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[2023] ZAFSHC 64
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R.S.H v A.J.T (4523/2022) [2023] ZAFSHC 64 (8 March 2023)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
THE
HIGH COURT OF SOUTH AFRICA
FREE
STATE PROVINCIAL DIVISION
Case
Number 4523/2022
REPORTABLE:YES/NO
CIRCULATE
TO OTHER JUDGES: YES/NO
CIRCULATE
TO MAGISTRATES: YES/NO
In
the matter between:
R[...]
S[...] H[...]
Applicant
and
A[...]
J[...] T[...]
Respondent
CORAM:
BERRY, AJ
HEARD
ON:
16 FEBRUARY 2023
DELIVERED
ON:
This
judgment was handed down electronically by email to the parties'
representatives and by release to SAFLII. The date and time
for
hand-down is deemed to be 15h00 on 08 March 2023.
JUDGEMENT
BY:
BERRY,
AJ
JUDGMENT
[1]
The
Parties entered
into a settlement agreement, which was made an Order of Court, in
divorce proceedings under case number 1752/2004.
[2]
The clauses of the agreement which form the subject matter of today's
proceedings
are clauses 5.2 and 5.3, although the Application aims
specifically at clause 5.2.
[3]
Clause 5.2 reads.
“
5.2
The Plaintiff will maintain the payments of Defendant’s current
Old Mutual Flexi Pension policy
until her death provided that the
Plaintiff remains the life beneficiary of that policy. The Defendant
will hand the original policy
documents to the Plaintiff to secure
his right title and interest in the policy. The Defendant will not be
entitled to encumber,
cede or assign her benefits in terms of the
policy.”
[4]
Clause 5.3 reads:
“
5.3
The Plaintiff will maintain the payments of his own current
life/endowment policies and the Defendant
will remain the life
beneficiary of that policy(sic).”
[5]
The Applicant was the Defendant, and the Respondent was the Plaintiff
in the divorce
proceedings.
[6]
The Applicant removed the Respondent as a beneficiary from her Old
Mutual Flexi Pension
policy during May 2018. She however restored the
Respondent as sole beneficiary on 25 September 2018. The reasons for
this are
unknown.
[7]
The Respondent paid the monthly premiums of the policy into the
Applicant’s
bank account, from where the insurance company
deducted it monthly.
[8]
The attorney for the Applicant sent an e-mail to the Respondent
advising him that
the monthly premium for the policy has increased to
an amount of R2528.10 per month and that he needs to increase the
monthly payments
on 20 October 2021.
[9]
The attorney for the Respondent addressed a letter to the Applicant’s
attorney
on 2 November 2021, wherein she advised that the removal of
the Respondent as beneficiary during 2018 was a breach of contract by
the Applicant and that the Respondent accepted Applicant the
repudiation. Thus, the Respondent was no longer bound to paragraph
5.2 of the Settlement Agreement and would not make further payments
towards the policy.
[10]
The Respondent stopped paying the monthly premium of the Old Mutual
Flexi Pension policy on 01
October 2021.
[11]
Correspondence between the parties’ attorneys culminated in a
letter on 10 March 2022 where
the Application’s attorney made
an offer without prejudice, where she proposes that clause 5.2 be
amended, as follows:
“
The
Defendant will maintain payments of the current Old Mutual Flexi
Pension policy until her death provided that the Defendant
may change
and/or nominate her preferred life beneficiaries of that policy.”
[12]
The effect of the proposed amendment would be that the Respondent
would no longer have to pay
the monthly premiums and the Applicant
would be able to change the beneficiaries on the policy.
[13]
Paragraph 7 of the Deed of Settlement reads:
“
7
NON-VARIATION
7.1
This agreement contains all the terms and conditions of the agreement
between the parties.
7.2
No variation of or abandonment or waiver of rights or obligations,
whether express or implied,
shall be binding unless contained in this
agreement, or subsequently reduced to writing and signed by both
parties.
7.3
Save as provided for in this agreement, neither party shall have any
further claims against
the other and each party hereby waives and
abandons all and any such claims.”
