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[2010] ZAGPJHC 191
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Investec Bank Limited v Naidoo (09/1041) [2010] ZAGPJHC 191 (24 November 2010)
IN THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG
(REPUBLIC OF SOUTH
AFRICA)
CASE NUMBER: 09/1041
DATE: 24 NOVEMBER 2015
In the application between
INVESTEC BANK
LIMITED
.................................................................................................
Applicant
And
SILVANATHAN
NAIDOO
....................................................................................................
Respondent
JUDGMENT
EF Dippenaar AJ
[1] This is an application in which the
Applicant seeks a money judgment against the Respondent on the basis
of a deed of suretyship
(limited to R14 million) in respect of the
indebtedness of the principal debtor, Tropical Paradise Trading (Pty)
Ltd (“Tropical
Paradise”) to the Applicant. It is
contended that the principal debtor is indebted to the Applicant
pursuant to a written
loan agreement concluded between it and the
Applicant. The Applicant seeks payment of the amount of R14 million
together with interest
on the aforesaid amount at the rate of 14,25 %
per annum calculated daily from 5 November 2008 to date of payment
and compounded
monthly.
[2] The Applicant previously obtained
judgment against the Respondent in this application by default and
also brought an application
for sequestration of the estate of the
Respondent based on a nulla bona return of service and the default
judgment obtained by
the Applicant against the Respondent.
[3] The Respondent brought an
application for rescission of the default judgment and opposed the
sequestration application. The
rescission application was opposed by
the Applicant but was successful before His Lordship Mr Justice
Lamont (“Lamont J”),
who granted an order on 23 November
2009 rescinding the default judgment and dismissing the sequestration
application. After the
filing of answering and replying papers, the
matter has been referred to me for adjudication.
[4] The Respondent has relied heavily
on the judgment of Lamont J and contends that it is relevant to the
merits of the Respondent's
defence, in as much as Lamont J found that
the facts relied upon by the Respondent in the rescission
application, being substantially
the same facts now relied upon by
the Respondent, constitute a triable issue to be determined at trial.
I have been favoured with
a copy of the said judgment and with a copy
of the papers in the rescission application.
[5] The Respondent made some moment of
the conduct of the Applicant in launching sequestration proceedings
against the Respondent
and opposing the rescission application. These
issues have been dealt with by Lamont J, who granted the rescission
application
and in my view it is not necessary to comment further on
those issues.
[6] It is common cause between the
parties that Tropical Paradise is indebted to the Applicant in an
amount of R27 021 030.98 together
with interest thereon calculated
at 14,25 % per annum from 5 November 2008 to date of payment,
calculated daily and compounded
monthly. It is further common cause
that on or about 20 September 2005 the Respondent executed a written
deed of suretyship in
favour of the Applicant in which he bound
himself onto and in favour of the Applicant as surety in solidum for
and co-principal
debtor, jointly and severally with Tropical Paradise
limited to an amount of R14 million plus finance charges and costs.
[7] Of relevance is clause 16 of the
deed of suretyship, which provides as follows:
"NON VARIATION
No variation or cancellation (whether
oral, consensual or otherwise) of the terms of this Deed of
Suretyship shall be of any force
or effect unless it is reduced to
writing and signed by the Surety and Investec...”.
[8] The clause contemplates that,
notwithstanding any oral cancellation of the deed of suretyship, it
would have no force or effect
unless reduced to writing and signed by
both parties.
[9] The Respondent does not take issue
with the indebtedness of Tropical Paradise to the Applicant, but
contends that it is not
liable to the Applicant on essentially three
grounds: first; as the Applicant orally undertook to release him
from the deed of
suretyship, written confirmation of which allegedly
exists although it does not form part of the papers before court;
secondly,
that the conduct of the Applicant in undertaking to thus
release him, was a representation which founds an estoppel to the
Applicant’s
reliance on the said clause; and thirdly, in the
alternative to the estoppel that the Applicant’s alleged
conduct amounted
to a waiver by the Applicant to rely on clause 16 of
the deed of suretyship, if not the whole suretyship.
[10] The Respondent alleges thus in his
answering affidavit:
“30. On 29 June 2007, Bronkhorst
and I met at the Applicant’s office with, inter alia, Sizu
Ncunu and Ratsalsenyana
Zebediela, both of whom are employed by the
Applicant..., during which meeting:
30.1 A new written loan agreement
between the Applicant and the Bronkhorst Family Trust in respect of
the purchase of my shares
in Tropical Paradise was concluded.
30.2 Pursuant to the conclusion of the
new loan agreement between the Applicant and the Bronkhorst Family
Trust, I enquired as to
my release as surety. Zebediela advised that
the Applicant was awaiting the signature of Rwayitare on the
suretyship which was
required in terms of the loan facility for the
Bronkhorst Family trust, and upon signature thereof, the Applicant
would forward
to me confirmation in writing of my release as surety.
