REPORTABLE
Case number: 105/2000
IN THE SUPREME COURT OF APPEAL OF
SOUTH AFRICA
In the matter between:
ABSA BANK LIMITED t/a VOLKSKAS BANK
APPELLANT
and
JAN HENDRIK NEL PAGE
FIRST RESPONDENT
HENDRIK VAN NIEKERK NO
SECOND RESPONDENT
CORAM:
NIENABER,
NAVSA,
MTHIYANE
JJA,
CONRADIE and NUGENT AJJA
DATE OF HEARING:
18 SEPTEMBER 2001
DELIVERY DATE:
28 SEPTEMBER 2001
Summary:  Interpretation of court order – limited suretyship - discharge of
surety by payment by principal debtor – only where liability of principal
debtor and surety co-extensive.
__________________________________________________________________
JUDGMENT
__________________________________________________________________

CONRADIE AJA:
[1] The appellant is a commercial bank. It is a creditor of Derryk Page, a
farmer in the Adelaide district of the Eastern Cape. He was the first
defendant in a trial before Whitehead AJ in which the appellant sued him to
recover money which he had borrowed on a current account overdraft.  His
son, who was the second defendant, stood surety for his father’s liability up
to an amount of R190 000.  I shall refer to the dramatis personae as the
creditor, the principal debtor and the surety.
[2] The only part of the relief granted in the trial against the principal
debtor and the surety  which is relevant at present is that formulated in
paragraph 2 of the order:
‘Judgment is granted in favour of the plaintiff in the sum of R597
056,57 together with interest thereon at the rate of 19,5% per annum
from 24 January 1998 to the date of payment, in respect of which sum
the first defendant and the second defendant shall be jointly and
severally liable for payment of the first R190 000.00 together with the

said interest thereon, the one paying the other to be absolved, and the
first defendant shall be solely liable for the balance together with the
said interest thereon.’
[3] The creditor promptly caused a garnishee order to be issued against
the principal debtor’s attorney who held R300 000 in his trust account on his
client’s behalf. The attorney’s reaction to the service of the garnishee order
was to pay over to the acting sheriff of Adelaide an amount of R219 741, 51.
This was the capital of R190 000 together with interest up to the date of
payment. In a letter to the acting sheriff (who is the second respondent) he
stated that the payment was ‘in full settlement of the amount due by the First
and Second Judgment Debtors on a joint and several basis.’  In subsequent
correspondence he made it clear that the money had been paid in discharge
of that portion of the debt for which, according to his interpretation of the
judgment, the two defendants were jointly and severally liable.
[4] The creditor did not accept that the payment on behalf of the principal

debtor had discharged the surety's liability. It accordingly issued a writ
against the latter. The attachment of a truck forming part of the surety’s
transport business impelled him to bring an urgent application to set aside
the writ. This in turn prompted the creditor to bring an application of its own
for a declaratory order establishing the meaning of the order made by
Whitehead AJ.
[5] The two applications came before Leach J. The decision in the court a
quo is reported as Page v Absa Bank Ltd t/a Volkskas Bank and Another
2000 (2) SA 661 (E). The creditor’s application was dismissed with costs on
the attorney and client scale. The court held that it had been frivolous to
bring a separate application since the meaning of the order would in any
event be a central issue in the interdict proceedings.  The surety’s contention
that the order of  Whitehead AJ meant that the principal debtor’s payment
absolved him (the surety) from liability to the creditor  was upheld. The writ

was set aside.  The creditor’s contention that Whitehead AJ did no more than
give effect to the suretyship , as interpreted in the light of the common law,
failed. The creditor’s application for leave to appeal also failed, but an
application to the Chief Justice for leave to appeal against the whole of the
judgment of the court a quo dated 10 September 1999 in respect of the main
application was successful.
[6] The approach which Leach J adopted to test the order for ambiguities
or errors was to compare it with what he conceived the common law position
to be.  Since it seemed to him  that the order expressed the common law he
concluded that it meant what it said.  He relied on what he called ‘the well
established principle’ that a payment by a debtor ought to be appropriated to
the most onerous portion of his debt. In the case of a debt partly secured by a
suretyship, this would be that part of it for which both debtor and surety are
liable. The learned judge held that –

