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[2018] ZASCA 17
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Bannister's Printer (Pty) Limited v D and A Calenders CC and Another (1078/2016) [2018] ZASCA 17 (15 March 2018)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case
No: 1078/2016
In
the matter between:
BANNISTER’S
PRINT (PTY) LIMITED
APPELLANT
and
D
& A CALENDARS CC
FIRST
RESPONDENT
DARRYL
ALBERT BANNISTER
SECOND RESPONDENT
Neutral
citation:
Bannister’s
Print v D & A Calendars
(1078/2016)
[2018] ZASCA 17
(15 March 2018)
Coram:
Lewis,
Leach and Willis JJA and Pillay and Mothle AJJA
Heard:
6
March 2018
Delivered:
15
March 2018
Summary:
An
agreement of settlement of litigation, forged by a lawyer for one of
the parties, cannot be relied on by the other party. It
is a nullity.
ORDER
On
appeal from:
Gauteng
Local Division of the High Court, Johannesburg (Mashile, Masipa and
Keightley JJ sitting as court of appeal):
The
appeal is dismissed with the costs of two counsel.
JUDGMENT
Lewis
JA (Leach and Willis JJA and Pillay and Mothle AJJA concurring)
[1]
The facts giving rise to the litigation between the parties in this
appeal are extraordinary, but not in dispute. Two of the
parties are
corporate entities each owned by members of the Bannister family. The
appellant is Bannister’s Print (Pty) Ltd
(Print), controlled by
Mr Sonny Bannister. The respondents are D & A Calendars CC
(Calendars), and Mr Darryl Bannister (Darryl)
the son of Sonny
Bannister. The members of Calendars are Darryl and his wife. The
Bannisters are not on good terms and Print and
Calendars have a
dispute about various financial claims against each other.
[2]
In April 2011, Print instituted action against Calendars and Darryl
as second defendant in the South Gauteng High Court for
payment of
certain amounts, and Calendars in turn raised various claims against
Print. Darryl consulted Mr M Strauss, an attorney
working for Ian
Levitt Attorneys (Levitt), and asked him to represent Calendars and
him in the litigation. Strauss delegated the
matter to a professional
assistant working for Levitt. The professional assistant left the
employ of Levitt in 2012.
[3]
In June 2012 Levitt hired Mr Marc Lieberthal, who had completed his
articles of clerkship, but had not been admitted as an attorney
because his previous employer had refused to sign a certificate of
good conduct. Mr Levitt was aware of this, but the firm nonetheless
gave the work of conducting the litigation on behalf of Calendars to
Lieberthal – something of which Mr Levitt maintained
he was
ignorant.
[4]
Lieberthal advised Darryl in November 2012 that he would be dealing
with the matter, and Darryl and his wife consulted Lieberthal
in that
month. Lieberthal told them that the trial had been set down for
hearing in February 2013, but was unlikely to proceed
then. Darryl’s
attempts to contact Lieberthal towards the end of 2012 and at the
beginning of 2013 were unsuccessful. He
assumed that the trial was
not proceeding.
[5]
Early in the morning on 5 February 2013, Darryl was phoned by
Lieberthal, who asked whether he had received an email allegedly
sent
by Lieberthal the previous day. Darryl had not in fact received
anything. Lieberthal advised that Print’s attorney had
sent him
an agreement in an attempt to settle the litigation, such that claims
and counterclaims would be withdrawn. Lieberthal
wanted the agreement
signed and sent to him immediately, as he needed it in court that
morning. Darryl said that Lieberthal sounded
frantic. He was
astonished that Print was willing to withdraw its claim, but believed
Lieberthal.
[6]
Later in the day Darryl received an email with the draft settlement
agreement attached. He printed it out on yellow scrap
paper,
and amended it by deleting various provisions that would have left
the claims against Calendars and him extant. The effect
of the draft,
before Darryl amended it, would have been to record that Calendars
was indebted to Print in the sum of R846 626 plus
interest, and that
if it were not paid within 30 days of the date of the agreement, the
full sum claimed by Print, some R2 390
707, would become due
immediately. Darryl crossed these provisions out, initialed the first
to fourth pages with his deletions,
and signed the draft on the last
page. He sent the amended draft to Lieberthal by fax.
[7]
In about March, possibly April, of 2013 Lieberthal phoned Darryl and
asked him to send the signed original of the draft agreement
to the
Levitt offices. Calendars’ driver delivered it there. Darryl
heard nothing more until 10 May 2013, when the sheriff
of the high
court arrived at the premises of Calendars with a writ of execution.
