About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
1992
>>
[1992] ZASCA 152
|
|
Jurgens and Others v Volkskas Bank Ltd. (404/91) [1992] ZASCA 152; 1993 (1) SA 214 (AD); [1993] 1 All SA 199 (A) (17 September 1992)
Case No 404/91
IN THE SUPREME COURT OF SOUTH AFRICA APPELLATE DIVISION
In the matter between:
DIRK HENDRIKUS JURGENS (Snr)
1st Appellant
DIRK HENDRIKUS JURGENS (Jnr)
2nd Appellant
GEERT DIRK
JURGENS
3rd Appellant
JURGENS BODIES CARAVANS & TRAILERS
COMPANY (PTY) LIMITED
4th Appellant
TEREXKO LIMITED
5th Appellant
CORNELIS PETRUS SWART
6th Appellant
and
VOLKSKAS BANK LIMITED
Respondent
CORAM:
HOEXTER, HEFER, GOLDSTONE, JJA et HOWIE, KRIEGLER, AJJA
HEARD:
18 August 1992
DELIVERED
: 17 September 1992
JUDGMENT
HOEXTER, JA
2
HOEXTER, JA
In an application for summary judgment ("the
application") made in the Witwatersrand Local Division Lazarus J (whose recent
untimely
death is a loss keenly felt by the profession) granted judgment in
favour of the respondent against the six appellants, jointly and
severally, for
payment of R2,9 million, interest thereon, and costs. With leave of Eloff JP the
appellants appeal to this court against
the said orders.
The fourth and fifth
appellants are two of a number of companies within the Jurgens Group ("the
group") which has its offices at Jurgens
House in Kempton Park. The first,
second, third and sixth appellants are directors of the companies within the
group. One of the
companies in the group is Jurgens Landgoed (Edms) Beperk ("the
principal debtor") which is in liquidation.
The principal debtor was a client of the
3
respondent at its Kempton Park branch. The respondent advanced money to the
principal debtor by way of overdraft facilities. As security
for the overdraft
the respondent from time to time required the first, second, third and sixth
appellants, both personally and in
their representative capacities as directors
of the fourth and fifth appellants, to sign various bank guarantee documents.
During
March 1991 the respondent instituted an action against the six appellants
and the wife of the sixth appellant ("Mrs Swart"), jointly
and severally, for
payment of an amount in excess of R8 ½ million, together with interest
thereon, and costs. The respondent's
summons alleged that the sum claimed had
been advanced by it to the principal debtor by way of the aforementioned
overdraft, and
that the appellants and Mrs Swart had bound themselves to the
respondent as sureties and co-principal debtors in respect of the principal
debtor's aforesaid indebtedness.
4
Annexed to the summons were copies, respectively marked "A", "B" and "C", of
three contracts of suretyship. The appellants and Mrs
Swart gave notice of
intention to defend the action, whereupon the respondent made the application.
The application was resisted
by all the defendants to the action, the main
opposing affidavit ("Swart's affidavit") being deposed to by the sixth
appellant. At
the hearing the application against Mrs Swart was
withdrawn.
Swart's affidavit raised a number of grounds of objection to the
application. However, in argument before Lazarus J only two defences
were put
forward. The second defence related to the amount of the principal debtor's
indebtedness to the respondent. It succeeded
to the extent that it induced the
learned judge (1 ) to grant summary judgment in the lesser amount of R2,9
million and (2) to give
leave to the appellants to defend in respect of the
balance claimed. The first defence was that each of
5
the three suretyships reflected in Annexures "A", "B" and "C" to the summons,
and on which the respondent's action was founded, failed
to comply with the
provisions of sec 6 of the General Law Amendment Act No 50 of 1956 ("the Act")
as amended by sec 34 of Act No
80 of 1964. Lazarus J held that the first defence
was legally unsound. The correctness or otherwise of that finding is the sole
issue
in this appeal.
