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[2014] ZAGPPHC 291
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Edan Vehicle And Asset Finance (Pty) Ltd v Orthosmart (Pty) Ltd and Another (47986/2012) [2014] ZAGPPHC 291 (19 March 2014)
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IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG DIVISION.
PRETORIA
Case
number: 47986/2012
Date:
19 March 2014
In the matter
between:
EDAN VEHICLE &
ASSET FINANCE (PTY)
LTD
..........................................................
Plaintiff
And
ORTHOSMART (PTY)
LTD
................................................................................
First
Defendant
(Registration
number: 2010/003991/07)
DR. RUMBIDZAI
ESINATH MASHAYAMOMBE
.....................................
Second
Defendant
JUDGMENT
PRETORIUS J,
[1] The plaintiff
claims confirmation of the cancellation of the rental agreement;
payment of the amounts of: R82 580.00 in respect
of claim 1; R173
280.00 in respect of claim 2 and R10 485.38 in respect of claim 3 and
ancillary relief.
[2] Counsel for the
defendants conceded that default judgment should be granted at the
outset against the first defendant for payment
as set out in the
above prayers.
[3] The second
defendant is cited as having entered into a suretyship agreement.
Counsel for the second defendant argued that a
suretyship document
must comply with section 6 of the General Law Amendment Act 50 of
1956 which provides:
“6 Formalities
in respect of contracts of suretyship 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: Provided
that nothing in this section
contained shall affect the liability of the signer of an aval under
the laws relating to negotiable
instruments. ”
[4] According to
counsel for the second defendant the suretyship document in this case
lacks the principle document debtor’s
name as principal debtor.
Therefor the document is invalid and unenforceable against the second
defendant.
[5] Mr Venables gave
evidence on behalf of the plaintiff. According to him the suretyship
document related to a contract to rent
two trailers to the first
defendant. He identified the Vehicle Hire Agreement between the
plaintiff and the first defendant. His
evidence was that the rental
agreement was marked 0206-EV and that the same two trailers are
identified in the surety document
as is done in the rental agreement.
He testified that it is clearly set out in the deed or suretyship
that the suretyship related
to “Rental Agreement Number
0206-EV.”
[6] It is further
evident that the surety document reads as follows:
“I Dr
Rumbidzal Esinath Mashavamombe, I.D. Number: 83……………
of 27 San V……...
5th Street, H………..
G………, 1………, the
undersigned, do hereby bind myself
as Surety and Co-Principal
Debtor ”
[7] The problem in
the document is that the principal debtor’s name is not
inserted as the principal debtor, but it is mentioned.
The name of
the first defendant does appear on the document and the creditor is
identified as such in the document.
[8] Mr Venables’
evidence concluded the case for the plaintiff, after the second
defendant’s counsel chose not to cross-examine
him. The second
defendant chose not to lead any evidence and closed its case.
[9] It is of
importance that the second defendant did not deny that he had signed
the suretyship in his personal capacity, or that
he had signed on
behalf of the first defendant.
[10] In paragraph 17
of the particulars of claim it is averred:
“The second
defendant confirmed that when they signed the suretyship (Annexure
“F1-3”) the plaintiff had explained
to him the contents
of the suretyship and the second defendant was advised to get
independent legal advice to make sure that he
understood his
commitment as surety. ”
[11] The second
defendant chose not to plead to this paragraph at all and the court
has to take the contents of the paragraph into
consideration when
deciding the case.
[12] In the leading
case of Sapirstein and Others v Anglo African Shipping Co (SA) Ltd
1978 (4) SA 1
(A) Trengrove AJA held at p 12 A-C:
“The
provisions of s 6 of Act 50 of 1956 do not invalidate a contract of
suretyship of this sort provided, of course, such
contract is
embodied in a written document, and it is signed by or on behalf of
the surety. What s 6 requires is that the "terms"
of the
contract of suretyship must be embodied in the written document. It
was contended by counsel for plaintiff that this
meant that the
identity of the creditor, of the surety and of the principal debtor,
and the nature and amount of the principal
debt, must be capable of
ascertainment by reference to the provisions of the written document,
supplemented, if necessary, by extrinsic
evidence of identification
other than evidence by the parties (ie the creditor and the surety)
as to their negotiations and consensus.
