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[2015] ZAWCHC 199
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Parys Development Properties (Pty) Ltd v Metzer and Another (A208/14, 26097/11) [2015] ZAWCHC 199 (3 December 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
APPEAL
CASE NO : A208/14
CT/CASE
NO : 26097/11
DATE:
03 DECEMBER 2015
In
the matter between:
PARYS
DEVELOPMENT PROPERTIES (PTY)
LTD
.........................................................
Appellant
And
URS
METZER
....................................................................................................................
1
st
Defendant
ELEANOR
YVONNE FARBER
MITCHELL
...................................................................
Respondent
HEARD
: 15 SEPTEMBER 2015
DELIVERED
: 3 DECEMBER 2015
JUDGMENT
Nuku,
AJ
[1]
This appeal concerns the defence of
iustus
error
to appellant’s claim based
on an agreement of suretyship. Appellant also brought two
applications for condonation. The first
application is in respect of
appellant’s non-compliance with Rule 50 of the Uniform Rules of
Court. The second application
is in respect of appellant’s
non-compliance with Rule 51 of the Magistrate’s Court Rules.
Respondent opposed both applications.
Respondent also brought an
application to have appellant’s appeal struck from the roll and
for the dismissal of appellant’s
application for condonation
for its non-compliance with Rule 50 of the Uniform Rules of the
Court.
[2]
The appeal was initially set down for hearing on 28 August 2015. On
21 August 2015 appellant filed its application for condonation
for
its non-compliance with Rule 50 of the Uniform Rules. On 26 August
2015, respondent filed its opposing papers to the application.
On 28
August 2015, respondent filed an application to strike the appeal
from the roll as well as an application to have appellant’s
application for condonation dismissed. On the same date respondent
filed its replying affidavit to the application for condonation.
Due
to these applications, the matter was postponed to 17 September 2015
and appellant tendered the wasted costs. On 8 September
2015
appellant filed an application for condonation for its non-compliance
with Rule 51 of the Rules of the Magistrate’s
Court read with
Rule 50 of the Uniform Rules of Court.
[3]
In the court below, respondent denied binding herself as a surety in
favour of the appellant. At a pre-trial held by the legal
representatives of the parties it was agreed to separate issues
on the basis that the hearing would first proceed in respect
of the
determination of liability ( the so called “merits”) with
the quantum standing over for determination
at a later stage. It was
also agreed that respondent had a duty to begin. Respondent testified
and also called one witness, David
Thomas Crymble. Appellant closed
its case without calling any witness. After both parties had closed
their respective cases respondent
filed a notice of intention to
amend its plea and appellant did not object thereto. After the expiry
of the prescribed time period
within which appellant had to object
respondent filed the amended plea. In the amended plea respondent
admitted signing the deed
of suretyship; alleged that she did not see
any surety document and that she was at all times under the
impression that she was
only signing a lease agreement.
[4]
I do not intend to summarise the evidence except as in so far as it
is relevant for the determination of this appeal. The respondent
testified that: she was a member of Alexia’s Catering CC, a
close corporation which acquired premises for the purposes of
operating a restaurant; she was not involved with the operation of
the business and described herself as “
a
sleeping partner
”; she was not
involved in negotiating the lease for the premises; George Manousakis
(“George”) was responsible
for all the work necessary to
set up the restaurant including finding the premises and negotiating
the lease for such premises;
on the day when the lease was to be
signed she received a call from George requesting that they meet at
Seaside Village to sign
off the lease as all the members of the close
corporation had to be there; present also at the meeting was
appellant’s representative;
documents were passed around the
table and they were told where to initial and sign; that there
is no way that she would
have signed the agreement of suretyship if
she had known that the document she was signing was an agreement of
suretyship; that
she was not aware that she was signing a deed of
suretyship and that she was under the impression that she was signing
a lease
agreement; she saw these documents for the first time at the
meeting; she never read the documents; the reason why she did not
read these documents is because she was only presented with the
documents for signature at the meeting and she had left the
matters
in the hands of George and first defendant as she trusted them; she
only realised that she had signed a deed of suretyship
when her
attorney drew her attention to it and this was after the proceedings
had been instituted against her by appellant;
the agreement of
suretyship was not brought to her attention at the meeting and that
no one explained the need for her to sign
the agreement of
suretyship.
[5]
The question that this appeal raises is whether on the facts,
respondent’s mistake in signing the agreement of suretyship
can
excuse her from liability. The other question is whether the
appellant’s failure to comply with Rule 51 of the
Magistrate’s
Court Rules as well its failure to comply with Rule 50 of the Uniform
Rules of Court should be condoned.
[6]
Counsel for the respondent submitted, correctly in my view, that it
is well- established law that the factors which a Court
takes into
consideration when considering an application for condonation are:
6.1.
The degree of non-compliance;
6.2.
The explanation therefore;
6.3.
The importance of the case;
6.4.
A respondent’s interest in the finality of the judgment of the
court below;
6.5.
