About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2016
>>
[2016] ZAGPPHC 530
|
|
26492.2013 Sasol Pension Fund and Another v Love Bitez CC T/A Love Bites and Another (20 April 2016) (26492/2013) [2016] ZAGPPHC 530 (20 April 2016)
IN THE HIGH COURT OF
SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
20/4/2016
Case no. 26492/13
IN
THE MATTER BETWEEN:
SASOL
PENSION
FUND
First
Plaintiff
GROWTHPOINT
PROPERTIES
LTD
Second
Plaintiff
and
LOVE
BITEZ CC T/A LOVE
BITES
First
Defendant
SUNETTE
ROSSLEE
Second
Defendant
JUDGMENT
LEGODI
J;
HEARD
ON:16 March 2016
JUDGMENT
HANDED DOWN ON: 20 April 2016
[1]
"The general effect of misrepresentation and fraud on a contract
can be shortly stated: A party who has been induced to
enter into a
contract by misrepresentation of an existing fact is entitled to
rescind the contract provided the misrepresentation
was material, was
intended to induce him to enter into the contract and did so induce
him."
[1]
[2]
This case is about fraudulent misrepresentation arising from
negotiations which resulted into a lease agreement concluded between
Sasol Pension Fund (the first plaintiff), Growth Point Properties
Limited (the second plaintiff) and Love Bitez cc (first defendant)
of
which Sunnette Rosslee (the second defendant) was the sole member.
[3]
The lease agreement aforesaid was for a period of three years effect
from 1 September 2012 in respect of a premises described
as Shop no
27, situated at Kolonnade Shopping Mall, Montana Park, Pretoria
North. The estimated area of the shop aforesaid was
236m2 situated
directly opposite to another shop which was called Ice Rink with
estimated area space of 3196m
2
.
[4]
Using the words of the only witness for the plaintiffs, Mrs Kruger:
"Ice-Rink was an important tenant. It was important
because of
its size, big space occupied in the centre. It was an anchor tenant
element in the centre". Furthermore, Kruger
stated that Ice Rink
occupied the space within the mall since 1995 upon the establishment
of the mall. It was an entertainment
kind of a business occupying two
levels of the centre, the upper level being good for viewing the
lower level where activities
of ice scatting and other activities
were taking place. Opposite to where Ice-Rink was situated, it was
the first defendant and
other three restaurants, importantly located
in such a way that patrons, children and adults coming to the
Ice-Rink can conveniently
move into the restaurant (first defendant)
for a bite, drink or meal. However, Ice Rink closed down business at
the end of December
2012.
[5]
The lease agreement between the plaintiffs and the defendants became
the subject of fierce dispute as a result of the closure
of Ice Rink,
the issue being characterised by counsel on behalf of the defendants
as being:
"Did
the plaintiffs as represented by Mrs Kruger make fraudulent
misrepresentation to the second defendant? In particular:
(a)
Whether the closure of the Ice-Rink was
a
material fact, in other words, was the closing
of the Ice-Rink germane to the contract?
(b)
Whether Mrs Kruger deliberately withheld the
fact of the closure of the Ice Rink?
(c)
Whether there was duty to disclose that Ice
Rink was not extending its lease with the Plaintiffs resting on the
legal convictions
or bona mores of the community and policy
consideration based on full and frank disclosure?"
[6]
The questions above were based on the following pleaded defence and
repeated in the counterclaim by the defendants:
"4.2
During the negotiations which gave rise to the conclusion of the
Agreement and prior to the signing of the Agreement by
the first
Defendant's representative, the plaintiff's representatives,
alternatively
employee,
in the further alternative
duly
authorised agent made the following intentional,
alternative
negligent misrepresentations (hereafter referred to as "the
Misrepresentations") to the Defendant:
4.2.1.
That the leased premises would be located
across from the ice rink at the Kolonnade Shopping Centre and that
the premises was
a
prime
spot;
4.2.2.
That the presence of the ice rink would
substantially contribute to the number of patrons to the First
Defendant's business;
4.2.3.
That as
a
result
of the location of the premises across from the ice rink that the
location is the best location in the whole shopping centre;
4.2.4.
