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[2008] ZANCHC 47
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ABSA Bank Limited v Wernich (665/2004) [2008] ZANCHC 47 (23 May 2008)
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IN THE HIGH COURT OF
SOUTH AFRICA
(Northern Cape
Division)
Case Nr:
665/2004
Case Heard:
29/04/2008
Date
delivered: 23
/05/2008
In
the matter between:
ABSA
BANK LIMITED PLAINTIFF
and
MARIE
CAROLE LOUISE WERNICH RESPONDENT
JUDGMENT
Olivier J:
The plaintiff, Absa
Bank Limited, issued summons against the defendant, mrs Marie Carole
Louise Wernich, in which it claimed payment
of outstanding balances
on an overdrawn cheque account and a bond account. The plaintiff’s
claim is based on a suretyship
in terms of which the defendant bound
herself for payment of the debts of PJ’s Biltong Bar CC.
At the commencement of
the trial it was placed on record that agreement had been reached on
several issues:
The issues concerning
the bond account had been settled and was no longer in dispute (The
plaintiff had apparently received
and accepted payment in respect
of that account, but only after summons had been issued and any
costs pertaining to that part
of the plaintiff’s claim will
therefore be regarded as costs in the cause).
The
only issue to be decided was whether the parties had concluded a
settlement agreement which would prevent the plaintiff
from
proceeding with its claim in respect of the overdrawn cheque
account (see
Hamilton
v Van Zyl
1983 (4) SA 379
(E) at 383H-384B and
Gourlay
v Canoa KZN (Pty) Ltd t/a Canon Office Automation
[2008] 2 ASS SA 194 (N)) . If so, the plaintiff’s claim fell
to be dismissed. If not, judgment should be granted in
favour of
the plaintiff in the amount of R1 032 272.52, interest
a tempore morae
on that amount calculated from 5 November 2007 and costs on the
scale as between attorney and own client (as agreed to in the
deed
of suretyship).
As regards the defence
that the plaintiff’s claim against the defendant had been
settled, the defendant initially pleaded
the following under
paragraph 4 of her plea:
“
4.
Defendant pleads
further that she entered into a verbal agreement with the Plaintiff
during July 2004 with the following relevant
terms:
That the only
assets belonging to the Defendant are her interests in the close
corporations Biltong Huts 2 through 5.
That the four
close corporations be liquidated and a Liquidator appointed who
would be best suited to distribute the assets
of the close
corporations between creditors.
That the defendant
will ‘cede’ or pay over her interests in the said close
corporations to the Plaintiff in full
and final settlement of all
claims by the Plaintiff under case number 665/2004 in the High
Court of South Africa (Northern
Cape Provincial Division).
In
the
alternative
,
the Defendant agreed that neither she nor any of her family receive
any funds or payment whatsoever from the liquidation of the
close
corporations in exchange wherefore the Plaintiff will lodge a claim
or claims with the Liquidator in terms of a suretyship
given by
Biltong Hut 2 CC in favour of the Plaintiff in full and final
settlement of all claims by the Plaintiff, but in any event
will the
Plaintiff not proceed with the action provided neither Defendant nor
any of her family receive any such funds or payment,
under case
number 665/2004 in the High Court of South Africa (Northern Cape
Provincial Division).”
At a later stage the
plea was amended by the insertion of paragraph 4.4 therein, which
reads as follows:
“
4.4 The
Defendant pleads further that this action and/or litigation has been
settled between the parties on or about 27 August 2004,
by virtue of:
Plaintiff’s
attorneys’ settlement proposal contained in the letter dated
15 July 2004, hereto attached as
annexure
WA
;
Defendant’s
attorneys’ settlement offer contained in their reply (to
annexure
WA
),
dated 27 August 2004 hereto attached as
annexure
WB
;
and
Plaintiff’s
attorneys’ acceptance thereof in their reply (to
annexure
WB
),
dated 27 August 2004 hereto attached as
annexure
WC
,
and received in Victoria West on or about 27 August 2004”.
