Paddock Motors (Pty) Ltd v Igesund

• Jurisdiction: South Africa
• Judge: Jansen JA, Trollip JA, Rabie JA, Hofmeyr JA and Galgut AJA
• Judgment Date: 31 March 1976
• Hearing Date: 25 November 1975
• Court: Appellate Division

Jansen, J.A.:

The appellant sued the respondent in the Durban and Coast Local Division for transfer of certain immovable property owned by the latter, described as

'subdivisions 9 and 10 of the farm Brasfort Flats No. 9022, situate in the county of Alfred, province of Natal'.

The action was based on the terms of a contract of settlement entered into between the appellant, the respondent and one Classen on 23 September 1969. It appears that on 16 August 1967 the respondent had sold to Classen

Jansen JA

personally a motor garage business (including certain equipment), conducted on the premises of a third party, for the sum of R3 900 and also to Classen,

'as trustee for a company about to be registered and to be named Paddock Motors (Pty.) Ltd ',

the said subdivisions of Brasfort for the sum of R1 200. The proposed company was duly registered (being the present A appellant) and it accepted and ratified the contract entered into on its behalf by Classen. During 1968 the respondent, however, instituted an action against Classen (as first defendant) and the appellant (as second defendant), claiming that certain suspensive conditions, governing the operation of the two contracts, had not been fulfilled and that, B accordingly, they were of no force or effect. Consequently, the respondent claimed inter alia return of the business from Classen and ejectment of the appellant from the subdivisions of Brasfort. The contract of settlement now sued on, relates to this action. According to its terms the two contracts were declared to be of no force or effect, but the respondent was to retain all payments already made by the appellant and Classen. However, Classen was to retain the motor garage business, it C being recorded that the lease of the premises concerned had been ceded by the respondent to Classen, and he was to pay the respondent R1 200 on signing of the settlement, and a further sum of R4 380 in six equal monthly instalments, a total amount thus of R5 580. As to the subdivisions of Brasfort, it is D significant that the settlement provided that Classen (not the appellant) was to be entitled to their 'use and occupation', immediately upon payment of the said R1 200. No obligations were imposed upon the appellant, but it was provided in para. 5 thereof that

'as soon as possible after the payment of the final instalment'

by Classen, the respondent should transfer the subdivisions of E Brasfort to the appellant, subject, however, to 'a condition precedent' that Classen

'shall have paid timeously the whole of the said sum of'

R5 580. The appellant averred payment by Classen and on this ground claimed transfer of the subdivisions.

At the close of pleadings it became clear that the facts were common cause and that questions of law constituted the real F issues. The parties, therefore, prepared a special case for the adjudication of the Court in terms of Rule 33 (1). The agreed statement of facts incorporated, inter alia, the contract of settlement as 'annexure C' and three questions of law were specifically raised:

"(i)

Whether or not the said Classen had paid timeously the whole of the said sum of R5 580, as provided for in G para. 2 of the contract which forms annexure 'C' hereto.

(ii)

Whether or not the conduct of the defendant, by accepting and continuing to retain both payment in full of the sum specified in the contract which forms annexure 'C' hereto and which includes the purchase H price of the immovable property, and refusing to give transfer of the immovable property, is inconsistent with good faith and whether, accordingly, the plaintiff is entitled to invoke the exceptio doli.

(iii)

Whether or not the provisions of the contract, which forms annexure 'C' hereto, constitute a penalty within the meaning of the Conventional Penalties Act, 15 of 1962, and are out of proportion to the breach suffered by the defendant by reason of any act or omission in respect of which the alleged penalty is or was stipulated.'

Jansen JA

The contentions of the appellant in regard to the three issues were stated as follows:

'A.

As to the first issue:

(a)

The said lessen was obliged to have paid the whole of A the said sum of R5 580 on or before 23 March 1970.

(b)

Despite the fact that he did not pay the instalment due on 23 January 1970, nor the instalment due on 23 February 1970 he had, in fact, paid the whole of the said sum of R5 580 by 5 March 1970.

(c)

He had, accordingly, paid timeously the whole of the said sum as provided for in para. 2 of the contract B which forms annexure 'C' hereto.

B.

As to the second issue:

(a)

The exceptio doli was introduced to prevent anything being done inequitably with the consciousness that one is acting contrary to good faith.

(b)

C It is completely contrary to good faith for the defendant to retain both the full amount agreed to be paid to him as well as the immovable property and to refuse to pass transfer thereof in the present circumstances.

C.

As to the third issue:

D If the contract, forming annexure 'C' hereto, entities the defendant to obtain payment of the full amount specified in the contract which forms annexure 'C' hereto and at the same time to claim the ejectment of the plaintiff from the property, then the right to claim ejectment constituted a penalty out of proportion to the breach suffered by the defendant for all purposes and within the meaning of Act 15 of 1962.'

E In effect, the first issue was whether the 'condition precedent' had been fulfilled; the second, whether, even if it had not been fulfilled, the respondent was not precluded by the principles of the exceptio doli from raising the non-fulfilment as a defence; the third, whether, in any event, the appellant was not entitled, at least, to some relief in terms of Act 15 of 1962 by way of reduction of the 'penalty' said to be F constituted by the relevant provisions of the contract of settlement.

In the event the Court a quo (MILLER, J.) was only called upon to decide the special case on the issue based on the exceptio doli. Holding the law in this regard to be in favour of the respondent, the Court granted judgment for the respondent on G the appellant's claim for transfer, with costs (including the fees consequent upon the employment of two counsel). The appeal is against this order.

In view of the course the proceedings have taken before us, it is necessary to explain how it came about that the Court a quo limited itself to the single issue of the exceptio doli. After quoting the three questions of law as formulated in the special case (see supra), the Court said the following:

H 'At the commencement of the hearing, Mr. Mendelow, for Paddock Motors, expressly abandoned the contention on his client's behalf which is implicit in question (i) above. He explained that in the light of the terms of clause 2 of the agreement of settlement, which rendered the full amount due upon failure to pay any one instalment on due date, he could not contend that the proviso to clause 5, relating to the 'condition precedent' to the right of Paddock Motors to receive transfer of the properties, could be construed otherwise than Igesund construed it, namely' that the right to claim transfer was lost so soon as there had been default in the payment of any of the agreed instalments. And as to question (iii) above, Mr. Mendelow said that he could not argue in this Court that the proviso constituted a penalty within the

Jansen JA

meaning of Act 15 of 1962, having regard to the judgment of JAMES, J.P., in Classen v Igesund and Another, 1970 (4) SA 41 (D), in regard to the very clause now in issue. However, he 'reserved the right' to argue that question in another Court, if necessary. This left only question (ii) above which was the only question argued.'

(See the full report of the judgment of the Court a quo: 1975 (3) SA 294 (D) A at p. 296F - H. Future reference to the 'judgment a quo ' will be to this report). Consistent with his stand in the Court a quo, Mr. Mendelow, for the appellant, did not raise the first issue of law in his heads of argument nor in his main argument before us - he relied on the exceptio doli and the provisions of Act 15 of 1962. However, apparently as a result of certain exchanges between the Bench...