I had no reason to doubt Zebediela’s undertaking. The Applicant
must
have obtained Rwayitare’s suretyship and must have
advanced the loan to the Bronkhorst Family Trust because:-
30.2.1 I received payment from
Bronkhorst in respect of my shares; and
30.2.2 The Applicant has obtained
judgment against Bronkhorst and the Bronkhorst Family Trust in
respect of the loan facility; and
....”.
[11] The Respondent then contends that
the conduct of the Applicant, represented by Zebediela and Ncunu, in
having undertaken to
the Respondent during the meeting of 29 June
2007 to release the Respondent as surety, amounted to a
representation which the Respondent
relied upon to his detriment,
i.e. he relied on what was said to him and he did not insist on a
written cancellation of the suretyship
signed by the Applicant and
him. In the circumstances the Respondent contends that the Applicant
is stopped from enforcing the
suretyship and/or from relying on
clause 16 thereof.
[12] He further alleges that the
conduct of the Applicant, represented by Zebediela and Ncunu, in
having undertaken to the Respondent
during the meeting of 29 June
2007 to release him as surety, amounted to a waiver of the
suretyship, alternatively clause 16 thereof.
[13] The Respondent further contends
that the conduct of the Applicant in attempting to enforce the
suretyship in the circumstances
set out by the Respondent, i.e. the
oral agreement by the Applicant (represented by Ncunu and Zebediela)
to release the Respondent
from the deed of suretyship and/or the oral
undertaking to provide the Respondent with a written release, is
fraudulent and contrary
to public policy.
[14] The Applicant denies all the
aforesaid contentions.
[15] The nub of the dispute is
accordingly whether the provisions of clause 16 of the deed of
suretyship precludes the Respondent’s
reliance on an oral
release. Secondary issues are whether the Respondent was indeed
released from the deed of suretyship and whether
the estoppel and
waiver relied on by the Respondent are sustainable.
[16] It is settled in our law that as a
matter of policy a non variation clause should be recognised as
enforceable and that it
effectively entrenches both itself and all
the other provisions of the contract against oral amendment. See: SA
Sentrale Ko-op
Graanmaatskappy Beperk v Shiffren en Andere,
1964 (4)
SA 760A
; Tsaparas and Others v Boland Bank Ltd,
1996 (1) SA 719A
at
724D-E; Yarram Trading CC t/a Tijuana Spur v ABSA Bank Ltd,
2007 (2)
SA 570
SCA; Brisley v Drotsky,
2002 (4) SA 1
SCA; Telcordia
Technologies Inc v Telkom SA Ltd,
[2006] ZASCA 112
;
2007 (3) SA 266
SCA.
[17] The Applicant further relies on
HNR Properties CC v Standard Bank of SA Ltd,
2004 (4) SA 471
(SCA)
para [19] - [21], pp479, 480, which it contends is definitive of the
issue and which precludes any oral release from the
deed of
suretyship.
[18] The Supreme Court of Appeal in HNR
Properties, supra explained the purpose of a non variation clause in
a deed of suretyship
thus, at paragraph [15] 477I - 478B:
“The object of a clause in a
suretyship agreement providing that the surety 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 the greater where the
creditor is a large
organisation comprising different divisions and
employing a large number of people. The surety, on the other hand, is
unlikely
to be prejudiced. Institutions such as banks do not lightly
release 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."
[19] Regarding the issues of estoppel
and waiver, the legal position is stated thus by Scott JA in HNR
Properties at paragraphs
[19] to [21], 479C - D, F/G - G/H and 480A -
A/B:
[19] The further grounds upon which
the appellants rely in support of their contention that they were
released as sureties are
waiver, estoppel and the reliance theory of
contract. I shall deal with each in turn. Clause 16 of the suretyship
agreements provides
as follows:
'No cancellation or variation of this
suretyship shall be of any force or effect whatsoever unless and
until it is recorded in writing
signed by or on behalf of the bank
and the surety.'
In SA Sentrale Ko-op Graanmaatskappy
Bpk v Shifren en Andere
1964 (4) SA 760
(A) this Court 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 by this
Court in Brisley v Drotsky
2002 (4) SA 1
(SCA). (A non-variation
clause is not necessary in a contract of suretyship by reason of the
provisions of s 6 of Act 50 of 1956
- Tsaperas and Others v Boland
Bank Ltd (supra at 725B - C)[1996
91) SA 719A]
- but that does not
detract from the legal force of such a clause where it exists.)
