserve Bank Act, Act 90 of 1989.
Commercial banks, invest their money with the South African Reserve Bank and the interest received on such investments is called ‘seigniorage’.
Ordinarily seigniorage is an interest-free loan (historically of gold) to the issuer of the coin or paper money. When the currency is worn out, the issuer buys it back at face value, thereby balancing exactly the revenue received when it was put into circulation, without any additional amount for the interest value of what the issuer received.
The solvency constraint of the South African Reserve Bank only requires that the present discounted value of its net ‘non-monetary liabilities’ (separate from its monetary liabilities accrued through seigniorage attempts) be zero or negative in the long run. Its monetary liabilities are liabilities only in name, as they are irredeemable: the holder of base money cannot insist at any time on the redemption of a given amount of base money into anything else other than the same amount of itself (base money); unless, of course, the holder of said base money is another Reserve Bank/ Federal Reserve Bank reclaiming the value of its original interestfree loan.
Currently over half the revenue of Zimbabwe is in seigniorage. Zimbabwe has experienced hyperinflation, with the annual rate at about 24,000% in July 2008, indicating that prices would double every 46 days.
Currently notes and coins represent 5 to 6%in the market place, the remaining 94 to 95% are generated by banks, who loan against their share capital and reserves which the banks invest in property, short term assets and so on.
Until 1980 the South African Reserve Bank would issue directives as to the amount of reserves relative to the duration of the loan, the volume of credit advanced and the maximum growth rate at which credit extension could increase.
Within the framework of co-operation between the South African Reserve Bank and Commercial Banks, a bank can loan what it has put into circulation, without providing any additional amount for the interest value of what the issuer received.
Thus, a loan from the South African Reserve bank to a bank is interest free, less the cost of the manufacturing (print) of the note. This equates to a 95% interest free loan.
38.10 From the aforementioned two particular legal questions are raised:-
The bank, in this instance the 1st Respondent, was not the institution that loaned in the first instant as it had presented itself to me, via press media and its home loan agreement. In other words, the 1st Respondent only obtained the required funding once I had completed and signed the
necessary contracts. Therefore, by non-disclosure in the contract, the 1st Respondent failed the very basic requirement in contract law; that is, its true stance was that of an intermediary and not the physical lender of money. It therefore can also be said that there could have never been a true ‘consensus’ between the parties or “meeting of the minds.”
In conjunction to the aforementioned, the 1st Respondent did not have the necessary ‘capacity’ to act in the first instance, as it only became the holder of ‘money’ after the fact (conclusion of agreement).
126.96.36.199 I could not have had ‘consensus’ as the 1st Respondent, fully knowledgeable of its lack of money, did not disclose these facts. What the 1st Respondent had in mind and what I had at mind were two very separate and very distinct ideals.
188.8.131.52 The 1st Respondent lacked the ‘capacity’ to act, due to the fact it only became the holder of what was borrowed after the conclusion of the contract; It, the 1st Respondent, therefore was never in possession of what was presented as ‘being’ in their possession prior to the contract being concluded. In other words, the transaction was subjected to
them obtaining the funds from another, the South African Reserve Bank.
184.108.40.206 For the 1stRespondent to have the appropriate and correct status, the contract should have clearly stated that it is acting as “intermediary” or “broker”, subject to the Respondent obtaining a loan from the South African Reserve Bank. This fact is not disclosed in the 1stRespondent’s contract.
220.127.116.11 In addition, the 1st Respondent does not disclose this fact, or any third party association, anywhere, period.
38.11 The 1st Respondent in this regard will argue, as they have done before, that the relationship between themselves and that of the 2nd Respondent is one conjured in terms of legislation. Thus the 1st Respondent, like other banks, are exclusively and uniquely authorised to utilise the future “advancement” of loans at a fraction of the apparent cost of money, i.e. almost free. Their argument, with due respect, has nothing to do with the fact that the 1st Respondent still acts as ‘intermediary’ or ‘broker’, irrespective of their special legislative relationship. As such, they cannot
escape their common law and fiduciary duty to provide full disclosure of all material facts.
38.12 It is the 1stRespondent whom is required in law, inter alia, the National Credit Act(34 of 2005), Consumer Protection Act(68 of 2008), the latter all deriving its legislative inauguration from the South African Constitution, 1996, to disclose all material facts to a consumer so to enable a consumer to make an informed decision.
The requirements to disclose, which contention was in particular raised in the Court below, was relevant and important as the lack of disclosure raises questions as to the true intent of the 1stRespondent.Myalludement is that the 1st Respondent is not disclosing these facts for the following reasons;
18.104.22.168 Its gain in interest, comprising of almost 90% profit; and
22.214.171.124 The 1stRespondent, not being compelled by legislation to disclose such transactions.
38.13 The facts stated above remain intact, irrespective if the 1stRespondent had utilised its credit with the 2nd Respondent or “other” security to obtain the loan, as it had masked their truthful role as intermediary or broker.
The 1st Respondent, acting in any other principal other than that which is allowed in the Bank Act, contravenes the outlining prescription of the “business of the bank”; if it acts as intermediary, it needs to conform with such legislation and other governing subordinate rules and policies as would apply to these industries.
126.96.36.199 Having regard to the proposition above, the 1st Respondent, in acting as intermediary or broker, circumvents the requirements set out in legislation for such industries; therefore it flies under the radar.