That the First Defendant's patrons would
have
a
view of the ice
rink thereby allowing parents and/or persons accompanying individuals
who are frequenting the ice rink to have
a
view of the ice rink and those individuals;
4.2.5.
That the ice rink is frequented by
a
large number of people and that as
a
result the First Defendant's shop would be
frequented by
a
large
number of customers which would increase the turnover;
4.2.6.
That the shopping centre receives over
a
million customers per month;
4.2.7.
That there are no other factors (such as
renovations or the opening of new malls in the area of any other
factor) which would affect
the number of patrons to the shopping
centre or the First Defendant's shop;
4.2.8.
That the shopping centres number of
visitors has remained constant notwithstanding the fact that other
shopping centres had opened
in the area;
4.2.9.
That the First Defendant could expect
a
turnover of at the very least R2500,00 per
square meter (in other words the total area of the shop being 236 sqm
multiplied by R2500
would equal
a
minimum
monthly turnover of R590 000,00), but that
a
higher turnover was to be expected;
4.2.10.
That there would only be minor renovation
work done at the shopping centre but that it would be done in such
a
way that the First Defendant's business would
not be negatively influenced thereby;
4.2.11.
That the renovation would that was to be
done would be done after
hours and would
therefore not affect the First Defendant's business or the number of
patrons frequenting the shopping centre or
the First Defendant's
business.
4.3
When the Misrepresentations were made the Plaintiffs'
representatives, alternatively employee,
in the further
alternative
duly authorised agent was aware of the fact that the
Misrepresentations were untrue in so far as:
4.3.1 …
4.3.2 The closing of
the ice rink would substantially affect the number of patrons to the
First Defendant's business and also the
value of the location of the
premises;
4.3.3
…
…
4.4
In the alternative
to subparagraph 4.
3 above, the Plaintiffs' representatives,
alternatively
employee,
in
the further alternative
duly
authorised agent was aware of the fact that the ice rink would be
closing,
alternatively
should
have been aware of the fact, as well as the fact that the
Misrepresentations were untrue and/or inaccurate and had
a
legal duty to disclose those facts to the
Defendants.
4.5
….
4.6
When the Plaintiffs' representatives,
alternatively
employee,
in the further alternative
duly authorised agent made the
Misrepresentations,
alternatively
breached their legal duty to
disclose the true facts, the Plaintiffs' intended the Defendants to
act thereon and to enter into the
Lease Agreement and the subsequent
suretyship.
4.7
The First Defendant was induced by the
Misrepresentations,
alternatively
the
Plaintiffs' failure to disclose the full and/or relevant and/or
correct and/or information,
as
is alleged supra, and had the First Defendant been aware of the full
and/or relevant and/or correct and/or true information,
it would not
have entered into the Agreement at all".
[7]
Brief background to the dispute is necessary: The negotiations
between the plaintiffs and defendants started about April-May
2012.
On one occasion, the negotiations took place in the presence of a
certain Willie Nel who was an acquaintance of the second
defendant
and who accompanied her as a possible investor in the business of the
first defendant. Nel happened to be an attorney
by profession.
[8]
On 6 June 2012 the second defendant on behalf of the first defendant
signed an offer to conclude the lease agreement with the
plaintiffs.
At that time, the second defendant was operating her business at
Morelleta Park which was marketed as the Love Bitez
Patisserie aimed
to become a unique and modern bakery situated in the upmarket suburbs
of Gauteng. Its trademark was said to be
for freshly baked pastries,
cupcakes and birthday cakes. It was intended to be ultimately
described as a cake boutique and bakery
where customers can expect a
twist and trendy cupcakes with exceptional Italian coffee or
beverages in a retail environment. Love
Bitez was said to be a unique
wholesale and retail confectionary brand.
[9]
On 25 July 2012, Ice Rink formally informed the plaintiffs that it
would not be renewing its lease agreement which was expiring
during
October 2012. This was after its proposal for the renewal of the
lease agreement was rejected by the plaintiffs. On the
same date, the
first defendant represented by the second defendant, singed the lease
agreement with the plaintiffs. On 28 August
2012, the lease agreement
was concluded when it was signed on behalf of the plaintiffs.
