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[2019] ZAECBHC 16
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Coppermoon Trading 13 (Pty) Ltd v Government of the Province of the Eastern Cape and Another (1949/05) [2019] ZAECBHC 16; 2020 (3) SA 391 (ECB) (18 June 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE LOCAL DIVISION, BHISHO
CASE
NO: 1949/05
REPORTABLE
In
the matter between:
COPPERMOON
TRADING 13 (PTY) LTD
APPLICANT/PLAINTIFF
and
THE GOVERNMENT OF THE
1
ST
RESPONDENT/1
ST
DEFENDANT
PROVINCE OF THE
EASTERN
CAPE
THE MEMBER OF THE
2
ND
RESPONDENT/2
ND
DEFENDANT
EXECUTIVE COUNCIL OF
THE
GOVERNMENT OF THE
PROVINCE
OF THE EASTERN CAPE
FOR THE
DEPARTMENT OF ROADS
AND
PUBLIC WORKS
JUDGMENT
D
VAN ZYL DJP:
[1]
This is an application wherein the defendants in an action sought to
introduce a further
defence after the close of pleadings. The
plaintiff in the action is Coppermoon Trading 13 (Pty) Ltd. The
first defendant
is the Government of Province Eastern Cape,
represented by the Premier in his official capacity. The second
defendant is
the Member of the Executive Council for the Department
of Roads and Public Works of the Government of the Province of the
Eastern
Cape. For convenience the parties will be
referred to as they are in the action.
[2]
The plaintiff’s action is founded on a written agreement of
sale, in terms of
which the defendants sold an immovable property to
the plaintiff during March 2004. The defendants repudiated the
sale agreement
whereupon the plaintiff instituted an action claiming
specific performance, alternatively damages. The
defendants defended
the action.
[3]
The defendants are the applicants in the present proceedings (“
the
application”
). In the notice of
motion, and in the papers filed in support of the present proceedings
(the “application”),
the defendants asked for the
following relief:
3.1
that plaintiff be held to have surrendered and abandoned its right to
continue with the
action;
3.2
declaring that the plaintiff lost its right to proceed with the
action against the defendants,
and that it is barred from doing so;
and
3.3
in the alternative, that the application be referred for the hearing
of oral evidence on
the question “
whether
the plaintiff’s action and its rights flowing from the deed of
sale had been abandoned.”
[4]
The background to the application is that, after the close of the
pleadings, and before
the trial, the plaintiff and the defendants
concluded, what is titled, a “
deed of settlement”
.
(Also referred to as “
the settlement agreement”
)
In the preamble of the deed of settlement the parties declared to
have reached an agreement regarding a settlement of their dispute,
and that they “
now wish to record the settlement agreement
and to have the terms thereof made an order of Court.
”
The terms of the settlement agreement were recorded to be the
following:
“
1.
The first Defendant shall lease to the Plaintiff the portion of erf
312 Bhisho and the buildings
situated thereon, known as the Amatola
Sun Hotel, Bhisho (hereinafter referred to as the “property”)
for a period of
49 years, subject to an option in favour of the
Plaintiff to renew the lease agreement for a further period of not
less than twenty
years.
2.
At the expiration of the initial period of 49 years, the parties
shall negotiate
a reasonable market related rental; the full terms
whereof shall be incorporated in the lease agreement.
3.
The amount of R5 million originally tendered by the Plaintiff for the
purchase
of erf 312 Bhisho shall be allocated in the following
manner:
3.1
R3 million in respect of rental for the period of 49 years, and
3.2
R2 million as purchase price for the furniture and fittings contained
in the Amatola Sun
Hotel complex.
4.
The amounts referred to in 3.1 and 3.2 above shall be payable on the
date of
signature of the lease agreement by the parties.
5.
The Plaintiff shall be liable for all rates, taxes and municipal
service fees
for the property (as described in paragraph 1 above)
during the currency of the lease.
6.
The Plaintiff shall at its own costs, refurbish the Amatola Sun Hotel
in order
that it be upgraded to a four star status.
7.
The Plaintiff attorneys shall be tasked with the drawing of the lease
agreement
necessary to give effect to the intention of the parties.
8.
Upon signature of the finalised settlement agreement between the
Plaintiff and
the First and Second Defendant’s, the Plaintiff
shall withdraw its action and each party shall pay its own legal
costs.”
[5]
The parties thereafter proceeded to negotiate the terms of a notarial
deed of lease.
Various drafts were exchanged. Several
meetings were held with officials of the defendants to discuss, and
attempt to settle
the various amendments to the proposed lease
agreements. However, in March 2009 when the negotiations were
at an advanced
stage, the defendants repudiated the settlement
agreement when it informed the plaintiff that they were “
not
in a position to proceed with the existing terms of the settlement
agreement and the draft lease agreement”.
[6]
The plaintiff then launched an application (the “
settlement
application”
) wherein it sought to have the terms of the
deed of settlement made an order of court, as the parties envisaged
in the preamble
thereto. It asked for the following relief:
“
1.
That the Deed of Settlement signed by the Applicant on 19 October
2007 and signed by the
First and Second Respondents on 29 October
2007 and 23 October 2007 respectively, be made an Order of Court.
2.
That the terms of the court order be embodied in a written lease
agreement to
be concluded by the parties within 14 days of the date
of this order”.
[7]
The defendants opposed the matter and raised a number of legal
defences in response.
Prompted by the employment of new
counsel, the defendants later filed a further affidavit wherein it
was contended that the terms
of the settlement agreement were too
vague to be enforceable, and what the parties contemplated, with
specific reference to clause
8 thereof, was that a further, and a
more comprehensive agreement still had to be negotiated.
