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2024
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[2024] ZALMPPHC 24
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Albertyn and Another v Dreyer and Another (7486/2022) [2024] ZALMPPHC 24 (8 March 2024)
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
(LIMPOPO DIVISION,
POLOKWANE)
CASE №:
7486/2022
In
the matter between:
CHRISTOPHER CHARLES
ALBERTYN 1
ST
RESPONDENT / 1
ST
PLAINTIFF
CAROL
ALBERTYN
2
ND
RESPONDENT / 2
ND
PLAINTIFF
and
MICHAEL
DAVID DREYER
1
ST
EXCIPIENT / 1
ST
DEFENDANT
DONOVAN
WIGGIL
2
ND
EXCIPENT / 2
ND
DEFENDANT
CORAM
: M.G.
PHATUDI J
HEARD
: 15
NOVEMBER 2023
DELIVERED
:
This
judgment was circulated electronically to the parties’ legal
representatives by email, and uploaded on SAFLII.
The date and
time for delivery of this judgment is deemed to be
08
March 2024
at
10:00AM
.
JUDGMENT
M.G.
PHATUDI J:
BACKGROUND
INFORMATION:
[1]
The Respondent, (the plaintiff in the main action), instituted an
action against the Excipients,
(the defendants in the main action)
for payment of the amount of Five Hundred Thousand Rand (R 500 000,
00) being for the
balance of the purchase price for and sale of two
(2) Members Interest held in a Close Corporation known as Marana
Liquor Store
CC [Reg №: 2010/158927/03]. The plaintiffs are in
terms of the agreement the Sellers while the defendants are the
Purchasers
of the business and Member’s Interest in the said
corporation.
The
action is defended. I shall for considerations of convenience refer
the parties as plaintiff (respondents in exception) and
defendants as
Excipient in this judgment.
[2]
The cause of action it appears, is based on a written agreement
entered into by the parties at
Tzaneen on 20 March 2020
[1]
.
I summarize its terms and conditions hereunder.
2.1.
Clause 3.1.1 provides that the transaction
set out in clause 4 of the agreement is subject to the suspensive
condition, inter alia,
that the purchaser
in
casu,
the Excipients obtain security of
tenure of the premises on the same terms and conditions as contained
in the existing lease in
respect of the premises. These would have
been subject to the consent of the landlord in writing to the cession
of the lease by
the Plaintiffs (Sellers) to the Defendants
(Purchasers) on same terms and conditions of the lease.
2.2.
Clause 5.1 provides that the purchase price
for the Members Interest is an amount of Two Million Five Hundred
Thousand Rand
(R 2 500 000.00) (VAT
exclusive) payable by the Purchasers to the Sellers by way of a loan
of Two Million Rand (R 2 000 000.00)
obtained from a
financial institution, and the balance of Five Hundred Thousand Rand
(R 500 000,00) would be payable by the
Purchasers to the Sellers
in terms of the agreement within a reasonable time. This business was
sold as a going concern.
2.3.
Furthermore, clause 6 of the said sale
agreement, in particular sub – clause 6.3, restricts ownership
in and to the business
and the sale asset from passing to the
Purchaser, not until payment of the entire purchase price has been
effected.
2.4.
Clause 10.3 regulates instances of any
party acting in breach of any of its obligations in terms of the
agreement, persisting in
such breach in excess of seven (7) days
after a notice of
mora
has been issued to the defaulting party.
2.5.
Clause 12 stipulates that the agreement
constitutes the entire agreement between the parties, and no
extraneous issues outside the
agreement, not expressly or impliedly,
contained in the agreement, shall be binding on them, whatsoever.
Similarly, no indulgence
sought and granted shall constitute a waiver
of any of that party’s rights flowing there from.
[3]
The Plaintiff alleged that notices placing the defendants in mora
were issued on 09 February and
24 June 2022, respectively. This
was after the Plaintiffs had allegedly delivered the business
premises and the Members’
Interest to the Defendants after they
have tendered payment due and payable to the Plaintiffs in partial
fulfilment of the transaction,
in or about June 2020. A follow up
meeting of the parties was allegedly held on 11 March 2021 in terms
of which the Plaintiffs
demanded payment of the balance of R 500
000,00 from the Defendants, as purchasers within six (6) months post
the date of the meeting.
I hasten to remark,
though in passing, that the period June 2020 to March 2021,
translates to 9 months passage of time.
