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(Registration No: 2010/005466/23) Fifth Respondent
Neutral Citation :
Delivered: By transmission to the parties via email and uploading onto Case
Lines the Judgment is deemed to be delivered.
JUDGMEN T
SENYATSI J
Introduction
[1] This is an application for money judgment . The application arises due to
the deeds of surety executed by the second to fi fth respondents who bound
themselves as sureties and co-principal debtors for the indebtedness of the
first respondent, who is in liquidation.
Background
[2] The first respondent concluded three master lease agreements for the rental
of th ree Volvo equipment and the first respondent defaulted and was
eventually liquidated. There is not relief sought against the first
respondent.
[3] The parties agree d that the first Respondent as principal debtor concluded
the Master Rental Agreements and defaulted. The First Respondent has
been wound up . The parties also agree that the remaining respondents
executed the deeds of surety in favour of the applicant for the liability of
the first respondent arising out of the Master Rental Agreement. The parties
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also agree d that t he outstanding balance has b een confirmed by means of a
detailed statement; a letter of demand; a termination agreement in terms of
which the outstanding balance was confirmed by the respondents
themselves and an E lectronic Communication Transactions Act, no 25 of
2002 (“ECTA”) Certificate .
[4] The r espondents have raised several contentions that the y aver are
defences. First ly, they deny that the amount claimed is due and payable.
The basis of their contention is that when the first respondent made
monthly repayments, the applicant refused to accept the payment and did
not credit the first respondents with the alleged payments. They aver that
the first respondent suffered serious financial setback and logistical
challenges and was eventually wound up. They contend that the applicant
did not submit its claim with the liquidators of the estate of the first
respondent. They argue that the applicant should pursue its claim against
the first respondent before it holds the respondents liable.
[5] Secondly, so contend the respondents, they never intended to bind
themselves to the applicant as sureties for the fulfilment of the first
respondent's obligations with the applicant. In amplification of their
alleged defence, they contend that they were never informed of the
consequences of the deeds of surety. They furthermore aver that the
members of the third and the fourth respondents never adopted the
resolution to authorise the third and fourth respondents to conclude the
deeds of surety . Consequently, so the argument goes, the third and fourth
respondents never intended to be bound by the deeds of surety as co -
principal debtors with the applicant and that the deeds of surety are void
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and un enforceable. The respondents aver furthermore that they were
ambushed with documents to sign and that they have no legal experience.
[6] The issu e for determining is whether the defences raised by the respo ndents
are sustainable.
[7] I now deal with the alleged disputed amount claimed and the principles on
dispute of facts. In the seminal case of Plascon -Evans Paints Ltd v Van
Riebeeck Paints (Pty) Ltd 1, the Court held that an applicant who seeks final
relief on motion must in the event of conflict, accept the version set up by
his opponent unless the latter’s allegations are, in the opinion of the court,
not such as to raise a real, genuine or bona fide dispute of fact or are so far -
fetched or clearly untenable that the court is justified in rejectin g them
merely on the papers .
[8] In Wightman t/a J W Construction v Headfour (Pty) Ltd and Another 2
Heher JA said the following regarding a bona fide defence:
“A real, genuine and bona fide dispute of fact can exist only where the court is satisfied
that the party who purports to raise the dispute has in his affidavit seriously and
unambiguously addressed the fact said to be disputed. There will of course be instances
where a bare denial mee ts the requirement because there is no other way open to the
disputing party and nothing more can therefore be expected of him. But even that may
not be sufficient if the fact averred lies purely within the knowledge of the averring
party and no basis is l aid for disputing the veracity or accuracy of the averment. When
1 [1984] ZASCA 51 ; 1984 (3) SA 623 (A) at 634E -635C.
