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[2002] ZASCA 82
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Van Der Westhuizen v Arnold (414/2000) [2002] ZASCA 82; [2002] 4 All SA 331 (SCA); 2002 (6) SA 453 (SCA) (29 August 2002)
THE SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
Reportable
CASE
NO
: 414/2000
In the
matter between:
GIDEON
ANDRIES VAN DER WESTHUIZEN
Appellant
and
JOHAN HEINRICH ARNOLD
Respondent
Before: MARAIS JA, HEHER
et
LEWIS AJJA
Heard: 22
FEBRUARY 2002
Delivered:
29 AUGUST 2002
JUD G M E N T
___________________________________________________________________
LEWIS AJA/
LEWIS
AJA:
[1] I have read the judgment of Heher AJA and regret that I cannot
agree with his conclusion as to the interpretation of the exclusion
clause in the ‘koopbrief’, and therefore also with the
decision reached by him. There are, with respect, two important
aspects of contractual interpretation that have not been accorded
sufficient weight. First, in interpreting any provision of an
agreement, the court should have regard to background circumstances
regardless of whether it considers the wording ambiguous or
uncertain. It is my view, in any event, that the words ‘geen
waarborge hoegenaamd’ in the context of this sale are
neither
clear nor certain. Secondly, exclusion clauses should be construed
bearing in mind that that they seek to limit or oust
a party’s
common-law rights.
The
background and surrounding circumstances
General principles applicable to interpretation
[2] In interpreting a contract a court must determine the intention
of the parties as reflected by the terms of the contract. Where
there
is some uncertainty as to the meaning, or an ambiguity such that
different meanings are possible on the literal wording of
the
contract, a court may have regard to surrounding circumstances. In
the absence of uncertainty or ambiguity, evidence as to
surrounding
circumstances is inadmissible. Whether this should be the approach
adopted is a question that does not, in my view,
arise in this matter
since the meaning of the words ‘geen waarborge hoegenaamd aan
my gegee is’ is not clear to me.
Accordingly extrinsic evidence
should in my view be admissible to ascertain what guarantees were
being referred to by the parties.
[3] Suffice it to say, for the purpose of this judgment, that the
formalistic approach to the interpretation of contracts, one
that
precludes recourse to extrinsic evidence on what the parties intended
in the absence of ambiguity or uncertainty, has been
criticised by
this Court, which has recently questioned whether the principle is
justifiable. (See
Pangbourne Properties Ltd v Gill & Ramsden
(Pty) Ltd
1996 (1) SA 1182
(A) at 1187E—F) and
Sun
Packaging (Pty) Ltd v Vreulink
[1996] ZASCA 73
;
1996 (4) SA 176
(A) at 184A—E;
see also the judgments of Jansen JA referred to in (1991) 108
SALJ
249 at 259ff and particularly that in
Cinema City (Pty) Ltd v
Morgenstern Family Estates (Pty) Ltd
1980 (1) SA 796
(A) at
805—6. For a general discussion of the interpretation of
contracts see R H Christie
The Law of Contract
4 ed 217ff and
C H Lewis ‘Interpretation of Contracts’ in Reinhard
Zimmermann and Daniel Visser ‘
Southern Cross: Civil Law and
Common Law in South Africa’
195ff.)
[4] On the other hand, it is trite that even where the wording of a
provision is such that its meaning seems plain to a court,
evidence
of ‘background circumstances’ is admissible for the
purpose of construing its meaning. In
Coopers & Lybrand v
Bryant
[1995] ZASCA 64
;
1995 (3) SA 761
(A) Joubert JA said (at 768A—E):
‘The correct approach to the application of the “golden
rule” of interpretation after having ascertained the
literal
meaning of the word or phrase in question is, broadly speaking to
have regard:
to
the context in which the word or phrase is used with its
interrelation to the contract as a whole, including the nature and
purpose of the contract, . . .
to
the background circumstances which explain the genesis and purpose
of the contract, ie
to matters probably present to the minds of
the parties when they contracted. Delmas Milling Co Ltd v Du Plessis
1955 (3) SA 447
(A) at 454G—H;
Van Rensburg en andere v
Taute en andere
1975 (1) SA 279
(A) at 305C—E . . . . (my
emphasis)
to
apply extrinsic evidence regarding the surrounding circumstances
where the language of the document is on the face of it ambiguous,
by considering previous negotiations and correspondence between the
parties, subsequent conduct of the parties showing the sense
in
which they acted on the document, save direct evidence of their own
intentions. . . .’
It is not apparent to me quite where to draw the line between
background and surrounding circumstances. Perhaps it is a distinction
without a difference. But it is clear that in construing the ambit of
the exemption clause between the parties in this matter regard
should
be had at least to the ‘matters probably present to the minds
of the parties when they contracted’ – the
‘background
circumstances’.
