JUDGMENT. 1. In this application the applicants seek a declaratory order that is

Transcription

1 1 Reportable: YES / NO Circulate to Judges: YES / NO Circulate to Magistrates: YES / NO Circulate to Regional Magistrates: YES / NO IN THE HIGH COURT OF SOUTH AFRICA (NORTHERN CAPE HIGH COURT, KIMBERLEY) In the matter between: JAMES ANDREW JORDAN JUNE AGNES JORDAN Case No: 1352/09 Heardon: Delivered: st Applicant 2 nd Applicant and CHRISTO DIRK FARBER Respondent CORAM: MJALI AJ JUDGMENT MJALI AJ: 1. In this application the applicants seek a declaratory order that is couched in the following terms. I. That the lease agreements concluded between the first applicant and the respondent, attached to the papers as Annexures B and C are void alternatively are cancelled. II. That the respondent and any member of his family living with him be evicted from Portion 7 of Weltevrede farm no. 92 in the district of Herbert.

2 2 III.That in the event of the respondent s failure to comply with this order, the sheriff for the district of Herbert be authorised and ordered to remove the respondent or any other person who occupies the farm through the respondent together with their belongings, from the property. IV. V. That the respondent be ordered to pay the costs of this application. VI.Further and alternative relief. 2. The respondent opposes the relief sought. The following facts are common cause. The applicants are married in community of property and are the co owners of Portion 7 of Weltevrede farm no. 92 in the district of Herbert. They had been running the farm since the 1970s but since 2002 they could no longer manage it due to illness. Consequently they fell into arrears with their monthly instalments to the Land Development Bank prompting that institution to issue a letter of demand for the payment of the arrear instalments of R The applicants also received a letter of demand from GWK Limited for the payment of an amount of R They disputed any indebtedness to GWK Limited. 3. Following the receipt of the letters of demand the first applicant consulted the respondent, a practising attorney under the name and style Christo Faber Attorneys, at his offices in Jacobsdal. The respondent now has offices at Yates Singel NO. 5 Monumenthoogte,

3 3 Kimberley. Following the consultation the respondent undertook to defend both actions on behalf of the applicants. Indeed the respondent communicated with both institutions and arranged that all correspondence be directed to him. He informed the first applicant that he has entered into an agreement with the Land Bank and that the applicants should leave everything to him. 4. The first applicant also instructed the respondent to find a lessee for the farm. After a while the respondent indicated his interest to lease the farm. The parties agreed on a rental amount of R payable in every six months commencing on 1 October Contrary to the applicants intention of leasing the farm for a period of three years, the respondent 5. advised them that the Land Bank would only accept a long lease of nine years and eleven months. The respondent drew up the lease agreement in his capacity as the legal representative of the applicants as well as in his personal capacity. Relying on the advice of his attorney the first applicant signed the contract on 26 July 2006.In terms of the contract the rent was to be paid directly to the Land Bank. 6. After signing the lease agreement for the farm, the respondent advised the first applicant to sell all the livestock on the farm and use the proceeds to settle the arrears with the Land Bank. The first applicant refused and instead suggested that 150 lambs and 10 calves be sold to defray the arrears. He further suggested that the respondent hire the remaining livestock. The respondent agreed and drew up a lease agreement in respect of the livestock. This agreement according to the first applicant was signed exactly a week after the first lease and not on

4 4 the 26 July 2006 as reflected on the contract. He did not worry about the date appearing thereon as the respondent told him that it did not matter. 7. It is worth noting that the both lease agreements were signed only by the first applicant and the respondent. The second applicant who is married to the first applicant in community of property and a co owner of the farm did not sign the lease agreements. It is common cause that the respondent took occupation of the farm and the livestock in terms of the written agreements of lease (concluded between the respondent and the first applicant) which were drawn by him in his capacity as the attorney for the applicants on the one hand and on the other hand in his personal capacity. For the purposes of this judgment the relevant terms of the lease agreement pertaining to the farm are the following; EIENDOM Die plaas bekend as gedeelte 7 van die plaas Weltevrede no. 52 in die distrik van Herbert, ook bekend as die plaas Vrede tesame met die verbeterings insluitende Huis, buitegeboue, store, arbeidershuise, die huidige drie spulpunte met motors en pompe, pyplyne entrekkers, implimente, gereedskap en sprinkelpype soos op die eiendom met ondertekening van die kontrak. HUURTERMYN Die HUURTERMYN sal trek vir n tydperk van 9 jaar en 11 maande. Dit sal aanvangs neem met die ondertekening van die kontrak. HUURBEDRAG

