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[1995] ZASCA 106
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Bulsara v Jordan & Co Ltd (Conshu Ltd) (406/92) [1995] ZASCA 106; 1996 (1) SA 805 (SCA); (21 September 1995)
Case no 406/92 IN THE SUPREME COURT OF SOUTH AFRICA
APPELLATE DIVISION
In the matter between
HAMANT
BULSARA
Appellant
and
JORDAN & CO LTD (CONSHU
LTD)
Respondent
Coram:
JOUBERT, EM GROSSKOPF, VAN DEN HEEVER,
OLIVIER JJA et SCOTT AJA
Heard:
31 August 1995
Delivered
: 21 September 1995
JUDGMENT J
OUBERT JA:
This matter originated in the Magistrate's Court, Port Elizabeth.
The
2 respondent, Jordan & Co Ltd, ("the creditor")
sued the appellant ("Bulsara") as
surety Tor payment of the amount
of R11 326-76 (subsequently reduced to
R10 000-00 to bring it within
the then magisterial jurisdiction) which Bulsara
Outfitters (Pty)
Ltd ("the principal debtor") had failed to pay. Bulsara
successfully
raised a special plea that the creditors's claim against him had
prescribed. The magistrate accordingly dismissed the creditor's action
against
him. On appeal to the Eastern Cape Division the judgment of the
magistrate
was reversed by allowing the appeal and remitting the
matter for further hearing
on matters unrelated to the plea of
prescription. The judgment of the Court a.
quo
(delivered by MULLINS J and concurred in by JANSEN J) is
fully
reported as
Jordan and Co Ltd v Bulsara
1992 (4) SA 457(E).
With
leave of
the Court
a quo
Bulsara now appeals to this Court.
The material facts which arc common cause and constitute
the
background to the appeal, are as follows:
1 On 29 August 1985 Bulsara signed a deed of suretyship in terms
of
which he bound himself as surety and co-principal debtor for certain
in-
3 debtedness of the principal debtor to the creditor. I shall
hereinafter consider
the material provisions of the deed of
suretyship and the interpretation thereof.
2
On 20 March 1987
the creditor issued summons in the Magistrate's Court against the principal
debtor for payment of R3 220-63 in respect
of goods sold and delivered "during
September to December 1986". It was served on the same date. The judgment of the
magistrate does
not appear from the record but the matter was apparently taken
on appeal to the Eastern Cape Division which gave judgment on 23 May
1989 in
favour of the creditor against the principal debtor in the sum of R2 782-22.
Various bills of costs relating to the action
and the appeal were taxed until 13
February 1990. Eventually the total sum of capital, interest and costs owing by
the principal
debtor to the creditor amounted to R11
326-76.
3
On 21 May 1990 the
creditor sued Bulsara, as surety, in the Magistrate's Court for payment of Rll
326-76 (reduced to R10 000-00 as
stated
supra
), which arose from the
judgment given on 23 May 1989 in favour of the creditor against the principal
debtor. The summons was served
on 28 May
1990.
4
4 On 14 March 1991 Bulsara raised a special plea that the creditor's
claim
against him had become prescribed.
5 On 29 August
1991 the magistrate found that prescription had taken
place and
upheld (he special plea. The magistrate held that the original
debt
became due and payable on 20 March 1987 when the summons was
issued and
served on the principal debtor. Prescription then
commenced to run against the
principal debtor. According to the
magistrate the judgment of 23 May 1989
against the principal debtor
did not amount to novation of the original debt and
therefore did
not give rise to a new cause of action. He held that a period
of
more than three years had elapsed since the debt became due and
payable when
service of the summons was effected on Bulsara on 28
May 1990.
According to the Court
a quo
the crisp question for decision was
whether the judgment obtained against the principal debtor on 23 May 1989, and
the costs involved
in obtaining it, amounted to a new debt payable by the
principal debtor for which Bulsara was liable as surety. It held that the
running of prescription against the principal debtor was in terms of section 15
(1) of the
5
Prescription Act 68 of 1969
("the
Act") interrupted
by
the service of the
summons on him on 20 March 1987. The judgment of 21 May 1989
against
the principal debtor created an independent new cause of
action binding both
the principal debtor and Bulsara. This debt had
not become prescribed when
summons was served on Bulsara. The Court
a quo
accordingly upheld the
creditor's appeal against
Bulsara with costs. Bulsara's special plea of
prescription was
dismissed with costs and the matter was remitted to the
magistrate for further hearing.