The
‘
background circumstances’
[5] On the assumption, for the sake of argument, that evidence of
surrounding circumstances is inadmissible because the wording
is on
the face of it clear, evidence of the parties’ negotiations and
their subsequent conduct cannot be taken into account.
And on any
basis, direct evidence as to what they intended is inadmissible. But
the evidence adduced in the trial court described
not only what
passed between the parties but also the background circumstances.
[6] As Heher AJA has pointed out, the evidence led at the trial (in
both stages) was limited. It seems to me, however, that such
evidence
as there was of background circumstances indicated clearly that the
only matter of interest to the parties was the physical
and
mechanical condition of the car. The seller (the appellant) knew very
little about the car. It was registered in his name,
and there was no
doubt (although at some stage this was raised as an issue) that he
thought he was the owner. But he had no interest
in the car other
than as security for what Mr Swart, owed him. Swart had dealt with
the buyer (the respondent), and had discussed
with him the condition
of the car and the repairs required to be effected. Swart had
introduced the respondent to the appellant,
and the former had then
requested (although again this was the subject of some conflict) the
‘koopbrief’. It was not
disputed that the document in
question was written by the appellant without any careful thought or
preparation. It did not reflect
the whole agreement between the
parties, since certain aspects had been agreed orally previously by
Swart and the respondent. The
document was no more than a
confirmation of various terms of the sale. It did not, for example,
reflect the purchase price. The
question whether it was the contract
itself, or simply a written confirmation of the fact of the sale is
not, however, before this
Court.
[7] The parties had not met before the respondent went to the
appellant’s office to pay for the car. The matters discussed
related to the condition of the car. The respondent knew that it
required extensive repair. The appellant had not ever used or
even
seen the car (it is not clear, however, that the respondent knew
this). Swart had had possession and had negotiated the sale
to the
respondent. He had bought the car from the previous ‘owner’.
[8] The evidence of background circumstances, limited as it is, shows
in my view that the parties did not put their minds to the
question
of the implied warranty against eviction, nor therefore to the
exclusion of the respondent’s liability for breach.
Indeed, it
is unlikely that the respondent, a layman, knew of its existence.
While the appellant was an attorney, his field of
expertise was
conveyancing.
[9] The principle that liability for breach of the warranty against
eviction can be excluded is clear. But where the parties have
not
expressly excluded the obligation to perform a material obligation
imposed on one of them, and where the background circumstances
do not
show that it was a matter present to the mind of either, can the
phrase ‘geen waarborge hoegenaamd’, which is
so general
in its ambit, be taken to exclude specifically liability for the
non-performance of the primary obligation of one of
them? In my view,
having regard to the background circumstances and to the general
nature of the ‘koopbrief’ (which,
as I have mentioned,
did not embody the entire contract and was no more than a
confirmation of the fact of the sale and of certain
terms) the
provision in the ‘koopbrief’ could have been intended to
mean no more than that no express guarantees about
the condition of
the car would render the seller liable.
[10] Furthermore, as already indicated, I do not agree with the view
of Heher AJA that the words are of such breadth that they
are plainly
to be construed as expressly excluding all liability for breach of
warranties on the part of the appellant arising
from the contract of
sale, including liability for the breach of the implied warranty
against eviction. On the contrary, I consider
the phrase ‘geen
waarborge hoegenaamd’ to be uncertain in its import. The
learned judge in fact refers to the words
as being of
‘indiscriminate breadth’. That suggests to me that they
are vague rather than that they encompass an exclusion
of absolutely
every liability of the seller that may exist, irrespective of whether
the parties are aware of it. Accordingly, there
should be a
consideration of surrounding circumstances in order to determine what
precisely was being referred to.
The surrounding circumstances
[11] The whole tenor of the respondent’s evidence was that he
believed that he was acquiring ownership of the car from the
appellant as seller. He did not expect any guarantees in respect of
the vehicle because he knew that it needed extensive repairs.
He knew
that it was defective. What was foremost in his mind when the car was
sold to him was that he was taking responsibility
for the requisite
repairs.
[12] The appellant’s evidence was to the effect that he had
known nothing about the car. As indicated, he had not possessed
it
but had had it registered in his name, believing that he was
acquiring some sort of security for a debt owed to him by Swart.
The
appellant stated, when explaining the wording of the ‘koopbrief’:
‘Die
idée daarvan was net om bevestig of om ‘n skriftelike
bevestiging te kry van mnr. Arnold dat hy hierdie
kar voetstoots
verkoop (sic), dat hy met ander woorde nie agterna terugkom na ons en
sê maar hier was allerhande foute aan
die kar nie, en in die
tweede plek dat daar nie vir hom enige waarborge van watter aard ook
al gegee is nie. . . . [D]ie bedoeling
op daardie stadium was
eenvoudig dat dit ‘n bevestiging was van sy kant op skrif, op
watter basis hy die kar koop.’
