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
>>
2013
>>
[2013] ZAGPPHC 265
|
|
Absa Bank Ltd v Lowting and Others (39029/2011) [2013] ZAGPPHC 265 (19 August 2013)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT, PRETORIA
(REPUBLIC
OF SOUTH AFRICA)
CASE
NO: 39029/2011
DATE:19/08/2013
In
the matter between:
ABSA
BANK
LIMITED
....................................................................................
Plaintiff
(Registration
Number: 1986/004794/06)
and
LOWTING,
LANTIS EGAN
NOEL
....................................................
First
Defendant
(Identity
Number:)
WILSON,
DANN
..........................................................................
Second
Defendant
(Identity
Number: )
JACOBS,
WILLIAM
AUDIE
….......................................................
Third
Defendant
(Identity
Number: )
JUDGMENT
JANSEN
AJ
[1]
The trial related to an amount of R444 734.38 at an interest rate of
12% per annum alleged to be due and owing to the plaintiff,
ABSA Bank
Limited by the defendants in terms of deeds of suretyship. The deeds
of suretyship were also signed by a Mr William Audie
Jacobs, the
third defendant, who did not defend the action, because it transpired
that he was insolvent. Hereinafter, where a reference
is made to the
“defendants”, it is a reference to the first defendant
and second defendant only. The defendants signed
surety for a close
corporation, namely PRADZ TRADING 24 CC, of which they were members
and which close corporation had been created
with the sole purpose of
carrying on the business of the transportation of goods. It was, to
this end, that the three defendants
purchased the 2007 Nissan UD 440
TAT C/C truck, in issue in this trial, from the plaintiff. There was
a fourth member of the close
corporation, a Mr Winded Donevon Mount
who was deceased when these proceedings were instituted.
Preliminary
issues
[2]
At the pre-trial meeting of 4 December the 2012 the issue to be
decided by the court was agreed to be the enforceability of
the
suretyship agreements.
[3]
The court was informed that agreement had been reached regarding the
quantum payable. Mr Kehrhahn, when questioned by the court
stated
that he had only been briefed in respect of the merits and not in
respect of the quantum
[4]
Notice was given by the plaintiff that at the trial, an amendment
would be sought in terms of which the particulars of claim
would be
amended to amend the amount alleged to be owing and “to
supplement the original annex “D" with another
annex “D’”\
These amendments are granted and the plaintiff ordered to pay the
wasted costs. Similarly, the first
and second defendants sought to
amend two paragraphs of their plea, which amendments are granted and
the defendants ordered to
pay the wasted costs occasioned by the
amendment.
[5]
Mr Maritz, on behalf of the plaintiff, took the court through the
plea and indicated that it consisted of bald denials and “taking
note” of the contents of paragraphs. However, the defendants
pleaded that:
“
After
the vehicle was purchased and after the vehicle was handed to the
Principal Debtor, the third Defendant took control over
the Principal
Debtor. The third Defendant unlawfully and fraudulently removed the
second Defendant as a member of the Principal
Debtor. There after the
first Defendant removed himself as a member of the principal Debtor.
Thereafter the third Defendant had
the total control over the
Principal Debtor
[6]
They further pleaded as follows: -
“
18.
18.1
First defendant denies that he bound himself as surety and
co-principal debtor jointly and severally; in favour of the Plaintiff
for the repayment of all and any amounts, which may become due by the
Principal Debtor to the Plaintiff.
18.2
First Defendant admits signing the document annexed to the
Particulars of Claim, but: -
18.2.1
denies that the nature of the document was explained to him prior to
the signing of the document;
18.2.2
denies that the consequences of the document were ever explained to
him;
18.2.3
declares that Earl Roger Daniels, who was the representative of the
Plaintiff, indicated to the first Defendant that the
signing of the
document was mere formalities;
18.2.4
denies that he had the intention to bind himself as surety and
co-principal debtor jointly and severally in favour of the
Plaintiff
for the repayment of all and any amounts which may become due by the
Principal Debtor to the Plaintiff.
18.3
The first Defendant specifically pleads that if the true nature of
the document was disclosed to him he never would have signed
same as
he had no intention bind himself as surety and co-principal debtor
jointly and severally in favour of the Plaintiff for
the repayment of
all and any amounts which may become due by the Principal Debtor to
the Plaintiff.
18.4
At all relevant times it was the agreement between the first, second
and third Defendants that the third Defendant would put
his second
dwelling as the surety for the property. The first Defendant
therefore believed that it was not necessary for him to
sign any
surety. ”
[7]
The second defendant’s plea was identical to the first
defendant’s plea in this respect. It is pointed out that
the
pleas do not, pertinently, raise a defence of iustus error, although
such a iustus error plea can be inferred from the facts
pleaded. This
is mentioned as the argument presented at the end of the trial in the
form of written heads of argument which were
prepared and handed to
the court a week later, dealt extensively with the defence of iustus
error. Yet further heads of argument
were called for on the following
issues: whether the Credit Act 43 of 2005 was applicable to the facts
of the case; and what the
ramifications were of signing a credit
agreement at a place other than the credit provider’s place of
business. The rationale
behind these questions is dealt with below.
[8]
It further bears mention that the plaintiff brought an application
for summary judgment which was dismissed. On the pleadings
as they
currently stand, the court which heard the summary judgment, thus
believed that the defendants had shown that they had
a bona fide
defence to the plaintiff's cause of action which, similarly, did not
mention a defence of iustus errorby name.
[9]
The court is mindful of Corbett J’s dictum in Maharaj v
Barclays National Bank Z.ft/1976 (1) SA 418 (A) -
“
Accordingly;
one of the ways in which a defendant may successfully oppose a claim
for summary judgment is by satisfying the Court
by affidavit that he
has a bona fide defence to the claim. Where the defence is based upon
facts, in the sense that material facts
alleged by the plaintiff in
his summons, or combined summons, are disputed or new facts are
alleged constituting a defence, the
Court does not attempt to decide
these issues or to determine whether or not there is a balance of
probabilities in favour of the
one party or the other AH that the
Court enquires into is: (a) whether the defendant has ‘fully’
disclosed the nature
and grounds of his defence and the material
facts upon which it is founded, and (b) whether on the facts so
disclosed the defendant
appears to have, as to either the whole or
part of the claim, a defence which is both bona fide and good in law:
If satisfied on
these matters the Court must refuse summary judgment,
either wholly or in part, as the case maybe!' [emphasis added]
[10]
However, both defendants pertinently state in their respective
answering affidavits in the application for summary judgment:
“Daar
bestaan ‘n weseniike dwaling oor die dokument wat ek onderteken
het Daar is ook geen wilsooreenstemming ten aansien
van dit wat ek
onderteken het nie
[11]
It was further pleaded by the first defendant that: -
“
19.
19.1
The first Defendant is also married in community of property with
JUDY ROSALINE LOWTING, with identity number 670703 0158 012.
19.2
The plaintiff and/or its representatives were at all relevant times
aware of the fact that the first Defendant is married in
community of
property JUDY ROSALINE LOWTING, with identity number 670703 0158 012.
19.3
JUDY ROSALINE LOWTING, with identity number 670703 0158 012\ did not
co-signed (sic) the Surety at is required.
19.4
The surety was not signed in the execution of the normal duties of
the first Defendant
19.5
JUDY ROSALINE LOWTING, with identity number 670703 0158 012 never
agreed that the first Defendant may bind the joint estate
as surety
to the principal debtor.
19.6
The surety is therefore not a valid surety
[12]
The second defendant’s wife, Ingrid Wilson, did sign a document
consenting to her husband signing “onbeperke borgskap
(sessie
van ieningsrekening ingesluit)”.
The
applicability or otherwise of the
National Credit Act 34 of 2005
[13]
The question arises as to whether the National Credit Act 34 of 2005
(hereinafter referred to as the “
National Credit Act&rdquo
;)
finds application in respect of the said suretyship agreements.
[14]
As stated, the court called upon the advocates to furnish further
heads of argument on the issue of the applicability or otherwise
of
the
National Credit Act. Such
heads were not forthcoming due to a
miscommunication but were provided promptly when the issue was
followed up by the court. In
both sets of heads of argument the
conclusion was reached that the
National Credit Act does
not apply to
the facts of this matter. The question arises whether these
submissions are accurate.
[15]
A credit guarantee to which the
National Credit Act applies
is
defined with reference to
section 8(5)
of the
National Credit Act as
follows: -
"8(5)
An agreement, irrespective of its form but not including an agreement
contemplated in subsection (2), constitutes a credit
guarantee if, in
terms of that agreement, a person undertakes or promises to satisfy
upon demand any obligation of another consumer
in terms of a credit
facility or a credit transaction to which this Act applies [emphasis
added]
[16]
A consumer in respect of a credit agreement to which the Act applies
is defined in section 1(g) as the “guarantor under
a credit
agreement' and also in section 1(h) as “the party to whom or at
whose direction money is advanced or credit granted
under any other
credit agreement!'. [emphasis added]
[17]
In the particulars of claim, the following allegations are made in
paragraph 6 thereof: -
“
6.
APPLICATION OF THE
NATIONAL CREDIT ACT
6.1
The
National Credit Act 34 of2005
is not applicable to the agreements
in view of the fact that the Principal Debtor is a juristic person
and its principal debt exceeds
R250 000.00 on the credit agreement.
6.2
The
National Credit Act is
not applicable to the Suretyship
Agreements in accordance with
Sec 4(2)(c)
of the abovementioned Act”
[18]
This allegation is admitted in the plea.
[19]
The question arises whether this admission of a legal issue is
correct or can bind a court. The
National Credit Act places
a duty on
a court hearing a matter to give effect to its provisions thereof and
its objectives as set out in
sections 2
and
3
, particularly
subsections 3(c), (d), (e), (g), (h) and (i). An erroneous legal
admission cannot absolve a court from its duty.
A credit provider
cannot sidestep the provisions.