[10]
On 7 September 2012 the second defendant heard over the news and
confirmed by Nel that Ice Rink was closing down. The second
defendant
immediately contacted Kruger who then confirmed the closure of Ice
Rink. When the second defendant enquired as to what
was going to
happen to the lease agreement, she was assured that the closure of
Ice Rink would not have significant impact on the
business of the
first defendant and that in any case Ice Rink was moving out at the
end of December 2012. That made the defendants
to elect not to cancel
the agreement. They proceeded to operate, considered themselves bound
by the terms and conditions of the
lease and continued to pay the
rental amount.
[11]
On 5 April 2013 the defendants caused a letter to be sent to the
plaintiffs and recorded as follows:
"Dear
Sir/Madam
1.)
It is our instructions that a meeting took place in July 2012,
whereby information was disclosed by yourself to our client which
led
our client to enter into a lease agreement with yourselves. The
following relevant points were discussed:
i.)
A layout of our client's shop as well as her products was presented.
You were made aware that there would be a slight increase
in the
prices as displayed on the menu, however that the prices will be in
line with all the other coffee shops. You consequently
consented to
the aforementioned;
ii.)
It was disclosed in negotiations by our client that one of the key
factors and rational for our client to consider entering
into the
agreement was the fact that her proposed rental space would be across
from the ice rink, which makes her rental space
prime.
ii.)
It is our instructions that our client requested you to disclose the
number of potential customers that enters the mall. You
have conveyed
that on average over a million people enters the shopping mall per
month.
iii.)
You were directly requested to disclose the impact that the new and
surrounding malls in the region the Kolonnade will have
on the number
of potential customers, Berdine Kruger conveyed to our client that no
significant impact is expected,
iv.)
It is further our instructions that Berdine Kruger was bold to convey
that our client could expect a turnover of at least R2
500 per square
meters.
v.)
The information disclosed by yourself was used by our client to
calculate the turnover expected which was relayed to yourself
and
relevant financial insitutions.
vi.)
Due to the aforesaid negotiations and presentations made by yourself
our client entered into the agreement. It is our instructions
that
you have failed to disclose crucial information to our client, which
would have had the effect that our client would not have
entered into
this agreement alternatively on the current terms and conditions
inter alia:
a)
Indiscreet renovations that is disrupting the
customers and has a direct influence in the amount of people visiting
the mall;
b)
The termination of the agreement with the ice
rink which followed shortly after the commencement of the agreement;
c)
According to your statistics, you had negative
growth in customers entering the mall which was never disclosed to
our client.
The
aforesaid presentations and representations were made in the presence
of an attorney who also acted as an investor on behalf
of our client
who will be more than willing to testify to this account.
The
aforesaid is disclosed without limiting our client's rights to expand
on further reason if the need arise.
It
is further our instructions that your center management enters our
client's premises without consent with the main aim to disrupt
business and to create a negative vibe between our client and her
employees.
Further,
that our client was summoned on several occasions to the offices of
the center management and illegitimately confronted
with regard to
the business operations inter alia why there is no 'white face' as
part of the business operations".
[9]
The first (ii) of the letter became the centre of argument during the
proceedings as it would appear later hereunder. There
was no response
to the letter. Instead, on 6 April 2013 the plaintiffs instituted the
present proceedings claiming payment of the
sum of R259 318.68 in
respect of damages for the period 1 May 2013 to 1 February 2014 and
R207 341.15 in respect of arrear rental
and other costs payable under
the lease as at 1 April 2013. That prompted the defendants to file a
plea and raised a defence of
fraud or misrepresentation and in the
counterclaim, asked for payment of R2 982 188.86 coupled with
cancellation of the agreement
based on fraud or misrepresentation. It
is said, had the defendants been told that Ice-Rink would be closing
down they would not
have concluded the lease agreement.
[10]
The issue therefore is whether the defendants have proved fraud or
material misrepresentation attributable to the plaintiffs
and if so,
whether the defendants not to cancel the agreement immediately after
they became aware of the misrepresentation on 7
September 2012 and
claim damages, are bound by their election.
Fraud/Misrepresentation
[14]
A party wishing to rely on fraud must not only plead it, but must
also prove it clearly and distinctly
[2]
.
