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[2020] ZALMPPHC 95
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Stopforth and Others v Nedbank Limited (HCAA20/2019) [2020] ZALMPPHC 95 (18 November 2020)
IN
THE HIGH COURT OF SOUTH AFRICA
LIMPOPO
DIVISION, POLOKWANE
CASE NO: HCAA20/2019
CHARLES
JOSEPH
STOPFORTH
FIRST APPELLANT
AMANDA
STOPFORTH
SECOND APPELLANT
BUSESI
INVESTMENTS
183(PTY)LTD
THRID APPELLANT
and
NEDBANK
LIMITED
RESPONDENT
JUDGMENT
MULLER
J:
[1]
The issue in this appeal is whether compliance of the terms and
conditions of a deed settlement
has put an end to the total
indebtedness of the defendant. The appeal is with leave of the court
a quo
. I will refer to
the parties as the plaintiff and the defendants for the sake of
convenience.
[2]
The salient background facts are that all the defendants duly bound
themselves jointly
and severally as sureties and co-principal debtors
for indebtedness of the principal debtor Cape Town Fish Market
Polokwane (Pty)
(Ltd) (in liquidation) formerly known as K2012206839
(South Africa) Pty Ltd.
[1]
On 23
June 2017 the parties entered into a written deed of settlement.
[3]
The plaintiff, instituted action on 23 November 2017 against the
defendants as the
sureties and co-principal debtors, for the recovery
of the amount of R272 740.30 due and owing in terms of an overdraft
facility
and also the amount of R996 974.28 due and owing in respect
of a written term loan agreement granted to the principal debtor
CTFM.
[4]
The defendants in their plea specifically pleaded that they paid an
amount of R800
000.00 to the plaintiff in full and final settlement
of all amounts due and payable in accordance with the terms of a
written deed
of settlement entered into between the parties on 23
June 2017.
[5]
The parties, at a pre-trial conference, foreshadowed a stated case
and prepared a
document termed “Agreed Facts and Special Case”
in terms whereof they agreed on the following facts:
(a)
that overdraft facilities were granted to CTFM in
terms whereof monies were lent and advanced to it;
(b)
monies were also lent and advanced to CTFM in
terms of a “Term Loan Agreement;
(c)
the first to the third defendants entered into
written deeds of suretyship for the obligations of CTFM which has
failed to make
regular payments;
(d)
CTFM was also placed in liquidation;
(e)
the National Credit Act is not applicable;
(f)
the plaintiff and defendants entered into an
agreement termed a “deed of settlement;”
(g)
the first to third defendants made payment of
R800 000.00 on 11 September 2017 to the plaintiff which payment was
recorded and credited
to the account of CTFM.
[6]
The different points of view with regard to the nature of the deed of
settlement were
recorded as the following;
(a)
the plaintiff avers that the deed of settlement
was concluded as an interim payment and that a further arrangement
was made in respect
of the balance due and owing.
(b)
the defendant contended that the deed of
settlement constitutes a settlement in full and final settlement of
all the obligations
of the defendants towards the plaintiff.
[7]
The issues which the court
a quo
was called upon to decide on
were formulated as follows:
(a)
whether the amount of R800 000.00 was paid in
full and final settlement of all amounts due and payable by the
defendants jointly
and severally; and
(b)
whether the deed of settlement dated 23 June 2017
precluded the plaintiff from prosecuting the balance which remained
after payment
of the aforesaid amount.
[8]
The statement of “Agreed Facts and Special Case” is not a
true stated
case as envisaged by rule 33, because the parties left it
open to adduce evidence in support of their respective contentions.
The
document, nevertheless, contains a statement of the agreed facts
and what the disputed issues were which were presented for
determination
by the court. The court is, therefore not at liberty to
change the questions to be determined and have to take the respective
contentions
put forward by the parties into account when it answered
the questions of law. The deed of settlement has to be interpreted to
determine what its terms are, if it, as contented by the plaintiff,
was concluded to provide for an interim payment of R800 000.00
and
payment of the balance remaining or if, as contended by the
defendants, that the payment of R800 000.00 was made in full and
final payment of all the obligations of the defendants.
[2]
The
starting point in my view when interpreting the written deed of
settlement is to adopt the approach set out in
Natal
Joint Municipal Pension Fund v Endumeni Municipality
:
[3]
“
Interpretation
is the process of attributing meaning to the words used in a
document, be it legislation, some other statutory instrument,
or
contract, having regard to the context provided by reading the
particular provision or provisions in the light of the document
as a
whole and the circumstances attendant upon its coming into existence.
