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[1] The applicant launched proceedings against the respondents for payment of the
sum of R43 092.95 in respect of the following Claim A : R227,223.66 ; Claim B :
R51,659.58 and Claim C, being amounts in arrears in respect of loans and overdraft
facility accounts held by the first respondent. The second and third respondents are sued
in their capacities as sureties and co -principal debtors with the first respondent.
[2] Both the first and second respondent s are not opposing the application and the
applicant seeks that default judgment be granted against them as set out in the notice of
motion.
[3] The third respondent has delivered an opposing affidavit and has further launched
proceedings in terms of Rule 13 seeking an order against the second respondent to pay
him an amount of R300 000.00 , alternatively that the second respondent be ordered to
indemnify him for any sum he may be ordered to pay the applicant.
Parties
[4] The applicant is Standard Bank of South Africa Limited , a public company
registered in accordance with the laws of the Republic of South Africa . The applicant is
also registered as a deposit -taking institution in terms of the Banks Act.1 The applicant
conducts its business at 6 Simmon ds Street, Johannesburg.
[5] The first respondent is Brazen Freight SA (Pty) Ltd , a private company with
registration numbers (2015/363742/ 07) registered in accordance with the laws of the
Republic of South Africa with its domicilium citandi et executandi at 39 Lepus Road,
Crown Exten sion 8, J ohannesburg.
[6] The second respondent is Wayne De Don ker, an adul t male with his domicilium
citandi et executandi at 12 Barbara Van Wyk Street, Discovery Ext 10 , Roodepoort ,
Johannesburg.
1 94 of 1990.
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[7] The third Respondent is Manoj Chaggan Naran, an adult male whose domi cilium
citandi et executandi is 12 Almeisan Western Lane, Wilgeheuwel . Florida, Johannesburg .
Background
[8] The applicant and the first respondent entered into three written agreements . First,
a Business Flexible Facility agreement with a principal debt of R428 750.00. The facility
was for a term of 1270 days and repayable with capitalised interest at a rate of 22.5 % The
first respondent would repay the loan by paying an amount equal to its revenue percentage,
set at 4. 62%.
[9] The first respondent breached the agreement by , inter alia , failing to make a
minimum payment due on the account , and was in ar rears in the amount of R1 325.53 as
of 9 June 2023. The applicant demanded payment of the arrears on 3 July 2023 and
subsequently cancelled the agreement on 26 September 2023 . The amount due at the date
of cancellation was R43 092.95 as set out in the Certificate of Balance attached to the
applicant’s founding affidavit.
[10] The second agreement was for an overdraft facility which was initially limited to
the amount of R270 000.00 and was repayable with interest at a rate of 7.15% per ann um
above the applicant’s prime overdraft interest rate. The facility was cancelled on 26
September 2023 due to the first respondent’s failure to make minimum payments due on
the account . The balance as at 3 August 2023 was R233 895.21 as set out in the Cer tificate
of Balanc e annexed to the applicant’s founding affidavit.
[11] The third agreement entered into was a Covid -19 emergency term loan agreement
entered into on 29 May 2020 in the sum of R399 000.00 . The loan was repayable at
R8 272.27 per month which included interest at 7.75% per month over a period of 65
months . The agreement was cancelled on 26 September 20 23 due to first respondent’s
failure to make timeous payments . The balance due was R286 446.15 as set out in the
Certificate of Balance attached to the applicant’s founding affidavit.
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[12] The second responde nt entered into a guarantee agreement for the repayment of
the sum s due by the first respondent and unconditionally guaranteed payment of the first
respondent’s debts. The guarantee was only limited to the Covid -19 loan .
[13] The second and third respondent s signed suretyship agreements on 15 January
2018 and bound themselves jointly and severally as suret ies and co -principal debtors for
the payment of all present and future i ndebtedness of the first respondent to the applicant .
The suretyship was limited to R700 000.00. The sureties renounced the benefits of
excussion and division and agreed to be liable for collection costs, default administra tion
charges and other costs associated with legal proceedings for collect ion of monies due.
