Morgan Air Cargo (Pty) Ltd v Sim Road Investments CC and Another (22024/06) [2009] ZAGPPHC 36; [2009] 4 All SA 249 (GNP) (29 April 2009)

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
>>
2009
>>
[2009] ZAGPPHC 36
|

|

Morgan Air Cargo (Pty) Ltd v Sim Road Investments CC and Another (22024/06) [2009] ZAGPPHC 36; [2009] 4 All SA 249 (GNP) (29 April 2009)

IN THE HIGH COURT
OF SOUTH AFRICA
(NORTH
GAUTENG HIGH COURT, PRETORIA)
CASE NO: 22024/06
REPORTABLE DATE: 29/4/2009
In the matter
between:
MORGAN
AIR CARGO (PTY) LTD
….............................................
Plaintiff
and
SIM
ROAD INVESTMENTS CC
….............................................
1
st
Defendant
VENDITOR
AFSLAERS
….............................................
2
nd
Defendant
JUDGMENT
________________________________________________________________
MURPHY J
1. On
17 May 2006, Mr Jan Morgan, a shareholder and director of Morgan Air
Cargo (Pty) Ltd, attended an auction where he bid and
made an offer
in respect of a property owned by the first defendant described as
“Hoewe 35 Pomona Estates, Landbouhoewes, Pomona,
Kempton Park”.
Morgan signed the offer and stipulated that the purchaser was either
himself or a “genomineerde.” It is
the plaintiff’s case that
after the auction Morgan nominated Morgan Air Cargo (Pty) Ltd, the
plaintiff, as the nominee and
thus purchaser of the property.
2. The
auction was conducted by Mr Koop Styger, a director or employee of
the second defendant, Venditor Afslaers.
3. The
bid was in the amount of R2 million. In terms of the sale agreement
the plaintiff paid a deposit of R200 000 to the first
defendant and
R182 400 to the second defendant as auctioneer’s commission.
4. Immediately
after the auction, which took place on the property, Morgan signed
the sale agreement annexed to the particulars
of claim as Annexure
A. This being the offer was accepted and signed a day later by Mr
Carel Moolman, the authorised representative
of the first defendant.
5. It
is common cause that the second defendant prior to the auction had
caused an advertisement of the auction to be advertised
in various
newspapers in Gauteng. Several pamphlets or flyers similarly
advertising the auction were available and distributed
on site at
the time of the auction. The relevant portion of the advertisement
relating to the immovable property read as follows:
“
VENDITOR
AFSLAERS / AUCTIONEERS,
KOMMERSIëLE
EIENDOM - POMONA (2.2
HEKTAAR)
,
ligging: Hoewe 35, Pomona, Kempton Park. Verbeterings:
Rondawel/kantoor met afskortings - onvoltooid. Omhein met beton

palisade met 10 meter skuifhek. Hierdie puik 2,2-hektaar-eiendom
is geleë in ‘n baie gesogte gebied - bestem vir ligte
industrie.
Dienste beskikbaar.
VOORWAARDES
:
Deposito 10% plus BTW. Koperskommissie: 8% (plus BTW).”
In the
actual advertisement and flyers (Exhibit A1), the words “Kommersiële
Eiendom - Pomona (2.2 Hektaar)” are emblazoned
in white against a
black background in a font larger than the font of the ensuing text.
They are also underlined. Their presentation
in such manner was
aimed evidently at highlighting the nature, size and location of the
property. The remainder of the advertisement
is concerned with the
sale of certain movable property such as earthmoving equipment,
trucks and the like, thus having no relevance
to the present
dispute. The advertisement includes a small extract of a road map
depicting the location of the property. It
reflects that the
property is on the corner of Pomona Rd and a small side road. It is
in the first street a block away from
the Pomona Rd intersection
with the R21 highway, being the national artery that runs between
Pretoria and the OR Tambo International
Airport.
6. In
its particulars of claim the plaintiff alleged that certain
representations made in the advertisement and flyers were false
in
that the property is not “Kommersiële eiendom” nor is it
“bestem vir ligte industrie”. In addition it is alleged
that
before and/or during the auction the defendants represented that the
property was suitable for industrial activities and
that application
had been made for certain business rights and rezoning of the
property. All these representations are not correct
because the
land is zoned as agricultural land and no application for rezoning
had been done prior to the auction. The first
defendant has admitted
that an application for the rezoning of the property was not done
and that at the time of the sale, the
property was not a property
zoned as a commercial property for light industry. It is common
cause therefore that the property
is zoned and is restricted in
terms of its title deeds for agricultural purposes.
7. The
particulars go on to allege that Morgan was under the
bona
fide
impression that the sale
agreement was consistent with and not contrary to the advertisement
and that in view of the misrepresentation,
alleged to be either
fraudulent or negligent, he was induced to conclude the contract and
thus entitled to rescind it, claim
restitutio
in integrum
and repayment of the
amounts paid to the defendants as a deposit and auctioneer’s
commission.
8. In
so far as Annexure A to the particulars of claim contains exemption
clauses, in clauses 7, 8 and 18, the plaintiff contended
that
Morgan’s supposition that the agreement was consistent with the
advertisement resulted in a mistake as to the ambit of
the exemption
clauses and that his error in that regard was a
iustus
error
,
and, hence, that the defendants were
not permitted to rely upon the exemption clauses to avoid the
consequences of the alleged
fraudulent or negligent
misrepresentation.
9. The
relevant exemption clauses read:
“
7.
VOETSTOOTS
Die eiendom word VOETSTOOTS
verkoop, soos dit tans is en die AFSLAER nog die VERKOPER gee enige
waarborge ten opsigte van groottes,
sigbare of verborge gebreke,
kwaliteit of wettigheid van verbeterings of aktiwiteite wat daarop
bedryf word nie. Die eiendom
word verder verkoop onderhewig aan al
die voorwaardes en serwitute teen die titelakte geregistreer.
8.
GRENSE EN BAKENS
Die AFSLAER en VERKOPER is nie
verplig om enige grense of bakens uit te wys nie, en enige
beskrywing of inligting, hetsy in
advertensies, katalogusse,
brosjures of mondelings verskaf, word in goedertrou gedoen en die
KOPER erken dat hy nie deur enige
uitdruklike of stilswyende
voorstellings tot die sluiting van hierdie kontrak beweeg is nie.
18.
WYSINGINGS EN TOEVOEGINGS
Die bepaling van hierdie dokument
behels die gehele ooreenkoms tussen die partye en geen voorlegging
gemaak deur of namens die
partye sal bindend wees as dit nie
skriftelik tot hierdie dokument gevoeg en deur die partye
onderteken is nie.”
10. Predictably,
the first defendant in its plea pleaded that the express terms of
the offer made by the plaintiff and accepted
by it provided that the
property was sold
voetstoots
and
that no guarantees were given regarding the size, latent or patent
defects, the quality or legality of any improvements or
the
activities that can be conducted on the property. Moreover, the
property, in terms of clause 7, was sold subject to all
the
conditions and servitudes registered against the title deed of the
property. It is common cause that the title deed (Exhibit
A35-37)
contains the following condition:
“
This holding is transferred as
an agricultural holding, and it may be used only for the purposes
contemplated by the definition
of the terms contained in the
Agricultural Holdings (Transvaal) Registration Act 1919. That
definition reads as follows: “Agricultural
Holding” shall mean
a portion of land not less than 0,8565 hectares in extent used
solely or mainly for the purposes of agriculture
or horticulture or
for breeding or keeping domestic animals, poultry or bees.”
11. The
first defendant pleaded further that the sale agreement contains all
the terms of the agreement between the parties and
representations
by or on behalf of any party, and no representation will be binding
upon any party unless made in writing and
annexed to the agreement
and signed by the parties.
12. Regarding
the representations themselves, the first defendant put the
plaintiff to the proof thereof and if proved denied
they were made
on its behalf or with its authority; and, in the event of the latter
being established it reiterated its reliance
on the “no
representations” clauses in clauses 8 and 18 of the agreement.
13. Finally,
the first defendant regarded the plaintiff’s notice of
cancellation as a repudiation which it accepted and claimed
to be
entitled to retain the deposit as liquidated damages in terms of
clause 13 of the agreement.
14. In
addition to the foregoing, the first defendant challenged Morgan’s
nomination of the plaintiff, and hence the
locus
standi
of the plaintiff. I will deal
with the point later but before canvassing the evidence and issues
relating to the alleged misrepresentation
and the exemption clauses.
15. The
second defendant in its plea denied making any misrepresentations
and pleaded that it acted at all times on behalf of
and on the
instructions of the first defendant. It pleaded further that it had
no knowledge of the correctness of whether or
not the property was
not a commercial property suited for light industry in respect of
which a rezoning application had been
made. It pleaded also that
even if the plaintiff is entitled to restitution against the first
defendant, it is nonetheless still
entitled to retain the
auctioneer’s commission.
16. At
the pre-trial conference the defendants enquired from the plaintiff
if the representations referred to in paragraph 12
of the
particulars of claim were made orally or in writing and, if orally,
particulars were required. The plaintiff answered
as follows:
“
(a) Skriftelik
deur die Tweede Verweerder as afslaer en agent van die Eerste
Verweerder by wyse van die advertensie wat aangeheg
is aan die
Eiser se voorverhoorvrae. Die skriftelike voorstelling is dat die
eiendom ‘n kommersiële eiendom is en dat
dit geleë is “in ‘n
baie gesogte gebied - bestem vir ligte industrie”.
(b) ‘n
Verdere mondelingse telefoniese voorstelling is deur Mnr Koop
Steyger, synde ‘n behoorlike daartoe gemagtigde werknemer
van
die Tweede Verweerder, aan Jan Morgan, synde die persoon na verwys
in die Eiser se Besonderhede van Vordering gemaak
waartydens dit
bevestig is dat die eiendom ‘n kommeriële eiendom is.
(c) Voorafgaande
die veiling het gemelde Koop Steyger op 17 Mei 2006 op die eiendom
mondelings teenoor beide gemelde Jan Morgan
en ‘n ander senior
werknemer van die eiser bevestig dat die eiendom ‘n kommersiële
eiendom is, dat dit geskik is vir
industriële aktiwiteite en dat
dit daarom minstens ‘n veilingprys van R2 miljoen behoort te
behaal.
(d) Alvorens
die veiling gehou is, het gemelde Koop Steyger ook die inhoud van
die voormelde veilingsadvertensie uitgelees
en die eiendom
mondelings teenoor almal teenwoordig aangebied en beskryf as ‘n
“puik kommersiële eiendom”.
(e) Die
voorstelling van die eiendom as ‘n “kommersiële eiendom” is
deur alle aanhoorders daarvan en/of lesers van
die advertensie
redelikerwys verstaan as bedoelende dat die eiendom nie ‘n
residensiële eiendom is of landbougrond is
nie en dat dit met
ander woorde besigheidsregte het of as Aldus gesoneer is.
(f) Tydens
die veiling is voormelde interpretasie bevestig deur voubiljette
wat as deel van die Verweerders se advertensiemateriaal
beskikbaar
gestel is ten aansien van ‘n voorgestelde “R21 corridor” van
industriële- en/of besigheidsontwikkeling
in die onmiddelike
omgewing van die eiendom.
(g) Duidelikshalwe
en, ten einde die pleitstukke in ooreenstemming te bring met
hierdie antwoorde, dui die Eiser aan dat hy
van voorneme is om by
die verhoor die woorde” …geleë in ‘n baie gesogte gebied…”
in te voeg voor die woorde “…
wat bestem is vir ligte
industrie” waar laasgenoemde voorkom in paragraaf 12.1 en om die
woorde “… wat bestem is vir
ligte industrie…” waar dit
voorkom in paragraaf 13.1 deur te haal.”
17. During
argument, Mr Davis SC, counsel for the plaintiff, conceded that the
evidence did not support the allegations and averments
made in
paragraphs (b) and (d) of the plaintiff’s answer to the
defendant’s pre-trial request for particulars. The plaintiff’s

