Norex Industrial properties (Pty) Ltd. v Monarch South Africa Company Ltd. (393/1985) [1986] ZASCA 137; [1987] 1 All SA 437 (A) (28 November 1986)

Norex Industrial properties (Pty) Ltd. v Monarch South Africa Company Ltd. (393/1985) [1986] ZASCA 137; [1987] 1 All SA 437 (A) (28 November 1986)

The Supreme Court of Appeal held that the respondent's guarantee covered the lessee's obligations under the lease, including losses suffered by the appellant due to the statutory cancellation of the lease by the liquidator under section 37(1) of the Insolvency Act. The court found that the statutory right to claim compensation for loss is not extrinsic to the lease but flows directly from it, and that the respondent's liability as guarantor is not excluded by the statutory intervention. The court overruled Strydom v Goldblatt, holding that its interpretation of the effect of statutory lease termination on surety liability was incorrect. The respondent is liable to make good the...

Citation
[1986] ZASCA 137
Parties
Appellant: Norex Industrial Properties (Pty) Limited; Respondent: Monarch South Africa Insurance Company Limited
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
28 November 1986
Case Number
393/1985
Procedural Posture
Civil Appeal / Appeal From Dismissal of Claim in the Transvaal Provincial Division; Leave to Appeal Granted
Outcome
Appeal allowed; order of the court a quo set aside and substituted with judgment for the appellant.
Judges
Rabie, Jansen, Joubert, Botha, Boshoff
Legal Topics
Suretyship, Lease Termination, Insolvency Act Section 37, Damages for Breach of Contract
Commercial and Corporate Land and Property Suretyship Lease Termination Insolvency Act Section 37 Damages for Breach of Contract

Case Brief

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Parties

Norex Industrial Properties (Pty) Limited

Appellant

Monarch South Africa Insurance Company Limited

Respondent

Procedural Posture

Civil Appeal / Appeal From Dismissal of Claim in the Transvaal Provincial Division; Leave to Appeal Granted

Legal Issues

  1. 1 Whether a surety or guarantor is liable for damages suffered by a lessor following the cancellation of a lease by a liquidator under section 37(1) of the Insolvency Act.
  2. 2 Whether the decision in Strydom v Goldblatt correctly interpreted the effect of statutory lease termination on surety liability.
  3. 3 Whether the respondent's guarantee covers losses arising from statutory cancellation of the lease due to insolvency.

Ratio Decidendi

The Supreme Court of Appeal held that the respondent's guarantee covered the lessee's obligations under the lease, including losses suffered by the appellant due to the statutory cancellation of the lease by the liquidator under section 37(1) of the Insolvency Act. The court found that the statutory right to claim compensation for loss is not extrinsic to the lease but flows directly from it, and that the respondent's liability as guarantor is not excluded by the statutory intervention. The court overruled Strydom v Goldblatt, holding that its interpretation of the effect of statutory lease termination on surety liability was incorrect. The respondent is liable to make good the...

Court Disposition

Appeal allowed; order of the court a quo set aside and substituted with judgment for the appellant.

Orders

  • The appeal is allowed, with costs, including the costs of two counsel.
  • The order of the court a quo is set aside and substituted with judgment in favour of the plaintiff against the defendant for payment of R604,878.