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IN THE KWAZULU-NATAL HIGH COURT, PIETERMARITZBURG

REPUBLIC OF SOUTH AFRICA

CASE NO. AR 547/09

In the matter between:

WALTER McKENZIE GIBSON …................................1^st Appellant/Applicant

ELIZABETH ARLENE MARCELLE GIBSON ….........2^nd Appellant/Applicant

and

DANIEL PETRUS DE LANGE …..................................Respondent

APPEAL JUDGMENT Delivered on 13 September 2010

SWAIN J

[1] The respondent (plaintiff in the Court a quo) was granted judgment against the appellants (defendants in the Court a quo) by Balton J for payment of the sum of R300,000.00, together with interest thereon and costs of suit.

[2] The appellants, with the leave of Balton J, challenge the finding of the Court a quo that the appellants “unilaterally terminated the agreement” which it is common cause was concluded between the parties, entitling the respondent to a refund of the money paid by the respondent to appellants in pursuance of the agreement. It was common cause that the appellants had already paid the respondent R100,000.00 of the amount of R400,000.00 paid by the respondent to the appellants and hence judgment in the amount of R300,000.00, was entered in favour of the respondent.

[3] It was common cause between the parties that the terms of the agreement were:

[3.1] The respondent would pay to the appellants the sum of R400,000.00 as an investment in respect of a housing development known as Project 627 Chakas Rock.

[3.2] The payment by the respondent would secure seven per cent of the shares in the development.

[3.3] The respondent’s return on his investment and percentage of the development partnership would be finalised and agreed upon, in a separate agreement to be concluded between the parties, and a yet to be determined third party. A copy of the written agreement was annexed as Annexure “A” to the respondent’s particulars of claim.

[4] The cause of action advanced by the respondent for repayment of the sum of R400,000.00, was that during or about January 2005 the parties orally, expressly alternatively tacitly, agreed to cancel the agreement. It was further alleged that it was a material express, alternatively tacit, term of this agreement, that the appellants would repay to the respondent the sum of R400,000.00.

[5] The appellant denied the conclusion of the agreement of cancellation and alleged that the oral agreement concluded between the parties in January 2005 had the following terms:

[5.1] The parties decided to terminate Project 627 Chakas Rock

and

[5.2] The assets of the project would be liquidated, the liabilities paid and the nett proceeds distributed to the parties involved, according to their respective interests.

[6] The appellants further alleged that the appellants, with the consent of the respondent, entered into an agreement with J & C Industrial Investments (Pty) Ltd., in terms of which they exchanged Portion 20 of Erf 627, Chakas Rock Township (being the property which was the subject of the agreement between the parties) for another property described as Erf 138 Chakas Rock Township plus R3M. The appellants alleged that pursuant to this agreement, the appellants paid some of the liabilities of the project, the appellants paid the respondent the said amount of R100,000.00 on account of his interest in the project and offered Erf 138, Chakas Rock Township for sale.

[7] The appellants would according to their plea, only account to the respondent when the appellants received the proceeds of the sale of Erf 138 Chakas Rock Township. The appellants denied any liability to pay the sum of R300,000.00 to the respondent.

[8] It is therefore apparent that the respondent bore the onus of proving on a balance of probabilities, the conclusion of the oral agreement of cancellation, containing a term that the appellants would repay to the respondent, the balance of the contribution made by the respondent in the sum of R300,000.00.

[9] In this regard the evidence led in the Court a quo, in support of the parties’ respective contentions was only that of the respondent and the first appellant, in which there was a direct dispute of fact, as to the terms of the agreement which was concluded between them during January 2005.

[10] The respective versions of these witnesses have therefore to be assessed against the general probabilities of the matter, as well as the credibility of each of them, as revealed by the evidence.

[11] As regards the general probabilities of the matter, the first appellant conceded in evidence that:

[11.1] As at the end of January 2005 the project had not commenced.

[11.2] The agreement concluded between the parties contemplated that another agreement would have to be drawn up, once the project became a reality, which would deal with exactly how the project would work and how the partnership would work. It would also deal with exactly how much the respondent would get out of the project.

[11.3] Project 627 was at an end and at the end of January 2005 was not going to happen.

[11.4] The respondent had invested the amount of R400,000.00 in Project 627.

