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[1986] ZASCA 137
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Norex Industrial properties (Pty) Ltd. v Monarch South Africa Company Ltd. (393/1985) [1986] ZASCA 137; [1987] 1 All SA 437 (A) (28 November 1986)
LL
Case
No 393/1985
IN THE SUPREME COURT OF SOUTH AFRICA APPELLATE DIVISION
In the matter between:
NOREX INDUSTRIAL PROPERTIES (PTY) LIMITED
Appellant
and
MONARCH SOUTH AFRICA INSURANCE COMPANY
LIMITED
Respondent
CORAM
: RABIE CJ, JANSEN, JOUBERT, BOTHA JJA
et
BOSHOFF AJA
HEARD
: 10 NOVEMBER 1986
DELIVERED
: 28 NOVEMBER 1986
JUDGMENT
/
BOTHA JA
...
2.
BOTHA JA
:-
The appellant was the plaintiff and the respon= dent the defendant in an
action brought in the Transvaal Provincial Division by the
former against the
latter for payment of R604 878, interest thereon and costs. The trial Judge
(CURLEWIS J) dismissed the appellant's
claim, with costs. The present appeal is
directed at that order, the trial Judge having granted leave to the appel= lant
to appeal
against it to this Court.
The facts are common cause and can be summarised briefly.
The appellant's case against the respondent was founded upon a document which
bears the heading "LETTER OF GUARANTEE", and which was
executed by the
respondent in favour of the appellant on 8 February 1983. It is addressed to the
directors of the appellant and the
body of it reads as follows:
/"We ....
3.
"We the undersigned
MONARCH SOUTH AFRICA INSURANCE COMPANY_LIMITED
57 Commissioner Street, Johannesburg, do hereby guarantee that throughout the
first three years of the Deed of Lease about to be entered
into between
yourselves as lessor and SPIRAL INDUSTRIES (PTY) LIMITED as lessee in respect of
ERF 99, WALTLOO, PRETORIA with buildings
thereon, SPIRAL INDUSTRIES (PTY)
LIMITED will promptly and faith= fully fulfil all the obligations and
undertakings by it in terms
of the said Deed of Lease."
The deed of lease which was contemplated in the letter of guarantee was
concluded on 9 February 1983. In terms of it the appellant
let Erf 99, Waltloo,
Pretoria, with the buildings and improvements thereon, to Spiral Industries
(Pty) Ltd, for a period of 9 years
and 11 months, from 1 February 1983 to 31
Desember 1992, at a monthly rental which was R22 000 per month for the first
year of the
lease and which was to escalate from time to time thereafter (it is
not necessary to enter upon the details).
The name of the lessee was later changed to Tomlyn Industries (Pty) Ltd
(hereinafter abbreviated to "Tomlyn").
/On ...
4.
On 10 February 1984 Tomlyn was placed in provisional
liquidation by an order of the Transvaal Provincial Divi= sion, which order was
made final on 22 March 1984, on the ground that Tomlyn was unable to pay its
debts. At all material times since February 1984 Tomlyn
has been and still is
insolvent and unable to pay its debts.
In its particulars of claim the appellant made the following allegation,
which was admitted by the res= pondent in its plea:
"On 17 February 1984 the provisional ligui=
dators of TOMLYN duly cancelled the lease in
terms of Section 37 (1) of the Insolvency Act,
1936, read with Section 386 of the Companies
Act, 1973, from which time they have failed
to perform the terms of the lease."
The appellant alleged further in its particulars of claim that by virtue of
the cancellation and the non-performance of the lease
it had suffered loss in an
amount of R604 878, being the amount of the rental that was payable in terms of
the lease from 18 February
1984
/to ...
5.
to 31 January 1986, less a certain amount received by
the
appellant from the liquidators of Tomlyn in respect of
the use of the
property for storage purposes. The
calculation of the appellant's loss was
based on the
further allegation, contained in the appellant's
further
particulars, that it had been unable to re-let the pre=
mises. The
appellant's allegations regarding its loss
were placed in issue in the
respondent's plea, but
shortly before the trial it was agreed between the
par=
ties that the appellant had in fact suffered loss in
the amount
alleged by it and that the appellant would
be entitled to judgment in that
amount if the defence
to its claim on which the respondent relied were not to be upheld.