The avoidance of unnecessary delay in the administration of justice.
(See
Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining and
Development
Company
[2013] 2 All SA 251
and
referred to with approval in
Express
Model v Dolphin Ridge
2015 (6) SA
224
(SCA) at 229B-D)
[7]
Counsel for respondent further submitted, also correctly in my view,
that the appellant’s prospects of appeal are also
taken into
consideration when considering an application for condonation.
[8]
Appellant’s non-compliance with the rules can be summarised as
follows: appellant failed to file security timeously
as
required in terms of Rule 51(4) of the Rules of the Magistrate’s
Court and did so 44 days out of time; appellant
failed to
timeously file the record and to apply for the assignment of a date
for the hearing of appeal as required in Rule 50(4)
of the Uniform
Rules of Court and did so 71 days out of time; appellant applied for
condonation for its non-compliance with Rule
50 only after this issue
was raised by respondent in her heads of argument; appellant filed
its application for condonation for
its non-compliance with Rule 51
after the matter had been postponed on 28 August 2015 and only after
this was raised by the respondent.
[9]
The degree of non-compliance by appellant is not a matter of being
few days out of time. As appears above appellant was 44 days
out of
time with its filing of security and 77 days out of time with the
filing of the record and the application for the date
for the hearing
of the appeal. The reasons proffered by appellant’s attorney
range from the misunderstanding that the documents
required to be
filed had to have a case number to administrative oversight. In
essence, these reasons are nothing but an indication
of the slackness
on the part of appellant’s attorney. There is no doubt that it
is in the interest of respondent that the
matter is finalised. There
is also no doubt that appellant’s conduct albeit through its
attorneys resulted in the unnecessary
delay in the administration of
justice. This court also had to be inconvenienced as the matter could
not proceed on 28 August 2015.
[10]
Appellant’s heads of argument did not address the application
for condonation at all. During the hearing Counsel for
appellant
argued that the matter is of great importance to appellant. It was
submitted that appellant enters into a number of lease
agreements
with corporate entities in respect of which it, as a matter of
practice, requires the directors or members of those
entities to sign
agreements of suretyship.
[11]
Respondent’s counsel submitted that appellant’s
non-compliance with the Rules was so flagrant and gross that its
prospects of success should not even be considered. She further
submitted that even if the appellant’s prospects are
considered,
they are poor. Whilst I agree that appellant’s
non-compliance was flagrant and gross, I am of the view that the
merits should
be considered as not to do so may at times lead to
injustice. In any case the Court exercises a discretion when
considering an
application for condonation. I now turn to deal with
the merits of the appeal.
[12]
The issue in this appeal concerns the application of the principles
laid down in
Sonap Petroleum v
Pappadogianis
[1992] ZASCA 56
;
1992 (3) SA 234
(A)
in instances where a party seeks to avoid liability under a contract
on the basis of its unilateral mistake. These principles
were stated
as follows at page 238I-204B;
“
The
law, as a general rule, concerns itself with the external
manifestations, and not the workings, of the minds of the parties
to
a contract… However, in the case of an alleged dissensus the
law does have regard to other considerations: it is said
that, in
order to determine whether the contract has come into being, resort
must be had to the reliance theory… This court
has, in two
judgments delivered on the same day by different constituted Benches,
dealt authoritatively with the question of iustus
error in the
context of a so-called unilateral mistake.”
The
first part is George v Fairmead (Pty) Ltd
1958 (2) SA 465
(A) at
417B-D where Fagan CJ said the following:
‘
When
can an error be said to be Justus for the purpose of entitling a man
to repudiate his apparent assent to a contractual term?
As I read the
decisions, our Courts, in applying the test, have taken into account
the fact that there is another party involved
and have considered his
position. They have, in effect, said: Has the first party – the
one who is trying to resile –
been to blame in the sense that
by his conduct he has led the other party, as a reasonable man, to
believe that he was binding
himself?... If his mistake is due to a
misrepresentation, whether innocent or fraudulent, by the other
party, then, of course,
it is the second party who is to blame and
the first party is not bound.’
The
second is Shreiner JA’s statement in
National and Overseas
Distributors Corporation (Pty) Ltd v Potato Board
1958 (2) SA 473
(A) at 479 G-H:
‘
Our
law allows a party to set up his own mistake in certain circumstances
in order to escape liability under a contract into which
he has
entered. But where the other party has not made any representation
and has not appreciated at the time of acceptance that
his offer was
being accepted under a misapprehension, the scope for a defence of
unilateral mistake is very narrow, if it exists
at all. At least the
mistake (error) would have to be reasonable (justus) and it would
have to be pleaded.’
In
my view, therefore, the decisive question in a case like the present
is this: did the party whose actual intention did not conform
to the
common intention expressed, lead the other party, as a reasonable
man, to believe that his declared intention represented
his actual
intention?... To answer this question, a three-fold enquiry is
usually necessary, namely, firstly, was there a misrepresentation
as
to one party’s intention; secondly, who made that
representation; and thirdly, was the other party misled thereby?...
