Absa Bank Ltd v Hlathini Safaris CC and Others (2009/18432) [2012] ZAGPJHC 176 (17 August 2012)

Absa Bank Ltd v Hlathini Safaris CC and Others (2009/18432) [2012] ZAGPJHC 176 (17 August 2012)

The court held that the deregistration of the principal debtor close corporation did not discharge the third defendant from his liability as surety and co-principal debtor. Section 26(4) of the Close Corporations Act makes it clear that deregistration does not affect any liability of a member to third parties, and such liability may be enforced as if the corporation were not deregistered. The statutory liability imposed by section 26(5) operates in addition to, and does not nullify, contractual suretyship obligations. The argument that a person cannot stand surety for his own debt was rejected as unfounded and contrary to the statutory scheme. The court found that the third defendant...

Citation
[2012] ZAGPJHC 176
Parties
Plaintiff: Absa Bank Ltd; Defendant: Hlathini Safaris CC; Defendant: Bereschaut, Paul; Defendant: Lahoud, Warren Anthony
Court
South Gauteng High Court, Johannesburg
Jurisdiction
South Africa
Judgment Date
17 August 2012
Case Number
2009/18432
Procedural Posture
Civil Trial / Final Judgment
Outcome
Judgment for the plaintiff against the third defendant; the third defendant is ordered to pay the claimed amount, interest, and costs.
Judges
D S S Moshidi
Legal Topics
Suretyship, Close Corporation Liability, Deregistration Effects, Joint and Several Liability, Statutory Liability
Commercial and Corporate Civil Procedure Suretyship Close Corporation Liability Deregistration Effects Joint and Several Liability Statutory Liability

Case Brief

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Parties

Absa Bank Ltd

Plaintiff

Hlathini Safaris CC

Defendant

Bereschaut, Paul

Defendant

Lahoud, Warren Anthony

Defendant

Procedural Posture

Civil Trial / Final Judgment

Legal Issues

  1. 1 Whether the deregistration of the principal debtor close corporation discharged the third defendant from liability as surety for its debts.
  2. 2 Whether the third defendant's statutory liability as a member upon deregistration supersedes or nullifies his suretyship obligations.
  3. 3 Whether a person can legally stand as surety for his own debt after deregistration.

Ratio Decidendi

The court held that the deregistration of the principal debtor close corporation did not discharge the third defendant from his liability as surety and co-principal debtor. Section 26(4) of the Close Corporations Act makes it clear that deregistration does not affect any liability of a member to third parties, and such liability may be enforced as if the corporation were not deregistered. The statutory liability imposed by section 26(5) operates in addition to, and does not nullify, contractual suretyship obligations. The argument that a person cannot stand surety for his own debt was rejected as unfounded and contrary to the statutory scheme. The court found that the third defendant...

Court Disposition

Judgment for the plaintiff against the third defendant; the third defendant is ordered to pay the claimed amount, interest, and costs.

Orders

  • The third defendant shall pay to the plaintiff the sum of R800,403.07 jointly and severally with the first and second defendants.
  • Interest on the aforesaid amount at the rate of 14% per annum calculated from 12 February 2009 to date of payment, capitalised monthly as agreed.