ABSA Bank Ltd. v Davidson (389/97) [1999] ZASCA 94; [2000] 1 All SA 355 (A); 2000 (1) SA 1117 (SCA) (30 November 1999)

ABSA Bank Ltd. v Davidson (389/97) [1999] ZASCA 94; [2000] 1 All SA 355 (A); 2000 (1) SA 1117 (SCA) (30 November 1999)

The Supreme Court of Appeal held that Davidson was not released from his obligations as surety. The estoppel defence failed because Davidson did not prove that the bank received or responded to his letter seeking release, and the suretyship required written cancellation signed by the bank. The prejudicial conduct defence also failed because the bank acted within its contractual rights under the principal agreement and suretyship, both of which permitted honouring cheques and increasing the overdraft at the bank's discretion. Davidson had expressly agreed to be bound for an unlimited amount and to renounce certain legal exceptions. The court found no breach of legal duty or obligation by...

Citation
[1999] ZASCA 94
Parties
Appellant: ABSA Bank Limited; Respondent: John Garrick Davidson
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
30 November 1999
Case Number
389/97
Procedural Posture
Civil Appeal / Appeal From Dismissal of Claim in the Cape of Good Hope Provincial Division
Outcome
Appeal upheld; judgment granted in favour of ABSA Bank Limited.
Judges
Smalberger, Vivier, Harms, Olivier, Farlam
Legal Topics
Suretyship, Estoppel, Prejudicial Conduct by Creditor, Contractual Liability
Banking and Finance Civil Procedure Suretyship Estoppel Prejudicial Conduct by Creditor Contractual Liability

Case Brief

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Parties

ABSA Bank Limited

Appellant

John Garrick Davidson

Respondent

Procedural Posture

Civil Appeal / Appeal From Dismissal of Claim in the Cape of Good Hope Provincial Division

Legal Issues

  1. 1 Whether the respondent was released from his obligations as surety by estoppel or prejudicial conduct of the creditor.
  2. 2 Whether the bank's conduct in honouring cheques and increasing the overdraft prejudiced the surety so as to release him from liability.
  3. 3 Whether the terms of the principal agreement and deed of suretyship permitted the bank's actions.

Ratio Decidendi

The Supreme Court of Appeal held that Davidson was not released from his obligations as surety. The estoppel defence failed because Davidson did not prove that the bank received or responded to his letter seeking release, and the suretyship required written cancellation signed by the bank. The prejudicial conduct defence also failed because the bank acted within its contractual rights under the principal agreement and suretyship, both of which permitted honouring cheques and increasing the overdraft at the bank's discretion. Davidson had expressly agreed to be bound for an unlimited amount and to renounce certain legal exceptions. The court found no breach of legal duty or obligation by...

Court Disposition

Appeal upheld; judgment granted in favour of ABSA Bank Limited.

Orders

  • The appeal succeeds with costs on the scale as between attorney and client, including the costs occasioned by the employment of two counsel.
  • The judgment of the court a quo is set aside and replaced with an order granting judgment in favour of the plaintiff for payment of R372 101,89.