Brits v Van Heerden

• Jurisdiction: South Africa
• Citation: 2001 (3) SA 257 (C)

Brits v Van Heerden
2001 (3) SA 257 (C)

2001 (3) SA p257

Citation	2001 (3) SA 257 (C)
Case No	2755/98
Court	Cape Provincial Division
Judge	Knoll J
Heard	September 13, 1999; September 14, 1999; September 20, 1999; September 29, 1999; October 1, 1999; October 13, 1999; November 5, 2000
Judgment	April 20, 2000
Counsel	P A L Gamble for the plaintiff.; F J Murray for the defendant.

Flynote : Sleutelwoorde B

Mistake — Rectification of contract — Mistaken belief of parties not as to recorded terms in document, but as to effect of additional oral agreement on recorded terms — Written documents merely evidence of agreement — Rectification can be granted where written memorial of agreement does not reflect true consensus of C parties — Necessary to prove that there was prior common continuing intention which is not reflected in written agreement — In order to obtain rectification of written document, necessary to prove there was mistake of some sort — Mistake not having to relate to writing itself, but can relate to consequences thereof — Mistake can be one common to both parties; of one party; or induced by misrepresentation or D fraud — Crux of matter is that mistake, be it misunderstanding of fact or law or incorrect drafting of document, has to have effect of written memorial not correctly reflecting parties' true agreement.

Contract — Legality — Contracts contrary to statute — Parties to contract for sale of immovable property inserting incorrect amount in written deed of sale to avoid paying transfer duty — Claim for rectification to E reflect correct purchase price — By not allowing plaintiff to succeed in action for rectification, in effect defendant succeeding by indirect means in enforcing illegal agreement not to include balance of purchase price consideration in written contract — Maxim ex turpi causa non oritur actio would operate against any enforcement of that illegal agreement — To find that plaintiff barred from seeking F rectification of agreement to reflect true agreement between parties would be to allow fraud on fiscus — Defendant would benefit to detriment of fiscus should plaintiff be non-suited for that reason — Court cannot be party to such result — Plaintiff's claim for rectification not defeated because of admission of what were prima facie criminal actions. G

Contract — Reality of consent — Mistake. See Mistake.

Maxims — Ex turpi causa non oritur actio — Parties to contract for sale of immovable property inserting incorrect amount in written deed of sale to avoid paying transfer duty — Claim for rectification to reflect correct purchase price — By not allowing plaintiff to succeed in action for rectification, in effect defendant succeeding by indirect means in enforcing illegal agreement not to include balance of purchase price consideration in written contract — Maxim ex turpi causa non oritur actio would operate against any enforcement of that illegal agreement — To find that plaintiff barred from seeking rectification of agreement to reflect true agreement between parties would be to allow fraud on fiscus — Defendant would benefit to detriment of fiscus should plaintiff be non-suited for that reason — Court cannot be party to such result.

Headnote : Kopnota

The plaintiff had entered into an agreement with the defendant in terms of which the defendant would purchase her house, the purchase price being made up of a cash payment of R160 000 and the defendant ceding an insurance policy worth approximately R33 000 to the H plaintiff. The agreement was reduced to writing, although the purchase price was reflected as only R160 000, ostensibly to avoid paying transfer duty on the balance. When the defendant failed to cede the insurance policy, the plaintiff claimed rectification of the written document and an order compelling the defendant to cede the policy in terms of the amended agreement, alternatively damages, based on the I value of the policy, which had in the mean time been surrendered. The defendant opposed the claim on the grounds, inter alia, that the plaintiff was not alleging a common mistake or error, but rather a deliberate exclusion of the terms of the prior oral agreement, and further that the Court should not come to the assistance of the plaintiff as the exclusion of the term relating to the insurance policy had been to avoid J

2001 (3) SA p258

transfer duty and accordingly to commit a fraud on the fiscus. The plaintiff averred that she had believed that A the term relating to the policy could be enforced, despite its omission from the written document.

Held, that the Courts had elected to follow a positivist approach in the application of their equitable jurisdiction to allow rectification of a contract. This was based on the recognition that written documents were merely evidence of an agreement, but for various reasons might not necessarily always reflect the true contract between B the parties. Although the Court did not have a general equitable jurisdiction and cases had to be decided on general principles of law, the equity was to be found in the remedy of rectification, which had been expanded over the years to give full meaning to the basic principle on which it operated and that was that rectification could be granted where the written memorial of an agreement did not reflect the C true consensus of the parties. (At 269B/C - E and 283A/B - B/C.)

