Standard Bank of South Africa Ltd v Friedman

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: Katz AJ
• Judgment Date: 20 February 2024
• Citation: 2024 (3) SA 171 (WCC)
• Hearing Date: 20 February 2024
• Counsel: G Woodland SC (with C Morgan) for the applicant. R Goodman SC (with T Crookes) for the respondent.
• Docket Number: 21244/2023
• Court: Western Cape Division, Cape Town

Katz AJ:

[1] On 19 June 2023 Standard Bank of South Africa Ltd made application for a monetary judgment against the respondent, Jonathan Nicholas Friedman (Friedman), in the amount of R110 million plus interest and costs.

[2] Standard Bank claims Friedman's indebtedness to it is in terms of a guarantee, limited up to the amount of R110 million plus interests and costs, in terms of which Friedman guaranteed the obligations of Urban Lime Properties (South Africa) (Pty) Ltd [2] (registration 2006/023754/07) (Urban Lime) [3] to Standard Bank in respect of a loan-facility agreement granted by Standard Bank to it.

[3] Friedman filed his answering affidavit on 31 August 2023. Standard Bank filed its replying affidavit on 31 October 2023.

[4] Standard Bank launched the application in the High Court, Gauteng Local Division, Johannesburg. Friedman applied in terms of s 27 of the Superior Courts Act 10 of 2013 for the application to be transferred to the Western Cape Division as a matter of convenience and cost-effectiveness because Standard Bank was also seeking an order of liquidation against Urban Lime in this division. [4]

[5] The Acting Judge President on 18 December 2023 set the application down for hearing on the semi-urgent roll to be heard simultaneously on 14 February 2024 with the liquidation application brought by Standard Bank against Urban Lime under case No 9696/2023 (the liquidation application). There was no consolidation in terms of rule 11 and the two applications were and are not consolidated into one application.

[6] On Friday 9 February 2024 the respondent in the liquidation application (Urban Lime) provided me with a copy of an application issued out of the High Court, KwaZulu-Natal Local Division, Durban, under case No D1740/2024 in the matter of Rivertown Central (Pty) Ltd v UL Prop SA (Pty) Ltd. The KZN application seeks to place Urban Lime under supervision to commence business rescue proceedings in terms of s 131(1) of the Companies Act 71 of 2008.

[7] Section 131(6) of the Companies Act effectively requires the liquidation application to be suspended subject to various conditions. [5]

Katz AJ

[8] I thus only heard the monetary judgment application and removed the liquidation application from the roll. This judgment only deals with the monetary judgment application.

[9] In the monetary claim Friedman raised a number of defences, including what was described by Standard Bank as an eccentric interpretation of a particular clause of the guarantee. Standard Bank dealt with the defences in its replying affidavit and in its heads of argument. As the case developed Friedman's defence ultimately boiled down to a single point. His other defences had fallen away.

[10] It appears that Friedman's remaining single point was not completely covered by Standard Bank's heads of argument. So, when Mr Woodland SC (who appeared with Ms Morgan) on behalf of Standard Bank commenced oral argument, he developed what I may call a fresh argument and handed in a bundle of authorities which included three cases not previously referred to, to deal with the single point. Mr Woodland's fresh argument seemed not to have arisen on the papers and was not contained in the heads of argument. Mr Goodman (who appeared with Mr Crookes) for Friedman had been provided by Mr Woodland with the new cases on the previous day.

[11] Mr Goodman, quite correctly in my view, suggested that Friedman's defence to the monetary claim effectively turned on what could be regarded as the single point, which he described as a point in limine. He accepted that he would be hard-pressed to argue that the monetary judgment claim should not be granted if the in limine point didn't succeed.

[12] The point in limine amounted to what may be described as a 'pleading point'. Standard Bank, so it was argued, had not pleaded a case in its founding affidavit that should lead to the relief being granted.

[13] The point was that on 19 June 2023, when the application was launched, Standard Bank in its founding affidavit could not — and did not — demonstrate that Friedman was indebted to Standard Bank in any amount. The reason for this was that at that date it was not proved that Urban Lime was indebted to Standard Bank. Thus, if Urban Lime was not so indebted, Friedman was similarly not indebted.

[14] Friedman accepts the guarantee was executed by him. He effectively accepted that were Urban Lime to have been indebted as at 19 June 2023 to Standard Bank under the loan-facility agreement for the amount (some R357 million) as claimed by Standard Bank, he would be liable for the full amount of the guarantee.

[15] I agree with Friedman's position.

[16] The material terms of the guarantee are, inter alia:

[16.1]

As a principal and primary obligation, Friedman irrevocably and unconditionally guaranteed the due and full performance by the borrower (Urban Lime) of the 'guaranteed obligations'.

[16.2]

The guaranteed obligations refer to all present and future indebtedness of whatsoever nature and howsoever arising

Katz AJ

which was or may become owing by Urban Lime to Standard Bank, up to the amount of R110 million, plus interest and certain costs, fees, charges and expenses.

[16.3]

The guaranteed obligations include all items which would be guaranteed obligations but for the winding-up or business rescue of Urban Lime.

[16.4]

Friedman undertook to pay Standard Bank, inter alia, whenever Urban Lime did not pay any amount or perform any obligation as borrower in terms of the Urban Lime Facility Agreement (the Facility Agreement).

[16.5]

A default on the facility agreement is defined as a default on the guarantee.

[17] Standard Bank correctly states the guarantee gives rise to a principal obligation.

[18] The nature of a guarantee is to...