A defendant who signed surety for a bank raised a number of unsuccessful defences including prescription. The bank granted the principal debtor an overdraft facility which the client failed to reduce within the credit limit as required in December 2018. Summons was issued in July 2024. The court dismissed the prescription defence because it was an overdraft facility that was to continue until terminated by the bank, which only happened in November 2023.
An additional defence that the founding affidavit was dismissed because the commissioner of oaths had left the reference in the attestation to “he/she” when the deponent was a female did not justify any inference that the affidavit was not signed in the presence of the commissioner of oaths. There was substantial compliance.
It was held in favour of the surety that the suretyship only applied to the overdraft facility and not to any funds that the principal debtor may owe to the bank in future. The surety bound herself for money owed to the bank “in terms of the credit agreement that the bank and the debtor concluded or about to conclude and to fulfil all obligations the debtor has to the bank in respect of this agreement … and in terms of the credit agreement”. The wording referred to the credit agreement in the singular that had already been concluded or was about to be concluded. The suretyship contract did not refer to multiple agreements nor did it refer to other agreements to be entered in the future. The surety was given leave to defend the action.
There is a material difference between a credit agreement and a credit facility. A credit facility is a revolving debt, and prescription runs on the final debt due on cancellation, not on interim payment obligation to meeting the revolving credit.