5 5 Die HUURBEDRAG beloop n bedrag van R (EEN HONDERD DUISEND RAND) Die bedrag sal ses maandeliks betaalbaar wees met die eerste betaling voor of op 1 Oktober Alle betalings sal gemaak word direk aan Landbank, Vryburg. HERSTEL Die HUURDER sal verantwoordelik wees om alle eiendom in stand te hou en na verstryking van die termyn aan die VERHUURDER terug te lewer in die toestand wat hy dit ontvang het, normale slystasie uitgesluit. WAANPRESTASIE Indien die HUURDER versuim om sy HUURGELD stiptelik te betaal, of sou hy/ sy versuim om enigevan die ander bepaalings van hierdie HUURKONTRAK stiptelik n ate kom, sal die VERHUURDER geregtig wees om, indien die HUURDER na n termyn van 7 (SEWE) dae na afsending van n SKRIEFTELIKE KENNISGEWING, per Vooruitbetaalde Geregistreerde Pos, of Per Hand, steeds in versuim verkeer met betrekking tot die nakoming van die betrokke term(e) van die ooreenkoms, hierdie kontrak te kanseleer sonder benadeling van sy / haar regte om uitstande huurgelde en skadevergoeding voortspruitend uit sodanige kansellasie, van die huurder te vorder, bedrae reeds betaal sal deur die huurder verbeur word. 8. The lease agreement pertaining to the livestock differs from that of the farm only in respect of the following terms; HUURSAAK 350 Skaapooie, 30 Melktipe Beeste,110 Boerbokke. Met die duur van die huurkontrak sal die Huurder die reg he om met die huursaak te

6 6 handel na goeddinke. Die huurder sal ook die vee van sy brandmerk of tatoeermerk voosien. HUURBEDRAG Die Huurbedrag beloop n bedrag van R (EEN HONDERD DUISEND RAND), betaalbaar voor of op 1 Augustus 2006 aan Landbank Vryburg. 9. It transpired later when the Land Bank sued the applicants for the payment of an amount of R that the respondent did not pay Land Bank as required in terms of the contract and did not enter into any agreement with Land Bank pertaining to the payment terms of the outstanding balance. The initial balance was R but had escalated to R In support of this application Mr Reinders, for the applicants presented a three pronged argument namely; 1. first that the contract is void and of no effect as it is contra bonos mores. In support of this contention counsel for the applicants submitted that the respondent acted in conflict of interests when he drew up the contract both in his personal capacity as well as an attorney for the applicants. As such he acted in his own interests to 2. the detriment of the applicants (his clients). He had a duty to advise the applicants to seek independent legal advice. He argued further that although the applicants wanted to lease the farm for three years they were misled into believing that the Land Bank required them to enter into long lease agreement of 9 years and

7 7 11 months. The applicants relied on the advice of the respondent as their attorney and had no reason to disbelieve him. 3. secondly, the fact that the respondent now disputes that the amount of rent was R per annum is indicative of the fact the parties never reached a consensus on a material term of the contract. For this reason Mr Reinders submitted that the contract never came into being as there was never a meeting of the minds. 4. thirdly that the respondent failed to pay the agreed amount of rent and by so doing effectively cancelled the contract. In the alternative the applicants seek an order cancelling the contract on the ground that the respondent is destroying the property. For these reasons the applicants contend that the contract cannot be enforced. 11.The respondent opposed the application on the grounds that; 1. he had entered into a valid contract of lease with the applicants. 2. he was not obliged to advise the applicants to seek services of an independent attorney in relation to the lease of the farm and the livestock. For this contention in his heads of argument, Mr. Fourie who appeared for the respondent sought to rely on Leite v Leandy & Partners 1992 (2) SA 309 (D) at p 321 where Page J stated,

