About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2017
>>
[2017] ZAGPJHC 37
|
|
Sapor Rentals (Pty) Limited v Tayob (07897/2016) [2017] ZAGPJHC 37 (23 February 2017)
THE
HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 07897/2016
Reportable:
NO
Of
interest to other judges: NO
Revised.
23
February 2017
In
the matter between:
SAPOR
RENTALS (PTY)
LIMITED
Applicant
And
FAHEEM
TAYOB Respondent
JUDGMENT
RATSHIBVUMO
AJ
:
[1]
In this application, the applicant seeks an order against the
respondent for a payment of R400 392.22 plus interests and costs
order. The application is based on a Continuing Guarantee (guarantee)
signed by the respondent in terms of which he bound himself
as
guarantor for the indebtedness of Geochris Investment CC (the
principal debtor) in favour of the applicant. The guarantee was
signed following a written Master Rental Agreement (the agreement)
entered into between the applicant and the principal debtor
on 27
October 2014.
[2]
In terms of the agreement, the applicant leased out the equipment to
the principal debtor, who in turn was to make 60 monthly
rental
payments of R8 094.00 towards the applicant. The equipment was
received in good condition by the principal debtor on the
date of the
agreement. As of 15 January 2016, the principal debtor was in arrears
in the amount of R16 467.63 which reflects arrears
for just over two
months.
[1]
The Applicant now claims for the amount as per notice of motion based
on the principal debtor’s breach of agreement which
makes the
whole amount due and payable. The liability of the respondent is
based on the guarantee.
[3] The Respondent does not dispute the factual
averments by the applicant. He however denies his liability to the
applicant on
three bases. First, he alleges that the applicant
repossessed the leased equipment, 15 months into the lease agreement.
Paying
the applicant the full amount as per agreement would as such
unjustly enrich him. Second, the claim is precluded by sec 133 of the
Companies Act, no 71 of 2008 (the Act) in that the principal debtor
is under business rescue proceedings and may be placed under
liquidation should those proceedings fail. Third, the Respondent
alleges that the applicant entered into another agreement in terms
of
which the leased equipment the losses by the principal debtor.
Interlocutory order
[4]
Application for condonation
– Respondent’s
answering affidavit. When the matter was argued on 01 February 2017,
I granted an order of condonation
of the late filing of the answering
affidavit and made no costs order. Rule 27 (1) provides,
“
In the absence of agreement between the
parties, the court may upon application on notice and on good cause
shown, make an order
extending or abridging any time prescribed by
these rules or by an order of court or fixed by an order extending or
abridging any
time for doing any act or taking any step in connection
with any proceedings of any nature whatsoever upon such terms as to
it
seems meet.”
The
application may be made after the expiry of the prescribed or fixed
period and the court is empowered to make an order concerning
the
recalling, varying or cancelling of the results of the expiry of
time.
[2]
As to the meaning of good cause, every case needs to be judged on its
own merits. It is however generally accepted that the court
would
consider the reasons for noncompliance so as to determine if there
was wilful conduct on the part of the applicant, the existence
of
bona fide
defence to the claim and the prejudice the respondent may suffer.
[3]
[5]
The application for condonation by the respondent is in respect of
the late filing of the answering affidavit after he entered
notice to
defend. The notice to defend was entered by the respondent’s
attorney on 22 March 2016. The answering affidavit
was only served on
27 June 2016. In explaining his delay, the respondent attaches flight
tickets that confirm that he was overseas
from 13 December 2015 to 11
June 2016. He only learned of the papers served on his property from
a neighbour. He was not able to
properly and fully consult with the
attorney given the 8 hours difference between South Africa and the
country he was visiting,
save for the entry of notice to defend the
motion. Once back in the country, the respondent consulted his
attorney and counsel
and an affidavit setting out a defence as
paragraph 3 above was prepared and served.
[6]
These reasons reflect that the respondent’s failure to serve
the answering affidavit within 15 days as required was not
due to a
wilful conduct on his part. He was not aware that once he leaves the
country, a notice of motion would be served. It cannot
as such be
suggested that he was running away or he should have cut short his
visit. Equally, I was satisfied that the defences
raised above could
absolve him if they were proved. The defence raised by the respondent
deserved to be fully ventilated as the
matter could result in serious
injustice if judgment was to be given without its consideration.