Section 90
of the
National Credit
Act, inter
alia, stipulates that any clause in a credit agreement,
the purpose of which is to defeat the policies or purposes of the
act,
or to deceive the consumer or to subject the consumer to
fraudulent conduct, is unlawful. The importance of the objectives of
the
National Credit Act was
emphasised by Levenberg AJ in the matter
of SA Taxi Securitisation (Pty) Ltd v Mbatha and two similar cases
2011 (1) SA 310
(GSJ) at paragraph [30] etseq.
[20]
The point that a court is not bound by a legal concession was
trenchantly made in Azanian Peoples Organization (AZAPO) and
Others v
President of the Republic of South Africa and others
1994 (4) SA 671
(CC);
1996 (8) BCLR 1015
(CC) at paragraph 16.
[21]
It would appear that the provisions of the
National Credit Act might
find application in this matter. The reason for this is that not only
did the defendants sign the deeds of suretyship as guarantees;
they
also signed it as co-principai debtors.
[22]
Furthermore even legal entities are bound by the
National Credit Act
and
only certain sections thereof do not find application, as set out
in
section 6
thereof. However (subject to
sections 4
and
5
) the
National Credit Act excludes
the application of the
National Credit
Act in
toto where the legal entity’s assets exceed a certain
value or in the case of a large credit agreement, as defined. In the
instant case, the credit agreement entered into was a large credit
agreement - namely an agreement the value of which exceeded
R250
000.00
(section 4(1
)(a) of the
National Credit Act).
[23
]
In terms of
section 8(1)
of the
National Credit Act, such
credit
guarantees constitute credit agreements for purposes of the Act.
Section 8(1) reads as follows: -
“
8
Credit agreements
(1)
Subject to subsection (2), an agreement constitutes a credit
agreement for the purposes of this Act if it is -
(a)
a credit faciiity, as described in subsection
(3);
(b)
a credit transaction, as described in subsection (4);
(c)
a credit guarantee, as described in subsection (5); or
(d)
any combination of the above. ” [emphasis
added]
[24]
The exemptions set out in
section 9
of the
National Credit Act find
application because the credit guarantees (the suretyships signed by
the defendants) related to a large credit agreement entered
into by a
juristic person, namely PRADZ TRADING 24 CC. This is so even though
credit guarantees are exempted from the definition
of a large credit
agreement, because of the provisions of
section 4(2)(c).
This is
pertinently dealt with in the article by Corlia van Heerden “The
impact of the
National Credit Act 34 of 2005
on standard
acknowledgements of debt” at pages 647-652 and PN Stoop and M
Kelly-Louw “The
National Credit Act regarding
Suretyships and
Reckless Lending” PER/PELJ 2011 Volume 14 No 2 at pages 67- 85.
[25]
However, the defendants bound themselves as sureties and co-
principai debtors. The term co-principal debtors cannot be read
as
pro non scripto, as was done in the past before the advent of the
National Credit Act (even
though its precursors had certain elements
in common with the
National Credit Act).
[26
]
The law relating to suretyships is fairly complex. One of the
defences (sometimes called exceptions or benefits) that sureties
are
required to waive is the beneftcium ordinis seu excussionis (the
benefit of excussion). It is an exception open to a surety
by which
he can compel the creditor to proceed against the principal debtor
first and to obtain all he can from such debtor's estate
before
proceeding against the surety. The renunciation of the ‘benefit’
has the effect of permitting the creditor to
proceed directly against
the surety, before excussing the principal debtor, should he so wish.
It should be noted that in law a
surety who binds himself as
co-principal debtor is taken to have tacitly renounced this benefit.
Notwithstanding this, and possibly
as evidence of the ignorance of
the draftsman, it will be found in almost all suretyships,
irrespective of the way in which the
surely binds himself.
[25]
In the matter of Trans-Drakensberg Bank Ltd v The Master and Others
1962 (4) SA 417
(N) the court held that where a person binds himself
as “surety and co-principal debtor” this results in joint
and
several liability along with the principal debtors and the person
stands in the same relation to the creditor as the principal debtor.
It therefore follows that the co-principal debtor is entitled to
receive the same notice as that to which the principal debtor
would
have been entitled.
[26]
In contrast the judgment of Firstrand Bank Ltd v Carl Beck Estates
(Pty) Ltd and Another2009 (3) SA 384 (T) at paragraphs 22-24
the
contrary was held. In the opinion of this Court, this judgment is
wrong because the
National Credit Act defines
a credit provider in
terms of
section 1(g)
as “the party to whom an assurance or
promise is made under a credit guaranteeAs stated above, a consumer
is also defined
as a guarantor in
section 1(g).
[27]
By binding the sureties as co-principal debtors, the credit provider
obtains certain rights. The corollary of this fact, is
that the
credit provider is also saddled with certain obligations. One cannot,
in this Court’s opinion, read the phrase “co-principal
debtor” as pro non scripto.
[28]
In Firstrand Bank Ltd v Car/ Beck Estates (Pty) Ltd and Another supra
at pages 390-391 pars [20]-[24], Satchwell J, followed
the reasoning
of Trollip JA in Neon and Cold Cathode Illuminations (Pty) Ltd v
Ephron
1978 (1) SA 463
(A) who, at page 471 of the said judgment held
that because credit was not, in fact, granted to the surety even
though he had signed
as a surety and co-principal debtor, the
addition of the words “co-principal debtor” did not
transform the contract
into any other species of agreement other than
that of suretyship, and concluded that the consumer was liable as a
co-debtor, but
not as a co-buyer, only a surety. Trollip JA’s
said dictum reads as follows: -
“
Now
the right enforceable by appellant against respondent arises from the
contract of suretyship. That is a contract between appellant
and
respondent, separate and distinct from the lease between appellant
and Benam, although it is accessory to it (see Van der Merwe's
case,
supra, 1921 T.P.D. at p. 321). Although respondent bound himself, not
only as surety, but also as co-principal debtor with
Benam, that did
not render him liable to appellant in any capacity other than that of
a surety who has renounced the benefits ordinarily
available to a
surety against the creditor.
[31]
However, when this dictum was uttered, the
National Credit Act did
not exist and a consumer was not defined as including a guarantor
under a credit agreement, nor was a credit provider defined as
a
person to whom an assurance or promise is made under a credit
guarantee, a point which Satchwell J seems to have overlooked in
the
Firstrand Bank Ltd v Cari Beck Estates (Pty) Ltd and Another 2 supra
case.
[32]
Satchwell J in Firstrand Bank Ltd v Carl Beck Estates (Pty) Ltd and
Another2 supra also held as follows in paragraphs [21]
and [22]: -
“[21] The second respondent signed as surety and co-principal
debtor. The right enforceable by applicant against
second respondent
arises from the contract of suretyship. The contract between
applicant and second respondent is separate and
distinct from the
bond agreement between applicant and first respondent although it is
accessory to it. The second respondent is
not a consumer and did not
receive credit. He is a guarantor of a consumer's obligations to a
credit giver. Second respondents
contractual relationship with the
applicant remains ancillary to the main agreement between the
applicant and the first respondent.
[22]
The authorities on this point are clear; A surety who has bound
himself as surety and co-principal debtor remains a surety
whose
liability arises wholly from the contract of suretyship. Signing as
surety and co-principal debtor does not render a surety
liable in any
capacity other than a surety who has renounced the benefits of
excussion
and
division.
1
As De ViHiers CJ stated, ‘the use of the words "co-principal
debtor" does not transform the contract into any other
than
suretyship’.
2
’’
[emphasis added]
[33]
As pointed out above, a co-principal debtor and a surety is
considered to be a consumer (guarantor) in terms of the
National
Credit Act. Section
8(5) does not detract there from.
[34]
In this regard the learned authors PN Stoop and M Kelly-Louw op cit.
pertinently state the following at page 85/225 paragraph
2.5: -
“
It
should be noted that where the words "co-principal debtor and
surety” are used in a suretyship agreement, the
National Credit
Act should
apply to the surety and co-principal debtor to the same
extent that the Act applies to the principal debtor and the principal
debt.
If someone has bound himself as co-principal debtor his
obligations are co-equal in extent with those of the principal debtor
and
of the same scope and nature and he is liable together with the
principal debtor jointly and severally, which means that a
co-principal’s
debt becomes enforceable at the same time as the
principal debt
3
(emphasis added)
[35]
However, the learned authors make it clear that if the
National
Credit Act does
not apply to the principal debtor’s debt, it
will also not apply to a co-principal debtor’s debt (loc.cit.
Paragraph
2).
[36]
Furthermore, as set out above
section 8(2)(d)
of the
National Credit
Act stipulates
that a combination of various agreements stipulated in
section 8
constitutes a credit agreement.
[37]
The co-principal debtor and suretyship agreements which the
defendants were required to sign are draconian of nature. In this
regard reference is made to clauses 8 and 9 thereof. No cap was
placed on the amount in respect of which the defendants bound
themselves as co-principal debtor and sureties, and their liability
was therefore limitless.
[38]
It is trite that once a principal debt has been extinguished a surety
agreement no longer has any force or effect. It was common
cause that
the vehicle had been returned and that the close corporation had been
liquidated. Furthermore, Mr Jacobs had apparently
set up his second
house as security and the first defendant loaned the close
corporation (and ceded this loan account to the bank)
in an amount of
R117 000.00. However, the court was informed that had the issue of
quantum having been settled. (That the quantum
had been settled was
expressly stated by the Plaintiff’s counsel in his heads of
argument. Upon a query by the court the
Defendant’s counsel
stated that he could make the contribution regarding this submission
as he had been briefed to argue
the merits only, and not the
quantum). However, given what the courts experience daily in the
unopposed motion court and the many
errors that banks make, (a fact
which the plaintiff’s witness Mr WHE Gertenbach conceded and
which mistakes are often overlooked,
it is deemed necessary to
highlight certain aspects.
[39]
Furthermore, no evidence was tended by Mr WHE Gertenbach (the
plaintiff’s sole witness) that there was any compliance
with
section 92(2)
of the
National Credit Act, as
far as the defendants
are concerned, which section provides in relevant part as follows: -
92
Pre-agreement disclosure (1) ...