When the 1stRespondent obtained a ‘loan’ from the 2nd Respondent, it received same as South African Reserve bank “bonds” which closely resemble ‘promissory notes’. No liquid money passes from one bank to another, but rather a debit and credit entry takes place in the accounting records of each institution. The latter entries are then followed through to the eventual borrower, attracting escalating costs and interest along the way. In this regard the Honourable Court’s attention is drawn to annexure “MT 16” read with “MT 6”, “MT 7” and “MT 12” and “MT 13”.
Due to the 1stRespondent’s use of electronic methods, it has become highly proficient at debiting and crediting accounts with nothing more than “nothing.”
To illustrate the point above, where “liquid money/ cash money” is required, the 1stRespondent would simply place such funds into the possession of the drawer from reserved funds. However, in all other transactions (such as the advancement of credit)it will simply pass a ‘credit’ or ‘debit’ as required, or pass it along to the recipient’s bank account. This is achieved by the very same technology we have become so accustomed to. This is so if consideration is given to the Financial Markets Bill, annex “MT 22” hereto.
The 1st Respondent will raise the argument, as it has done in the Court below, that these processes suffer no prejudice to the lender; I submit that the contrary is true due to mathematic calculations utilised in this process. The following serves as an example;
If Bank A’s total exposure is one billion and it requires additional ‘capital’ to extend and uphold its business for the next year, Bank A will ‘borrow’ from the South African Reserve Bank ‘bonds’ or ‘credit notes’ at close to 5% of its face value or less. It will then enter these “bonds” into the accounts of their clients whom have borrowed from Bank A. These clients are now obliged to affect ‘liquid money’ as repayment, first towards interest then to capital.
The requirement for ‘liquid money’ repayments by the clients is to;
40.1.1 Replenish the 1stRespondent’s reserves; and
40.1.2 To receive a credit from the 2nd Respondent on the return of these notes.
The principles followed by the 1st Respondent and 2nd Respondent jointly eradicate sound business principals and ethics as the 1st Respondent profiteers horizontally and vertically. Horizontally, it gains from the interest it earns and vertically, it gains from returning liquid money to the 2nd Respondent. Thus, it could be said that the banks earn 100% profit on loans it makes, with no particular risk. See annexure “MT 13” read with “MT 14” and “MT 16”, also the principals contained in the GEAR policy, annex “MT 17” hereto.
This places an unreasonable financial prejudice onto the borrower, so much so, that the legislature has asymmetrically authorised the Banks, like the 1stRespondent, to print proverbial money at leisure at my expense and factual financial prejudice to me. See “MT 12” hereto.
41.1.1 The 1st Respondent pounced onto me, demanding its fulfilment of contract, arbitrarily so, considering the facts aforementioned.
The 1st and 2nd Respondent have exclusive access to this money making capability, which diminishes true competiveness in the market. Although each bank is structured differently, the mathematics remain the same, which equals no more than 1% difference in borrowings.
The legislative prescription does not allow for healthy competition; to the contrary it causes a manifestation of corporate collaboration that monopolises the banks.
Given the facts aforementioned, consideration must be given that the 1stRespondent’s claim would, in effect, be incorrect. Its claim in liquid money has no basis, as the fundamental aspect is that they did not lend liquid money. It was no more than a simulated promissory note, entered as a debit/ credit entry.
The 1st Respondent’s certificate of balance is based on liquid money that clearly could not be the foundation of its claim which is fictional and untenable, lacking the very strict definition of liquidity on demand.
It follows that the claim of the Respondent would be in contravention of the In Duplum Rule, so much so, that the interest charged would in fact be null and voidable as [a] the liquid money never received entry into the books of the Respondent, and in the alternative [b] interest charged on the capital is based on an illiquid transaction.
It is common cause, but not general public knowledge, that banks conclude ‘bank credit’ with their clients as illustrated here. A client borrowed R10, 000 from a bank. The bank in return opened for that client a checking account for R10, 000, gave him a checkbook, and
told the client that he can now write out checks for an amount up to R10, 000. The bank, for its part, wrote in its books a deposit of R10, 000 and a liability of R10, 000. When a loan is made in this manner, the bank has created R10, 000 worth of new bank credit “out of thin air.” The bank did not give out any of its own money, nor out of its reserves, or any of its depositors’ money. But the bank credit money (checks that the client/ borrower would write out) would buy goods and services in the same manner as real/ liquid9 money that someone had earned. See annexure “MT 11”, “MT 7” and “MT 21”.
If the collateral/security pledged for that loan contained items that the client/ borrower was about to sell, then that bank credit money would not be inflationary10, because goods were available to be claimed by it. However, if the collateral security were items such as the client’s vehicle or house, which the client did not intend to sell, then that bank credit money could be inflationary.
The bank credit money was not earned by anyone. It was not earned by the bank and it was not earned by any of the depositors, it was just a bookkeeping entry.
Cash such as coins, notesthat are tangible.
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.
When the loan is paid back by the client, the bank credit money will no longer exist. The bank’s books will show a decrease of deposits and liabilities of R10 000 each. It also will show a profit of the amount of interest it received for the loan of its bank credit, or for its bookkeeping transactions.
It is projected that as much as 90% of all the buying and selling in South Africa is done with interest-bearing bank credit.
Within these premises it is important to note that the word money is frequently applied to anything that is used as a medium of exchange. In the past, many items have served as media of exchange, such as gold, silver, cattle, grain, salt, notes, and checks, certificates of credit, postage stamps and so forth.
In South Africa, the power to mint coins and notes has been passed on to the South African Reserve Bank in terms section 10(1)(a)(i) - (v) of the South African Reserve Bank Act (90 of 1989).
