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[2012] ZAGPJHC 170
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Pieterse NO and Others v African Dawn Property Transfer Finance 3 (Pty) Ltd and Others (A5030/2012) [2012] ZAGPJHC 170 (21 September 2012)
NOT
REPORTABLE
SOUTH
GAUTENG HIGH COURT
JOHANNESBURG
CASE NO
:A5030/2012
DATE:21/09/2012
In the matter between
ERNST PHILIP PIETERSE N.O.
…..........................
FIRST
APPELLANT
ERNST PIETERSE
N.O.
.......................................................
SECOND
APPELLANT
BIG COUNTRY INVESTMENTS (PTY) LIMITED
.............
THIRD
APPELLANT
SOUTHERN STAR ORGANISATION (PTY)
LIMITED
....................................................................................
FOURTH
APPELLANT
HICHANGE INVESTMENTS (PTY) LIMITED
....................
FIFTH
APPELLANT
PIETERSE, ERNST
PHILIP
..................................................
SIXTH
APPELLANT
and
AFRICAN DAWN PROPERTY TRANSFER
FINANCE 3 (PTY)
LIMITED
................................................
FIRST
RESPONDENT
KAREN KEEVY
N.O.
...........................................................
SECOND
RESPONDENT
LEBOGANG MICHAEL MOLOTO N.O.
............................
THIRD
RESPONDENT
J U D G M E N T
WEPENER J:
[1] This is an appeal against
the judgement of Teffo AJ, with the leave of the court below.
[2] The first respondent brought an application against the
appellants for the payment of money, the appellants having been
sureties
and co-principal debtors in favour of the first respondent
for the general indebtedness of Southern Star Organisation (South
Africa)
(Pty) Ltd (‘Southern Star’). The latter company
has been liquidated. Teffo AJ granted judgment against the appellants
for the payment of the sum of R 4 300 696.74 and interest from 1 July
2010.
[3] The second and third respondents were respondents in the court
below but took no part in the proceedings. For reasons unknown,
they
have again been cited as respondents in the appeal. They play no part
in the matter.
[4] Pursuant to agreements of loan the first respondent lent and
advanced monies to Southern Star from time to time on certain
terms
and conditions. Repayments were also made from time to time.
[5] It was alleged that Southern Star breached the agreement by
failing to repay all the amounts which it should have. The agreement
of loan and suretyship documents also provide that a certificate of
balance setting out Southern Star’s indebtedness to the
first
respondent would be prima facie proof of such indebtedness of
Southern Star or any surety. Such a certificate was indeed
attached
to the founding affidavit.
[6] The appellants, however, attacked the certificate and the amounts
owing, resulting in the first respondent amending it in reply
in
order to supply, what it contended to be, the correct amount owing.
[7] On appeal, the appellants argued that the amount arrived at by
the first respondent in its calculation and certificate of balance
in
the replying affidavit is still incorrect. I do not tabulate these
incorrect calculations although the effect of these calculations
is
that there would be a difference in the amount to which the first
respondent is entitled to and the amount for which judgment
was
granted, the former being a lesser amount than the latter.
[8] On appeal, the appellants raised three issues. Firstly, that the
calculations by the first respondent in the founding affidavit
and
the replying affidavit are incorrect. Secondly, that the first
respondent was not entitled to raise new matter in the replying
affidavit and thirdly, that the fifth appellant could not be held
liable as surety and co principle debtor, for reasons referred
to
later in this judgment.
[9] Mr H.P. van Nieuwenhuizen,
who appeared on behalf of the appellants, abandoned the argument that
the issues raised in the replying
affidavit were new matter which was
impermissible to be taken into account in application proceedings. By
virtue of decisions such
as
Shepherd
v Mitchell Cotts Sea-Freight (SA) (Pty)
Ltd 1984 (3) 202 (T) at 205G,
Scotch
Whisky Association and Another v Totpak Manufacturing Division (Pty)
Ltd and Others
2006
JOL 17235
(T) (and the cases therein referred to) and
Van
Zyl and Others v Government of RSA and Others
(2005) 4 ALL SA 96
(T) at p148-149, the appellants were well advised
not to pursue the issue regarding the alleged new matter contained in
the replying
affidavit as the facts therein contained are in
amplification or explanation of what the first respondent had said in
its founding
affidavit. Nothing more needs to be said about the
argument.
