Everite Building Products (Pty) Ltd v Cassim (121/2005) [2006] ZAFSHC 110 (16 February 2006)

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[2006] ZAFSHC 110
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Everite Building Products (Pty) Ltd v Cassim (121/2005) [2006] ZAFSHC 110 (16 February 2006)

IN THE HIGH COURT
OF SOUTH AFRICA
(ORANGE FREE STATE
PROVINCIAL DIVISION)
Case No.: 121/2005
In
the case between:
EVERITE BUILDING
PRODUCTS (PTY) LTD
Plaintiff
and
CASSIM, CHOTHIA
Defendant
JUDGMENT:
EBRAHIM, J
_____________________________________________________
HEARD ON:
7, 8 & 10 FEBRUARY 2006
_____________________________________________________
DELIVERED ON:
16 FEBRUARY 2006
_____________________________________________________
[1] The plaintiff sues
the defendant on the basis of a written Deed of Suretyship signed by
the defendant on the 7
th
of May 2002 for the unpaid purchase price in the sum of R127 675,17
of goods sold and delivered by it to Kroon Build Centre (Pty)
Ltd
(hereinafter referred to as “Kroon”) during September - October
2003. The plaintiff alleges that the defendant bound himself
as
surety in solidium and co-principal debtor with Kroon for the due
payment of the latter’s indebtedness to plaintiff.
[2] The Deed of
Suretyship was attached to the summons as annexure “B” and
provides as follows:
“
1. I/We the undersigned
CASSIM
CHOTHIA
I.D.No.:
551105 5025 08 5
do hereby bind myself/ourselves, as
surety/ies and co-principal debtor/s jointy and severally and in
solidium with:
for
and behalf of:- KROON BUILD CENTRE (PTY) LTD
(hereinafter
referred to as “The Principal Debtor/s”)
unto
and in favour of the Creditor or any of its associated, subsdiary,
divisions and agent companies or its successors in title or
assigns
for the due and punctual payment of all amounts due payable or owing
by the Principal Debtor/s to the Credit or for any reason
whatsoever.”
The defendant affixed
his signature to the Deed of Suretyship after making the following
endorsement in manuscript on the right-hand-side
of the 2
nd
page-:
¡°This suretyship shall be valid for one year from dated and not
exceed R150 000,00 (one hundred & fifty thousand rands).”
He
explained in evidence that the word “dated” refers to the date of
signature of the document viz. 7 May 2002.
[3] The defendant has
admitted that the goods in question were delivered to and received by
Kroon but has denied liability on two
grounds. The first ground is
a denial that Kroon purchased the goods from the plaintiff. Whilst
admitting his signature on annexure
“B”, the defendant denies
that annexure “B” is a suretyship undertaking given by him in
favour of the plaintiff. The second
ground of dispute is directly
concerned with the endorsement made on annexure “B” and is
pleaded as an alternative defence.
Defendant contends that in the
event of it being found that plaintiff is indeed the creditor then
ex
facie
the endorsement, the Deed of Suretyship was given for limited
duration; it was valid for a period of only one year from date of
signature,
until 7
th
May 2003. The period of purchase relevant to this case, September -
October 2003, falls outside the period covered by the suretyship
and
defendant accordingly argues that he cannot be held liable for the
payment of goods purchased in that period.
[4] In support of its
case the plaintiff called as its first witness Mrs. Paola, it’s
National Credit Control Manager. She testified
quite simply that she
received the duly completed credit application form (annexure “C”
to the summons) together with annexure
“B” (the Deed of
Suretyship) from the defendant who she understood was the Managing
Director of Kroon, the principal debtor.
Indeed it was common cause
that the defendant had been in telephone communication with her
assistant, one Elaine Green on the 7
th
of May 2002 and a credit application form had been faxed to the
defendant for completion. According to this witness, she approved
a
credit facility of R65 000,00 initially and Elaine Green communicated
this to the defendant by way of a letter dated the 20
th
of May 2002. On the 21
st
of May 2002 she increased the facility to R150 000,00 at the
defendant’s request. She said that she had no difficulty approving
the initial facility as well as the increased facility as she had
done a thorough investigation on both defendant and the principal
debtor and was satisfied as to the creditworthiness of both. When
referred to the endorsement on annexure “B”, she confirmed
knowledge of it but said she had disregarded it as the terms were not
acceptable to the plaintiff. In other words she said, she
had
rejected on behalf of the plaintiff the limited undertaking given by
the defendant in annexure “B”. She said she did not
communicate
the plaintiff’s non-acceptance to the defendant and assumed that
her silence would denote this to the defendant. She
said she
believed that it was for the defendant to have been pro-active in
making enquiries to ascertain whether his limited undertaking
had
been accepted by the plaintiff. She was questioned on the various
documentation issued by the plaintiff in connection with the
purchases made by Kroon during September, October 2003 and she
identified all the invoices and delivery notes shown to her as being
the plaintiff’s documentation. She was emphatic that the words
“Everite Building Products (Pty) Ltd as agents for Everite Limited”
on the documentation did not purport to convey that the plaintiff was
acting in a representative capacity on behalf of a principal
being
Everite Limited. According to her Everite Limited is a holding
company which does not trade, the plaintiff being the trading
company
in the Everite group of companies. Both she and Green, her assistant
who dealt with the Kroon account, were employed by
the plaintiff.
