Absa Bank Ltd v McCreath (26/14) [2014] ZAECGHC 51 (13 June 2014)

Absa Bank Ltd v McCreath (26/14) [2014] ZAECGHC 51 (13 June 2014)

The respondent has disclosed a bona fide defence by alleging that he was misled by the bank official into signing a deed of suretyship under the impression it was a standard agreement for the corporation's credit facility. The caveat subscriptor rule does not apply absolutely; if a signatory is induced by misrepresentation, even innocently, he is not bound by the document. The respondent's affidavit, corroborated by a witness, establishes that he would not have signed had he known the document's true nature. If proven at trial, these facts would render the deed of suretyship void due to justus error. Accordingly, the respondent is entitled to leave to defend.

Citation
[2014] ZAECGHC 51
Parties
Applicant: Absa Bank Ltd; Respondent: Glenn Leander McCreath
Court
Eastern Cape High Court, Grahamstown
Jurisdiction
South Africa
Judgment Date
13 June 2014
Case Number
26/14
Procedural Posture
Summary Judgment Application / Opposed Application for Summary Judgment; Decision on Leave to Defend
Outcome
Leave to defend is granted to the respondent.
Judges
C Plasket
Legal Topics
Summary Judgment, Suretyship, Caveat Subscriptor, Misrepresentation, Justus Error
Civil Procedure Commercial and Corporate Summary Judgment Suretyship Caveat Subscriptor Misrepresentation Justus Error

Case Brief

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Parties

Absa Bank Ltd

Applicant

Glenn Leander McCreath

Respondent

Procedural Posture

Summary Judgment Application / Opposed Application for Summary Judgment; Decision on Leave to Defend

Legal Issues

  1. 1 Whether the respondent has disclosed a bona fide defence to the summary judgment application.
  2. 2 Whether the respondent is bound by the deed of suretyship signed under alleged misrepresentation.
  3. 3 Whether the caveat subscriptor rule applies in the circumstances.

Ratio Decidendi

The respondent has disclosed a bona fide defence by alleging that he was misled by the bank official into signing a deed of suretyship under the impression it was a standard agreement for the corporation's credit facility. The caveat subscriptor rule does not apply absolutely; if a signatory is induced by misrepresentation, even innocently, he is not bound by the document. The respondent's affidavit, corroborated by a witness, establishes that he would not have signed had he known the document's true nature. If proven at trial, these facts would render the deed of suretyship void due to justus error. Accordingly, the respondent is entitled to leave to defend.

Court Disposition

Leave to defend is granted to the respondent.

Orders

  • The respondent is granted leave to defend.
  • The costs of the summary judgment application shall be costs in the cause, subject to the next order.