THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 511/2022
In the matter between:
BA-GAT MOTORS CC T/A
GYS PITZER MOTORING FIRST APPELLANT
GYBERTUS PITZER SECOND APPELLANT
and
KEMPSTER SEDGWICK (PTY) LTD RESPONDENT
Neutral citation: Ba-Gat Motors CC t/a Gys Pitzer Motoring and Another v
Kempster Sedgwick (Pty) Ltd (511/2022) [202 3] ZASCA 137
(25 October 2023)
Coram: DAMBUZA, CARELSE, MABINDLA-BOQWANA and MEYER
JJA and NHLANGULELA AJA
Heard: 16 August 2023
Delivered: This judgment was handed down electronically by circulation to the
parties’ legal representatives by email, publication on the Supreme Court of Appeal
2
website and release to SAFLII. The date and time for hand -down is deemed to be
11h00 on 25 October 2023.
Summary: Summary judgment – non-variation clause – oral agreement alleged –
application of the Shifren principle and estoppel.
3
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria ( Mabuse J, sitting
as court of first instance):
The appeal is dismissed with costs.
JUDGMENT
Mabindla-Boqwana JA (Meyer JA and Nhlangulela AJA concurring):
[1] The issue in this appeal is whether the Gauteng Division of the High Court,
Pretoria (the high court) properly rejected a defence of estoppel relied upon by the
appellants in resisting a summary judgment application. In this regard, the high court
applied the Shifren principle, adopted by this Court in SA Sentrale Ko -op
Graanmaatskappy Bpk v Shifren en Andere .1 In terms of this principle, if a written
contract provides that any variation of its terms must be in writing, any purported
variation by the parties which is not in writing will be void.2
[2] The first appellant, Ba -Gat Motors CC trading as Gys Pitzer Motori ng
operates a used-car dealership. The second appellant, Gybertus Pitzer is the sole
1 SA Sentrale Ko -op Graanmaatskappy Bpk v Shifren en Andere [1964] 4 All SA 520 (A); 1964 (4) SA 760 (A) at
765C.
2 9 Lawsa 3 ed para 345. This Court has reaffirmed the Shifren principle in Brisley v Drotsky 2002 (12) BCLR 1229
(SCA); 2002 (4) SA 1 (SCA) paras 10-12.
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member of the first appellant. The respondent, Kempster Sedgwick (Pty) Ltd
operates a Volvo franchise from leased premises.
[3] On 21 February 2017, the respondent concluded a written agreement to sub-
lease a portion of the premises to the first appellant commencing on 15 March 2017
to 30 September 2020. The first appellant agreed to pay a rental amount of R100 000
plus VAT, per month for the initial 12 months and thereafter rental increased by 8%
on the anniversary of the commencement date. Notably, the sub -lease agreement
(the agreement) contained a non-variation clause. Clause 13.3 of the agreement read:
‘No agreement varying , ad ding to, deleting from or cancelling this Sub -Lease (including this
clause) and no waiver of any right under this Sub -Lease shall be effective unless in writing and
signed by or on behalf of the parties.’ (My emphasis.)
[4] In addition, clause 13.4 of the agreement stated:
‘No relaxation by a party of any of its rights in terms of this Sub-Lease at any time shall prejudice
or be a waiver of its rights (unless it is a signed written waiver), and it shall be entitled to exercise
its rights thereafter as if such relaxation had not taken place.’
[5] The second appellant bound himself jointly and severally as surety and co -
principal debtor with the first appellant in favour of the respondent for all or any
obligations of the first appellant arising out of or in an y way connected to the sub -
lease.
[6] The first appellant paid escalated rent up to and including April 2019 and
refused to pay any rent thereafter. This prompted the respondent to institute action
against the appellants in the high court, claiming payment of an amount of R938 952
for arrear rental, for the months of May 2019 to October 2019.
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[7] The appellants delivered a plea denying any obligation to pay rental beyond
April 2019. According to the appellants, the sub -lease between the first appellant
and the respondent no longer subsisted. They alleged that it was cancelled in terms
of an oral agreement concluded between the first appellant and the respondent during
or about May/June 2018. In this regard, they alleged that ‘it was agreed that the sub-
lease would terminate upon the [f irst appellant] securing an alternative premises
(“the new premises”), from which the [first appellant] would continue with its
business activities, alternatively, the sub -lease would terminate o n a date to be
provided to the [respondent] by the [first appellant] by notice’.
