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IN THE HIGH COURT OF SOUTH AFRICA

(WITWATERSRAND LOCAL DIVISION)

CASE NO A5027/05

REPORTABLE

In the matter between

THRUPP INVESTMENT HOLDINGS (PTY) LTD APPELLANT

and

THOMAS BERNARD GOLDRICK RESPONDENT ______________________________________________________________

J U D G M E N T

______________________________________________________________

VAN OOSTEN J

[1] This is an appeal against the dismissal, with costs, by the court a quo (Woodward AJ) of the appellant’s claim, as lessor of certain business premises, against the respondent, who was one of two sureties of the lessee. The appellant’s claim was dismissed on the ground that the appellant had failed to present prima facie proof of the amount of the indebtedness of the principal debtor and hence that of the respondent as surety. In the alternative the Judge a quo firstly upheld a special plea raised by the respondent that a portion of the appellant’s claim had become prescribed and secondly found it impossible to determine the remaining portion of the appellant’s claim. Leave to appeal was refused by the Judge a quo but subsequently granted by the Supreme Court of Appeal.

[2] The appellant’s action was based upon a deed of suretyship undertaken by the respondent and the first defendant in the action. At the commencement of the trial the action against the first defendant was postponed sine die. The appellant, subsequent to an assignment, became the lessor of the leased premises in terms of a written agreement of lease concluded with the lessee, O’Briens Family Pub and Grill CC. The lease was for a fixed period of 5 years and the terms thereof inter alia provided for payment of monthly rental in a determined amount, increasing annually again in determined amounts and payment by the lessee of operating costs as well as all charges in respect of water and electricity consumed. Concerning overdue amounts, the lease agreement provided for interest compounded monthly and calculated from the due date at the rate of 2% above the prime rate of the Standard Bank of South Africa Ltd. To complete the picture of the lease agreement it is necessary to refer to the certificate of indebtedness-clause contained therein, which reads as follows:

“29.5 A certificate signed by a director, company secretary, credit manager or internal accountant of the Lessor or the Lessor’s agent shall be prima facie proof of the amount of any indebtedness owing by the Lessee to the Lessor at any time and also the fact that the due date of payment of the whole or, as the case may be, any portion of that amount has arrived.”

[3] The suretyship we are here concerned with was an annexure to the lease agreement and bound the respondent and the first defendant as sureties and co-principal debtors with the lessee “for the due, proper and timeous performance by the lessee of all its obligations to the lessor arising from or related to the lease agreement to which this suretyship forms an annexure”. I should add that the suretyship does not contain a certificate of indebtedness-clause. The lease agreement terminated by effluxion of time and the lessee was after that placed in liquidation.

[4] The appellant’s claim against the respondent as surety was for arrear rentals and related costs. At the trial in the court a quo the amount of the indebtedness of the lessee and hence the respondent as surety became the principal issue between the parties. The appellant sought to prove the amount of indebtedness by relying on a certificate of indebtedness pursuant to the provisions of the lease agreement that was signed by Mr Tomlinson, a company secretary of the appellant. Tomlinson was called to testify and his cross-examination revealed certain errors in the calculation of the amount

certified resulting in two revised certificates being produced which in turn after two amendments of the particulars of claim, led to a reduction of the amount of the appellant’s claim to R 312 525 – 25.

[5] The court a quo however held that the appellant in the absence of a certificate of balance-clause in the suretyship, could not rely on such a certificate in respect of the amount it sought to prove against the respondent. The finding was attacked on appeal and another string to the bow was added when the appellant in the alternative sought to rely on the plaintiff’s Customer Detailed Ledger which it had kept in respect of this lease, for proof of the amount of the respondent’s indebtedness.

[6] As regards the effect of the absence of a certificate of balance-clause in the suretyship counsel for the appellant submitted that a proper interpretation of the certificate of indebtedness-clause contained in the lease agreement leads one to conclude that the production of such a certificate in fact established the liability of the lessee for the amount certified, which in turn was sufficient to constitute prima facie proof of the liability of the sureties. The argument in my view is flawed in its premise. A certificate-clause, it has been held in a number of cases, is designed to facilitate proof of the amount of liability (See Nedbank Ltd v Abstein Distributors (Pty) Ltd and Others 1989 (3) SA 750 (T); Bank of Lisbon International Ltd v Venter en ‘n Ander 1990 (4) SA 463 (A) at 478 E). The certificate therefore is merely an evidentiary tool provided for in an agreement by one contracting party to the other to facilitate proof of the amount of indebtedness. It does not in itself establish liability. In casu the clause was only valid as between the lessor and the lessee and therefore could not be invoked against the sureties. The fact that the suretyship was referred to in and addition to that, also annexed to the lease agreement, is of no moment. The suretyship although collateral to the lease agreement, remains a separate and independent agreement and the certificate of balance-clause therefore as correctly held by the Judge a quo, did not by reference become incorporated into the suretyship.

