Slip Knot Investments 777 (Pty) Ltd v Du Toit

Slip Knot Investments 777 (Pty) Ltd advanced a loan of R6 million to the Smitskop Trust. Willem Malan du Toit, a trustee of the trust, signed a bundle of documents including a deed of suretyship binding him personally as surety for the trust’s indebtedness. Du Toit admitted signing the suretyship but alleged that he did so under a mistaken belief, induced by his brother and nephew, that the documents related only to trust business and did not impose personal liability. He did not read the documents and claimed he lacked intention to bind himself. After default, Slip Knot obtained judgment against the trust and sureties. Du Toit successfully applied for rescission in the High Court, which held his mistake to be reasonable. Slip Knot appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The High Court judgment was set aside and replaced with an order granting judgment in favour of Slip Knot against the respondent, jointly and severally with the other sureties, for payment of R7 950 000, interest at 1.5% per week calculated daily from 8 May 2008, and costs on the attorney and own client scale.

The case reaffirms the narrow scope of the defence of iustus error in South African contract law and clarifies that a surety cannot escape liability for a signed suretyship where the mistake was caused by a third party and not by the creditor. It underscores the continued application of caveat subscriptor and the doctrine of quasi-mutual assent in suretyship agreements.