During
the trial the date in paragraph 4.4.2 was amended to read
“16
July 2004”
.
The defendant assumed
the duty to begin and on her behalf the evidence of her husband, mr
P J Wernich, and of their attorney,
mr W Viljoen of the firm M D
Visser & Partners in Victoria West, was presented. The evidence
of mr T R de Wet, an attorney
in the firm Marais Müller Yekiso
in Cape Town, who represents the plaintiff, was presented on its
behalf.
The
plaintiff’s case was that no
consensus
had been reached and that no settlement agreement had therefore been
concluded (see
Lake
and Others NNO v Caithness
1997
(1) SA 667
(E) at 372C,
The
Principles of the Law of Contract
,
Kerr, 6
th
edition, p 241 and
Diamond
v Kernick
1947 (3) SA 69
(AD) at 83-84).
The
defendant bore the onus of proving that such an agreement had indeed
been concluded (see
Cecil
Nurse (Pty) Ltd v Bongile Nkola
[2008] 1 All SA 428
(SCA) para [14],
The
Torch Moderne Binnehuis Vervaardiging Venn (Edms) Bpk v Husserl
1946 CPD 548
and
Be
Bop a Lula Manufacturing & Printing CC v Kingtex Marketing
(Pty) Ltd
2006 (6) SA 379
(C) para [24]).
The following facts
were common cause:
The
defendant and mr Wernich were the only members of,
inter
alia
,
close corporations known as Biltong Hut 2 through 5 and which owned
fixed properties (houses).
The plaintiff had
claims against Biltong Hut 2 CC, one as the holder of a first
mortgage bond over its property and the other
in terms of a
suretyship by the close corporation in respect of the debts of PJ’s
Biltong Bar CC.
The plaintiff had no
claims against the other Biltong Hut close corporations, the
properties of which were the subject of mortgage
bonds in favour of
Old Mutual Finance.
The fixed properties
of the Biltong Hut close corporations were sold and yielded nett
proceeds in the total amount of approximately
R544 000,00.
When these close
corporations were wound up early in 2005 the plaintiff lodged no
claims in the liquidation of Biltong Huts
3, 4 or 5, but did
receive payment of an amount of approximately R81 500,00 as a
concurrent creditor in the liquidation of
Biltong Hut 2 CC.
The plaintiff never
received any payment or benefits by virtue of the settlement
agreement/s alleged by the defendant in her
plea (as amended).
Mr Wernich’s
estate was provisionally and finally sequestrated in or about June
2004 in an application in which the plaintiff
had intervened as
sequestrating creditor.
After the evidence had
been led mr Grewar, counsel for the defendant, announced that the
defendant was abandoning what was pleaded
in paragraph 4.4 of the
amended plea and would only be relying on the agreement alleged in
paragraphs 4.1 to 4.3 (and the alternative
thereto).
This announcement did
not come as a surprise:
I found it difficult
to understand how a matter that had been settled in terms of an
earlier verbal agreement could at a later
stage once again have
formed the subject of a settlement agreement, unless the later
agreement constituted an amendment of
the earlier agreement or a
novation thereof (which was not pleaded).
The
contents of the three letters referred to in paragraphs 4.4.1 to
4.4.3 of the amended plea (and which, according to the
amended
plea, constituted a settlement agreement) could in my view by no
stretch of the imagination be read as indicating that
there had
been
consensus
on the very material issue regarding what the plaintiff would
accept in settlement of its claim.
In
the first of these letters (dated 15 July 2004, annexure WA to the
amended plea and exhibit B18 - 20) mr de Wet made the
“proposal”
that the fixed properties of the Biltong Hut close corporations be
sold and that
“The
remaining nett proceeds (i.e. purchase price plus occupational
interest collected less bondholders’ claims less
estate agents
commission) will be paid on day of registration of transfer by the
relevant transferring attorneys to insolvent estate
P J Wernich c/o
mr Spangenberg of Van De Wall & Partners, to be dealt with in
terms of the Provisions of the Insolvency Act”
.
