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[2016] ZAGPPHC 228
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Nedbank Limited v Chapter II Farm (Pty) Ltd and Others (31150/11) [2016] ZAGPPHC 228 (12 April 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE GAUTENG DIVISION OF THE HIGH COURT, PRETORIA
12/4/2016
CASE
NO: 31150/11
Not
reportable
Not
of interest to other judges
Revised
In
the matter between:
NEDBANK
LIMITED
Plaintiff
and
CHAPTER
II FARM (PTY) LTD
and
five
others First
Defendant
JUDGMENT
J
W LOUW, J
[1]
Summary judgment has been granted in favour of the plaintiff against
the first defendant, to whom I shall refer as Farm, in
the amount of
R896 992.06 together with interest. The plaintiff now claims payment
of the judgment debt from the second to sixth
defendants on the basis
of suretyships which they have signed in favour of Farm. The dispute
between the parties is whether the
suretyships cover the debt for
which the plaintiff obtained the judgment against Farm, which was for
the outstanding amount owing
on an overdraft facility of R750 000.00
granted by the plaintiff to the first defendant on 13 November 2008.
The second to sixth
defendants contend that they don't. They rely on
a number of defences in this regard. The second defendant was not
represented
at the trial and I have been informed by counsel that her
estate has been sequestrated. Her trustee has not been joined to the
proceedings. I will hereafter refer to the third to sixth defendants
as the defendants.
[2]
The suretyships relied upon by the plaintiff are the following:
· A suretyship
signed by the third defendant, Mr. Tyrone Willemse, in his personal
capacity on 19 February 2007 for a limited
amount of R5,45 million.
· A suretyship
signed by the fourth defendant, Mr. Andre Immelman, in his personal
capacity on 21 February 2007 for a limited
amount of R5,45 million.
· Chapter II
Farming Enterprises (Pty) Ltd Enterprises ("Enterprises"),
represented by Mr.Immelman, signed a suretyship
on 21 February 2007
for payment of any sum of money which Farm may owe to the plaintiff,
limited to R7,2 million. Mr.Immelman signed
a suretyship on 7 June
2001 in his personal capacity for the repayment of any sum of money
which Enterprises may owe to the plaintiff.
The plaintiff therefore
alleges that Mr. Immelman is liable as
"achterborg"
to
the plaintiff for the obligations of Farm.
· A suretyship
signed by the Micali Trust, represented by Mr. Immelman as trustee,
on 21 February 2007 for a limited amount
of R5,45 million.
· A suretyship
signed by the fifth defendant, Mrs Immelman, in her personal capacity
on 7 June 2001 for the repayment of
any sum of money which
Enterprises may owe to the plaintiff. As in the case of Mr. Immelman,
the plaintiff relies on the suretyship
signed by Enterprises on 21
February 2007. The plaintiff therefore alleges that the Mrs. Immelman
is also liable as
"achterborg"
to the plaintiff for
the obligations of Farm.
[3]
A plaintiff who wishes to claim on a deed of suretyship must prove a
valid contract of suretyship, that the
causa debiti
is one in
respect of which the defendant undertook liability and the
indebtedness of the principal debtor, i.e. that the amount
is due.
The defendants admit that the deeds of suretyship were signed by
them. Adv. Baguley, who appeared for the plaintiff, submitted
that
the defendants had undertaken liability in respect of the
causa
debiti.
He relied in this regard on the wording of the
suretyships that the sureties are liable for
"all or any sum
or sums of money which the debtor may now or from time to time owe or
be indebted to the bank
......
whether such indebtedness
arises from
money already advanced or hereafter to be advanced
......
or by virtue of any individual or joint suretyship,
guarantee or bond."
The defendants admit that Farm failed to
repay the amount of R896 992.06 to the plaintiff on due date. Mr.
Baguley accordingly submitted
that the plaintiff had proved its case
and indicated that it would lead rebutting evidence after the
defendants had led their evidence
in respect of their defences. He
then closed the plaintiff's case.
[4]
The defences relied upon by the defendants are the following:
· That there was
no
consensus ad idem
in regard to the terms of the
suretyships.
· That the
defendants laboured under a mistake as to the terms of the
suretyships when they signed them, which mistake was
caused by the
negligence of the plaintiff
(justus error).
· Alternatively,
that the deeds of suretyship stand to be rectified in that the scope
of the security had been intended by
the parties to cover and to be
limited to the amount of R5,45 million advanced by the plaintiff to
Farm and to only secure the
second bond to be registered for that
amount over a property of Farm.
· That the wide
wording of the suretyships referred to above, which makes the
defendants liable for an unlimited set of obligations
in an unlimited
amount and for an unlimited period, does not comply with s 6 of the
General Law Amendment Act 50 of 1956 which,
as it has been
interpreted by the courts, requires that the nature and amount of the
principal debt must be capable of ascertainment
by reference to the
provisions of the written document; alternatively that such wide
wording is
contra bonos mores.
