REPUBLIC OF SOUTH AFRICA

     SOUTH GAUTENG HIGH COURT
     (JOHANNESBURG) 

	           CASE NO 2010/43142	

(1)	REPORTABLE: NO
(2)	OF INTEREST TO OTHER JUDGES: YES
(3)	REVISED. 

31 AUGUST 2012 	                        FHD VAN OOSTEN               		       		

In the matter between 

JAN HENDRIK COETZEE				      FIRST APPLICANT/DEFENDANT 
CHRISTOFFEL JOHANNES NORTJE 		  SECOND APPLICANT/DEFENDANT
and
INTERFUSION FINANCE (PTY) LTD	      RESPONDENT/PLAINTIFF
Practice - application for rescission of a default judgment - defence by sureties and co-principal debtors of rectification of written agreement - essential allegations necessary to sustain defence - absence of - no bona fide defence made out - application dismissed. 
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J U D G M E N T
____________________________________________________________________
VAN OOSTEN J:
[1] This is an application for the rescission of a default judgment granted in this Court on 10 February 2012.  In terms of the judgment the respondents were ordered, jointly and severally, to pay to the respondent the sum of R3,4m, interest thereon, certain penalties and costs on the attorney and client scale. The respondent opposes the relief sought.  
[2] The applicants seek condonation for the late bringing of the application. A proper case for condonation has been made out and counsel for the respondent rightly conceded as much. It is accordingly only necessary to consider and decide whether the applicants have made out a bona fide defence which prima facie carries some prospect of success (Naidoo and another v Matlala NO and others 2012 (1) SA 143 (GNP)152 
I-J).  
[3] The respondent’s claim against the applicant’s is based on suretyship agreements signed by the applicants, in terms of which they bound themselves as sureties and co-principal debtors for the principal debtor, Three Diamonds Trading 184 (Pty) Ltd, in favour of the respondent for the due payment of monies loaned to it by the respondent. The suretyship agreements are not in dispute neither that the principal debtor was indebted to the respondent in the sum of R3,4m, which is the amount of the judgment. The only defence relied on by the applicants is they have been released as sureties by the respondent which the respondent denies.    
[4] It is at the outset necessary to set out the way in which the defence relied on has been set out in the applicants’ founding affidavit. During November 2009, and probably resulting from the non-payment of the debt, the applicants and the respondent orally agreed to settle the matter. The basis of the settlement was firstly, to obtain a suretyship from a company known as Ravenswood Development (Pty) Ltd, and secondly, “in order to enhance the respondent’s security” and secondly, “that the applicants would be released as sureties of Three Diamonds”. On 10 December 2009, a written settlement agreement was concluded between the principal debtor (represented by the second applicant) and the respondent. In terms of the agreement the principal debtor admitted liability for payment to the respondent of the sum of R3,4m and inter alia undertook to settle the amount by way of two payments on specified dates. On 4 June 2010, the principal debtor (again represented by the seconds applicant), and Ravenswood concluded a written addendum to the settlement agreement, in essence providing for revised payments and security in respect of the amount outstanding. It is at this juncture already necessary to remark that clause 4 of the addendum provides that the remainder of the settlement agreement remains unaltered. Also of significance is that the applicants were not parties to either the agreement or the addendum. Against this background, the applicants state their defence as follows: 
‘34. The settlement agreement and the addendum to the settlement agreement do not correctly record the true intention of the parties to the agreement, more in particular in that they make no provision for the applicants and the 3rd defendant in the main action to be released as sureties of Three Diamonds in favour of the respondent, and furthermore in that the sureties were not privy to the agreement.
…
35. The said error has been occasioned as a result of a common error between the parties and the parties were under the impression at the time that the settlement agreement and addendum correctly recorded their true intention due to the wording, more in particular in that the agreement was a settlement agreement in order to resolve the parties’ disputes, and not a novation.  
…
38. Wherefore the applicants will in due course pray that the settlement agreement be rectified, more in particular that clauses 5.3 and 17 be inserted as follows:
5.3. The company (the repondnet) hereby releases the sureties of the debtor, namely Jan Hendrik Coetzee, Christoffel Johannes Nortje and Tertius Adriaan Roscher  from all obligations towards the company in terms of the agreements of suretyship dated 24th February 2006 and 5th July 2006 respectively, and undertakes to sign all documentation necessary to effect such release.
      
and

17. The sureties, Jan Hendrik Coetzee, Christoffel Johannes Nortje and Tertius
      	Adriaan Roscher, hereby accept the benefits of this agreement, more in parti-
      	cular their release as sureties of the debtor.

[5] The absence of essential allegations to sustain a defence of rectification based on common mistake is apparent. The defence is tersely dealt with, and conclusions are stated without factual foundation. The “defence” is clearly an afterthought: nothing is said concerning the “documentation” that was “necessary” to effect the release: it must be assumed that such document indeed never came into being. Nor is there any reference to the alleged release, in correspondence or otherwise, until the launching of the present application. A number of further considerations militate against the sustainability of the defence: the applicants were both practicing attorneys who had operated through their alter ego, the principal debtor. The settlement agreement and addendum thereto were drawn by the second applicant. He moreover signed both documents on behalf of the principal debtor. The notion of an attorney drawing and signing an agreement of settlement, some 6 months later again drawing and signing an addendum to that agreement, in which the terms of the first were confirmed, and then only almost 2 years later, for the first time, relying on a common mistake, in the nature of a release having been agreed upon, is plainly untenable. No explanation as to the nature of the common mistake and how it had occurred, especially by the respondent, has been tendered. The facts as a whole show that respondent, at all times, pursued payment and security for payment of the debt owed to it. Essential allegations necessary to sustain the defence are lacking. But it does not end there: the respondent has specifically referred to and highlighted these deficiencies in its answering affidavit. The applicants have chosen not to respond thereto and no replying affidavit has been filed. 
[6] One last obstacle the applicants seem to have overlooked: clause 11 of the suretyship agreements provides for a continuation of liability for payment of all debts existing as at the date of the release of the surety. This has not been dealt with at all by the applicants. For all these reasons I am not satisfied that a sustainable has been made out by the applicants. It follows that the application cannot succeed.    
[7] In the result the application is dismissed with costs on the scale as between attorney and client. 

_________________________
FHD VAN OOSTEN
JUDGE OF THE HIGH COURT

COUNSEL FOR APPLICANT 			ADV ME TRAUB 
						
APPLICANT’S ATTORNEYS			COETZEE NORTJE INC 	

COUNSEL FOR THE RESPONDENT 			ADV JE SMIT
					 
RESPONDENT’S ATTORNEYS			TIM DU TOI	T & CO INC 

DATE OF HEARING		 	 	30 AUGUST 2012
DATE OF JUDGMENT 		 	 	31 AUGUST 2012