[7] It follows that the learned Judge a quo correctly held that the appellant could not avail itself of the benefits of the certificate of indebtedness-clause contained the lease agreement, in attempting to prove the amount of the respondent’s indebtedness.

[8] I turn now to a consideration of the alternative contention raised by appellant’s counsel, to which I have already referred. It concerns the probative value to be attached to the appellant’s Customer Detailed Ledger. The ledger contains entries and calculations of the financial transactions relating to the lease. Counsel submitted that the ledger, in the absence of a certificate of indebtedness, provided sufficient prima facie evidence and therefore proof of the amount of the respondent’s indebtedness. Before I deal with this aspect it is necessary to mention that counsel who appeared for the appellant at the trial during argument at the end thereof, and once again during argument on the application for leave to appeal, conceded that outside the certificate of indebtedness, no proof of the respondent’s indebtedness existed. The learned Judge a quo consequently was not called upon and therefore did not deem it necessary to consider the argument that has now been raised. Finally, regarding the concession made at the trial, it was correctly argued by appellant’s counsel that this court is not bound by it (See Sentrachem Bpk v Wenhold 1995 (4) SA 312 (A) at 318G; Ndlovu v Santam Bank Ltd 2006 (2) SA 239 (SCA) at par [3] and [4] ).

[9] The appellant proceeded to prove its case against the respondent in the court below solely relying on the certificate of indebtedness. The Customer Detailed Ledger was introduced merely as a back-up document in support of the certificate of indebtedness. That however does not preclude this court on appeal to adjudicate this aspect afresh provided that it was properly raised and fully dealt with in the evidence in the court below.

[10] Firstly then, it becomes necessary to determine whether the ledger was properly introduced into the body of evidence. It featured right from the outset in the particulars of claim where it was referred to as follows:

“A copy of the Customer Derailed Ledger setting out the due dates and amounts due for water and electricity operating costs and maintenance costs is attached hereto, marked “D” and the interest calculation marked “D2” respectively”.

A closer examination of the ledger reveals nothing more than just those entries. In essence, it is a fairly basic, uncomplicated recordal and computation of debits and credits pursuant to the lease agreement. The relevance of this observation will become apparent later in the judgment. Mr Tomlinson, who it will be remembered was the author of the certificate of indebtedness relied upon by the appellant, in his evidence to which I will presently refer in more detail, dealt with the creation of the ledger and his examination in chief as well as cross-examination required him to extensively refer to the contents thereof. No objection was raised as to the admissibility of the ledger. On the contrary, it was used as a basis for attacking the correctness of the certified amount in cross-examination by counsel for the respondent. There accordingly exists no reason why the appellant, in this appeal, would not be entitled to rely on the ledger.

[11] The next question arising is whether the ledger constituted prima facie proof of the entries it reflected. Before I deal with this aspect, it is useful by way of background to briefly refer to the legal concept of prima facie proof. Its essence was succinctly coined by Stradford JA in Ex parte Minister of Justice: In re Jacobson and Levy 1931 AD 466 at 478 in the following oft quoted passage:

“If the party on whom lies the burden of proof, goes as far as he reasonably can in producing evidence and that evidence “calls for an answer” then, in such case, he has produced prima facie proof, and, in the absence of an answer from the other side, it becomes conclusive proof.”

The nature and quantity of the evidence required to constitute prima facie proof will of course depend on the particular circumstances of each case. As a general proposition it can however be stated that prima facie evidence is more than merely “some evidence” (Cf Schmidt and Rademeyer: Law of Evidence Issue 4; 3-22).

[12] I turn now to the evidence of Tomlinson concerning the ledger in order to determine whether it provides prima facie proof of the amount of the

respondent’s indebtedness. Tomlinson as I have indicated, was the company secretary of the appellant. In that capacity he said he managed the building where the leased premises were situated, which he explained included “letting of the premises, collecting rent, etcetera”. His name appeared on each page of the ledger which was a computerised document produced by a Pastel Accounting System which for practical reasons, was registered in his own name. He said he was “responsible” for the accounting records, which in cross-examination he clarified did not necessarily mean “that I was responsible for what was produced on that Pastel programme” but added that it included the responsibility to “manage the Sunhill Centre (consisting of inter alia the leased premises), to charge rentals and to collect them”. The ledger he further said, he “believed”, contained “everything” relating to the claim in respect of the leased premises. A number of questions relating to the entries were addressed to Tomlinson in cross-examination, all of which were satisfactorily dealt with. My overall impression gained from his evidence as a whole is that he was intimately and personally involved in the management of this particular account which as I have already alluded to, was not of great complexity. The rentals and operating costs debited in the ledger are readily verifiable against the amounts reflected in the agreement of lease, which as I have mentioned are all fixed amounts. The amount of the payments that were made are separately listed opposite the dates of payment. None of the payment entries were disputed. The respondent’s cross examination was directed at the correctness of the manner in which certain items were calculated.