· That the
plaintiff agreed to accept payment of an amount of R6,5 million in
full and final settlement of all amounts due
to the plaintiff by
Farm, including any securities given by the second to sixth
defendants.
· That the
defences of lack of
consensus ,
mistake and rectification also
applied to the suretyships signed by the fourth and fifth defendants
in 2001 in respect of the debt
of Enterprises to the plaintiff,
making them so-called 'achterborgen'.
Consensus
ad idem
[5]
The first witness for the defendants was Mr. Tyrone Willemse, the
third defendant. The fifth defendant, Mrs. Michelle Immelman,
is his
aunt. The Immelmans are the trustees of the Micali Trust which,
according to Willemse's understanding, owns the shares in
Farm and
Enterprises. Before Mr. Willemse became involved in the business of
Farm and Enterprises, Mr. Immelman conducted the farming
business of
the companies in George on his own. His wife was not involved at all.
[6]
Mr. Willemse testified that he became involved in the farming
business of Farm and Enterprises in a bout 2003. Mr.Immelman handed
the management of the business over to him and he was appointed as
the chief operating officer of the two companies. In 2005, Willemse
and Immelman realised that the companies needed to raise capita l to
be able to proceed with their business. A loan of R 1,75 million
was
raised with the plaintiff against security of a first mortgage bond
registered over the farm property of Farm. As further security
for
the loan, deeds of suretyship limited to R 1,75 million were signed
by Immelman and the Micali Trust on 24 April 2006.
[7]
During this time, Willemse and Immelman got involved in the business
of a company called Performance Consumer Technologies (Pty)
Ltd
("PCT") in Johannesburg. The owner of PCT was the second
defendant, Mrs. Shelly Maynard, although the business was
run by her
husband. Willemse andImmelman invested part of the R 1,75 million in
PCT. They became shareholders of PCT through a
trust. The other
shareholders were the second defendant, Mr. Maynard and a Mr. Harold
Nimmo.
[8]
At some stage, an opportunity came up for PCT to do business with
Nissan which was considered very promising. Mr. Maynard approached
Willemse and Immelman to assist PCT with the funding which was
required. They agreed to try to raise funds with the plaintiff
against security of a further mortgage bond over Farm's property. It
was further agreed that the second defendant, Willemse, Immelman,
the
Micali Trust and Nimmo would participate in the loan application.
[9]
Willemse was then mandated by the shareholders to approach a Ms. Val
Leeming, a bond originator known to Nimmo and who was approved
by the
banks, including by the plaintiff, to assist in obtaining a loan from
the plaintiff for an amount of R5,45 million. When
discussing the
matter with Leeming, he told her that the shareholders would be
co-applicants and sureties for the loan for a limited
amount of R5,45
million. Willemse's evidence was that the shareholders were all
involved in the negotiations for the loan. Willemse
represented
himself, Mr. Immelman and the Micali Trust. Maynard represented his
wife and Nimmo represented himself. Willemse's
evidence was that the
gist of all conversations was that the shareholders would be
co-applicants for the loan and sureties for
a limited amount of R5,45
million for the specific transaction. Willemse and Immelman's
personal banker at the plaintiff's George
branch, Mr. Patrick
Schwartz, became involved in the process. Willemse had numerous
discussions with Schwartz. The sureties were
all treated equally by
the plaintiff. Willemse was asked in cross-examination whether he and
Maynard and Nimmo had expressly agreed
with Schwartz that their
suretyships would be only for the bond of R5,45 million. His answer
was that it was expressly discussed
with the bond originator, not
with Schwartz.
[10]
On 21 December 2006, Schwartz, in his capacity as the business
manager of the plaintiff's Garden Route George branch, addressed
a
letter, referred to in evidence as a term sheet, to the directors of
Farm, the relevant part of which reads as follows:
"
Bond
Application Chapter II Farm Pty Ltd
&
Co-Applicants
With reference to the
abovementioned we have pleasure in advising that we have granted a
commercial bond of R5 450 000.00 (five
million four hundred and fifty
thousand rand) subject to the following conditions:
·
Second
covering bond of R5 450 000 over portion 24 of the farm geelhoutboom
217 and First covering bond over portion 65 of the farm
geelhoutboom
217.
·
As proposed
Mr Willemse, Mrs Maynard and Mr Nimmo will be coapplicants to
the bond and as such will be party to the loan agreement.
·
Limited
suretyships for R5 450 000 of Mr Willemse, Mrs Maynard and Mr Nimmo
in favour of Chapter ii Farm Pty Ltd.
·
Limited
suretyships incorporating cession of loan funds of Mr A L Immelman
and Micali trust for R5 450 000 in favour of Chapter
ii Farm Pty ltd.
·
Limited
suretyship incorporating cession of loan funds by Chapter ii Farming
Enterprises Pty Ltd for R7 200 000 in favour of Chapter
ii Farm Pty
Ltd."
