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[1991] ZASCA 183
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Total South Africa (Pty) Ltd. v Bekker NO (261/90) [1991] ZASCA 183; 1992 (1) SA 617 (AD); [1992] 4 All SA 98 (AD) (28 November 1991)
261/90
N v H
TOTAL SOUTH AFRICA (PTY) LIMITED
and
JACOBUS NICHOLAS BEKKER N O
SMALBERGER JA -
1
261/90
N, V H
IN THE SUPREME COURT OF SOUTH AFRICA
(
APPELLATE DIVISION
)
In the matter between:
TOTAL SOUTH AFRICA (PTY) LIMITED
Appellant
and
JACOBUS NICHOLAS BEKKER N
O
Respondent
CORAM
: JOUBERT, HEFER, SMALBERGER,
EKSTEEN, JJA, et NICHOLAS, AJA
HEARD
: 1 NOVEMBER
1991
DELIVERED
: 28 NOVEMBER 1991
JUDGMENT
SMALBERGER JA:-
On 18 November 1988, one Johannes Petrus
Jansen Van Vuuren ("Van Vuuren") applied on notice of motion in the Transvaal
Provincial
Division for an order staying the execution of a writ issued
against
2/
2
him at the instance of the appellant ("Total") pending an action for a
declaratory order. The application was opposed by Total, which
in turn
counter-applied for the sequestration of Van Vuuren's estate. The matter
eventually came before PUCKRIN AJ. He dismissed
Van Vuuren's application with
costs, and granted an order provisionally seguestrating Van Vuuren's estate. Van
Vuuren has since then
been represented by the respondent as trustee in his
insolvent estate. The respondent noted an appeal to the Full Bench of the
Transvaal
Provincial Division. The Full Bench (per KRIEGLER J, STAFFORD J and
ROOS AJ concurring) allowed the appeal and granted an order staying
the writ of
execution pending the institution by the respondent of an action for an order
declaring the writ to be invalid. The provisional
sequestration order was not
affected by the outcome of
3/
3 the appeal and remains in force. The judgment of the Full
Bench is reported as
Bekker NO v Total South Africa (Pty) Ltd
1990(3) SA
159 (T) ("the reported judgment"). The present appeal comes before us in
consequence of special leave thereto having been
granted by this
Court.
Before I proceed to the merits of the appeal it is necessary to
dispose of an argument raised by Mr Wulfsohn, for the respondent,
concerning the
alleged non-appealability of the order issued by the Full Bench. The nub of his
argument was that the order is a simple
interlocutory one and as such is, on a
proper interpretation of the relevant provisions of section 20 of the Supreme
Court Act 59
of 1959 as amended ("the Act"), not appealable despite the grant of
special leave by this Court. As provided for in section 20(1)
of the Act this
Court,
4/
4
subject to the necessary leave to appeal having been
granted in terms of
section 20(4), is empowered to hear
"(a)n appeal from a judgment or order of the court of a provincial or local
division in any civil proceedings or against any judgment
or order of such a
court given on appeal
As appears from its terms,
section 20(1) caters for two distinct situations. The first relates to an appeal
from a judgment or order
of the court of a provincial or local division sitting
as a court of first instance. In this context the distinction between a
"judgment"
and an "order" is as follows: a "judgment" relates to a decision
given upon relief claimed in an action, while "order" refers to
a decision given
upon relief claimed in an application on notice of motion or petition or on
summons for provisional sentence. (See
Van Streepen & Germs (Pty) Ltd v
Transvaal Provincial Administration
1987(4) SA 569 (A) at 580 D - E).