He phoned Lieberthal to ask why this had occurred.
Lieberthal
undertook to investigate, and asked for a copy of the writ.
[8]
Darryl managed to obtain a copy of the court order that had given
rise to the writ. It transpired that it was in the form of
the draft
that had been sent to him by Lieberthal in early February, emanating
from Print’s attorneys, and the amendments
made by Darryl were
not reflected in the agreement in the court file. It became common
cause that Lieberthal had forged Darryl’s
initials on the
document submitted to court, but had used the last page which Darryl
had signed. The entire document was thus a
fiction created by
Lieberthal.
[9]
When the action was called at roll call before Mojapelo DJP in the
then South Gauteng High Court, Print and Calendars were represented
by counsel. They advised the Deputy Judge President that the matter
had been settled. But the original of the alleged agreement
of
settlement was not in the file so the matter stood down until a copy
was transmitted by fax to the court building, and was then
handed up.
The court made the alleged agreement an order of court, provided that
it was not uplifted until the original was placed
in the court file.
The original document that Lieberthal possessed, delivered to him by
Calendars, was never placed in the court
file. The signed yellow
scrap paper draft was found some time after his departure from
Levitt, hidden behind a cupboard.
[10]
In early July 2013, Calendars and Darryl applied to the South Gauteng
High Court for an order declaring the agreement of settlement
to have
been fraudulently created and void ab initio. Satchwell J granted the
application. Darryl deposed to the founding affidavit
and Ian Levitt
deposed to a supplementary affidavit in support of the application.
Levitt made much of his ignorance of the matter,
and advised that
when he had discovered the way in which Lieberthal had dealt with his
clients, he had instituted disciplinary
proceedings against
Lieberthal, and appointed someone to chair a disciplinary hearing.
The details of what happened are not germane
to this appeal. Suffice
it to say that Lieberthal did not appear at his hearing, and regarded
himself as dismissed. He subsequently
wrote to Levitt apologizing for
his behaviour, which he claimed was the result of a psychiatric
disorder. It is not necessary to
deal with the question whether
Levitt was to blame for the whole fiasco. A claim against him is not
before us.
[11]
Print opposed the application for an order that the alleged agreement
of settlement was a nullity. It argued that, although
the agreement
might have been obtained fraudulently, Calendars and Darryl had led
it reasonably to believe that Lieberthal had
authority to conclude
the agreement, and were thus estopped from asserting its invalidity.
Sonny Bannister, in his answering affidavit,
contended that Calendars
and Darryl had authorized Lieberthal to act on their behalf, and that
Print was entitled to accept that
he was acting on their
instructions. Print, he contended, had been detrimentally affected by
Lieberthal’s conduct.
[12]
The legal principle underlying Print’s attempt to enforce the
‘agreement’ is that a party to an agreement
of settlement
of litigation can be held bound by it on the basis of estoppel,
despite the fact that the agreement that was allegedly
made an order
of court was forged by the legal representative of that party.
Satchwell J had not found on the basis of this principle,
holding
that the agreement was a nullity and that Calendars and Darryl had
not agreed to it at all.
[13]
Satchwell J held that ‘fraud unravels all’ and that the
agreement did not result from consensus between the parties.
She
distinguished the application before her from
MEC
v Kruizenga
2010 (4) SA 122
(SCA) where this court had held that where a litigant
clothes a legal representative with authority to conduct litigation
but exceeds
his mandate, the other party may rely on the ‘aura
of authority’ accorded to him or her. She considered that this
was
not such a case since the agreement was in fact forged. She also
refused to grant leave to appeal. This court did grant such leave
to
a full court (in what is now the Gauteng Local Division of the High
Court) and the appeal was dismissed.
[14]
The argument advanced before the full court (Masipa, Mashile and
Keightley JJ) was that Satchwell J had not taken into account
the
principles of agency by estoppel. The full court dismissed the appeal
on the basis that the elements of estoppel had not been
shown. This
court, rather surprisingly, gave special leave to appeal to it
against the decision of the full court.
