Standard Bank of SA Ltd v El-Naddaf and Another

• Jurisdiction: South Africa
• Judge: Marais J
• Judgment Date: 17 June 1999
• Citation: 1999 (4) SA 779 (W)
• Docket Number: 99/1576
• Hearing Date: 31 May 1999
• Counsel: R Shepstone for the applicant (second defendant). A P den Hartog for the respondent (plaintiff). No appearance for the first defendant.
• Court: Witwatersrand Local Division

Marais J:

This is an application by the second defendant to rescind a default judgment granted against her. I refer to the parties as they are in the action. E

The second defendant was sued as surety for amounts owed by the first defendant to the plaintiff. The second defendant executed a written deed of suretyship, which is annexed to the summons as annexure B.

The summons was served on 27 January 1999 by affixing it to the F principal door of second defendant's chosen domicilium and admitted then residence. Judgment was taken on 2 March in the absence of an appearance to defend. On 12 March the second defendant instructed an attorney to defend the claim and he entered an appearance to defend on 17 March.

A defendant seeking rescission of a judgment granted in her absence G has to show good cause, which involves giving a reasonable explanation of her default and demonstrating that she has a bona fide defence.

On the first leg the second defendant's initial explanation was that a copy of the summons was served on the first defendant who then asked that he be given the copy of the summons intended for the second defendant as he would hand it to the second defendant. Thus, so the H second defendant maintained, the summons was not served on her at all. All of that is contrary to the Sheriff's returns of service, which demonstrate two separate services on the same day (giving times for both of them), and his affidavit. It is also grossly improbable that the Sheriff so neglected his duties. It is also claimed that the first defendant (a relative of the second defendant) did not inform her of I the summons as he intended handling the matter on his own. This again is grossly improbable. Furthermore, there are totally inadequate explanations for the ensuing delay. In short, the initial explanation (without going more deeply into the matter) for the default is wholly unsatisfactory and very hard to believe. J

Marais J

In her replying affidavit the second defendant changes her stance and A says that she does not (at this stage) deny that the summons was indeed served at her domicilium as claimed by the Sheriff. However she says she did not receive the summons. She tenders no explanation as to how it could be that the summons disappeared. She does not explain whether she was in residence on that day; if so at what time she returned and who else had access to the premises. I find myself B dissatisfied by her explanation but I will leave the matter there as I do not propose to decide this on the basis that the second defendant has not satisfied the first part of the test by showing that she was not in wilful default and reasonably explaining her default.

I now turn to the defence raised. The defence was categorised by her C counsel as justus error. That is the only possible defence which can be extracted from the second defendant's affidavit. The full explanation reads as follows:

'11. The first defendant in this matter, my son in law's brother, is a director of a company called Trans North Executive Motor Dealers (Pty) Ltd (''the company''). The company required D additional funds and the plaintiff, on or about May 1996, and at the instance of first defendant, advanced on overdraft the amount required by the company.

12. As is practice the plaintiff required security for the moneys advanced to the company.

13. I was approached by the first defendant and agreed to secure the E amount advanced by the plaintiff by means of an endowment policy of which I am the owner. I agreed to cede the policy to the bank for a limited period and until the aforementioned amount was repaid.

14. I duly signed the cession document and the document annexed to the summons as annexure B on 7 May 1996. I annex hereto a copy of the cession as B.

15. My attorney of record has subsequently advised me that I signed a F suretyship agreement in favour of the plaintiff for all existing, contingent and future debts of the first defendant up to a limit of R180 000.

16. I firmly believed that the documents I signed comprised only of a cession of my life policy. I was at no point advised that I was signing a surety agreement and was not advised of the consequences of signing the suretyship.

17. I firmly state that I signed the suretyship agreement under the G mistaken belief that I was ceding an endowment policy to the plaintiff as security for the money advanced by the plaintiff to the first defendant on behalf of the company.

18. I certainly would not have signed the document knowing that it was a suretyship agreement for any debt to be incurred by the first defendant as now explained to me by my attorney.'

The requirements of justus error were dealt with in H George v Fairmead (Pty) Ltd 1958 (2) SA 465 (A). The principles as therein enunciated were repeated and approved by the Appellate Division in Spindrifter (Pty) Ltd v Lester Donovan (Pty) Ltd 1986 (1) SA 303 (A) at 314J-315D. In the case of George Fagan CJ said at 471A-D: I

'When can an error be said to be justus for the purpose of entitling a man to repudiate his apparent assent to a contractual term? As I read the decisions, our Courts, in applying the test, have taken into account the fact that there is another party involved and have considered his position. They have, in effect, said: Has the first party - the one who is trying to resile - been to blame in the sense that by his conduct he had led the other party, as a reasonable man, to believe that he J

Marais J

was binding himself?. . . If his mistake is due to a misrepresentation, A whether innocent or fraudulent, by the other party, then, of course, it is the second party who is to blame and the first party is not bound.'

(My emphasis.) At 472A the Court went on to say:

'When a man is asked to put his signature to a document he cannot B fail to realise that he is called upon to signify, by doing so, his assent to whatever words appear above his signature. In cases of the type of which the three I have mentioned are examples, the party who seeks relief must convince the Court that he was misled as to the purport of the words to which he was thus signifying his assent. That must, in each case, be a question of fact, to be decided on all the evidence led in that particular case.'

I asked both counsel whether the...