case is thus that the misrepresentation was made in the
advertisement and was repeated by Mr Koop Steyger on 17 May 2006 to
Morgan just before the auction as well as in the flyers and
advertising material distributed at the auction, from which it is

contended participants in the auction would have reasonably
understood that the property was not a residential or agricultural

property but one which had been zoned for commercial or business
purposes.
18. In
paragraph (g) of the answer to the request, the plaintiff indicated
that it would seek to amend its pleadings by the insertion
of the
words “geleë in ‘n baie gesogte gebied” immediately prior to
the words “wat bestem is vir ligte industrie”
in paragraph 12 of
the particulars. The plaintiff accepts that the advertisement did
not intend to state that the property is
a commercial property
destined or earmarked for light industry, but rather, on a proper
reading, it is intended to convey that
the property is a commercial
property situated in an area earmarked for light industry. The
amendment sought thus aims merely
to bring the pleadings in
accordance with the undisputed written contract document. The
amendment also seeks consequentially
to delete in paragraph 13.1 of
the particulars of claim the reference to the property as being
destined for light industry.
The defendants were given notice of
the proposed amendment prior to trial, and as there is accordingly
no prejudice in bringing
the pleadings into line with the evidence,
the amendment may be granted.
19. The
first defendant, as mentioned earlier, has placed the
locus
standi
of the plaintiff in issue.
Paragraph 10 of the particulars of claim reads:
“
Die
gemelde Jan Morgan handelend in sy persoonlike hoedanigheid het na
die toeslaan van die bod op die veiling die Eiser, Morgan
Air Cargo
(Pty) Limited, genomineer as koper in terme van die bepalings van
Aanhangsel “A”
welke nominasie
deur die Eiser aanvaar is op of ongeveer 17 Mei 2006. ‘n Afskrif
van die skriftelike nominasie word hierby
aangeheg as synde
Aanhangsel “B”
.
The
first defendant pleaded to this in paragraph 6 of its plea by
stating that it had no knowledge of the allegations, did not
admit
the same and put the plaintiff to the proof thereof. The second
defendant in paragraph 10 of its plea admitted the allegations.

There is a measure of inconsistency in the first defendant’s plea
in that it appears to admit in paragraph 4.3 of its plea
that Morgan
made the offer he did, as averred in paragraph 6.1 of the
particulars of claim, “in sy persoonlike hoedanigheid
of namens ‘n
genomineerde”. Be that as it may, Mr Bruwer, counsel for the
first defendant, persisted in argument with the
contention that the
plaintiff had not discharged its onus to prove that a nomination of
the plaintiff as purchaser had occurred.
20. Annexure
B to the particulars of claim, alluded to in paragraph 10 thereof,
reads as follows:
“
MORGAN
AIR CARGO (PTY) LTD
REGISTRASIENOMMER:
2003/008869/07
AANVAARDING
VAN NOMINASIE
Ek die
ondergetekende,
PETRUS JANSE VAN VUUREN
In my hoedanigheid as Algemene
Bestuurder van Morgan Air Cargo (Pty) Ltd, behoorlik bevoeg en
gemagtig daartoe aanvaar hiermee
namens Morgan Air Cargo (Pty) Ltd
die nominasie van Jan Morgan vir die koop van Hoewe 35, Pomona
Estates, Landbouhoewes IR,
Munisipaliteit van Groter Oos-Rand
Metro, Gauteng beter bekend as Hoewe 35, Pomona Estates,
Landbouhoewes Pomona, Kemptonpark.
ALDUS
GEDOEN en GETEKEN te
KEMPTONPARK
op hierdie
17de
dag van
Mei
2006
.
__________________________
PETRUS JANSE VAN VUUREN
(Behoorlik daartoe
gemagtig)”
21. It
was submitted on behalf of the first defendant that the relevant
witnesses, Morgan and van Vuuren, were vague as to what
they did to
effect the nomination. Annexure B is admittedly unusual in that it
does not overtly appear to be a nomination of
the plaintiff by
Morgan. It is rather a document in the name of the plaintiff in
which van Vuuren, the general manager of the
plaintiff, accepts the
nomination of Jan Morgan to purchase the property. Whatever the
unusual forum of the document, if one
reads it together with the
sale agreement it is quite evident that the intention was for the
plaintiff to become the “genomineerde”
referred to in the sale
agreement. Morgan testified that when he signed the contract he
communicated to the female assistant
who was processing the
documentation as follows:
“
Ja, ek het
vir haar gesê ek weet nie of dit in my persoonlike naam gaan wees
en of ons ‘n maatskappy wil gebruik nie.”
Later he went
on to say that he purchased it and later nominated the plaintiff.
He referred to Annexure B (also Exhibit A14)
and said:
“
Dit is waar
ek vir Petrus sê dat hy, ons doen dit in, waar ek vir hom sê ons
doen dit nou in Morgan Air Cargo se naam en hy
moet vir my die
tekenwerk doen.”
He confirmed
that van Vuuren signed as the authorised representative of the
plaintiff.
22. Under
cross-examination Morgan appeared to contradict himself by saying
that at the time he signed Annexure A, he did not
know whether or
not he would put the property into the name of one of his companies.
I do not think too much should be made
of that. His evidence in
cross-examination that he intended to discuss the matter first with
his auditors is obviously consistent
with the fact that he signed
the agreement alternatively in his personal capacity or on behalf of
a nominee. Mr Bruwer’s submission
that Morgan himself was the
purchaser and that the plaintiff sued because it had put up the
money (without having been nominated)
was directly countered by
Morgan in his evidence. He testified that the plaintiff would have
been the company managing the warehouse
intended for the property.
The land was required for warehousing goods for export via the
airport. Thus, the probabilities
support the conclusion that the
plaintiff was nominated. The following exchange took place during
cross-examination:
Counsel
: Sê
vir sy Edele as die koop deur gegaan het, dan sou dit in die naam
van Morgan Air Cargo gewees het, is dit reg?....
Morgan
: Ek
weet nie watter strik u my wil in lei nie, maar ek bedoel as die
transaksie, as ons die plek gebou het en ons kliënt
daar in
gesit het, dan sou die eiendom in Morgan Air Cargo gewees het.
He
went on to say that given the plaintiff’s intended future
involvement it was logical that the property would be in its name.

That is why it (rather than he) paid the commission and deposit the
day after the offer was made. Accordingly, despite the
somewhat
vague account of how and when the nomination occurred, and van
Vuuren’s initial mistaken statement that Morgan nominated
him
(qualified in the final analysis by the wording of Annexure B which
manifestly did so in his representative capacity as the
general
manager of the plaintiff), I am satisfied that a proper nomination
occurred and that the plaintiff has the necessary
locus
standi
.
23. I
turn now to consider the evidence and issues related to the alleged
misrepresentation and the exemption clauses.
24. Morgan,
the sole shareholder and sole director of the plaintiff at the time
of the transaction, testified that the plaintiff
was in the business
of airfreight. At that time the plaintiff had access to another
property in the same vicinity which was
also close to the airport.
However, that property did not have business rights and hence was
unsuitable for building and operating
a warehouse; something the
plaintiff intended to do for its own purposes and on behalf of
clients. The plaintiff was accordingly
on the look out for a
suitable alternative and van Vuuren had been instructed to secure
another property. Morgan and the plaintiff
were clearly in the
market for commercial property and their interest was evoked by that
description in the advertisement. As
Flemming DJP said in
Muller
v De Wet NO and Others
2001 (2) SA 489
(W) at 495D:
“
If there is
any sense in advertising, it rests upon the prospect of evoking
interest in that which is mentioned in the advertisement.”
25. In
response to the advertisement, Morgan phoned Mr Koop Steyger, the
director of the second defendant whom he knew by reputation.