[14]
The attorney for the Respondent replied per e-mail on 11 March 2022:
“
3.
To curtail possible uncertainty, our client will sign an addendum to
the settlement
agreement and to arrange that Mrs RS Howard (formerly
Tonks) will make payment of the current Old Mutual Flexi Pension
policy premiums
and are entitled to appoint life beneficiaries of
that policy.”
[15]
This e-mail makes it clear that the attorney for the Respondent
intended that both parties should
sign a written addendum “to
curtail uncertainty”.
[16]
The attorney for the Applicant addressed a letter to the attorney of
the Respondent on 11 April
2022, wherein she states:
“
1.
Reference is made to be above mentioned and the parties’
agreement to invoke
clause 7 of the Deed of Settlement.
2.
Kindly find attached herein, the Variation Agreement.
3.
Our client has already signed the agreement, kindly have your client
also sign
and send the fully signed agreement to us.
4.
We trust that the above is in order and await your signed agreement.”
[17]
The attorney for the Respondent replied per e-mail on 12 April 2022,
that their client could
not sign the agreement and made a counter
proposal, wishing to also amend clause 5.3 of the Settlement
Agreement:
“
Clause
2.2 should read:
…
by
deleting the entire content of clause 5.3 and replacing it with the
following:
The
Plaintiff will maintain the payments of his own current
life/endowment policies and is entitled to change and nominate his
preferred life beneficiaries for that policy.”
Clause
2.2 refers to the proposed Variation Agreement.
[18]
The attorney for the Applicant responded on 13 April 2022 that the
amendment of clause 5.3 was
never agreed between the parties, but
that she will obtain further instruction.
[19]
At this stage the Respondent did not pay the monthly premiums because
of the so called repudiation
of the agreement by the Applicant.
[20]
In Par 40 of the Respondent Answering Affidavit he changes tact and
no longer relies on the alleged
repudiation but on the argument that
the e-mail of 10 March 2022 read with his attorney’s e-mail of
11 March 20221 constitutes
an agreement and tendered to pay the
arrears of the premiums from 01 October 2021 to 11 March 2022. This
amount was paid by the
time this matter was heard.
[21]
The Applicant filed an Application to declare that
the Respondent is still bound by the Settlement Agreement
and the
Respondent filed a counter Application to declare that the settlement
agreement has been amended by the e-mail correspondence
between the
parties’ attorneys.
[22]
The Respondent correctly abandoned reliance on the so-called
repudiation of the “agreement”
as it is not an agreement
between the parties, but a Court Order.
[23]
Counsel for the Respondent relied on the letter from the Applicant’s
attorney, dated 10
March 2022, read with the e-mail from the
Respondent’s attorney on 11 March 2022 to submit that this
correspondence constitutes
the agreement between the parties and that
this agreement should be made an Order of Court.
[24]
Counsel for the Respondent submitted that the e-mails between the
parties’ attorneys contained
enough identifying information to
qualify as an electronic signature in terms of the Electronic
Communications Act 125 of 2002,
and that the e-mailed correspondence
between the parties’ attorneys meet the requirements of Clause
7 of the Settlement Agreement,
requiring the amendment to be reduced
to writing.
[25]
Counsel for the Respondent referred the Court to
Spring Forest
Trading CC v Wilberry (Pty) Ltd t/a Ecowash and Another
2015 (2)
SA 118
SCA at PAR [18], where the Court held that e-mails constitute
data messages and thus met a condition that an agreement had to be
reduced to writing.
[26]
This contention does not explain why a counteroffer including a
proposal to also amend clause
5.3 of the Settlement Agreement was
made on 12 April 2022, after receipt of the addendum requested by the
Respondent’s attorney
on 11 March 2022.
[27]
It seems the Respondent realised that if he signed the variation
agreement varying only clause
5.2 of the Settlement Agreement, the
Applicant will remove him as beneficiary of the Applicant’s
policy, whilst he would
be obliged to retain the Applicant as
beneficiary of his life policy, if clause 5.3 is not also amended.
[28]
The counterproposal made on 12 April 2022 to also amend clause 5.3 of
the Settlement Agreement,
shows that there was not a meeting of the
minds between the parties.
