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[2013] ZASCA 23
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Banda and Another v Van der Spuy and Another (781//2011) [2013] ZASCA 23; 2013 (4) SA 77 (SCA) (22 March 2013)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 781//2011
Reportable
In the matter between:
RAYMOND BANDA
....................................................................
FIRST
APPELLANT
PATRICIA FYNN
.....................................................................
SECOND
APPELLANT
and
FRANK
JOHANNES VAN DER SPUY
.
...................................
FIRST
RESPONDENT
ALICIA ANASTASIA VAN
DER SPUY
..............................
SECOND
RESPONDENT
Neutral
citation
:
Banda
v Van der Spuy
(781/2011)
[2013] ZASCA
23
(22 March 2013)
Coram
: Lewis,
Maya, Cachalia JJA and Erasmus and Swain AJJA
Heard
: 7 March
2013
Delivered:
22
March 2013
Summary
:
Knowledge by the sellers of a house that its roof was latently
defective and that repairs to it had not properly rectified the
latent
defect, which they fraudulently concealed, vitiated the effect
of a voetstoots clause – an alternative cause of action based
upon a fraudulent misrepresentation by the sellers as to the
existence of a guarantee in respect of the repairs, which induced
the
buyers to purchase the house – alternatively, agree upon the
price, was causally related to the damage suffered, being
the cost of
repairing the roof – this was so despite the fact that the
guarantee did not cover all of the defects which caused
the roof to
leak and sellers were unaware of an additional cause of the leak.
ORDER
On appeal from:
South
Gauteng High Court, Johannesburg (Boruchowitz J sitting as court of
first instance):
1 The appeal is upheld
with costs.
2 The order of the high
court is set aside and is substituted with the following order:
‘
The
defendants are ordered jointly and severally to pay to the plaintiffs
the sum of R449 499 together with interest thereon
at the rate
of 15.5 per cent per annum from the date of judgment, being 23
September 2011, and costs of suit including the qualifying
fees of Mr
Visagie.’
JUDGMENT
_______________________________________________________________
SWAIN AJA
(
LEWIS,
MAYA AND CACHALIA JJA AND ERASMUS AJA
concurring):
A
thatch roof that leaked prior to the sale of a house by the
respondents to the appellants, and which continued to leak after
the
sale, gave rise to the present dispute between the parties.
The
main claim advanced before the South Gauteng High Court (Boruchowitz
J) by the appellants, was based upon the
actio
quanti minoris
,
in which a reduction in the purchase price was sought, being the
cost of repairing the roof, to cure the leaks.
The
agreement of sale contained a voetstoots clause. This placed the
added burden upon the appellants of not only proving the
existence
of the latent defects in the roof, but also that the respondents
were aware of these defects which caused the roof
to leak, and
thereby fraudulently neglected to inform the appellants of their
existence.
Two
further alternative causes of action were advanced by the
appellants. One was based upon a fraudulent misrepresentation by
the
respondents as to the existence of a guarantee in respect of repairs
done to the roof and the other was founded on the
actio
ex empto
.
None of these claims
found favour with the trial court, with the result that they were
dismissed. The appellants were granted
leave to appeal to this
court.
The
trial court found that the defects in the roof were latent in
nature, but upheld the defence of the respondents that they
were
excused from liability by virtue of the provisions of the voetstoots
clause. The trial court found that the appellants had
failed to
establish on a balance of probabilities that,
when
the sale agreement was concluded,
the
respondents had knowledge of the latent defects ‘and
designedly,
craftily
or fraudulently,
concealed
their existence from the plaintiffs’.
There
is no challenge by the respondents by way of a cross-appeal against
the finding of the trial court, that there were latent
defects in
the roof at the time of the sale. Indeed, from the evidence it is
abundantly clear that this was the case.
