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[2012] ZASCA 187
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Strydom v Engen Petroleum Ltd (184/2012) [2012] ZASCA 187; 2013 (2) SA 187 (SCA); [2013] 1 All SA 563 (SCA) (30 November 2012)
THE SUPREME COURT
OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case no: 184/2012
In the matter
between:
Ockie Strydom
........................................................................................
Appellant
and
Engen Petroleum
Limited
..................................................................
Respondent
Neutral citation:
Strydom v Engen Petroleum Limited
(184/2012)
[2012] ZASCA
187
(30 November 2012)
Coram:
HEHER,
TSHIQI et WALLIS JJA et SWAIN et SALDULKER AJJA
Heard
: 21
NOVEMBER 2012
Delivered
: 30
NOVEMBER 2012
Summary:
Suretyship – validity –
ss 15(2)
(h)
and
15
(6)
of the
Matrimonial Property Act 88 of 1984
.
ORDER
On appeal from:
North Gauteng High Court, Pretoria (Southwood J, sitting as court of
first instance):
The appeal is
dismissed with costs.
JUDGMENT
WALLIS JA (TSHIQI JA
et SWAIN et SALDULKER AJJA concurring))
[1] Soutpansberg
Petroleum (Pty) Ltd (Soutpansberg) distributed petroleum products on
behalf of the respondent, Engen Petroleum
Limited (Engen), from
depots in Musina and Louis Trichardt in Limpopo. It was provisionally
wound up on 13 November 2006 and a
final winding-up order was made on
12 November 2007. At that time it owed some R25 million to
Engen. Mr Strydom, the
appellant, was previously a director of
Soutpansberg and, on 15 December 2004, had executed an unlimited deed
of suretyship in
favour of Engen, binding himself as surety for and
co-principal debtor with Soutpansberg for the due and punctual
payment of all
moneys that were then or might thereafter be owing by
Soutpansberg to it. With a view to recovering the amount owed to it,
Engen
instituted motion proceedings against Mr Strydom and another
surety, a Mr Louw, in the North Gauteng High Court, Pretoria. The
application was heard by Southwood J who granted judgment against Mr
Strydom and Mr Louw (the latter having not defended the proceedings)
in the amount of R25 311 432.21, together with interest and
costs of suit on the scale as between attorney and client.
[2]
Mr Strydom opposed Engen's application on two grounds. First, he
contended that Engen had not proved the amount of its claim.
Second,
he said that he was married in community of property and that his
wife had refused her consent to his signing the deed
of suretyship.
Engen was not in a position to dispute this and did not do so. He
contended that the deed was therefore invalid
by virtue of the
provisions of s 15(2)
(h)
of the Matrimonial
Property Act 88 of 1984 (the Act). Southwood J rejected both
defences, but gave leave to appeal to this court
in relation to the
second defence only.
[3] Under the Roman
Dutch common law, marriages were ordinarily in community of property
and the husband was vested with the marital
power. This enabled the
husband to deal with all the assets of the joint estate to the
exclusion and without the consent of his
wife. That meant that the
husband could incur debts and bind the joint estate to those debts
irrespective of the views or interests
of his wife. Such a
patriarchal regime is of course intolerable under our present
constitutional dispensation. Even under its oppressive
predecessor it
was regarded as unacceptable and the provisions of chapter III of the
Act were directed at changing it.
[4] The Act did not
abolish the institution of marriage in community of property, where
the assets of the respective spouses fall
into a joint estate.
Instead s 11 of the Act abolished the marital power and, in terms of
s 12, did away with the restrictions
that the husband’s
marital power had placed on the capacity of a wife to contract and
litigate. The resultant consequences
of marriages in community of
property were set out in chapter III of the Act. In construing those
provisions it is necessary for
us to be conscious that we now live in
a society where everyone is equal before the law and has the right to
equal protection and
benefit of the law, and unfair discrimination on
the grounds of gender, sex and marital status has been outlawed.
[5] Under the new
legal regime governing marriages in community of property both
spouses have the same powers with regard to the
disposal of the
assets of the joint estate, the contracting of debts which lie
against the joint estate and the management of the
joint estate (s
14). They are each vested with the powers that previously vested in
the husband alone. However, those powers are
not entirely unfettered.
The Act recognises that, if they were, either spouse would be
vulnerable to suffering financial loss in
the event of their partner
making ill-judged or profligate decisions in relation to their
financial affairs. Accordingly, in s
15, a number of limitations are
put in place on the exercise of this power.
[6] The starting
point under s 15(1) is that either spouse in a marriage in community
of property may perform any juristic act with
regard to the joint
estate without the consent of the other spouse. That right is,
however, made subject to the limitations contained
in ss 15(2) and
(3), which impose the requirement of the consent of the other spouse,
written in the cases described in s 15(2),
but not in the cases
described in s 15(3), in order to undertake certain financial
transactions. It is with one of these, the prohibition
on the one
spouse binding him or herself as surety, that this case is concerned.
