Africa v Standard Bank of South Africa Limited (40658/2005) [2007] ZAGPHC 42 (29 May 2007)

THE HIGH

COURT OF SOUTH AFRICA

(TRANSVAAL PROVINCIAL DIVISION)

Date: 13 April, 29 May 07 Case No.: 40658/2005

UNREPORTABLE

In the matter between:

MERCIA DELAINE ANGELA AFRICA Applicant

and

STANDARD BANK OF SOUTH AFRICA LIMITED Respondent

_____________

APPLICATION FOR

LEAVE TO APPEAL

Van Rooyen AJ

[1] On the 19th October 2007 I dismissed an application for the rescission of a default judgment against the applicant (Ms Africa). My ex tempore reasons for the dismissal are in the file and I need not repeat them. An application for leave to appeal against this judgment was filed on the 3rd November 2006. The application was not brought to my attention. At the end of the last term of 2007 my acting term came to an end. When I returned to Court on the 23rd of March 2007, the application was brought to my attention and the application was then heard on the 13th April 2007. I reserved judgment to consider the application. The question before me is, of course, whether there are reasonable prospects that another Court may come to a different conclusion.

[2] It was not in dispute that the residential address of Ms Africa was the address as identified by a representative of Standard Bank. This was so in spite of the fact that this address was not mentioned in the mortgage bond documents. Only the erf number, Township and Province are identified in the said documents. Ms Africa denies that the summons was affixed to the house, as stated by the Sheriff. She states that the notice would either have been affixed to the front gate or the front door. She would have noticed this if it had been there. She accordingly doubts whether the Sheriff’s Return of Service could be true. The Standard Bank did not file an answering affidavit and Mr.Bothma, for Standard Bank, argued that the statement by a sheriff is prima facie proof of its contents and that a court would require clear and satisfactory proof that a return of service is incorrect.

[3] Although the matter has not finally been decided by the SCA,1 I agree with the judgments which hold that evidence as to whether an error had been made by a Court in terms of Rule 42(1)(a) need not necessarily appear from the Court record.2 The evidence as to the affixing of the summons is, of course, conflicting: the sheriff states that he affixed the document to the address as stated by a representative of Standard Bank to be the address. This address accords with the address stated to be her residential address by Ms Africa. However, she states in her affidavit that she was unaware of the summons. I would have expected the bank to have replied to this by obtaining the Sheriff’s affidavit as to what “diligent search and enquiries” he undertook at the premises. At the hearing of the matter the validity of the service was not argued fully before me. However, Ms van Nieuwenhuyzen, in the application for leave to appeal, argued this matter in depth. I am inclined to believe that another Court may come to a negative finding on the service. If that is the case, no further inquiry into a bona fide cause on the merits is necessary.

[4] Ms van Nieuwenhuyzen also argued that the close relationship between the mortgage bond and the contract of sale should have been taken into consideration by me. Once again I am inclined to believe that another Court may approach the matter differently. The question whether a voetstoots clause could ever be valid in these circumstances would then become particularly relevant. The fundamental right to housing, might then even be relevant. That the validity of a contractual term should no longer be tested against the contra bonos mores standard, but against Constitutional Standards, appears from the authorities cited hereunder.

[5] I agree with Cameron JA that the term “boni mores” should rather be replaced with “public policy” as rooted in our Constitution. The following statement by Cameron JA in his additional judgment in Brisley v Drotsky 2002(4) SA 1(SCA) at para [91] – [95] is informative as to this approach:

[91] The jurisprudence of this Court has already established that, in addition to the fraud exception, there may be circumstances in which an agreement, unobjectionable in itself, will not be enforced because the object it seeks to achieve is contrary to public policy.3 Public policy in any event nullifies agreements offensive in themselves – a doctrine of very considerable antiquity.4 In its modern guise, ‘public policy’ is now rooted in our Constitution and the fundamental values it enshrines. These include human dignity, the achievement of equality and the advancement of human rights and freedoms, non-racialism and non-sexism.5

[92] It is not difficult to envisage situations in which contracts that offend these fundamentals of our new social compact will be struck down as offensive to public policy. They will be struck down because the Constitution requires it, and the values it enshrines will guide the courts in doing so. The decisions of this Court that proclaim that the limits of contractual sanctity lie at the borders of public policy will therefore receive enhanced force and clarity in the light of the Constitution and the values embodied in the Bill of Rights.