The
5/
5 second situation relates to an appeal from a judgment or
order of such court "on appeal", that is, where it sits as a court of appeal
from a decision of a single judge. In this context the words "judgment or order"
relate to the decision given by such court on the
question or questions at issue
between the parties to the appeal, and any order incidental thereto, including
the upholding or the
dismissal of the appeal. Views differ on the question
whether the words "judgment or order" in section 20 embrace (or are capable
in
certain circumstances of embracing) a "simple interlocutory order" emanating
from the court of a provincial or local division
sitting as a court of first
instance, and whether such an order is appealable (as opposed to a mere "ruling"
which is not -
Van Streepen's
case (
supra
) at 580 F). (See in
this
6/
6 regard, e g,
South African Druggists Ltd v Beecham Group
plc
1987(4) SA 876 (T) at 879 D to 880 B;
Government Mining Engineer and
Others v National Union of Mineworkers and Others
1990(4) SA 692 (W) at 704
G -705 G and authorities there cited; and see also in general
Van
Streepen's
case (
supra
) at 583 G to 584 C. ) The question has not
been finally resolved by this Court. I refrain from expressing any opinion on
the point
as it is unnecessary to do so for the purposes of the present appeal.
We are dealing here with the question whether the Court a
quo's
decision
constitutes "a judgment or order .... given on appeal" as envisaged by section
20(1). In my view it clearly does. The Court
a
quo's
decision was twofold
in effect: it (1) allowed the appeal, with costs, against the judgment of the
Court of first instance, and set
aside the order made; and (2) substituted
its
7/
7 own order staying execution of the writ. Whatever the
position may be wlth regard to (2), (1) is clearly a "judgment or order...
given
on appeal" as envisaged by section 20(1), as Mr Wulfsohn ultimately conceded.
The matter was therefore appealable with special
leave of this Court.
In
seeking the relief which he did, Van Vuuren relied principally (as does the
respondent) upon the terms of an agreement entered
into between Total and one J
J N Fourie ("Fourie") on 20 August 1986 ("the agreement"), particularly clauses
1 and 2 thereof. The
crux of Van Vuuren's case was that no valid
causa
existed for the issue of the writ, which was accordingly invalid and
unenforceable. In the circumstances it was incumbent upon Van
Vuuren to make the
essential allegations in his founding affidavit necessary to support the relief
he sought.
8/
8 This, as will appear more fully later, he failed to do. The
background to Van Vuuren's application is set out in some detail in
the reported
judgment at 165 B - 167 H and need not be repeated in full herein. In order to
facilitate the reading of this judgment,
however, it is necessary to briefly
recapitulate certain of these facts. As at 1 March 1986 Van Vuuren and Tornado
Transport (Pty)
Ltd ("Tornado") (a company effectively owned by him) were
jointly and severally indebted to Total in a sum in excess of R2 000 000.
At
that time Tornado was under provisional judicial management. Total instituted
action against Van Vuuren for the amount due by
him. The matter was settled, and
on 29 April 1986 an order of court was made in terms of which Van Vuuren was
obliged to pay Total
the sum of R2 842 866-80 plus interest, costs and
collection charges by 11 June 1986 ("the settlement
9/
9 order"). Van Vuuren failed to pay on due date. As a result
Total caused a writ of execution to be issued against Van Vuuren on 18
June
1986. The writ was never executed because on 22 July 1986 Van Vuuren's estate
was provisionally sequestrated. It appeared that
two months previously Van
Vuuren had disposed of his shareholding in Tornado (which comprised all the
shares bar one) to a company
called Dawes Ltd. The latter company was controlled
(at least ostensibly) by Fourie, a chartered accountant, who was a long-time
friend and financial adviser of Van Vuuren. Following upon an offer of
compromise in terms of the Companies Act 61 of 1973, Tornado
was discharged from
provisional judicial management on 19 August 1986. The following day the
agreement was concluded.
