Standard Bank of South Africa v Lorenzo Builders (Pty) Ltd and Others (4689/2009) [2014] ZAKZDHC 28 (10 June 2014)

IN THE HIGH COURT OF SOUTH AFRICA

KWAZULU-NATAL LOCAL DIVISION, DURBAN

Case no: 4689/2009

In the matter between:

STANDARD BANK OF SOUTH AFRICA......................................................................APPLICANT

and

LORENZO BUILDERS (PTY) LTD............................................................................RESPONDENT

DAX EDWARD GOOSE..............................................................................SECOND RESPONDENT

LAWRANCE M. KHOZA...............................................................................THIRD RESPONDENT

ROBERT STEPHEN NIENABER..............................................................FOURTH RESPONDENT

MAGLAN MUDALANY...................................................................................FIFTH RESPONDENT

LORENZA WESSELS......................................................................................SIXTH RESPONDENT

JUDGMENT

Delivered: 10 June 2014

MBATHA J

[1] The Plaintiff’s claim against the Second to Fifth Defendants is based on deeds of suretyships signed by each of these Defendants for an overdraft facility granted to the First Defendant in the name of Lorenzo Builders CC. It is common cause or at least not capable of dispute at this stage of the proceedings that at the time when these deeds of suretyships were signed the First Defendant had been converted from a close corporation into a company and its correct citation ought to have been Lorenzo Builders (Pty) Limited on the deeds of suretyships.

[2] After the Plaintiff closed its case Adv. Gajoo S C who appears on behalf of the Second to Fifth Defendants applied for a judgment

absolving them from the instance the contention being that on the evidence presented by the Plaintiff no court acting reasonably would be capable of finding for the Plaintiff. This argument is based on firstly, the contention that no court will be able to find on the evidence led this far that the deeds of suretyship signed by the Second to Fifth Defendants in respect of an overdraft facility granted to the close corporation has any legal basis for serving as security in respect of the First Defendant as a company. Secondly, it is contended that Plaintiff will fail in its attempt to seek rectification of the deeds of suretyships to reflect the company as the primary lender.

Adv. Gajoo based his first contention on the judgment in Townsend Productions (Pty) Limited v Leech and Others 2001 (4) SA 33 and argued that for the reasons given in that judgmentwhich involved a restraint of trade, the effects of the conversion of a close corporation into a company as provided for in section 29D of the Companies Act 61 of 1973 will not be able to benefit the Plaintiff.

[3] Secondly he argued that on the issue of the proposed rectification being sought by the Plaintiff the evidence of Ms Jones who testified on behalf of the Plaintiff excludes “mistake” as a necessary component for such an order to be made.

[4] Since the matter is not concluded and further evidence may be led by the Second to Fifth Defendants on both these issues and the further averments contained on their behalf in the pleadings it is not necessary nor advisable to say any more than is strictly required of me to do once I have come to the conclusion that the application ought to be dismissed as it will be an interlocutory order by its very nature.

[5] I am not persuaded that the Plaintiff has failed to make out a prima facie case and therefore, I make the following order:

(a) The application for absolution from the instance is dismissed with costs to be costs in the cause.

__________________________

MBATHA J

Date of hearing: 3 December 2013

Date of judgment: 10 June 2014

Counsel for the Applicant: Adv. S. Hoar

Instructed by:

Counsel for the 1st& 6th Respondents: Adv. R. Suho

Counsel for the 2nd, 4th& 5th Respondents: Adv. V Gajoo SC

Instructed by: TheyagarajChetty Attorneys