Absa Bank Ltd v Trzebiatowsky and Others (2240/2010) [2012] ZAECPEHC 13; 2012 (5) SA 134 (ECP) (23 February 2012)

Absa Bank Ltd v Trzebiatowsky and Others (2240/2010) [2012] ZAECPEHC 13; 2012 (5) SA 134 (ECP) (23 February 2012)

The court found that the second defendant, an experienced businesswoman and director, signed three deeds of suretyship in her personal capacity to secure loans for companies in which she was a director. The documents were clear, and the unlimited liability clause was specifically pointed out, requiring her full signature. There was no evidence of misrepresentation or omission by the bank's representative, and the suretyship agreements did not contain unusual or unexpected terms. The court held that the defence of iustus error was not established, as the second defendant failed to show she was misled or that the bank had a duty to explain the risks. The maxim caveat subscriptor applied,...

Citation
[2012] ZAECPEHC 13
Parties
Plaintiff: Absa Bank Limited; Defendant: Paul Deneys Trzebiatowsky; Defendant: Barbara Tracey Trzebiatowsky; Defendant: Paul Deneys Trzebiatowsky N.O.; Defendant: Mark Bradley N.O.; Defendant: Gavin McNisch N.O.
Court
Eastern Cape High Court, Port Elizabeth
Jurisdiction
South Africa
Judgment Date
23 February 2012
Case Number
2240/2010
Procedural Posture
Civil Trial / Judgment After Trial; Summary Judgment Previously Granted Against Trustees; Trial Proceeded Against Second Defendant
Outcome
Judgment entered in favour of the plaintiff against the second defendant, jointly and severally with the first defendant, for payment of the claimed amount, interest, and costs.
Judges
E Revelas
Legal Topics
Suretyship Liability, Iustus Error, Contractual Mistake, Caveat Subscriptor, Personal Guarantees, Banking Practice
Banking and Finance Civil Procedure Commercial and Corporate Suretyship Liability Iustus Error Contractual Mistake Caveat Subscriptor Personal Guarantees +1 more

Case Brief

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Parties

Absa Bank Limited

Plaintiff

Paul Deneys Trzebiatowsky

Defendant

Barbara Tracey Trzebiatowsky

Defendant

Paul Deneys Trzebiatowsky N.O.

Defendant

Mark Bradley N.O.

Defendant

Gavin McNisch N.O.

Defendant

Procedural Posture

Civil Trial / Judgment After Trial; Summary Judgment Previously Granted Against Trustees; Trial Proceeded Against Second Defendant

Legal Issues

  1. 1 Whether directors who signed deeds of suretyship in their personal capacities can escape liability on the basis that they did not understand the nature of the documents.
  2. 2 Whether the defence of iustus error applies to the second defendant who claims ignorance of the suretyship agreements.
  3. 3 Whether the bank or its representative had a duty to explain the risks and consequences of signing the suretyship agreements to the second defendant.

Ratio Decidendi

The court found that the second defendant, an experienced businesswoman and director, signed three deeds of suretyship in her personal capacity to secure loans for companies in which she was a director. The documents were clear, and the unlimited liability clause was specifically pointed out, requiring her full signature. There was no evidence of misrepresentation or omission by the bank's representative, and the suretyship agreements did not contain unusual or unexpected terms. The court held that the defence of iustus error was not established, as the second defendant failed to show she was misled or that the bank had a duty to explain the risks. The maxim caveat subscriptor applied,...

Court Disposition

Judgment entered in favour of the plaintiff against the second defendant, jointly and severally with the first defendant, for payment of the claimed amount, interest, and costs.

Orders

  • The second defendant is ordered to pay the sum of R7,809,810.43 jointly and severally with the first defendant.
  • Interest on the aforesaid amount at the rate of 10% per annum from 1 July 2010 to date of payment.