A company operated through a number of divisions each with its own trade name. An agreement of suretyship was signed headed “Deed of Suretyship – Tuning Fork (Pty) Limited t/a After Market Products”.
The company, Tuning Fork (Pty) Limited, alleged that the appellant surety was liable for debts owing to other divisions of the principal debtor because the company was one unitary person even though it operated through a number of divisions.
Divisions operating within the same juristic entity are not in law regarded as distinct or separate legal personalities. The company contended that the reference to the division in the heading was purely for administrative purposes.
The court in Ian Kilburn v Tuning Fork (Pty) Limited rejected this contention and said that the words in the heading must be given a meaning. The deed of suretyship had come into existence only because security was required for the principal debtor to buy goods on credit from the After Market Products division. The surety was personally liable only for the debts incurred by the principal debtor in purchasing goods on credit from that division.
Whilst there was in law only one creditor, there is nothing to prevent a suretyship securing only certain specified debts due to that creditor.
Like any agreement, suretyships are interpreted within their relevant factual matrix including the purpose and the circumstances under which they are prepared and produced. A suretyship will not be stretched beyond its clear intention.