According to the creditor's
summons of 21 May 1990 against Bulsara its cause of action was based on the
latter's liability as a surety
for the judgment debt obtained against the
principal debtor on 23 May 1989. In this Court Mr
De Bruyn
on behalf of
Bulsara contended that the wording of the deed of suretyship was not wide enough
to include a judgment debt acquired
by the creditor against the principal
debtor. The fate of this contention depends upon the proper construction of the
deed of suretyship.
In this Court Mr Gauntlett, who appeared for the creditor, adopted
a
6 straightforward approach. He argued that the
creditor did not sue Bulsara on
the cause of action based on suretyship for goods sold and delivered, but
on the
suretyship for the judgment debt obtained against the debtor
as a separate and
new cause of action. He also argued that whatever
may have been the late of
the creditor's action against Bulsara
based on "goods sold and delivered" - and
even if" that cause of
action had become prescribed - the creditor's present
action against
Bulsara is founded on a new and independent cause of action
based on
the judgment debt against the debtor. That cause of action arose
only
at the earliest on 23 May 1989. As summons was served on
Bulsara on 28
May 1990, the debt could not have become prescribed.
The first leg of Mr Gauntlett's argument appears to be sound. In its
Particulars of Claim, the creditor manifestly does not rely on
an amount due in
respect of goods sold and delivered, but on the judgment debt.
The second leg of Mr Gauntlett's argument was hotly debated at the Bar.
The crux of the debate was whether the judgment debt constituted
a new and
separate cause of action, in respect of which prescription would
commence
7 running independently of the cause of action based on
goods sold and
delivered.
Counsel were
ad idem
, in my view correctly, that this question has
to
be decided exclusively with reference to the
interpretation of the deed of
suretyship.
The main provisions of the deed of suretyship may be listed as
follows:
(i) "I, the undersigned HAMANT BULSARA do
hereby interpose and bind myself as Surety and Co-Principal Debtor for the due
and punctual
payment of all amounts or any obligations which may now or in the
future become due by BULSARA OUTFITTERS (PTY) LIMITED (hereinafter
referred to
as the DEBTOR) to JORDAN & CO LIMITED (hereinafter referred to as the
CREDITOR) in respect of goods sold and delivered
by the CREDITOR to the DEBTOR
or in respect of interest on overdue payments, legal costs or for any other
causes of debt arising
out of such transactions." (ii) The deed of suretyship
proceeded to provide for the renunciation by
8
Bulsara of the exceptions of excussion, division and cession of
action.
(iii) It was recorded that the suretyship was to
remain in force as a
continuing security. (iv) It was also stated that it would be in the
entire discretion of the creditor
to determine the extent, nature and duration of the debtors'
indebtedness
to it.
It is clear from the wording of the deed of
suretyship as a whole that the intention of the parties was not to limit the
liabilities
in respect of goods sold and delivered by the creditor to the
principal debtor since the wording was very widely stated to include
"any other
causes of debt arising out of such transactions", i.e. out of transactions of
sale and delivery of goods which would include
judgment debts in respect of such
sales. The deed of suretyship read as a whole supports the interpretation that
the parties intended
to include a judgment debt against the principal debtor for
goods sold and delivered to the latter by the creditor as the subject
of the
suretyship. In other words, the deed of suretyship evinces an intention of the
parties to cover both the original cause
9 of debt as well as a
judgment debt. Mr Gauntlett's contention as regards the
second leg of his approach, as set out
supra
, must also be
upheld.
Before analysing the question of prescription raised by the special
plea
it is expedient to examine the nature of the legal
relation of the parties:
1
The creditor and the principal debtor relation
The creditor as seller entered into contracts of sale of goods with the
principal debtor. They were the only parties to these contracts
which gave rise
to the principal obligation and the contractual debt, also known as the
principal or original debt.
