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[2016] ZASCA 97
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Botha v Road Accident Fund (463/2015) [2016] ZASCA 97; 2017 (2) SA 50 (SCA) (2 June 2016)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case
No: 463/2015
DATE:
2 JUNE 2016
Reportable
In
the matter between:
ROELOF
ERNST
BOTHA
...............................................................................................
APPELLANT
And
ROAD
ACCIDENT
FUND
............................................................................................
RESPONDENT
Neutral
Citation:
Botha v Road Accident Fund
(463/2015)
[2016] ZASCA 97
(2 June
2016).
Coram:
Leach, Saldulker, Dambuza JJA and Fourie and
Victor AJJA
Heard:
18 May 2016
Delivered:
2 June 2016
Summary:
Contract ─ agreement in
settlement of claim for damages made an order of court ─
agreement concluded on the strength
of a representation of fact made
by appellant’s attorney relied on by the respondent ─
agreement binding and not to
be set aside under Uniform rule
42(1)(
c
).
ORDER
On
appeal from:
Gauteng Division of the
High Court, Pretoria (Hughes J, sitting as court of first instance):
The
appeal is dismissed with costs including the costs of two counsel.
JUDGMENT
Leach
and Dambuza JJA (Saldulker JA and Fourie and Victor AJJA concurring):
[1]
The issue in this appeal is whether the appellant is bound by a
settlement agreement concluded with the respondent pursuant
to a
misrepresentation the appellant had made as to certain material
facts. The agreement was made an order of court but the appellant
subsequently applied for rescission or variation of that order under
Uniform rule 42(1)(
c
).
The application was dismissed. The appeal comes before us with the
leave of the court a quo.
[2]
The appellant and his wife sustained serious bodily injuries in a
motorcycle accident. They then instituted separate actions
against
the respondent, the Road Accident Fund, for damages suffered as a
result of their injuries. Both claims were defended by
the
respondent. On 3 March 2014, both cases came to trial before
different judges in the Gauteng Division, Pretoria. The respondent
conceded liability for whatever damages the appellant and his wife
were able to prove. The appellant’s wife’s claim
then
went to trial before Pretorius J for determination of her damages.
Judgment in that matter was reserved.
[3]
In the meantime, parties entered into negotiations in regard to the
appellant’s claim which was due to be heard by Molefe
J. As I
have said, the respondent conceded liability leaving only the quantum
of the appellant’s damages in issue. The appellant’s
claim for general damages was agreed at R1 million and his claim for
past hospital and medical expenses was settled in an amount
of
R236 922.70, this despite the claim at that stage only being one
for R150 000. The respondent, however, was persuaded
to accept
liability for the higher amount in the light of vouchers and
documentation presented by the appellant’s attorney.
The
respondent also furnished an undertaking in respect of the
appellant’s future hospital and medical expenses in terms
of
provisions of s 17(4)(
a
)
of the
Road Accident Fund Act 56 of 1996
. Thus the only outstanding
item of damages related to the appellant’s claim for loss of
future earnings. The parties agreed
to separate that claim from the
other heads of damages under the provisions of Uniform
rule 33(4)
,
and to postpone the trial to determine those damages at a later
stage. However, the respondent agreed to pay the appellant the
sum of
R1 236 922.70 in respect of his past medical expenses and
general damages and to furnish the aforementioned undertaking.
This
agreement was embodied in the order Molefe J then issued by consent.
[4]
Subsequent to payment by the respondent of the amounts agreed, the
appellant’s attorneys ascertained that the amount of
R236 922.70 paid by the respondent in respect of the appellant’s
past hospital and medical expenses, represented only
a portion of the
actual expenses incurred by the appellant, which in fact totalled
R784 278.78. On investigation, the appellant‘s
attorney
discovered that source documents relating to some of the expenses
incurred in respect of the appellant’s hospital
and medical
expenses had been placed in his wife’s file and had not been
presented to the respondent when the settlement
was negotiated.
[5]
The appellant’s attorney then wrote to the respondent’s
attorneys advising them of this ‘mutual error’.
He
proposed that the court order obtained on 3 March 2014 be rescinded
by agreement and that it be replaced by a court order reflecting
an
amount of R784 278.78 for past medical and hospital expenses.
The respondent refused to agree, stating that as the agreement
had
been made an order of court, it was res judicata.
[6]
It is against this background that appellant’s attorneys
approached the court a quo seeking rescission or variation of
the
aforesaid court order under Uniform
rule 42(1)
(c)
,
contending ‘there had been a mistake common to the parties’
which rendered the settlement agreement void.
[7]
The application was opposed by the respondent, who maintained that
the appellant (or his attorney) had misrepresented the facts
on which
the settlement had been rendered. The court a quo dismissed the
application and found that the source documents relating
to the
unclaimed portion of the expenses constituted evidence that ‘came
to the fore after the court [had] considered the
vouchers and given
judgment on same’. Consequently, the court held, the mistake
relied upon by the appellant was a ‘retrospective
mistake by
means of fresh evidence’.
[8]
In seeking relief under Uniform
rule 42(1)
(c)
,
the appellant was obliged to show that the settlement agreement had
been concluded as a result of a mistake common to both himself
and
the respondent as to the correct facts. In attempting to do so the
appellant relied heavily on this court’s decision
in
Tshivhase
Royal Council & another v Tshivhase & another;
[1992]
ZASCA 185
;
1992 (4) SA 852
(A). In that case Nestadt JA, writing for
the court, described a mistake common to the parties as envisaged by
the rule as a ‘common
mistake’ as understood in the field
of contract, which occurs where both parties are of one mind and
share the mistake.