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. No doubt in particular circumstances a
waiver of rights under a contract containing
a non-variation clause
may not involve a violation of the Shifren principle, for example,
where it amounts to a pactum de non petendo
or an indulgence in
relation to previous imperfect performance. (For an interesting
discussion on the topic, see Hutchison 'Non-variation
Clauses in
Contract: Any Escape from the Shifren Straitjacket'
(2001) 118 SALJ
720.)
But nothing like that arises in the present case.
[20] The appellants contend that they
were released as sureties by virtue of the conduct of the bank,
coupled with a consensual
waiver of the provisions of clause 15. In
my view, a factual basis for such a contention was not established
on the evidence.
But even if it had been, it would have amounted, in
the circumstances of the present case, to no more than a variation of
clause
15 which was not in writing. This is precluded by clause 16.
To hold otherwise, would be to render the principle in Shifren
wholly
ineffective.
[21] The same applies to the
appellants' reliance on estoppel. In their plea, the appellants
alleged that Linnell had represented
to H Berthold that the
appellants were released from their suretyship obligations and that,
relying on such a representation,
the appellants had acted to their
prejudice. The representation was clearly not established and in
argument counsel sought to rely
on a representation based more
generally on the bank's conduct together with the letter dated 20
April 1998. But even if there
had been such a representation, it
would not assist the appellants. Where a release is required to be in
writing, as in the present
case, it may perhaps be possible, in
limited circumstances, to frame an stoppel in such a way as not to
violate the Shifren principle.
It is unnecessary to consider what
those circumstances would have to be.
What is clear is that an estoppel
cannot be upheld when the effect would be to sanction a
non-compliance with provisions in a suretyship
agreement of the kind
contained in clauses 15 and 16. It follows that the appellants'
reliance on waiver and estoppel must similarly
fail.”
[20] The non variation clause in the
present instance is couched in similar terms. I am of the view that
in the present instance,
and based on the aforegoing principles the
estoppel relied on by the Respondent would be one which would in
effect sanction a non
compliance with the non variation clause
contained in clause 16 of the agreement in issue. Moreover, I am not
satisfied that the
Respondent has factually provided sufficient
evidence in support of all requirements of such an estoppel.
[21] Similarly, the evidence provided
by the Respondent in support of its alleged waiver falls short of the
required mark and would
similarly violate the Shiffren principle.
[22] In the circumstances I agree with
the Applicant that the aforesaid defences of waiver and estoppel
raised by the Respondent
do not pass muster and do not defeat the
Applicant’s claim.
[23] The Respondent’s contentions
that the alleged conduct of the Applicant orally agreeing to release
the surety from a suretyship
(in the face of a clause such as clause
16) and thereafter seeking to enforce the suretyship, is tantamount
to fraud and must be
contra bonos mores, are issues which were not
specifically considered in HNR Properties, supra. Although notionally
such contentions
may be sustainable (where the necessary evidence is
provided to sustain such conclusions), as was considered by Lamont J
in the
rescission application, and with which I respectfully agree,
it must be considered whether the Respondent has made out such a
case.
These contentions are denied by the Applicant.
[24] The Respondent sought the
dismissal of the application and in the alternative sought the
referral of the matter to trial, alternatively
oral evidence.
[25] The Respondent’s contentions
that irresoluble factual disputes exist on the papers, must be seen
against the backdrop
of the requirements of a bona fide factual
dispute, as formulated by Heher JA in Wrightman t/a JW Construction v
Headfour (Pty)
Ltd and Another
[2008] ZASCA 6
;
2008 (3) SA 371
SCA paragraphs 11 to
13, as follows:
“[11] The first task is
accordingly to identify the facts of the alleged spoliation on the
basis of which the legal disputes
are to be decided. If one is to
take the respondent’s answering affidavit at face value. The
truth about the preceding events
lies concealed behind irresoluble
disputes. On that basis, the applicant’s application was bound
to fail. Bozalek J thought
that the court was justified in subjecting
the apparent disputes to closer scrutiny. When he did so he concluded
that many of the
disputes were not real, genuine or bona fide. For
the reasons which follow I must respectfully agree with the learned
judge.
[12] Recognising that the truth almost
always lies beyond mere linguistic determination the courts have said
that an applicant
who seeks final relief on motion must, in the event
of conflict. Accept the version set up by his opponent unless the
latter/s
allegations are, in the opinion of the court, not such as to
raise a real, genuine or bona fide dispute of fact or are so
far-fetched
or clearly untenable that the court is justified in
rejecting them merely on the papers: Plascon-Evans Paints Ltd v van
Riebeeck
Paints (Pty) Ltd
1984 (3) SA 623A
at 634E-635C. See also the
analysis by Davis J in Ripoll-Dausa v Middleton NO and Others
2005
(3) SA 141C
at 151A-153C with which I respectfully agree. (I do not
overlook that a reference to evidence in circumstances discussed in
the
authorities may be appropriate).
