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2024
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[2024] ZAFSHC 130
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Care Cure (Pty) Ltd v Landman (A134/2023) [2024] ZAFSHC 130 (10 May 2024)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable:
NO
Of
Interest to other Judges: NO
Circulate
to Magistrates: NO
Case
No: A134/202
In
the
matter
between:
CARE
CURE (PTY) LTD
Appellant
and
HEIDI
JOHANNA LANDMAN
Respondent
JUDGMENT
BY
:
MHLAMBI, J
CORAM:
MHLAMBI ADJP
et
BOONZAAIER,
AJ
HEARD
ON:
29 JANUARY 2024
DELIVERED
ON:
10 May 2024
[1]
The appellant
noted an appeal against the whole of the judgment of the
court
a
quo
which was
delivered on 21 April 2023 in terms of which the appellant, as the
defendant, was ordered to pay the plaintiff the amount
of R 364
761.00 with interest and its counterclaim was dismissed with costs.
The appeal is based on 17 grounds which were barely
dealt with in the
appellant's heads of argument as the latter consisted mostly of a
reference to certain portions of the evidence.
[2]
The
respondent's
action in the
summons
was
based on a settlement agreement, styled
"Full
and Final Settlement Agreement"
between
the appellant and the respondent dated and signed on 17 February
2017. Paragraph 2.1 of the said settlement agreement provided
that it
was entered into in full and final·settlement of all claims of
any nature whatsoever arising from the termination
of the employment
of the employee with the employer with specific reference to the
employment relationship.
[3]
It was agreed
between the parties that the respondent would be paid the amount of R
364 761.00, payable as a retrenchment package,
in three monthly
instalments commencing at the end of February 2017. On signature of
the document, the respondent resigned as the
director of the
respondent and its affiliated companies.
[4]
In its plea,
the appellant stated that no true contract existed between the
parties since the plaintiff, before signing the settlement
agreement,
made misrepresentations to the defendant which were so fundamental,
that the
defendant's
apparent
consent to
the
contract was, in truth, no consent at all. The appellant filed a
counterclaim for alleged fraudulent claims totalling R 206
025.30 for
the period 01 March 2014 until 28 February 2017 by the respondent to
the appellant which the appellant honoured and
paid.
[5]
The main
grounds of appeal are contained in paragraph 7, 8, 10 to 12, 14 to 17
which read as follows:
"7.
The honourable
magistrate erred in finding that the
appellant's
evidence falls short of the required standard of proof
as
set out in
Novick v Comair Holdings Ltd and
others
1979
(2) SA 116
(W).
8.
The honourable
magistrate erred by not considering the
testimony
of Dr
Cronje, that the respondent misrepresented him, when he asked her if
someone
was
misappropriating
the funds of the appellant. Further that if the appellant knew about
the misappropriation by the respondent, the
appellant
would
never have
concluded
the
settlement
agreement,
but
would have proceeded
with
disciplinary
steps to dismiss the respondent
,
10.
•
The
honourable
magistrate
erred
in
finding
that
the
transactions
referred
to
by the
appellant
dated
back
to
the
year
2013,
past
the
required
period
of
three
(3)
years
when
debts
are usually prescribed. The honourable magistrate failed to consider
that the appellant only became aware of the existence
of the debt
on/or about 20 May 2017.
11.
The
honourable magistrate erred in finding that the appellant had no
intention of honouring the settlement agreement and instructed
Marelize to look for discrepancies in the respondent's expenses,
directly after the respondent left.
12.
The
honourable magistrate should have found that the respondent
misrepresented
the appellant when she denied any wrongdoing or misappropriation when
confronted by Dr Cronje and that the appellant
would never have
concluded the settlement agreement.
14.
The
honourable magistrate should have found that the misrepresentation
was material since it induced the appellant to believe that
the
respondent was
a
truthful
person, in good standing, without misconduct, which was one
of
the
operative courses that induced the appellant to conclude the
settlement agreement.
15.
The
honourable magistrate should have found that the appellant had proved
on
a
balance of
probabilities that no true contract exists between the parties,
because of the respondent's
misrepresentation,
that the misrepresentation was of such
a
nature that
the appellant was entitled to cancel
the
settlement
agreement
during
May
2017, alternatively in the proceedings.
16.
The
honourable magistrate erred in not finding that the respondent made
fraudulent claims relating to personal expenses, by representing
it
to be official expenses and further made fraudulent claims relating
to travelling expenses for the period March 2015 until December
2015.
