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[1988] ZASCA 35
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Bank of Lisbon & South Africa v Ornelas and Another (53/85) [1988] ZASCA 35; [1988] 2 All SA 393 (A) (30 March 1988)
Case No 53/85 /MC
IN THE SUPREME COURT OF SOUTH
AFRICA (APPELLATE DIVISION)
Between:
THE BANK OF LISBON & SOUTH AFRICA
LTD
Appellant
AND
ANTONIO DE ORNELAS
First Respondent
JORGE DE COSTA DE ORNELAS
. Second Respondent
Coram
: RABIE ACJ et JANSEN, JOUBERT, HEFER
et
GROSSKOPF
JJA.
Heard:
9 MARCH 1987
Delivered
: 30 MARCH 1988.
JUDGMENT
JANSEN /.....
1.
JANSEN JA
:
I have had the privilege of reading the.
judgment by JOUBERT JA, but I find myself, unfortunately,
driven to a
different conclusion.
The respondents (applicants in the Court a q
uo
)
raised
the
replicatio doli
(
generalis
), but the underlying
principles
are the same as those of the
exceptio doli
(
generalis
) .
Whether the
exceptio
has any role to play
in
our modern law is a matter of debate. The chief
supporters of
the defence are e g:
p van Warmelo
(
Exceptio Doli
1981
De Jure 203-22); A J
Kerr
(The Principles of the Law of
Contract 3ed 107-8, 137-42, 174;
1971 SALJ 408
; 1981 THRHR
88-9, 93-4;
1981 SALJ 159)
; P
Aronstam
(Consumer
Protection, Freedom of Contract and the Law, 168 et
seg
,
1979/...
2.
1979 THRHR 21
et seq); A D
Botha
(Unpublished thesis
June
1981,
Die Exceptio Doli Generalis
in die S A Reg;
1980 THRHR 255-266
-where the author arrives at a contrary
conclusion which he does not continue
to support in his.
thesis). The main critic is J C de
Wet
. In
his
thesis, "Estoppel by Representation" in die S A Reg (1939),
he deals with the
exceptio
at pp 83-89. He concludes that "die
exceptio doli generalis
geen aanspraaklikheids= beginsel bevat nie, en
dus nie die grondslag van aanspraak= likheid by estoppel kan vorm nie". This
dismissal
of the
exceptio doli
(
generalis
) from the arena as a
separate substantive defence has been adopted by some later writers, including
Van Huyssteen
(Onbehoorlike Beïnvloeding en
Misbruik/...
3. Misbruik van Omstandighede in die S A Verbintenisreg,
1980, p 23 n 174) and p J J Olivier (Aanspreeklikheid weens Onskuldige
Wanvoorstelling
by Kontraksluiting,
1964 THRHR 20
,26,28), in respect of their
particular fields of enquiry. They see the
exceptio doli generalis
merely
as a label for a defence that the plaintiff,has no cause of action.
Since the
beginning of this century the
exceptio
has however often been raised in
our Courts as a substantive defence. Single judges felt themselves constrained
to recognize its existence,
but their reactions run the gamut of unbelief
(
Aris Enterprises (Finance) (Pty) Ltd v waterberg Koelkamers (Pty) Ltd
,
1977(2) SA
436 / ....
4. 436(T)), scepticism (e g
North Vaal Mineral co Ltd v
Lovasz,
1961(3) SA 604(T)), circumspection (e g
Novick and Another v
Comair Holdings Ltd and Others,
1979(2) 116(W), 155H-157B) and enthusiasm
(
Rand Bank Ltd v Rubenstein
1981(2) SA 207(W)). In rscent times' a full bench
of the Transvaal
Provincial Division however had no difficulty in accepting that the
exceptio
doli
constituted a defence which is not "'n skerp omlynde regswetenskaplike
figuur nie maar 'n regsmiddel wat na gelang van al die feite
in 'n gegewe geval
aan 'n party toegeken word as die Hof meen dat daar anders ontoelaatbare onreg
sou geskied" (
Otto en 'n Ander v Heymans
(1971(4) SA 148(T), 155 C-E);
and a full bench of the Cape Provincial Division in
Sonday
/ ...
5.