Annexure “MT 5”, “MT 6”, “MT 7”, “MT 8” to “MT 10” and “MT 11”
Securitisation is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations
and selling said consolidated debt as bonds, pass-through securities, or collateralised mortgage obligation [CMOs], to various investors. The principal and interest on the debt, underlying the security, is paid back to the various investors regularly.
Securities backed by mortgage receivables are called mortgage-backed securities (MBS), while those backed by other types of receivables are asset-backed securities (ABS).
As stated supra, paragraph 13 hereof, it is not the ‘business of the bank’ to engage in or deal in securitisation of its own contractor assets. The Respondent is prohibited from such activities.
The 1stRespondent has confirmed this notation in many submissions. See annex “MT 1” and “MT 3” hereto. Paragraph 1 of this publication reads as follows: “SA Home Loans (“SAHL”) is not a bank and does not accept deposits from the public. As such, in order to be able to fund the home loans which are given out to clients, SAHL (South African Home Loans) has set up a securitisation funding platform.” and at paragraph 3 “The capital markets are where long term funding (greater than one year in duration) can be obtained and it is, as such, the place where many lenders, banks included, would obtain long term funding for their longer term assets (such as home loans).”It should be pointed out that the 1st Respondent is the majority shareholder of SA Homeloans.
To achieve the aforementioned, the process would in most instances be one where a suitably large portfolio of assets is "pooled" and transferred to a "special purpose vehicle" or "SPV." The SPV (the issuer), is a tax-exempt company or trust formed for the specific purpose of funding the assets. Once the assets are transferred to the issuer, there is normally no recourse to the originator. The issuer is "bankruptcy remote," meaning that if the originator goes into bankruptcy, the assets of the issuer will not be distributed to the creditors of the originator. In order to achieve this, the governing documents of the issuer restrict its activities to only those necessary to complete the issuance of securities.
Accounting standards govern when such a transfer is a sale, a financing, a partial sale, or a part-sale and part-financing. In a sale, the originator is allowed to remove the transferred assets from its balance sheet: in a financing, the assets are considered to remain the property of the originator. Under South African accounting standards, the originator achieves a sale by being at arm's length from the issuer, in which case the issuer is classified as a "qualifying special purpose entity" or "qSPE".
For a bank, like the 1st Respondent it will be required to bundle the security (a bond registered over the title deed) with other agreements and assign the rights and title over to the particular securitisation broker or company. See annexure aforesaid. Within these premises, one will note that the 1st Respondent (bank) loses its rights and title to the
security which results in the 1st Respondent’s lack of locus standi in the proceedings in the Court below.
The originator (the 1st Respondent) initially owns the assets engaged in the deal. This is typically a company looking to raise capital, restructure debt or otherwise adjust its finances. Under traditional corporate finance concepts, such a company would have three options to raise new capital: a loan, bond issue, or issuance of stock. However, stock offerings dilute the ownership and control of the company, while loan or bond financing is often prohibitively expensive due to the credit rating of the company and the associated rise in interest rates.
If for any reason the 1st Respondent claims that it has the proper locus standi, it had, in any event failed to do so proper in their surmising proceedings;
Once again, the 1st Respondent finds itself in a precarious position, as it once again was not the original ‘moneylender’, but rather an “intermediary” with the added negative legal standing of lacking locus standi;
The 1st Respondent now also benefits from the transaction of securitisation two folded: ~
The 1st Respondent gains furthers loan capacity as it has rid its debt and its exposure to entertain more loans to the public without my knowing participation; and
Commissions or interest are earned by the 1st Respondent of securitisation transactions; in other words, over and above earning in receivables from me it now earns income from securitisation as can be seen annexure “MT 5” to “MT 7” hereto. Securitisation makes it possible to record an earnings bounce without any real addition to the firm. When a securitisation takes place, there often is a "true sale" that takes place between the Originator (the parent company) and the SPE. This sale has to be for the market value of the underlying assets for the "true sale" to stick and thus this sale is reflected on the parent company's balance sheet, which will boost earnings for that quarter by the amount of the sale. While not illegal in any respect, this does distort the true earnings of the parent company.
I had signed a limitless power of attorney authorising the 1st Respondent to dispense with, inter alia, registration of a bond onto the title deed of the property, thus, the deed will form part of security held by 1st Respondent against the loan. However, the registration of the bond together with the power of attorney is utilised by the 1st Respondent to gain funding from processes mentioned above and below. The 1st Respondent therefore does not (and the power of attorney stipulates as much) require any further authority from me. The result
being that I am in toto removed from any transaction the 1st Respondent concludes with securities given by me.
I contend that the power of attorney was given explicitly for the exclusive use to register a bond, and nothing more, therefore the use of the power of attorney in any other formulations are without consent, authority and such use is in conflict with the National Credit Act and law in general use, e.g. law of contract.
If such signature had been used, or in the alternative assigned to any other process of securitisation or in its third alternative to gain funds or loans relating to securitisation, or in its fourth alternative gain any benefit or in its fifth alternative placed an obligation on me, the 1st Respondent had done so without explicit permission from me and the 1stRespondent is in violation of the fiduciary relationship as between me and 1stRespondent (as banker) and in terms of the Bank Act.
Had the 1st Respondent gained from any securitisation, aforementioned, I am entitled to share in such profits, notwithstanding the fact that such profits would effectively lessen my liability to the 1st Respondent.
