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[2012] ZAKZPHC 10
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Astill v Lot 54 Falcon Park CC (AR 447/2011) [2012] ZAKZPHC 10 (20 February 2012)
Case
No AR 447/2011
IN
THE HIGH COURT OF KWAZULU-NATAL, PIETERMARITZBURG
REPUBLIC
OF SOUTH AFRICA
In
the matter between :
CHRISTOPHER
LIONEL ASTILL
…....................
Appellant
and
LOT
54 FALCON PARK CC
….......................
Respondent
_____________________________________________________
Delivered : FEBRUARY
2012
J U D G M E N T
_____________________________________________________
KOEN J :
INTRODUCTION :
[1] This is an
appeal against a judgment for payment of various amounts of rental,
water charges, rates and insurance owed by Two
Be Sales Thirty One CC
trading as Moulded Comfort Products (‘the principal debtor’)
for which the appellant (the defendant
in the Court
a quo)
had
allegedly bound himself as surety and co-principal debtor.
[2] The parties
shall be referred to as in the Court
a quo
.
BACKGROUND
:
[3] The defendant
was previously a member of the principal debtor. His membership
ceased on or about 15 October 2004. The principal
debtor occupied
premises at Unit 4, Falcon House, 10 Lanner Road, New Germany. It did
so in terms of a written agreement of lease
concluded on 29 August
2001 for a period of three years from 1 September 2001 to 31 August
2004 (‘the first lease’).
From 1 September 2004 to 31
August 2007 it occupied the premises in terms of a written lease
concluded on 30 July 2004. This lease
also reflected that Mr K.R
Hannaford, one of the members of the principal debtor, would be a
‘guarantor’. From 1 September
2007 to 31 August 2009 the
principal debtor occupied the premises in terms of a written lease
agreement (‘the last lease’)
executed on 18 July 2007,
reflecting the same Mr Hannaford as guarantor. At the time of
concluding the first lease, the defendant
signed a written deed of
suretyship, upon which the plaintiff’s claim against him is
based. The rental and other charges
for which the defendant is sought
to be held liable, arise in terms of the last agreement of lease,
specifically the period from
1 March 2009 to 31 August 2009.
THE ISSUE
:
[4] The issue for
determination is whether the obligations of the principal debtor in
terms of the last lease are covered by the
terms of the deed of
suretyship concluded in 2001.
THE OPERATIVE
TERM IN THE DEED OF SURETYSHIP:
[5] Paragraph 1 of
the deed of suretyship provided that the defendant bound himself unto
and in favour of the plaintiff as creditor
for: -
‘
The
due payment on demand by the Creditor of all monies which the
Principal Debtor may now or from time to time hereafter owe to
the
Creditor and arising from an agreement of lease executed by Principal
Debtor with the Creditor.’
THE FINDING OF
THE COURT
A QUO
:
[6] The learned
magistrate held that the deed of suretyship did include the amounts
for which the principal debtor is liable, as
claimed in the
particulars of claim.
[7] The learned
magistrate concluded that:
‘
The
words “from time to time hereafter, owe to the Creditor”,
foresees a future between the plaintiff and defendant
and does not
restrict the plaintiff to the 2001 lease specifically. If the
intention was for the suretyship agreement to be restricted
to the
2001 lease, provision should have been made for this clearly in the
suretyship agreement.
The rest of the
words in paragraph 1 being, “and arising from an agreement of
lease executed by the principal debtor and creditor”.
The word
“an” as opposed to “the” is used and can
easily be interpreted to include further leases. The
word “executed”
read in context of the entire sentence does not specifically refer to
a lease already entered into,
as the parties may have further
executed leases in the future and this was foreseeable by the
defendant.’
THE APPROACH
TO BE ADOPTED WHEN INTERPRETING A DEED OF SURETYSHIP:
[8] A deed of
suretyship must be construed strictly.
[9] In
SA General
Electric Co (Pty) Ltd v Sharfman and Others NNO
1981 (1) SA 592
(W) at 597A to B, the following was said:
‘
In
construing the deed of suretyship it is as well to remember that
broadly speaking a suretyship receives as a rule a somewhat
strict
interpretation, so that it may not be extended beyond what was
expressed or was at least covered by the intention and sense
of the
words of the suretyship; see
Voet
46.1.12; Wessels
The
Law of Contract in South Africa
vol 2 paras 3891 - 3894. The surety is a favoured debtor and the
creditor is bound to express clearly the extent of the surety's
liability. The surety takes upon himself a debt which is not his own
and therefore he is not likely to intend to charge himself
by
implication with more onerous duties than are expressed in the
contract.’
