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[2002] ZAWCHC 42
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Strydom v Blue Owl cc (4268/2000) [2002] ZAWCHC 42 (14 August 2002)

REPORTABLE
IN THE HIGH COURT OF SOUTH
AFRICA
(CAPE
OF GOOD HOPE PROVINCIAL DIVISION)
CASE
No: 4268/2000
In the
matter of
GLYNNIS ANNE
STRYDOM
Plaintiff
and
THE BLUE OWL CC
Defendant
JUDGMENT DELIVERED : 14
AUGUST 2002
MOOSA,
J:
INTRODUCTION:
Plaintiff instituted action against defendant for
cancellation of a deed of sale in respect of a business known as The
Blue Owl
Restaurant and Take-aways (“the business”). She
claimed refund of R244 000,00 being part payment of the purchase
against delivery
of the business to defendant. Plaintiff’s claim
is based on the non-fulfilment of a suspensive condition contained
in clause
7.1 of the deed of sale, alternatively on the fraudulent
misrepresentation by defendant that the business made a nett profit
of
R38 000
per
month.
Defendant denied the basis of plaintiff’s claim. It pleaded that
the suspensive condition had been fulfilled and that the monthly
nett profit was R38 000 when it conducted the business. It
counterclaimed payment of the balance of the purchase price due
and
payable in terms of the deed of sale.
As a preliminary relief, plaintiff claimed
rectification of clauses 7.1.1, 7.1.2 and 7.1.3 of the deed of sale
by inserting the
word “written” between the words “existing”
and “lease” wherever they appear in such clauses. Plaintiff
averred that
due to a
bona fide
mutual error, the word “written” was omitted from the deed of
sale and the parties signed the written deed of sale in the
bona
fide
but mistaken belief that it
recorded the true agreement between the parties. Defendant denied
the allegations and averred that
an oral agreement of lease existed
between it and the landlord, Mrs Osman.
RECTIFICATION:
It is trite law that where a written agreement
does not reflect the true intention of the parties, any one of them
can approach
the court for rectification of the written contract.
The
locus classicus
is the case of
WEINERLEIN v GOCH
BUILDINGS
LTD
1925 (AD) 282 in which the full bench
settled the doctrine of rectification. One of the judges,
Kotzé,
JA
, says at p 294/5 as follows:
“
The doctrine of rectification of a written instrument is fully
recognised in our South African practice, which grants restitution
or
relief upon any just ground.”
The learned judge continues on p 297:
“…
and
it is derived, whence most equitable rules have originated, from the
Corpus
Juris
.”
A party who approaches a court for rectification must satisfy such
court that
a contract was entered into;
the written document does not reflect the true intention of the
parties; and
what the true intention of the parties was.
(KERR on
LAW OF
CONTRACTS
, 6
th
edition at p 152.) The first requisite for rectification is that the
error or mistake of the underlying agreement is a
mutual
one. In
TRUST BANK OF AFRICA LTD v
FRYSCH
1976 (2) SA (C) 337 at 338G,
Van Zijl, JP
made
the following observation:
“
If the Court were to order a contract to be rectified to
include a term or to cover circumstances that had not been mutually
agreed
upon, the Court would not be ordering the rectification of the
agreement but would be imposing upon the parties a contract which
had
not been arrived at by their agreement-consensus, the foundation upon
which all contracts, i.e. agreements, rest.”
Rectification may involve the insertion of a
material clause or for that matter, in my view, a word which was
omitted from the written
agreement. (
TESVEN
CC & ANOTHER v SOUTH AFRICAN BANK OF ATHENS
2000
(1) SA 268
(SCA) at para 16.)
It is common cause that no written lease existed between defendant
and the landlord of the premises. According to the undisputed
testimony of Mr Osman, the spouse of the landlord, a written
agreement of lease was prepared between the landlord and defendant,
but such agreement was never signed by the parties. As far as he
was concerned, an oral agreement existed and such oral agreement
incorporated the terms and conditions contained in the written
document. Mr Abel, the agent who brokered the deal between
defendant
and plaintiff, testified that he had assumed that the
lease was a written one. He had made the assumption on the
representation
by Mr Abdullah, the spouse of the sole member, that
defendant had a lease of 10 years. He testified that a lease of 10
years is
usually in writing. Mr Abdullah testified that his
relationship with the landlord was such that he could negotiate any
period of
lease.
The suspensive condition in the deed of sale is
silent as to whether the existing lease is a written or an oral one.
The deed of
sale was negotiated between Mr Strydom and Mr
Abdullah on behalf of the respective parties. Mr Strydom was a
lawyer by profession.