(2)
A credit provider must not enter into an intermediate or targe credit
agreement unless the credit provider has given the consumer-
(a)
a pre-agreement statement-
(i)
in the form of the proposed agreement; or (ii) in another form
addressing all matters required in terms of
section 93
; and
(b)
a quotation in the prescribed form, setting out the principal debt,
the proposed distribution of that amount, the interest rate
and
other credit costs; the total cost of the proposed agreement, and the
basis of any costs that may be assessed under
section 121
(3) if the
consumer rescinds the contract, "[emphasis added]
[40]
In this regard, due regard should be had to the fact that the
National Credit Act does
find application in respect of juristic
persons and that such application is merely limited by Chapter 1 Part
B
section 4
of the
National Credit Act. Sections
92 and 93 find
application regardless of whether the consumer is a juristic person.
It is only when the provisions of
section 4(1
)(a) or 4(1 )(b) find
application, as in the present case, that the
National Credit Act
finds
no application.
[41]
In addition, the
National Credit Act assists
consumers in prohibiting
reckless credit grants.
Section 80
of the said Act provides as
follows: -
"80
Reckless credit
(1)
A credit agreement is reckless if, at the time that the agreement was
made, or at the time when the amount approved in terms
of the
agreement is increased, other than an increase in terms of section
119(4) -
(a)
the credit provider failed to conduct an assessment as required by
section 81(2), irrespective of what the outcome of such an
assessment
might have concluded at the time; or
(b)
the credit provider, having conducted an assessment as required by
section 81(2), entered into the credit agreement with the
consumer
despite the fact that the preponderance of information available to
the credit provider indicated that -
(i)
the consumer did not generally understand or appreciate the
consumer’s risks, costs or obligations under the proposed
credit agreement; or
(ii)
entering into that credit agreement would make the consumer over-
indebted.
(2)
When a determination is to be made whether a credit agreement is
reckless or not, the person making that determination must
apply the
criteria set out in subsection (1) as they existed at the time the
agreement was made, and without regard for the ability
of the
consumer to -
(a)
meet the obligations under that credit agreement; or
(b)
understand or appreciate the risks, costs and obligations under the
proposed credit agreement;
at
the time the determination is being made.
(3)
When making a determination in terms of this section, the value of-
(a)
any credit facility is the credit limit at that time under that
credit facility;
(b)
any pre-existing credit guarantee is -
(i)
the settlement value of the credit agreement that it guarantees, if
the guarantor has been called upon to honour that guarantee;
or
(ii)
the settlement value of the credit agreement that it guarantees,
discounted by a prescribed factor; and
(c)
any new credit guarantee is the settlement value of the credit
agreement that it guarantees, discounted by a prescribed factor."
(Section
80 is not applicable to a juristic entity but to consumers other than
juristic entities.)
[42]
Section 83 specifically provides as follows: -
“
83
Court may suspend reckless credit agreement
(1)
Despite any provision of law or agreement to the contrary, in any
court proceedings in which a credit agreement is being considered,
the court may declare that the credit agreement is reckless, as
determined in accordance with this Part.
(2)
If a court declares that a credit agreement is reckless in terms of
section 80(1)(a) or 80(1 )(b)(i), the court may make an
order -
(a)
setting aside all or part of the consumer's rights and obligations
under that agreement, as the court determines just and reasonable
in
the circumstances; or
(b)
suspending the force and effect of that credit agreement in
accordance with subsection (3)(b)(i).
(3)
If a court declares that a credit agreement is reckless in terms of
section 80( 1)(b)(ii), the court -
(a)
must further consider whether the consumer is over-indebted at the
time of those court proceedings; and
(b)
if the court concludes that the consumer is over-indebted, the court
may make an order-
(i)
suspending the force and effect of that credit agreement until a date
determined by the Court when making the order of suspension;
and
(ii)
restructuring the consumer's obligations under any other credit
agreements, in accordance with section 87.
(4)
Before making an order in terms of subsection (3), the court must
consider -
(a)
the consumer’s current means and ability to pay the consumer's
current financial obligations that existed at the time
the agreement
was made; and
(b)
the expected date when any such obligation under a credit agreement
will be fully satisfied, assuming the consumer makes all
required
payments in accordance with any proposed order. ”
(Similarly,
this section is not applicable to a juristic person, but in respect
of other consumers.)
[43]
Part D of the
National Credit Act only
became effective on 1 June
2007. The instalment sale agreement was entered into thereafter on 10
November 2007, when Mr Daniels
signed the agreement.
[44]
Furthermore, the cancellation letters which were sent to the
defendants do not comply with the provisions of
section 129
of the
National Credit Act. Furthermore
, the cancellation letter which
related to the co-principal and suretyship agreement signed by the
second defendant, was not sent
his domicilium citandi et executandi\
and he denied in evidence that he knew that the instalment sale
agreement had been cancelled
until he received the summons in this
matter. (It is emphasised once again that
section 129
of the
National
Credit Act applies
to juristic persons. In fact, the entire Chapter 6
of the
National Credit Act applies
to juristic persons.)
[45]
Furthermore, prima facie the plaintiff’s conduct is in breach
of
section 130(2)(b)
of the
National Credit Act, because
the net
proceeds of the sale of the Nissan truck which could be realized
were, apparently, in accordance with the certificate of
balance not
taken into account in ascertaining the defendants’ financial
obligations under the agreement. In this regard,
the certificate of
Balance, which was annexed to the Particulars of Claim, demonstrates
that no amount realised or value gained
as a result of the return of
the Nissan truck, was deducted from the defendant’s financial
obligations.
[46]
Furthermore, an aspect which has not received judicial scrutiny is
whether
section 4(1)
of the
National Credit Act is
constitutional.
Section 4(1
)(a) and (b) provide as follows: - “4 Application
of Act
(1)
Subject to sections 5 and 6, this Act applies to every credit
agreement between parties dealing at arm’s length and made
within, or having an effect within, the Republic, except-
(a)
a credit agreement in terms of which the
consumer
is-
(i)
a juristic person whose asset value or annual turnover, together with
the combined asset value or annual turnover of all related
juristic
persons, at the time the agreement is made, equals or exceeds the
threshold value determined by the Minister in terms
of section 7 (1);
(ii)
the state; or
(Hi)
an organ of state;
(b)
a large agreement, as described in section 9(4), in terms of which
the consumer is a juristic person whose asset value or annual
turnover is, at the time the agreement is made, below the threshold
value determined by the Minister in terms of section 7(1)!'
[47]
Neither has the constitutionality of section 4(2)(c) been tested by
the courts.
[48]
The purpose of the
National Credit Act is
, as stated in sections 2
and 3 of the Act, and, in particular the preamble of section 3
thereof, is the following: -
“
3
Purpose of Act
The
purposes of this Act are to promote and advance the social and
economic welfare of South Africans, promote a fair; transparent
competitive, sustainable, responsible, efficient, effective and
accessible credit market and industry, and to protect consumers,
by-
(a)
promoting the development of a credit market that is accessible to
all South Africans, and in particular to those who have historically
been unable to access credit under sustainable market conditions;
(b)
ensuring consistent treatment of different credit products and
different credit providers;
(c)
promoting responsibility in the credit market by -
(i)
encouraging responsible borrowing,
avoidance
of over-indebtedness and fulfilment of financial obligations by
consumers; and
(ii)
discouraging reckless credit granting by credit providers and
contractual default by consumers;
(d)
promoting equity in the credit market by balancing the respective
rights and responsibilities of credit providers and consumers;
(e)
addressing and correcting imbalances in negotiating power between
consumers and credit providers by -
(i)
providing consumers with education about credit and consumer rights;
(ii)
providing consumers with adequate disclosure of standardised
information in order to make informed choices; and
(Hi)
providing consumers with protection from deception, and from unfair
or fraudulent conduct by credit providers and credit bureaux;
(f)
improving consumer credit information and reporting and regulation of
credit bureaux;
(g)
addressing and preventing over-indebtedness of consumers, and
providing mechanisms for resolving over-indebtedness based on
the
principle of satisfaction by the consumer of all responsible
financial obligations;
(h)
providing for a consistent and accessible system of consensual
resolution of disputes arising from credit agreements; and
(i)
providing for a consistent and harmonised system of debt
restructuring; enforcement and judgment, which places priority on the
eventual satisfaction of all responsible consumer obligations under
credit agreements
[49]
Section 9 of the Constitution of the Republic of SA, 1996 is set out
below: -
“
9
Equality
(1)
Everyone is equal before the law and has the right to equal
protection and benefit of the law.
(2)
Equality includes the full and equal enjoyment of all rights and
freedoms. To promote the achievement of equality, legislative
and
other measures designed to protect or advance persons, or categories
of persons, disadvantaged by unfair discrimination maybe
taken.
(3)
The state may not unfairly discriminate directly or indirectly
against anyone on one or more grounds, including race, gender,
sex,
pregnancy, marital status, ethnic or social origin, colour, sexual
orientation, age, disability, religion, conscience, belief,
culture,
language and birth.
(4)No
person may unfairly discriminate directly or indirectly against
anyone on one or more grounds in terms of subsection (3).
National
legislation must be enacted to prevent or prohibit unfair
discrimination.
(5)
Discrimination on one or more of the grounds listed in subsection (3)
is unfair unless it is established that the discrimination
is fair
[50]
This right has an interna! limitation namely section 9(3) and the
general limitation of rights are set out in section 36 of
the
Constitution: -
'36
Limitation of rights
(1)
The rights in the Bill of Rights may be limited only in terms of law
of general application to the extent that the limitation
is
reasonable and justifiable in an open and democratic society based on
human dignity, equality and freedom, taking into account
all relevant
factors, including -
(a)
the nature of the right;
(b)
the importance of the purpose of the limitation;
(c)
the nature and extent of the limitation;
(d)
the relation between the limitation and its purpose; and
(e)
less restrictive means to achieve the purpose.
(2)
Except as provided in subsection (1) or in any other provision of the
Constitution, no law may limit any right entrenched in
the Bill of
Rights."