The process of securitisation caused prejudice towards me as, unknown to me, another becomes the holder of its security (bond) and therefore the risk arises that such security can be called-up under any judicial process like liquidation or administrative orders;
The opposite of the above, any income derived from securitisation is deliberately withheld from me, or will never be brought to my attention as acknowledgement of such securitisation process has been withheld from me by the 1stRespondent, so much so, that the 1st Respondent is not even prohibited from making such entries into the accounting books of the 1stRespondent.
The process of securitisation deprives me of knowledge as to who the true creditor is. As such, its financial exposure, inter alia, could include the 1stRespondent acting as intermediary and/ or collecting agent for a third party whom could, once again, earn collection commission when acting as intermediary/ collecting agent.
Lastly, when the 1stRespondent entertains processes like securitisation, why is it held so secretively; the subject matter being protected most vigorously by the 1st Respondent. The only conclusion is that there is collusion between the parties that can only equate to profiteering. If, which I contend it is not permitted in terms of how the 1stRespondent deals therein, securitisation is allowed, why is it not disclosed or public knowledge?
Thus application for summary judgment must fail and the 1stRespondent must amend its application proper; In this regard the Honourable Judge failed to realise that the defence so offered by me is technically difficult, obscured by generality, implied contract law remedies and the bone of contention is that what is contained in defence is further
frustrated by the 1stRespondent’s unwillingness to go beyond its contract of loan, holding same as a proverbial shield from the seriousness of the allegations made by me.
SEIGNORAGE: See annexures “MT 12” hereto. 65. This subject matter co-exists with the foregoing paragraphs and the, “Business of the Bank”, supra, discussed separately due to its fundamentals being difficult to comprehend and/ or appreciated.
Seignorage can be defined as one of the following as it relates to these proceedings;-
Historically, if a person has one ounce of gold, he trades it for a ‘governmentissued gold certificate’ (providing for redemption in one ounce of gold), keeps that certificate for a year, and then redeems it in gold. That person ends up with exactly one ounce of gold again. No seigniorage occurs. [A historical view of the aforesaid is available and as such will be made available is so needed.]
Instead of issuing gold certificates, a government converts gold into currency at the market rate by printing paper notes. A person exchanges one ounce of gold for its value in currency. They keep the currency for one year, and then exchange it all for an amount of gold at the new market value. This second exchange may yield more or less than one ounce of gold if the value of the currency relative to gold has
changed during the interim. (Assume that the value or direct purchasing power of one ounce of gold remains constant through the year.)
66.2.1 If the value of the currency relative to gold has decreased, then the person receives less than one ounce of gold, thus seigniorage occurred.
66.2.2 If the value of the currency relative to gold has increased, the redeemer receives more than one ounce of gold thus seigniorage did not occur.
66.2.3 Seigniorage, therefore, is the positive return on issuing notes and coins, or "carry" on money in circulation.
66.2.4 The opposite, "cost of carry", is not regarded as a form of seigniorage.
Ordinary seigniorage can be defined as an ‘interest-free loan’, for instance, of gold, to the issuer (South African Reserve Bank) of the coin or paper money. When the currency is worn out, the issuer buys it back at face value, thereby balancing exactly the revenue received when it was put into circulation, without any additional amount for the interest value of what the issuer received.
Historically, seigniorage was the profit resulting from producing coins. Silver and gold were mixed with base metals to make durable coins. Thus the British
"sterling" was 92.5% pure silver; the base metal added (and thus the pure silver retained by the government mint) was (less costs) the profit, the seigniorage.
Currently, under the rules ‘governing monetary operations’ of major central banks(including the central bank of the USA and in similarity the South African Reserve Bank), seigniorage on bank notes is simply defined as the interest payments received by central banks on the total amount of currency issued. This usually takes the form of interest payments on ‘treasury bonds’ purchased by central banks, putting more Rands into circulation. However, if the currency is collected, or is otherwise taken permanently out of circulation, the back end of the deal never occurs (that is, the currency is never returned to the central bank). Thus the issuer of the currency keeps the whole seigniorage profit, by not having to buy worn out issued currency back at face value.
The solvency constraint of the 2nd Respondent only requires that the present discounted value of its net non-monetary liabilities (separate from its monetary liabilities accrued through seigniorage attempts) be zero or negative in the long run. Its monetary liabilities are liabilities only in name, as they are irredeemable: the holder of base money cannot insist at any time on the redemption of a given amount of base money into anything else other than the same amount of itself (base
money); unless, of course, the holder of said base money is another central bank reclaiming the value of its original interest-free loan.
To illustrate the aforementioned points, in relation to modern day application of seigniorage, would be to reference “Slate Online” comments on 29th of July 2011, regarding the 2011 United States of America debt ceiling crisis. The author suggested that the United States of America Government mint a US$5 trillion coin, deposited the said mint with the Federal Reserve and used to buy back debt thus making funds available. The author, whom in-effect suggested seigniorage was not off-beat, as it later appeared that the United States of America caused such a bailout for its bankers, thus it created money out of nothing.
Seigniorage is a concept utilised throughout financial history over decades, the only difference is that modern seigniorage does not have physical “liquidity” like gold as the exchange principal; this has been replaced by axiomatic “I owe you notes”.
To further illustrate the points above and below, the Basel Reports emanating from the Global Regulator, USA, which formulates the standard on bank capital adequacy, stress testing and market liquidity risk agreed upon by the members of the Basel Committee on Banking Supervision. Currently the Basel III (see annexure “MT 7” hereto) report is the operative guideline internationally. These reports have been excluded from this application
due to their volumes being extensive; however copies of Basel II and III shall be made available at the hearing of this matter. A report by Deloitte has been annexed hereto as “MT 7” as further referencing material.
