Chetty v Govender and Another, Govender and Another v Chetty and Another (9190/06, 9380/04) [2008] ZAKZHC 101 (20 June 2008)

IN

THE HIGH COURT OF SOUTH AFRICA

NATAL

PROVINCIAL DIVISION

Case No: 9190/06

In the matter between:

SOMAGANDHI

CHETTY

Applicant

and

LYNN

GOVENDER

First Respondent

CHARLES

POOBALAN GOVENDER Second

Respondent

AND

In the matter between:

Case

No. 9380/04

LYNN

GOVENDER

First

Plaintiff

CHARLES

POOBALAN GOVENDER

Second Plaintiff

SOMAGANDHI

CHETTY

First Defendant

REGISTRAR

OF DEEDS FOR THE

PROVINCE OF KWAZULU-NATAL

Second Defendant

JUDGMENT

MSIMANG, J:

When the matter was called on 30 April 2008, two opposed applications were placed before Court. In the one

application (Case No. 9190/06) an order was sought interdicting and restraining the first and second respondents from taking any steps to enforce the provisions of a Settlement Agreement which had been concluded between the respondents and the applicant in Case No. 9380/04 on 16 August 2006. That order was being sought pending the finalisation of an action which would be instituted by the applicant for the setting aside of the said Agreement and/or damages, such an action to be instituted within a period of thirty (30) days of the date of the granting of the order. For the sake of convenience, henceforth in this judgment this application will be referred to as “the interdict application”. The second application (the Rule 41(4) application) was launched by the plaintiffs in Case No. 9380/04 (the respondents in the interdict application) in terms of Rule 41(4) of the Uniform Rules and, in this application, the applicant in the interdict application is cited as the first defendant and the Registrar of Deeds for the Province of KwaZulu-Natal as the second defendant. The relief sought in this application is payment by the first defendant of, inter alia, a certain sum of money plus interest which payment is alleged to be resulting from, and therefore the enforcement of, the provisions of the said Settlement Agreement. As the issues involved in both applications appear to be similar, the parties agreed (and I ruled) that both applications be heard on the same day.

To avoid any misunderstanding, throughout this judgment the applicant in the interdict application will be referred to as the first defendant and the respondents in that application as the plaintiffs.

At all times material hereto the plaintiffs were man and wife. They were the joint owners of a certain landed property situate in the Township of Tongaat on the North Coast of Kwazulu-Natal (the immovable property). On or about 11 September 2002 a written Agreement of Sale was concluded in terms of which the immovable property was sold by the plaintiffs to the first defendant. It was pursuant to this transaction that, on 11 December 2002, the immovable property was transferred into the name of the first defendant.

25 August 2003 saw the commencement of two proceedings involving the immovable property which would be launched by the plaintiffs, one of which led to the applications which are now before Court. The first one was an action instituted under Case No. 4420/03 claiming rectification of the Agreement of Sale and demanding the balance of the purchase price from the first defendant.

The latter defended the action and, while this action was in progress and on 19 November 2004, the plaintiffs launched an application under Case No. 9380/04 citing the first defendant as the first respondent, one Balakrishna Naidoo t/a M Naidoo & Associates (Balakrishna) as the second respondent, one Sathish Mahabir (Mahabir), as the third respondent and the Registrar of Deeds for this Province as the fourth respondent.

The essential relief which the plaintiffs sought in a form of a rule nisi in this application was an order setting aside the transfer of the immovable property into the name of the first defendant.

Certain interim relief was also being sought pending the return date of the rule nisi. The allegations made in the founding papers in support of the claim were that the first plaintiff had not signed the Deed of Sale but that, what purported to be her signature appearing thereon, was a forgery, that none of the plaintiffs had signed the Power of Attorney to transfer the property and that, what purported to be their signatures appearing on the document, were forgeries. The matter came before Court on 1 December 2004 and a rule nisi coupled with an interim relief was granted. In the meantime, the plaintiffs withdrew the action instituted under Case No. 4420/03, contending that their attorney in that matter had no authority to institute that action. They, however, persisted with the new application which was resisted by, among others, the first defendant who, in his answering affidavit, disputed the allegations of forgery set out in the plaintiffs’ founding papers. The matter came up on the opposed motion roll on 14 March 2005 and the Court, on that occasion, dismissed the application and ordered, inter alia, that the plaintiffs’ founding papers would stand as a simple summons, that the plaintiffs deliver a declaration within fourteen days and that further pleadings and conduct of the matter would be in terms of the rules while the rule which the Court granted on 1 December

2004 would operate as an interim relief pending the finalisation of that action. It would appear that pleadings were duly exchanged in terms of that Order and the matter was eventually set down for trial on 16 August 2006. On that date the plaintiffs and the first defendant were represented by their respective legal representatives, each team comprising an attorney and Counsel. Certain discussions occurred between the respective legal representatives leading to the conclusion of a written Settlement Agreement. It is the implementation of this Agreement that the first defendant seeks to interdict in the interdict application and which the plaintiffs seek to enforce by means of the Rule 41(4) application.

