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[2015] ZAGPJHC 52
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Beaux Lane (SA) Properties (Pty) Limited v Marais (01653/13) [2015] ZAGPJHC 52 (13 March 2015)
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Certain
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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 01653/13
DATE:
13 MARCH 2015
In
the matter between:
BEAUX
LANE
(SA)
PROPERTIES (PTY)
LIMITED
............................................................
Plaintiff
And
ALBERTUS
CHRISTIAAN
MARAIS
...................................................................................
Defendant
(IDENTITY
NUMBER 4……………….)
SUMMARY
Surety –
principal and surety – deed of suretyship – contained in
separate but high-lighted clause in lease agreement
– the
defendant signing lease agreement and deed of suretyship as sole
member of close corporation under alleged mistake
of not attracting
personal liability – defences under sec 6 of General Law
Amendment Act 50 of 1965 and the
Consumer Protection Act 68 of 2008
not exonerating defendant from liability – alleged mistake not
just and reasonable – landlord succeeding in enforcing
deed of
suretyship.
J
U D G M E N T
MOSHIDI,
J
:
[1]
The plaintiff has instituted action against the defendant for payment
of the amounts of R244 538,12 (Claim 1), and R44 673,75
(Claim 2)
(“
the amounts
”).
The amounts represent arrear rentals, rates and taxes, and damages
for breach of contract based on a lease agreement.
CAUSE
OF ACTION
[2]
The cause of action is predicated on a deed of suretyship contained
in the lease agreement concluded between the plaintiff and
an entity
called Ustica 1019 CC (“
the
tenant
”) in July 2011. The
defendant, who was the sole member of the tenant at the time, signed
a suretyship in favour of
the plaintiff, also in July 2011.
THE
ISSUES FOR DETERMINATION
[3]
The central issues to be decided in this trial are whether the
defendant was aware of the deed of suretyship when he signed
the
lease agreement; whether he was aware that by signing the deed
of suretyship he attracted personal contractual liability
towards the
plaintiff; whether the defendant was misled into signing the
suretyship; and whether the defences raised by the defendant
under
the Consumer Protection Act,
[1]
(“
the
CPA
”)
and sec 6 of the General Law Amendment Act,
[2]
(“
the
GLAA
”)
were valid. There were other peripheral issues to be determined.
THE
EVIDENCE
[4]
The plaintiff led the evidence of a single witness. He was Mr
Bernard Bredenkamp (“
Bredenkamp
”).
At the time of the conclusion of the lease and the suretyship
agreements, Bredenkamp was the property manager in
the employ of a
company called Eris Property Group (Pty) (“
Eris
”),
and had been in the property industry for some 18 years. His
company, Eris, was the managing agent on behalf of
the plaintiff.
The plaintiff was a landlord that owned immovable property.
[5]
Bredenkamp was not involved in the initial negotiations leading to
the lease agreement under discussion. However, an unnamed
external
broker from a company called Galetti Commercial and Industrial
(“
Galetti
”),
approached Eris looking for space on behalf of a potential tenant,
which later turned out to be the tenant in the present
action.
An offer was made to Eris on behalf of the tenant, and in respect of
the leased property. The leased property comprised
of two warehouses
for commercial use. In the offer, the tenant opted for a two months’
only deposit payable plus a suretyship
agreement, which fell in line
with the policy of Bredenkamp’s company. The plaintiff,
as landlord, would also not accept
a two months’ deposit
without the accompanying suretyship.
[6]
The above was conveyed to the broker before the lease agreement was
signed. The offer, which was in writing, was signed
by the
tenant on 30 May 2011. The offer also made mention that the
tenant, by signing the lease agreement, acknowledged that
they may
sign personal surety at the landlord’s request.
[7]
Bredenkamp testified that his legal department proceeded to prepare
the lease agreement pursuant to his management policy which
included,
credit checks and bank cheques, which were all favourable. The lease
agreement was then signed by the tenant (the defendant)
on 30 May
2011, and later by Bredenkamp on 18 July 2011, at separate venues.
The defendant presumably signed the lease agreement
in the presence
of his broker at Galetti. There was some delay in between,
which Bredenkamp explained satisfactorily. In
the end, nothing really
turned on this aspect, save that the investigations leading to the
signing of the lease agreement confirmed
that the defendant was the
sole member of his close corporation, i.e. the tenant.
[8]
The defendant signed the lease agreement, which included a deed of
suretyship (clause 54), and initialled each clause thereof.