Thus, in my view, the evidence shows that the origin and genesis of
the ‘contract’ was the respondent’s request
for
confirmation that the car had been sold to him, and that the
appellant’s primary concern was to ensure that the respondent
would not look to him for the cost of repairs. There is no suggestion
that he was excluding all common law rights available to
a buyer
against a seller. The appellant claimed that he wanted only to ensure
that no guarantees had been given about the car.
Does that indicate
an intention to exclude the implied warranty against eviction?
[13] Evidence of negotiations and discussions was that when the
respondent had asked for confirmation that the owner had sold
the car
to him, the appellant, being ignorant about the car, asked Swart what
had been said to the respondent about it. The appellant
was told that
the purchase price was low because extensive repairs were needed to
make the car roadworthy. Swart assured him that
there was nothing in
writing: the appellant told Swart that he was anxious to ensure that
the car was sold ‘voetstoots’
(excluding liability for
defects) and that no guarantees had been given to the respondent, who
had not himself negotiated the sale.
Both parties were thus concerned
about the mechanical state of the vehicle. The respondent assumed
that the appellant was the owner
of the car. He knew that it was
registered in the appellant’s name.
[14] The appellant did not regard himself as the owner, but
acknowledged that the car was registered in his name. He testified
that he had no expertise in the law relating to the sale of goods and
had not wanted ‘come backs’. The appellant did,
however,
say that he wanted to ensure that the respondent knew that no
guarantees had been given to the respondent. That evidence
must be
considered in the light of what the parties knew: what they were
concerned about. And it appears from their testimony that
what had
been considered by them was the condition of the car alone.
[15] Do the surrounding circumstances – what passed between the
parties, their negotiations and their conduct – accordingly
show that the words ‘geen waarborge hoegenaamd’ included
the implied warranty against eviction? In my view, the answer
must be
‘No’. Although the phrase might be regarded at first
blush as a complete catch-all, saving the seller from
any liability
that might arise by operation of law, or by virtue of representations
or warranties, it cannot, given its generality,
and the absence of
any evidence that the question of title was considered or in
contemplation, exclude the most fundamental obligation
of the seller
– to give undisturbed possession of the merx to the buyer.
[16] The only inference to be drawn from the circumstances is that
the respondent did not intend or even contemplate that he might
be
deprived of possession by the true owner, and yet have no recourse to
the appellant. If he had no such intention, how could
there have been
agreement on this aspect of the contract? The evidence does not show
that the appellant had any such liability
in mind either. He was
concerned only to protect himself against any claim in respect of
defects in the car, and against any representations
or warranties
that Swart may have made. He said as much. That does not mean that he
intended to exclude liability for breach of
a warranty implied by
law. It is not a probable inference to be drawn from the evidence of
either party.
[17] In
the circumstances, I consider that the provision in the document that
the appellant had given no warranties whatsoever does
not exclude his
liability for breach of the warranty against eviction. This does not
mean that the words at issue are superfluous:
they refer also to
express warranties which, having regard to the evidence of the
parties, would have related to the condition
of the car. I should at
this point state that I agree with the reasoning of Heher AJA in
respect of the grammatical construction
of the provision, and that a
distinction should be drawn between the voetstoots protection and the
exclusion of liability for warranties.
The
construction of exclusion clauses
[18] In view of the conclusion to which I have
come on the interpretation of the particular provision in issue, I do
not consider
it necessary to traverse in any depth the principles
established over the years as to the interpretation of clauses in
contract
that limit the liability of one or more of the parties. See
in this regard Christie
op cit
209ff. The author states (at 214—15) in particular that courts
‘endeavour to confine exemption clauses within reasonable
bounds . . . by interpreting them narrowly. The method is
particularly applicable to clauses which do not specifically set out
the legal grounds for liability from which exemption is granted.’
Christie refers in this regard,
inter
alia,
to
Essa
v Divaris
1947 (1) SA 753
(A), and a
number of cases that deal with the exclusion of negligence as a
ground of liability. This principle is discussed also
in
Government
of the Republic of South Africa v Fibre Spinners & Weavers (Pty)
Ltd
1978 (2) SA 794
(A), where the
Court held, however, that the construction of the particular clause
at issue did effectively exclude liability for
negligence.
[19] It is also suggested fairly regularly (see in
this regard Christie
op cit
255—7) that exemption clauses should be construed
contra
proferentem
– against the person
for whose benefit the exemption is included, and at whose behest it
is drafted. In this case, the entire
‘koopbrief’ was
drafted by the appellant, and on the basis of the
contra
proferentem
maxim, any doubt as to its
meaning should be resolved in favour of the respondent. It is
important to bear in mind, however, that
the guides to
interpretation, such as
contra
proferentem
, should be resorted to only
where the application of the general principles of interpretation
fails to yield a clear meaning.
