Eerste Nasionale Bank van Suidelike Afrika Bpk. Saayman NO (650/93) [1997] ZASCA 62; 1997 (4) SA 302 (SCA); [1997] 3 All SA 391 (A); (30 May 1997)

Eerste Nasionale Bank van Suidelike Afrika Bpk. Saayman NO (650/93) [1997] ZASCA 62; 1997 (4) SA 302 (SCA); [1997] 3 All SA 391 (A); (30 May 1997)

The majority of the court found, on a balance of probabilities, that Mrs Malherbe was mentally incapacitated at the time she signed the suretyship and cession on 2 May 1989. The evidence, including expert testimony and her conduct, demonstrated that she did not understand the nature or consequences of the transaction and was unable to appreciate the risks involved. The court held that she should not be bound by the contract, as she lacked the requisite capacity. Furthermore, the bank failed to ensure that Mrs Malherbe understood the implications of the documents she signed, and enforcement of the contract would be unconscionable and contrary to public policy and good faith. The appeal was...

Citation
[1997] ZASCA 62
Parties
Appellant: Eerste Nasionale Bank van Suidelike Afrika Beperk; Respondent: Elisabeth Anna Saayman N.O.
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
30 May 1997
Case Number
650/93
Procedural Posture
Civil Appeal / Appeal From a Decision of the Cape Provincial Division
Outcome
Appeal dismissed with costs, including the costs of two counsel.
Judges
Streicher, Hefer, Vivier, Olivier, Zulman
Legal Topics
Suretyship, Mental Capacity, Contra Bonos Mores, Public Policy, Good Faith, Burden of Proof
Commercial and Corporate Civil Procedure Suretyship Mental Capacity Contra Bonos Mores Public Policy Good Faith Burden of Proof

Case Brief

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Parties

Eerste Nasionale Bank van Suidelike Afrika Beperk

Appellant

Elisabeth Anna Saayman N.O.

Respondent

Procedural Posture

Civil Appeal / Appeal From a Decision of the Cape Provincial Division

Legal Issues

  1. 1 Whether Mrs Malherbe possessed the mental capacity to understand and appreciate the nature and consequences of signing the suretyship and cession documents on 2 May 1989.
  2. 2 Whether the enforcement of the suretyship and cession is contrary to public policy and good faith given the circumstances of Mrs Malherbe's condition and the conduct of the parties.
  3. 3 Whether the appellant discharged its duty to ensure that the surety understood the implications of the transaction.

Ratio Decidendi

The majority of the court found, on a balance of probabilities, that Mrs Malherbe was mentally incapacitated at the time she signed the suretyship and cession on 2 May 1989. The evidence, including expert testimony and her conduct, demonstrated that she did not understand the nature or consequences of the transaction and was unable to appreciate the risks involved. The court held that she should not be bound by the contract, as she lacked the requisite capacity. Furthermore, the bank failed to ensure that Mrs Malherbe understood the implications of the documents she signed, and enforcement of the contract would be unconscionable and contrary to public policy and good faith. The appeal was...

Court Disposition

Appeal dismissed with costs, including the costs of two counsel.

Orders

  • The appeal is dismissed with costs, including the costs of two counsel.
  • The order of the court a quo, declaring the suretyship and cession unenforceable against Mrs Malherbe, is confirmed.