In
reply (annexure WB to the amended plea and exhibit B21, dated 16 July
2004) mr Viljoen stated that the defendant and mr Wernich
were “
in
agreement to pay over the proceeds of their interests in the CC’s
…
”.
This quite clearly did not amount to an acceptance of mr de Wet’s
“
proposal
”.
In his evidence mr
Viljoen was constrained to concede, albeit reluctantly, that there
was a very clear difference between the notion
of the nett proceeds
of a property belonging to a close corporation, on the one hand, and
that of the nett proceeds of a member’s
interest in a close
corporation, especially where other creditors were involved.
Apart
from this, and possibly a further indication of the fact that the
defendant and mr Viljoen must have been aware of the difference
between what mr de Wet had offered and what the defendant was
prepared to agree to, there is the fact that it was specifically
pleaded that mr Viljoen’s letter was a
“settlement
offer”
(and therefore not an acceptance of mr de Wet’s earlier
proposal).
In
the last of these three letters (annexure WC to the amended plea,
exhibit B32, dated 27 August 2004) mr de Wet, however,
made it
quite clear that what the plaintiff would be prepared to settle
for, was the nett proceeds
“as
defined in our previous letter dated 15 July 2004”.
This
could never be construed as an
“acceptance”
of what was proposed in the letter of 16 July 2004.
Much
was made in cross-examination of how many times mr de Wet, the
attorney for the plaintiff, had in his correspondence alluded
to an
agreement which had been reached between the parties. In my view
this would not take the matter any further if it later
transpired
that there had in actual fact never been
consensus
between the parties.
What remains to be
decided is whether the conclusion of an agreement as alleged in
paragraphs 4.1 to 4.3 (and the alternative
thereto) has been proved
on a balance of probabilities.
In my view this
question can be easily disposed of without discussing the
credibility and the inherent probabilities of the evidence
that was
led in any detail. This is so because the evidence led on behalf of
the defendant quite simply did not prove the conclusion
of such an
agreement.
Mr de Wet denied the
conclusion of such an agreement and on mr Viljoen’s own
version he had not been involved in the conclusion
of such an
agreement. According to mr Viljoen he acted on the instructions of
mr Wernich in the telephonic discussions that
he had with mr de Wet
and in the letters that he drafted.
Mr Wernich’s
evidence in this regard was briefly the following:
During
a telephonic discussion between himself en mr de Wet the latter had
conveyed to him that the plaintiff would be prepared
to write off
money on condition that the defendant and mr Wernich
“do
not get any financial benefit from the sale of the houses and out
of the close corporations”
.
He
testified that mr de Wet was, however, not prepared to negotiate
with him and asked him to
“get
mrs Wernich to do it and send it to me so that I can take it up
with my client”
.
According
to mr Wernich this then led to the letter dated 12 July 2004
(exhibit C), which the defendant addressed to mr de Wet.
Mr
Wernich described this letter as
“the
basis of the agreement”
.
In
the letter the defendant proposed
“ceding”
her interests in the close corporations to the plaintiff in full and
final settlement (Interestingly enough no mention was made
of mr
Wernich also being prepared to “
cede
”
any interest that he might have had in the close corporations, an
undertaking that mr Wernich would as unrehabilitated insolvent
not
have been in a position to give at that time).
Mr Wernich then
consulted mr Viljoen and after telephonic conversations between mr
Viljoen and mr de Wet, the latter addressed
the letter dated 15 July
2004 (annexure WA to the amended plea, exhibit B18-20) to mr
Viljoen.
I have already dealt
with the contents of this letter. It quite clearly did not
constitute an acceptance of what had been proposed
in the
defendant’s letter of 12 July 2004 (exhibit C). Although mr
de Wet did refer to the defendant’s proposal
in his letter, he
made a completely different proposal in his letter.
That
the defendant herself had not seen the letter of 15 July 2004 as an
acceptance of her offer, is borne out by the fact that
it was
referred to as a “
settlement
proposal
”
in paragraph 4.4.1 of the amended plea.
in
any event, mr Wernich insisted that the settlement agreement had
been verbal (not in writing or partially in writing). He
conceded,
however, that he had not been “
part
of that verbal agreement
”.
