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[2018] ZAGPPHC 731
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KMSA v Moss and Another (24939/2015) [2018] ZAGPPHC 731 (23 March 2018)
IN
THE REPUBLIC OF SOUTH AFRICA
IN
THE HIGH COURTOF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
(1)
NOT REPORTABLE
(2)
NOT OF INTEREST TO OTHER JUDGES
(3)
REVISED.
CASE
NO: 24939/2015
23/3/2018
KMSA
APPLICANT
and
ED
MOSS
1
ST
RESPONDENT
F
D DE
LANGE
2
ND
RESPONDENT
LEAVE TO APPEAL JUDGMENT
KHUMALO J
Introduction
[1]
This is an application for leave to
appeal by the Respondents against the judgment of the above
honourable court delivered on 12
September 2017 in terms of which the
Applicant's claim for payment of R3 000 000.00 (Three Million Rand),
against them jointly
and severally, the one paying the other to be
absolved, was upheld with costs.
[2]
The Respondents were sued in their
capacity as sureties and co-principal debtors with Express Model
Training 284 (Pty) Ltd ("EMT")
(in liquidation) of which
they were also directors. The amount was owed to the Applicant by
EMT, in terms of a compromise that
was affirmed in an arbitration
award and made an order of court on 28 April 2015.
[3]
I am implored to grant the application
on the basis that not only are there prospects of success but also
compelling reasons that
the matter should be sent on appeal as
envisaged in s 17 (1) (a) of the Superior Court Act 10 of 2013 that
reads:
"17. (1) Leave to appeal may
only be given where the judge or judges concerned are of the opinion
that -
(a)
(i) the appeal would have a
reasonable prospect of success; or
(ii) there is some other
compelling reason why the appeal should be heard, including
conflicting judgments on the matter under consideration;
[4]
In that I erred in granting the judgment
against the Respondent based on the suretyship that was an annexure
to the dealer agreement,
by doing so effectively following on the
findings an or principles enunciated in
Bulsara
v Jordan
&
Co
Ltd
[1995] ZASCA 106
;
1996 (1)
SA
805
(A)
to discern the conflicting
provisions and content of the suretyship agreement and clause 17 of
the Dealer Agreement and as a result:
[4.1]
finding that the sureties (Respondents) were not also parties to the
Dealer Agreement, as the agreement
expressly provided for the sureties to be part of the agreement.
[4.2]
finding that there was no room for a finding that the suretyship
(annexure 4) relied upon did not
form part of the Dealer Agreement as
the Dealer agreement expressly provided for the suretyship to form a
composite part of the
Dealer Agreement.
[4.3]
failing to find that a material conflict exists between the
provisions and content of clause 17 of
the Dealer Agreement and the
suretyship.
[5]
As a result should have found that the only manner in which the
conflict could have
been resolved was by application of the mechanism
provided in the Dealer Agreement to reconcile the difference and
conflict as
per provisions of clause 2.1.17 of the Dealer agreement
that expressly states that:
"Annexures to the agreement
forms part of the agreement and will not be interpreted in a separate
manner or to be separated
from this agreement for construction of a
different meaning."
[6]
In that regard I should have held that
the suretyship concerned was confined and restricted to liability
that arose under the Dealer
Agreement, and as the judgment debt
concerned did not arose under the Dealer Agreement, accordingly that
the Respondents cannot
be held liable on the basis of the suretyship
concerned for the judgment debt.
[7]
The argument is found a bit disingenuous
as the defence of the Respondents constituted a concession of the
unlimited nature and
extent of the suretyship agreement (therefore
common cause) that the Respondent sought to counter by an allegation
that the signatory
on behalf of the Applicant assured them that the
provisions of the suretyship were restricted to EMT's indebtedness
under the Dealer
Agreement. Further that it was never intended to
agree to providing a suretyship in that wide and unlimited terms as
set out in
the suretyship itself.
[8]
In other words, the court was being
implored to establish the liability of the sureties not from the
terms of the suretyship agreement
that they signed and which they
were party to, because of its contradiction of clause 17 of the
principal agreement but from the
terms of the principal agreement
that was concluded between the principal debtor and the creditor to
which they were not part of.
[9]
These contentions were substantively
dealt with in my judgment. The suretyship is additional or accessory
but not a composite part
of the principal agreement, determining the
nature and extent of the sureties' liability to the debts of the
principal debtor.
The two agreements therefore exist side by side not
as one. As a result the nature and extent of the liability of the
sureties
cannot be determined by the principal agreement to which the
sureties are not part of. The intentions reflected in the principal
agreement are those of the creditor and principal debtor, its binding
effect therefore confined to its signatories. However, whether
the
liability that arises therefrom can be extended to the sureties is
established from the wording of the suretyship agreement
itself. The
notion advocated in
Bulsara.