[8]
The settlement application was heard by Eksteen J. At the
hearing the defendants
elected not to persist in any of the
substantive defences set out in their answering affidavit. They
instead confined the
issue to the one raised in the further
affidavit. In dismissing the settlement application Eksteen J
held that the settlement
agreement was not a final agreement, and
that it consequently could not be made an order of court. In
arriving at this conclusion
the learned Judge found that the
“
finalised settlement agreement”
envisaged in clause 8 of the deed of settlement, was the agreement of
lease “
which it was envisaged would
contain the intention of the parties including but not limited to,
the ultimate agreement relating
to the terms of the option period and
the full terms relating to the manner of determination of the rental
payable during the option
period”
.
[9]
The learned Judge further found that in clause 8 of the dead of
settlement, the parties
intended that the plaintiff’s right of
action arising from the sale agreement would remain alive, and “
may
still be prosecuted until and unless a subsequent settlement
agreement”
was concluded in writing.
The plaintiff’s obligation to withdraw the action would
accordingly only arise upon the conclusion
of the final settlement
agreement. It was not in dispute that the plaintiff did not
withdraw the action. Eksteen J
found that the conduct of the
plaintiff, in staying the action after the signing of the deed of
settlement pending the final settlement
of the terms of the final
settlement agreement, was consistent with the intention of the
parties, as expressed in the deed of settlement,
that a binding
compromise will only be reached upon the signing of a further
agreement. The deed of settlement was consequently
found to be
nothing more than an agreement to agree (a
pactum
de contrahendo
) that was, in the absence of a
deadlock breaking mechanism, not capable of enforcement.
[10]
The plaintiff applied for leave to appeal. Consistent with its
argument before Eksteen
J, the plaintiff contended in its
application, that upon a proper construction thereof, the deed of
settlement constituted a final
agreement of compromise. The
application for leave to appeal was dismissed.
[11]
The plaintiff thereafter petitioned the Supreme Court of Appeal for
special leave to appeal.
That application was similarly
dismissed.
[12]
In February 2016 the defendants’ attorney wrote to the
plaintiff’s attorneys.
The letter served to notify the
plaintiff that one of the grounds of appeal in the plaintiff’s
Notice of Application to Appeal
constituted an expression of an
intention to withdraw and abandon the action, that the plaintiff’s
decision was accepted,
and that the action was considered as having
been finalised. The quoted ground of the appeal read:
“
1.
The learned Judge erred in the following respects:
…
1.4
In failing to find that in causing the action to be stayed and in
bearing the costs of the
litigation the Applicant had withdrawn and
abandoned the action.”
The
plaintiff’s attorney responded by denying that the action was
withdrawn.
[13]
The letter of February 2016 was clearly motivated by the fact that
following the conclusion of
the proceedings in the settlement
agreement, the plaintiff took no steps to withdraw the action.
In the absence of the parties
having concluded, what Eksteen J
referred to as the finalised settlement agreement, there was no
obligation on the plaintiff to
do so (clause 8 of the settlement
agreement). In December 2016, the defendants then launched the
present application.
The relief claimed therein was premised on
the contention that the plaintiff has made an election to waive or to
abandon the action.
The defendants averred that such an
election or waiver is found in the following conduct of the
plaintiff: (a) The
plaintiff’s election to pursue a
remedy inconsistent with an action for an order for specific
performance based on the agreement
of sale, when it applied for
relief based on the deed of settlement; (b) to thereafter seek
leave to appeal the decision
to dismiss the settlement application;
(c) the plaintiff’s statements in the settlement
application that from
the signing of the deed of settlement, it had
not taken any further steps to prosecute the action; (d) by
raising
as a ground of appeal, the failure of Eksteen J to find
that by staying the action, and agreeing to bear the costs thereof,
the
plaintiff had withdrawn and abandoned the action; and (e),
by failing to take any further steps in the action subsequent to
the
refusal of the applications for leave to appeal.
[14]
The plaintiff raised two preliminary objections to the application.
I intend to only deal
with the first objection because it is in my
view dispositive of the matter. The essence of the objection is
that the procedure
adopted by the defendants for raising the issue
for determination is not sanctioned by the Rules of Court, and that
it amounts
to an abuse of the process of this Court.
[15]
The issue raised in the application is stated to be whether the
plaintiff is barred from proceeding
with the action by reason of it
having made an election to abandon or to waive its right to do so.
The defence of election
or waiver must be pertinently raised and
pleaded (
Collen v Rietfontein Engineering
Works
1948 (1) SA 413
(A) at 436 and
Montesse
Township & Investment Corporation (Pty) Ltd and Another v Gouws,
NO and Another
1965 (4) SA 373
(A) at 381
B-D). By raising this issue in the manner in which they did,
the defendants have clearly circumvented the Rules
of Court.
What they seek by way of application proceedings, is the introduction
of a special plea in bar with the aim of
quashing the plaintiff’s
action. That this is so, was acknowledged by the defendants in
their replying affidavit.
[16]
In action proceedings, a special plea is raised in a defendant’s
plea filed in terms of
Court Rule 22. In the present matter the
defence raised by the application arose after the defendants had
already filed their
plea and the pleadings were closed. That in
itself did not prevent the defendants from raising it. The
appropriate
procedure was however to seek an amendment of their plea
in terms of Court Rule 28. A defendant will ordinarily be
allowed
to amend his plea where a new ground for defence comes to the
defendant’s knowledge for the first time after he has filed
his
plea, provided the application is
bona fide
and is not prejudicial to the plaintiff. (See
Flemmer
v Ainsworth
1910 TPD 81
;
Combrinck
v Strasburger
1914 CPD 15
;
Frenkel,
Wise and Co Ltd v Cuthbert
1947 (4) SA 715
(C), and
Erasmus Superior Court Practice
2
nd
ed at page
D-1-336.)