Attached to the lease agreement, was a schedule marked “
B
”,
(at least on my papers), which dealt with the particulars of the
parties, the description of the leased premises, the commencement
of
the lease i.e. 1 May 2011, the rental and the deposit of R26 000,00
payable. The schedule, consisting of several blocks
and one of
the blocks was headed, ‘
Full names
and identity numbers of sureties
’.
This was the same schedule on which the defendant signed the lease
agreement. He printed his full names next
to the name of the
close corporation as member of the tenant, and signed ‘
for
and on behalf of the tenant who warrants that he/she is duly
authorised thereto
’. The
block just referred to on the schedule, was left blank.
[9]
Bredenkamp testified that the reason why the block was left empty,
was simply that there were no additional sureties required
since the
defendant was the sole member of the tenant. Bredenkamp was
contend that the defendant intended to be bound by
the suretyship,
otherwise he would have said so, and the deposit would have been
increased to three months’, in which event
the suretyship
clause would have been deleted.
[10]
Bredenkamp was cross-examined. The lease agreement was prepared by
the legal department of Eris. This, after consultation
with the
South African Property Owners’ Association (“
SAPOA
”),
and in order to comply with the provisions of the CPA. He
studied the lease agreement subsequently and noticed that
the
defendant had initialled twice in the right-hand margin against
clause 54 of the lease agreement which is headed, “
DEED
OF SURETYSHIP
”. In his
view, by this, the defendant signified that he (the defendant), was
aware of the deed of suretyship, had read
the clause and in fact
assented to its terms. Rather strangely, it was put to
Bredenkamp in cross-examination that if the
landlord had required a
personal suretyship, that the broker (from Galetti) would have
included a reference to a suretyship in
the offer to lease.
This suggested clearly that the defendant omitted to instruct his
counsel that there was in fact a reference
to a suretyship in the
offer he made to lease. In response to the proposition that for the
purposes of law, clause 54 was ‘
hidden
’,
Bredenkamp replied that the clause had a separate heading, and
therefore it was not concealed; the bold or highlighted
portion of
the clause attracted attention, and the boldness was readily seeable,
and that the defendant had initialled twice in
the margin against
this clause.
THE
DEFENDANT’S EVIDENCE
[11]
Mr A C Marais, the defendant, testified in his own defence. In
short, his evidence came to this: he was the only
member of the
tenant, and was duly authorised to sign the lease agreement on behalf
of the tenant. He identified the unknown broker
from Galetti as Mr
Darryl Frerk (“
Frerk
”),
whom he appointed for the purposes of the transaction in question.
[12] The defendant
and Frerk went through the agreement but did not discuss the contents
thereof. However, during cross-examination,
he conceded that he
had read the document in full and was aware of its contents. He
further acknowledged that he saw the
reference to the suretyship
contained in paragraph 9 of the offer he made, which reads as
follows:
“…
By
signing this agreement, the tenant acknowledges that they
may
have to sign personal surety over the lease agreement at the
landlord’s request
(underlining
added).”
[3]
[13]
In addition, the defendant testified that he was asked by Frerk to
fill in his (defendant’s) details under the heading,
“
Sureties
For Company/CC
”, in a document of
the landlord requesting details for the lease agreement. The
defendant conceded during both his
evidence-in-chief and
cross-examination that, by filling in the details, he would be
liable. He knew that the landlord required
him in future, and
when the lease agreement was to be concluded to execute a deed of
suretyship in respect of debts of the tenant.
The defendant
plainly contradicted himself when he testified, first that Frerk must
have brought the lease agreement to him in
order to explain it to
him, but then testified that Frerk at the same time was in a hurry
and instructed him merely to sign in
the margin against all the
paragraphs. There were other contradictions which emerged from the
defendant’s evidence.
[14]
He admitted in evidence that, as sole member of the tenant, he passed
a resolution of the directors/members of the tenant at
Alberton, on
20 May 2011. He signed the resolution in his capacity as sole
member. In terms of the resolution the defendant
was
authorised,
inter
alia
,
“
to
sign all such documents and to perform all such acts as may be
necessary, to conclude a valid and enforceable lease agreement
and
any addendum or addenda thereto …
”
[4]
He testified that he had to do so since he was the tenant.
[15]
The crucial contradiction, and indeed unreliability of the
defendant’s version came in regard to the actual suretyship
clause in question, which I deal with immediately below.
