Lategan and Another NNO v Boyes and Another

• Jurisdiction: South Africa
• Judge: Le Roux J
• Judgment Date: 18 July 1980
• Court: Transvaal Provincial Division
• Citation: 1980 (4) SA 191 (T)

Le Roux J:

The plaintiffs, in their capacity as trustees of a testamentary trust, created by the late Evert Frederik Johannes Pretorius, instituted an action against the defendants, jointly and severally, for the recovery of the balance of a loan said to be due to the trust by a company, G Liverken (Pty) Ltd ("Liverken") and secured by a mortgage bond registered over certain properties belonging to the principal debtor. It is alleged that the defendants signed a written deed of suretyship in which they undertook, jointly and severally, to be liable for the due performance of all Liverken's obligations under the bonds still to be registered, towards the bondholder, the said E F J Pretorius.

H A mortgage bond, dated 10 November 1972, was duly registered over 34 properties all forming part of the original farm, Liverpool No 202, in the district of Pilgrim's Rest, to secure a capital sum of R115 000, and interest at an annual rate of 12 per cent. Provision was further made for the release of some or all of the properties under mortgage on payment of certain stipulated sums. The capital sum was due for repayment on 31 October 1975. By a written agreement, dated 21 October 1975, this date was extended for one year to 31 October 1976 on condition that R15 000 of the outstanding balance be repaid by 31 October 1975 and that the

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interest rate be increased by 2 per cent per annum to 14 per cent. Only the second defendant, in his capacity as director of Liverken, signed the amending agreement.

A On 22 October 1976, a few days before the capital sum secured under the bond became payable in terms of the amending agreement, Pretorius died. He left the proceeds of the loan in trust to Volkskas Bpk, who in turn appointed the plaintiff as trustees. During April 1977, Liverken was placed in final liquidation and a dividend of some R15 000 was eventually B received from the insolvent estate by the trustees. The sum presently outstanding amounts to R79 435,05 which is the amount now claimed by the plaintiffs, together with interest and costs.

Only the second defendant opposed the relief claimed by the plaintiffs. He originally raised two basic defences, affecting the validity of the deed C of suretyship and, alternatively, his liability as a surety thereunder. These defences were already reflected in his affidavit filed in opposition to an application for summary judgment. Shortly stated, these were:

(a)

that the deed of suretyship was invalid because of non-compliance with the formalities prescribed by s 6 of Act 50 of 1956; and

(b)

that the amending agreement of 21 October 1975 between Liverken and Pretorius constituted a material D variation of the principal debt which made the position of the sureties more onerous and, as they did not give their consent to this variation, they were therefore discharged.

By a subsequent amendment to defendant's pleadings a further defence was E raised, viz that the first defendant had not consented to or signed the agreement varying the principal debt and that this omission rendered the suretyship agreement "inchoate" (sic) in terms of Act 50 of 1956. By this statement (which was apparently drafted by the second defendant himself after his attorneys of record had withdrawn as his legal representatives) I understand him to convey that, because the first defendant is a F co-surety and because he was in no way involved in the variation of the bond, therefore the requirements of s 6 of Act 50 of 1956 have not been satisfied and the suretyship agreement is accordingly null and void.

Attached to the summons is a copy of the deed of suretyship, which reads as follows:

"Borgakte
G Ons, die ondergetekendes, Alfred George Boyes en Kenneth John Boyes, verbind onsself hiermee gesamentlik en afsonderlik as borge en medehoofskuldenaars vir al die verpligtings van Liverken (Edms) Bpk onder 'n verbandakte te worde geregistreer ten gunste van Evert Frederik Johannes Pretorius in terme van die aangehegte volmag deur ons geparafeer vir identifikasie-doeleindes;
Vir alle doeleindes hiervan doen ons hiermee afstand van die voordele H voortspruitende uit die wetlike eksepsies 'de duobus vel pluribus reis debendi, excussionis et divisionis' en kies ons respektiewelik domicilium citandi et executandi te Stadsentrum 40, Pretoriusstraat, Pretoria, en Laer Grond Vloer nr 6, SALU - gebou, h/v Schoeman-en Andriesstraat, Pretoria.
Geteken te Pretoria hierdie 26ste dag van Oktober 1972.
	(get) A G Boyes; (get) K J Boyes.
As Getuies
1. (get) ??
2. (get) ??"