[17]
In
Minister van die SA Polisie v Kraatz
1973 (3) SA 490
(A) (at 512 E – H), and
Gollach
and Gomperts (1967) (Pty) Ltd v Universal Mills & Produce Co
(Pty)
Ltd
1978 (1) SA 914
(A) (at 928 D), it was stressed that a litigant that
seeks to add a new ground of relief does not claim an amendment as a
matter
of right, but rather seeks and indulgence. It will
require the litigant to prove that he did not delay the application
to
amend the pleadings after becoming aware of the evidentiary
material on which he proposes to rely. He must further explain
the reason for the amendment, and that it
prima
facie
raises a triable issue (Erasmus,
op
cit
at page D1 - 338).
[18]
The application also circumvents Court Rule 33 (4). This rule
entitles any party to a pending
action to seek on application, a
separation of any question of law or fact which may arise in the
action. The aim of Rule
33(4) is to facilitate the convenient
and expeditious disposal of litigation (
Denel (Edms) Bpk v Vorster
2004 (4) SA 481
(SCA) at para [3]. Whilst it is incumbent upon
the party opposing a Rule 33(4) application to satisfy the court that
the
application should not be granted, (
African Bank v Soodhoo
2008 (6) SA 46
(D) at 51 E – H), it does not absolve the party
seeking a separation of issues to place sufficient information before
the
court to enable it to make an informed decision.
[19]
In
Minister of Agriculature v Tongaat Group
Ltd
1976 (2) SA 357
(D) at 362 H, it was held
that it is ordinarily desirable, in the interest of expedition and
finality of litigation, to have one
hearing only at which all issues
are canvassed so that the court at the conclusion of the case may
dispose of the entire matter.
(See also
African
Bank v Soodhoo supra
at 51 C.) In
Denel
(Edms) Bpk v Vorster supra
at para [3], it
was said that: “
And even where the
issues are discrete, the expeditious disposal of the litigation is
often best served by ventilating all the issues
at one hearing,
particularly where there is more than one issue that might be readily
dispositive of the matter. It is only
after careful thought has
been given to the anticipated course of litigation as a whole that it
will be possible properly to determine
whether it is convenient to
try an issue separately.”
This
caution was again sounded by the same court in
Transalloys
v Mineral-Loy
[2017] ZASCA 95
at para
[6]
.
[20]
The relief contemplated in Rule 33(4) is therefore not a mere
formality, and the court must be
given sufficient information to
place it in a position to determine convenience (
Internatio
(Pty) Ltd v Lovemore Brothers Transport CC
2000 (2) SA 408
(SECLD) at 411 B – D). Although the court
has a wide discretion under sub-rule (4), it has a duty to “
ensure
at all times”
that “
there
is a realistic prospect that the separation will result in the
curtailment and expeditious disposal of litigation”
(
Privest
Employee Solutions v Vital Distribution Solutions
2005 (5) SA 276
(SCA) at para [27].) The court ought not to
grant an application for a separate hearing, “
unless
there appears to it to be a reasonable degree of likelihood that the
alleged advantages would in fact result”
(
Minister
of Agriculture v Tongaat Group Ltd supra
at
364H). Once satisfied that it is proper to make an order of
separation, it is the duty of the Court to ensure that the
issues to
be tried are clearly circumscribed in its order. (Denel (
EDMS)
Bpk v Vorster supra at 485 C – D
).
[21]
The question raised by the preliminary objection to the proceedings
is whether the application
should be entertained despite the failure
of the defendants to comply with the Rules of Court. This Court
has the inherent
power to regulate its own proceedings so as to
enable it to function effectively, and in accordance with justice and
good sense.
In appropriate circumstances a departure from the
Rules of Court may be permissible. (
Neal v Neal
1959 (1)
SA 828
(N) at 832 F – 833 C). The exercise of the court’s
inherent power is a matter of discretion, and will be used
only in
appropriate cases. In
Moulded Components and Rotomoulding
South Africa (Pty) Ltd v Coucourakis and Another
1979 (2) SA 457
(a) at 462 F to 463 B the Court said the following in this regard:
“
I would sound a
word of caution generally in regard to the exercise of the Court’s
inherent power to regulate procedure.
Obviously, I think, such
inherent power will not be exercised as a matter of course. The
Rules are there to regulate the
practice and procedure of the Court
in general terms and strong grounds would have to be advanced, in my
view to persuade the Court
to act outside the powers provided for
specifically in the Rules. Its inherent power in other words,
is something that will
be exercised sparingly. As has been said
in the cases quoted earlier, I think that the Court will exercise an
inherent jurisdiction
whenever justice required that it should do
so. I shall not attempt a definition of the concept of justice
in this context.
I shall simply say that, as I see the
position, the Court will only come to the assistance of an applicant
outside the provisions
of the Rules when the Court can be satisfied
that justice cannot be properly done unless relief is granted to the
applicant.”
[22]
In the context of the present matter the exercise of a discretion to
depart from the aforementioned
Rules of Court is in my view dependant
on whether it can be said that the issue raised have been properly
defined and ventilated
without the need for pleadings, and can
conveniently be determined simply on the papers without there being
any prejudice to the
plaintiff. The defendants made the
submission in argument that there is no real dispute of fact, and
that the application
can be decided on the papers. I am not
convinced that this submission is correct. In fact, the
submission was made
rather tentatively as demonstrated by the
alternative relief claimed by the defendant’s in their notice
of motion, namely
that the matter should be referred for the hearing
of oral evidence.