Sonday v Surrey Estate Modern Meat Market (Pty)
Ltd
(1983(2) SA 521(C)) found it to be clear that the
exceptio doli
generalis
"has been accepted as part of our law and applied as such for a
considerable period of time, both by Provincial Divisions as well
as the
Appellate Division" (
per
TEBBUTT J). This Court has certainly always
assumed that such a defence at least exists. Whether it has in fact gone further
and
applied the underlying principles is a question that will be returned to
later.
The roots of the
exceptio
in its modern guise must be found in the
treatment of the subject in the Digest title De
Doli Mali et Metus
Exceptione
(D.44.4),
where / ...
6. where
inter alia
the following is found :-
Ideo autem hanc exceptionem praetor proposuit,
ne
cui dolus
suus
per occasionem juris
civilis
contra naturalem
aeguitatem prosit
.(p.44.4.i.l).
Seen as a
substantive defence the
exceptio
would imply
that in appropriate
circumstances a Court could grant
relief where the strict law would have an effect
contra
naturalem aequitatem
, and in so doing it would modify
the
law. Broadly speaking this is what happened in Rome
and in the course of
time new defences developed as a
result (e g
exceptio non numeratae pecuniae
etc).
Critics of the
survival of the
exceptio
would have one
believe that the defences so
developed constituted a
numerus
clausus
to this day. This would deny the possibility
of / ...
7. of the law being adapted according to the exigencies of the
times and in the light of the changing
mores
and concepts of fairness and
proper conduct. It must be emphasized that seen as a substantive defence the
exceptio
is no longer a procedural device, as
it once was in the hands of the Praetor to enable
the objective standard
of
bona fides
to be applied
to
negotia
which would otherwise
have given rise to
judicia stricti juris
.
It / ...
8.
It is said that the recognition of the
exceptio
doli
in this sense would be
an infraction of the freedom
of contract and of the principle that
pacta
servanda sunt
-
that it would lead to legal uncertainty. Freedom
of
contract, the principles of
pacta servanda sunt
and
certainty
are not however absolute values. They did
not prevent the modification in
England of the common
law by Eguity, which
inter alia
gives relief
against
"unconscionable"bargains :-
"There is a well developed jurisdiction in equity independent of the principles
as to undue influence to set aside catching and unconscientious
bargains. The
English cases are centred in the last century. But in Australasia the
jurisdiction still flourishes." (
Meagher
,
Gummow
and
Lehane
: Eguity, para 1601).
Moreover /
...
9.
Moreover, the twin concepts of freedom of contract and
pacta servanda sunt
have, during this century, increasingly
come under assáult as a result of
inter alia
rampant
inflation, monopolistic practices giving rise to unequal
bargaining power, and the large-scale use of standard
form contracts (often couched in small print). (Cf.
Asser-Rutten II,
Algemene Leer der Overeenkomsten,
1979,
Chapter V). In 1895 the Dutch
jurist Molengraaf
expressed the following view :-
"Meer en meer wint de overtuiging veld dat
het dogma der contractsvrijheid niet
als de hoogste wijsheid mag gelden. Men is gaan
in
zien, dat er hoogere
beginselen zijn dan het pacta sunt servanda; dat het recht slechts dan een, 'ars
boni et aegui' mag heeten, als
het in overeenstemming is met ethische beginselen
en tot doorvoering daarvan heeft medegewerkt."
(as )
/ ...
10. (as cited by
Van
H
uyssteen
op
cit
p 128 n5).
Sub=
sequent developments in the Netherlands confirm his
assessment. The
operational field of B W Art 1374.3
("Zij [overeenkomsten] moeten te goeder trouw worden
ten uitvoer gebragt")
has expanded to include not only
the supplementing óf an agreement
("aanvullende werking")
as a result of "de eisen van redelikheid en
billikheid",
but also the limitation of an agreement
("beperkende
werking") (cf P
Abas
, Beperkende werking van de
goede
trouw, 1972). This development has culminated in the
Nieuw
Burgerlijk Wetboek Art 6.5.3.1:-
"1. Een overeenkomst heeft niet alleen door partijen overeengekomen
rechtsgevolgen, maar ook die welke, naar de aard van de overeenkomst,
uit de
wet, de gewoonte of de eisen van
redelijkheid en
billijkheid voortvloeien.
2./...
11.
2. Een tussen partijen als gevolg van de overeenkomst geldende regel is niet van
toepassing,voor zover dit.in de gegeven omstandigheden
naar maatstaven van
redelijk= heid en billijkheid onaanvaardbaar zou
zijn."
