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[2020] ZASCA 43
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L M and Others v T M (343/2019) [2020] ZASCA 43 (21 April 2020)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
reportable
Case
No: 343/2019
In
the matter between:
L
M FIRST
APPELLANT
H
M
NO SECOND
APPELLANT
PP
MARÈ (HOËVELD) BOERDERY (PTY)
LTD THIRD
APPELLANT
and
T
M RESPONDENT
Neutral
citation:
L
M and Others v T M
(343/2019)
[2020] ZASCA 43
(21 April 2020)
Coram:
CACHALIA,
WALLIS, SALDULKER, VAN DER MERWE AND MAKGOKA JJA
Heard:
2 March
2020
Delivered:
This judgment was
handed down electronically by circulation to the parties'
representatives by email, publication on the Supreme
Court of Appeal
website and release to SAFLII. The date and time for hand-down is
deemed to be 10h00 on 21 April 2020.
Summary:
Contract
– interpretation – undertaking to pay R5,5 million –
provision that payment be made from proceeds of
sale of game –
not condition for coming into existence of obligation to make payment
– failure of envisaged source
of payment – no effect on
obligation to pay – payment due within reasonable time after
failure.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Louw J sitting as court of
first instance):
The
appeal is dismissed with costs, including the costs of two counsel.
JUDGMENT
Van
der Merwe JA (Cachalia, Wallis, Saldulker and Makgoka JJA concurring)
[1]
The first appellant, Mr L M, and the respondent, Ms T M, were married
to each other. Their marriage relationship broke down
and the
respondent instituted an action in the Gauteng Division of the High
Court, Pretoria, for an order of divorce and ancillary
relief. The
second appellant, Ms H M, in her representative capacity as the
executrix of the estate of the first appellant’s
late father,
and the third appellant, PP Marè (Hoëveld) Boerdery (Pty)
Ltd, were subsequently joined as the second
and third defendants in
the divorce action. The parties to the action entered into a written
settlement agreement, which was made
an order of the court, in terms
whereof an amount of R5,5 million was payable to the respondent on a
basis, the failure of which
has led to the present litigation.
Payment was not forthcoming and the respondent launched an
application against the appellants
to enforce the settlement
agreement. Louw J granted the application and refused leave to
appeal. In terms that I shall return to,
this court granted limited
leave to appeal to the appellants.
[2]
The first appellant and the respondent were married on 28 February
1997. Their marriage was out of community of property, but
subject to
the accrual system specified in Chapter 1 of the
Matrimonial Property
Act 88 of 1984
. Two children were born of the marriage. On 30 June
2010, the high court made an order in terms of the provisions of
Uniform
rule 43.
It awarded the primary care of the minor children to
the respondent and circumscribed the first appellant’s rights
of access
to them. It ordered the first appellant to pay maintenance
pendente
lite
to
the respondent in the amount of R13 500 per month and for the
minor children in the amount of R7 500 per child per
month.
[3]
The divorce action eventually proceeded to trial. The joinder of the
second and third appellants was effected during the trial.
The second
appellant, the mother of the first appellant, also represented the
third appellant. The basis of the joinder, so we
were informed from
the bar by both counsel, was the respondent’s assertion that
assets nominally held by the second and third
appellants, should, for
purposes of her claims in respect of the financial consequences of
the dissolution of the marriage, be
regarded as the assets of the
first appellant. The respondent thus laid claim to assets held by the
second and third appellants.
[4]
It is against this background that the parties reached a settlement.
The settlement agreement was concluded on 18 January 2017.
It
recorded that the first appellant and the respondent consented to a
decree of divorce. The parties agreed that the existing
order in
respect of the primary care, access to and maintenance of the minor
children would remain in force. It provided that the
first appellant
would pay maintenance to the respondent until 31 December 2016,
whereafter this obligation would irrevocably come
to an end.
[5]
Clause 2 of the settlement agreement provided as follows:
‘
The First, Second and Third
Defendants pay, in full and final settlement of any and/or all claims
that the Plaintiff has and/or
had, an amount of R5,5 million to the
Plaintiff, which amount is payable as follows:
2.1
The Plaintiff selects in cooperation with Messrs Dirk Maree, Killie
Williams, Giep Stander and Poon du Plessis, a parcel
of game,
consisting of sable antelope and buffalo which are kept on the farm
situated at Gravalotte, to the value of R5,5 million;
and
2.2
Mr Killie Williams pays within a reasonable and fair period of time
after the game, as referred to in paragraph 2.1 above,
were removed
and/or moved from the farm situated at Gravalotte, the amount of R5,5
million to the Plaintiff.’