[7] It is
appropriate at this stage to set out the relevant statutory
provisions. They are as follows:
(1) Subject to the
provisions of subsections (2), (3) and (7), a spouse in a marriage in
community of property may perform any juristic
act with regard to the
joint estate without the consent of the other spouse.
(2) Such a spouse
shall not without the written consent of the other spouse –
(h)
bind
himself as surety.
(6)
The provisions of paragraph …
(h)
of
subsection (2) do not apply where an act contemplated in those
paragraphs is performed by a spouse in the ordinary course of
his
profession, trade or business;’
[8]
These provisions were considered by this court in
Amalgamated
Banks of South Africa Bpk v De Goede
.
1
There two members,
who were employed respectively as a teacher and a clerk, each held a
12 per cent interests in a close corporation.
The controlling
interest was held by a man who, in the case of the teacher, was his
father and, in the case of the clerk, was his
father-in-law. The two
younger men played no day to day role in the operation of the close
corporation. They had, however, contributed
small amounts to the
close corporation as their members’ interests and by way of
loans. In order to finance the business
activities of the close
corporation a loan was sought from the bank and it required all three
men to sign suretyships as security
for the loan. When the close
corporation went into liquidation the bank sued the teacher and the
clerk on their suretyships to
recover what was owing to it and were
met with the defence that these were invalid by reason of s 15(2)
(h)
of the Act.
[9]
This court rejected that defence on the grounds that, in accordance
with the provisions of s 15(6), the suretyships had
been
furnished by them in the ordinary course of their business. It
pointed out that in enacting the legislation the legislature
must
have been aware that the limitations in ss 15(2) and (3) had the
potential to interfere with the operation of businesses,
trades or
professions and that the requirement of consent in these cases would
unnecessarily interfere with and restrict the ordinary
conduct of
business.
2
One can readily see
why that might be the case. For example, if an attorney who was a
member of a partnership, was married in community
of property and the
partnership required an overdraft, wished to purchase business
premises or conclude agreements to acquire office
machinery, which
agreements would be subject to the provisions of the
National Credit
Act 34 of 2005
, their spouse’s consent would be required in
order for the partnership to enter into these ordinary business
transactions.
To impose such a limitation would seriously hamper the
ability of a spouse married in community of property to function
effectively
in that profession. As a result the protection the
statute provides against unilateral conduct by one spouse that may
detrimentally
affect the joint estate is not absolute.
3
[10]
Accordingly
s 15(6)
provides that spousal consent in relation to
most of the transactions in
s 15(2)
and (3) is not required
where those transactions are entered into in the ordinary course of a
spouse’s business, trade or
profession. Where a business is
carried on through an incorporated vehicle such as a company or close
corporation, or even an unincorporated
vehicle, such as a partnership
or trust, the question to be answered is whether the surety’s
involvement in that business
is his or her business and whether the
execution of the suretyship was in the ordinary course of the
surety’s business, not
the business of the company, close
corporation, partnership or trust.
4
It may not be the
surety’s business if they are a mere salaried employee, having
no commercial interest in the business’
success or failure.
However, a person who holds a number of non-executive directorships
that are the principal source of their
income may well when executing
a deed of suretyship for one of those companies be acting in the
ordinary course of their business.
[11]
This illustrates the fact that whether a deed of suretyship was
executed in the ordinary course of business is, as Southwood
J held
it to be in this case, a question of fact. That is how this court
treated it in
De
Goede
.
5
It rejected a
contention by the sureties that their interest in the close
corporation was merely a paper interest. It pointed out
that under
the
Close Corporations Act 69 of 1984
they both owed a fiduciary duty
to the close corporation and both were vested with powers of
management in respect of its affairs.
They had involved themselves in
those affairs by investing money to provide it with capital and by
being parties to the conclusion
of the loan agreement with the bank.
Their intention was to profit from their participation in the affairs
of the close corporation.
They were therefore conducting business
through the vehicle of the close corporation and the execution of the
deeds of suretyship
was done in the ordinary course of that business.
[12]
That was also the approach of Hurt J in
Investec
Bank Ltd & another v Naidoo & others
.
6
That case involved a
property syndication, where 50 investors, through the medium of a
private company, purchased a property for
redevelopment and resale on
a sectional title basis. The acquisition was funded by way of a loan
from the plaintiff bank repayment
of which was secured inter alia by
individual deeds of suretyship from the investors. When the scheme
collapsed and the bank sued
the sureties 14 of them raised a defence
under s 15(2)
(h)
of the Act that the
deeds of suretyship were invalid because their wives had not
consented to their execution. Hurt J held that
the question whether
they had been granted in the ordinary course of the sureties business
‘must be judged objectively with
reference to what is to be
expected of businessmen (or, these days, businesswomen)’. He
stressed the importance attached
in
De
Goede
to
the fact that the sureties’ interest in the close corporation
was an investment and that the suretyship was given to enable
that
investment to succeed by providing it with the necessary funding via
a loan to pay operating expenses. In those circumstances,
even though
the shareholders were not directors and were not managing the
venture, he held that the only difference in the two
cases was that
he was dealing with shareholders and not members of a close
corporation. Given the nature of the scheme; the obligation
of the
shareholders to make capital contributions; the fact that they were
consulted on the purchase of the property at a higher
price than
originally contemplated and that the corporate form was adopted for
reasons of business convenience in relation to what
was in substance
a partnership or joint venture, he held that the deeds of suretyship
were executed in the ordinary course of the
business of the sureties.
