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IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NUMBER : 16451/2010

DATE: 03 APRIL 2014

In the application between

J P KRUGERRAND DEALS CC....................................First Applicant

IOANNIS SALALIDES..............................................Second Applicant

And

MOSCON THYME CC......................................................Respondent

JUDGMENT

André Gautschi AJ:

[1] This is an application for leave to appeal by the first and second defendants in the action against the whole of my order which I granted on 25 February 2014.

[2] In the judgment (“the main judgment”) I found the following :

2.1 The only issue in relation to the claim in convention was whether the suspensive condition in the agreement of sale had been fulfilled.  Although I did not say so specifically, it is clear from my approach to the matter that I accepted that the onus in this regard lay on the plaintiff.

2.2 I found that the admission made in the affidavit resisting summary judgment by the defendants, that the suspensive condition had been fulfilled, was admissible as an admission made by the first defendant, and gave the plaintiff a prima facie case on the question of fulfilment of the suspensive condition.

2.3 I further found that the evidence of the sole witness for the plaintiff, Ms Berridge, read with the documents in the trial bundle which enjoyed an agreed status (that they would, without further proof, serve as evidence of what they purport to be), established that the first defendant had in fact been appointed as a distributor and had acted as such for more than three years, which also established a prima facie case on the question of fulfilment of the suspensive condition.

[3] Mr Symon S.C., who was brought in to lead Mr Kaplan in the application for leave to appeal, addressed me on three aspects.  As appears from what I say below, only the third aspect appears to me to be relevant to whether leave to appeal should be granted or not.

[4] The first aspect was that the plaintiff bore the onus to prove the fulfilment of the suspensive condition, which Mr Symon contended it had failed to discharge, and that any adverse inference to be drawn against the defendants is irrelevant unless a prima facie case is established.  I agree with this submission, and was alive to this, as the last sentence of paragraph 13 of the main judgment indicates.

[5] The second submission related to my finding that the evidence of Ms Berridge, read with the documents in the trial bundle which enjoyed the status referred to above, established that the suspensive condition had been fulfilled.  I may indeed have gone too far in relying to some extent on the contents of the documents, and if this aspect were decisive in the matter, I would have granted leave to appeal.  However, I found in the judgment that the admission in the affidavit resisting summary judgment alone was sufficient to establish a prima facie case, and this application therefore turns on the admission.

[6] Mr Symon made three submissions on the third aspect, namely the admission contained in the affidavit resisting summary judgment.  These submissions had not been advanced at the trial.  The first was that it is not sufficient that the document is proved to be authentic; the truth of the contents must still be proved.  Secondly, because an admission is an exception to the hearsay rule, and all hearsay evidence now falls under the Law of Evidence Amendment Act, No 45 of 1988 (“the Amendment Act”), an admission must now be treated under the Amendment Act, and, if so, thirdly, in terms of a recent Supreme Court of Appeal decision, Giesecke & Devrient Southern Africa (Pty) Ltd v Minister of Safety and Security[1], a court must at the end of the plaintiff’s case rule on all hearsay evidence so that the defendant might know the case it is to meet[2], which I had not done.  Mr Symon relied heavily for his second submission (which, as I see it, is the crux of the matter) on a passage in Zeffertt[3] which reads as follows :

“The status of this class of admissible evidence [informal admissions] is interesting and has given rise to some controversy.  Admissions and confessions were traditionally viewed as constituting an exception to the rule against hearsay in that they were extra-curial statements or conduct which were admissible to prove the truth of what they asserted.  In S v Holshausen, however, it was held – rather illogically – that the statement of a party (including the accused) was not hearsay, with the result that admissions and confessions were excluded from the hearsay fold.  Hearsay, however, was redefined in section 3(4) of the Law of Evidence Amendment Act 45 of 1988 to mean “evidence, whether oral or in writing, the probative value of which depends upon the credibility of any person other than the person giving such evidence”.  When the prosecution witness testifies to a statement – whether oral or in writing – or conduct of the accused that constitutes an admission or a confession, it is clear that the probative value of this evidence depends materially upon the credibility of the accused, since it would have no probative value at all if the admission was false.  Clearly, then, admissible admissions and confession are, today, exceptionally received hearsay.”

[7] This statement is seemingly supported by Schmidt[4], who says :

“In principle it [an informal admission] is then admissible, even if it is adduced in the form of hearsay evidence.”[5] which is then followed by footnote 5, which reads :

“According to the wording of s 3(4) of the Law of Evidence Amendment Act 45 of 1988 evidence by a witness that he heard or saw someone making an admission would be hearsay evidence and according to s 3(1)(b) it would be admissible if the person who made the admission were to give evidence.  If he does not give evidence the court may admit it in terms of s 3(1)(c) “in the interests of justice”.  The court will naturally incline towards admitting if it is relevant and conforms to the requirements set out below. …”

[8] Section 3(4) of the Amendment Act defines hearsay evidence as follows :

“(4) For the purposes of this section—

“hearsay evidence” means evidence, whether oral or in writing, the probative value of which depends upon the credibility of any person other than the person giving such evidence;

. . .”

[9] In order for an admission to fall within section 3 of the Amendment Act, its probative value must depend upon the credibility of the person who made the admission.  I have two difficulties with the submission made by Mr Symon that an admission would fall within this definition.  The first is that the admission has value regardless whether it is true or false.  The mere fact that it was made by the party[6] may be used as evidence against him.  It may of course be contradicted or explained away, as I said in paragraph 10.1.2 of the main judgment, but absent that, a court may rely on the admission without first enquiring whether it is true or false.  It follows that I disagree with the statement in Zeffert quoted above that:

“… it would have no probative value at all if the admission was false.”