(My
translation.)
[1]
[6]
On 28 February 2017, after exactly 20 years of marriage, a decree of
divorce was issued and the settlement agreement made an
order of the
court. By November 2017, however, the respondent had not received
payment of the amount of R5,5 million and she instituted
the
application in the court a quo. She explained that sub-clauses 2.1
and 2.2 of the settlement agreement did not materialise,
because Mr
Williams and the appellants, represented by the first appellant, had
been unable to reach agreement on the prices for
the game in
question. Mr Williams was of the view that the prices proposed by the
appellants were unrealistic and not market related
and he therefore
resolved not to purchase the game. The respondent said that as a
result, and because she no longer received payment
of maintenance,
she had no income, found herself in dire financial straits and had no
option but to approach the court for an order
obliging the appellants
to make payment of the amount of R5,5 million.
[7]
The appellants elected not to file answering affidavits, but to raise
questions of law in terms of Uniform
rule 6(5)
(d)
(iii).
In formulating the questions, the appellants stated that clause 2 of
the settlement agreement provided for a specific method
of payment,
namely that set out in sub-clauses 2.1 and 2.2. They proceeded to say
that the relief sought by the respondent was
not in consonance with
the provisions of the settlement agreement and that the respondent
therefore failed to establish any basis
upon which the appellants
might be ordered to pay the amount of R5,5 million to the respondent.
After this the notice went further
and alleged that ‘furthermore’
the failure of the payment provisions amounted to supervening
impossibility and that
it rendered the settlement agreement void.
[8]
The court a quo determined the matter in favour of the respondent. It
said that the case brought before it was not about impossibility
of
performance but of the non-compliance with the appellants’
contractual undertaking that the third party would render performance
to the respondent. It had regard to, inter alia,
Voet
45 1 5
(P
Gane’s
translation) and G B Bradfield
Christie’s
Law of Contract in South Africa
7 ed (2016) at 471 and concluded:
‘
It therefore seems clear that
the position in our law is that when a party contracts with another
that a third party will perform
the obligation of the party who
undertook the obligation, the party who undertook the obligation will
become liable to perform
if the third party does not. In terms of
clause 2 of the settlement agreement, the respondents incurred the
obligation to pay the
applicant the sum of R5,5 million. In light of
the refusal by Mr Williams to give effect to clause 2 and to pay the
said amount
to the applicant, the respondents have become liable to
make the payment.’
It
proceeded to hold that there was no basis for joint and several
liability and ordered the appellants to jointly make payment
of R5,5
million to the respondent.
[9]
As I have said, the court a quo refused leave to appeal, but this
court granted leave to appeal, limited to the following issue:
‘
Whether clause 2 of the
settlement agreement provided for payment out of a fund the coming
into existence and sufficiency of which
was a pre-requisite to the
obligation to make payment (
Van
den Berg v Tenner
1975 (2)
SA 268
(A) at 275G-H).’
(the
issue)
This
limitation caused the issues of impossibility of performance and
resultant voidness of the settlement agreement to fall away.
[10]
The issue requires consideration of whether, as a matter of
interpretation of the settlement agreement, the coming into existence
or continuation of the obligation to pay R5,5 million to the
respondent, was conditional upon compliance with sub-clauses 2.1 and
2.2 and, if not, of the effect of the failure of the intended method
of payment.
[11]
It is convenient, at this juncture, to analyse the decision in
Van
den Berg v Tenner
1975 (2) SA 268
(A). There the plaintiff had
paid the amount of R10 000 to the defendant in terms of a sale
agreement that was subsequently
cancelled by agreement between them.
The cancellation agreement provided that the defendant would repay
the sum of R10 000
to the plaintiff from the proceeds of the
sale of the business of a company controlled by the defendant and
upon registration of
transfer of immovable property that he had sold.
Its terms were that the sum of R10 000 ‘…
shall be provided
from the sale … and … shall be paid …
on date of finalisation of such sale and registration of transfer of
the property … .’ Both these agreements were,
however, cancelled as a result of the failure of the respective
purchasers to comply with their obligations. When the plaintiff sued
the defendant for payment of the sum of R10 000, the
defendant
argued that these provisions of the cancellation agreement had to be
interpreted as suspensive conditions. As they had
not been fulfilled,
so the argument went, the cancellation agreement and the obligation
to repay the sum of R10 000 did not
come into existence.
