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[2016] ZAFSHC 39
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Standard Bank of South Africa Ltd v Herselman (328/2015) [2016] ZAFSHC 39 (3 March 2016)
IN THE HIGH COURT OF
SOUTH AFRICA
FREE STATE DIVISION,
BLOEMFONTEIN
Case number: 328/2015
DATE: 03 MARCH 2016
In the matter between:
THE STANDARD BANK OF SOUTH AFRICA
LTD
.............................................................
Plaintiff
And
JAKOBIE ALBERTINA
HERSELMAN
...............................................................................
Defendant
HEARD ON: 9th, 10th and 18 FEBRUARY
2016
JUDGMENT BY: EBRAHIM, J
DELIVERED ON: 3 MARCH 2016
[1] The plaintiff instituted action
against the defendant on the basis of a Deed of Suretyship (Annexure
A to the Summons) in terms
of which she guaranteed payment, when due,
of all present and future debts of whatever kind owing by her
husband, Jacobus Nicolaas
Herselman (the principal debtor) to the
plaintiff Bank.
[2] In its summons the plaintiff
claimed payment of R6 961, 138.07 interest and costs on the attorney
and scale arising out of the
non-payment of various loan amounts
granted to her husband, comprising, inter alia, vehicle asset
finance, overdraft facilities
and mortgage loans. In support of its
claim, the plaintiff annexed certificates of balance as annexures B1
– B9 to the summons,
which reflected the sum due on the various
accounts as at date of the institution of the action.
[3] The certificates were annexed
pursuant to the plaintiff’s reliance on clause 13 of the Deed
of Suretyship which provides:
“A certificate signed by one of
the Banks Managers, will on its mere production be sufficient proof
of any amount due …
unless the contrary is proved.”
[4] As its only witness the plaintiff
called Johanna Magrieta Greyling, in her capacity as manager:
Business Support Rescue and
Recoveries, Personal and Business Banking
Credit, a division of The Standard Bank of South Africa, who signed
the certificates
of balance annexed to the summons. She testified
that, as at 8 February 2016 the outstanding balance due to the
plaintiff by the
principal debtor, was R1770 806.67 because the
plaintiff had written off the shortfall on the vehicle asset finance
accounts and
had received dividends from the trustees of the
insolvent estate of the principal debtor on proof of the plaintiff’s
claims
against the insolvent estate. She handed in a certificate of
balance confirming the amount due, as well as a letter from the
trustees
confirming that no further dividends would be paid to the
plaintiff from the insolvent estate.
[5] In its plea, the defendant placed
the validity of the Deed of Suretyship in issue, alleging a
misrepresentation by the plaintiff
that the defendant’s
liability as surety would be limited to two term loans granted to the
principal debtor for the purchase
of 2 farms. In addition the
defendant raised a special plea that plaintiff had granted credit
recklessly, without first ascertaining
whether the defendant had the
financial means to honour her indebtedness in terms of the suretyship
agreement, if called upon to
do so, in compliance with section 80 of
the National Credit Act 34/2005.
[6] Although Mr. Marais, who appeared
on behalf of the defendant, challenged the evidence of the amount due
to the plaintiff in
cross examination of Ms Greyling, no contrary
evidence was placed before court by the defendant when she testified,
to seriously
dispute Ms. Greylings testimony. It was also not
disputed by the defendant that she had received notice in terms of
section 129
of the National Credit Act 34/2005 of the principal
debtor’s failure to pay and plaintiff’s demand that she
honour
the suretyship undertaking.
[7] When she testified the defendant
admitted having signed the Deed of Suretyship but alleged that she
was under the impression
that she was guaranteeing payment only in
respect of the two medium term loans which plaintiff had granted to
her husband for the
purchase of 2 farms. She told the court the
farms were to be purchased from her sister for R2 million. She
testified that at
the time she signed the Deed of Suretyship she was
unemployed. She also admitted having signed a form entitled
“Financial
Assessment for Sureties” which she said was
handed to her for signature by a Bank employee, one Cathy, who placed
both the
Deed of Suretyship as well as the Financial Assessment Form
(handed in at the trial as Exh “E”) before her. She
conceded
under cross examination by Mr Zietsman, for the plaintiff,
that she had furnished to the Bank the details on Exhib E relating to
her assets and liabilities. Exhibit E reflects that the defendant
had assets totalling R1, 938.70 and no liabilities. It also
contains
the following declaration:
“I hereby confirm that the
information provided is accurate and a true reflection of my
financial position. I am not under,
nor have I applied to be placed
under, administration order, sequestration or Debt Review, as at the
date of signature of this
document by me.”
At no stage did the defendant challenge
in evidence any aspect of this declaration. All she did do was to
emphasize to the court
that the form was just placed before her
without any explanation and that she was requested to sign it.
[8] Under cross examination by Mr.
Zietsman, the defendant admitted that the Deed of Suretyship in
clause 16 conveyed that the Bank
had explained its contents to her,
that her liability in terms thereof was predetermined whether or not
the suretyship was limited
or unlimited, and in the full knowledge of
its terms she had signed as surety. She insisted, however, that
despite the clear and
unambiguous language of the terms recorded in
the Deed of Suretyship, she was, in fact, unaware, of its precise
terms because the
contents of the document had not in fact been
explained to her. The document was merely placed before her for
signature and she
signed it.