2 [2008] ZASCA 6; [2008] 2 All SA 512 (SCA); 2008 (3) SA 371 (SCA) at para 13
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the facts averred are such that the disputing party must necessarily possess knowledge
of them and be able to provide an answer (or countervailing evidence) if they be not
true or accurate bu t, instead of doing so, rests his case on a bare or ambiguous denial
the court will generally have difficulty in finding that the test is satisfied. I say
‘generally’ because factual averments seldom stand apart from a broader matrix of
circumstances all o f which needs to be borne in mind when arriving at a decision. A
litigant may not necessarily recognise or understand the nuances of a bare or general
denial as against a real attempt to grapple with all relevant factual allegations made by
the other party . But when he signs the answering affidavit, he commits himself to its
contents, inadequate as they may be, and will only in exceptional circumstances be
permitted to disavow them. There is thus a serious duty imposed upon a legal adviser
who settles an an swering affidavit to ascertain and engage with facts which his client
disputes and to reflect such disputes fully and accurately in the answering affidavit. If
that does not happen it should come as no surprise that the court takes a robust view of
the mat ter.”
[9] In its founding affidavit, the applicant states fully the basi s of its claim . It
states how it launched an urgent application in Mpumalanga High Court
against the first respondent and cited all the other respondents. It further
states what the amount owing was in terms of each of the three rental
agreement regarding the three equipment used in the colliery operated by
the first respondent and the fact that both Part A order which was obtained
ex parte and later confirmed in Part B order without opposition was dealt
with. It states that the equipment had already been attached in terms of Part
A order and that the e quipment was sold by an online auction where the
under recovery of the amount owed was R25 million plus interest sets out
how the amoun t is made up which is supports by the statement of account
which has been generated electronically .
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[10] The answe r provided by the respondents to the application’s affidavit on
the disputed amount is a bare denial of the amount and an averment that
the applicant refused to accept payments from the first respondent. They
do not provide an answer with the sufficient detail to enable me to assess
the alleged disputed amount. It follows ,therefore, that the alleged dispute
of facts and the bona fide defence based on th e alleged ground has not been
supported by any cogent facts . Accordingly, the dispute raised by the
respondents on the amount of the claim has not been established and the
defence must fail.
[11] The view that I hold is supported by Clause 16 .1 of the Ma ster Rental
Agreements which provides:
“A certificate signed by a manager or director of AAFC , whose position it shall not be
necessary to prove , as to any amounts owing by the Hirer in terms of the Agreement,
or any other fact, shall in the absence of manifest and/or clerical error, be prima facie
evidence of the Hirer ’s indebtedness to AAFC herein .” The respondents have not
provided facts in their papers suggesting that there was any manifest or
clerical error pertaining to amount claimed.
[12] I now deal with the contention by the third and the fourth respondents that
the did not inten d to be bound by the deeds of surety because they are
laymen with no knowledge or understanding of the law .
[13] In George v Fairmead3 the Appellate Division had an opportunity to deal
with the contention where the party raised a contention that he was not
3 [1958 ] ALL SA 1 (A)
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bound by what is contained in the agreement as a guest of the hotel because
he had concluded a separate agreement with one offic ial of the hotel he was
staying which did not limit the hotel’s liability to him . Fagan CJ , accept ed
what Innes CJ said in Burger v. Central South African Railways ,4 that:
“It is a sound principle of law that a man, when he signs a contract, is taken to be bound
by the ordinary meaning and effect of the words which appear over his signature. There
are, of course, grounds upon which he may repudiate a document to which he had put
his hand. But no such grounds have been shown to exist in the present case. Consider
the circumstances under which this note was signed. Neither fraud nor
misrepresentation has been alleged; nothing wa s said by any railway official which
misled the signatory; the language of the document was one which the consignor
understood; no pressure of any kind was exercised. All that can be said is that the
consignor did not choose to read what he was signing, an d after he had signed did not
know the particulars of the regulations by which he had agreed to abide. For the Court
to hold upon these facts that the appellant is legally justified in repudiating his signature
would be a decision involving far -reaching co nsequences, and it would be a principle
unsupported by any principle of our law. The mistake or error of the signatory in the
present case was not such justus error as would entitle him to claim a restitutio in
integrum , or as could be successfully pleaded as a defence to an action founded upon
the written contract, and therefore it cannot be used for the purpose of attacking that
contract when the railway seeks to rely upon it.” This has been the law of our
Republic and various courts judgments have not su ggested the departure
from this principle . Accordingly, there is no merit to suggest that a person
can sign an agreement without an intention to be bound by the terms
thereof.