Steyger informed Morgan that he would conduct the auction
personally. On the morning of the auction, before the bidding
began,
Morgan again spoke to Steyger, this time in person, and
conveyed to him the plaintiff’s intention to erect a warehouse on
the
property. They discussed the likely price the property could
fetch and agreed it would be in the region of R2million, which

Morgan considered fair for a commercial property of that extent and
at that location. At no stage during this conversation, according

to Morgan, did Steyger communicate that the property would be
unsuitable for erecting a warehouse on account of it being zoned
for
agricultural purposes. Despite Steyger being present in court
throughout the trial, he elected not to give evidence and
hence
Morgan’s evidence regarding this conversation between them is
uncontested and not contradicted by any other testimony
26. Prior
to the commencement of the bidding, as is customary in auctions of
this kind, some conditions of sale were read out.
As I understand
the case for the defendants, they allege that the entire document
containing the contractual terms (Annexure
A) was read out over a
public address system by the auctioneer who was seated in a small
rondawel that served as an office on
the day of the auction. The
auctioneer was presumably out of view of the bidders who were
assembled on the property, like Morgan,
outside the rondawel.
Morgan testified that he did not listen or pay much heed to what was
read over the public address system.
However, the auction itself
was held later outside the rondawel and at that stage Morgan moved
forward and stood in close proximity
to the auctioneer.
27. Morgan
testified that at no point during the auction did Steyger explain
that the property was not commercial property. As
mentioned, flyers
confirming the advertisement were distributed and available on site
that advertised the property as a commercial
property.
28. Morgan’s
claim that Steyger never corrected the representation of the
property as commercial property was disputed by the
defendant’s
witnesses. Morgan described how before the auction commenced
Steyger welcomed the son of the seller and announced
his presence to
the bidders. Morgan went on to say:
“
Ek
kan nie onthou wie dit was nie, ek kan net onthou dit was ‘n man
gewees, en dit is nog te meer vir my, die papiere het
daar orals
rond gelê wat op die advertensie staan en seersekerlik sou ek
gegloo het as die verkoper gesien het daar staan
kommersiële
eiendom, ek bedoel dit het daar orals rond gelê. Jy moet regtig
met toe oë rondloop as jy dit nie raakgesien
het nie, want daar
was borde op gewees ook aan die kant, dan glo ek hy sou dan ten
minste kon hy maar net vir die afslaer gesê
het, hoor hierso maar
hierdie is nie kommersiële eiendom nie.”
In
response to this statement it was put to Morgan by counsel for the
first defendant that the conversation could have been made
but
because he was not listening he might not have heard it. To which
Morgan conceded that it might have been said, but he doubted
it.
Then, during cross-examination by Mr Maritz, counsel for the second
defendant, it was put to Morgan that Steyger would testify
that
after reading the terms and conditions of sale he allowed question
time, an opportunity for bidders to clear up any uncertainty

regarding the property, and that during that time one of the bidders
asked a question regarding the zoning of the property to
which
Steyger replied it was agricultural property. Morgan adamantly
denied this, saying:
“
Verseker
nie, dit kan ek kategories vir jou sê. Ek het naby hulle gestaan,
dis verseker nie gesê nie.”
29. As
it turned out, Steyger did not testify and thus did not back up the
assertion made on his behalf. The son of the seller’s
sole
member, Mr Johan Moolman, did however testify. He had also been
present in court when Morgan testified. His evidence in
respect of
the question asked is at variance with the assertion put to Morgan
during cross-examination. Asked by Mr Bruwer during
his evidence in
chief whether bidders had asked questions, Moolman replied:
“
Daar
was enkele vrae gewees. Daar was ‘n vraag gewees oor die
hersonering
waarin
ek
geantwoord
het, dit is gesoneer as ‘n landbouhoewe.”
Earlier
in his testimony Moolman claimed that Steyger also had announced to
the bidders before the auction began that the property
was being
sold as an agricultural holding. He could offer in
cross-examination no satisfactory explanation for why this
proposition
(that an announcement had been made) had not been put to
Morgan. Sabine Lehmacher, who testified on behalf of the first
defendant,
also claimed, contrary to what she had intimated during
her evidence in chief, that she heard Steyger make the announcement.

None of the pre-trial correspondence makes any reference to either
the question posed and answered by Steyger or Moolman, or the

alleged pre-auction announcement by Steyger.
30. Whether
or not the alleged question was asked and answered, and whether or
not the alleged announcement was made prior to
the bid, are matters
of obvious relevance and significance to which I will revert later.
Associated with them is the further
question of whether such answer
and announcement, if made, would have been sufficient to correct the
false impression created
by the newspaper advertisements and the
flyers and placards displayed at the auction.
31. When
Morgan’s bid was accepted, he went to the rondawel to sign the
paper work. He conceded that he did not read the terms
and
conditions of sale properly but merely scanned them, looking
primarily at headings of the various clauses. Thus he neither

listened to the terms and conditions when read out, nor did he read
them thoroughly before signing. He was consequently not
acquainted
with the content and import of the exemption clauses contained in
the contract, namely clauses 7, 8 and 18.
32. After
conclusion of the sale, (acceptance by the first defendant), the
plaintiff approached town planners who advised that
the property was
zoned only for agricultural purposes and that there was a
prohibition against rezoning it. Morgan testified
that had he known
the property was not a commercial property and could be used only
for agricultural purposes, he would not have
attended or bid at the
auction and the plaintiff would not have purchased the property.
His rationale for attending the auction
was to overcome the
difficulty the plaintiff faced because the property it occupied did
not have business rights. He added that
even if the property had
been capable of being rezoned he would not have bid at the auction
because of the cost and the time
delay involved in a rezoning
application. He needed the property at the earliest opportunity.
33. Finally,
in relation to the exemption clauses, particularly the
voetstoots
clause, Morgan indicated that he
accepted such would have operated normally had the property been a
commercial property, but insofar
as he considered them when scanning
the document before signature, he would not have understood them to
exclude his right to
rescind the contract on the grounds that the
res vendita
had
been misrepresented as commercial land when it was in fact
agricultural.
34. During
the cross-examination of Morgan the defendants made the point, with
reference to correspondence directed on his behalf
by his erstwhile
attorneys, that the initial complaint was not about the land being
zoned agricultural but rather that the plaintiff
was unable to
rezone it and obtain business rights. The aim of this line of
questioning was to show that Morgan must have in
fact known that the
property was agricultural when he signed the offer to purchase and
accordingly that the sale was not induced
by any material
misrepresentation as regards the zoning of the property. The first
letter to which counsel referred was that
dated 23 May 2006 (less
than a week after the contract was concluded) addressed by the
plaintiff’s attorney to the second defendant
- Exhibit A17. It
reads:
“
KOOPOOREENKOMS:
HOEWE 35, POMONA ESTATES, LANDBOUHOEWES, POMONA, KEMPTON PARK
(MORGAN AIR CARGO (PTY) LTD: KOOPER // SIM RD
INVESTMENTS CC:
VERKOPER)
Ons verwys na
bovermelde en bevestig dat ons optree namens Morgan Air Cargo (Pty)
Ltd, die koper in bogemelde transaksie.
Dit is ons
instruksies dat ons kliënt op 17 deser en per openbare veiling ‘n
aanbod gemaak he tom die bogemelde eiendom te
koop welke aanbod,
ons verstaan, intussen deur die verkoper aanvaar is.
Dit het
intussen tot ons kliënt se kennis gekom dat die gemelde eiendom
uitsluitlik vir landbou gesoneer is en dat daar hoegenaamd
geen
kans bestaan dat die eiendom hersoneer kan word na Ligte Industrie
of and Besigheidsgebruik nie.
Die probleem
met die hersonerings kwessie is deur Gautrans aan ons kliënt
geopenbaar en is daar deur Gautrans tydens ‘n vergadering
met ons
kliënte bevestig dat die eiendom nie hersoneer kan word nie as
gevolg van die bou aan beoogde padnetwerke. Hierdie
inligting moes
te alle relevante tye aan die verkoper bekend gewees het.
Onder
omstandighede waar die eiendom aanvanklik bemark is as ‘n
“kommersiële eiendom” wat “bestem is vir ligte industrie”

