ALL roads lead to the Eastern Cape right now, and to celebrations of the National Arts Festival’s 40th anniversary. It’s even the setting for this week’s legal decision, with the drama’s central moment played out against the backdrop of that favourite student watering hole, the Pig and Whistle in Bathurst.

The dispute involves Absa on the one hand and Glenn McCreath on the other. Ironically McCreath is a member of a ‘Amhappy’, a closed corporation property group which, from the sound of it, is extremely unhappy right now.

Absa says Amhappy owes the bank money and it now wants almost R300 000 plus interest and punitive legal costs from McCreath, arguing that he signed a deed of suretyship agreeing to be personally liable for Amhappy’s debts.

The bank asked for summary judgment against McCreath. This may happen where the court finds it can rule on a dispute without a hearing involving both sides because the documents reflect that the factual matters are effectively settled.

In this case Absa said that there could be no dispute: McCreath had signed documents agreeing to be personally liable for the CC’s debts.

Normally that would mean ‘case closed’. But McCreath believes he has a defence and it was this defence that was tested and ruled on by the court last week.

McCreath says he signed the suretyship document but did not know that’s what it was. Normally that would be a weak defence: we all know never to sign any document without fully understanding it                                               .

But McCreath told an interesting tale: in 2007 Amhappy, which had no written credit agreement with the bank, was contacted by Absa offering a revolving credit facility of R185 000, later increased to R285 000

Absa didn’t ask Amhappy to sign an agreement for this credit. Soon after they first used the facility however an Absa representative contacted McCreath saying documents had to be signed so Amhappy’s overdraft facilities could continue.

McCreath, Amhappy’s bookkeeper Sheila Jones and a Mr Rieck of Absa then had a meeting on the verandah of the Pig and Whistle.

According to McCreath, Rieck said the documents to be signed were ‘standard terms and conditions’ related to the Amhappy’s credit facility, and ‘limited to the agreement between (Absa) and (Amhappy).’

‘I accepted his word,’ says McCreath, ‘and signed the documents where he indicated. At no stage did the official indicate to me that the documents represented a personal surety agreement. If he did, I would have refused to sign. ‘

Jones says she arranged for the meeting at the Pig and was there when it took place. She says Rieck ‘took a document out of an envelope and told McCreath “that a document for the loan had still to be signed”. He turned each page … indicating where McCreath had to sign.’ McCreath, she confirms, never read the document.

Judge Clive Plasket, who dealt with the matter, pointed out that if you want to oppose an application for a summary judgment you must satisfy the court that you have a ‘bona fide’ defence that you set out fully. In this case, McCreath’s defence was that he could not be bound by the document he signed because he was led to believe he was signing something quite different, namely ‘the standard terms and conditions in respect of the facility enjoyed by (Amhappy)’.

The judge said he was satisfied that McCreath had ‘fully disclosed’ his defence and that the court had next to decide whether the defence was ‘good in law’.

Normally if you sign a document you are bound by it whether you read it or not, but this isn’t an absolute rule. If there has been misrepresentation, for example, the law could take a very different view and the contract could be invalid from the start.

In this case McCreath, supported by Jones, says that Rieck ‘misrepresented the nature of the document he wanted McCreath to sign,’ and states that if he had known it was a personal suretyship agreement for Amhappy’s debts he would have refused to do so.

Judge Plasket said that if the facts as stated by McCreath and Jones were proved in a trial then the defence would be good in law: it would be a case in which McCreath signed induced by misrepresentation. The judge therefore ordered that the case go ahead as a defended matter with McCreath able to tell his story to the court hearing the dispute.

Watch this space – sounds more like a serialised drama than a one-act play.

ABSA Bank Ltd v Glenn Leander McCreath (1)