[23]
The law relating to the renunciation of rights is characterised by
its inconsistent and imprecise
use of the terminology, and the debate
whether waiver is a unilateral or bilateral act. (See Bradfield
Christie’s Law
of Contract in South Africa at page 508 and
further, and Kerr The Principles of the Law of Contract 6
th
ed at page 469 and further). Election and waiver have been
described as being species of the same general legal concept that
involves the abandonment of a right. (
Bekazaku
Properties (Pty) Ltd v Pam Golding Properties
1996 (2) SA 537
(C) at 542 F;
Moyce v
Estate Taylor
1948 (3) SA 822
(A) at 829;
Montesse Township & Investment Corporation
v Gouws and Another supra
at 381 B. An
election has also been said to “
generally
involves a waiver: one right is waived by choosing to exercise
another right which is inconsistent with the former.
Indeed
election and waiver have been equated as being species of the same
general legal concept.” (
Feinstein
v Niggli and Another
1981 (2) SA 684
(A) at
698 E – F. See also
North Vaal
Mineral Co Ltd v Lovasz
1961 (3) SA 604
(T)
at 611F-H). Both concepts may be relevant in more than one
context. (See by way of example
City of
Cape Town v Mquqi and Another
2006 (4) SA 355
(C) and
Administrator, Orange Free State and
Others v Mokopanele and Another
[1990] ZASCA 69
;
(1990 (3) SA
780
(A)). They also overlap with related concepts such as
abandonment and estoppel, and are all potentially relevant in the
context
of explaining jurisprudentially why it is that a litigant is
barred from entertaining a right, or a privilege or power, an
interest
or a benefit.
[24]
Election and waiver are legal acts and its requirements may be stated
as follows: Waiver
is the intentional and unequivocal
renunciation or relinquishment of a known right (Mutual Life
Insurance Co of New York v Ingle
1910 TPD 540
of 550 and Botha (now
Griesel) and Another v Finanscredit (Pty) Ltd
1989 (3) SA 773
(A) at
792B-D). Election postulates a choice between two inconsistent
rights each of which have different legal consequences.
(Total
South Africa (Pty) Ltd v Bekker NO 1992 (1) SA 617 (A) at 627B).
Common to both waiver and election is that
it is a matter of the
intention of the party said to have made the election, or waived the
right in question. The intention
is determined objectively,
that is, it is adjudged by its outward manifestation in the form of
words, spoken or written, or in
the form of conduct or a combination
of words and conduct (
The Road Accident Fund v
Mothupi
2000 (4) SA 38
(SCA) at para (15) and
Absa Bank Ltd v The Master and Others NNO
1998 (4) SA 15
(N) at 28 G – J).
[25]
If a party does not expressly waive a right, and waiver is to be
inferred, the conduct relied
upon must be such as are more
consistent, on a reasonable view thereof, with an intention to waive
the right in question.
The outward manifestations of intention
must accordingly be adjudged from the perspective of a reasonable
person in the position
of the other party. (
Palmer
v Poulter
1983 (4) SA
11
(T) at page 21A and
Mutlilateral Motor
Vehicle
Accidents Fund
v Meyerowitz
1995 (1) SA 23
(C) at 27D –
E). This does not mean that other factors such as the
subjective motivation of a party for acting
in the way in which he
did, are irrelevant. (
Thomas v Henry and
Another
1985 (3) SA 889
(A) at 897D).
In
The Road Accident Fund v Mothupi supra
the court said that: “
what the one
party now says he then believed may still be relevant, although not
necessary conclusive.” (
at para [17]).
[26]
Further, being a matter of intention, election or waiver can only
occur when the party concerned
had full knowledge of the legal right
which he is said to have waived, and of the facts under which, or
from which, the right arose.
(
Ex parte
Sussens
1941 TPD 15
at 20;
The
Road Accident Fund v Mothupi supra
at para
[17]; and
Borstlap v Spagenberg
1974
(3) SA 695
(A) at 704). As stated by Steyn CJ in
Hepner
v Roodepoort-Maraisburg Town Council
1962 (4)
772 (A) at 778H-779A:
“
In the ordinary
case of waiver, the
facta probanda
would be full knowledge of the rights in question and express waiver
or waiver by plainly inconsistent conduct, i.e. knowledge
of a
particular kind and surrender of the right in a particular manner.”
In
the case of an election, in the sense of a choice between rights, it
means that the person making the election must similarly
have
knowledge of both the facts giving rise to the election, and of the
rights (
Feinstein v Niggli and Another supra
698A – 699B and
Pretorius
v Greyling
1947 (1) SA 171
(W) at 177).
The required knowledge as an ingredient of the required intention
must necessarily also include knowledge of
the existence of a choice
between, what are alternative and inconsistent rights.
[27]
The burden of proof is on the party who alleges that an election has
been made, or that a right
has been a waived. By reason of the
fact that no-one is presumed to waive his rights, clear proof is
required of an intention
to do so. (
Ellis
and Others v Laubscher
1956 (4) SA 692
(A) at
902E). In
Laws v Rutherford
1924 AD 261
(at 263) the position was stated as follows: “
The
onus is strictly on the appellant. He must show that the
respondent, with full knowledge of her right, decided to abandon
it,
whether expressly or by conduct plainly inconsistent with an
intention to enforce it.”
(Also
Montesse Township & Investments
Corporation v Gouws & Another supra
at
381B;
Borstlap v Spangeberg supra
at 704;
Feinstein v Niggli and Another
supra
at 698H, and
The
Road Accident Fund v Mothupi supra
at para
[19].) The conduct from which waiver is to be inferred, must be
unequivocal, “
that is to say, consistent
with no other hypotheses”
(
The
Road Accident Fund v Mothupi supra
at para
[19]).)
