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IN THE HIGH COURT OF SOUTH AFRICA

(TRANSVAAL PROVINCIAL DIVISION

CASENO: 34457/08/2007

NOT REPORTABLE DATE: 23/10/2008

In the matter between:

FOKANE FAMILY TRUST First Applicant LAWRENCE FOKANE NO. Second Applicant

TEBOGO FOKANE N.O. Third Applicant

MATSHAMA FOKANE N.O. Fourth Applicant

AND

FINSBURY SOUTH DEVELOPMENT (PTY) LTD First Respondent

KNYSNA TRUST Second Respondent

(EDMS) BPK

JOHANNES JAKOBUS KRUGER N.O. Third Respondent

JUDGMENT

MAVUNDLA. J.

[1] The plaintiffs seek a summary judgment for the payment in the amount of R 640 666, 16 against the first defendant.

[2] The cause of action arises out of a settlement agreement concluded between the parties during or about March 2007.

BACKGROUND FACTS

[3] The first plaintiff, that is Fokane Family Trust, and Knysna Trust were 50% shareholders respectively in Finsbury South Development (Pty) Ltd which is the first defendant in these proceedings.

[4] During or about February 2007 the first defendant in terms of a written agreement of sale, sold to a third party a variety of immovable properties for a purchase consideration of

R7 000 000. 00 (seven million rand). A dispute arose between the first defendant and the first plaintiff as to what the plaintiff’s entitlement to the profit share was. This resulted in a settlement agreement being entered into. The first defendant’s attorneys of record confirmed the aforesaid agreement per letter dated 28 March 2007¹ marked annexure A attached to the particulars of claim.

[5] In accordance with the aforesaid agreement, the first respondent received payment of an amount of R1 259 332, 84 (One Million Two Hundred Fifty Nine Thousand Three Hundred and Thirty Two Rand and Eighty Four Cent) from Knysna Trust, thus resulting in the balance of R640 667, 16 (Six Hundred Forty Thousand Rand sixteen Cent), which is the amount claimed.

[6] It is indeed not in dispute that movable property was sold for the amount of R7million by Knysa and that the amount of

1 900 000 (Million Nine Hundred Rand was calculated as being the profit amount the first plaintiff is entitled to. It is also not in dispute that the first plaintiff has since received the amount of R1 259 332, 84 (One Million Two Hundred Fifty Nine Thousand Three Hundred and Thirty Two Rand and Eighty Four Cent) from Knysna Trust, thus resulting in the balance of R640 667, 16.

[7] Mr. Johannes Jakobus Kruger, who is a director of the first respondent and Finsbury South Developments (Pty) Ltd and also a trustee of the second defendant has deposed to the affidavit resisting the grant of summary judgment. He has stated inter alia that there was no written shareholder’s agreement entered into between the Knysna Trust and the Fokane Family Trust. He says that from inception the understanding between the aforesaid trusts was (a) that the property be either developed and sold or (b) the property be sold at a profit; (c) the net profit after taking all the expenses and liabilities, including shareholders loan accounts etc. into account, be equally divided amongst the shareholders;

and (d) the company thereafter be deregistered since its main purpose would have been fulfilled.

[8] Mr. Kruger avers in his affidavit that the parties would not have arrived at the settlement figure of R1 900 000,00 payable to the first plaintiff if the true state of affairs pertaining to the amount of rates and taxes were known to the parties. The rates and taxes were budgeted at R100 000,00 as being reasonable estimation at the time of the conclusion of the settlement agreement. He says that subsequently when there were massive problems relating to the obtaining of the arrear rates and taxes and the clearance certificates from the Council, it was agreed that a a more specialised conveyancer be appointed to attend to the transfer of the property of the first defendant due to the complexities pertaining to the transaction. He further states that all the parties were informed by Tonkin Clacey on about 17 September 2007 that the agent’s fees, being the agent appointed to obtain the clearance certificates, together with clearance figures amounted to R2 224 013. 81(two million two hundred and twenty four thousand and thirteen rand and

eighty-one cent). He says that this huge difference between the last mentioned amount and the amount of R100 000. 00 initially budgeted for, was caused by the fact that property had been sub-divided into scores of erven and the Local Municipality levied rates and taxes against each one of the sub-divided erven.