The defence to the appellant's claim on
which
the respondent relied was set
forth in the following terms in the respondent's plea:
"4.1 The cancellation of the lease by the
/provisional ...
6.
provisional liquidators of TOMLYN resulted in the creation of
liabilities not flowing from the lease itself.
4.2
In terms of the letter of
guarantee, the Defendant is liable to the Plaintiff for the fulfilment only of
the obligations and undertakings
of TOMLYN in terms of the Deed of
Lease.
4.3
In the premises, no liability
attaches to the Defendant as a result of the cancella-tion of the lease in terms
of
Section 37
(1) of the
Insolvency Act, 1936
, read with Sec= tion 386 of the
Companies Act, 1973."
The defence thus raised was
based squarely on the decision in the case of
Strydom v Goldblatt
1976
(2) S A 852
(W). The trial Judge in his judgment came to the conclusion that it
would be out of the guestion for him to say that the judgment
in that case was
clearly wrong. In the result he found that the judgment was binding upon him,
and upon that footing he upheld the
respondent's defence and dismissed the
appellant's claim.
In this Court it was common cause between counsel that the fate of the appeal
hinged on the question whether
/or ...
7.
or not
Strydom v Goldblatt supra
was correctly decided.
Counsel for the appellant urged us to find that it was not and to overrule it,
while counsel for the respondent
argued to the contrary. It will be convenient,
there= fore, to discuss the judgment in that case in some de= tail: to do so
will
at the same time determine whether or not the respondent's defence in the
present case is sound in law.
In
Strydom v Goldblatt
the Court (PRANKLIN J) was concerned with an
application by a defendant in an action for an order setting aside a judgment by
default
granted against him on a summons in which the plaintiff had claimed
payment of an amount as owing by the defen= dant to the plaintiff
arising out of
a deed of surety= ship signed by the defendant in favour of the plaintiff. In
the deed of suretyship the defendant
had bound him= self "as surety for and
co-principal debtor with" a certain company ("the lessee") to and in favour of
the
/plaintiff ...
8. plaintiff ("the lessor"),
"for the due fulfilment by the lessee of all
its obligations in terms of
the annexed lease
and the due payment of all amounts claimable
thereunder
"
In order to succeed in his application the defendant was
required to show that he had a
bona fide
defence to the
action, and the only issue that FRANKLIN J was called
upon to decide was whether the defendant had done so.
The defence that was put forward was the following: the
lessee company for which the defendant had stood surety
had been placed in liquidation; a lease is not termi=
nated
ipso jure
by insolvency, but the liquidator had
terminated the lease by virtue of the provisions of
section 37
(1) of the
Insolvency Act, 1936
, read with
section 386 (4) of the Companies Act, 1973; the amount
in issue was not claimable under the lease but on account
of a statutory intervention by the liquidator; and by
reason of the liquidation of the company and the conse=
guent intervention of the liguidator, a different
/statutory ...
9.
statutory liability for compensation for loss (and not for
damages) had arisen, which did not flow from the agreement itself but arose
from
extrinsic causes, viz from the statutory act of intervention of the liquidator.
FRANKLIN J found that this was a valid defence
in law. The
ratio
decidendi
appears from the following passage in his judgment (at 855 i f -
856 B) :
" I have come to the conclusion that the
act of the liquidator in terminating the lease in this case resulted in the
creation of lia= bilities not flowing from the lease itself
but from extrinsic
causes, namely the statutory act of intervention which conferred on the
plaintiff a right differing in its juristic
nature from the rights which it had
previously enjoyed and which flowed directly from the non-performance by the
lessee of his obligations
under the lease. And, since the deed of surety= ship
does not bind the defendant for liabilities arising from such extrinsic causes,
in my view
the point taken is sound in law, and the
default judgment was wrongly granted.