10/
10
The terms of the agreement are set out (by
way of
quotation or summary) in the reported judgment
at 167 J- 169 G. Because of
the importance they
assume in the determination of the issues on appeal
it
will be convenient to set out herein the provisions of
clause 1 and certain of the provisions of clause 2
thereof. Before I do so specific mention should also
be made of the preamble to the agreement which, after
recording Van Vuuren's indebtedness to Total, states
(in paragraph B) that "Fourie has agreed to intercede
on behalf of Van Vuuren". Thereafter clauses 1 and 2
provide -
"1. Subject to the condition that Fourie faithfully carries out the terms of
this Agreement and performs the obligations herein contained
on the due dates
thereof, Total agrees that it shall . not proceed against Van Vuuren in respect
of its claim against Van Vuuren
arising out of a settlement which was made an
Order of Court in
11/
11
the Supreme Court of South Africa Transvaal Provincial Division under Case
No. 2667/86.
2. In consideration for its undertaking aforesaid, Fourie agrees and
undertakes to pay to Total an amount of R500 000,00 which amount
shall be paid
as follows:-
2.1. An amount of R60 000,00 shall be paid by Fourie to Total by not later
than the 1st of September 1986.
2.2 The balance of R440 00,00
shall be paid by way of
monthly instalments of not
less than R10 000,00
the first
instalment to be paid on the
7th of November, 1986
2.3
2.4
"
It is
common cause that Fourie paid the amount of R60 000,00 but thereafter failed to
pay the instalment of R10 000,00 due on 7 November
1986. He also breached
certain of his other obligations under
12/
12 the agreement. On 17 November 1986 Total issued a
provisional sentence summons against Fourie for the accelerated balance of R440
000,00 plus interest and costs. The matter was ultimately settled, and the
settlement agreement was made an order of Court. Its principal
provisions are
summarised at 166 D - F of the reported judgment. Fourie did not initially pay
his instalments under the settlement
agreement timeously, but it is accepted by
Total that subsequently Fourie complied fully with his obligations in terms
thereof. The
main issues on appeal are the following: what rights, if any, did
Van Vuuren acguire under the agreement, and did the terms of the
agreement, or
the conduct of Total, release him from his legal indebtedness to Total under the
settlement order of 29 April 1986?
The answers to these questions are to be
found, in the main, in the proper interpretation of the
13/
13
agreement, particularly clauses 1 and 2 thereof. These clauses fall to be
interpreted with a view to ascertaining the intention of
the parties to the
agreement having due regard to the words used in their proper contextual
setting, and to any admissible surrounding
or background circumstances
(
Cinema City (Pty) Ltd v Morgenstern Family Estates (Pty) Ltd and Others
1980(1) SA 796 (A) at 804 A -806 A). Despite pleas for a more liberal approach
(see the
Cinema City
case at 805 G - H), the generally accepted view of
our law is that reference to surrounding circumstances is only justified in
cases
of uncertainty or ambiguity (
Pritchard Properties (Pty) Ltd v
Koulis
1986(2) SA 1(A) at 10 C - D). Mr Wulfsohn did not contend to the
contrary. This does not exclude a court being informed "of the background
circumstances under which a contract was concluded so as to enable it to
14/
14 understand the broad context in which the words to be
interpreted were used" (
List v Jungers
1979(3) SA 106(A) at 120 C; and
see too
Van Rensburg en Andere v Taute en Andere
1975(1) SA 279 (A) at
303 D;
Swart en h Ander v Cape Fabrix (Pty) Ltd
1979(1) SA 195 (A) at 202
C). Apparently "background" circumstances are something different from
"surrounding" circumstances (see
Swart's
case at 201 A) but, (as in
Swart's
case) it is not necessary to pursue this matter further for the
purposes of the present appeal. What is clear, however, is that where
sufficient
certainty as to the meaning of a contract can be gathered from the language
alone it is impermissible to reach a different
result by drawing inferences from
the surrounding circumstances (
Delmas Milling Co Ltd v Du Plessis
1955(3)
SA 447 (A) at 454 H;
Rand Rietfontein Estates Ltd v Cohn
1937 AD 317
at
328). The underlying
15/
15 reason for this approach is that where words in a
contract, agreed upon by the parties thereto, and therefore common to them,
speak
with sufficient clarity, they must be taken as expressing their common
intention (Christie:
The Law of Contract in South Africa
, p
177).
