What happened
In November 2019 the bank gave Crestar Printers and Publishers loan and overdraft facilities. Several people signed as sureties and co-principal debtors. Two of them, Mr Omar and a close corporation, Ghousbibi Arifullah CC, limited their liability to R6 million each. Both held deposit accounts with the bank, and from the middle of 2021 those deposits exceeded the R6 million each had signed for. Ghousbibi also registered a mortgage bond over a commercial property to secure its suretyship.
Crestar fell into arrears. On 15 June 2021 the bank demanded R6 million from each surety by 17 June. Neither paid and the bank applied to court on 26 July 2021. Then everything fell over in turn: Mr Omar died in January 2022 and his executrix stepped in; Crestar was liquidated in May 2022; the bank itself went under curatorship in March 2023 and was finally liquidated in February 2024. From the curatorship the two depositors could not touch their money, and in the bank's liquidation each stands to recover about R100 000.
For almost three years the sureties fought the validity of their suretyships. Six days before the hearing they filed a further affidavit abandoning that fight, admitting liability, and arguing for the first time that their debts to the bank had been set off against what the bank owed them on their accounts. The High Court admitted the affidavit, ordered the bank to pay its costs, held that set-off took effect on 26 July 2021, the day the bank launched its application, and directed the liquidators to restate Crestar's account.
What the court held
In Habib Overseas Bank Limited (in liquidation) v Crestar Printers and Publishers (Pty) Ltd (in liquidation) and Others [2026] ZASCA 136, handed down on 5 October 2026, the Supreme Court of Appeal upheld the bank's appeal in part.
The court restated set-off as a rule of the common law. Where two parties owe each other money and both debts are fixed in amount and due, the one cancels the other to the extent they overlap, as if payment had been made. It happens by operation of law, but the party who wants its benefit must raise it, and once raised it takes effect from the date both debts first existed together. Parties may agree to exclude it, but because such an agreement displaces the ordinary rule it must be clearly expressed.
The bank offered five sources for an agreement excluding set-off and the court rejected four. The facility letter's clause allowing the bank to use credit balances applied to Crestar's accounts, not the sureties'. The suretyship clause dealt with money received when enforcing the suretyship, not ordinary deposits. The set-off clause in the account-opening terms gave the bank a right of set-off; it did not take away the customer's. And there was no evidence that keeping separate accounts meant the parties had agreed to keep those debts apart, nor was the argument accepted that the debts were never due at the same time.
The fifth source was different. Ghousbibi's mortgage bond said in terms that the amounts payable by the mortgagor were to be paid without set-off. That was a clear agreement excluding set-off, and the most recent and most specific document the parties had signed on the subject. Mr Omar had given no bond. Two sureties on identical deeds therefore ended in different positions, which the court called the consequence of the security Ghousbibi chose to give.
On the date, the High Court was wrong. Mr Omar's debt as surety became due on 17 June 2021, the deadline in the demand. Set-off took effect that day, extinguished his R6 million liability and reduced Crestar's debt by the same amount. Issuing the application on 26 July changed nothing.
The bank's waiver argument failed. A debtor may rely on set-off but is not obliged to raise it at the first opportunity, and waiver is not lightly inferred; all the bank had shown was delay. The delay still cost the sureties: they, not the bank, had to pay the costs of the late affidavit.
Ghousbibi's invitation to develop the common law so that set-off applies automatically immediately before a bank's liquidation, failing which its loss would be an arbitrary deprivation of property, was declined. Its position came from the bond it gave, not from anything the bank did, and public policy is as concerned with holding people to agreements they freely make as with relieving them of the consequences.
The order: Mr Omar's estate's liability was extinguished by set-off on 17 June 2021 and Crestar's debt reduced from that date; no set-off operated between the bank and Ghousbibi; the liquidators must restate Crestar's account; the sureties pay the costs of the late affidavit; the bank's remaining claims, including against Ghousbibi and the request to declare the mortgaged property executable, were postponed for supplemented papers; and each side bore its own appeal costs.
What it means for your practice
Read every security document for the words "without set-off" before you advise a surety or a borrower. The deed of suretyship was silent and the account terms helped the customer, but a bond signed later and more specifically decided the case. The most recent, most specific instrument on the subject is the one a court will hold the client to.
When your client is a depositor with a bank that owes it money and to which it owes money, set-off is a live defence and it is not lost by delay alone. It takes effect from the date both debts were due, which in a suretyship is the date in the demand, not the date summons or an application is issued. That date matters for interest and for how much of the principal debt survives.
Raise it early anyway. The sureties here kept the defence but paid the costs of raising it six days before the hearing, after three years of a different case. A defence that exists by operation of law still has to be pleaded, and a court will not rescue a party from the consequences of a late change of front.
Expect the same reasoning on the bank's side. A bank's standard set-off clause gives the bank a right; it does not strip the customer of one. Banks that want exclusivity have to say so clearly, and after this judgment they will.
What to do on your files
For every surety client with a deposit or investment at the creditor bank, check the demand date, quantify the balance on that date, and plead set-off now if it has not been pleaded. Check the bond.
For every borrower or surety client being asked to sign a mortgage bond or new facility terms, read the payment clause and explain in writing what "without set-off" means before signature. The judgment is the example to give.
Where you act for a liquidator or a bank, confirm that the account restatement uses the demand date, not the litigation date, and that set-off has been applied only to the counterparties whose documents do not exclude it.
This note is drawn from the Supreme Court of Appeal's own media summary, which does not form part of the judgment; read the judgment before relying on it.
Source: Habib Overseas Bank Limited (in liquidation) v Crestar Printers and Publishers (Pty) Ltd (in liquidation) and Others (058/2025) [2026] ZASCA 136, Supreme Court of Appeal, 5 October 2026. The court's media summary: https://www.supremecourtofappeal.org.za/images/SCA2026-136ms.pdf