[28]
In the application the plaintiff acknowledged in answer, that it
sought to enforce the deed of
settlement when the defendants
repudiated the terms thereof, rather than to prosecute the action.
That decision, according
to the plaintiff, was founded on the view it
took of the validity of the settlement agreement and the legal
consequences flowing
therefrom. It was premised on the belief
that the deed of settlement was intended to be a compromise, and that
the only avenue
available to it was to seek the enforcement of the
terms thereof. If the deed of settlement was a compromise of
the dispute
in the action, as the plaintiff believed, it is correct
that its remedy was to institute proceedings upon the contract of
compromise,
unless it expressly or impliedly reserved the right to
proceed with the action in the event of the compromise not being
carried
out. It is trite that the effect of the compromise in
law is equivalent to that of a judgment, and is an absolute bar to an
action on the compromised cause of action. It renders the
matter
res iudicata
.
(
Van Zyl v Nieman
1964
(4) SA 661
(A) at 669H – 670A).
[29]
Eksteen J in the settlement application found that the view which the
plaintiff took of the deed
of settlement was incorrect. He
found that, whilst the parties thereto were in agreement that the
settlement pursued in the
action proceedings were intended to
constitute a compromise, the parties intended a binding compromise
only to be concluded upon
signature of a further agreement.
According to the plaintiff, its election to pursue a remedy based on
the deed of settlement,
first in the settlement application, and
subsequently on appeal, was based on its continued misunderstanding
of the true nature
of the settlement agreement, and that it
consequently acted in ignorance of the law. In reply the
defendants denied that
plaintiff made a mistake of law,
alternatively, that if there was such a mistake, it could not in law
avail the plaintiff.
[30]
In the exercise of the court’s discretion to allow a departure
from the Rules of Court,
the point of departure must be the question
whether the issue raised can conveniently be decided on a purely
legal basis that may
decisively dispose of the matter.
The defendants’ case was that the plaintiff renounced its right
to enforce
the terms of the deed of sale. They interchangeably
used the terms “
election”,
“
waiver”,
“
abandon”
and
“
surrender”
in
their papers, in the context of the contention that the plaintiff
relinquished its right of action arising from the sale of the
immovable property when it pursued the right of the action underlying
the deed of settlement. The defendants contention was
that
“
when the alleged breach of the
Deed
of Settlement
occurred, plaintiff did
not fall back on the summons and action based on the
Deed
of Sale
, but
elected
to launch and proceed with an application for specific performance of
the
Deed of Settlement
and the lease agreement, and to have it incorporated in a court
order.”
[31]
This, according to the defendants, meant that the plaintiff elected
to pursue a remedy completely
inconsistent with an action for
specific performance based on the deed of sale. As stated,
election is a choice between two
inconsistent rights. (
Total
South Africa (Pty) Ltd v Bekker NO
supra
at 627B). In my view the making of a
choice between two alternative remedies does not
per
se
amount to conduct that is only consistent
with an intention to make an election in law. There is no
compulsion on a party
to choose between two causes of action, or more
correctly, two rights of action each with its on valid
causa
,
Court Rule 10(2) provides that a plaintiff may join several causes of
action in the same action. (See Erasmus
Superior
Court Practice
at B1 – 96B and the
cases referred to in footnote 1 on page B1-97). Two claims may
be pleaded in the same summons,
and if inconsistent, in the
alternative. It is open to a plaintiff to later amend and add a
claim, or substitute another,
and no question of election arises.
[32]
There is however in my view a more fundamental reason why the
plaintiff’s decision to institute
proceedings based on the deed
of settlement did not constitute an election. Purely from a
legal point of view, just as there
cannot be a waiver without a valid
right (Bradfield
op cit
at page 510), there cannot be an election in the sense of making a
choice, without there being two valid inconsistent rights.
Eksteen J found that on the deed of settlement was unenforceable.
It was in other words invalid
ab initio
.
It could not, and did not, create any rights that were capable of
enforcement, and in relation to which an election could
be made.
[33]
The next question is whether there is a short answer to the
plaintiff’s alleged mistake
or ignorance of the law as was
suggested in argument on behalf of the defendants. The
defendants’ submission that it
could not constitute a valid
answer to a defence of waiver, was premised on the argument that the
plaintiff’s decision not
to pursue the action, but to instead
seek to enforce the deed of settlement, was made on the advice of its
legal advisors.
With reliance on the decisions in
Fehr
v Gordon and Rennie NNO and Another
1988 (1)
SA 125
(A) (
Fehr
),
it was submitted that that being the position, the plaintiff’s
mistake could not provide an answer to a defence of waiver.
[34]
The legal position is that an error of law or fact, in the context of
an renunciation of rights
is excusable, provided it is
iustus
et probabilis
. The reason is found in
the fact that, as stated earlier, proof of an intention to waive a
right can only exist where there
is knowledge of both the facts and
the legal consequences that flow therefrom. Election or waiver
in other words is a question
of intention based on knowledge.
(
Moyce v Estate Taylor supra
at 528). In the present case the plaintiff’s alleged
ignorance of the law arises in the context of its pleaded lack
of
knowledge of the facts and the rights it is alleged to have waived.
In
Willis Faber Enthoven (Pty) Ltd v Receiver
of Revenue
[1991] ZASCA 163
;
1992 (4) SA 202
(A) (
Willis
Faber
) the Appellate Division held that,
in the context of the
condictio indebiti
,
there is no evidence of a general application of the
ignorantia
iuris
rule in our law, and that on the
contrary, there exists many instances where it is not applied.
