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[2011] ZASCA 73
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Presidency Property Investments (Pty) Ltd and Others v Patel (2011 (5) SA 432 (SCA)) [2011] ZASCA 73; 407/10 (25 May 2011)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 407/10
In the matter between:
PRESIDENCY PROPERTY
INVESTMENTS (PTY) LTD
..........................
First
Appellant
FAIRCAPE PROPERTY
DEVELOPERS CC
.......................................
Second
Appellant
VERED ESTATES (PTY)
LTD
..................................................................
Third
Appellant
and
SHIRAZ PATEL
.............................................................................................
Respondent
Neutral citation
:
Presidency Property Investments v Patel
(407/10)
[2011] ZASCA
73
(25 May 2011)
Coram:
MPATI P,
NAVSA, HEHER, BOSIELO and MAJIEDT JJA
Heard:
6 May 2011
Delivered:
25 May
2011
Updated:
Summary:
Practice
– pleading – reliance on cause of action not pleaded and
not apparent to defendant – prejudice resulting
–
plaintiff held to claim as pleaded.
Contract –
Fraudulent misrepresentation – sale off plan – statements
as to anticipated view from property to be
built no more than bona
fide opinion – absence of reliance.
____________________________________________________________________________________
ORDER
On appeal from:
Western Cape High Court (Cape Town)
(Davis J sitting as court of first instance):
1. The appeal succeeds
with costs.
2. The order of the court
a quo is set aside and replaced with the following order:
(a) The plaintiff’s
claim is dismissed with costs, save for the wasted costs of the
postponement of 5 March 2007, which costs
are to be paid by the first
and second defendants jointly and severally.
(b) The first and second
defendants’ costs are to include the qualifying expenses of the
expert witnesses Mr J van der Spuy
and Ms L Marantz.
_______________________________________________________________________
JUDGMENT
_____________________________________________________________________
HEHER JA (MPATI P, NAVSA,
BOSIELO AND MAJIEDT JJA concurring):
[1] This is an appeal,
with leave of this Court against a judgment of the Western Cape High
Court. In an action for damages arising
from an alleged fraudulent
misrepresentation Davis J ordered the two appellants jointly and
severally to pay to the respondent
the sum of R289 500 with interest
a tempore morae and costs (including the costs of a postponement on 5
March 2007, against which
order no appeal is pursued).
[2] The respondent, Dr
Patel, is a medical practitioner. The first appellant, Presidency
Property Investments (Pty) Ltd (‘Presidency’)
is a
company formed to carry out a sectional title development named ‘The
Meridian’ on erven 278 and 279 Sea Point.
The second appellant,
Faircape Property Developers CC (‘Faircape’) is a
property investment, development and holding
company. A certain Mr
Michael Vietri is the common link between them being, apparently, the
sole member of the second appellant
which holds a 50 per cent
interest in Faircape Contractors CC which in turn holds half the
shares in the first appellant. In the
court a quo there was a third
defendant, Vered Estates (Pty) Ltd (‘Vered’) a real
estate agent employed by the first
appellant to market apartments in
The Meridian. Davis J made no order against it.
[3] The respondent issued
summons against the two appellants and Vered. He alleged, as was
common cause, that he had, on 2 July
2003, concluded a written
agreement to purchase an apartment in The Meridian from Presidency at
a price of R2.95 million. At the
time of sale, he alleged, the
building was in the process of development and construction by or
under the control of Presidency
and Faircape or one of them; Vered
was their agent to market the units off plan. (It became common cause
that The Meridian was
little more than a hole on the side of the hill
at that time.)
[4] In his particulars of
claim the respondent pleaded two distinct representations. The first
was said to have been made by two
employees of Vered, Mr Frank
Meiring and Ms Sandra Singer, acting in the course and scope of their
employment and contained two
elements:
1. At a site inspection
of the premises where The Meridian was to be constructed, Singer
represented to him that the apartment would
have an unobstructed view
of the Green Point and Waterfront areas and the ocean in the
north-east, north and north-west directions
when viewed from the
apartment.
2. Singer and Meiring
presented him with a CD-ROM disk comprising marketing material in
respect of the proposed development and
which contained a graphic
description of the apartment and, in particular, the unobstructed
views from it.