All order notes from the defendant were faxed to the fax number of
the plaintiff and all statements, invoices and
delivery notes sent to
Kroon bore the fax and telephone numbers as well as the address
details of the plaintiff. According to her
Kroon had no dealings
with any other entity but the plaintiff and it was the plaintiff who
sold and delivered the goods in question
to Kroon during September,
October 2003. She also verified the correctness of the amount owing
as contained in the Certificate of
Indebtedness annexed to the
summons as annexure “D” as being R127 675,00 plus interest at a
rate 15,5% per annum. The plaintiff
thereafter closed its case.
[5] The defendant
testified in his own defence. His evidence was that he did not know
who he had dealt with, whether he had dealt
with Everite Building
Products (Pty) Ltd, that is the plaintiff, or Everite Limited. He
said as far as he was concerned he knew
he was dealing with Everite
and he conceded under cross-examination that it did not matter to him
whether it was Everite Building
Products (Pty) Ltd or Everite Limited
who was supplying the goods. After testifying that he had endorsed
the Deed of Surityship
limiting the value thereof to R150 000,00 and
the duration thereof to 1 year from date of signature because that
was the sum total
of the risk which he was in a position to
undertake, he too closed his case.
[6] It is trite that in
cases such as the present where the plaintiff seeks to enforce a
contract, the onus is upon it to prove its
terms on a balance
probabilities.
See:
PILLAY
v KRISHNA & ANOTHER
1946 AD 946.
6.1 In addressing the
first issue, in this case, namely the dispute surrounding the
identity of the creditor, I have been unable to
find a single shred
of evidence in the documentation which points to any other entity but
the plaintiff being that which granted
the credit facilities and
supplied the goods to Kroon, the principal debtor. I also have no
reason to reject the testimony of Mrs.
Paola to this effect. I have
attempted to understand why it was that the identity of the plaintiff
as creditor in these proceedings
was placed in dispute in the first
place as no evidence to that effect emerged from the defendant’s
testimony. In fact the defendant
stated that it was immaterial to
him who it was that supplied the goods. Mr. Roux’s brave attempt
to come to the aid of his client
by latching onto the fact that the
documentation purported to create an agency relationship between the
plaintiff and Everite Limited,
the holding company, must therefore
fail as it is unsupported in the evidence.
6.2 Turning to the second
and alternative ground of defence, namely that the suretyship does
not hold good for the relevant period
(September to October 2003),
Mr. De Koning who presented the plaintiff’s case relied essentially
on clause 7 of the Deed of Suretyship
to prove his case. Clause 7
provides:
“
7. No addition to variation or
consensual cancellation of this Deed of Suretyship shall be of any
force or effect unless in writing
and signed by or on behalf of the
parties.”
He argues that the
endorsement by the defendant
in manuscript to be bound
as surety for a limited duration amounts to a variation of the Deed
of Suretyship which, because it was
not consented to and signed by
both plaintiff and defendant, cannot and does not bind the plaintiff.
He argues that, accordingly
the defendant must be taken to have
consented to the terms of annexure “B” to be bound as surety
unconditionally.
6.2.1 A Deed of
Suretyship, albeit that it is to be signed by the surety alone, is
nevertheless a bilateral juristic act. It is a
contract between
creditor and surety and accordingly in the making thereof there must
be a conscious and deliberate intention by
both parties to enter into
a binding contract of suretyship. The creditor and surety, must each
of them, be competent to make the
contract and must be
ad
idem
on
all the terms and conditions of the contract. Thus the ordinary
rules as to offer and acceptance apply. It follows that an offer
of
suretyship can be withdrawn before acceptance by a creditor.
See:
1.