Whatever the nature of the document, consideration must
be given to
the language used in the light of the ordinary rules of grammar and
syntax; the context in which the provision appears;
the apparent
purpose to which it is directed and the material known to those
responsible for its production. Where more than one
meaning is
possible each possibility must be weighed in the light of all these
factors. The process is objective, not subjective.
A sensible meaning
is to be preferred to one that leads to insensible or unbusinesslike
results or undermines the apparent purpose
of the document. Judges
must be alert to, and guard against, the temptation to substitute
what they regard as reasonable, sensible
or businesslike for the
words actually used. To do so in regard to a statute or statutory
instrument is to cross the divide between
interpretation and
legislation; in a contractual context it is to make a contract for
the parties other than the one they in fact
made. The “inevitable
point of departure is the language of the provision itself”,
read in context and having regard
to the purpose of the provision and
the background to the preparation and production of the document.”
[4]
[9]
If parties disagree as to the meaning of the instrument regard may be
had to extrinsic
evidence as to what was intended, if there is
ambiguity or uncertainty.
[5]
The contextual setting or background is a means by which the
intention of the parties may be ascertained from the language used
in
the contract and in the light of the admissible evidence. There are
three classes of admissible evidence. There is, first of
all,
evidence of the background facts. These may be facts which are part
of the factual matrix which explains matters probably
present in the
minds of the parties when they entered into the contract. The aim is
to put the court in the “armchair of
the authors of the
document.”
[6]
Secondly, there is evidence of surrounding circumstances which will
be admissible only if evidence of the context or of the factual
matrix fails to clear up ambiguity or uncertainty. And thirdly,
evidence of what passed between the parties during the negotiations
that preceded the conclusion of the contract will be admissible only
when evidence of the surrounding circumstances does not provide
sufficient certainty.
[7]
[10]
The categorization of evidence as ‘background facts’ and
‘surrounding circumstances’,
was criticized as being
artificial in
KPMG
Charted Accountants (SA) Ltd v Securefin Ltd and Another
:
[8]
“
First,
the integration (or parol evidence) rule remains part of our law.
However, it is frequently ignored by practitioners and
seldom
enforced by trial court. If a Document was intended to provide a
complete memorial of a jural act, extrinsic evidence may
not
contradict, add to or modify its meaning (
Johnson
v Leal
1980 (3) SA 927
(A) at 943B). Second, interpretation is a matter of
law and not of fact and, accordingly, interpretation is a matter of
the court
and not for the witnesses (or, as said in common-law
jurisprudence, it is not a jury question: Hodge M Malek (ed) Phipson
on Evidence
(16 ed 2005) paras 33-64). Third, the rules about
admissibility of evidence in this reard do not depend on the nature
of the document,
whether statute, contract or patent (
Johnson
& Johnson v Kimberly-Clark of South Africa (Pty) Ltd
1985 BP 126 (A)
[1985] ZASCA 132
(at
www.saflii.org.za)
).
Fourth, to the extent that evidence may be admissible to
contextualize the document (since “context is everything”)
to establish its factual matrix or purpose or for the purposes of
identification, “one must use it as conservatively as possible”
(
Delmas
Milling Co Ltd v Du Plessis
1955 (3) SA 447
(A) at 455B-C). The time has arrived for us to accept
that there is no merit in trying to distinguish between “background
circumstances” and “surrounding circumstances”. The
distinction is artificial and, in addition, both terms are
vague and
confusing. Consequently, everything tends to be admitted. The terms
“context” or “factual matrix”
ought to
suffice. (See
Van
der Westhuizen v Arnold
2002
(6) SA 453
(SCA) ([2002]
4 All SA 331)
paras 22 and 23, and
Masstores
(Pty) Ltd v Murray & Roberts Construction (Pty) Ltd and Another
[2008] ZASCA 94
;
2008
(6) SA 654
*(SCA) para 7.”
[9]
[11]
In clause 4.2 of the deed of settlement the parties recorded:
“
4.The
parties specifically record:
4.2
That this agreement constitutes the entire agreement between the
parties and no alteration hereof, addition hereto or consensual
cancellation hereof shall be of any force or effect unless reduced to
writing and signed by the parties or their duly authorized
representatives;”
[10]
[12]
And in clause 4.3 it is provided:
“
4.3
that no representation, warranties, undertakings or promises of
whatsoever nature have been made by Nedbank its agents or servant,
other than these herein contained;”
[13]
The parties, in addition to clause 4.2 and 4.3 also agreed that the
deed of settlement may be
made an order of court. There is no doubt,
in the light of the aforegoing clauses, that the parties intended
that the written instrument
to be the sole and complete memorial of
the contract entered into between the parties. Botha JA in
National
Board (Pretoria) (Pty) Ltd and Another v Estate Swanepoel
[11]
stated:
“
When
a jural act is embodied in a single memorial, all other utterances of
the parties on the topic are legally immaterial for the
purpose of
determining what are the terms of their act.”