vind ons kliënt die toedrag van sake onaanvaarbaar.
Onder
die omstandighede waar daar dan ‘n wanvoorstelling aan ons kliënt
gemaak is en op sterkte van welke wanvoorstelling
ons kliënt die
koopkontrak gesluit het, is dit ons instruksies om u mee te deel
dat dit ons kliënt se voorneme is om nie
met die kooptransaksie
voort te gaan nie. Onder die omstandighede versoek ons dan dat u
aan ons kliënt sal terugbetaal die
bedrag van R382,400,00 synde
die 10% deposito, 8% kooppryskommissie en 14% BTW op
kooppryskommissie binne 3 dae vanaf datum
van hierdie skrywe.
Voorts is dit
ons instruksie om u mee te deel dat ons kliënt sy spyt uitspreek
oor die wending wat die aangeleentheid nou geneem
het en wil ons
kliënt dit ook duidelik maak dat hy nie u, Venditor-afslaers,
kwalik neem vir die wanvoorstelling wat gepleeg
is nie. Ons kliënt
aanvaar u werk op instruksies van die verkoper wat u ten volle in
die prentjie moes plaas, spesifiek wat
betref die verbod op
hersonering, welke inligting sonder twyfel tot die verkoper se
kennis moes strek.
Onder die
omstandighede verneem ons dringend van u.”
A
second letter, Exhibit A19, was addressed on 25 May 2006 to the
first defendant’s attorneys which reads as follows:
“
KOOPOOREENKOMS:
HOEWE 35, POMONA ESTATES LANDBOUHOEWES, POMONA, KEMPTON PARK
Ons tree
hierin op namens Morgan Air Cargo (Pty) Limited.
Dit is ons
instruksies dat ons kliënt op of omtrent 17 Mei 2006 per openbare
veiling, gehou deur Venditor Afslaers, ‘n aanbod
gemaak he tom
die bogemelde eiendom van u kliënte te koop, welke aanbod deur u
kliënte aanvaar is.
Ons kliënt he
took intussen voortgegaan om ‘n bedrag van R382 400,00 te betaal
ten opsigte van die 10% deposito asook die
8% kommissie tesame met
BTW.
Voorafgaande
die veiling is die eiendom deur Venditor Afslaers, as synde agente
van die verkoper, geadverteer en bemark as ‘n
“kommersiële
eiendom” wat bestem is vir “ligte industrie”.
Tydens die
veiling wat plaasgevind het, het Venditor Afslaers, as synde u
agente, ook aan die voornemende kopers, wat natuurlik
ons kliënt
insluit, voorgehou dat die eiendom geskik is vir industriële
aktiwiteite en dat u kliënt reeds aansoek gedoen
het vir sekere
besigheidsregte. Hierdie voorstelling het ons kliënt oorreed om
‘n aanbod te maak welke aanbod dan deur
u kliënt aanvaar is.
Dit blyk nou
volgens ons kliënt se ondersoeke dat hierdie voorstellings wat aan
ons kliënt gemaak is in alle opsigte vals
was deurdat daar nou
vasgestel het dat die relevante owerhede onder geen omstandighede
‘n hersonering van die eiendom sal
toelaat nie. Hierdie eiendom
vorm, volgens ons ondersoeke, deel van die eiendomme wat affekteer
word deur beoogde pad-netwerke
en derhalwe die weiering om die
eiendom te hersoneer. Hierdie feite was te alle relevante tye
binne die kennis van u kliënt.
As dit nie was
vir die wanvoorstelling wat aan ons kliënt gemaak is nie, sou ons
kliënt onder geen omstandighede bereidwillig
gewees he tom ‘n
aanbod ten opsigte van die eiendom te maak nie en stel u kliënt se
wanvoorstelling derhalwe ‘n wesenlike
wanvoorstelling daar.
Hierdie wanvoorstelling word uit die aard van die saak nie gedek
deur die voetstoots-klousule soos wat
dit in die koopooreenkoms
gevind word nie en plaas ons hiermee op record dat ons kliënt nie
bereid is om met die transaksie
voort te gaan nie en derhalwe die
koopooreenkoms wil kanselleer.
Vir wat dit
werd is maan ons u kliënt hiermee formeel aan in terme van
klousule 13 van die koopooreenkoms om die kontrakbreuk
en/of
wanvoorstelling reg te stel binne 7 (sewe) dae vanaf datum hiervan
ten einde te voldoen aan die bepalings van die koopooreenkoms.

Indien ons nie binne 7 (sewe) dae vanaf u verneem dat die eiendom
wel geskik is en hersoneer kan word vir die doel soos wat
dit
geadverteer en aan on kliënt wanvoorgestel is nie, sal ons kliënt
onmiddellik voortgaan om die ooreenkoms te kanselleer
en
terugbetaling tee is van die bedrag van R382 400,00 soos reeds aan
u en Venditor afslaers oorbetaal.
Ons stel voor
daar word dringend ‘n rondetafelgesprek gehou en word al ons
kliënt se regte voorbehou.
Ons
verneem graag van u.”
35. Morgan
did not concede that the formulation of the demands by his attorney
could be interpreted to suggest that his instructions
were that the
defendants had merely misrepresented the prospects of an application
for rezoning. He, however, construed the
letter as an attempt to
bring about a favourable result either in the form of the property
being rezoned, or, failing that,
restitutio
in integrum
.
36. Mr
van Vuuren testified that he accompanied Morgan to the auction. He
confirmed that he had been instructed to find a commercial
property
and that he had brought the advertisement to the attention of
Morgan. He knew that they required the property for the
purpose of
erecting a warehouse upon it. It was put to him during
cross-examination that he had told Sabine Lehmacher after
the
dispute arose that he was in trouble for not having done his
homework by checking the zoning of the property. He had no

recollection of this and only remembered phoning Lehmacher to tell
her he was upset that the property was not a commercial property.
37. The
first defendant called two witnesses: Mr Johan Moolman and Ms Sabine
Lehmacher. The second defendant closed its case
without leading any
evidence.
38. Johan
Moolman is the son of Mr Carel Moolman, the sole member of the first
defendant, the seller, who is described in the
sale agreement as the
“gevolmagtigde van die firma Sim RD Inv CC handelende in sy
hoedanigheid as eienaar “ of the property.
Mr Carel Moolman, who
issued the instructions to the auctioneer to sell the property, did
not testify.
39. Johan
Moolman testified that he attended the auction on 17 May 2006 and
was present from the beginning until the sale of the
property. When
asked to describe what he heard, what the auctioneer said and what
happened at the auction, he replied that about
2 hours before the
auction commenced it was announced to the bidders then assembled
that the title deed was available for anyone
to inspect. Morgan’s
uncontested evidence was that he and van Vuuren arrived about one
hour before the auction. They consequently
would not have been
present when the invitation was made to the bidders to inspect the
title deed. Before the auction began,
according to Moolman, Steyger
read out the terms and conditions and then said, as Moolman put it:
“
Menere
julle het julle vergewis met die eiendom en julle het julle
huiswerk gedoen op die eiendom en die eiendom word as ‘n

landbouhoewe verkoop.”
Counsel
then asked him whether any questions were asked to which Moolman
tendered the answer mentioned earlier that some questions
were
asked, and that there was one question about the zoning which he
(and not Steyger) answered to the effect that the land
was zoned as
agricultural.
40. Moolman
did not sign the agreement upon behalf of the first defendant at
Kempton Park. Nor did he take the written offer
made by Morgan to
his father at Bela Bela. Instead Sabine Lehmacher drove to Bela
Bela the next day and presented the offer
to his father for
signature.
41. Moolman
initially said he was not present when his father telephonically
gave instructions to the second defendant to auction
the property.
Nonetheless, he volunteered, his father had discussed the call with
him afterwards, mentioning to him that the
property was contemplated
for business rights but remained agricultural. On 17 April 2006 he
had a discussion with Ms Lehmacher
on the telephone, during which he
furnished her with information regarding the property, including the
extent of it and the details
of the owner and seller. Under
cross-examination by counsel for the second defendant, he again
stated that he had answered the
question from one of the bidders
regarding the zoning of the property.
42. Under
cross-examination by counsel for the plaintiff, Moolman elaborated
on how the instruction to sell the property came
about. As just
mentioned, he had initially said (during cross-examination by
counsel for the second defendant) that he was not
present during the
first phone call between Lehmacher and his father but that the
conversation was discussed with him after the
telephone call. When
counsel for the plaintiff questioned him, the story changed
significantly. He explained that the second
defendant had contacted
his father on seeing a “for sale” sign on the property and
requested permission to auction the property.
When it was put to
him that his relaying of the telephone conversation was hearsay, he
replied (contrary to what he had said
earlier) that he had walked
into his father’s office while the conversation was under way and
thus heard his father’s side
of the conversation. His father
agreed to sell the property on condition that the second defendant
bore the advertising costs.
This last proposition is inconsistent
with the common cause fact that the second defendant deducted
approximately R44 000 from
the deposit for advertising costs.
43. Moolman
further confirmed that on 24 April 2006 he sent a fax (Exhibit A5)
to Lehmacher confirming the details of the property.
The letter
furnishes a description of the plot as: “Plot 35 Pomona Estates
A/H” and provides information about the size,
the owner and its
VAT registration number. Nothing is stated overtly about the zoning
of the property, though A/H could have
been interpreted to mean:
Agricultural Holding. This latter aspect was not explored in
questioning.
44. Moolman
testified that he had not seen the advertisement of the auction
published in the newspapers. However, he conceded
that he saw the
flyers when he arrived at the auction and noted that they said
nothing about the zoning of the property as agricultural.
He went
on to say:
“
Dit is reg.
En voordat die veiling begin het met hierdie wat ek daar gesien
het, het ek aan Sabine duidelik gesê maak dit
duidelik vir die
mense dat hierdie is ‘n landbouhoewe, hy is nie gehersoneer nie.
Hy word verkoop as ‘n landbouhoewe.”
My impression
is that Moolman intended to convey that this instruction is what led
to Steyger allegedly making the announcement
before the auction
commenced.
45. Moolman
was unable to give any explanation why his version of the alleged
announcement and his answering the question had
not been put to
either Morgan or van Vuuren before the closing of the plaintiff’s
case. He confirmed that he and Steyger had
attended the trial, had
been present when the plaintiff’s witnesses gave their testimony
and did not deny that he and Steyger
had been in conversation. He
was furthermore unconvincing when asked to explain the reaction of
the bidders who had come to
purchase commercial property when told
that the property was not commercial but in fact agricultural. The
probabilities are
that the bidders would have been aggrieved.
Moolman’s answers to the questions posed in that regard were
mostly non-responsive
and evasive. His testimony is also
inconsistent with the content of a letter addressed to the
plaintiff’s attorney by the
first defendant’s attorney dated 1
June 2006 (Exhibit A 25) in response to the letter of 25 May 2006
(Exhibit A 19). In the
latter letter it was particularly stated on
behalf of the plaintiff that the property was advertised and
marketed before the
auction as commercial property destined for
light industry and further that during the auction the auctioneer
represented that
the property was suitable for industrial activities
and that the seller had made application for business rights. Had
the announcement
been made and the bidder’s question about zoning
been answered by Moolman as said, the appropriate response would
have been
to refer to the announcement and answer. Instead in
Exhibit A25 the first defendant’s attorney, acting on the
instructions
of his client, replied:
“
Ons Kliënt
dra geen kennis daarvan dat die eiendom as kommersieël of
industrieël bemark is, of dat dit enigsins voorbehou
is as geskik
vir industriële aktiwiteite, besigheidsregte of enige ander
doeleindes anders as landbou nie, of dat beweer is
dat ons kliënt
reeds aansoek gedoen het vir besigheidsregte nie. Inteendeel was
ons kliënt se spesifieke instruksie dat
die eiendom voetstoots
verkoop word as landbouhoewe. Ons kliënt ontken dus dat daar
enigsins wesenlik of andersins enige
wanvoorstelling teenoor u
kliënt gemaak is.”
Moolman
could give no explanation for this contradictory and inconsistent
statement, nor any explanation for why the announcement
had not been
raised with the plaintiff at any stage by anyone prior to his giving
testimony in court on behalf of the first defendant.
46. Moolman
could also not explain where the description of the property as
commercial property came from, despite Steyger in
a letter dated 8
June 2006 addressed to the first defendant’s attorney (Exhibit
A28) stating as follows:
“
In
paragraaf 2 spreek u u kliënt se onkunde rakende die bemarking van
die veiling uit. Ons plaas op record dat ons nie enige
inligting
rondom die eiendom self nagevors en bekom het nie, maar alle
inligting vanaf u kliënt verkry is.”
It
is also notable that Steyger made no mention in this letter of the
alleged fact that he had announced to the bidders that the
property
was agricultural, as one might have expected, considering that he
was responding to the suggestion in Exhibit A25 that
he had acted
contrary to the first defendant’s instruction to sell the property
as an agricultural holding.
47. The
first defendant also led the evidence of Sabine Lehmacher who was
employed as a “veilingsagent en eiendomsagent” by
the second
defendant at the time of the auction. She testified that she had
obtained instructions to proceed with the sale of
the property from
Mr Carel Moolman. She made a contemporaneous note in her diary of a
telephone call between herself and Carel
Moolman on 17 April 2006.
The relevant note is recorded in Exhibit A4, being the page of her
diary for 17 April 2006. The note
reads:
“
Karel. Erf
35 Pomona. Sim Rod Invest (Pty) Ltd was written but then deleted)
CC. … very popular area. 1.8/2.2 ha omhein met
sementmuur.
Soneer landbou/kommersieel. Geoormerk ligte industry. Nie water
nie - dienste beskikbaar … Water aansluit
- aansit … Karel
Jacobus Moolman volspoed.”
Thus,
contrary to the first defendant’s plea denying that the second
respondent made the representations on behalf of it, Lehmacher
in
effect testified that she had. She also confirmed that the
information had come from Carel Moolman. She had specifically

