Heathfield v Maqelepo (430/02) [2003] ZASCA 126 (27 November 2003)

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[2003] ZASCA 126
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Heathfield v Maqelepo (430/02) [2003] ZASCA 126; 2004 (2) SA 636 (SCA) (27 November 2003)

THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Case No: 430/02
REPORTABLE
In
the matter between
ROBYN LYNNE HEATHFIELD
Appellant
and
LIJANE MAQELEPO
Respondent
Before: Scott, Mthiyane JJA, Southwood AJA
Heard: 14 November 2003
Delivered: 27 November 2003
Summary: Proper construction of written agreement to
purchase immovable property – purchaser or surety
JUDGMENT
SOUTHWOOD AJA
[1] On 5 August 2001 the respondent signed a written
offer to purchase from the appellant stand no 716, Bedfordview
Extension 115,
for a purchase price of R1 300 000. In terms of the
offer the purchase price was payable by way of one instalment of R120
000 to
be paid in cash within 30 days of acceptance of the offer and
the balance of R1 180 000 was to be paid against registration of the
property in the name of the purchaser. The balance was to be secured
by a Bank or other approved guarantee delivered within 120 days
of
acceptance of the offer. The offer was subject to a bond or bonds of
R1 180 000 being obtained by the purchaser within 30 days
of
acceptance of the offer. The appellant accepted the offer on 6 August
2001.
[2] The agreement consists of an estate agent’s
printed form (the ‘Offer to Purchase’) containing standard terms
and conditions
into which the purchaser’s and seller’s names and
addresses, the purchase price, amounts to be paid, dates of payment
and bond
details must be inserted. It incorporates an additional page
on which the relevant information pertaining to the purchaser and
seller
is to be inserted for the purpose of transfer and/or a bank
loan application. The purchaser is described in the form as ‘Lijane
Maqelepo [the respondent] for and on behalf of the above co’. The
‘above co’ is obviously a reference to New Heights (Pty)
Ltd as
the name, New Heights Pty Ltd, has been inserted above that of the
respondent.
[3] Clause 21 of the offer to purchase has been inserted
in manuscript and reads as follows:
‘
Should the PTY LTD NEW HEIGHTS not be able to take
transfer and or ratify this agreement I LIJANE MAQELEPO HEREBY holds
(sic) myself
surety and co-principal debtor for all the obligations
of this offer towards the seller and irrevocably hereby undertake to
take
transfer in my own name.’
The respondent signed the offer to purchase as purchaser
without qualifying his signature.
[4] The respondent is reflected in the additional page
referred to as the purchaser and all his relevant details have been
inserted.
There is no reference to the company, New Heights (Pty)
Ltd.
[5] It is clear that the document was completed in two
stages. Initially the purchaser was to be LIJANE MAQELEPO as his name
was entered
as purchaser in the appropriate place in the document and
only his particulars were inserted in the additional page as
purchaser.
Thereafter the parties attempted to make NEW HEIGHTS (PTY)
LTD the purchaser by inserting the words ‘on behalf of the above
co’
after the respondent’s name as purchaser, the name NEW
HEIGHTS PTY LTD above the respondent’s name and by inserting clause
21.
[6] The respondent paid the cash instalment of R120 000
and obtained a mortgage loan of R1 180 000 from ABSA Bank as
stipulated by
the agreement. After the respondent obtained the
mortgage loan, Biccari Bollo Mariano, the attorney appointed to
attend to the transfer,
communicated with him and he signed all the
documents which were necessary to take transfer. On 10 January 2002
the respondent paid
the transfer duty and registration costs
amounting to R118 927,60 to Biccari Bollo Mariano.
[7] In February 2002, when the respondent called upon
the appellant to pass transfer, the appellant repudiated the
agreement. The
respondent did not accept the repudiation and launched
an application in the Witwatersrand Local Division for an order that
the appellant
transfer the property to him.
[8] The appellant opposed the application. In her
answering affidavit the appellant did not dispute any of the
respondent’s factual
allegations. She contended that as New Heights
(Pty) Ltd (‘New Heights’) did not exist the agreement was null
and void; and that
the respondent was no more than a surety and
therefore had no right to enforce the agreement.
[9] It is common cause that a company called New Heights
(Pty) Ltd has never been registered and accordingly has never
existed.
[10] The matter came before Goldstein J in the
Witwatersrand Local Division who identified the essential issue to be
whether the respondent
signed the agreement as principal or as
surety. After analysing the provisions of the Offer to Purchase (i e
the agreement) the learned
Judge concluded that the clear intention
of the parties was that the respondent would be the purchaser if the
company was not such.
He accordingly granted the relief sought.
[11] With the leave of the Court
a quo
the
appellant now appeals. The appellant contends that the agreement is
void because the principal on behalf of whom the respondent
signed
the Offer to Purchase did not exist; that the Court
a quo
erred in finding that the respondent signed the Offer to Purchase as
principal and not as surety and that as surety the respondent
is not
entitled to claim performance by the appellant in terms of the
agreement.
[12] As correctly pointed out by the Court
a quo
the essential question is whether the parties intended that the
respondent be a purchaser in his own right or a surety for New
Heights.
This depends upon the proper construction of the agreement
and in particular whether the alteration to the description of the
purchaser
and the insertion of clause 21 changed the intention that
the respondent be the purchaser.
[13] The appellant’s counsel has seized on the words
‘surety and co-principal debtor’ in clause 21 of the agreement
and argued
that the parties intended that the respondent would be a
surety for New Heights and nothing else. In effect, his argument is
that
the respondent signed the agreement as agent on behalf of New
Heights, as purchaser, and in his personal capacity, as surety, for
New Heights. He contended that an agreement signed on behalf of a
non-existent principal is invalid. If these are the facts that
contention is clearly correct. See
Natal Land and Colonization Co
Ltd v Pauline Colliery and Development Syndicate Ltd
[1904] AC
120:
McCullogh v Fernwood Estate, Ltd
1920 AD 204
at 207:
Sentrale Kunsmis Korporasie (Edms) Bpk v N K P Kunsmisverspreiders
(Edms) Bpk
1970 (3) SA 367
(A) at 396D-E.