Accordingly
the issue for determination is whether the appellants proved the
requisite knowledge on the part of the respondents
of the latent
defects in the roof, which they then fraudulently concealed from the
appellants. By virtue of the fact that it
was common cause that the
respondents had effected repairs to the roof before the sale, this
would also embrace a determination
of the issue of whether,
to the knowledge of the
respondents, these repairs did not properly or adequately rectify
the defects in the roof to prevent the
roof leaking.
In
order,
however,
properly to address the
issue of whether the respondents possessed knowledge of the latent
defects in the roof, it is necessary
to briefly deal with the
evidence concerning the nature of the defects in the roof, which
caused the roof to leak. The evidence
led by the appellants was that
of Mr Jan de Wet Bornmann, an independent assessor of insurance
claims, employed by the bond holder
over the house, namely Absa Bank
and Mr Abraham Visagie, a professional engineer who was called as an
expert witness. No evidence
was led by the respondents to contradict
the testimony of these witnesses.
The
evidence of these two witnesses clearly established that the cause
of the leaks in the roof was twofold. Bornmann’s
evidence was
that the wooden roof poles were inadequate properly to support the
weight of the thatch roof and would have to be
reinforced. As a
result,
the
roof was gradually collapsing, moving downwards, as well as
laterally. As a consequence of the movement in the roof, openings
had appeared between the flashing and the thatch, through which
rainwater had gained ingress and flowed down the internal walls
of
the house.
Visagie
testified that the cause of the leaks was the inadequate pitch of
the roof. The recommended pitch for a thatch roof was
45 degrees.
The roof of the house was less than 30 degrees in places and could
not be regarded as functional, because the thatch
fibres would have
a negative gradient and water would not run off the roof, but into
the thatch. As a consequence,
the
thatch would stay wet and would rot much more quickly than it was
supposed to. Much of the top layer of thatch had rotted
away when he
inspected the roof and leaks had occurred in various locations. In
addition, severe deflection was visible in the
ridge line which he
regarded as a failure. At the time the repairs to the roof were
carried out, it had already deflected beyond
the point of repair. In
Visagie’s opinion,
the
only way to repair the roof was to demolish it and reconstruct it in
accordance with a properly engineered design with the
correct pitch.
The
trial court correctly found in the light of this evidence that the
design of the roof structure was inadequate, the thatch
roof was not
functional,
leaks
would occur and the remedial work performed would not make the
structure safe and pass engineering guidelines. As pointed
out, the
trial court then concluded that these defects were clearly latent.
An
assessment of whether the appellants proved that the respondents
knew of the latent defects in the roof which caused it to
leak, and
whether they also knew that the repairs effected would not
permanently solve the problem of it leaking, in the face
of the
first respondent’s denial that he possessed such knowledge,
requires an assessment of the objective facts. Any inference
must be
drawn from the facts revealed by the evidence.
As pointed out in
R v
Myers
1948 (1) SA 375
(A) at 383:
‘
.
. .absence of reasonable grounds for belief in the truth of what is
stated may provide cogent evidence that there was in fact
no such
belief.’
Similarly in
Hamman v
Moolman
1968 (4) SA 340
(A) at 347A the following was added:
‘
The
fact that a belief is held to be not well-founded may, of course,
point to the absence of an honest belief, but this fact must
be
weighed with all the relevant evidence in order to determine the
existence or absence of an honest belief.
’
Central to this enquiry
is the evidence concerning the undertaking given by the first
respondent to the appellants, contained
in an addendum to the
contract of sale, executed on 25 July 2007 providing as follows:
‘Seller to transfer guarantee on
thatch roof to purchaser from
the contractor.’
The
first respondent was forced to concede that when he signed the
addendum,
to
his knowledge,
there
was no guarantee in existence, because the time period for which it
was furnished had expired. The trial court correctly
concluded that:
‘To have undertaken in these circumstances to provide a
guarantee was thoroughly misleading and in my view
fraudulent’.
In addition, a
consideration of the first respondent’s evidence in relation
to what he alleged was the duration of the guarantee,
reveals a
similar distressing lack of veracity.