Ex facie
the agreement it is one between Total and Fourie, and
Vah Vuuren is not a party thereto. It was contended on behalf of the respondent,
however, that Van Vuuren became a party thereto. Two possible bases for this
were suggested. The first was what was referred to in
the respondent's heads of
argument as a "direct tacit agreement" between Total and Van Vuuren (and
presumably also Fourie) by which
Van Vuuren became a party to the agreement. By
this was apparently meant that it was an implied term of the agreement that Van
Vuuren
would be a party to
16/
16 it. Not only are there insufficient factual allegations
to support such a submission, but it is also hit by clauses 8.3 and 8.4
of the
agreement which expressly excludes any implied term not recorded in the
agreement, or any variation thereof not in writing.
Not surprisingly Mr Wulfsohn
did not pursue this point. The second argument advanced was that clauses 1 and 2
of the agreement constituted
a stipulation for the benefit of Van Vuuren (a
stipulatio alteri
), and that he became a party to the agreement by
accepting the benefit offered. As was pointed out by SCHREINER, JA in
Crookes
NO and Another v Watson and Others
1956(1) SA 277 (A) at 291 B - c "a
contract for the benefit of a third person is not simply a contract designed to
benefit a third
person; it is a contract between two persons that is designed to
enable a third person to come in as a party to a
17/
17 contract with one of the other two", The mere conferring
of a benefit is therefore not enough; what is required is an intention
on the
part of the parties to a contract that a third person can, by adopting the
benefit, become a party to the contract. (
Joel Melamed and Hurwitz v
Cleveland Estates (Pty) Ltd
1984(3) SA 155 (A) at 172 D - F), The agreement
itself does not disclose any intention on the part of Total or Fourie that Van
Vuuren
could become a party thereto. There is no express wording to such effect,
nor is there any provision in the agreement for the acceptance
by Van Vuuren of
any benefit thereunder. Furthermore the terms of the agreement (leaving aside
the possible effect of clause 8.3)
do not support a necessary implication to
that effect. Total and Fourie would have been at liberty to cancel the agreement
at any
time without reference to Van Vuuren.
18/
18 Apart from these considerations, Van Vuuren does not
specifically allege in either his founding or his replying affidavit (as one
would have expected him to do) that the parties to the agreement intended a
stipulation in his favour. But even if there was an intention
to benefit Van
Vuuren, there is no evidence, direct or circumstantial, that Van Vuuren ever
accepted such benefit at a time when
it was open to him to do so. He himself
does not allege that he accepted any such benefit, or that a contract came into
being between
himself and Total. It follows that Van Vuuren has not made out a
case for a
stipulatio alteri
in his favour, the benefit of which he
accepted.
It is common cause that had Fourie "faithfully" performed his obligation
under the agreement "on the due dates thereof" Van Vuuren's
indebtedness to
Total under the settlement order would
19/
19
effectively have come to an end. It is not necessary
to consider the
precise juridical basis on which this
would have occurred. What is the
position
where, as was the case, Fourie failed to perform his obligations
under the agreement in the manner stipulated? Was Total, in such
event, entitled
to look to both Fourie (under the agreement) and Van Vuuren (under the
settlement order), as found by the Judge of
first instance, or was it obliged to
elect to proceed against the one or the other, as held by the Court a
quo
? The answer lies essentially in the proper meaning of clauses 1 and 2
of the agreement within the context of the agreement as a whole.
In this respect
the Court a
quo
stated (at 171 C - D) of the reported judgment) that:
20/
20
"(T)here is nothing in annexure 'E' [the agreement], certainly nothing express,
to the effect that respondent could proceed under
both the judgment against Van
Vuuren
and
annexure 'E'. In my view a
purely linguistic interpretation of annexure 'E' ineluctably leads to the
conclusion that respondent was afforded the benefit of
an election, and no
more."