[5] The respondent
further alleged that Presidency and Faircape were aware of the making
of the said representation by their agents
and that both knew at that
time that the representations were false because Presidency and
Faircape intended to construct, on a
site adjacent to The Meridian,
and to the north-east of it, another five-storey sectional title
development known as Avenue de
Calais which would cause the
obliteration or obstruction of the views from the apartment purchased
by the respondent in a north-east
direction.
[6] The second
misrepresentation was an alleged failure by all three appellants to
disclose to the respondent at the time of sale
that:
1. the building plans in
respect of Avenue de Calais had been submitted to the municipality
for approval;
2. the construction of
Avenue de Calais would commence shortly after approval of the plans
towards the end of 2003; and
3. the construction work
on that development would cause nuisance and inconvenience to owners
and residents of The Meridian apartments
‘to such an extent
that beneficial occupation of those apartments could not take place
for a period of approximately six
months’ (by which I assume
was intended, six months after the construction commenced.)
[7] The
respondent went on to allege, in para 11 of his particulars of claim,
that when Vered made the first representation and
when the appellants
failed to disclose the facts relevant to the second
misrepresentation, they intended the respondent to act
on each
representation and into enter in the agreement ‘to pay the
first defendant a purchase price which was substantially
in excess of
the value of the apartment and to take transfer thereof prior to the
completion of the construction of Avenue de Calais’.
(I assume
that the higher price was not really contemplated by the pleader as a
constituent of the representors’ intention
but rather a
consequence, since no-one at the trial considered whether such an
intention had to be or was proved.)
[8] According to the
allegations all the appellants were aware that Dr Patel was ignorant
of the falsity of the representations
concerning the unobstructed
view and of the facts bearing on the delay in affording beneficial
occupation; they knew that he was
purchasing the property for
investment purposes in order to derive rental from it upon transfer
to him; nevertheless they intentionally
made the representation and
withheld disclosure. In consequence, according to the pleaded case,
the respondent purchased the apartment
for R2.95 million but was
unable to let it or derive rental due to the construction work at
Avenue de Calais and the nuisance so
caused; moreover, he was induced
to purchase the apartment for the agreed price, whereas, if he had
known the true facts, he would
have paid only the true value of the
property with its obstructed view (alleged to be R1.95 million) less
an additional amount
of R100 000 on the basis of inability to derive
rental income from the property until the completion of Avenue de
Calais. The respondent
in consequence claimed damages in the sum of
R1.1 million.
[9] The respondent’s
claim embodied all the elements of a delict arising from fraudulent
misrepresentation both in its positive
and negative senses. The
respondent did not plead the making of either a negligent or innocent
misrepresentation.
The judgment of the
court a quo.
[10] The approach of the
learned judge is perplexing. He commenced by recording that the
action was one ‘for damages arising
out of an alleged
fraudulent misrepresentation made by the defendants’. In paras
2 and 3 he set out in detail the pleaded
basis of the respondent’s
claims and the appellants’ defence. He then proceeded to set
out the issues in dispute:
‘
[4]
Given the defendants’ plea, the following issues remained in
dispute between the parties:
4.1
The misrepresentation, as alleged by the plaintiff;
4.2
The non-disclosure, as alleged by the plaintiff;
4.3
Defendants intended plaintiff to act upon any such misrepresentations
and on non-disclosures;
4.4
Such misrepresentation and/or non-disclosure were made fraudulently
by defendants;
4.5
Plaintiff was induced by the representations and/or non-disclosures
to purchase the apartment at a price in excess of its true
market
value;
4.6
Plaintiff sustained damages in the amount of R1 100 000.00; and
4.7
Plaintiff was unable to let the apartment and derive rental income
therefrom due to the construction work on Avenue de Calais
and the
nuisance caused thereby and thereby suffered further damages in the
amount of R100 000.00.’
[11] Davis J went on to
summarise the legal basis of the action as follows:
‘
In
order to succeed, the plaintiff is required to demonstrate conduct on
the part of the defendants in the form of a misstatement,
whether by
an act or an omission, that the statement was made wrongfully,
negligently and that the act or omission caused loss
to the
plaintiff, both in the legal and the factual sense.’
