Rand Bank Ltd v Rubenstein

• Jurisdiction: South Africa
• Judge: Botha J
• Judgment Date: 13 November 1978
• Court: Witwatersrand Local Division

Botha, J.:

In this action the plaintiff claims payment by the defendant of an amount of R9 810 837,52 with interest thereon at the rate of 14 per C cent per annum from 1 February 1977 to date of payment. The plaintiff's claim is based on a deed of suretyship signed by the defendant and his late father and bearing the date 30 May 1972. The first portion of this document, under the heading "Suretyship", reads as follows:

"I/We, the undersigned, Dr Edward Adrian Rubenstein and David Allan Rubenstein hereby irrevocably bind myself/ourselves jointly and severally D to and in favour of Rand Bank Ltd (hereinafter referred to as the creditor) as surety/ies and co-principal debtor/s in solidum with Glen Anil Development Corporation Ltd (hereinafter referred to as the debtor) of... for:

(a)

the proper and punctual performance by the debtor of all his obligations of whatever nature to the creditor;

(b)

the payment by the debtor on due date of each and every amount which the debtor presently owes the creditor or which the debtor may hereafter owe the creditor, however such indebtedness may arise, E including interest on such outstanding amounts, bank and bank exchange costs, all necessary disbursements as well as legal and other costs incurred in connection with the recovery of any amounts due by the debtor to the creditor."

The company, Glen Anil Development Corporation Ltd, referred to in the F deed of suretyship as the debtor, is at present in liquidation. I shall refer to it as Glen Anil.

It is common cause on the pleadings that Glen Anil, as at 1 February 1977, was indebted to the plaintiff in an amount of R9 810 637,52 in respect of money lent and advanced by the plaintiff to G Glen Anil and that Glen Anil was liable to pay interest on the amount of its indebtedness to the plaintiff at the rate of 14 per cent per annum.

Prima facie, on what has been said so far, the defendant is liable to pay to the plaintiff the amount of capital and interest as claimed. The defendant has, however, raised a number of defences to the plaintiff's claim with which it shall be necessary to deal in this judgment. The H defendant said in his evidence that he had signed the deed of suretyship without first having read it. Mostly, when a man commits that kind of foolishness, he must suffer the consequences of his folly. The mere fact that defendant failed to read the document before he signed it, by itself, cannot avail the defendant, but he has put forward a number of alternative defences based upon other facts alleged, apart from his failure to read the document before signing it.

In order to understand and deal with these defences, it is necessary to refer to some of the history of the various transactions between the

Botha J

plaintiff and the defendant, and between the plaintiff and Glen Anil, represented by the defendant.

Glen Anil was a property development company. In order to procure the proclamation of townships which it was A developing it was necessary for it to supply to the local authorities concerned guarantees in respect of the provision of certain essential services to the townships. In order to obtain the required guarantees and to arrange for the financing thereof, the defendant, on behalf of Glen B Anil, held discussions with the Central Merchant Bank Ltd, hereinafter referred to as Senbank. The defendant said in his evidence that he could not remember with whom acting on behalf of Senbank he had these discussions, but he gave a number of names of people with whom discussions could possibly have been held. However that may be, by 18 May 1972, the C discussions had culminated in an agreement in terms of which the plaintiff would make guarantee facilities available to Glen Anil in an amount of R2 000 000.

On that date - that is 18 May 1972 - the plaintiff, through its credit manager, one Parsons, addressed a letter to the secretary, Glen Anil Investments (Pty) Ltd, reading as follows:

D "Dear Sir,

Guarantee for township services to local authorities.

We are pleased to advise that our board has approved the following facility, subject to the terms and conditions mentioned:

Amount: R1 000 000 guarantees to local authorities.

Rates: 1 per cent per annum payable six-monthly in advance from the time of issue of the guarantee.

Security: Guarantees of Dr E A Rubenstein and D A Rubenstein. A form for this purpose is enclosed and we shall appreciate your signing and E returning it to us.

Term: The facility is at your disposal until further notice.

Other conditions: The Bank reserves the right in its sole discretion to decline to issue any guarantees which in its opinion is not acceptable.

We take this opportunity to welcome you as clients of Rand Bank and trust that our relationship will continue on a pleasant and mutually profitable F basis. Please signify your acceptance of the facility and its attendant terms and conditions by signing and returning the attached copy of this letter."

The defendant's evidence was that this letter was at variance with the actual arrangements arrived at during the discussions in two respects: first, it had been addressed to the wrong company, that is Glen Anil G Investments (Pty) Ltd, instead of Glen Anil Development Corporation Ltd; secondly, that the amount of the guarantee facilities of R1 000 000 as stated in the letter was wrong, it should have been R2 000 000. According to the defendant he spoke to Parsons, whom he had met before, and pointed out these mistakes to him. The result was a further letter from Parsons, H addressed on this occasion to the secretary of Glen Anil Development Corporation Ltd, and dated 29 May 1972. The letter reads as follows:

"Dear Sir,

Guarantees for township services to local authorities.

We refer you to our letter dated 18 May 1972, addressed to Glen Anil Investments (Pty) Ltd. This letter should have been addressed to Glen Anil Development Corporation Ltd, and we shall be pleased if you will return it to us so that we may provide you with the correct letter. We very much regret the error, and the inconvenience caused."

This letter was followed by a further letter of Parsons to the secretary

Botha J

of Glen Anil, marked...