[93] I share the misgivings the joint judgment expresses about over-hasty or unreflective importation into the field of contract law of the concept of ‘boni mores’. The ‘legal convictions of the community’ – a concept open to misinterpretation and misapplication – is better replaced, as the Constitutional Court itself has suggested, by the ‘appropriate norms of the objective value system embodied in the Constitution’.6 What is evident is that neither the Constitution nor the value system it embodies give the courts a general jurisdiction to invalidate contracts on the basis of judicially perceived notions of unjustness or to determine their enforceability on the basis of imprecise notions of good faith.7

[94] On the contrary, the Constitution’s values of dignity and equality and freedom require that the courts approach their task of striking down contracts or declining to enforce them with perceptive restraint.8 One of the reasons, as Davis J has pointed out,9 is that contractual autonomy is part of freedom. Shorn of its obscene excesses,10 contractual autonomy informs also the constitutional value of dignity…

[95] The Constitution requires that its values be employed to achieve a careful balance between the unacceptable excesses of contractual ‘freedom’, and securing a framework within which the ability to contract enhances rather than diminishes our self-respect and dignity. The issues in the present appeal do not imperil that balance.”

[6] A summary of the approach to a challenge to the enforceability of an agreement on the ground that it is contrary to public policy is also to be found in Price Waterhouse Coopers Inc and Others v National Potato Co-operative Ltd 2004(6) SA 66 (SCA) at para [23] and [24] per Southwood AJA:

“[23] At common law agreements that are contrary to public policy are void and not enforceable. While public policy generally favours the utmost freedom of contract it does take into account the necessity for doing ‘simple justice between man and man’. Therefore, when a court finds that an agreement is contrary to public policy it should not hesitate to say so and refuse to enforce it. However, the court should exercise this power only in cases where the impropriety of the transaction and the element of public harm are manifest. It is an important consideration that there be certainty about the validity of agreements and that this certainty could be undermined by an arbitrary and indiscriminate use of the power to declare agreements contrary to public policy (see Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1 (A) at 71J and 9A-C; Botha (now Griessel) and Another v Finanscredit (Pt y) Ltd 1989 (3) SA 773 (A) at 782J-783B; Brisley v Drotsky 2002 (4) SA 1 (SCA) para [94]; Afrox Healthcare Bpk v Strydom 2002 (6) SA 21 (SCA) para [8]).

[24] What public policy is and when an agreement is contrary to public policy are often difficult and contentious questions. Since the advent of the Constitution public policy is rooted in the Constitution and the fundamental values it enshrines (Brisley v Drotsky (supra para [91]; Afrox Healthcare Bpk v Strydom (supra para [18]). The fundamental values enshrined in the Constitution and the interests of the community or the public are accordingly of the utmost importance in relation to the concept of public policy. Therefore an agreement will be regarded as contrary to public policy when it is clearly inimical to these constitutional values, or the interests of the community, whether it be contrary to law or morality or runs counter to social or economic expedience (Sasfin (Pty) Ltd v Beukes (supra) at 8C-D; Botha (now Griessel) and Another v Finanscredit (Pty) Ltd (supra) at 782I-J). It is important to bear in mind that views about what public policy entails are constantly evolving (Magna Alloys and Research (SA) (Pty) Ltd v Ellis [1984] ZASCA 116; 1984 (4) SA 874 (A) at 891H) and the court must be careful not to conclude that an agreement is contrary to public policy just because some of its terms offend against its sense of propriety and fairness (Sasfin (Pty) Ltd v Beukes (supra) at 9B-C). It is also important to bear in mind that to decide whether an agreement is against public policy a court must look at the tendency of the proposed transaction, not its actually proved result (Sasfin (Pty) Ltd v Beukes (supra) at 8G-9B; Eastwood v Shepstone 1902 TS 294 at 302).”