THE
DEED OF SURETYSHIP
[16]
The lease agreement consists of some 59 clauses, each with a separate
heading typed in bold letters. The suretyship clause,
clause 54, on
page 23 of the agreement, is reproduced as follows:
“
DEED
OF SURETYSHIP
In
the event of the Tenant being a private company, close corporation,
trust or other legal entity, the authorised signatories,
by their
signatures hereto, irrevocably bind themselves jointly and severally
as surety and co-principal debtors in solidum to
the Landlord as
defined herein (‘the creditor’) for the due fulfilment by
the Tenant (‘the debtor’) of
all terms of the Lease or
any renewal thereof between the creditor and the debtor in respect of
the Leased Premises as defined
herein and agree that this surety
shall extend to cover any failure to fulfil the terms of the Lease or
any renewal or extension
thereof whether brought by the action of the
debtor or any person or by the liquidation of the debtor.
The
surety/sureties waive the benefits of excussion and division and
agree that any indulgence or latitude granted by the Landlord
to the
Tenant in respect of any obligation in terms of this Lease agreement
or any amendment of the terms thereof, shall in no
way prejudice the
Landlord’s rights in terms of this suretyship.
Benefits
of excussion means the Landlord becomes entitled to sue the surety
for the full amount for which the surety is liable in
terms of the
suretyship without first proceeding against the Tenant and division
means that the surety is not only responsible
for a pro rata share of
the debt but for the entire debt (if more than two persons bind
themselves as sureties for one obligation).
”
[17]
As in the case of all the clauses in the agreement, it was
undisputed that the defendant initialled the deed of suretyship
clause 54, which appears on p 23 of the 25-page lease agreement.
However, in evidence-in-chief, the defendant alleged that Frerk
did
not point out to him the suretyship deed. He said it was just one of
the clauses that he was required to sign. He complained
that
Frerk had not drawn his attention to the clause. However, in
cross-examination the defendant conceded that the clause
containing
the deed of suretyship is confined within a separate paragraph;
that the deed of suretyship clause has a separate
heading; part of
the clause, as quoted above, is in bold letters; he initialled
against the clause in the right-hand margin twice,
that is, first
against the part of the clause that was not in bold, and then he
initialled against the bold portion of the clause,
i.e. clause 54;
and that by just giving the clause a cursory glance, a reasonable
person would have determined that it contained
a deed of suretyship.
He agreed that he signed as tenant, but however, proceeded to contend
that he made a mistake by not realising
that by signing, he was
liable in his personal capacity. He admitted that by signing it
could mean that he was a surety as
a member of the tenant and would
be a surety in that capacity. He admitted in cross-examination
that his alleged mistake
was caused by his own recklessness and
inattention in not reading the document in part and in part by Frerk.
Later, the defendant
conceded that the suretyship clause had been
properly highlighted, and that his attention was in fact drawn to it
by requesting
him to initial against the right hand margin of the
paragraph on two occasions.
DISCUSSION
OF THE DEFENDANT’S DEFENCES
[18]
In the light of the above it was unnecessary to consider fully the
defendant’s other defences, including the defence
based on the
Consumer Protection Act
(“
CPA
”).
In fact, the latter defence was specifically abandoned at the
commencement of closing argument. What however,
remained to
determine were the three other defences advanced. The first is
whether the defendant was mistaken about the fact that
he signed the
lease agreement as tenant, and that the tenant was the surety for its
own debts, and whether the mistake alleged
by the defendant was
iustus
or
reasonable. The final defence related to the provisions of
sec
6
of the GLAA.
SOME
LEGAL PRINCIPLES APPLICABLE
[19]
The matter of
Glen
Comeragh (Pty) Ltd v Colibri (Pty) Ltd and Another,
[5]
concerned
an application for an order against the first and the second
respondents jointly, second respondent being a director of
first
respondent. The order was for payment of the balance of the
purchase price owing in respect of certain deeds of sale.
The
second respondent stated in his affidavit that when he signed the
deeds of sale, he was not aware, ‘
that
hidden amongst the detailed small print was a sentence to the effect
that I would incur liability as suretyship by my signature
to the
documents
’,
and that if he had been aware thereof, he would never have agreed to
it and would have insisted upon its deletion.
At 214D-H, the
Court said:
“
In
an action based on a written contract, the defendant cannot escape
liability (at any rate in the absence of misrepresentation)
merely
because he was unaware of the terms of the contract. In George
v Fairmead (Pty) Ltd
1958 (2) SA 465
(A) FAGAN CJ said at 472A:
‘
When
a man is asked to put his signature to a document he cannot fail to
realise that he is called upon to signify, by doing so,
his assent to
whatever words appear above his signature.’