[9] Mr Marais, in leading the
defendant, attempted to place on record evidence from the defendant
of the alleged misrepresentation
relating to the ambit of the
liability covered by the Deed of Suretyship but was met with an
objection from Mr. Zietsman that such
conflicting evidence could not
be led because the defendant had failed to plead a rectification of
the Deed of Suretyship and had
failed to counter claim for such
rectification in the specific fashion defendant alleges the terms of
the suretyship had been agreed
between herself and the plaintiff.
That being the case, he argued, the defendant was prevented from
placing evidence of a different
contract before the court by the
combined effect of the parol evidence rule and the rule that no
evidence may be given to alter
the clear and unambiguous meaning of a
written contract.
[10] In view of the fact that
rectification is essential before a version of an agreement directly
contradictory to that embodied
in a written document, is admitted as
evidencing the true version of the contract agreed between the
parties, the objection was
sustained. The defendant sought to attack
the validity of the Deed of Suretyship without properly pleading its
illegality and
the grounds upon which such illegality was based
preparatory to seeking a claim for the rectification of the
suretyship agreement.
This the defendant is not entitled to do. The
upshot of all of this is simply that, in the absence of a
rectification of the
suretyship agreement, the unrectified contract
stands as evidence of the true agreement between the parties. The
onus is on the
defendant as the party attacking the validity of the
contract, to plead and prove that the said suretyship contract
inaccurately
represents the agreement between the parties as the
basis for that invalidity. The defendant has not done so and
consequently
her defence relating to being bound as surety only to
the extent of monies due to the Bank in respect of loans advanced for
the
purchase of the 2 farms must fail and the parties must be held to
have agreed on an unlimited suretyship undertaking by the defendant
in favour of the Plaintiff Bank:
See: Christie The Law of Contract in
South Africa 6th Edition page 343 et sequor.
[11] I turn now to deal with the
defendant’s defence that reckless credit was granted by the
plaintiff. It was accepted by
both parties that a surety must, from
his/her own financial resources, be in a position to repay the
indebtedness of the principal
debtor. It was also accepted by both
parties that the surety only comes into the picture when the
principal debtor fails to honour
his obligations and that in this
sense the surety’s obligations/indebtedness to the Bank is
accessory in nature. I have
also accepted that, at the time of
negotiating the contract of suretyship it was in the contemplation of
both plaintiff and defendant
that the defendant was not undertaking a
primary obligation as the Bank would first look to the principal
debtor for payment.
It was thus common cause between the parties
that the defendant was being sued in this matter as a credit
guarantor and that a
Deed of Suretyship falls into that category of
credit agreement described as a credit guarantee within the meaning
of the provisions
of section 8 (5) of the National Credit Act
34/2005. It was also not disputed that the defendant, as a surety in
terms of a credit
guarantee fell within the definition of a consumer
in section 1 of that Act and that a creditor, in this case the
plaintiff, must
comply with the affordability assessment criteria
laid down in the National Credit Act 34/2005 and the regulations
framed thereunder
prior to determining whether to grant credit to a
consumer. The plaintiff was thus obliged to conduct an affordability
assessment
in the case of the defendant to establish her ability to
honour the suretyship undertaking.
[12] In terms of section 82 of the
National Credit Act 34/2005, the plaintiff was entitled to choose its
own evaluative mechanisms
and procedures to be used in carrying out
the assessment provided such mechanisms resulted in a fair and
objective assessment of
the defendant’s affordability. I have
difficulty in accepting Mr. Marai’s submission that Exh E (the
financial assessment
form for sureties) failed this litmus test.
From Exh E the plaintiff was able to determine the following
information as to the
defendant’s financial position:
(a) She had no debt
(b) She owned assets valued at approx.
R2 million
(c) She had no credit agreements
history, having not applied for any credit in her name in the past;
(d) She had never been sequestrated, or
placed under administration order or debt review.
(e) From this credit record she
appeared to be a person who would honour her obligations as surety
for the principal debtor, having
furnished all the relevant
information requested by the Bank.
(f) As at the date of the signature of
the Deed of Suretyship, i.e. 1 October 2010, the principal debtor’s
debt consisted
in the loans granted for the purchase of the 2 farms
for R2 million and the value of the defendant’s assets covered
this
loan amount.
[13] When one adds to this list of
favourable factors the absence of any gainsaying evidence from the
defendant that she understood
the risk she was undertaking in signing
as a guarantor for her husband’s debts with the Bank, only one
conclusion is possible
and that is, that having objectively and
fairly assessed the defendant to be a person of sound credit
worthiness and capable of
honouring her husband’s indebtedness
to the plaintiff, if called upon to do so, the Bank awarded the
credit after obtaining
the signed Deed of Suretyship from the
defendant. I find therefore that the defendant’s defence of
reckless credit is without
substance and merit. There will
accordingly be judgment for the plaintiff as follows:
(1) Payment in the amount of R1,770
806.67
(2) Interest on the aforesaid amount at
the rate of 13,5% per annum calculated from 1 February 2016 to date
of payment, both days
inclusive;
(3) Costs of suit on the scale of
attorney and own client in accordance with clause 6.2 of the Deed of
Suretyship.
S. EBRAHIM, J
On behalf of plaintiff: P. Zietsmn
S.C.
Instructed by: Matsepes Inc.
Bloemfontein
On behalf of defendant: Mr. A.S.
Marais
Instructed by: HW Smith & Marais
Attorneys
c/o Eugene Venter Attorneys
Bloemfontein
/PC