CANEY’S:
THE LAW OF SURETYSHIP, 5
TH
EDITION,
page 60.
2.
VOLKSKAS
SPAAR BANK BPK v VAN ASWEGEN
per M.T. Steyn JA,
1990 (3) SA 978A
at 986 F – G:
“Enige
nuwe aanspreeklikheid van verweerder teenoor eiser spruitende uit die
transaksies van 24 April 1975 sou derhalwe slegs ingevolge
'n nuwe
ooreenkoms tussen hulle tot stand kon kom. So 'n ooreenkoms sou
uiteraard konsensueel moes wees. 'n Onderneming deur verweerder,
'n
aanvaarding deur eiser en mededeling daarvan aan verweerder, is
gevolglik noodsaaklik vir die totstandkoming van so 'n nuwe
aanspreeklikheid.
Aanvaarding van verweerder se onderneming van 26
Mei 1982 en mededeling daarvan aan verweerder moes derhalwe deur
eiser bewys word.”
3.
FEDERATED
TIMBERS (PRETORIA) (PTY) LTD v FOURIE
1978 (1) SA 292
at 297 A-B per Melamet, R:
“Mededeling
van die aanvaarding van die voordele verleen onder 'n borgakte deur
'n krediteur is nie nodig nie as die borgakte 'n
duidelike
onderneming waarby die verpligtinge van 'n ander gewaarborg word,
vervat - mededeling is net nodig as die onderneming deurd
die borg in
die vorm van 'n voorstel gegiet is.”
4.
BOUWER
v LICHTENBERG CO-OPERATIVE SOCIETY
1925 TPD 144
at 148 per Stratford, J:
”…
but, on the other hand, if the undertaking is put in the form of a
proposition, it is required to be accepted.”
5.
BROWN
& CO v JACOBSON
1915 OPD 42
at 44 (per Maasdorp, CJ).
6.
AFRICAN
LIFE PROPERTY HOLDINGS v SCORE FOOD HOLDINGS
1995
(2) SA 230
at 239 (per Nienaber, JA).
6.2.2 The defendant’s
evidence is clear. It was his intention to be bound for a limited
duration of one year. He accordingly endorsed
the Deed of Suretyship
in this respect and signed it. On receiving no enquiry or objection
from the plaintiff he assumed that all
was in order and that his
offer to be bound for one year was acceptable to the plaintiff. In
my view this assumption on his part
was a natural one and quite
understandable in the circumstances especially considering that
immediately thereafter on receipt of
the credit application and
signed Deed of Suretyship, credit facilities were given to him by the
plaintiff. Moreover it is clear
from the evidence that the plaintiff
had ample opportunity to communicate its rejection of the defendant’s
offer of limited suretyship,
but failed to do so. It does not avail
the plaintiff to argue that its silence and failure to communicate
its rejection in a written
letter amounted to a show of its refusal
to accept the limited undertaking offered by the defendant. It was
the defendant who was
undertaking the risk and he had clearly
indicated an intention unequivocally to be bound only for one year
and only up to an amount
of R150 000,00 because this was the only
risk he was capable of carrying. It was not up to the plaintiff in
those circumstances
to have ignored the defendant’s stated
intention and to have accepted his signature as surety for an
unlimited amount and for an
unlimited duration.
6.2.3 The argument that
the defendant had unilaterally varied the agreement is wholly without
substance. There can only be talk of
a variation once the agreement
is in place. In the present case no contract came into existence in
my view because there was no
acceptance by the plaintiff of the
defendant’s offer. Annexure “B” is thus of no force and effect
as between the plaintiff
and the defendant. Alternatively, if I am
wrong in this conclusion and annexure “B” is properly in place,
it follows that annexure
“B” can only be valid to the extent of
the limited liability undertaken by the defendant, for a period of
one year from date
of signature. This would mean that annexure “B”
ceased to be of force and effect on the 7
th
of May 2003. The plaintiff’s claim being for payment in respect of
purchases sold and delivered in September - October 2003, outside
the
decisive period of the suretyship, it follows therefore that the
plaintiff’s claim cannot succeed even on this account.
[7] On all accounts
therefore I am of the view that the plaintiff has failed to discharge
the onus it carries in this matter and accordingly
its claim is
dismissed with costs.
_____________
S. EBRAHIM, J
On
behalf of the plaintiff: Adv. De Koning
Instructed by:
McIntyre & Van der Post
BLOEMFONTEIN
On
behalf of the defendant: Adv. Roux
Instructed by:
Smith Tabata Buchana Boyes
JOHANNESBURG
/em