[20] Further, South African law does not recognise
a doctrine of fundamental breach (as English law did at one stage),
so that a
party may exclude liability for failure to perform a
material obligation under a contract:
Elgin
Brown & Hamer (Pty) Ltd v Industrial Machinery Suppliers (Pty)
Ltd
[1993] ZASCA 55
;
1993 (3) SA 424
(A) at 429—31
in which Hoexter JA discussed also the brief life of the doctrine in
English law. It is noteworthy, however,
that in the United Kingdom
the Unfair Contract Terms Act 1977 would render the exemption of
liability for the equivalent of the
breach of a warranty against
eviction ineffective: see Michael Furmston
Cheshire,
Fifoot & Furmston’s Law of Contract
14 ed p 200.
[21] There does not, therefore, appear to be any
clear authority for a general principle that exemption clauses should
be construed
differently from other provisions in a contract. But
that does not mean that courts are not, or should not be, wary of
contractual
exclusions since they do deprive parties of rights that
they would otherwise have had at common law. In the absence of
legislation
regulating unfair contract terms, and where a provision
does not offend public policy or considerations of good faith, a
careful
construction of the contract itself should ensure the
protection of the party whose rights have been limited, but also give
effect
to the principle that the other party should be able to
protect himself or herself against liability in so far as it is
legally
permissible. The very fact, however, that an exclusion clause
limits or ousts common law rights should make a court consider with
great care the meaning of the clause, especially if it is very
general in its application. This requires a consideration of the
background circumstances, as described in
Coopers
& Lybrand v Bryant
(above), and a
resort to surrounding circumstances if there be any doubt as to the
application of the exclusion.
[22] I
find, therefore, on a construction of the provision in question,
having regard to evidence as to background and surrounding
circumstances, that the appellant was indeed liable for breach of the
warranty against eviction and I would dismiss the appeal
with costs.
_____________________
C H LEWIS
ACTING JUDGE
OF APPEAL
HEHER AJA
[1]
This is an appeal with leave of this Court against an order of
the Cape High Court given on appeal from a magistrate. The single
issue to which the grant of leave was confined was whether an
agreement of sale concluded between the parties did not exclude the
implied warranty against eviction. As will appear below, the ambit
of debate was subsequently broadened at the instance of this
Court.
[2]
The appellant is a conveyancing attorney. The respondent
is a man in his seventies who, at the time of the trial, was employed
by a fruit exporter at Cape Town harbour in an undisclosed capacity.
[3]
The respondent sued the appellant in the magistrate’s
court of Kuils River for payment of R14 474,69 as damages. The
circumstances
given rise to the claim, as disclosed by the evidence,
are substantially beyond dispute.
[4]
During 1995 the respondent met a certain Swart who was
offering a used Mercedes-Benz motor car for sale. They agreed on a
price
of R15 000,00. The respondent knew the vehicle was in a poor
state. Probably, he discussed with Swart the obtaining of a
roadworthy
certificate since he afterwards accepted without query his
responsibility for the cost of putting the vehicle in the necessary
condition. The respondent seems to have taken delivery from Swart
before meeting the appellant who, so Swart informed him, was
the
seller of the vehicle. Swart arranged a meeting between them at the
appellant’s offices on 2 May 1995. There the price
was
confirmed. The appellant, whether on his own insistence or at the
respondent’s request for a “koopbrief”
is not
clear, wrote out, off the cuff, a document which he handed to the
respondent with the registration and license papers.
It read as
follows:
“Ek die ondergetekende,
Johan
Heinrich Arnold
Id no. 2607295024004
Erken en bevestig hiermee dat ek die motorvoertuig beskryf as ‘n
Mercedes-Benz W123 met voertuigregistrasienommer 1232236A263451
en
enjinnommer 10298062135500 hiermee voetstoots koop van Gideon Andries
van der Westhuizen en dat geen waarborge hoegenaamd aan
my gegee is
of word deur gemelde verkoper of sy agent(e) nie.
Ek onderneem verder op my
koste die voertuig aan die relevante padvaardigheidstoetse te laat
onderwerp en dit op my naam te laat
oordra binne 30 (dertig) dae
vanaf datum hiervan.”
[5]
The
respondent read the document. He signed it without comment. He drew
a cheque in favour of the appellant which he handed to
him. In due
course he paid for the repair of the vehicle and caused it to be
registered in his own name.
[6]
During
August 1995 the sheriff of the court descended with a writ taken out
by a bank which claimed ownership of the vehicle.
After discussing
the problem with the appellant, the respondent paid an amount of R14
474,69 to the bank to protect himself against
eviction . He then
sued the appellant for damages in the amount paid by him, basing his
claim on the implied warranty. The respondent
did not seek repayment
of the purchase price, a remedy which survives an agreement to
exclude the implied warranty:
Vrystaat Motors
v Henry Blignaut (Edms.) Bpk
. 1996(2) SA
448(A) 455 H - 456 B, an expedient which may have avoided the long
and unsatisfactory struggle which ensued.