The onus is the ordinary civil onus, bearing in mind that fraud is
not easily inferred. The essential elements for a claim or
defence
based on fraud are the following:
(a)
There must
be a representation by the other party or by that party's agent. In
the present case Kruger who represented the plaintiffs
during the
negotiations
[3]
.
Representation
may consist of non-disclosure
.
[4]
(My emphasis).
(b)
It must be
alleged that fraud or misrepresentation was false and or intentional
or negligent
[5]
.
(c)
It must be
alleged and proved that the representation induced the representative
or innocent party to act
[6]
.
(d)
If damages
are claimed, it must be alleged that the representee suffered damages
as a result of the fraud
[7]
.
[15]
The failure to disclose during the negations preceding the signing
and conclusion of the lease agreement that Ice-Rink will
be closing
down, became the defendants' pleaded defence and cause of action for
damages against the plaintiffs.
[16]
Kruger on behalf of the plaintiffs initially suggested that the
closure of the Ice Rink did not come up during the negotiations,
because at that time, she had no reason to suspect that Ice Rink
would not extend the lease. This of course is not correct because
before 25 July 2012, the plaintiffs rejected the Ice Rink's proposal
for the renewal of the lease. Furthermore, Kruger suggested
that at
the time of the signature of the lease agreement by the second
defendant on 25 July 2012, she did not know that Ice Rink
will not be
renewing the lease. This was clearly not correct because, she knew on
25 July 2012 being the very day the second defendant
signed the lease
agreement. On 28 August 2012, the plaintiffs signed the agreement,
yet it was not disclosed to the defendants
that Ice Rink was closing
down.
[17]
Before Kruger was confronted with the obvious, she had said, if she
had been aware during the negotiations that Ice Rink was
to close
down she would not have told the second defendant because she did not
think that it was a material fact to the conclusion
of the agreement.
The assertion did not last for long as she later conceded that
she knew on 25 July 2012 that Ice Rink was
not renewing. Her evidence
proceeded more or less as follows during cross- examination:
"Q: You did not
tell her because you knew that you will scare her away, will it be
fair to say that? -
A: My Lord Ja, I think
that could have been the reason.
Q.
Because had you
told her, she could have said: 'I don't want to proceed with the
lease'?
---
That is
a
possibility".
[18]
Furthermore, in cross examination, Kruger made a statement to this
effect:
"I did not want
to give her (the second defendant) that she had the right to cancel".
All
of this in my view, brought to an end any suggestion that the
non-disclosure or misrepresentation was not material especially
taking into account the contents of the letter of 5 April 2013 from
the defendants to which Kruger conceded that it was the essence
of
the discussion. Of relevance, and at the risk of repetition, it was
stated in the letter as follows:
"ii.) It was
disclosed in negotiations by our client that one of the key factors
and rational for our client to consider entering
into the agreement
was the fact that her proposed rental space would be across from the
ice rink, which makes her rental space
prime."
[19]
However, Kruger and counsel for the plaintiffs suggested that Ice
Rink situated across the first defendant's shop "was
important
but not a deciding factor" and that "had it having been a
deciding factor that would have been included in
the lease
agreement". I cannot agree seen in the light of Kruger's
evidence quoted in paragraph 17 above. For this she had
a duty to
disclose the fact that Ice Rink was due to close down. But her
answers and the concession she made as indicated above,
in my view,
displays a deliberate withholding of material information.
[20]
"Deciding factor" and "material fact" or
"material misrepresentation" was used inter-changeably
during the evidence of Kruger and during oral argument by counsel on
behalf of the plaintiffs. Material misrepresentation is the
act of
intentional hiding or fabrication of a material fact which if known
to the other party, could have terminated, or significantly
altered
the basis of a contract, deal or transaction. It is a
misrepresentation that would be likely to induce a reasonable
person
to manifest his assent, or that the maker knows would be likely to
induce the recipient to do so.
[21]
On the other hand, material fact is a fact that is important,
significant or essential to a reasonable person in deciding whether
to engage or not to engage in a particular transaction, issue or
matter at hand. "Material" means that the subject matter
of
the statement or concealment relates to a fact or circumstance which
would be significant to the decision to be made as distinguished
from
an insignificant, trivial or unimportant detail.