[10] The paragraphs
from Wessels referred to were quoted with approval in W
ood
Brothers v Gardner
(1886) 5 EDC 189
at 191. They were also
referred to in this Division in
Van Rensburg v City Credit (Natal)
(Pty) Ltd
1980 (4) SA 500
(N) at 507G – H where Kriek J
(with whom Broome J concurred) quoted with approval from the judgment
of Barry J in
Wood Bros v Gardner
(
supra
) at 191, where
the following was stated:
‘…
the
extent of a surety’s liability must be expressed by him, or
necessarily comprised in the terms of his contract. This contract
is
to be construed strictly – that is, the obligation is not to be
extended to any other subject, to any other person, or
to any other
period of time than is expressed or necessarily included in the
contract.’
[11] In
Patel v
Patel and Another
1968 (4) SA 51
(D) at 56A-B, Caney J held:
‘
If
there is ambiguity and interpretation leaves it in doubt whether the
surety’s obligation extends as far as the creditor
would have
it, it is the creditor’s fault that he has not made express
provision for this in the contract, to which (in the
absence of
admissible extrinsic evidence) must be applied the maxim
verba
contra stipulatorem
interpretanda
sunt
.’
THE
PLAINTIFF’S CASE
:
[12] Notwithstanding
Mr Holmes of the plaintiff having testified that the principal ‘had
renewed leases’ he elsewhere,
under cross-examination testified
that ‘each time it was a new lease’. Counsel for the
plaintiff contends that the
plaintiff’s case was always
presented on the basis that the leases subsequent to the first lease
were new leases to which
the deed of suretyship applied, and that
insofar as the learned magistrate concluded that they were renewals,
this was incorrect.
[13] I shall accept
in this judgment, on the basis of the plaintiff’s submission,
that the subsequent and last leases were
separate and new leases.
THE
INTERPREATION TO BE GIVEN TO THE RELEVANT MATERIAL PROVISIONS OF THE
DEED OF SURETYSHIP
:
[14] The operative
words in the deed of suretyship indicating the principal debt secured
by the suretyship, are that the defendant
binds himself to payment of
all monies ‘arising from an agreement of lease executed by
principal debtor with the creditor.’
The word ‘executed’
is employed as a verb, not an adjective. It could therefore only
relate to any agreement of lease
which had already been executed, and
not to refer to executed leases which might follow in the future
between the creditor and
the principal debtor. If the intention was
to include leases to be executed in the future, then the term in the
deed of suretyship
should simply have referred to ‘any future
leases concluded between the parties’, or words to that effect.
[15] The reference
to monies which ‘may now or from time to time hereafter’
be owing, is qualified by the words ‘arising
from an agreement
of lease executed by principal debtor with the creditor’, and
therefore are not decisive. The words referring
to monies which may
‘from time to time hereafter’ be owing cannot refer to
all amounts which at any stage thereafter
may from time to time be
owing also in terms of subsequent leases not yet executed.
Interpreted restrictively, it includes only
such amounts as may
become owing ‘arising from an agreement of lease executed by
the principal debtor with the creditor’.
[16] Had the
definite article ‘the’ been used to describe the
agreement of lease executed, as opposed to the indefinite
article
‘an’, then it might have been clearer that the first
lease was the one intended to be referred to. Likewise,
if that
agreement of lease had been identified with reference to the date of
signature, matters would have been placed beyond any
doubt.
[17] Conversely, if
it was the intention to bind the surety in respect of any and all
agreements of lease which may thereafter be
executed by the principal
debtor with the creditor, then one would have expected the word ‘an’
to rather have referred
to ‘any’ and then the singular
form ‘agreement’ would not have been used, but the plural
‘agreements’.
[18] Unfortunately
however, the term in the agreement contained none of the wording in
either paragraphs [16] or [17] above. The
court has to ascertain the
intention of the parties, as best as it can, from the words used.