As authority for that statement
the Court then proceeded to point to,
what it considered to be the accepted legal position, in relation to
the renunciation of
rights. (at 221F to 222I) I quote from the
judgment:
“
As early as
1891 De Villier CJ said in
Watson v
Burchell
9 SC 2
at 5 that, ‘no
doctrine is better settled in our law that a person cannot be held to
have renounced his legal rights by acquiescence
unless it is clear
that
he had full
knowledge
of
his rights and intended to part with them’.
The reason is plain
for, as De Villiers J remarked in
Tighy
v Putter
1949 (1) SA 1087
(T) at 1095,
rights cannot be renounced unless the person concerned ‘knew
what those rights were both in fact and in law’.
Save for
a somewhat discordant note sounded in
Schwarzer
v John Roderick’s Motors (Pty) Ltd
1940 OPD 170
at 185, this has always been and still is our law (
Laws
v Rutherfurd
1924 AD 261
at 263;
Martin v De Kock
1948 (2) SA 719
(A) at 733;
Feinstein
v Niggli and Another
1982 (2) SA 684
(A) at 698F-G where an election to rescind or affirm an agreement
received similar treatment.” (at 221 F-G.)
[35]
The notion that relief may be granted in circumstances where a party
renounced a right in ignorance
is founded on what the Court in
Umhlebi and Fina
(1905) 19 EDC 237
at 249 said to be equitable spirit of our common
law:
“
The equitable
spirit of our own Roman-Dutch law, to a large extent due to the
influence of the Canon law, is indeed one of its leading
features.
Hence ignorance of one’s right, if it be a just and probable
ignorance, is good ground for restitution or
relief according to the
practice adopted in the Netherlands, as appears from an examination
of the authorities….”
This
passage was quoted with approval in Willis Faber at 222 A-B.
(See generally
Christie’s Law of
Contract in South Africa
op cit at page 512).
[36]
The judgment in Fehr is not authority for the general proposition
that conduct based on legal
advice can never constitute an error that
is just and probable. The effect of, or the extent to which a
reliance on legal
advice will bind a party must be determined in the
context of the requirements for election and waiver. The legal
advice
given by the attorney in Fehr was in relation to what the
Court in
Imata v MEC Environmental Affairs and
Others
1999 (4) SA 267
(NCD) at 281J
described as advice on the general law. In the present context
the error was in relation to the nature of the
settlement agreement,
put differently, what the common intention of the parties to the
agreement was. That is also what Eksteen
J was asked to decide
in the settlement application. The advice which the plaintiff
is said to have received accordingly
related to what was essentially
a factual matter.
[37]
Further, on a reading of the judgment in Fehr the finding that an
election made under Section
14(2) of the Sale of Land on Instalments
Act, 72 of 1972 was not vitiated by mistake, was based on the fact
that the appellant’s
attorney, on whose advice the election was
made, could not claim not to have had full knowledge of the facts and
the right to make
an election (at 137 D-F). The knowledge of
the agent was accordingly imputed to the client. That was also
the basis
of the finding made in the decision
Mthanti
v Netherlands Insurance Co of South Africa
1971 (2) SA 305
(N) on which the defendants sought to rely in
argument. (at 315H – 316A)
[38]
It follows that the necessity to prove knowledge of the rights said
to have been waived or in
relation to which an election is said to
have been made, must equally apply to a case where the act of the
alleged waiver or election
was performed, not by the party
personally, but by his agent. In
Pretorius
v Greyling supra
at 177 Price J said that:
“
It seems to me,
however, that in the matter of waiver it cannot be said that the
knowledge of the principal is that of the agent
or that the knowledge
of the agent is that of the principal, because before there is a
waiver there must be an unequivocal act
done with full knowledge of
all the relevant facts as well as of the rights which it is argued
have been waived. This knowledge,
to be effective in the case
of waiver, must be the knowledge of a single person, not partly of
one and partly of another, because
no intention to waive can be
inferred unless the particular person himself who commits the act
which is said to constitute waiver
knew of the relevant facts and
intended to waive the rights of which he was fully aware.
If in this case it is
the agent who waived the rights then it must be proved that he
himself knew all the relevant facts as well
as his principal’s
legal rights and intended to waive those rights, and it must also be
proved that he was authorised to
waive his principal’s
rights.”
(See
also
Stoltz v Ho Kee
1975 (1) SA 100
(E) at 1030.) In
Bikitsha
v Eastern Cape Development Board and Another
1988 (3) SA 522
(E) at 527J it was held that an attorney requires a
special mandate to waive important rights on behalf of his client.
What
the plaintiff’s instructions in the present matter were to
his legal representatives is a factual issue that cannot be decided
in these proceedings.
[39]
The requirement of full knowledge of the right said to have been
waived therefore means that
a mistake, whether in fact or in law, may
be excusable, provided it is just (
iustus)
.
This is primarily a factual question, in that it essentially requires
a determination of the reasonableness of the plaintiff’s
error. (
Logan v Beit
(1890) 7 SC 197
at 216) It is a determination that must be made
on the facts, and in the circumstances of the case. In the
present
matter it may require a consideration of the plaintiff’s
submission that evidence of the conduct of the defendants before
they
repudiated the settlement agreement, point to the fact that all the
parties thereto, initially shared the same error.
