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[2022] ZAGPJHC 189
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Radiant Group (Pty) Ltd v Xelmar (Pty) Ltd and Another (2018/3067) [2022] ZAGPJHC 189 (31 March 2022)

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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NUMBER:
2018/3067
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED
NO
31
March 2022
In
the matter between:
RADIANT
GROUP (PTY)
LTD
Plaintiff
(Registration Number:
2002/022677/07)
And
XELMAR
(PTY)
LTD
1
st
Defendant
(Registration number:
2017/22754/07)
ZALMON MARON
(Identity Number:
[....])

2
nd
Defendant
JUDGMENT
Delivered:
This judgment was handed down electronically by circulation to
the parties’ legal representatives by e-mail. The date and time

for hand-down is deemed to be 10h00 on the 31st of March 2022.
DIPPENAAR
J
:
[1]
The plaintiff instituted action against the
first and second defendants, as principal debtor and surety
respectively for payment
of an amount of R594 623,77, being the
balance due, owing and payable by the first defendant in respect of
goods sold and
delivered by the plaintiff at the first defendant’s
special instance and request during the period 22 June 2016 to 29
June
2018, together with interest and costs. Reliance was placed on a
written trade facility agreement (“the trade agreement”)

which included the suretyship provisions.
[2]
At the commencement of the trial, the first
defendant withdrew its opposition to the plaintiff’s claim and
withdrew its counterclaim
in terms of which it claimed payment of
R960 000 for expenses and damages. At the end of the trial,
judgment was granted against
the first defendant.
[3]
The crisp issues to be determined are
whether the second defendant bound himself as surety for the due
performance of the first
defendant’s obligations or whether the
second defendant is estopped from relying on the name change of the
first defendant
to avoid the obligations of the suretyship. The
central dispute crystallised into whether the plaintiff discharged
its onus to
prove that the second defendant signed a written deed of
suretyship for the indebtedness of the first defendant in favour of
the
plaintiff.
[4]
Three witnesses testified at the trial: Mr
Farhad Ally, the erstwhile managing director of the plaintiff at the
time, Mr Mark Wilken,
the plaintiff’s head of national sales at
the time and Mr Zalmon Maron, the second defendant. Although I agree
with the plaintiff
that Mr Maron’s evidence was unsatisfactory
in numerous respects, it is not necessary to make any credibility
findings as
the matter can be determined on the undisputed facts.
During the hearing, the relevant facts by and large became common
cause.
[5]
The plaintiff’s evidence established
that in order for a credit facility to be provided by it, a trade
facility agreement
had to be concluded between the plaintiff and a
prospective customer which would be evaluated by Credit Guarantee
Insurance Corporation
(“CGIC”), which would provide the
plaintiff with cover for the credit facility. Credit was not usually
granted to customers
without a signed deed of surety as it was a
requirement of CGIC.
[6]
It was common cause that the trade
agreement was concluded on 22 June 2016 between the plaintiff and
Zalmon Maron t/a Xelmar FXN (”Xelmar
FXN”),
reflected as trade name. A
box “sole trader” is ticked. The deed of suretyship
incorporated into the trade agreement
was signed by the second
defendant for and on behalf of Xelmar FXN. A trade limit of R400 000
was requested. reflecting registration
number 4008145025085
.
In a block, designated “Director(s)/Member(s) details”,
the names of both the second defendant and a Mr Jeffrey Robert
Allan
(“Mr Allan”) together with their contact numbers are
reflected. An addendum, styled, “limit increase application

form” dated 15 November 2016 requested an increase of the
credit limit of Z Maron T/A Xelmar FXN to R1.8 million. The document