[12] After the preceding
recordal of the pleadings and the elements of the claim based on
fraudulent misrepresentation and fraudulent
non-disclosure inducing a
contract, the learned judge’s identification of the legal basis
of the action as being negligent
misstatement is surprising. He
proceeded to address the ‘requirements for a successful action’
under the headings of
(a) conduct, (b) wrongfulness, (c) negligence
and (d) causation. He did not revert to the alleged fraud or explain
why he was adjudicating
a claim deriving from negligent misstatement.
[13] As to the element of
conduct, Davis J held that, on the evidence, representations were
made by Mr Meiring and Ms Singer concerning
the nature of the views
that would be enjoyed from the apartment that they were selling to Dr
Patel in The Meridian development.
The representations took the form
of statements about uninterrupted views of the Indian Ocean, a
promotional DVD depicting the
development in which views played an
important part, and a general letter dated 11 March 2003 handed by
them to Dr Patel which
the second respondent, Faircape, had
apparently prepared for previous purchasers which read as follows:
‘
We
address you at the instance of the developers of the above scheme in
which you have purchased an apartment.
This
serves to confirm that by way of a Notarial Agreement binding both
you (the owner) and the successors-in-title, the owner of
the
property fronting the development has agreed to restrict the height
of any dwelling/structure thereon to not more than 52,3
metres above
mean sea-level which is tantamount to being 1 metre below the ground
floor of the development.’
This letter was not
relied upon in the pleadings as a misrepresentation, but there were
times during the trial, in the judgment
of the court a quo and in the
submissions made to this Court by the respondent’s counsel when
that fact was ignored. More
important, the representation was true:
the developers had procured a restriction in the height of the
property immediately to
the front of The Meridian development thereby
protecting the view to the sea.
[14] All the
representations made to the respondent concerning the view were held
by the court a quo as matters influencing his
decision to purchase
the apartment as an investment and for resale. However, Davis J found
that they did not amount to actionable
representations because they
‘
were
intended to be expressions of an opinion regarding the future and,
particularly the view which could be expected from the apartment.
But
viewed from the position of a reasonable person, no guarantee could
ever be given by a seller of a property concerning a view
in
perpetuity, particularly in the Sea Point area where properties are
zoned general residential, as a result of which many residential
developments take place.’
[15] Despite that
conclusion the learned judge then continued as follows concerning the
potential liability of the first appellant:
‘
Returning
to first defendant, as Mr Patrick correctly noted, plaintiff’s
case was based on an argument that first defendant’s
representations could be classified as
dicta
et promissa
.
In
Phame
(Pty) Ltd v Paizes
1973
(3) SA 397
(A) at 418A Holmes JA said of this concept:
“
A
dictum
et promissum
is
a material statement made by the seller to the buyer during
negotiations, bearing on the quality of the
res
vendita
and
going beyond mere praise and commendation.”
At
417A Holmes JA set out the consequences for the seller who makes a
dictum et promissum
:
“
[t]he
aedilitian remedy is available by operation of law. There is no need
to invoke any warranty or terms or to aver the breach
of either.
Indeed that is one of the reasons why the aedilitian remedy is useful
to buyers.”
In
essence, what was decided in
Phame
v Paizes
was that a
purchaser who has been misled by an innocent misrepresentation of the
seller which amounts to a dictum et promissum (as
will usually be the
case), will be entitled to “restitutional damages” in the
form of a reduction of the purchase price.
See
Wille’s
Principles of South African Law
(9
th
ed) at 778; Christie
The
Law of Contract
(5
th
ed) at 300. Such an action (the
actio quanti minoris
)
as developed in
Phame
v Paizes
is one which
does not appear to be excluded in terms of clause 30. . .
For
these reasons, it cannot be said that negligence has been proved
against third defendant nor that it made
dicta et promissa
.
But, by making a
dictum et promissum
the first defendant is
liable by operation of law, . . .’
