Da Silva v Slip Knot Investments 777 (Pty) Ltd

Slip Knot Investments 777 (Pty) Ltd lent substantial sums to R B Merit Investments (Pty) Ltd under two loan agreements in 2007 for a hotel development. J C da Silva and L D Boshoff bound themselves as sureties for R B Merit’s obligations. The loans were not subject to the National Credit Act 34 of 2005 (NCA) because they were large agreements involving a juristic person above the statutory threshold. When R B Merit and the sureties defaulted, the parties concluded a further written agreement in January 2008 to settle the indebtedness. Under this agreement R B Merit paid part of the debt and provided a bank guarantee, after which it was released from further obligations, while the sureties undertook to pay the remaining balance with interest. The sureties failed to do so, and Slip Knot obtained judgment against them in the High Court. On appeal, the sureties argued that the January 2008 agreement was a new credit agreement subject to the NCA and therefore void because Slip Knot was not a registered credit provider.

The appeal was dismissed with costs, and the High Court judgment in favour of Slip Knot Investments 777 (Pty) Ltd was confirmed.

The case clarifies the distinction between a credit agreement and a credit guarantee under the National Credit Act and confirms that a restructuring or settlement agreement linked to an underlying non-NCA loan does not necessarily attract the Act. It is an important authority on the accessory nature of suretyship and the interpretation of settlement agreements in the context of the NCA.