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[2012] ZASCA 9
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Scholtz v Scholtz (209/2011) [2012] ZASCA 9; 2012 (5) SA 230 (SCA); [2012] 2 All SA 553 (SCA) (14 March 2012)
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case No: 209/2011
In the
matter between:
ELIZE
SCHOLTZ
…....................................................................................
APPELLANT
v
THEODORUS ERNEST SCHOLTZ
…....................................................
RESPONDENT
Neutral citation:
Scholtz v Scholtz
(209/2011)
[2012]
ZASCA 9
(14 March 2012)
Coram:
Brand, Cloete, Cachalia, Tshiqi JJA
et
Plasket AJA
Heard:
1 March 2012
Delivered:
14 March 2012
Summary: Donation – s 5 of the General Law Amendment
Act 50 of 1956 – donated property encumbered by mortgage bond
–
no term pertinently governing liability for bond debt after transfer
in written agreement – does not inevitably result
in invalidity
of donation for non-compliance with s 5.
________________________________________________________________
ORDER
On appeal from:
On appeal from Western Cape
High Court, Cape Town
(Le Grange J sitting as court of first instance).
The appeal is upheld with costs, including the costs of two counsel.
The order of the court a quo is set aside and replaced with the
following:
‘
(a) The defence raised in para 9 of the
defendant’s plea is dismissed.
(b) The defendant is to pay the costs of the preliminary proceedings
arising from that defence.’
________________________________________________________________
JUDGMENT
________________________________________________________________
BRAND JA
(
CLOETE, CACHALIA, TSHIQI JJA
et
PLASKET AJA
):
[1] On 18 November 2007 the parties entered into a written agreement
of donation. In terms of the agreement the respondent donated
his
undivided half share in an immovable property to the appellant. At
the time of the agreement the parties were married to each
other and
the appellant owned the other undivided half share in the property.
Alleging that the respondent refused to give effect
to his obligation
under the donation agreement, the appellant instituted action against
him in the Western Cape High Court for
specific performance. The
respondent in his plea raised various defences against her claim.
Included amongst these was the defence
in para 9 of the plea that the
contract of donation was invalid for failure to comply with s 5
of the General Law Amendment
Act 50 of 1956.
[2] Eventually the matter came before Le Grange J. By agreement
between the parties he was asked to determine only those issues
arising from the respondent’s plea of invalidity while all
other issues stood over for later determination. During the
preliminary
proceedings that followed, no evidence was led by either
party and the matter was argued on the pleadings. At the end of these
proceedings Le Grange J upheld the respondent’s plea that the
agreement of donation was invalid for failure to comply with
the
provisions of s 5 of the General Law Amendment Act. The appeal
against that judgment is with the leave of the court a
quo.
[3] The background facts are undisputed and not particularly complex.
They are these. The written deed of donation is in Afrikaans.
It
contains the description of the property as registered in the Deeds
Office and then records the respondent’s donation
of his
undivided half share in the property thus described to the appellant.
The agreement proceeds to stipulate that the respondent
would sign
all documents and take all other steps necessary to facilitate the
transfer of the donated property to the appellant
as soon as
possible. Finally the agreement records the appellant’s
acceptance of the donation as well as her undertaking
to pay the
costs of transfer, including transfer duty, to bring about the
registration of the property in her name.
[4] In her particulars of claim the appellant alleged that she
performed her obligations in terms of the donation by providing
her
conveyancers with the funds necessary to effect transfer of the
donated property in her name. According to the particulars
of claim
the conveyancers thereupon prepared the transfer documents and
presented them to the respondent for his signature, but
the
respondent refused to comply with their request. On the basis of
these allegations the appellant sought an order – according
to
my translation from Afrikaans –
(a) that the respondent be directed to sign all documents and to take
all other steps necessary to transfer the donated property
to her;
and that
(b) failing compliance by the respondent with the order in (a), the
sheriff be authorised to sign all documents and to take all
necessary
steps on behalf of the respondent to effect transfer of the property.
[5] As I have indicated by way of introduction, the respondent raised
various defences, including that he was unduly influenced
to make the
donation; that he had revoked the donation because of appellant’s
gross ingratitude; and so forth. Pertinent
for present purposes,
however, is the discrete defence raised in paragraph 9 of the plea.
Underlying this defence was the undisputed
fact that at the time of
the donation the donated property was – and still is –
encumbered by a mortgage bond in favour
of Nedbank for some R2
million. Relying on this factual basis, the defence in paragraph 9
was formulated along the following lines:
(a) There must have been some agreement between the parties as to
what would happen to the liability for the bond debt.
(b) That agreement would constitute a material term of the donation.
(c) Since that material term is not contained in the deed of
donation, the deed failed to comply with the requirements of the
governing statutory provisions, which rendered the donation void.
[6] The respondent’s argument in support of this defence, which
found favour with the court a quo, rested on the supposition
that the
governing statutory provisions are to be found in s 5(1) of the
General Law Amendment Act 50 of 1956. In relevant
part this section
provides:
‘
. . .