The last question postulates two possibilities: Was he actually
misled and would a reasonable man have been misled?”
[13]
In the Court below the magistrate, in dismissing the appellant’s
claim came to the conclusion that there was no consensus
between the
parties and as a result appellant could not rely on the agreement of
suretyship. Her reasons for coming to this conclusion
appear to be
based on the following: that the appellant would have been aware that
the respondent had not been involved in the
negotiations prior to
signing the documents; that appellant could not have assumed that the
respondent was aware that an agreement
of suretyship was amongst the
documents when she had to sign; that it would have been appropriate
for appellant to point out to
respondent what documents were being
presented as well as the purpose thereof; and that it is not bona
fide to present a lease
agreement for signature where the agreement
of suretyship is part of it and not to lay it out clearly so that the
signatory is
not aware of the nature of the document.
[14]
The evidence that was not contested is that respondent signed the
agreement of suretyship without reading it and that she was
under the
impression that she was signing a lease agreement. This
constitutes her mistake and it can be accepted that the
mistake was
material and caused
dissensus
.
What remains then is the three-fold enquiry as stated in the
Sonap
case referred to above.
[15]
As to the first two stages of the enquiry it can also be accepted
that respondent, by signing the agreement of suretyship,
misrepresented to appellant that she intended to bind herself in
favour of appellant for the obligation of Alexia Catering CC.
[16]
As to the third stage of the enquiry it can also be accepted that
appellant was misled by respondent into believing that she
intended
to be bound as a surety. What requires more examination is whether a
reasonable man would have been misled.
[17]
Counsel for appellant submitted that the test whether a reasonable
person would have been misled must be answered by applying
an
objective test based from the appellant’s perspective on facts
known to a reasonable person in the position of appellant
and I am in
agreement with the formulation of the test. He further submitted that
it is sometimes necessary for a contract assertor
to lead evidence in
order to assist the court in this objective enquiry: whether a
suretyship agreement was reasonably objectively
expected or not.
Appellant, so argues his counsel, was prevented from presenting such
evidence in the court below when its application
to re-open its case
was refused. Although the appellant argues that the appeal should
succeed on this basis, it failed to provide
this court with the
record dealing with the application for the re-opening of the
appellant’s case in the court below. As
this court does not
have the record referred to above, it cannot deal with appellant’s
protestations. As such the appeal
must be dealt with on the basis of
the material before this court.
[18]
Counsel for respondent submitted that a reasonable man would not have
been misled for the following reasons: respondent did
not negotiate
and was not required to sign the lease agreement; appellant did not
negotiate the suretyship agreement with
respondent; the first page of
the document presented to her on the day for signature was a lease
agreement; as an annexure to the
lease agreement, however forming one
single document, was a personal suretyship for her to sign; it was
the first time she ever
saw the document; that she did not read the
document before signing it; that it was pointed out to her where to
initial and sign;
there was no discussions about the document
presented for signature; the bundle of documents was bound at the top
and the pages
were lifted from the bottom upwards causing her not to
see the top of the pages.
[19]
It is common cause that the appellant drafted the lease agreement and
the agreement of suretyship. The evidence of respondent
in the court
below was that respondent was not involved in the negotiations for
the lease agreement. The lease agreement provided
for members of the
closed corporation to bind themselves as sureties in respect of the
obligations of the lessees in terms of the
agreement. It is evident
that, the respondent, not having been a party to the lease agreement,
was neither aware nor informed of
this term. On the probabilities
this fact was known to the representative/s of appellant who
negotiated the lease agreement. The
evidence of respondent was also
that appellant never negotiated any suretyship agreement with
respondent. On the probabilities,
this was a fact known to the
representative/s of appellant. The representative/s of appellant who
was at the meeting when the agreement
of suretyship was signed
probably knew of the fact that the agreement of suretyship was
presented to respondent for the first time
at that meeting. The
representative/s of appellant must also have observed that the
agreement of suretyship was signed by respondent
without having read
it. Considering the above factors in conjunction with the fact that
the agreement of suretyship was drafted
by the appellant, I am of the
view that the appellant had a duty to speak and to alert the
respondent that she was required to
bind herself as surety in respect
of the lease agreement prior to her signing the document. The
inference is inescapable that the
representative/s of appellant was
or were aware of respondent’s mistake. On these facts it is my
view that the reliance by
appellant on respondent’s signature
of the agreement of suretyship as respondent’s intention to be
bound is unreasonable.
A reasonable person who had negotiated neither
the agreement of lease nor the agreement of suretyship with
respondent would have
brought respondent’s attention to the
agreement of suretyship. In my view there are no prospects of success
in appellant’s
appeal and as such the application for
condonation must be refused.
[20]
In the result I propose the following
order
The
application for condonation is refused and the appeal is dismissed
with costs.
NUKU,
AJ
I
agree. It is so ordered.
GOLIATH,
J