[4]
Notwithstanding demand, the Defendants allegedly remained in mora, by
failing to remedy their
breach of the agreement, which the Plaintiff
pleaded that they are entitled to claim specific performance,
alternatively, cancel
the agreement, and claim damages.
[5]
Aggrieved with the persistent breach of the agreement by the
defendant, the Plaintiffs proceeded
to institute action against them,
claiming payment of an amount of R 500 000,00, together with the
costs of suit on attorney
and client scale, and interest at 10% rate
a
temporae morae
.
THE FACTS:
[6]
Having entered an appearance to defend the claim, the Defendants on
07 September 2022,
delivered an exception to the Plaintiffs’
particulars of claim.
Subsequent
thereto, on 05 August 2022, the Defendants delivered their plea to
the Plaintiffs particulars of claim together with
a counterclaim.
[2]
6.1.
In it, the Defendants relied on clause 9.1
of the sale agreement that records that: –
“
It
is hereby recorded that the Seller hereby warrant that the business
has no outstanding debt, save for a small overdraft account,
and in
clause 9.2, it is further provided that the overdraft account will be
settled in full by the Seller on the closing date.”
I
interpose to mention that the “closing date” means
“
the
first business day after the fulfilment (or waiver) of the last of
the conditions, or such other date as may be mutually agreed
amongst
all of the parties in writing.”
6.2.
The defendants pleaded that the material
breach of clause 9.1 and 9.2 of the agreement as alleged was that the
overdraft account
had in fact amounted to R 505 737, 75 which
the Plaintiff failed to settle in full on the “closing date”
of the
business.
In order to mitigate
their loss, so the submission went, the Defendants had to inject the
capital amount of R 597 949,61 towards
the liquidation of the
overdraft facility, (R 505 737, 75) Makro amount (R 37 040,10)
Rhnino Beetle, (R 12 600,00)
Greater Tzaneen Municipality (R
36 984,00) and Zwaleala, (R 5 587,74) all of which were
debts that accrued to the business.
6.3.
Additionally, the business’ banking
account was allegedly debited after the effective date for debts of
the First Plaintiff’s
motor vehicle in the sum of R 66 278,00,
and its insurance premium in the amount of R 3 954, 56, which
according to the
counter claim, is due by the plaintiff as refund
emanating from the clause 9.1 warranty.
In consequence, the debt
due by the Plaintiff to the Defendants is in the amount of R 668 135,
95, together with interest a
temporae morae,
and costs of
suit.
[7]
Undeterred, the plaintiff filed its replication and plea to the
counterclaim, denying that the
Defendants had performed all of their
obligations in terms of the agreement, in particular, failure to
settle the outstanding business
debt.
[8]
To summise, the Plaintiffs in their replication had for some obscure
reasons, introduced entirely
new facts as well as evidential matter
not pleaded in their particulars of claim, and strangely for that
matter, that clause 9.1
to which they agreed, was somewhat to them
misleading. They therefore purported to repudiate their agreement. It
boggles one’s
mind as to why if misled by any of the terms of
the agreement, none of the parties could not seek recourse in
resiling the agreement?
This issue is, however, not before me for
determination.
THE ISSUE:
[9]
I am called upon to determine whether or not the replication and plea
to the counterclaim raise
valid defenses or arguable issues as
pleaded by the Excipients?
9.1.
The Excipient took issue and launched a
withering scornful attack on the Respondents’ (plaintiffs)
replication and plea to
counterclaim.
9.2.
The attack, in the main, was aimed at the
oral agreement in terms which the Plaintiffs alleged that the
Defendants would settle
the overdraft fully, which according to the
latter is at odds with the provisions of clause 9.1 and 9.2 of the
agreement, respectively.
This obligation so the submission went,
rested on the Seller
in casu
,
the Plaintiffs, to discharge.
Accordingly, the basis of
the argument against the replication is, among others, that once an
agreement has been reduced to writing,
the written instrument is
accepted as the exclusive memorial of its contents and annuls all
other previous inconsistent statements
to the contrary. The result is
that the previous declarations by word of mouth on the subject are of
no moment and, therefore,
of no force or binding effect. The oral
evidence of the subsequent meeting is precluded by the operation of
the parol evidence.
This, moreover, is borne out by clause 12 of the
agreement that excludes any representations, terms, conditions or
warranties,
expressed or implied not contained within the four
corners of the contract.
