A Johannesburg businessman has been ordered to repay his 76-year-old sister almost R1 million, plus interest, after borrowing it 12 years ago to improve his struggling firm.
The judgment was issued by the South Gauteng High Court in Johannesburg after Gwendoline Dorothy Williams, who now resides in a retirement residence, struggled to reclaim the R1.1 million loan she gave her brother, Andre Tsakos, in 2012.
Williams had saved the money by selling a house, cashing in policies she owned with her ex-husband, and making other connected investments.
Tsakos and a friend started a waterproofing business together in December 2011. However, in January 2012, his companion died in a motorcycle accident.
Following his friend’s death, Tsakos, who was already involved in a microfinance business, sought to acquire funds to preserve the struggling waterproofing company.
Knowing his sister’s investment savings, he contacted her for a loan. In his words, he said he gave her an irresistible offer with a reasonable interest rate.
Despite having carefully placed the money with Allan Gray, she was convinced to lend it to her brother because of the favorable interest rate.
After the money was paid, Williams contacted an attorney and had a loan agreement drafted. When she presented it to her brother, he was outraged and tore it up, insisting on creating his own document, which he did.
In the paper, he admitted that he owed his sister R1.1 million as of February 14, 2012, and that she was not entitled to return of the entire amount during the first two years of the loan term.
During the two years, Tsakos was required to pay the accrued interest on a monthly basis. All contributions would be used first to pay interest and then to reduce the capital total.
Tsakos asked his other sister, who worked as his bookkeeper in the microlending firm, to make the regular interest payments.
The initial installment of R20,000 was made in March 2012, and subsequent repayments were made on a regular basis for more than six years.
Between 2017 and 2018, his payments deteriorated, and he paid his final payment of R1,000 in September 2018. However, he had paid R1 million in interest but not settled the capital loan.
He then offered his sister the debtor’s book from his microlending business in exchange for the loan’s outstanding money.
Williams, dissatisfied with the offer, petitioned the Supreme Court for her money back.
Tsakos claimed he was never opposed to repaying the money. However, he said that his sister had multiple opportunities to retrieve her money since 2012, but she chose not to accept them.
He also said that he had provided his debtors’ books as repayment. Tsakos said that his financial circumstances had altered drastically, to the point where multiple creditors were seeking him as a result of the waterproofing company’s troubles.
“I wasn’t in a position to simply go to the bank and make a withdrawal and pay her money. If I was, I would have just left it at that, but the circumstances were different, so I tried to give her the debtor’s book in good faith,” he told the court.
His lawyer also claimed that the loan agreement between the parties was illegal since Williams was not registered as a credit provider under the National Credit Act of 2005.
He also stated that his client was marginally overcharged for interest during a six-month period.
Acting Judge C Todd stated that there was evidence that the siblings’ borrowing agreement was mutually understood.
“I accept the plaintiff’s (Williams) evidence that the schedule was prepared under the defendant’s (Tsakos’) direction and instructions, and with his approval. The defendant, when confronted with the schedule attached to the declaration, pointed out no flaws and did not declare at any point during his testimony that compound interest was not considered.
“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,” according to the acting judge.
Tsakos has been ordered to pay Williams R1 million plus interest from October 24, 2019 until the date of full payment.