[N]o executory contract of donation entered into after the
commencement of this Act shall be valid unless the terms thereof
are
embodied in a written document signed by the donor or by a person
acting on his written authority granted by him in the presence
of two
witnesses.’
[7] The appellant, on the other hand, contended that the agreement is
governed by
s 2(1)
of the
Alienation of Land Act 68 of 1981
. The
relevant provisions of this section are:
‘
No
alienation of land after the commencement of this Section shall . . .
be of any force or effect unless it is contained in a deed
of
alienation signed by the parties thereto or by their agents acting on
their written authority.’
[8] In support of this contention the appellant referred to the
meaning of ‘alienate’ as defined in this Act, which
includes ‘sell, exchange or donate’. To my way of
thinking an executory contract of donation of immovable property
–
like the one under consideration – falls within the ambit of
both these statutory enactments. But since the General
Law Amendment
Act appears to be the more stringent one, I think the court a quo was
right in its approach that the validity of
the donation at issue
depends on compliance with this enactment.
[9] Having said that, I do not believe that in this case it would
make any difference if we were to apply
s 2(1)
of the
Alienation
of Land Act instead
. A comparison of the two statutory enactments
reveals two additional requirements in the General Law Amendment Act.
First, that
the terms of the agreement must be embodied in the
document. Second, that the written authority to sign on behalf of the
donor
must be given in the presence of two witnesses. The last
mentioned requirement clearly has no bearing in this case. As to the
first
requirement,
s 2(1)
of the
Alienation of Land Act has
been
understood to contain virtually the same stipulation, albeit not
expressly stated. This much appears from the following dictum
by Maya
JA in
Stalwo v Wary Holdings (Pty) Ltd
2008 (1) SA 654
(SCA)
para 7:
‘
That
[ie
s 2(1)]
means that the essential terms of the agreement . .
. must be in writing and defined with sufficient precision to enable
them to
be identified. And so must the other material terms of the
agreement.’
(See also
Johnston v Leal
1980 (3) SA 927
(A) at 937G-H.)
[10] Both the argument of the respondent and the reasoning of the
court a quo relied to a great extent on the judgment by Myburgh
AJ in
Savvides v Savvides
1986 (2) SA 325
(T). The facts in
Savvides
were not entirely on all fours with the facts of this case. Yet I
believe they were similar enough to render the two cases
indistinguishable
on their facts. As in this case, the immovable
property donated in
Savvides
was encumbered by a mortgage bond
to which no reference was made in the deed of donation. In this light
Myburgh AJ recognised at
least two possibilities: that the donor
would discharge the mortgage debt and thus facilitate the transfer of
the property free
of the bond; alternatively that the donee accepted
liability for the bond debt. Thereafter he proceeded as follows (at
333A-B):
‘
Those
are possibilities. But the point is this that in terms of
s 5
[of the General Law Amendment Act 50 of 1956] the terms [of the
donation agreement] had to be stipulated in the deed. That is the
meaning of the words “unless the terms thereof are embodies in
the written document”.’
[11] Absent any pertinent reference as to who would be liable for the
bond debt, which would constitute a material term, Myburgh
AJ
therefore held the donation void for non-compliance with the
requirements of s 5. But with respect to Myburgh AJ and the
court a quo following him, I find their reasoning flawed. The flaw,
as I see it, is that it fails to recognise the possibility
that the
‘missing term’ relating to liability for the bond debt
can be found in a proper interpretation of the express
terms of the
agreement or that it may be incorporated by way of a tacit term. As
to the first possibility, it requires no motivation
that in the event
of ambiguity the process of interpretation is not restricted to the
wording of the document. So for example reference
may be had to the
context or the factual matrix of the contract which includes both the
background and surrounding circumstances
(see eg
KPMG Chartered
Accountants SA v Securefin Ltd
2009 (4) SA 399
(SCA) para 31).
[12] Tacit terms, on the other hand, are by definition not to be
found through interpretation of the express terms. They are by
definition neither recorded nor expressly agreed upon by the parties.
They often pertain to matters which the parties did not even
consider. They emanate from the common intention of the parties as
inferred by the court from the express terms of the contract
and the
surrounding circumstances (see eg
Alfred McAlpine & Son (Pty)
Ltd v Transvaal Provincial Administration
1974 (3) SA 506
(A) at
531
in fine
). The juxtaposition of tacit terms in the context
of statutory provisions requiring the written recordal of the terms
of certain
contracts, is explained with admirable clarity by Nienaber
JA in
Wilkins NO v Voges
[1994] ZASCA 53
;
1994 (3) SA 130
(A) at 143
in fine
–
144D:
‘
. . .
[I]t was argued on behalf of the plaintiff . . . that the tacit term
pleaded, if found to exist, would offend against [the
similarly
worded predecessor of
s 2(1)
of the
Alienation of Land Act
] . .