[14]
Difficulties do arise when evidence is adduced with regard to the
context or factual matrix to
determine where the limits of the
evidence to be admitted are and to guard against allowing
inadmissible evidence. The non-variation
clause contained in Clause
4.2 as well as clause 4.3 bolster the applicability of the
integration rule with the result that the
evidence of the prior
discussions between the parties are inadmissible.
[12]
[15]
It bears mention that interpretation of a document is a matter of law
and is thus a matter for
the court, and not for the witnesses. The
first step, despite the different views held by the parties as to the
meaning of the
deed of settlement, is to determine, not what the
parties say they intended, but what the deed of settlement means, as
expressed
by the language used in the deed. The court must,
therefore, ascertain the nature of the deed of settlement with regard
to its
substance.
[13]
[16]
I turn to the deed of settlement. It is recorded in the preamble that
the defendants acknowledged
that they are jointly and severally
indebted to the plaintiff, as sureties, in respect of a medium term
loan and a current account
which were granted to CTFM. The defendants
also acknowledged in clause 1.1 and 1.2 that they are indebted to the
plaintiff in the
amount of R546 263.17, in respect of the “Term
Loan Agreement” and the amount of R963 093.81 in respect of the
current
account, together with interest.
[17]
Clause 2.1 provides:
“
That
R800 000.00, will be paid towards the accounts mentioned in paragraph
1.1 and 1.2
supra
on
or before 30 September 2017.”
[18]
Clause 4.6 provides:
“
that
should Charles, Amanda and Bubesi duly comply with all terms and
conditions as set out in this agreement, timeously and on
due dates
thereof, then Nedbank will not pursue any action against them,
relating to the indebtedness contained herein;”
[19]
The indebtedness contained in the deed of settlement is clearly the
indebtedness of the CTFM
as the principal debtor, in respect of the
current account and the term loan agreement and the indebtedness of
the defendants arising
from the surety agreements inclusive of the
the amounts due and payable. Payment of R800 000.00 on 30 September
2017 was the only
obligation that the defendants had to comply with
in terms of the deed of settlement. The deed is silent whether the
payment of
the R800 000.00 is to be considered as part payment of the
total indebtedness of the defendants. Clause 4.6 makes it clear that
no action will be instituted by the plaintiff in relation to the
indebtedness of the defendants referred to in the deed of settlement,
which is a reference to the balance remaining if payment in the
amount of R800 000.00 is made on 30 September 2017. No other
indebtedness
of the principal debtor or the sureties are contained in
the deed of settlement. It was argued that the word “towards”
in clause 2.1 must be interpreted to indicate that an interim payment
was envisaged. The word must be interpreted against the whole
of the
agreement. The dictionary meaning of the word “towards”
is:
“
1
.
in the direction or vicinity of: towards London.
2
.
With regard to: her feelings towards me.
3
.
as a contribution or help to: money towards a new car.
4
.
Just before: towards noon.”
[14]
[20]
The purpose of the settlement was to afford the defendants the
opportunity to pay a lesser amount
than the amount due in terms of
clause 1.1 and 1.2 on or before 30 September 2017 to avoid paying the
total indebtedness due and
payable. Clause 2.1 simply indicates what
the amount is which is required to be paid by the defendants. Put
differently; clause
2.1 stipulates, with regard to the total
outstanding amounts referred to in clause 1.1 and 1.2, what the
contribution is that has
to be made by the defendants and also
stipulates the date upon which such amount has to be paid before
clause 4.6 comes into operation.
[21]
Clause 4.6 is in the nature of a
pactum
de non petendo,
which is a promise by a creditor not to sue the debtor for the
balance outstanding if an amount of R800 000.00 is paid on 30
September
2017. The legal effect of the promise is that the claim
becomes unenforceable upon payment of the amount on the due date and
provides
a debtor with an absolute defence when the creditor
instituted an action for the enforcement of its claim in conflict
with that
promise.
[15]
The
defendants are simply relieved from the obligation to pay because the
plaintiff is barred from enforcing its right to payment
of the
balance that remained unpaid.
[22]
The plaintiff instituted the present action for the recovery of the
outstanding balance arising
from the same current account and Term
Loan Agreement and the surety agreements referred to in the deed of
settlement on the basis
that the amounts claimed were due and
payable.