Lastly, I was satisfied that the
applicant would suffer very little
prejudice if any since a replying affidavit was filed in advance,
just in case the condonation
was allowed. For these reasons, I
granted the interlocutory order above.
[7]
The allegations of repossession of the equipment and the oral
amendment of the agreement are vehemently disputed by the applicant.
The Respondent suggests that for the court to make a finding, oral
evidence is necessary and the court should make such order.
I do not
see a need for this because of the non-variation clause that exists
in the agreement. There is no dispute that the agreement
was in
writing and that it contained non-variation clause. In
SA
Sentrale Ko-op Graanmaatskappy Bpk v Shifren en Andere
[4]
the
Appellate Division held that a term in a written contract providing
that all amendments to the contract have to comply
with specified
formalities is binding. The principle has been consistently
reaffirmed, most recently in
Brisley
v Drotsky
[5]
.
Courts have in the past, often on dubious grounds, attempted to avoid
the
Shifren
principle where its application would result in what has been
perceived to be a harsh result. Typically, reliance has been placed
on waiver and estoppel.
[6]
The Respondent
in
casu
does not
suggest waiver or estoppel on the part of the applicant.
[8]
The object of a clause in an agreement providing that a contractor
shall not be released from any liability unless such release
be in
writing is to protect the creditor. It enables the creditor to
determine its rights with reference to the documents in its
possession. The creditor does not have to rely on the memory of its
employees or ex-employees. It protects the creditor against
spurious
defences and unnecessary litigation. The need for such provision is
even greater where the creditor is a large organisation
comprising
different divisions and employing a large number of people. A
contractor, on the other hand, is unlikely to be prejudiced.
Big
institutions (such as the banks) do not lightly release parties to
contracts such as sureties where the debt of the principal
debtor
remains extant. If there is release, it is in the interest of both
parties that it be readily capable of proof.
[7]
[9]
While counsel for the respondent argues that it is the applicant who
caused the principal debtor to default by repossessing
the equipment,
15 months into the agreement, this cannot be true because a careful
calculation of 15 months from 27 October 2014
would end in February
2016. The certificate of indebtedness issued on 15 January 2016
reflects that at that time, the principal
debtor was in arrears of
more than two months already. For that reason, these submissions are
far-fetched and highly unlikely.
[10] The last defence raised is based on sec 133 of the
Act which provides,
“
General moratorium on legal proceedings
against company.
—
(1) During
business rescue proceedings, no legal proceeding, including
enforcement action, against the company, or in
relation to any
property belonging to the company, or lawfully in its possession, may
be commenced or proceeded with in any forum,
except—
(
a
) with the written consent of the practitioner;
(
b
) with the leave of the court and in accordance with any
terms the court considers suitable;
(
c
) as a set-off against any claim made by the company in any
legal proceedings, irrespective of whether those proceedings
commenced
before or after the business rescue proceedings began;
(
d
)
criminal proceedings against the company or any of its directors or
officers;
(
e
) proceedings concerning any property or right over which
the company exercises the powers of a trustee; or
(
f
) proceedings by a regulatory authority in the
execution of its duties after written notification to the business
rescue practitioner.
(2) During business rescue proceedings,
a guarantee or surety by a company in favour of any other person may
not be enforced
by any person against the company except with leave
of the court and in accordance with any terms the court considers
just and
equitable in the circumstances.”
[11]
Just as Rogers J observed in
Tuning
Fork
(Pty)
Ltd
t/a
Balanced
Audio
v
Greeff
and
another
[8]
,
the Act does not address the issue of
the effect by the adoption of a business rescue plan on creditors'
rights against sureties.
Once business rescue proceedings have
commenced, the distressed company is protected from legal proceedings
by way of the moratorium
provided for in section 133 of the Act. The
general principles of our law of suretyship must thus be applied to
determine what
effect, if any, the provisions contained in any
particular business rescue plan have on sureties. If the principal
debt is discharged
by a compromise with or release of the principal
debtor, the surety is released unless the deed of suretyship provides
otherwise.