[13] In argument before us appellant’s counsel conceded, in my view rightly so, that the charges in respect of electricity and water consumed had not been proved and he accordingly abandoned the claim in respect of those amounts. When the abandoned items are deleted from the ledger all that remain on the debit side therof are the debits in respect of rentals and operating costs, which as I have mentioned, conform with the amounts reflected in the lease agreement, and on the credit side the payments made. During argument before us counsel for the appellant handed in a schedule setting out a revised calculation of the amount due based on the remaining

items in the ledger. While dealing with this aspect, I should add that the appellant’s claim suffered a further decrement once it was conceded that the prime rate of interest charged by Standard Bank had also not been properly proved. The effect hereof will be dealt with later in the judgment.

[14] Having dealt with the debits all that remain to finally compute the amount due, are the payments that were made by the lessee as reflected in the ledger. In this regard I think it is of some importance to bear in mind that the respondent was not an entirely remote party to O’Briens Family Pub and Grill CC and its business operations. Although he was not directly involved in the day to day running of the business, he held a 50% shareholding in the close corporation and moreover eagerly invested substantial sums of money into the setting up of the business of the close corporation. He professed ignorance of the terms of the lease agreement not having “actually seen it”. Tomlinson however apprised him of the arear rentals when those spiralled to R250 000, and more, which not only left him “breathless” but also elicited the response “well look, this is ridiculous, how did it get there?”. But the respondent significantly at no time raised any concerns regarding the fact of or the amount of the arrears, which it must be added could only have resulted from non-payment of rentals. On the contrary he without more ado scapegoated the appellant for allowing the arrears to spiral out of control which eventually perpetuated itself in one of the defences raised by him. When he was asked in evidence whether he could dispute any of the items in the ledger, he without hesitation, unequivocally denied the correctness of the ledger but could do no more than merely raise concerns relating to the correctness of the “interest factor” and further the confusion that had earlier arisen concerning the rental entries in repect of other premises let to the lessee referred to as “shop 2” which in any event was satisfactorily cleared up.

[15] Weighing all the aspects I have referred to in the scale, it in my view was sufficient to consitute prima facie proof calling for an answer from the respondent. The revised Customer Detailed Ledger in fact stands uncontroverted and accordingly, in the absence of rebutting evidence, conclusively proves the amounts now relied upon by the appellant.

[16] The respondent from the outset raised a number of defences against the claim of the appellant. Some of those were dealt with by the court a quo and others were not persisted with on appeal. Only two aspects of the remaining defences require the attention of this court. It is firstly contended that in the event of the appellant succeeding in proving any amount owing to it by the respondent, a reduction of the sum of R100 000 should be allowed, which was received by the liquidator after termination of the lease and the liquidation of the close corporation in respect of the sale of its fixtures and fittings. The contention is short-lived. It is effectively countered by the provisions of the lease agreement in terms of which the lessee forfeited any claim for compensation in respect of moveable items remaining on the premises after termination of the lease and notice to remove having been given. Written notice to the lessee to remove the fixtures and fittings was duly given. This is not in dispute. As it appears from the correspondence the removal of the fixtures and fittings was regarded as too costly and therefore was not affected, resulting in the lessee having forfeited its right to compensation in respect thereof. The forfeiture provision referred to may well be in the nature of a penalty provision but this aspect was not dealt with and I need not say anything further on it. The lessee and hence the respondent therefore have not become entitled to a credit in respect of the sale of the fixtures and fittings.

[17] Finally, I turn to the issue of prescription. The respondent as I have already alluded to, raised a special plea of prescription against that portion of the appellant’s claim which fell due more than three years before the date of service of the summors on the respondent. The appellant did not file a replication to the special plea of prescription. During this opening address at the commencement of the trial in the court below, counsel then appearing for the appellant indicated that the appellant would rely on a delay in the running of prescription in terms of sec13(1)(g) of the Prescription Act 68 of 1969. He further informed the court that this aspect had been raised at the pre-trial conference between the parties. Notwithstanding the learned Judge’s cautionary remarks regarding the delay not having been pleaded, the appellant proceeded without regularising the position by an appropriate amendment. The learned Judge upheld the plea on the basis that it was not

properly raised and secondly that the appellant had failed to discharge the onus resting on it to prove the delay in prescription.

[18] It is common cause that but for the delay relied upon by the appellant, all amounts claimed older than three years prior to the service of the summons on the respondent, have become prescribed. It is therefore only necessary to consider whether the delay contended for by the appellant, had occured.