was signed by Mr Allan and witnessed by the second defendant.
[7]
The second defendant did not dispute the
account statement relied on by the plaintiff, which pertained to the
period 1 February
2017 to 31 August 2018, was addressed to the first
defendant, Xelmar (Pty) Ltd, and commenced with an opening balance of
R770 430.40.
The statement reflects invoices, payments and
credit notes for the period 8 February 2017 to 25 June 2018. It was
undisputed that
the invoices relied on by the plaintiff were all
addressed to the first defendant. All the invoices produced at the
trial, made
out to either the first defendant or Xelmar FXN, bore the
same account number.
[8]
It was common cause that on 1 October 2017
and 2 February 2018, respectively, the second defendant confirmed
“change of details
for Xelmar FXN” with the plaintiff.
The plaintiff was provided with certain documents evidencing that
Xelmar (Pty) Ltd was
registered during May 2017, including a bank
account confirmation letter, a notice of registration for VAT, a CIPC
registration
certificate for Xelmar (Pty) Ltd and copies of the
identity documents of the second defendant and his partner, Mr Allan.
[9]
Although the documents evidenced different
export numbers, bank account numbers and tax and VAT numbers, the
email address, contact
details and physical business addresses for
the two entities were the same. Their letterhead reflected logos for
both entities
and the link to the website of one took one to the
website of the other.
[10]
No written notification was received by the
plaintiff of any change in ownership of Xelmar’s business. If
there was a change
in ownership, in all amounts owing by FXN would
immediately become due and payable in terms of the trade agreement.
From the objective
documentary evidence it was established that the
first defendant continued trading with the plaintiff under the FXN
trade agreement,
using the same account reference and on the same
trading terms.
[11]
Mr Ally testified that he understood Xelmar
FXN and Xelmar (Pty) Ltd to be the same entity. Mr Wilken confirmed
that he did not
differentiate between the entities and dealt with the
second defendant and his partner Mr Allan personally. He understood
the entities
to be the same. The letterhead is confusing in that both
Xelmar (Pty) Ltd and the logo of Xelmar FXN appears on the
letterhead.
Mr Ally understood this to mean that the entities were
the same.
[12]
According to Mr Ally, the name change and
change of banking details had no consequences on the written credit
agreement and it continued
to apply to the first defendant. The first
defendant acted on the terms of the credit agreement signed in the
name of Xelmar FXN
and the credit limit increase application signed
by Mr Allan. Financial statements of FXN were used in motivation for
certain proposals
of the first defendant as background. The first
defendant met with CGIC and requested amendments and extensions of
the credit agreement
signed by Xelmar FXN.
[13]
Against
this background, the apposite starting point is whether the plaintiff
established a valid suretyship. Our courts have held
that the
plaintiff must at the outset prove the existence of a valid contract
of suretyship and must then prove that the source
of the indebtedness
of the agreement is one in respect of which the surety undertook to
be liable. Finally it must prove that the
indebtedness is due and
payable.
[1]
If a surety raises a
defence such as illegality, he would be required to present evidence
in support thereof.
[14]
To
prove a valid deed of suretyship, the plaintiff must prove compliance
with the requirements of s 6 of the General Law Amendment
Act
[2]
(“the Act”), by reference to the document, supplemented
if necessary by admissible extrinsic evidence.
[3]
S 6 of the Act provides:
“
Formalities
in respect of contracts of suretyship
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 an aval under the laws relating to negotiable instruments
”
.
[15]
It
is trite that identification of the principal debt and the parties is
not only a term of the contract but is essential to the
creation of
the surety’s liability as suretyship is an accessory
obligation
[4]
. If a deed of
suretyship does not contain three distinct parties
[5]
and the names of the creditor, principal debtor and all sureties it
is not a valid deed of suretyship.
[6]
[16]
Our
courts
[7]
have further held, in
the context of s 6 of the Act, that the plain grammatical meaning of
the words used in s 6 of the Act are
clear. As explained in
Fourlamel
:
“
The
section presupposes that an agreement of suretyship has been
reached-“contract of suretyship entered into”- and
it