[16]
No reference was
made that the amount of R800 000.00 had been paid in terms of the
deed of settlement, prior to the institution
of the action. The
action to recover the outstanding balance which remained after
payment of the R800 000.00 was, therefore, instituted
against the
defendants in direct violation of the unambiguous promise made by the
plaintiff in clause 4.6.
[23]
Clause 4.4 provides:
“
that
this agreement does not constitute a novation of any of Nedbank’s
rights;”
[24]
Counsel for the plaintiff argued that it remained open to the
plaintiff to claim the balance
outstanding on those accounts by
virtue of clause 4.4. The parties stipulated in clause 3.1 that
should the amount of R800 000.00
not be paid on or before the due
date, then and in that event the full amounts (or the total
indebtedness of the defendants) referred
to in clause 1.1 and 1.2
together with interest calculated daily and compounded monthly from
15 March 2017, less any payments made,
shall immediately become due,
owing and payable.In addition, in clause 3.2 the plaintiff would be
able to obtain an order to declare
two specified properties
“specially” executable, together with costs on the scale
as between attorney and client.
[25]
Clause 4.1 provides that the plaintiff is able to prove the nature
and amount of CTFM’s
indebtedness to the plaintiff together
with the annual finance charges payable in respect thereof,may at any
time be determined
by a written certificate which will be
prima
facie
proof of the contents and that such amounts are due and payable.
Clause 4.4 makes express provision for the plaintiff to, at its
option, institute action on the original claim or on the subsequent
settlement agreement, but only if the defendant has failed
to comply
with the terms and conditions of the deed of settlement.
[17]
It will be recalled that it is common cause that the defendants in
fact duly complied with their obligation in terms of the deed
of
settlement.
[26]
It is important to note, the parties also agreed in clause 4.5 that
the agreement be made an
order of court and should the defendants not
comply with all the terms and conditions on the due dates, the
plaintiff may without
notice apply to the court to make the agreement
an order of court. It is common cause that the deed of settlement was
not made
an order of court. It would not have served any purpose to
approach the court prior to the institution of the action with a
request
to make the deed of settlement, an order of court. If the
defendants complied with the terms and conditions of the deed before
action was instituted, there would have been no need to make it an
order of court. A court would not have entertained such a request
if
the court was approached before action was instituted simply because
there was no live dispute before the court to determine.
[18]
[27]
The language used in the deed, in my considered view, is clear and
admits of no ambiguity that
the parties intended a
transactio
(compromise)
of their dispute, prior to the institution of an action. In
Gollach
& Gompers v Universal Mills & Produce CoI
[19]
Miller JA sets out the purpose of a
transactio
:
“
The
purpose of a
transactio
is not only to put an end to existing litigation but also to prevent
or avoid litigation. This very clearly stated by Domat, Civil
Law vol
1, para 1078, in a passage quoted in
Estate
Erasmus v Church
,
1927 TPD 20
at p 24, but which bears repetition:
“
A
transactio
is an agreement between two or more persons, who, for prevention or
ending a law suit, adjust their differences by mutual consent,
in the
manner which they agree on; and which every one of them prefers to
the hopes of gaining, joined with the danger of losing.””
[28]
The purpose of the settlement agreement fits neatly into the
description
supra
and was entered into with a view to averting an action being
instituted against the sureties in terms whereof the full amount due
and owing by CTFM is claimed. The deed of settlement has not affected
the right of the plaintiff to claim against the CTFM as the
principal
debtor.
[20]
[29]
The plaintiff, as the author of the deed of settlement, could without
any difficulty and with
ease included a clause in the deed that
payment of R800 000.00 is considered as part payment towards the
total indebtedness of
the defendants, if that was intended. The
construction placed on the deed of settlement by the plaintiff that
its purpose was to
make provision for part payment of the total
indebtedness cannot be accepted. The contents of the deed of
settlement considered
as a whole does not support such a contention.
No provision is made when the balance will be paid and the conditions
in terms whereof
future payments are to be made. It is improbable
that a prominent financial institution, like the plaintiff, will
simply allow
the balance outstanding to remain unresolved when the
plaintiff which bargaining from a position of strength could have
included
terms and conditions pertaining to future payment of the
outstanding balance in the deed. The plaintiff, notwithstanding such
knowledge,
included clause 4.6 in the deed of settlement, the
compliance of which was an incentive to the defendants to pay R800
000.00 on
or before the due date, which would effectively have
relieved the defendants from their obligation to pay and at the same
time
would have put paid to the right of the plaintiff to enforce any
claim based on the indebtedness of the defendants. The proposition
that the provisions of clause 4.6 of the deed of settlement are no
bar to the claim instituted for the balance outstanding, must
firmly
be rejected.
