IN THE HIGH COURT OF SOUTH AFRICA 
(WESTERN CAPE HIGH COURT, CAPE TOWN)

In the matter between:

And

JUDGMENT DELIVERED ON 6 NOVEMBER 2012
YEKISO. J

[2] The claim referred to in the preceding paragraph was in respect of goods sold and delivered to George Roofing CC, a close corporation of which the appellant and the said George Sebastian Smit (“Smit”) were members at the time the cause of action arose. On 16 April 1998 and at George the appellant and Smit bound themselves as sureties and co-principal debtors with George Roofing CC in favour of Safintra Cape (Pty) Ltd (the respondent in this appeal) for debts due and owing by George Roofing CC. George Roofing CC has since been liquidated hence the action in the magistrate’s court against the appellant and Smit in their respective capacities as sureties and coprincipal debtors. This appeal is against the whole of the judgment handed down by the magistrate, inclusive of the order that the appellant is jointly liable with Smit for debts due and owing to the respondent by George Roofing CC (in liquidation).
[3] On 3 April 1998 the representatives of the respondent, in response to an application for credit by George Roofing CC, faxed a form for an application for credit to the offices of George Roofing CC. The form was headed “APPLICATION TO OPEN A CREDIT ACCOUNT” (“the credit application”). The credit application was completed by the administrative officer of George Roofing CC and submitted to Smit and the appellant for their signature who both proceeded to sign the credit application form.
[4] The prominent heading of the document proclaims that it is an application to open a credit account. The credit application form is a three page document comprising 13 paragraphs inclusive of sub-paragraphs. Paragraph 4(a)(i) to (iii) makes provision for completion of persona! particulars of each member of the close corporation. Paragraph 4(b) seeks to elicit a response as to whether the signatory of the form is prepared to sign personal surety for the close corporation. A response to this question is indicated in the affirmative in the credit application.
[5] The terms and conditions of the credit application are contained in paragraphs 13(a) to 13(i) of the credit application. Paragraph 13(g) of the terms and conditions reads as follows:

[6] Paragraph (j) of the terms and conditions of the credit application reads as follows:

Just below paragraph 13(j) there is provision for signature by a proprietor/partner/director/member followed by “obo George Roofing CC”. It is common cause that the appellant and Smit signed the credit application form at the back thereof.

When can an error be said to be justus for purposes of entitling a man to repudiate his apparent assent to a contractual term? As I read the decisions, our court, in applying the test, have taken into account the fact that there is another party involved and have considered his position. They have, in effect, said: Has the first party - the one who is trying to resile - been to blame in the sense that by his conduct he has led the other party, as a reasonable man, to believe that he was binding himself? ... If his mistake is due to a misrepresentation, whether innocent or fraudulent, by the other party, then, of course, it is the second party who is to blame and the first party is not bound.”
[9] Based on the authority cited in the preceding paragraph, it is contended on behalf of the appellant that it is because of misrepresentation by the respondent that the appellant was induced to sign the credit application form in the reasonable, but mistaken, belief that it did not constitute a suretyship agreement. The issue that calls for determination, therefore, is whether there was misrepresentation which induced the appellant to sign the credit application in a reasonable, but mistaken belief that it did not constitute a suretyship agreement.

"......did the party whose actual intention did not conform to the common intention expressed, lead the other party, as a reasonable man, to believe that his declared intention represented his actual intention? ... To answer this question, a three-fold inquiry is usually necessary, namely firstly, was there a misrepresentation as to one party’s intention; secondly, who made that representation; and thirdly, was the other party misled thereby? ... The last question postulate two possibilities: was he actually misled and would a reasonable man have been misled?”

[11.2.] whether such misrepresentation is attributable to the respondent;
[11.3.] whether the appellant was actually misled by the representation; and [11.4.] whether a reasonable person, in the position of the appellant, would have been misled by the misrepresentation.

[15] The appellant’s evidence at trial, in broad terms, was that no person representing the respondent at any stage spoke to him or alerted him that the document he was required to sign contains a personal suretyship binding the signatory thereof as surety to George Roofing CC. He testified further that members of the close corporation (George Roofing CC) were advised by the financial advisor of the close corporation that, if at all possible, members should not sign personal sureties. He had in the past signed credit application forms and where the members of the close corporation were required to also sign as sureties, such a suretyship document would be contained in a separate document as opposed to it being inconspicuously enmeshed amongst the other terms and conditions of the proposed credit agreement.
[16] In his evidence at trial the appellant referred to a form for an application for credit with one corporate entity, Macsteel Service Centre (Pty) Ltd, which required the signatories to the document to bind themselves as sureties, but that the personal suretyship being given is contained in a separate document.
[17] The appellant concluded his evidence at trial by stating that the document he was required to sign, which without his knowledge contained a suretyship clause, is misleading on the basis that the document reads “APPLICATION TO OPEN A CREDIT ACCOUNT” and that the word “surety” does not appear anywhere on the face of the document. He testified that other documents he was required to sign in the past which contained a suretyship clause, the word “surety” would appear on the face of the document and the document imposing suretyship obligation would be contained in a separate document.
[18] The appellant made several concessions in his evidence under cross examination, as for an example, that the close corporation relied on credit facilities by suppliers for the operation of its business; that the close corporation relies on credit facilities to manage its cash flow; and that had he read the document he would have seen the suretyship clause. But, in my view, these concessions are negated by some features of the credit application which, taken cumulatively, only have the effect of misleading the signatory thereof.

[24] In my view, a case has been made out that the document which the appellant was required to sign constitutes misrepresentation; that such representation is attributable to the respondent; that the appellant was actually misled by the form and the design of the credit application; and that a reasonable person, in the position of the appellant, would have been misled by such misrepresentation.
[25] In the result I make the following order:
[25.1.]	The appeal is upheld with costs.

[25.2.1.]	Plaintiffs claim against the second defendant is dismissed.

[25.2.2.] Plaintiff is ordered to pay second defendant’s costs in defending the action on a party and party scale;

[25.2.3.] Judgment is granted in favour of plaintiff against the first defendant for:

(a) Payment in the sum of R145,811.47;
(b) Interest on the aforementioned sum at the rate of 15.5% per annum from 28 February 2009 until date of final payment;
(c) Costs on an attorney and client scale up to, but excluding, trial.
N J Yekiso, J

I agree

J H M Traverso, DJP