[51]
The circumstances of this case demonstrate that the specific goals of
the
National Credit Act are
not achieved when sureties, in the
position of the defendants set out below, are not protected by its
provisions. In the opinion
of the court, this issue should enjoy
judicial scrutiny.
[52]
There is no reason why the defendants should not have been fully
informed of their rights, full disclosure made to them and
section
129
notices sent to them.
[53]
The applicant made no endeavour to inform the sureties of their
rights, the documentation signed by them, and also entered
in an
instalment sale agreement with them which exceeded a million rands.
Given the paltry means of the defendants, such conduct,
prima facie
is unconscionable.
[54]
Reference is also made to the case of Standard Bank of South Africa
Ltd v D!amini2W$ (1) SA 219 (KZD) where the following was
stated in
paragraphs [77] and [78]: -
“
[77]
in passing I note that the CPA, assented to on 24 April 2009\
commenced on 31 March 2011. Although the agreement in this case
was
terminated before the general effective date of the CPA, ie 31 March
2011, the Bank, like most large corporations that invest
in corporate
social responsibility projects, had to be aware of the purposes of
the CPA which was already in the public domain.
The purposes of the
CPA are:
’
...
to promote and advance the social and economic welfare of consumers
in South Africa by
(c)
promoting fair business practices;
(d)
protecting consumers from -
(i)
unconscionable, unfair, unreasonable, unjust or otherwise improper
trade practices; and
(ii)
deceptive, misleading, unfair or fraudulent conduct;
(e)
improving consumer awareness and information and encouraging
responsible and informed consumer choice and behaviour;. .. .
4
[78]
Institutions such as the Bank should welcome the framework proffered
by the NCA and the CPA for bridging socio-economic inequalities
substantively, and for reforming the credit industry; if for no
reason but that sustained inequalities and need lead to unrest
and
social instability, which are not good for business. Even though the
CPA was not in effect when the Bank sold the vehicle to
Mr Dlamini,
it should have voluntarily acknowledged that, as goods sold in terms
of a credit agreement,
s 5(2)(d)
of the CPA would have applied to the
sale. It should have been dear when the Bank issued summons on 3
March 2011 that consumer
relations were no longer business as usually
practised over its 150-year history in South Africa. Disappointingly,
the Bank remained
unresponsive to the CPA and its aspirations before
it became enforceable. My interpretation and application of the
provisions of
the NCA above are fortified by the CPA."
[55]
The court is bound by the dictum by Trollip JA set out above.
However, the court makes these observations as it deems to defeat
the
objects of the
National Credit Act when
sureties and co-principal
debtors, who are natural persons, have no protection when a bank
enters into a large agreement with a
juristic entity which is a mere
shell (as in this case). In such circumstances, where the sureties
and co-principal debtors, more
often than not are natural persons,
the banks may see a loophole to advance exorbitant amounts of credit
to juristic entities such
as close corporations and have the members
sign suretyship and co-pricipal debtor agreements in the full
knowledge that they will
not be able are to repay the credit granted.
The court takes judicial notice of the fact that close corporations
are often the
vehicle utilised to conduct business by individuals
with small businesses and limited means. This is an issue which
should clearly
be investigated further by courts.
The
effect of the first defendant’s wife not consenting to him
signing a suretyship
[56]
Section 15(2)(h)
of the
Matrimonial Property Act 88 of 1984
read with
section 15(5)
thereof, stipulates that a spouse shall not without the
written consent of the other spouse, bind himself as a suretyship.
This
consent must be given separately in respect of each act and
shall be attested to by two competent witnesses. However,
section
15(6)
provides that such consent is not required where the signing of
the surety is performed by the spouse in the ordinary course of
his
profession, trade or business. The focus dassicus in the case of
Amalgamated Banks of South Africa v De Goede en ‘n Ander
[1977]
2 All SA 427
(A), wherein the terms “business” and in the
ordinary “course” were interpreted. The “business”
of a member of a close corporation was held to be that of the
management of the close corporation’s business.
[57]
In the instant case, it is significant that the first defendant’
wife was asked to go to the residence of Mr Daniels
in order to sign
a consent, but given the less than ideal circumstances in which the
relevant documentation was signed, it somehow
transpired that she did
not sign any documentation. This was also, as stated earlier, the
first defendant’s first foray into
a business venture, whilst
he was in the fulltime employ of Amalgamated Beverages.
[58]
The test is if the surety agreement was signed in the ordinary course
of the spouse’s business and not in the ordinary
course of the
close corporation's business. The facts of the present case are on
all fours with the facts in the Amalgamated Banks
of South Africa v
De Goede en ‘n Ander supra case. For purposes of deciding this
issue it is clear that the defendants signed
the co-principal debtor
and suretyship agreements in their capacity as members of PRATZ
TRADING 24 CC. Although, as set out below,
they were apparently not
aware of the instalment sale agreement, they knew that the documents
that they were signing pertained
to the business of the close
corporation and on their version, a loan application. That, in
itself, renders the signing of the
co-principal debtor and suretyship
agreements akin to the once off signing by a teacher and a clerk of
suretyship agreements in
their capacities as members of a close
corporation as happened in the case of Amalgamated Banks of South
Africa v De Goede en ‘n
Ander supra at pages 77F-GH.
[59]
In the interpreting the
Matrimonial Property Act 88 of 1984
the court
in Amalgamated Banks of South Africa v De Goede en ‘n Ander
supra noted that the reason for the Act was to amend
the common law
to give spouses married in community of property equal abilities,
albeit with an exception not to place too heavy
a burden on the trade
industry.
[60]
Most importantly, the court looked at the definitions and how the
same words were used in other legislation and how the courts
interpreted the said legislation in that respect.
[61]
The court held that the word “business” could mean “even
a single, isolated activity, enterprise, or pursuit
of serious
importance that occupies a person’s time, energy or resources”.
The court in Amalgamated Banks of South
supra, also, with reference
to the use of the words “business” and “ordinary
course” in the Insolvency
Act, decided that it referred to an
agreement normally entered into between solvent business men (at
pages 77I-78D).
[62]
The Supreme Court of Appeal matter Strydom v Engen Petroleum Ltd
2013
(2) SA 187
(SCA) also deals with this issue. In this matter, Mr
Strydom, who had stood surety for the Engen garage in Soutpansberg’s
company, worked at the very core of the company’s business.
However, this case does not detract from the principle laid down
in
the case of Amalgamated Banks of South Africa v De Goede supra.
[63]
It is trite that a member of a close corporation is entitled to
co-mange a close corporation. However, because of the fact
that the
first defendant’s defence is that he did not realise that he
was standing surety for the close corporation, and
because he did not
realise that an instalment sale agreement had been entered into, the
question as to whether he was acting in
the ordinary course of
business of PRATZ TRADING CC is inextricably interwoven with the
defence of iustus error. The question is:
to what did the first
defendant’s wife believe that she was consenting?
[64]
Nonetheless, on the first defendant’s own version, he was
applying for a loan for the close corporation which falls within
the
concept of managing a close corporation’s business. Furthermore
Mr Lowting’s wife did not testify for unknown reasons
although
she was clearly available to give evidence. The court draws a
negative inference from this fact and this defence of the
first
defendant fails.
The
certificate of balance
[65]
Although the court was not requested to assess the quantum payable by
the defendants, as the court was informed in the Plaintiff’s
heads of argument that agreement had been reached on this issue, it
is still deemed obligatory for the court to set out certain
observations.
[66]
Clause 14 of the suretyship agreements signed by the defendants reads
as follows: -
“
14
SERTIFIKAAT
’
n
Sertifikaat onderteken deur enige bestuurder van die Bank sal
voldoende bewys wees van enige toepaslike rentekoers en van die
bedrag hierkragtens verskuldig of van enige ander feit met betrekking
tot die borgstelling vir doeleindes van vonnis, insluitende
voorlopige en summiere vonnis, bewys van eise teen insolvente en
bestorwe boedels of andersins en indien ek/ons die korrektheid
van
sodanige sertifikaat betwis, sal die bewvslas op my/ons rus om die
teendeel te bewys. Dit sal nie nodig wees om in sodanige
verrigtinge
die aanstelling of bevoegdheid van die ondertekenaar te bewys nie.”
[emphasis added]
[67]
Clause 9 sub. Cap. “INSOLVENSIE, UKWIDASIE, ENS” the
following is stated: -
“
9.1.2
sal die Bank geregtig wees om alle opbrengste of betalings wat van
die Skuldenaar, kurator, likwidateur of uit enige ander
bron ontvang
word, aan te wend ter vermindering van die verskuldigde bedrag,
sonder dat mv/ons aanspreeklikheid hierkragtens vir
die bedrag wat
uiteindelik na ontvanqs van sodanige opbrengste of betalings deur die
Skuldenaar aan die Bank verskuldinq mag wees,
geraak of verminder
word:” [emphasis added]
[68]
Hence, the amount due and owing by the co-principal debtor and surety
shall be the amount remaining after the deduction of
any monies
received from the main debtor or another source. It is common cause
that the plaintiff has taken possession of the vehicle
and that PRADZ
TRADING CC has been liquidated.
[69]
It is wholly unsatisfactory that ex facie the detailed certificate of
balance attached to the particulars of claim, no amounts
were
deducted from the amount allegedly still owing by the defendants,
because it is trite that when the principal debt is reduced,
or paid
in toto, so is that of a co-principal debtor and surety. In the
column entitled “MINUS” the “SELLING
PRICE OF THE
ARTICLE” is stated to be “R0.00”.
[70]
Letters drawing the defendants’ attention to the fact that
their credit agreement had been cancelled and that the defendants
as
co-principal debtors owed the bank R479 037.42 were addressed to them
on 24 May 2011. These letters were referred to in evidence
(there was
thus interpellatio) but the one letter to the second defendant and
his spouse was addressed to the incorrect address,
as it was not
addressed to the domicilium citandi et executandi in the co-principal
debtor and surety agreement. Interpellatio
thus only occurred when
the summons was served on the second defendant and his spouse.