provides thereafter that such agreement shall not be valid “unless
the terms thereof are embodied in a written document
signed by or
behalf of the surety”. What is that requires to be signed by
the surety? It is surely the written document containing
the terms of
the agreement.
[17]
However of the many objects the Legislature
may have in mind in enacting s6 of the Act, one of them was surely to
achieve certainty
as to the true terms agreed upon and thus avoid or
minimize the possibility of perjury or fraud and unnecessary
litigation.
[18]
It was common cause that no written trade
facility agreement was concluded between the plaintiff and the first
defendant and that
no written deed of suretyship was signed by the
second defendant for the indebtedness of the first defendant in
favour of the plaintiff.
The only credit agreement and suretyship was
the one signed by Mr Maron on behalf of Z Maron t/a Xelmar FXN. It
was further common
cause that no subsequent trade facility agreement
was entered into between the plaintiff and the first defendant and
that no written
suretyship was signed by the second defendant for the
indebtedness of the first defendant in favour of the plaintiff.
[19]
Moreover,
Z Maron t/a Xelmar FXN is a sole trader and is not a separate legal
entity from the second defendant. It is well established
that it is
essential to the existence of a suretyship that there be a principal
obligation in terms whereof someone other than
the surety is the
debtor, and that a person cannot stand as surety for his own debt
[8]
.
It is further trite that a surety and principal debtor cannot be the
same person
[9]
and that a
suretyship does not comply with the statute if there are not three
distinct parties, being the surety, the principal
debtor and the
creditor.
[20]
From the undisputed facts and applying the
principles referred to above, I conclude that the plaintiff did not
establish a valid
deed of suretyship as envisaged by s6 of the Act,
binding the second defendant for the obligations of the first
defendant.
[21]
It
must be considered whether plaintiff’s reliance on estoppel can
salvage its position. It is trite that the plaintiff bore
the onus to
prove the estoppel
[10]
pleaded.
[11]
[22]
I
accept that the plaintiff has established the representations relied
on and that the plaintiff acted to its detriment
[12]
.
It is apposite to refer to the relevant principles. In
Scottish
Rhodesian Finance Ltd v Olivier
[13]
the
proper test to be applied was enunciated thus:
“
The
Court should first of all determine the nature of the obligation
imposed by the statute, and then consider whether the admission
of an
estoppel would nullify the statutory provision
[14]
[23]
In
Trust
Bank van Afrika Bpk v Eksteen
[15]
(“Eksteen”)
,
in the context of an exception it was held:
“
Dit
is ‘n erkende beginsel van ons reg dat wat by direkte optrede
in stryd met ‘n wetlike voorskrif van nul en gener
waarde sou
wees, nie deur indirekte optrede geldig gemaak kan word nit. So ‘n
voorskrif wat teen ‘n bepaalde transaksie
gerig is, tref ook
enige optrede wat die voorskrif sou verydel. Geldigheidsvereistes kan
daarom bv. nie deur gesimuleerde voldoening,
nabootsing van ‘n
andersoortige kontrak, enige waarborg van nakoming, by wyse van
aparte onderneming of andersins, of enige
ander optrede wat hulle sou
verydel, omseil word om aan ‘n nietige transaksie geldigheid of
wesentlike afdwingbaarheid te
verleen nie. By die toepassing van
hierdie beginsel is dit egter nodig om nie die doel en strekking van
die voorskrif waarom dit
gaan, uit die oog te verloor nie…Indien
die een party hom teenoor die ander, waar bedoelde vereistes nie
nagekom is nie,
op estoppel sou beroep, …sou bogenoemde
beginsel pertinent die vraag laat ontstaan of erkenning van estoppel
toelaatbaar
is, want daardeur (so sou aangevoer kan word) soul die
kontrak dan tussen die partye afgedwing word asof hy geldig is”
[16]
[24]
In
Eksteen
,
it was further explained:
“
The
doctrine of estoppel is an equitable one, developed in the public
interest, and whenever a representor relies on a statutory
illegality
it is the duty of the Court to determine whether it is in the public
interest that the representee should be allowed
to plead estoppel.
The court will have regard to the mischief of the statute concerned
on the one hand and the conduct of the parties
and their relationship
on the other hand.
[17]
.
[25]
In
the context of estoppel, the Supreme Court of Appeal in
City
of Tswane Metropolitan Municipality v RPM Bricks (Pty) Ltd
[18]
held:
“
There
are formidable obstacles to the plaintiff’s reliance upon the
doctrinal device of estoppel. Assuming in the plaintiff’s

