Sydney Road Holdings (Pty) Ltd v Simon

• Jurisdiction: South Africa
• Judge: Leon J
• Judgment Date: 16 February 1981
• Citation: 1981 (3) SA 104 (D)
• Hearing Date: 02 February 1981
• Court: Durban and Coast Local Division

Leon, J.:

In this case the plaintiff has sued the defendant as surety for the obligations of Beacon under a certain lease. Beacon was provisionally placed in liquidation by order of the Court on 23 March 1979 and the B provisional liquidator cancelled the lease by virtue of s 386 (2) of the Companies Act 61 of 1973, he having obtained the consent of the Master of the Supreme Court to do so. When the lease was terminated it had one year and 24 days to run. The plaintiff has claimed damages in consequence of such termination.

Para 15 of the defendant's plea reads:

"(1)

Upon the proper construction of annexure 'D', the defendant is C not liable for any damages whatsoever suffered by the plaintiff consequent upon a termination of the lease in circumstances such as those pleaded in para 10 of the particulars of claim.

(2)

The defendant repeats para 14 (2) hereof.

(3)

The defendant is accordingly not liable to the plaintiff for any damages which the plaintiff may prove were suffered by it."

The reference therein to para 14 (2) is a reference to the allegation "that such damages as the plaintiff may prove were suffered by it were the direct consequence of the termination of the lease in the circumstances pleaded in para 10 of the particulars of claim."

E Para 10 of the particulars of claim refers to the provisional liquidation of the principal debtor and the termination of the lease in terms of s 386 (2) of the Companies Act.

The plaintiff has excepted to the defence pleaded in para 15 of the defendant's plea. The grounds of the exception are as follows:

"(a)

the substance of the defence raised in para 15 of the defendant's F plea appears to be that:

(i)

the plaintiff's claims arise in consequence of the action of Parton in the circumstances set forth in para 10 of the plaintiff's particulars of claim;

(ii)

the deed of suretyship (annexure 'D') is not wide enough upon a proper construction thereof (the defendant having G disclaimed reliance upon any surrounding circumstances as an aid to the interpretation thereof) to encompass the plaintiff's claims;

(iii)

accordingly the defendant is not liable as a surety for Beacon Shipping Services (Pty) Ltd to pay any amounts thus arising which are claimed by the plaintiff;

(b)

the said defence is bad in law because, upon a proper H construction of annexure 'D', the defendant is liable to pay such amounts to the plaintiff."

The point which I have to decide is whether the language of the deed of suretyship is wide enough to cover the case of an action for damages in consequence of the termination of the lease, not by the lessee, but by the provisional liquidator acting in terms of s 386 (2) of the Companies Act. The defence is based upon the decision in Strydom v Goldblatt 1976 (2) SA 852 (W).

Leon J

In terms of the deed of suretyship in the present case the sureties bound themselves jointly and severally in solidum as sureties and coprincipal A debtors with Beacon for the due performance by Beacon of all its obligations in terms of the lease,

"and for the due payment (by Beacon) to the company of all sum or sums of money which may at any time be or become owing by or claimable from the debtor (Beacon) in terms of or arising from the said agreement of lease, or any future variation thereof."

The phrase "arising from" seems to be wider than "in terms of" and would B include a claim for damages for such claim would spring from the lease. Clauses (e) and (g) of the deed read:

"(e)

In the event of insolvency, liquidation, assignment or compromise of the debtor, no dividends or payments which the company may receive from the debtor or any other person shall prejudice its rights to recover from us, to the full extent of this guarantee, any sum which after receipt of such dividends, or payments, may be owing by the said debtor, and we acknowledge...