I agree with this contention.
In my view, there can be no objection to extrinsic evidence of
identification being given, either
by the parties themselves, or by
anyone else,...” (Court’s emphasis)
[13] In Fourlamel
(Pty) Ltd v Maddison
1977 (1) SA 333
(A) at 342 H - 343 A Miller JA
found:
“Concerning
that aspect of the problem which relates to what it is that is
required to be signed, I am unable to find any
essential or material
difference between a requirement that the agreement is to be
"embodied in a document" signed by
the surety and a
requirement that the agreement is to be "entered into in
writing" and signed by the buyer. In either
case, the party
concerned is required to manifest his assent to the agreement as
recorded in a written document, by appending his
signature to such
written document. However many objects the Legislature may have had
in mind in enacting sec. 6 of Act 50 of 1956,
one of them was surely
to achieve certainty as to the true terms agreed upon and thus avoid
or minimize the possibility of
perjury or fraud
and unnecessary litigation.’’ (Court’s emphasis)
[14] In Caney’s
The Law of Suretyship, 5th edition by CF Forsyth and JT Pretorius
this dictum was confirmed as the correct
position.
[15] Caney’s
book set out that the courts take a common sense approach to the
interpretation of section 6, as set out in Credit
Guarantee Insurance
Corporation of South Africa Ltd v Schreiber
1978 (3) SA 523
W.
[16] The essential
terms of the surety must be properly identified, although extrinsic
evidence may be used to identify the terms
of the surety. I find that
it is clear that the essential terms of the surety have been
identified properly, if the above dicta
are applied to the present
case.
[17] The Supreme
Court of Appeal held in Inventive Labour Structuring (Pty) Ltd v
Corfe
2006 (3) SA 107
(SCA) dealt with rectification. The court found
at paragraph 11:
“[11] In a
case where the contract being construed is capable of more than one
interpretation, one meaning leading to invalidity
and the other not,
preference must be given to the latter meaning in order to save the
contract from invalidity. That much
is trite. Therefore,
the present suretyship - when properly construed - complies with the
formal requirements
in s 6 of the Act. ”
(Court’s emphasis)
[18] This approach
confirmed the stance of the SCA in Intercontinental Exports (Pty) Ltd
v Fowles
1999 (2) SA 1045
(SCA)
where Smalberger JA
held:
“Likewise a
deed of suretyship, in my view, ought not be held to be formally
invalid where ex facie the document it is reasonably
capable of an
interpretation consistent with validity. ”
[19] These
principals should be applicable in the current case before me. It is
so that the second defendant had set out in the
document that he
binds himself as surety and co-principle debtor, although it was not
set out in this paragraph that it was the
principal debtor’s
debt that he bound himself for. From the deed of surety, it is quite
clear that the surety referred to
the rental agreement with the
correct number and particulars of the rental agreement. There can be
no doubt that it refers to the
rental agreement. The creditor is set
out as the plaintiff and there can be no doubt who the creditor is.
The document was signed
by the second defendant and no evidence was
led to contradict Mr Venables’ evidence that the document was
signed by the second
defendant.
[20] In these
circumstances I have considered all the evidence and find that if the
principals as set out in the authorities are
applied, that the deed
of surety has been proven.
[21] Therefore I
make the following order against the first and second defendants, the
one to pay the other to be absolved:
1. Confirmation of
cancellation of the agreement;
2. Payment of:
2.1 R82,580.00 in
respect of claim 1;
2.2 R173,280.00 in
respect of claim 2;
2.3 R10,485.38 in
respect of claim 3;
3. Interest on the
above amount at 15.5% per year from 17 April 2012 till date of final
payment;
4. Costs of the
action.
Jud(Je C
Pretorius
Case number :
47986/2012
Heard on : 12
March 2014
For the Applicant
/ Plaintiff : Adv De Beer
Instructed by :
Vezi & De Beer
For the
Respondent : Mr Saddler
Instructed by : F
J Cohen
Date of Judgment
: 19 March 2014