The factual basis of the first defence is the
following. Each of Annexures "A", "B" and "C" is a printed bank form headed by
the name
of the respondent and designed for completion as a contract of
suretyship by the filling in of appropriate blank spaces and by signature
by or
on behalf of a surety or sureties. Annexure "A", which bears the sub-heading
"WAARBORG DEUR TWEE OF MEER BORGE -ONBEPERK" is
intended for suretyships
undertaken by natural persons. Annexures "B" and "C" each bear the
sub-heading
6
"WAARBORG DEUR BEPERKTE MAATSKAPPY." All the blank spaces in Annexures "A",
"B" and "C" have been filled in. Thus, for example, on
the first page of
Annexure "A" there have been inscribed, in typescript, the name of the principal
debtor and the names of the sixth,
the first, the third and the second
appellants respectively as the sureties; and on the last page of the document
there have been
inscribed in typescript "KEMPTON PARK" as the place,
and
"13de ... DESEMBER 1988" as the date of signature by
the sureties. Thereunder
appear four signatures. It is common cause that these are the signatures of the
sixth, first, third and second
appellants respectively. It is not common cause
that such signatures were affixed on 13 December 1988. The typescript filled in
on
the remaining two guarantees respectively name the fourth appellant (in
Annexure "B") and the fifth appellant (in Annexure "C") as
the surety for the
indebtedness of the principal debtor;
7
and the names of the first, third and sixth appellants
(duly authorised by a board resolution) acting for and on
behalf of the surety in each case. On the last page of
each of Annexures "B" and "C" the same place (Kempton Park)
. and the same
date of signature (13 December 1988) have
been typed in. Thereunder appear three signatures. It
is common cause that these are the signatures of the first,
third and sixth appellants respectively. It is not common
cause that such signatures were affixed to Annexures "B"
and "C" on 13 December 1988.
Whenever the respondent required suretyships from
the appellants the printed bank forms such as those already
described were delivered by the respondent at the group
office. According to Swart's affidavit such documents -
".... although prima facie signed on a particular date by particular persons
...."
were in fact signed -
"....from time to time by whichever of the
8
signatories were then present .... in blank and in an incomplete state pending
final signature by the last of the persons concerned,
whereupon one of the
secretaries [at the group office] would complete the documents by inserting the
appropriate names."
Swart's affidavit proceeds to
say that each of the
suretyships reflected in Annexures "A", "B" and "C" was
so
signed, and -
".... at the time each of the signatures was appended thereto, the document was
inchoate in that, in particular, none of the typescript
appearing throughout the
body of the document had been inserted...."
It is
not expressly stated in Swart's affidavit that it was
only after the
secretaries of the group had typed in all
the relevant particulars now
appearing therein that
Annexures "A", "B" and "C" were delivered to
the
respondent, but in the course of his judgment Lazarus J
correctly
concluded that this was the obvious inference to
draw. In argument before
this court it was common cause
that all three suretyships were returned to the respondent
9
after they had been so completed on behalf of the
appellants.
The court below gave the first defence short
shrift. Lazarus J said the following:-
"I refer to the case of Standard Bank of South Africa v Jaap de Villiers
Beleggings 1978(3) SA
955(W), where Coetzee J held that the relevant time for considering whether a
suretyship is complete is the time of delivery and
not the time of signature. He
found that Miller JA in the case of Fourlamel (Pty) Ltd v Maddison 1977(1) SA
333 (A), had not intended
to deal with the case where the suretyship was
complete at the time of delivery though incomplete at the time of signature. In
my
respectful view this is correct, and I in any event regard myself as bound by
the case."
Sec 6 of the Act is in the following
terms:-
"No contract of suretyship entered into after the commencement of this Act,
shall be valid, unless the terms thereof are embodied
in a written document
signed by or on behalf of the surety: Provided that nothing in this section
contained shall affect the liability
of the signer of an aval under the laws
relating to negotiable
instruments."
In the Fourlamel case
(supra) the defendant
10
surety raised the defence that the printed document which
bore his
signature had been a blank form at the time when
he signed it. In delivering
the unanimous judgment of this
court Miller JA (at 341 C-D) defined the
essential issue
between the parties as being -
"....whether, if the printed document was in
blank in the
respects alleged by respondent at
the time of his signing thereof, the
unilateral
insertion thereafter, by another, of the missing
details,
resulted in a contract of suretyship
'the terms (whereof) are embodied in
a
written document signed by or on behalf
of the surety',
within the
meaning and effect of those words in
sec 6 of Act 50 of 1956."