Because of the obvious importance and relevance of this Agreement to the issues to be determined in both applications it is essential that the terms thereof be quoted in full in this judgment. Those terms are as follows :-

“SETTLEMENT

AGREEMENT

1. The plaintiffs and the first defendant (“the defendant”) settle this matter on the basis set out below.

2. This agreement settles all disputes between the parties and the parties will have no further claims against each others.

3. The parties will have the property which is the subject of this dispute valued by a valuer who will be appointed as follows:

(a) the parties will attempt to agree on the person;

(b) in the event of the parties failing to agree on the person within 10 days hereof, any of the parties may approach the secretary of the S A Institute of Valuers, Kwa-Zulu Natal branch to make an appointment, and that person’s appointment shall be binding on the parties.

4. The parties agree that the valuation by the person appointed in terms of para. 3 above, shall be binding on them.

5. The defendant shall pay to the plaintiffs 50% of the value determined by the valuer less the valuer’s valuation fee within 2 months of the date of the valuation, such payment to be made into the trust account of the plaintiffs’ attorney, Garlicke and Bousfield.

6. Should the defendant fail to pay the amount due in terms of para. 5 above timeously, interest will accrue on the amount due from the expiry of the two month period.

7. Subject to any existing costs orders, the parties will pay their own costs.

8. The defendant shall not be entitled to conclude a deed of alienation in respect of the property prior to the defendant paying the plaintiffs in terms hereof, without the prior written consent of both plaintiffs.

9. Until the defendant has paid the plaintiffs in terms hereof, the defendant shall not be entitled to regist6er a mortgage bond over the property unless prior to registration thereof, the conveyancer attending to the registration has provided a written undertaking on terms acceptable to the plaintiffs, to pay to the plaintiffs the amount due to them in terms hereof.

10. This is the whole agreement between the parties and no variation or concensus cancellation thereof shall be of any force and effect

unless reduced to writing and signed by the parties.

Signed at Pietermaritzburg on 16 August 2006.”

In support of the claim for an order restraining the plaintiffs from taking any steps to enforce the provisions of the Settlement

Agreement and in resisting plaintiffs’ application in terms of Rule 41(4) the first defendant contends, firstly, that she was induced by the plaintiffs’ fraudulent misrepresentations or fraudulent non-disclosure to enter into the said Agreement.

Those misrepresentations or that fraudulent non-disclosure, she argues, consisted in the plaintiffs’ declarations of ignorance of the identity of the author of the forgeries referred to in this judgment, whereas, in truth, the argument continues, they knew that the second plaintiff had perpetrated the said forgeries, the fact of which the first defendant became aware after the Settlement Agreement had been concluded.

In resisting the interdict application and in support of their application in terms of Rule 41(4), the plaintiffs submit that their

knowledge of or complicity in the forgeries referred to in the first defendant’s argument is irrelevant with regard to the enforcement

of the Settlement Agreement. In the plaintiffs’ application, which had subsequently been converted into an action, the relief which had been sought by the plaintiffs had been based on the allegations that first plaintiff’s signature and initials on the Agreement and that what purported to be plaintiffs’ signatures appearing in the Power of Attorney to transfer were forgeries, the allegations which had been disputed by the first defendant. Forgery, including the forgery of first plaintiff’s signature, was therefore an issue in that action. When the first defendant concluded an agreement settling the matter, especially when that agreement contained a clause confirming the parties’ settlement of all disputes between them and declaring that they would have no further claims against each other, that defendant had compromised her right to re-open the dispute between the parties based on the allegations of forgery, plaintiffs’ submission concludes.