He perused and approved the terms and
conditions of the deed of sale. The deed of sale was prepared by
Mr Abel, the broker.
Mr Strydom must have satisfied himself
that the terms of the deed of sale reflected the true intention of
the parties. Mr Abdullah,
in my opinion, must have been aware that
no written lease existed other than an unsigned document purporting
to be a lease agreement.
Nevertheless, Mr Abdullah could have
created the fiction that a written lease agreement existed. It was
probably on the basis
of such fiction that Mr Abel had assumed that
a 10 year written lease existed, and Mr Strydom had assumed,
that a written
lease existed. In my view the most that such fiction
could have constituted was a representation, but not necessarily a
term of
the deed of sale. Such representation could only have been
elevated to a term of the deed of sale if there was
consensus
ad idem
. The overwhelming evidence is
to the contrary. In my view plaintiff has not established that it
was a term of the deed of sale.
The possibility that it was a
representation as part of the negotiations leading up to the
conclusion of the deed of sale cannot
be excluded. In the
circumstances plaintiff has failed to prove, on a balance of
probabilities, that there was a
bona
fide
mutual
error
that a written lease existed
between defendant and the landlord. The claim for rectification of
the deed of sale must accordingly
fail.
REPRESENTATION WITH REGARD TO THE LEASE:
Plaintiff alleged in the alternative, that defendant represented to
her that a written lease existed in respect of the business
premises. Plaintiff claims that this representation was false and
was intended to induce her to purchase the business. Defendant
denies the allegations and averred that the suspensive condition has
been fulfilled inasmuch as plaintiff has been in occupation
of the
premises since April 2000 until February 2002.
It is also common cause that the
terms of the existing lease were partially verbal and partially in
writing. This ambiguity could
have formed the basis on which
Mr Abdullah founded the fiction that I mentioned earlier, that
the lease was in writing. It
could account for the fact that the
deed of sale is neutral on the issue. It could have been a
deliberate and calculated omission
on the part of the parties. In
any event, prior to the effective date of the sale, Mr Abdullah
introduced Mr Strydom to Mr Osman
to negotiate a new lease. In view
of this, the significance of the existence of a written lease
between defendant and the landlord
paled into the background. The
terms and conditions of the proposed new lease were discussed and
agreed upon. Plaintiff signed
the final draft of the proposed lease
and returned it to the landlord’s attorneys. Such lease was never
signed by the landlord.
Mr Osman explained that the landlord wanted
collateral security as she feared that plaintiff would not be able
to meet her financial
commitments arising from the business as she
had paid far too much for the business.
It is common cause that defendant had a lease of three years and an
option of two years. It is not disputed that this was reflected
in
an unsigned lease between the parties. Two of the three years had
elapsed at the time of the sale. It is also common cause
that
plaintiff negotiated a lease of three years with a two year option.
This is evidenced by a lease signed by plaintiff but
not signed by
the landlord. In reality therefore, the situation that obtained
between defendant and the landlord with regard to
the lease, was
similar to that which obtained between plaintiff and the landlord.
The only additional requirement the landlord
imposed on plaintiff
was the furnishing of collateral security. I do not think that such
requirement was unreasonable in the light
of the circumstances. In
any event, plaintiff continued in occupation of the premises until
she decided, for reasons beyond her
control and to which I shall
return later, to hand the business over to Mr Osman as
representative of the landlord in February
2002.
Defendant’s averments and submissions that the suspensive
condition has been fulfilled, are not without merit. Firstly,
plaintiff
negotiated with the landlord for a new lease and the terms
and conditions of such lease was settled save and except for
collateral
security; secondly, plaintiff took possession of the
business on the effective date in terms of the deed of sale;
thirdly, plaintiff
paid the second tranche of the purchase price
directly to defendant in spite of the protection afforded to
plaintiff in the deed
of sale that should the suspensive condition
not be met, the monies shall be held in a trust account until
compliance therewith.
I am not convinced that the representation
made by Mr Abdullah of the existence of a written lease, induced
plaintiff to purchase
the business. I am inclined to accept that
plaintiff was induced to purchase the business on the strength of
the representation
with regard to the nett profit and subject of
course, to her securing a lease, whether it was the cession or
assignment of the
existing lease or a new lease. It is clear from
the evidence that the parties opted for a new lease.
In the light of all the circumstances, I am not satisfied that
plaintiff has discharged the onus of showing that defendant had
made
a material representation with regard to the lease which was false
and which induced plaintiff to conclude the deed of sale.
With
regard to defendant’s averment that the suspensive condition has
been fulfilled, I am prepared to make such assumption
in favour of
the defendant without making a formal finding in respect thereof.