[22]
In the present case it is the concealment of the fact that Ice Rink
was closing down which is complained of. This issue cannot
be said to
be insignificant taking into account what was stated in the letter of
5 April 2013 to which Kruger conceded. The submission
"important
factor" but not a 'deciding factor" is, in my view, without
merit. Kruger's evidence referred to in paragraphs
17 and 18 above
make it overwhelmingly clear that the fact that Ice Rink was closing
down, was not only 'important,' but that it
was also a 'deciding
factor' for the defendants in concluding the lease agreement.
[23]
The second defendant says it was important because if she had known
or been told that Ice Rink was to close down she would
not have
concluded the agreement on behalf of the first defendant. So, it was
not only material, but the concealment related to
a fact or
circumstance which was significant in the making of a decision
whether to conclude the lease agreement or not. In this
regard, the
evidence by the second defendant remained steadfast and consistent. I
therefore find that fraud or material misrepresentation
has been
established. I turn now to the other issue.
Election
[24]
Election of remedies is the liberty of choosing a particular remedy
out of several means afforded by law for the redress of
an impugned
right, or choosing one out of several causes or forms of action. An
election of remedies arises when one having two
co-existent but
inconsistent remedies chooses to exercise one, in which event she or
he loses the right to thereafter exercise
the other. The doctrine
provides that if two or more remedies exist that are repugnant and
inconsistent with one another, a party
will be bound if he or she has
chosen one of them. The doctrine is most commonly employed in
contractual cases involving fraud
which is a misrepresentation of a
material fact that is intended to deceive a person who relies on it.
A plaintiff can sue
for either damages, thereby acknowledging
the contract and recovering the difference between the contract price
and the actual
value of the subject of the contract or cancellation
of the contract and the return of what has been paid under its
provisions,
restoring the plaintiff to the position he or she would
occupy had the contract never been made. If the plaintiff sought both
damages
and cancellation, the person would be asking a court to
acknowledge and enforce the existence of a contract whilst
simultaneously
requesting its unmaking, that is, two inconsistent
damages.
[25]
Once a plaintiff elects a remedy, he or she precludes the pursuit of
other inconsistent method of relief. Not all jurisdictions
require a
plaintiff to elect remedies and many jurisdictions have abolished
this requirement because of its harsh effects. However,
South Africa
has not abolished the doctrine of election. For this, I find it
necessary to deal with how in our own jurisdiction
the courts
revisited the principle of election of remedies.
[26]
In
Hlatswayo v Mare and Deas
1912 AD 242
at 259, De Villiers
JP dealing with the doctrine of election of remedies stated:
"At bottom the
doctrine is based upon the application of the principle that no
person can be allowed to take up two positions
inconsistent with one
another, or as is commonly expressed to blow hot and cold, to
approbate and reprobate".
[27]
Similarly, in
Farmers' Co-operations Society (Reg) v Berry
1912
AD 343
the Court of Appeal had an opportunity to deal with the
doctrine of election when it expressed itself as follows at page 350:
" ...
there are
many cases in which justice between the parties can be fully and
conveniently done by an award of damages. But that is
different thing
from saying that
a
defendant who has broken his undertaking
has the opinion to purge his default by payment of money. For in the
words of
S
Corey, (Equity Jurisprudence, sec 717 (a) "It
is against conscience that
a
party should have
a
right
of election whether he would perform his contract or only pay damages
for breach of it. The "election is rather with
injured party,
subject to discretion of the
court".
[28]
In
Segal v Mazzarr
1929 CPD 634
at 644-645, Watermeyer AJ
stated:
"Now, when an
event occurs which entitles one party to
a
contract to refuse to carry out his part of
the contract, that party has the choice of two courses. He can either
elect to take
advantage of the event or can elect no to do so. He is
entitled to
a
reasonable
time in which to make up his mind, but when once he has made his
election he is bound by that election and
cannot afterwards change his mind . . .If,
with the knowledge of the breach, he does an unequivocal act which
necessarily implies
that he has made his election one way, he will be
held to have made his election that way".