The term transactio is a Roman Law concept referring to an agreement whereby parties settle a lawsuit or regulate between themselves some legal relationship of a doubtful nature. [1] The agreement, which is commonly referred to as a compromise, was once defined as follows by a Zimbabwean Chief Justice :-

“Compromise, or transactio, is the settlement by agreement of disputed obligations, or of a lawsuit the issue of which is uncertain. The parties agree to regulate their intention in a particular way, each receding from his previous position and conceding something – either diminishing his claim or increasing his liability ….. The purpose of compromise is to end doubt and to avoid the inconvenience and risk inherent in resorting to the methods of resolving disputes. Its effect is the same as res judicata on a judgment given by consent. It extinguishes ipso jure any cause of action that previously may have existed between the parties, unless the right to rely thereon was reserved. ….. As it brings legal proceedings already instituted to an end, a party sued on a compromise is not entitled to raise defences to the original cause of action.” [2]

The plaintiffs had originally sought the setting aside of the transfer of the immovable property into the first defendant’s name based on the allegations, inter alia, that first plaintiff’s signature appearing on the Deed of Sale was a forgery. This allegation was disputed by the first defendant. In the agreement of settlement, not only did the parties settle this dispute, proclaiming that no further claims between them would be entertained, but they went further and signified their respective intentions to be regulated in a particular way, to wit, by agreeing, inter alia, that the property would be valued, that the first defendant would pay to the plaintiff 50% of the determined value of the property and that, thereafter, the first defendant would become full owner of the immovable property. In her opposition to the plaintiffs’ application, the first defendant had averred that she had paid the purchase price of the immovable property to the plaintiffs in full. By agreeing in the Settlement Agreement that she would pay 50% of the determined value, she was receding from her previous position and increasing her liability. The same applies to the plaintiffs who had

previously claimed the setting aside of the transfer of the immovable property. In the Deed of Settlement they no longer

claimed that relief, thus diminishing their claim. Clearly therefore the transaction which the parties subsequently

concluded bore all the hallmarks of a transactio or compromise as defined in Georgias (supra) and I did not understand Mr. Moodley, who appeared for the first defendant, to dispute this proposition.

Relying on a number of decisions [3] he, however, submitted that a party to a compromise is entitled to resile from the same on account of the other party’s fraudulent misrepresentations or, alternatively, on account of that party’s fraudulent non-disclosure. He referred the Court to paragraphs 30, 31 and 31.1 of first defendant’s founding affidavit in the interdict application where the first defendant deposed to the events that had unfolded at Court on 16 August 2006 and prior to the conclusion of the Settlement Agreement. Certain discussions had ensued between the parties’ respective legal representatives, without the parties themselves being present.

As a result of these discussions first defendant’s legal representatives had recommended to her that, in view of the fact that the plaintiffs professed to have no knowledge of how the forgeries had been committed, it would be in her best interests to

settle the dispute between herself and the plaintiffs and to look to either Balakrishna or Mahabir or to both of them for her damages

claim. Though she was reluctant to do so, she, succumbed to her legal representatives’ persuasions and concluded the Settlement Agreement which conclusion, she avers, was induced by the representations made in the plaintiffs’ affidavit and by the representations made by their legal representatives at Court, namely, that the plaintiffs bore no knowledge of the authorship of the forgery.

In her founding affidavit she also refers to a telephonic discussion which was subsequently held between her husband and Balakrishna

during which discussion the latter had allegedly informed her husband that the second plaintiff had forged the first plaintiff’s initials and signature and that, all along, the first plaintiff had been aware of this fact. In a statement which Balakrishna

subsequently made to the police, he confirms that he had witnessed the second plaintiff signing the transfer document on behalf of the first plaintiff. A copy of this statement was annexed to first defendant’s founding affidavit. In an affidavit accompanying plaintiffs’ answering affidavit Balakrishna admits having made a statement to the first defendant and to the Police implicating the plaintiffs in the forgery but adds that the said statement was false and that it had been made under duress.

It was accordingly submitted on behalf of the first defendant that, at the time of the conclusion of the Settlement Agreement, she had not been privy to the information which was later disclosed in the statements made by Balakrishna regarding first plaintiff’s

knowledge of and second plaintiff’s authorship of the forgeries, that she had been induced by the plaintiffs’ fraudulent non-disclosure of this information to enter into the Settlement Agreement, that, now that she has discovered and disclosed plaintiffs’ fraudulent non-disclosure of the true facts, the provisions of the Settlement Agreement cannot be enforced and that the enforcement thereof should await the outcome of an action to be instituted for an order setting aside the said Agreement.

The allegations which a party must prove in order to avoid a contract on the ground of misrepresentation were set out in Novick and another v Comair Holdings Ltd and others. [4] Three of the allegations are that the representation complained of must be false, that not only must it have been intended to induce the person to whom it was made to conclude the contract sought to be avoided but that it must in fact have induced the contract. Assuming (without deciding) that in casu the first defendant has proven that the representation complained of is false [5] and that it did in actual fact induce the first defendant’s conclusion of the Settlement Agreement, in my judgment, it has not been shown that when the plaintiffs made the representation they had intended to induce the first defendant to conclude the Settlement Agreement. Perhaps this requirement is more succinctly couched in Standard Bank of South Africa Ltd v Coetsee [6] where Viljoen JA held that a representation must be proved :-

“(c) which the representor intended the representee to act upon.”