Counsel for the appellant in the Fourlamel case had
submitted that sec 6 of the Act required only that the
terms of the
contract of suretyship be embodied in a
written document bearing the surety's
signature,
irrespective whether the orally agreed terms were so
inscribed before or after the surety appended his
signature. In rejecting this submission Miller JA
11
remarked (at 341 G-H):-
"The plain, grammatical meaning of the words used in sec 6 appears to me to be
clear. The section presupposes that an agreement of
suretyship has been reached
- 'contract of suretyship entered into' - and it provides thereafter that such
agreement shall not be
valid
'unless the terms thereof are embodied in a written document signed by or on
behalf of the surety.' What is it that requires to be
signed by the surety? It
is surely the written document containing the terms of the agreement (Cf. the
Afrikaans version
'....tensy die bepalings daarvan
in 'n deur of namens die borg ondertekende skriftelike dokument beliggaam
is'.)."
In the course of his judgment Miller JA considered what
objects sec 6 had
been intended to achieve. In this
connection the learned judge of appeal
pointed out the
following (at 342 in fin - 343 C) -
"However many objects the Legislature may have had in mind in enacting sec 6 of
Act 50 of 1956, one of them was surely to achieve
certainty as to the true terms
agreed upon and thus avoid or minimize the possibility of perjury or fraud and
unnecessary litigation.
This is a purpose which, despite differences in wording,
is common
12
to the enactments relating, respectively, to contracts for the sale of land
(see, e g, Wilken v Kohler,
1913 A.D. 135
at pp 142, 149; Clements v Simpson,
1971 (3) SA 1
(A.D.) at p 7) and to agreements of hire-purchase (Van Rooyen v
Hume Melville Motors (Edms) Bpk., supra at p 71). The Legislature
may also have
been influenced by other considerations, for example, that suretyship being an
onerous obligation, involving as it
does the payment of another's debts,
would-be sureties should be protected against themselves to the extent that they
should not
be bound by any precipitate verbal undertakings to go surety for
another but would be bound only after their undertaking had been
recorded in a
written document and signed by them or on their behalf. These objects would
clearly be defeated if it were left to
another, after a party had appended his
signature to a blank document, to insert the terms of a prior verbal
agreement."
Suretyship is a bilateral jural act. See LAWSA
vol
26 par 156 at p 138. It is a contract which arises
from agreement between
creditor and surety, and it involves
the acceptance of an offer. An offer is
a manifestation
of the offeror's willingness to contract, made with the
intention that it shall become binding as soon as it is
accepted by the offeree. It is trite that an offer cannot
13
be accepted unless and until it has been brought to the attention of the
offeree. It need hardly be said that there is a fundamental
difference between,
on the one hand, the situation in which after a surety has signed and delivered
a blank form to the creditor,
the latter unilaterally completes the blank form
by filling in some of the contractual terms, and, on the other hand, the
situation
in which the surety has signed a blank form which is then filled in,
by, or for and on behalf of the surety, before the document
so completed is
delivered to the creditor. In the Fourlamel case this court was concerned only
with the former situation.
A prerequisite for a contract of suretyship is
that the offer communicated by the would-be surety to the creditor must be
complete.
In the instant case, so it seems to me, the appellants communicated
their offers to the respondent when the documents in question,
duly filled
14
in, were delivered by or on behalf of the appellants to the respondent. It
cannot be suggested that, on the face of them, these offers
were in any respect
incomplete. At that juncture they contained the terms essential for the material
validity of a contract of suretyship
(the identity of the creditor; the identity
of the surety or sureties; and the amount of the principal debt.) These terms
had been
incorporated at the group office by the secretaries of the group for
and on behalf of the appellants. Each such document bore the
signatures of those
of the appellants named therein. It is not in dispute that the suretyships thus
delivered to the respondent were
accepted by it.
It will be recalled that in
rejecting the appellants' first defence the court a quo relied upon the judgment
of Coetzee J in Standard
Bank of South Africa v Jaap de Villiers Beleggings
(supra), to which I shall refer
15
hereafter as "the De Villiers case". There the plaintiff bank had partially
filled in one of its standard printed suretyship forms.