[13] A real, genuine and bona fide
dispute of fact can exist only where the court is satisfied that the
party who purports to raise
the dispute has in his affidavit
seriously and unambiguously addressed the fact said to be disputed.
There will of course be instances
where a bare denial meets the
requirements because there is no other way open to the disputing
party and nothing more can therefore
be expected of him. But even
that may not be sufficient if the fact averred lies purely within the
knowledge of the averring party
and no basis is laid for disputing
the veracity or accuracy of the averment. When the facts averred are
such that the disputing
party must necessarily possess knowledge of
them and be able to provide an answer (or countervailing evidence) if
they are not
true or accurate but, instead of doing so, resets his
case on a bare or ambiguous denial the court will generally have
difficulty
in finding that the test is satisfied, I say ‘generally”
because factual averments rarely stand apart from a broader
matrix of
circumstances all of which needs to be borne in mind when arriving at
a decision. A litigant may not necessarily recognise
or understand
the nuances of a bare or general denial as against a real attempt to
grapple with all relevant factual allegations
made by the other
party. But when he signs the answering affidavit he commits himself
to his contentions, inadequate as they may
be, and will only in
exceptional circumstances be permitted to disavow them. There is a
serious duty imposed upon a legal advisor
who settles an answering
affidavit to ascertain and engage with facts which his client
disputes and to reflect such disputes fully
and accurately in the
answering affidavit. If that does not happen it should come as no
surprise that the court takes a robust
view of the matter.”
[26] In my view, the Respondent has
failed to set out any defence based on fraud in sufficient
particularity to justify a conclusion
that he is bona fide, inter
alia, for the following reasons:
[26.1] On the Respondent’s own
version, the alleged undertaking by the Applicant to furnish him with
a written release, was
conditional and would still not comply with
the requirements of clause 16 of the agreement as there was no
alleged undertaking
or agreement to conclude a consensual written
cancellation agreement which would be signed by both parties. The
Respondent speculates
about the fulfilment of the condition and does
not provide positive facts in support of his averments.
[26.2] The details of the alleged
meeting are stated in very broad terms and there is no detailed
particularity provided of the
discussions which transpired thereat.
[26.3] The Respondent does not provide
factual evidence of all the averments necessary to sustain this
defence and does not even
aver any fraudulent intention on the part
of the Applicant or facts from which such intention can be inferred.
[26.4] The Respondent is inconsistent
in his different versions on oath regarding when the meeting with the
Applicant allegedly
took place. In his affidavit supporting the
rescission application, the Respondent contends that the meeting took
place on 29 June
2009, whereas in the affidavit resisting the current
application, the Respondent changes his version and avers that the
meeting
took place on 29 June 2007, without any explanation being
proffered for the apparent discrepancy and only after the Applicant
pointed
out the improbability of the Respondent’s then version
in its opposing papers in the rescission application.
[26.5] In terms of clauses 9 and 11 of
a sale of shares agreement concluded between the Respondent and
Bronkhorst dated 18 May 2007,
it was incumbent upon the Respondent to
have himself removed as surety and Badenhorst provided him with a
full indemnity if such
removal could not be procured. No
particularity is provided by the Respondent in his earlier affidavit
of the reasons for the
time lapse between the conclusion of the
agreement and the meeting.
[26.6] The Respondent further does not
provide any explanation for the supine attitude adopted by him after
the alleged meeting
(if it took place in 2007) and does not even
contend that he made any attempt to demand compliance from the
Applicant with its
alleged undertaking. Furthermore, no documentary
evidence was produced by the Respondent evidencing any attempt to
confirm the
alleged meeting or to follow up on the Applicant’s
alleged undertaking, which one would reasonably have expected in the
circumstances
and no explanation is provided why the Respondent did
not take any such steps.
[26.7] Other than bald contentions of
fraud, the Respondent has not provided primary facts sustaining such
conclusion.
[27] I am in the circumstances not
convinced that the Respondent’s defence is bona fide or that
bona fide factual disputes
exist which necessitate a referral to oral
evidence or trial.
[28] I am satisfied that for all the
above reasons, the Applicant is entitled to the relief it seeks on
the papers.
[29] I accordingly make the following
order:
[29.1] The Respondent is directed to
pay the Applicant:
[29.1.1] the amount of R14 000 000. 00
(Fourteen million rand);
[29.1.2] interest on the aforesaid
amount at the rate of 41.25% per annum calculated daily from 5
November 2008 to date of payment;
[29.2] The Respondent is directed to
pay the costs of the application.
EF DIPPENAAR
ACTING JUDGE OF THE HIGH COURT
Date of hearing : 13 May 2010
Date of judgement : 24 November
2010
For applicant :Adv DF Fischer SC
Blakes Maphanga Inc
For respondent : Adv L Hollander
Louis & Associates Attorneys