The reason for it will become obvious in what follows
later in my
judgment.
REPRESENTATION WITH REGARD TO THE NETT PROFIT OF THE BUSINESS:
I now turn to discuss the representation made by defendant to
plaintiff that the nett profit generated by the business was R38 000
per month. Plaintiff alleged that such representation was false,
whereas defendant alleged that it was true. It is common cause
that
defendant through Mr Abdullah represented to plaintiff that the nett
turnover of the business was R38 000 per month. Defendant
admitted
this allegation in the pleadings. The nett turnover is confirmed by
Mr Abel who reflected it on the written mandate he
received from Mr
Abdullah on behalf of the defendant. It is re-affirmed in the advert
that was placed by Mr Abel’s brokerage
firm in the “Argus” as
per exhibit B2. The representation is also confirmed by the
witnesses who testified for plaintiff and
defendant. The court
therefore finds as a fact that defendant represented to plaintiff
that the nett turnover of the business
was R38 000 per month.
Mr
Eia
argued
that the representation was a “puff” and not a material
consideration (“
dictum et promissum
”)
which induced the contract. I respectfully disagree. Both
plaintiff and Mr Strydom who at all material times acted for
plaintiff,
testified that they were induced by the representation
with regard to the nett profit to enter into the contract. Mr
Strydom said
in his evidence:
“
Daar was net een sover dit my betref, een werklike voordeel van
hierdie transaksie en dit was die netto inkomste. Daar was verskeie
nadele … maar omdat hierdie inkomste so fantasties was, het ons
besluit, kom ons doen dit vir ʼn paar jaar. Ons werk hard vir
ʼn
paar jaar. Ons vat nou maar al hierdie nadele en ons maak vir ons ʼn
neseier bymekaar en dan verkoop ons weer die besigheid en
dan kan ons
rustig raak.”
A
dictum et
promissum
is a material statement
made by a seller to a buyer during negotiations, bearing on the
quality of the
res vendita
and going beyond mere praise and commendations. It is upon the
faith of such
dictum et promissum
that the buyer is induced to enter into a contract or pay the
purchase price. On the conspectus of authorities that
Holmes,
JA
referred to in the case of
PHAME
(PTY) LTD v PAIZES
1973 (3) SA 397
(A) at 417H-418A-B, the learned judge summarised the relevant law as
follows:
“
1. The Aedilitian remedies (actio redhibitoria or actio quanti
minoris, as the case may be) are available if the res vendite
suffered
from a latent defect at the time of the sale.
2. The
Aedilitain remedies are also available if the seller made a dictum et
promissum to the buyer upon the faith of which the seller
entered
into the contract or agreed to the price in question; and it turned
out to be unfounded.
3. A
dictum et promissum is a material statement made by the seller to the
buyer during the negotiations, bearing on the quality of
the res
vendita and going beyond mere praise and commendation.
4. Whether
a statement by the seller goes beyond mere praise or commendation
will depend on the circumstances of each case. Relevant
considerations could include the following: whether the statement was
made in answer to a question from the buyer; its materiality
to the
known purpose for which the buyer was interested in purchasing;
whether the statement was one of fact or of personal opinion;
and
whether it would be obvious even to the gullible that the seller was
merely singing the praises of his wares, as sellers have
ever been
wont to do.
The representation with regard to the nett profit, in my view, was a
material statement bearing on the quality of the business and
went
beyond mere praise of the business. I am satisfied that the
representation was not a “puff”, but was a material consideration
which induced plaintiff to conclude the deed of sale.
The next inquiry is whether the representation was true or false.
Mr Strydom testified that, prior to plaintiff concluding the
deed of
sale, he asked Mr Abdullah for the financial statements of the
business. Mr Abdullah informed him that it was a “cash
business”
and no financial statements are available. Mr Strydom then
requested Mr Abdullah to get defendant’s bookkeeper to
prepare a
financial statement for his scrutiny. A meeting was arranged where
the parties met with a Mr Khumalo, defendant’s
bookkeeper. Mr
Khumalo produced certain monthly financial statements. Mr Strydom
could not verify the figures appearing on those
statements. Mr
Abdullah also showed him a desk calendar which apparently reflected
the daily takings in the form of a code. Mr
Strydom testified that
Mr Abdullah appeared to be very nervous about the financial
statements. He said the financial statements
cannot “lie around,
people can go to jail for them”.
Mr Strydom testified that the goodwill of the business bore a
relationship to the nett profit, and the goodwill agreed to by
plaintiff
was based on a nett profit of R38 000 per month.