[10] The second is that, to the extent that section 3(4) requires that the probative value “depends upon” the credibility of the party who made the admission, and who is not the party giving the evidence, such probative value would mainly depend upon the credibility of the party giving the evidence, and (because it would not matter whether the admission were true or false), not on the credibility of the person making the admission.  In this I am supported by Hoffmann and Zeffertt[7] who reason as follows :

“[i]f a witness testified that X had admitted something to him, the probative value of his testimony would depend to some extent on the credibility of X, but it would usually rest primarily upon the credibility of the witness, or be governed by it.  In other words its probative value would not “depend upon” a person other than the person who is giving the evidence and, therefore, would not be hit by s3.”[8]

[11] An admission made by a party in a document which is accepted or proved to be that party’s document is an a fortiori case, in my view, of being excluded from the definition of “hearsay evidence” in the Amendment Act.  The facts in the present case would illustrate this.  The first defendant, through the mouth of its representative, the second defendant, made an admission in an affidavit in an interlocutory application which, as I found in the main judgment, is evidence before me (i.e. proved to be authentic) on one of two bases, namely the agreed status of the documents, or the principle laid down in the Howard & Dekker case[9] that an affidavit in an interlocutory application in the same matter proves itself. Once the document is before me I may have regard to it, even though the truth of the contents have not been proved. Since it is an admission I am not concerned with the truth of the contents; it is an admission against interest by the party, which exists independently of the truth of the contents. The probative value thereof does not depend upon the credibility of the party making the admission.  In my view, section 3 of the Amendment Act does not apply to this type of admission.

[12] The position could be stated in a different way.  A document which was created to, and does, express a statement of fact may be tendered simply to prove that the statement of fact has in fact been made. The evidence thus tendered will not be inadmissible on the basis that it is hearsay evidence[10].  An admission is tendered purely to prove that it was made, and is not tendered to prove the truth of the contents. It is for that reason too excluded from the operation of section 3 of the Amendment Act.

[13] Once the Amendment Act does not apply, the Giesecke & Devrient case has no application.

[14] In the light of the aforegoing analysis, I am of the view that there is no reasonable prospect that another court might find that the admission did not afford the plaintiff a prima facie case.  Also on an overall conspectus of the facts I do not perceive any reasonable prospect that another court would find that the plaintiff had not prima facie proved the fulfilment of the suspensive condition.  I would therefore refuse leave to appeal on the claim in convention.

[15] Mr Kaplan made submissions to me in regard to the application for leave to appeal on the counterclaim, which I had dismissed on the basis that the cause of action was for damages for fraudulent non-disclosure, which are therefore delictual damages, whereas the damages claimed were couched as contractual damages calculated on the basis that the misrepresentations had been true. 

[16] Mr Kaplan relied exclusively on the case of Hunt v Van der Westhuizen[11].  As I found in the main judgment, the damages awarded by Seligson AJ in that matter accord with the principles for delictual damages.  Whilst it is true that the courts “will not be hidebound by rigid classifications, but will endeavour to do justice by compensating the plaintiff for the loss caused by the defendant’s wrongdoing”[12], the amount awarded there was the cost to rectify the misrepresentation.  That is no different from a delictual claim for damage to a vehicle in a collision matter, where the true measure of damages is the diminution in the plaintiff’s patrimony (the value of the vehicle before the accident less the value of the vehicle after the accident), which may equate to the cost of repairs[13].  Hunt v Van Westhuizen is not authority that the diminution in patrimony could be changed into the innocent party’s positive interesse, claimed on the basis of the position the innocent party would have been in had the misrepresentation been true.

[17] In Hunt v Van der Westhuizen, Seligson AJ refers to an article by Anthea Cameron[14] in which the following useful, and with respect correct, passage appears[15] :

“To understand this distinction [the theoretical distinction between the delictual and contractual measure of damages], it is important to bear in mind the nature of a fraudulent misrepresentation.  It is false statement of fact (or possibly opinion), which is made in the course of negotiating a contract, with the requisite fraudulent knowledge and intent, which induces a party to contract (either at all or on the terms in fact agreed on), but which does not become a term of the contract.  Hence, the fact that the representation is false does not give rise to breach of contract, and the aggrieved party, accordingly, has no contractual claim for damages. The representee’s claim for damages (as opposed to rescission) arises in delict and therefore is governed by delictual principles.  It follows that the representee cannot claim to be placed in the same position he would have been in if the representation had been true, for this would constitute the contractual measure of damages.”

[18] The defendants have accordingly not referred me to any authority in support of their contention that the first defendant’s formulation of damages is appropriate.  I am of the view that in this regard too there is no reasonable prospect that another court may come to a different conclusion.

[19] In the result, leave to appeal is refused, and the defendants, jointly and severally, are ordered to pay the costs of this application, such costs to include the costs of two counsel.

ANDRÉ GAUTSCHI

ACTING JUDGE OF THE HIGH COURT

Date of hearing:11 March 2014

Date of judgment:3 April 2014

Counsel for the applicants/ defendants:S Symon S.C. J L Kaplan

Instructed by: Hirshowitz Flionis Attorneys

(Mr A Flionis)

Counsel for the plaintiff : B K Pincus S.C.

E Rudolph

Instructed by : Witz Padayachee Isakov Attorneys

(Mr J Isakov)

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