When asked whether the defendant had concluded the alleged verbal
agreement, mr Wernich responded as follows:
“
Where you
part of that verbal agreement? === No.
Who was? ===
According to this it must be the Plaintiff. And I am not saying that
I was not, I am saying that I can not remember.
I can not sit here
and honestly say to the Court that I can distinguish between July
2004 and September 2004. Sitting here, I
am just not capable of
doing that My Lord. I am sorry.
Did your wife enter
into this agreement of July 2004? === She would not have a problem in
entering into it.
Sir, did she or did
she not enter into it? === I believe she did.
You believe she did?
=== She might have, I do not know.
You do not know?
=== No.
So we can take the
proverbial blue pen and draw a line through the first part of that
plea. 4.1, 4.2, and 4.3 we can draw a line
through, because you do
not know? === I can not sit here and honestly say that I can
remember what happened in July 2004 or September
2004.”
The
defendant was not called as a witness herself. Mr Wernich testified
that
“It
would have been very difficult for her to come and give evidence”
.
Mr Wernich said that the defendant was from Canada. When asked in
chief-examination
“En
is sy Engels magtig?”
,
mr Wernich’s answer was
“In
‘n sekere mate ja Edelagbare. Nie perfek nie.”
Although mr Wernich testified that he had assisted the defendant in
this, the fact remains that she also signed several letters
which
were drafted in English. The deed of suretyship which she signed
was also drafted in English.
Even if the defendant
would only have been able to testify in some other language, she
could have made use of an interpreter.
No other explanation was
tendered for the fact that she was not called to testify.
These
circumstances would in my view justify the drawing of a negative
inference from the failure to present the defendant’s
evidence
(see
Just
Names Properties 11 CC and Another v Fourie and Others
2007 (3) SA 1
(W) at 16-17), but even without drawing such an
inference the position would be that the only witness that would
have been able
to testify about the conclusion of the alleged verbal
agreement was not called to testify.
In my view, and on the
evidence that was led, the probabilities are in any event
overwhelmingly against the conclusion of such
a verbal agreement.
In view of the conclusion to which I have already come, I will only
briefly refer to a few of these:
The contents of the
letters by the defendant herself (exhibit C), her attorney mr
Viljoen (annexure WB to the amended plea and
exhibit B21) and the
attorney for the plaintiff, mr de Wet (annexures WA and WC to the
amended plea, exhibits B18-20 and B32)
are simply completely
irreconcilable with the conclusion of such an agreement.
Had a verbal agreement
with such terms been concluded between the defendant and mr de Wet
during the same month in which most of
these letters were written,
there would not have been any reason or need for further proposals.
Mr
de Wet’s proposal that the nett proceeds of the sale of the
properties of the close corporations be paid to the plaintiff
is, as
already discussed, completely different from and irreconcilable with
an agreement that the plaintiff would accept whatever
proceeds the
defendant’s interest in the close corporations in liquidation
might yield after distribution of the assess of
the close
corporations
“between
creditors”
(see paragraph 4.2 of the plea). In the one scenario the plaintiff
would be entitled to the full nett proceeds of the sales and
in the
other at best to only a part thereof.
No reason or
explanation was suggested for the fact that mr de Wet made such
proposals in his letters of 15 July 2004 and 27 August
2004, if he
had known that he had already concluded a verbal agreement in
completely different terms.
The allegation that
mr de Wet was prepared to write off his client’s claims as
long as the defendant and mr Wernich did
not receive any financial
benefits from the sale of the properties of the close corporations
or their liquidation, is irreconcilable
with:
mr de Wet’s
persistent requests for details of the assets and liabilities of
the Wernich’s;
mr de Wet’s
meticulous exposition (in his letter of 15 July 2004) of what he
would accept as the nett proceeds of the
sale of the houses of the
close corporations; which proceeds he wanted to be paid over to mr
Wernich’s insolvent estate
(and not, as would normally be
done, to the close corporations as sellers) on the date of the
transfer of the properties
(and not only eventually when the close
corporations were liquidated); and
the fact that mr de
Wet had, even before his letter of 15 July 2004, been making
calculations of what the nett proceeds of
the sale of the
properties of the close corporations would be.