[71]
The state of affairs is wholly unsatisfactory. No details regarding
the sale of the vehicle and the amount obtained by the
plaintiff, nor
any amount realised as a result of the liquidation of the close
corporation, or subtraction of the loan accounts
ceded to the bank,
have been included in the detailed certificate of balance, attached
to the particulars of claim.
[72]
The end result is that the court is left in doubt as to the accuracy
of the alleged amount due and owing to the plaintiff.
[73]
Should the amounts received as a result of, inter alia, of the sale
of the vehicle, the loan account, etc not have been deducted
from the
amount allegedly due and owing, which appears to be the case, then it
is important that this lacuna be addressed. It is
the duty of the
bank to mitigate its losses as was reiterated in the case of Standard
Bank of South Africa Ltd v Dlamini
2013 (1) SA 219
(KZD) as follows:
-
“
[73]
Once the agreement was terminated\ for whatever reason, the Bank had
to sell the vehicle to mitigate losses. Its decision not
to sell the
vehicle pending this action is also unexplained. If the losses were
for Mr Dlamini's account the Bank would have seriously
prejudiced him
by not reselling the vehicle for more than two years" (emphasis
added).
The
evidence for the defendants
[74]
The plaintiff’s sole witness was a Mr William Henry Edward
Gertenbach. The plaintiff did not call Mr Jacobs to testify,
and
neither did the defendants. No reason was proffered by any of the
parties as to why Mr Jacobs was not called as a witness.
Mr
Gertenbach had no persona! knowledge of the actual instalment sale
agreement which was entered into by the defendants, nor of
the
suretyships signed by them. However, he testified that his job
description was that of an asset finance manager and that his
position entailed him overseeing accounts of any nature whatsoever in
the commercial legal department pertaining to legal entities
only. He
testified that he had twenty-five years’ experience and had
held his current position as manager for three years.
Mr Earl Roger
Daniels, who had handled the instalment sale agreement, had entered
into the said agreement with the close corporation,
and who had
obtained suretyships from the defendants and one from Mr Jacobs
(presumably in the form of a mortgage bond over Mr
Jacobs’
second house as set out above), did not testify as he has relocated
to Australia and is currently in the employ of
the Bank of Queensland
in Australia.
[75]
Upon being questioned as to how the instalment sale agreement and the
suretyship agreement would have been cancelled, he said
by way of
notice per registered post and by sending a debt collector to the
defendants. However, this statement was made within
the context of
the general modus operand! of the plaintiff, and not with specific
reference to the defendants.
[76]
Mr Gertenbach confirmed that ABSA Bank Limited can only sign an
instalment sale agreement once it has sufficient security,
and will
under no circumstances grant the loan without sufficient security.
[77]
He also testified that Mr Daniels would have breached his
responsibilities had he not explained the contents of the documents
to the first defendant and second defendant.
[78]
The instalment sale agreement was only signed by ABSA Bank Limited on
10 November 2007. (Note should be taken that the vehicle
was already
delivered on 28 September 2007.)
[79]
In cross-examination Mr Gertenbach also conceded that there was no
resolution to allow Mr William Jacobs to sign the said instalment
sale agreement on behalf of PRATZ TRADING 24 CC.
[80]
Mr Gertenbach further conceded that the bank made many errors,
especially regarding signatures and dates.
[81]
He also confirmed that one of the letters calling on the sureties to
pay the outstanding amounts was sent to the incorrect
address.
[82]
As set out above, the suretyship agreements, which were signed by the
defendants, were signed not only as sureties but also
as coprincipal
debtors with PRADZ
TRADING
24 CC.
[83]
As shall appear from what is stated below, Mr Jacobs (who was not
called upon to testify by the defendants, and against whom
the second
defendant testified that he had laid a criminal charge for forging
his signature and unilaterally removing him as a
member of the ciose
corporation) was, on the defendants’ version, the person who
had persuaded them to purchase the truck
and to incorporate the close
corporation.
The
evidence for the defendants
[84]
Both defendants testified. The wives for reasons which were not
disclosed, did not testify.
[85]
As a general statement, the court observes that much of the evidence
proffered by the defendants, was hearsay evidence.
[86]
The first defendant testified that he was in the employ of
Amalgamated Beverages Industries, Coca-Cola and had a standard ten
qualification. He testified that the wife of the second defendant
(who was not called as a witness) also worked at the same business,
and suggested to him that he and the second defendant, third
defendant, and one Mr Windell Donevon Mount (the latter two working
at Siemens Engineers) register a close corporation for transport
purposes. She had met the third defendant who informed her of
the
possibility of starting a transport business and her husband, the
second defendant was working for a transport company. The
second
defendant would be the driver of the truck that the close corporation
would acquire. (As stated, the reason why Mr Mount
was not sued was
because he was deceased when the action was instituted.) The first
defendant testified that he would retain his
day job but assist
(after hours) with the day to day running of the close corporation.
Each member of the close corporation would
hold a 25% stake in the
close corporation.
[87]
The first defendant testified that the third defendant stated that he
had connections and would be able to obtain a loan for
the close
corporation but he later told the first defendant that the loan had
been refused because the second defendant’s
name showed up on a
credit defaulter list. Yet later the third defendant told the first
defendant that a provisional loan had been
approved and that they had
to go to the house of a Mr Earl Roger Daniels, whom the first
defendant knew to be a bank official because
he lived in Eersterus (a
suburb of Pretoria), the same suburb in which the first defendant
resides. The court takes judicial cognisance
of the fact that
Eersterus is not an affluent suburb. The third defendant told the
first defendant that he, the second defendant
and their wives had to
go and sign certain documents for purposes of obtaining the
provisional loan. He testified that on the evening
of the 26th
September 2007 between 20h00 to 20h30 he, his wife and the Wilsons
(the second defendant and his wife) drove in one
motor vehicle to the
home of Mr Daniels and Mr Jacobs in his own motor vehicle.
[88]
He further testified that they had a transport agreement in the
“pipeline” for PRATZ TRADING 24 CC called
Fiam.
[89]
The first defendant further testified that Mr Jacobs was standing
next to Mr Daniels on the grass when Mr Jacobs said that
they are
signing an application form for a loan and that it is a mere
formality. Mr Daniels did not invite them into his house
and had
three Rottweiler dogs in his garden. He came out with a bundle of
documents and flipped through the pages, requesting the
defendants to
sign at certain stipulated places marked with an “x". The
stipulated places marked with an “x”,
indicating where
the defendants should sign, are visible on the documents signed by
them which were made available to the court.
He testified that Mr
Daniels did not explain the terms of the agreement to them and that
he did not read the documents.
[90]
In the haste to get the documents signed Mrs Lowting, did not sign
the form granting her consent to the first defendant signing
a
suretyship agreement.
[91]
Mr Jacobs informed the first defendant that he, Mr Jacobs, has two
houses in Eersterust (one house in Crawford Street and the
other
house in Roots Avenue). Mr Jacobs informed the first defendant that
he gave the house in Roots Avenue as security for the
purchase of the
vehicle. (All of this is hearsay as Mr Jacobs did not testify.) The
first defendant testified that he would never
have signed a
suretyship agreement had he known what it was that he was signing,
namely a suretyship and co-principal debtor agreement.
[92]
The first defendant testified that Mr Jacobs also signed the
documentation and that the instalment sale agreement was never
shown
to him. He stated that his wife requested whether they would receive
copies of the documents that they had signed and that
Mr Daniels
stated that they would get copies of the documentation, being a loan
application and mere formality, the next day -
which never
transpired. He stated that Mr Daniels explained nothing to them and
that they signed the documentation on the roof
of the motor vehicle
in which they had all travelled to Mr Daniels’ residence (save
for Mr Jacobs who travelled in his own
motor vehicle). The first
defendant further testified that he was under the impression that he
was signing an application for a
loan for the truck and would never
have signed a suretyship agreement. (He conceded during
cross-examination that banks require
some form of security, but that
Mr Jacobs had told them that he, Mr Jacobs, had put up his second
home in Roots Avenue as security.)
[93]
He further testified that the vehicle was already delivered on the
28th of September 2007.
[94]
The first defendant further testified that the signing of the
documentation took only about five minutes, and that Mr Daniels
was
in a hurry as he was entertaining visitors.
[95]
During cross-examination it was put to the first defendant that the
instalment sale agreement had already been allocated a
number, and
that all the relevant financial information had already been inserted
into the said agreement. It was unclear as to
when and at what time
the third defendant had signed this agreement on the 26th of
September 2007. This clearly did not happen
when meeting with Mr
Daniels at his residence and it was never suggested to the defendants
in cross-examination. (The plaintiff’s
representative, Mr
Daniels, only signed it on 10 November 2007.) The first defendant
testified that he was not even aware that
there was an instalment
sale agreement amongst the documents. No resolution had been taken by
the members of the close corporation
for the signature of such an
agreement by Mr Jacobs. They took resolutions, in general, however,
so the first defendant testified,
by way of a “round robin”
of phone calls.
[96]
Much was made, in cross-examination that the defendants allegedly
knew that a loan would not be granted without security, by
a bank,
and that the “loan agreement” had already been completed.
However, this point is self-destructive. Mr Gertenbach
testified that
a loan would never be granted before a bank had sufficient security.
Hence, the fact that the first defendant thought
they were still at a
stage before the loan agreement had been approved, was correct.
[97]
It bears mention that the instalment sale agreement is barely legible
and printed in a miniscule font to such an extent that
a “legible”
copy of its terms and conditions was discovered. The first defendant
stated that Mr Daniels merely asked
him to sign certain documents
without explaining them to him.