[7]
The
magistrate, eventually – in the interim there had been a
successful appeal
by the
respondent against a judgment of absolution from the instance at the
close of his case – heard the evidence of both
parties and
Swart. Because of the view which he continued to hold, incorrectly,
that the respondent had not proved that he paid
the bank under a
lawful threat of eviction, the magistrate again granted absolution
and made no findings of credibility and no
attempt to resolve
conflicts of fact. The respondent appealed.
[8]
The Court
a quo
agreed with the respondent that the
uncontradicted evidence had been sufficient to prove an unassailable
title in the bank. That
finding is not in question before us. It
also upheld his submission that the agreement between the parties did
not exclude the
implied warranty against eviction. The respondent
therefore succeeded. The Court reasoned that the agreement made no
reference
to the implied warranty and that the words “geen
waarborge hoegenaamd” related to and qualified the exclusion of
the
warranty against latent defects which preceded those words. In
its view the language of the contract was clear.
[9]
I am constrained to disagree, although I also think that
the words which the parties used were unambiguous.
[10]
On a plain reading of the document, the first paragraph
manifests a dual intention: first, to protect the seller against a
claim
for latent defects (the “voetstoots” aspect), and,
secondly, to provide him with a wider protection (expressed in the
form of a “catch-all”), by excluding any possible
reliance on any claim for breach of warranty arising from a source
to
which the parties may or may not have given specific thought. This
is a common linguistic device. Certainly there is no express
mention
of the implied warranty against eviction. One would not expect there
to be. Because of its residual nature (i.e. not
being one of the
essentialia of a contract of sale) the law recognizes that such a
warranty may be excluded or renounced expressly:
Van Leeuwen, Cens.
For. 1.4.19.13-14, Voet 21.2.31, Pothier, Sale, para 182,
Alpha
Trust
(Edms) Bpk. v Van der Watt
1975(3) SA 734(A) 745H –
746A. (It is unnecessary to consider the effect of an implied
exclusion in this case since the
words under consideration are of
such breadth as to embody an express intention, but in general,
whatever may be done expressly
may just as effectively be achieved
impliedly;
cf.
however,
Botha v Swanepoel
2002 (4) SA
577
(T) 582 D - F.) Whether the parties intend that result depends
in the first instance on the language they use in their contract.
In
the present instance there is no reason to conflate the two parts of
the protection under the “voetstoots” umbrella.
That
would render the phrase “geen waarborge hoegenaamd”
superfluous, a result which flies in the face of the rule
of
interpretation that
“…
one who reads a legal document, whether public or private, should
not be prompt to ascribe – should not,
without necessity or
some sound reason, impute – to its language tautology or
superfluity, and should be rather at the outset
inclined to suppose
every word intended to have some effect or be of some use.”
Ditcher
v Denison
11 Moore PC 325
at 357, cited with approval in
Wellworths Bazaar
Ltd v
Chandlers Ltd & Another
1947 (2) SA 37
(A) 43. No sound
reason to favour
superfluity
is discernible in this case.
[11]
The
interpretation relied on by the Court
a quo
also ignores the
grammatical independence of the expressions as well as the
forcefulness and indiscriminate breadth of “geen
waarborge
hoegenaamd” (no warranty whatsoever, absolutely no warranty at
all), all of which is at odds with an intention
to limit the
protection accorded the seller in the sense understood by the Court
a
quo
.
[12]
Having read the judgment of Marais JA I am not persuaded that
the segment "aan my gegee is of word deur gemelde verkoper of
sy
agent(e) nie" excludes reliance on a warranty arising
ex
lege
. Such a warranty is deemed by law to have been given to the
party in whose favour it operates by the other party, whether or not
either has brought his mind to bear on the subject. The language
used in the contract under consideration was in my view apposite
to
and broad enough ("geen waarborge hoegenaamd") for an
acknowledgment that the respondent released the appellant from
an
obligation arising by operation of law. The consensus of parties to
a written contract is revealed in the breadth and unequivocality
of
the language which they use and not in the extent of the appreciation
of all its consequences. Moreover, the use of the present
tense
("geen waarborge hoegenaamd aan my gegee . . . word") in
the context of an absence of any discussion concerning
the contents
of the document, emphasises that the parties intended the protection
to extend to warranties about which nothing had
been said between
them, howsoever such warranties might otherwise attach to their
contract.
