Barclays National Bank Ltd v Brownlee

• Jurisdiction: South Africa
• Judge: Kriek J
• Judgment Date: 18 March 1981
• Citation: 1981 (3) SA 579 (D)
• Hearing Date: 14 August 1980
• Court: Durban and Coast Local Division

Kriek, J.:

This is an application for summary judgment in which the defendant does not dispute any of the averments in the particulars of the plaintiff's claim, these being to the effect that -

(a)

a company now in liquidation operated a current banking account H with plaintiff (a registered commercial bank) upon certain terms and conditions;

(b)

since 24 December 1979 this account has been overdrawn to the extent of R62 676,68;

(c)

on 13 March 1979 defendant signed a written deed of suretyship (a copy of which is annexed to the particulars of claim) in terms of which he bound himself to plaintiff as surety in solidum for and co-principal debtor jointly and severally with the company

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for the due payment by it of all moneys which the company then, A or at any time thereafter, owed plaintiff, up to an amount of R65 000;

(d)

defendant is consequently liable to pay plaintiff the sum of R62 676,68 together with interest thereon.

What defendant says in his affidavit opposing summary judgment may be summarised as follows:

(i)

B Plaintiff agreed to allow the company overdraft facilities on condition that defendant, his brother and one Kohler signed suretyship undertakings in the form of the annexure to the particulars of claim.

(ii)

Defendant, his brother and Kohler each signed such an undertaking.

(iii)

C Defendant's brother has been resident outside the Republic of South Africa for the past 13 years.

(iv)

In the premises plaintiff, relying inter alia upon a suretyship D undertaking furnished by a person resident outside the Republic, lent money or granted credit to the company in the Republic.

(v)

In terms of reg 3 (1) (e) of the Exchange Control Regulations, 1961, as amended, promulgated in Government Notice R1111 dated E 1 December 1961, under the provisions of s 9 (1) of Act 9 of 1933, the granting of such loan or credit was prohibited unless it was done pursuant to an exemption granted by the Treasury, or a person authorised by it, or unless permission was granted by the Treasury or a person authorised by it.

(vi)

No such exemption or permission is alleged in the plaintiff's F particulars of claim which are therefore "bad in law and disclose no cause of action".

(vii)

Defendant has no knowledge whether such exemption or permission was granted, and a request for information in this regard made to plaintiff's attorneys before the issue of summons was met with the following response:

G "Should the action which is to be instituted reach the stage where your client is entitled to discovery of our client's documentation, such documentation will obviously then be made available".

Mr Giles, who appeared for the defendant, did not confine his argument within the narrow limits summarised in para (vi) above. In fact, he did not support that contention at all. What he did submit was firstly that H an agreement in terms of which a loan or credit is granted in contravention of reg 3 (1) (e) is null and void (which would have the effect of releasing defendant from his suretyship undertaking), and secondly that, since defendant did not know whether or not reg 3 (1) (e) had been contravened, he ought to be given the opportunity of investigating that aspect of the matter, if necessary by proceeding to the stage of the discovery of documents.

If the first submission is well-founded, then defendant ought clearly to be granted leave to defend. If, on the other hand, a contravention

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of reg 3 (1) (e) does not have the effect contended for by Mr Giles, then defendant equally clearly has no defence to plaintiff's claim.

Reg 3 (1) reads:

A "Subject to any exemption which may be granted by the Treasury or a person authorised by the Treasury, no person shall, without permission granted by the Treasury or a person authorised by the Treasury and in accordance with such conditions as the Treasury or such authorised person may impose -

...........

(e)

B make a loan or grant credit to any person in the Republic, or guarantee such loan or credit, where, as security for the repayment of the loan or credit, the lender or guarantor relies on any security, guarantee or undertaking, explicit or implied, furnished by a person or persons resident outside the Republic."

I was also referred to reg 22 which reads:

"Every person who contravenes or fails to comply with the provisions of C any of these regulations, or contravenes or fails to comply with the terms of any notice or order or direction issued or any permission or exemption granted under these regulations,... shall be guilty of an offence and liable to a fine not exceeding R10 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment; provided that where he is convicted of an offence against any of these regulations in relation to any security, foreign currency, gold, bank-note, cheque, D postal order, bill, note, debt, payment or goods, the fine which may be imposed on him shall be a fine not exceeding R10 000, or a sum equal to the value of the security, foreign currency, gold, bank-note, cheque, postal order, bill, note, debt, payment or...