[12]
This court rejected this argument. It held that, on a proper
construction of the cancellation agreement, the obligation to
repay
was unconditional. It held that the only effect of the provisions in
respect of the source, manner and time of payment had
been to
postpone compliance with the obligation to repay until after
finalisation of the transactions in question, or until it
became
clear that they would not take place. Thus, so Botha JA said for the
court, it was not a case where parties had agreed that
payment would
exclusively be made out of a specific fund, and where the obligation
to pay was subject to the coming into existence
and sufficiency of
the designated fund.
[13]
The decision of
Gowan v Bowern
1924 AD 550
constitutes an
example of the latter type of case. Mr Gowan mandated Mr Bowern to
sell his ship for commission. As a result of
the efforts of Mr
Bowern, the ship was sold to Mr Nemazee for £140 000. Mr
Bowern claimed commission and the issue was
what the terms of the
contract between Mr Gowan and Mr Bowern were. Wessels JA determined
the issue by ascribing the following
to Mr Gowan (at 570):
‘
I am willing that you should
act as my agent to sell my ship and you can make out of it whatever
you can get provided I get £120 000.
As you have got
£140 000, I shall transmit to you £20 000 when
I get the second instalment. I am quite willing
to hide from Nemazee
the fact that you are getting £20 000, and will pretend
that the whole £140 000 comes
to me. I am also willing to
consider the second instalment as an instalment due to me, plus the
£20 000 you are to get
out of the business and this latter
amount I will send to you if, and when, I get it.’
[14]
As Mr Nemazee never paid the second instalment, the claim had to
fail. De Villiers JA put the matter as follows (at 565):
‘
If Bowern had been satisfied
with the ordinary commission payable by the seller, he would have
been entitled to it when the contract
with Nemazee was concluded, and
the subsequent fate of the contract would have been a matter of
indifference to him. But he chose
to make a special contract under
which he was to obtain a portion of the purchase price thereby
linking up his claim with the fate
of the contract of sale, with the
result that when the principal contract was cancelled by the parties
his claim of necessity,
in the absence of an expressed provision to
the contrary, went with it.’
[15]
It is trite that the interpretation of the settlement agreement
entails giving meaning to the words used in the context in
which they
were used, including the apparent purpose of the agreement. As to the
context, the first appellant and the respondent
were married for 20
years under the accrual system. There is no suggestion of any dispute
that the respondent was entitled to be
paid something under the
accrual system. The evidence, as supplemented by the information
about the course of the proceedings described
above in para 3, shows
that the disputes related to the identification of the assets that
were to be taken into account in determining
the claim and ascribing
a monetary value thereto. The purpose of the settlement agreement
included the final determination of the
financial consequences of the
dissolution of this marriage and the claims to the assets of the
second and third appellants. It
did not provide for payment of
maintenance to the respondent after the divorce. Her evidence that
she was financially entirely
dependent on the payment of the sum of
R5,5 million was not disputed. In this context, the settlement
agreement contained a clear
recognition of the family law rights of
the respondent to a financial award. Therefore, it is highly
improbable that the parties
could have intended that the respondent’s
right to payment would be entirely dependent on whether Mr Williams
would purchase
the game or not.
[16]
The language of clause 2 also points to an unconditional obligation
to pay. It will be recalled that it provided that the appellants
‘pay, in full and final settlement of any and/or all claims
that the Plaintiff has and/or had, an amount of R5,5 million
to the
Plaintiff, which amount is payable as follows …’. The
existence of the obligation was not in any terms subjected
to an
occurrence or event; and sub-clauses 2.1 and 2.2 were not couched in
the conventional language of conditions for the coming
into existence
of the obligation. In the light of what I have said, clear wording to
that effect would have been required. And
the obligation to ‘pay
in full and final settlement’ strongly indicated that the
obligation would continue even if,
contrary to the provision ‘which
amount is payable as follows’ that prefaced sub-clauses 2.1 and
2.2, payment by those
means would not be forthcoming. The latter
expression is compatible with those clauses being merely matters of
manner and form
rather than being fundamental to the obligation to
make payment and the context suggests that this was the case.
In the result,
the failure of the envisaged source of payment had no
effect on the coming into existence or the continued existence of
their obligation
to pay.
[17]
The point of departure in
Van
den Berg
was the common law right to repayment of part of the purchase price
following the cancellation of a sale. In this matter it was
the
family law rights to a financial award following the dissolution of
the marriage. It follows that the matter is very different
from
Gowan
and
indistinguishable, in principle, from
Van
den Berg.
[18]
As to the effect of the impossibility of the agreed source, manner
and time of payment,
Van
den Berg
provided
two answers. In my view both are applicable here. The first is that,
as a result of the impossibility, the amount became
payable within a
reasonable time after it had become evident that Mr Williams would
not purchase the game. See
Van
den Berg
at 276B-F. I perceive this proposition to be founded on a
construction of the agreement and the application of the common law.