contacted him, as she put it:
“
om die
bewoording te kry vir die advertensie en wat ek hier neergeskryf
het is die inligting wat ek by mnr Carel Moolman gekry
he tom die
advertensie te kan plaas.”
She
stated in cross-examination that the word “kommersieël” came
from Carel Moolman. As I have said, Carel Moolman did not
testify
and this evidence therefore stands uncontradicted.
48. During
the course of her evidence in chief, Exhibit E, which had only been
discovered the previous day, was admitted into
evidence without
objection. The document is a handwritten note on the back of an
inventory. The note reads:
“
082 5555
756 Karel - Dienste beskikbaar. Krag en riool beskikbaar. Water
reeds aangesluit. Verkoop as landbougrond/hoewe.
Klient moet self
aansoek doen vir regte.”
No
explanation was offered for the late discovery of this note. Nor is
there any account of its immediate provenance. Asked
by counsel
where it came from, Lehmacher replied:
“
Ek
het hierdie nota vir Koop Steyger gegee voor die veiling net
ingeval daar vrae sou gewees het en om seker te maak dat hy
dit
noem voor die veiling.”
When
asked where she had obtained this information, she replied that it
was her own information. Counsel endeavoured to prompt
her to
corroborate Moolman’s testimony that he was the person who had
warned her to correct the false information in the flyers.
He asked
her if she knew Moolman, to which she replied affirmatively and that
she had met and spoke to him at the auction.
She did not however
testify that he had instructed her to correct the false impression
created by the flyers.
49. When
asked if she was present during the auction, and when “die
aankondigings gedoen is en die voorwaardes gelees is”
she replied:
“
Ek was nie
in perseel, in die kamer nie, maar ek was op die perseel, ek was
besig met die los bates.”
In other words she
was on the property but busy with other work.
50. Counsel
for the second defendant sought direct corroboration of Moolman’s
alleged instruction to her to correct the false
impression created
by the flyers by telling her what Moolman had testified. She
responded that she was unable to remember the
conversation.
However, she testified that she heard Steyger read the terms and
conditions over the public address system from
within the rondawel
while she was outside. She then also stated that he had mentioned
that the property was agricultural and
that the client would have to
apply for business rights. The impression so created was that
Steyger made the announcement from
within the rondawel which is at
variance with the scenario sketched by Moolman that Steyger did so
just before commencing the
bidding, which would have been outside
the rondawel. She reiterated in cross-examination that she heard
the announcement over
the loudspeakers.
51. Lehmacher
conceded during cross-examination by counsel for the plaintiff that
the advertisement simply referred to the property
as a commercial
property without any indication of its sole zoning for agricultural
purposes. She disingenuously sought to rely
on the reference in the
advert to “Hoewe 35” (the address) as a clear indication of its
agricultural nature. The submission
holds no water and frankly
redounds negatively upon her credibility, especially in the light of
her subsequent reluctant concession
that a “hoewe” could be
zoned for commercial rights.
52. In
further cross-examination she ventured that she wrote the note to
Steyger, not because of Johan Moolman’s instruction
to her to
correct the flyers but because she had received telephone calls from
potential buyers prior to the auction and had
checked the title
deeds. If that were so, it begs the question why the second
defendant, fully aware of the agricultural zoning
prior to the
auction, would continue to distribute flyers on the day of the
auction that the property was commercial. Lehmacher
readily
admitted that she had become aware that the property was not zoned
commercial when she obtained the title deeds some
time before the
auction and realised that Carel Moolman had given her incorrect
information on 17 April 2006. She distanced
herself from
responsibility by claiming that the flyers were distributed by
Moolman and not the second defendant on the day of
the auction. Her
testimony contradicts Moolman who created the impression that he
approached her to correct the misrepresentation
because he saw what
was written in the flyers. She conceded though that the second
defendant had taken no steps to put up any
placard or notice
correcting the false impression created by the advertisement and
flyers that the property was a commercial
property when she knew or
understood that it was not such.
53. The
second defendant did not lead any evidence. It is common cause that
Steyger was present in court throughout the trial
and thus heard the
entire testimony of all the other witnesses.
54. The
plaintiff’s cause of action is that it was induced to enter into
the sale agreement by a material misrepresentation
entitling it to
resile from the agreement and to claim restitution. It claims
further that by virtue of an
iustus
error
following from the
misrepresentation it is not bound by the terms of the contract,
including the clause exempting the seller from
liability for
misrepresentation.
55. I
am satisfied on the basis of the evidence adduced on behalf of the
first defendant that the second defendant on the instructions
of the
first defendant represented in the newspaper advertisements and in
placards on the day of the auction that the subject
property was a
commercial property. All the witnesses, except Lehmacher, seemed to
suggest that the defendants together caused
the representation to be
made again through flyers distributed at the auction. Lehmacher as
just explained testified that the
flyers were distributed by the
first defendant alone. Whatever the case, one may safely conclude
that the representation was
made in the various forms by the second
defendant on behalf of the first defendant or by the first defendant
itself. If such
were indeed misrepresentations then the plaintiff
will be entitled to rescind the contract and claim restitution.
56. The
question then is whether the representation of a property
exclusively zoned as agricultural property with no prospect
of
either being zoned commercial or being granted business rights, as a
“commercial property” constitutes misrepresentation.
The
statement that the property was commercial was made in the
advertisement, poster or flyer alongside the description of the
area
where it is situated as “bestem vir ligte industrie”. There is
no evidence that Steyger ever confirmed the representation
in the
advertisement either telephonically or during his undisputed
conversation with Morgan before the auction. Nor is their
any
evidence to support the allegations made in the pleadings and
correspondence that Steyger confirmed that the property was
‘’n
Kommersiële eiendom … dat geskik is vir industriële
aktiwiteite”, or that he referred to it as “’n puik
Kommersiële
eiendom.” I accordingly accept that the only
evidence of any positive representation about the nature of the
property is that
in the advertisement, placard and flyers.
57. In
addition to that there is the conversation that took place between
Morgan and Steyger in person on the morning of the auction.
Morgan
had telephoned Steyger and established that he would conduct the
auction personally. He informed Steyger that he would
see him at
the auction. Morgan arrived an hour before the auction. He walked
around, noticed the flyers and posters containing
the advertisement,
saw Steyger and approached him. When asked what he told Steyger,
Morgan said:
“
Vir
hom vertel wat ek wil doen. Vertel vir hom dat ek het ‘n, ons
wil baie dringend ‘n warehouse opsit vir een van ons
kliënte.
Ook vir hom gesê dat ons het ‘n perseel gehad nie vêr
hiervandaan af nie waar ons nie regte het nie, en baie
opgewonde
hier is nou ‘n perseel en as ons die koop kan, as ons die eiendom
in die hande kan kry, dan kan ons begin om om,
om ‘n gebou op te
sit.”
When
asked what Steyger said in response, Morgan said:
“
ons het daaroor gesels”.
This
evidence has not been contradicted.
58. In
other words, in addition to the positive representation of the
property as commercial, there is the omission by Steyger
to disclose
that the property was zoned agricultural and did not have business
rights. If Steyger was aware that the property
was not zoned
commercial, which for reasons that follow I consider doubtful, he
may well have had a duty to disclose that during
his conversation
with Morgan who for understandable reasons was labouring under the
impression that it was commercial - see
Du
Toit v Atkinson Motors Bpk
1985 (2)
893 (A) at 905D. One must accept, on the basis of Lehmacher’s
evidence, her diary entry, and the content of the advert,
that the
second defendant originally thought the property was commercial.
Hence, any change in that supposition before the auction
gave rise
to a duty to disclose and any silence on the part of a knowing
Steyger would have constituted a misrepresentation by
silence -
Cloete v Smithfield Hotel (Pty) Ltd
1955 (2) SA 622
(O) at 626-627. In
the absence of contrary evidence from Steyger himself, he either
unwittingly persisted in the misrepresentation
reflected in the
advertisement or misrepresented the true situation through his
silence. As will become clearer later, I incline
to the view that
Steyger probably thought the property was zoned commercial. This,
if anything, is reinforced by his undisputed
failure to put Morgan
right during their conversation before the auction began.
59. Mr
Maritz, however, in addition argued that the plaintiff failed to
establish that the representation constituted a representation
of
fact that was wrong or false. First of all, he submitted, a
description of the area as “bestem vir ligte industrie”,
does
not indicate that the property itself had been zoned for light
industry but might indicate that re-zoning had yet to occur.
To my
mind the use of the word “bestem” says nothing about zoning or
the use rights attached to the property. Rather, along
with the use
in the advertisement of the phrase “baie gesogte area”, it
projects an image that the area was undergoing change.
The
description of the property as “’n Kommersiële eiendom” in
such an area, in my opinion, would posit in the mind of
the
reasonable buyer the idea that the property in question had already
been zoned or approved as commercial in an area where
the other
properties were likely in the future to be favourably considered for
rezoning for light industry. To the extent that
the description of
the area involved an element of speculation or prophecy about the
future of the area, such did not qualify
the stated nature of the
property itself, which was expressed unequivocally to be presently
commercial in an area previously
otherwise, but likely to change,
like the subject property, for use as an area for light industry.
Where a seller makes a representation
or an assertion of a positive
and material fact in regard to the quality and possible uses of the
merx,
such
conduct approximates a warranty or undertaking, which in appropriate
circumstances could give rise to remedies other than
restitutio
in integrum
-
Corbett
v Harris
1914 CPD 535
at 543. But
whatever the remedy sought, having regard to the language used in
the advertisement and the circumstances in which
it was used, a
reasonable person in the position of the plaintiff would have
understood the defendants to have represented as
a statement of fact
that the property was suitable and immediately available for
commercial purposes - see
Petit v
Abramson (II)
1946 NPD 673
at 682.
60. Mr
Maritz contended also that the description of the property as “’n
Kommersiële eiendom” did not in any event represent
that the
property had “besigheidsregte”. The term, it was submitted, is
a vague and generic term for a number of species
of business rights,
not all of which might suit the plaintiff’s purposes. The point,
it seems to me, goes to the question
of materiality. Before an
innocent party may resile from a contract on the grounds of
misrepresentation, the incorrect statement
of fact must be material.
The question is then whether a reasonable person in the position of
the plaintiff objectively would
have believed the description of the
property as commercial meant that it had business rights permitting
the plaintiff to engage
in the activities it envisaged. The word
“commercial” is indeed a word of wide connotation, meaning
“concerned with or
engaged in commerce”, which is the activity
of buying and selling. But in the context in which the phrase
appeared in the
advertisement, referring as it did to land, the word
must be given a more restricted meaning by contrasting it to other
land
uses, such as agricultural or residential. Land is used for
commercial purposes when the activities upon it involve the
exchange,
distribution and merchandising of goods. The erection of
a warehouse for conducting the business of importing and exporting

