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[2008] ZAWCHC 205
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Ieiman v Scott and Others (12977/2007) [2008] ZAWCHC 205 (20 May 2008)
IN
THE HIGH COURT OF SOUTH AFRICA
(CAPE
OF GOOD HOPE PROVINCIAL DIVISION)
CASE
NO
:
12977/2007
DATE
:
20
MAY 2008
In the matter between:
WILLEM
IEIMAN
Applicant
And
ALLISTER
SCOTT
1
st
Respondent
SANDRA
MICHELLE SCOTT
2
nd
Respondent
THE
REGISTRAR OF DEEDS
3
rd
Respondent
JUDGMENT
DAVIS.
J
:
[1]
This is an application in which the applicant seeks an order that a
deed of sale which was entered into between appficant and
first
respondent. On 12 July 2006 the sale of the immovable property
situate at 66 Lily Street, Bellville South (the "property")
be declared void.
[2]
As Mr van
Reenen
,
who appeared on behalf of first and second respondent wryly remarked,
the basis of the applicant's case has altered significantly
for
reasons to which I shall allude presently. In essence, the
applicant initially alleged that the first respondent misrepresented
the market value of the property of the applicant which induced him
to sell the property to the applicant for the sum of R93 000.
The
market value of the property at the time the agreement was concluded
was more than R93 000.
[3]
Furthermore, applicant alleges that first respondent unduly
influenced and manipulated the applicant to aEienate the property
for
less than its market value. In addition, applicant alleged that the
agreement was entered into without the consent of the second
respondent {first respondent's wife) and the agreement was
accordingly void.
[4]
Further affidavits were filed pursuant to this application.
Additional allegations were then made by first applicant. I shall
not
dwell on them all but, significantly, in a further affidavit,
applicant averred that he had been subject to duress in circumstances
where first and second respondent had indeed exploited his penchant
for drinking and that he was an alcoholic. None of these averments
were pursued in the final stages of this case when it was contended
by applicant that, in essence, the agreement was void because
of a
common mistake.
[5]
It appears to me, having examined the papers, that the issue of
common mistake as the justification for the relief sought by
applicant was, at the very least, comprehensively raised for the
first time on 13 May 2008. At that hearing, applicant's legal
representatives abandoned ail legal arguments which were raised
previously and the argument of common mistake was only one with
which
he persisted.
[6]
In order to assist in this particular examination as to whether there
was a justification for the relief sought by applicant
on the grounds
of common mistake, I requested further supplementary heads of
argument from both legal representatives. I am indebted
to both
counsel for having supplied me with written arguments.
[7]
There is a further difficulty to which I must make reference. In
examining the question of mistake, I was not entirely certain
as to
the form of mistake upon which the case was based, f must assume that
the mistake to which the applicant refers is a mistake
which is
referred to in the literature as a "common mistake". That
itself raises a problem because the question arises
as to the nature
of a common mistake. When parties share the same mistake, they
are in essence in complete agreement.
There is a consensus
between the parties but it is based on a common false supposition
that a certain state of affairs exists when
in fact the converse is
the case.
[8]
The authorities indicate that if such a supposition is "vital to
the transaction" in that neither party would have
concluded the
contract had they known the true facts, a court can hold the contract
to be void
ab
initio.
{See
in this connection
Dickinson
Motors fPtv) Ltd v Oberholzer
1952(1)
SA 443 (A) at 450; and
Van
Reenen Steel (Ptv^ Ltd v Smith N.Q. & Another
2002(4) SA 264 (SCA) at 270-271). The contract is void, only where
the parties expressly or by clear implication concluded the
contract
on the basis of the correctness of their assumption. In short, they
elevate the assumption, {the supposition) to the status
of a term of
the contract. That, it appears to me, is the basis upon which
applicant finally came to court for the relief it sought.
[9]
When I trawled through the multitude of affidavits, there were hints
that the argument was in fact based upon a form of
Justus
error.
For
example, B knows of A's mistake, B keeps quiet in order to snatch a
bargain. B should have realised as a reasonable contracting
party
that A was labouring under a mistake when the contract was concluded,
or B induces A by some form of misrepresentation as
to the nature or
contents of that which had been agreed upon. All of these cases form
part of the broad jurisprudence relating
to
Justus
error.
(See
in this connection
Sonap
Petroleum SA fPtv) Ltd v Pappadogianis
1992(3) SA 234 (A).)
