EFFECTS ON MAXIMS
4.4 Case law
4.4.1 National Credit Act
4.4.1.1 Visagie NO & others v Erwee NO & Another103
4.4.1.1.1 Facts
The Supreme Court of Appeal had to rule on whether an agreement entered into between the parties amounted to a credit transaction in terms of the National Credit Act. If it was held to be a credit agreement the party extending the credit had to be registered as a credit provider, failing which, the agreement would be rendered unlawful and null and void.
The main issue before the court by the time the matter went to litigation was whether the agreement of purchase and sale of shares between the parties whereby the contract provided for interest to be paid on deferred payments amounted to a credit agreement in terms section 8(4)(f) of the National Credit Act. The trial court held that the agreement failed to provide for interest paid in respects of deferred payments and as a result the agreement was therefore not a credit transaction, the decision of the court a quo was appealed by the appellants.
4.4.1.1.2 Discussion
The court a quo firstly looked at the principles governing the interpretation of contracts more particularly the maxim of ut res magis valeat quam pereat in which an agreement should rather be upheld than destroyed. In doing so, the court looked at the judgment of Hughes v Rademeyer104 which set out the principles to be applied when utilising the maxim:
102 Louw (n 1) 66.
103 Visagie NO and others v Erwee NO and another (74/2013) [2014] ZASCA 121.
104 Hughes v Rademeyer 1947 3 SA 133 (A).
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“It appears to me that, in construing a contract, the Court is not entitled to strain words because of the provisions of an Act which might affect the validity of the contract, or to be influenced by those provisions in determining whether the contract is reasonably capable of a meaning which will not make the contract invalid, but that when it has come to a conclusion that the contract is reasonably capable of such meaning, it will apply the maxim.”105
The maxim is not to be used as a “point of departure in interpreting agreements” and only to be applied if the agreement is ambiguous but still capable of a meaning which renders the contract valid.106 The court a quo rendered the agreement invalid due to the fact that it did not meet the requirements of section 8(4)(f) of the National Credit Act and the court held such an act would lead to “unbusinesslike or oppressive consequences.”107
The Supreme Court of Appeal though coming to the same decision as the court a quo that the agreement was null and void, reached this conclusion for a different reason. The Supreme Court of Appeal held that the payment of interest of deferred payments was a standard business practice especially in the case where the merx has been transferred and the purchaser has the right of use and enjoyment without the full purchase price being paid to the seller.108 The sale and purchase agreement was held to be a credit agreement as envisaged in terms of section 8(4)(f) of the National Credit Act and was accordingly void. The courts differed in their findings in that the Supreme Court of Appeal disagreed with the court a quo that the maxim that the agreement is to be upheld rather than destroyed is the starting point to the interpretation of the contract.109
On application of the National Credit Act, the agreement in question failed to meet the requirements of the relevant section and no further investigation into the contract being upheld in terms of the maxim ut res magis valeat quam pereat was necessary. In this case the compliance with the statute outweighed the application of the maxim.
105 Ibid 138.
106 Visagie NO and others v Erwee NO and another (n 103) 10.
107 Ibid 20.
108 Ibid 21.
109 Ibid 22.
34 4.4.2 Companies Act
4.4.2.1 Budge NO and others v Midnight Storm Investments (Pty) Ltd and Another110
4.4.2.1.1 Facts
The applicant sought an order in terms of section 81(1)(d)(iii) of the new Companies Act (Companies Act 71 of 2008), for the winding up of the first respondent together with an order for the same relief against the first respondent’s close corporation. The applicant relied on the judgment of Judge Weiner in the matter of Heinrich Muller v Lily Valley (Pty)111 in which it was held that the legal basis for the winding up of an entity is the same under the new companies act as it was under the old companies act.
The counsel for the respondent however argued that the just and equitable grounds for the winding up of a company should be restrictive and limited to the circumstances as provided for in section 81(1)(c) and (d), which was contrary to the circumstances being relied upon by the applicant.112
4.4.2.1.2 Discussion
The respondents attempted to sway the courts to find that the new Companies Act’s section 81(1)(d)(iii) should be construed eiusdem generis to the other sections of 81(1)(c) and 81(1)(d). The court was of the opinion that the eiusdem generis rule of interpretation did not apply to specific section of the Companies Act.
Section 81(1)(d)(i) applies in situations where the directors are deadlocked on the management of the company as opposed to section 81(1)(d)(ii) which only applies to situations where the shareholders are deadlocked in voting power. The court in this instance
110 Budge NO and others v Midnight Storm Investments (Pty) Ltd and another 2012 2 SA 28 (GSJ).
111 Heinrich Muller v Lily Valley (Pty) (2011/22041) [2011] ZAGPJHC 146.
112 Budge NO v Midnight Storm Investments (Pty) Ltd (n 110) 3.
35 was of the opinion that the rule was excluded due to the fact that the specific word of deadlock as contained in the separate sections exhausted the genus.113
The application of the eiusdem generis rule would be in direct conflict with the intention of the legislature’s object of adopting the same meaning.114 The meaning has been given to the words which equate to a just and equitable basis for the winding up of a company by the courts which has been developed over many years and incorporated into the new Companies Act with the same words as used by the old Companies Act.115
4.5 Conclusion
It is evident from the cases above that the consumer legislation and the Companies Act has had some impact on the applicability of maxims. For instance, the amendments made to consumer contracts in that they are to be written in plain language resulted in maxims not being used anymore when drafting agreements. With regard to the interpretation of contracts, the applicability of the statute will always outweigh the relevance of the maxim, if the set of facts before the court call for such a finding, in order to obtain a just and equitable ruling for the disputing parties.
113 Ibid 10.
114 Ibid 11.
115 Ibid.
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