[9] Mr. Kruger further avers that the parties would not have arrived at the settlement figure of R1 900 000. 00 payable to the first plaintiff if the true state of affairs pertaining to the amounts of rates and taxes were known to the parties. He says that the rates and taxes were an unavoidable expenses which has to be deducted from the purchase price in order to arrive at the nett figure available for distribution between the shareholders. He says that both parties erred in their estimation and acceptance of the amount of R100 000. 00 in respect of rates and taxes and that this was a material aspect upon which the agreement was concluded. He says that there is therefore a iustus error, or mutual or common mistake of fact, which renders the agreement relied upon by the plaintiffs void, alternatively voidable.

[10] According to the authorities, for the defendants to succeed in resiling from the agreement on the basis of iustus error, it would have to be shown that the plaintiffs were to blame in the existence of such iustus error².

In the matter of Standard Bank of SA Ltd v El-Nadder and Another³ Marais J said:

“The requirements of justus error were dealt with in George v Fairmead (Pty) Ltd 1958 (2) SA 465 (A). The principles as therein enunciated were repeated and approved by the Appellate Division in Sprindrifter (Pty) Ltd v Lester Donovan (Pty) Ltd 1986 (1) SA 303 (A) at 314J-315D.” Marais J further cited the dictum by Fagan J in the matter of George v Fairmead (supra) at 471A-D, which I have already fully cited under footnote 2 herein above, and also where Fagan J proceeded at 472A to say:

“‘When a man is asked to put his signature to a document he cannot fail to realise that he is called upon to signify, by doing so, his assent to whatever words appear above his signature. In cases of the type of which the three I have mentioned are examples, the party who seeks relief must convince the Court that he was misled as to the purport of the words to which he was thus signifying his assent. That must, in each case, be a question of fact, to be decided on all the evidence led in that particular case.’ “.

[11] In his works, The Principles of the Law of Contract⁴ where the learned author, Kerr states that:

‘Discussing the iustus error approach G F Lubbe and C M Murray cite Van Rensburg, Lotz and Van Rhijn who in their description of approach say that: “Before a person is allowed to claim nullity on the ground of mistake, he must show that he was labouring under a mistake which was both operative and reasonable (iustus).” The learned authors (G F Lubbe and C M Murray go on to say that on this approach “the party seeking to resile from the transaction (the resiler) will succeed in doing so only if, in addition to proving dissensus, he discharges the onus of showing that his mistake was reasonable and excusable under the circumstances (see Joubert 84, Van Rensburg (1986) 49 THRHR 448 at 4553, 459). Should he succeed in establishing dissensus but fail on the second point the resiler will be liable ex contractu on objective grounds on account of his injustus error.”

[12] The letter of the 28 March 2008⁵, which was written in unambiguous terms, was written by the attorneys representing the defendants. This letter is very clear with regard to how the matter was settled. If indeed the settlement reached by the parties was subject to any variance at a later stage, to have regard to a subsequent determined correct rates and taxes, certainly this would have been spelt out in very clear terms. The defendants, through their attorneys prepared the documents and the figures reflected in annexure “A” and “B” attached to their opposing affidavit. They provided the estimates of the rates and taxes of R100 000, 00. It does not seem that the plaintiffs had any hand at all in the determination of the figures that were used in calculating the plaintiffs’ entitlement. In my view, it cannot be said that the plaintiffs contributed in any fashion at all in making the defendants to negotiate under any mistaken belief, in particular in regard to the amount of R100 000, 00.

[13] In an unreported judgment in the matter of Port St Francis (Pty) Ltd v Louw NO. and others⁶ the Court stated that:

“The parole evidence rule

The general principle regarding the parole evidence rule, as

formulated by Watermeyer JA in Union Government v

Vianini Ferro-Concrete Pipes (Pty) Ltd 1941 AD 43 at 47

is:

“That when a contract has been reduced to writing, the writing is,

in general, regarded as the exclusive memorial of transaction and in

a suit between the parties no evidence to prove its terms may

be given save the document or secondary evidence of its contents,

nor may the contents of such documents be contradicted, altered,

added to or varied by parole evidence.”

