Dormell Properties 282 CC v Bamberger

Dormell Properties 282 CC (appellant) was the landlord of commercial premises. Edulyn (Pty) Ltd, represented by its sole director Bamberger (respondent), made a written offer to lease premises on 12 September 2008, which Dormell accepted on 16 September 2008. The offer to lease contained a suretyship clause (clause 10) whereby Bamberger bound himself as surety for Edulyn's obligations. The offer contemplated that a formal memorandum of lease would later be signed. On 21 October 2008, Bamberger signed a memorandum of lease and a separate deed of suretyship annexed to it, but Dormell never signed the memorandum. When Edulyn breached the lease by failing to pay rent, Dormell cancelled the lease on 9 March 2009 and sued both Edulyn and Bamberger for damages. Dormell's particulars of claim relied on the deed of suretyship dated 21 October 2008 (annexed to the unsigned memorandum) but made no express reference to the suretyship clause in the offer to lease. The Magistrate's Court granted judgment against both defendants. Bamberger appealed to the Western Cape Division.

• Whether a suretyship deed annexed to an unsigned and therefore invalid memorandum of lease is enforceable
• Whether a plaintiff may rely on a different suretyship provision (contained in the offer to lease) than that pleaded in the particulars of claim without amending the pleadings
• Whether the failure to plead the correct suretyship provision prejudiced the surety's ability to raise available defences
• Whether the benefit of excussion could have been raised as a defence if the suretyship clause in the offer to lease had been properly pleaded

The appeal was dismissed with costs, including the costs of two counsel.

A plaintiff who bases its claim against a surety on an invalid deed of suretyship cannot, without amending its pleadings, rely on appeal on a different suretyship provision (even if valid) where doing so would prejudice the defendant's ability to raise defences that must be pleaded in initio litis. Where a suretyship provision does not contain a waiver of the benefit of excussion, a surety is entitled to raise that defence at the commencement of litigation, and denying the surety that opportunity by relying on an unpleaded suretyship provision constitutes material prejudice. The purpose of pleadings is to define issues for parties and the court, and parties must be afforded the opportunity to know exactly what case they must meet. While courts have discretion in relation to pleadings, that discretion must be exercised fairly and must not result in prejudice to a party who would have conducted their case materially differently had the matter been properly pleaded.

The court considered but did not need to finally determine whether Bamberger could have raised a defence based on the Matrimonial Property Act 88 of 1984, s 15(2)(h), on the basis that his wife had not consented to the suretyship in the offer to lease. The court observed that this defence would likely not have succeeded because s 15(6) provides an exception where the spouse acts in the ordinary course of his profession, trade or business, and the evidence showed that Bamberger was the sole director and shareholder of Edulyn and described himself as owner of the restaurant that occupied the premises, making it "inescapable" that he signed in the ordinary course of business. The court also noted the general principle that a contract of suretyship requires a valid principal obligation with someone other than the surety as debtor, and the liability of the surety does not arise until this principal obligation has been contracted.

This case is significant in South African law for reinforcing strict pleading requirements in contract and suretyship cases. It establishes that: (1) a creditor seeking to enforce a suretyship must plead the correct suretyship agreement and cannot switch to a different suretyship provision without amendment; (2) courts will not exercise discretion to allow reliance on unpleaded provisions where doing so would prejudice a party's ability to raise available defences; (3) the benefit of excussion is a dilatory defence that must be raised in initio litis and cannot be raised after litis contestatio or for the first time on appeal; and (4) sureties may suffer material prejudice when denied the opportunity to raise defences they would have raised had the matter been properly pleaded. The case demonstrates the critical importance of accurate pleading in commercial litigation and the consequences of failing to amend pleadings when defects are identified.