[1]
He held
further that where both sides had assumed a state of affairs that
turned out to be wrong, the court was entitled to set
aside an order
made on the basis of their common mistake.
[9]
Tshivhase
,
however, is clearly distinguishable from the present matter. There
both parties had acted in error on the strength of a representation
made by a third party. Theirs was thus a common mistake of fact which
vitiated their agreement. That is not here the case. In the
present
matter the error may be described as being a ‘unilateral
mistake’ in that it was made by the appellant’s
attorney
who, through his misrepresentation, induced the respondent to
contract on the terms they did. And this difference is fatal
to the
appellant’s claim.
[10]
Under the so-called reliance theory, if there is a material mistake
by one party to a contract and therefore no actual consensus,
the
contract will be valid if the other party reasonably relied on the
impression that there was consensus.
[2]
This was recognised by this court in
Sonap
Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v
Pappadogianis
[1992]
ZASCA 56
;
1992 (3) SA 234
(A) at 239A. In that case, a mistake made by
a firm of attorneys representing the appellant (a lessor of property)
resulted in
an erroneous reduction of the term of a property lease
from 20 to 15 years. The respondent (the lessor) insisted that no
mistake
had been made. This led to the appellant seeking an order of
rectification of the agreement by replacing the term of 15 years with
20 years. On appeal against the dismissal of that claim, this court
found that there had been no common intention to agree on the
20 year
term. More relevant for the issues at hand, the court defined mistake
as implying a ‘misunderstanding, misrepresentation,
and
resultant poor judgment’,
[3]
Harms AJA expressed the test as to whether reliance on a mistake
entitles a party to resile from a resultant agreement as follows:
‘
.
. . 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?’
[4]
(Footnotes omitted.)
[11]
In this case the answers to these questions are self-evident. It was
not suggested that a reasonable man would not have accepted
the facts
presented to the respondent’s attorneys, or that a reasonable
man would have realised that there was a real possibility
of a
mistake in the amount of expenses the appellant’s attorney
requested to be paid. The misrepresentation by the appellant
misled
the respondent, and this resulted in the conclusion of the settlement
agreement. The appellant cannot rely on his own mistake
to avoid the
contract which was solely his fault. As stated by Christie:
[5]
‘
However
material the mistake, the mistaken party will not be able to escape
from the contract if his mistake was due to his own
fault. This
principle will apply whether his fault lies in not carrying out the
reasonably necessary investigations before committing
himself to the
contract, that is, failing to do his homework; in not bothering to
read the contract before signing; in carelessly
misreading one of the
terms; in not bothering to have the contract explained to him in a
language he can understand; in misinterpreting
a clear and
unambiguous term, and in fact in any circumstances in which the
mistake is due to his own carelessness or inattention,
. . . ’
[12]
In the light of this, the appellant sought refuge in an argument that
both parties had assumed that the documents supporting
the figure
agreed in respect of past hospital and medical expenses were the only
documents that were relevant and consequently
that the compromise was
concluded based on an incorrect assumption. However, as pointed out
by this court in
Van
Reenen Steel (Pty) (Ltd) v Smith NO & another
[2002] ZASCA 12
;
2002 (4) SA 264
(SCA), this was no more than
an assumption based on an unilateral mistake.
[6]
And as Harms JA said in that case:
[7]
‘
The
first problem facing the appellants is that they are unable to rely
on a unilateral mistake because, as mentioned, the respondents
were
not the cause of the mistake in the sense discussed in
Sonap
Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) (Ltd)
v Pappadogianis
;
[1992] ZASCA 56
;
1992 (3) SA 234
(A).
The next problem is that it is common cause that the written contract
expresses the parties’ consensus.’
The
argument that there was a mutual mistaken assumption is no more than
an attempt to clothe a unilateral mistake in another garb.
For the
reasons already set out the appellant’s mistake does not void
the agreement.
[13]
Confronted with all these difficulties the submission on behalf of
the appellant was that this court should use its discretion
under
rule 42(1)
to set aside the judgment although the settlement
agreement was binding. In
Theron
NO v United Democratic Front (Western Cape Region)& others
1984
(2) SA 532
(C) at 536G this court held that a court has a discretion
whether or not to grant an application for rescission under
rule
42(1).
But where, as here, the court’s order recorded the terms
of a valid settlement agreement,
[8]
there is no room for it to do so.
[14]
The appeal is dismissed with costs including the costs of two
counsel.
L
E LEACH
N
DAMBUZA
JUDGES
OF APPEAL
APPEARANCES:
For
the Appellant: J C Bergenthuin
Instructed by: Van
Zyl Le Roux & Hurter, Pretoria
c/o
Honey Attorneys, Bloemfontein
For the Respondent:
N G D Maritz SC; J Lingenfelder
Instructed by: Diale
Mogashoa Attorneys, Pretoria
c/o
McIntyre & Van der Post, Bloemfontein
[1]
Tshivhase
Royal Council v Tshivhase supra
at
863A-B.
[2]
S
W v
an
der Merwe et al
Contract:
General Principles
4
ed (2012) at 33.
[3]
At
238H.
[4]
This
test being an adaptation of a dictum by Blackburn J in
Smith
v Hughes
(1871)
LR 6 QB 597
at 607 (at 239I-240B).
[5]
R
H
Christie
& G B Bradfield
Christie’s
the Law of Contract in South Africa
(2011) 6 ed at 329-330.
[6]
Paragraph
9.
[7]
Paragraph
7.
[8]
Eke
v Parsons
[2015]
ZACC 30
;
2015 (11) BCLR 1319
; (C) 2016 (3) SA (CC).