[13]
The argument before us on behalf of the appellant proceeded on the
footing that, once Mr Strydom said that he was married in
community
of property and that his wife had not consented to his executing the
deed of suretyship,
7
an onus rested on
Engen to prove that he had nonetheless bound himself as surety in the
ordinary course of his business. Whilst
in my view the evidence
before the court demonstrated that this was indeed the case the
approach was in my view wrong. The reason
is that it treated the
provisions of s 15(2) as distinct from s 15(6). However, that is
not appropriate as a matter of interpretation,
which requires
statutes to be construed in the light of their context not as
isolated fragments of words.
8
The requirement that
spousal consent be obtained before concluding certain defined
financial transactions as set out in ss 15(2)
and (3) of the Act
cannot be read in isolation. Section 15(6) says expressly that in
respect of certain of those transactions,
including binding oneself
as surety, section 15(2) does not apply if the act in question is
performed in the ordinary course of
the spouse’s business,
trade or profession. What one knows therefore is that ss 15(2)
and (3) operate in respect of
some, but not other, financial
transactions depending on whether or not they are performed in the
ordinary course of the spouse’s
business, trade or profession.
Accordingly it does not suffice for a person seeking to rely on
s 15(2)
(h)
to say that they
were married in community of property and that their spouse did not
consent to the transaction to bring themselves
within the ambit of
the section. That is because the section only operates in certain
limited circumstances. If they wish to rely
upon it they must bring
themselves within the full range of operation.
[14]
The fallacy underlying the appellant’s approach is not far to
seek. It lay in a failure to recognise that in substance,
if not in
form, s 15(6) is a proviso to the relevant parts of ss 15(2)
and 15(3). Had it been universally applicable
to all transactions
dealt with in those sections, no doubt they would have commenced with
the qualification that it embodies, in
words such as ‘Save
where the act contemplated in the following paragraphs is performed
by a spouse in the ordinary course
of his profession, trade or
business’. However, that was not possible as a matter of
drafting because s 15(6) does not,
for example, apply in
relation to the transactions in sub-paras
(a)
(d)
and
(e)
of
s 15(2). Hence it is contained in a separate sub-section. That
does not, however, change its essential character. Use of
the
familiar form ‘Provided that …’ is not necessary
to constitute a provision in a statute or contract a proviso.
9
Any form of words
that serves to narrow the scope of another provision by qualifying
its scope of operation or excepting from it
something that would
otherwise fall within it is treated as a proviso.
[15]
The correct approach to the interpretation of a proviso and the
fallacies that arise in respect thereof was identified in the
following passage from the judgment of Botha JA in
Mphosi
v Central Board for Co-operative Insurance Ltd
:
10
‘‘
This
argument altogether overlooks the true function and effect of a
proviso. According to Craies,
Statute
Law
,
7th ed., at p. 218 –
"the effect of
an excepting or qualifying proviso, according to the ordinary rules
of construction, is to except out of the
preceding portion of the
enactment, or to qualify something enacted therein, which but for the
proviso would be within it; and
such proviso cannot be construed as
enlarging the scope of an enactment when it can be fairly and
properly construed without attributing
to it that effect".
In
R. v Dibdin
,
1910 P. 57
, Lord FLETCHER MOULTON at p. 125, in the Court of Appeal,
said –
"The fallacy of the proposed
method of interpretation (i.e. to treat a proviso as an independent
enacting clause) is not far
to seek. It sins against the fundamental
rule of construction that a proviso must be considered in relation to
the principal matter
to which it stands as a proviso. It treats it as
if it were an independent enacting clause instead of being dependent
on the main
enactment. The Courts … have frequently pointed
out this fallacy, and have refused to be led astray by arguments such
as
those which have been addressed to us, which depend solely on
taking words absolutely in their strict literal sense, disregarding
the fundamental consideration that they appear in a proviso."’
[16] Once it is
recognised that it was for Mr Strydom to demonstrate that he was
entitled to the protection of s 15(2), and
that, in order to do
so, he was required to show that he did not bind himself as surety in
the ordinary course of his business,
it is immediately apparent that
he failed dismally to do so. He said that he was a businessman, but
other than his involvement
in Soutpansberg, he mentioned no other
business in which he was involved. He was admittedly a director of
Soutpansberg, but he
sought to distance himself from this by saying
that he was principally involved with the marketing of the product in
the Limpopo
area and not intimately involved in the day to day
running of the business. In the heads of argument on his behalf it
was sought
to distance himself still further by saying that he was
‘exclusively responsible for the marketing of the principal
debtor
in a specific area’. However, these allegations take on
a different colour once it is recognised, as appears from the
admitted
contracts between Soutpansberg and Engen on which the
relationship was built, that Soutpansberg’s business was the
distribution
and sale of Engen’s products in Limpopo through
its depots in Musina and Louis Trichardt. The entire business was the
sale
of those products. Accordingly the marketing of the business was
the heart and soul of its operations. Apart from that there was
only
the logistical side of delivering product to customers and
administration. Far from being involved to a limited extent Mr
Strydom worked at the very core of the business.