‘In terms of the common law, and without specific appropriation to
any particular portion of the judgment debt, the payment of the
principal debtor, Derryk Page, of the amount equal to the indebtedness
of the surety, immediately discharged that portion of the debt for
which the latter was liable as surety to the creditor…’
[7] One should approach the interpretive difficulty in the order on the
footing that the expression “the first R190 000,00 together with interest
thereon” in the context is ambiguous. The manner  in which ambiguities in
an order of court are to be dealt with is explained in Firestone South Africa
(Pty) Ltd v Gentiruco A.G. 1977 (4) SA 298 (A) at 304 D – H). The order
and the court’s reasons for giving it must be read as a whole; if uncertainty
on the meaning of the order still persists, extrinsic circumstances leading up
to the court’s judgment may be investigated in order to clarify it.
[8] The trial before Whitehead AJ was not about the surety’s liability. It
revolved around the principal debtor’s indebtedness. The judgment
concerning the liability of the surety is understandably brief. It does little

more than quote the part of the suretyship imposing liability on the surety. In
essence, the document binds the surety as co-principal debtor to the payment
of whatever sums may be owing by the principal debtor to the creditor from
time to time.  The limitation on the surety’s liability is recorded in the form
of a proviso:
‘…met dien verstande, nietemin, dat die totale bedrag verhaalbaar van
my
ingevolge
hiervan
nie
altesaam
die
bedrag
van
R19000.00…tesame met sodanige verdere som vir rente en koste wat
reeds opgeloop het of mag oploop tot die datum van betaling van die
hoofsom, te bowe sal gaan nie.’
[9] The learned judge confined himself to this crisp comment on the
terms of the suretyship:
‘The liability of the second defendant (the surety) is, therefore, limited
to the sum of R190 000.00 together with interest thereon and costs.’
[10] At the conclusion of his judgment he found  the surety  liable to the
principal debtor ‘in accordance with the terms of the Deed of Suretyship’.

There is no discussion in the judgment of the soundness or otherwise of
dividing the principal debt into two parts, one of which is secured and the
other not. If there had been such a (highly unusual) provision in the deed of
suretyship, the learned judge could hardly have failed to mention it. It has
not been suggested before us that there was. I proceed on the footing that
there was not. I further proceed on the footing that the judgment of
Whitehead AJ was intended not to novate but to reinforce the suretyship
obligation (Swadif (Pty) Ltd v Dyke NO 1978 (1) SA 928 (A) at 944F – G)
and that the surety at whom the order was directed would have understood it
in this sense. I furthermore do not believe that one should assume that the
learned judge misunderstood the terms of the suretyship.
[11] The ambiguity in the expression “the first R190 000 together with
interest thereon” is latent. Leach J put the focus on compliance with the
order. He assumed that the expression referred to the first R190 000 (and

interest) paid or to be paid by either of the debtors. It does not necessarily
refer to that. On the face of it, it may with equal justification be taken to
refer to the principal debtor’s indebtedness. In fact, having regard to the
terms of the suretyship, and the tenor of the judgment, this is its probable
meaning. Whitehead AJ must be understood as having declared the extent of
the two debtors’ joint and several liability (ie the obligation to pay R190 000
of the debt). He did not purport to deal with the legal consequences
produced by the payment by either debtor of his obligations. Read in this
way, the order means that the surety was adjudged liable only for an amount
up to R190 000 (and interest) of that owing by the principal debtor; the
amount by which the creditor permitted the principal debtor’s indebtedness
to exceed the ‘first’ R190000 was not the surety’s concern. Indeed, the order
takes the trouble to spell out that the remainder of the debt (over and above
the limit of R190 000) is the responsibility of the principal debtor alone.

Interpreted in this way, the order makes linguistic sense.  It also gives effect
to the provisions of the suretyship (quoted by Whitehead AJ without
comment) that make the surety accountable for ‘terugbetaling op aanvraag
van enige som of somme geld wat die skuldenaar/s nou, of van tyd tot tyd
hierna,aan die Bank…om welke rede ook al verskuldig mag wees.’
[12] The suretyship envisages security for all debts of the principal debtor
to the creditor. No question of any common law allocation arises. The
parties’ intention that every single one of the principal debtor’s debts  be
secured,  is incompatible with an intention on their part  that any particular
portion of any particular debt should remain unsecured. If one were to
suppose that the order held the surety  liable only for so long as it took the
principal debtor to pay off R190 000 on his indebtedness, it would, contrary
to what Leach J thought, not accord with the common law. An unlimited
suretyship covers the whole debt.  A limited suretyship is no different.  It

does not cover only a portion of the debt. A limited surety who performs
obligation must be taken to pay a (fixed) contribution towards the whole
debt. His payment means that the creditor receives a ‘dividend’ of fewer
than one hundred cents in the Rand on the whole debt. He does not receive
payment in full of some part of the debt. Since a surety’s liability is
accessory, and a surety’s debt cannot be greater than that of the principal
debtor, payment by a principal debtor of an indebtness which is co-extensive
with the surety’s liability will discharge both him and the surety.  Before
that, a principal debtor’s payment discharges only his own debt.
[13] The contrary conclusion of Leach J is based on a misreading of dicta
in  Northern  Cape Co-Operative Livestock Agency Ltd v John Roderick &
Co. Ltd 1965 (2) SA 64 (O) at 73D – H and  Zietsman v Allied Building
Society 1989 (3) SA 166 (O) at 178C – D).  These cases dealt with
distinct secured and unsecured debts.

