Traub v Barclays National Bank Ltd; Kalk v Barclays National Bank Ltd

• Jurisdiction: South Africa
• Judge: Rabie CJ, Hoexter JA, Botha JA, Nicholas AJA and Howard AJA
• Judgment Date: 10 May 1983
• Citation: 1983 (3) SA 619 (A)
• Hearing Date: 04 March 1983
• Court: Appellate Division

Botha JA:

The appellants are Morris Traub and Arnold Kalk. On 24 June 1971 they signed separate deeds of suretyship in favour of the respondent, to which I shall refer as "the Bank", in terms of which they severally bound themselves as sureties and co-principal debtors to the Bank for the payment on demand of all sums of money which might then or thereafter be owing to E the Bank by a company, Dancor Land Holdings (Pty) Ltd (hereinafter referred to as "Dancor").

In December 1978 the Bank issued two summonses, instituting separate actions in the Witwatersrand Local Division against the appellants, claiming from each of them, by virtue of their respective deeds of suretyship, payment of the sum of R62 F 500,41 with interest thereon at the rate of 131/2 per cent per annum from 24 October 1978 to date of payment, allegedly owing by Dancor to the Bank. In February 1979 the Bank obtained judgment by default on its claim against the appellant Kalk. The latter applied for, and was granted, on 20 March 1979, an order rescinding the default judgment. Thereafter pleadings in the usual form were exchanged in each of the two cases. They G followed the same pattern; notably the defences raised by each of the appellants against the Bank's claims were the same. In one respect there was a divergence: in the Bank's case against the appellant Kalk the latter filed a counterclaim against the Bank for damages, alleging that the Bank had wrongfully obtained judgment by default against him.

H After the pleadings were closed and before the actions proceeded to trial the appellants and the Bank agreed on a "consolidation of trials". The cases were accordingly heard together. At the hearing, which took place before MYBURGH J in March 1981, it was common cause that Dancor, having made certain payments to the Bank since the issue of the summonses, was indebted to the Bank in a capital sum of R60 416,86. MYBURGH J, whose judgment has been reported in part (see Barclays National Bank Ltd v Traub; Barclays National Bank Ltd v

Botha JA

Kalk 1981 (4) SA 291 (W)) rejected the appellants' defences against the Bank's claim for payment of the capital sum, but upheld a defence against the Bank's claim for interest as from 24 October 1978; and on the counterclaim he found in favour of the appellant Kalk. The following orders were made by the trial Judge:

A.

A Judgment was granted in favour of the Bank against each of the appellants for R60 416,80 with costs.

B.

Absolution from the instance was ordered in respect of the Bank's claim for interest subsequent to 31 October 1978.

C.

Judgment was granted on the counterclaim in favour of B the appellant Kalk against the Bank for R400 with costs.

(The figure of "80" cents in A is apparently an error for "86", and the date "31 October 1978" in B is apparently an error for "24 October 1978".)

The matter originally came to this Court by way of -

(a)

an appeal by both appellants against the judgment in A C above;

(b)

an appeal by the appellant Kalk against the quantum of damages (R400) awarded in the judgment in C above;

(c)

a cross-appeal by the Bank against -

(i)

the order in B above; and

(ii)

the judgment in C above.

D Shortly before the hearing of the matter in this Court, by agreement between the parties, the Bank abandoned its cross-appeal mentioned in para (c) (ii) and the appellant Kalk abandoned his appeal mentioned in para (b) above. This had the effect of removing from the area of dispute between the parties in this Court the issues flowing from the appellant Kalk's E counterclaim against the Bank and the judgment of the Court a quo thereon, as set forth in C above. Accordingly there is no occasion for this Court to say anything about what is contained in the major part of the judgment of MYBURGH J in the abbreviated form in which it has been reported (see 1981 (4) SA 291 at 295F - 299). As will appear from what follows, the F present judgment is mainly concerned with issues which were dealt with in that part of the judgment of the trial Judge which has not been reported (see at 294C - D).

