The appellant (Fivaz) was a surety in respect of a lease agreement concerning a front-end loader (voorhaker) between McGregor and Volkskas (now ABSA Bank). The appellant claimed that Volkskas made a representation that a new lease contract had been entered into between McGregor and Volkskas, which would release him from his suretyship obligations. The appellant relied on alleged oral representations by Jacobs (a representative of Volkskas) and conduct by Volkskas, including accepting a payment of R5,000 from McGregor and delivering the front-end loader to him. Jacobs denied making any representation that a new contract had already been concluded, testifying that he only indicated that if a new contract were to be concluded in the future, the appellant would be released from his suretyship.
The appeal was dismissed with costs
In order for an appeal based on misrepresentation to succeed in the context of suretyship, the surety must prove unambiguously that the creditor made a representation that a new contract had been concluded which would release the surety from obligations. A statement indicating that a surety would be released if a new contract were to be concluded in the future does not constitute a representation that such a contract has already been concluded. Where a party relies on misrepresentation by conduct, the conduct must be clearly distinguishable from mere communication and must unambiguously support the alleged representation. Conduct by a creditor that is consistent with interim arrangements does not amount to a representation releasing a surety from obligations.
The court observed that even if the argument regarding representation by conduct had not failed on technical grounds relating to the pleadings, it would have failed on the merits in any case ("in elk geval weinig om die lyf"). The court noted that other arguments raised on behalf of the appellant were "eweneens sonder pit" (equally without substance) but did not consider it necessary to detail these arguments.
This case is significant in South African law of suretyship and misrepresentation as it reinforces the principle that a surety seeking to be released from suretyship obligations on the basis of alleged misrepresentation must prove clearly and unambiguously that such a representation was made. The case also clarifies the distinction between misrepresentation by conduct and misrepresentation by communication, and emphasizes that ambiguous conduct by a creditor (such as accepting payment and delivering property) will not necessarily constitute a representation that releases a surety from obligations, as such conduct may be consistent with other arrangements.