Fourlamel (Pty) Ltd v Maddison

• Jurisdiction: South Africa
• Citation: 1977 (1) SA 333 (A)

Fourlamel (Pty) Ltd v Maddison
1977 (1) SA 333 (A)

1977 (1) SA p333

Citation	1977 (1) SA 333 (A)
Court	Appellate Division
Judge	Holmes JA, Trollip JA, Muller JA, De Villiers JA and Miller JA
Heard	September 24, 1976
Judgment	November 5, 1976

Flynote : Sleutelwoorde B

Principal and surety — Deed of suretyship — Act 50 of 1956, sec. 6 — "Unless the terms thereof are embodied in a written document signed by or on behalf of the surety" in the section — Meaning of — "Terms" in section — Such including the identification of the parties and of the principal debt and debtor — Incorporation by C reference of such in a lease in deed of suretyship — Lease referred to in a paragraph which was not linked with any debt for which person was to be surety — Such insufficient.

Headnote : Kopnota

The plain, grammatical meaning of the words used in section 6 of the General Law Amendment Act, 50 of 1956, is clear. The D 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. What requires to be signed by the surety (or his agent) is a document which contains, at the time of his signing it, the terms of the E contract.

The notion that, by using the words "the terms" of the contract in section 6 of Act 50 of 1956, the Legislature intended or contemplated that not that part of the agreement which would give it meaning, direction and purpose (the identification of the parties and of the principal debt and debtor) but only other "terms" needed to be embodied in a written document, is fanciful.

Appellant had obtained summary judgment against respondent in a Local Division on a written deed of suretyship. Respondent had F opposed the grant of summary judgment on the grounds, inter alia, that, at the time of the signing of the deed of suretyship, the name of his co-surety did not appear on the document nor had the latter signed it, that neither the name of the creditor nor that of the principal debtor appeared on the document and that, accordingly, the deed of suretyship did not comply with section 6 of Act 50 of 1956. In an appeal to a Provincial Division the decision of the Local Division was reversed. In a further appeal the appellant contended that section 6 required only that the terms of the suretyship be G embodied in

1977 (1) SA p334

a written document bearing the surety's signature, regardless of whether the verbally agreed terms were so "embodied" before or after the surety had appended his signature. Alternatively, it was contended (a) that the names of the creditor, the co-surety and the principal debtor could not be regarded as "terms" of the contract and, accordingly, did not have to be A embodied in the written document, and (b) that, as the concluding paragraph of the deed of suretyship (which read: "I/We hereby select domicilium citandi et executandi for all purposes hereunder at the leased premises referred to in the deed of lease annexed hereto") referred to the deed of lease, in respect of the obligations under which the co-sureties had bound themselves, annexed to the deed of suretyship, the names of the parties which were not contained in the deed of B suretyship when respondent signed it had to be taken to have been incorporated by reference into the deed of suretyship.

Held, that, if the deed of suretyship did not contain the names of the creditor, principal debtor and co-surety when it was signed by the respondent, it was not a valid deed of suretyship in terms of section 6.

Held, further, in regard to appellant's alternative contention (a), that such contention was without real substance.

Held, further, in regard to appellant's alternative contention C (b), that, assuming that the principle of incorporation by reference, as it had been recognized and applied in regard to contracts for the sale of land, was equally applicable to contracts of suretyship governed by section 6 of Act 50 of 1956, it was a condition of the incorporation of other writing into a written document required by law to contain the terms of the contract, if such contract was to have validity, that such other writing be referred to in the written document.

Held, further, that the concluding paragraph of the lease dealt exclusively with the selection of domicilium and was in no way D linked with any debt or debts for which respondent was to be surety.

Held, accordingly, that alternative contention (b) had to be rejected.

Held, further, that it could not be said that appellant had an unanswerable case or that respondent, having no bona fide defence, had given notice of intention to defend solely for the purpose of delay. Appeal dismissed.

E The decision in the Transvaal Provincial Division in Maddison v Fourlamel (Pty.) Ltd. reversing the decision in Fourlamel (Pty.) Ltd. Penguin Heating and Air Conditioning (Pty.) Ltd. and Others, 1975 (4) SA 501 (W), confirmed.

