Authored by Donald Dinnie, Boitumelo Phillips and Jakop Mphofu.
In a February 2026 judgment, the high court confirmed that sureties who freely bind themselves as co-principal debtors cannot escape liability by claiming that the suretyship clauses are contrary to public policy, nor can they challenge a liquidation order through rescission when the proper remedy is an appeal.
A lender advanced a loan of R1 539 600 to a property company, repayable in monthly instalments. Two sureties, a close corporation and an individual bound themselves jointly as co-principal debtors for payment of all amounts owing. The loan was amended on five occasions, and the borrower defaulted. The lender obtained provisional and final liquidation orders against the borrower and then pursued the sureties for the outstanding balance of approximately R1.49 million.
The sureties admitted under oath that the amounts were due and owing but nonetheless disputed the quantum, claiming they had not had the opportunity to audit payments made. The court found this untenable: the sureties had approximately 16 months to produce documentary proof of payments and produced nothing. A certificate of balance clause in the loan agreement placed the evidential burden on the sureties to produce evidence to disprove the amounts claimed, and they failed to do so.
The sureties argued that clauses requiring them to renounce the benefits of excussion, division, and cession of actions were oppressive and contrary to public policy. The court held that agreements must be honoured. The principle that agreements are binding (pacta sunt servanda) gives effect to the constitutional values of freedom and dignity. The sureties never alleged they were forced to sign or that they objected to the clauses at the time, and the court found no basis to refuse enforcement.
The sureties separately sought rescission of the liquidation orders against the borrower under section 354 of the 1973 Companies Act and rule 42. The court found they lacked standing: the statute permits only a liquidator, creditor, or member to bring such an application, and the sureties did not claim to act in any of those capacities. Furthermore, the individual surety had been present in court and participated when the final order was granted, so the "absence" requirement for rescission was not met. The proper remedy, the court held, would have been an appeal.
For practitioners advising sureties, the judgment is a useful reminder that certificates of balance carry real evidential weight, that public policy challenges to standard suretyship clauses remain difficult to sustain where obligations were freely undertaken, and that rescission is not a substitute for an appeal.