[14] In my view the appellant’s counsel’s argument
ignores the context in which these words have been used in clause 21
and the
agreement as a whole. The context in which words are used in
an agreement is vital. See
Coopers & Lybrand and Others v
Bryant
[1995] ZASCA 64
;
1995 (3) SA 761
(A) at 767E-768E:
List v Jungers
1979
(3) SA 106
(A) at 118D-119B:
Aktiebolaget Hässle and Another
v Triomed (Pty) Ltd
2003 (1) SA 155
(SCA) par [1].
Furthermore, as pointed out by Colman J in
Burroughs
Machines Ltd v Chenille Corporation of SA (Pty) Ltd
1964 (1) SA
669
(W) a court should not lightly hold that an agreement is invalid.
At 670G-H the learned Judge said:
‘
In so doing I must, I think, have regard to the fact
that exh. “A” is a commercial document executed by the parties
with a clear
intention that it should have commercial operation. I
must therefore not lightly hold the document to be ineffective. I
need not
require of it such precision of language as one might expect
in a more formal instrument, such as a pleading drafted by counsel.
Inelegance, clumsy draftmanship or the loose use of language in a
commercial document purporting to be a contract, will not impair
its
validity as long as one can find therein, with reasonable certainty,
the terms necessary to constitute a valid contract.’
See also
Hillas & Co Ltd v Arcos Ltd
[1932] UKHL 2
;
1932 All
ER 494
(HL) at 499H-I and
Soteriou v Retco Poyntons (Pty) Ltd
1985
(2) 922 (A) at 931G-I.
In construing the agreement it is also proper to take
into account and make allowance for the fact that ‘the language
used was manifestly
not that of a lawyer or linguistic precisian’ –
Trever Investments (Pty) Ltd v Friedhelm Investments (Pty) Ltd
1982 (1) SA 7
(A) at 15C-D:
African Organic Fertilizers and
Associated Industries Ltd v Premier Fertilizers Ltd
1948 (3) SA
233
(N) at 235-6.
[15] Clause 21 is inelegantly worded. It is obviously
not the work of ‘a lawyer or linguistic precisian’. When read
together with
the description of the purchaser it shows that the
respondent was purporting to act on behalf of New Heights when he did
not have
authority to do so and that the parties knew that the
company would have to ratify the agreement to become bound. The
parties clearly
contemplated that the company might fail to do so in
which event there would be no binding agreement between the appellant
and the
company. They sought to regulate what would happen in such an
eventuality. They accordingly agreed that in the event of the company
not being bound the respondent would perform all the obligations of
the purchaser in terms of the agreement and that he would take
transfer of the property in his own name. They provided that in so
doing the respondent would act as ‘surety and co-principal debtor’.
[16] The agreement that the respondent would perform all
the obligations of the purchaser in terms of the agreement in the
event of
the company not being bound is not consistent with the
obligations of a surety in two crucial respects. First, a surety
cannot be
liable unless there is a principal debtor who is or becomes
liable. The liability of a surety is entirely dependent upon the
liability
of the principal debtor: i e it is accessory to that of the
principal debtor. And second, a surety is liable for the debt or
obligations
of another. See
Trust Bank of Africa Ltd v Frysch
1977
(3) SA 562
(A) at 584F- H:
Sapirstein and Others v Anglo
African Shipping Co (SA) Ltd
1978 (4) SA 1
(A) at 11G-H:
Nedbank
Ltd v Van Zyl
[1990] ZASCA 12
;
1990 (2) SA 469
(A) at 473G-474B.
The agreement that the respondent would take transfer of
the property into his own name is also inconsistent with the position
of
a surety. If a surety is called upon to perform the purchaser’s
obligations and does so, the agreement between the purchaser and
the
seller remains in force and the seller will be obliged to transfer
the property into the name of the purchaser, not that of the
surety.
Performance of the purchaser’s obligations and taking transfer of
the property are consistent with the respondent being
the purchaser.
[17] It is therefore clear from clause 21 that the
parties intended that if the company did not ratify the agreement and
become bound
as purchaser the respondent would step into the shoes of
the purchaser and perform the purchaser’s obligations and take
transfer
of the property. This construction is supported by the
respondent’s unqualified signature as purchaser and the
respondent’s name
and other details in the annexure to the
agreement as those of the purchaser. I therefore agree with the Court
below that the word
‘surety’ was used inappropriately and that it
was inconsistent with the parties’ true intention.
[18] In so far as clause 21 may be ambiguous, there is
also the evidence of the respondent, which is not disputed, that he
performed
the obligations of the purchaser and that when he met the
Appellant on 7 January 2002, he and she discussed the agreement and
the
implementation thereof on the basis that the respondent was the
purchaser. It is clear from this evidence that both the appellant
and
the respondent regarded the respondent, and not the company, as the
purchaser of the property. See
MTK Saagmeule (Pty) Ltd v Killyman
Estates (Pty) Ltd
1980 (3) SA 1
(A) at 12F-H:
Shacklock v
Shacklock
1949 (1) SA 91
(A) at 101.
[19] The conclusion that the respondent was intended to
be the purchaser renders it unnecessary to consider the other
arguments raised
with regard to the position of a surety.
[20] The appeal is dismissed with costs.
________________
B R SOUTHWOOD
ACTING JUDGE OF APPEAL
CONCUR:
SCOTT JA
MTHIYANE JA