[98]
The first defendant’s involvement in the close corporation
started to decrease. Mr Jacobs asked him to step down in order
for Mr
Jacob’s son to become a member of the close corporation. The
first defendant stated that he resigned. That the son
of Mr Jacobs
did, in fact, become a member was proved with an extract from a
company search. The first and second defendants asked
the bank to be
removed from its records and the first defendant testified that the
wording of the document requesting the same
had been given to him by
Mr Daniels as he did not know which wording to use. There were two
documents - one with the wording given
to them by Mr Daniels, and the
other on the close corporation’s letterhead, on which Mr
Wilson’s (the second defendant)
daughter typed the said wording
furnished by Mr Daniels. Under cross-examination, when asked why he
had referred to the “security
records” of the company in
the said letter, he stated that he simply wished his name to be
removed from any bank documentation
pertaining to the close
corporation and that the wording, to inform that they were no longer
members of the close corporation,
had been furnished to them by Mr
Daniels when they went to the bank to tell him what had happened and
asked him what to do, as
set out above. He also stated that as he was
no longer a member of the close corporation, his name cleariy had to
be removed from
the bank documentation. The bank promised to revert
to them but never did. In this regard, a defence of iutus error could
also
have been raised by the defendants as they, through Mr
Daniels’conduct, believed that they were absolved from any
obligation
to, and right in, the close corporation. This avenue was,
however not pursued by the defendants.
[99]
The first defendant testified that Mr Williams Jacobs was standing
next to Mr Daniels on the grass when Mr Jacobs said that
they were
signing an application form for a loan and that it was a mere
formality. (Once again, this allegation is hearsay.)
[100]
The first defendant conceded that he made a loan of R107 000.00 to
the close corporation. This was a loan made by him to the
close
corporation. He confirmed that the plan with the close corporation
was to earn an extra income and the plan was to make a
profit.
[101]
The second defendant testified that he was unemployed, had a standard
eight qualification and tax debts and did not have the
financial
means to sign a suretyship agreement. He testified that the close
corporation, as he understood, had to demonstrate that
it had
transport contracts. He testified, as had the first defendant, that a
woman by the name of Flam had given them a transport
contract.
[102]
The second defendant also testified that he was under the impression
that he was signing documents to obtain a loan. He testified,
as did
the first defendant, that the papers were given to them by Mr Daniels
outside Mr Daniels’ residence. He said that
the lighting was
good and that they never entered the property as there where dogs -
one of which, a bullterrier, came out with
Mr Daniels and which
caused Mrs Lowting (the first defendant’s wife) to get back
into the motor vehicle. This, of course,
would explain why she did
not sign a consent form and supports the defendants’ version
that the signing procedure was rushed.
[103]
The second defendant testified that he was in no position,
financially, to sign a suretyship agreement.
[104]
It was put to the first defendant during cross-examination that he
could have asked to take the document home to read and
he conceded
that he could have done so, but testified that Mr Daniels had
requested him to sign the documentation there and then
and that Mr
Daniels had categorically informed him that he was signing an
application form. (Once again, this testimony is hearsay.)
[105]
The second defendant further testified that the first time that he
realised that what he had signed was a suretyship was upon
receipt of
the summons. He testified that he had asked Mr Daniels what the
purpose of the documentation was and that he was told
that it
constituted a mere formality. He further testified that they were not
given copies of the documents. He also testified
that they waited for
about twenty minutes for Mr Daniels to come out of his residence and
that the signing of the documents did
not take longer than five
minutes.
[106]
The second defendant testified that he was, without his knowledge and
consent, fraudulently removed as a member of the close
corporation by
the third defendant who forged his signature, as a result of which he
laid a complaint with the police against the
third defendant. He
stated that Mr Mount’s name was removed and his signature
forged (presumably by the third defendant)
a week after his death,
and that he and the first defendant went to speak to Mr Daniels about
this at the bank.
[107]
The second defendant testified that the close corporation had been
liquidated.
[108]
The second defendant conceded that PRATZ TRADING 24 CC traded for a
profit.
[109]
Under cross-examination, the second defendant also testified that he
was unaware that he was signing a suretyship and that
he had trusted
the third defendant who had told him to go to the home of Mr Daniels
to apply for a loan. He confirmed that he never
read the documents
but believed that it was unnecessary as it was a mere formality. Mr
Daniels never asked him to read the documentation.
[110]
Both defendants testified that the first defendant’s wife did
not cosign the surety, but that the second defendant’s
wife
did.
[111]
The second defendant admitted, under cross-examination, that the
lighting was good and that he could have asked to take the
documents
home but that he did not wish to hold up the procedure.
[112]
The second defendant confirmed that he did not take his spectacles
with him on the night he was asked to sign the documents
as it was a
mere formality. He stated that he would not have been able to read
the documents even if he wanted to. Under cross-
examination he
confirmed that he was still using spectacles of the same strength and
that his eyesight had not deteriorated.
[113]
The second defendant further stated that the writing was so small
that he decided not to seek to read it. However, in cross-
examination he conceded that he could read without his glasses. This
was not surprising. It was during daytime, in a court with
proper
lighting and where his attention was pertinently drawn to the caption
termed SURETYSHIP.
[114]
The second defendant testified that there was a streetlight ten to 12
metres away and that the house of Mr Daniels had exterior
lights. He
further confirmed never reading the documentation and only signing
the parts marked with an “x” by Mr Daniels.
However, he
stated that he trusted Mr Daniels who told them that they were
signing an application form for a loan and that the
women had to give
their permission for such a loan.
[115]
The second defendant confirmed that he and the first defendant
visited Mr Daniels, when they were no longer members of the
close
corporation to have their names removed. He testified that he was
unaware of the legal implication of being a member of the
close
corporation as opposed to a person in his personal capacity and that
he wanted to ensure that ABSA Bank Limited was aware
that he was no
longer a member and that they would not hold him liable for the debt
of the corporation.
[116]
Clearly the defendants were unaware of their legal position and
believed that they had been released of any legal obligations
and
right arising from being members of a close corporation. However, it
is trite that a surety remains bound even though he is
no longer a
member of a close corporation.
Legal
principles
[117]
The case of Standard Bank of South Africa Ltd v Diamini
2013 (1) SA
219
(KZD) is instructive. In that matter the
National Credit Act did
apply but it was held that the common law pertaining to iustus error
was still relevant. In that case Mr Diamini was completely
illiterate
and it was held that there was a positive duty on the bank and its
representatives to inform him of all relevant facts.
It was also held
that the credit agreement itself must spell out all Mr Dlamini’s
rights and obligations.
[118]
In Home Fires Transvaal CC v Van Wyk and another
2002 (2) SA 375
(W)
at 381 the full bench held-
“
A
party will not be held bound by his signature to a contract which he
has not read, where the other party knew that he had not
done so, was
not misled by the signature and only had himself to blame for the
other’s ignorance of the contents of the document.
(See Van Wyk
v Otten
1963 (1) SA 415
(O) at 418A - 419H; Payne v Minister of
Transport
1995 (4) SA 153
(C) at 159G- 160IJ
[119]
The question to be answered is: what is the position of a party who
signs an agreement without reading it? In the instant
case, the
suretyship that the defendants signed, boldly declared at the top of
the document that it is a suretyship. However, the
uncontested
evidence of the defendants was that the nature of the documents that
they were signing was never explained to them
by Mr Daniels and that
he simply asked them to sign where crosses had been inserted by him
on the documents.
[120]
According to both defendants, the third defendant had informed them
that the signature of the document was a mere formality
and the first
defendant testified that Mr Daniels stated the same. However, neither
Mr Jacobs nor Mr Daniels testified - Mr Daniels
because he is
overseas and Mr Jacobs, presumably because he would have been a
hostile witness. However, no objection was made to
the leading of
hearsay evidence and some of it was solicited in cross-examination.
Mr Jacobs and Mr Daniels were also not called
by the plaintiff who
merely argued on the probabilities.
[121]
It is common cause that the circumstances in which the documentation
was signed were not ideal and that Mr Daniels did not
inform the
defendants what the precise nature of the documents was that they
were asked to sign. Given these facts, can the defendants
be held to
the suretyships that they signed?
[122]
In the matter of Brink v Humphries & Jeweii (Pty) Ltd
2005 (2) SA
419
(SCA) the defence of iustus error was upheld. It contains a very
useful summary of the circumstances in which the caveat
subscriptorxu\e
will not apply.
[123]
In paragraph [2] thereof, reference was made to the locus ciassicus
on the doctrine of quasi-mutual assent, namely the case
of George v
Fairmead (Pty) Limited
1958 (2) SA 465
(A) 470B-E where the following
was stated: -
“
When
can an error be said to be Justus for the purpose of entitling a man
to repudiate his apparent assent to a contractual term?
As / read the
decisions, our Courts, in applying the test, have taken into account
the fact that there is another party involved
and have considered his
position. They have, in effect, said: Has the first party - the one
who is trying to resile - been to blame
in the sense that by his
conduct he has led the other party; as a reasonable man, to believe
that he was binding himself? ... If
his mistake is due to a
misrepresentation, whether innocent or fraudulent, by the other
party, then, of course, it is the second
party who is to blame and
the first party is not bound"
[124]
Even an innocent misrepresentation by the other party suffices.5
5
[125]
in Brink v Humphries & Jeweli (Pty) Ltd supra at paragraph [3] it
was held that in deciding whether a misrepresentation
was made, all
the relevant circumstances must be taken into account.
[126]
On the defendant’s version of the events, they did not expect
any suretyship agreement or any clause that related to
a suretyship
agreement in the documents presented to them by Mr Daniels, as he
never told them that he was asking them to sign
suretyships. This
could not be gainsaid by the plaintiff, as Mr Daniels was not
available to testify as he is currently working
in Australia. When
all hearsay evidence is discounted, the fact remains that the
documents were given to them without any explanation
from Mr Daniels
with crosses (which were still clearly visible on the court’s
copies) indicating where they had to sign.
It is also a fact that the
signing procedure took only about five minutes and that the
defendants did nor read the documents.
[127]
To some extent the circumstances in which the defendants signed the
suretyship agreements are reminiscent of the circumstances
in Brink v
Humphries & Jewell (Pty) Ltd supra at pages 422-423 paragraph
[6]. The evidence of the defendant in chief was as
follows: -
Did
you expect any suretyship agreement or any clause that relates to a
suretyship agreement in this document? - No.