In the United States a somewhat similar
development has
taken place. The Uniform Commercial Code
contains
provision against "unconscionable" contracts (U C C
para 2.302)
and this has, according to
Calamari
and
Perillo
(Contracts 2d
1970 para 9-39) "entered the
general law of contracts". They cite the
Restatement
of the Law of Contract 2d (1979) Vol 2 para 208 :-
"If a contract or term thereof is uncon= scionable at the time the contract is
made a court may refuse to enforce the contract, or
may enforce the remainder of
the contract without the unconscionable term, or may so limit the application of
any unconscionable
term as to avoid any unconscionable
result."
The / ...
12. The authors in para 9-40
point out :-
"'Unconscionable' is a word that defies lawyerlike definition. It is a term
borrowed from moral philosophy and ethics. As close to
a definition as we are
likely to get is 'that which affronts the sense of
decency'."
They also say in para 9-37 that "the
legislative purpose
of the section (viz of the U C C) is illuminated by the
following language in the official comment :-
'This section is intended to make it possible for the courts to police
explicitly against contracts or clauses which they find to
be unconscionable. In
the past such policing has been accomplished by adverse construction of
language, by manipulation of the rules
of offer and acceptance or by
determinations that the clause is contrary to public policy or to the dominant
purpose of the contract.'
"
The / ...
13.
The ideal that the law should be certain,
is often
contrasted with adjudication by the length
of the Chancellor's foot. In
relation to such an
argument adduced in
Preller and Others v Jorcaan
(1956(1)
SA 483(A4) against the acceptance of an extended meaning
of
dolus
and the recognition of a remedy based on undue
influence, FAGAN JA, delivering the judgment of the
majority, said (at 493
2): "Daar is egter vertakkings
van die reg waarin uit die aard van die saak
die beginsels
elasties moet wees omdat dit alleen aangedui kan word
in
woorde waarvan die toepassing in grensgevalle soms moeilik
mag wees,
maar dit in sigself kan geen rede wees om 'n
andersins gesonde remedie uit ons reg te weer nie".
Apart from statutory innovations, there are in any event a
number / ...
14.
number of well recognized instances in our law of contract
where freedom
of contract and the principle of
pacta
servanda sunt
and the ideal of certainty give way to other
considerations. A few examples may be mentioned. A
creditor has a right to
specific performance but a Court
may in the exercise of its discretion refuse
to make such
an order. The discretion
"is aimed at preventing an injustice - for cases do arise where justice demands
that a plaintiff be denied his right to per= formance
- and the basic principle
thus is that the order which the Court makes should not produce an unjust result
which will be the case,
eg, if, in the particular circumstances, the
ord
er will operate unduly harshly on the defendant. Another principle is
that the remedy of specific performance should always be granted
or withheld in
accordance with
legal and public policy "
(per HEFER JA:
Benson
v S A Mutual Life
Assurance Society 1986(1) SA 776(A), 783 D-E).
A restraint of trade is not
per se
invalid or unen=
forceable /...
15. forceable - but it is so if it offends against the
public interest (
Magna Alloys and Research (SA) (Pty)
Ltd v
Ellis
1984(4) SA 874(A)). In delivering the
judgment of the Court, RABIE CJ points out :-
"Omdat opvattings oor wat in die openbare belang is, of wat die openbare belang
vereis, nie altyd dieselfde is nie en van tyd tot
tyd kan verander, kan daar ook
geen
numerus clausus
wees van soorte ooreenkomste wat as strydig met die
openbare belang beskou kan word nie. Dit sou dus volgens die beginsels van ons
reg moontlik wees om te sê dat 'n ooreenkoms wat iemand se handelsvryheid
inkort teen die openbare belang is indien die omstandighede
van die betrokke
geval sodanig is dat die Hof daarvan oortuig is dat die afdwing van die betrokke
ooreenkoms die openbare belang
sou skaad." (891 H-I).
"Die opvatting dat 'n persoon wat 'n beperking wil afdwing nie die las dra om te
bewys dat dit redelik
inter partes
is nie, bring nie mee dat oorwegings
van die redelikheid of onredelikheid van 'n beperking nie van belang is of kan
wees nie." (893
H).
Die /...