Case Information

Appeal from a decision in the Transvaal Provincial Division F (HIEMSTRA, J., BOTHA, J., and JOUBERT, J.). The facts appear from the judgment of MILLER, J.A.

H. Z. Slomowitz, for the appellant: Respondent averred that the suretyship was void for want of compliance with sec. 6 of the General Law Amendment Act, 50 of 1956 ("the Act"). The respondent did not aver that the document which he signed was G filled in later otherwise than in accordance with his instructions and authority and in fact nothing was subsequently inserted which had not been agreed upon initially. It is to be observed that: (a) the specific requirement of the Act is merely that the suretyship to be valid must be embodied in a written document; there is no requirement that the document be complete when signed; (b) there is no requirement that the H agent who signs on behalf of the surety must be authorised thereto in writing; (c) there are fundamental differences of wording between the Act and the provisions of other Acts prescribing formalities in respect of specific contracts (cf. sec. 1 of the Formalities in respect of Contracts of Sale of Land Act, 71 of 1969, and sec. 4 (1) of the Hire-Purchase Act, 36 of 1942). In order to justify the requirement that the suretyship be complete at the moment of signature, and may never thereafter be completed, the ordinary meaning of the words "embodied in the written document" must be violated. There is nothing in the quoted

1977 (1) SA p335

words which require the suretyship to be complete when signed. The Full Bench ignored entirely the plain meaning of the words. It paid regard instead only to what it conceived to be the purpose of the Legislature and the mischief that the Act was A designed (according to it) to avoid. In this regard, the Full Bench ignored certain of the cardinal rules for the interpretation of statutes. Steyn, Die Uitleg van Wette, pp. 2 - 13. While it is true that a cardinal or golden rule of interpretation is to ascertain the intention of the Legislature, it must be borne in mind that this is to be ascertained from a study of the provisions of the enactment in question and that words must be given their ordinary B signification unless an inconsistency is produced. Principal Immigration Officer v Hawabu, 1936 AD at p. 30; Union Government v Mack, 1917 AD at p. 739; Seluka v Suskin & Salkow, 1912 T.P.D. at p. 270; Bulawayo Municipality v Bulawayo Waterworks, 1915 CPD at p. 445; Wilken v Kohler, C 1913 AD at p. 143; Steyn, supra, pp. 3 - 4. The Full Bench erred in finding that, if the purpose of the Legislature in enacting the relevant section was the same as its purpose in enacting sec. 1 of Act 71 of 1969, it had achieved that purpose to the same extent. In the case of sale the relevant Act has been held to have been directed against uncertainty, disputes D and malpractices. Clements v Simpson, 1971 (3) SA at p. 7. The purpose of the Legislature may, in the case of suretyship, have been no more than to obtain some measure of certainty as to the terms of the contract without intending to preclude the scope for uncertainty to the same extent that it did in the case of sale, or its purpose may have been purely fiscal or it may have been both. Conroy, N.O. v Coetzee, 1944 OPD 207; E Lodge v Modern Motors Ltd., 1957 (4) SA at p. 113C - E; Denton v Haldon's Furnishers, 1951 (1) SA at pp. 724 - 5. In Northern Cape Co-op. Livestock Agency Ltd. v John Roderick & Co. Ltd., 1965 (2) SA at p.71G - H, it was held that the Legislature had in mind a similar purpose in enacting both statutes. Even if this is correct, however, it does not follow that it achieved exactly the same result in both statutes or, F for that matter, that it intended exactly the same results. No more can be said than that its purpose was broadly similar in both instances. It should also be borne in mind that the Court in John Roderick's case was concerned not with the issue in this matter but purely with determining the circumstances in which it could be said that a contract in writing contained all G the elements of the contract. It was not concerned with determining the point in time at which those elements must be inserted into the contract. To hold in each case which turns on the interpretation of words in a statute prescribing formalities in respect of a specific contract that the Legislature intended to avoid the same mischief as in every other statute and that it follows from that that whatever words it used it in fact avoided the mischief to the same extent in H each case, is to hold that all of the statutes in question bear the same meaning, notwithstanding their obvious differences...