The incomplete form was
then handed to the defendant surety which further filled in the form. The form
was signed on behalf of the
surety and handed back to the bank. At that stage
there was still blank a clause which provided that the guarantee would remain in
force as a continuing guarantee -
"..... until the .... branch of the Bank"
should receive written notice of termination and until the sums due at the
date thereof should have been paid. Having received the
signed document the bank
in the blank space just indicated caused to be typed in on the document the
words:-
"Standard Bank Centre" Relying on the suretyship, the bank sued the
surety. The latter noted an exception to the claim on the ground
that
16
the document did not comply with sec 6 of the Act in that
at the time of
its signature not all the "terms thereof"
had been embodied therein. The
notice of exception stated
that the term not so embodied was contained in the
words
"Standard Bank Centre" abovementioned.
Coetzee J dismissed the exception. The learned
judge
held that a contract had come into existence when the
signed document, which
contained all the terms material to
suretyship, had been returned to the
bank. The clause in
which the words "Standard Bank Centre" had
subsequently
been inscribed by the bank was irrelevant to the action
and
the signed document made sense without those words. The
following observations in the judgment of Coetzee J (at 958
A-D) seem to
me to be pertinent to the issue in this
appeal:-
"The question which must be answered in the first instance is when did the
parties, as the declaration is framed, actually enter
into em agreement of
suretyship, one that had to be
17
embodied in writing. It seems to me that, on the facts alleged in the
declaration, such a contract could not, on any basis, have
come into being until
the defendant delivered the document signed by him to the plaintiff. When he
took the document away, there
may already have been an agreement reached between
itself and the plaintiff in relation to the suretyship. It may be that the
purpose
of taking the document away was for the defendant to complete it in
whatever way was necessary. Now if the defendant had signed it
at some or other
stage and kept it locked up in the privacy of its own premises, then clearly
until it informs the plaintiff that
such a document exists with the intention of
creating a valid vinculum juris thereby, no such vinculum juris can possibly
come into
existence. It can only begin to exist at a moment when the defendant
manifests its intention of being bound according to the tenor
of the document
and, on these facts, that is when it delivers that piece of paper to the
plaintiff and not before. Consequently,
the important point in time at which I
should look, for the purposes of the exception, is the moment of delivery of
this document
to determine whether a valid contract came into existence at that
moment."
Sec 6 of the Act requires (i) that the terms of
the
contract of suretyship shall be embodied in a written
document which (ii)
shall be signed by the surety. The
18
function of a signature is to signify that the writing to
which it
pertains accords with the intention of the
signatory. It conveys an attestation by the person signing
of his approval
and authority for what is contained in the
document; and that it emanates
from him. Sec 6 is silent
as to when the surety's signature must be affixed
to the
document. Nothing is prescribed as to the sequence in
which
completion of the document and the affixing of his
signature by the surety
must occur.
The Act is similar in purpose to the English
Statute
of Frauds - see Wilken v Kohler (supra) at 142.
Kindred legislation exists in
the United States of America.
In regard to the antecedent signature of a document
subsequently completed, the following remarks of Corbin, on
Contracts, vol
2 (Statute of Frauds) para 522, are
instructive. At p 769 the learned author states:-
"It is not usual to sign a formal document until it is complete in form with its
terms fully written out. Nevertheless, sometimes
words are scratched out and new
words inserted by
19
interlineation or other addition, after the act of signing. The document as thus
amended is quite effective to perform its ordinary
functions if what is known as
'delivery' takes place after the amendment. There need be no new act of
signing."
On p 770 the following is said:-
"In requiring a memorandum signed by the party to be charged, the statute of
frauds makes no requirement as to the time of inscribing
the signature. The
court must be satisfied that the signature was intended as an authentication of
the instrument in the form in
which it is now afforded as evidence; but it may
be satisfied of this even though the signature was inscribed before the terms of
the agreement were written. This is shown by the cases holding that a name
written at the beginning of a letter as the address, or
a name printed on a
letterhead long before the subject matter appears on the paper, may operate as a
signature. In all these cases,
it must be shown that the name antecedently
inscribed was adopted by the party to be charged as his authenticating
signature." (Emphasis
supplied.)
In my view it is quite immaterial whether the
surety
signs the document only after all the material terms
have been written
therein or whether the surety signs the
20
document first and thereafter, by his own hand or that of
his agent,
completes the document by filling in the
material terms. In either case the
surety's signature
serves to authenticate the document.
