About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2014
>>
[2014] ZAGPPHC 492
|
|
Theron and Another v Investec Bank Limited (27916/2009) [2014] ZAGPPHC 492 (26 February 2014)
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG HIGH COURT, PRETORIA)
CASE NO:
27916/2009
APPEAL NO: A99/12
In the matter
between;
THERON ANNA
ELIZABETH
...............................................................................................
First
Appellant
(Second
Respondent in the Court quo)
THERON ANTONIE
MARIUS
…......................................................................................
Second
Appellant
(Third Respondent
in the Court a quo)
And
INVESTEC BANK
LIMITED
.......................................................................................................
Respondent
(Applicant in the
Court a quo)
JUDGMENT
JORDAAN. J
The respondent has
applied for judgment against the appellants for payment of R38
million arising from two identical deeds of suretyship
executed by
the appellants in the respondent’s favour The appellants admit
executing the deeds of suretship, but rely upon
the following two
defences:
1.
They allege that they are entitled to resile from the deeds of
suretyship because they were induced to sign them as a result
of
certain fraudulent misrepresentations
(“assurances”)
made
by the respondent; and
2. They allege that
they are entitled to rectification of the deeds of suretyship. They
assert that the deeds of suretyship once
rectified would preclude the
respondent from claiming against them.
The
court a
quo
(Southwood
J) dismissed the appellants’ defences and granted judgement in
favour of the respondent Southwood J dismissed an
application for
leave to appeal but the Supreme Court of Appeal granted the
appellants leave to appeal to this court.
On behalf of the
respondents it was contended that the following facts are undisputed:
1 The first
appellant is a businesswoman who, over a period of forty years, built
up a successful business, known as Annique Skin
Care Products. She is
also an active director of two companies and one close corporation.
In addition, she has recently resigned
as a director of two other
companies.
2. The second
appellant is the first appellant’s son, and is a businessman.
He merely signed a confirmatory affidavit in which
he aligned himself
with what is stated in the first appellant’s answering
affidavit,
3. On 27 June 2006
the respondent and Idada Trading 3 (Pty) Limited (“Idada”)
entered into a written loan agreement
in terms of which the
respondent lent an amount of. R40 560 000.00 to Idada (“the
loan agreement"). The agreement was
subsequently amended in that
the amount of the loan was increased to R43 130 000,00.
4. Idada signed the
agreement on 22 June 2006 but the respondent signed it only on 27
June 2006, the day that the deeds of suretyship
giving rise to the
claims against the respondents were signed.
5. In terms of the
loan agreement:
5.1 the respondent
lent the loan amount to Idada for a period of twelve months as from
the date the respondent first advanced the
capital or any part
thereof to Idada;
5.2
the loan agreement was subject to the fulfilment of
inter
alia
the
following special conditions:
5.2.1
registration of a first covering mortgage by Idada over
“
the
Property"
(i.e.
portions 19, 21, 22, 26, 37, 84, 88 and 92 of the farm Rietspruit 518
IQ, which are situated within the Parys region) for
an amount of R43
million;
5.2.2 registration
of a first covering mortgage bond by Abrina 128 (Pty) Limited
(“Abrina”) over “the Collateral
Property
1
'
(i.e. portions 10, 65, and 123 of the farm Roodepoort 467 KR, which
was a residential development next to Bela-Bela) for an amount
of R38
million;
5.2.3
joint and several continuing suretyships for
inter
alia
the
appellants, each limited to R38 million for the obligations of Idada
in favour of the respondent subject to the respondent’s
standard terms and conditions;
5.2.4 receipt and
approval by the respondent of all the documents contemplated in
clause 22.1 of the respondent’s standard
terms and conditions
(i.e. all the documents necessary for the development of the Property
and the Collateral Property including
the approved township
conditions of establishment);
6.