favour that all the requirements for its successful invocation have
been established, this is not a case in which it can be allowed
to
operate. It is settled law that a state of affairs prohibited by law
in the public interest cannot be perpetuated by reliance
upon the
doctrine of estoppel (Trust Bank van Afrika Bph v Eksteen
1964 (3) SA
402
(A) at 411H-412A), for to do so would be to compel the defendant
to do something that the statute does not allow it to do. In effect

therefore it would be compelled to commit an illegality (Hoisain v
Town Clerk, Wynberg
1916 AD 236)
”
[19]
[26]
Application of these principles are in my
view fatal to the plaintiff’s case. I have already dealt with
the nature of the
obligations imposed under s6 of the Act and the
mischief the legislature sought to address. Even taking onto
consideration the
conduct of the second defendant it cannot be said
to be in the public interests to jettison the requirements of s6 of
the Act and
allow the suretyship to be enforced. In my view, the
public interest demands the converse. I conclude that the plaintiff
cannot
rely on the estoppel raised to overcome the deficiencies in
the suretyship.
[27]
As
succinctly put by the Supreme Court of Appeal in
Philmat
(Pty) Ltd v Mosselbank Developments CC
[20]
:
”
Where
a statute requires certain formalities to render a transaction valid,
failure to comply with such formalities cannot be remedied
by
estoppel”.
[28]
Moreover,
the estoppel relied on by the plaintiff is pleaded in specific terms,
namely that defendants “are estopped from
relying on the name
change
[21]
to avoid the
obligations of the suretyship”. The change from Z MAron t/a
Xelmar to Xelmar (Pty) Ltd is more than a name change.
It is an
entirely different legal entity. I am not persuaded that the estoppel
as pleaded in any event assists the plaintiff’s
case. I am
further not persuaded that the plaintiff established that it was
induced by the conduct of the second respondent to
act to its
detriment, given the documentation provided to the plaintiff
pertaining to the first defendant. In light of the conclusion

reached, it is not necessary to deal with the evidence in detail.
[29]
I conclude that the plaintiff has failed to
discharge its onus that the second defendant signed a written deed of
suretyship for
the indebtedness of the first defendant in favour of
the plaintiff or that he can be held liable for the debts of the
first defendant.
It follows that the plaintiff’s claim must
fail. This is in my view dispositive of the action and the
plaintiff’s claim
is doomed to failure.
[30]
The plaintiff however raised various other
arguments, albeit that they were not expressly raised on the
pleadings and take the matter
no further. For the sake of
completeness, I shall deal with these arguments, raised by the
plaintiff in its heads and supplementary
heads of argument.
[31]
The plaintiff argued that the first
defendant’s withdrawal amounted to a concession of its claim as
pleaded and thus that
it was conceded that the plaintiff supplied
goods to the first defendant in terms of a credit agreement concluded
between it and
the first defendant and it was not possible for the
second defendant to evade liability under the suretyship on the basis
that
the agreement applied only to Xelmar FXN. It was argued that the
only defence against the suretyship was that the first defendant
did
not exist as a juristic entity when the agreement was concluded in
June 2016 and that he signed surety only on behalf of Xelmar
FXN. As
Mr Maron admitted that the first defendant did exist as an entity
when the agreement was concluded the suretyship could
only have been
signed in respect of that entity that was party to the agreement.
[32]
The
plaintiff’s arguments do not pass muster for various reasons.
First, from the notice delivered it is clear that the first
defendant
withdrew its opposition to the plaintiff’s claim and withdrew
its counterclaim. It also consented to the plaintiff’s
costs to
be taxed. Under r41 the first defendant was entitled to do so. It is
not ordinarily the function of a court to force a
party to persist
with its claim or to investigate the reasons for abandoning it
[22]
.
[33]
Second, the first and second defendants are
different parties and any concessions made by the first defendant
cannot be attributed
to the second defendant. The second defendant
did not concede the plaintiff’s claim, even if both defendants
may have been
represented by the same counsel.
[34]
Third,
on a proper interpretation of the pleadings
[23]
,
the second defendant did dispute the existence of a valid deed of
suretyship, signed by him in favour of the plaintiff for the

indebtedness of the first defendant.
[24]
Although in general terms, the suretyship was denied together with
the averments pertaining thereto, thus placing them in dispute.
Read
in context the defence raised was that the second defendant did not
conclude a deed of suretyship for obligations of the first
defendant
and that the first defendant was not a party to the credit agreement.
[35]
In supplementary heads of argument
submitted after the hearing was concluded, the plaintiff argued that
the defendants’ plea
did not place the validity of the
suretyship in issue and the defendant ambushed it in argument. A
simple reading of the credit
application in its terms would alert the
reasonable reader that the document was signed by Mr Maron personally
with Zelmon Marron
trading as Xelmar FXN reflected as principal
debtor. I cannot agree that the plaintiff would be deprived of a fair
trial if the
validity of the deed of suretyship is considered.
[36]
The argument that Mr Maron admitted the
validity of the suretyship in failing to directly plead it and/or is
precluded from placing
in issue the validity of the suretyship, lacks
merit. The plaintiff argued that the second defendant was precluded
from raising
the validity of the deed of suretyship (in the context
of it being invalid on the principle that one cannot stand surety for
yourself)
as it was not pleaded, not was an issue plaintiff
anticipated it needed to lead evidence on and the plaintiff was
prejudiced. I
cannot agree.
[37]
Based
on general principles, the plaintiff at all material times bore the
onus to prove the credit agreement and the validity of
the suretyship
on which it relies.
[25]
The
denial of the suretyship, albeit it in broad terms, should have
alerted the plaintiff to the need to prove a valid suretyship
with
all that that entails, including the terms of the partnership, which
includes the parties thereto. A court cannot ignore the
trite
principle that a party cannot stand surety for itself and it was open
to the second defendant to argue compliance with the
requirements of
s 6 of the Act for its validity.
[38]
Moreover, at the close of the plaintiff’s
case, the second defendant applied for absolution. That application
was refused,
reasons having been provided in an ex tempore judgment
at the time. The second defendant argued in that application that
there
was no compliance with the provisions of s6 of the Act. That
should have alerted the plaintiff that the second defendant disputed