[14] The applicant has demanded payment of the sum due under the above agreements
and proceeded to launch these proceedings pursuant to the respondents’ failure to pay the
amount s as demanded.
Parties submissions and contentions
Narrowing of issues
[15] The applicant ’s counsel submitted that a discussion was held with the third
respondent ’s counsel and agree d that the contentions raised by the third respondent
regarding the author ity of the deponent of the applicant’s affidavit , and the dispute about
of the signing of the suretyship as raised in the answering affidavit are no longer persisted
with. The third respondent’s s counsel confirmed the discussion and the agreement.
[16] The applicant’s counsel further stated that the third respondent has raised the issue
of condonation in respect of the late delivery of the replying affidavit. Stated f urther that
it is no longer necessary for the Court to consider the merits of the opposition thereto , and
that only the issue of costs re mains to be determined in this regard.
[17] The question of condonation lies within the repository of the Court’s discretion .
In view of the fact that th e third respondent opted not to challenge the application for
cond onation , I decided to grant same and also order ed that the applicant should be liable
for the costs ass ociated with the application.
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Application for a mendment
[18] The applicant’s counsel moved an application f rom the bar for the notice of motion
to be amended to include a claim for the amount in claim A which was inadvertently not
included in the notice of motion though dealt with in the applicant’s founding papers.
Further , that the respondents would not suffer any prejudice if the application for the
amendment is granted .
[19] The counsel for the third respondent contended that Rule 28 of the Uniform Rules
affords the respondent an opportunity to consider a notice to amend. That since the
applicant did not serve the notice of intention to amend , the third respondent is deprived
of the opportunity as set out in Rule 28.
[20] I noted that t he amendment sought by the applicant relates to a claim for the
amount of R43 092.95 which is reflected in the applicant’s founding affidavit , letter of
demand and the Certificate of Balance . Noting that the affidavits also serve as evidence ,
the third respondent has considered and responde d to all facts set out in the aff idavit. There
is nothing new which is being introduced which may need another reflection. There is also
no need for the third respondent to depose to an affidavit to react specifi cally to what is in
the amended notice of motion. If averments on claim A have not been specifically denied
in the answering affidavit, then the y are no t disputed and have been admitted.
[21] It is settled in our jurisprudence that the Court considering the application for
amendment should have regard to the question of prejudice and whether the application
is being launched maliciously. It was also stated in Affordable Medicines Trust and others
v Minister of Health and others2 that:
“The principles governing the granting or refusal of an amendment have been set
out in a number of cases. There is a useful collection of this cases in the governing
principles in Commercial Union Assurance Company Limited v Waymark NO .
The practical rule that emerges from th ese cases is that amendments will always
2 2006 (3) SA 247 (CC) at para 9. S ee also Imperial Bank Limited v Barnard and Others NNO 2013 (5) SA
612 (SCA) at para 8 which says, “… an application for amendment will always be allowed ‘unless it is mala
fide or would cause prejudice to the other party which cannot be compensated for by an order for costs or
by some other suitable order such as a postponement ’.”
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be allowed unless the amendment is mala fide (made in bad faith) or unless the
amendment will cause an injustice to the other side which cannot be cured by an
appropriate order for costs, or ‘unless the parties cannot be put back for the
purposes of justice in the same position as they were when the pleading which it
is sought to amend was filed ’. These principles apply equally to a notice of
motion. The question in each case, therefore, is, what do the interest s of justice
demand?”
[22] To this end I find that there is no prejudice to visit the respondents , and the
application for amendment is granted . In any event , the prayer for further and alternative
relief should be invoked to cater for the inclusion of the amount in claim A.
Merits
[23] Based on the background set out above , the applicant submitted that a case has
been made out for judgment as prayed for against all the respondents.
