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[2015] ZASCA 89
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Dormell Properties 282 CC v Bamberger (20191/14) [2015] ZASCA 89 (29 May 2015)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case
no: 20191/14
In
the matter between
DORMELL
PROPERTIES 282
CC
APPELLANT
and
ALWYN
GIDEON
BAMBERGER
RESPONDENT
Neutral
citation:
Dormell Properties 282 CC v Bamberger
(20191/14)
[2015] ZASCA 89
(29 May 2015)
Coram:
Lewis,
Shongwe and Majiedt JJA and Schoeman and Mayat AJJA
Heard: 15
May 2015
Delivered:
29
May 2015
Summary:
Civil Procedure – particulars of claim premised on an
invalid suretyship agreement – breach of an offer to lease
agreement
containing a suretyship clause not expressly pleaded but
annexed to the particulars of claim as if incorporated – surety
not afforded an opportunity to raise the defence of the benefit of
excussion – fatal to the landlord‟s case.
ORDER
On
appeal from:
The Western Cape Division of the High
Court, Cape Town (Savage AJ with Yekiso J concurring, sitting as
court of appeal):
The
appeal is dismissed with costs, including the costs of two counsel.
JUDGMENT
Shongwe
JA (Lewis and Majiedt JJA and Schoeman and Mayat AJJA concurring)
[1]
This appeal concerns a claim against a surety for damages resulting
from a breach of a lease agreement. The appellant, Dormell
Properties
282 CC (Dormell), successfully sued Edulyn (Pty) Ltd (Edulyn), as the
first defendant in its capacity as the tenant.
The respondent, Mr A G
Bamberger, was sued as the second defendant in his capacity as surety
for the obligations of Edulyn. Both
Edulyn and Bamberger were sued in
the Bellville Magistrate‟s Court jointly and severally, the one
paying the other to be
absolved. Bamberger in turn successfully
appealed against the judgment and order of the Bellville Magistrate‟s
Court to the
court a quo (Western Cape Division, Cape Town, Savage AJ
with Yekiso J concurring). This appeal is with the leave of this
court.
It should be noted at the outset that at the time when the
appeal was heard by this court, Edulyn had been liquidated.
[2]
Edulyn made a written offer on 12 September 2008 to lease certain
premises situated at shop 26, Cobble Walk, corner De Villiers
Road
and Verdi Boulevard, Sonstraal Heights, Durbanville, Western Cape
(the premises), which offer Dormell, as owner and landlord,
accepted
on 16 September 2008. The terms and conditions of the lease were
fully set out in the offer to lease. Of significance
are clauses 9.1,
9.2 and 10 which read as follows:
‘
9
Offer and Agreement
9.1
This offer is irrevocable and open for acceptance by the Landlord by
noon on the sixtieth day following the date
of signature hereof by
the Tenant, unless another date is stipulated in “I”
below, following which it shall become
a building agreement (“the
Agreement”). Upon acceptance hereof by the Landlord, this offer
shall become a binding agreement,
mutatis mutandis with the terms and
conditions of the Landlord‟s Agreement of Lease assigned to
this project (a copy of the
lease can be viewed at the following
address: Suite OG, Nautica, The Waterclub, Beach Road, Granger Bay,
8005).
9.2
The parties agree that after acceptance hereof they will sign the
Lease for the premises whereupon this Agreement
will fall away. A
copy of the Lease is filed with and available for inspection at the
offices of GAIN CC, Suite OG, Nautica, The
Waterclub, Beach Road,
Granger Bay. Any failure so to sign shall not, however, affect the
validity of this Agreement, but the duty
to sign shall be enforceable
at the instance of either party and pending such signature the
provisions of 9.2 shall apply. Should
there be any conflict between
this Agreement and the Lease, the terms of this Agreement will
prevail.
10
Suretyship
The
person/s signing this Offer on behalf of the Tenant, if such be the
case, hereby guarantees the Tenant‟s obligations to
the
Landlord and undertake/s in his/her/their personal capacity and
on behalf of the Tenant, to procure that such of the
Directors and/or
Shareholders and/or members and/or partners and/or spouse of the
Tenant, as the case may be, as the Landlord requires,
will, if the
Landlord requires, guarantee the obligations of the Tenant to the
Landlord.‟
[3]
Bamberger, as the sole director of Edulyn, represented and signed the
offer to lease on behalf of Edulyn. By doing so, he also
bound
himself as surety for Edulyn‟s obligations under the lease. The
lease was due to commence on 1 November 2008 and terminate
on 31
October 2013. In the particulars of claim, Dormell alleged,
inter
alia
, that the offer to lease annexed should be read as if
incorporated in the particulars. But no express mention was made of
clause
10 which bound Bamberger as a surety.