[10]
If the papers in this case are examined, there are suggestions that
initially this was the case brought by the applicant. The
essence of
the case would then have been that the respondent knew the real value
of the property, knew also that the applicant
was labouring under a
misapprehension and snatched at the bargain. But that is not what was
argued. What was argued was the following:
Applicant relied expressly
on Sharrock:
Business
Transactions Law
(1993) and the following example provided by the author. S agreed to
sell a horse to B for a million rand both parties believing
the horse
to be a racehorse where it is in fact a carthorse. The agreement,
therefore, is a nullity because it was made on the
mistaken
assumption that the horse sold had the qualities of a racehorse and
consequently was of considerable value.
[11]
The argument is that this example is similar to the facts of the
present dispute, i.e. applicant sells his house to respondent
for R93
000. Both parties believe that R93 000 is the market value, whereas
it is the municipal price Accordingly it is a price
far less than the
market value price, which is alleged by applicant to be in the region
of R180 000. In short, the submission is
that this agreement should
be set aside as being void
ab
initio
because
it was made on the mistaken assumption that the house was sold at
market value whereas to the contrary, it was sold at the
municipal
price. That is applicant's case, or the case ultimately brought
before this court. I emphasise this point again so that
there can be
no doubt as to what was argued before me and on what particular basis
I have been required to analyse the law in relation
to the factual
matrix.
[12]
Applicant sought to rely both on
Dickinson
,
supra,
and
therefore, by analogy, on
Van
Reenen Steel
,
supra.
The
facts in
Dickinson
are instructive. Plaintiff invoked the
condictio
indebtti
for
repayment of an amount paid in error to defendant. The substance of
the case was that plaintiff had paid the amount in error
because both
he and defendant considered that the car that was to be delivered to
him in return for payment was a Plymouth motor
vehicle (A) which had
been sold to plaintiff's son by the defendant and that they had no
idea that it was Plymouth (B) which was
the subject of the agreement.
Defendant then delivered Plymouth (B) to the plaintiff and thereafter
another party repossessed it.
Schreiner,
JA
said at 448D that;
"This
error common to both parties is not in dispute and the real issues in
the case were what was the nature of the transaction
which led to the
payment and what legal consequences flowed therefrom".
[13]
The common error was that the car delivered was car (A) and not car
(B) That was common cause. In this case that assumption
cannot be
employed, the submissions of applicant's counsel notwithstanding,
that many of the facts were common cause. The facts
are somewhat more
complicated when considered within the context of the law that I have
briefly outlined. Applicant relies on an
answering affidavit in which
at paragraph 24 thereof, first respondent states:
"I
wrote the purchase price being R93 000 in the agreement. I thought
that the price was reasonable and I was desperate to
that area(sic).
I also thought that the rates invoice represented the value of the
property"
Applicant
appears to rely on the last sentence of this paragraph to contend
that both parties believed that the municipal rates
invoice reflected
the market value of the property.
[14]
Further in the affidavit, first respondent explains the basis on
which he considered that R93 000 represented a fair price
for the
property. Accordingly, he states thus:
"During
April 2005 a property was sold in Lily Street which is the same
street in which the applicant and my family-in-law
(the second
respondent's family) reside. I was informed by my father-in-law that
the property sold (R80 000(sic)). I was also interested
in buying a
property in that area.
I
had
expected to pay R80 000 to R100 000 on the basis of what my
father-in-law had told me regarding the sale in the same street
for
R80 000. I was of course willing to pay more depending on the
condition and size of the property.
I
thought that the price would be between R80 000 to R100 000 as it was
in a worse state than the house in the same road which sold
for R80
000. I understood that we would negotiate the exact purchase price
later".
A
further material statement by first respondent is the
following:
"When
I got to the portion of the document which is blank for the purchase
price to be inserted I asked how much the applicant
wanted to sell
the house for. The applicant stated that he had a rate invoice and
produced it from his pocket. The applicant stated
that according to
the rate invoice the value of the property was R93 000. I checked the
rate invoice and I saw that the property
was valued at R93 000... I
deny that I kept the true market value of the property from applicant
as I was of the opinion that R93
000 was a fair price for the
property based on the fact that another house was sold in the same
street for R80 000 a year earlier.
It was the applicant who suggested
the purchase price and not me. I was prepared to pay the amount of
R93 000".
[15]
This case must be evaluated on the law relating to applications.
The so-catled
Plascon-Evans
rule governs
cases
of this kind. I have not had an application for oral evidence.