[16] With
regard to the last-mentioned finding, the learned judge did not make
clear which of the representations attributed in
the pleadings to the
third defendant he regarded as a
dictum et
promissum
of the first appellant. Nor did he
explain how, if such statements were mere opinions as to an
unpredictable future in the mouths
of the first appellant’s
agents, they metamorphosed into ‘material statements ... going
beyond mere praise and commendation’
which were to be held to
the account of the first appellant. It should be pointed out that the
evidence did not establish that
the first appellant knew that the
verbal statements had been made by the agents nor that it had
authorised them. Nor did the respondent
seek to prove that the first
appellant was aware that the agents had shown or made the DVD
available to him, although there is
no dispute that it was given to
them to be used as a marketing tool.
[17] As regards the first
appellant’s liability Davis J found that
‘
defendants
were aware of the importance of the view for a purchaser of Meridian.
They exploited this very point in their marketing
campaign. On the
basis of Mr Vietri’s evidence, first and second defendants knew
that the construction of Avenue de Calais
would commence towards the
end of 2003. Further, it was clear that the construction of Avenue de
Calais would unquestionably cause
a significant obstruction to the
view of the Meridian, especially the view from the north-east
direction.’
[18] The finding of Davis
J in respect of the second appellant was as follows:
‘
.
. . second defendant’s failure to speak was clearly negligent
in the circumstances of this case and viewed through the prism
of the
common law . . . cannot be saved by recourse to clause 30.’
Here too it should be
noted that the only act of omission alleged against the second
defendant in the pleadings relates not to the
view but to the
construction of Avenue de Calais and its consequences on beneficial
occupation of the apartments in The Meridian.
[19] With regard to the
judgment of the court a quo I agree with counsel for the appellants
that:
1. The learned judge
failed to judge the case according to the pleaded cause of fraudulent
misrepresentation.
2. His
finding that the first appellant was liable on the basis of a
dictum
et promissum
was inconsistent with his
conclusion that the pre-agreement representations did not constitute
actionable representations and were
expressions of an opinion
regarding the future.
3. If the
statements qualified as
dicta et promissa
,
clause 30 of the sale agreement probably presented a bar to the
claim. Some reference will be made below to the contractual terms,
but, for reasons which will become apparent, it will be unnecessary
to decide their effect on the rights of the parties.
4. As I have noted, the
finding that the second appellant was liable on the basis of a
fraudulent non-disclosure was not justified
by reference to the
pleaded issues. Nor, if second appellant were to be liable on the
basis of negligent non-disclosure outside
the contractual context (as
here), was any basis laid for the existence of a legal duty to
disclose. Whether that appellant, as
a party not involved in the
development, could have been under a legal duty to speak was not
ventilated at the trial as the question
was not raised. As counsel
submitted, Davis J seems to have treated the first and second
appellants on the same basis simply because
the companies were
indirectly related in having Mr Vietri as a common director and
shareholder. Aside from the fact that the letter
I have quoted
earlier concerning the height restriction on the front property
appears to have emanated from it, the second appellant
was not shown
to have played any role whatsoever in relation to the development or
construction of the property, the marketing
and sale of The Meridian,
the instructing of Vered, or the negotiating and sale to the
respondent. Neither was there evidence that
it was involved at all
with the planning, development or construction of Avenue de Calais.
Finally there were no grounds even to
suspect that in concluding the
agreement on behalf of the first appellant Vietri was wearing the hat
of the second appellant. In
the circumstances the order made against
the second appellant was unfounded.
The true cause of
action against the first appellant
[20] The
judge in the court below and counsel in this court agreed that the
pleaded case was founded in fraudulent misrepresentation.