I respectfully disagree. In my view the
clear
meaning of the words of clauses 1 and 2 is to the
contrary, and
there is no room for putting Total to an
election.
In terms of clause 1 of the agreement Total
undertook not to proceed against Van Vuuren in respect
of its claim against him provided Fourie faithfully
carried out the terms of the agreement and performed
his obligations thereunder on the due dates thereof.
In return (in "consideration") for this undertaking
Fourie agreed to pay Total the sum of R500 000-00 in
the amounts and at the times set out in the agreement.
21/
21
(It is important to note that Fourie's payment was to
be for Total's
undertaking - it was not to be in
substitution for Van Vuuren's indebtedness
to Total.) In my view the learned Judge of first instance correctly interpreted
these clauses
as a conditional
pactum de non petendo
- an undertaking not
to sue Van Vuuren conditional upon the due and punctual performance by Fourie of
the obligations imposed upon
him. When Fourie breached the terms of the
agreement the condition to which the
pactum
was subject failed and
Total's undertaking not to sue lapsed. This left Total free to recover from Van
Vuuren his outstanding indebtedness
under the settlement order; at the same time
it was entitled to enforce performance by Fourie of his obligations under the
agreement.
These are two separate and distinct rights of action, each with its
own valid
causa
. No question of election
22/
22
arises, either from the wording of the agreement or by
operation of law.
Where remedies are not inconsistent
the pursuit of one cannot
per se
exclude the other.
In this respect the words of BEYERS JA in
Montesse
Township and
Investment Corporation (Pty) Ltd and
Another v Gouws NO and
Another
1965(4) SA 373(A) at 380
in fine
are particularly apposite where he said:
"I am not aware of any general proposition that a plaintiff who has two or more
remedies at his disposal must elect at a given point
of time which of them he
intends to pursue, and that, having elected one, he is taken to have abandoned
all others. Such a situation
might well arise where the choice lies between two
inconsistent remedies and the plaintiff commits himself uneguivocally to the one
or other of them. But that is not the case here."
In
the present instance Total was not faced with two
inconsistent remedies; it had separate remedies
against Van Vuuren (based on the settlement order) and
Fourie (based on the agreement). It was at liberty to
23/
23
pursue both. An election generally involves waiver: one right is waived by
choosing to exercise another right which is inconsistent
with the former
(
Feinstein v Niggli and Another
1981(2) SA 684(A) at 698 G). Unless Van
Vuuren can show that Total either expressly or by its conduct abandoned its
remedy against
him any argument based on election must fail. Van Vuuren never
sought to make out such a case.
The effect of the judgment of the Court a
quo
is that Total waived its
rights against Van Vuuren when it elected to proceed against Fourie after the
latter had breached his obligations
under the agreement. From that it follows
that if Total had been unable to recover from Pourie in full, it could not have
reverted
to its claim against Van Vuuren. It is unlikely that the parties to the
agreement could ever had intended that, and no such intention
is manifest from
the
24/
24
agreement.
The Court a
quo
went further and concluded
(at 174 E of the reported judgment) that the same result was arrived at
"whether interpreting the contract linguistically or contextually".
In using the
word "contextually" the Court a
guo
appears to have had in mind, in
particular, the wording of paragraph B of the preamble and "the factual matrix
in which the contract
was cast" ie the surrounding circumstances. It also held
that "(t)he word the parties used to describe their contract and the general
tenor thereof points to a form of
expromissio
" (at 172 J).
