Smile, You'RE ON Camera - Court Reaffirms Virtually Signed Agreements Still Valid

The company, for which the defendants stood surety, had entered into multiple written loan agreements and a facility agreement with the plaintiff, involving substantial sums of money. The defendants executed unlimited suretyships in favour of the plaintiff, binding themselves as co-principal debtors for all monies owed by the company.

Following breaches of the facility and asset finance agreements — specifically, exceeding overdraft limits and failing to make required payments — the plaintiff demanded payment from the defendants.

Despite an initial payment under a subsequent memorandum of agreement, no further payments were made, and the company was ultimately placed in liquidation. The plaintiff then instituted proceedings to recover the outstanding amounts from the defendants under the suretyships.

The defendants opposed the application on several grounds, including allegations that the suretyships did not comply with statutory requirements for written execution, that the signatures were electronic and thus invalid under the relevant legislation, and, in a supplementary affidavit, that one defendant’s signature had been forged.

Court’s findings

The court found in favour of the plaintiff, granting judgment for the amounts claimed, together with interest and costs on an attorney and client scale.

Reasons and evidence considered

The court’s reasoning was comprehensive and addressed each of the defendants’ contentions:

1. Nature of the signatures:

The defendants argued that the suretyships were executed electronically and thus did not comply with the General Law Amendment Act, which requires suretyships to be in writing and signed. The court, however, found that the signatures were in manuscript, not electronic. This was supported by direct evidence, including video footage of the signing process.

2. Admissibility and weight of video evidence:

The plaintiff produced a recording of a virtual meeting (held via Microsoft Teams) during which both defendants were observed signing the suretyship documents in manuscript, in the presence of a representative of the plaintiff.

The court held that such video evidence is admissible and relevant, confirming the authenticity of the signatures and the process by which the documents were executed. The plaintiff’s representative provided a confirmatory affidavit, attesting to the accuracy of the recording and the events depicted.

3. Transmission of documents:

The signed suretyships were subsequently emailed to the plaintiff. The court held that, in terms of the Electronic Communications and Transactions Act (ECTA), the emailed copies were admissible as the best evidence available, especially since the originals remained with the defendants.

4. Defendants’ conduct and admissions:

The court noted that the defendants had previously acknowledged their indebtedness and the execution of the suretyships in a memorandum of agreement, only to later attempt to deny their signatures and raise allegations of forgery. The court found this conduct to be disingenuous and an attempt to mislead the court.

5. Legal principles applied:

The court reaffirmed that, under both common law and statutory provisions, evidence is admissible if relevant, and that the rules of evidence should not exclude data messages or video recordings where they are the best available evidence. The court also distinguished the authorities relied upon by the defendants, finding them inapplicable to the facts at hand.

Conclusion

The court was satisfied that the plaintiff had established its case on the evidence, particularly the video recording and supporting affidavits, which demonstrated that the suretyships were properly executed in manuscript.

The defendants’ attempts to avoid liability were rejected as lacking credibility and contrary to the weight of the evidence. Judgment was accordingly granted in favour of the plaintiff for the full amounts claimed.