Arprint Ltd v Gerber Goldschmidt Group South Africa (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Wessels JA, Muller JA, Kotzé JA, Holmes AJA and Diemont AJA
• Judgment Date: 29 September 1982
• Citation: 1983 (1) SA 254 (A)
• Hearing Date: 17 September 1982
• Court: Appellate Division

Diemont AJA:

William Hyman and Hugh Winston Hyman are brothers. They are known as Boet and Hint and as the witnesses and the B trial Judge found it convenient to refer to them informally by their nicknames, I shall do the same. I shall also refer to the appellant and the respondent in this Court as the defendant and the plaintiff respectively.

The two brothers were the directors of a company known as Arprint Ltd. This was the defendant company and all its shares C were owned by the Hyman family. Boet Hyman was also the director of another company, Southern Bearing and Engineering Supplies (Pty) Ltd, which was liquidated in 1977. This company was indebted to the plaintiff company - Gerber Goldschmidt Group SA (Pty) Ltd - in a considerable sum of money. Boet Hyman had stood surety for this debt. He was called upon to D make payment and when he failed to do so the plaintiff company sued him. He then signed a consent to judgment for the amount due, R87 000.

An amount of R21 000 was in due course recovered from the liquidators of Southern Bearing and Engineering Supplies (Pty) Ltd, but by then further bills had matured and R202 000, including interest, was owed by Boet Hyman to the plaintiff.

E During the years 1977 and 1978 there were drawn out negotiations between the parties in an effort to avoid plaintiff taking action against Boet Hyman and avert the threat of sequestration. It was suggested that 36 bills of exchange be drawn by the defendant company, Arprint, in favour of the plaintiff company and endorsed by Boet Hyman as surety. This F scheme was vetoed by Hint Hyman who did not wish this liability to appear on the balance sheet of the defendant company. The suggestion that there should be an acceleration clause so that all the bills would fall due in the event of one bill not being met on due date was also firmly rejected but after further negotiation agreement was reached. The plaintiff G was furnished with 36 promissory notes dated 19 September 1977, each made by the defendant company in favour of Boet Hyman and endorsed by him. These notes were payable at monthly intervals, the first on 9 January 1978 and the last on 10 December 1980. Their individual amounts ranged from R5 000 to about R6 500. Altogether these notes totalled R202 681 which, when interest was taken into account, was the full extent of H Boet Hyman's suretyship liability.

The parties subsequently agreed through their attorneys that payment of the first promissory note would be deferred so that it would in effect become the last note of the series. The second note was met on due date, 10 February 1978, but it was the last note to be met. The defendant stopped payment of the remaining promissory notes.

When the third promissory note was dishonoured the plaintiff came to Court claiming provisional sentence for R5 000 against the defendant

Diemont AJA

and Boet Hyman jointly and severally. Summons was issued on 20 March 1978. The proceedings were unsuccessfully opposed and on 28 April 1978 provisional sentence was granted and defendant paid the sum claimed.

The course of events which followed was somewhat strange. As A each of the next 22 notes was dishonoured in turn the plaintiff issued summons for provisional sentence. Initially both defendant company and Boet Hyman were sued, but when the latter's estate was sequestrated by a third party, the defendant alone was sued. The defendant resisted on none of these occasions. It paid the sum claimed more often than not on B receipt of the summons before provisional sentence was granted. Over a period of almost two years the plaintiff was paid the amounts of the second to the 25th promissory notes, in all R139 249,50.

But then the tide turned. An amount of R5 572,92 was due for payment on 11 February 1980 on the 26th promissory note. The usual default was followed by the usual summons for provisional sentence. Provisional sentence was granted on 5 March 1980 but C the defendant now, for the first time, entered into the principal case. This was the case which came before the trial Court and resulted in the appeal which is before this Court.

The parties agreed to treat this as a test case and no further summonses were issued. The unpaid balance of the original R202 D 681 is R63 431,50 - the payment of that sum depends on the outcome of these proceedings.

The defence is founded on a letter dated 21 September 1977 which was sent to the plaintiff's attorneys with the promissory notes. The letter was written by defendant's attorneys and is annexed to the amended plea. It records inter alia the number, E date and amount of each of the 36 promissory notes and also the fact that Boet Hyman or Mr W Hyman, as he is more formally referred to by the writer, is employed by the defendant company as a director and is in receipt of a salary. The last paragraph of the letter reads as follows:

"By virtue of the...