According to the monthly financial statements of plaintiff which
were kept and
prepared by Mr Strydom, the nett profit was as
follows: April, 2000 - R18 114,00; May, 2000 - R6 102, 00;
July, 2000
- R8 156,00; September, 2001 - R10 183, 00; October,
2001 - R20,00; November, 2001 - R2 028,00; December, 2001 - R16
324,00.
Mr Strydom testified that the best trading months were
April and December. Even during those two months, the nett profit
was
more or less half of the amount which defendant warranted.
According to the annual financial statements of
defendant as at 29 February 2000, the nett profit of the business
for the year ended
February 1999 was R37 380 and for the year ended
February 2000, R66 252. This represented an average monthly nett
profit of R3
115 for the year 1999 and R5 521 for the year 2000.
These figures are a far cry from the R38 000 per month warranted by
defendant.
What, however, is strikingly obvious is the fact that
the
gross
profit for the year ended February 2000, as reflected in the annual
financial statements, is R456 180. If this figure is reduced
to the
monthly average, it amounts to R38 012. This is the average gross
profit per month and not nett profit. Mr Abdullah was
adament that
he was not confusing the gross profit with the nett profit. The
accounting officer’s report which appears on the
letterhead of
By-laws Dealings CC, and forms part of the annual financial
statements for the year ended February 2000, the following
appears:
“
We have determined that the financial statements are in
agreement with the accounting records and have done so by adopting
such procedures
and conducting such inquiries in relation to the
books of account and records as we considered necessary in the
circumstances.”
It is common cause that Mr Khumalo is attached to
By-laws Dealings CC. None of the books of account and accounting
records referred
to in the aforesaid report were produced by
defendant for purpose of the trial.
According to Mr Abdullah these records, for some inexplicable
reason, were destroyed. It was put to Mr Strydom under
cross-examination
that Mr Abdullah will testify that the financial
statements for the year ending February 2000 was made available to
him at the
time of them negotiating the sale. Mr Strydom denied the
allegation. He said that he saw the financial statements for the
first
time a few days before he testified. I accept Mr Strydom’s
testimony in this regard. The Strydoms would no doubt have had
serious
reservations about purchasing the business as the financial
statements would cleary have indicated that the nett profit
warranted
by Mr Abdullah was palpably false.
Despite overwhelming evidence to the contrary, Mr Abdullah
maintained that the nett profit of the business was R38 000 per
month.
It was pointed out to him under cross-examination that the
financial records of defendant, for the two years it traded at the

business, reflected an average monthly nett profit of R3 115, and R5
521. He testified that the figures were deflated to defraud
the
Receiver of Revenue. When the court pointed out the serious
implications and consequences such testimony may have for him
and
his wife, he persisted with such evidence. The court adjourned to
enable him to take legal advice on the matter. On the resumption
of
the cross-examination he elected not to answer certain incriminating
questions. The court will return to this aspect later
when it
evaluates his evidence.
Defendant suggested various reasons why plaintiff
did not obtain the desired result with regard to the nett profit.
Firstly, when
Mr Strydom confronted Mr Abdullah about the
profitability of the business in early May 2000, Mr Abdullah
retorted:
“I cannot help if that is
the way you run the business”.
He
placed the blame on the Strydoms for the manner in which they
conducted the business. Mr Strydom explained that they continued
conducting the business in the same manner as defendant did.
Secondly, that the business had a reasonably large Muslim clientele
and plaintiff had failed to obtain a
“halaal
certificate”
. Mr Strydom indicated
that a
“halaal certificate”
was issued by the relevant religious authority, but they had not
uplifted such certificate. However, Mrs Strydom testified that
they
had a letter from the Muslim Judicial Council indicating that the
business complied with the halaal requirements. I might
mention in
passing that it was a special condition of the deed of sale that
plaintiff had to conform to the terms laid down by
the Muslim
Judicial Council for obtaining a halaal certificate. I am satisfied
that plaintiff complied with such requirement.
Thirdly, Mr Abdullah claimed that they ran the business as a family
business. They did not draw salaries but lived off the business.

The evidence is that the Strydoms also ran the business as a family
business. Both of them were intimately involved in running
the
business. Fourthly, it was suggested that plaintiff gave the staff
a substantial increase in wages immediately after she took
over the
business and thereby increased the expenditure of the business. Mr
Strydom admitted increasing the salaries of the staff.
He said he
wanted to bring it to an acceptable level in order to have a loyal
and satisfied staff. I am not convinced that such
increase in
salaries would have had an appreciable affect on the nett profit.