[10]
The suretyship that was signed by the
Respondents was very explicit in its nature and and exceptionally
wide in extent, covering
all obligations of whatsoever nature and
howsoever arising in delict or in contract or any other cause
whatsoever, which the debtor
may presently or in the future owe to
the creditor whether jointly or severally or to their successor in
title or assigns, which
therefore included, inter alia debts arising
from the Dealer Agreement.
[11]
The Respondents argument therefore as
submitted by Mr that the suretyship agreement constitutes or form a
composite part of the
Dealer agreement and therefore the court was
supposed to have looked at the terms of the Dealer agreement as
superseding the suretyship
agreement and determining the nature and
extent of the liability of the sureties is off the mark.
[12] Under
the circumstances there is no possibility of another court reaching a
different conclusion on
the principles applicable in establishing the
nature and extent of the sureties liability as in terms of the
suretyship agreement
vis a vis the terms of the principal agreement
[13] The
Respondents further contends that
there is no basis in fact or in
law for EMT to be held liable to the Applicant for the debt arising
from the sale agreement for
the reason, inter alia, that:
[13.1] The novation brought about
by the judgment in respect of which the arbitration award was made an
order of court, did not
extinguish the original cause of action vis -
a- vis the sureties.
[13.2] the sureties were not in
fact bound by the compromise, the arbitration award, and or the order
of Court in terms of which
the arbitration ward was confirmed.
[13.3] The sureties were not
barred in fact and/or in law on the basis of compromise,
res
judicata
or any other or similar principle to rely on defences in
respect of the original cause of action from which the causa debiti,
ie,
the judgment debt originated.
[13.4] Because the sureties never
partook or got involved as parties in the arbitration and or the
compromise and or application
to make the arbitration award an order
of court, therefore none of the above was bonding and or enforceable
vis a vis the Respondents.
[13.5] Whether as a result of the
settlement agreement (with EMT acknowledging liability) resolving the
issues between Applicant
and EMT, and made an order of court, the
Respondents are precluded from raising any defences that might have
been available to
EMT? on the basis of the compromise or doctrine of
res judicata.
[14] Once
more, my judgment extensively dealt with the aforementioned
contention in relation to the obligations
of the sureties vis a vis
the principal debtor that they are accessory to and dependent on a
valid principal obligation. On the
principal debt being extinguished
or novated or compromised, the obligation of the surety is
accordingly extinguished or novated
or compromised, dependent again
on the wording of the suretyship which
in casu
unequivocally
provided for the performance on demand of all obligations of
whatsoever nature and however arising (which the EMT
may presently or
in future owe to the creditor).
[15]
The aspect of a compromise being a final
settlement of either disputed or uncertain obligations have been
adequately addressed by
the judgment, specifically that when
concluded not only does a compromise disposes of the disputes and
uncertainty but results
in the termination of litigation on the
issues settled between the parties; see
Paramount
Stores Ltd v Hendry
(2)
[1957] All
SA 291
;
1957 (2) SA 482
(W). Any proceedings based on the original
cause of action are barred, and therefore neither the principal
debtor nor the sureties
can go behind the compromise and raise
defences to the original cause of action when sued on the compromise;
see
Van Zyl v Nieman
1964
(4) 661 (A).
[16]
Based on the aforementioned findings it
would be of not use to decide on the final issue raised by the
Respondents reliant on the
sale agreement when it has been replaced
by a new cause of action.
[17]
The persistence by the Respondents to
rely on the lapse of the sale agreement rendered
res
iudicata
in terms of the settlement
agreement between EMT and the Applicant is unmerited. The defences
upon which the Respondents sought
to rely as they were purportedly
available to EMT, were compromised by EMT by concluding a settlement
agreement.
[18]
Under the circumstances I find no compelling reasons or prospects of
success upon which leave to appeal
should be granted.
I therefore make the following
order:
1.
The application for leave to appeal is dismissed with costs
N V KHUMALO J
JUDGE OF THE HIGH COURT
GAUTENG
DIVISION, PRETORIA
On
behalf of Applicant:
H P WEST
Instructed
by:
MALHERBE RIGG AND RANWELL INC
C/O FRIEDLAND HART SOLOMON &
NICOLSON ATTORNEYS
REF: CG STOLP/VAA/328674
TEL:
012 424 0200
On
behalf of Respondents:
A LIVERSAGE
Instructed
by:
KRUGEL HEINSEN INC
C/O MARTIN TERBLANCHE ATTORNEYS
REF:K0099
TEL: 012 342 0006