[14] Mr. Hartog, on behalf of the applicants, has submitted that for the defendants to succeed in showing that there was mutual mistake, they would have to lead secondary evidence of what transpired during the negotiations, and this is against parole evidence. I agree with this submission. The defendants, who were represented by able and competent attorneys, cannot want to resile from the agreement which was concluded and which they recorded as the settlement between the parties of their disputes. The defendants did not state, through their attorneys that the letter of 28 March 2007 was not without prejudice. They cannot want to seek to contradict the terms of this agreement. Neither can they succeed to show that there was mutual mistake on both parties at the time of the conclusion of the agreement,⁷by wanting to lead evidence relating to what happened during the negotiations.

[15] It is trite that in summary judgment applications, for the defendant to successfully resist the application, he must satisfy the Court that he has a bona fide defence against the plaintiff’s claim. He must set out fully the material facts upon which he relies. The Court has a discretion in such matters and that its discretion should not be exercised on the basis of conjecture or speculation but on the basis of the material before it⁸. In the matter of Wilson Bayly Holmes (Pty) Ltd v Maeyane and Others⁹ Nugent J (as he then was) said that:

“Summary judgment may be granted if a defendant has not set out in his affidavit facts which if proved at a trial, will constitute an answer to the plaintiff’s claim (Brietenbach v Fiat SA (Edms) Bpk 1976 (2) SA 226 (T). The appellant has not done so, and it cannot avoid summary judgment merely because there is a possibility that something may come up at trial. While the court retains a discretion to refuse summary judgment even where a defence has not been disclosed, that discretion is not to be exercised against the plaintiff on the basis of mere conjecture or speculation.”

[16] In casu, I am of the view that the defendants have not set out facts, upon which, if proven at trial, can be regarded as establishing a defence to the plaintiffs’ action. There are no facts set out demonstrating that there was mutual mistaken error that resulted in the calculation of rates and taxes

of R100, 000, 00.¹⁰ Neither are there any facts alleged upon which it can be said that the plaintiffs contributed to any justus error. On the contrary, in my view, the defendants attorneys, should have realised at the time of the negotiations, that there may be an error in respect of the estimates on the rates and taxes. The defendants’ attorneys should have carried more investigations before conveying to the plaintiffs that the estimates for the rates and taxes¹¹ were estimated at R100 000, 00. I am of the view that the dicta of Miller J in Diedericks v Minister of Lands are apposite in casu, namely:

“It was not reasonable or excusable error at all; it seems to me to have been a blunder which could, with the exercise of moderate care, have been avoided. Moreover, as I have already pointed out, defendant’s error was not due to any misrepresentation by the plaintiff who neither knew of the error nor was concerned with the defendant’s motive or reasons or beliefs in making the offer. In such circumstances the mistake cannot successfully be set up as a defence by the erring party when sued upon the contract.”

[17] It is trite that in summary judgment applications, the defendant must disclose fully the nature and the grounds of his defence and the material facts upon which his defence is grounded. The Court has a discretion and will then inquire whether, on the facts so disclosed, the defendant appear to have a bona fide defence. If the Court is satisfied that on the facts so disclosed the defendant has a bona fide defence. So too will the Court, if not satisfied that the defendant has a bona fide defence, in the exercise of its discretion will grant summary judgment¹².

[18] In casu, for all the reasons I have stated herein above, I am not satisfied that the defence raised by the defendants is bona fide. I am consequently of the view, that in the exercise of my discretion, I should not grant the defendants leave to defend but grant the summary judgment against the defendants as prayed for by the plaintiffs.

[19] In the premises, I make the following order:

1. That summary judgment in favour of the plaintiffs is granted against the defendants, the one paying the other to be absolved, for:

1.1 payment of the sum of R640 666, 16;

1.2 Interest on the aforesaid amount at the rate of

15,5% per annum a tempore morae from 4^th July 2007 to date of payment;

1.3 Costs of suit.

N.M. MAVUNDLA

JUDGE OF THE COURT

HEARD ON THE : 09 OCTOBER 2008.

DATE OF JUDGEMENT : 23 OCTOBER 2008.

PLAINTIFF’S ATT : RENIE VAN RENSBURG INC.

PLAINTIFF’S ADV : MR. A P DEN HARTOG.

DEFENDANTS’ ATT : EFSTRATIOU & VISAGIE ATTORNEYS.

DEFENDANTS’’ ADV : P. NEL

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