A Johannesburg businessman has been ordered to pay back his 76-year-old sister over R1 million, with interest, after borrowing it 12 years ago to boost his struggling business.
The order was made by the South Gauteng High Court in Johannesburg after Gwendoline Dorothy Williams, who now lives in a retirement village, struggled to recover the R1.1 million she loaned her brother, Andre Tsakos, in 2012.
Williams had accumulated the money through the sale of a house, cashing in policies she held with her former husband, and other related investments.
In December 2011, Tsakos entered into a waterproofing business venture with a friend. However, in January 2012, his friend was killed in a motor cycle accident.
Following his friend’s death, Tsakos, who was already involved in a micro-lending business, needed to raise money to save the struggling waterproofing business.
Knowing that his sister had investment savings, he approached her for a loan. In his words, he said he made her an offer she couldn’t refuse with a good interest rate.
Although she had safely invested the money with Allan Gray, she was persuaded to loan her brother due to the favourable interest rate.
After the money was paid, Williams approached an attorney and had a loan agreement drawn up. When she handed it to her brother, he was furious and tore it up and insisted on drawing up his own document, which he did.
In the document, he acknowledged to be indebted to his sister to the tune of R1.1 million from February 14, 2012 and she was not entitled to claim repayment of the whole amount during the first two years of the loan.
However, during the two years, Tsakos was obliged to pay the interest accrued on a monthly basis. All payments made would be appropriated firstly towards interest and lastly in reduction of the capital sum.
Tsakos instructed his other sister, who served as his bookkeeper in the micro-lending business, to make the regular interest payments.
The initial repayment of R20,000 was made on March 2012 and repayments were made from time to time over a continuous period of more than six years.
Between 2017 and 2018, his payments started deteriorating and he made his last payment of R1,000 in September 2018. However, he had paid R1 million interest but had not settled the capital loan.
He then offered his sister the debtor’s book from his micro-lending business in settlement of the outstanding capital on the loan.
Unhappy with the offer, Williams approached the high court to get her money back.
Tsakos argued that he was never opposed to repaying the money. However, he claimed that his sister had several opportunities since 2012 to recover her money, but she chose not to take it.
He also mentioned that he had even offered his debtors’ books as a form of repayment. Tsakos submitted that his financial circumstances had changed significantly, to the point where numerous creditors were pursuing him due to the struggles of the waterproofing company.
“I just wasn’t in the position to just go to the bank and make a withdrawal and pay her her money. If I was, I would have and just been done with it, but the circumstances weren’t like that, so I tried to in good faith give her the debtors book,” he told the court.
His lawyer further argued that the loan agreement between the parties was void because Williams was not registered as a credit provider under the provisions of the National Credit Act, 2005.
He also added that his client was was overcharged interest to a marginal degree for a period of some six months.
Acting Judge C Todd said there was evidence that the loan agreement between the siblings was mutually understood.
“I accept the plaintiff’s (Williams) evidence that the schedule had been prepared under the direction and instructions and with the approval of the defendant (Tsakos). The defendant, faced with the schedule attached to the declaration, pointed out no errors and also did not at any stage during his evidence state that compound interest was not contemplated.
“On the contrary he simply said that these calculations were straightforward, confirmed that the the plaintiff was very familiar, because of her work in his micro-lending business, with how interest was expected to be calculated,” said the acting judge.
Tsakos has been ordered to pay Williams over R1 million together with interest calculated from October 24, 2019 until date of final payment.
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