Leipsig v Bankorp Ltd

• Jurisdiction: South Africa
• Judge: Hoexter JA, Nestadt JA, Eksteen JA, Nicholas AJA and Harms AJA
• Judgment Date: 01 December 1993
• Docket Number: 377/92
• Court: Appellate Division
• Hearing Date: 19 November 1993
• Citation: 1994 (2) SA 128 (A)

G Eksteen JA:

On 27 August 1986 the appellant, acting in his capacity as a director of William Lipsey and Sons (Pty) Ltd ('the principal debtor'), signed an acknowledgment of debt in which he acknowledged that the principal debtor was indebted to the respondent in the sum of R74 769,64. The principal debtor also undertook to pay this amount, together with such H finance charges as respondent might stipulate from time to time, in instalments, and, in the event of a breach or non-performance of any term by it, the full amount owed would become due and payable.

At the same time appellant bound himself to respondent as surety and co-principal debtor for 'each and every amount in which the debtor is at present indebted to the Bank or may in future become indebted to the I Bank'. Prior to entering into this deed of suretyship appellant had entered into a mortgage bond in which he granted a second mortgage of R60 000 over certain property in favour of respondent as surety for any amount owing by him to respondent.

From facts agreed upon by the parties at a pre-trial conference held on 23 J April 1992, and from allegations in the pleadings which are common

Eksteen JA

A cause, it appears that the principal debtor defaulted in the payment of the instalment due on 30 January 1987 and that respondent became aware of the default on 3 February 1987.

On 30 April 1987 a liquidation order was obtained against the principal debtor, and on 19 October 1987 respondent filed a claim for R75 633,26 B against the company in liquidation. This claim was accepted by the liquidator, and on 16 March 1989 the Master confirmed the second and final liquidation and distribution account. The respondent received two payments from the liquidator in respect of its claim, viz R11 344,99 on 18 April 1988 and R2 946,36 on 4 April 1989.

Based on the deed of suretyship, respondent issued a summons on 1 June C 1990 which was served on appellant on 14 June 1990. In it respondent claimed an amount of R93 749,32 and an order declaring the mortgaged property executable. At the pretrial conference, however, the parties agreed that 'the outstanding amount at 15 May 1990 was R67 861,93'.

D Relying on s 13 of the Prescription Act 68 of 1969 ('the Act') the appellant in his plea raised a defence of prescription. In effect it amounted to this, viz that respondent's debt had become 'the object of a claim filed against a company in liquidation' in terms of s 13(1)(g); that the relevant period of prescription would, but for the provisions of para (i) have been completed before, on, or within one year after the day on E which the impediment created by para (g) had ceased to exist, ie by virtue of the Master's confirmation of the second and final liquidation and distribution account on 16 March 1989; and that the period of prescription had been completed a year after that date, and that the debt was therefore prescribed.

F The argument before us was directed at the soundness of the defence of prescription raised by the appellant in its plea. Although at the pre-trial conference the parties are recorded as having agreed 'that the issue of prescription be dealt with in terms of Rule 33(4)' it would appear, as I have indicated, that this was the only issue before the Court. In his judgment (reported in Bankorp Ltd v Leipsig1993 (1) SA 247 (W) G ), the learned Judge a quo recorded at 249A that both parties had closed their cases without leading evidence, and before us respondent's counsel indicated that in the event of the appeal succeeding the appropriate order would be one dismissing respondent's claim with costs. The whole dispute between the parties turns, therefore, on this issue.

H In the present case it should be borne in mind that we are concerned with the debt owing by the appellant to the respondent - an indebtedness which arose from his assumption of the obligation of a surety and co-principal debtor. As was pointed out in Kilroe-Daley v Barclays National Bank Ltd I 1984 (4) SA 609 (A) at 622I-623I and the cases there cited, the contract of suretyship, though a separate one from that between the principal debtor and creditor, is nevertheless accessory to the main contract. It follows...