[8] The appellants further pleaded that the respondent ‘is estopped from denying
that the sub -lease was cancelled in terms of the aforesaid oral agreement and/or
contending that the cancellation agreement relied upon by the [appellants] is of no
force and effect as it [did] not comply with the requirements of clause 13.3 of the
sub-lease and/or that the [appellants] are precluded from relying on an oral
cancellation agreement by the provisions of clause 13.3 of the sub-lease’.
[9] The basis for this defence is that during or about May/June 2018 , the
respondent, represented by one Thomas Reyneke (Reyneke) , an employee of the
respondent’s landlord in the main lease agreement , Steve Atkinson (Atkinson), the
director of the respondent and one Org Robertse (Robertse) , informed the second
appellant, who represented the first appellant, of a request to vacate the premises, as
the respondent required them for a Subaru dealership.
[10] The sec ond appellant informed the said ‘ representatives’ that the first
appellant was not interested in vacating the premises . In an endeavour to convince
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him, they took the second appellant to view alternative premises offered to the first
appellant. The second appellant was however not satisfied with the alternative
premises shown to him . Reyneke then showed him an empty stand next to a
McDonald’s outlet, which he considered as a viable option upon which to erect new
premises. Reyneke subsequently approached him with suggestions and preliminary
plans for the new premises.
[11] These actions persuaded him, as the representative of the first appellant, to
agree to vacate the premises and move the first appellant’s business to new premises.
The construction of these new premises proceeded and it was envisaged that the first
appellant would vacate the premises and move its business to the newly constructed
one, once they were completed. According to the second appellant, had it not been
for the request made by the respondent’s representatives, the first appellant would
not have proceeded to secure the new premises and incur the expenses in regard
thereto.
[12] The appellants contend that it is against that backdrop that the first appellant
‘entered into the oral cancellation agreement with the [respondent] . . . [who] assured
the first appellant that the sub-lease would be validly cancelled in terms of the oral
agreement that was concluded during or about May/June 2018’. The first appellant
acted on the correctness of the facts represented by the respondent’s representatives
and proceeded with the construction of the new premises and vacated the leased
premises to take occupation of the newly constructed premises , according to the
appellants.
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[13] The appellants further allege that, a t no point during the construction of the
new premises, which happened with the full knowledge of the respondent’s
representatives, did the respondent inform the appellants that the first appellant
remained bound by the agreement for the full term thereof. The first appellant acted
to its detriment, as a result of the intentional, alternatively negligent representations
made by the respondent’s representatives. Had the first appellant known that the
respondent intended to invoke the provisions of clause 13.3 of the agreement and/or
insisted on written cancellation of the agreement, the first appellant would not have
proceeded to secure the new premises and incur costs in relation thereto.
[14] The respondent applied for summary judgment, which was resisted by the
appellants. In considering the application, the high court found as follows:
‘A contract with a non variation clause cannot be amended orally.
. . .
I am satisfied that on the basis of the authorities that I have cited, such a cancellation is [in]valid,
because it is not in keeping with the non variation clause. Therefore, if a party raises an oral
cancellation or variation of an agreement, such defence is invalid and such a party can be regarded
as having raised no defence at all.
. . .
There is, however, another aspect that this Court should turn its mind to , and that is the date of
termination of the agreement. It will be recalled that in this matter, even after the purported oral
cancellation of the agreement, the [appellants] retained the keys to the building. In terms of the
law, even if the [appellants] did not occupy the premises concerned, the mere fact that they had in
their possession the keys to the premises, it means that the agreement only terminated [when] the
[appellants] returned the keys to the [respondent].’
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[15] The high court did not consider it necessary to deal with estoppel considering
its findings on the purported oral cancellation of the agreement. The appeal is before
us with the leave of this Court.
[16] In Brisley v Drosky,3 this Court endorsed the Shifren decision as representing
‘a doctrinal and policy choice which, on balance, was sound ’.4 It, however,
recognised that ‘in addition to the fraud exception, there may be circumstances in
which an agreement, unobjectionable in itself, will not be enforced because the
object it seeks to achieve is contrary to public policy’.5
[17] The appellants do not rely on the defence that the agreement or clause 13.3
(the non-variation clause) offends public policy. Nor do they allege fraud or deceit.