An agreement by mr de
Wet which would yield an amount of R544 000,00 in settlement of the
plaintiff’s claim would have
made business sense, but
certainly not one in terms of which the plaintiff would happily
write off its claim for only the satisfaction
that the Wernichs
also do not draw any financial benefit from the winding-up of the
close corporations.
When confronted with
this improbability mr Viljoen testified that he was of the view that
mr de Wet had made a mistake in concluding
such an agreement and that
mr de Wet had only realised his mistake when he became aware of the
fact that the close corporations
were insolvent and that the
plaintiff would not get anything from their liquidation.
This evidence of mr
Viljoen is very difficult to reconcile with his evidence that he had
informed mr de Wet of the dire financial
position of the close
corporations as early as in May 2004.
It is also
irreconcilable with mr Wernich’s evidence, because according to
him mr de Wet was prepared to write off everything
and on his version
mr de Wet could therefore not have been making any mistake in this
regard.
It is not clear why
mr de Wet would in July 2004 be prepared to write off his client’s
claim if the defendant had as recently
as on 20 April 2004 promised
to pay an amount of R500 000,00 to the plaintiff (exhibit B8).
I am in any event not
prepared to accept on a preponderance of probabilities that mr de
Wet had been made aware of the full
particulars of the financial
positions of the close corporations before July 2004, and
especially of the possibility that the
plaintiff could quite
possibly not get anything from the liquidation of the close
corporations.
I
find it difficult to understand why mr Viljoen would have informed mr
de Wet of the claim of the Meat Corporation of Namibia (Meatco)
and
of the fact that it would render the close corporations insolvent and
could result in the plaintiff not being able to obtain
any financial
benefit from the liquidations by means of
“cessions”
of the defendant’s interests, but not of the fact that Meatco’s
legal representative had indicated to him that it would
not pursue
its claim in the liquidation of the close corporations.
In the end mr Viljoen
was constrained to concede that in the circumstances the conclusion
by mr de Wet of an agreement as alleged
in paragraphs 4.1 to 4.3 of
the plea would have made no sense:
“
Maar dit sal
mos bitter nalatig van hom wees om te skik op die basis dat hy nie
weet wat hy gaan kry nie? === Ek kan nie kommentaar
daarop lewer
nie. Dit sou verbasend gewees het, ja.”
Mr
de Wet’s letter of 15 July 2004 (exhibit B18-20 and annexure
WA to the amended plea), in which he stated that he was
making a
settlement proposal to avoid,
inter
alia
,
“liquidation”
,
would be difficult to reconcile with an earlier agreement to the
effect that the close corporations would be wound up as part
of the
settlement.
As far as the
defendant’s alleged undertaking to cede her “interests”
in the close corporations is concerned,
strangely enough neither mr
Wernich nor mr Viljoen was able to say whether the defendant had a
claim on the basis of a loan
account against the close
corporations.
As for the
alternative pleaded under paragraph 4.3, the plaintiff in any event
had a claim against Biltong Hut 2 CC and would
in any event have
been entitled to lodge a claim in its liquidation. An agreement as
alleged in the alternative would therefore
also have made no
business sense at all.
As already mentioned,
however, it is not necessary to make findings as regards
probabilities and credibility. The fact is that
the defendant
abandoned her plea in paragraph 4.4 of the amended plea and that the
evidence that would have been necessary to
prove the other alleged
settlement agreement, pleaded in paragraphs 4.1 to 4.3 (and the
alternative thereto) of the plea, was
never presented.
Insofar
as the evidence of mr Wernich and mr Viljoen may be relevant in
determining whether such a verbal agreement had been concluded,
it
appears quite clearly from their own versions that no
consensus
could have been reached in the terms pleaded in paragraphs 4.1 to
4.3 (or the alternative thereto) of the plea.