Why
not? - It has been years that / have been filling in application
forms, specifically for banks and bonds. You fill in application
form, it always without exception they come back to you, they tell
you we need A, B, Cf D and one of them to be a surety: It was
then
prepared and make an appointment with you, you sign the surety form.
They
did not include any suretyship agreement? - Yes.
But
they granted the, did the credit, without a suretyship agreement?-
Yes.
Just
finally; was it ever your intention to enter into a suretyship
agreement? - No.
And,
in your opinion, did you enter into a suretyship agreement? -No.
What
is your opinion, what did you sign here in this document in this
document? - Application for credit, as / did with numerous
banks and
institutions, they will look at it and come back to you and tell you
if they need any further documentation. ’
The
following passages appear in cross-examination:
'Would
you not agree that the paragraph at the bottom is most conspicuous,
one of the first things you recognise on this document,
since it is
different print and it is in bold and it is in capital letters? -
Well\ to be quite honest, the first thing / saw was
credit
application form.
[128]
In the instant case, both defendants did not have a matriculation
qualification and were clearly unaware of bank procedures
even though
they were members of a close corporation. It was their first foray
into any business enterprise and their evidence
was that they relied
wholly on the expertise of Mr Jacobs, the third defendant. The third
defendant was considered to be knowledgeable
about bank procedures.
It was the third defendant who told the first and second defendants
that the signing of documentation was
a mere formality. As stated, Mr
Daniels omitted to say anything about the nature of the documents to
them which he handed to the
defendants to sign ( when the hearsay
evidence that he stated that it was a mere formality is excluded).
They were aware of the
fact that the bank would require some form of
security but the third defendant had assured the first defendant and
second defendant
that he had put up his second house as security.
[129]
As stated, the third defendant was not called as a witness, neither
by the first and second defendants nor by the plaintiff.
Both
defendants, however, made a favourable impression on the court.
[130]
They were present when the other defendant gave evidence but it
struck the court that the detail that they gave could not
have been
fabricated and that, although their versions were similar, small
details were added by each of the defendants to their
own versions
which was indicative of a true recollection of what transpired and
which would be difficult to fabricate. For example,
the second
defendant recalled that a dog had accompanied Mr Daniels when he
exited from the gate of his residence. The Court found
them to be
honest and credible witnesses. Their versions accorded with the
probabilities, given their level of education and lack
of knowledge
of business transactions. They did not contradict themselves or each
other.
[131]
On an analysis of the probabilities, the preponderance of
probabilities favour the defendants’ version, and could not
be
gainsaid by the plaintiff. It was clear that both defendants did not
have the funds to sign any suretyship agreement, and they
were
adamant that they would never have done so. No cogent evidence was
advanced to counter the defendants’ version.
[132]
However, there is a second leg to the inquiry as to whether a
signatory’s mistake is justifiable because it was induced
by
the other contracting party, which is not a subjective enquiry. This
enquiry is objective, namely: would a reasonable person
have been
misled in the circumstances as was held in the matter of Sonap
Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA)
(Pty) Ltd) v
Pappadogianis
[1992] ZASCA 56
;
1992 (3) SA 234
(A). Harms JA at pages 239I-240B
summarised the enquiry in cases such as the one in issue: -
“
In
my view, therefore\ the decisive question in a case like the present
is this: did the party whose actual intention did not conform
to the
common intention expressed\ lead the other party; as a reasonable
man, to believe that his declared intention represented
his actual
intention? Compare Corbin on Contracts (one volume edition) (1952) at
157. To answer this question, a three-fold enquiry
is usually
necessary, namely, firstly, was there a misrepresentation as to one
party's intention; secondly; who made that representation;
and
thirdly, was the other party misled thereby? See also Du Toit v
Atkinson's Motors Bpk
1985 (2) SA 893
(A) at 906C-G; Spindrifter
(Pty) Ltd v Lester Donovan (Ptv) Ltd
1986 (1) SA 303
(A) at
3161-317B. The last question postulates two possibilities: Was he
actually misled and would a reasonable man have been misled?
Spes
Bona Bank Ltd v Portals Water Treatment South Africa (Pty) Ltd
1983
(1) SA 978
(A) at 984D-H, 985G-H."
[133]
It is trite that a misrepresentation can be made by way of an omissio
or a commissio. In the instant case, the misrepresentation
was made
by way of an omission on the part of the bank representative to
fulfil his duty to inform the defendants as to what the
documents
were which they were required to sign. In this regard, reference is
made to the case of Spindrifter (Pty) Ltd v Lester
Donovan (Pty) Ltd
1986 (1) SA 303
at page 318 where the Appeal Court quoted from the
matter of Du Toit v Atkinson’s Motor Bpk
1985 (2) SA 893
(A) at
906C-G where the essential facts and the legal consequences were
succinctly stated by Van Heerden JA:-
“
Samevattend
is die posisie dan soos volg: Die advertensie was daarop gerig om die
indruk te verwek dat die voertuig 'n bepaalde
attribuut gehad het, en
om aanbiedinge vir die aldus omskryfde koopgoed uit te lok. Op
sterkte van die indruk, waarvan die respondent
bewus was, het die
appellant die voertuig gekoop. Deurniks te se aangaande die effek van
para 6 van die dokument nie, het die respondent
se werknemers...die
vertroue by die appellant verwek dat die dokument nie strydig met die
advertensie was nie en derhalwe nie aanspreeklikheid
uitgesluit het
nie ten opsigte van voorstellings daarin vervat. Handelende in
hierdie vertroue het die appellant die dokument geteken,
onbewus van
die inhoud of effek van para 6.
Na
my mening het die respondent dus deur stilswye die appellant mislei,
en is sy dwaling aangaande die dokument wel Justus error.
Of die
appellant as gevolg daarvan hoegenaamd nie aan die bepalings van die
dokument gebonde is nie, is nie tersake nie en kan
tersy gelaat word.
Op sy beste vir die respondent is die appellant nie gebonde nie aan
para 6 insoverre dit aanspreekfikheid uitsiuit
vir voorsteflings
vervat in die advertensie(However, the facts of this case differ from
the facts of the current case as the advertisement
referred to
contained a representation which ran contrary to the document that
was signed - a fact which the appellant in that
case could not
foresee.)
[134]
Goudsmit Pandecten-Systeem I para 52 at 119 states in this context: -
“
Dolus
mafus kan ook zwijgen zijn, waar spreken pficht is."
[135]
Given the circumstances in which the defendants were requested to
sign the documents, it cannot be stated that a reasonable
man would
have acted differently. It is human nature not to read contracts
(specifically when set out in miniscule font) in circumstances
where
the signatories are under the impression that the document can have
no serious ramifications and particularly in circumstances
less then
ideal, after 20h00, outside a residential house, on the roof of a car
within the time span of approximately five minutes.
Even though it
was put to both defendants during cross-examination that credit would
not be granted to a legal entity without some
form of security, which
the defendants conceded, they stated that they were under the
impression that such security had been granted
by the third
defendant.
[136]
Even though the defendants could have insisted on reading the
documentation carefully, the circumstances under which the defendants
were asked to sign the documentation, were far from ideal. It lent
itself to a rushed signing of the parts marked with an “x”,
which is precisely what the defendants did, and what Mr Daniels
requested them to do.
[137]
In the matter of Brink v Humphries & Jewel/ (Pty) Ltd supra at
page 426 paragraph [11] the following was held: -
‘
It
is not reasonable for a party who has induced a justifiable mistake
in a signatory as to the contents of a document to assert
that the
signatory would not have been misfed had he read the document
carefully; and such a party cannot accordingly rely on the
doctrine
of quasi-mutual assent." (emphasis added)
[138]
While courts should come to the rescue of parties who have been
misled or induced to enter into agreements of the kind under
discussion, they should be mindful of what was stated in Nationals
Overseas Distributors Corporation (Pty) Ltd v Potato Board
1958 (2)
SA 473
(A) at 479G - H:
“
Our
law allows a party to set up his own mistake in certain circumstances
in order to escape liability under a contract into which
he has
entered. But where the other party has not made any misrepresentation
and has not appreciated at the time of
acceptance
that his offer was being accepted under a misapprehension; the scope
for a defence of unilateral mistake is very narrow,
if it exists at
all At least the mistake (error) would have to be reasonable (Justus)
and it would have to be pleaded. In the present
case the plea makes
no mention of mistake and there is no basis in the evidence for a
contention that the mistake was reasonable.
[139]
In this regard, the question arises as to whether the defendants’
pleas are defective in that they have not expressly
pleaded a defence
of iustus error. However, the facts which they pleaded indicate that
they signed the suretyships without knowing
the nature thereof
because it was not explained to them by Mr Daniels. Once this is so,
the defendants have pleaded an omissio
which led them to
misunderstand the nature of the documentation being signed. These
factors were also fully canvassed in evidence
and cross-examination.
[140]
However, the question can legitimately be posed is whether it was not
the third defendant who caused the first and second
defendants to be
misled as he told them that they had to go to Mr Daniels to sign
applications for credit. In this regard the matter
of Slip Knot
Investments 777 (Pty) Ltd v Du Toit
2011 (4) SA 72
(SCA), discussed
in the article authored by CJ Pretorius entitled Third Party Fraud
Inducing Material Mistake Slip Knot Investments
777 (Pty) Ltd V Du
Toit 2(m
4 SA 72
(SCA) PELJ/PER 2011 Volume 14 No 7, is instructive.
The Supreme Court of Appeal was not prepared to uphold a plea of
iustus error
where the mistake in question was caused by third
parties and not the contract assertor.
[141]
In the instant case, the third defendant could be stated to have
acted as Mr Daniel’s agent when he was tasked to tell
the first
and second defendants to go to Mr Daniel’s residence. However
it is clear that he was, de facto, the close corporation
and the
defendants’ agent. The evidence was to the effect that Mr
Daniels, himself, did not ask the defendants to come to
his home but
that he clearly expected them, and had the documentation available
for them to sign. Why they were requested to sign
documents outside
Mr Daniels’ home after 20h00 at night, as testified by the
defendants, is unclear. Mr Daniels never sought
to clarify to the
defendants what the nature of the documents were that they were
signing. The court is entitled to take into account
that he did not
explain the nature of the documentation and merely asked the
defendants to sign it (if it is accepted that everything
else he
might have said is hearsay.)