[4]
As clause 9 quoted above stated, the parties agreed that they would
sign a further agreement of lease, the terms of which were
to be
found at the address referred to. But failure to sign the memorandum
would not affect the validity of the offer to lease.
And if there was
conflict between the offer signed and the terms of the lease to be
signed, the former would prevail.
[5]
As fate would have it, Bamberger did sign the memorandum
anticipated in the offer to lease, but Dormell, for
some unknown
reason, did not. And after signing, on 21 October 2008, Bamberger
signed yet another suretyship, purporting to bind
himself as surety
and co-principal debtor for the fulfilment of the obligations of
Edulyn as tenant. It is significant to mention
that this deed of
suretyship was made an annexure to the memorandum of agreement of
lease, and was annexed to Dormell‟s particulars
of claim as if
it were the instrument that bound Bamberger as surety and
co-principal debtor. The deed of suretyship was expressly
said to
arise „from the Agreement of Lease to which this Suretyship is
annexed‟. More will be said on this aspect
later in the
judgment.
[6]
Dormell‟s first claim against Bamberger was premised on the
suretyship signed by him on 21 October 2008 to fulfil the
obligations
of Edulyn. It was alleged, which allegation was not denied by
Bamberger, that Edulyn had failed to pay the rental,
hence the breach
of the offer to lease. As a consequence, Dormell cancelled the
agreement of lease on 9 March 2009. The second
claim was based on the
fact that Edulyn unlawfully remained in occupation of the premises,
despite the cancellation. It was alleged
further that the unlawful
holding over of the premises made Edulyn liable for the monthly
rental and associated charges arising
from its continued unlawful
occupation of the premises. The trial court granted judgment in
favour of Dormell.
[7]
While the action against Edulyn and Bamberger was pending, Dormell
issued an application to have Edulyn and all those occupying
the
premises by, through or under it evicted from the premises. The full
court that dealt with the eviction application on appeal
found that
Bamberger had bound himself as surety for the obligations of Edulyn.
It also found that Bamberger had admitted in his
answering affidavit
that he was bound as surety. The eviction order was granted with
costs.
[8]
However, the court a quo upheld the appeal against the decision to
award damages against Bamberger on the basis that, because
the deed
of suretyship was attached to an invalid memorandum of lease, the
suretyship was also invalid. Savage AJ said that „A
contract of
suretyship requires a valid principal obligation with someone other
than the surety as debtor and the liability of
the surety does not
arise until this principal obligation has been contracted (
Caney
[C F Forsyth and J T Pretorius
Caney’s The Law of Suretyship
in South Africa
6 ed (2010)] at 47)‟. Dormell does not take
issue with the finding in principle. Savage AJ also found that the
admission of
liability as surety in the eviction application was not
binding on Bamberger in the action for damages.
[9]
Before us, the appellant attacked the judgment and order of the court
a quo on the basis that –
although the appellant conceded that
no express reference to the suretyship clause was
made in
the particulars of claim – „in the circumstances of this
case the omission caused no prejudice to Bamberger‟
and
secondly, that „the rules of pleading in the Magistrate‟s
Court at the time were less stringent than those pertaining
to High
Court pleadings.‟ Dormell contended that Bamberger was sued
together with Edulyn on the basis that he was a continuing
covering
surety for Edulyn‟s obligations to Dormell. This argument was
put forward on the basis that Bamberger did not dispute
that he had
signed the deed of suretyship and that he had admitted in his
answering affidavit during the eviction application that
he had bound
himself as a surety and co-principal debtor for Edulyn‟s
obligations
[10]
On the other hand, Bamberger contended that Dormell‟s cause of
action, as pleaded
ab initio,
was premised on the deed of
suretyship and not on the offer to lease containing the suretyship
clause. It was argued further that
no reference at all was made in
the particulars of claim to the suretyship clause in the offer to
lease. It was contended further
that „it is not open to Dormell
at this stage, to seek to rely upon the suretyship clause –
doing so amounts, effectively,
to an amendment of its particulars of
claim in order to advance a case which has not been pleaded.‟
In a nutshell, Bamberger
contended that he was denied the opportunity
to raise any defence he could legally have been permitted to raise,
'had
the suretyship clause been an issue in the trial court.' I shall deal
later with the possible defences that Bamberger says
he could have
raised.