agricultural products, which the plaintiff had in mind, would entail
utilising the land for commercial purposes - see
Benrose
Holdings Ltd v Flamingo Laundries and Another
1978
(2) SA 377
(W) at 380B. The description of property as commercial
therefore, in my judgement, represented that the land was suitable,
zoned
and authorised for that or other commercial purposes. The
evidence of all the witnesses established beyond doubt that the land

was not so zoned. Indeed the first defendant admitted that no
application for rezoning the property was done prior to the auction

and that the property is not and never has been zoned as a
commercial property for light industry. While it is correct that

the allegation that the property could not be rezoned in the future
is hearsay, common sense tells us that had rezoning been
possible
this litigation would not have commenced, or at least not have taken
the course it did.
61. In
the result, therefore, I am satisfied that the defendants’
representation of the property as a commercial property when
it was
zoned exclusively agricultural constituted a material
misrepresentation.
62. The
prima facie
evidence of Morgan and van Vuuren that the misrepresentation induced
the contract is undisputed. They sought out a property
with
commercial rights precisely because the property they occupied was
unsuitable for commercial purposes. However, a person
to whom a
misrepresentation has been made and then acquires knowledge of the
misrepresentation before the contract is concluded
cannot claim to
have been induced by the misrepresentation. Mr Bruwer has argued
that Morgan was not induced to conclude the
contract by reason of
the misrepresentation. He contended that the probabilities point to
Morgan having been aware of the agricultural
zoning at the time he
signed the offer and that he persisted in the optimistic hope (on
the basis of a different misrepresentation
perhaps) that there would
be no difficulty in rezoning the property. This line of argument
necessitates the investigation of
two issues: firstly whether or
not there was a public announcement prior to the bidding that the
property was not a commercial
property as advertised but zoned
exclusively for agriculture; and secondly whether one may
legitimately conclude from the pre-trial
correspondence that the
original complaint of the plaintiff related to the lack of any
prospect of the property being rezoned,
from which it could be
inferred that Morgan knew at the auction that the property was zoned
as agricultural.
63. The
difficulty in the way of accepting that Steyger made an announcement
prior to the commencement of the bidding is that
this evidence was
tendered for the first time after the plaintiff had closed its case
and Steyger, despite being present throughout
the trial, failed to
testify and thus confirm that he had done so. The evidence of an
announcement was first tendered by Moolman,
who also had been in
attendance throughout the presentation of the plaintiff’s case,
and hence loses much in the way of credibility
and reliability on
account of it emerging only after the theoretical possibility of the
need for such an announcement had been
raised by counsel during the
examination of the plaintiff’s witnesses. Neither counsel for the
two defendants put it to the
plaintiff’s witnesses that an
announcement had been made, meaning that they probably had no
instructions on the matter, which
considering the obvious importance
of the evidence from a common sense point of view, renders the late
raising of it suspect
and uncreditworthy. Added to that, the
plaintiff has been denied the opportunity to deal with it, either
through the witnesses
who testified or others that might have been
called in rebuttal.
64. While
the plaintiff might have applied successfully to re-open its case,
one may assume it did not do so because counsel had
other good
grounds to support the contention that the evidence was
uncreditworthy and unreliable. Firstly, the fact of a corrective

announcement was never raised in the pre-trial correspondence.
Indeed, in Exhibit A28, written by Steyger himself to the first

defendant’s attorney in response to the suggestion in Exhibit A25
that he had acted without instructions in marketing the property
as
commercial, Steyger indignantly placed it on record that he
auctioned the property on the basis of the information supplied
to
him by the first defendant. That such information included a
description of the property as commercial is borne out by

Lehmacher’s diary entry of 17 April 2006 (Exhibit A4). Had
Steyger made the announcement as alleged he would undoubtedly have

said so in his letter. The fact that he did not, gives the lie to
Moolman’s claim, and in my assessment confirms that he proceeded

with the auction on the instruction that the property was commercial
and probably thought it was so.
65. Besides
that, the evidence about when and where the announcement was made is
contradictory. Moolman testified that Steyger
made the announcement
just before the bidding. In that case Steyger would have been
outside the rondawel in the presence of
all the bidders. Morgan’s
uncontradicted evidence is that at such time he stood in close
proximity to Steyger and would have
heard any announcement. The
fact that Morgan negligently failed to take heed while the terms and
conditions were read out over
the loudspeakers through the public
address system by Steyger sitting out of view inside the rondawel,
accordingly would have
no bearing upon that. Lehmacher, on the
other hand, testified that she heard the announcement being made
through the loud speakers.
Because Steyger did not testify, it is
not possible to determine accurately which of the two versions is
the true account, or
whether he did neither or both. By virtue of
his presence in court, Steyger knew that the announcement had become
controversial,
that it stood in direct conflict with the
advertisement, that it had not been put to the plaintiff’s
witnesses and that the
first defendant’s witnesses had
contradicted each other in relation to it. Where there is doubt of
such an order about whether
an obviously critical announcement has
been made or not, and the witness who made the announcement is
present and available to
testify, the failure to call that witness
permits the drawing of an appropriate adverse inference that the
announcement was not
made and the rejection of the contrary (and
contradictory) evidence as uncreditworthy and unreliable.
66. The
problem of credibility attending Lehmacher’s evidence is
compounded by the late discovery of Exhibit E, the note she