[29]
Even if I were to find that there was a meeting of the minds on 11
March 2022 as argued by the
Respondent, the case law referred to by
Counsel for the Respondent does not find application in that clause
7.2 of the Settlement
Agreement requires that the Variation Agreement
had to be signed by both parties and not by their attorneys.
“
7.2
No variation of or abandonment or waiver of rights or obligations,
whether express or implied, shall
be binding unless contained in this
agreement, or subsequently reduced to writing and signed by both
parties.”
[30]
I was informed during Court proceedings that the Respondent made a
payment of R15 168.60
for the monthly premiums from 01 October
2021 to 11 March 2022. This payment must have been done after the
Application was filed
as the Answering Affidavit was attested to on
26 October 2022 and in Par 40 of the Answering Affidavit the
Respondent undertakes
to pay the premiums from 01 October 2021 to 11
March 2022.
[31]
The Respondent contents that this payment met his obligations as the
Variation Agreement came
into existence on 11 March 2022 when his
attorney advised the Applicant’s attorney that they accept the
proposed amendment
and requested her to draft an addendum.
[32]
The Applicant seeks a Declaratory Order that clause 5.2 of the
Settlement Agreement is still
applicable and that the letter of 10
March 2022, followed by the e-mail from the Respondent’s
attorney 11 March 2022 requesting
the Applicant’s attorney to
draft an addendum to amend the Settlement Agreement.
[33]
In
SA Sentrale Ko-op Graanmaatskappy v Shifren en Andere
1964
(4) SA 760
(A) the Court dealt with policy considerations such as the
need to avoid disputes, evidential difficulties often associated with
oral agreements, the need for certainty and clarity in a commercial
environment, and the infringement of the right to contractual
freedom.
[34]
The principle of
Pacta Sunt Servanda
entails that parties are bound to the agreements they conclude. This
principle is fundamental to our law.
[35]
In
its most common sense, the
Pacta
Sunt Servanda
principle
refers to private
contracts
and
prescribes that the provisions of a contract are binding in
law
between the
parties to the contract. If a party neglect his or her obligations
that party acts unlawful.
[36]
The Court found in
Shifren
that there is no basis upon which a
non-variation clause could be deemed to be against public policy.
[37]
In
Brisley v Drotsky
2002 (4) 1 (SCA) at 11B-H the Court held
that
Shifren
gives greater weight to the parties’
original exercise of contractual freedom than to their capacity to
undo their original
choice without limitation. The
Shifren
principle essentially delineates that - where such provisions are
itself entrenched in the agreement between the parties, the original
agreement is incapable of being validly altered without complying
with certain prescribed formalities.
[38]
Shifren
held that in circumstances where the parties have
incorporated a formalities clause which entrenches a prohibition
against an oral
variation, there was no reason to find that one party
cannot hold the other party bound thereto.
[39]
The
Shifren
principle is one of certainty. It aims to give effect to the
intention of the parties through such a clause and to guard against
disputes and difficulties of proof which often arise in oral
agreements
[1]
.
[40]
In
Barkhuizen v Napier
[2007] ZACC 5
;
2007 (5) SA 323
(CC) at Par
[57]
the
Constitutional Court held that public policy requires parties to
honour contractual obligations that have been freely and voluntarily
undertaken. The principle of
Pacta Sunt Servanda
is a
profoundly moral principle on which the coherence of any society
relies.
[41]
The majority held that the
Pacta Sunt Servanda
principle –
“…
gives
effect to the central constitutional values of freedom and dignity.
Self-autonomy, or the ability to regulate one's own affairs,
even to
one's own detriment, is the very essence of freedom and a vital part
of dignity.”
[42]
The Court held at Par [69] that the onus rest on the party seeking to
avoid the enforcement clause,
to demonstrate why its enforcement
would be unfair and unreasonable in the given circumstances.