Plaintiffs’ affidavits containing the declarations of their ignorance of the authorship of the forgeries were deposed to long before the date of the conclusion of the Deed of Settlement. At the time none of the parties could have contemplated an idea of the conclusion of a settlement agreement. It therefore cannot be said that those declarations were made in contemplation of and therefore with the intention of inducing the first defendant to conclude the said agreement.

Regarding the representations allegedly made by plaintiffs’ legal representatives at Court on 16 August 2006, the circumstances

surrounding the making of those representations were not explicitly spelt out in the first defendant’s founding affidavit.

All she states is that discussions between the respective legal representatives had taken place and that the representations made

through plaintiffs’ legal representatives at Court, at all material times, were to the effect that they had no knowledge of how the forgeries had been committed. In my view those legal representatives could hardly have been expected to represent

otherwise as it was their clients’ case, as contained in the affidavits, that they bore no knowledge of the forgeries and, as

already indicated, those allegations had not been made in contemplation of the conclusion of any Settlement Agreement or with the intention of inducing first defendant’s conclusion of the Settlement Agreement herein. Besides, it would appear

that this defence which the first defendant purports to invoke in order to resist the enforcement of the Settlement Agreement relates

to the motive which induced her to agree to a settlement. As it was stated in Hamilton (supra) :-

“ …. the defendant is not entitled to raise defences relating to the motives which induced him to agree to the compromise…..”

[7]

First defendant’s argument based on fraudulent non-disclosure of the true facts must accordingly fail.

The second ground upon which the first defendant relies in support of his interdict application and in resisting plaintiffs’ Rule 41(4) application constitutes an attack on the integrity of the valuation made by Mr. T B Richardson of the firm Dube & Richardson at the instance of the plaintiffs. Clause 3 of the Settlement Agreement makes provision for the valuation of the immovable property by a valuer appointed by the parties, failing their agreement on the person to be so appointed within ten days from the date of the agreement, the clause makes provision for the valuation of the property to be made by a valuer appointed by the Secretary of the South African Institute of Valuers, KwaZulu-Natal branch, which appointment would be made upon the approach to the said Secretary by any of the parties. The valuation made by a person appointed in terms of the provisions of clause 3 shall, in terms of clause 4, be binding upon the parties and the first defendant shall pay to the plaintiffs, inter alia, 50% of the value so determined within a period of two months of the date of valuation.

It is common cause that no agreement was reached by the parties regarding the person to be appointed valuer in terms of clause 3,

causing the plaintiffs’ approach to the Secretary of the South African Institute of Valuers who recommended the appointment of Mr. Richardson to act as a valuer in terms of the Settlement Agreement. Mr. Richardson was duly commissioned by the plaintiffs to do the valuation and, on 1 October 2006, he produced a valuation report valuing the property at R2500 000.00. By letter dated 6 October 2006 the report was referred to first defendant’s attorneys and the first defendant was called upon to make payment in terms of the Settlement Agreement. It was when the first defendant refused to do so, inter alia, disputing the integrity of Mr. Richardson’s valuation, that the plaintiffs launched the Rule 41(4) application.

In challenging the integrity of the valuation, the first defendant sets out a number of grounds all of which are designed to show that, in making the determination, the appointed valuer had not exercised an honest judgment, the arbitrium boni viri. Relying on the decision in Perdikis v Jamieson [8] Mr. Moodley, on behalf of the first defendant, submitted that where a valuer makes a determination based on an inappropriate influence and on incorrect assumptions, such valuation is liable to be set aside however bona fide such a valuer might have been. [9] The grounds set out by the first defendant must accordingly be considered in turn so as to establish whether the allegations made therein are sufficient to sustain a finding that, in making the determination, the appointed valuer herein made incorrect assumptions and/or whether he was inappropriately influenced and therefore that he did not act arbitrium boni viri.