[17] Then there was
Mr Strydom’s coy silence on a number of key issues. He was a
director of the business. It was a small
private company and it is
unusual for such companies to have directors who have no share in the
company. Yet Mr Strydom did not
claim not to be a shareholder. An
important part of the agreements that were concluded between
Soutpansberg and Engen was the agreement
in December 2004 in terms of
which Engen required the directors of Soutpansberg to sign deeds of
suretyship for the company’s
indebtedness to Engen. The natural
inference underlying this request is that the directors were also the
persons having a financial
stake in the company, in other words, its
shareholders. Yet Mr Strydom merely admits the agreement and his
signature to the deed
of suretyship without indicating that he signed
it on some other basis. Had he been a mere employee given token
status as a director
that was the obvious thing to say, yet he
remained silent. Significantly, on the deed of suretyship,
immediately beneath his signature
and a little to the left, is a
line, under which appear the words ‘CONSENT BY SPOUSE (TO THE
EXTENT APPLICABLE). Entered
on that line is the acronym ‘N/A’
meaning ‘not applicable’. The central issue in this case
is whether that
was so yet he does not explain that insertion.
Various possibilities were postulated in argument, but these are mere
speculation.
The document is admitted and this is unexplained. That
is a glaring failure if in truth spousal consent was necessary.
[18] Furthermore,
annexed to the application papers was the judgment by Mynhardt J
in the application for the winding-up of
Soutpansberg. That recorded
that the opposition by the company was contained in opposing
affidavits and that Mr Strydom had signed
a confirmatory affidavit.
Significantly the judgment reflects that at the time of the
application Mr Strydom had a debit loan account
with the company in
an amount in excess of R3 million. He said nothing about this.
Nor did he say anything about the circumstances
in which he came to
sign directors’ resolutions that resulted in Soutpansberg
waiving claims against Engen and varying the
terms of the sales and
distribution agreement. He was silent also on his presence at
meetings between Engen and Soutpansberg reflected
in the letter the
company’s attorneys addressed to Engen in October 2006 that led
to the final rupture in relations. Any
proper explanation of his
involvement in Soutpansberg demanded that he deal with issues such as
these yet he chose to remain silent.
In this case his silence speaks
volumes.
[19]
The reality of the matter is that the only person who could testify
to these matters was Mr Strydom himself. He could explain
how he came
to be involved in Soutpansberg; why he was appointed a director and
why his activities in relation to its operations
did not constitute
his business. He chose not to do so in the face of an explicit
statement on behalf of Engen that he had bound
himself as surety in
the ordinary course of his business. That was said in the replying
affidavit in response to his invocation
of s 15(2) and in his
supplementary answering affidavit delivered some eight months later
he chose not to deal with it. The
obvious inference is that he was
unable to do so. Where matters are within the exclusive knowledge of
one party less evidence is
required to be adduced by the other party
to discharge the onus of proof on a point.
11
And sometimes the
silence of a witness on a vital point within that person’s
knowledge is as telling as anything that may
be said from the other
side.
[20] Even had the
onus of proving that Mr Strydom had bound himself as surety in the
ordinary course of his business rested on Engen
there would still
have been a need for Mr Strydom to give evidence to rebut that
suggestion. There was certainly sufficient evidence
in the nature of
the business, Mr Strydom’s position as the director in charge
of the key area of the company’s operations,
the fact that he
signed the deed of suretyship and, as a result of his directorship,
was clearly aware of the nature of the company’s
relationship
with Engen and familiar with the contractual arrangements between
Soutpansberg and Engen to require him to explain
why he had not been
acting in the course of his business. That he failed to do.
Accordingly, even if the onus had rested on Engen
it was discharged.
[21] That conclusion
renders it unnecessary to consider some other matters that were
canvassed in argument and in particular the
impact of s 15(9)
which reads:
‘
(9)
When a spouse enters into a transaction with a person contrary to the
provisions of subsection 2 … of this section …,
and –
(a)
that
person does not know and cannot reasonably know that the transaction
is being entered into contrary to those provisions or
that order, it
is deemed that the transaction concerned has been entered into with
the consent required in terms of the said subsection
(2) …;
(b)
that
spouse knows or ought reasonably to know that he will probably not
obtain the consent required in terms of the said subsection
(2) …
and the joint estate suffers a loss as a result of that transaction,
an adjustment shall be effected in favour of
the other spouse upon
the division of the joined estate.'
It is possible that
this section might have come into play in different circumstances but
as the case can be resolved without needing
to deal with it, the
better course is to say nothing in regard to its meaning and effect.
Any such statement would be obiter and
that should if possible be
avoided.
[22] My brother
Heher, whose imminent retirement is a source of regret to his
colleagues on this court, takes a different view of
the case to mine.
