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[2019] ZASCA 18
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Gridmark CC v Razia Trading CC (349/18) [2019] ZASCA 18 (25 March 2019)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
reportable
Case
No: 349/18
In
the matter between:
GRIDMARK
CC APPELLANT
and
RAZIA
TRADING
CC RESPONDENT
Neutral
citation:
Gridmark
CC v Razia Trading CC
(349/18)
[2019] ZASCA 18
(25 March 2019)
Coram:
Cachalia,
Majiedt, Van der Merwe and Mocumie JJA and Dlodlo AJA
Heard:
19
February 2019
Delivered:
25
March 2019
Summary:
Contract:
whether compromise was effected.
ORDER
On
appeal from:
Western
Cape Division of the High Court, Cape Town
(Kose
AJ, with Saldanha J concurring, sitting as court of appeal):
1 The appeal is upheld
with costs.
2 The order of Western
Cape Division of the High Court is set aside and replaced with the
following order:
‘
(a)
the appeal is upheld with costs;
(b) the order of the
magistrates’ court is set aside and replaced with an order
dismissing the special plea with costs.’
JUDGMENT
Dlodlo
AJA (Cachalia, Majiedt, Van der Merwe and Mocumie JJA concurring)
[1]
This is an appeal with the special leave of this court against the
whole of the judgment and order handed down by the Western
Cape
Division of the High Court, Cape Town (sitting as a court of appeal)
on 6 June 2017.
[2]
The appeal calls for the interpretation of correspondence exchanged
between the parties. The question for determination is whether
such
correspondence altered the contract originally entered into by the
parties resulting in a compromise alleged by the respondent.
The
appellant denied that such compromise came into existence.
Background
[3]
The appellant sold its business, Yorkers Superette, to the respondent
on 15 February 2013. The agreed purchase price was R850 000.00.
[4]
The agreement stipulated that payment of the purchase price was to be
made as follows:
(a) R500 000.00 to
be transferred within 5 days of acceptance into the account
stipulated in the contract.
(b) The balance of
R350 000.00 was to be paid in four consecutive payments in equal
parts per month on 15 April 2013, 15 May
2013, 15 June 2013 and 15
July 2013.
[5]
On 25 February 2013, the parties signed an addendum to the agreement
in terms of which the balance of the purchase price was
reduced to an
amount of R302 209.33. The payments of this amount would be on
the same terms as originally agreed to by the
parties.
[6]
It is common cause that the respondent paid the R500 000.00. It,
however, failed to pay the balance of R302 209.33
in four equal
monthly payments as agreed.
[7]
The following payments were, however, made:
(a) R10 000.00 on 15
April 2013;
(b) R20 000.00 on 16
April 2013; and
(c) R20 000.00 on 18
April 2013.
The
above payments left an outstanding balance of R252 209.33.
[8]
A dispute arose between the parties as to whether the balance of
R252 209.33, was payable. On 4 May 2013, the respondent
wrote to
the appellant offering to settle the dispute by paying the amount of
R150 000.00 to the appellant in full and final
settlement.
Payment was to be made in equal instalments on 15 May 2013, 15 June
2013 and 15 July 2013.
[9]
On 6 May 2013, the appellant responded to the offer as follows:
‘
We do not deem it necessary to
deal with the full contents of your letter save to say that it is our
client’s submission that
he duly complied with the terms of the
agreement between the parties and reserve the right to claim the full
balance of the purchase
price for the sale of the business. In order
to finalize all disputes between the parties our client would be
willing to accept
payment of the amount of R150 000.00
if
payment is received before close of business on Friday, 10 May 2013
.’
(emphasis added)
The
respondent failed to pay the R150 000.00 by 10 May 2013.
[10]
Instead, in a letter dated 11 May 2013, Mr Hossain on behalf of the
respondent offered to pay the amount of R150 000.00
in two
instalments: R50 000.00 on 15 May 2013 and R100 000.00 on 5
June 2013. The appellant rejected the offer. Despite
this, on 14 May
2013 the respondent’s attorneys wrote to the appellant’s
attorneys saying that it will proceed as follows:
‘
. . .
[O]ur client will be making a deposit
into your client’s banking account in the amount of
R50 000.00
on
15
MAY 2013
. This will be
followed by a further deposit of
R30 000.00
on
20
MAY 2013
. The balance of
R70 000.00
will
be deposited directly into your client’s banking account on/or
before
5 JUNE 2013
.
This is the best our client can do and
we trust that you find it as such in order. We will appreciate it if
you could confirm in
writing that your client accepts this offer as
such. We really feel that the parties are not far from each other and
surely a few
days will not sink the ship…’
On
15 May 2013, the appellant’s attorneys, responded by
emphatically rejecting the respondent’s proposal in these
terms:
‘
Ons erken ontvangs van u skrywe
van 14 Mei 2013 en
heg
hierby aan ‘n
akskrif van ‘n skrywe wat ons voorneme was om aan u kliënt
te stuur.
Ons kliënt dring derhalwe aan op
betaling van die volle uitstaande balans en is u kliënt se
aanbod nie aanvaarbaar nie.’
The
attachment enclosed and referred to above inter alia, recorded:
‘
. . . Your offer in your letter
of 11 May 2013 is not acceptable. It is therefore our instruction to
proceed with collection of
the full balance owing in terms of the
agreement between the parties . . .’