The
first respondent’s legal representative presented the
respondents’ case on the basis that Braaff, the contractor,
had given an oral guarantee of one year to first respondent’s
brother. However,
when
giving evidence the first respondent said that he asked Braaff for a
guarantee until after the rains, to which Braaff agreed.
When the
first respondent was asked where his legal representative had
obtained the idea that the guarantee was for one year,
he gave a
clearly fallacious reply in which he attempted to reconcile a
guarantee for one year with the date in the following
year when the
first rains fell.
On
the other hand Braaff maintained that the first respondent had asked
for a guarantee for six months, to which he agreed. It
is
significant that when Braaff was asked to furnish a guarantee,
which he did on 27 July
2007, to enable the respondents to comply with their obligations in
terms of the addendum, it was for
a period of six months only. This
elicited no protest from the first respondent, who maintained that
he did not see the document
when it was furnished. In my view it is
highly improbable that the first respondent, knowing that the
furnishing of a valid guarantee
had been elevated to the status of
an obligation in terms of the addendum, would have had no interest
in the duration of the
guarantee furnished by Braaff.
The
evidence clearly establishes that the first respondent was
untruthful concerning the duration of the guarantee. That he was
dishonest in regard to the guarantee’s duration clearly shows
he appreciated the danger to the sale of the house, inherent
in a
guarantee which was worthless, because it had expired. The trial
court found that ‘[o]n the probabilities the defendants
gave
the undertaking to deliver, what at that stage was a non-existent
guarantee, because they did not wish to sabotage or derail
the
contract and hoped that in the fullness of time there would be no
need on the part of the plaintiffs to rely upon same’.
The
trial court did not,
however,
interrogate the further
issue, namely,
why
the respondents would fear disclosure of the non-existence of the
guarantee? If the first respondent believed in the adequacy
of the
repairs, why did the first respondent not simply disclose that the
guarantee had expired and invite an inspection of the
roof? That the
first respondent did not do so speaks volumes for his lack of belief
in the adequacy of the repairs.
It
is necessary,
however,
to examine the relevant
evidence to determine whether there were reasonable grounds for the
professed belief of the first respondent
in the adequacy of the
repairs effected by Braaff. Bornmann said his great fear, which he
pointed out to the first respondent,
was that if nothing was done to
stop the movement of the roof, it would become worse and could
eventually collapse, causing damage
to the structure of the walls.
He told the first
respondent that the reinforcement of the roof was not as he would
have wished, but what had been done was better
than doing nothing.
In other words, it would delay further movement of the roof. The
first respondent conceded that Bornmann
had said that the work was
not done as Bornmann would have done it, but that it was acceptable
(‘aanvaarbaar’) if
he could use that word.
According
to the first respondent, Bornmann stated that the roof was much
better than it was and that the problems with the roof
had been
permanently cured (‘dit sal stopgesit word nou’). This
was in direct contradiction to what Bornmann had
said, namely that
the repairs would only delay further movement of the roof, which
statement was never challenged. If the first
respondent truly
believed that this was Bornmann’s view of the adequacy of the
repairs, why did he not disclose the non-existence
of the guarantee
and refer the first appellant to Bornmann for confirmation, that the
problems in the roof had been permanently
rectified? That the first
respondent did not do so again speaks volumes for his lack of belief
in the adequacy of the repairs.
A
further issue which must be addressed,
in
the context of determining the bona fides of the first respondent’s
professed belief in the adequacy of the repairs,
is his contention
that he believed that the repairs were acceptable because he
continued to enjoy insurance cover over the roof
by Absa Insurance,
after the repairs had been effected.