allegedly handed to Steyger just before the bidding. Here too one
might have expected Steyger to testify to corroborate the
fact that
the note was given to him. No reasons were advanced for the late
discovery of the note, nor was any evidence tendered
explaining how
it was that three years after the auction, subsequent to her
termination of employment, she came still to be in
possession of a
scrap of paper with a handwritten note on it which she handed to
Steyger. Apart from the improbability of Steyger
handing it back to
her at the time, had Steyger kept it and produced it only at the
trial this too would beg the question of
why he had not discovered
it in the ordinary course or why he neglected to rely upon it in his
pre-trial correspondence to counter
the accusation that he had acted
contrary to instructions.
67. This
then leaves the issue of the question allegedly asked by one of the
bidders. This at least was put to Morgan. The submission
by Mr
Bruwer that Morgan would not have heard it, because of his negligent
failure to pay heed, holds no water. The evidence
discloses that
Morgan would have been in close proximity to Steyger when the
question was asked, if it was asked at all. The
evidence also
suffers the same defect of credibility attending the alleged
announcement. It was not raised in prior correspondence
and Steyger
did not testify to corroborate it. Added to that is the
contradiction about who answered the question. In the proposition

put by Mr Bruwer to Morgan (which Morgan vehemently denied) it was
said that Steyger answered the question. In his evidence
Moolman
said he answered the question.
68. Finally,
there is an air of improbability to the whole scenario. The
advertisement was aimed at evoking interest in a target
market of
buyers interested in acquiring commercial property. Flyers and
posters displayed at the auction reiterated the commercial
nature of
the property. And, conceivably, the attending bidders, like Morgan,
had intentions to use the property for purposes
other than
agricultural. In such circumstances, the sudden and unexpected
announcement that the property was not commercial
but agricultural
most likely would have caused a stir and some dissatisfaction, for
the simple reason that those interested would
have been told that
the land for sale was not that in which they were interested. By
all accounts the auction went smoothly
and the brouhaha one might
have expected did not occur. It also seems improbable, especially
if I accept Lehmacher’s evidence
that she became aware of the
agricultural zoning when she obtained the title deeds some time
before the auction, that posters
and flyers advertising the property
as commercial would have been put up and distributed on the morning
of the auction, without
any effort made to correct their mistaken
content, had the defendants been as committed as they claimed they
were to rectify
the false impression created by the description of
the property.
69. Neither
Lehmacher nor Moolman impressed as witnesses. Both were naturally
and inherently biased against the plaintiff. Lehmacher
was the
person responsible for the advertisement and Moolman had a direct
interest in the sale. Lehmacher’s initial stance
that the
description of the property as commercial was qualified by the use
of the term “hoewe”, as well as her efforts to
get away from the
note in her diary that the property was commercial, tainted her
credibility and created the impression that
she might be willing to
tailor her evidence to diminish any accountability for the role she
played. Moolman’s credibility
was impacted upon negatively not
only by the inconsistencies and improbabilities attached to the
sudden tendering of the fact
that an announcement had been made, but
also by his noticeable change in demeanour as the cross-examination
of him progressed
and the weaknesses in his assertions became
manifest. These factors too therefore militate against accepting
their evidence about
the supposed announcement and question.
70. The
next question is whether the correspondence of the plaintiff’s
attorney supports a legitimate inference that Morgan
knew of the
agricultural zoning because he complained only that it was not
possible to re-zone. The first letter Exhibit A17
addressed to the
second defendant by the plaintiff’s erstwhile attorney, it was
submitted, stated that it had come to the notice
of the client that
the property could not be rezoned. That, in my opinion, is too
narrow an interpretation of the gist of this
letter. The complaint
that the property could not be rezoned is made in the context of the
plaintiff complaining that he had
just become aware of the fact that
the land was zoned exclusively for agriculture. The letter includes
an assertion that the
property had been marketed as commercial
property. Prior to that statement, it is said: “Dit het intussen
tot ons Kliënt
se kennis gekom dat die gemelde eiendom uitsluitlik
vir landbou gesoneer is…” While it is correct that the focus of
the
letter then shifts to the lack of any prospect of re-zoning, I
doubt that such justifies, as the most probable inference, a
conclusion
that Morgan knew the property was zoned exclusively as
agricultural, particularly in view of the assertion in the very same
letter
that he had only acquired knowledge of that fact after the
auction. The concentration on the limited prospects of success for

a re-zoning application should be construed rather as the plaintiff
highlighting the evident and unalterable unsuitability of
the land.
Likewise, counsel’s reliance on the final paragraph of Exhibit
A19-20, the letter to the first defendant’s attorney,
affording
the seller an opportunity to sort out the re-zoning is equally
misplaced. The demand is strategic and mindful of avoiding
any
procedural or formal defect on commencing litigation in terms of the
provisions of the contract. In any event the demand
is prefixed
with the qualification: “
Vir wat dit
werd is
maan ons u kliënt hiermee
formeel
aan….”
71. In
the result therefore, I reject as improbable the evidence that
Steyger, Moolman or both sought to correct the incorrect
description
of the property prior to the bidding and hence accept that Morgan
remained under the impression that it was a commercial
property and
was accordingly induced to conclude the contract by that
misrepresentation. As I have said, Morgan and van Vuuren’s

testimony that they consciously sought out a commercial property
because of the unsuitability of the property they occupied has
not
been contested or contradicted. It follows from this finding that
there is no need to consider whether the alleged correction
would
have been sufficient or effective to remedy the misrepresentation.
72. As
a general proposition in our law, it does not matter whether a
misrepresentation was fraudulent, negligent or innocent
should the
relief sought by the innocent party be limited to
restitutio
in integrum
, as in this case. Where
an award of damages is sought on the basis of delictual liability
then fraud or negligence will need
to be established. It is
sufficient for the purposes of restitution for the plaintiff to show
that the misrepresentation is
material, as I have already found it
was. The fact that the title deed contained the restriction for use
only for agricultural
purposes and the fact that Lehmacher, acting
as an authorised agent for the seller, was aware of that before the
auction was
conducted and failed to take appropriate steps to
correct the misrepresentation points towards the misrepresentation
having been
at least negligent. The question of whether or not
there was fraud, however, may assume importance in determining the
applicability
of the exemption clauses.
73. Before
turning to that issue, it needs to be said that there is no debate
about the general effect of a misrepresentation.
A fraudulent
misrepresentation would normally result in the contract being void
ab initio
.
However, an innocent misrepresentation renders a contract voidable,
effective until set aside by the innocent party, even though
it
results only in a unilateral mistake on the part of the representee
-
Trollip v Jordaan
1961
(1) SA 238
(A) at 252H. This general principle has been added to
recently in
Brink v Humphries and
Jewell (Pty) Ltd
2005 (2) SA 419
(SCA)
at 421G where it was held that where an innocent misrepresentation
results in a fundamental mistake, the “contract”
is void
ab
initio
. Not much turns on the
distinction for present purposes. Insofar as it might have been
obliged to do, so the plaintiff rescinded
the voidable contract, if
that, on 7 June 2006.
74. Mr
Maritz, however, has argued that the first defendant was not
represented by the auctioneer, the second defendant, who he

submitted was a third party to the contract for the purposes of the
payment of the commission and that any innocent misrepresentation
on
its part did not have the effect of vitiating the obligation to pay
commission. He argued that the claim for restitution
can only be
against the other contracting party to whom partial or complete
performance has been made. For this reason, he submitted,
where the
representation was made by the agent of the guilty party,
restitution can only be claimed from the principal. For
that claim,
the principal and his agent cannot be seen as joint wrongdoers or be
held jointly and severally liable.
75. The
submission is unsustainable for more than one reason. The submission
seems first to say that the second defendant was
not an authorised
agent but an independent third party but then goes on to argue as a
general principle that restitution cannot
be claimed in respect of
any performance rendered by an innocent party (payment of
commission) to an agent for the benefit of
the agent. Starting
first with the question of whether the second defendant was indeed
the first defendant’s agent. In paragraph
5 of the particulars of
claim the plaintiff alleged that it was. In paragraph 4.2 of its
plea the first defendant admitted that
the second defendant
represented it in attending to the sale and procurement of an offer
for the property by public auction.
In paragraph 5 of its plea the
second defendant did not deny, but nor did it expressly admit, that
it was authorised by the
first defendant. It implicitly admitted it
though by pleading that Annexure A was concluded at the conclusion
of the auction.
Annexure A (the offer and contract) expressly
states in the preamble that the auctioneer is acting on behalf of
the seller.
Hence there is little doubt that the auctioneer was
acting as the seller’s agent. The commission payment is deducted
from
the purchase price and is only due and payable in terms of
clause 10 of the sale agreement “met bekragtiging hiervan”, that

is on the conclusion of the sale. But that amount, together with
the deposit, in terms of the contract, is paid upfront by the

purchaser. However, the fact of its deduction from the agreed price
makes it inescapably an obligation for the account of the
seller. I
accordingly do not accept Mr Maritz’s submission that the payment
of the commission involved any separate and divisible
contract in
terms of the second defendant’s own bargain with the plaintiff.
Moreover, by its nature, the remedy of rescission
and restitution is
aimed at setting aside the contract and returning to the
status
quo ante
. An innocent party who has
rendered partial performance and paid money under the contract is
entitled to claim its return from
the party to whom it has been
paid. A void contract or a rescinded voidable contract, gives rise
to no enforceable obligations.
The right to commission depended on
the conclusion of a valid contract. Absent any right to commission
it must be restored
from whence it came. The object of the remedy
of
restitutio in integrum
is
that the parties ought to be restored to the respective positions
they were in at the time they contracted. There must be
complete
restitution. To allow an agent to retain unearned commission would
thwart the remedy and its underlying equitable considerations.
76. This
leaves the issue of the plaintiff’s attempt to avoid the exemption
clauses. Morgan’s evidence is that he neither
listened when the
terms and conditions including the exemption clauses were read over
the public address system, nor did he read
them properly when he put
his signature to Annexure A immediately after the conclusion of the
auction. The exemption clauses,
clause 7, 8 and 18 exempt the
seller
inter alia
for latent and patent defects and provide that no guarantees are
given in respect of the “kwaliteit of wettigheid van verbeterings

of aktiwiteite wat daarop bedryf word”. The property is
explicitly sold subject to the conditions of the title deed. In
clause 8 the purchaser acknowledges that he was not induced or
influenced by any express or tacit representations to conclude
the
contract. And clause 18 provides that the document constitutes the
entire contract between the parties and no representations

