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[2019] ZANCHC 64
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Auto Commodities (Pty) Ltd v Vam Zyl (205/2018) [2019] ZANCHC 64 (6 September 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTHERN
CAPE HIGH COURT, KIMBERLEY)
Case
No: 205/2018
Heard
On: 6/08/2019
Delivered:
6/09/2019
Reportable:
YES/NO
Circulate
to Judges: YES/NO
Circulate
to Magistrates: YES/NO
Circulate
to Regional Magistrates: YES/NO
In
the matter between:
AUTO
COMMODITIES (PTY)
LTD
PLAINTIFF
and
MARTIN
VAM
ZYL
DEFENDANT
JUDGMENT
COETZEE
AJ
[1]
Plaintiff' is Auto Commodities (Pty) Ltd, a private company, and
supplier
of,
inter
alia,
petroleum
products. Plaintiffs claim is based on a deed of suretyship, dated 9
June 2014, in terms whereof defendant, Mr Martin
van Zyl, bound
himself as surety and co principal debtor for the due fulfilment
of all obligations which Blue Chip Mining
and Drilling (Pty) Ltd
("Blue Chip") may have towards the plaintiff and prays as
follows:
1
Payment of the sum of R 6 327 293,98 plus interest calculated
at 14.5% being the prime rate charged by the plaintiffs bankers plus
4% from 10 January 2017 to date of payment in full, alternatively
calculated at 10,25% per year.
2
Alternatively to prayer 1
2.1
Rectification of the deed of suretyship by deleting the words
"As Witness" where the defendant signed.
2.2
Payment of the sum of R 6 327 293,98 plus interest calculated
at 14.5% being the prime rate charged by the plaintiffs bankers plus
4% from 10 January 2017 to date of payment in full, alternatively
calculated at 10,25% per year.
3
Costs of suit.
[2]
The parties agreed at a pre-trial conference that,
inter
alia,
that the following relevant facts are not in
dispute:
2.1
During or about the beginning of June 2014 the plaintiff sent forms
for an application for the granting
of a current account and credit
facilities, which forms included a suretyship, to Blue Chip. The
complete document consisted of
6 pages of which the Application for a
Current Account" and the "Conditions of Trade" each
consisted of a single
page and the "Deed of Suretyship" of
4 pages.
2.2
The completed application for the current account and credit facility
as well as the completed deed
of suretyship was faxed back to
plaintiff on 8 June 2019. The application was successful and
plaintiff approved the application
on 30 July 2019.
2.3
Pursuant to the approval of the application the plaintiff supplied
petroleum products to Blue Chip on
credit and did so from 1 August
2014 to 5 December 2016.
2.4
On 18 December 2014 Blue Chip was placed in Business Rescue in terms
of section 129 (1) of the Companies
Act, 2008 (Act 71 of 2008) ("the
Act").
2.5
On or about 14 December 2015 the business rescue practitioners paid
an amount of R 1 319 160.50 to the
plaintiff.
2.6
As at 5 December 2016, Blue Chip was indebted to plaintiff in the
amount of R 6 927 239.98.
[3]
Defendant raises, in essence, the following defences:
3.1
As a result of the implementation of a business rescue plan of
Blue Chip and the filing of a certificate of substantial
implementation
of the rescue plan in terms of
section 152(8)
of the
Companies Act, 2008
, plaintiff can no longer, in terms of
section
154(2)
of the
Companies Act enforce
any debt which was owing prior to
the business rescue.
3.2
The purported deed of suretyship was not signed by the
defendant as surety as his signed the document as a witness.
3.3
The defendant's suretyship is limited and for this defence he
relies on the following provision in the deed of suretyship:
"Subject
however
that
our
total
indebtedness
.......
Will never exceed an amount equivalent to the
percentage
of
the debtor's interest
in the
principal
debtor
, expressed
as an amount
of the
total
of the
Principal
Debtor's indebtedness
to
the Creditor.
(My underlining)
[4]
Ad 3.1
supra
4.1
Mr Theron, on behalf of the defendant, submitted that Blue Chip has
been released of its obligation
towards plaintiff. He contends that
once the business rescue plan has been implemented, which involved
the acceptance by creditors,
including plaintiff, of full or partial
payments from the controlled sale of Blue Chip's assets, the company
would be returned
to its directors and shareholder. He then submitted
that once full or partial payment has been made, the creditors would
retain
no right against Blue Chip for payment of any part of the debt
which remains unpaid. The question then arises whether the releasing
of Blue Chip of their debt towards the plaintiff extinguished the
debt. For the reasons hereunder I am of the view that it does
not.