The issues calling for consideration in this judgment are those arising from certain defences raised by the appellants in the Court a quo and again relied upon in this Court against the Bank's claim for payment of capital (pertaining to the appeal G against the judgment in A above) and its claim for payment of interest (pertaining to the crossappeal against the order in B above).

The facts giving rise to the main contention advanced on behalf of the appellants can be summarised briefly. Dancor was engaged in the business of township development. It conducted a banking H account at the Springs branch of the Bank, and it made use of overdraft facilities extended to it by the Bank. In order to secure the repayment of money advanced on overdraft to Dancor, the Bank required personal guarantees to be signed by the shareholders of Dancor. The appellants were shareholders, and that is how it came about that they signed deeds of suretyship in favour of the Bank on 24 June 1971. At that time there were two other shareholders, L B Taurog and J G C Anderson. They

Botha JA

too signed deeds of suretyship in favour of the Bank. The deeds were all similarly worded; the wording is reproduced in the reported judgment of MYBURGH J at 293C - F and, since nothing turns on it, there is no need to quote any of the provisions A here. L B Taurog died in September 1977. At the time of his death he held 20 per cent of the shares in Dancor and the appellants together 80 per cent. Dancor was in dire financial straits, and matters went from bad to worse. During the first part of 1978 the amount owing by Dancor on its overdraft with the Bank was in the vicinity of R56 000 and there was no real B prospect of its being able to repay the Bank. In February 1978 the Bank lodged a claim in the estate of the late L B Taurog for payment of Dancor's indebtedness to the Bank in terms of the deceased's suretyship, and in April 1978 the Bank demanded payment of the debt from each of the appellants in terms of their deeds of suretyship. The Bank was unable to trace the whereabouts of the other surety, Anderson. Neither of C the appellants responded to the demand. The Bank did not expect to be able to recover from them for, on the information available to the Bank, they did not possess assets of any consequence. In August 1978 Dancor, as a result of a sale in execution held at the behest of a creditor other than the Bank, D lost practically all its then remaining assets. So the Bank looked to the estate Taurog for the settlement of Dancor's indebtedness. In the meantime interest was accruing on the overdraft at the rate of 131/2 per cent per annum. This was a cause of concern to one of the executors in the estate Taurog, Mr R D Taurog, a son of the deceased and a partner in a firm of attorneys in Johannesburg. He calculated that the amount of E interest accruing annually was about R8 000. Acting on behalf of the estate, he approached Mr J A Naudé, the then manager of the Springs branch of the Bank, with the object of finding ways and means of avoiding the possibility of the estate being held liable for interest accruing in the future. Negotiations ensued F between Taurog and Naudé. They came to fruition in the form of a letter addressed by Taurog to Naudé, dated 26 October 1978. The body of the letter reads at follows:

"Estate Late L B Taurog

We refer to the purported suretyships signed by the late Mr L B Taurog in favour of your bank in respect of the liabilities of Dancor Land Holdings (Pty) Ltd. We confirm that, without G prejudice or any admission whatsoever, our client, the estate late L B Taurog, is prepared to pay you the amount presently owed to you on the basis that:

1.

Our client's liability to you, if any, will be limited to the amount inclusive of interest and all other charges owed by Dancor Land Holdings (Pty) Ltd to you as at date hereof.

2.

You will forthwith institute action against all the other persons who have bound themselves to you as sureties for H Dancor Land Holdings (Pty) Ltd. Such actions will be instituted in your name but all decisions in regard to the conduct or abandonment of such actions shall vest in our client. All costs and expenses incurred thereby will be borne by our client.

We accordingly enclose herewith cheques totalling the aggregate liability of Dancor Land Holdings (Pty) Ltd to you as at today's date."

The letter was handed personally by Taurog to Naudé together with cheques to...