the respondent and Idada agreed on
inter
alia
the
following special conditions:
6.1 a minimum
valuation of the Property by a valuer appointed by the respondent for
an amount of not less than R30 million and compliance
by Idada with
such conditions as the valuer may impose;
6.2 a minimum
valuation of the Collateral Property by a valuer appointed by the
respondent for an amount of not less than R55 million
and compliance
by Idada with such conditions as the valuer may impose;
6.3 The pre-sale
amount had to provide 2.5 times cover of the capital outstanding
under the loan agreement at all times. A minimum
pre-sale amount of
R25 million had to be obtained prior to the advance of any portion of
the capital in terms of the loan agreement;
6.4 The special
conditions had been inserted for the respondent’s benefit. The
respondent could waive or defer fulfilment
of one or more of the
special conditions in its sole and unfetterd discretion;
6.5
Notwithstanding
anything else in clause 2 of the loan
agreement,
the respondent had the right in its sole
discretion
to advance the capital (or any part of it)
before
the fulfilment of the special conditions.
(My
underlining). With effect from the date of that advance, all of the
terms of the loan agreement would apply to that advance
(mutatis
mutandis, as applicable), whether or not the special conditions had
been fulfilled, that advance would not:
6.5.1 constitute a
waiver of the rights of the respondent to require fulfilment of all
of the special conditions in terms of clause
2.4 of the loan
agreement;
6.5.2 oblige the
respondent to advance any further part of the capital to Idada, if
the advance was of a part of the capital only
or;
6.5.3 prejudice the
respondent’s' rights under or in relation to any finance
document.
7. The driving force
behind the developments (which were the underlying reason for Idada
requiring the loan amount) was Armand Theron.
He is the first
appellant’s son-in-law. He was at all material times, unbeknown
to the respondent, an un-rehabilitated insolvent.
8. The first advance
in terms of the loan agreement was made to Idada on 10 July 2006 and
accordingly the capital and interest outstanding
became repayable on
11 July 2007. The respondent continued to make advances to Idada
until was indebted to the respondent in the
sum of R44 789 553.24.
Idada failed to
repay the capital and interest outstanding on 11 July 2007 or
thereafter, resulting in the respondent launching
an application for
its winding-up. Prior to the hearing of the matter idada was placed
in final liquidation.
9,
On 27 June 2006 the appellants executed identical deeds of suretyship
in favour of the respondent. In terms of the deeds of suretyship
the
appellants bound themselves in favour of the respondent as sureties
in
soiidum
for
and co-principal debtors jointly and severally with Idada for the due
and punctual payment by Idada of all and any monies which
Idada may
then or from time to time in the future owe to the respondent from
whatsoever cause and howsoever arising, including
any judgment debt
against Idada (clause 1.1.1); and for the due and punctual
performance and discharge by Idada of its obligastions
under or
arising from, any contract or agreement entered into or to be entered
into in the future by Idada, from whatsoever cause
and howsoever
arising (clause 1.1.2),
The amount
recoverable from each surety was limited to R38 million plus such
further sums for interest, charges, expenses and costs
as may from
time to time and howsoever arising be incurred or become payable by
the respondent in or about the exercise of any
of the respondent's
rights in terms of the deeds of suretyship (clause 1.2).
It would always be
in the respondent’s discretion to determine the extent, nature
and duration of facilities or obligations
to be allowed to Idada
(clause 3.1).
No variation or
cancellation (whether oral, consensual or otherwise) of the terms of
the deeds of suretyship would be of any force
or effect unless it was
reduced to writing and signed by the appellants and the respondent
(clause 16).
The appellants
acknowledged in the deeds of suretyships that no representations
whatsoever had been made to them in order to induce
the appellants to
sign the deeds of suretyship (clause 17),
10. it is important
to note that the last page of each of the deeds of suretyship was in
a larger font than the rest of the document,
and recorded that the
appellants reaffirmed by their signatures appended below that they
understood that the deeds of suretyship
would secure not only one
transaction but also and all future transactions entered into
When the deeds of
suretyship were signed by the appellants, there were no blank spaces
therein which were still required to be completed
and no deletions
which were still required to be made and that in particular the name
of the debtor had been duly inserted and
that the deeds of suretyship
were in all respects complete and not subject to any conditions
precedent to their coming into force.
They understood
their rights and obligations under the deeds of suretyship.
They understood that
they may become liable with Idada or instead of idada as provided for
in the deeds of suretyship.
They understood that
their liability in terms of the deeds of Suretyship would be
continuous until ail Idada's existing
They acknowledged
that they had the right to obtain independent legal advice on the
deeds of suretyship.