Fifthly, that the quality of their products, particularly
the steak
burgers , was compromised. Mr Strydom denied this allegation and
testified that they maintained the quality of their
products
throughout their trading operation at the business. Sixthly, that
Mr and Mrs Strydom were never in the business. They
came and went
and entrusted the running of the business to the staff. Mr Strydom
denied these allegations. He testified that
he and his wife
staggered their duties at the business in such a way that one of
them was always in control of the business during
trading hours.
I am of the view that Mr Abdullah was clutching at straws in order
to advance reasons why plaintiff was not meeting the warranted
nett
profit. There was no foundation or evidence to justify such a
conclusion. Mr Osman sounded sceptical when confronted with
the
figure of a nett profit of R38 000 per month. The business
belonged to him and a partner before it was sold to defendant
for
R150 000. He had serious doubts and reservations that the business
could generate a nett profit of R38 000 per month. He
testified
that the turnover of the business at the time it was sold to
defendant was between R45 000 and R50 000 per month. His
partner,
Mr Mullagee had lived off the business. No salaries were drawn as
the business did not generate any profit. He testified
that the
turnover of the business after he took the business over from the
Strydoms was approximately R65 000 per month and the
nett profit was
approximately R4 000 per month. The irresistable inference the
court draws from all the evidence is that the nett
profit generated
by plaintiff was due to the inherent limitation and weakness of the
business and not due to any fault of plaintiff.
Defendant tendered no reliable evidence in rebuttal. The only
person called to give evidence for the defendant was Mr Abdullah.

He was a pathetic witness. He was evasive. He adapted his evidence
when driven into a corner. He refused to answer certain
legitimate
questions put to him, on the grounds that it may incriminate him. He
perpetuated the untruth that the nett turnover
of the business was
R38 000 by stating under oath that the nett profit reflected for the
years ended 1999 and 2000 in the financial
statement for the year
ended February 2000, was deflated to evade payment of taxes. He
could produce no documents, books, records
or financial statements
to corroborate the performance of the business according to his
representation and evidence. He could
give no plausible explanation
why he destroyed important documents that could have substantiated
his allegations. He testified
that he can destroy anything. He
does not have to prove anything. He came across as arrogant. Mr
Abdullah testified that he
was a shrewd businessman of many years
standing. It is not reasonable to expect of a businessman of his
experience and standing
to destroy financial records of a business.
The court can only infer that if he did so, it was for an ulterior
motive. In the
present instance it was done to destroy vital
evidence which would have been inconsistent with his representation
that the nett
profit was R38 000 per month.
It was put to Mr Abdullah under cross-examination
that he had stated under oath in certain criminal proceedings, that
the “Food
Planet” was his business. He retorted that he could
not remember. When Mr
Le Roux
referred him to the record of the criminal proceedings, he tried to
explain by saying that it was a matter of speaking. He maintained
that the business belonged to his brother-in-law who worked for a
foreign embassy. He merely helped out at “Food Planet” for
pocket money. He admitted that it was not true what he had said in
the criminal matter about the business being his. Mr Abdullah
did
not impress the court as an honest and reliable witness.
In my view, he was thoroughly discredited. The court rejects his
evidence, save insofar as it is not inconsistent with plaintiff’s
witnesses, proven facts and the probabilities in the case. I wish
to pause here momentarily and say that the court does not believe
his story that he deflated the figures in the financial statements
in order to defraud the Receiver of Revenue. I am of the view
that
he wove the story in order to justify the fraudulent
misrepresentation made by him with regard to the nett profit of the

business. I am fortified in this conclusion, in the first place, by
the fact that it is unlikely that Mr Khumalo who is a professional
person, would have been a party to such unlawful conduct. This
inference is reinforced by the fact that Mr Khumalo was not called
as a witness by defendant. In the second place, the financial
statements, according to the accounting officer’s report, were
prepared from books of account and records. In the third place,
according to the evidence of Mr Abdullah, these books and records
were destroyed for no plausible reason. In the fourth place, the
probabilities militate against the sort of monthly nett profit
that
Mr Abdullah represented the business could generate.
Mr Strydom on the other hand, gave his evidence in a forthright
manner. He made many concessions that were favourable to the

defendant. His evidence was substantiated by documents produced by
both plaintiff and defendant. It was also substantiated by
the
testimony of the other witnesses for plaintiff. He impressed the
court as an honest and reliable witness. The court accordingly
accepts his evidence. The evidence of Mrs Strydom was short. It is
common cause that most of the negotiations were between Mr
Strydom
and Mr Abdullah. Their respective wives played a minor role in the
negotiations. Mrs Strydom substantially corroborated
her husband in
those matters in which she was involved. Her evidence is also
accepted. Mr Abel and Mr Osman were impartial witnesses.