[24] The third respondent averred that he terminated his directorship with the first
respondent during June 2018 and at the same time sold his shares to the second respondent
for R300 000,00. The said amount was to be paid by the second respondent over a period
of 12 months. In their termination agreement the second respondent further undertook to
ensure that the third respondent is released from the suretyship agreement entered into
with the applicant. Further, that the second respondent indemnified him from any liability
he may be sued for, arising or linked to the company after his resignation. The sec ond
respondent has failed to pay the agreed amount of R300 000,00 and failed to ensure that
the third respondent’s suretyship obligation is terminated. On the basis of the foregoing ,
a rule 13 notice has been launched against the second respondent and was served but
remains unopposed.
[25] In view of the reluctance by the second respondent to ensure that the suretyship is
terminated, he, the third respondent then called the applicant in September 2018 and
informed the account manager that he is terminating the suretyship . He has no recollection
as to when exactly the call was made , and also who answered the call on behalf of the
applicant. He however believes that it was the business account manager who took his
call. He referred to the provisions of clause 63 of the suretyship agreement which provides
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for the termination of suretyship . The said termination , the third respondent continued, is
valid and effective since the suretyship agreement makes no provision for the Shifren rule
which requires any amendment to be in writ ing.
[26] It is therefore submitted, counsel for third respondent continued, that in the event
that the applicant wishes to dispute this assertion , then there would be a bona fide dispute
which cannot be resolved in the motion court. Since the applicant has not prayed for
referral to oral evidence the Court should therefore dismiss the claim against the third
respondent , alternative ly exercise its discretion and refer the matter to oral evidence or
trial.
[27] The applicant on the other hand contends that the fact that the third respondent
does not know when the termination was made , and further who answered the call on the
part of the applicant means that his contention cannot be relied on. In addition, the
termination should have been made in writing without which the third respondent ’s basis
for opposition should not be upheld.
[28] The applicant states in its heads of argument that in reply to the third party notice ,
the respondent stated that the agreement with the second respondent was that he would
ensure that he is released fr om suretyship with the applicant who failed to do so. At the
same time he alleges that he did so by himself. This is contradictory and the contention
should be dismissed. In addition, counsel argued, that the suretyship agreement was joint ,
and where variation is to be implemented it must be done in writing by all. This is a
statutory requirement , he submitted.
Issues
[29] Issues for determination are whether the applicant has made out a case against the
third respondent , and whether the third respondent’s basis for opposition is sustainable.
Legal principles
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[30] Section 6 of the General Law Amendment Act3 provides that no contract of
suretyship is valid unless the terms are embodied in a written document signed by or on
behalf of the surety. It was stated , though in passing , in HNR Properties CC v Standard
Bank of SA Ltd4 that a non-variation clause is not necessary in a contract of suretyship by
reason of the provisions of section 6 of th e Act. It was also held in Tsaperas and Others v
Boland Bank Ltd 5 also referred to in HNR Properties CC where it was stated that :
“Although a suretyship agreement requires writing and the surety’s signature for
validity, there are no formalities for a valid cancellation. A surety is also generally
entitled to cancel by notice and unilaterally his future obligations under a
continuing guarantee. If the agreement prescribes formalities for the amendment
or determination of the s urety ship, th ese are binding upon both parties.6
Further that
“No one suggested that the oral cancellation agreement was prohibited by the
statute regulating the formalities of surety ships . …But a non -variation clause is
unnecessary in a contract of suretyship.” 7
[31] It is stated in Amler’s Precedents of Pleading s8 that “Termination may also be by
agreement , oral or otherwise , unless the deed [of suretyship ] prescribes forma lities for
cancellation .” (underling added). In support of the contention that termination may not
necessarily require to be in writing , payment or reimbursement of the amount tendered by
the surety from the principal debtor also terminates a suretyship.9
[32] The applicant referred to the S upreme Court Appeal in African Life Pr operty
Holdings (Pty) Ltd v Score Food Holdings Ltd10 where the court held that amendments to
suretyship should comply with the formalities which were complied with at the initial
formation of the suretyship agreement. In this case the third respondent does not contend
3 50 of 1956 .