[11.5] The first appellant was unable to say where the R400,000.00 paid by the respondent went, but agreed that it was spent on something unrelated to the project.

[12] It is therefore clear that as at the time when the agreement was concluded between the parties in January 2005, Project 627 in which the respondent had invested R400,000.00 had not commenced, was at an end and the first appellant had spent the sum of R400,000.00 on something unconnected with Project 627.

[13] Of crucial importance to the appellant’s case in this context is the allegation made in the appellant’s plea, that the respondent consented to the conclusion of the agreement with J & C Industrial Developments (Pty) Ltd. and the exchange of the immovable properties, referred to in paragraph [6] supra. In other words, the respondent agreed that his contribution could be invested in the property, which was exchanged for the property forming the subject matter of Project 627 Chakas Rock. Without the agreement of the respondent, in the light of the concessions made by the first appellant, there was no right vested in the appellants to utilise the respondent’s money in the further project.

[14] In evidence however, contrary to what was alleged in the appellants’ plea, the first appellant conceded that there was no agreement concluded with the respondent as to the further project. The inference is accordingly inescapable that the first appellant gave instructions to his legal representatives, in order to draft the appellants’ plea, which were at variance with the evidence he gave in the Court a quo. It is in this context that the further averment made in the appellants’ plea that “the parties decided to terminate Project 627 Chakas Rock” assumes significance. As pointed out above, the first appellant denied when giving evidence, that there was any agreement to cancel the contract. The contract in issue dealt with the development of Project 627 Chakas Rock. A joint “decision” to terminate Project 627, in the absence of any agreement with the respondent, that the respondent would be a party to any further development, must have as a necessary consequence the agreed cancellation of the contract.

[15] When I pointed out to Mr. Joubert, who appeared for the appellants, the above contradictions between what the first appellant had said when giving evidence and what was contained in the appellants’ plea, he stated that he was not before us to defend the first appellant’s credibility. His argument was rather directed at the fact that the respondent had never said when giving evidence, that the agreement was cancelled by “mutual consent” and that it was a term of this agreement, that the appellants’ would repay the respondent the amount of R400,000.00. As I understood the argument, Mr. Joubert placed particular emphasis upon the fact that the respondent had never used the word “cancel” in describing the agreement concluded in January 2005.

[16] What the respondent said was that he kept a note on his computer of the discussions he had with the first appellant. He then wrote out the notes off his computer, when he saw the development was not going to take place and decided to take action. The typed out notes formed part of the exhibits before the Court a quo. Respondent confirmed that he had made the following entries:

“9. On the 20/1/2005 was advised that the development will no longer take place.

10. Advised Wally Gibson that if nothing happens by the 29/1/2005 I wish to withdraw.

11. Wally phoned 16/2 promised payment nothing materialised.”

[17] Respondent explained that he was advised by the first appellant in a telephone call, that the development would no longer take place and it was in a different telephone call that he advised the first appellant, that if the development was no longer taking place, he should be refunded, because the money was not used for the purpose that he invested it originally. In the next telephone call on 16 February the first appellant telephoned him and promised to repay him the full amount of R400,000.00.

[18] Respondent then referred to a further entry which reads as follows:

“12. Met with Wally on 26/2 confirmed that the sale of property will take place on 28/2”

explaining that the first appellant told him he would sell off part of Erf 627 and exchange the rest of the property for other land. When the first appellant was paid for the part of Erf 627 he had sold, he would repay the respondent, because the respondent was never part of the other development that would happen on the other piece of land, which would be acquired as a swap.

[19] The following entries read as follows:

“13. Next promise documents will only be signed on the 04/03.

14. Date 09/03 phoned Wally “no reply”.

15. Phoned Wally 10/03. He promised absolute payment into my banking account not later than Friday 11/03.

16. Phoned Wally 15/03. He commented that bank won’t release money”

The respondent explained that the first appellant had told him that the documents for the sale of Erf 627 would be signed on 04 March and on 10 March he had promised that the amount of R400,000.00 would be paid into his bank account no later than 11 March. The respondent then telephoned the first appellant on 15 March because he had not been paid, and the first appellant explained that the bank would not release the money.