8 8 I should not be understood, however as holding that there is such an obligation in law. I will deal with this contention in due 3. course. 4. because there are material disputes of facts such as undue influence and misrepresentation that cannot be decided on paper, this matter must be referred for oral evidence. 12.On the issue of referral to oral evidence Mr Reinders submitted that whilst there are dispute of facts nothing will be clarified by referral to oral evidence. The only disputes relate to the amount of rent as well as the condition of the farm which the respondent has now tried to clean up and taken good photos thereof. The issue of the condition of the farm was no longer pursued. For the stated reasons Mr. Reinders submitted that the matter should be decided on papers. In my view, most of the significant and relevant facts for the purpose of this application are either common cause or have not been disputed. As will be apparent in my judgment wherever there is a real dispute of fact on a material point, I have decided the point on the respondent s version, regard being had to the principles laid down in Plascon Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634E 635C. 12. I turn now to consider whether the contract is contra bonos mores. It is trite that our courts will invalidate and refuse to enforce agreements which are contrary to public policy. As to what public policy entails, the Constitutional Court in Barkhuizen v Napier 2007 (5) SA 323 (CC) at

9 9 334 par 28 recognised that the Bill of Rights represents a reliable statement of public policy. Thus, what public policy is and whether a term in a contract is contrary to public policy needs to be determined by having regard to the Bill of Rights and the values that underlie our constitutional democracy (as expressed in the Constitution). 13. At paragraph 29 in Barkhuizen v Napier (supra) the majority held that; A term in a contract that is inimical to the values enshrined in our Constitution is contrary to public policy and is, therefore, unenforceable. At paragraph 30 the majority stated that: The proper approach to the constitutional challenge to contractual terms is to determine whether the term challenged is contrary to public policy as evidenced by constitutional values, in particular, those found in the Bill of Rights. This approach leaves space for the doctrine of pacta servanda sunt to operate, but at the same time allows courts to decline to enforce contractual terms that are in conflict with constitutional values even though the parties may have consented to them. 14.As against this, the applicants face the challenge that the first applicant signed the contract acknowledging that the terms of such contract were reasonable and essential for the mutual benefit of the parties. In fact it was submitted on behalf of the respondent that the contract is valid and that the respondent rescued a desperate situation as no one wanted to lease the

10 10 farm. This dichotomy enjoins the Court to enquire whether, despite the signing of the agreement, such agreement is consistent with the Constitution, is reasonable and is not contrary to public policy. One of the factors which the Court must consider is the bargaining power of the parties. 15.In Afrox Healthcare Bpk v Strydom 2002 (6) SA 21 (SCA) the Supreme Court of Appeal recognised that unequal bargaining power is indeed a factor that together with other factors plays a role in the consideration of public policy. This is a recognition of the potential injustice that may be caused by inequality of bargaining powers. Although the court found ultimately that on the facts there was no evidence of an inequality of bargaining power, this does not detract from the principle enunciated in that case, namely that the relative situation of the contracting parties is a relevant consideration in determining whether a contractual term is contrary to public policy. 16. In this matter despite the fact that the parties signed the agreement freely and voluntarily, I would in my view be short sighted not to acknowledge that this is an agreement between an attorney on the one hand and a client who solely relies on his (the attorney s) advice on the other. Attorneys wield tremendous power over clients who depend on them to handle their affairs in stressful situations. When the applicants approached the respondent for legal representation they were vulnerable both emotionally and economically and consequently were in no position to refuse or scrutinise advice given by the respondent on whom they relied. This is evident from Mr Fourie s submission that the applicant was in big trouble financially. He was on the verge of loosing his farm. Nobody wanted to hire the farm. It is