9.3.
Furthermore, being impeded by the parol
evidence rule, the balance of the replication and / or the doctrine
of estoppel, as pleaded
naturally collapse.
COUNSEL’S
SUBMISSIONS:
[10]
Counsel for the Excipients, Mr. van Wyk, submitted correctly so, in
my view, that in law where a contract
has been crafted in writing and
duly signed by the parties or their authorised representatives, the
written memorial of the transaction
becomes conclusive as to its
terms. I agree.
In
other words, the content of a contract comes into existence by
crystalizing together statements made verbally, into writing.
If the
parties, as in the instant case, decide to embody their agreement in
written form, all previous statements are neither here
nor there.
The
execution of the document in fact deprives all such verbal
declarations of their legal consequence. The document becomes
conclusive
as to the terms of the transaction the parties intended to
record.
[11]
The above principle is juridically called the “integration
rule” which Harms JA meticulously
said in the case of
Telcordia
Inc v Telkom SA
[3]
Ltd that it concerns “agreements which precede the relevant
jural act”
By
necessary implication, if a written memorial encapsulates all the
intended terms, a colleterial oral transaction that is at variance
with it, should necessarily be of no force or effect.
[12]
Furthermore, for the reasons advanced in the Defendant’s
exception to the Replication, so the submission
went, the Plaintiffs
are precluded
by the parol evidence or integration rule from
relying on the allegations on Which they anchored their denial in
paragraph [4]
of the counterclaim, and in addition, their plea
discloses no defence to the counterclaim, at all, alternatively, it
is devoid
of averments necessary to sustain a defence against the
exception.
[13]
Counsel for the Respondents, Mr AC Diamond, having traversed the
Defendant’s plea and counterclaim,
submitted that the Exception
raised against the Plaintiff’s replication and plea are bad in
law and must, therefore, fail
on grounds
inter alia
, that: -
13.1.
The exception is a “straw man argument” in that the
Plaintiff’s plea to the counterclaim
does not attempt to
enforce any oral argument, but raises a claim for fraudulent or
negligent misrepresentation, or non –
disclosure establishing
the invocation of estoppel, and
13.2.
They do not enforce any previous statement, but opted to enforce the
existing contract on terms that
they would have concluded it, but for
the fraudulent misrepresentation, in which event, the integration or
parol evidence rule
finds no application.
[14]
I am unable to agree with these submissions. Despite the denial of
the enforcement of the oral agreement by the
Plaintiffs in the
replication and plea to counterclaim, it is patent that in paragraph
4.2 of their particulars of claim pleaded
that “on the 11
th
March 2021, the Purchasers and the Sellers had a meeting where the
Plaintiff sought payment of the remaining R 500 000,00
from the
Sellers within 6 months”, which meeting is admitted by the
defendants in their plea, but deny payment was discussed.
[15]
Although the written agreement was concluded and signed in Tzaneng
on 20 March 2020, the Plaintiff in their
plea to the claim in
reconvention, intimated that “the Plaintiffs agree that they
may set off” from the outstanding
amount of R 500 000,00
owed to the Plaintiffs. Furthermore, they conceded in paragraph 7
thereof that the amount of R 7 023,
56 may so “set off”
from the R 500 000,00 owed to them.
[16]
One wonders where this “set offs” are derived from,
regard being had that clause 13 of the agreement
excluded any
variations, additions, waivers, unless reduced to writing and signed
by or on behalf of the parties.
Similarly, there are no
collateral or other agreements except the sole existence of the
principal agreement. Apart from that, clause
12 makes the agreement,
“the entire agreement” between the parties with regard to
the matters dealt with in it. No
extraneous issues would be binding
on the parties, and certainly “set off” is not part of
the agreement.
[17]
To crown it all, the relief claimed in their plea to the claim in
reconvention, was, once again, to “set-off”
of the amount
of R 20 232.56 from the amount awarded in the main claim. This
cannot be.
LEGAL
PRINCIPLES IN EXCEPTIONS:
[18]
The main purpose of an exception that a declaration does not disclose
a cause of action is to avoid the leading
of unnecessary evidence at
the trial.
[4]
Accordingly, an
exception to a plea should consequently also not be allowed unless,
if upheld, it would obviate the leading of
unnecessary evidence. To
succeed in its cause of action, the Plaintiff’s pleading must
set forth every material fact which
it would be necessary for the
latter to prove, if traversed, in order to consolidate his / her
right to judgment of the court.