[19]
Secondly, I entertain no doubt that had an officious bystander at the
time of the entering into the settlement agreement asked
the parties
‘what would happen if Mr Williams did not purchase the game?’,
they would have answered that the appellants
would be obliged to make
payment from another source within a reasonable time thereafter. See
Van den
Berg
at
276H-277C. In the circumstances, the respondent could hardly be
blamed for not pleading such a tacit term. And when, on the
facts,
such a reasonable period had commenced, was not implicated by the
issue.
[20]
At best for the appellants, clause 2 is ambiguous. On this basis this
court may adopt an equitable construction of the settlement
agreement. In
Trustee, Estate Cresswell & Durbach v Coetzee
1916 AD 14
at 19 Innes CJ said:
‘
The expression therefore which
occurs in paragraph 6 of this lease is capable of two constructions,
and if there is nothing in the
context which points specially to one
of them, it would be proper to apply the meaning which would avoid a
manifestly inequitable
result.’
In
Financial Mail (Pty) Ltd and Others v Sage Holdings Ltd and
Another
[1993] ZASCA 3
;
1993 (2) SA 451
(A) at 468G-H Corbett CJ similarly
stated:
‘
In a case such as this, where
the meaning of the words used in the contract is not clear, there is
room for the rule of interpretation
which puts an equitable
construction on the contract and does not adopt a meaning which gives
one party an unfair or unreasonable
advantage over the other ...’
Corbett
CJ inter alia referred to Wessels’
Law of Contract in South
Africa
2 ed by A A Roberts (1951) § 1974 to1977. At §
1977 the esteemed author said:
‘
The Courts ought not to assume
that the one party intended to get an unfair or unreasonable
advantage over the other, but should
presume the contrary. Hence, if
the language of the promisor may be understood in more senses than
one, the Court will interpret
it in that sense in which the promisor
at the moment the contract was concluded knew, or had good reason to
believe, that the other
party understood his words.’
In
South African Forestry Co Ltd v York Timbers Ltd
[2004] ZASCA
72
;
2005 (3) SA 323
(SCA) para 32, Brand JA formulated this principle
as follows:
‘
While a court is not entitled
to superimpose on the clearly expressed intention of the parties its
notion of fairness, the position
is different when a contract is
ambiguous. In such a case, the principle that all contracts are
governed by good faith is applied
and the intention of the parties is
determined on the basis that they negotiated with one another in good
faith.’
See
also
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2012]
ZASCA 13
;
2012 (4) SA 593
(SCA) para 26 and
Bradfield
256-257.
[21]
On the interpretation raised by the issue, the respondent would
simply have to walk away with nothing. This would be a most
inequitable result, as counsel for the appellants readily conceded.
His attempt to soften this impact by saying that should the
appeal
succeed, the divorce action would proceed as if it was not settled,
is untenable. The issue raised the interpretation of
the settlement
agreement and not the existence thereof. On this basis, too, the
issue must be answered in the negative.
[22]
In the result I make the following order:
The
appeal is dismissed with costs, including the costs of two counsel.
_______________________
C
H G VAN DER MERWE
JUDGE
OF APPEAL
APPEARANCES
For
appellants: M C Erasmus SC
Instructed
by: Thys Cronje Inc., Pretoria
Van
der Merwe & Sorour, Bloemfontein
For
respondent: F W Botes SC, with him J Janse van Rensburg
Instructed
by: Rorich, Wolmarans & Luderitz Inc., Pretoria
Pieter
Skein Attorneys, Bloemfontein
[1]
‘
2. Die Eerste-, Tweede-
en Derde Verweerders betaal, in volle en finale vereffening van
enige en/of alle eise wat die Eiseres
het en/of gehad het, ‘n
bedrag van R5,5 miljoen aan die Eiseres, welke bedrag soos volg
betaalbaar is:
2.1
Die Eiseres kies in samewerking met Mnre Dirk Maree, Killie
Williams, Giep Stander en Poon du Plessis, ‘n pakket
wild,
bestaande uit swartwit-pense en/of buffels wat op die plaas geleë
te Gravalotte gehuisves word, ter waarde van R5,5
miljoen; en
2.2
Meneer Killie Williams betaal binne ‘n redelike en billike
tydperk nadat die wild, soos na verwys in paragraaf 2.1 hierbo,
van
die plaas geleë te Gravalotte verwyder en/of geskuif is die
bedrag van R5,5 miljoen aan die Eiseres.’