[142]
In the article by CJ Pretorius entitled Third Party Fraud Inducing
Material Mistake Slip Knot Investments 777 (Pty) Ltd V
Du Toit
2011 4
SA 72
(SCA) at page 190/261 paragraph 3.2 the following is stated:
“
In
delivering the judgement of the Supreme Court of Appeal, Maian JA
affirmed that generally a contractual party is not obliged
to inform
the other party of the terms of the proposed agreement,
6
unless there are provisions that could not reasonably have been
expected to be part of the contract.
7
(emphasis
added)
[143]
In the instant case, given the unfamiliarity of the defendants with
bank documentation and the circumstances under which they
were
requested to sign the documentation, it can be said that the
suretyship agreements were “hidden" amongst the documents.
However, where parties are directors of companies, trustees of trust
or, for example, members of a close corporation, a stricter
test is
applied (page 201/261 of the said article by CJ Pretorius): -
“
In
this regard Slip Knot perhaps suggests a stricter approach than was
adopted in Brink to instances where directors of companies,
members
of dose corporations, trustees of trusts and the like sign
contractual documents relating to the dealings of the entity
represented. ”
[144]
Sub cap. Commentary in the said article Third Party Fraud Inducing
Material Mistake Slip Knot Investments 777 (Pty) Ltd V
Du Toit
2011
4 SA 72
(SCA) the following is stated at page 191/261 paragraph 4: -
“
There
is authority for both the decision in the court a quo and the Supreme
Court of Appeal. It is, however, suggested that the
approach of the
Supreme Court of Appeal is preferable, but the question that begs is
if in all instances where the material mistake
of a contractant has
been caused by the fraud of a third party contractual liability
nevertheless should lie as a matter of strict
principle. After all,
one is potentially dealing with two innocent parties
8
the contract denier's mistake has been induced by the fraudulent
conduct of a third party, while the reliance of the contract assertor
has been caused by the contract denier Why should the contract
assertor necessarily be in a preferential position to the contract
denier? As will be suggested\ much depends on which approach to
material mistake weighs heavier as a matter of legal policy,
9
but that in itself should not preclude exceptions to the general rule
in appropriate circumstances. ”
[145]
At page 193/261 of the same article, the following is stated: -
Moreover
virtually in all instances of material mistake induced in this manner
the negligence of the contract denier has in the
main consisted of
not reading a contractual document before signing it.
10
The
courts vary in their interpretation of such conduct; at times
labelling it negligent, while at other times not
11
Focusing on negligence simply does not seem to take the matter any
further: if the contract denier was not negligent and actually
read
the contractual document before signing it; then surely there would
have been no mistake to speak of. Rather, the point is
that the
fraudster has managed to lull the mistaken party into not bothering
to read a contractual document before signing it.
Should the tatter
be penalised simply because the deceiver has succeeded in
perpetrating the fraud?
12
it is suggested that in the light of the apparent difficulties
surrounding negligence within this context it seems best to leave
it
out of the enquiry altogether:
13
[146]
However, the causa causans of the defendants’ being misled, was
the conduct of their own chosen representative whom
they initially
trusted implicitly. The court is bound, in the circumstances of this
case, by the Supreme Court of Appeal judgment
Slip Knot Investments
777(Pty) Ltd supra.
CONCLUSION:
[147]
In the premises, it is held that the defendants are liable to pay the
amount due and owing to the Plaintiff. That Mr Jacobs
contributed to
their ignorance is clear because he caused the defendants to sign any
documents presented to them willy nilly, in
the faith that he knew
what he was doing, and in the belief that they were only going to
sign loan applications and that it was
a mere formality. Although, as
set out above, it can be stated that he acted as Mr Daniels’
agent, he was, at all relevant
times, primarily acting as well as the
defendants’ agent and the close corporation’s agent and,
to the knowledge of
the defendants, was applying for a loan to
finance a truck. Hence, for example, he bound the other members when
signing the instalment
sale agreement with their consent.
[148]
The suretyship agreements contained a clause that the defendants
would pay attorney and client costs in the event of breach
of
contract.
[149]
Given the fact, the defendants did not read the suretyship
agreements, the court is not willing to grant a costs order on
the
attorney and client scale. Given the ignorance of the defendants,
their attention should have been drawn specifically to this
clause by
Mr Daniels.
[150]
However, the plaintiff has failed to prove which amount is due and
payable to it. As set out above, it is clear from the certificate
of
balance annexed to the pleadings that no amount was subtracted for
the value of the Nissan truck, and in the absence of such
evidence,
the court is in no position to ascertain what amount the defendants
allegedly owe the plaintiff. It matters not that
this issue has
allegedly been settled. Prima facie it appears to the court, on a
reading of the detailed certificate of balance
that there was no
settlement. The plaintiff is asking for exactly the amount still
allegedly owing in terms of the instalment sale
agreement without any
regard being had to at least the ceded loan account to the bank, and
the value of truck, which, it is common
cause, was returned to the
plaintiff. Were it not for the allegation that the quantum had been
settled, which counsel for the defendants’
cannot confirm,
absolution of the instance would have been granted. (From documents
which were discovered, but for obvious reasons
not dealt with in
evidence, the truck was sold for a higher amount than that which is
alleged to be due and owing by the first
and second defendants).
Order
In
the event, the following order is made: -
[1]
The plaintiff is ordered to state, on oath, within 5 court days from
the date of this order and judgment, whether the returned
truck has
been sold, and if so, for which amount. If it was not sold, the
plaintiff is ordered to state why it did not mitigate
its losses.
[2]
It should also be clarified why interest has been levied on this
amount from the 1st of June 2011, whereas the letters of demand
gave
the first and second defendants ten business days within which to
react and in circumstances where the letter of demand to
the second
defendant was sent to the wrong docicttum citandi et executandi.
Furthermore, in the minutes of the pre-trial, it is
specifically
sated: “No settlement could be reached on the disputes”.
[3]
The plaintiff is further ordered to make full disclosure of all
amounts received by it in respect of the instalment sale agreement
entered into with PRATZ TRADING CC which forms the subject matter of
this litigation.
[4]Upon
receipt of such an affidavit, a final order will be made by the
court. Counsel may approach the judge in chambers.
MM
jansen aj
ACTING
JUDGE OF THE HIGH COURT
ATTORNEYS
FOR THE PLAINTIFF
SMIT
SEWGOOLAM INCORPORATED
2
Ayonwold Road
SAXONWOLD
Tel:
(011)646 0006
Fax:
(011)646 0016
Ref:
HHS/MP/1003907
c/o
PRETORIUS LE ROUX INCORPORATED Third Floor 339 Hilda Street
HATFIELD
Docex 1, Hatfield
Tel:
(012) 342 1797
Fax:
(011)342 1796 Ref: TJ Le Roux/TH0370
COUNSEL
FOR THE PLAINTIFF Advocate Nic Maritz
FOR
THE FIRST DEFENDANT AND SECOND DEFENDANT
MA
CHRISTIAN ATTORNEYS
C/o
B CEYLON ATTORNEYS
Suite
1-C, 1st Floor
ILO
Building
347
Hilda Street
Cnr
Hilda & Arcadia Streets
HATFIELD
Pretoria
Tel:
(012) 806 6780
Fax:
(012) 806 6380/086 620 9274
Ref:
WIL-001(2)-MA CHRISTIAN
COUNSEL
FOR THE FIRST DEFENDANT AND SECOND DEFENDANT Advocate Kehrhahn
1
Maasdorp
v Graaff-Reinet Board of Executors
(1906 -
1909) 3 Buch AC 482
at 490;
Du
Plessis v Estate Teich Brothers
1914 CPD 48
at 50;
Neon
and Cold Cathode Illuminations (Pty) Ltd v Ephron
1978 (1) SA 463
(A) at 471.
2
Maasdorp supra
at page 490.
3
Union Government v Van derMerwe
1921 TPD 318
322; Mahomed v Lockhat
Bros
S
Co Ltd
1944 AD 230
238;
Business Buying and Investment Co Ltd v Linaae
1959
3 SA 93
(T)
95-96; Trans-Drakensberg Bank Ltd v The Master
1962 4 SA 417
(N)
422; see also Caney Suretyship 51; Lotz
"Suretyship”203.
4
Section 3(1)
of the
Consumer Protection Act 68 of 2008
.
5
See also
Spindrifter (Pty) Ltd v Lester Donovan (Pty) Ltd
1986 (1) SA 303
(A) at 3161-J
6
With
reference to
Constantia
Insurance Co Ltd v Compusource (Pty) Ltd2
005
4 SA 345
(SCA) para 19.
7
With
reference to
Afrox Healthcare Bpk v Strydom
[2002] ZASCA 73
;
2002 6 SA
21
(SCA) para 36; see also
Fourie v Hansen
2001 1 All SA 510
(W) 516.
See also
Potgieter v British Airways pic
2005 3 SA 133 (C) 140
8
See Christie
and Bradfield
Christie's The Law of
Contract
184; Floyd and Pretorius 1992
THRHRQ73.
9
Christie and Bradfield
Christie's The Law of Contract
184 emphasise "the value, especially in commercial matters, of
being able to assume that the signatory is bound by his signature".
10
The
resulting mistake is usually one regarding the nature of the
juristic act in question or rather an
error
in negotio
(see Joubert
Genera! Principles of the
Law of
contract /6,
//; van aer ivierwe
era/
contract:
uenerasprinciples
zo; Muicntson
ana Pretorius
Law of Contract
88).
11
Contrast
e.g.
Standard Credit Corporation Ltd v
Naicker
1987 2 SA 49
(N) 51 and
further
with
Kok
v Osborne
1993 4 SA 788 (SE) 799-800.
12
See Kerr Principles of the Law of Contract 278-279.
13
See further
Pretorius
2011b
THRHR
190-191
;
Lewis 1987
SALJZ7S.