“It does not comprise every
piece of evidence which is necessary to prove each fact, but every
fact which is necessary to
be proved”
[5]
Plainly
put, a pleading is only excipiable on the basis that no possible
evidence led on the pleading can disclose a cause of action.
[19]
Generally, the excipient bears a duty to persuade the court that upon
every interpretation which the pleading can
reasonably bear, no cause
of action or defence is disclosed
[6]
.
Courts are slow to decide
upon exception issues of interpretation of a contract where its
import is uncertain.
[7]
To that end, when the
exception is based on an interpretation of a contract, as in the
present instance, it is incumbent upon the
excipient to show that the
contract is unambiguous.
[20]
The dispute in the present case orbits around the interpretation of
Clause 9 of the contract and issues of the
passing of possession and
ownership of the business as envisaged in clause 6.
These clauses in the
contract are in, my view, unambiguous.
Consequently, if the
conditions are not ambiguous so that evidence is inadmissible for
their interpretation, the question of its
interpretation can properly
be decided on exception.
Standard
Building Society v Cartoulis
1939 AD 510
is authority for this.
[8]
[21]
At issue in this exception is that the Respondent (Plaintiff in
convention) in its plea to Excipient’s counterclaim
pleads and
relies on a verbal agreement allegedly the parties concluded in
December 2019, before signature of the written agreement
in March
2020. In the exception thereto, regard being had to the clause
contained in the written contract, the oral agreement by
the
Respondent would neither be unsustainable nor disclose a defence to
the Excipient’s counterclaim on account of the non-variation
clause (clauses 12 and 13).
I find, therefore, that
the alleged oral agreements pleaded are at variance with the parol
evidence rule or the integration rule,
as the case may be.
Generally speaking, the
writing in a contract is regarded as the exclusive embodiment or
memorial of the transaction and no extrinsic
evidence may be adduced
of other utterances or jural acts by the parties which would have the
effect of contradicting, altering,
adding or varying the written
instrument. The exclusion flows from the reduction of the contract to
writing and its integration
in a single document, have become legally
immaterial or irrelevant.
[9]
[22]
It is trite principle of our common law that contracts are there to
be respected (Pacta sunt servanda). Accordingly,
an entrenched term
in a contract providing that all amendments to the contract must
comply with specified formalities is binding
and enforceable.
[10]
[23]
For all the reasons above, I am persuaded that the exception ought to
succeed. I, therefore, make an order as follows:
-
ORDER:
1.
The exception is upheld;
2.
The Respondent’s plea to Excipient’s
counterclaim (in reconvention) is struck out
;
3.
The Respondent is ordered to pay the costs
of the exception.
_______________________
M.
G. PHATUDI J
JUDGE
OF THE HIGH COURT,
LIMPOPO
DIVISION, POLOKWANE
APPEARANCES:
Counsel
for the Excipients
: Adv. A.S.L. van Wyk
Instructed
by
: Steward Maritz Basson Inc.
Tzaneen
Counsel
for the Respondent
: Adv. A.C Diamond
Instructed
by
: Charl Naude Attorneys
Polokwane
Date
of the hearing
:
15 November 2023
Date
of delivery of Judgment
:
08 March 2024
[1]
Paginated Pleadings Bundle pp 13 – 24, Annexure ‘POC’.
[2]
Ibid. pp 34 – 40.
[3]
[2006] ZASCA 112
;
2007
(3) SA 266
(SCA) at para: 115
[4]
Dharumpal Transport (Pty) Ltd v Dharumpal
1956 (1) SA 700
(A) at
706.
[5]
Vide: Mckenzie v Farmers’ Co-Operative Meat Industries Ltd
1922 AD 16
at 23.
[6]
Francis
v Sharpe
2004 (3) SA 230
(c) at 233.
[7]
Sun
Packing (Pty) Ltd v Vreulink 1996 (4) SA 176 (A)
[8]
See. Sacks v Venter
1954 (2) SA 427
(W) at 429, per Ramsbottom J
[9]
See
also, Johnson v Leal
1980 (3) SA 927
(A) at 942 – 943 C –
7; and KPMG Chartered Accountants (SA) v Securefin
2009 (4) SA 399
(SCA) ar para:39
[10]
Brisley
v Drotsky
2002 (4) SA 1
(SCA) at para: 6 – 10.