It
was originally put to Bornmann that the first respondent would say
that he had phoned Bornmann to inspect the repairs, because
the
first respondent was worried about his insurance cover and had
wanted to be satisfied that the repairs would not place his
insurance at risk. Bornmann emphatically disputed that there was any
basis upon which he would inspect a property to certify
that the
property was free of any defects, latent or otherwise, or that he
would inspect the property purporting to represent
Absa and certify
that the property was insurable. The first respondent maintained
that although Bornmann had said the repairs
were not executed as he
would have liked, Bornmann did not explain what he meant, or
elaborate upon his reservations. When asked
why he did not ask
Bornmann what he meant, he replied that it was not important to him
because Absa had satisfied him that the
repairs were acceptable and
he again had insurance cover on his roof. He added that this was not
conveyed to him but was what
he concluded. When the first respondent
was asked why he did not directly address this issue with Bornmann,
he replied that Bornman
worked with the bank and he believed that
Bornmann would correspond with the bank.
In
R v Myers
(at
382) Greenberg JA, quoting Halsbury 2 ed vol 23 sec 59, stated that
a belief is not honest which
‘
though
in fact entertained by the representor may have been itself the
outcome of a fraudulent diligence in ignorance – that
is,
of
a wilful abstention from all sources of information which might lead
to suspicion, and a sedulous avoidance of all possible avenues
to the
truth, for the express purpose of not having any doubt thrown on what
he desires, and is determined to, and afterwards does
(in a sense)
believe.
’
The
first respondent quite clearly avoided asking Bornmann what his
reservations were in regard to the adequacy of the repairs
to the
roof and whether this would affect his insurance cover. He also
avoided directing the same enquiry to Absa Insurance.
His conduct
cannot be construed as anything other than a ‘wilful
abstention’ from both sources of information, which
would,
according to his professed understanding of what the purpose was of
Bornmann’s visit, have led to an answer to his
fears. That he
did not do so indicates an avoidance by him of all possible avenues
to the truth, for the express purpose of not
having any doubt thrown
upon what he desired and was determined to believe.
When
all of the above is considered, it is clear that the first
respondent did not possess an honest belief in the adequacy of
the
repairs that were effected to the roof, such that the problem of
leaks in the roof had been permanently addressed. Considered
together with the fraudulent conduct of the respondents in not
disclosing the absence of a valid guarantee and their dishonesty
in
relation to the duration of the guarantee, it is clear that they
possessed knowledge of the structural defects in the roof,
identified by Bornmann, which were a cause of the roof leaking, and
which had not been permanently repaired by Braaff. At the
very
least, they were conscious of the inadequate nature of the repairs
to the defects in the roof, which gave them reasonable
grounds to
suspect that the leaks in the roof had not been fixed, and they were
therefore obliged to disclose this knowledge
to the appellants. See
A J Kerr
The Law of Sale and Lease
3
ed (2004) at
148.
It
is, however, clear that the respondents were not aware that an
additional cause of the leaks in the roof was the inadequate
pitch
of the roof as identified by Visagie. Braaff maintained that he had
identified this problem and told the first respondent,
which the
first respondent denied. Braaff also said that before he had
delivered a quotation to repair the roof, he had inspected
the roof
with Bornmann and they had discussed the roof and Bornmann had
pointed out to him what the problem was. If Braaff was
aware of the
serious problem in the roof, namely the inadequate pitch, and had
inspected the roof with Bornmann, it is highly
improbable that he
would not have mentioned it to Bornmann. It is, however, clear that
Bornmann was not aware of this problem
in the roof when he compiled
his report. In addition if Braaff was aware of this problem in the
roof, it is unlikely that he
would have suggested repairs which
would not have addressed the problem. His explanation that he had
not quoted to remove the
roof, because if he had, he would not have
obtained the job, rings hollow. Considering all of the above, it is
clear that Braaff
did not possess knowledge of the inadequate slope
of the roof and accordingly could not have told the first respondent
of this
defect. In this context I agree with the trial court’s
view that Braaff was neither a reliable nor satisfactory witness.
It is trite that a
seller is liable for all latent defects which render unfit or
partially unfit, the res vendita for the purpose
for which it was
intended to be used. See
G
R J Hackwill and H G Mackeurtan
Sale
of Goods in South Africa
5
ed (1984) at 135.