16
"Die belangrike vraag is dus nie of 'n oor= eenkoms van so 'n aard is dat dit
ab
initio
ongeldig is nie, maar of dit 'n ooreenkoms is wat die Hof,
gesien die vereistes van die openbare belang, nie behoort af te dwing nie."
(895
D-E).
The Court may reduce a stipulated penalty "to such an
extent as it may consider equitable in the circumstances"
(Act 15 of 1962, section 3 - reinstating the common law).
Not only contracts against public interest or public
policy are subject to
control by the Court, but also
those offending the
boni mores
. In this
field
reference must be made to the sense of justice -("regsgevoel")
of
the community, as is the case in delict, where it is
now recognized that
there is no
numerus clausus
of actionable wrongs
Perforce our Courts must in a variety of
cases work
with the prevailing
mores
and the sense of
justice / ....
17.
justice of the community as a norm. In principle
there can be no real objection in the case of the
exceptio
to
determine an objective standard of
aeguitas
along similar lines.
In discussing the
exceptio
reference is
some=
times made to its fate in German law. ït
is said that at
the time of the introduction of the BGB it was a dead
letter. However, the true position seems to be that
it was considered obsolete because its underlying
principles were absorbed
into the requirement of
bona
fides
(cf BGB article 242).
Reference to a few writers
will illustrate the general approach:
A Brinz,
Lehrbuch
der Pandekten
(1884) p 379:-
"So/...
SEE ORIGINAL JUDGMENT PAGE
18.
19.
H Dernburg
-
P Sokolowski
(System des Römischen Rechts
(1911)) p 323-4 :-
SEE ORIGINAL JUDGMENT TEXT
(However, in the end art 138 ("a transaction that offends
good morals
(guten Sitten) is void") proved to be a more
fruitful source of development. ( Cf John P
Dawson
:
Unconscionable
Coercion: The German Version, 1976 Harvard
Law Review, p 1041).
In our law the requisite, of good faith has not
as
yet absorbed the principles of the
exceptio doli
nor
has the concept
of
contra bonos mores
as yet been spe=
cifically applied in this
field. To deny the
exceptio
right of place would leave a vacuum.
This / ....
20.
This Court has certainly not considered the
exceptio doli
to be an
empty shell. In
Trust Bank van Afrika Bpk v Eksteen
(1964(3) SA 402(A) at
411 A-C) the majority of this Court referred
inter alia
to
Waterval
Estate and Goldmining Co Ltd v New Bullion Gold Mining Co Ltd
(1905 TS
717)as
a case on estpppel where "nie nagelaat is om na die grondslae waarop dit
in ons reg sou rus, te verwys nie". In that case CURLEWIS
J said that "the
doctrine of estoppel in pais is merely an extendec interpretation of the
principles underlying the
exceptio doli mali
". He specifically refers to
D.44.4.1. Clearly what happened here was that a new defence, not specifically
described in our authorities,
was thus accepted on the ground of "natural
justice". To that
extent / ...
21.
extent the law was modified. In
Preller and Others v
Jordaan
(
supra
) the majority of the Court extended the
meaning of
dolus
as to enable an equitable remedy on the
ground of undue influence to be
adopted where the existing
authorities did not go as far. (This was a case of
dolus
praeteritus,
but it is nevertheless an instance where
the
law was modified as a result of equitable consideration).
In
Weinerlein v Goch Buildings Ltd
(1925 AD 282)
the Court
accepted a
remedy of rectification not on any contractual
theory of
consensus
but
as a result of equity. It is true
that DE VILLIERS JA cited what he
considered to be direct
authority for the remedy (at p 289), but both WESSELS
and
KOTZe JJA refer to the
exceptio doli
. In
Mouton v
Hanekom
(1959(3) SA 35(A) at 40 B-C) a full bench of this Court
applied the
following dictum of WESSELS JA (at p 292 of
the
Weinerlein
-case):-
"The /...
22.
"The exception (
exceptio doli
) lies whenever the court regards it as a
fraudulent act to rely on your
summum jus
when you know full well that
your claim is founded on a mutual
error."
The existence of the
exceptio doli
as a
defence based on equity is demonstrated by the decisions
of this Court;
moreover, our lower courts have over=
whelmingly assumed for many years such
a defence to be
available. Although the underlying principle is to
be
traced back to the Digest it seems, in view of the afore=
going, to be
of no crucial import whether the
leges
dealing
with the
exceptio
were received in Holland or fell into
disuse. However, it is
significant that
Groenewegen
in his De
Legibus Abrogatis
, where he deals with D.44.4.,
does / ...
