THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Not Reportable
Case no: 1120/2018
In the matter between:
AIRPORTS COMPANY SOUTH AFRICA LTD           APPELLANT
and
MASIPHUZE TRADING (PTY) LTD
FIRST RESPONDENT
JOHN RUSSEL GOLDREICH
SECOND RESPONDENT
NTAVHANYENI ALBERT NEMUKULA    THIRD RESPONDENT
WILLIAM PATRICK O’DRISCOLL        FOURTH RESPONDENT

Neutral citation: Airports Company SA Ltd v Masiphuze Trading (Pty)
Ltd and Others (1120/2018) [2019] ZASCA 150 (22
November 2019)
Coram:
Cachalia, Wallis, Nicholls and Dlodlo JJA and Hughes AJA
Heard:
12 November 2019
Delivered: 22 November 2019
Summary: Suretyship – s 6 of General Law Amendment Act 50 of 1956
– compliance therewith – defence of justus error – alleged error induced
by co-shareholders not lessor – not a basis for defence.

ORDER

On appeal from: KwaZulu-Natal Division of the High Court, Durban
(Koen J, sitting as court of first instance)
The appeal is upheld with costs, such costs to include those
consequent upon the employment of two counsel.
Paragraph 1 of the High Court’s order is set aside and replaced
with the following:
‘(a)
It is declared that the third defendant is bound by the deed of
suretyship Annexure 5 to the agreement of lease concluded between the
first defendant and the plaintiff and annexed as Annexure A1 to the
particulars of claim.
(b)
The third defendant is ordered to pay the plaintiff’s costs of suit up
until 15 June 2018.’
The case is remitted to the trial court for determination of the
amounts owing to the plaintiff by the defendants in terms of the lease and
the deed of suretyship, including the plaintiff’s claim for damages for
holding over.

JUDGMENT

Wallis JA (Cachalia, Nicholls and Dlodlo JJA and Hughes AJA
concurring)
[1] This is a dispute over the validity and binding effect of a deed of
suretyship signed by the third respondent, Mr Nemukula, for the
obligations of the first respondent, Masiphuze Trading (Pty) Ltd
(Masiphuze), under an agreement of lease. In 2009 Masiphuze leased
premises at the King Shaka International Airport from the appellant, the

Airports Company South Africa Limited (ACSA). Its purpose was to
operate a Wimpy franchise. The lease was to commence on 1 May 2010
and expire on 30 April 2015. In 2014 ACSA complained that Masiphuze
had fallen into arrears with the payment of rental and accordingly gave
notice terminating the lease and instituted action to recover arrear rentals,
damages for holding over, ejectment and costs. The directors and
shareholders of Masiphuze, Messrs Goldreich, Nemukula and O’Driscoll,
were joined as the second to fourth defendants respectively on the basis
that they had bound themselves as sureties for and co-principal debtors
with Masiphuze for the due performance of the latter’s obligations under
the lease.

[2] When the matter came to trial it proceeded against only Mr
Nemukula. Masiphuze had entered business rescue. Messrs Goldreich and
O’Driscoll defended the action separately from Mr Nemukula and their
attorneys withdrew shortly before the trial. The action was accordingly
adjourned sine die against them. After a three day trial Koen J dismissed
ACSA’s claim against Mr Nemukula. The appeal is with his leave.

The facts
[3] Since 1997 Mr Nemukula has been engaged through different
companies in leasing premises from which to conduct retail businesses in
airports operated by ACSA. Prior to the opening of the King Shaka
International Airport he had leased retail premises in the old Durban
International Airport from which a franchise business known as House of
Coffees was conducted. It was there that he encountered Messrs
Goldreich and O’Driscoll, who had experience in the food industry. Mr
Nemukula having won the tender to lease premises at King Shaka
International Airport for that purpose, the three of them used Masiphuze

as a corporate vehicle for the operation of a Wimpy franchise. The
operational side of the business was in the hands of Messrs Goldreich and
O’Driscoll, while Mr Nemukula was merely an investor and non-
executive director of the company. This was the standard pattern he
adopted with all his businesses. After problems arose with the business of
Masiphuze, Mr Nemukula resigned as a director in March 2014.
However, he remained a shareholder in the company.