[11]
The respondent ignored the response and proceeded to make the
following payments to the appellant:
(a) R50 000.00 on 15
May 2013;
(b) R30 000.00 on 20
May 2013; and
(c) R70 000.00 on 4
June 2013.
The
above payments left a balance of R102 209.33.
[12]
On 5 June 2013, the respondent indicated that it would make no
further payments. The appellant viewed this indication as a
repudiation of the contract. It accordingly instituted an action
against the respondent in the George Magistrate’s Court
on 18
June 2013 for payment of the amount of R100 000.00 and abandoned
the amount of R2209.33, which was also due, in order
to bring the
claim within the jurisdiction of the magistrates’ court.
Was
there a compromise?
[13]
The onus is on the party alleging that a compromise has been
effected.
[1]
Compromise being a form of novation involving the waiver of
existing rights (or those claimed), it must be clearly and
unambiguously
proved.
[14]
A compromise must be accepted by the other contracting party. As held
in
JRM
Furniture Holdings
,
[2]
the acceptance must be absolute, unconditional and identical with the
offer. If the acceptance falls short of this, then the court
is bound
to hold that there was no consensus. That would mean no contract of
any form came into existence.
[15]
Thus, in his article,
Settlement
and the law
,
[3]
Alan Rycroft states as follows:
‘
A settlement agreement (or
compromise), being a form of contract, must comply with all general
contractual requirements as regards
consensus, certainty, legality
and possibility of performance.’
[16]
The offer of compromise must therefore be accepted in its terms in
order to form a contract. The acceptance ought to be a mirror
image
of the offer in order to constitute a contract. In other words, the
acceptance may not seek to add, subtract or modify any
of the terms
contained in the offer.
[4]
A
counter-proposal must be regarded as a counter-offer. If that is the
case, that would mean in simple terms that there is a new
offer on
the table. The issue then would be whether the offeror accepted the
counter-proposal.
[17]
In the present appeal, the respondent’s offer of 4 May 2013
elicited a counter-offer from the appellant to a term relating
to
performance and therefore to the parties’ obligations. The
appellant required complete performance by a specific date,
which was
contrary to respondent’s offer of performance over time. There
was therefore no agreement between the parties and
thus no
compromise.
[18]
To buttress its case the respondent, relying on
Absa
Bank
[5]
,
contended that the acceptance by the appellant of the payments made
in terms of the proposal on 14 May 2013 constituted a valid
acceptance of the offer to compromise that the respondent made. The
facts in
Absa
Bank
were
different. A cheque was offered in full and final settlement
contemporaneously with the offer to settle having been made, and
the
cheque was then deposited. The act of depositing the cheque created
the impression of acceptance of the settlement offer. In
the present
matter, the original offer of settlement – unaccompanied by any
payment – as outlined above, resulted in
a counter-offer which
was not accepted. While the dates on which payments were eventually
made were suggested in the second and
the third offers to settle,
those two offers were expressly rejected by the appellant, resulting
in there being no extant contract
of compromise in terms of which the
payments could have been appropriated. The contested payments were in
fact only made after
all three attempts to compromise had been
unsuccessful. In fact, Mr Hossain, who testified for the respondent,
admitted in cross-examination
that correspondence exchanged between
the parties made it clear that the offer had not been accepted.
Additionally, the appellant’s
witness, Mr J Barnard, testified
that the appellant’s attorneys had written to respondent’s
attorney that the offer
of compromise was not acceptable and that he
insisted on payment of the full outstanding balance. This evidence
was not contested.
[19]
In the absence of a compromise the appellant was entitled to
appropriate the further payments. This must be so because in terms
of
the original agreement of purchase and sale the appellant was still
owed money towards the purchase price. The argument that
the payments
received from the respondent should have been returned in the absence
of a compromise is without merit.
[20]
Accordingly the following order is made:
1 The appeal is upheld
with costs.
2 The order of Western
Cape Division of the High Court is set aside and replaced with the
following order:
‘
(a)
the appeal is upheld with costs;
(b) the order of the
magistrates’ court is set aside and replaced with an order
dismissing the special plea with costs.’
___________________
D
V Dlodlo
Acting
Judge of Appeal
APPEARANCES:
Counsel
for Appellant: A G Christians
Instructed
by:
Barnard
Labuschagne Inc t/a Ettienne Barnard Attorneys, Somerset West
Symington
De Kok Attorneys, Bloemfontein
Counsel
for Respondent: J J Buys
Instructed
by:
Phatshoane
Henney Attorneys, Bloemfontein
[1]
R H
Christie
The
Law of Contract in South Africa
5
ed (2006) at 456.
[2]
JRM Furniture
Holdings v Cowlin
1983
(4) SA 541
(W) at 544A-B.
[3]
A Rycroft ‘Settlement and the
law’ (2013) 3
SA
LJ
187
at 189; S van der Merwe et al
Contract:
General Principles
3
ed (2007) at 538.
[4]
M Nortje
‘Quasi-mutual assent and the battle of the forms’
(2018)
TSAR
443
at 444.
[5]
ABSA Bank Ltd v
Van der Vyver NO
2002
(4) SA 397
(SCA) para 17.