He would place the onus on Engen on the basis that it was obliged to
prove that it had a legally enforceable
deed of suretyship. I
respectfully differ. A person relying on a deed of suretyship need
show only that it was executed by a person
having full legal capacity
in accordance with the requirements of section 6 of the General Laws
Amendment Act 50 of 1956. It is
no part of their cause of action to
allege and prove that the surety was either not married in community
of property, or, if they
were, that their spouse had consented to the
execution of the deed, or that such consent was unnecessary because
it was executed
in the ordinary course of the surety’s
profession, trade or business. However, at the end of the day that is
neither here
nor there, because my colleague holds that Mrs Strydom
was a necessary party to this litigation and that her non-joinder has
the
effect that Engen is non-suited until she has been joined.
[23]
Again I find myself in respectful disagreement. Joinder is necessary
in the circumstances explained by Corbett J, with his
customary
lucidity, in
United
Watch & Diamond Co (Pty) Ltd & others v Disa Hotels Ltd &
another
.
12
He said:
‘
It is
settled law that the right of a defendant to demand the joinder of
another party and the duty of the Court to order such joinder
or to
ensure that there is waiver of the right to be joined (and this right
and this duty appear to be co-extensive) are limited
to cases of
joint owners, joint contractors and partners and where the other
party has a direct and substantial interest in the
issues involved
and the order which the Court might make (see
Amalgamated
Engineering Union v Minister of Labour
,
1949 (3) SA 637
(AD);
Koch
and Schmidt v Alma Modehuis (Edms.) Bpk.
,
1959 (3) SA 308
(AD). In
Henri
Viljoen (Pty.) Ltd. v Awerbuch Brothers
,
1953 (2) SA 151
(O), HORWITZ, A.J.P. (with whom VAN BLERK, J.,
concurred) analysed the concept of such a 'direct and substantial
interest' and
after an exhaustive review of the authorities came to
the conclusion that it connoted (see p. 169) –
“
... an
interest in the right which is the subject-matter of the litigation
and ... not merely a financial interest which is only
an indirect
interest in such litigation”.
This view of what constitutes a
direct and substantial interest has been referred to and adopted in a
number of subsequent decisions’.
Corbett J’s
exposition has been cited countless times as a correct statement of
our law including in judgments of this court.
13
[24] On that basis
the question is whether Mrs Strydom has a direct and substantial
interest in the subject matter of this litigation,
that is, the
suretyship and its validity, or whether her interest is merely a
financial interest that is only indirect and therefore
does not
require her joinder. The answer is clear. She has no interest in the
suretyship or its validity. She is not a party to
it and according to
her husband she was opposed to its execution. The fact that he went
ahead and executed it notwithstanding her
disapproval is a potential
source of financial prejudice to her and undoubtedly a source of
matrimonial discord. However, that
is not a direct and substantial
interest in the issues in this case. It is an interest that exists
only by virtue of the fact that
she and Mr Strydom are married in
community of property. I accordingly disagree with the proposition
stated in para 43 of my colleague’s
judgment.
[25] The consequence
of my colleague’s judgment would be that in every case where
the effect of a judgment, or more accurately
the execution of a
judgment, would be to diminish the joint estate, joinder of the
spouse who was not party to the underlying transaction
or dispute,
would be essential in order that they could protect their interest in
the joint estate. Whilst the proposition in para
43 of his judgment
is in terms confined to suretyship, I can see no reason why it would
not apply in any situation where a claim
against one spouse married
in community of property would, if successful, detrimentally affect
the joint estate. On my colleague’s
reasoning, particularly
that in the final sentence of para 45 of his judgment, the other
spouse would have to be joined to enable
them to protect the joint
estate and their interest in it. Not only has that never been our
law, but it would fly in the face of
the constitutional guarantee of
equality between husband and wife by forcing them to litigate
together in all situations where
the joint estate could be affected
by the outcome of the litigation. Sections 15(5) and 17(1) of the Act
make it clear that this
is not a requirement. In relation to matters
relating to a spouse’s profession, trade or business that
spouse is free to
institute or defend litigation without obtaining
the consent of their spouse. This provision would be entirely
undercut by a requirement
that the other spouse must be joined in
that litigation.
[26] For those
reasons the appeal is dismissed with costs.
M J D WALLIS
JUDGE OF APPEAL
HEHER JA
(dissenting):
[27] This appeal
concerns the application of
s 15
of the
Matrimonial Property Act 88
of 1984
which provides, in so far as here relevant, as follows:
‘
(1)
Subject to the provisions of [subsection (2)] … a spouse in a
marriage in community of property may perform any juristic
act with
regard to the joint estate without the consent of the other spouse.
(2) Such a spouse shall not
without the written consent of the other spouse –
…
(
h
)
bind himself as surety.
…’
[28] The provisions
of [paragraph (
h
)]
of subsection (2) do not apply where an act contemplated in [that
paragraph] is performed by a spouse in the ordinary course
of his
profession, trade or business.’
[29] The respondent
(‘Engen’) a manufacturer, marketer and distributor of
fuel and chemical products concluded a sales
and distribution
agreement with Soutpansberg Petroleum (Pty) Ltd on 3 December 2004
which amplified earlier contractual arrangements
between the parties.