2
The creditor and the
surety relation
Surety is a contract which arises by agreement between the creditor and the
surety. The suretyship contract is accessory to the principal
contract between
the creditor and the principal debtor. By signing the deed of suretyship as a
surety and co-principal debtor and
by his renunciation of the exceptions of
excussion, division and cession of action, Bulsara did not in law become a party
to the
principal contract between the
10 creditor and the principal debtor. See
Neon and Cold
Cathode
Illuminations
1978 (1) SA 463
(A) at p 471C -
472E.
The position here is that the principal contract
and the suretyship contract arc two separate and distinct contracts existing
side
by side in respect of the same debt viz. the original debt. They give rise
to two distinct obligations on the part of the principal
debtor and Bulsara in
respect of the original debt. The creditor, being the only party common to both
contracts could , if he so
elected, have sued them jointly in the same action,
or separately in two different actions. He elected to proceed first against the
principal debtor and subsequently against Bulsara. There was no obligation on
the creditor to have joined Bulsara when it sued the
principal debtor on 20
March 1987. Moreover, if he so wished he could have ceded his two actions to
third parties.
I now turn to consider the question of prescription in regard to the two
debts arising from the principal contract and the suretyship
contract.
Section 12
(I) of the
Act provides
that prescription "shall commence to
run as soon as the debt is due." (The provisos thereto mentioned in
subsections
11
(2) and (3) arc not relevant for present purposes). The word "debt' in
this context has a wide meaning. See
Oertel en Andere NNO v Direkteur van
Plaaslike Bestuur en Andere
1983 (1) SA 354
(A) at p 370B: "Volgens die
aanvaarde betekenis van die begrip slaan 'n skuld' op 'n verpligting om iets te
doen (hetsy by wyse van
betaling of lowering van 'n saak of dienste), of nie te
doen nie. Dit is die een pool van 'n verbintenis wat in die reel 'n
vermoënsbeslanddeel
en- verpligting omvat." The expression "debt is due" is
construed in
Deloitte Haskins & Sells Consultants (Pty) Ltd v Bowthorpe
Hellerman Deutsch (Pty) Ltd
[1990] ZASCA 136
;
1991 (1) SA 525
(A) at p 532 H-I as follows:
"This means that there has to be a debt immediately claimable by the debtor, or
stated in another way,
that there has to be a debt in respect of which the
debtor is under an obligation to perform immediately. See
The Master v I L
Back & Co Ltd and Others
1983 (1) SA 986
(A) at 1004, read with
Benson and Others v Walters and Others
1984 (1) SA 73
(A) at 82. It
follows that prescription cannot begin to run against a creditor before his
cause of action is fully accrued, i.e.
before he is able to pursue his claim (cf
Van Vuuren v
12
Boshoff
1964 (1) SA 395
(T) at
401."
In terms of
section 11
(d) of the
Act the
period of prescription in
respect of the principal debt was three years. When judgment was given on 23 May
1989 in favour of the
creditor against the principal debtor in respect of goods
sold and delivered the prescriptive period of 30 years in terms of
section 11
(a) (ii) of the
Act became
applicable against the creditor in respect of that
cause of action.
The prescriptive period in respect of the
suretyship debt was also three years according to
section 11
(d) of the
Act.
When
did the suretyship debt become due and enforceable against Bulsara? I
indicated
supra
in construing the deed of suretyship that it included a
judgment debt against the principal debtor as the subject of the suretyship.
When judgment was given on 23 May 1989 against the principal debtor the amount
due and payable by Bulsara became liquidated and shortly
thereafter the amounts
due and payable in respect of interest and costs were likewise liquidated when
the various bills were taxed.
Summons was served on Bulsara on 28 May 1990 well
within the
13 aforementioned three year period of prescription.
Hence Bulsara cannot rely
on the plea of prescription.
The correctness or otherwise of the judgments in
Rand Bank v De Jager
1982 (3) SA 418
(C) and
Bank of Orange Free State v Cloete
1985 (2)
SA 859
(E) does not arise for decision in this appeal.
It follows that the appeal is dismissed with costs which includes the
costs of two counsel.
C.P. JOUBERT JUDGE OF APPEAL
CONCUR
EM GROSSKOPF JA VAN DEN HEEVER JA OLIVIER JA SCOTT AJA