[13]
Given
that “[t]he intention of the parties must be gathered from
their language not from what either of them may have had
in mind”:
Van Pletsen v Henning
1913 AD 82
at 99, the additional
contribution which may be made by reference to the background
circumstances in which the contract was concluded
so as to enable the
court to put itself in the position of the parties at the time, and
thereby to understand the broad context
in which the words to be
interpreted were used:
Richter v
Bloemfontein Town Council
1922 AD 57
at 69,
Coopers & Lybrand and Others v Bryant
1995(3) SA 761(A) 768B, must perforce be limited, albeit that it is
admissible to that end. Although we are in no position to
resolve
the conflicts left open by the magistrate – only selected
portions of the evidence have been made part of the appeal
record –
it nevertheless seems clear that those elements of the appellant’s
case, which, if they had been known to
the respondent at the time of
contracting, might have influenced the interpretation of the document
(e g the appellant had never
been in possession of the vehicle, the
beneficial owner and sole user was Swart, an unrehabilitated
insolvent whose wife was employed
by the appellant, the vehicle had
been
registered in the appellant’s name as security for a loan etc)
were never brought to the respondent’s attention
and could not,
therefore, be used against him. (I understand Schreiner JA in
Delmas
Milling Co Ltd v Du Plessis
1955(3) SA 447 (A) 454 G and Joubert
JA in
Coopers & Lybrand v Bryant
,
supra
, 768 B, to
have used the description "matters probably present to the minds
of the parties when they contracted" in the
limited sense of
matters of which both parties were aware.) I can find no admissible
(or other) evidence within the category of
background circumstances
which justifies the narrow interpretation which the respondent’s
counsel attempted to support before
us.
[14]
If
the plain language is to triumph, as it should, as the only evidence
of the parties’ intentions, I think the appeal should
succeed.
[15]
During
the course of argument counsel were requested to address the court as
to whether, in the circumstances of this case, grave
injustice would
be caused to the respondent should he not be permitted to recover the
purchase price from the appellant in accordance
with the remedy
available to an evicted purchaser who has by agreement excluded
reliance on an action for breach of the warranty.
Counsel were, not
surprisingly, taken unawares. The Court therefore offered them the
opportunity to address written submissions.
Counsel for the
appellant duly submitted supplementary submissions opposing an
'extension' of the common law, arguing that the
principles have been
established for centuries, that no cause has been shown to depart
from them, that 'hard cases make bad law'
and that his client is
entitled to the benefit of his contract despite the onerous
consequences which it may hold for the respondent.
None of these
submissions seems to meet the real thrust of the Court’s
question which was directed to whether it could properly
treat the
respondent’s cause of action in the magistrate's court as one
for substitute performance.
[16]
Counsel
for the respondent, after some prevarication, also addressed the
Court on this issue. He relied on
Pick 'n Pay Retailers (Pty) Ltd
t/a Hypermarkets v Dednam
1984(4) SA 673 (O) for the proposition
that the respondent's claim for what he paid to the sheriff was in
substance a claim for
repayment of the purchase price. In that case
the plaintiff purchased a motor vehicle for R2 300 from the
defendant. It delivered
the vehicle to R as the winner of a prize in
a competition organized by it. R was lawfully evicted by the
Department of Customs
and Excise. The plaintiff was obliged to
reimburse R and to that end paid her R2 300. The plaintiff sued the
defendant for payment
of R2 300 as damages suffered in consequence of
having to pay that amount to her. In an application for summary
judgment it was
contended on behalf of the defendant that the claim
was illiquid and thereby not susceptible of recovery by such a
procedure.
After referring to
Alpha Trust (Edms) Bpk v Van der
Watt supra
, De Wet J said (at 678)
‘In die onderhawige saak is dit dus na my mening duidelik dat
eiser ten minste geregtig is om die koopprys van verweerder
terug te
vorder alhoewel hy nie die koopkontrak tussen hom en verweerder
kanselleer nie. Indien eiser behalwe die koopprys nog
ander skade
gely het weens gemelde uitwinning kan sodanige vergoeding vir sy
skade met die
actio empti
van verweerder gevorder word. Die
bedrag wat eiser tans van verweerder vorder is na my mening vasgestel
by wyse van ‘n ooreenkoms
tussen die partye. Alhoewel daar na
gemelde bedrag in eiser se besonderhede van vordering verwys word as
skadevergoeding kan daar
na my mening geen twyfel bestaan dat die
bedrag van R2 300 wat eiser van verweerder vorder ’n
gelikwideerde geldsom is nie.
Eiser eis slegs die minimum wat hy op
geregtig is as gevolg van die uitwinning van die betrokke voertuig,
welke bedrag duidelik
die koopprys van gemelde voertuig was. Indien
eiser verdere vergoeding vir sy skade met die
actio empti
gevorder het van verweerder, sou sodanige vergoeding wat gevorder
word slegs skadevergoeding wees en nie ’n gelikwideerde
geldsom
uitmaak nie.’
The Court accordingly held that the submission that the claim was not
one for a liquidated amount in money was without merit.