17.
The
honourable magistrate erred in not considering all the evidence
properly and should have found that the appellant proved it
defence
and claim in reconversion on
a
balance of
probabilities.
[6]
In
its judgment, the
court
a
quo
found
that it was not in dispute that the parties concluded a settlement
agreement terminating the plaintiff's employment or that
the money
claimed was never paid over to the respondent.
[1]
The
court found that the evidence of Dr Cronje did not provide much value
to the defendant's case because he was solely concerned
with why the
company was not turning a profit, as it should, and suspected that
the respondent and Estelle, an employee, were stealing
from
the
company.
[2]
It
was
clear
in
his
testimony
that
when
the
opportunity
arose to merge the appellant with another company, he, being the
shareholder in the appellant, directed that the plaintiff
be sacked
and got one Malan, also an employee, to execute the termination of
employment.
[3]
[7]
The
appellant, the court opined, did not want the respondent to be part
of the company anymore and had no intention of honouring
the
settlement agreement as a certain Marelize was instructed to look for
discrepancies in the respondent's expenses directly after
she left
the appellant's employment.
[4]
The
totality of the evidence revealed that the appellant deliberately
sought out transactions which were never queried internally
or with
external auditors long after the agreement had been concluded. The
appellant failed to demonstrate the causal link between
the making of
the misrepresentation and how it would have been induced into signing
the contract as it, as per the evidence of
Cronje, a decision was
already made to get rid of the plaintiff.
[5]
[8]
In
the court's view, the appellant's evidence on this aspect fell short
of the required standard of proof as set out in
_
Novick
v Comair Holding.
[6]
though
reference was made to certain was the appeal assailable on the basis
of misrepresentation or fraud? Whilst the counterclaim
correctly
dismissed and whether that claim had prescribed?
[9]
The critical
questions in this appeal are, firstly, whether at the time of the
conclusion of the settlement agreement, the respondent
made
misrepresentations to the appellant which induced it to enter into
that agreement. Secondly, whether the counterclaim had
prescribed.
[10]
A party who has been induced to enter into a contract by
misrepresentation of an existing fact is entitled
to rescind the
contract, provided that the misrepresentation was material, was
intended to induce him to enter
into
the
contract
and
did
so
induce
him.
[7]
Once
it
has
been
discovered
that
the
representation
was incorrect, it is against good faith for the party who made it, to
continue to hold an
innocent
party to
a
contract so obtained
.
[8]
[11]
In
cross-examination, Dr Cronje, a semi-retired oncologist, shareholder
and the director of the respondent, on being asked how the
respondent
deceived him into making a contract of that nature or whether she did
make any misrepresentation to him at the conclusion
of the settlement
agreement, he responded as follows
:
"/
did
not
discuss
any
possible misrepresentation because at that stage
the
decision
was
that
we
have
to get rid of Mrs Landman
.
The
reason
was
different
from that reason that
we
are
sitting
here today
.
"
[9]
On
a further question
:
“
Who
wanted
to
have this contract drafted and signed, is it not the
company?"
[10]
His
response was
:
"Well,
we
had to have
a
contract
drafted
and signed
to
get
rid of
Mrs
Landman
.
"
[11]
[12]
This
addresses the concerns raised in the grounds of appeal numbers
7,8,11,12,14,15 and 16. It is crystal clear that the respondent
never
made a misrepresentation at the time that the settlement agreement
was entered into. The appellant was determined to get
rid of the
respondent and needed the settlement agreement to execute its plan.
The delay or refusal to effect payment as agreed
and the sudden
investigation of the respondent's expenses after her departure from
the company is a clear indication that the appellant
was not of
intention to comply with the settlement agreement. The court a quo
correctly found that the appellant's evidence fell
short of the
required standard of proof as set out in
Novick.
[12]
[13]
In
dealing with the counter claim, the court a
quo
stated
that it became clear during cross-examination that the appellant
relied
on past credit card statements dating as far back as the year 2013
,
past
the required period of three (3) years when debts usually
prescribe
.
[13]
[14]
The
Prescription Act
[14]
provides
that a debt prescribes after a period of three (3) years
save
where
an
act of parliament
provides
otherwise.
The
prescription
of
such
a debt shall commence to run as soon as the debt is due. If the
debtor wilfully prevents the creditor from coming to know of
the
existence of the debt, the prescription shall not commence to run
until the creditor becomes aware of the existence of the
debt.