[10] That brings me to the second issue, namely, that the first
respondent admittedly erred in its calculation in the founding
affidavit and according to the appellants’ argument, also erred
in its calculations in the replying affidavit. This argument
can be
shortly dealt with.
[11] The first respondent
instituted application proceedings for the payment of the amount of R
4 300 696.74 and ancillary relief.
It attempted to prove the amount
owing to it by the inclusion of the certificate of balance as
provided for in the suretyship agreement.
The first respondent
admitted that certain calculation errors had been made and in reply
the first respondent conceded that it
erred in the founding affidavit
in that it included an amount of interest in contravention of the
in
duplum
rule. It
consequently reduced its claim by the amount which was in excess of
the
in duplum
rule.
[12] The appellants were still
not satisfied with the first respondent’s calculation of the
amount owing as the first respondent
showed in reply that the amount
owing was R 7 965 463.37 at the time when a new agreement was entered
into between first respondent
and Southern Star. The new agreement,
however, recorded that ‘…
the
settlement figure shall be an agreed amount of R8m notwithstanding
the prior settlement date’
.
[13] The appellants, as sureties,
are not privy to the agreement and Mr van Nieuwenhuizen was unable to
advance any reason on what
basis the appellants can attack the
validity of the agreement between Southern Star and the first
respondent. Whilst the agreement
is in existence (and the fact that
the agreement is in existence is common cause) and considering that
no attempt has been made
by any party to rectify it or set it aside
on any basis, it stands as a valid agreement between Southern Star
and the first respondent.
In supplementary heads of argument Mr van
Nieuwenhuizen argued that there was an incorrect common assumption
between Southern Star
and the first respondent when they agreed to
the sum of R8m and that the sureties can rely on such mistaken common
assumption,
iustus
error
or on a
rectification citing
Forsyth
& Pretorius:
Caney’s
The Law of Suretyship
5
th
ed. 2002 JUTA p. 188, para (b). There is no merit in the argument.
The factual basis for such incorrect common assumption or
iustus
error
is missing. No rectification of the agreement of loan has been sought
by any of the parties entitled to seek a rectification.
[14] The difficulty with which the appellants are saddled is the fact
that Southern Star and the first respondent agreed that the
amount of
R8m was to be paid. This happens when parties settle issues and enter
into agreements. The fact whether Southern Star
actually owed the sum
of some R 35 000.00 less than the R8m would be immaterial. It
undertook an obligation for R8m.
[15] The agreement consequently provides for an indebtedness of R8m
by Southern Star and that interest could be charged at a rate
of 5%
per month from 26 April 2008. In a schedule of amounts owing since 26
April 2008, Mr Bishop, appearing for the first respondent,
demonstrated that by pure arithmetical calculations, and taking into
account interest as provided for in the agreement and payments
made
from time to time, that the total outstanding balance owing by
Southern Star as at 30 June 2010 was the sum of R4,8m. The
schedule
is attached to this judgment as ‘A’.
[16] Mr van Nieuwenhuizen accepted the correctness of the
calculations in the schedule. He, however, argued that the initial
amount
should not have been R8m, which argument I have indicated has
no merit. It is quite apparent that the calculations supplied to
Teffo AJ were incorrect as she granted judgment for the lesser amount
of R 4 300 696.74 only. The first respondent has not applied
to amend
its claim by filing additional affidavits to increase the amount
awarded by the court below.
[17] The appellants have advanced no basis on which the agreed amount
to be paid by Southern Star can be varied or set aside.
[18] Even if one would be generous to the appellants and calculate
the amount outstanding based on the initial amount of R 7 965
463.37
being the amount that the appellants argued should be used instead of
the sum of R8m, the outstanding balance as at 30 June
2010 would be
in excess of the amount of the judgment granted by Teffo AJ. This is
clear from the calculations handed in by Mr
Bishop and attached as
‘B’ hereto.
[19] The various calculations of the appellants to indicate that the
agreed amount of R8m was incorrectly arrived at, is of no
assistance.