I conclude, therefore, that the defendant has disclosed a
bona fide
defence in law and that he is entitled to a rescission of the de=
fault judgment on this ground."
/In ...
10.
In analysing the reasoning of the learned Judge it will be convenient to
consider, as a starting point, his reference to "the rights"
which the plaintiff
"had previously enjoyed", i e prior to the termination of the lease by the
liquidator, "and which flowed directly
from the non-performance by the lessee of
his obligations under the lease". To facilitate the discussion I shall first
assume a situation
in which there was no super= vening insolvency of the lessee.
The defendant had bound himself as surety "for the due fulfilment by
the
lessee of all its obligations in terms of the lease
and the due payment of all amounts claimable thereunder." In my view the
effect of an obligation undertaken by a surety in such terms
is perfectly plain.
In relation to a failure by the lessee to make due payment of the rental, the
lessor is entitled, not only to
claim pay= ment of the rental by the surety, but
also to hold the surety liable to indemnify him for any loss suffered by
/him ...
11.
him in consequence of the non-payment by the lessee. So, if the lease were to
be duly cancelled by the lessor on the ground of the
lessee's failure to pay the
rental, the lessor could hold the surety liable for damages flowing from the
lessee's breach of contract.
I do not consider that proposition to be open to
any doubt. I mention it with the object of obviating any misunderstanding that
might
arise from the fact that FRANKLIN J in the course of his judgment (at 854
B-F) guoted at some length cer= tain passages from the
judgment of CLAYDEN J in
Moreriane v Trans-Oranje Finansierings- en Ontwikkelingskorporasie Beperk
1965 (1) S A 767
(T). In those passages a situation was dealt with in which it
was held that the creditor's claim against the surety was limited to
the payment
of arrear instalments in terms of the principal contract, and did not extend to
liability for damages for its breach.
(It may be observed in passing that the
nature of the amount claimed by the plaintiff in
/
Strydom
...
12
Strydom v Goldblatt
is not mentioned expressly in the
judgment of FRANKLIN J; it can be assumed with safety, however, in view of the
tenor of the judgment
as a whole, that the claim was one for compensation of the
plaintiff's loss consequent upon the termination of the lease.) But the
judgment
in
Moreriane
's case
supra
was based on the particular terms of the
suretyship in that case, which were quite different from those of the deed of
suretyship
in
Strydom v Goldblatt
. In my view the passages quoted by
FRANKLIN J had no bearing on the terms of the deed of suretyship with which he
was dealing (see
the comment of CLAYDEN J in
Moreriane
's case on the case
of
Beaufort West Municipality v Krummeck's Trustees
5 S C 5
- which will
be considered later in this judgment - as quoted in
Strydom v Goldblatt
at 854 D; and cf the observations of MILLER J in
Demetriou v O'Flaherty and
Another
1973 (4) S A 691
(D & C) at 694 C-G and of LEON J in
Sydney
Road Holdings (Pty) Ltd v Simon
1981 (3) S A 104
(D & C) at
/107 A/B-C) ...
13. 107 A/B-C). It follows, therefore, that FRANKLIN
J's
use of the phrase "the rights which flowed
directly
from the
non-performance by the lessee of his obligations under the lease" ought not to
be construed as excluding a claim by the plaintiff
for damages for breach of the
contract.
I proceed to consider the effect of the lessee's insolvency on the position
discussed above. I shall do so first with regard to the
insolvency
per
se
, leaving aside for a while the termination of the lease by the
liquidator. It was accepted by FRANKLIN J that the in= solvency of
the lessee
did not
ipso jure
terminate the lease (see at 853 D and 855 H - in the
latter passage there is a typographical error: "lessor" should read "lessee";
the same error occurs at 855 D). In the course of the argument in this appeal
counsel for the respondent belatedly suggested that
at common law a lease was
automatically terminated by the lessee's insolvency.
/The ...
14.