[29]
In
Bowditch v Peelmond Magill
1921 AD 561
at page 572 dealing
with the doctrine of election which concerned misrepresentation
inducing a contract, Innes CJ held as follows:
"A person who has
been induced to
a
contract
by
a
material and
fraudulent misrepresentation of the other party, may either stand by
the contract or claim rescission. (Voet,
4.3
see
3, 4 7). It follows that he must make his
election between those two inconsistent remedies within
a
reasonable time after knowledge of the
deception. And the choice of one necessary involves the abandonment
of the other. He cannot
both approbate and reprobate".
[30]
Regarding an election generally, in
Chamber of Mines of South
Africa v National Union of Mineworkers and Another
1987 (1) SA
6698
(A) at 690 D-G it was held:
"One or other of
the two parties between whom
some
legal
relationship subsists is sometimes faced with two alternatives and
entirely inconsistent courses of action or remedies. The
principle
that in this situation the law will not allow that party to blow hot
and cold is
a
fundamental
one of general application . . ."
[31]
The Supreme Court of Appeal in
Merry Hill (PTY) v Engelbrecht
2008
(2) SA 544
SCA, at 550 B-E [par 15] expressly gave approval to the
statement by Friedman JP in
Bekazaku Properties (PTY) Ltd v Pam
Golding Properties (PTY) Ltd,
1956 (2) SA 537
(C)
at 542E-F in which it was held:
"When one party
to
a
contract commits
a
breach of
a
material term, the other party is faced with
an election. He may cancel the contract or he may insist upon due
performance by the
party in breach. The remedies available to
innocent party are inconsistent. The choice of one necessarily
excludes the other, or
as it is said, he cannot both approbate and
reprobate. Once he has elected to pursue one remedy, he is bound by
his election and
cannot resile from it without the consent of the
other party".
[31]
If that is so, as stated above, the defendants having known of the
closure of Ice Rink, and having accepted that they were
bound by the
lease agreement and continued to pay rental from 7 September 2012 in
accordance with their obligations, should serve
as a bar disentitling
the defendants to 'approbate and reprobate' and not 'to blow both hot
and cold'. By the way, the plaintiffs
in their plea to the
counter-claim challenged the defendants about their entitlement to
cancel the lease agreement and or the claim
for damages. Election
to keep the contract in this case was completed when the second
defendant discussed the closure of
Ice Rink on 7 September 2012
[8]
.
Therefore, in the circumstances, the defendants would ordinarily be
bound by their election to continue with the agreement and
not later
to cancel it, unless there is another ground upon which the
defendants can rely.
[32]
In
Sandwon Travel (PTY) Ltd v Cricket South Africa
2013 (2) SA
502
(GSJ) at para 39, Wepener J alluded to the fact that there are
decided cases which have held that, despite an election to keep a
contract alive, the innocent party may, in the case of anticipatory
breach, reconsider its position when the time for performance
arrive.
[33]
Anticipatory breach occurs when a party to a contract repudiates or
reneges on his or her obligations under that contract before
fully
performing those obligations. This can be by word: "I would not
deliver the rest of the goods" or "I cannot
make any more
payments" or by action, for example, not showing up with the
goods or stopping making payments. Anticipatory
breach of a contract
is sometimes described as a failure to live up to a contract term
before the actual time for performance has a
rrived. It often
occurs when one party states an intention not to fulfil or
substantially fulfil a contractual obligation before
it is due. Such
a repudiation of contract term is generally required to be
affirmatively stated. The repudiating party may not
later demand
performance under the contract from other party. The result of
anticipatory breach is that the other party does not
have to perform
his obligations and cannot be liable for not doing so. This is often
a defence to a lawsuit for payment or performance.
(The underlining
is emphasis).
[34]
An innocent party may when the other contracting party commits an
anticipatory breach, elect to ignore the breach and keep
the contract
alive in order to allow the defaulting party to repent of his or her
repudiation. In
Culverwell and Anotehr v Brown
1990 (1) SA 7
(A) at 17E-F Nicholas AJA in a dissenting judgment stated:
"And where the
injured party refuses to accept and thereby allows the defaulting
party to repent of his repudiation and giving
him an opportunity to
carry out his portion of the bargain, and the defaulting party
nevertheless persists in his repudiation,
the injured party is
entitled to change his mind and notify the other party that he would
no longer treat the agreement as existing,
but that he would now
regard it as rescinded and sue for damages”
[9]
.