4 1903 T.S. 571, at 578
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[14] It is trite that a contract of suretyship is accessary to the contractual
relationship between the principal debtor and the creditor.5 In this regard,
Wallis JA in Van Zyl v Auto Commodities (Pty)Ltd6 said the following:
“[11] A contract of suretyship is distinct from the contract or contracts between the
principal debtor and the creditor that give rise to the principal indebtedness, but it is
accessory to that contractual relationship and the principal debtor's obligations under it.
Subject to any specific limitation, such as a suret yship in a limited amount, the surety’s
obligations are coterminous with those of the principal debtor. Where the surety signs
as co -principal debtor, as Mr van Zyl did, the addition of those words shows that the
surety is assuming the same obligations as the principal debtor. In other words, the
obligation of the surety is the same as that of the principal debtor.7 It follows from the
accessory nature of the surety’s undertaking that the liability of the surety is dependent
on the obligations of the princi pal debtor.8
[12] A consequence of this is that if the principal debtor’s debt is discharged,
whether by payment or release, the surety’s obligation is likewise
discharged.9 If the principal debtor’s obligation is reduced by compromise
the surety’s obligation is likewise reduced. If the principal debtor is
afforded time to pay that enures for the benefit of the surety.10 If the claim
against the principal debtor prescribes so does the claim against the
surety.11 This will be subject to any terms of the deed of suretyship that
preserve the surety's liability notwithstanding the release or discharge of,
or any other benefit or remission afforded to, the principal debtor. ”
5 See For syth and JT Pretorius Caney’s The Law of Suretyship 6th Edition at p38.
6 [2021] ZASCA 67; [2021] 3 All SA 395 (SCA); 2021 (5) SA 171 (SCA) at para s 11 and 12
7 Kilroe -Daley v Barclays National Bank Ltd [1984] ZASCA 90 ; 1984 (4) SA 609(A) at 622H -623H.
8 Neon and Cold Cathode Illuminations (Pty) Ltd v Ephron 1978 (1) SA ( A) at 470C -D.
9 Moti and Co v Cassim's Trustee 1924 AD 720.
10 Tuning Fork paras 46 to 49 and the authorities there cited.
11 Jans v Nedcor Bank Ltd 2003 (6) SA 646 (SCA) .
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[13] Although a principal debtor’s discharge from liability ordinarily releases the
debtor’s surety, the accessory nature of a surety’s liability is not so rigidly
applied in our law as to preclude some derogation by way of agreement
between the creditor and the surety.12 As will be shown below, the terms of
the Deed of Surety are an important consideration.
[14] The respondents have also argued that the applicant must first file its claim
against the estate of the first respondent and if it does not achieve the full
recovery, only then can it claim against the respondents . This is a common
law exception of excu ssion. Absent any agreement to the contrary, the
respondents would , in principle , be correct . To test if this is correct, regard
should be had to the terms of the Deeds of Surety.
[15] Page two of the Deeds of Surety and paragraph two thereof provide as
follows:
“The Surety hereby renounces the benefit of legal exceptions of excussion and division,
with the force and meaning whereof I acknowledge the Surety to be fully acquainted.
The Surety waives and abandons any right it might otherwise have had to rely on
prescri ption of any obligation of the Principal Debtor or of itself to the Creditor ,and
the Surety undertakes not to raise prescription as a defence to any claim brought against
it by the Creditor pursuant to this deed. The Surety shall be bound by this deed whether
or not any other intended surety becomes such.”
12 See Van Zyl case footnote 6 above para 4.
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[16] The effect of the paragraph referred above is that the right to raise the
defence as the respondents sought to do has been waived as agreed between
the parties. The Court has no basis to interfere with what the parties to the
Deeds of Surety agreed upon.