Despite the reference in the deed of suretyship to an "attached" power

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of attorney, no document conforming to this description was attached to the summons. After the second defendant had pointed this out in his affidavit filed in opposition to an application for summary judgment, the A plaintiffs again annexed the above-quoted deed of suretyship to their declaration, but this time with the document referred to therein attached thereto, and they allege that both defendants had duly bound themselves as sureties and co-principal debtors for the due performance by Liverken of its obligations in terms of the mortgage bond to be registered.

To this allegation, second defendant pleaded as follows:

"4 (a)

... B

(b)

Second defendant denies that the power of attorney to pass a mortgage bond now attached to the aforesaid annexure was:

(i)

annexed thereto when the deed of suretyship was signed by him; and

(ii)

was initialled by second defendant C and first defendant when the deed of suretyship was signed by them.

(c)

In the premises second defendant denies that the alleged deed of suretyship constitutes a valid deed of suretyship for want of compliance with the provisions of s 6 of Act 50 of 1956."

D In order to understand and formulate the dispute between the parties relating to the validity of the deed of suretyship, it will be necessary to describe more fully the document referred to in the deed of suretyship as "die aangehegte volmag". It comprises in effect two documents printed together and containing blank spaces where particulars of the mandator (mortgagor), the property offered as security, and variable terms relating E to interest and repayment and the like may be inserted. The first document is headed "Prokurasie om verband te passeer" and refers to a second document printed immediately below and headed "Verbandakte". In the first document the mandator is described as Kenneth John Boyes in his capacity F as director of Liverken, duly authorized to act by a resolution of the directors, the precise date whereof has been left blank. This document has not been signed or witnessed and the precise date of its completion is not stated, save that it was during October 1972. An attempted signature was subsequently cancelled and both Mr Odendaal, the attorney who acted for the defendants at the time, and second defendant admit that this power of G attorney was not signed by him. It is also clear that a separate power of attorney in a form identical to the one described above, but fully completed and witnessed, was signed by the second defendant on the same date as the deed of suretyship. It is also clear from the pleadings and the minute of the pre-trial conference handed in at the trial that both H first and second defendants as well as Mr M W Odendaal, their attorney, placed their initials at the bottom of every page of the attached document.

By reason of the somewhat ambiguous nature of the annexure to the deed of suretyship and for the sake of convenience, it was throughout the trial referred to as annexure "X", and I shall continue to use this description in this judgment.

The portion of annexure "X" under the heading "Verbandakte" consists of some 3½ pages of printed matter with some of the blank spaces completed in typescript. Although this document contains most of the

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provisions of the power of attorney and the bond finally registered pursuant thereto, some of the provisions were left out, notably the extent of the mortgaged property.

A The minute of the pre-trial conference contains the following statements in regard to the defence raised on the validity of the deed of suretyship and the signing of the annexure:

"2.

Second defendant admits that the document marked 'X' is initialled by him at the bottom of each page, but states that this was done

(a)

in respect of the mortgage bond and

(b)

in his capacity as director of Liverken (Edms) Bpk. B

3.

Second defendant admits that the document marked 'X' is also initialled by Mr A G Boyes at the bottom of each page.

4.

Second defendant admits that the document marked 'X' was initialled on the same day as the deed of suretyship dated 26 October 1972 which deed of suretyship second defendant admits was signed by him and Mr A G Boyes on 26 October 1972."

C The second defendant was not represented either at the pre-trial conference or during the trial, but he was obviously advised at some stage prior to the withdrawal of his attorney and counsel on 17 May 1979. I gained the distinct impression that he is an articulate person of above-average intelligence who had acquired a superficial knowledge of the D various legal rules applicable to the formation and continued validity of a contract of suretyship; that he was doing his utmost on the pleadings drawn for him to handle the case which he conceived he had, and that at times he was unsure which admissions he could safely make and which concessions would adversely affect his defence. I had some difficulty as a E result in divining the exact dispute between the parties on this aspect of the case. It seems, however, that, on the formation of...