The 1stRespondent, having required a loan from the 2nd Respondent in the historical sense of seigniorage, had incurred nothing more than the printing cost of the ‘currency’, its return value to balance the books, thus the loan was zero rated in interest; in the alternative the Respondent had accounted a loan based on “bonds”, zero rated in interest, however there is no seigniorage to be earned. See paragraph 24.2.4 supra.
FRACTIONAL RESERVE SYSTEM:
See annexures “MT 13”, “MT 14” and “MT 15”, read with “MT 17”
By definition, Fractional Reserve System forms part of banking where banks maintain reserves (of cash and coin or deposits at the central bank) that are only a fraction of the customer's deposits. Funds deposited into a bank are mostly lent out, and a bank keeps only a fraction (called the reserve ratio) of the quantity of deposits as reserves. Some of the funds lent out are subsequently deposited with another bank, increasing deposits at that second bank and allowing further lending. As most bank deposits are treated as money in their own right, fractional reserve banking increases the money supply, and banks are said to create money. Due to the prevalence of fractional reserve banking, the broad money
supply of most countries is a multiple larger than the amount of base money created by the South African Reserve Bank. That multiple (called the money multiplier) is determined by the reserve requirement or other financial ratio requirements imposed by financial regulators, and by the excess reserves kept by commercial banks like the 1stRespondent.
The South African Reserve Bank generally mandates reserve requirements that require banks to keep a minimum fraction of their demand deposits as cash reserves. This both limits the amount of money creation that occurs in the commercial banking system, and ensures that banks have enough ready cash to meet normal demand for withdrawals.
Problems can arise, however, when depositors withdraw a large proportion of deposits simultaneously; this can cause a bank run or, when problems are extreme and widespread, becomes a systemic crisis. To mitigate this risk, the governments of most countries (usually through their Central Bank) regulate and oversee commercial banks, provide deposit insurance and act as lender of last resort to commercial banks like the 1stRespondent.
Fractional reserve banking is the most common form of banking and is practiced in almost all countries, including South Africa. Although Islamic banking prohibits the making of profit from interest on debt, a form of fractional reserve banking is still evident in most Islamic countries. It must be noted that the 1st Respondent, like
ABSA Bank Limited and First National Bank Limited have Islamic accounts separated from the norm.
The nature of modern banking is such that the cash reserves at the bank available to repay demand deposits need only be a fraction of the demand deposits owed to depositors. In most legal systems, a demand deposit at a bank (e.g., a checking or savings account) is considered a loan to the bank (instead of a bailment), see Bank Act, repayable on demand that the bank can use to finance its investments in loans and interest bearing securities. Banks make a profit based on the difference between the interest they charge on the loans they make, and the interest they pay to their depositors (aggregately called the net interest margin (NIM)). Since a bank lends out most of the money deposited, keeping only a fraction of the total as reserves, it necessarily has less money than the account balances of its depositors.
The main reason customers deposit funds at a bank is to store savings in the form of a demand claim on the bank. Depositors still have a claim to full repayment of their funds on demand even though most of the funds have already been invested by the bank in interest bearing loans and securities. Holders of demand deposits can withdraw all of their deposits at any time. If all the depositors of a bank did so at the same time a bank run would occur, and the bank would likely collapse. Due to the practice of the 2nd Respondent, this is a rare event today, as the2nd Respondent,
usually guarantees the deposits at commercial banks, and acts as lender of last resort when there is a ‘run on a bank’.
As an example for a very simple idea of how the fractional reserve system can work is as follows: if there is only one bank, for a Reserve Fraction of 10%, a bank can turn R1, 000.00 deposit “M0” of money, into R18, 997.00 of "M1" money. Ignoring interest & fees, which makes banks even more profitable, this is how a bank can copy 90% of "M0" money to make "M1" money, where in this example the money loaned out is simply re-deposited in the bank and loaned out again, and so on, that is how the R18, 997.00 "M1" money comes from the R1, 000.00 of "M0" money. Banks, like the Respondent do this by accumulating loans and deposits (effectively multiplying) the "M0" supply to make a larger "M1" supply. Banks can collect interest on the spread of the higher loan interest from the lower deposit interests. Return on Investment (ROI) for a bank is theoretically infinite considering the bank is using none of its own money, if one excludes the cost of setting up and maintaining the accounting system.
PREJUDICE CAUSED TO ME:
If a ‘bank run occurs’, like that of the ‘Northern Rock’ crisis of 2007 in the United Kingdom. The collapse of ‘Washington Mutual’ bank in September 2008, the largest bank
failure in history, was preceded by a "silent run" on the bank, where depositors removed vast sums of money from the bank through electronic transfer. In this regard see annexure “MT 18” read with “MT 19”, “MT 21” and “MT 20”.
In a normal economic environment, cash is steadily being introduced into the economy by the 2nd Respondent. See annex “MT 18” hereto. Given the facts of financial crises across the Globe, there seems to more and more concerns that the Fractural Banking System will fail, causing Governments to bail out more and more bankers at the expense of the public, despite the 1stRespondent and alike profiteering in billions. Is it is up to this Honourable Constitutional Court to take into account, or at least be aware of, the potential threat that such a system poses to society, and thus act in the best interest of the large body of citizens who stand to lose drastically as a result of such a systemic failure.
If creditors are afraid that the bank is running out of cash or is insolvent, they have an incentive to redeem their deposits as soon as possible before other depositors access the remaining cash reserves before they do, triggering a cascading crisis that can result in a full-scale bank run. The aforementioned scenario has had its reality when the 20Twenty Bank was placed in liquidation; its bailouts were stupefied, leaving the public to fend for themselves, thus the victim.