[11]
Generally, it is accepted that the purpose of pleadings is to define
the issues for the parties and the court. Pleadings must
set out the
cause of action in clear and unequivocal terms to enable the opponent
to know exactly what case to meet. Once a party
has pinned its
colours to the mast it is impermissible at a later stage to change
those colours. This general proposition is applicable
in motion
proceedings as well as in action proceedings (see
Diggers
Development
(Pty) Ltd v City of Matlosana
[2011]
ZASCA 247
;
[2012] 1 All SA 428
(SCA)
para
18;
Naidoo
v
Sunker
[2011]
ZASCA 216
;
[2012] JOL 28488
(SCA);
Swissborough
Diamond Mines (Pty) Ltd v Government of the Republic of South
Africa
1999 (2) SA 279
(T) at 323F-234C;
Minister
of
Safety
and
Security
v
Slabbert
[2009] ZASCA 163
;
[2010] 2 All SA
474
(SCA) para 21-22).
[12]
It is settled law that a party who wishes to claim on a deed of
suretyship must comply with the ordinary rules relating to
pleading
of a contract. In the present case, Dormell should have alleged,
inter alia, a valid contract of suretyship that complied
with the
provisions of the General Law Amendment Act 50 of 1956 – the
terms of the deed of suretyship must have been embodied
in a written
document signed by or on behalf of the surety which identified the
creditor, the surety and the principal debtor.
It must have alleged
the cause of the debt in respect of which the defendant undertook
liability as well as the actual indebtedness
of the principal debtor
– that is, the amount owed and that it was due.
[13]
In the present case, we know that the deed of suretyship was invalid
because the suretyship was annexed to an agreement of
lease which was
not signed by Dormell, as the landlord. The deed expressly guaranteed
the obligations of Edulyn under that agreement.
Failure to sign that
agreement of lease by Dormell meant that it did not come into
existence: thus the suretyship to which it was
annexed was in respect
of a non-existent obligation and was accordingly unenforceable.
Therefore Dormell could not have relied
on the deed of suretyship as
pleaded in the particulars of claim. As I have indicated earlier, the
appellant conceded the invalidity
but averred that there was no
prejudice to Bamberger in relying instead on the suretyship embodied
in the offer to lease which
was itself still valid.
[14]
In their plea to the particulars of claim Edulyn and Bamberger denied
liability for arrear rental and damages for holding over,
but
asserted also that the anticipated memorandum of lease had not been
signed by Dormell and that the suretyship was in respect
of a
non-existent obligation. It was at this stage, after the plea, that
Dormell should have applied for an amendment of the particulars
of
claim so as to rely on the clause in the offer to lease guaranteeing
Edulyn‟s obligations under it as against Bamberger,
rather than
the deed of suretyship. Dormell did not amend its particulars of
claim. This failure to amend was fatal, it was submitted,
to
Dormell‟s case, particularly since no explanation
was proffered for the failure to effect the amendment.
[15]
Counsel for Dormell submitted that, despite the principle that the
object of pleading is to define the issues and that the
parties will
be kept strictly to their pleadings, within those limits the court
has a wide discretion:
Robinson v
Randfontein
Estates
Gold
Mining
Co
Ltd
1925 AD 168
at 173. The question arises: how
far does this „wide discretion‟ stretch? Can the exercise
of this discretion go as
far as placing Bamberger at a disadvantage
in that he could not be permitted to raise any legal defence, be it a
dilatory defence
or not? I do not think so.
[16]
Generally a court‟s discretion in relation to pleadings is
based upon a consideration of all the factors involved, taking
into
account fairness to the parties. The exercise of the discretion is
not unlimited and must be judicially justifiable. If the
outcome of
the exercise of a discretion will prejudice a party such as
Bamberger, a court should be slow to exercise the discretion.
(
Fourway
Haulage
SA
(Pty)
v
South
African
National
Road
Agency
Ltd
[2008]
ZASCA 134
;
2009 (2) SA 150
para 14, which allowed a legal issue not
canvassed in the pleadings or at the trial to be argued on appeal.
See contra
Presidency Property
Investments (Pty) Ltd
& others v Patel
2011 (5) SA 432
(SCA) para 21). In the
present case, as discussed below, Bamberger would have conducted his
case materially differently if Dormell‟s
case had been properly
pleaded. Therefore the prejudice to Bamberger that would result
requires exercising the discretion in favour
of him if he can show
how he might have conducted himself differently had the claim against
him been pleaded on the basis of the
offer to lease rather than the
deed of suretyship.