Their
evidence was not seriously challenged under cross-examination. The
court found their evidence to be reliable and the court
likewise
accepts their evidence.
In the light of the proven facts and probabilities, the court is
satisfied that the representation made by defendant to plaintiff
with regard to the nett profit of the business was false. The court
is further satisfied that defendant made such false representation
to induce plaintiff to enter into the deed of sale. This conclusion
is fortified by the fact that when Mr Abdullah discovered
that the
Strydoms had backed out of the proposed sale and had purchased
another business, he was upset and persuaded them to reconsider.

Defendant was even prepared to sacrifice the deposit of R10 000
which the Strydoms had paid as a deposit for the other business,
namely, Wayne’s Fast Foods. When this did not materialise,
defendant
even took over the rights and obligations of the plaintiff in the
purchase of Wayne’s Fast Foods.
APPROBATE AND REPROBATE:
Defendant raised two further defences. I will
discuss them in turn. The first is that plaintiff has affirmed the
deed of sale
and is therefore not entitled to cancel the sale. The
second is that plaintiff is not able to effect restitution in
integrum, in
other words, to restore the subject matter of the sale
to what it was at the effective date of the sale. Mr
Eia
submitted that an innocent party to a
fundamental misrepresentation has an election to approbate or
reprobate. He has an option
to either stand by the contract or
claim rescission. He submitted further that plaintiff by continuing
to trade and by continuing
to pay the rental on the leased premises,
affirmed the contract. According to Mr
Eia
this is further reinforced by the fact that plaintiff tried to
impose the restraint of trade condition in the deed of sale.
Mr
Eia
argued that plaintiff is estopped from cancelling the deed of sale.
The court might mention at this stage that it is precluded
from
considering the issue of estoppel as it was not pleaded. Defendant
introduced a proposed amendment to its plea dated 19 March
2001
which incorporated a plea of estoppel, but such proposed amendment
was not proceeded with and was superceded by defendant’s
amended
plea dated 13 February 2002 which does not include a plea of
estoppel.
With regard to the doctrine of election, the
evidence is that when Mr Strydom discovered early in May 2000, that
the business was
not generating the nett income represented by Mr
Abdullah, he had immediately confronted the latter. Mr Abdullah
put the
blame for the non-performance of the business on the
Strydoms. Certain correspondence followed between the parties. By
letter
dated 23 May 2000 from plaintiff’s attorneys to defendant’s
attorneys, plaintiff cancelled the deed of sale and tendered the
return of the business against repayment of the money paid to
defendant in respect of the purchase price. By letter dated 9 June
2000, from defendant’s attorneys to plaintiff’s attorneys,
defendant repudiated the cancellation. On 9 June 2000, plaintiff
issued summons against defendant claiming the necessary relief in
the matter. I am satisfied that plaintiff had exercised her
election to reprobate within a reasonable period of time. In the
matter of
BOWDITCH v PEEL & MAGILL
1921 AD 561
at 572-3,
Innes,
CJ
held that:
“
A
person who has been induced to contract by the material and
fraudulent misrepresentations of the other party may either stand by
the contract or claim rescission. (
VOET
,
4.3, Sections 3, 4, 7.)
It
follows that he must make his election between those two inconsistent
remedies within a reasonable time after knowledge of the
deception.
And the choice of one necessarily involves the abandonment of the
other. He cannot both approbate and reprobate.”
The plaintiff’s conduct after the cancellation
of the sale, was in no way inconsistent with such intention. She
tendered the
return of the business on refund of the monies paid.
She refused to effect any further payments on account of the
purchase price.
I am satisfied that she continued conducting the
business and paying the rental for the benefit of defendant so that
she could
preserve the goodwill of the business and the right of
occupation and mitigate the losses. In my view, it was the unlawful
conduct
of Mr Abdullah that diminished the goodwill and eventually
led to plaintiff handing the business over to the landlord. The
court
does not agree with the submission by Mr
Eia
that plaintiff affirmed the deed of sale by trying to enforce the
restraint of trade. It is clear from the evidence that the
opening
of “Food Planet” by Mr Abdullah had a negative influence on the
viability of “Blue Owl” and accordingly on the
preservation of
the goodwill. Plaintiff was entitled to draw defendant’s
attention to the restraint of trade clause. Defendant
ignored the
complaint. The fact that plaintiff did not proceed with court
proceedings negates any conclusion that plaintiff had
elected to
affirm the deed of sale.
