Summary of Judgment

Introduction

The matter concerned an appeal to the KwaZulu-Natal Division of the High Court, Pietermaritzburg, against a decision of the Pinetown Magistrates’ Court (as court of first instance). The appeal followed the granting of summary judgment in favour of the plaintiff in the magistrates’ court.

The parties in the appeal were Branley Interiors CC (first appellant; cited in the court a quo as the first defendant) and Brian Phillip Staples (second appellant; cited as the second defendant), opposed by Adprops SA (Pty) Ltd (respondent; the plaintiff in the court a quo). The respondent had instituted action for payment of arrear rental, alternatively a lesser amount, together with interest and costs.

Procedurally, the respondent sued the appellants for R158 566.31 alternatively R123 556.31, alleging that the first appellant owed arrear rental under a written lease and that the second appellant was liable as surety and co-principal debtor. The appellants delivered a plea disputing the quantum and denying that the second appellant signed a deed of suretyship. The respondent then applied for summary judgment, which the magistrates’ court granted against the appellants for R123 556.31 plus interest and costs on the attorney-and-client scale. An appeal was noted (and condonation for late steps was sought and granted to the extent necessary), but the High Court understood the appeal to be directed in substance at the finding of liability against the second appellant.

The general subject-matter of the dispute was whether, on the wording and signature of the written lease agreement, the second appellant became bound as surety for the tenant’s obligations, and whether the requirements of section 6 of the General Law Amendment Act 50 of 1956 were satisfied.

Material Facts

The respondent’s claim was founded on a written lease agreement concluded on 19 February 2020, which was attached to the particulars of claim. The respondent alleged that arrear rental was owing under that lease and sought to hold the first appellant liable as tenant and the second appellant liable as surety and co-principal debtor.

The lease documentation recorded, in the schedule and in clause 2, that the tenant was described as: “Company name: Adprops SA (Pty) Ltd; Represented by: Brian Phillip Staples.” The judgment further recorded it as common cause that, in terms of the lease agreement, the tenant was the first appellant and that the second appellant acted as its representative. The schedule (clause 14) reflected that “BP Staples is the guarantor/s for the tenant”.

The agreement contained a guarantee provision. Clause 19, headed “Guarantee”, provided for the guarantor to bind himself in favour of the landlord as surety and co-principal debtor, jointly and severally with the tenant. The judgment also highlighted that clause 19 included an acknowledgment that a separate, distinct and independent contract of guarantee was brought into existence by the guarantor’s signature, and clause 19.4 recorded that each guarantor who signs acknowledges that a distinct and independent contract of guarantee is created by that signature.

It was common cause that the second appellant signed the agreement, doing so on each page, and signed the last page in the space provided and described as “Tenant”. The agreement also included a manuscript amendment to clause 16 (dealing with payment of rental), where a sentence was deleted and replaced with words providing that rental would be paid by EFT on the first of each month; both the deletion and the inserted words were signed by the respondent and the second appellant.

The disputed factual contention (to the extent material to the outcome) was the capacity in which the second appellant signed. In the plea and in the affidavit resisting summary judgment, the second appellant contended that he signed only as representative of the first appellant and not in his personal capacity as surety. The appellants also advanced an argument that section 6 of the General Law Amendment Act 50 of 1956 had not been complied with because, on their contention, the guarantor should have been required to sign on a separate portion of the document.

The High Court recorded that the opposition was not understood to rest on justus error (that is, the second appellant did not base his case on not having known that the suretyship clause was included in the document).

Legal Issues

The central legal question was whether the second appellant, by signing the lease agreement (including its guarantee provisions), bound himself as surety and co-principal debtor for the tenant’s obligations.

This raised, in substance, an issue of the application of legal requirements to largely common-cause facts, namely whether the written lease and its signature satisfied section 6 of the General Law Amendment Act 50 of 1956 (requiring suretyship terms to be embodied in a written document signed by or on behalf of the surety), and whether a person signing in a representative capacity can, on the same document and in addition, undertake personal liability as surety.

