IN THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, CAPE TOWN
Case Number: 3788/2023
In the matter between:
The Standard Bank of South Africa Limited First Applicant
SB Guarantee Company RF (Pty) Limited Second Applicant
and
Mandlakomoya Trade and Projects CC First Respondent
Nonele Mathe Second Respondent
JUDGMENT ON COUNTER-APPLICATION
JANISCH AJ:
INTRODUCTION
[1] The first and second applicants have applied for judgment against the second
respondent in respect of monies advanced by the first applicant to the first
respondent under a home loan agreement, a business revolving credit plan and an
overdraft. The second respondent has bound herself, i n various agreements, as a
guarantor as well as a surety and co-principal debtor towards the first applicant in
respect of the debts of the first respondent (of which she was the sole member). She
has also bound herself as a surety and co -principal debtor towards the second
applicant in respect of any indebtedness of the second applicant (as guarantor) to
the first applicant under the terms of a mortgage bond arrangement.
[2] The notice of motion reflects claims against bot h the first and second
respondents. On 24 April 2023, this Court granted orders against the first respondent
in favour of the first applicant for payment of the amounts as prayed. Because it was
not clear that the application papers had been properly served on the second
respondent, no order was taken against her and the matter was postponed for
service to occur . The application became opposed and on 15 August 2024 was
postponed to the semi-urgent roll on 16 October 2024.
[3] Prior to the application for a money judgment against the respondents being
launched, the second applicant (which was the mortgagee of the property under the
home loan ) launched an application in the KwaZulu -Natal High Court for the
liquidation of the first respondent. The liquidation proceedings still were not complete
when the application for the money judgment was brought. The first respondent was
placed in final liquidation on 3 September 2024 (after the o rder of this Court had
been made against it).
[4] As stated, the applicants’ money claims against the second respondent on
the basis of the guarantees and suretyships was set down for hearing on 16 October
2024.
[5] A month before the set-down date, the second respondent brought a counter-
application, praying inter alia that the main proceedings against her in relation to
money judgments and costs be “temporarily stayed pending the finali sation of the
liquidation proc eedings of the first respondent”. She also sought an order entitling
the applicants to re -enrol the main application when the liquidation proceedings had
been finalised provided that amounts were still owed to the applicants.
[6] By way of the stay application the second respondent wished this Court, in
the exercise of its inherent discretion to regulate its process, to stop the applicants
from pursuing their money orders against her pursuant to the guarantees and
suretyships until it was known what the shortfal l was after the liquidation process
was complete.
[7] The application for a stay was opposed.
[8] At the commencement of the hearing of the matter on 16 October 2024 , I
permitted the second respondent first to move her counter-application, since if a stay
was granted there would be no basis to proceed at that time with the main
application.
[9] After hearing argument, I made an order dismissing the counter-application to
stay the proceedings, with costs. I indicated that my reasons would follow.
[10] My reasons for making the order are as follows.
[11] This court has a n inherent discretion, now entrenched in section 173 of the
Constitution, to regulate its own process. This includes a power to stay proceedings
in an appropriate case. But like all discretions, it must be exercised judiciously and
based on proper principles.
[12] Various circumstances have been identified in which proceedings brought in
this Court may be stayed. For example, a matter may be stayed where a similar or
identical dispute is pending before another court and allowing them both to proceed
could lead to conflicting judgments ( lis alibi pendens ), or to combat an abuse of
process (such as vexatious litigation), or pending compliance with an order to
provide security for costs . The list is not a closed one. However, it is clear that the
power should only be exercised where there is a proper reason to delay a claimant
in pursuing relief to which he or she is in principle entitled (whatever the inherent
merits of the claim may be).
[13] The application for a stay in this case was not based on any of the recognised
categories in which such relief has typically been granted. Although it was
suggested that the present case has some similarity to lis alibi pendens , th e
circumstances are very different. The liquidation proceedings in respect of the first
respondent, to which the second respondent was never a party, are complete, and
no further judgment of another Court is awaited. In any event, a liquidation
application is something very different from a money claim . The process of winding
up the first respondent’s estate is not a judicial one . In my view there is no reason
why the fact that the principal debtor is in liquidation should preclude this Court from
determining a separate claim against a different party based on guarantees or
suretyships in relation to the princip al debtor. Nothing that happens in an ordinary
liquidation process can alter the creditor’s independent rights to call up its security.
[14] Indeed, money claims against those who have put up security for persons or
entities that have become insolvent are entertained practically every day in this
Court.
[15] The crux of the Second Respondent’s case for a stay was that she was
hopeful that the main asset of the first respondent (the mortgaged property , which
this Court had declared to be especially executable) would realise a sufficient
amount in the liquidatio n process to settle the applicants’ claims , thus reducing or
even eliminating what could be claimed against her as guarantor or surety. If orders
were taken against her now, the applicants may take steps to execute against her,
possibly even leading to her sequestration, all of which may prove unnecessary if the
applicants are settled out of the insolvent estate.
[16] It is important to note that, in the suretyships on which the claim against the
second respondent is partly based, she had expressly waived the benefit of
excussion. This meant that, in the ordinary course, she could not raise the dilatory
plea that judgment could not be taken until the applicants had completed recovery
steps against the principal debtor . She could, under the suretyship agreements
voluntarily concluded, be required to pay immediately as co -principal debtor .
Moreover, to the extent that she held herself out as guarantor, her obligation was a
primary one, and excussion would in any event not be available as a defence.
[17] It appeared to me that, if the main application were stayed to allow the
liquidation process to run its course and for the application only to be re -enrolled if
there is a shortfall, this would effectively be reinstating the Second Respondent’s
benefit of excussion, which she expressly waived. It would also run counter to her
primary obligation as guarantor, which again she voluntarily assumed.
[18] In the face of these concerns, counsel for the Second Respondent submitted
that the differentiating factor between the ordinary position of a surety or guarantor ,
who cannot delay judgment pending the excussion of the principal debtor , and the
Second Respondent is the nature of the principal debtor (the First Respondent). As I
understood the submission, the First Respondent was the source of the Second
Respondent’s income. Now that it has been placed in liquidation, she has lost control
of it and cannot now employ it to generate income which may have assist ed her in
settling her obligations towards the applicants. A stay would redress that.
[19] I do not see this as a factor which would justify granting a stay. The Second
Respondent would have been aware of the risks of incurring debt within her
business entity (including property debt which may or may not have been associated
with the business), and of the risks of putting up security for that debt in her personal
capacity. The fact that she may now have lost a source of income to enable her to
deal extraneously with the applicants to attempt to ward off judgment is unfortunate
but is the result of defaults in payment by the very entity on which she was relying for
income. This is not a factor which in my view should preclude the applicants fro m
protecting their rights by moving for judgment in the ordinary course.
ORDER
[20] In the premises, I was not persuaded that ther e were proper grounds to stay
the main application, and I granted the following order:
“The counter -application for a stay is dismissed with costs, such costs to
include the costs of counsel on the tariff as per Scale A.”
-----------------------------
M W JANISCH
Acting Judge of the High Court
Western Cape Division
APPEARANCES:
For the Applicants: Adv G Slingers
Instructed by:
Werksman Inc
For the Second Respondent: Adv C Fehr
Instructed by:
Attorneys Zumpt
Date of hearing: 16 October 2024
Date of judgment: 18 October 2024