11. On 23 April 2009
the respondent sent a letter to Idada, calling up Idada's
indebtedness to the respondent. Neither Idada nor
the appellants
replied to these letters. The respondent submits what they did do,
was to seek extensions of time for payment.
THE APPELLANTS’
DEFENCES
On
behalf of the respondents it was argued,
oomctly
in
my
view, that the appellants do not contend that they were misled as to
the nature of the document signed by them. They both concede
that all
material times they knew that what they were signing was a suretyship
and agreed to bind themselves as sureties.
The
essence of their complaint is that the terms of the suretyships did
not
"accord
with the common intention of the parties when the suretyships were
signed”. In her answering affidavit the first
appellant
expressly states that
"
I informed the
[second appellant] that
/
would be prepared
to sign a suretyship based on those assurances” and that
"the common intention of
the arties
was
based on the
assurances that were given to us prior to the signing of the
suretyships. The suretyships do not reflect this common
intention of
the parties. ”
The
appellants however
contend
that
the deeds of suretyship fall to be rectified. This would mean that
once the. deeds of suretyship are rectified to reflect the
“common
intention of the parties,” as contended for by them, they are
bound as sureties for the debts of Idada.
It was argued on
behalf of the respondent that this is in direct contradiction to
their claim that they are entitled to resile from
the suretyships. As
Í understood the argument on their behalf is, once the
suretyships are rectified, they are entitled
to resile therefrom.
The first appellant,
in her answering affidavit, articulates ten specific respects in
which the deeds of suretyship should be rectified
in order to reflect
the common intention of the parties.
On behalf of the
respondent it was argued that several of the rectifications sought
are not consonant with the assurances asserted
and several would, in
any event, not constitute a bar to the respondent’s claim. In
the heads of argument the counsel for
the respondent then analyse
each of the proposed rectifications to illustrate their point.in his
judgment Southwood J dealt with
these proposed rectifications as
follows:
“
Significantly
... the respondents
'.
(the present
appellants)counsel did not attempt to rely on the rectification
pleaded by the respondents In their answering affidavits.
Instead he
attempted to persuade the court, that without this being pertinently
dealt with in the answering affidavits, the respondents
could rely on
a term which they formulated in the course of argument (it
was
not even referred
to in the respondents
J
heads of argument)
-
“
provided
that the surety will not be liable in terms of the deed of suretyship
unless Investec prior to advancing any funds to the
debtor has
pre-sale agreements to the value of 2.5 times the funds to be
advanced to Idada.’ They argued that the respondents
were
entitled to rely on this common intention even though it was not
pleaded: I do not agree. The respondents have filed a detailed
answering affidavit in which they seek a specific rectification of
the deeds of suretyship. In the absence of exceptional circumstances
they are not entitled to disavow the case made out in the answering
affidavits ”
In argument before
us there was also not an attempt to persuade us that the ten pleaded
rectifications should be made. Counsel on
behalf of the appellants
persisted in his stance before Southwood J. I am not persuaded that
Southwood J erred in this finding.
On behalf of the
respondent it was pointed out that the appellants have not sought to
rely upon this In their grounds of appeal.
The respondent
further correctly state that the appellants’ claimed
entitlement to rectification (like the claimed entitlement
to resile)
was raised for the first time in the answering affidavits and is
contradictory to what occurred prior to the launching
of the
application.
It is significant
that the appellants do not seek to rectify the following clauses on
the last page of the suretyships;
Clause 3 on the last
page of the document, which contains an acknowledgement that the
appellants’ understand their rights
and obligations under the
suretyships, as contained in the printed documents which were signed.
Clause 4 on the last
page of the document, which provides that the appellants understand
that they may become liable jointly or
severally for Idada’s
debts.
Clause 5 on the last
page of the document, which provides that the appellants understand
that their liability in terms of the suretyships
will be continuous
until all Idada’s existing and future obligations have been
met.