The suggestion is without merit. It was based on a
passage in
Van der
Linden
(
Koopmanshandboek
) 1.15.12,
which is cited, together with
Van der Keessel Th Sel
676, in Cooper's
The S A Law of Landlord and
Tenant
at
295 in support of a statement by the author that at
common law the
insolvency of the lessee terminated the
lease. (A similar statement, with a reference to the
same authorities, had appeared in Wille's
Landlord and
Tenant in S A
, 5th ed, at 256.) It is clear, however,
that neither
Van der Linden
nor
Van der Keessel
was
expounding the common law of Holland in the passages
cited; they were dealing with the effect of purely
local ordinances or
keuren
.
Van der Linden
says that
in the case of insolvency (sc of either the landlord
or the tenant) the lease does not endure for longer "dan
tot den gewoonen eerstkomended verhuistijd." In sup=
port of this statement he cites
Van der Keesse
l
loc cit
,
who says (I quote from the translation of
Lorenz
at 243):
/"If ....
15.
"If the lessee, or even the lessor, has made cession to the Court (
foro
cedente
), the lease expires after a short delay, at the customary time for
removal' (
eo tempore, quo solent cives migrare
); which varies in
different places", and he then refers to ordinances and
keuren
of
Amsterdam, Leiden, Haarlem and Rotterdam. The position is made even clearer in
Van der Keessel
's more elaborate treatment of the topic in his
Praelectiones ad Gr
3.19.11, which is to be found in
Gonin
's
transla= tion, Vol V at 35 (the notes are at 575). He there states expressly
that provision is made.in either the old or the more
recent statutes (
vel
antiquis legibus vel recentioribus
) for the termination of a lease upon the
insolvency of the lessor or the lessee, and he proceeds to give numerous
examples of the
varying periods of time laid down in various local statutes for
regulating the termination of the lease. It is not necessary to go
into the
details. My researches into the well-known
/old ...
16.
old Roman Dutch writers have failed to reveal any sug= gestion, of the
existence of a general principle in the law of Holland that
a lease is
terminated by the insol= vency of the lessor or the lessee. In any event, there
can be no doubt that in our case law,
far from any such principle having been
recognised, a directly contrary principle has been applied. The insolvency of
the les= sor
is not in issue here, so that I shall content myself by saying that
it can be regarded as a trite proposition that in our law a lease
is not
automatically terminated by the lessor's insolvency. The effect on a lease of
the lessee's insolvency, under the common law,
arose pertinently for
consideration in
Liquidators F H Clarke & Co Ltd v Nesbitt
1906 T S
726
, before a full Bench consisting of INNES CJ and SOLOMON and WESSELS JJ. The
facts are summarised in the report of the case as follows:
"F.H. Clarke & Co., Ltd., held a lease from the respondent of certain
premises for five years from May, 1904, at a monthly rental
of E12,10s. '
/In ...
17.
In March, 1906, the company was placed in liquidation. The company remained
in occu= pation of the premises until after the month
of July. The lessor sued
in the court below for rent for May, June and July. By letter dated the 25th
June the liquidators intimated
that they disclaimed the lease, which they
contended had been terminated by liquidation. They tendered rent for May and
June, but
re= pudiated any liability under the lease for rent for July; they
offered to pay for use and oc= cupation during the latter month."
The lessor's claim having succeeded in the magistrate's court, the
liquidators appealed. It was contended on their behalf that the
Liquidation of
Companies Law (1 of 1894) had incorporated the provisions of section 104 of the
Insolvency Law (21 of 1880), in terms
of which a lease terminated upon the
insolvency of the lessee. The appeal was dismissed. INNES CJ, delivering the
judg= ment of the
Court, said (at 727; my emphasis):
"The only point for decision is whether the liquidators were liable for the
July rent ..... Their defence is that the lease was duly
ter= minated before
July, and that therefore they are not liable to pay rent for that month. That
raises the question
whether they had the
/
right
...
18.
right to treat the lease as terminated
.
Under the
common law clearly they had no such right
; nor is it expressly conferred
upon them by the statute regulating the liquidation of companies."