[43]
In clarification of what is required to avoid being bound by a
contractual term, freely and voluntarily
agreed upon, the Supreme
Court of Appeal considered the judgement of
Barkhuizen
in
Bredenkamp v Standard Bank of SA Ltd
2010 (4) SA 468
(SCA)
held at Par [50]:
“
I
do not believe that the judgement in
Barkhuizen
held or purported to hold that the
enforcement of a valid contractual term must be fair and reasonable,
even if no public consideration
found in the Constitution or
elsewhere, is implicated.”
[44]
In
Nyandeni Local Municipality v MEC for Local Government and
Traditional Affairs and Another
2010 (4) SA 261
(ECM), the
Eastern Cape High Court considered what is required to avoid being
bound by a contractual term, freely and voluntarily
agreed upon, and
commenced its assessment of the question in relation to an
entrenchment clause by stating at Par [2]:
“
As
the law stands at present, there are no exceptions to the application
of a Shifren principle, and there are no decided cases
not overturned
on appeal, where the Shifren principle was relaxed.”
[45]
At Par [50] in
Nyandeni
, the Court held:
“
In
terms of Shifren, it is the original contract which must be protected
and enforced, not a subsequent oral one, which effectively
ignores
the first. To enforce the second oral contract on the basis of
Pacta
Sunt Servanda
in contravention of the
original one, results in circuitous reasoning and is destructive of
the carefully constructed reasoning
in Shifren, and is offensive to
all case law since 1964 following Shifren.”
[46]
The Court in
Nyandeni
referred with approval to the
Shifren
principle:
“
A
Court has no general discretion with reference to considerations of
fairness and equity to decide whether or not to enforce contractual
rights. The exercise of such general discretion is contrary to the
law of contract and the principle of
Pacta
Sunt Servanda
, and will result in the
enforcement or otherwise of contractual rights and obligations
depending on the personal views of the Judge
on what is fair and
equitable (at 16B-E). Such general discretion will result in
contractual uncertainty and will. undermine their
Constitutional
Rights to freedom to contract and choose and agree on the terms”.
[47]
In this matter the Settlement Agreement between the parties was
elevated to a Court Order, thus
the more the ned for compliance with
the formalities agreed between the parties.
[48]
The parties did not conclude a written agreement when the Applicant’s
attorney made a proposal
to amend the Settlement Agreement on 10
March 2022 and the Respondents attorney replied on 11 March 2022,
that the Respondent is
agreeable to sign an addendum.
[49]
The proposal of 10 March 2022 was furthermore made without prejudice
of rights.
[50]
The e-mail accepting the proposed amendment on 11 March 2022 made it
clear that the Respondent’s
attorney envisaged that a written
addendum should be signed by both parties. This was clearly intended
to fulfil the formalities
agreed upon between the parties in clause 7
of the Settlement Agreement.
“
3.
To curtail possible uncertainty, our client will sign an addendum to
the settlement
agreement to delete the existing clause 5.2 of the
settlement agreement and to arrange that Mrs RS Howard (formerly
Tonks) will
make payment of the current Old Mutual Flexi Pension
policy premiums and are entitled to appoint life beneficiaries of
that policy.”
[51]
I find that the parties did not conclude an agreement to amend the
original Settlement Agreement
in that the intended amendment did not
meet the formalities the parties agreed would be applicable in clause
7 of the Settlement
Agreement.
ORDER
[52]
The following order is made:
1.
The Respondent is bound by clause 5.2 of
the Settlement Agreement which was made an Order of Court on 17
February 2005, under Case
Number 1752/2004.
2.
The Respondent is ordered to pay the
premiums from 11 March 2022 to date of this Order and to pay the
monthly premiums forthwith.
3.
The Counter Application is dismissed.
4.
The Respondent is ordered to pay the
costs of the Application and the Counter Application.
AP
BERRY, AJ
APPEARANCES:
For
the Plaintiff:
Adv.
HJ van der Merwe
Instructed
by:
Neumannn
Van Rooyen Attorneys
WELKOM
c/o
Phatshoane Henney Inc
BLOEMFONTEIN
For
the Defendant:
M
Booysen
Instructed
by:
Moller
& Pienaar Attorneys
PRETORIA
c/o
Van der Merwe & Sorour
BLOEMFONTEIN
[1]
Shifren
at 768 G-H.