Currently, policy papers and the state of Governance have inadequate funds to maintain roads, municipal services and basic education, the Government therefore does not sit in any position to cause a financial bailout should any one of the events, supra, take place. In particular a 75 Billion rand exposure for the 1st Respondent.
Redressing of such a failure can be seen in the events of Iceland and related problems in their own home loan industries. These avertments are too voluminous to include herein and also consist of video footage. Such will be made available at the proceedings should the Honourable Court require so. See annex “MT 20” page 885 to 886 hereto.
ARTIFICIAL MONEY CREATION:
Money creation, as pleaded by me in proceedings before this application, has been rejected and booted as an argument held by cults, ignorant laymen and outbursts of utter nonsense. It would seem that history seems to be an untold story when these avertments are made; as such possibilities seem surreal in an open and democratic society, like South Africa. Therefore some time will be spent on explaining how money creation happens at banks and that of the Respondent.
The relending model begins when an initial R100 deposit of the South African Reserve Bank money is made into Bank A. Bank A takes 20 percent of it, or R20, and sets it aside as reserves and then loans out the remaining 80 percent, or R80 to other customers of the same bank.
At this point, the money supply actually totals R180, not R100, because the bank has loaned out R80 of the South African Reserve Bank money, kept R20 of South African Reserve Bank money in reserve (not part of the money supply), and substituted a newly created R100 ‘IOU’ (I owe you) claim for the depositor that acts equivalently to and can be implicitly redeemed for South African Reserve Bank money (the depositor can transfer it to another account, write a check on it, demand his cash back, etc.). These claims by depositors on banks are termed demand deposits or commercial bank money and are simply recorded in a bank's accounts as a liability (specifically, an IOU to the depositor). From a depositor's perspective, commercial bank money is equivalent to South African Reserve Bank money – it is impossible to tell the two forms of money apart unless a ‘bank run’ occurs (at which time everyone wants South African Reserve Bank money).
At this point in the relending model, Bank A now only has R20 of South African Reserve Bank money on its books. The loan recipient is holding R80 in South African Reserve Bank money, but he soon spends the R80. The receiver of that R80 then deposits it into Bank B.
Bank B is now in the same situation as Bank A started with, except it has a deposit of R80 of South African Reserve Bank money instead of R100. Similar to Bank A, Bank B sets aside 20 percent of that R80, or R16, as reserves and lends out the remaining R64, increasing money supply by R64. As the process continues, more commercial bank money is created.
To illustrate the above a chart representing the transactions above follows: (as per loans between banks)
Total Reserves ...
Although no new money was physically created in addition to the initial R100 deposit, new commercial bank money is created through loans. The two boxes marked in italics show the location of the original R100 deposit throughout the entire process.
The total reserves plus the last deposit (or last loan, whichever is last) will always equal the original amount, which in this case is R100. As this process continues, more commercial bank money is created. The amounts in each step decrease towards a limit. If a graph is made showing the accumulation of deposits, one can see that the graph is curved and approaches a limit. This limit is the maximum amount of money that can be created with a given reserve rate. When the reserve rate is 20%, as in the example above, the
maximum amount of total deposits that can be created is R500 and the maximum increase in the money supply is R400.
Considering the magnitude and scale at which money is created, one can simply not ignore that commercial banks, like the 1stRespondent, are directly the cause of increase and decrease of loan rates. Fractional reserve banking allows the money supply to expand or contract.
Generally the expansion or contraction of the money supply is dictated by the balance between the rate of new loans being created and the rate of existing loans being repaid or defaulted on. The balance between these two rates can be influenced to some degree by actions of the 2nd Respondent.
Returning to the contention I have shown from inception of these cases, one cannot simply ignore the facts above and expect to be profiteered on; and, when called-upon to make good an agreement which was designed to circumvent liability, disable defences, and condone activities that beg justification as to why a system of such gross infringement and prejudice could exist in an open democratic society, I do expect the courts to be impartial and evaluate all arguments meticulously, and in my case recognise the real merit in my sometimes complicated arguments. See annexures “MT 7” read with “MT 5”, “MT 6” and “MT 17”.
I persist as follows: I do not want any privilege or discount in these proceedings, other than justification as to why the 1stRespondent is allowed to charge exuberant fees and interest on what in fact does not exist tangibility; and why I must give way to its property, a guarantee in terms of the Constitution, which should stand above the might of the 1stRespondent profiteering/ unjust enrichment.
The actions of the 1stRespondent described supra amount to contravening of section 1 read with section 78 of the Bank Act, which prescribes “undesirable practice”.
Forfeitures amounting to arbitrary deprivations of property should not occur where the 1stRespondent has more than doubled on its profits as would directly infringe upon the rights to property in terms of the Constitution.
INFERENCE OF FIDUCIARY:
The Respondent owes me a duty to be treated honestly, to be informed of all material matters before and during the existence of the contract and even thereafter; and not to profit additionally from my transaction and security. When one person stands in relation to another in a position of confidence involving a duty to protect the interests of that other person, he or she is not allowed to make a secret profit at the other's expense, or to place himself or herself in such a position that his or her interests conflict with his or her duty. Such a claim may arise because of a breach of contract or in delict as the case was in
Daewoo Heavy Industries (SA) (Pty) Ltd v Banks  2 All SA 530 (C), 2004 865 (4) SA 458 (C), Da Silva v CH Chemicals (Pty) Ltd  1 All SA 216 (SCA), 2008 (6) SA 866 620 (SCA).