.
A tacit term in a written
contract, be it actual or imputed, can be the corrolorary of the
express terms – reading, as it
were, between the lines –
or it can be the product of the express terms read in conjunction
with evidence of admissible surrounding
circumstances. Either way, a
tacit term once found to exist, is simply read or blended into the
contract: as such it is “contained”
in the written deed.
Not being an adjunct tool but an integrated part of the contract, a
tacit term does not, in my opinion, fall
foul of . . . the Act.’
(See also
Stalwo v Wary Holdings (supra)
paras 11 and 12.)
[13] What may have contributed to the confusion in this case is that
it does not appear from the pleadings whether there is any
dispute as
to what would happen to the bond. The appellant’s complaint in
her particulars of claim is essentially that the
respondent refused
to sign the papers presented to him that are necessary to effect
transfer. She then sought an order that the
respondent be directed to
sign these papers and to do whatever else is necessary to facilitate
transfer. But we do not know what
papers were presented to him, nor
whether those papers had any bearing on the bond. And we also do not
know what the appellant
claims to be ‘necessary steps’
that the respondent is obliged to perform.
[14] In argument before us counsel for the appellant contended that
on a proper interpretation of the deed of donation the respondent
is
obliged to discharge the bond. In support of this contention counsel
referred to the respondent’s undertaking to do all
things
necessary to effect transfer of the property. This undertaking, so
counsel argued, must be read with
s 56(1)
of the
Deeds
Registries Act 47 of 1937
which is to the effect that the transfer of
mortgaged property can only be registered after the bond has been
cancelled or the
property has been released from the operation of the
bond. In this light, so the argument concluded, ‘steps
necessary to
effect transfer’ must be understood to include the
discharge of the bond.
[15] The problem with this argument, as counsel for the respondent
rightly pointed out, is that it fails to take account of
s 57(1)
of the same Act. That section provides that, notwithstanding s 56(1),
transfer of mortgaged property may be registered without
cancellation
of the bond, subject to the written consent by the bond holder and
the transferee to the substitution of the latter
for the transferor
as the debtor in terms of the bond. In the result the respondent’s
undertaking ‘to do everything
necessary to effect transfer’
does not necessarily exclude the hypothesis that the agreement was
that the appellant would
take transfer of the property, subject to
the bond, with the written consent of the bond holder.
[16] Another problem with this argument raised by the appellant’s
counsel is, of course, that her own pleadings do not rely
on an
agreement that the respondent would discharge the bond. Her pleadings
are equally open to the interpretation that she is
prepared to take
transfer of the property subject to the bond. What is likely to
result from these proceedings is that the appellant
will amend her
particulars of claim so as to state her position with regard to the
bond liability. The same clarity can, of course,
be obtained through
a request for further particulars by the respondent.
[17] Should the appellant’s position be clarified in one of
these ways, it may transpire that there is no dispute between
the
parties with reference to the bond liability. If, for example, the
appellant should allege that it was a tacit term of the
agreement, or
that on a proper interpretation of the express terms of the agreement
in their proper context, she would take responsibility
for the bond,
the respondent may very well admit those allegations. That, I
believe, would clearly put paid to an argument that
the written
donation does not embody all the material terms of the agreement. The
‘missing term’ contended for would
be established through
interpretation, or by incorporation of a tacit term.
[18] But even if the respondent were to deny the appellant’s
allegations, the position would be no different. As Steyn CJ
pointed
out in
Neethling v Klopper
1967 (4) SA 459
(A) at 464E-G, the
legislature’s intention with the prescription of formalities
for certain contracts could hardly have been
to eliminate all
disputes with regard to the terms of these contracts. It therefore
stands to reason that a subsequent dispute
about the terms of the
contract, in itself, cannot render the agreement void
ab initio
.
The court will simply have to determine the dispute. Once the facts
of this case have been determined on the pleadings or by the
court it
may emerge that the donation is indeed invalid because the deed
omitted to record a material term. But as I see it, that
prospect
does not detract from my conclusion that on the pleadings as they
stand, the respondent failed to establish the defence
raised in para
9 of his plea.
[19] In the result:
The appeal is upheld with costs, including the costs of two counsel.
The order of the court a quo is set aside and replaced with the
following:
‘
(a) The defence raised in para 9 of the
defendant’s plea is dismissed.
(b) The defendant is to pay the costs of the preliminary proceedings
arising from that defence.’
________________
F D J BRAND
JUDGE OF APPEAL
APPEARANCES
:
APPELLANTS: A C Oosthuizen SC
P van den Heever
INSTRUCTED BY: Visagie Vos
Cape Town
CORRESPONDENTS: Rosendorff & Reitz Barry
Bloemfontein
RESPONDENTS: A S de Villiers
INSTRUCTED BY: Hannes Pretorius, Bock & Isaacs
Cape Town
CORRESPONDENTS: Bock & Van Es
Bloemfontein