The first ground is set out in paragraph 63(a) of first defendant’s founding papers in the interdict application and is based on the allegations of undue influence which, according to the first defendant, was brought to bear upon the valuer in the letter dated 4 September 2006 addressed by plaintiffs’ attorneys to the South African Institute of Valuers wherein the said attorneys had supplied certain information regarding the intended development of the property as well as recent sales of similar properties in the area. In an affidavit deposed to by the appointed valuer in support of plaintiffs’ opposition to first defendant’s interdict application, he deals with this issue and concedes having been given, not only the information referred to herein, but more information by the first defendant’s attorneys. He, however, states that, in making the determination, he had ignored all this information and that the same had not affected his judgment. In first defendant’s replying affidavit the valuer’s response is met with the reiteration of the allegations contained in paragraph 63 coupled with a bare denial. Prima facie therefore there is a dispute of fact on the issue of whether the valuer was influenced by the information supplied by plaintiffs’

attorneys.

However, on close scrutiny of the allegations made in first defendant’s replying affidavit on the issue it becomes clear that she has failed to “issuably” deal with the factual averments made in plaintiffs’ answering affidavit. [10] As already indicated, all the first defendant did in response to specific issues raised in plaintiffs’ answering affidavit, was to reiterate the allegations in paragraph 63 of his founding affidavit and to proffer a bare denial in respect of the rest of the allegations contained in plaintiffs’ answering affidavit. Clearly this approach did not adequately, seriously and unambiguously address the fact alleged to be disputed and, as Heher JA would say, the effect thereof was :-

“…. to water the force of the general denial down to a state of insipidity into which reality, bona fides and genuineness of the denial all disappear.” [11]

In the circumstances I have concluded that no genuine dispute of fact on the issue has been demonstrated and that the valuer’s allegations that, in making a determination, he had not considered and was not influenced by the information supplied by the plaintiffs’

attorneys, must be accepted.

The same approach was adopted by the first defendant in response to the valuer’s allegations regarding the latter’s alleged assumption that a formal environmental assessment would not be required and that the property was not environmentally impaired. In his affidavit the valuer made it clear that, at all material times, he had been aware, not only of the environmental impairment on the property, but also that an impact assessment would have to be carried out and that, in making the determination, he had factored in these issues. This specific averment was only met with a bare denial in first defendant’s replying affidavit, thus eliminating all reasonable prospects of the existence of a bona fide dispute on the issue.

In regard to the rest of the allegations of incorrect assumptions contained in first defendant’s answering affidavits, they can be dismissed as either having been adequately dealt with in the valuer’s report as confirmed in his subsequent affidavit or, as plaintiffs’ counsel Mr. Rall correctly submitted, as being based on the first defendant’s non-expert inadmissible opinion.

To sum up therefore, first defendant’s interdict application (under Case No. 9190/06) is dismissed with costs and I grant an order in terms of paragraphs 1, 2 and 3 of the Notice of Motion in plaintiffs’ application in terms of Rule 41(4), save that the amount of R1 254 275.00 appearing in paragraph 1 is substituted with the amount of R1 241 450.00.

For the Plaintiffs: Adv. A J Rall SC (instructed by Garlicke & Bousfield Inc.)

For First Defendant: Adv. Y N Moodley SC (instructed by Ravindra Maninklal Attorneys)

C

A V

Matter argued:

29 April 2008

Judgment delivered: 20 June 2008

[1] Wessels’ Law of Contract in South Africa 2nd ed. Vol II p.675 section 2456;

[2] Georgias v Standard Chartered Finance Zimbabwe Ltd 2000(1) SA SA 126 (SC) at 138 I – 139 B; see also Hamilton v van Zyl 1983(4) SA 379 especially at 383 G – 384 B;

[3] Such as Gollach & Gomperts (1967) (Pty) Ltd v Universal Mills and Produce Co (Pty) Ltd and others 1978(1) SA 914 (A); Wessels v Badenhorst 1939 TPD 464;

[4] 1979(2) SA 116 (W) at 149 D – 150 D;

[5] There is considerable doubt in my mind that this allegation has been proved. The first defendant relies on the statements allegedly made to her husband and to the police by Balakrishna. In a later affidavit the latter has, however, deposed that those statements were made under duress and therefore that they are false.

[6] 1981(1) SA 1131 (A) at 1145 D;

[7] At 384 A; See also Gourlay v Canoa KZN (Pty) Ltd t/a Canon Office Automation [2008] 2 All SA 194 (H) at 197 a-c;

[8] 2002(6) SA 368 (W);

[9] Rössing Stone Crushers (Pty) Ltd v Commercial Bank of Namibia and another 1994(2) SA 622 (Nm HC) at 630;

[10] See the judgment of Heher JA in the hitherto unreported judgment of the Supreme Court of Appeal in Wightman t/a J W Construction v Headfour (Pty) Ltd and another delivered on 10 March 2008 at page 8 para 19;

[11] Ibid. at page 10 para 22;