11 11 clear that the applicants could not have been on par with, or in a stronger bargaining position than, the respondent. To me this is an indication of the immense bargaining power the respondent had as against that of the applicants. 17.Yet another reason for holding that the contract is against public policy and of great concern is the fact that the respondent breached the standards of professional ethics by knowingly entering into a business transaction with his clients and failing to advise them to seek independent legal advice before concluding the lease agreements with them. Further by misleading his clients into entering into a long lease agreement and then drafting a contract without taking into account the best interests of the clients. In this way the respondent placed himself in a conflict of interest situation. 18.Loyalty is an essential element of the attorney and client relationship. I have no doubt in my mind that the respondent placed himself in a situation where his loyalty was divided or he compromised the interests of the applicants. This resulted in his failure to perform his obligations with the necessary care and skill reasonably expected of a legal practitioner in his position. I am fortified in my view by the following; 1. the respondent s averment in his pleadings that he also had to take his own interests into account. 2. his view that he was under no obligation to advise the applicants to seek independent legal advice. As well as 3. the unprofessional manner in which the contracts are drafted. No provision is made for the escalation of rent. There is no nonvariation clause. Certain provisions are ambiguous. There is no inventory of the livestock as well as the property on the farm.

12 12 19.An ethical attorney is expected to maintain a measure of detachment from clients. The conclusion of a business transaction with his very own client where that client is not independently represented in respect of that business transaction is totally at odds with this requirement of detachment. By entering into such an agreement, the respondent assumed a personal stake that in my view affected his professional judgment and conduct. An attorney should not act for a client whose interests conflict with his or her (the attorney s) interests or those of another client. The attorney must, while holding his position of trust and confidence, prefer the interest of the principal even to his or her own in case of conflict, and to his skill, diligence and zeal must be added good faith. See LAWSA vol 14(2) Conflict of interests 20.The dictum of Page J in Leite v Leandy & Partners 1992 (2) SA 309 (D) on which the respondent sought to rely to escape the duty to advise the applicants is not helpful to the respondent for the following reasons. 1. It is distinguishable from the facts of this matter in that it dealt with an attorney drawing a contract between his client and an unrepresented third party. The matter at hand deals with an attorney entering into a business transaction with his own client in the course of his professional duty. 2. Read in context that dictum can never be viewed as authority for the submission that an attorney has no duty to advise a client (with whom he concludes a business transaction) to seek independent legal advice. On the contrary and as aptly put by

13 13 Mr Reinders, it places a duty on the attorney to be fair to client and even to an unrepresented third party entering into a contract with his client. He had a duty to act in the best interests of his clients. Failure to advise them to seek independent legal advice when a conflict of interest arose can hardly be regarded as acting in the best interests of the applicants. 21.In Law Society of the Cape of Good Hope v Tobias and Another 1991 (1)SA 430 (CPD) at D Berman J dealing with a matter similar to this one stated,..., but it was certainly the duty of Tobias (Wilson s family attorney) and of Van Biljon ( the conveyancer in the firm who attended to the transfer of Wilson s property to Du Plessis) to advise, and indeed to recommend, to Wilson that he should consult another attorney with regard to what was to happen with the purchase price. 22. An extremely worrying feature is the respondent s lack of appreciation of the seriousness of the transgression of the rules of professional conduct he has committed. This is evident from his averment that he was under no obligation to advise the applicants to seek independent legal advice as well as the submission made on his behalf by Mr Fourie that He (the first applicant) is not a zombie, he is somebody with a mind of his own and for sure he can think about what his attorney says to him. Otherwise each and everybody will just sit back and say I trust my attorney I don t even read the papers because I trust my attorney. Jy kan nie net blindelings jou prokureur vertrou nie.