Clause 2.10 provided that an undertaking of suretyship for the
obligations of the company would be signed
by all its directors. The
appellant was a director and he duly signed the required undertaking
on 15 December 2004 as did his fellow
director, Mr Nico Louw.
(Another director did not, but that factor is irrelevant to the
issues in this appeal.)
[30] Soutpansberg
Petroleum (Pty) Ltd was provisionally wound up upon the application
of the respondent on 13 November 2006, the
order being made final on
12 November 2007.
[31] In February
2009 the respondent applied on motion to the North Gauteng High
Court, Pretoria for an order directing the appellant
and Louw jointly
and severally to pay to it the sum of R25 311 432.21 together with
mora interest on that amount and costs on the
attorney and client
scale. This amount, the respondent alleged, was due and payable to it
by the company and accordingly owed by
the sureties.
[32] The application
was opposed by the appellant. He essentially raised two defences:
that the respondent had refused to furnish
him with particulars that
established any indebtedness on the part of the company; in
consequence he denied that it was a debtor
of the respondent; and
that he, the appellant, was married in community of property when he
signed the deed of suretyship and his
spouse had refused to consent
to him doing so, with the consequence that his undertaking had been
without force and effect by reason
of the provisions of s 5(2)
of the Act.
[33] The court that
heard the application (Southwood J) rejected both grounds. It ordered
the relief as claimed. However it granted
leave to appeal to this
Court ‘in respect of only the [appellant’s] defence based
on the provisions of [the Act].’
[34] The onus in the
application proceedings rested on the present respondent throughout.
That included the burden of establishing
that it relied upon a
legally enforcible undertaking of suretyship. In the context of
s 15(2) that required that Engen prove,
on a balance of
probabilities, that the appellant’s spouse had consented in
writing to him incurring the obligations of a
surety (which, it was
common cause, she had refused to do) or that it exclude the operation
of ss (2)(
h
)
by proving that the appellant gave the undertaking in the ordinary
course of his business. (There was no question of practising
a
profession or carrying on a trade in this instance.)
[35] Whether Engen
knew when it instituted the proceedings that the appellant was
married in community is unclear. I shall assume
it did not and that
it only became aware of that status when he raised the statutory
defence in his answering affidavit. It follows
that it was only then
that the aspect of whether the appellant had acted in the ordinary
course of business became relevant. The
generalised allegations in
the founding affidavit – that the appellant was at all material
times a director of Soutpansberg
Petroleum (Pty) Ltd and that he
entered into the suretyship in that capacity, and the fact that the
appellant, as a director, signed
a resolution to conclude a waiver of
claims with the respondent – therefore contribute little or
nothing to the elucidation
of an issue that had not then become
apparent.
[36] In the
answering affidavit, the appellant deposed:
‘
5.
Although I was a director of Soutpansberg, I was never intimately
involved in the day to day running of Soutpansberg. I was almost
exclusively involved with the marketing on behalf of Soutpansberg in
the Limpopo area.’
This was purely an
answer to the allegations in the founding affidavit. It was not
directed to the applicability of s 15(6) for
the simple reason that
Engen had not by then pleaded reliance on that section and there is
no indication that the appellant was
aware of its existence or its
terms.
[37] The statutory
defence was raised by the appellant in the following terms:
‘
I
married Hendrina Petronella Jacomina Steyn Crouse on 5 April 1980. We
are married in community of property. My wife did not provide
her
consent to the suretyship, as required in terms of Section 15(2) of
the Matrimonial Property Affairs Act, 88 of 1984. She specifically
refused to sign the suretyship. As a result thereof the deed of
suretyship is invalid.’
[38] In its replying
affidavit Engen admitted that the appellant was a director of
Soutpansberg but denied in bare terms the remainder
of the
allegations in para 5 of the answering affidavit. As to para 11 the
respondent contended itself with stating that the appellant
was, at
the time of signature of the deed, a director of Soutpansberg ‘and
signed the deed in the ordinary course of [the
appellant’s]
trade and business as well as in the ordinary course of business of
the principal debtor.’
[39] The learned
judge a quo quite correctly held that whether the appellant signed
the undertaking in the ordinary course of his
business depended on
the facts.
[40] Southwood J
summarised the facts that he regarded as relevant as follows:
‘
The
first respondent was a director of Soutpansberg when he signed the
deed of suretyship. He describes himself as a businessman
and states
that he was almost exclusively involved in the marketing on behalf of
Soutpansberg in the Limpopo area. He refers to
no other business in
which he was involved. On the information in the affidavits it
appears that the directors were all actively
involved in the conduct
of Soutpansberg’s business and in reality conducted business
through the vehicle of the company.
It appears that when the
liquidation proceedings commenced the directors all owed Soutpansberg
large amounts on loan account: in
the case of the first respondent
this was R3 065 251. When the first respondent signed the deed of
suretyship he did so because
the applicant had agreed to increase
Soutpansberg’s credit limit to R21,5 million and in return
required deeds of suretyship
signed by the directors, something which
had not been required before.’