No objection was raised in the Court a quo, as to the admissibility of the notes made by the respondent, on the ground that they were in essence, previous consistent statements. These notes were clearly admissible as they formed part of the res gestae, being relevant through contemporaneity (being part of the story) and were not used to corroborate the evidence of the respondent.

Principles of Evidence –

Schwikkard & van der Merwe 3^rd Edition pg 120 para 9.9

[20] What is quite clear from the evidence of the respondent is that he told the first appellant that he wished to withdraw from the project and the first appellant in turn agreed to repay him the amount of R400,000.00. The common intention of the parties is clear, namely the discharge of the agreement concluded between them. There was no need for the respondent to describe what occurred as an agreement to cancel. The manner in which the respondent described what occurred between the first appellant and himself, in fact speaks volumes for his credibility, and his understanding as a layman of what had been agreed. If the respondent wished to fabricate what had occurred, it would have been simple for him to say that he had agreed with the first appellant to cancel the agreement.

When the probabilities set out above, are considered together with the glaring contradictions in the evidence of the first appellant with what was pleaded on behalf of the appellants, together with the detailed evidence of the respondent as to what was discussed and agreed with the first appellant, I am satisfied that the respondent discharged the onus of proving the oral agreement of cancellation, and that the appellants’ version of that agreement falls to be rejected as false.

[21] In argument before us, Mr. Combrink, who appeared for the respondent, submitted that it could be inferred as an implied term of the original agreement concluded between the parties, that if Project 627 did not go ahead, the appellants would be obliged to repay the first respondent his contribution of R400,000.00.

[22] However, as decided in

Paddock Motors (Pty) Ltd. v Igesund

1976 (3) SA 16 (A) at 23 D – E

The raising of a new point of law on appeal, is not precluded, provided certain requirements are met, one of which is that the point must be covered by the pleadings. No such allegation is made in the respondent’s particulars of claim and consequently this point cannot be considered on appeal. In any event, in the light of the conclusion I have arrived at, it would be superfluous to do so.

[23] It is in this context that the learned Judge erred in finding as follows:

“By terminating Project 627 the defendants unilaterally terminated the agreement with the plaintiff and the plaintiff is entitled to a refund of the money paid to the defendants”.

[24] A “unilateral termination” of the agreement by the appellants was never pleaded by the respondent as part of his cause of action. In addition, and in any event, in the absence of a clause in the agreement entitling either of the parties to cancel the agreement, in the event that Project 627 did not proceed, the conduct of the appellants in terminating Project 627, could only be construed as a repudiation of their obligations in terms of the agreement. The respondent would then have an election either to ignore the repudiation and demand performance by the appellants of their obligation to proceed with the development, or accept the repudiation and cancel the agreement claiming restitution, either with or without, a claim for damages.

[25] Be this as it may, and for the reasons set out above, I am satisfied that the respondent discharged the onus of proving an agreement to cancel the contract, as well as the undertaking by the appellants to repay the sum of R400,000.00. In this regard it should be noted that even in the absence of an agreement by the appellant to repay the sum of R400,000.00, it is a principle of the law of contract, that an agreement to discharge a contract is presumed to include a tacit agreement, to restore what has been delivered in part performance

Geldenhuys v Maree

1962 (2) SA 511 (O) at 513 E

[26] When this matter came before us on 23 July 2010, it could not proceed and had to be adjourned because the record in many places was illegible. It is the appellant’s duty to ensure that the record is complete and accurate and for this reason the appellants were ordered to pay the wasted costs of the adjournment. For the sake of clarity, that order will be included in the order made in respect of the costs of the appeal.

The order I make is the following:

1. The appeal is dismissed.

2. The appellants are ordered to pay the respondent’s costs of the appeal, such costs to include the wasted costs of the adjourned hearing on 23 July 2010.

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K Swain J

I agree

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Ntshangase J

I agree and it is so ordered

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Msimang J P

Appearances /

Appearances:

For the Appellant : Mr. H. H. Joubert

Instructed by : Wynand Viljoen

C/o Botha & Olivier Inc.

Pietermaritzburg

For the Respondents : Mr. P. C. Combrinck

Instructed by : De Wet Letich Hands Inc.

C/o Stowell & Company

Pietermaritzburg

Date of Hearing : 03 August 2010

Date of Filing of Judgment : 13 September 2010

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