[35]
Inasmuch as the defendants might have wanted to bring themselves
within the ambit of the principle of "anticipatory breach",
the facts of the present case do not support such insulation. For
several reasons the defendants elected not to cancel the agreement
and claim damages after the fraud or misrepresentation came to their
knowledge on 7 September 2012. The second defendant stated
in her
evidence and also as argued by counsel for the defendants: One, that
acting on behalf of the first defendant, she elected
to keep the
contract alive despite the fraud or misrepresentation because more
costs and abandonment of the Morelleta business
had already taken
place. Two, that Ice Rink was only closing down at the end of
December 2012 suggesting therefore that there was
no risk. Lastly,
that Kruger made her to believe that the closure of Ice Rink will
have no significant implications on the viability
of the first
defendant's business. All of this, in my view, did not justify the
defendants to elect to keep the contract alive
and later seek to rely
on fraud or material representation as their defence and claim for
damages against the plaintiffs. The fact
that the business
deteriorated after the closure of Ice Rink, in my view was not a
justification to approbate and reprobate. That
is the risk or chance
the defendants took when they elected to keep the contract alive
despite knowledge of the fraud or misrepresentation.
[36]
There is another reason why "anticipatory breach" will not
find application in the present case. The plaintiffs had
nothing to
do in terms of the lease agreement under consideration. The
plaintiffs after the 7 September 2012 when the defendants
elected to
be bound by the lease agreement lived up to terms and conditions of
the agreement and performed in terms of the agreement.
That is, they
provided the defendants with the lease premises. Therefore, they did
not have to wait until their actual time for
performance has arrived.
There was never a need for them to make any U-turn by approbating and
reprobating. In the circumstances
of the case, whatever motivated the
defendants to keep the agreement alive after they had become aware on
7 September 2012 of the
fraud or misrepresentation, does not serve as
an excuse to deviate from the doctrine of election of remedies
espoused in the preceding
paragraphs. As a result, the defendants
must fail in both their defence and counterclaim for which they carry
the burden of proof.
[37]
The plaintiffs' quantum has been settled by the parties in the amount
of R350 000.00 plus interest at 15.5% per annum. This
was on
condition that the court finds for the plaintiffs.
[38]
Consequently judgment is hereby granted against the defendants as
follows:
38.1.
Payment of the sum of R350 000.00 jointly and
severally.
38.2.
Interest at the rate of 15.5% per annum from 8
May 2013.
38.3.
Costs of the action.
____________________
M
F LEGODI
JUDGE
OF THE HIGH COURT
FOR
THE PLAINTIFFS:
INSTRUCTED
BY: MARK EFSTRATIOU INCORPORATED
Suite 12, Avocet Corner
Hazeldean Office Park
Silver Lakes Drive,
Tiger Vallei, PRETORIA
REF: Mr Efstratiou/E11548
TEL: 012 809 4301/4
FOR
THE DEFENDANTS:
INSTRUCTED
BY: KRITZINGER ATTORNEYS
1181 Church Street
Hatfield, PRETORIA
REF: A
Kritzinger/MB/KH0054
[1]
See Law of Contract in South Africa by Christie 4 edition Chapter 7
page 313.
[2]
See Country-Clarke Bassingthwaighte
1991 (1) SA 684
(NM) pg 689.
[3]
See Feinstein v Niggli 1981 (2) SA 684 (A).
[4]
See Stainer v Palmer-Pilgrim 1982 (4) SA 205 (O).
[5]
See Rota Flour Mills (PTY) Ltd v Moriates
1957 (3) ALL SA 28
(T).
[6]
See Bill Harvey's Investment Trust PTY) Ltd v Oranjegezicht Citrus
Estate (PTY) Ltd 1958 (2) ALL SA 12 (A), 1958 (1) SA 479 (A).
[7]
See Truth and Reconciliation Commission v Mpumalanga 2001 (3)
ALL SA 58 (CK).
[8]
See Mutual Life Co of New York v lngly
1910 TPD 540
at pg 550.
[9]
See Cohen v Orlovski 1930 SWA 125 at 133.