A leaking roof is a
latent defect which renders the house unfit for habitation. The
respondents were aware of one of the causes
for the leaking roof,
namely inadequate roof design,
which
resulted in the sagging of the roof, which had not been permanently
repaired and which they had concealed. The respondents
were unaware,
however,
of the other cause of
the leaking roof namely, the inadequate pitch of the roof. The fact
that they were unaware of an additional
cause of the leaking matters
not. Their fraudulent conduct in concealing the existence of the
defective leaking roof forfeits
the protection of the voetstoots
clause in respect of this latent defect.
The
appellants are accordingly entitled to the difference between the
purchase price of the house and its value with the defective
roof.
(See
Hackwill
supra at 156 para 10.6.1.)
No
evidence was led of the market price of the house with the defective
roof at the time of the sale. It seems self-evident,
however,
that there would not be
a market for a house where the whole roof has to be replaced. Where
there is no market the court is entitled
to fix the sum for which
the house could have been restored. (See Hackwill supra at 157 para
10.6.2.)
The
cost of repairs may be used as a measure of the award to be made
where the actual value could not be determined, or is difficult
to
determine. See
Labuschagne
Broers v Spring Farm (Pty) Ltd
1976
(2) SA 824
(T).
An
alternative cause of action was based upon the fraudulent,
alternatively, negligent misrepresentation by the respondents that
a
valid written guarantee, regarding the soundness of the thatch roof,
was in place and that the defect had been rectified. As
pointed out,
the trial court found that the respondents were aware that the
guarantee had lapsed when the addendum was signed
and the
undertaking to provide one was misleading and fraudulent. The trial
court found that a fraudulent misrepresentation was
made by the
respondents to the appellants in regard to the guarantee. I agree
with this view.
The
trial court,
however,
found that the damages
claimed, being the cost of replacing the thatch roof,
did not arise as a
direct consequence of the respondents’ fraudulent conduct in
relation to the guarantee. The reasoning
of the trial court was that
the guarantee, even if provided by the respondents to the appellants
(presumably as a valid guarantee)
would not have prevented the
appellants from suffering loss as a result of the presence of the
latent defects, because the guarantee,
given
by Braaff, only related to the remedial work performed and did not
operate as a guarantee in respect of all latent defects.
The
first appellant’s evidence was that if the first respondent
had not informed him of the guarantee he would not have
signed the
agreement, and if this was conveyed to him when the addendum had
been signed, he would not have proceeded with the
transaction. The
first appellant also stated that if he had been aware of the problem
with the roof, he would have had an expert
assess the roof and
furnish him with a quotation of what it would cost to restore it. He
would then have negotiated with the
respondents regarding the
quotation because they really liked the house. If agreement could
not be reached,
then
they would not have gone ahead with the purchase. On the evidence,
the existence of a
guarantee in respect of the repairs to the roof had played a vital
role in the conclusion of the agreement,
right from the outset. It
was for this reason that it was elevated to a term of the agreement,
by the first appellant,
in terms of the addendum. It is quite clear that the appellants were
induced by the fraudulent misrepresentation
to conclude the sale
agreement or,
at
least, to pay the purchase price agreed upon.
It is trite that the
claim of the appellants,
based
as it is in delict,
is
one in which the appellants seek to recover the amount by which
their patrimony has been diminished. See
Trotman
& another v Edwick
1951
(1) SA 443
(A) at 449B-C.
The
fraud of the respondents may be considered either as having causally
effected, not the transaction as a whole, but only the
roof of the
house, as a distinctive part having special significance to the
appellants. The fraud therefore affected only the
amount of the
purchase price that the appellants agreed to pay. On this basis the
so-called ‘swings and roundabouts’
principle of
computing the damages would be inapplicable and the cost of
repairing the defect would be the appropriate measure.
See
Ranger
v Wykerd & another
1977
(2) SA 976
(A) at 992A-B.
Alternatively,
the fraud of the respondents may be regarded as causally related to
and affecting the transaction as a whole. In
the present case, as in
Ranger
,
it may be inferred as a fact that the agreed purchase price for the
house, was prima facie its actual market value in its represented
condition (with a properly repaired roof) at the time of the sale.
