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[2012] ZAGPJHC 296
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Pieterse N.O. and Others v African Dawn Property Transfer Finance 3 (Pty) Limited and Others (A5030/2012) [2012] ZAGPJHC 296 (21 September 2012)
REPUBLIC OF SOUTH
AFRICA
SOUTH GAUTENG
HIGH COURT
JOHANNESBURG
CASE
NO A5030/2012
DATE:
21 SEPTEMBER 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 5th 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:
1. 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
2. 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