compliance with those provisions. The plaintiff could have applied to
reopen its case, but did not do so. This court did not raise
the
issue of validity of the suretyship
mero
motu
as suggested by the plaintiff in
its supplementary heads of argument.
[39]
The
plaintiff further argued that the representations made by Mr Maron
represented to plaintiff that Xelmar FXN was being converted
to a
company but that the entity remained the same as a going concern. It
argued that once this conclusion was accepted, the law
applicable to
the conversion of juristic entities applies. In support of the
argument, reliance was placed on
Masibuyisane
Services (Pty) Ltd v Eqstra Corporation (Pty) Ltd
[26]
(“
Masibuyisane
”)
in which it was held that the juristic persona remains the same
regardless of the corporate form upon conversion from a
close
corporation to company or vice versa and an incorrect description of
the juristic persona is not a ground to compromise a
contract
concluded between it and another person. It was held that the
suretyship was valid and the incorrect description of the
juristic
persona was not a ground to compromise that contract.
[40]
In
my view, the plaintiff’s argument and its reliance on
Masibuyisane
is misplaced as it is distinguishable.
Masibuyisane
dealt with the conversion of a close corporation into a company and
the applicable statutory framework
[27]
concerning conversions of the same juristic person. The present facts
and context are different. It is trite that a sole proprietorship
has
no separate legal existence whereas a company has a separate juristic
personality.
[41]
The
plaintiff further relied on the substance over form doctrine allowing
courts to ignore the form of a disguised transaction to
examine its
true nature and attach adequate legal implications to it.
[28]
For the same reasons as the plaintiff cannot rely on estoppel, this
argument is equally doomed to failure. In any event, the plaintiff

made out no proper case for application of this doctrine.
[42]
In
the alternative it was argued that the evidence established that FXN
is not a sole trader but a partnership with Mr Maron and
Mr Allan as
partners. It was argued that a suretyship signed by one of the
partners for the debts of the partnership is indeed
valid.
[29]
The authorities relied on by the plaintiff do not however establish
that the agreement is valid as a deed of suretyship, but rather
that
it is an enforceable agreement having the effect that a partner
waives a procedural advantage.
[30]
Reliance was also placed on
M
Pupkewitz & Sons (Pty) Ltd t/a Pupkewitz Megabuild v Kurz
[31]
,
which
is similarly distinguishable
.
Although the facts may be similar, the fundamental distinction is
that the validity of the deed of suretyship was not placed in
issue.
The partnership issue was further never raised in the pleadings nor
expressly canvassed at the trial.
[43]
Even
if the obligations of Xelmar FXN were delegated to the first
defendant, it would not assist the plaintiff in proving the validity