Calculations based on the alleged incorrect point of departure i.e.
the R8m have no value and the appellants are bound
by the amount as
contained in the written agreement between Southern Star and the
respondent.
[20] The last issue to be considered is the liability of the fifth
appellant as surety for the amount owing by Southern Star. The
fifth
appellant is a company of which the sixth appellant and his father,
Mr Ernst Pieterse, were the sole directors. The sixth
appellant avers
that his father positively refused that the fifth appellant be bound
as surety.
[21] What neither the sixth appellant nor his father say is when such
refusal occurred, why such positive refusal was not disclosed
to the
first respondent as and when it was known and, most importantly why
the sixth appellant signed the deed of suretyship on
behalf of the
fifth appellant in the face of such alleged refusal. The sixth
appellant stated that he prepared a resolution on
a standard form in
anticipation of his father’s signing it. The resolution reads:
‘
RESOLUTION
PASSED AT A MEETING OF THE DIRECTORS OF HICHANGE INVESTMENTS (PTY)
LIMITED, REGISTRATION NUMBER: 1969/010538/07 (“the
Company”)
HELD AT on DAY OF FEBRUARY 2009
WHEREAS the Company wishes to bind itself as surety
and co-principal debtor with Southern Star Organisation SA (Pty)
Limited [In
Liquidation] which borrowed an amount of R4 310 183.27
plus interest at 3% per month from African Dawn Property Transfer
Finance
2 (Pty) Limited and;
WHEREAS the company is desirous to bind itself as
surety and co-principal debtor with Southern Star Organisation SA
(Pty) Limited
[In Liquidation] which borrowed an amount of R7 263
653.35 plus interest at 5% per month from African Dawn Property
Transfer Finance
3 (Pty) Limited and;
IT WAS RESOLVED THAT:
Ernest Pieterse and/or Ernest Philip Pieterse is
hereby authorised to act on behalf of the Company and sign all and
any such documentation
in respect of the suretyship in favour of
African Dawn Property Transfer 2 (Pty) Limited; and
Ernest Pieterse and/or Ernest Philip Pieterse is
hereby authorised to act on behalf of the Company and sign all and
any such documentation
in respect of the suretyship in favour of
African Dawn Property Transfer 3 (Pty) Limited.
CERTIFIED A TRUE EXTRACT
________________________
Ernest Pieterse – Director
SIGNED
_________________
Ernest Philip Pieters – Director’
It is signed by the son but not by the father. Extracts of minutes of
meetings require no signatures to show that such a meeting
indeed
occurred or that a resolution was passed thereat. On the face of it,
the resolution is a regular document showing that a
meeting of
directors occurred where it was resolved that, inter alia, the sixth
appellant could sign the suretyship on behalf of
the fifth appellant.
Absent any explanation by father and the son, the directors, why the
son (sixth appellant) then signed the
suretyship on behalf of the
fifth appellant, the version proffered by them flies in the face of
the objective facts.
[22] The fifth appellant relied on the fact that its Articles of
Association, which are contained in a public document and thus
deemed
to be known by the first respondent, provides as follows:
’
81. In
regard to the proceedings of directors, the following provisions
shall have effect, namely:-
(a) TWO (2) directors shall be a quorum.
(b) The continuing directors may act notwithstanding
any vacancy in their number.
(c) A resolution
in writing, signed by all the directors for the time being shall be
as valid and effectual as if it had been passed
at a meeting of
directors duly called and constituted.
’
[23] It was argued that, because the resolution was not signed by all
the directors, it was not a proper and valid resolution and
the
knowledge thereof has to be imputed to the first respondent that all
the directors had to sign a resolution, and failing such
signature,
to be invalid.
[24] The argument misses the fact that resolutions need not to be
signed by all directors to be valid. Resolutions taken at a meeting
of directors fall under paragraph 81(a) of the Articles. No signature
is required. Paragraph 81(c) of the Articles only deal with
a
situation where no meeting is held and a decision is taken by
‘round-robin’. In such an event the resolution must
be
signed by all the directors to be valid as if passed at a meeting.