[7] In Juglal and Another v Shoprite Checkers (Pty) Ltd t/a OK Franchise Division 2004(5) SA 248 (SCA) at para [12] the following is stated in this regard by Heher JA:

“[12] Because the courts will conclude that contractual provisions are contrary to public policy only when that is their clear effect (see the authorities cited in Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1 (A) at 8C-9G) it follows that the tendency of a proposed transaction towards such a conflict (Eastwood v Shepstone 1902 TS 294 at 302) can only be found to exist if there is a probability that unconscionable, immoral or illegal conduct will result from the implementation of the provisions according to their tenor. (It may be that the cumulative effect of implementation of provisions not individually objectionable may disclose such a tendency.) If, however, a contractual provision is capable of implementation in a manner that is against public policy but the tenor of the provision is neutral then the offending tendency is absent. In such event the creditor who implements the contract in a manner which is unconscionable, illegal or immoral will find that a court refuses to give effect to his conduct but the contract itself will stand. Much of the appellant’s reliance before us on considerations of public policy suffered from a failure to make the distinction between the contract and its implementation and the unjustified assumption that, because its terms were open to oppressive abuse by the creditor, they must, as a necessary consequence, be against public policy.

[13] An attempt to identify the tendency of contractual provisions may require consideration of the purpose of the contract, discernible from its terms and from the objective circumstances of its conclusion. The present is such a case” (emphasis in italics added).

[8] In the result I make the following order:

The application for leave to appeal to the Full Bench of this Division is granted. Costs to be costs in the appeal.

____

JCW Van Rooyen

Acting Judge of the High Court

For the Applicant : adv Nicoleen van Nieuwenhuyzen (with her adv Lezanne Coetzee) instructed by Lawyers for Human Rights, Pretoria Law Clinic.

For the Respondent : adv C Bothma ( heads prepared by JE Smit) instructed by Hammond Pole Majola Inc, Johannesburg c/o Henry Oltman Attorneys, Pretoria

1 Colyn v Tiger Foods Industries Ltd t/a Meadow Feed Mills (CAPE) 2003(6) SA 1 (SCA) where it was held that the facts before the Court did not amount to an error in terms of Rule 42(1)(a).

2 Stander and Another v ABSA Bank 1997(4) SA 873(E); Mutebwa v Mutebwa & Another 2001(2) SA 193(TkH) at 204-5 per Jafta J; President of the Republic iof South Africa (Moinister of Home Affairs Intervening) 2005(1) SA 247© at 264-5 per HJ Erasmus J

3 Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1 (A); de Beer v Keyser and Others 2002 (1) SA 827 (SCA) para 22.

4 Robinson v Randfontein Estates GM Co Ltd 1925 AD 172, per Innes CJ, who analyses the Roman and Roman-Dutch authorities at 204-205.

5 Constitution, sections 1(a) and (b).

6 Carmichele para 56.

7 As to which, see A Cockrell 1997 Acta Juridica 26 at 41ff.

8 See generally RH Christie ‘The Law of Contract and the Bill of Rights’ Section 3H in Bill of Rights Compendium (1996), especially at paras 3H5, 3H6, 3H8 and 3H13(f).

9 Mort NO v Henry Shields-Chiat 2001 (1) SA 464 (C) 475B-F.

10 Compare Lochner v New York [1905] USSC 100; 198 US 45 (1905), 49 L Ed 937; discussed by Laurence H Tribe American Constitutional Law (2 ed, 1988) chapter 8 pages 560-586, and by Owen M Fiss History of the Supreme Court of the United States vol VIII, chapter VI pages 155-184.