To establish a breach of a fiduciary duty, I must allege facts from which the existence of such a duty can be deduced. For instance, I can rely on the relationship between principal and agent, of a guardian to a ward, director to a company or an attorney to a client or in this instance, the 1stRespondent to me.
The scope and ambit of the duties imposed on the 1stRespondent, in this case the duties are implied (duties that derive ex lege) and arise in the context of the contract that defines the relationship between the parties.
Furthermore, the case of Slip Knot Investments 777 (Pty) Limited v Project Law Prop (Pty) Limited and Others (36018/2009)  ZAGPJHC 21 (1 April 2011). Has particular reference to illustrate the Court’s approach to over-profiting. At paragraph 11 on page 6 the Learned Judge sites Innes J finding in Reuter v Yates, as follows: “It comes to this - in deciding whether the defence of usury has been sustained, and whether the lender has taken such an undue advantage of the borrower, has so practised extortion and oppression, that his conduct, being akin to fraud, disentitles him to relief, the Court will examine all the circumstances of the case. It will not only look at the scale of interest
which has been stipulated for, but will have regard to the ordinary rate prevalent in similar transactions, to the security offered and the risk run, to the length of time for which the loan was given, the amount lent, and the relative positions of the parties.” Further, at endnote 15 of page 9 of the Learned Judge, remarks “Since time immemorial, our common law has set its face against exploitation in the levying of interest.” A most illuminating discussion on this aspect can be found in an historical survey by Grové, Die gemeenregtelikebeheer van woeker in die Suis-Afrikaanse Reg, De Jure, 1989 (22), 233and Die gemeenregtelikebeheer van woeker in die Suis-Afrikaanse 1027 Reg (vervolg), De Jure, 1990 (23),118.”
A fiduciary relationship prevents an agent, in this instance the 1stRespondent, from entering into any transaction that would cause my interests to clash with the 1stRespondent’s duty. For instance, an agent employed to buy cannot sell his or her own property; an agent employed to sell cannot buy his or her own property. In addition the agent cannot make any profit from his or her agency other than the agreed remuneration. As the case was in Robinson v Randfontein Estates Gold Mining Co Ltd 1921 883 AD 168 180, Bellairs v Hodnetl1978 (1) SA 1109 (A) 1130F, Low v Shedden  2 All SA 884 171 (C) and Ganes v TelecornNarnibia Ltd  2 All SA 609 (SCA), 2004 (3) SA 615 885 (SCA).
Within these premises the 1stRespondent was duty bound in terms of the fiduciary relationship that came into operation the moment I applied for a loan from the 1stRespondent, further to be confirmed by entering into a contract with the 1stRespondent and this on-going relationship is confirmed by me making payment to the 1stRespondent.
If follows that the Respondent has seriously breached the fiduciary duty by misleading me in the grounds so-set-out supra and therefore it is my right to bring civil action against the Respondent, which I intend doing.
The structures employed by the Respondent are at very least distrustful, designed for failure as it has no tangibility or substance which can justify the exorbitant interest charged against their ‘co-called’ loans.
The 1stRespondent acted with a predefined, predetermined set of actions prior to concluding the agreement with me because laws relating to the conduct of their industry allow for such conduct of profiteering to take place; and such actions are unassailable in the courts where the courts seem to have acted as shields and guardians of such actions by the 1st Respondent.
There exists no true competition among commercial banks where one can take your business, as each one of these so-called competitors are just another extension of the banking system whom hold the exclusive mandate to exchange nothing for liquid demands;
I had not mandated the Respondent to act, as it did in these premises, where its contention is that liquid money is borrowed against liquid repayments. There could never exist consensus or “meeting of the minds” between the parties given the facts aforesaid as what I had envision and what the Respondent versioned are two very distinct and far apart things that one cannot connect the two minds to agree;
Policies and guidance’s designed to protect the system from manipulation have been infringed upon, with absolute disregarded for rights and obligations in terms of law. Rules and public policy have been replaced with reckless profiteering.
The Respondent cannotclaim that it had the capacity to act, as it had no such means; The Respondent had to use external manipulation processes along with elaborate and complicated schemes that serve only to elicit the trust of an unsuspecting customer, that enabled it to gain the capacity to act;
It is doubtful that the Respondent had acquired authority to act; that is that the Respondent had acquired the rights and obligations prior to the loan agreement being brought into existence, as the majority of the Respondent’s rights and obligations were only concluded
once security, surety and creditworthiness were given, sold-off, loaned against or manipulated from nothingness, sheer simulations or illusions of physical value.
Furthermore, I interject that the processes followed by the 1stRespondent are in violation of the Constitution as far as the Legislation, in particular The Bank Act, The South African Reserve Bank Act and Policies concerning financial services rendered by the Respondent, in so far the Bill of Rights, Section 25 are concerned.
I have been materially prejudice as in the forgoing paragraphs to such extend that my rights to represent myself have be interfered with, thus disallowing the audi alteram partem rule;
The material facts of the process followed by the 1st Respondent and 2nd Respondent has caused undue financial burdens in that interest charged on my home loan are in excessive range and bridge just interest;
That the 1st Respondent had acted outside its mandate by utilising my security or debt to gain additional income and/ or profit, thus, and in conjunction thereto had caused financial hardship to me.
The 1st Respondent had in its proceedings relied on its contract of loan to shield it from answering questions about how it generates funds.