[11]
Mr. Willemse said that his understanding of the letter was that it
accorded with what had been discussed with the bond originator,
namely that the suretyships would be limited to R5,45 million for the
specific transaction. Two months later, during February 2007,
Willemse was contacted by the plaintiff's George attorneys who said
that their correspondents in Johannesburg required the relevant
documents to be signed. He and Maynard went together to the offices
of the plaintiff's Johannesburg attorneys. They were asked
to sign
each document at the end thereof. They were there for less than ten
minutes. They did not read the documents, which was
a thick pack.
Nothing was explained to them. Willemse said in cross-examination
that they signed the suretyships based on the discussions
they had
with the bond originator and that he assumed that the documents
reflected what had been discussed, namely that one of
the conditions
of their application was that their suretyships would be limited to
R5,45 million for the bond. He assumed that
Ms. Leeming conveyed this
to the plaintiff and that is how he understood the plaintiff's
letter.
[12]
Mr Nimmo
[1]
testified on behalf
of the defendants and confirmed that Mr. Willemse was mandated to
approach Ms. Leeming in regard to the loan
required from the
plaintiff. She then approached all the shareholders individually to
obtain the necessary information and documents
from them. Her
function was to interact with the plaintiff and to revert to say
whether or not the bond had been approved. He made
his instructions
clear to Ms. Leeming, namely that he would sign surety for R5,45
million and limited to the second bond. He did
not have any
discussions with the plaintiff.
[13]
Mr. Nimmo testified that he went on his own to the plaintiff's
Johannesburg attorneys to sign the relevant documents. He asked
the
attorney in question whether the documents he was required to sign
were the same as the documents signed by the other shareholders.
He
was assured that they were the same. He said that there was a
plethora of documents and that he didn't read them. He agreed
in
cross-examination that he shouldn't have signed the documents without
reading them, but said that he would have expected the
plaintiff to
have used the correct wording.
[14]
Mr. Immelman testified that his relationship with the plaintiff went
back 40 years. He was originally a client of the plaintiff's
Sandton
branch and all transactions were done telephonically with his
personal banker, a certain Kevin. When he and his wife moved
to
George during 1988/89, the account was taken over by the plaintiff's
George branch where Mr. Schwartz became his personal banker.
He had,
and still has, a very good relationship with Mr. Schwartz. In all
transactions which he concluded with Mr. Schwartz, e.g.
for the
purchase equipment such as a tractor, it was always clearly
understood that the suretyship signed by him would not apply
to
anything else than for the particular transaction. He signed the
suretyship as security for the loan of R5,45 million without
reading
it and his wife signed the deed of suretyship as trustee of the
Micali Trust in good faith when he asked her to sign. She
is not
involved in the business. Mr.Immelman regarded the plaintiff's
reliance on the deeds of suretyship as a betrayal of his
trust as
they did not reflect what he had discussed with Mr. Schwartz whom he
regarded as a man of integrity.
[15
] The plaintiff did not call either Mr. Schwartz or Ms. Leeming to
rebut the evidence of the defendants. It is, in my view,
particularly
significant that Mr. Schwartz was not called to testify. If he had
testified, he could either have denied that he
was informed by Ms.
Leeming that the defendants had insisted that their suretyships had
to be limited to the specific loan transaction
of R5,45 million, or
he could have confirmed that he was so informed. If he had denied
that he had been so informed, and also denied
that it was so
discussed with Mr. Immelman, it would have followed, unless there was
reason to reject the evidence of the defendants,
that there was no
consensus ad idem
between Mr. Schwartz and the defendants. If,
on the other hand, he had confirmed that he was so informed by Ms.
Leeming and that
it was so discussed with Mr. Immelman, the
defendants would have been entitled to the rectification of the
suretyships which they
claim.
[16]
There is, in my view, no reason to reject the evidence of the
defendants. Their evidence was consistent and I found them to
be
credible and satisfactory witnesses. On their evidence, there
was no
consensus ad idem
between them and the plaintiff as to
the disputed term of the suretyship agreements.
[17]
The suretyships signed by Mr. and Mrs.Immelman in favour of
Enterprises during 2001 do not assist the plaintiff in holding
them
liable as
"achterborgen" .
The suretyship of
Enterprises in favour of Farm which was signed by Mr. Immelman on
behalf of Enterprises on 21 February 2007 was
signed under the same
circumstances as the signing of his personal suretyship.
[18]
In the result, I conclude that the defendants' defence of lack of
consensus must succeed. In view of this conclusion, I find
it
unnecessary to consider the other defences which have been raised by
the defendants.
[19]
The plaintiff's claim against the third to sixth defendants is
accordingly dismissed with costs.
Counsel
for plaintiff: Adv. D W Baguley
Instructed
by: Van der Spuy Attorneys, Cape Town
Counsel
for 3
rd
to 6
th
defendants: Adv. A Kantor
Instructed
by : Dewey Hertzberg Levy Inc, Sandton
[1]
Mr. Nimmo was not cited as a defendant. The plaintiff wrote a letter
to him on 5 January 2009 in which it confirmed that his
personal
suretyship was not obtained for the overdraft facility after the
plaintiff had sent him a letter of demand.