[40]
On the assumption that the plaintiff’s mistake was a mistake of
law, the defendants’
argument was premised on the allegation
that the plaintiff acted on the advice of its legal advisors, and by
necessary implication,
that the legal advice was given with full
knowledge of the right and its legal consequences. As the
plaintiff did not state
that to have been the position, the
defendants instead sought to rely on the drawing of an inference from
the plaintiff’s
statement in answer that, pursuant to the
judgment of Eksteen J, it “
took advice
to the effect that it enjoyed reasonable prospects of success in an
appeal … that another court may hold a different
view
regarding the nature of the settlement agreement”.
The defendants’ submission was that it must follow as a
necessary inference from this statement that the plaintiff
took
advice regarding the nature of the settlement agreement and its
conduct throughout the proceedings.
[41]
There are several problems with this line of reasoning. One is
that it is premised on the
assumption that the plaintiff’s
attorneys advised the plaintiff with full knowledge of the facts and
of the right the defendants
say the plaintiff waived. As a
general rule there can be no inference unless there are objective
facts from which to infer
the other facts which it is sought to be
established. Another problem is that the defendants seek to
draw the inference from
a single passage in the plaintiff’s
answering affidavit. Inferential reasoning requires an
evaluation of all
the evidence and not merely of selected parts.
South African Post Office v De Lacey
2009 (5) SA 255
(SCA) at para [35]). The drawing of an
inference may further require a consideration of the probabilities.
“
The inference that is sought to be
drawn must be ‘consistent with all the proved facts: If
it is not, then the inference
cannot be drawn’ and it must be
the more natural, or plausible, conclusion from amongst several
conceivable ones’ when
measured against the probabilities.”
(
South African Post
Office v De Lacey supra
at para [35].)
Decisions of fact can generally not properly be decided in motion
proceedings on a consideration of the probabilities.
(
Administrator, Transvaal v Theletsane
[1990] ZASCA 156
;
1991 (2) SA 192
(A) at 197 A - B).
[42]
The nature of the present proceedings is therefore not conducive to
resolving the factual issue
underlying the argument by way of
inferential reasoning. However, as stated earlier, and putting
aside the issue of the plaintiff’s
alleged mistake, that the
party who is said to have waived a right can only do so with full
knowledge of the facts and the legal
consequences, is only one aspect
of the requirement that the intention must be to surrender the right
in issue. The question
that remains in a matter such as the
present, where there has not been an express waiver, but where
reliance is instead placed
on the conduct or spoken word of the party
concerned, is whether the outward manifestations of what is relied
upon as the expression
of an intention to waive, are more consistent,
on a reasonable view of it, with an intention to waive, than with any
other theory.
[43]
This question must in turn be answered by bearing in mind that the
burden of proof is strictly
on the person who alleges waiver.
It is an
onus
that is
not easily discharged. As stated, the reason is the presumption
that no-one is presumed to surrender his rights.
The conduct
must accordingly be clear and unequivocal, that is to say, it must be
capable of one construction only. (
The
Road Accident Fund v Mothupi supra
at para
[19]). Conduct that is intrinsically contradicting, or oral
statements they are contradictory or ambiguous and capable
of more
than on meaning, either standing on their own, or in the broader
context in which it was spoken, will therefore be an obstacle.
(
Ellis and Others v Laubscher
1956 (4) SA 692
(A) at 702A and
The Road
Accident Fund v Mothupi
supra
at para [18]). It is furthermore not sufficient to point
to conduct of a neutral character, or to conduct which may
be equally
consistent with another intention. (
Thomas
v Henry supra
at 897B-C and
Multilateral
Motor Vehicle Accident Fund v Meyerowitz supra
at
27D-G). The nature and position of the onus will mean that an
interpretation that will leave the particular right in place,
must be
preferred. (
Ellis and Others v Laubscher
supra
at 702 E).
[44]
Whether or not a particular act evinces an unequivocal intention to
either make an election or
to waive a right is a question of fact in
each case (
Segal v Mazzur
1920 CPD 634
at 644 to 645;
Laws v
Rutherford supra
at 263;
Borstlap
v Spangenberg en Andere supra
at F –
H.) As stated, the test to determine the required intention to
waive is objective. This however
does not mean that the
subjective motivation of the party who is said to have waived a right
is irrelevant, unless the conduct
in question can be said to plainly
contradict it “
What the one party now
says he then intended and what his opposite number now says he then
believed may still be relevant.”
(
The
Road Accident Fund v Mothupi supra
at para
[17] See also
Palmer v Poulter supra
at 20 F – H;
Thomas v Henry and
Another
1988 (3) SA 889
(A) at A – D.)
The expression of what a party’s subjective motivation was for
his conduct may necessitate the
presentation of oral evidence.
[45]
Proceeding then to apply the requisites of waiver to the present
matter, the conduct of the plaintiff
by seeking to enforce the terms
thereof and to exercise its procedural right to appeal the judgment
of Eksteen J, does not in my
view by itself evince, on a reasonable
view thereof, an unequivocal intention to waive the right to fall
back on the action.
In Netlon Ltd and Another v Pacnet (Pty)
Ltd
1977 (3) SA 840
(A) at 873 A – B, Trollip JA said that it
was doubtful in his mind that conduct consisting of the entering into
of an enforceable
“
gentlemen’s”
agreement could constitute conduct of the kind postulated. In
the present matter the plaintiff of course went one step further
by,
acting on a perceived repudiation of the settlement agreement,
seeking to enforce the terms thereof. The doubt expressed
by
Trollip J in my view remains. The fact is that the agreement
which the plaintiff sought to place reliance upon, could
not produce
any legal consequences. It was void. It follows therefrom
that there could not have been a repudiation
of something which was
incapable of producing any legal consequences, and it is difficult to
see that any legal consequences are
to be attached to a reliance on a
non-existent repudiation. (See by analogy
Van
Zyl v Government of the Republic of South Africa
2008 (3) SA 294
(SCA) at para [71]),
[46]
In the context of the requisites of waiver, this raises the question
whether a reasonable person
in the position of the defendants, who
themselves took the view that the settlement agreement was
unenforceable, would conclude
that the intention of the plaintiff was
to waive its right to fall back on the cause of action in the
action. The position
of the reasonable person is after all not
determined in
vacuo.