No reliance
was placed on an innocent or negligent misrepresentation. But counsel
for the respondent argued, as he had apparently
done with profit
before Davis J, that judgment for a reduction in the purchase on the
strength of an
actio quanti minoris
was competent. He submitted that, despite clothing the
claim in delictual habiliments, it contained the requisites for the
actio
viz the making of representations warranting a reduction in the
purchase price. He cited
Phame (Pty) Ltd v
Paizes
at 407E-408G and 420E. In that case
the plaintiff pleaded and relied on an innocent misrepresentation in
a claim for a reduction
of the price in an agreement for the sale of
shares and loan accounts. The defendant excepted to the claim on the
ground the summons
lacked averments necessary to found or sustain a
cause of action. The question which the judgment answers is whether
an innocent
misrepresentation can ever entitle a buyer to a reduction
of the price under the
actio quanti minoris
and, if so, the factual foundation required for such a
claim. The Court held, inter alia, that the aedilitian remedies are
available
against a seller who makes a
dictum
et promissum
to the buyer on the faith of
which the seller enters into a contract or agrees to the price in
question and the
dictum et promissum
turns out to be unfounded. At 420D Holmes JA said:
‘
I
would add that the pleadings do not aver a term or a warranty; and
the plaintiff’s case was not presented to us on the footing
of
any such averment. In all these circumstances, taking a practical
view of the pleadings, in relation to a contract of such financial
magnitude, entered into after meticulous calculation as to expresses
and returns, I do not think it can be said that they are incapable
of
being read as laying a foundation for a material statement by the
seller going beyond mere praise [and] commendation.’
It seems clear that a
representation made fraudulently is capable of qualifying as a
dictum
et promissum
whether for the purposes of the aedilitian remedies
if the other requisites are satisfied or simply to justify a
reduction in the
price. See Grotius 3.15.8 quoted in
Phame (Pty)
Ltd v Paizes
at 411G-H, Prof A M Honore,
ibid
at 412C and
cf
Cujacius,
ibid
at 412G-H.
[21] The general
principles governing the interpretation of pleadings have often been
referred to by this Court. See particularly
Stead v Conradie en
Andere
[1994] ZASCA 147
;
1995 (2) SA 111
(A) at 122A-I and the authorities there
cited. It may well be that a putative claim may be winkled out of a
clearly pleaded cause
of action sufficient to support another barely
discernible cause. This case probably provides such an instance. Such
recognition
of the concealed cause would be at odds with the object
of pleading, viz clear and precise definition of issues, and be an
invitation
to misleading formulation of claims. As such the party
seeking to rely on it will necessarily require special circumstances
to
persuade a court to come to his assistance. In the end however he
will have no leg to stand on if recognition can only be afforded
to
the prejudice of the opposing party or at the cost of proper
investigation into the emerging issue. This again in my view is
such
a case.
[22] Counsel for the
appellants has attempted to persuade us that the exemption contained
in clause 30 of the contract nullifies
the respondent’s
reliance on a
dictum et promissum
made innocently. His
opponent’s riposte was that this court requires such reliance
to be pleaded, citing
Mutual & Federal Insurance Co Ltd v SMD
Telecommunications CC
2011 (1) SA 94
(SCA) at 103B. But the
reason it has not been pleaded is because of the respondent’s
specific reliance on fraud as an inducing
factor to the contract
which rendered such a plea irrelevant in law. There are other
provisions in the contract which at first
reading could with some
prospect of success have been relied on by the appellants but were
not, perhaps for the same reason. These
include clause 14.4,
‘
Save
as specifically set out in this Agreement the Seller has made no
representations and given no warranties in respect of the
subject
matter of this Agreement or in respect of anything relating thereto
and this sale is accordingly voetstoets.’
and clause 8.2,
‘
On
or before the Occupation Date of which notice has been given to the
Purchaser, the Seller shall request the Architect to certify
that the
Section is available for Beneficial Occupation. A Certificate signed
by the Architect that the Unit is available for Beneficial
Occupation
shall be binding on both parties . . .’
[23] Whether or not the
appellants would have placed reliance on the contractual provisions
with success is of little consequence.
What is of importance is that
because of the manner of pleading which he adopted the respondent
deprived the appellants of the
opportunity to do so. Neither party
has applied to amend its pleadings. To permit what in substance
amounts to a tacit amendment
at this stage would be unfair to the
appellants. In my view the trial court should have adjudicated the
claim at its face value
as an action in delict to recover damages for
fraudulent misrepresentation and this Court should test the appeal on
the same assumption.
Was a representation
proved and, if so, in what terms?
[24] I shall first
consider the representations concerning the view. Dr Patel was a
single witness in this regard. He was a honest
witness but he
testified on 9 September 2009, more than six years after the event.
