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South Africa: Supreme Court of Appeal |
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In the matter between
and
JOHAN HEINRICH ARNOLD RESPONDENT
Heard: 22 February 2002
Delivered: 29 August 2002
_____________________________________________________________________
__________________________________________________________________
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,
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 (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
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