[14] In his judgment refusing  the application for leave to appeal Leach J
found further support for his view of the law in the majority judgment of this
Court in Pfeiffer v First National Bank of SA Ltd 1998 (3) SA 1018 (SCA).
But the point on which the Court a quo  sought to rely for authority was
expressly left open in the majority judgment. The judgment of the majority
is based on the rule that payments by a debtor are, in the absence of
agreement to the contrary, to be credited first to interest and then to capital.
In regard to the rule that, failing agreement, payments are to be appropriated
to a secured debt in preference to an unsecured one, Harms JA says the
following (at 1032G – H):
‘The other appropriation rule that, conceivably, can be invoked is that
a secured debt should be paid before an unsecured debt. This rule as
found in textbooks is formulated on the assumption that there is more
than one debt, the one secured and the others not. The obvious reason
for the rule is that good faith requires that the creditor and the debtor
should as far as possible ease the burden of the surety. Whether there
is reason in principle, logic or fairness why this rule should not also

apply, depending upon the terms of the deed of suretyship, if a debt is
partially secured does not arise on the facts of this case.’
Pfeiffer’s case is thus no authority for the proposition that the common law
countenances an appropriation of a debtor’s payment to a surety’s debt
where the liabilities of the two are not co-extensive.
[15] The appeal succeeds with costs against the first respondent.
The order of the court a quo is set aside and replaced with an order
reading:
‘The application is dismissed with costs’.
_______________
J H CONRADIE
ACTING JUDGE OF APPEAL
NIENABER JA
)Concur
MTHIYANE JA
)

NUGENT AJA:
[1] I have read the judgment of Conradie AJA and regret that I
do not share his view regarding the outcome of this appeal.
[2] I have accepted for purposes of this appeal that generally a
surety who has bound himself up to a limited amount is not
discharged from liability merely upon payment by the principal
debtor of an equivalent portion of the principal debt (but cf
Harms JA in Pfeiffer v First National Bank of SA Ltd 1998 (3) SA
1018 (SCA) at 1032G-H) and that that applies specifically in
relation to the surety in the present case.   If that is so, and the
liability of the surety is discharged only when the principal debt is
paid in full (which is the view expressed by Conradie AJA) it
follows that it is not the first and immediately succeeding
payments made by the principal debtor that discharge the liability
of the surety pro tanto but rather the final and immediately
preceding payments that do so.  In that respect the court a quo
might thus have erred but that is not what this case is about.
The court a quo was not called upon to enquire into the true legal
liability of the surety but rather to determine what was meant by
the order that was issued by Whitehead AJ.
[3] The reasons furnished by the learned judge provide no
additional assistance in interpreting his order for he said no more
on the subject but that the surety was “liable to the [creditor] in
accordance with the terms of the Deed of Suretyship”.  That
remark, by itself, is equivocal as to what the learned judge
understood that liability to be.  One is thus left only with the
words used in the order itself to determine what the order
means.
[4] The learned judge ordered that the surety and the principal
debtor were “jointly and severally liable for payment of the first
R190 000” of the principal debt (plus interest thereon) and that
the principal debtor was solely liable for the balance.  In my view
that means what the words convey: that the surety and the
principal debtor were each liable (payment by one of them

discharging the liability of both of them) to pay the first R190 000
in reduction of the principal debt whereupon the liability of the
surety would be discharged and the principal debtor would
remain liable for the balance.  Conradie AJA has suggested that
the word “first” may refer to the oldest part of the indebtedness
rather than to the first payments in reduction of the debt.  I do not
think that the language of the order admits of that meaning, but
even if it does, the result would be the same, for the payment
that was made by the principal debtor, if appropriated to the
oldest part of the debt, would similarly discharge the liability of
the surety.
[5] However, I do not understand Conradie AJA to suggest
that the order, on the face of it, means that the liability of the
surety is not discharged until the full amount of the principal debt
has been paid, but only that the order might have that meaning
and it is thus ambiguous.  I do not think that is so, but if the order
is ambiguous the appellant’s remedy was to seek its variation so
as to remove the ambiguity as provided for in Rule 42(1)(b)
which is not what was sought in the present case.  Until that
ambiguity was removed and the meaning of the order was made
certain the appellant was not entitled to execute the order by
attaching and selling the respondent’s goods (Le Roux v Yskor
Landgoed (Edms) Bpk en Andere 1984 (4) SA 252 (T) esp at
257G).  In those circumstances the court a quo cannot be faulted
for having granted the interdict even though its reasons for
having done so might be unsound.  For those reasons I would
dismiss the appeal.
_________________
NUGENT AJA
NAVSA JA)  Concurs