4.2
In
New Port Finance Company (Pty) Ltd and another
v
Nedbank Ltd; Mostert and another v Nedbank Ltd
[2015] 2 All SA 1
(SCA) paragraph 8 (also reported as 2016(5) SA 503 SCA), Wallis JA
said the following:
"At the heart of
the submissions on behalf of Mr Mostert and New Port
was
the
proposition that the successful outcome of the business rescue
proceedings would be that the sureties would
have
been
relieved
of any
indebtedness
to
Nedbank over and
above the payment of the amounts already received by Nedbank under
those two plans. For various reasons that would
not
have been the case."
4.3
With regard to the
New Port Finance-case
Mr Theron contended
that the terms of the deed of suretyship,
in casu,
differs
from those terms considered by Wallis JA in that the present
suretyship only preserves the right to claim as set out in
clauses 5
and 5.4, which provide as follows:
"5
In
the
event
of
the
insolvency,
liquidation, sequestration or placing
under
judicial
management
of
the
estate
of the debtor
or
in
the event
of compromise
between
the debtor and
any
creditor
of the debtor:
5.4
"No dividends
or payments which the Creditor will receive from the debtor
......
shall prejudice the creditor's right to recover from us
........
any
sum
which, after the receipt of such dividends
or payments,
will
remain
owing
to
the
creditor
by
the debtor'
(My underlining)
4.4
In context, there is, in my view, no difference in the wording which
detracts from the cogency
of the principle, enunciated, albeit
obiter,
by Wallis JA in paragraph 12 of the judgement where he
says the following:
"[12]Of
necessity, therefore, it had to be argued that the liquidation of
Wedgewood
and Danger Point had altered the situation.
But that only brought clause
six
into sharper focus. It
identified four broad situations when its terms would apply. They
were liquidation, judicial management under
the Companies
Act
61
of 1973, the submission
of an offer of
compromise
by the debtor and the submission of
a
scheme of arrangement by the debtor. If any of those events
occurred, clause
six
entitled
Nedbank
to accept any dividend on account or any alternative
securities arising out of that event and "to
recover
from
the surety, to the
full extent of this suretyship" any
sums
remaining owing
thereafter. In other words, the fact that in any of those situations
the principal debtor would be released in whole
or in part from
its obligations
would
not
disentitle the bank from recovering
the
outstanding
amount
from the
sureties.
Neither
suggestion
by
Counsel
as
to
ways
in which this could be
avoided held water. In particular the suggestion that a clause in
these terms
did
not encompass business
rescue
-
an institution that did not exist under that name
when the deeds were
executed
-
was incorrect
4.5
Mr Theron also referred me to an unreported judgment by Williams J,
in this devision, in
Hitachi Construction Machinery Southern
Africa
Co
Pty Ltd v Wiets Bates
(First Respondent)
and
Martin van Zyl
(Second Respondent) Case number 205/2018), handed
down on 15 March 2018.
4.6
Mr Theron, who, in the
Hitachi-case
represented the
respondents, repeated his submission that the remarks made by Wallis
JA in
New Port Finance
were
obiter_and
urged me to find
that William J was wrong in finding as follows in paragraph 16:
"Mr Theron's
argument, that the pronouncements in New Port
relating
to the liability of sureties after a business rescue plan, are
obiter, may be
so
in the
sense
that the
issues
in
New Port
were decided on a different ground. It can
however not be said that these are only passing remarks, since the
SCA had
heard
full
argument
on
the
business
rescue
point
and
had found the
issues
to be of such importance that it
was
appropriate to state
why the business rescue defence would not have availed the appellants
in that matter. I would be
slow
to ignore these findings."
4.7
I am in agreement with the finding of Williams J.
4.8
I am therefor of the view that this defence must fail
[5]
Ad
3.2
supra
5.1
It is trite law that, in the present circumstances, the plaintiff
carries the burden to show the existence
of a valid and enforceable
contract of surety which burden includes, save for the essential
elements as statutory provided for,
the terms of the contract and
intention of the surety. (See
Di Giulio v First National Bank of
South Africa Ltd
2002 (6) SA 281
(K) Paragraph [26]. Once it has
been shown that a valid suretyship exists, the surety must show, on a
balance of probabilities
why the
caveat subscriptor
rule
should not be applied.
