Creutzburg and Another v Commercial Bank of Namibia Ltd (29/04) [2004] ZASCA 117; [2006] 4 All SA 327 (SCA); [2006] 4 All SA 327 (SCA) (1 December 2004)

Creutzburg and Another v Commercial Bank of Namibia Ltd (29/04) [2004] ZASCA 117; [2006] 4 All SA 327 (SCA); [2006] 4 All SA 327 (SCA) (1 December 2004)

The Supreme Court of Appeal held that the deed of suretyship, although invalid under South African law due to non-compliance with section 6 of the General Law Amendment Act 50 of 1956, was valid under Namibian law, which does not require such formalities. The contract stipulated that either South African or Namibian law could apply, and since the contract was executed in Namibia, the lex loci contractus principle governed the formalities, rendering the suretyship valid and enforceable in South African courts. Regarding the second appellant, the court found that his liability was discharged because, after the determination of his suretyship, payments made by Pacific Best were appropriated...

Citation
[2004] ZASCA 117
Parties
Appellant: Ekkehard Creutzburg; Appellant: Emil Eich; Respondent: Commercial Bank of Namibia Ltd
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
1 December 2004
Case Number
29/04
Procedural Posture
Civil Appeal / Appeal From Trial Court Judgment
Outcome
The first appellant's appeal is dismissed with costs. The second appellant's appeal is upheld with costs. The order against the second appellant is set aside and replaced with dismissal of the bank's claim against him with costs.
Judges
MPATI, STREICHER, NUGENT, HEHER, PONNAN
Legal Topics
Suretyship, Choice of Law, Formalities of Contract, Accessory Liability
Commercial and Corporate Civil Procedure Suretyship Choice of Law Formalities of Contract Accessory Liability

Case Brief

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Parties

Ekkehard Creutzburg

Appellant

Emil Eich

Appellant

Commercial Bank of Namibia Ltd

Respondent

Procedural Posture

Civil Appeal / Appeal From Trial Court Judgment

Legal Issues

  1. 1 Whether the deed of suretyship was validly executed under the applicable law.
  2. 2 Whether the second appellant's liability as surety was discharged by subsequent payments.
  3. 3 Whether the bank's claim against the second appellant had become prescribed.

Ratio Decidendi

The Supreme Court of Appeal held that the deed of suretyship, although invalid under South African law due to non-compliance with section 6 of the General Law Amendment Act 50 of 1956, was valid under Namibian law, which does not require such formalities. The contract stipulated that either South African or Namibian law could apply, and since the contract was executed in Namibia, the lex loci contractus principle governed the formalities, rendering the suretyship valid and enforceable in South African courts. Regarding the second appellant, the court found that his liability was discharged because, after the determination of his suretyship, payments made by Pacific Best were appropriated...

Court Disposition

The first appellant's appeal is dismissed with costs. The second appellant's appeal is upheld with costs. The order against the second appellant is set aside and replaced with dismissal of the bank's claim against him with costs.

Orders

  • The first appellant's appeal is dismissed with costs.
  • The second appellant's appeal is upheld with costs.