They contend for estoppel by representation. Apart from the fact that th e alleged
representation is obscurely pleaded , i t seems to be this : the respondent’s
representatives represented to the second appellant that the agreement would be
cancelled upon the first appellant securing alternative premises and the second
appellant was led to believe that the non-variation clause would not be enforced.
[18] The appellants specifically stated that they do not rely on the respondent’s
waiver of its rights to enforce the non -variation clause. The oral agreement,
therefore, is not pleaded as a pactum de non petendo in anticipando (agreement not
to sue) that may stand alongside the non -variation clause. It is not denied that the
alleged oral cancellation amounts to a variation , deletion or cancellation of the
agreement, as contemplated in the non -variation clause , which clause 13.3 is
3 Brisley v Drotsky 2002 (12) BCLR 1229 (SCA); 2002 (4) SA 1 (SCA).
4 Ibid para 90.
5 Ibid para 91.
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designed to guard against . What is raised is that the respondent is estopped from
relying on the non-variation clause.
[19] This Court in Aris Enterprises (Finance) (Pty) Ltd v Protea Assuranc e Co
Ltd,6 defined estoppel as:
‘The essence of the doctrine of estoppel by representation is that a person is precluded, ie estopped,
from denying the truth of a representation previously made by him to another person if the latter,
believing in the truth of the representation, acted thereon to his prejudice (see Joubert The Law of
South Africa vol 9 para 367 and the authorities there cited). The representation may be made in
words, ie expressly, or it may be made by conduct, including silence or inaction, ie tacitly (ibid
para 371); and in general it must relate to an existing fact (ibid para 372).’
[20] It follows that if a party reasonably believes in a misrepresentation made by
another and relies on it to its own detriment, such a party may hold the latter to the
misrepresentation and prevent th e representor from relying on the true state of
affairs.7 ‘[A] party may only rely on estoppel if the reasonable person on the street
would also have been misled by the conduct on which the estoppel is founded’.8
[21] However, before one gets to whether the pleaded facts reveal conduct on the
part of the respondent’s alleged representatives , that would have led a reasonable
person in the position of the appellants to believe that the respondent would not rely
on the non -variation clause , an antecedent question is whether the appellants’
reliance on the defence of estoppel as pleaded is sustainable in law.
6 Aris Enterprises (Finance) (Pty) Ltd v Protea Assurance Co Ltd [1981] 4 All SA 238 (A); 1981 (3) SA 274 (A) at
291D-E.
7 University of Johannesburg v Auckland Park Theological Seminary and Another [2021] ZACC 13; 2021 (8) BCLR
807 (CC); 2021 (6) SA 1 (CC) para 118.
8 Ibid.
10
[22] This Court in HNR Properties CC and Another v Standard Bank of SA Ltd 9
had occasion to deal with whether a debtor was released from a suretyship agreement
by waiver or estoppel when a suretyship agreement required the release by a creditor
in writing. The appellants therein had relied on waiver and estoppel, amongst other
grounds, to advance a defence that they were released from the suretyship
agreements, which contained a no-cancellation or non-variation clause like the one
in this case.10 This Court had this to say:
‘Courts have in the past, often on dubious grounds, attempted to avoid the Shifren principle where
its application would result in what has been perceived to be a harsh result. Typically, reliance has
been placed on waiver and estoppel. No doubt in particular circumstances a waiver of rights under
a contract containing a non-variation clause may not involve a violation of the Shifren principle,
eg where it amounts to a pactum de non petendo or an indulgence in relation to previous imperfect
performance. (For an interesting discussion on the topic, see Dale Hutchison Non-variation
Clauses in Contract: Any Escape from the Shifren Straitjacket (2001) 118 SALJ 720.) But nothing
like that arises in the present case.
The appellants contend that they were released as sureties by virtue of the conduct of the bank,
coupled with a consensual waiver of the provisions of clause 15. In my view, a factual basis for
such a contention was not established on the evidence. But even if it had been, it would have
amounted, in the circumstances of the present case, to no more than a variation of clause 15 which
was not in writing. This is precluded by clause 16. To hold otherwise, would be to render the
principle in Shifren wholly ineffective.
The same applies to the appellants’ reliance on estoppel. In their plea, the appellants alleged that
Linnell had repres ented to Berthold that the appellants were released from their suretyship
obligations and that, relying on such a representation, the appellants had acted to their prejudice.