That the 1st Respondent together with the 2nd Respondent and 3rd Respondent had elected to, caused these actions of the 1st Respondent to take place with their explicit or negligent or in the alternative, to have been knowable thereof or could have been knowledgeable thereof, and had done nothing to protect me from such profiteering and financial prejudice.
The 3rd Respondent had failed to take appropriate remedial steps to prevent the 1st Respondent and 2nd Respondent to act within the confines of law. In the alternative, to advise the general public of the principle of money generation so it could ascertain valuable input from the public regarding these types of transactions. This will include the valuation of our South African Rand.
LEGISLATIVE BILL INTRODUCED:
The Honourable Court’s attention is drawn to annexure “MT 22”, page 896. In order to fully address the aspects contained in this application I have included the Financial Markets Bill, which will be brought into law once qualified. The importance of this bill is that it addresses some of the aspects contained herein.
ERRORS IN LEGAL REASONING:
The 1st Respondent had address my defence as one where I have paid the debt and where I refute the existence of the contract or its enforceability as per annexure “MT 1” page 16.
I reiterate here and refer the Honourable Court’s attention to my application for leave to appeal with its notes, annexure “MT 2” and “MT 3” hereto. These points are my contentions and not what the 1st Respondent’s notations are.
CONCLUSION AND REMEDIES:
These are per my prayers in the application for leave to appeal in the Court below; and
That where the Honourable Court finds inconstancies in the Law governing the 1st Respondent and the 2nd Respondent, that it issues such declaration as requested hereunder; and
The 1st Respondent, together with the 2nd Respondent if it contests this application, pay to me an amount of R15 000’000.00 (fifteen million) in damages, general damages and damages caused to my reputation; and
That the 1st Respondent, together with the 2nd Respondent if it contest this application, be ordered to pay the cost of these proceedings.
LEAVE TO APPEAL:
The first prayer contained in the Notice of Motion to which this affidavit is annexed is for leave to appeal to this Honourable Court against the Judgment. This prayer is justified and in the interest of justice as per the facts and considerations set out under paragraph seven above which, mutatis mutandis, is hereby incorporated by reference, so as not overburden these papers.
DECLARATION OF UNCONSTITUTIONALITY:
In terms of section 172(1)(a) of the Constitution, a court considering a constitutional matter within its power has no discretion but must declare any unconstitutional law invalid to the extent of its inconsistency.
After having made the declaration of invalidity, a court may then, in terms of section 172(1)(b) of the Constitution, make any order that is just and equitable.
In terms of section 172(1)(a), therefore, I submit that this Honourable Court must, on the basis of the reasons set out above, make an order declaring those parts of the acts, regulations and/ or policy governing the economical and/ or financial markets which infringe upon a individual or juristic person’s rights to be unlawful and invalid. This is the fourth prayer contained in the aforesaid Notice of Motion.
In terms of section 172(1)(b) of the Constitution, should this Court find that the acts, regulations and/ or policy governing the economical and/ or financial markets are unconstitutional, it may grant me just and equitable relief.
I submit that the second and third prayers in the aforesaid Notice of Motion constitute such relief, as should be granted by this Honourable Court.
REVIEW OF THE 1ST RESPONDENT'S DECISION:
If the relevant acts, regulations and/ or policy governing the economical and/ or financial markets are unconstitutional, the 1stRespondent’s decision, which was based upon the home loan agreement, is clearly unlawful and falls to be set aside in terms of the fourth prayer in the aforesaid Notice of Motion.
I submit that, once the impugned are declared null and void, the remainder sections and rules applicable to these proceedings reads well enough to enable the introduction of a bill or amendment to such acts/ rules, as the case might be, to be submitted in a manner which is akin to the procedures and under the same conditions applicable to bills/ amendments introduced by a Cabinet member or a Deputy Minister.
The fifth and sixth prayers in the aforesaid Notice of Motion relates to an order for costs against the 1st Respondent, with the prayer that such order be made even if this Honourable Court dismisses my applications;
124.1 In respect of the costs of my applications before this Honourable Court; OR
124.2 Subordinately, in respect of the costs relating to the proceedings in Court below.
In support of this prayer, I make reference to;
125.1 The facts and considerations set out under Para 123 above which, mutatis mutandis, are hereby incorporated by reference, so as not overburden these papers;
125.2 The Court below exercised its discretion in an arbitrary or capricious manner;
The criteria set out by this Honourable Court in at paragraphs 6 to 7 Chonco and Others v President, RSA 2010 (6) BCLR 511 (CC), inter alia, with reference how “in constitutional litigation [...] the way in which a costs order will hinder or advance constitutional justice”; and
126.1 additional argument and reasons shall be submitted to this Honourable Court with my ‘Heads of Argument’ and in oral argument.
I submit that the aforesaid prayers are;
127.1 Consistent with my prayers in the Court below, and
127.2 Consonant with the interest of justice.
For the reasons set out above, I submit that I have made out a case for the relief contained in the Notice of Motion to which this affidavit is annexed, and I pray for an order incorporating its terms.
DATE ATMIDRAND, THIS 19th DAY OF APRIL 2012
__________________________ DEPONENT I hereby certify that the deponent declares that the deponent knows and understands the contents of this affidavit and that it is to the best of the deponent's knowledge both true and correct. This affidavit was signed and sworn to before me at MIDRAND on this 19th day of APRIL 2012 and that the Regulations contained in Government Notice R1258 of 21 July 1972, as amended, have been complied with.
__________________________ COMMISSIONER OF OATHS
Name & Rank Address Telephone No.
: ………………………………………………… : ………………………………………………… : …………………………………………………
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