Held, further, that it was necessary to prove that there had been a prior common continuing intention which was not reflected in the written agreement. (At 269E/F - F.)

Held, further, that in order to obtain rectification of a written document it was necessary to prove that there had been a mistake of some sort. However, the mistake did not have to relate D to the writing itself, but could have related to the consequences thereof. The mistake could have been one common to both parties; the mistake might have been that of one party; the mistake might have been induced by misrepresentation or fraud. The crux of the matter was that the mistake, be it a misunderstanding of fact or law or be it an incorrect drafting of the document, had to have had the effect of the E written memorial not correctly reflecting the parties' true agreement. (At 282C - D/E and 283B/C - C.)

Held, further, that the plaintiff had proved that, although the exclusion of the particular term relating to the cession of the policy was a deliberate one, she had been mistaken as to the effect of the exclusion. Furthermore, she had proved that the true whole agreement between the parties had been that the purchase price included F the cession of the policy. The whole agreement was not reflected in the written deed of sale. The written memorial was valid on the face of it. Accordingly, the plaintiff had fulfilled the requirements for the claim for rectification. (At 269F/G - G/H and 283I - 284A.)

Held, further, that, by not allowing the plaintiff to succeed in her action for rectification, in effect the defendant would succeed by indirect means in enforcing the illegal agreement not to G include the balance of the purchase price consideration in the written contract. The maxim ex turpi causa non oritur actio would operate against any enforcement of that illegal agreement. To find that the plaintiff was barred from seeking rectification of the agreement to reflect the true agreement between the parties would be to allow a fraud on the fiscus. The defendant would benefit to the detriment of the fiscus should the plaintiff be non-suited H for that reason. The Court could not be party to such a result. (At 272B - E/F, paraphrased.)

Held, accordingly, that the plaintiff's claim for rectification could not be defeated because of her admissions to what were prima facie criminal actions. However, the matter should be referred to the Director of Public Prosecutions and the Receiver of Revenue for investigation. (At 284B/C - C and 287D/E - F.) I

Cases Considered

Annotations

Reported cases

Bank of Lisbon and South Africa Ltd v De Ornelas and Another1988 (3) SA 580 (A): considered

Benjamin v Gurewitz1973 (1) SA 418 (A): discussed and compared J

2001 (3) SA p259

Bobrow v Meyerowitz1947 (2) SA 885 (T): referred to A

Cowie v Witt (1874) 23 WR 76: referred to

Eerste Nasionale Bank van Suidelike Afrika Bpk v Saayman NO 1997 (4) SA 302 (A): considered

Headermans (Vryburg) (Pty) Ltd v Ping Bai1997 (3) SA 1004 (SCA): referred to

Humphrys v Lazer Transport Holdings Ltd and Another1994 (4) SA 388 (C): referred to B

In re Alluvial Creek Ltd 1929 CPD 532: referred to

ISEP Structural Engineering and Plating (Pty) Ltd v Inland Exploration Co (Pty) Ltd1981 (4) SA 1 (A): dictum at 8H applied

Jajbhay v Cassim1939 AD 537: distinguished

Lazarus v Gorfinkel1988 (4) SA 123 (C): dictum at 129D applied C

Meyer v Merchant's Trust Ltd1942 AD 244: considered

Mouton v Hanekom1959 (3) SA 35 (A): discussed and applied

Nel v Waterberg Landbouwers Ko-operatiewe Vereniging1946 AD 597: referred to

Offit Enterprises (Pty) Ltd and Others v Knysna Development Co (Pty) Ltd and Others1987 (4) SA 24 (C): discussed and applied D

Rens v Coltman1996 (1) SA 452 (A): dictum at 458E - G applied

Rootes (Central Africa) (Pvt) Ltd v Mundawarara and Another 1973 (2) SA 447 (R): referred to

Spiller and Others v Lawrence1976 (1) SA 307 (N): referred to

Standard Bank of South Africa Ltd v Cohen (2)1993 (3) SA 854 (SE): discussed and applied E

Strydom v Coach Motors (Edms) Bpk1975 (4) SA 838 (T): referred to

Tesven CC and Another v South African Bank of Athens2000 (1) SA 268 (SCA): applied

Thathiah v Khan NO1982 (3) SA 370 (D): applied

Trust Bank of Africa Ltd v Frysch1976 (2) SA 337 (C): referred to

Van Wyk v Rottcher's Saw Mills (Pty) Ltd1948 (1) SA 983 (A): dictum at 988 applied F

Vogel NO v...