INNES CJ proceeded to enquire whether Law 1 of 1894 had incorporated the
provisions of the Insolvency Law of 1880 in regard to the
termination of leases
to which insolvents were entitled, and found that it had not. His judgment
proceeded (at 728; my emphasis):
"What then is the position?
The lease still runs
.
If the
liquidators
do not occupy the premises, but
repudiate the lease, then the
lessor will have his action for damages
or otherwise. But if they do occupy
they must pay rent."
As far as I am aware (leaving aside the statements in
Cooper
and
Wille
to which I referred above) the correct= ness of this decision has
never been questioned (cf
Neon and Cold Cathode Illuminations (Pty) Ltd v
Lowe N O
1957 (1) S A 80
(N) at 83 G and
Montelindo Compani
a
Naviera S A v Bank of Lisbon and S A Ltd
1969 (2) S A 127
(W) at 140 B-H;
and cf also De Wet & Yeats,
/
Kontraktereg
...
19.
Kontraktereg en Handelsreg
, 4th ed, at 337).
I have dwelt at some length on the effect under the common law of a lessee's
insolvency upon the lease, because it provides the important
background against
which an assessment is to be made of the effect of sec= tion 37 (1) of the
Insolvency Act of 1936
. Were it not for the provisions of that section, the
legal posi= tion following upon the insolvency of the lessee would have been
governed by the ordinary principles which apply when apartyto an executory
contract of a kind not specifically dealt with in the
Insolvency Act goes
insolvent (cf
Bryant & Flanagan (Pty) Ltd v Muller and Another N NO
1978 (2) S A 807
(A) at 812 G - 813 B;
Smith and Another v Parton N 0
1980 (3) S A 724
(D & C) at 728 D-F and 728 H - 729 D; and
Somchem (Pty)
Ltd v Federated Insurance Co Ltd and Another
1983 (4) S A 609
(C) at 615 B -
616 A). Very briefly, in the con= text of the facts in
Strydom v
Goldblatt
, it comes to
/this ...
20..
this: the act of the liquidator of the lessee company, in
deciding not to continue with the lease, would have constituted a repudiation
of
the contract, which would have afforded the lessor (the plaintiff) the right,
con= currently with other creditors, to claim from
the liqui= dator the payment
of damages for the non-performance by the company of its contractual
obligations.
Now
section 37
(1) of the
Insolvency Act (24
of 1936) provides as follows (it
may be noted that there are typographical errors in the quotation of the section
in
Strydom v Goldblatt
at 853 E):
"A lease entered into by any person as lessee shall not be determined by the
sequestration of his estate, but the trustee of his insolvent
estate may
determine the lease by notice in writing to the lessor: Provided that the les=
sor may claim from the estate, compensation
for any loss which he may have
sustained by reason of the non-performance of the terms of such lease."
(This section, read with
section 37
(2), was, in broad substance, a
re-enactment of its forerunners, section
/43 ...
21.
43 of Transvaal Law 13 of 1895, and
section 36
(1) and
(2) of Act 32 of 1916.)
FRANKLIN J, it will be recalled, considered the
liquidator's termination
of the lease in terms of this section to be a "statutory act of intervention
which conferred on the plaintiff
a right differing in its juristic nature from
the rights it had previously enjoyed", and which "resulted in the creation of
liabilities
not flowing from the lease itself." I respectfully dis= agree with
these views of the learned Judge. In my opinion they are at variance,
on the one
hand, with the wording of the proviso to the section, and, on the other, with
the common law position as discussed above.
With regard to the wording of the
proviso, it recognises a right of the lessor to "
claim
from the estate
compensa
=
tion for any loss
he may have sustained'
by reason of
the non-performance
of such lease." Wïth reference to the words I have
emphasiséd, two observations fall to be
/made ...
