This blog was co-authored by Adrienne Hendricks, Trainee Associate and Adriaan Lourens, Candidate Attorney.

In April 2025 the High Court dealt with a bank’s claim for payment of R15 million, plus interest and costs, brought against the surety of a company. The company, as principal debtor, had concluded a loan agreement with the bank but defaulted on its obligations under that agreement. The sole shareholder of the company had bound himself as surety and co-principal debtor for the principal debtor’s obligations under the loan agreement. The surety had renounced the benefit of excussion, which is a defence that a surety may raise, demanding that the creditor must first pursue legal remedies against the principal debtor before claiming payment from the surety.

After the principal debtor defaulted, the bank sought to recover the outstanding debt from the surety and co-principal debtor.

The surety opposed the application, though he admitted that he had signed the suretyship agreement and did not dispute the principal debtor’s indebtedness to the bank.

The surety argued that the debt might soon be extinguished. Another company intended to purchase a property owned by the principal debtor and had paid the R14 million purchase price into an attorney’s trust account. Although the aforesaid transaction had not been finalised, separate litigation was underway to determine whether the purchase price which was held in trust should be released or returned. The surety contended that, if the purchase price was released and ultimately paid to the bank, it would extinguish the debt.

The court rejected this argument. It held that even if the funds were eventually paid over to the principal debtor’s liquidators and distributed to creditors, including the bank, that process would not extinguish the surety’s current liability. There was no legal obligation on the bank to await the outcome of uncertain litigation or the conclusion of a third-party transaction before exercising its rights.

The court noted that a surety and co-principal debtor becomes jointly and severally liable with the principal debtor. Therefore, the bank could claim the monies owed by the principal debtor directly from the surety, subject to any limitations contained in the deed of suretyship. A co-principal debtor is deemed to have waived the benefit of excussion. The court further noted that the surety had expressly waived the benefit of excussion. The bank was therefore entitled to proceed directly against him without first attempting to recover from the principal debtor or its liquidators. The surety’s defence did not amount to a defence to the claim.

This judgment reinforces the strength of suretyship agreements, where the surety is bound as surety and co-principal debtor. Such surety cannot avoid enforcement merely on the basis that the principal debt might be repaid, as the surety’s obligation is the same as that of the principal debtor. Creditors remain entitled to claim immediate payment of the debt when the debt becomes due.

The full judgment can be accessed here:

Nedbank Limited v Baba (6535/2024) [2025] ZAWCHC 176 (25 April 2025)