of the suretyship. As a general principle, if the principal debtor
was substituted or its obligations delegated to a new debtor,
a
surety is discharged
[32]
. The
surety’s obligation is not transferred to operate in respect of
the new debtor unless he agrees to this. If he does
not agree, he is
discharged. If he does agree to secure the new debtor’s debt,
the agreement will have to comply with the
formalities in s 6 of the
Act
[33]
.
[44]
There is no reason to deviate from the
normal principle that costs follow the result. I am not persuaded
that costs should be granted
on the scale as between attorney and
client as sought by the second defendant.
[45]
Two additional costs orders require
consideration. First, the costs of the absolution application, which
were reserved. That application
was orally launched from the bar
after closing of the plaintiff’s case and neither party
delivered heads of argument. The
issue took up the whole day for the
hearing on 1 March 2022. As the application was dismissed, it would
be appropriate for the
second defendant to be held liable for those
costs.
[46]
Second, the matter was enrolled for trial
on 23 November 2020. From the available facts it cannot be concluded
that any fault can
be ascribed to the plaintiff, as argued by the
second defendant. It would be appropriate that each party pay its/his
own wasted
costs.
[47]
I grant the following order:
[1] The plaintiff’s
claim against the second defendant is dismissed with costs, save for
the cost orders referred to in [2]
and [3] below;
[2] The costs of the
absolution application and the hearing on 1 March 2022 are to be paid
by the second defendant.
[3]
Each party is liable for its/ his own wasted costs for the hearing on
23 November 2020.
EF
DIPPENAAR
JUDGE
OF THE HIGH COURT
JOHANNESBURG
APPEARANCES
DATE
OF HEARING
: 28 February, 1, 2, 4 March 2022
DATE
OF JUDGMENT
: 31 March 2022
PLAINTIFF’S
COUNSEL
: Adv. R. Blumenthal
PLAINTIFF’S
ATTORNEYS
: NVDB Attorneys
DEFENDANTS’
COUNSEL
:
Adv. P. Marx
DEFENDANTS’
ATTORNEYS
: Schickerling Inc.
[1]
Di
Giulio v First National Bank of South Africa Ltd
2002 (6) SA 281
(C)
at para [26]-[28]
[2]
50
of 1956
[3]
Sapirstein v Anglo African Shipping Co (SA) Ltd
1978 (4) SA 1
(A);
Du Toit v Barclays Nasionale Bank Bpk 1985(1) SA 563 (A); Stewarts &
Lloyds of Sa Ltd v Croydon Engineering & Mining
Supplies (Pty)
Ltd
1981 (1) SA 305
(W) at 309E-H; General Accident Insurance Co SA
Ltd v Dancor Holdings (Pty) Ltd
1981 (4) SA 968
(A)
[4]
Fourlamel (Pty) Ltd v Maddison (“Fourlamel”)1977 (1) SA
333 (A) 334B-C, 345A-B 34B-C
[5]
Nuform
Formwork & Scaffolding (Pty) Ltd v Natscaff CC and Others 2003
(2) SA 56 (D)
[6]
Fourlamel (Pty) Ltd v Maddison (“Fourlamel”)1977 (1) SA
333 (A) 334B-C, 345A-B
[7]
Oceanair
(Natal) (Pty) Ltd v Sher
[1980] 1 All SA 206D
at 210-211 and 213,
referring to Fourlamel at 341H-342A
[8]
Nedbank
Ltd v Van Zyl
[1990] ZASCA 12
;
1990 (2) SA 469
(A) at 474E-I
[9]
Nuform
Formwork & Scaffolding (Pty) Ltd v Natscaff CC and Others
2003
(2) SA 56
(D) at 61A-B; 62D-E;
[10]
Blackie Swart Argitekte v van Heerden 1986 (1) SA 249 (A)
[11]
In
response to the plea, the plaintiff delivered a replication in terms
of which it raised an estoppel in the following terms:
“
2.1
The first defendant underwent a change from a sole proprietor to a
(Pty) Ltd :-
2.1.1
On 02 February 2018 the second defendant notified the plaintiff of
the change from a sole proprietor to a (Pty) Ltd;
2.1.2
The second defendant represented to the plaintiff by words
alternatively conduct that the entity remained the same and that
the
incorporation was as a going concern with no change to debtors and
creditors;
2.1.3
The plaintiff relied on this representation to its detriment;
2.1.4
In the circumstances, the defendants are estopped from relying on
the name change to avoid the obligations of the suretyship”.
[12]
Aris
Enterprises (Finance)(Pty) Ltd v Protea Assurance Co Ltd
1981 (3) SA
274
(A); SA Broadcasting Corp v Coop 2006 92) 217 (SCA)
[13]
1965
(2) SA 716
(SRA) 720I-721A, applying the test as
expressed
in Maritime Electric Co v General Diaries Ltd
1937 A.C. 610
at 620
.
[14]
720I-721A
[15]
1964
(3) SA 402
(A) at 415-416
[16]
At
411G-412A
[17]
415I-416A
[18]
[2007]
JOL 19532
(SCA) para [16]
[19]
HNR
Properties Cc & Another v Standard Bank of South Africa Ltd
[2003] JOL 12162
(SCA) PARA [21]; Croxon’S Garage (Pty) Ltd v
Olivier
1971 (4) SA 85
(T); Strydom v Die Land & Landbou Bank
van Suid Afrika 1971 (1) PH K10 (NKA)
[20]
Philmat
(Pty) Ltd v Mosselbank Developments CC [1996] 1 All SA 296 (A).
[21]
To Xelmar (Pty) Ltd
[22]
Levy v Levy 1991 (3) SA614 (A) at 619 D-E and 620B-C
[23]
In
relation to the trade agreement and the suretyship, plaintiff
pleaded:
“
5
On or about 22 June 2016 and at Sandton, the first defendant duly
represented by Zalmon Maron in his capacity as Director, entered