The dispute was therefore primarily one of law and the application of law to the contractual document and signature, rather than a dispute of credibility or factual probabilities.

Court’s Reasoning

The court approached the matter by focusing on the text of the lease agreement and what it recorded regarding the parties and the guarantee.

In relation to compliance with section 6 of the General Law Amendment Act 50 of 1956, the court referred to the statutory requirement that no contract of suretyship is valid unless its terms are embodied in a written document signed by or on behalf of the surety. The court noted as common cause that the lease agreement identified the tenant as represented by the second appellant and, separately, that the second appellant was recorded as the guarantor for the tenant (clauses 2 and 14 of the schedule). The court also emphasised that clause 19 set out the guarantee undertaking, including that the guarantor binds himself as surety and co-principal debtor in favour of the landlord.

Against that contractual and factual backdrop, the court rejected the contention that section 6 had not been complied with. It treated the suretyship obligation as sufficiently embodied in the written lease and accepted that the second appellant’s signature on that document constituted signature for purposes of the statute. The court recorded that counsel for the appellants did not refer to case law supporting the proposition that a guarantor must sign on a separate portion of the document, and the court’s conclusion was that the requirements of section 6 were met on the document’s terms as signed.

The court then addressed the submission that the second appellant signed only as a representative and not personally. It applied the principle from Steenkamp v Webster 1955 (1) SA 524 (A), namely that a person who signs a document in a representative capacity may nevertheless, within the same document, expressly undertake personal liability. On the court’s reading, the lease expressly recorded the second appellant as guarantor and expressly created a guarantee obligation in clause 19, which the second appellant’s signature brought into existence. The court regarded this as sufficient to justify the magistrate’s conclusion that the second appellant was bound personally as surety despite also acting as the tenant’s representative.

On costs, the court applied the ordinary approach that costs follow the result, and it also noted that the agreement itself provided for attorney-and-client costs. In the absence of reasons to depart from that position, the court upheld the attorney-and-client costs consequence following the dismissal of the appeal.

Outcome and Relief

The High Court dismissed the appeal and upheld the magistrates’ court’s order. The appeal was dismissed with costs on the attorney-and-client scale.

The court also granted condonation to the extent necessary for the late delivery of the notice of appeal and any delay in prosecuting the appeal, noting that the condonation application was unopposed.

Cases Cited

Steenkamp v Webster 1955 (1) SA 524 (A).

Legislation Cited

General Law Amendment Act 50 of 1956, section 6.

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that, on the proper reading of the written lease agreement, the second appellant was identified as the guarantor and the agreement expressly contained a guarantee clause by which the guarantor bound himself as surety and co-principal debtor. Because the terms of the suretyship were embodied in the written agreement and the second appellant signed that document, the requirements of section 6 of the General Law Amendment Act 50 of 1956 were satisfied.

The court further held that a signatory who signs in a representative capacity may nevertheless undertake personal liability within the same document where the document’s terms so provide, and that the magistrate was correct in concluding that the second appellant had bound himself as surety. The appeal was therefore dismissed with attorney-and-client costs.

LEGAL PRINCIPLES

A contract of suretyship is valid under section 6 of the General Law Amendment Act 50 of 1956 where the terms of the suretyship are embodied in a written document and the document is signed by or on behalf of the surety; a separate signature block or separate document is not, on the reasoning adopted, required where the signed document itself contains the suretyship terms and identifies the surety.

A person who signs a contract in a representative capacity may, in the same contractual instrument, expressly assume personal liability (including liability as surety), depending on the language and structure of the document, as recognised in Steenkamp v Webster 1955 (1) SA 524 (A).

Where a contract provides for attorney-and-client costs and the successful party seeks such costs, and no basis is established to depart from the ordinary approach that costs follow the result, the court may order costs on that scale following the outcome.