If
he chooses not to read what he is signing, he takes the risk, with
his eyes open, of being bound by it and he cannot be heard
to say
that his ignorance of what was in it was justus error (ibid at
472H-473A).
The
question is accordingly whether the second respondent has ‘put
his signature’ on the deed of sale. He admittedly
signed
his name above the word ‘koper’. The word ‘koper’,
must, however, be given the same meaning
as it is given in the deed
of sale, namely ‘Colibri (Pty) Ltd, van Lewis Gebou, Paul
Krugerstraat 259, Pretoria (hierinlater
na verwys die ‘koper’).
(See Major v Business Corners (Pty) Ltd
1940 WLD 84
; Meter Motors
(Pty) Ltd v Cohen
1966 (2) SA 735
(T)). His signature is
accordingly that of the second respondent in his capacity as agent
acting on behalf of the first respondent.
It may however also
be his signature in his personal capacity. There is no reason
in principle why a person should not sign
a contract in two
capacities, ie in his capacity as agent and in his personal capacity,
so that his signature is in effect a double
signature. See
Phipson on Evidence 11
th
ed at 714 para 1635:
‘
Where
a party executes a document in several different capacities, it is
not necessary that he should sign more than once and extrinsic
evidence is admissible to show his intention …’
”
Compare
Brink
v Humphreys and Jewell (Pty) Ltd,
[6]
where
the majority of the Court found that the error was just and the
suretyship agreement was void
ab
initio
.
In
Slip
Knot Investments 777 (Pty) Ltd v Du Toit,
[7]
the
appeal was upheld in the following circumstances. One of the
respondents in the court
a
quo
,
although admitting that he signed the deed of suretyship, denied that
he was liable, and averred that he signed by mistake,
and
without the intention to incur contractual liability. At para
[12] of the judgment, the Court, per Malan JA, said:
“
A
contracting party is generally not bound to inform the other party of
the terms of the proposed agreement. He must do so, however,
where
there are terms that could not reasonably have been expected in the
contract. The court below came to the conclusion
that the
suretyship was ‘hidden’ in the bundle, and held that the
respondent was in the circumstances entitled to assume
that he was
not personally implicated. I can find nothing objectionable in the
set of documents sent to the respondent. Even
a cursory glance
at them would have alerted the respondent that he was signing a deed
of suretyship …
”
[20]
In the present matter, there was no question of any misrepresentation
made by the landlord’s managing agent when the
agreement was
signed. In fact, the defendant appointed his own broker, Frerk, who
assisted him in presenting the offer and executing
the lease
agreement. They both went through the document. The defendant
was informed in advance, i.e. in his own offer to
lease that a
suretyship was expected. The defendant was a businessman of
longstanding. He signed the offer to lease on behalf
of the
tenant in favour of the plaintiff. He acknowledged that he may have
to sign personal surety in respect of the lease agreement
at the
landlord’s request. In addition, the defendant knew what a
suretyship was, and he understood the implications thereof.
He
had previously concluded a suretyship in favour of another bank, i.e.
Nedcor Bank for the debts of a tenant. In any event,
the
version of how he made the mistake, was highly questionable and
inherently incredible. He was simply not a good witness,
and
his evidence, like his several other defences, was not impressive for
a number of reasons. It was also contradictory.
He never
raised some of the defences in his affidavit resisting summary
judgment. The mistake on which he relied was clearly
of his own
recklessness and inattention. There was no reasonable error or
misrepresentation. He failed to discharge the
onus
placed on him that he was unaware of the suretyship provision.
See in this regard
Stiff
v Q Data Distribution (Pty) Ltd.
[8]
See
also
Tesoriero
v Bhyjo Investments Share Block (Pty) Ltd.
[9]
THE
PROVISIONS OF THE GENERAL LAW AMENDMENT ACT
[21]
I turn to the defendant’s contention that the plaintiff failed
to comply with the provisions of sec 6 of the GLAA. The
sec provides
that:
“
No
contract of suretyship entered into after the commencement of this
Act, shall be valid, unless the terms thereof are embodied
in a
written document signed by or on behalf of the surety: provided
that nothing in this section contained shall affect
the liability of
the signer of aval under the laws relating to negotiable
instruments.