In the circumstances it is hardly surprising
that his recall of what
was said to him by the agents was inconsistent. His evidence in chief
makes only indirect reference to
oral representations by the agents:
‘
You
told us that when you first went into the house in Ocean View Frank
and Sandra told you about a new development, the jewel in
their
crown, that would take place. Did they tell you who would be
developing the property? ---
Not
on the Sunday, but during that week I went to their office. They then
took me to Ocean View Drive from which we had the view
that I was to
get in purchasing at 4, the Meridian. The development they told me
was being done by Faircape, and they took me back
to the office to
show me the CD Rom which we saw earlier here, and I took it home and
showed it to a couple of my friends for the
next few days, and by
Friday they had come with the offer to purchase.’
.
. .
‘
Well,
from Ocean View Drive right up above the point where the Meridian was
to be built, we had panoramic views of the west side
of Sea Point on
the left, and the Waterfront and Green Point Common on the right.
What
did Frank and Sandra tell you about where the Meridian would be
built? --- The point on your map marked “A”, that
is
where the Meridian was to be built.
And
what did they tell you about the apartments in the Meridian? --- They
said it’s an excellent investment; it’s one
apartment per
floor. It’s unique and there’s a distinction made between
the development next door, which was Crystal
Springs, which is right
next door but it didn’t have one apartment per floor.
Panoramic
views
, exclusivity,
three parking bays and it was a jewel in their crown. (My emphasis.)
And
then you said you went back to their office and it was there that
they showed you the CD Rom or the DVD, and that you took that
home.
--- Yes, I took that home. I was very excited with this. I took it
home, I showed it to a couple of my friends and I expressed
a keen
interest in acquiring an apartment there. We had some telephonic
conversations during that week and ...
“
We”
being? --- Myself and Frank and myself and Sandra. And I said to them
I’m very keen. They said it was the only one
left so I must
move fast, and by the Friday afternoon, evening – 6 o’clock,
they came home – when I got home
they had been there, the
documentation was there, and I signed an offer to purchase, which was
on the 27
th
June
2003.
For
what purpose did you wish to buy the apartment? --- I bought this
apartment – it’s an investment. I was involved
in other
such deals previously where we put in the 10% deposit and before
transfer takes place, because it takes about a year for
transfer to
take place, we’d re-sell the thing and realise a huge profit on
our 10% deposit.
And
what did the agents say about that? Did you convey that to them? ---
They said for various reasons it was an excellent investment.
The
location was excellent, the
panoramic
views were superb and unparalleled
,
one apartment per floor was unique. So I was excited about it, and I
thought – and I concurred with them that, you know,
this is a
valuable piece of – an apartment.’ (My emphasis.)
[25] He was also given
the general letter earlier referred to on the letterhead of the
second appellant. Under cross-examination
he testified as follows:
‘
Well,
I thought – I like Ocean View Drive. The views were fantastic.
I didn’t know exactly about the merits of the development
itself, but I liked the views, and then he said when we get to the
office – he also told me at that point that there were
height
restrictions, that nobody will be able to build up in front of you,
that the view you get here is the view you’re
going to have. We
went back to the office, we looked at the CD Rom, I took the CD Rom
home and a few days later we signed the offer
to purchase.’
.
. .
’
Well,
my day trip to the site on Ocean View Drive, we had this panoramic
view, the said the Firmount building – the Meridian
– was
coming on here, and
expressly
told me that no further developments will be taking place in front of
you
.
When we went back to the office
they
showed me this generic letter confirming what they had told me
at
the – on Ocean View Drive.’ (My emphasis.)
As to the signing of the
offer to purchase, Dr Patel said:
‘
They
were sitting at my dining room table. There’s always a bit of
apprehension when you buy something that expensive, and
whether it
was Sandra or whether it was Frank, they said, don’t worry,
Doctor – this is a good investment. I said,
look, I’m
happy with it, I’m happy with the CD Rom. I’ve shown it
to a couple of my friends. Everybody likes
it, and I’m glad to
go ahead. I signed the Deed of Sale that evening.
Now,
did you read the Deed of Sale? --- More or less.
Are
you aware what it says about representations and so forth, relating
to such things as a view? --- No.’