[15]
The full court also held that
Kruizenga
was distinguishable
from the matter on appeal before it. In
Kruizenga
this court
held that in order to hold a principal liable on the basis of an
agent’s apparent authority, the representation
that induced
reliance on that authority had to be rooted in the words and conduct
of the principal – in this case Calendars
and Darryl. Cachalia
JA said (para 11):
‘
[I]t
would appear that our courts have dealt with questions relating to
the
actual
authority of an attorney to transact on a client’s behalf in
the following manner: attorneys generally do not have implied
authority to settle or compromise a claim without the consent of the
client. However, the instruction to an attorney to sue or
defend a
claim may include the implied authority to do so, provided the
attorney acts in good faith. And the courts have said that
they will
set aside a settlement or compromise that does not have the client’s
authority where, objectively viewed, it appears
that the agreement is
unjust and not in the client’s best interests.’
[16]
Dealing with ostensible authority (agency by estoppel), Cachalia JA
said (para 20):
‘
I
accept that in this matter, by agreeing to the settlement, the State
attorney not only exceeded his actual authority, but did
so against
the express instructions of his principal. As opprobrious as this
conduct was, I cannot see how this has any bearing
on the
respondents’ estoppel defence. The proper approach is to
consider whether the conduct of the party who is trying to
resile
from the agreement has led the other party to reasonably believe that
he was binding himself. Viewed in this way it matters
not whether the
attorney acting for the principal exceeds his actual authority, or
does so against the client’s express instructions.
The
consequence for the other party, who is unaware of any limitation of
authority, and has no reasonable basis to question the
attorney’s
authority, is the same. That party is entitled to assume . . . that
the attorney who is attending the conference
clothed with an “aura
of authority” has the necessary authority to do what attorneys
usually do at pretrial conferences
. . .’.
[17]
In this matter, Calendars and Darryl might have given the impression
that Lieberthal had the authority to represent them in
litigation.
But that is not what Print relied on. It relied on a piece of paper
purporting to be an agreement of settlement actually
signed by the
other parties. What in fact they were relying on, however, was a
document forged by the person representing the other
party.
They were not relying on conduct that clothed Lieberthal with an aura
of authority. Far from it.
[18]
It must be made clear that the statements of the court of first
instance and that of the full court on appeal to it, that ‘fraud
unravels all’, cannot be taken at face value. Fraud certainly
unravels a contract induced by a party to it. But if a party
to an
agreement of settlement is misled by the conduct of the other party,
in appearing to clothe a legal representative with authority
to
settle litigation, and the legal representative dishonestly exceeds
his mandate or goes against express instructions, as in
Kruizenga
,
the effect of the dishonesty does not necessarily unravel an
agreement between the parties.
[19]
As Cameron J said, in
Absa Bank Ltd v Moore
2017 (1) SA 255
(CC) para 39, referring to the maxim ‘fraud unravels all’:
‘
The
maxim is not a flame-thrower, withering all within reach. Fraud
unravels all directly within its compass, but only between victim
and
perpetrator, at the instance of the victim. Whether fraud unravels a
contract depends on the victim, not the fraudster or third
parties.’
[20]
Where a lawyer exceeds his or her mandate, or acts against express
instructions, but nonetheless concludes an agreement on
behalf of a
client, the client may be precluded – estopped – by the
other party from denying the lawyer’s authority.
That is
because it is a proper agreement, on which consensus between them has
been reached.
[21]
That is not what happened in this strange matter. The purported
agreement of settlement was a forged document, and cannot give
rise
to liability on the part of Calendars and Darryl. It bore no
resemblance to the agreement that Darryl intended to conclude,
embodied in the document with deleted provisions, and which he
signed. This conclusion is buttressed by the order of the Deputy
Judge President that the agreement should not be uplifted before the
original was placed in the court file. The original was not
ever
placed there because it was hidden behind a cupboard in the Levitt
offices. If Print has suffered any loss at the hands of
Lieberthal it
has other remedies at its disposal.
[22]
Calendars and Darryl have asked for the costs of two counsel who were
required, they argue, to defend the reputation of Levitt.
They also
argue that Print knew it was relying on a forgery, and should not
have pursued the second appeal. I agree that the employment
of two
counsel was necessary in the circumstances.
[23]
The appeal is dismissed with the costs of two counsel.
_________________________
C
H Lewis
Judge
of Appeal
APPEARANCES
For Appellant:
M M Segal
Instructed
by:
Schoonees, Belling &
Georgiev, Maraisburg
Phatshoane Henney
Attorneys, Bloemfontein
For
Respondent:
G I Hoffman SC,
with him J L Kaplan
Instructed by:
Ian Levitt &
Associates, Sandton
Lovius Block Attorneys,
Bloemfontein