[25] The document in which the resolution is contained, on the face
of it, is evidence of a meeting of the directors where the
resolution
was passed. Subsequently the sixth appellant signed a deed of
suretyship on behalf of the fifth appellant in accordance
with the
wording of the resolution. The sixth appellant, as director of the
fifth appellant, would, in my view, ordinarily be authorised
to sign
such documents, on behalf of the fifth appellant as he did for other
companies of which he and his father are the sole
directors. The
failure of the sixth appellant and his father to explain why the
sixth appellant signed the suretyship on behalf
of the fifth
appellant, in my view, is so glaring that the allegations that the
father refused that the fifth appellant be a surety
can be rejected
as it is completely at odds with their conduct. The father did refuse
that the son sign a suretyship on behalf
of Southern Star South Cape
(Pty) Ltd and that party’s name was deleted from the suretyship
document with an initial affixed
next to the deletion. The sixth
appellant, however, signed the suretyship document on behalf of the
fifth appellant and Southern
Star. In addition, the statement that
the resolution is ‘a standard form’ is false. The
resolution is clearly a resolution
of the fifth appellant, with
reference to definite amounts, amounts of interest and the fact that
either the father or the son
was authorised to sign the ‘surety
documentation’. It is not a standard form and the document
itself belies the allegation
by the appellants.
[26] In these circumstances, I am
of the view that the version offered by the father and son (the
latter being the sixth appellant),
is farfetched and untenable and
that a court is justified in rejecting it merely on the papers.
Plascon-Evans
Paints (TVL) Ltd. v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at 635C,
Yarram
Trading CC t/a Tijuana Spur v Absa Bank Ltd
2007 (2) (SA) 570 (SCA) at 582. Having come to this conclusion, the
fifth appellant is indeed liable as surety with the other appellants
and I need not decide whether the fifth appellant should be held
liable by virtue of any ostensible authority.
[27] In the circumstances, I would propose that the appeal be
dismissed with costs.
WEPENER J
JUDGE OF THE HIGH COURT
SOUTH GAUTENG
I agree, it is so ordered
SALDULKER J
JUDGE OF THE HIGH COURT
SOUTH GAUTENG
I agree.
NICHOLLS
J
JUDGE OF THE HIGH COURT
SOUTH GAUTENG
COUNSEL FOR APPELLANTS:
H
P Van Nieuwenhuizen
APPELLANTS ATTORNEYS:
SSH
Inc
COUNSEL FOR THE
RESPONDENTS:
Anthony
Bishop
RESPONDENTS ATTORNEYS:
Peterson
Hertog & Associates
DATE/S OF HEARING:
13
September 2012
DATE OF JUDGMENT:
21September
2012
Calculation of simple interest:
‘
A
’
Monthly period
Interest at 5%
Cumulative interest
Balance outstanding
30 April 2008
R8 000 000.00
1 May 2008 – 31 May 2008
R400 000.00
R400 000.00
R8 400 000.00
1 June 2008 – 30 June 2008
R400 000.00
R800 000.00
R8 800 000.00
1 July 2008 – 31 July 2008
R400 000.00
R1 200 000.00
R9 200 000.00
1 August 2008 – 31 August 2008
R400 000.00
R1 600 000.00
R9 600 000.00
1 September 2008 – 30 September 2008
R400 000.00
R2 000 000.00
R10 000 000.00
1 October 2008 – 31 October 2008
R400 000.00
R2 400 000.00
R10 400 000.00
(R8 000 000.00)
R0.00
R2 400 000.00
1 November 2008 – 30 November 2008
R120 000.00
R120 000.00