4 2004 (4) SA 471 (SCA) at para 19.
5 1996 (1) SA 719 (A) .
6 Id para 724 B – C.
7 Id at 725 B .
8 Harms Amler’s Precedents of Pleadings 9th Ed (LexisNexis , 2018 ) at 35 1.
9 CJ Nagel (Ed) Commercial Law 4th Ed (LexisNexis, 2011) at 396 .
10 1995 (2) SA 230 (A ).
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that the suretyship was amended , but that it was terminated.11 To this end this judgment
is distingui shable. The reasoning should also apply to the judgment referred by the
applicant’s counsel in Nelson v Hodgetts Timbers (East London) (Pty) Ltd12 which
underpinned the applicant’s contention in their heads of argument that “The joint
suretyship, could only have been amended/varied by complying with the formalities.” In
any event , as the counsel for third respondent has argue d, the agreement makes provision
for the words “I/We ” and one would assume that if a ny of the words were not applicable
same should have been crossed out.13
[33] The authorities referred and the sentiments echoed above indicates that the General
Law Amendment Act set s out requirements for a valid suretyship agreement but does not
make provision for a valid cancellation more specifically that it must also be in writing.
That notwithstanding, the sa id judgments are not authorities on whether oral cancellation
is valid or not , as they relate to cases where the agreements were subject to the Shifren
clause. As such an indication on the validity or otherwise of oral cancellation was said in
passing.
[34] The third respondent contends that this lis is not properly placed in the motion
court and this should have been foreseen by the applicant who should have launched action
proceedings. To this end the application should be dismissed. Rule 6(5)( g) of the Uniform
Rules endows the presiding judge with a discretion to refer a matter to trial or for oral
evidence. There is no evidence fortifying the third respondent’s contention that the
possibility of a dispute arising was foreseen by the applicant. The said dispute is limited
to determining whether the suretyship agreement was cancelled as contended by the third
respondent. I therefore find that it is necessary to refer the issue for oral evidence.
[35] Regarding the third respondent ’s Rule 13 application which is not opposed by the
first and second respondent s and in view of the finding that t he mat ter be referred to oral
11 Ordinarily , termination end s the agreement whereas amendment refers to changes to some of the terms of
the agreement.
121973 (3) SA 37 (A) .
13 The suretyship agreeme nt provides that : “My/our liability under this suretyship will not be effected by
any renewal, change or withdrawal of any facilities, or indulgence s, granted by the bank to the debtor, or
any delay, omission or failure by the bank to enforce its rights or to inform me/us of any breach by the
debtor. If I/we terminate this suretyship, I/we will remain liable for the amount of the debts as at the
termin ation date, including revived debts, contingent or actual liab ilities , interest and costs. ”
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evidence it would therefore be premature to make a finding that the second respondent be
ordered to contribute any monies or indemnify the third respondent.
Conclusion
[36] Having concluded that a suretyship agreement in this instance is capable of
termination orally , the opposition by the applicant is therefore unsustainable. At the same
time the evidence by the third respondent requires to be verified by a trial judge through
cross examination hence the specific issue should be referred to oral evidence.
Costs
[37] The costs should be reserved for determination by the court which will finally
adjudicate over this lis.
Orde r
[38] I make the following order:
1. The first and second respondents are ordered to pay the applicant amount
of R 563 434,31 , jointly and severally, the one paying the other to be
absolved .
2. The first and second respondent s are ordered to pay costs of the application
on attorneys and client scale, jointly and severally the one paying the other
to be absolved.
3. The application against the third respondent is referred to oral evidence, as
specified below:
3.1.That the affidavits exchanged by the parties be considered as
pleadings,
3.2.The parties be entitled to invoke the provisions of rule 35 of the
Uniform Ru les of Court.
3.3.The issue for determination is whether the suretyship was
terminated orally as stated by the third respondent.
4. The relief against the first and second respondents sought in terms of Rule
13 of the Uniform Rules of Court is referred to the oral court as set out in
para 3 above .