22.
made. First, the concept involved in the expression
"claim compensation for loss", in the con=
text, is identical with the concept involved in a claim for damages (cf
Russell N O and Loveday N 0 v Collins Submarine Pipelines Africa (Pty)
Ltd
1975 (1) S A 110
(A) at 145 D); counsel for the respondent was unable to
suggest any difference in content between the two concepts in the context
of the
subject-matter dealt with in the section. Secondly, the phrase "by reason of the
non-performance" of the lease shows that
the liability of the estate flows from
the lease itself. That being the tenor of the proviso, it follows, when the
effect of the
section is tested against the background of the com= mon law
position, as discussed above, that the position in which the lessor
and the
liquidator find themselves under the section is, substantially speaking, no dif=
ferent from that which it would have been
but for the section. Accordingly,
there is no warrant for regard= ing the section, or the liquidator's
"intervention"
/pursuant ...
23.
pursuant to it, as resulting in the
creation
of a pre= viously
non-existent right on the part of the lessor (the plaintiff), or of liabilities
on the part of the liquidator not
flowing from the lease itself. The true impact
of the proviso to the section is no more than to
preserve
for the lessor
the right he would have had, but for the main provision of the section, to hold
the liquidator liable for the compensation
of his loss, or his damages, flowing
from the liquidator's decision not to continue with the lease and the consequent
non-performance
of the lessee's contractual obligations.
From the view I have just expressed as to the effect of the proviso, two
further observations follow. The first is that it provides
an immediate and
complete answer to what counsel for the respondent described as the heart of his
argument. That was that the lessor
could not claim damages from the liquidator
flowing from the termination of the lease, because the liquidator
/acted ...
24.
acted lawfully in terminating it, being expressly autho=
rised by the section to do so.. The argument negates the very object of the
proviso: while the opening words of the section preserve the common law position
. that the lease is not terminated, the words following
thereupon confer upon
the liquidator the right to ter= minate the lease; under the common law his
termination of the lease would
have constituted a repudiation there== of, giving
rise to a concurrent claim for damages for breach of contract; and it was
precisely
for the purpose of preserving that claim for the lessor that it was
neces= sary to add the proviso to the section. Accordingly the
lawfulness of the
liquidator's act is of no consequence.
The second observation is that FRANKLIN J's view as to the liquidator's
intervention in terminating the lease constituting "extrinsic
causes" for which
the surety (the defendant) could not be held liable in terms of the deed of
suretyship, is, with respect, unsound.
/The ...
25.
The genesis of the learned Judge's use of the expression "extrinsic causes"
is to be found in his earlier reference (at 853 F-H) to
the judgment of CANEY J
in
Patel v Patel and Another
1968 (4) S A 51
(D & C) at 56 D. (There
are typographical errors in the quotation at 853 H.) But an examination of CANEY
J's discussion of the
topic and of the examples given by him (at 56 F - 57 A)
shows that the concept of "extrinsic causes" could not have been intended
to
apply to a situation such as in
Strydom v Goldblatt
. That is borne out by
an examination of the authorities to which CANEY J referred:
Van der
Linden
,
Pothier
and
Wessels
. The sense of what they say is
reflected in the statement by
Wessels
(para 3907) that consequences which
arise from "a cause foreign to the transaction" (sc between the creditor and the
principal debtor)
will be regarded as "extrinsic". When a surety binds himself
to a lessor "for the due fulfilment by the lessee of all its obligations
in
terms of the .... lease",
/and ...
26.
and the lessee goes insolvent, in consequence of which the
liquidator terminates the lease and the lessor suf= fers a loss in respect
of
the rental, that can assuredly not be regarded as a cause foreign to the lease.
On the contrary, it seems to me to be apparent
that that was exactly the kind of
eventuality against which the lessor would have wished to protect himself by
procuring the suretyship,
and in respect of which the surety bound himself to
indemnify the lessor.
FRANKLIN J was referred to the case of
Beaufort West Municipality v
Krummeck's Trustees and Others
(1887) 5 S C 5
, which he discussed in his
judgment at 854 G -855 H. In that case two persons had bound themselves as
sureties to a lessor for,
inter alia
, "the due ful= filment of the
conditions and stipulations" in a lease, by the lessee. The latter's estate was
sequestrated. Section
104 of Cape Ordinance 6 of 1843 (incorrectly referred to
in the judgment of FRANKLIN J as Ordinance
/68 ...
