CIV/T/95/85

IN THE HIGH COURT OF LESOTHO

In the Matter of

BARCLAYS BANK P.L.C. Plaintiff

V

ETHEL THANDIWE MOTSETA Defendant

JUDGMENT

Delivered by the Hon Acting Mr. Justice D.S. Levy on the 17th day of July, 1985.

Plaintiff has instituted action for provisional sentence on a written suretyship agreement by the defendant as surety and co-principal in solidum for all such sums of money that may be owing to the Plaintiff by certain Likuiling Trading (Pty) Ltd (The company).

The agreement, which is dated 16th September, 1982, was entered into by the Defendant after the death of her husband (the deceased), who died on 3rd August, 1982, and who, until his death, was the Managing Director of the company.

Before his death, negotiations were in progress between the Plaintiff and the deceased for the grant of overdraft facilities to the company up to an amount of R30.000-00. The Plaintiff was ready to grant such facilities, as appears from its letter to the company dated 11th June, 1982, in which it is stated that the Plaintiff was agreeable to overdraft facilities on a fluctuating basis subject to the conditions that

1. The deceased, who was then living, of course, sign a fresh guarantee for M30.000.00.

2. The bond over his house be increased to M30.000-00 as further security to the bank.

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The guarantee would of course have been in the form of suretyship, and the house to which reference is made was the property of the deceased to whom the Defendant was married with the exclusion of community of property. A previous letter dated 3rd of August, 1981 from Plaintiff to the company also indicates that the registration of a bond over the deceased's house in favour of the Plaintiff was a condition pre­cedent to the grant of such overdraft facilities to the company.

The Defendant has produced a letter dated 6th September, 1982, written by Plaintiff's Attorney to Plaintiff in which reference is made to the death of the deceased and in which the Plaintiff is advised that since the proposed surety bond can no longer be regis­tered in the name of the deceased because of his death, the Plaintiff should call upon the person nominated by the Family Council as heir of the deceased, who died intestate in terms of Family Law to pass the bond in favour of the Plaintiff The Plaintiff was also advised that, in the Attorney's opinion, the property would not devolve on the Defendant

No bond was registered over the house either by the deceased or his heirs, so that the Plaintiff is without any security, other than the Defendant's surety­ship, for repayment of the overdraft which notwith­standing the non-registration of a bond was allowed to the company.

The certificate of the Plaintiff's manager on which the action is based shows an amount of R36.673.86 owing by the company to the Plaintiff, of which amount the Plaintiff claims M30.000.00 from the Defendant.

The Defendant has said that she is one of the Directors of the company but raised a defence based upon the senatus consultum velleianum which had not been re­nounced by her. This defence is still available in this country to women sureties, and it prohibits every woman whether married or not, whether

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with or without capacity to contract, from interceding, and in particular as surety, in respect of the ,debt of any other person without renunciation' of this bene-fit See the numerous cases in South African law cited by Caney in Law of Suretyship 2nd Ed. pp 163 -173

In addition to renunciation, which as I have said did not take place in casu, numerous exceptions have been grafted upon the defence.

The Plaintiff has said that the Defendant is a public trader and hence liable on the suretyship, notwithstanding the exception But as a public trader, the Defendant would lose the benefit of the exception only when it can be shown that she personally obtained some real even though indirect benefit from the surety­ship. If, of course, she signed the suretyship for the purpose of advancing her business, she would lose the benefit of the exception But the fact that she conducts her own business as a public trader does not deprive her of the defence where she has gone surety for some 3rd party without any benefit to herself. (See Kavnat v Kavnat 1946 W.L D 77 at 81 and African Guarantee & Indemnity Co. Ltd v. Rabinowitz 1934 W.L D 141)

The onus of proof that the Defendant herself has received a benefit from her intercession is upon the Plaintiff (See Rabinowitz's case supra at 157). The fact that she has bound herself as surety & co-principal debtor in solidum is also no answer to the exception. (See Maasdorp v Graaff-Reinet Board of Executors (1909) 3 B.A.C. 482).

The only fact emerging from the papers before me, upon which Plaintiff could rely for proof of Defendant's personal interest in the affairs of the company, is that she is one of its directors and apparently is or may have been also a shareholder in it. That this is insufficient is apparent from the

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decision in National Industrial Credit Corp.Ltd. v. Zacharias 1949(4) S.A. L.R 790(W). To hold a woman liable on her suretyship, it must be proved by the Creditor that she received a direct benefit from the debt for which she is surety.

There would also appear to be some justifi­cation for the Defendant's defence based upon failure of the Plaintiff to complete its securities by ob­taining the registration of the bond over the decea­sed's house by his heirs before advancing the over­draft to the company

A surety is entitled to a discharge from liability where the creditor has failed to obtain the securities which the parties contemplated would be obtained and held by the creditor and on the basis of which the suretyship contract was entered into. This situation arises where the surety has suffered pre­judice through the failure of the creditor to perfect his security through his failure to see to the regi­stration of a surety bond. (See Business Buying and Investment Co. Ltd v Linaae 1959(3) S.A. L R 93 T.

The Defendant appears, therefore, to have raised two successful defences which would disentitle the Plaintiff from provisional sentence It may be, however, that the Plaintiff can show at a trial of the action that the Defendant received substantial benefit from her intercession and that the Plaintiff's failure to secure registration of the bond does not entitle Defendant to a discharge of liability.

It seems to be equitable that I should order the action to go to trial and that the Defendant's affidavit stand as a plea and give Plaintiff leave to seek further particulars or take any further step within 14 days from date thereof. I also order the costs of these preceedings to be costs in the cause of action.

D S LEVY

ACTING JUDGE

17th July 1985.

For Plaintiff Mr Harley

For Defendant Mr Mphutlane.