Under further
cross-examination the appellant gave this more detailed account of
his visit to the proposed site of The Meridian
with the agents:
‘
No,
sir. It was specifically mentioned that you will be standing, like we
are standing here on Ocean View Drive, with the height
restriction of
the agreement in front, with the person in front of the Meridian,
you’ll
have sweeping views, and sweeping views from the Waterfront on the
eastern side right across to the western side of
this thing
,
whether you’re in your living room or your balcony, you’ll
have these views. From your bedroom you’ll be able
to see the
Waterfront, or the east sun will be coming in that side from the
Waterfront.’ (My emphasis.)
Finally he testified as
follows:
‘
I
felt, the price I was paying, I was paying close onto R3 Million, and
I needed to know what was happening in the area, and –
or
especially because the agents had told me we’re going to have
unobstructed views, which they admitted in a subsequent
letter to
me.’
The letter to which Dr
Patel referred was one sent by the appellants’ attorneys on 19
February 2005 which contained the following
statements:
‘
It
is admitted that in and during October 2002
1
our
clients’ agents did inform your client that at the time of
erecting the development known as The Meridian
they
anticipated that there would be unobstructed views of Green Point
,
The Waterfront areas and the ocean to the north-east.
Our
clients emphatically deny that at that time they were aware of the
Avenue de Calais development nor were they aware that such
a
development would obstruct your client’s views. In the
circumstances our client denies that there were any
misrepresentations
and/or non-disclosures made and any action
instituted will be defended.’ (My emphasis.)
[26] Mr Meiring was the
only witness called on behalf of the appellants on this issue (Ms
Singer being unavailable). He confirmed
the correctness of the
contents of the letter of 19 February 2005 and that confirmation was
not challenged in cross-examination.
He did not dispute the truth of
the respondent’s various descriptions of what had been said and
done prior to the signing
of the offer to purchase.
[27] The evidence thus
established that the agents
(a) told Dr Patel that
they anticipated that the views from the proposed apartment would be
‘unobstructed’ (and perhaps,
‘panoramic’ and
‘sweeping’).
(b) demonstrated the
breadth and panoramic scope of such views on site;
(c) handed to him a
CD-ROM which provided a conceptual vision of the developed site that
emphasized the range and attractiveness
of the view.
Did any or all of this
constitute an actionable representation?
[28] In order to
constitute such a representation the statement or assertion must
relate to an ascertainable fact as distinct from
a mere expression of
opinion: see
Jones v Mazza and Another
1973 (1) SA 570
(R) at
572B-573E, although a dishonest opinion as to a future event may be
sufficient to found an action for fraudulent misrepresentation
in so
far as it falsely reflects the state of mind of the representor:
Van
Heerden and Another v Smith
1956 (3) SA 273
(O) at 275-6. As in
many other cases what is decisive is a holistic view of the terms of
the representation and the context in
which it was made.
[29] The evidence
discloses that
(i) both the oral and
graphic representations were made in the course of a sales pitch by
the agents and, not, it would seem, in
answer to direct questions by
the respondent;
(ii) the subject matter
was the future qualities of a fourth floor apartment in an as yet
unerected building, qualities which depended
not on the design or
location of the building so much as upon the development of other
properties in the vicinity of the building
over which neither the
agents nor the seller exercised control;
the representation was
not limited as to time;
(iv) the agents probably
expressed themselves in terms which conveyed no more than their
opinion of the future state of the view.
All these matters were as
apparent to the respondent as they were to the agents. Although the
agents made an express representation
concerning the height
restriction over ‘the property fronting the development’,
the respondent was not misled by this
into believing that it extended
to the property on which Avenue de Calais was eventually erected; his
grievance was the agents’
supposed non-disclosure which he
expressed as follows:
‘
I
took it that they would have told me, knowing about the one at Avenue
de Calais, because they expressly tried to encourage me
to buy this
property based on the fact that nobody will be building in front of
you.’
