New Port Finance Company (Pty) Ltd and Another v Nedbank Limited

Wedgewood Village Golf and Country Estate (Pty) Ltd and Danger Point Ecological Development Company (Pty) Ltd borrowed money from Nedbank Ltd for property developments. Their debts were secured by deeds of suretyship executed by New Port Finance Company (Pty) Ltd and its sole director, Mr David Mostert. Both principal debtors defaulted, and Nedbank obtained judgments in 2011 against the principal debtors and the sureties jointly and severally. The principal debtors were liquidated but later placed under business rescue in terms of the Companies Act 71 of 2008, and business rescue plans were adopted. Mr Mostert and New Port sought to interdict Nedbank from enforcing the judgments against them, including sequestration and liquidation proceedings, arguing that the business rescue plans altered or suspended their liability as sureties.

The appeals were dismissed with costs, including the costs of two counsel.

This case is significant for clarifying the effect of business rescue proceedings on the liability of sureties in South African law. It confirms that business rescue does not, without more, release or suspend the obligations of sureties, particularly where judgments have already been obtained and where deeds of suretyship contain standard protective clauses. The decision provides important certainty to lenders and the commercial community regarding the continued enforceability of suretyships notwithstanding business rescue.