He found on the
strength of these ‘facts’ that the appellant signed the
deed in the ordinary course of his business.
[41] I have serious
doubts whether, upon a proper application of the principles stated in
cases such as
Radebe
v Eastern Transvaal Development Board
1988
(2) SA 785
(A) at 793C-G and
Minister
of Land Affairs and Agriculture v D & F Wevell Trust
2008
(2) SA 184
(SCA) at 200C-E, Engen set up sufficient facts to enable
the court to decide in its favour that it had brought its case within
the exception for which s 15(6) provides. However, for the reasons
which follow, I find it unnecessary to pronounce finally on that
question.
[42] When the appeal
commenced the court requested counsel to address it as to whether Mrs
Strydom, to whom (it was not in dispute)
the appellant was married in
community of property at the date on which he signed the undertaking
of suretyship in favour of Engen,
was a necessary party to the
proceedings in the court a quo, and should, therefore, have been
joined as a respondent in the application.
14
Having heard counsel
and considered the matter further, I am persuaded that she was indeed
such a party and that it is required
of this Court to make an order
which addresses that conclusion:
Amalgamated
Engineering Union v Minister of Labour
1949
(3) SA 637
(A) at 663;
Rosebank
Mall (Pty) Ltd v Cradock Heights (Pty) Ltd
2004
(2) SA 353
(W) para 13.
[43] In my view the
applicable principles can be stated thus in relation to the
proceedings brought by Engen:
When a person is
sued for payment of an indebtedness allegedly arising from an
undertaking of suretyship signed by that person and
he or she was at
the time of giving the undertaking married in community of property,
the spouse to whom he or she was then married
has a material or
direct and substantial interest in the relief claimed such as to
confer on that spouse the right to be joined
in the proceedings and
conversely the party suing is obliged to join that spouse unless he
or she has waived that right.
[44] The question of
joinder does not depend on the nature of the subject-matter of the
suit but on the manner in which, and the
extent to which, the court’s
order may affect the interests of third parties:
Amalgamated
Engineering Union
at
657. That notwithstanding, where there exists a joint financial or
proprietary interest, a ‘vermoënsbelang’,
joinder of
a person sharing that interest is insisted upon:
Morgan
& Another v Salisbury Municipality
1935
AD 167
at 171;
Kock
& Schmidt v Alma Modehuis (Edms) Bpk
1959
(3) SA 308
(A) at 318F.
[45] The debts
incurred by a spouse married in community of property are (subject to
the operation of
s 15
of the
Matrimonial Property Act 88 of 1984
) the
joint debts of the common estate, the spouses are joint debtors, the
debts are paid out of the estate and execution can be
levied against
it in the event of non-payment:
De
Wet NO v Jurgens
1970
(3) SA 38
(A) at 47D-F. It follows that any judgment obtained by a
creditor in Engen’s position could not be carried into effect
without
prejudicing the financial interests of both spouses.
[46] Moreover a
consideration of the purpose and terms of
s 15
shows that a spouse in
the position of Mrs Strydom possesses a legal interest in the relief
claimed.
Section 15(2)
(h)
enacts a prohibition
against a husband or wife married in community of property
undertaking the obligations of a surety without
the consent of his or
her spouse. The purpose is plainly to protect both spouses against
the unilateral improvidence of one of
them. Each spouse has a
material interest in the consequences of the prohibition. Neither is
deprived of asserting that interest
unless and until the creditor
seeking to enforce an otherwise prohibited act brings that act within
the scope of the exception
for which
s 15(6)
provides (in accordance
with the general principle that he or she who asserts must prove:
Pillay
v Krishna
1946
AD 946
at 951;
Tooth
& another v Maingard and Mayer (Pty) Ltd
1960
(3) SA 127
(N) at 134-5). I agree with Kirk-Cohen J, in
Amalgamated
Bank of SA Bpk v Lydenburg Passasiersdienste BK
1995
(3) SA 314
(T) at 322 that ‘’n borgakte deur ‘n
gade aangegaan waar subarts (5) en (6) nie van toepassing is nie is
nietig’.Just
as either spouse has the right to assert his or
her interest in the prohibition, so he or she has an equivalent right
to resist
a creditor’s resort to
s 15(6)
in order to sustain
the benefit of the prohibition. To refuse either spouse his or her
right in this regard would be to deprive
that spouse of the means to
protect his interest in the joint estate which the statute
guarantees. To find that it is unnecessary
for the creditor to give
notice to and join the innocent spouse in proceedings in which
s
15(6)
is invoked by that creditor would tend to the same deprivation.
[47]
Section 15(5)
provides:
‘
Where a
debt is recoverable from a joint estate, the spouse who incurred the
debt or both spouses jointly may be sued therefor,
and where a debt
has been incurred for necessaries for the joint household, the
spouses may be sued jointly or severally therefor.’
Although the general
operation of this provision may permit the recovery of debts from a
joint estate without joinder of both spouses:
Zake
v Nedcor Bank Ltd & another
1999
(3) SA 767
(SECLD), it should not be so interpreted as to avoid the
requirement of joinder when the issue is whether a spouse enjoys the
protection
of
s 15(2)
in relation to one of the prohibited acts.