[30] While the fact that
a person has relied upon a statement is not decisive on the question
of whether the representation in the
statement is actionable,
evidence that he or she did not rely on it is a strong indication
against a finding that it was intended
to be taken seriously. (This
is of course distinct from the requirement that a representation, in
order to ground an action, must
have been relied upon by the
representee, ie induced him or her to act upon it or to withhold
action.) In the present case Dr Patel
was asked by counsel, ‘But
obviously no developer can guarantee a view – you accept that?’
He replied:
‘
I
accept that. I accept that no – I even thought to myself when
the transfer took place and I went to the Department, I said,
tough
luck, these guys are building in front of us. Its only when I found
out that Faircape were the same developers, that’s
when I said,
you know what, this is not right. And that’s when I decided to
go to Council to establish did they have intent
to build this before
they sold it to me, or did they just decide subsequently to buy and
sell it to me. So that is my whole point
of trying to establish my
case, you know – the same developer misleading me.’
So Dr Patel did not
regard either the agents’ statement or the visual
representation of the CD-ROM as grounds for complaint
– they
were what he expected in the circumstances. What irked him was the
failure of the seller to inform him before transfer
that at the time
the contract was concluded the same developers were intending to
erect a building that would obstruct the view
from his Meridian
apartment.
[31]
Taking all the considerations I have referred to in the preceding
paragraph into account I am left in no doubt that the agents
were not
party to an actionable misrepresentation, as indeed the learned judge
a quo initially concluded. No more, of course, could
the first
appellant be held to a ‘representation’ by its agents
which was not actionable.
2
[32] The case pleaded
against Presidency in relation to the view was never that it
had
fraudulently withheld disclosure that it intended to erect, or
contemplated the erection of, a building on the Calais Road site
which it foresaw might obstruct the view from The Meridian, and that
it was under a duty to disclose that fact to the respondent
as a
purchaser or prospective purchaser of an apartment in The Meridian.
The only relevance of the non-disclosure of its awareness
of the
development of Avenue de Calais was in the context of the claim for
damages arising out of the alleged interference with
or deprivation
of beneficial occupation.
[33] Although not
strictly necessary, I will deal briefly with the claim for damages
flowing from the alleged non-disclosure. It
is sufficient to draw
attention to the following shortcomings – in the respondent’s
case – in the evidence:
1. The first appellant
(in the person of Vietri) was not shown to have been aware that:
(i) the respondent
purchased the apartment for investment purposes or letting; or that
(ii) the construction of
Avenue de Calais would have any adverse effects on ownership or
occupation of the Meridian apartments;
(iii) and, in
consequence, was never proved to have been under a duty of disclosure
to the respondent at the conclusion of the sale
that the Calais Road
development was in the offing.
2. There was no evidence
that the respondent was prevented from letting his apartment, after
the completion of The Meridian, by
the construction of Avenue de
Calais or that he received a reduced rental in consequence of that
activity.
[34] The learned judge
erred in awarding the respondent a reduction in the purchase price on
the basis of the
actio quanti minoris
. If he had tried the
case as pleaded, viz as one for damages for fraudulent
misrepresentation he must necessarily have dismissed
the action
against both appellants for the reasons I have given.
[35] In the result the
following order is made:
(a) The appeal succeeds
with costs.
(b) The order of the
court a quo is set aside and replaced with the following order:
1. The plaintiff’s
claim is dismissed with costs, save for the wasted costs of the
postponement of 5 March 2007, which costs
are to be paid by the first
and second defendants jointly and severally.
2. The first and second
defendants’ costs are to include the qualifying expenses of the
expert witnesses Mr J van der Spuy
and Ms L Marantz.
____________________
J A Heher
Judge of Appeal
APPEARANCES
APPELLANTS: S P Rosenberg
SC (with him P A Corbett)
Smith Tabata Buchanan
Boyes, Cape Town
E G Cooper & Majiedt
Inc, Bloemfontein
RESPONDENT: R Patrick
Cliffe Dekker Hofmeyr,
Cape Town
McIntyre & Van der
Post, Bloemfontein
1
At
the trial it was common cause that this date was a mistake and that
the correct date should have been June 2003.
2
This
being the conclusion, it follows that the respondent would likewise
have been bound to fail in his reliance on a
dictum et promissum:
Phame (Pty) Ltd v Paizes
at 418A.