The representation was clearly not established and in argument counsel sought to rely on a
representation based more generally on the bank’s conduct together with the letter dated 20 April
1998. But even if there had been such a representation, it would not assist the appellants. Where
9 HNR Properties CC and Another v Standard Bank of SA Ltd [2003] ZASCA 135; [2004] All SA 486 (SCA).
10 The clause read as follows: ‘No cancellation or variation of this suretyship shall be of any force or effect whatsoever
unless and until it is recorded in writing signed by or on behalf of the Bank and the surety’ . (Ibid para 20.)
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a release is required to be in writing, as in the present case, it may perhaps be possible, in limited
circumstances, to frame an estoppel in such a way as not to violate the Shifren principle. It is
unnecessary to consider what those circumstances would have to be. What is clear is that an
estoppel cannot be upheld when the effect would be to sanction a non-compliance with provisions
in a suretyship agreement of the kind contained in clauses 15 and 16. It follows that the appellants'
reliance on waiver and estoppel must similarly fail.’11 (My emphasis.)
[23] Considering these principles, the question is, were the plea of estoppel by the
appellants to be upheld, will it not have the effect of sanctioning non-compliance
with the provisions of the agreement of the kind contained in clause 13.3? Given that
prevailing position, it is difficult to see how the defence of estoppel would work out
in this kind of situation. To uphold an estoppel in such circumstances would negate
the very purpose and effect of the non-variation clause. Estoppel may only be framed
on limited grounds. Although the Court in HNR Properties CC did not say what
those could be, it did stress that such reliance must not violate the Shifren principle.
[24] In my opinion, upholding the defence of estoppel in the present matter would
be to do so on dubious grounds and only because the rejection of such would appear
harsh to the appellants, something the Court in HNR Properties CC cautioned
against. To find oth erwise would violate the Shifren principle. Further, it would
render clause 13.3 of the agreement nugatory; this could not have been the intention
of the parties when they concluded the agreement.
[25] I have considered the decision of this Court in BMW Financial Services (SA)
(Pty) Ltd v Tabata,12 which also dealt with suretyship and in which estoppel was
11 Ibid paras 20-22.
12 BMW Financial Services (SA) (Pty) Ltd v Tabata 2018 JDR 1286 (SCA).
12
raised as a defence. In that case, BMW claimed some R9.5 million from three
individuals, including Mr Tabata, the respondent in that case, and two companies in
terms of suretyship agreements. Mr Tabata held shares in a company called Vu wa
Motor Group (Pty) Ltd (VMG). He sold his shares in VMG. The sale of shares
agreement had a clause that read:
‘[T]he Purchasers undertake in favour of the Sellers to procure the written release of Vuwa and/or
Tabata from all guarantees /deeds of suretyship contemplated above and to deliver such written
releases to the attorneys by the date and in the manner contemplated in clause 7.2.3 of this
contract.’
[26] The deeds of suretyship were given in favour of various creditors, including
BMW. An attorney, Mr Dixon, entrusted to secure Mr Tabata and Vuwa’s release
from the deeds of suretyship, wrote a letter to various creditors, including BMW,
addressed to Mr Steyn, stating that their consent was a precondition to the release of
Mr Tabata and Vuwa and that those creditors will be required to advise of their
‘requirements with a view to securing the necessary releases by [the] . . . deadline’.
Mr Dixon called Mr Steyn to inquire about the process to be followed for the release,
but Mr Steyn told him that BMW held no suretyships from Vuwa or Mr Tabata. Mr
Steyn conveyed this representation to Mr Tabata and Vu wa, who accepted such to
be the position and acted according to this representation.
[27] The distinction between BMW Financial Services (SA) and the present matter
is manifest: there, the representation did not concern the non-variation clause. In
other words, BMW’s case was not that, for the release to have been effective, it had
to be reduced to writing. The dispute turned on the telephonic conversation between
Mr Dixon and Mr Steyn and its contents. On appeal, this Court accepted that the
telephone conversation occurred. Accordingly, the representation there was that
13
there were no suretyship s. A non-variation clause or its violation by the alleged
representation, was not in issue in that case.
[28] The appellants’ pleaded case also fails at another level. The conclusion of the
alleged oral agreement is based on the following facts : (a) the respondent ’s
representatives approached the second appellant to vacate the premises and take
alternative premises, which were not to his liking ; (b) the representatives showed
him vacant land where new premises could be constructed; (c) the second appellant,
on behalf of the first appellant, went ahead to construct these new premises; (d) while
all this was taking place the respondent w as silent and never advised that the non -
variation clause would be relied upon.
