Don’t forget to update your suretyships

The Supreme Court of Appeal has recently handed down a very interesting judgment in the matter of SA Breweries v Pieter van Zyl.  This case highlights the importance of ensuring that your suretyships are up to date, especially where there has been a change in legal entities. Here is the media summary:

Supreme Court of Appeal of South Africa

MEDIA STATEMENT

From:    The Registrar, Supreme Court of Appeal

Date:        Thursday, 29 September 2005

Status:    Immediate



The Supreme Court of Appeal today dismissed an appeal by SA Breweries Ltd against an order of the Pretoria High Court dismissing its claim against Mr Pieter van Zyl for payment of certain moneys allegedly due to it by Ray’s Liquor Store. Mr van Zyl had admittedly stood surety for Ray’s Liquor Store’s indebtedness, not in favour of SA Breweries Ltd but another company with the same name, which had since become dormant.

Ray’s Liquor Store had had a credit facility with the old SA Breweries Ltd, which later sold its business to Lexshell 159 Investment Holdings Ltd. Lexshell changed its name to SA Breweries (Pty) Ltd and later became a public company, assuming the name SA Breweries Ltd. When the erstwhile SA Breweries Ltd sold its business to Lexshell it ceded to Lexshell its claims against its debtors. Lexshell then continued to sell liquor to Ray’s Liquor Store on credit and when the latter could not pay, Lexshell, by then renamed SA Breweries Ltd, looked to the surety, Mr Venter, for payment.

Mr Venter’s argument that he was liable to SA Breweries Ltd only for such amounts as may have been owed by Ray’s Liquor Store to the erstwhile SA Breweries Ltd at the time of the cession, was upheld by the SCA. Mr Venter had never stood surety for the present SA Breweries Ltd. Because there was no proof of the amount owing at the time of the

cession, the appeal was dismissed with costs.