CHRISTIE on
THE LAW
OF CONTRACT
(4
th
edition) sets out the innocent party’s right to cancell the
contract as follows (p 332):
“
Where an innocent party has made his choice, which he may do by
express notification to the maker of the misrepresentation or by
conduct
indicative of his choice, he cannot, without the consent of
the other party, change his mind because he would place the maker of
the misrepresentation in an intolerable position. This principle of
irrevocability of choice, has been expressed in a number of
more or
less picturesque phrases; the innocent party is put to his election;
he cannot both approbate and reprobate; he cannot
blow hot and
cold, he cannot have his cake and eat it.”
Plaintiff had exercised her election to reprobate
and clearly expressed her intention to defendant in writing. She
could not approbate
thereafter without the consent of defendant.
There is no evidence of such consent whether expressed or by
implication. These two
remedies are, however, mutually exclusive and
the overwhelming evidence is that plaintiff had irrevocably
reprobated. (See
THOMAS v HENRY &
ANOTHER
1985 (3) SA 889
(A) at
896A-E.)
Mr
Eia
made great play of the fact that when plaintiff communicated her
election to defendant in writing, she qualified such election
with
the words
“insofar as this may be
necessary”
. This qualification must
be seen against the background of plaintiff’s case. Her case was
firstly based on the allegation that
the sale was null and void by
virtue of the non-fulfilment of the suspensive condition.
Alternatively, if the court held the sale
was valid, she pleaded
that she had exercised her right to repudiate the contract. The
qualification was dependent on whether
or not the court granted the
first remedy. The argument of Mr
Eia
on this point is, in my view, without merit.
The onus to prove that plaintiff has affirmed the
sale after having reprobated, is on defendant. In
LAWS
v RUTHERFORD
1924 AD 261
at 263,
Innes, CJ
said as follows:
“
The onus is strictly on the appellant. He must show that the
respondent with full knowledge of his right, decided to abandon it,
whether expressly or by conduct plainly inconsistent with an
intention to enforce it.”
(See also
VAN
SCHALKWYK v GRIESEL
1948 (1) SA 460
(A) at 473;
FEINSTEIN v NIGGLI AND
ANOTHER
1981 (2) SA 684
at 698B-H.)
In my view, defendant has failed to prove on a balance of
probabilities that plaintiff had an unequivocal intention to
approbate
after having reprobated.
RESTITUTION:
As a general rule, a party who seeks rescission
of a contract of sale on the grounds of fraudulent
misrepresentation, must restore
to the other party the “merx” or
the “
res vendita
”.
Restitutio in integrum
forms an integral part of such rescission. (
FEINSTEIN
v NIGGLI AND ANOTHER
(
supra
)
at 700F-H-701A-C.) It is common cause that plaintiff is no longer
in possession of the business. She handed the business over
to the
landlord. Mr Osman testified that he and a partner is presently
running the business. He admitted that the fixtures, fittings
and
equipment are still in the business. He was evasive when asked
whether the premises in which the business is located, was
available
for letting to either party if the matter was finalised in court.
He said any party was free to negotiate with the landlord.
Mr
Le Roux
submitted that restitution can be effected. He said that,
according to the evidence, the fixtures, fittings and equipment are
at the business; the name and goodwill are available and the stock
can be restituted. He argued that the premises did not form
a
composite part of the business and defendant can trade under the
same name at other premises. I disagree. The premises,
particularly
its location in the present instance, forms an integral
part of the business. The evidence is that the business was in
existence
at the premises for more than 38 years. It has a
strategic location and was described as a landmark. Considerable
goodwill is
therefore attached to the business at the premises and
such goodwill, in my opinion, would diminish in value if the
business were
moved to other premises. Not only would the business
have to be redeveloped at the new premises, but it will have to
contend with
competition with the business at the existing premises.
Mr
Eia
submitted that plaintiff is not in a position to effect restitution
as she is no longer in possession of the business. Moreover,
while
the business was in her possession, it deteriorated and the value
thereof depreciated. There is no evidence that the business
deteriorated as a result of the fault of plaintiff. The return of
the business was tendered to defendant a few weeks after plaintiff
took possession thereof, but defendant refused to accept such
tender. The evidence was that Mr Abdullah from very early on, tried
to disrupt the smooth operation of the business. He interfered with
the staff of plaintiff by inciting them to strike. He intimidated
the Strydoms. He opened the “Food Planet” in competition with
the “Blue Owl” about 300 meters away. If anyone were to
be
blamed for the deterioration of the business and depreciation of the
value of the business or the closure of the business, then
it must
squarely fall on the shoulders of Mr Abdullah as agent of defendant.