[30]
The learned Judge
a quo
erred by allowing evidence in
violation of the parol evidence rule with regard to the prior
discussions between the officials from
the plaintiff and the first
defendant when the deed of settlement was negotiated and concluded
instead of embarking on an interpretation
of the instrument.
[31]
The court was required to determine the questions put up in the
statement of “Agreed Facts
and Special Case.” Question
(a) must be answered in the negative. Payment was not made in full
and final settlement of all
the obligations of the defendants towards
the plaintiff. The consequences of the provisions of clause 4.6 which
came into effect
when the amount of R800 000.00 was paid are that the
right of the plaintiff to claim performance of the obligation to pay
the outstanding
balance from the defendants, has become
unenforceable. The result of which is that the defendants are
relieved from their obligation
to perform in terms the surety
agreements to pay the balance which is outstanding. It follows from
the aforesaid that question
(b) must be answered in the affirmative.
[32]
In the result, the appeal should be allowed.
ORDER
(1)
The appeal is upheld
with costs.
(2)
The order of the court
a quo
is set aside and is replaced with the following order:
“
The
action is dismissed with costs”
GC
MULLER
JUDGE OF THE HIGH
COURT LIMPOPO DIVISION:POLOKWANE
I
agree
EM
MAKGOBA
JUDGE PRESIDENT
OF THE HIGH COURT LIMPOPO DIVISION: POLOKWANE
I
agree
M
NAUDE
ACTING JUDGE OF
THE HIGH COURT LIMPOPO DIVISION:POLOKWANE
APPEARANCES
1.
For the Appellants
: G Diamond
2.
For the Respondent:
: WP Steyn
3.
Date of the hearing
: 13 November
2020
4.
Date judgment delivered
: 18 November 2020
[1]
Hereinafter referred to as “CTFM”.
[2]
Mtokonya
v Minister of Police
[2017]
ZACC 33
par16.
[3]
2012
(4) SA 593
(SCA) 13 para 18.
[4]
Also
Coopers
& Lybrand and Others v Bryant
[1995] ZASCA 64
;
1995 (3) SA 761
(A) 767E-768E.
[5]
Rane
Investments Trust v Commissioner South African Revenue Service
2003
(6) SA 332
(SCA) par 26.
[6]
Sun
Packing (Pty) Ltd v Vreulink
[1996] ZASCA 73
;
1996
(4) SA 176
(A) 184A-C.
[7]
Engelbrecht
and Another NNO v Senwes
Ltd
2007 (3) SA 29
(SCA) par 7.
[8]
2009
(4) SA 399 (SCA).
[9]
Par
39.
[10]
SA
Sentrale Ko-op Graanmaatskappy Bpk v Shifren
1964
(4) SA 760
(A) 767;
Brisley
v Drotsky
2002
(4) SA 1 (SCA).
[11]
1975
(3) SA 16
(A) 26C.
[12]
ABSA
Technology v Michael’s Bid a House
(212/2012)
[2013] ZASCA 10
(15 March 2013) par 7.
[13]
Tucker
v Ginsberg
1962
(2) SA 58
(W) 62F-H.
[14]
The
New Collins Concise Dictionary
(1985).
[15]
Erasmus
v Du Toit
1907
TS 891
, 893;
Estate
Logie v Priest
1912 AD 312
, 321;
Dreyer
v Sacks and Goldstein
1913 CPD 694
, 694-695;
Schneider
NO v Raitkin
1955 (1) SA 19
(W) 22A-B;
District
Bank Ltd v Hoosain and Others
1984 (4) SA 544
CPD 548H-I.
[16]
The
amounts claimed in summons
are R272 740.30 in respect of the current account and R454 398.41 in
respect of the term of agreement.
[17]
Van
Zyl v Nieman
1964 (4) SA 661
(A) 669-670;
Antonie
en Andere v Koekoe
1966
(2) SA 610
(T);
Woolfsons
Credit (Pty) Ltd (Formally Vavasseur (SA) Credit (Pty) Ltd v Holdt
1977 (3) SA 720
(N) 726G-H.
[18]
Avnet
South Africa (Pty) Ltd v Lesira Manufacturing (Pty) Ltd and Another
2019
(4) SA 541
(GJ) par 35.6.
[19]
1978
(1) SA 914
(A) 921C-D.
[20]
CTFM
is neither a party to the agreement nor is it a party to the action
which was instituted.