It appears
from the passage I have quoted that the learned judge purported to
lay down no precedent but considered the objection
in the light of
the particulars of claim and the facts available to him. I do not
think the facts of the case before us are capable
of sustaining the
analogy. The respondent’s cause of action was founded on an
assumption, based on a proper interpretation
of the contract, that
the warranty against eviction had not been excluded. He had the
right, therefore, to sue for repayment of
the purchase price and
damages. Cancellation of the contract of sale would be unnecessary
(
Alpha Trust (Edms) Bpk v Van der Watt supra
at 748 I;
cf
De Wet and Yeats,
Kontraktereg & Handelsreg
5 ed 331 fn
102, ‘
die koper by terugtrede geregtig is op terugbetaling
van die koopprys, of hy nou skade gely het of nie’)
.
In the
event, the respondent sued for the amount paid by him to settle the
bank’s claim and thereby ward off eviction. He
also alleged
that he had been obliged to borrow the money on overdraft. He
claimed the interest charged by the bank on the loan.
The summons
expressly described his claim as damages, and rightly so. If a
purchaser, threatened by lawful eviction, enters into
a transaction
with the true owner to protect his possession, the transaction is
res
inter alios acta
as regards the seller although it arises from
his breach of contract. It is not ordinarily concluded by reference
to the price
already paid to him. There was in the context no
correlation between the price contractually agreed between the
respondent and
the appellant and the amount which the former paid and
claimed. He could in addition have sued for a return of the purchase
price
since the seller had not performed and his continued possession
of the goods was not due to the seller at all. But he did not.
Nor
did he, at any stage of the proceedings up to and including the
present appeal, attempt to seek such relief. It was only
in response
to the prompting of the Court, realising that the pinch of the shoe
was a forewarning of an otherwise mortal pain,
that counsel sought to
place a slant on his case of which neither side had until then been
conscious and which had not been addressed
in evidence or argument
in three courts.
[17]
I
accept that it is trite law that
‘in
proceedings in the magistrate’s courts, the duty of the court
is not to pay too meticulous regard to the
ipsissima
verba
of the pleadings but to try to get to the bottom of the real
dispute, to try and determine what are the real issues between the
parties and, provided no possible prejudice can be caused to either
party, to decide the case on those real issues. The court
is not
confined within the technical limits of the pleadings.’
Ellison’s
Electrical Engineers Ltd v Barclay
1970 (1) SA 158
(RAD) 161 A –
B. But, as Le Roux J emphasized in
Mastlite (Pty) Ltd v
Stavracopolous
1978 (3) SA 296
(T) at 299C,
‘Both
parties must willingly participate in the effort to canvas the new
issue, otherwise the possibility of prejudice must
almost inevitably
arise which would be fatal to any attempt to depart substantially
from the pleadings …’
As these
authorities emphasise, it is essentially for the parties alone to
define the scope of the issues, whether that be done
directly by
amendment of their pleadings or by the indirect broadening tacitly
contemplated by the parties in the presentation
of their cases.
While I am inclined to think that no prejudice could have been
uncovered by the appellant if the dispute had
been approached as a
claim for return of the price in the first instance, neither counsel
has addressed us on this issue and it
would be dangerous to make a
finding in that regard. This is not a situation where the Court
should make a case for the parties.
[18]
Counsel
for the respondent, absent a factual substratum for his initial
argument, submitted that to deprive the respondent of a
right to
claim the price as damages would be unfair and in conflict with the
convictions of right-thinking men. Counsel referred
particularly to
the remarks of R H Christie in his preface to the fourth edition of
The Law of Contract that
‘the
gap between law and justice is steadily closing as the judges become
more confident in applying the concepts of good
faith and public
policy.’
He also
relied upon the dicta of Olivier JA in
Eerste Nasionale Bank van
Suidelike Afrika Bpk v Saayman
[1997] ZASCA 62
;
1997 (4) SA 302
(A) 318 H –
326 G which the learned judge concluded with the words
‘Ek
hou dit as my oortuiging na dat die beginsels van die goeie trou,
gegrond op openbare beleid, steeds in ons kontraktereg
’n
belangrike rol speel en moet speel, soos in enige regstelsel wat
gevoelig is vir die opvattinge van die gemeenskap, wat
die
uiteindelike skepper en gebruiker van die reg is, met betrekking tot
die morele en sedelike waardes van regverdigheid, billikheid
en
behoorlikheid.’
In this
regard counsel drew our attention to the comments of Christie,
op
cit
, pages 19 and 20:
‘There
is every reason to hope that when the opportunity arises the Supreme
Court of Appeal will apply Olivier JA’s
reasoning, harnessed to
the concept of public policy, in the context of the unfair
enforcement of a contract. The foundation has
long since been laid
by the Appellate Division’s recognition that in our law the
concept of good faith is applicable to all
contracts, and its
acceptance of the principle that in deciding whether public policy
forbids the enforcement of a contract the
circumstances existing at
the time enforcement is sought must be taken into account. Public
policy is a question of fact not law
and changes with “the
general sense of justice of the community, the
boni mores,
manifested in public opinion”, public opinion being understood
in the sense of seriously considered public opinion on the
general
sense of justice and good morals of the community. By limiting good
faith in the enforcement of the contract to the requirement
to show
that degree of consideration to the legitimate interests of the other
party that public policy demands, the Supreme Court
of Appeal could
tackle the unfair enforcement of contracts with a flexible instrument
free from the rigidity inherent in an Act
of Parliament.’