”
The
GLAA came into operation in June 1956. In
Fourlamel
(Pty) Ltd v Madison,
[10]
the
Court said:
“
In
either case, the party concerned is required to manifest his assent
to the agreement as recorded in a written document, by appending
his
signature to such written document. However many objects the
Legislature may have had in mind in an acting sec 6 of Act
50 of
1956, one of them was surely to achieve certainty as to the true
terms agreed upon and thus avoid or minimise the possibility
of
perjury or fraud and unnecessary litigation … The
Legislature may also have been influenced by other considerations,
for example, that suretyship being an onerous obligation, involving
as it does the payment of another’s debts, would-be sureties
should be protected against themselves to the extent that they should
not be bound by any precipitate verbal undertakings to go
surety for
another but would be bound only after their undertaking had been
recorded in a written document and signed by them or
on their behalf
…
”
In
Caney’s
The
Law of Suretyship:
[11]
“
Thus,
‘signature’ means, any mark – whether it be a
person’s full name and surname, or his initials and
surname, or
only his initials, or a mere mark-placed on the contract with the
intention of identifying the signatory. A signature
need not be in
ink, nor be written in a specific manner or in a specific place.
An agent must indicate that he is signing
in a representative
capacity in order to escape personal liability on the contract.
”
[footnotes omitted]
[22]
In the instant matter, the lease agreement incorporating the
suretyship was in writing. The defendant initialled each
clause
and signed it. He signed on the strength of a resolution on
behalf of the tenant whilst being the sole member thereof.
The
representative capacity in which he signed could hardly be divorced
from incurring personal liability. This begged the
question,
who else would be liable, if not the defendant, for the debts of the
tenant. The tenant has in any event, since been
liquidated. The
defendant’s assertions that the suretyship contained in the
lease agreement was not signed by or on behalf
of the surety were
truly untenable and plainly without merit. He was admittedly
the sole member of the tenant at the time
the tenant concluded the
lease agreement pursuant to being duly authorised to sign the
agreement for and on behalf of the tenant.
The deed of
suretyship provides that the “
authorised
signatories bind themselves to the landlord for the due fulfilment by
the tenant of all the terms of the lease agreement
”
.
In the end, the conclusion that the
written document in which the deed of suretyship is contained,
complies with sec 6 of GLAA,
became irresistible. The plaintiff
has succeeded in proving its case on a balance of probabilities. The
various defences
raised by the defendant were truly redherrings”.
THE
DEPOSIT PAID BY THE TENANT
[23]
The parties omitted to take into account the deposit paid by the
tenant when the lease agreement regarding the quantum of plaintiff’s
claim was concluded. The amount agreed in respect of Claim A
was for payment of the sum of R244 538,12 plus interest thereon
at
the rate of 11% per annum (being prime of 9% plus 2% from the date of
service of summons). In the circumstances, the amount
agreed in
respect of Claim 1 should correctly and properly be reduced by the
amount of the deposit paid i.e. the amount of R26
000,00.
THE
COSTS
[24]
There was no reason advanced why the costs should not follow the
result. Clause 34 of the lease agreement makes provision
that
in the event of litigation, such as the present action, the tenant
shall pay for all the legal costs incurred by the landlord,
including
attorney and own client charges. At the conclusion of final
argument, the parties undertook to provide the Court
with a copy of
the transcript of the proceedings. There appears to have been
some delay in this regard.
ORDER
[25]
In the result the following order is made:
1.
The
defendant shall pay to the plaintiff the sum of R228 538,12,
including interest at the rate of 11% per annum
a
tempore morae
to date of final payment.
2.
The
defendant shall pay to the plaintiff the sum of R44 673,75 at the
legal rate of interest from the date of service of summons
to the
date of payment.
3.
Costs
on the attorney and client scale (as claimed in the heads of
argument).
D
S S MOSHIDI
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
COUNSEL
FOR THE PLAINTIFF R S SHEPSTONE
INSTRUCTED
BY KOKINIS ATTORNEYS
COUNSEL
FOR THE DEFENDANT B M HEYSTEK
INSTRUCTED
BYDOGULIN SHAPIRO DEMARTINIS INC
DATE
OF HEARING 30 SEPTEMBER 2014
DATE
OF JUDGMENT 13 MARCH 2015
[1]
68
of 2008.
[2]
50
of 1965.
[3]
See
trial bundle index A, p 9.
[4]
See
pleadings bundle p 39, annexure “
G
”.
[5]
1979
(3) SA 210
(T).
[6]
2005
(2) SA 419
(SCA).
[7]
2011
(4) SA 72
(SCA).
[8]
2003
(2) SA 336
(SCA) at [10].
[9]
2000
(1) SA 167
(W) at 175F-H.
[10]
1977(1)
SA 333 (A) at 342-343.
[11]
6
th
ed at 69.