[29] These facts, in my opinion, are a far cry from demonstrating the conclusion
of an agreement to the effect that the agreement was cancelled. I do not see how a
reasonable person in the position of the second appellant would, having knowledge
of the true facts, believe that the first appellant would be released from the agreement
to occupy premises where the respondent would no longer receive any rental income.
We however do not need to traverse this point any further.
[30] In the circumstances, oral evidence will not assist the appellants. I am
impelled, therefore, to find that the defence raised falls short of a bona fide defence
that is good in law. Accordingly, the high court’s order granting summary judgment
in favour of the respondent must stand.
[31] For these reasons, the appeal is dismissed with costs.
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__________________________
N P MABINDLA-BOQWANA
JUDGE OF APPEAL
Dambuza JA (Carelse JA concurring):
[32] I have had the benefit of reading the judgment prepared by my colleague
Mabindla-Boqwana JA. Regrettably, I am unable to agree with the outcome reached
therein. At summary judgment stage the inquiry in the high court was, in the main,
whether the appellants had raised a bona fide defence or a defence good in law, to
the respondent’s claim. Importantly, the respondent had admitted having initiated
the proposal that the first appellant vacate the leased premises. There were several
disputes of fact , including the veracity o f the authority of one of the respondent’s
alleged representatives at the discussions that resulted in the first appellant vacating
the leased premises. These disputes would ordinarily be determined at trial.
[33] Assuming that the appellants’ version was proven to be true, was the defence
raised good in law? As set out in the main judgment, this Court accepted in HNR
Properties13 that there is room, though small, for the defence of estoppel to claims
founded on non-variation clauses. The nature or extent of that narrow window has
not been defined by our courts, save to say that Shifren must not be violated. But in
the past this Court has, in similar cases, considered the plea of estoppel within the
context of the evidence tendered. It did so in both HNR Properties and in Tabata.14
13 See HNR Properties fn 9 in the main judgment.
14 See Tabata fn 12 in the main judgment.
15
[34] Estoppel essentially operates to prevent a party that has made a representation
from denying the truth thereof where the representee has acted thereon to his
detriment. The objective is to prevent litigants from seeking to escape, for
opportunistic reasons, agreements which they concluded.
[35] In my view the reliance on representation in this case is comparable to that
which was pleaded in Tabata and in HNP Properties. The clauses of the suretyship
that were under consideration in Tabata appear in BMW Financial Services (SA)
(Pty) Ltd v Finlay and Others15 (Finlay, the court a quo in Tabata) as follows:
‘3.6 This suretyship is a continuing suretyship tha t shall remain of full force and effect,
notwithstanding the fluctuation in, or temporary extinction of, the Customer's obligations to BMW
Financial Services. This suretyship may not be withdrawn, revoked or cancelled without BMW
Financial Services prior written consent.
3.12 This document was fully completed prior to signature by the Surety. The suretyship may
only be amended or cancelled where such amendment or cancellation is reduced to writing and
signed by the Surety and BMW Financial Services. BMW F inancial Services shall not be bound
by any undertakings, representations or warranties not expressly recorded in this document.’16
[36] In that case, BMW had contended that these clauses precluded reliance on oral
cancellation, revocation or withdrawal from the suretyship and that the
representation relied on by Mr Tabata was no proper defence as it had been made
orally’.17 This Court upheld the high court’s dismissal of BMW’s claim against Mr
Tabata. Essentially, it upheld the plea of estoppel. It might be that there are pertinent
features that distinguish this case from Tabata. However, they are not immediately
apparent to me at this stage.
15 See BMW Financial Services (SA) (Pty) Ltd v Finlay and Others [2017] ZAGPPHC 181 (GP).
16 Ibid para 26.
17 Ibid para 25.
16
[37] Consequently, I do not agree that the plea tendered by the appellants in this
case is a sham or not good in law. To deprive the appellants of the right to have their
case determined in the ordinary course of events, by granting the stringent remedy
of summary judgment, in these circumstances would be unjust. Accordingly, I would
have upheld the appeal.
_____________________
N DAMBUZA
JUDGE OF APPEAL
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Appearances
For the appellants: D Prinsloo
Instructed by: Morné Mostert Attorneys, Pretoria
Pieter Skein Attorneys, Bloemfontein
For the respondent: C D Pienaar
Instructed by: Pearce, Du Toit & Moodie, Durban
Hendre Conradie Inc, Bloemfontein