Stan Rio Pipe and Steel (Pty) Limited v Esterhuizen

• Jurisdiction: South Africa
• Judge: TD Vilakazi AJ
• Judgment Date: 29 January 2016
• Docket Number: 64166/2015
• Court: Gauteng Local Division, Johannesburg
• Hearing Date: 02 November 2015
• Citation: 2016 JDR 0189 (GJ)

Vilakazi AJ:

[1]

This is an application for summary judgment at the instance of the Applicant. The Plaintiff has instituted action against the

2016 JDR 0189 p2

Vilakazi AJ

Defendant based on an application for credit facilities including a deed of suretyship.

[2]

The plaintiff sued the defendant for payment of an amount of R503 393. 68 said to be due and payable to it by the defendant as surety and co-principal debtor in terms of the Application for credit facilities including a deed of suretyship concluded on 6 May 2014, attached herewith and marked as Annexure "A". Annexed to the summons is the detailed ledger account of the principal debtor marked as Annexure "B", which shows the claimed amount plus interest at 9% per annum tempera morae and costs on the scale of attorney and own client scale.

[3]

In its founding affidavit, plaintiff alleges that the principal debtor is Sansu Steel and that the defendant stood surety for the due and punctual performance of the principal debtor towards the plaintiff.

[4]

The defendant resists the plaintiff application for summary judgment on the basis that the contract of suretyship was invalid for want of compliance with the provisions of section 6 of the General Laws Amendment Act 50 of 1956 in that the name of the principal debtor is not recorded in Annexure "A"

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Vilakazi AJ

[5]

The defendant avers that the plaintiffs' action is mala fide and premature due to the fact that the plaintiff has accepted the business rescue plan in terms of which the plaintiff will be paid in full over time. In the alternative he avers that he is excused from his suretyship obligation should the court find that a deed of suretyship is valid, until such time that it has been determined that the principal debtor cannot meet its obligations to the plaintiff. He submits that this would occur if the principal debtor does not meet the terms of the business rescue plan or termination of same.

[6]

The defendant in the Answering affidavit admit that it signed an application for credit on behalf of Nansu Steel ("the principal debtor") on 6 May 2014 in terms of which it applied for trade credit facilities with the plaintiff.

[7]

Section 6 of Act 50 of 1956 provides:

"No contract of suretyship entered into after the commencement of this Act, shall be valid, unless the terms thereof are embodied in a written document signed by or on behalf of the surety; Provided that nothing in this section contained therein shall affect the liability of the signer of an oval under the laws relating to negotiable instruments".

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Vilakazi AJ

What the section requires is that the terms of the contract of suretyship are to embody in a written document. Terms which are essential for the material validity of a contract of suretyship are the identity of the creditor, the surety and the principal debtor and the identification of the principal debt. The requirement that the contract must be embodied in a written document does not however mean that every particular must be meticulously spelled out in the document. Although it may appear not to be the case, the identity of the principal debtor is undoubtedly a material term of a contract of suretyship (Fourlamel (Pty) Ltd v Maddison 1977 (1) SA 333 (A) at 344 H-345 E. Unless, therefore the identity of the principal debtor is embodied in the written document, the contract of suretyship will be invalid.

[8]

It was...