[17] In Neon an d Cold Cathode Illuminations (Pty) Ltd v Ephron13 the issue
for determin ation was whether the appellant’s right of action against
respondent, a surety and co -principal debtor, became prescribed under the
Prescription Act, 18 of 1943 . Before the Court considered the issue it
restated the law on suretyship to be as follows:
“From the above and other authorities it appears that generally the only consequence
(albeit an important one) that flows from a surety also under -taking liability as a co -
principal debtor is that vis-à-vis the creditor he thereby tacitly renounc es the ordinary
benefits available to a surety, such as those of excussion and division, and he becomes
liable jointly and severally with the principal debtor (see, for example, Caney, Law of
Suretyship , 2nd ed., p. 51; Wessels on Contract , 2nd ed., paras. 4087, 4088, and
4124; Voet, 46.1.16 and 24 ( Gane’s trans., vol. 7, pp. 38 -9, 48 -9); Pothier
on Obligations , paras. 408, 416 ( Evans ’ trans., pp. 330, 335 -6). However, he retains the
right, on paying the creditor, to obtain a cession of the latter’s rights and securities in
order to recover the full amount from the principal debtor ( Caney, supra at p.
52; Kotze v. Meyer , 1 Menz. 466 ; In re Deneys, 3 Menz. 309 ; Business Buying and
Investment Co. Ltd. v. Linaae , 1959 (3) S.A. 93 (T) at p. 96). It follows, I think, that in
the present case respondent, by also signing as a co -principal debtor, did not transform
his accessory obligation as a surety into a joint principal obligation as co -lessee with
Benam. As Burge on Law of Suretyship says of co -obligators liable in solidum (correi
debendi ) at p. 394 ” Although the appeal was dismissed based on prescription ,
13 [1978] 2 All SA 1 (A) page 7
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but the principles underlying the law on suretyship were fully and correctly
restated.
[18] I now consider another defence by the respondents that the deponent to the
founding affidavit of the applicant has not provided evidence that he has
authority to launch the application. They contend that because Mr.
Lizemore , who deposed to the applicant is not a director and that because
his authority has been challenged, that the application should be dismissed
on this basis alone.
[19] Mr. Botes SC referred me to the case of Ganes v Telecoms Namibia Ltd14
as the authority for this proposition. In that case , the SCA said the
following regarding the defence of lack of authority to institute the
application/ action:
“In my view it is irrelevant whether Hanke had been authorised to depose to the
founding affidavit. The deponent to an affidavit in motion proceedings need not be
authorised by the party concerned to depose to the affidavit. It is the institution of the
proceedings and the prosecution thereof which must be authorised. In the present case
the proceedings were instituted and prosecuted by a firm of attorneys purporting to act
on behalf of the respondent. In an affidavit filed together with the notice of motion a
Mr Kurz stated that he was a director in the firm of attorneys acting on behalf of the
respondent and that such firm of attorneys was duly appointed to represent the
respondent. That statement has not been challenged by the appellants. It must, therefor e,
be accepted that the institution of the proceedings was duly authorised. In any event,
rule 7 provides a procedure to be followed by a respondent who wishes to challenge the
authority of an attorney who instituted motion proceedings on behalf of an appl icant.
14 [2003] ZASCA 123; [2004] 2 All SA 609 (SCA); 2004 (3) SA 615 (SCA)
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The appellants did not avail themselves of the procedure so provided. (See Eskom v
Soweto City Council 1992 (2) SA 703(W) at 705C -J.)”
[20] Mr Botes SC submitted that because the respondents challenged the
authority of Mr Lezimore to instit ute the application and depose to an
affidavit on behalf of the applicant and failed to provide the evidentiary
proof of the authority when challenged , the application must be dismissed.
This submission loses the principle established in the case relied on by the
respondents. Mr. Lizemore says he is employed by the applicant as the
credit analyst, and he is authorised to institute the application and depose
to an affid avit on behalf of the applicant.