[4] The lease concluded with Masiphuze was a standard lease used by
ACSA for all leases of retail premises in its airports. It was a lengthy
document running to some 67 pages embodying the lease itself and seven
annexures. The disputed deed of suretyship was Annexure 5 to the lease
at pages 46 to 50 thereof. Clause 9.6 of the lease provided for a deed of
suretyship to be executed ‘on written request’ by ACSA. Although no
written request was produced at the trial, Messrs Goldreich and
O’Driscoll, who were the persons actively involved in its conclusion, did
not suggest in their plea that there was no such request, nor did they
suggest that they had executed the deed of suretyship under any
misapprehension as to its contents. It can safely be accepted that ACSA
required the shareholders of Masiphuze to provide sureties in addition to
the other security for which they stipulated.

[5] The deed of suretyship, like the lease itself, is a standard form
document. The typed form commences as follows:
‘Deed of suretyship
We, the undersigned,
[INSERT NAMES]
(“the Sureties”)
do jointly and severally hereby bind ourselves to:
AIRPORTS COMPANY SOUTH AFRICA LIMITED

(“the Lessor”)
and its successors and assigns as surety for and co-principal debtors with
[INSERT DETAILS]
(“the Lessee’)
for the due and punctual fulfilment and performance by the Lessee of all its
obligations to the Lessor in terms of the lease agreement to which this suretyship is
attached . . .’
Clause 14 of the deed made provision for selection of a domicilium
citandi et executandi by inserting the names and addresses of the sureties.
The final page of the document made space for the signatures of five
sureties.

[6] The names of Masiphuze and Messrs Goldreich, Nemukula and
O’Driscoll have been inserted in manuscript at the head of the deed of
suretyship after the words ‘We the undersigned’ and adjacent to the place
provided for the insertion of the names of the sureties. In clause 14, and
in the same handwriting, the name of the company and the names of the
directors have been inserted, together with their addresses. On the final
page the first signature is that of Mr Goldreich, the second that of
Mr O’Driscoll and the third that of Mr Nemukula. The first two wrote
next to their names that they had signed the document at Durban. The
similarity in both handwriting and the pen used makes it probable that Mr
O’Driscoll was the person responsible for the manuscript insertions
elsewhere in the document. All of the pages of the deed of suretyship
were initialled, although, unlike the rest of the document, not by Mr
Nemukula. In his evidence he sought to suggest that perhaps these pages
did not appear in the document at the time he affixed his signature, but
that was not pleaded and was inconsistent with his evidence that the
manuscript insertions were not in the document when he signed it. He
could only have known that if he had seen those pages.

[7] The signatures to the deed of Messrs Goldreich, Nemukula and
O’Driscoll were not disputed. There was no direct evidence concerning
the circumstances in which the manuscript insertions were added to the
document, although as I have said they appear to have been inserted by
Mr O’Driscoll. Mr Nemukula testified that they were not on the deed
when he affixed his signature to it. Mr Govind, who signed the lease
some months later on behalf of ACSA, could not cast any light on the
matter because he was not present when the sureties signed, but said that
when he received the document for signature on behalf of ACSA it had
been completed. That likelihood was reinforced by the fact that the
insertions included the residential addresses of the three shareholders.
Nonetheless Koen J accepted Mr Nemukula’s evidence that the
manuscript insertions were not on the document when he signed it and
that Mr Nemukula had not authorised whoever inserted them to do so on
his behalf.

[8] Mr Nemukula testified that he affixed his signature to the deed of
suretyship in the following circumstances. He had gone to Durban for a
meeting in 2009, which took place at the Greyville Racecourse, where Mr
Goldreich was a member of the Golf Club. The lease documents were
substantial and had already been signed by Messrs Goldreich and
O’Driscoll. He had no time to peruse the lease and other documents
carefully or to consider their terms. He simply signed where it was
indicated that he should do so and trusted his partners to inform him of
anything unusual. The result was that he signed not knowing what was in
the attachments to the lease. He said he believed that he was signing as a
shareholder of Masiphuze to indicate his assent to the lease. Nobody
pointed out to him that he was signing a deed of suretyship. He claimed

that had he known he would have refused to sign as surety for Masiphuze.
This evidence was likewise accepted by the trial court.

[9] Mr Nemukula did not go so far as to suggest that anything said to
him by Messrs Goldreich and O’Driscoll had misled him. His complaint
was rather that he trusted them to keep him fully informed and that they
did not tell him that the documents he was signing included a deed of
suretyship. He said that had he been told he would have refused to do so,
because as a matter of business principle he did not bind himself as surety
for the business obligations of the businesses in which he had an interest.
This despite the fact that ACSA produced another lease where he had
bound himself as surety for its performance by the lessee.

