Sampson v Union and Rhodesia Wholesale Ltd (In Liquidation)

• Jurisdiction: South Africa
• Citation: 1929 AD 468

Sampson Appellant v Union and Rhodesia Wholesale Ltd (In Liquidation) Respondent
1929 AD 468

1929 AD p468

Citation	1929 AD 468
Court	Appellate Division, Bloemfontein
Judge	De Villiers ACJ, Wessels JA, Curlewis JA and Stratford JA
Heard	June 5, 1929
Judgment	July 4, 1929

Flynote : Sleutelwoorde

Contract — Misrepresentation — Representation of fact or of law.- Representation as to meaning of clause in contract — Principal and agent — Authority of agent to bind principal — Agent to sell making misrepresentation — Cession — Right of cessionary — Appeal — Application to condone delay — Costs of opposition.

Headnote : Kopnota

A party who represents to another that he places a particular construction upon a clause in a written contract thereby inducing the other to enter into the contract is not entitled in an attempt to enforce the contract to set up a different construction though the latter construction may be correct in law.

The U Co. sold certain shares to the defendant in terms of a written contract. The price was to be paid in instalments and clause 10 of the contract was to the effect that should any instalment remain unpaid after certain days of grace had expired, the agreement should lapse and all payments made by the investor should be forfeited. The defendant had been induced to enter into the, contract by one B an agent of the U Co., B having represented to the defendant that clause 10 had been inserted in the contract, to protect investors, and that the meaning put upon the clause by the U Co. was that an investor could escape liability by not paying an instalment just as if the contract were an insurance policy. The agent worked on a commission basis and, as the Court found, held a position similar to an agent of an insurance company whose work it is to induce persons to take out policies of insurance. The U Co. had ceded its rights under the contract to the plaintiffs. Certain instalments under the contract remaining unpaid, the plaintiff claimed these instalments from the defendant. A magistrate's decision in favour of the defendant having been reversed on appeal to a Provincial Division on the ground that the defendant had made a mistake of law in reading clause 10 of the contract to mean that he could throw up the contract by not paying an instalment and that the fact that B had also made this mistake could not assist the defendant.

Held, on appeal, that B as agent to sell the shares had authority to bind his principal the U Co. by his representations.

Held, further, that assuming clause 10 of the contract meant in law that the defendant was not able to avoid liability for the fall amount of the purchase price by not paying an instalment as he had been induced to enter into the contract by the representations made by B, he was entitled to terminate the contract by not paying an instalment and to resist any claim made under the contract inconsistent with such representations.

Held, further, that the fact that the plaintiffs were the cessionaries of the contract did not affect the position.

1929 AD p469

A respondent who unsuccessfully opposes an application for condonation of a delay in prosecuting an appeal on the part of the applicant is not ipso facto entitled to costs of opposition.

The decision of the Cape Provincial Division in Union & Rhodesia Wholesale Ltd. (in Liquidation) v Sampson, reversed.

Case Information

Appeal from a decision of the Cape Provincial Division (GARDINER, J.P., and JONES, J.), reversing a decision of the magistrate's court at Port Elizabeth.

The facts appear from the judgment of WESSELS, J.A.

W. H. Stuart (with him H. J. Edeling), for, the appellant: Any equitable consideration which was good against the Share Agency is good against the respondents as cessionaries.

Despite the decision in the Queen v Davenport (3 A.C. 115), clauses 10 and 11 of the contract, read together, release the appellant. Secondly, in the alternative, because there is clear evidence of the real intention of the parties, appellant is entitled to have the contract rectified or treated as if it really expressed the intention of the parties because, if the parties agree that X means Y, then X does mean Y, or alternatively, if it is agreed verbally that X is to mean Y, the subsequent mistaken signature of a document containing X may be changed to and be taken as Y. As appellant repudiated it was not necessary to obtain an order of rectification. The subsequent change in the form of contract showed that the Share Agency did not think appellant was bound by the form he signed. Thirdly, the contract is clear but was never reduced to writing. Fourthly, if the actual misrepresentations are mixed fact and law they are inseparable. Fifthly, the misrepresentations are of fact. Sixthly, if the first representation is purely one of law, then, despite the maxim ignorantia juris non excusat, appellant is relieved because the maxim applies only to the general law and not to private rights, and in any case it is a presumption which is rebuttable.