In my view the plaintiff tried her best to preserve
the assets of
the business, but defendant, through the conduct of Mr Abdullah,
made such task difficult if not impossible. Defendant
must
therefore bear the consequences of such conduct.
The rule of
restitutio
in integrum
is founded on the
principle of equity and justice. In a number of varying
circumstances, our courts have departed from the strict
application
of the rule and, where necessary, have adjusted the deficiency by
monetary compensation. (See
FEINSTEIN
v NIGGLI AND ANOTHER
(
supra
)
at 700H-701A-C.) One of the defences raised by defendant was that
plaintiff could not effectively restitute and place defendant
in the
status quo ante
.
In terms of the deed of sale, the subject matter of the sale was
(a) the fixtures, the fittings and equipment; (b) the goodwill,
including the right to continue under the present trade name and
(c) the stock in trade as contained in the business. It is

unfortunate that the parties did not make an inventory of the
tangible assets which defendant sold to plaintiff. According to Mr
Strydom these items were left in the care of Mr Osman when he
returned the premises to the landlord. Mr Osman confirmed this and
said that these items could be uplifted from the premises. Mr
Strydom estimated the stock in trade at R20 000 when plaintiff took
possession of the business from defendant. Mr Abdullah confirmed
this figure.
Insofar as the fixtures, fittings and equipment are concerned, the
court is satisfied that plaintiff can effect restitution thereof.

With regard to the goodwill, firstly, plaintiff can effect the
restitution of the trade name. Secondly, the goodwill was not
worth
the value placed on it by defendant. The court found that the nett
profit as represented by defendant, was false. The court
is
satisfied that the value of the goodwill, amongst other factors, is
determined by the nett profit generated by a business as
pointed out
by Mr Strydom. Thirdly, the court found earlier that Mr Abdullah
had deliberately and intentionally, by his unlawful
conduct,
substantially destroyed whatever was left of the goodwill after
plaintiff tendered the return of the business to defendant.
In this
respect, defendant was the author of its own misfortune and must
accordingly bear the consequences. Insofar as the stock
in trade is
concerned, it was disposed of in the normal course of business as
contemplated and is no longer available for return.
The court will
have to make an adjustment of the deficiency by making an award for
monetary compensation in the sum of R20 000.
As far as payment
by plaintiff to defendant is concerned, defendant admitted in its
plea that it received from plaintiff the amount
of R234 000. The
court will bear these figures in mind when making its order.
COSTS:
In view of my findings, it is not necessary to
make a decision in respect of the claim in reconvention. As far as
costs are concerned,
Mr
Le Roux
submitted that the wasted costs occasioned by the postponement to
enable defendant to obtain a new set of attorneys and counsel,
should be borne by defendant’s attorneys on an attorney and client
scale. After the commencement of the trial, defendant fired
both
his attorneys and counsel who appeared for it at the time.
Subsequently defendant retained the same attorneys, but appointed
new counsel. No blame could be attached to plaintiff for the
postponement. She was, in fact, prejudiced thereby and there is
no
reason why she should not be compensated for such prejudice by a
suitable award as to costs. I do not think that defendant’s
attorneys could be blamed for them being fired and thereafter being
rehired. In my view, no case has been made out by plaintiff
for a
de bonis proprius
costs award against the attorneys for defendant and such request is
accordingly refused. However, I am satisfied that plaintiff
is
entitled to costs on an attorney-client scale in respect of the
wasted costs occasioned by the postponement to enable defendant
to
obtain new attorneys and counsel. Mr
Le
Roux
submitted further that in view
of Mr Abdullah’s demeanour in the witness box and the fact that he
had been purveying deliberate
untruths, the court should express its
displeasure by making an award for costs against defendant on an
attorney and client scale.
It is clear from the evidence that the
relationship between the parties has soured. Both parties feel that
they have been aggrieved
by the other. It would be unfair to
penalise defendant. As far as costs are concerned, I intend making
the usual order that costs
follow the outcome.
ORDER:
In the result there shall be judgment for plaintiff in the sum of
R234 000 (two hundred and thirty four thousand rand) less
R20
000 (twenty thousand rand) against delivery to defendant of the
fixtures, fittings, equipment and all movable trade names which
formed the subject matter of the sale. Defendant is ordered to pay
plaintiff’s costs on a party and party scale, save and except
the
wasted costs, occasioned by the postponement to enable defendant to
obtain the services of new attorneys and counsel, which
shall be
paid on an attorney and client scale. The claim in reconvention is
dismissed with costs.
…………………………….
E MOOSA
G A Strydom v The
Blue Owl CC

Cont/…