(voorleggings) made by either party will be binding unless in
writing, annexed to the agreement and signed by both parties.
77. Counsel
for the plaintiff placed much reliance on
Du
Toit v Atkinsons Motors Bpk
1985 (2)
SA 893
(A) in support of his contention that the plaintiff can avoid
the exemption clauses on the grounds of
iustus
error
. The facts of that case bear
superficial resemblance to the present case, but I am not persuaded
that the principle enunciated
has equal application. There the
appellant, enticed by an advertisement in a newspaper offering a
“Mercedes Benz 350 1979”,
agreed orally to purchase the vehicle.
After the vehicle was registered in his name he signed without
reading a document including
an exemption clause excluding the
liability of the seller in connection with any representation in
respect of
inter alia
the
year of manufacture of the vehicle. The vehicle was in fact a 1976
model. The trial court found the appellant was bound
by the
provisions of the contract. Its decision was reversed on appeal on
the ground that the seller’s failure to explain
the ambit of the
clause signed after the contract had been concluded amounted to a
further misrepresentation by silence. However,
what was critical to
the decision, in my view, was the fact that the exemption clause was
signed after an oral contract not incorporating
any exemption had
been concluded and that the seller had not explained the ambit of
the exemption to the purchaser who did not
read the document. In
other words there was a misrepresentation not only about the
attributes of the
merx
but
also about the contents of the document signed.
78. There
is no evidence before me that the content of Annexure A was
misrepresented in any way to Morgan. The terms and conditions
of
the sale were announced prior to the bidding and Morgan was given
the contract to read before he signed it. This accordingly
is not
an instance where we are concerned with a misrepresentation about
the ambit of the terms contained in a written contract.
If Morgan
was mistaken as to the written terms of Annexure A that was due
entirely to his own unreasonable conduct in paying
insufficient heed
and his error in that regard cannot be categorised as
iustus
-
Standard Credit Corp Ltd v Naicker
1987 (2) SA 49
(N).
79. However,
the matter does not end there. The reasonableness or otherwise of
Morgan’s conduct should not be adjudged solely
at the time he
signed the offer. One cannot divorce his conduct from his mistaken
assumption that he was purchasing a commercial
property and that
such mistake had been induced by the wrong information in the
advertisement, the posters, the flyers and possibly
the failure of
Steyger to draw attention to his mistaken assumption when he
discussed with him the plaintiff’s purpose in wanting
to acquire
the property. The advertisement was aimed at creating the
impression that the land was possessed of the attribute
of
commercial zoning and on the strength of that mistaken impression,
negligently conveyed, the plaintiff purchased the property.
The
mistake was unlikely to be rectified by a proper perusal of the
document - Annexure A. Such, while not quite an
error
in corpore
, was a mistake about an
essential attribute of the
merx
which induced the plaintiff to purchase something fundamentally
different to what he intended.
80. Traditionally
our law has not been willing to enforce exemption clauses excluding
liability for misrepresentations where the
contract has been induced
by a fraudulent misrepresentation. The principle was enunciated in
Wells v SA Alumenite Co
1927
AD 69
at 72 as follows:
“
On
grounds of public policy the law will not recognize an undertaking
by which one of the contracting parties binds himself
to condone
and submit to the fraudulent conduct of the other. The Courts will
not lend themselves to the enforcement of such
a stipulation; for
to do so would be to protect and encourage fraud.”
81. Left
at that an exemption clauses would be binding absent any fraud and
the plaintiff could not escape the contract notwithstanding
the
misrepresentation.
82. The
submissions by counsel on the possible fraudulent nature of the
misrepresentation were somewhat muted. As I have indicated,
having
regard to Exhibit A28, I accept that Steyger probably
bona
fide
believed the property was
commercial. Because Carel Moolman did not testify, it is difficult
to infer as the most plausible
inference that his instruction to
Lehmacher (reflected in her diary as “landbou/kommersiële) was
made knowing it was wrong
and with the intent to mislead. When
Lehmacher caused the misrepresentation to be published she genuinely
believed it was true.
Her failure to correct it when the truth came
to her knowledge, as I have said, at the very least was negligent,
if not reckless.
The reckless failure to correct an untrue
misrepresentation does amount to fraudulent misrepresentation -
Ruto
Flour Mills (Pty) Ltd v Adelson
1959
(4) SA 120
(P) at 122G. However, I do not think the evidence
establishes beyond a balance of probabilities that Lehmacher was
reckless.
There is insufficient cogent evidence from which one may
infer a state of mind on her part that she foresaw the possibility

of a bidder being misled to conclude a contract on the basis of the
misrepresentation and then recklessly reconciled herself to
that
possibility. Busy with other aspects of the auction, and perhaps
lulled into comfort by the availability of the title deed,
her
conduct was most likely only negligent, in the sense that a
reasonable person in her position and in the circumstances would

have forseen the possible effects of the misrepresentation and would
have taken appropriate steps to safeguard against them.
From what
has gone before, it is evident that Lehmacher, despite her knowledge
of the true situation, did nothing or insufficient
to convey the
correct impression.
83. Since
Trollip v Jordaan
1961
(1) SA 238
(A) our law appears to have taken a different turn by
allowing perhaps less than fraud to avoid an exemption clause.
Although
in that case the majority of the court upheld an exemption
clause, both the majority and the minority of the court were in
agreement
that, if the buyer’s mistake could be described as an
error in corpore
,
then the sale, including the exemption clauses, would be void in its
entirety. As Christie
The Law of
Contract in South Africa
(5
th
edition) at 320 puts it:
“
a
mistake may sometimes be fundamental in the sense that because of
its existence agreement is so completely lacking that it
is
impossible to say there is any contract at all.”
In
Allen v Sixteen Stirling Investments
(Pty) Ltd
1974 (4) SA 164
(D) Howard J
refused to give effect to an exemption clause where the
misrepresentation had resulted in an
error
in corpore
which vitiated consent to
the whole agreement. The learned judge cited with approval the
following statement made by Hunt in
1961
Annual
Survey of South African Law at 95
:
“
Prima
facie
it would
seem that the vice taints consent to the whole contract, including
the exemption clause. All the terms of the contract
together
regulate the contract’s object, and it is difficult to see how
the consent can but stand or fall as a whole. It
seems
impermissible to find a separate untainted consent to the exemption
clause.”
Howard J in
accepting the proposition added (at 171B):
“
I
can find no fault with the reasoning, provided that the “vice”
is understood as meaning something in the nature of an
essential
error which vitiates consent and renders the contract void
ab
initio
.”
In
Brink v Humphries and Jewell (Pty) Ltd
(
supra
)
the Supreme Court of Appeal approved of this decision stating (at
42G) that where a misrepresentation results in a fundamental
mistake
the contract is void
ab initio
.
It might be said then that the emphasis has shifted from the nature
of the fault element attending the misrepresentation to
the nature
and quality of the consensus vitiating error caused by the
misrepresentation.
84. In
the present case, the fundamental and essential object of the
contract was the purchase and sale of the property for use
as a
commercial property. The situation here is akin to that in
Milne
N.O. v Harilal
1961 (1) SA 799
(N).
In that case the defendant rescinded a contract of sale of land
which had been sold to him at an auction and which had
been
advertised as “an excellent sugar farm”. It appeared from the
evidence that the farm could not be truthfully described
as such.
About half of the farm was so steep and rocky that it was unsuitable
for the growth of sugar cane. The court found
the advertisement to
be a fraudulent misrepresentation, and gave judgment for the
defendant. A similar result would have been
permissible under the
new approach had the court found a material negligent
misrepresentation which had induced a fundamental
or essential
mistake, that is a mistake about the core attribute of the
merx
.
As in the present case, the land was unsuitable for the purpose
represented. Consequently, the entire consensus was tainted.
The
mistake induced by the misrepresentation in the present matter
likewise goes to the essence of the contract with the result
that
consensus was fundamentally lacking and hence there could not have
been an untainted consent to the exemption clauses.
Once the
consent to the exemption clauses is found to be tainted there is
less force in the argument that the error could have
been reasonably
avoided by Morgan reading the title deeds. The exemption clauses
were consented to on the mistaken premise negligently
misrepresented
that the title deeds contained no restriction on commercial use. In
any event, the evidence establishes that
Morgan was not informed
that the title deeds were available for inspection. It was
reasonable therefore for Morgan to assume
mistakenly (
iustus
)
that the title deeds of a property represented as commercial would
contain no restriction on commercial use.
85. Accordingly,
there is no basis for excluding liability for the misrepresentation
and the plaintiff should be granted restitution.
Each defendant
should be ordered to return that which it received. Costs should be
awarded jointly and severally.
86. The
following orders are issued:
1. The
first defendant is ordered to pay the plaintiff the amount of R200
000.
2. The
second defendant is ordered to pay the plaintiff R182 400.
3. The
defendants shall pay interest on the aforementioned amounts at the
rate of 15,5% per annum from 18 May 2006 to the
date of payment
thereof.
4. The
defendants are ordered to pay the costs of suit, jointly and
severally, the one paying the other to be absolved.
JR MURPHY
JUDGE OF THE HIGH COURT
Date
Heard:4, 5 & 23 March 2009
For the
Applicant: Adv N Davis SC, Pretoria
Instructed
By:Snyman’s Attorneys, Pretoria
For the
1
st
Respondent: Adv P Bruwer, Johannesburg
Instructed By:Ben Steyn Inc. c/o MP
Koekemoer Attorneys, Pretoria
For the
2
nd
Respondent: Adv JD Maritz, Pretoria
Instructed
By:Jaco Roos Attorneys, Pretoria