It is done from the perspective of the defendants, and their position
at the time. Of importance in this context must
be that the
defendants initially acted, as is strongly suggested by their conduct
subsequent to the signing of the deed of settlement,
as if they were
bound by the settlement agreement, and that it was only much later
after receiving the advice of counsel, that
its validity was
questioned. Further, as stated earlier, the issue that formed
the basis for the dismissal of the settlement
application by Eksteen
J, was only raised shortly before the hearing of the settlement
application.
[47]
I am further not convinced that the statements of the plaintiff made
in the settlement application,
and what was later raised in the
grounds of appeal, standing alone, can be said to be an unequivocal
expression of an intention
to waive the right to fall back on the
action when the further agreement as envisaged in the settlement
agreement did not materialise.
What was said by the plaintiff,
or for that matter on his behalf in the notice of appeal, must be
considered in its context.
That context was the proceedings in
the settlement application, and further what the plaintiff says its
motivation was for bringing
the application, namely to enforce the
settlement agreement under the mistaken belief that it was a
compromise, and that the dispute
in the action was
res
iudicata.
The plaintiff’s
statement in the settlement proceedings, that since the signing of
the settlement agreement, it did not take
any further steps to
prosecute the action, and that it had caused the action to be stayed,
without having withdrawn the action
as contemplated in clause 8 of
the settlement agreement, do not in my view represent unequivocal
conduct required for waiver.
The use of terminology such as
“
stayed”
,
in the same sentence as “
withdrawn”
and “
abandoned,”
is contradictory. After all, the word “
stayed”
in a legal context, ordinarily means to temporarily suspend
something. (See
Ellis and Others v
Laubscher supra
at 702 E). The
prima
facie
contradictory nature of the statements
in the different proceedings may raise issues of credibility.
The present proceedings
are however not the appropriate place to
resolve that.
[48]
The plaintiff has further denied that it had failed to take any
further steps in the action proceedings
subsequent to the dismissal
of its applications for leave to appeal the judgment of Eksteen J.
In response to the allegation
of the defendants in this regard, the
plaintiff stated that it since, within the relevant time period
relied upon by the defendants,
sought the advice of counsel how best
to proceed with the action. It further sought to enforce an
order of this Court in
terms of which the defendants were ordered to
furnish a reply to the plaintiff’s notice in terms of Court
Rule 35 (3).
[49]
To summarise, the nature of the onus that rests on the defendants,
and the factual nature of
the enquiry envisaged for determining the
plaintiff’s intention, is not in my view conducive in the
circumstances of this
case, to determine the issue raised in the
manner the defendants propose to do. There is no crisp legal
basis for its determination.
Also, the conduct relied upon was
either denied, or does not
per se
support an intention to waive, and the written or spoken statements
of the plaintiff on which reliance placed, requires a consideration
of the broader context in order to determine whether it is capable of
supporting the inference of waiver which is sought to be
drawn
therefrom. To this may be added that the issue of mistake or
ignorance of the law only arose on the papers in answer,
and limited
by the form of the present proceedings, the defendants were
restricted to dealing therewith in their reply. Furthermore,
the defendants’ response to the plaintiff’s alleged
ignorance of the true legal position, has a factual basis that
the
defendant in argument attempted to establish by way of inferential
reasoning.
[50]
On a whole, my view of the matter that is that it is an instance
where the plaintiff’s
own evidence of its intention is
relevant, and is in the interests of fairness to be considered in
proceedings where the defence
raised was properly pleaded, and the
issues have been allowed to become defined in the manner as
contemplated by the Rules of Court.
(
South
African Police Service v Solidarity obo Barnard
2014 (6) SA 123
(CC) at para [202]. On the purpose of
pleadings, see Cilliers, Loots and Nel
Herbstein
and Von Winsen The Civil Practice of the High Courts of South Africa
5
th
ed at page 559.) I do not think it is appropriate to refer the
matter for the hearing of oral evidence as suggested.
The
issues raised by the defence are not of a limited nature.
Furthermore, some of the issues raised in the founding affidavit
were
not actively pursued in argument, while others were developed in
reply. I am also not convinced that the balance of
probabilities are leaning in favour of the defendants, thereby
justifying the hearing of oral evidence within the confines of the
present proceedings. (Erasmus
op cit
at page D1 – 77). I therefore conclude that the
defendants must plead their defence in terms of the Rules of Court.
[51]
Accordingly, and for these reasons, the following order will issue:
“
The application
is dismissed with costs”.
__________________
D
VAN ZYL
DEPUTY
JUDGE PRESIDENT
Counsel
for the Plaintiff:
Adv R
P Quinn SC
Instructed
by: Smith
Tabata Inc
Sutton
Square
Queens
Road
KING
WILLIAMS TOWN
Ref:
Mr A Conroy/kks/33P085002
Counsel
for the Defendant: Adv P J De Bruyn SC / M H Sishuba
Instructed
by:
State Attorney
1
st
and 2
nd
Defendants
Attorneys
C/O Shared Legal Services
Office of the Premier
32 Alexandria Road
KING WILLIAMS TOWN
Ref: 283/05-P3 (Mr
Mgujulwa)
Date
heard:
28 February
2019
Date
delivered: 18
June 2019