R2 520 000.00
1 December 2008 – 31 December 2008
R120 000.00
R240 000.00
R2 640 000.00
1 January 2009 – 31 January 2009
R120 000.00
R360 000.00
R2 760 000.00
1 February 2009 – 28 February 2009
R120 000.00
R480 000.00
R2 880 000.00
1 March 2009 – 31 March 2009
R120 000.00
R560 000.00
R3 000 000.00
1 April 2009 – 30 April 2009
R120 000.00
R680 000.00
R3 120 000.00
1 May 2009 – 31 May 2009
R120 000.00
R800 000.00
R3 240 000.00
1 June 2009 – 30 June 2009
R120 000.00
R920 000.00
R3 360 000.00
1 July 2009 – 31 July 2009
R120 000.00
R1 040 000.00
R3 480 000.00
1 August 2009 – 31 August 2009
R120 000.00
R1 160 000.00
R3 600 000.00
1 September 2009 – 30 September 2009
R120 000.00
R1 280 000.00
R3 720 000.00
1 October 2009 – 31 October 2009
R120 000.00
R1 400 000.00
R3 840 000.00
1 November 2009 – 30 November 2009
R120 000.00
R1 520 000.00
R3 960 000.00
1 December 2009 – 31 December 2009
R120 000.00
R1 640 000.00
R4 080 000.00
1 January 2010 – 31 January 2010
R120 000.00
R1 760 000.00
R4 200 000.00
1 February 2010 – 28 February 2010
R120 000.00
R1 880 000.00
R4 320 000.00
1 March 2010 – 31 March 2010
R120 000.00
R2 000 000.00
R4 440 000.00
1 April 2010 – 30 April 2010
R120 000.00
R2 120 000.00
R4 560 000.00
1 May 2010 – 31 May 2010
R120 000.00
R2 240 000.00
R4 680 000.00
1 June 2010 – 30 June 2010
R120 000.00
R2 360 000.00
R4 800 000.00
Calculation of simple interest:
‘
B
’
Monthly period
Interest at 5%
Cumulative interest
Balance outstanding
30 April 2008
R7 965 463.67
1 May 2008 – 31 May 2008
R398 273.18
R398 273.18
R8 363 736.85
1 June 2008 – 30 June 2008
R398 273.18
R796 546.36
R8 762 010.03
1 July 2008 – 31 July 2008
R398 273.18
R1 194 819.54
R9 160 283.21
1 August 2008 – 31 August 2008
R398 273.18
R1 593 092.72
R9 558 556.39
1 September 2008 – 30 September 2008
R398 273.18
R1 991 365.90
R9 956 829.57
1 October 2008 – 31 October 2008
R398 273.18
R2 389 639.08
R10 355 102.75
(R7 994 791.50)
R0.00
R2 360 311.25
1 November 2008 – 30 November 2008
R118 015.56
R118 015.56
R2 478 326.81
1 December 2008 – 31 December 2008
R118 015.56
R236 031.12
R2 596 342.37
1 January 2009 – 31 January 2009
R118 015.56
R354 046.68
R2 714 357.93
1 February 2009 – 28 February 2009
R118 015.56
R472 062.24
R2 832 373.49
1 March 2009 – 31 March 2009
R118 015.56
R590 077.80
R2 950 389.05
1 April 2009 – 30 April 2009
R118 015.56
R708 093.36
R3 068 404.61
1 May 2009 – 31 May 2009
R118 015.56
R826 108.92
R3 186 420.17
1 June 2009 – 30 June 2009
R118 015.56
R944 124.48
R3 304 435.73
1 July 2009 – 31 July 2009
R118 015.56
R1 062 140.04
R3 422 451.29
1 August 2009 – 31 August 2009
R118 015.56
R1 180 155.60
R3 540 466.85
1 September 2009 – 30 September 2009
R118 015.56
R1 298 171.16
R3 658 482.41
1 October 2009 – 31 October 2009
R118 015.56
R1 416 186.72
R3 776 497.97
1 November 2009 – 30 November 2009
R118 015.56
R1 534 202.28
R3 894 513.53
1 December 2009 – 31 December 2009
R118 015.56
R1 652 217.84
R4 012 529.09
1 January 2010 – 31 January 2010
R118 015.56
R1 770 233.40
R4 130 544.65
1 February 2010 – 28 February 2010
R118 015.56
R1 888 248.96
R4 248 560.21
1 March 2010 – 31 March 2010
R118 015.56
R2 006 264.52
R4 366 575.77
1 April 2010 – 30 April 2010
R118 015.56
R2 124 280.08
R4 484 591.33
1 May 2010 – 31 May 2010
R118 015.56
R2 242 295.64
R4 602 606.89
1 June 2010 – 30 June 2010
R118 015.56
R2 360 311.20
R4 720 622.45