This general principle applies also to a compromise or
release pursuant to a statute, regardless of whether the creditor
himself
supported the compromise or release. Accordingly, if a
business rescue plan provides for the discharge of the principal debt
by
way of a release of the principal debtor, and the claim against
the surety is not preserved by such stipulations in the plan as
may
be legally permissible, the surety is discharged.
[12] I refer to the
Tuning
decision with due
diffidence since the matter
in casu
does not emanate from a
suretyship but a continuing guarantee the terms of which make the
respondent equally liable on terms not
similar to a suretyship. My
further concern is that the terms of the said business plan were not
pleaded in papers before me, so
I could see if the principal debtor
has indeed been discharged, so the status of the respondent could be
determined. As part of
the guarantee, the respondent bound himself to
a clause providing,
“
This guarantee is a continuing obligation
and nothing in this agreement shall be interpreted as an intention on
either party to
create a suretyship. Hirer need not institute action
against, or exhaust its rights and remedies against the User and/or
other
person/s, Hirer need not divide all the amounts owing by User’s
to Hirer between me/us… My/our performance and/or liability
under this Guarantee shall be absolute and unconditional irrespective
of whether (i) the underlying cause of the User’s indebtedness
to the Hirer has no legal effect, is capable of being legally avoided
by any party thereto or if it is unenforceable…”
[13]
Even if the guarantee was to be interpreted as a suretyship (of which
it is not given the clauses some of which were quoted
above); there
is nothing in the Act that would stay any legal action against the
respondent pursuant to the guarantee.
[14]
Costs
: I am satisfied that the postponement on 01 July 2016
was necessitated by the absence of an answering affidavit by the
respondent
being properly before court owing to the respondent’s
failure to apply for condonation. I do not see why costs for that day
should not be awarded to the applicant. The Applicant also asked for
the costs in that the matter stood down from 31 January 2017
to 01
February 2017 because of the absence of counsel for the respondent. I
am not persuaded to grant these costs because the matter
was not
postponed but merely stood over to the next day of the same week it
was allocated to. It is practice that counsel need
to avail
themselves for the whole week into which the opposed matter is
enrolled. Moreover, once it became clear that counsel for
the
respondent was not going to make it in time on 31 January 2017, she
communicated telephonically with the applicant’s
counsel who
was willing to have the matter stood down to the following day.
1. I therefore make the following
order:
1.1
The Respondent is
ordered to pay the amount of R400 389.22;
1.2
The Respondent is
ordered to pay the interest on the amount of R400 389.22 at the rate
of prime plus 6 (six) (prime is currently
10.25%) from the date of
issue of the application to the date of final payment.
1.3
The Respondent is
ordered to pay the costs of the application including the costs
occasioned by the postponement on 01 July 2016
on a scale of an
Attorney and own Client calculated on Magistrates’ Court scale.
_____________________
T.V.
RATSHIBVUMO
ACTING
JUDGE OF THE HIGH COURT
Date
Heard:
01 February
2017
Judgment
Delivered: 23 February 2017
For
the Applicant: Adv.
JJ Durandt
Instructed
by:
Jay Mothibi Inc
Johannesburg
For
the Respondent: Adv S Rawat
Instructed
by:
Yousha Tayob Attorneys
Johannesburg
[1]
See Certificate of Indebtedness on p. 19
[2]
Subramanian v Standard Bank Ltd
[2013]
JOL 30321 (KZP).
[3]
Madinda v Minister of Safety and Security
[2008] ZASCA 34
;
[2008] 3 All SA 143
and
Pienaar
v AA Mutual Insurance Association Ltd
1970 (3) SA 714
(W).
[4]
1964 (4) SA 760 (A)
[5]
2002 (4) SA 1 (SCA)
[6]
HNR Properties CC and Another v Standard Bank
of SA LTD
2004 (4) SA 471
(SCA) at p.
479.
[7]
HNR Properties CC and Another v Standard Bank
of SA LTD
supra at p. 478 para A-B.
[8]
[2014]
3
All
SA
500
(WCC)