(Standard Bank v Johannes Gerhardus Swanepoel NO [2015) ZASCA 71). Standard Bank provided an agricultural produce loan and a business…
Swanepoel signed as personal surety for these accounts. The trust defaulted on repayment of the loan and was overdrawn on the business account.
The bank instituted action against Swanepoel and claimed that Swanepoel had entered into the contracts in his capacity as a trustee of the Harne Trust.
However, the agreement reflected Harne Trust as the borrower. It was signed by Swanepoel ‘on behalf of the borrower’ (and not in his capacity as a trustee of Harne Trust).
Swanepoel stated that the contracts were between the bank and the trust, not the bank and himself in his capacity as trustee of the trust.
As the trust was not a ‘legal person’, it had no contractual capacity and hence no valid contracts were concluded. This resulted in the suretyship obligation being unenforceable. The lower court agreed with Swanepoel.
The Appeal Court had to ascertain if the contracts were concluded by Swanepoel in his capacity as trustee of the trust, even though the word ‘trustee’ was not mentioned.
It found in favour of Standard Bank, confirming that Swanepoel signed the loan agreement in his capacity as trustee of the trust, as was evidenced by the Trust Deed and external evidence.
The following are the reasons for reaching this decision.
The foregoing does not constitute financial or any other advice, and does not take into account your personal financial circumstances. For this reason, it’s recommended you speak to an accredited broker or financial adviser to consider all your options and draw up a plan to achieve your financial goals.
You can also contact Koos Nel, Head of Old Mutual Agri via email email@example.com.
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