[19] In my view the learned Judge a quo erred in holding that the delay in prescription was not properly raised. The approach she adopted in my view, is too technical. As I have already alluded to, the appellant’s reliance on the delay in prescription was raised at the pre-trial-conference as well as at the commencement of the trial. It was moreover fully ventilated at the trial. To insist in these circumstances on a formal replication in my view would be tantamount to a refusal to adjudicate one of the real issues between the parties. This court having before it all that is necessary to enable it to form an opinion, should therefore determine the issue (See Collen v Rietfontein Engineering Works 1948 (1) SA 413 (A) at 433).

[20] The learned Judge a quo found as I have indicated, that the appellant had failed to prove the delay. I respectfully agree although I have reached this conclusion along a different line of reasoning which I now intend to deal with.

[21] The facts relevant to prescription are the following: the principal debtor was placed in liquidation on 4 April 2001. The appellant forwarded its claim documents in respect of the present claim to the liquidator who acknowledged receipt thereof on 14 August 2001. The liquidator also informed the appellant that the claim would be submitted to a general second meeting of creditors in due course. The meeting in fact took place on 14 August 2002 but the appellant’s claim documents were rejected by the presiding officer. The only further information before us is that the appellant is reflected in the first and final liquidation and distribution account as a creditor and that the account was confirmed on 1 April 2003, which was after the date of service of the summons in this matter.

[22] Section 13(1)(g) of the Prescription Act provides that the completion of prescription is delayed for a period of one year after the date referred to in sub sec (i) (quoted below), if:

“ (g) the debt is the object of a claim filed against ...a company in

liquidation.”

and

“(i) the relevant period of prescription would, but for the provisions of this subsection, be completed before or on, or within one year after the day on which the relevant impediment referred to in paragraph (g) has ceased to exist”.

For the empediment to become effective, a claim, as provided for in s13(1)(g) must have been “filed” against the company in liquidation. The meaning to be attributed to the concept of “filing” of a claim as used in the sub-section must be ascertained with a reference to the Insolvency Act 24 of 1936 where the procedure for the proof of claims is provided for. Section 44 of the Insolvency Act (which applies to the liquidation of companies in terms of s339 of the Companies Act 61 of 1973) provides for proof of liquidated claims against an insolvent estate which is possible by way only of an affidavit together with supporting documents which “shall be delivered at the office of the officer who is to preside at the meeting of creditors not later than twenty-four hours before the advertised time of the meeting at which the creditor concerned intends to prove the claim, failing which the claim shall not be admitted to proof at the meeting, unless the presiding officer is of the opinion that through no fault of the creditor he has been unable to deliver such evidence of his claim within the prescribed period...”(s44(4) of the Insolvency Act). That being the prescribed procedure, the filing of the claim referred to in s13(1)(g) of the Prescription Act can only mean the date upon which the presiding officer of either the first or second meeting of creditors (Vide s44(1) of the Insolvency Act) admits the claim for purposes of proof thereof. In casu it is common cause that the claim documents of the appellant were rejected by the presiding officer of that meeting. The impediment provided for in s13(1)(g) of the Prescription Act accordingly did not come into operation.

[23] In conclusion, as to the amount of the appellant’s claim, it is necessary to revert to the revised schedule placed before us by appellant’s counsel to

which reference has already been made. The amount due after deduction of that portion of the claim having become prescribed is stated in the schedule as R103 667-82. The correctness of the arithmetic calculation has not been attacked. I therefore do not consider it necessary to further deal with it. It follows that the appellant is entitled to payment of this sum. Interest on the amount of the judgment will be allowed at the mora rate in view of, as I have mentioned, the absence of evidence to prove the Standard Bank interest rate.

[24] In the result, the following order is made:

1) The appeal is upheld with costs.

2) The order of the court a quo is set aside and substituted with the

following order:

“Judgment is granted (jointly and severally with any judgment that may be granted against the first defendant) in favour of the plaintiff against the second defendant for:

1. Payment of the sum of R103 667-82;

2. Interest on the amount in (1) above at the rate of 15.5% pa from 7 March 2003 to date of payment.

3. Costs of suit.”

_________________________

FHD VAN OOSTEN

JUDGE OF THE HIGH COURT

I agree.

________________________

LI GOLDBLATT

JUDGE OF THE HIGH COURT

I agree.

________________________

BH MBHA

JUDGE OF THE HIGH COURT

COUNSEL FOR THE APPELLANT ADV LJ VAN DER MERWE

APPELLANT’S ATTORNEYS MARTINI-PATLANSKY

COUNSEL FOR THE RESPONDENT ADV SM KATZEW

RESPONDENTS’ ATTORNEYS H MILLER ACKERMANN &

BRONSTEIN

DATE OF HEARING 23 FEBRUARY 2007

DATE OF JUDGMENT 13 MARCH 2007

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