5.2
Section 6 of the General Law Amendment Act 50 of 1956 ("the
Act") provides:
"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
..."
5.3
The validity of a deed of suretyship is dependent on its conformity
with the provisions of sec 6 of
the General Law Amendment Act, 1956
(Act 50 of 1956). Essential to the validity of a contract of
suretyship includes the identities
of the creditor, the principal
debtor and the surety
(Fourlamel (Pty) Ltd v Maddison
1977
(1) SA 333
(A) at 345A-D).
5.4
The Deed of Suretyship identifies the plaintiff as "creditor",
the defendant as "surety"
and Blue Chip as the "debtor"
and the signature of the defendant appears on the last page thereof
under the heading
"As Witness".
The essence of the
dispute is, in my view, whether the defendant appended his signature
to the deed of suretyship with the intention
to be bound as surety.
For convenience I reproduce the concluding portion of the agreement:
Thus done and signed
in
Kuruman
on this the
09
day of June
2014 AS WITNESS
1
Signed C P H Augustyn
2
Signed M van Zy
l
Blue Chip Mining and Drilling
For APPLICANT
Thus done and signed
in
Krugersdorp
on this the
30
day of July
2014
AS WITNESS
1
Signed (Illegible)
2
Signed (Illegible)
Signed (Illegible)
For AUTO COMMODOTIES
Initials (Illegible)
Signed M van Zyl
5.5
The plaintiff called Mr Andrew Joubert and Albertus Horn whilst only
the defendant testified.
5.6
Defendant testified that he is the chief executive officer of Blue
Chip. He also testified that, before
being involved in Blue Chip, he
held a high position in the Civil service, holds multiple University
degrees, inter alia, a Masters
degree which he obtained in the United
States of America.
5.7
In cross-examination he conceded that he signed the deed of
suretyship but denied that he intended to
append his signature to the
deed of suretyship as surety and persisted that he only signed as a
witness, as he only signed at the
pencil markings on the document
which markings were indicated to him by Mr Augustyn, the financial
manager of Blue Chip. He further
testified that all the handwritten
portions on the application and deed of suretyship was completed by
Mr Augustyn.
5.8
He also admitted that he signed every page of the application for
credit at the foot thereof, which
includes the very first and very
last page of the Deed of Suretyship. Defendant's name
"Martin
van
Zyl"
appears underneath the
heading
"DEED OF SURETYSHIP"
,
which is
typed in capital letters and is underlined, on the first page of the
deed of suretyship.
5.9
As there appears no signature in the space provided for the
"Applicant's" signature he could
not explain whose
signature he witnessed.
5.10 The defendant
admitted having received an e-mail from Mr Andre Joubert, a director
of the plaintiff, on 9 March 2016
in which e-mail the defendant was
referred to the personal suretyship which he had signed and he was
asked to indicate as to how
the outstanding amount would be settled.
Defendant's response was that he would consult with Blue Chip after
having heard from
the Business Rescue Practitioners. He then thanked
Mr Joubert for the understanding shown.
5.11 He
further admitted that his attorney did, on his instructions, caused a
letter to be written to the plaintiff's
attorneys on 17 January 2017
in which letter he avers that the deed of suretyship "was
intended to be no more than
a
draft, which accompanied
the
application
for information
purposes".
5.12 In
evaluating the defendant's evidence, I must, at the outset, say that
I find him not to be a good and reliable
witness. He was evasive
under cross-examination and could not explain why he regarded the
deed of suretyship to be a "draft"
for "information
purposes".
5.13 I find
it improbable that his financial manager would complete the
application and deed of suretyship and in particular
insert
defendant's name in the space for the surety without informing him
or, at the very least, draw his attention to the fact
that he was
about to sign a deed of suretyship. In this regard Mr Cilliers, on
behalf of the plaintiff, submitted that, on probabilities,
defendant
must have gleaned that from his interaction with Mr Augustyn. This
submission is, in my view, sound. In view of the contents
of his
attorney's letter he was aware that his name appeared on a deed of
suretyship as he regarded it as a "draft".