The first appellant stated that they had initially offered
an amount
less than the asking price, which was rejected by the respondents.
The respondents then offered an amount in return
as the sale price,
which the appellants accepted. The amount agreed upon constituted a
small reduction in the listing price of
the agents. There was no
evidence led by the respondents to disturb such a prima facie
inference on the facts of this case. (
Ranger
at 993C-E.)
Whether
the fraud of the respondents induced the appellants to conclude the
sale agreement, or simply to agree upon the purchase
price, it is
clear that the fraud did occasion as cause and effect the
patrimonial loss sustained by the appellants. On either
basis, the
correct manner of computing the appellants’ loss is the cost
of repairing the roof. That the cost of repairing
the roof included
the costs of rectifying a defect of which the respondents were
unaware ie the pitch of the roof, which was
an additional cause of
the roof leaking, is irrelevant to this inquiry. That the terms of
the guarantee only covered the repairs
to the roof effected by
Braaff,
and
not all latent defects in the roof,
is
likewise irrelevant.
In
addition,
the
respondents knew when making the fraudulent misrepresentation, that
because the roof had not been properly or adequately repaired,
it
would leak in the future and it would have to be repaired to render
the house habitable. The evidence establishes that the
reasonable
cost of repairing the roof to prevent it leaking necessitates that
the roof be replaced. That the respondents did
not foresee that the
reasonable cost of repairing the roof would entail its replacement,
matters not. The reasonable costs of
repairing the roof are directly
and causally connected with the fraud and are not remote. (
Ranger
at 994F-G.)
The trial court
accordingly erred in restricting the causative effect of the
fraudulent misrepresentation to those defects which
would have been
covered by the invalid guarantee. It is therefore unnecessary to
deal with the remaining alternative cause of
action based upon the
actio
ex empto
.
The
appellants are accordingly entitled to the reasonable cost of
repairing the roof. Visagie tendered evidence that the cost
of
repairing the roof in 2007 as at the date of the sale was R309 698.
In the appellants’ amended particulars of claim
this was the
amount advanced. Visagie stated that the cost of rebuilding the
internal walls and gables to accommodate the increased
pitch of the
roof, calculated in 2010,
was
R110 000. This price would have to be discounted by 30 per cent
to arrive at the cost in 2007,
which
discount produced an amount of R84 600. The total claim
accordingly advanced by the appellants in their amended particulars
of claim was R449 499. I do not agree with the view of the
trial court that there was no justification in the evidence for
the
amount claimed. Visagie explained how the calculation was done and
there was no evidence lead by the respondents to contradict
his
views.
As
regards the interest payable on this amount,
in
the particulars of claim interest was claimed at the rate of 15.5
per cent per annum
a
temporae mora
.
In the appellants’ heads of argument interest was claimed as
from the date of inception of the trial,
being
8 October 2010. However, during the hearing counsel for the
appellants agreed that interest should run only from the date
upon
which judgment was delivered by the trial court being 23 September
2011. Interest will accordingly run from this date.
In the result the
following order is made:
1 The appeal is upheld
with costs.
2 The order of the high
court is set aside and is substituted with the following order:
‘
The
defendants are ordered jointly and severally to pay to the plaintiffs
the sum of R449 499 together with interest thereon
at the rate
of 15.5 per cent per annum from the date of judgment, being 23
September 2011, and costs of suit including the qualifying
fees of Mr
Visagie.’
K G B SWAIN
ACTING JUDGE OF APPEAL
appearances:
FOR first AND M WAGENER
second appellantS: BOWMAN
GILFILLAN ATTORNEYS
MATSEPES INC,
Bloemfontein
FOR FIRST AND B M HEYSTEK
SECOND respondeNTS:
Instructed by: MARITZ BOSHOFF & DU PREEZ INC
BEN VAN DER MERWE INC,
Bloemfontein