[21] The submission is not sustainable. First ly, Rule 7 the Uniform Rules
envisages the challenge to the legal representative to act on behalf of a
party. It does not envisage the situation where an employee deposes to an
affidavit on behalf of the company. There is no impediment for Mr
Lezimore , as an employee of the applicant , to depose to an affidavit
providing the details of the claim and its b asis. Secondly, the there is no
need for a deponent to prove that he/she is authorised to give evidence by
way of an affidavit to prove the basis of the applicant’s claim. It follows
that the defence must fail.
[22] Mr Botes SC furthermore submitted that because the First Respondent has
been wound up, it ought not ha ve been cited in the proceedings. He relies
for his proposition on the provisions of section 359(1) of the Companies
Act, 61 of 1973 for his proposition. The section provides that where the
court has made an order winding -up the company, all civil proceedings by
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or against the company concerned are suspended until the appointment of
a liquidator.
[23] The proposition is the correct one . I have indeed looked at the notice of
motion as well as the draft order and noted that the citation of a first
respondent gives no indication on its face that the first respondent is in
winding -up. However, the argument does not take the matter any further
because it was accepted in the joint practice note by all the parties in this
litigation that the first respondent has been wou nd-up. The consequence
thereof must be and is that no relief is sought against the first respondent.
The point has therefore become moot.
[24] The prohibition against civil litigation of a company in winding -up is no
bar to the enforcement of the Deed of Suretyship is the legal exceptions
have been waived. It is not necessary to wait for the appointment of the
liquidato r before the enforcement of deeds of surety can be embarked
upon. Accordingly, as already stated, the defence must fail.
[25] Mr Botes sought to rely on what the Court said in Dole South Africa Pty
Ltd v Pieter Beukes (Pty) Ltd15 for the proposition that the respondents were
not aware of what they were signing.
15 2007(4) SA 577(C) at 587 where the Court said: “ A party to a contract who has concluded same whilst
labouring under a bona fide and reasonable mistake as to its contents will not be bound by the provisions
thereof. In particular, where the contracting party has been led to believe by the other party that the contract
contains certain provisions, which in fact it does not, the party relying upon the misrepresentations, will not be
bound by the agreement. In this regard it was stated in Tesoriero v BHYJO Investments Shareblock (Pty)
Ltd. 2000(1) SA 167(W) at 175: “The misrepresentation need not have been fraudulent or negligent. The duty
to inform would or could arise where the document departs from what was represented, said or agree d
beforehand or whether other contracting party realizes or should realize that the signatory is under a
misapprehension or whether the existence of the provision or the contract is hidden or not apparent by
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[26] It should be remembered that the general principle set out by Innes CJ
in Burger v Central South African Railways16 , namely that:
“It is a sound principle of law that a man, when he signs a contract, he is taken to be
bound by the ordinary meaning and effect of the words which appear over his
signature ,” has not been changed as part of our law . It must therefore
follow that the defence raised in this regard is not supported by the facts
and t he law and must fail because on the evaluation of the papers, not
case has been made in this regard by the respondents.
Order
[27] Having read the documents filed of record and having considered
Counsel’s submissions, it is hereby ordered that:
27.1. The Second to Fifth Respondents, jointly and severally, the one
paying the other to be absolved to make payment to the Applicant
in the amount R29 018 132.57.
27.2. Interest on the amount aforesaid at the rate of 2% per month, from
the 13th of September 2023 calculated daily and compounded
monthly in arrears, until the date on which the Applicant receives
payment; and
27.3. That the Second to Fifth Respondents, jointly and severally, the one
reason of the way in which it is incorporated in a document or whether provision, not clearly presented, is
unusual or would not normally be found in the contract presented for signature.”
16 1903 TS 571
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DATE APPLICATION HEARD : 14 Oct ober 2024
DATE JUDGMENT HANDED DOWN : 11 February 2025
APPEARANCES
Counsel for the Applicant: Adv Clive van der Spuy
Instructed by: Lanham -Love Galbraith -van Reenen In
Counsel for the first Respondent:
Instructed by:
Counsel for the 2nd to 5th Respondent s: Adv FW Botes SC
Instructed by: Macintosh Cross & Farquharson