As to the first point the Queen v Davenport (supra) did not form part of our law before its adoption in South Africa. See Story on Contracts (1st ed., p. 476, Ch. XVI, sec. 527). But, assuming that the case is applicable, clause 11 of the contract renders it applicable only on default after receipt of transfer of the shares in view of the maxim exclusio unius inclusio alterius. Clause 11 was not referred to in Union and Rhodesia Wholesale Ltd. v Becker and Others (1926, E.D.L. 314 at p. 319) or in

1929 AD p470

Darlington v Union and Rhodesia Wholesale Ltd. (in Liquidation.) (1926 OPD 172). The admission by another counsel in the court below in the present case does not bind the appellant. The plea enables the defence of mistake to be raised as nature of the defence was set out in compliance with Order XV, rule 1 of the Magistrates Courts Act and Rule 2 does not include mistake. On points three to six the renunciation of rights under a mistake as to a particular rule of law is not binding nor is a mistake as to a general rule of law always binding. See Pollock on Principles of Contract (9th ed., pp. 93, 476 and 477, 490, 499, 500, 541 554, 556, 557, 616); Wilding v Sanderson (1897, 2 Ch. 534) and Stewart v Kennedy (1890, 15 A.C. 75 and 108); Fry on Specific Performance (4th ed., p. 288).

GARDINER, J.P., was wrong in holding that the statement by Kerr on Fraud and Mistake (5th ed., p. 498) that the maxim ignorantia juris non excusat is not applicable even in the case of a mistake as to the general law if the mistake as to the meaning of the words used was induced by the other party, however innocently, is inconsistent with the statement on page 60 that the misrepresentation of the legal effect of a contract is not a sufficient ground for avoiding it. The passage on p. 60 sets out the broad principle to which the passages on pp. 498-99 are exceptions. The cases of Lewis v Jones (4 B and C. 506), which deal with a mistake not calculated to deceive; Rashdael v Ford (2 Eq. 750) and Beattie v Lord Ebury (7 H.L. 102) quoted in support of the passage on p. 60 are all distinguishable, as in all three a third party who was not privy to the mistake was sued. Wilding v Sanderson (supra) and Stewart v Kennedy (supra) quoted in support of the passage on pp. 498-9 apply. Moreover a distinction must be drawn between the case where, as here, the misrepresentation is raised as a defence and where, it is raised as a claim. The question of the effect of mistake of law which first came up in South Africa in Rooth v The State (2 S.A.R. 259 at p. 263) was raised on a condictio indebiti, and that case is therefore distinguishable.

As to statements of mixed fact and law see Halsbury's Laws of England (vol. XX, p. 668 and 670, paras. 1631 and 1633); Eaglesfield v Marquis of Londonderry (4 Ch.D. 693 at p. 702 per JESSEL, M.R.); Jones v Edney (3 Campbell 285); West London Commercial Bank v Kitson (13 Q.B.D. 360) and Derry v Peek (14 A.C. 280 at pp. 348-9).

1929 AD p471

A contract may be set aside if a representation is made by an agent acting on behalf of his principal. See Redgrave v Herd (20 Ch.D. 1).

On the question of inducement and materiality of the misrepresentation see Kerr on Mistake and Fraud (pp. 34 and 42); Arnison v Smith (41 Ch.D at p. 369); Smith v Kay (7 H.L.C. 750), and Peek v Derry (37 Ch.D at p. 573). The appellant had no opportunity of exercising his judgment. See Mahomed Adbullah v Levy N.O. (1916 CPD 308).

Where there is a mutual mistake the Court should interpret the contract as it was intended to be taken by the parties. See Paget v Marshall (28 Ch.D. 255) and Woodstock Municipal Council and Others v Smith and Another (26 C.S.C. 701).

A principal cannot adopt a contract procured by a fraudulent misrepresentation of his agent although he did not authorise the misrepresentations. See Kerr on Mistake and Fraud (p. 83).

D. Buchanan, K.C. (with him Bloch), for the respondents: Clause 10 is clear and unambiguous and leaves the option merely in the person entitled to payment. See The Queen v Davenport (supra, at pp. 128-9); Holder v Epstein (1905, T.H. 158) and Darlington v Union and Rhodesia Wholesale Ltd (in Liquidation) (supra.). Clause 11 does not alter the position.

Appellant exercised his judgment and applied his mind to the meaning of clause 10 and was not therefore induced by any representation.

The alleged misrepresentation is expressly contradicted by the written agreement and it is not therefore a misrepresentation and affords no relief. In order to afford relief a misrepresentation must be as to something upon which the written agreement is silent or ambiguous. If the agreement did not record the transaction, that might afford ground for relief as mistake but not as misrepresentation.

A misrepresentation, to afford relief, must have induced the contract and...