[10] Given the circumstances in which the deed of suretyship was
signed, there was nothing that ACSA could do to rebut this evidence. Mr
Nemukula had affixed his signature to the deed on an occasion when no
representative of ACSA was present. The suggestion in argument that
they should have called either Mr Goldreich or Mr O’Driscoll, whom
they were suing on the same deed of suretyship, was wholly impractical.
If anything, one of them should have been called by Mr Nemukula to
corroborate his version of events, a number of elements of which seemed
improbable. It seems clear that the manuscript insertions were made
before the documents were returned to ACSA for signature, probably by
Mr O’Driscoll, but the precise circumstances are shrouded in mystery.
Although a more sceptical view might have been taken of Mr
Nemukula’s evidence, given its acceptance by the trial judge, the appeal
must be determined on the basis that it was correct.

The issues
[11] Mr Nemukula’s first defence was based on the provisions of s 6 of
the General Law Amendment Act 50 of 1956 (the Act). This provides
that:
‘No contract of suretyship entered into after the commencement of this Act, shall be
valid, unless the terms thereof are embodied in a written document signed by or on
behalf of the surety . . .’
Mr Nemukula contended that, as the names of the sureties were not
inserted at the head of the deed and the name of the principal debtor was
omitted, there was non-compliance with this provision and the deed was
accordingly invalid and unenforceable.

[12] The second defence was one of iustus error. Mr Nemukula
contended that he was unaware that one of the documents he was signing
was a deed of suretyship and said that he did not intend to bind himself as
such. He had been misled, so he said, by Messrs Goldreich and
O’Driscoll’s failure to inform him that he was signing a deed of
suretyship. His signature was affixed in error as to its purpose and
function; such error was both bona fide and iustus; and he was,
accordingly, not bound by it.

[13]  If neither of these defences succeeded Mr Nemukula contended
that ACSA had not proved the quantum of its claim under the deed of
suretyship and on that basis also the judgment dismissing its claim was
correct.

The validity of the deed of suretyship
[14] The law in this regard is well established. The deed of suretyship
must include all the material terms of the contract including the identity

of the principal debtor, the principal debt and the identity of the sureties.1
However, these do not have to be set out expressly in the deed of
suretyship itself, provided that they are sufficiently incorporated by
reference.2 Extrinsic evidence is admissible to identify matters referred to
in the written document including the identity of the creditor, the
principal debtor and the surety, as well as the nature and amount of the
principal debt, provided such evidence does not seek to add to or
supplement the terms of the written contract.3

[15]  Mr Nemukula’s argument was that the failure to insert the names
of the sureties at the head of the deed and the name of the principal
debtor, Masiphuze, where indicated on the document, amounted to non-
compliance with these requirements. This is the basis upon which he
succeeded before the high court. It held that in the absence of evidence
that the insertion of the names of the sureties at the outset of the
document occurred with his authority4 he was not bound thereby and that
in the absence of his name as surety the deed did not comply with the
statute.

[16] Unfortunately the high court was not asked to, and did not address,
the consequence of holding that the manuscript insertions did not appear
in the deed when Mr Nemukula signed it. However, the problem with this
was that without the manuscript insertions the document he signed
identified the sureties and the principal debtor, as well as the debts for

1 Fourlamel (Pty) Ltd v Maddison 1977 (1) SA 333 (A) at 345.
2 Industrial Development Corporation SA (Pty) Ltd v Silver 2003 (1) SA 365 (SCA) paras 11-13.
3 Sapirstein and Others v Anglo-African Shipping Co (SA) Ltd 1978 (4) SA 1 (A) at 12A-D; Industrial
Development Corporation SA (Pty) Ltd v Silver supra, paras 9 and 10.
4 Which was held to comply with the Act in Jurgens and Others v Volkskas Bank Ltd 1993 (1) SA 214
(A) at 221.

which the sureties bound themselves as sureties. That is clear from the
following analysis.

[17] After the heading ‘Deed of suretyship’ the document, without the
manuscript
insertions,
read: ‘We,
the
undersigned,
[INSERT
NAMES](“the Sureties”)’. The signatures of Messrs Nemukula,
Goldreich and O’Driscoll appear on the signature page. They were ‘the
undersigned’ who bound themselves as sureties. By affixing their
signatures to the document the three shareholders identified themselves
unequivocally as the sureties. Deeds of suretyship commonly commence
with something along the following lines:
‘We the undersigned, do hereby bind ourselves as sureties for and co-principal
debtors with X for the due performance of the latter’s obligations to Y.’
The identity of the sureties then emerges by identifying the signatories to
the deed, if need be by way of evidence. It has never, so far as I am
aware, been suggested that this does not adequately identify the sureties
for the purposes of the Act.