Accordingly I am required to examine the factual matrix essentially
on the basis of common cause facts, together with facts which are
averred to by respondents, save where in terms of
Plascon-Evans
,
those facts can be legitimately ignored by the Court.
[16]
To my mind, first respondent considered that the amount of R93 000
was a fair amount to pay for the property due to the sale
of the
house which had taken place in the same street in April 2005. There
is no suggestion that this did not take place or that
the first
respondent was disingenuous with this Court. Mr
van
Reenen
submitted that first respondent did not consider that R93 000
represented the fair value of the house because it was reflected
on
the rates invoice, but rather because of his experience which flowed
from the comparative sate of a house for R80 000. In his
view, the
rates invoice corroborated this particular belief.
[17]
It may well be that the applicant considered that the municipal rates
invoice reflected the market value of the property as
being R93 000.
Given the unreliability of applicant's evidence, it may be somewhat
generous to make any finding in this regard,
but I will assume in his
favour that indeed he so thought it to be the case. But that was
certainly not the view taken by first
respondent who considered that
the R93 000, albeit that it had been shown to him
via
the
invoice, represented a fair market value based on the experience
which he had.
[18]
At one point, it appears that the applicant sought to shift its case
from a common mistake on the basis that both parties were
not
necessarily of the view that R93 000 was the fair value, but rather
in some form of
Justus
error
or
misrepresentation perpetuated by the first respondent. For example,
in the founding affidavit applicant states:
"It
is my respectful submission that first respondent intentionally kept
the true state of affairs as to the actual market-related
value of
the property from me and induces(sic) me to alienate and sell my
property far(sic) less to what the market-related value
was".
Later he says:
"It
is my humble submission that the first respondent misrepresented
himself by conveying to me information based on the false
premise and
in so doing induced me to sell the property to him for R93 000".
There
is a further allegation that the fault fay at the door of first
respondent's attorneys who should have so informed the applicant
and
that accordingly he was misled.
[19]
On the first version, first respondent is alleged to have known that
the property was worth in excess of R93 000. Later, applicant
alleged
that first respondent mistakenly believed that the property was worth
R93 000 due to the fact that this amount was reflected
on the
municipal rates invoice. On the one case there was a common mistake.
On the other case, there was an inducement by the one
party, who knew
what the true state of affairs was, to persuade the other party to
enter into a contract either on the basis of
misrepresentation or
Justus
error.
I
am not going to deal with the jurisprudential implications of these
two grounds in that, for the reasons I have already advanced
on these
papers, first respondent put up a credible explanation as to why he
considered R93 000 to be a fair value; indeed to have
been the market
value of the property, the municipal rates invoice notwithstanding.
[20]
It was suggested that our Constitution introduces a concept of good
faith into our law of contract and that courts should utilise
this
concept to protect the weak and those who have suffered from an abuse
of contractual power. Leaving aside the controversy
relating to these
questions of contract in our constitutional error, courts have to
base an analysis upon the facts. Neither of
these parties had a
significant amount of contractual power. This was a relatively simple
transaction between two individuals,
neither of whom appears to be an
owner of any means of production.
[21]
The facts illustrate that the price which was agreed was R93 000. The
facts do not indicate that first respondent knew or reasonably
could
have known that R93 000 was not the fair value of the house because,
as he averred, he had information about a comparative
sale on the
same street approximately a year earlier. On the factual matrix which
must inform the application of the law, there
is no room in this case
for utilising concepts of good faith to trump the facts which have
been set out on the affidavits.
[22]
For these reasons, I find that there is no basis for this application
to succeed and for the sale to be set aside. There was
a submission
by Mr
van
Reenen
that this Court should order that the applicant pay the first and
second respondents' costs on an attorney and own client scale,
alternatively on an attorney and client scale in that
there has been significant postponements and adjournments in this
particular case and that the losing party, being the applicant,
resorted to a whole range of strategies and trifling defences and
delaying tactics, none of which are sustainable in law and all
of
which have put first and second respondent to significant
disadvantage
[23]
Given the nature of the parties and the kind of dispute which arose
in this case
I
would
be reluctant to impose any punitive costs scale. The order which is
made is as follows:
1.
The application is dismissed.
2. The
applicant is ordered to pay the first and second respondents' costs,
such costs to include the costs on the postponement
of this matter on
30 November and the hearing on 13 May 2008.
DAVIS,
J