It is permissible to have regard to the words of the preamble in interpreting
the agreement but, as pointed out by the Court a
quo
(at 171 H) "a
preamble is generally regarded as subordinate to the operative portion of a
contract which, if clear, carries more
25/
25
weight than anything in the preamble". The use of the
word "intercede"
signifies no more, in my view, than an
intention on the part of Fourie to intervene or
interpose on Van Vuuren's behalf to enable Van
Vuuren, as it were, to keep the wolf from the door,
and to give him time to try and revive his flagging
financial fortunes. It was not used in the sense that
the term "
intercessio
" was used in the Roman Law. In
this respect Wessels'
Law of Contract in South Africa
,
2nd edition at 968 states,
inter alia
, the foilowing:
"3778. There are several ways in which a person, without being compelled to
do so by law, may intervene in a contract between two
parties ob
maiorem
creditoris securitatem
. The Roman jurists called this intervention an
intercessio
on the part of the stranger to the contract ('per
intercessionem aes alienum suscipiens' (D. 14.3.19.3). 'Se medium inter
debitorem
et creditorem interponere' (Voet,16.1.8)).
3779. The term intercession is a convenient one to denote the intervention of
one person (intercessor) in the obligation of another
either by way of
substituting or adding a new
26/
26
debtor (Nov., 4.1; C.8.40(41).19). 3780. The stranger may either intervene by
contracting with the creditor in such a way that the
original debtor is
completely liberated, or else he may promise the creditor to become liable for
the debt, the original debtor continuing
to remain bound. In the former case,
called
expromissio
by the glossators, there is a complete novation -the
old debtor and intercessor are liable, they may either both be principally bound
to the creditor or else the debtor may be principally liable, whilst the
intercessor is only bound in
subsidium
, ie., in case the creditor cannot
obtain payment from the principal
debtor."
Underlying
intercessio
, and the
related concept of
expromissio
, is an assumption of liability for the
debt
of another. Clauses 1 and 2 of the agreement, whether
taken alone or
in the context of the agreement as a
whole, are not open to the
interpretation that Fourie
assumed Van Vuuren's debt to Total, or any
part
thereof. Such interpretation flies in the face of the
clear and
unambiguous wording of the clauses in
question - which in the clearest of
terms record that
27/
27 Pourie's undertaking to pay R500 000 to Total is in
consideration for the latter's undertaking not to proceed against Van Vuuren.
(It must also be borne in mind that under the agreement Fourie secured an
acguittance from Total in respect of Tornado's liability
to it - at a time when
he effectiveiy controlled Tornado through Dawes Ltd. The R500 000 he undertook
to pay Total was not therefore
entirely unrelated to any personal benefit
received by him.) In the circumstances there is no need to have regard to
surrounding
circumstances. It is impermissible to draw inferences from such
circumstances inconsistent with the clear wording and meaning of
clauses 1 and 2
of the agreement. In this regard it is interesting to note that in his replying
affidavit Van Vuuren specifically
disavowed that any amount paid by Fourie was
in part payment of his (Van Vuuren's) indebtedness
28/
28
to Total. With regard to the amount paid by Fourie in
respect of his
liability to Total Van Vuuren said:
"Die bedrag is deur Fourie aan Respondent betaal nie tot gedeeltelike delging
van enige bedrag wat ek aan Respondent verskuldig was
nie, maar tot delging van
die bedrag wat hy self aan Respondent verskuldig
was."
It is also not without significance that the
later
settlement agreement between Total and Fourie did not
contain a similar undertaking to that in clause 1 of
the agreement, which strongly suggests that the
parties never had in mind that the subseguent
fulfilment by Fourie of his obligations would operate
to release Van Vuuren from his indebtedness to Total.
Various other arguments raised in the
respondent's heads of argument were not persisted with
on appeal, and therefore do not require attention. In
the result Van Vuuren failed to establish that there
was no valid
causa
for the writ issued against him by
29/
29
Total. It follows that the Judge of first instance
correctly dismissed Van
Vuuren's application, and that the Court a
quo
erred in arriving at a
contrary conclusion.
The appeal is upheld with costs, including the costs of two counsel. The
order of the Court a
quo
is set aside and there is substituted in its
stead the following order: "Appeal dismissed with costs, including the costs of
two
counsel."
J W SMALBERGER
JOUBERT, JA ) HEFER, JA ) CONCUR EKSTEEN, JA )
NICHOLAS, AJA )