5.14 Contrary
to the defendant's defence that he signed the deed of suretyship as a
witness, he contends in his attorney's
letter to the plaintiff's
attorney, that he
"signed an application for
a
current
account
............
on
behalf
of
the company",
which
ex facie the document he did not do as,
ex
facie
the document he did not sign the document on behalf of the
company but, on his evidence, as a witness. The fact that he regarded
the deed of suretyship to be a draft is indicative of the fact that
he was, at the time of signing it, aware of the fact that it
was a
deed of suretyship.
5.15 Mr
Theron, with reliance on
Brack
v
Citystate Townhouses
1982
(3) SA 364
WLD submitted that, as the defendant,
ex facie
the
deed of suretyship, signed in the space designated for witnesses, no
valid suretyship came about.
5.16
Brack's-
case does not support this submission as the facts are
distinguishable from the present case. In
casu,
the deed of
suretyship provides as follows:
"By appending our
signatures at the foot hereof, we bind ourselves
as
surety and
co-principle debtor, in terms of this deed
of
suretyship………..
"
5.17
Defendant did append his signature at the foot of the deed of
suretyship.
5.18 For the
above reasons I find that the defendant failed to show that the
caveat subsciptor-
rule should not be applied and that the
defendant intended to sign as surety. I therefore dismiss this
defence.
[6]
Ad 3.3 supra
6.1
The issue which the court needs to decide is whether the limitation
of the suretyship should be
regarded as
pro non scripto
as
submitted by Mr Cilliers or, as Mr Theron contends, that on a proper
interpretation of the relevant clause, the surety is limited.
6.2
GREENBERG, J.A., said in
Worman
v.
Hughes
and
Others,
1948 (3) S.A. 495
at p. 505
(A.D.), said the following:
"It must be borne
in mind that in an action on
a
contract, the rule of
interpretation
is
to ascertain, not what the parties'
intention
was,
but what the language
used
in the contract means,
, i.e.
what their intention was
as expressed in the contract.
As was
said by SOLOMON, J., in
van Pletsen v. Henning, 1913 A.D. p. 82 at p. 99: 'The intention of
the parties must be gathered from their
language, not from what
either of them may have had in mind.' (See
a/so
Union
Government
v. Smith, 1935 A.O. p. 232 at p. 240-1;
Lanfear v. du Tait, 1943 A.O. p. 59 at pp. 72-3 and, in regard
to wills,
6.3
It may well have been that the defendant had in mind that his
liability would be limited hence
the envisaged rectification as
alluded to in his attorneys letter dated 17 January 2017 where he
wrote the following:
"Appropriately
rectified it should read:
'..
..each of our total indebtedness
in terms of this deed of suretyship will never exceed an amount
equivalent to the percentage of
each's interest
in the
PRINCIPAL
DEBTOR"'
6.4
Defendant did not plead nor move for rectification.
6.5
Applying the principle referred to above, I am of the view that, on a
proper interpretation, the
suretyship
vis-a-vis
the defendant
is not limited.
6.6
Even if I am wrong in this finding, I am inclined to agree with the
submission that the limiting
portion should be regarded as
pro non
scripto.
From a mere reading of the document it is clear that the
"debtor" cannot have an interest in the "co
principal
debtor". This renders the limitation nonsensical and
thus void for vagueness.
[7]
In view of the order I intend to make there is no need to deal with
the
cause of action based on delict or the alternative claim for
rectification respectively.
[8]
No evidence was led with regard to the prime rate claimed by the
plaintiff's
bankers and he is not entitled to such an order.
[9]
No reason has been advanced why the costs should not follow the suit.
In
the above premises I make the following order:
1
Judgement
in granted
as
follows:
1.1
Payment of the sum of R 6 327 293.
1.2
Interest calculated on the above amount at 10.25% from
10 January
2017 to date of payment in full.
1.3
Costs of suit.
W
J COETZEE
ACTING
JUDGE-NORTHERN CAPE DIVISION, KIMBERLEY
On
Behalf of the Plaintiff:
Adv
G C
Pretorius
(SC)
Instructed
by:
Elliott Maris Wilmans & Hay Attornreys
On
Behalf of the Defendant:
Adv EL Theron (SC)
Instructed
by:
Duncan & Rothman Inc.