[19] In argument, it
has been stressed that the meaning of the wording in clause 1 of the
deed of suretyship should not be sought
in isolation and that it must
be interpreted against the background of all the provisions of the
deed of suretyship. Specifically,
reference was made to clause 4
dealing
inter alia
with leniency or extensions of time which
may be granted, which provides:
‘
Any
leniency or extension of time which may be granted to the Principal
Debtor, or a variation or alteration of the said agreement
or future
agreement between Principal Debtor and the Creditor shall not be
construed as a waiver of any of the Creditor’s
right or claims
…’.
[20] The submission
advanced by the plaintiff’s counsel is that as clause 4 refers
to the ‘said agreement or future
agreement’, the deed of
suretyship in referring to ‘an agreement of lease executed by
Principal Debtor with the Creditor’
must include any future
‘agreement of lease executed by Principal Debtor with the
Creditor.’
[21] Clause 4 deals
with the issue of leniency or extension. It appears that in preparing
the deed of suretyship, words were carried
forward in clause 4 which
are not consistent with the rest of the document. The operative
provision defining the obligations to
be covered by the deed of
suretyship, is clause 1 and not clause 4. Indeed if clause 4 dealing
with leniency or extensions of time
saw the need to refer not only to
the ‘said agreement’ but also to a ‘future
agreement’, then the omission
of any reference to any ‘future
agreement’ in clause 1 would suggest, all the more, that the
claims covered by the
suretyship were confined to those arising from
the first agreement of lease which had been executed only and not
extend to future
agreements.
[22] Such an
interpretation would also not necessarily render the words ‘or
future agreement’ in clause 4 superfluous;
one of the basic
rules of interpretation to be guarded against. Clause 4 dealt with
any variation or alteration of the said agreement
or a future
agreement. It is equally consistent with the notion that its terms
covered not only variations of the first lease,
but if the first
lease was varied or altered in any way hence giving rise to a future
agreement in revised form between the Principal
Debtor and the
Creditor during the currency of the first lease, variations or
alterations of such revised future agreement as well.
[23] The creditor
had it within its powers to stipulate clearly what was intended to be
covered by the deed of suretyship.
[24] The learned
magistrate in my view erred in seemingly being influenced by
considerations such as that ‘if the intention
was for the
suretyship agreement to be restricted to the 2001 lease provision
should have been made for this clearly in the suretyship
agreement.’
If anything, if the suretyship was to apply to future leases, not
executed at the time the suretyship was executed,
then provision
should have been made for this clearly in the suretyship agreement.
[25] At best for the
plaintiff there was an ambiguity in the deed of suretyship. If the
intention was for the suretyship agreement
to also include any
subsequent lease agreements, then this should have been stated by the
creditor. It could have done so expressly
or possibly by referring to
‘any’ agreement of lease executed or to be executed, or,
at the very least by referring
to ‘agreement
s
’ of
lease ‘executed or to be executed in the future’ by the
principal debtor.
[26] In the light of
the ambiguity, the clause must be interpreted against the interests
of the plaintiff which had it within its
powers to state exactly what
it intended.
[27] It follows that
the learned magistrate erred in finding that the debt allegedly due
by the principal debtor to it was covered
by the deed of suretyship.
[28] There was also
a cross-appeal but in view of the conclusion to which I have come it
is not necessary to consider the cross-appeal
further.
ORDER
:
[29] The following
order is granted:
(a) The appeal
succeeds with costs;
(b) The judgment of
the Court
a quo
is set aside and substituted with an order
that the plaintiff’s claim be dismissed with costs, such costs
to include counsel’s
fees where applicable.
_______________________
STRETCH AJ :
I
agree.
_______________________
DATE OF JUDGMENT
:
FEBRUARY 2012
DATE OF HEARING :
20 FEBRUARY 2012
COUNSEL FOR
APPELLANT :
MR D. G. TOBIAS
INSTRUCTED BY :
NAFEESA KADWA AND ASSOCIATES, DURBAN
C/O RANDLES INC,
PIETERMARITZBURG
COUNSEL FOR
RESPONDENT
: MS S. J. LINSCOTT
INSTRUCTED BY :
McCLUNG MUSTARD, PINETOWN,
C/O GEYSER, DU TOIT,
LOUW AND KITCHING INC,
PIETERMARITZBURG