Mr Hoffman, who argued the matter on behalf of
the
appellants, urged upon us that the De Villiers case had
been wrongly decided;
and that, upon a proper construction
of the judgment in the Fourlamel case,
Lazarus J had erred
in failing to uphold the first defence in the court
below.
Counsel founded his argument on the passage which occurs at
341 G-H in the judgment of Miller JA, and in particular the
following
statement:-
"What is it that requires to be signed by the surety? It is surely the written
document containing the terms of the agreement."
It
was said that, in so interpreting the provisions of sec
6 of the Act, this court in the Fourlamel case had laid
down without qualification the following principle of
21
general application: that whenever a would-be surety
affixes his signature
before completion (by whomsoever,
including the surety himself) of the document embodying the
terms of the
suretyship, there can never be compliance with
the requirements of sec 6. On
the other hand Mr Du
Plessis, who appeared for the respondent, submitted that
no
such broad proposition of law was implicit in the actual
decision of the
Fourlamel case; and that, in dealing with
the particular facts of the present
case this court
was unhampered in determining the legal point here
involved. For the reasons which follow I agree with the
latter submission.
At the outset it is useful to bear in mind
the
salutary reminder of the Earl of Halsbury LC in
Quinn v
Leathern
[1901] UKHL 2
;
1901 AC 495
(HL(I)) at 506:-
"....that every judgment must be read as applicable to the particular facts
proved, or assumed to be proved, since the generality
of the expressions which
may be found there are not
22
intended to be expositions of the whole law, but governed and qualified by the
particular facts of the case in which such expressions
are to be found .... that
a case is only authority for what it actually decides."
1 have already indicated what the sole issue was
in
the Fourlamel case. That what was decided in the
Fourlamel case was intended
by the court to be confined to
its particular facts, and the only issue raised by them,
appears
sufficiently, I think, from the following
observations of Miller JA when he
found it necessary to
contrast the facts of the case before him with the
facts in
Levin v Drieprok Properties (Pty) Ltd 1975(2) SA 397 (A).
Of the
last-mentioned decision Miller JA said (at 344 A-
B):-
"In that case, after a written offer for the purchase of land had been made, the
offeror's agent made an alteration to it. The Court
left open the question
whether, if the agent was verbally authorized to make the alteration, a valid
contract of sale would have
resulted from the written acceptance by the seller
of the amended offer (p.409G)."
23
Immediately thereafter Miller JA proceeded to say:-
"What is important to note in that connection, however, is that the question
left open by the Court related to an alteration made
by the offeror's agent, not
by any other person. Here, the additions to the deed of suretyship were not made
by the respondent or
his agent." (Emphasis
supplied.)
In the instant case the additions to the
suretyships were
made on behalf of the appellants before they were
returned
to the respondent. That was the very situation which
Miller JA
was at pains to distinguish from the facts of and
the issue in the Fourlamel
case. It follows, despite the
general statement made by Miller JA in the
Fourlamel case
at 341 G-H (and likewise at 344 D), that on the
facts
proved in the present appeal we are at liberty to state our
view of
the law on the point which here arises untrammelled
by what was said in the
Fourlamel case. In passing,
however, and with much deference, I am
constrained to say
24
that in the future this court may yet be required to reconsider the
correctness of the broad proposition stated at 341 G-H of the
Fourlamel case. In
support of that proposition Miller JA (at 342 D-H) relied upon Van Rooyen v Hume
Melville Motors (Edms) Bpk 1964(2)
SA 68(C). For purposes of the present appeal
it is unnecessary to decide whether that case was correctly decided. It is
likewise
unnecessary to venture any opinion as to whether there would still be
compliance with sec 6 where the surety fills in a material
term after the signed
document has been delivered to the creditor. Suffice it to say that on the
particular facts there assumed for
the purposes of an exception, the result in
the De Villiers case was correct; and that on the particular facts proven in the
present
case the judgment of Lazarus J is right and should not be disturbed.
25
For the above reasons I consider that the appeal should be dismissed with
costs, including the costs of two counsel.
G G HOEXTER, JA
Hefer, JA )
Kriegler, AJA )