Odgers Foam Insulation Company (Pty) Ltd. v Standard Bank of South Africa Ltd. (525/87) [1989] ZASCA 10 (16 March 1989)

Odgers Foam Insulation Company (Pty) Ltd. v Standard Bank of South Africa Ltd. (525/87) [1989] ZASCA 10 (16 March 1989)

The Supreme Court of Appeal held that the term 'guaranteed party' in the RG must be interpreted in light of the negotiable nature of the bills of exchange. Since the bills were payable to order and freely negotiable, the guarantee extended not only to Papenmeier but also to any subsequent lawful holder of the bills. The respondent bank, as guarantor, was entitled to pay the amounts claimed by the holder of the bills and to debit the appellant's account accordingly. The appellant's argument that the guarantee was limited to Papenmeier was rejected. The appeal was dismissed, and the orders of the court below were confirmed.

Citation
[1989] ZASCA 10
Parties
Appellant: Odgers Foam Insulation Company (Pty) Ltd.; Respondent: Standard Bank of South Africa Ltd.
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
16 March 1989
Case Number
525/87
Procedural Posture
Civil Appeal / Appeal From Orange Free State Provincial Division; Judgment Delivered
Outcome
Appeal dismissed with costs, including costs of two counsel.
Judges
G G Hoexter, Botha, Van Heerden, Grosskopf, Nicholas
Legal Topics
Guarantee Liability, Bills of Exchange, Aval, Negotiable Instruments
Banking and Finance Commercial and Corporate Guarantee Liability Bills of Exchange Aval Negotiable Instruments

Case Brief

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Parties

Odgers Foam Insulation Company (Pty) Ltd.

Appellant

Standard Bank of South Africa Ltd.

Respondent

Procedural Posture

Civil Appeal / Appeal From Orange Free State Provincial Division; Judgment Delivered

Legal Issues

  1. 1 Whether the term 'guaranteed party' in the Request to issue a Guarantee (RG) refers only to Papenmeier or also to subsequent holders of the bills of exchange.
  2. 2 Whether the respondent bank is entitled to pay the bills to a party other than Papenmeier and debit the appellant's account accordingly.

Ratio Decidendi

The Supreme Court of Appeal held that the term 'guaranteed party' in the RG must be interpreted in light of the negotiable nature of the bills of exchange. Since the bills were payable to order and freely negotiable, the guarantee extended not only to Papenmeier but also to any subsequent lawful holder of the bills. The respondent bank, as guarantor, was entitled to pay the amounts claimed by the holder of the bills and to debit the appellant's account accordingly. The appellant's argument that the guarantee was limited to Papenmeier was rejected. The appeal was dismissed, and the orders of the court below were confirmed.

Court Disposition

Appeal dismissed with costs, including costs of two counsel.

Orders

  • The appeal is dismissed with costs, including the costs consequent upon the employment of two counsel.