[18] In Fourlamel v Maddison5 Miller JA said that what s 6 requires to
be signed is the written document containing the terms of the agreement.
Elsewhere in that judgment he said that this included the identity of the
parties. But that does not mean that the document is not completed when
the signatures of the sureties are affixed identifying themselves as such.
Were that the case there could never be a valid agreement of co-
suretyship, because at the time the first co-surety signed the absence of
the second co-surety’s signature would render it non-compliant with s 6.6
When two or more persons must sign a document it is necessarily the

5 Fn 1, supra, at 341H.
6 See Nelson v Hodgetts Timbers (East London) (Pty) Ltd 1973 (3) SA 37 (A) where the co-surety did
not sign the document and it was sought to hold the surety who had signed liable.

case that one will sign first and the other or others later. That reality
cannot affect whether the signed document complies with a statutory
provision such as s 6 of the Act.

[19] The document identified ACSA (the Lessor) as the party to whom
the sureties bound themselves as such. It said that the sureties bound
themselves ‘as surety for and co-principal debtor with [INSERT
DETAILS](“the Lessee”)’. Given that the suretyship document was
Annexure 5 to the lease between ACSA and Masiphuze, it was perfectly
clear that Masiphuze was the principal debtor as the high court correctly
held. This was put beyond any doubt by the following words, in which
the principal debt for the performance of which the sureties bound
themselves was described as:
‘the due and punctual fulfilment and performance by the Lessee of all its obligations
to the Lessor in terms of the lease agreement to which this suretyship is attached . . .’
There was only one lease to which the deed of suretyship was attached
and that identified Masiphuze as the lessee.

[20] Accordingly, the deed of suretyship identified the sureties, the
principal debtor and the principal debt. It therefore complied with the
requirements of s 6 of the Act. The first defence must fail.

[21]  The second defence of iustus error was based upon the fact that
Mr Nemukula said that his trusted business associates, Messrs Goldreich
and O’Driscoll, did not tell him that ACSA required all the shareholders
to bind themselves as sureties and did not warn him that in signing the
lease with its annexures, more particularly Annexure 5, the deed of
suretyship, he was binding himself as surety for the due performance by
Masiphuze of its obligations in terms of the lease.

[22] There are limited circumstances in which a party can set up their
unilateral error as a defence to a claim based on contract. They were set
out as follows by Schreiner JA in the Potato Board case:7
‘Our law allows a party to set up his own mistake in certain circumstances in order to
escape liability under a contract into which he has entered. But where the other party
has not made any misrepresentation and has not appreciated at the time of acceptance
that his offer was being accepted under a misapprehension, the scope for a defence of
unilateral mistake is very narrow, if it exists at all. At least the mistake (error) would
have to be reasonable (justus) and it would have to be pleaded.’

[23] To similar effect is the following passage from the judgment of
Fagan CJ in George v Fairmead:8
‘When can an error be said to be justus for the purpose of entitling a man to repudiate
his apparent assent to a contractual term? As I read  the decisions, our Courts, 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 fradulent, by the other
party, then, of course, it is the second party who is to blame and the first party is not
bound.’(Citations omitted)

[24]  The decisive question to be asked and answered in cases where
reliance is placed on iustus error is:9
‘… 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
enquiry is usually necessary, namely, firstly, was there a misrepresentation as to one

7 National and Overseas Distributors Corporation (Pty) Ltd v Potato Board 1958 (2) SA 473 (A) at
479G-H.
8 George v Fairmead (Pty) Ltd 1958 (2) SA 465 (A) at 471A-D.
9 Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis 1992
(3) SA 234 (A) at 239I-240B.

party's intention; secondly, who made that representation; and thirdly, was the other
party misled thereby? … The last question postulates two possibilities: Was he
actually misled and would a reasonable man have been misled?’

[25] In this case Mr Nemukula claimed that he was misled by the failure
of his business associates to inform him that he was signing a deed of
suretyship. If the approach of Fagan CJ is adopted and we ask whether
he, as the party seeking to resile from the agreement, is to blame for the
situation in which he found himself, the answer is clear. It was his own
failure to check the documents that he was signing – a not particularly
onerous task for an experienced businessman – that led to the situation in
which he found himself. If one asks the question postulated in Sonap,
whether Mr Nemukula led ACSA to believe that his declared intention to
be bound by the deed of suretyship represented his actual intention, the
answer must be in the affirmative. On either basis it was not open to
Nemukula to rely upon the defence of iustus error.