14 The fact that the conduct of the respondent in this matter is regarded as reprehensible and unbecoming by our courts is well documented and is best captured in the dictum of Kirk Cohen J in Law Society, Transvaal v Mathews 1989 (4) SA 389 (T) at 395 F where the learned Judge stated; I refer next to the duty of an attorney in general. The attorney is a person from whom the highest standards are exacted by the profession and this Court. If an attorney wishes to digress from that standard he may do so but he must first cast aside his profession by resigning and then pursue his chosen course. He cannot serve two masters. In this regard the standards are admirably dealt with in the founding affidavit as follows: An attorney is a professional man whose independence and freedom in the conduct of his practice are recognised and preserved. Within the limits of the law and the rules of professional conduct an attorney conducts, and in fact should so conduct, his practice with a high degree of independence. The profession itself is not a mere calling or occupation by which a person earns his living. An attorney is a member of a learned, respected and honourable profession and by entering it, he pledges himself with total and unquestionable integrity to society at large, to the courts and to the profession...only the highest standard of conduct and repute and good faith are consistent with membership of the profession which can indeed only function effectively if it inspires the unconditional confidence and trust of the public. The image and standing of the profession are judged by the conduct and reputation of all its members and, to maintain this confidence and trust, all members of the profession must exhibit the qualities set out above at all times. The attorneys profession can only fulfil its obligations to the community and comply with its role in the

15 15 administration of justice in the land if it inspires and maintains the unconditional confidence of the community and if its members devote their absolute integrity to the conduct of their profession and to the fulfilment of all the requirements demanded of the profession and its members. The intergrity of an attorney should inter alia manifest itself in a situation where he must prefer the interests of his client above his own. It is required of an attorney that he observes scrupulously, and complies with, the provisions of the Attorneys Act and the rules 24.By any standard the respondent conducted himself disgracefully, dishonestly and unfairly. I am satisfied that the contracts forming the subject matter of this application are against public policy. I come to this conclusion mindful of the dictum of Smalberger JA in Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1 (A) at 9B, namely No court shall shrink from the duty of declaring a contract contrary to public policy when the occasion so demands. The power to declare contracts contrary to public policy should however, be exercised sparingly and only in the clearest of cases, lest uncertainty as to the validity of contracts result from arbitrary and indiscriminate use of the power. One must be careful not to conclude that a contract is contrary to public policy merely because its terms (or some of them) offend one s individual sense of propriety and fairness. (The underlining is mine) 25. I am convinced that this matter falls squarely within the category of the clearest of cases that are contrary to public policy. On this ground alone the contracts must be declared void ab initio. For the sake of completeness I proceed to consider the question of the meeting of the

16 16 minds of the applicants and the respondent at the time of the conclusion of the contract. 26. Mr Reinders submitted with specific reference to annexure B that the fact that the respondent now disputes that the amount of rent was R per annum is indicative of the fact the parties never reached a consensus on a material term of the contract. For this reason he submitted that the contract should be declared void ab initio. 27.It is trite that a meeting of the parties' minds must occur in order for a contract to come into being. The definition of a contract: "... postulates an agreement that is a meeting of the minds or mutual understanding between two or more persons as the basis of a contract, with the clear implication that without agreement in this sense there can be no contract" (LAWSA, Volume 5(1)(r), paragraph [127]). The relevant clause of annexure B reads; Die HUURBEDRAG beloop n bedrag van R (EEN HONDERD DUISEND RAND) Die bedrag sal ses maandeliks betaalbaar wees met die eerste betaling voor of op 1 Oktober Mr Fourie argued that this term can only be interpreted to mean that the amount of rent is payable in instalments of R every six months. He argued further that annexures B and C are not the true reflection of what the parties agreed to as the contracts were partly written and partly oral and that it was the intention of the parties to enter into only one agreement in respect of the livestock and the farm. The

17 17 respondent did not pursue the issue of ratification that was foreshadowed in his pleadings. 29.In reply Mr Reinders argued that nowhere on the contract is it stated that the rent should be paid in instalments of R in every six months instead the contract stipulates that R every six months. He contended further that the parol evidence rule should apply. He argued further that there are two separate agreements and that the applicants expected to get R per year for the animals in addition to the R for the farm. 30.I agree. On a proper reading of the relevant term of the contract (annexure B) the conclusion that an amount of R is payable in every six months is inescapable. The term does not stipulate that the R per jaar which is payable in instalments of R in every six months. Instead it stipulates that die bedrag meaning the (stipulated) amount shall be payable every six months. This is a fact that Mr Fourie was constrained to concede. Annexures B and C are separate contracts specifically drawn up in respect of separate entities and nowhere on any of the contracts is a cross reference made to the other. Each contract specifically describes the property which forms the subject matter of the lease. Also nowhere on any of the contracts is any mention made of the other contract replacing an earlier agreement entered into by the parties. It cannot therefore be said that the parties entered into one agreement in respect of the farm and the livestock. 31.In terms of the time tested parol evidence rule where an agreement is embodied in writing, the written document is conclusive as to its terms. No