As stated before
these clauses on the last page of each of the documents are in larger
print than the rest of the document. Southwood
J further held there
is no evidence tendered by the appellants that the parties
pertinently discussed the terms of the deeds of
suretyship after they
had been drafted. This is evident from paragraph 18 of the answering
affidavit where the first appellant
states:
"Shortly
before the [second appellant] and I signed the suretyships on 27 June
2006
,
I had several
discussions with the representatives of the ['respondentf and
“
During
our discussions they had given me various assurances. It was as a
result of these assurances that the [second appellant]
and I were
convinced to sign the sureties.
'
In
paragraph 21 of the answering affidavit the first appellant states
that
“
we did
not bother to read the suretyships”
and
in paragraph 22 the first appellant states that the deeds of
suretyship were
“
merely
produced
."
There is no evidence
that the parties pertinently agreed or even intended that the terms
of the deeds of suretyship should be amended
in the ten respects
contended for by the appellants in the first appellants answering
affidavit, nor the new rectification sought
for during argument
before Southwood J and before us.
In
addition, Southwood J found the following assurances (assuming they
were given) merely constituted an expression of opinion,
or a
speculation concerning the future: that the respondent's
representatives had never seen a development with so much potential
as that of Idada and Abrina; and Idada’s compliance with the
terms of the loan agreement would ensure that the appellants
"would
have almost no risk
."
If the future did
not unfold as forecast the appellants cannot rely on these opinions
or speculation, unless they were not honestly
made, it was argued,
and I agree, that Southwood J correctly found that there is no
evidence to show that the respondent's representative's
opinions were
not honestly held. The respondent, in my view correctly argued that
the evidence shows that the opinion must have
been held at the time
when the suretyships were signed otherwise why would the respondent
have lent in excess of R40 million to
Idada.
It is furthermore
important to note that one of the clauses on the last page of the
deeds of suretyship (in larger print) (clause
6) specifically
provides:
'The surety
acknowledges that he has the right to obtain independent legal advice
on this deed of suretyship"
I find it highly
improbable that the representatives of the respondent would under
those circumstances have made such grave fraudulent
misrepresentations as alleged by the appellants running the risk to
be found out should the appellants sought independent legal
advice,
Southwood
J held in the Court
a
quo
,
the following assurance had nothing at all to do with the deeds of
suretyship: If something went wrong with the development, the
first
appellant would be able to recover each and every cent which she had
advanced to Idada and Abrina in her personal capacity.
This finding
is clearly correct.
The respondent
correctly points out that the alleged assurance that the Parys
Property had been valuated by an expert valuator who
was employed by
the respondent was true as is evident from annexures H1 H6 to the
respondent’s Rule 35(12) reply.
There was no
evidence to suggest that the alleged statement that the market value
of the Parys property at the time of the conclusion
of the loan
agreement exceeded the purchase price was not true.
The alleged
assurance that the Beia-Bela property would be used as additional
security for Idada’s debt was true - a mortgage
bond was indeed
registered over the Bela-Bela or Collateral Property by Abrina for
the sum of R38 million on 13 September 2006.
Southwood
J found that the appellants had also to show that they elected to
resile from the deeds of suretyship* They do not allege
that they in
fact elected to resile from the deeds of suretyship. In the answering
affidavit, the first appellant merely contends
that: 7
am
advised, and accordingly submit, that as a result of the negligent
alternatively fraudulent misrepresentations that were made
by [the
respondent’s] representatives, both the [second appellant] and
i are entitled to resile from the suretyships”;
“Even if
it is found by the Honourable Court that the [second appellant] and
/
are not entitled
to resile from the suretyships...”; and “This is
a
further reason why
we are entitled to resile from the suretyships...”;
This finding by
Southwood J was criticized on behalf of the appellants. On behalf of
the respondent however the following was eluded
to by the respondent:
when they were called upon to perform in terms of the deeds of
suretyship they did not seek to resile from
them, but they indeed
negotiated extensions of time for the performance of the obligations
of Idada and Abrina and undertook to
service the interest on the
indebtedness, during October 2007 when the respondent called up the
loan to idada.
This was followed,
after telephonic discussions between the deponent to the respondent’s
affidavits and the first appellant,
by an application in December
2007 to wind-up idada and applications for payment against all
sureties. This is not disputed by
the appellants. The first appellant
in response to this assertion simply states that, facing a claim for
payment of R38 million,
she was aware of negotiations but was unaware
of the detail. This, in my view, is so improbable that it can be
rejected out of
hand. The winding up of an entity for which she
signed a deed of suretyship for such an amount would surely have
After further
negotiations a request was made for a postponement of the
applications against an undertaking to service interest
on the debts.