27.
68 of 1843) provided, in so far as is relevant here, as follows:
"If any insolvent shall be entitled to any
lease such lease shall, upon the
surrender or adjudication of sequestration of the estate of such insolvent,
cease and determine: Provided, that nothing herein
contained shall prevent the lessor from
suing the trustee or trustees for any
damage which he shall prove to the satisfac= tion of such court to have been
by him sustained, in consequence of the non-performance
of the
conditions of such lease during the full
period of the stipulated endurance thereof
The lessor sued the trustees for damages, after they had refused to continue
the lease. On their behalf it was argued that they were
not liable for damages,
because the lease had been extinguished. This argument was re= jected, DE
VILLIERS CJ holding as follows:
"Now one of the stipulations which the sureties undertook to fulfil was that
the lease should last for twenty-one years. It has been
put an end to by
operation of law and not by any= thing the lessor has done, and the very same
section of the statute which puts
an end to the lease specially provides that
the estate of the
/lessee ...
28.
lessee should still be liable for damages sus= tained in
consequence of the non-performance of the conditions of the lease during
the
full stipulated period."
FRANKLIN J sought to distinguish that case on the ground that under section
104 of the Cape Ordinance the lease terminated
ipso iure
upon the
insolvency of the lessee, whereas under section 37 (1) of the present
Insolvency
Act the
insolvency of the lessee does not of itself ter= minate the lease, but
the trustee may terminate it. In my respectful opinion that
is a distinction
without a difference. The principles discussed earlier in this judgment are as
applicable to the one case as to
the other. Counsel for the respondent in this
appeal was constrained to submit that that case had been wrongly decided. I do
not
agree with the submission, which is rejected.
For the above reasons I conclude that the deci = sion in
Strydom v
Goldblatt
was wrong and that it should be overruled.
/That ...
29.
That conclusion is decisive of the result of this appeal. It remains only to
say a word or two about the terms of the respondent's
letter of guarantee, as
quoted earlier. There can be no doubt that the res= pondent undertook the
liability of a surety vis-a-vis
the appellant in respect of the lessee's
obligations under the lease. There are some differences in the wording of the
letter of
guarantee and the terms of the deed of suretyship in
Strydom v
Goldblatt
, but they are clearly immaterial. In the course of the argument we
were referred to a number of cases decided after
Strydom v Goldblatt
, in
which that case was distinguished by reason of differences in the wording of the
particular deeds of suretyship under consideration.
In view of the conclusion
arrived at above, there would be no point in discussing the later cases. In the
present case the respondent
guaranteed to the appellant that the lessee would
fulfil its obligations in terms of the lease; the lessee in fact did not fulfil
its obligations
/in ...
30.
in terms of the lease; that was precisely the even= tuality against which the
guarantee was intended to protect the appellant; the
respondent can derive no
benefit from the provisions of
section 37
(1) of the
Insolvency Act; and
in the
result the respondent is liable to make good the appellant's loss.
The order which is to be substituted for the order made by the Court
a
quo
, as set forth below, is in accordance with what was proposed by counsel
for the appellant. Counsel for the respondent, on the hypo=
thesis that the
appeal were to succeed, offered no ob= jection thereto.
The order of the Court is as follows:
1. The appeal is allowed, with costs, in=
cluding the costs of two
counsel.
2. The order of the Court
a quo
is set aside,
and there is substituted therefor an order in the following
terms:
/"Judgment ...
31.
"Judgment is granted in favour of the plaintiff against the
defendant for -
(a)
Payment of R604
878;
(b)
Interest on the aforesaid amount at
the rate of 15% per annum from date of judgment to date of pay=
ment;
(c) Costs of suit, including the costs of two
counsel and the costs of the attendance of two counsel at the pre-trial
conference."
3. The expression "date of judgment" in para 2 (b) above means the date of
the delivery of the judgment of this Court.
A.S. BOTHA JA
RABIE CJ
JANSEN JA CONCUR . . .
JOUBERT JA
BOSHOFF AJA