23.
does not state the relevant
leges
to be inapplicable. Nor does Voet
(adl
Pandectas
) do so under this Title, although he is careful to state
where the modern law differs in other instances. In 1793, J
van der
Linden
(ad Voet 1.1.2) says the following :-
"Jure nos Romano uti, quoties scriptae apud nos Leges, vel recepti mores
& consuetudines de re controversa nihil certi statuunt,
satis constat,
Merula
Man
.
van Proced
. Lib. I. Tit 4
Cap
.l $ 5 n. 6 nunc
enim Jus Romanum, ut jus commune, esse receptum, multae posteriorum Principum,
Caroli inprimis V. & Philippi
II, multae item Ordinum Hollandiae Leges
significant: palam guippe, deficientibus Legibus propriis, remittunt ad
ius
scriptum
vel
commune
, quo utrogue Romanorum Civile intelligi certum
est. Atque ita servat utraque Curia, nisi vel manifesta Reipublicae ratio, vel
perpetuae
Consuetudinis
auctoritas obstet. Bynkershoek in Praefat.
ad
observ
.
jur
.
Rom
.
part
. 1.
pag
. 1 &
2."
This /...
24.
This must be read in conjunction with Van der Keessel's
Rule 11 as stated in his
Praelectiones
:-
"Wie die Romeinse Reg aanvoer vir sover dit nie openlik strydig met
uitdruklike wette of 'n bekende gebruiksregreël of die stelsel
van die
vaderlandse reg of 'n ander instelling van die staat is nie, het daarmee 'n
goeie grond vir sy eis aangevoer en word nie
verplig om die besondere erkenning
daarvan te bewys nie." (Transl.
Gonin
Vol I p 81). It would seem that in
the absence of contrary statutes or
usage it must be accepted that the principles of the
exceptio doli
were in fact part of the Roman Law that was
received in the Netherlands. Although there appears to
be no or little mention of the
exceptio
, in the sense
discussed above, being used in practice, the occasion may
not have presented itself in view of the social circumstances
existing and the
mores
of the times.
Van Huyssteen
(at /...
25. (at p 72) refers to
Obs
.
Tum Novae
vol 2 nr 1049 where
the Hooge Raad had applied D.45.1.36.
Van Huyssteen
considers the
lex
was cited "heeltemal buite sy betekenis",
but was this not rather an example of the Court using the principles of the
exceptio
to extend a remedy where there
would not otherwise have been
one available?
The
exceptio doli generalis
constitutes
a
substantive defence, based on the sense of justice
of the community. As such it is closely related to the defences
based on public policy (interest) or
boni mores
(cf I
smail v
Ismail
1983(1) SA 1006(A),1025F-1026C). Conceivably they may overlap: to
enforce a grossly unreasonable contract may in appropriate circumstances
be
considered as against public policy or
boni mores
. By the nature of
things no general definition can be given of what would consti= tute
dolus
. In
Zuurbekom Ltd v Union Corporation
Ltd
/ ....
26.
Ltd
(1947(1) SA 514(A)) an example is to be found: where the
enforcement of a "remedy by the plaintiff would cause some great ineguity
and
would amount to unconscionable conduct on his part" (
per
TINDALL JA at.p
537). However, each case must be judged on its own facts in the light of the
sense of justice of the community.
The facts in the present case present a
number of salient features: the respondents were suppliants for an overdraft (or
its increase);
they had not equal bargaining power with the Bank; standard forms
with standard terms were used by the Bank; the Bank stipulated
for security far
beyond its needs; the respondents never
actually / ...
27.
actually contemplated that the security would cover anything but the
overdraft. These facts go beyond. mere unreasonableness of the
contract
per
se
(cf
Paddock Motors v Igesund
1976(3) SA 16(A)). In my view it
would offend the sense of justice of the community to allow the Bank to use the
strict wording of
the documents to retain the securities after payment of the
overdraft. I find support for this in the views expressed by BOTHA J
in
Rand
Bank Ltd v Rubenstein
(1981(2) SA 207(W)) and that of the judge a quo in the
present matter.
I would dismiss the appeal.