As said the first appellant alleges she was aware of negotiations
taking place but avers she was unaware of the details
thereof.
It
is important to note that-the stay of proceedings was confirmed by
the respondent in an email dated 26 August 2008. In this email
the
respondent confirmed,
inter
alia
,
that the motion proceedings against the sureties would be postponed
and that the
“
shareholders"
would
service the interest on the indebtedness;
In
response to this email, the second appellant confirmed that
“
we
accept your decision
"
These allegations are not disputed and indeed are not dealt with by
the appellants. There is no suggestion of being misled
by the
respondent.
During
argument it was suggested on behalf of the appellants that the
“Marius Theron” referred to in the emails (Annexure
“O”)
was not proven to refer to the second appellant. There is no merit in
this argument. We know from the papers who
all the
dramatis
personae
are.
No other Marius Theron figures anywhere.
In her answering
affidavit the first appellant makes the following startling
statement:
“
Both
the (second appeliant) and I were shocked when the terms of the
suretyships were recently explained to us and we realised that
the
terms thereof were directly contradictory to what had been stated to
us by the (respondent's) representatives
"
At no stage prior to
the filing of the answering affidavit the appellants suggested that
they were entitled to resile from their
suretyship obligations.
The first appellants
answering affidavit was signed on 31 August 2010. The deeds of
suretyship were signed in June 2006.
Thereafter followed
the winding up and further negotiations referred to above during 2007
and 2008.
In my view Southwood
J correctly observed, if the attitude of the appellants was that they
were not bound to the terms of the deeds
of suretyship there can be
no doubt that they would have raised this instead of undertaking to
be party to the servicing of interest
on the indebtedness and seeking
in return the postponement of the applications against them. I agree
with the respondent’s
submission that had the appellants been
bona fide in the defence now asserted they would, undoubtedly not
have raised these defences
for the first time in their answering
affidavits.
I
am also in agreement that the Judge
a quo
relied
correctly on the line of cases which hold that a person who signs a
contract is taken to be bound by the document concerned
-
caveat
subscriptor.
See
Burner
v
Central African
Railways
1903 TS 571
at
578 and G
eorge v Fairmead
(Pty) Ltd 1958 (2) 465 (A) at 472A.
I
am, and so was Southwood J aware of the attitude a court must have
where there is a dispute of fact in motion proceedings set
out in
inter alia Plascon-Evans Paints Ltd v Van Riebeeck Paints Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 634F. In such an event the court will decide the
matter on the version of the respondent and the common cause facts.
The
alia Plascon-Evans Paints Ltd v Van Riebeeck Paints Ltd
[1984] ZASCA 51
;
1984 (3)
SA 623
(A) at 634F. In such an event the court will decide the matter
on the version of the respondent and the common cause facts.
The
exception to this rule is a finding that the respondent’s
version set out in the answering affidavit, taken as a whole, is
so
palpably implausible, far-fetched and untenable that it must be
rejected on the papers.
On an objective
analysis of the defences the version of the appellants is so
far-fetched that it falls to be rejected.
It
was argued on behalf of the appellants that in the alternative to the
setting aside of the judgement of the court
a quo
the
matter should be" referred to trial. I am in agreement with
counsel on behalf of the respondent that there would be no
benefit in
referring the mater to trial. The appellants have already stated
under oath that the common intention of the parties
was based on the
alleged assurances and have stated the respects in which they seek to
rectify the deeds of suretyship, I agree
that even if the appellants’
allegations are accepted (to the extent that the rectifications
sought are consonant with the
alleged assurances), it would still not
constitute a bar to the respondent’s claim. The matter is thus
capable of being finally
decided
on the papers. Oral evidence and cross-examination will take the
matter no further.
The appeal is
dismissed with costs, including the costs of two counsel.
E Jordaan
Judge of the High
Court
I agree
E M Kubushi
Judge of the High
Court
I agree
D S Fourie
Judge of the High
Court