[15]
The
court
a
quo
stated
that although a special plea was made that the appellant's claim had
prescribed and ought to be dismissed, it was so intrinsically
linked
to the facts of the case and more specifically their defence
that
it
could not be adjudicated separately given the nature of the defence.
However, the counterclaim
stood
to be dismissed and the appellant's claim should succeed.
[15]
[16]
In
the spe ial plea, the respondent pleaded that the alleged debts
became due during the period 2014 up until 2016 and March 2015
up
until December 2015. The counterclaim was served on the plaintiff on
11 May 2020, three (3) years after the alleged debts became
due. Even
though the court a
quo
did
not elaborate and traverse the aspect of prescription, it,
nevertheless,
upheld
the
special plea
that
was
raised and dismissed the counter claim; having taken into account
other circumstances that showed the improbability of the evidence
presented in support of the counterclaim. It is evident that the
appellant was aware long before the deed of settlement was entered
into that the company was not doing well financially and suspected
the employees of committing theft. As the external auditors
could not
pick up on any irregularities, he confronted the plaintiff and
Estelle individually with each other's alleged theft which
motivated
him
to
consult another branch of PWC auditors in
Welkom
to
address
the issue.
[16]
[17]
The
period of prescription begins to run against a creditor when the
creditor has the minimum
facts
which
are
necessary
to
institute
action.
[17]
The
appellant,
in
its reply to the counterclaim,
pleaded
that it
only
obtained
knowledge
of
the facts giving rise to the debt on/or about 20 May 2017, when it
was decided that the deed of settlement was not binding on
the
appellant. The prescription Act does not require
legal
conclusions
on
the part of the creditor before a debt can be said to be due.
Knowledge
that
the relevant agreement
was
not legally binding is not a fact that the appellant needed to
acquire to complete a cause of action and was therefore
not
relevant
to
the running
of
prescription.
[18]
The
period of prescription begins to run against the creditor when it has
minimum facts that are necessary to institute an action.
The running
of prescription is not postponed until it becomes aware of the full
extent of its rights nor until it has evidence
that would prove a
case 'comfortably'.
[19]
Besides,
there is no evidence that it was wilfully prevented
from
coming to know of the existence of the debt.
[18]
In our view,
one cannot find fault with all the findings of the court
a
quo
and
that it was correct in granting the action and dismissing the
counterclaim. The appeal must accordingly succeed.
[19]
It is trite
that the successful party is entitled to the costs. The respondent
requested that punitive costs be awarded taking into
account the
ill-conceived process followed by the appellant. Having considered
all the relevant circumstances, it is both fair
and equitable that
such a cost order should be granted
.
[20]
In the result,
the following
order is made:
Order:
The
appeal is dismissed with costs on an attorney and client scale.
MHLAMBI,
ADJP
I
concur,
BOONZAAIER,
AJ
On
behalf of the appellant:
Adv.
MDJ Steenkamp I
nstructed
by:
FS
Law Inc.
5
Kwagga Street
Kwaggafontein
Bloemfontein
On
behalf of the respondent:
Adv.
OM Grewar
Instructed
by:
Spangenberg
Zietsman & Bloem Attorneys
FAL
Manor
6
Seventh Street
Arboretum
Bloemfontein
[1]
Paragraph
45 of the judgment.
[2]
Paragraph
67 of the judgment.
[3]
Paragraph
69
of
the
judgment.
[4]
Paragraph
71
of
the
judgment.
[5]
Paragraph
74 of
the
judgment.
[6]
Supra.
[7]
Christes
the
law
of
contract
in
South
Africa
on
page
281;
Novick
v
Comair
Holding Ltd
1979
(2)
SA
116
(W)
149-
150.
[8]
C
hri
ste
sup
ra.
[9]
T
h
e
transcribed
r
ecord,
lines
1-4 on page 654.
[10]
Lines
1
5-
16
o
n
p
age
654
.
[11]
Lines
1
7-
I
8
on
page
654
.
[12]
Supra.
[13]
Paragraph
51
of
the
judgment.
[14]
Act
68
of
1
969.
[15]
Paragraph
76 of the
judgment.
[16]
Paragraph
38
of
the
judgment.
[17]
McMillan
v
Bate Chubb &
Dickson
Incorporated
[2021]
ZASCA
45
paras
38-39.
[18]
Fluxmans
Incorporated
v Levenson
2017
(
l)
All
SA
313
SCA.
[19]
Fluxman
s
,
supra.