[48]
Section 15(9)
provides:
‘
(9)
When a spouse enters into a transaction with a person contrary to the
provisions of subsection (2) or (3) of this section, or
an order
under
section 16
(2), and-
…
(b)
that
spouse knows or ought reasonably to know that he will probably not
obtain the consent required in terms of the said subsection
(2) or
(3),or that the power concerned has been suspended, as the case may
be, and the joint estate suffers a loss as a result
of that
transaction, an adjustment shall be effected in favour of the other
spouse upon the division of the joint estate.’
I do not think this
provision detracts from the necessity of joining an affected spouse.
It operates only once a joint estate has
suffered loss, ie subsequent
to judgment, and provides simply for an adjustment if and when a
division of the joint estate takes
place. There is no necessary
implication in the section that it ousts the ordinary right of a
spouse to take steps to protect the
joint estate against the
contingency of the loss referred to by resisting proceedings
instituted by a creditor.
[49] I find
therefore that the appellant’s wife possessed an interest that
was both financial and direct and substantial (as
that phrase is used
in the authorities cited) in the relief claimed by Engen which
required that Engen join her as a party to the
proceedings. Without
such joinder any judgment which Engen obtained was ineffective to
bind the joint estate.
[50] I would
therefore uphold the appeal with costs, set aside the order of the
court a quo, and direct that Engen take steps to
join the appellant’s
wife at the time of signing the undertaking of suretyship
15
as a respondent in
the application on appropriate terms (which it is unnecessary to
spell out here since this is a minority judgment).
_________________
J A HEHER
JUDGE OF APPEAL
APPEARANCES
APPELLANT: N G D
Maritz SC (with him A P J Els)
Schabort
Incorporated, Pretoria
Symington & De
Kok, Bloemfontein
RESPONDENT: P L
Carstensen
Lanham-Love
Attorneys, c/o Gerber Attorneys, Pretoria
McIntyre & Van
der Post, Bloemfontein
1
Amalgamated
Banks of South Africa Bpk v De Goede & ʼn ander
1997 (4)
SA 66
(A).
2
At
74F-I where F H Grosskopf JA said: ‘Waar 'n gade egter in die
gewone loop van sy beroep, bedryf of besigheid optree,
kan die
vereiste van toestemming die normale handelsverkeer onnodig belemmer
en beperk. Dit was vermoedelik om daardie beswaar
die hoof te bied
dat die Wetgewer in art 15(6) bepaal het dat die toestemming van die
ander gade nie vereis word waar die gemelde
regshandelinge in die
gewone loop van 'n gade se beroep, bedryf of besigheid verrig word
nie. Borgstelling is een van daardie
regshandelinge gemeld in art
15(6). Artikel 17(1)(c) bevat 'n soortgelyke bepaling. Volgens art
17(1) mag litigasie deur of teen
'n gade getroud in gemeenskap van
goed normaalweg nie sonder die skriftelike toestemming van die ander
gade ingestel of bestry
word nie, behalwe geregtelike verrigtinge
“(c) ten aansien van 'n aangeleentheid wat betrekking het op
sy beroep, bedryf
of besigheid”.
3
At
74I, F H Grosskopf JA said: ‘Dit is dus duidelik dat die
beskerming teen eensydige optrede van ʼn gade wat die
gemeenskaplike boedel nadelig kan raak, nie volkome is nie.’
4
At
77A-B.
5
And
how it was treated in
Tesoriero v Bhyjo Investments Share Block
(Pty) Ltd
2000 (1) SA 167
(W) at 173A-175E.
6
Investec
Bank Ltd & another v Naidoo & others (unreported)
, Case
No 9640/98 (DCLD).
7
He
in fact said that she refused to agree, something Engen hardly
surprisingly, as it was not privy to their matrimonial
communications,
did not dispute.
8
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA
593
(SCA) paras 18 and 19.
9
See
by way of example the judgment of Nicholas AJA in this court in
Hira
v Booysen
1992 (4) SA 69
(A) at 79F-80D.
10
Mphosi
v Central Board for Co-operative Insurance Ltd
1974 (4) SA 633
(A) at 645C-F.
11
Union
Government (Minister of Railways) v Sykes
1913 AD 156
at 173-4;
Ex parte The Minister of Justice: In re R v Jacobson & Levy
1931 AD 466
at 479 where reference is made to ‘the nature
of the case and the relative ability of the parties to contribute
evidence
on that issue’.
Hasselbacher Papier Import and
Export (Body Corporate) & another v MV Stavroula
1987 (1) SA
75
(C) at 79A-D.
12
United
Watch & Diamond Co (Pty) Ltd & others v Disa Hotels Ltd &
another
1972 (4) SA 409
(C) at 415E-H.
13
The
most recent is
National Director of Public Prosecutions v Zuma
[2009] ZASCA 1
;
2009 (2) SA 277
(SCA) para 85, fn 72.
14
There
was no indication in the record on appeal that Mrs Strydom had been
notified of the application or the relief claimed in
it.
15
The
record discloses nothing about her present status.