[17]
Counsel for Bamberger submitted that, had the matter been
properly pleaded, he could have raised a number of defences
that had
not been pleaded and canvassed during the course of the trial. I
shall deal with only two of the defences since Bamberger
did not
press the others at the hearing.
[18]
The first defence that could have been argued, it was submitted, was
that
'unlike
the deed of suretyship, the offer to lease was not co-signed by
Bamberger‟s wife‟. As they are married in community
of
property „and since his wife has not consented to the signing
of the offer to lease the suretyship clause (clause 10 of
the offer
to lease) was invalid by virtue of
s 15(2)
(h)
of the
Matrimonial Property Act 88 of 1984
, in that the suretyship was not
executed in the ordinary course of Bamberger‟s business but the
business of Edulyn'. However,
as Dormell argued, there is an answer
to the defence in
s 15(6)
of the
Matrimonial Property Act. It
provides that the provisions of
s 15(2)
(h)
, inter alia, do not
apply where an act contemplated in para
(h)
is
performed by a spouse in the ordinary course of his profession, trade
or business. The evidence before the trial court clearly
showed that
Bamberger, though he referred to himself as a financial advisor, was
the sole director and shareholder of Edulyn. He
described himself as
the owner of the Silverspoon restaurant, which occupied the leased
premises. His son managed the restaurant
but had no role in Edulyn
itself. The conclusion that he signed the offer to lease in the
„ordinary course of business‟
is inescapable. The fact
that this defence was not raised in the plea and at the trial thus
did not prejudice Bamberger.
[19]
At the hearing before us, Bamberger raised another point which was
not canvassed in his heads of argument. Counsel submitted
that it was
open to Dormell to raise a defence of non-excussion under the
guarantee in the offer to lease. Because Bamberger was
sued in his
capacity as a surety he was entitled to have the benefit of
excussion. Dormell should have proceeded against Edulyn
first (as
principal debtor) unless Bamberger had waived his right to raise the
defence of the benefit. The authors C F Forsyth
and J T Pretorius in
Caney’s
The
Law
of
Suretyship
in
South
Africa,
above at 128, hold the view that the benefit of excussion „is
a dilatory defence which the surety may elect to set up if the
creditor first sues him. If the surety intends to raise the defence,
he must do so in
initio litis
; it is too late to raise it
after
litis contestatio
. It certainly cannot be raised for the
first time on appeal‟. (See
Hurley v Marais
(1883-1884)
2 SC 155
at 158;
Klopper v
Van Straaten
(1894)
11 SC 94
at 98 and
Worthington v
Wilson
1918 TPD 104
at 107).
[20]
If the defence of non-excussion succeeds, the court may postpone the
proceedings pending excussion of the principal debtor
or grant
absolution against the creditor. In this matter, if the clause in the
offer to lease in terms of which Bamberger guaranteed
Edulyn‟s
obligations under the lease had been pleaded, Bamberger would have
been able to raise the benefit of excussion,
since he had not waived
it when he had signed the offer to lease. He did not raise the
defence in his plea or at the trial because
the deed of suretyship
was pleaded instead. In that deed he had waived the various benefits
available to sureties including that
of excussion.
[21]
The guarantee that Bamberger gave under the offer to lease did not
include a waiver of any of the benefits accorded to a surety.
If
Dormell were able, at appellate level, to rely on the guarantee in
the offer to lease, Bamberger‟s defence that Edulyn
had not yet
been excussed would be of no value: Edulyn had already been
liquidated.
[22]
Dormell argued, on the other hand, that the benefit of excussion is a
dilatory plea which would have postponed the inevitable.
I do not
agree. As the authors in
Caney’s The Law of Suretyship in
South Africa
have said, the defence must be raised in
initio
and not after
litis
contestatio
. Edulyn had
not been liquidated at the time when the summons was issued. This
court cannot speculate on whether or not Edulyn would
have been in a
position to settle its debts at that time. Bamberger would thus
suffer prejudice if this court were to allow Dormell
to rely on the
guarantee in the offer to lease.
[23]
For the above reasons the appeal is dismissed with costs, including
the costs of two counsel.
J
B Z Shongwe Judge of Appeal
Appearances
For
the Appellant:
E W Fagan SC (with him J P Steenkamp)
Instructed by:
Ben
Groot Attorneys, Cape Town;
Symington & De
Kok, Bloemfontein.
For
the Respondent: J A
Newdigate SC (with him W P Coetzee)
Instructed by:
Gerhard Gous
Attorneys, Cape Town;
Honey Attorneys,
Bloemfontein.