The second appellant was the managing member of the first appellant (Something Different Concepts and Shows CC), a décor and design business. The first appellant entered into Master Rental Agreements with the third respondent for the rental of a photocopy machine and related equipment. The second appellant signed the agreements, which contained deeds of suretyship binding her as guarantor and co-principal debtor. The first appellant defaulted on monthly instalments and was finally liquidated on 13 August 2020 due to the financial impact of COVID-19. The third respondent ceded its rights: Claim A to the second respondent (who ceded to the first respondent), and Claims B and C to the second respondent. The respondents claimed the outstanding amounts from the second appellant based on the suretyship. The second appellant raised four defences: lack of locus standi due to unproven cessions; justus error (she was unaware the documents contained suretyship clauses); failure to mitigate damages; and that the penalty clause claiming future rentals was contra bonos mores and subject to reduction under the Conventional Penalties Act. The court a quo granted summary judgment against the second appellant for the three claims plus interest and costs on an attorney-and-client scale.
The appeal was upheld. The summary judgment application was dismissed, and the second appellant was granted leave to defend. The costs of both the summary judgment application and the appeal were made costs in the action.
A defence of justus error raises a triable issue where a signatory alleges that a suretyship clause was surreptitiously hidden in a contract, was not brought to her attention by the offeror, and she would not have signed had she been aware of it — particularly where there was a prior interaction with the offeror's representative giving rise to an assumption that no such clause existed. In such cases the dispute of fact should be ventilated at trial with oral evidence. Additionally, where a defendant relies on the Conventional Penalties Act to seek reduction of a penalty, and the information needed to quantify the reduction lies exclusively within the knowledge of the plaintiff, the defendant need not specify the exact quantum of reduction at the summary judgment stage — it is sufficient to set out the grounds for reduction with sufficient particularity to disclose a triable issue.
The court observed that summary judgment proceedings should be viewed through a constitutional law prism, particularly because summary judgment has the hallmark of a final judgment. The court should not close its doors to a defendant unless the plaintiff's case is unanswerable, as doing so would violate the right of access to courts under section 34 of the Constitution. Courts must guard against grave injustice to a defendant called upon, without the benefits of discovery, to satisfy the court of a bona fide defence where supporting documents are in the exclusive possession or knowledge of the plaintiff.
This case is significant for its restatement of the principles governing summary judgment in the constitutional era, emphasising that courts must not grant summary judgment where a triable issue exists, as doing so would violate section 34 of the Constitution. It clarifies the requirements for resisting summary judgment based on justus error, particularly where suretyship clauses are alleged to have been hidden in agreements. It also provides guidance on the degree of particularity required when raising the Conventional Penalties Act as a defence at the summary judgment stage, especially where the plaintiff/respondent holds exclusive knowledge of facts relevant to the quantum of the reduction.