into a written agreement with the plaintiff, duly represented, in
terms of which the plaintiff sold and delivered goods to the
first
defendant at the latter’s special instance and request. 6 A
copy of the written agreement…is attached hereto
marked A1-A7
(the terms and conditions of which should be read as if specifically
incorporated herein”.
…
.
16
On or about 22 June 2016, and at Sandton, the second defendant bound
himself, in his private and individual capacity as surety,
guarantor
and co-principal debtor in solidum with the first defendant in
favour of the plaintiff for the due performance of the
obligations
of the first defendant and for the payment to the plaintiff of any
amounts are due in terms of the agreement.
17
The suretyship is incorporated into the agreement attached hereto
marked as Annexure A7 (clause 1-clause 3) (the terms and
conditions
of which should be read as if specifically incorporated herein).
17.1
The second defendant thereby bound himself in his private and
individual capacity and surety for and co-principal debtor
in
solidum with the first defendant in favour of the plaintiff for the
due performance of any obligation, of whatsoever nature
of the first
defendant to the plaintiff and for the payment to the plaintiff by
the first defendant of any amounts which may
have at any time have
become owing to the plaintiff by the first defendant from whatsoever
cause arising and including, but without
the generality of the
foregoing, any claims for damages and action against the first
defendant acquired by way of cession…
18
In the premises, and owing to the first defendant’s breach,
the second defendant in his capacity as surety, is jointly
and
severally indebted to the plaintiff ….”
[24]
In
their plea, the defendants pleaded in relation to the trade
agreement and the suretyship:
“
3.1The
defendants deny the allegations
[24]
;
3.2
Without derogating from the generality of the aforesaid denial,
defendants plead as set out below.
3.2.1
The first defendant did not exist as a juristic entity on 22 June
2016.
3.2.2
The first defendant was only registered at the Companies and
Intellectual Property Commission on 29 May 2017, being the

coinciding recorded date of commencement of business.
3.2.3.
The first defendant is not recorded as the principal debtor or a
contracting party in the alleged agreement.
3.2.4
The alleged agreement was not concluded for a company or juristic
person to be formed”.
…
5.1
Defendants deny the allegations herein contained for the reasons as
set out above.
5.2
Alternatively to 5.1 above, insofar as the second defendant was
indebted to the plaintiff, for whatever reason (which indebtedness

is denied) the defendants plead as set out below”
[24]
”.
[25]
Pillay v Krishna 1946 AD 946
[26]
2020JDR 2585 (SCA) paras 37 and 38
[27]
Being the
Close Corporations Act 69 of 1984
and the 1973 and 2008
Companies Acts
[28]
Dadoo Ltd & Others v Krugersdorp Municipal Council
1920 AD 530
;
SA Pulp and Paper Industries Ltd v Commissioner for Inland Revenue
1955 (1) SA 8
(T); Du Plessis v Joubert 1968 (1) SA 585 (A)
[29]
Relying on Standard Bank of Sa Ltd v Lombard & Another
1977 (2)
SA 808
(T); City of Cape Town v Lombard Insurance Co Ltd (unreported
CPD 24 October 2005 case no 5178/2002 Davis J. the judgment was
overturned by the Supreme Court of Appeal in Lombard Insurance Co
Ltd v City of Cape Town [2007] ZASCA 423
[30]
Caney’s Law of Suretyship (6
th
Edition) Chapter III, para 2(e) pp43-46
[31]
(SA25/2005) [2008] NASC9;
2008 (2) NR 775
(SC) (14 July 2008) para
[16]
[32]
Eaton Robins & Co v Nel (2)
(1909) 26 SC 624
at 630
[33]
Caney’s Law of Suretyship (6
th
edition)
Forsyth
& Pretorius
Chapter XIII para 2(i) and the authorities cited therein, p197