Counsel referred to certain considerations which, he submitted,
operated in favour of his client and warranted application of the
good faith principle along the lines advocated by Prof Christie. The
respondent had felt compelled to protect his own proprietary
interest in the vehicle by paying R14 474,69 to the sheriff. The
price of the vehicle had been R15 000. The difference was
neither
here nor there. He informed the appellant of the amount demanded from
him against the threat of eviction. He reduced the
scope of his
potential claim against the appellant by only claiming from him the
lesser amount. He did not resile from the agreement,
but kept it
alive. In all his dealings with the appellant he behaved with
moderation and reason despite the predicament in which
the
appellant’s breach of contract had landed him. While I do not
disregard the force of the author’s comments and
the benefits
of the flexibility to which he refers, the law which must be applied
is that recently stated in
Brisley v Drotsky
2002(4) SA 1 (SCA) in which this Court had occasion to consider
whether considerations of good faith provide an independent basis
for
the setting aside or non-application of contractual provisions and
principles of the law of contract. The conclusion was that
while
good faith has "a creative, a controlling and a legitimating or
explanatory function" it does not exclude consideration
of other
important contractual values or principles such as the sanctity of
contract.
'Die taak van die howe in die algemeen en van hierdie hof in
besonder is om hierdie grondliggende waardes wat soms met mekaar in
botsing kom teen mekaar op te weeg en by geleentheid, wanneer dit
nodige blyk te wees, geleidelik en met verdrag aanpassings te
maak.'
(at 15 I - 16 A)
I cannot find sufficient substance in the cumulative effect of
the factors relied on by counsel in this case to warrant interference
upon grounds of law rather than merely
ad misericordiam
.
The action of the respondent in paying off the bank was not, by
intent or effect, undertaken so as to keep the appellant’s
performance of his obligation to give undisturbed possession from
being undone. When he was faced with a lawful threat which he
could
not resist, the performance was undone. That is why he became, and
remains, entitled to recover the purchase price. Nor
do I consider
that the attitude of the appellant in holding the respondent to his
pleaded cause of action discloses any lack of
good faith in relation
to the performance of his obligations under the contract or
otherwise. The seller has done nothing to
bring about the
purchaser’s present dilemma. He has resisted a claim which had
no merit according to its terms. At best
for the respondent, the
equities are evenly balanced. One cannot speculate as to what the
appellant’s attitude would have
been if the claim had been
properly presented from the outset. Appellant’s counsel was,
in my view, fully justified in submitting
that the Court should
confine the respondent to the course which he has followed of his own
volition, a choice which hardly entitles
him to claim legitimacy for
his present interest. This Court would be wrong in fact and
principle to treat the claim as a surrogate
for recovery of the
price.
[19]
I would allow the appeal with costs.
J
A HEHER
ACTING
JUDGE OF APPEAL
MARAIS JA:
[1] I have had the advantage of
reading the judgments of Heher AJA and Lewis AJA. I agree with the
conclusion reached by Lewis
AJA but prefer to rest it upon a narrower
and perhaps less controversial ground. If appellant wished to
exclude liability for
a breach of the warranty against eviction which
warranty arose
ex lege
and existed whether or not the parties
turned their minds to it, it behoved him to say so plainly and
unambiguously. Having initially
thought otherwise, maturer
reflection has led me to conclude that the language he chose failed
to achieve that purpose (if that
was indeed his purpose).
[2] The words “en dat geen waarborge hoegenaamd aan my gegee is
of word deur gemelde verkoper of sy agent(e) nie” are
of the
widest connotation but of critical importance, in my view, are the
words “gegee is of word deur gemelde verkoper of
sy agent(e)”.
Their ordinary meaning is that the
appellant (or his agent(s))
neither
gives
nor
has given
any guarantees or
warranties whatsoever. They are, in my opinion, certainly apt to
exclude all expressly given warranties whatever
their content. I
grant too that the word “hoegenaamd” would cover both
expressly given and tacitly given warranties.
By tacit I mean: to
be inferred as having been the unspoken but yet clearly intended
consensus of the parties. But a warranty
which arises
ex lege
and owes nothing to the consensus of the parties is another matter
altogether. It is not a warranty which
is given
(either
expressly or tacitly)
by the seller or his agent(s).
Are the
chosen words apt to exclude such a warranty? I think not. In my
judgment, plainer language than that which appellant
chose would have
been necessary to exclude effectively such a warranty.
[3] This conclusion makes it unnecessary for me to express any
opinion on the question which the court raised and upon which counsel
addressed further submissions. The appeal is dismissed with costs.
______________________
R M MARAIS
JUDGE
OF APPEAL