In the South Gauteng High Court of Johannesburg case of Auction Alliance (PTY)LTD v Netluk Boerdery CC & Another the Applicant instituted a contractual claim for the payment of the balance of commission in respect of a sale of immovable property at an Auction held by the Applicant.
The Respondents defended the Action on the basis that the immovable property was purchased as a result of the Applicant’s fraudulent misrepresentations. The Applicant fraudulently advertised the immovable property in National Press and on flyers distributed at the Auction.
The immovable property was purchased subject to conditions of sale, “exclusionary clauses”, thus the Applicant relied on the defense that such clauses could oust any defense, including that of a deliberate misrepresentation.
The Court further held that a defense of fraud would trump all exclusionary clauses. In order to establish fraud the Respondents need to prove on a balance of probabilities the following:
1. That a representation was made to the Respondents;
2. The content of the representation;
3. That the representation was untrue;
4. That the Applicant knew that the representation was untrue;
5. That the Applicant intended the representation should be acted upon by the Respondents;
6. That the Respondents were in fact induced to act upon the representation.
The Respondents successfully proved fraud and the Court held that by the Applicant conducting the auction whilst being aware that there was a material difference as to what was advertised and the actual immovable property, they deliberately misrepresented to the Respondents. Thus the Court confirmed the principle that where an innocent party acted to his detriment in relying on a fraudulent misrepresentation, the fraudulent party cannot hide behind Exclusionary clauses that the innocent party agreed to.
To read Judgment: http://www.saflii.org/za/cases/ZAGPJHC/2011/62.html
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