Mr
Wernich himself testified that he did not think that the plaintiff’s
legal representative
“ever
worked out what I was thinking”
and mr Viljoen conceded that a plain reading of mr de Wet’s
letters made it clear that he could not have been considering
and
accepting the
“proceeds”
as envisaged by mr Viljoen in his letter of 16 July 2004.
It follows that the
plaintiff is entitled to judgment in its favour. There is no reason
why costs should not follow suit and
why such costs should not be
awarded on the scale of attorney and own client (as undertaken by
the defendant in the deed of suretyship).
What finally remains
to be considered is the wasted costs pertaining to the postponement
of the trial midway through the evidence
of mr Viljoen. Mr Grewar
applied for the postponement after the witness had been confronted
in cross-examination with a letter
which had not been discovered by
either party.
It was a letter dated
3 June 2004 and addressed to mr Viljoen, informing him of the fact
that PJ’s Biltong Bar CC owed an
amount of R825 214,42 to
Meatco and that the close corporations had bound themselves in
favour of Meatco for the payment of that
debt.
Mr
Grewar motivated the application for postponement by arguing that
the plaintiff should have discovered the letter before using
it in
cross-examination and that his instructions were that there was
another document (which had also not been discovered) which
would
show that shortly after the letter of 3 June 2004
“is
daar afgesien dat hierdie eise bewys sou word
”.
It was not in dispute
that mr Olivier, counsel for the plaintiff, had obtained a copy of
the letter of 3 June 2004 during an adjournment
and that he had done
so as a result of mr Viljoen’s evidence that Meatco never
intended pursuing its claims against the
close corporations. The
letter had therefore not been in the possession of the plaintiff or
its legal representatives at an
earlier stage.
It had, however, been
in the possession of mr Viljoen, the defendant’s attorney. It
was quite clearly relevant to the issues
in dispute and should have
been discovered by the defendant.
The same would have
applied to the document referred to by mr Grewar in his application
for postponement. It would have been
relevant for the same reasons
and would also have had to be discovered by the defendant.
The fact is, however,
that it transpired that no such document exists. When the trial
resumed, mr Viljoen testified that it had
been conveyed to him
telephonically, by the attorney for Meatco, that they did not wish
to apply for the winding-up of the close
corporations or to partake
in their liquidation.
There
had therefore been no reason for the postponement and there is no
reason by the defendant should not be held liable for
the wasted
costs. There is no reason why such costs should not also be taxed
on the scale as between attorney and own client,
as part of the
“costs
… incurred in the enforcement of this suretyship”
(clause
15 of the deed of suretyship, annexure B to the particulars of
claim).
Although mr de Wet is
not an attorney from a firm in Kimberley, he was present on behalf
of the plaintiff throughout the trial.
In view of his personal
knowledge of and involvement in the correspondence and negotiations
which were in issue, it would not
have made much sense to have a
correspondent attorney represent the plaintiff and assist mr Olivier
during the trial. Despite
the scale on which I intend awarding
costs, I will therefore specifically order that the plaintiff’s
costs will include
those of mr de Wet.
In the premises the
following orders are made:
The defendant is
ordered to pay to the plaintiff:
the amount of R1
032 272.,52; and
interest a tempore
morae on the said amount calculated from 5 November 2007.
The defendant is
held liable for the plaintiff’s costs, including the wasted
costs occasioned by the postponement of 7 November
2007, on a scale
as between attorney and own client and including the costs of the
plaintiff’s attorney, mr T R de Wet
of the firm Marais Müller
Yekiso of Cape Town.
________________________
C J OLIVIER
JUDGE
NORTHERN CAPE
DIVISION
For the Plaintiff: Adv L M
Olivier
Instructed by: Van der
Wall & Partners, KIMBERLEY
For the Respondent: Adv D
M Grewar
Instructed by: Elliot,
Maris, WIlmans & Hay, KIMBERLEY