[26] While disclaiming any suggestion that ACSA had misled Mr
Nemukula, there was some endeavour to suggest that the deed of
suretyship was insufficiently identified as forming part of the documents
constituting the lease and its annexures. A similar argument was
considered and rejected by this court in Slip Knot Investments 777 (Pty)
Ltd v Du Toit.10 There the trustee of a trust, at the request of his nephew,
executed a deed of suretyship as part of a suite of documents relating to a
R6 million loan to the trust, but without reading them. Like Mr Nemukula
he signed and initialled where the other two trustees had already signed or
initialled. He claimed that he was unaware that he was executing a deed
of suretyship and that his error was induced by the failure of the other

10 Slip Knot Investments 777 (Pty) Ltd v Du Toit 2011 (4) SA 72 (SCA) paras 11 and 12.

trustees to inform him of this fact, but disavowed any misrepresentation
on the part of the lender.

[27] In that case Malan JA dealt with the contention that the deed of
suretyship was somehow obscure or hidden away in the overall bundle of
documents in the following terms:11
‘A contracting party is generally not bound to inform the other party of the terms of
the proposed agreement. He must do so, however, where there are terms that could
not reasonably have been expected in the contract. The court below came to the
conclusion that the suretyship was “hidden” in the bundle, and held that the
respondent was in the circumstances entitled to assume that he was not personally
implicated. I can find nothing objectionable in the set of documents sent to the
respondent. Even a cursory glance at them would have alerted the respondent that he
was signing a deed of suretyship. … Slip Knot was entitled to rely on the respondent's
signature as a surety, just as it was entitled to  rely on his signature as a trustee. The
respondent relied entirely on what was conveyed to him by his nephew through Altro
Potgieter. Slip Knot made no misrepresentation to him, and there is no suggestion on
the respondent's papers that Slip Knot knew or ought, as a reasonable person, to have
known of his mistake.’ (Emphasis added.)

[28] That passage is entirely apposite to describe Mr Nemukula’s
situation. There was nothing objectionable in the lease documents.12 A
cursory glance through them would have identified that he was being
required to sign a deed of suretyship. ACSA was as entitled to rely on his
signature as surety as it was to rely on his signature as shareholder on
behalf of Masiphuze. The defence of iustus error cannot succeed. The
necessary conclusion is that Mr Nemukula was bound by the deed of
suretyship as surety for and co-principal debtor with Masiphuze for the
latter’s indebtedness to ACSA under the lease.

11 Ibid para 12.
12 The defence that it contained terms that were unusual, unduly onerous and contrary to public policy
was abandoned.

[29] In the course of argument before us the issue of quantum fell away
because it was necessary for the case to be remitted to the trial court to
resolve the issue of quantum insofar as it related to damages for holding
over. Some evidence had been led on quantum with a view to arriving at
an agreement, but no such agreement had been reached. Counsel agreed
that the remittal should also deal with the question of quantum in regard
to the amounts owing by Masiphuze to ACSA in terms of the lease.

[30] In the result the following order is made:
The appeal is upheld with costs, such costs to include those
consequent upon the employment of two counsel.
Paragraph 1 of the High Court’s order is set aside and replaced
with the following:
‘(a)
It is declared that the third defendant is bound by the deed of
suretyship Annexure 5 to the agreement of lease concluded between the
first defendant and the plaintiff and annexed as Annexure A1 to the
particulars of claim.
(b)
The third defendant is ordered to pay the plaintiff’s costs of suit up
until 15 June 2018.’
The case is remitted to the trial court for determination of the
amounts owing to the plaintiff by the defendants in terms of the lease and
the deed of suretyship, including the plaintiff’s claim for damages for
holding over.

_________________________
M J D WALLIS
JUDGE OF APPEAL

Appearances

For appellant:
L B Broster SC (with him J F Nicholson and
N Nicolls)(Heads of argument prepared by S M
Mullins SC and J F Nicholson)
Instructed by:
Garlicke & Bousfield, Durban;

Symington & De Kok, Bloemfontein
For third respondent:
Z Ploos van Amstel

Instructed by:
Fluxmans Inc, Johannesburg;
Lovius Block, Bloemfontein.