Oceanair (Natal) (Pty) Ltd v Sher

• Jurisdiction: South Africa

Oceanair (Natal) (Pty) Ltd v Sher
1980 (1) SA 317 (D)

1980 (1) SA p317

Citation	1980 (1) SA 317 (D)
Court	Durban and Coast Local Division
Judge	Howard J
Heard	September 17, 1979
Judgment	October 16, 1979

Flynote : Sleutelwoorde

H Principal and surety — Deed of suretyship — Oral variations of material terms — Contract thereby invalidated — Act 50 of 1956 s 6.

Principal and surety — Deed of suretyship stipulating same to remain in force until cancelled in writing — Alleged oral agreement terminating it invalid and unenforceable — Act 50 of 1956 s 6 — Defendant also precluded from relying on exceptio doli or estoppel by conduct.

Practice — Pleadings — Plea — Exceptio doli — Defendant relying on alleged oral agreement terminating effect of a deed of suretyship —

1980 (1) SA p318

Such oral agreement invalid and inadmissible — Defendant's conduct in seeking to enforce deed of suretyship not unconscionable or impermissible.

A Estoppel — Estoppel by conduct — Defendant sued on deed of suretyship seeking to rely on an alleged oral agreement terminating effect of deed — Oral agreement invalid and inadmissible — Defendant precluded from relying on exceptio doli — Therefore cannot rely on estoppel by conduct which is derived from the exceptio doli. B

Headnote : Kopnota

Section 6 of Act 50 of 1956 should be construed as invalidating oral variations of material terms of a contract of suretyship.

Plaintiff sued defendant on a written deed of suretyship for all sums which might be or become owing by the debtor to the plaintiff, signed by the defendant and three others as sureties. The deed of suretyship stated that it 'shall remain in full force as a continuing security..., until the C creditor shall have agreed in writing to cancel this suretyship'. The defendant pleaded (a) an oral agreement in terms whereof he and one of the other sureties had been released from liability under the deed as from the date when all indebtedness owing at the time of the oral agreement had been discharged; alternatively, (b) that by reason of the aforesaid averments the plaintiff was acting unconscionably and impermissibly in law in attempting to enforce its rights under the written agreement to claim D in respect of indebtednesses subsequently incurred by the debtor; alternatively (c) that plaintiff was estopped by conduct from doing so. Plaintiff excepted to the plea.

Held, as to (a), defendant's contention being that the oral agreement did not vary the contract of suretyship in any, or any material, respect, that the stipulation that the suretyship should remain in force until the E creditor agreed in writing to cancel it effectively removed the right of the individual surety to terminate his liability by notice or by concluding an oral agreement: the stipulation was valid and enforceable, and afforded sufficient basis for holding that the oral agreement was invalid and evidence of it was accordingly irrelevant and inadmissible.

Held, therefore, that the oral agreement was invalid for want of compliance with s 6 of Act 50 of 1956, and no evidence would be admissible to prove it.

F Held, as to (b), as the alleged oral variation of the suretyship contract was invalid, that plaintiff's conduct in seeking to enforce it could not be held to be unconscionable or impermissible.

Held, as to (c), that, as the doctrine of estoppel by conduct as recognised in South African law was derived from the principles underlying the exceptio doli, that it would be illogical to uphold the defence of estoppel stante the finding that in the circumstances the defendant was precluded from relying upon the exceptio doli itself as a defence.

G Held, further, that in any event it would be neither equitable nor competent to give indirect effect to the invalid oral agreement by allowing the plea of estoppel to stand.

Held, therefore, that all the exceptions should be upheld with costs. H

Case Information

Exceptions taken to a plea. The nature of the pleadings appears from the reasons for judgment.

P A M Magid for the excipient (plaintiff).

P M Meskin SC (with him E A Matthis) for the respondent (defendant).

Cur adv vult.

Postea (October 16).

1980 (1) SA p319

Judgment

Howard J:

This is a judgment on exceptions taken by the plaintiff to the defendant's plea.

The plaintiff's claim is based on a written deed of suretyship dated 31 A July 1961 in terms of which the defendant and three other persons bound themselves jointly and severally to the plaintiff as sureties for and coprincipal debtors with Brivik Brothers Ltd ('the debtor') for the due payment on demand of all such sums of money which might be or become owing by the debtor to the plaintiff. The following are the relevant provisions of the deed:

B 'We, the undersigned Solly Hyman Brivik, Ernest Leonard Brivik, Joseph Sher and Philip Sher, do hereby interpose and bind ourselves unto and on behalf of the above company, its order or assigns (hereinafter referred to as 'the creditor'), jointly or severally as surety/sureties and co-principal debtor/s, for the due payment on demand by Brivik Bros Ltd (hereinafter referred to as 'the debtor/s') to the creditor, of all such sum or sums of money which may at any time be or become owing by or C claimable from the debtor/s from any cause of debt whatsoever...

It is agreed and declared that it shall always be in the absolute discreation (sic) of the creditor without notice to us to determine the nature, extent and duration of any indebtedness of the debtor and all admissions or acknowledgments of indebtedness by the debtor shall be binding on us: Creditor shall be at liberty, without effecting its rights D hereunder to release securities and to give time or other indulgences to or to compound or make other arrangements with the said debtor/s or with me or any of us, or with any other sureties for the debtor/s, to release any co-principal debtor or co-surety...

That this suretyship shall remain in full force as a continuing security, notwithstanding any intermediate settlement of or fluctuations in the account, and notwithstanding the death or legal disability of me or any of us, until the creditor shall have agreed in writing to cancel this suretyship, and this suretyship shall further remain in force as a E continuing security binding upon the others or other of us, notwithstanding that it may on any ground in whole or part have ceased to be binding on any one or more of us.'

The plaintiff alleges that an amount of R34 877,38 plus interest is due and payable to it in respect of clearing and forwarding services performed and disbursements made for and on behalf of the debtor during the period F from March to December 1978. It claims payment of the said amount of R34 877,38 and interest from the defendant pursuant to the contract of suretyship.

In his plea the defendant puts the plaintiff to the proof of its allegations to the effect that the amount of R34 877,38 and interest G became due and payable to it by the debtor. He then proceeds to plead three separate defences in the alternative, as follows:

'4 (1)

During late 1961, alternatively early 1962 (the precise date being presently unknown to the defendant), and in Durban, an H oral agreement was concluded between the plaintiff and the defendant.

(2)

In concluding the said oral agreement:

(a)

the plaintiff was represented by one Theo Greenberg, who was authorised accordingly:

(b)

the defendant was represented by one Philip Sher (being one of the sureties under the said deed of suretyship), who was authorised accordingly.

(3)

In terms of the said oral agreement the said deed of suretyship, as against the defendant and the said Philip Sher, would:

1980 (1) SA p320

Howard J

(a)

cease to constitute a continuing security;

(b)

be limited to one constituting a security only for the then existing indebtedness of the debtor to the plaintiff.

(4)

A The said agreement meant, and was intended to mean, that once the said indebtedness had been discharged the defendant and the said Philip Sher would cease to be liable to the plaintiff in terms of the said deed of suretyship.

5.

The said indebtedness of the debtor to the plaintiff at the time of B the conclusion of the said oral agreement was approximately R2 000.

6.

By the expiry of a period of approximately ten months after the date upon which the said oral agreement was concluded the said indebtedness of...