18 18 evidence, save the document itself, is admissible to prove them. Nor may the contents of the document be contradicted, altered, added to or varied by oral evidence. This rule was formulated as follows by Watermeyer JA in Union Government v Vianini Ferro Concrete Pipes (Pty) Ltd 1941 AD 43 at 47: Now this Court has accepted the rule that when a contract has been reduced to writing, the writing is, in general, regarded as the exclusive memorial of the transaction and in a suit between the parties no evidence to prove its terms may be given save the document or secondary evidence of its contents, nor may the contents of such document be contradicted, altered, added to or varied by parol evidence. See also Dreyer NO and Another v AXZS Industries (Pty) LTD 2006 (3) ALL SA 219 (SCA). 32. Bearing in mind that the respondent is an attorney of long standing he should have known better that a written contract should reflect the intention of the parties and should have exercised diligent care to clear any ambiguity on the material terms. He should have deemed it prudent to state clearly that the latter contract replaces the earlier agreement. The absence of the non variation clause that the respondent now seeks to rely on does not assist his case as it is clear that two separate agreements were concluded and each contract stipulates the amount of rent, the commencement date different from each other. This matter turns on the interpretation of a clause written on the contract and not on whether or not the parties were could vary the clauses and the procedure of such variation. He is therefore precluded from varying the written contracts by

19 19 oral evidence. The respondent failed to perform in terms of the contracts prompting the applicants to take steps to cancel the contracts which they eventually did. I am satisfied that the steps taken constituted a valid cancellation of the contracts. For that reason the contracts cannot be enforced. 33. If I am wrong to conclude that the written contracts were validly cancelled, still the contract cannot be enforced for the following reasons. 1. if the version of the respondent that he has at all material times laboured under the impression that amount of rent is R per annum, payable in R instalments, is to be believed it cannot be said that there was any meeting of the minds between the parties. 2. Further the fact that the according to the respondent states it was the intention of the parties to conclude one agreement in respect of livestock and the farm whereas the applicants state the contrary indicates that there was no consensus. For these reasons I find that the contract should be declared void ab initio. 34. Mr Reinders applied that I order that a copy of my judgment be referred to the Law Society of the respondent. In view of my finding that the respondent conducted himself disgracefully, dishonestly and unfairly in this matter and in order to stem an erosion of professional ethical values, I deem it appropriate and necessary to order that relevant Law Society be informed of my judgment.

20 On the question of costs both parties applied that an order be made for costs on an attorney and own client scale. I am of the view that such an order is justified in the circumstances of this case. In the result I make the following order. ORDER 1. The application succeeds. The lease agreements concluded between the first applicant and the respondent, attached to the papers as Annexures B and C are declared void alternatively are cancelled. 2. The respondent and any member of his family living with him at Portion 7 of Weltevrede farm no. 92 in the district of Herbert must vacate the premises together with their belongings within a period of 1 month of the issue of this order. 3. In the event of the respondent s failure to comply with this order, the sheriff for the district of Herbert is hereby authorised and ordered to remove the respondent or any other person who occupies the farm through the respondent together with their belongings, from the property.

21 21 4. That the respondent is ordered to pay the costs of this application on an attorney and own client scale. 5. The Registrar is ordered to forward a copy of this judgment to the Law Society of which the respondent is a member. G N Z MJALI ACTING JUDGE NORTHERN CAPE HIGH COURT. On behalf of the Appellant Instructed by On behalf of the Respondent Instructed by Adv S J Reinders Haarhoff s Attorneys Adv J A Fourie Christo Faber Attorneys