REPUBLIC OF SOUTH AFRICA

THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

Case number: 312/03
Reportable

In the matter between:

L KOTZÉ                                                                      APPELLANT

and

SUIDWESTELIKE TRANSVAALSE
LANDBOUKOÖPERASIE                                      RESPONDENT

CORAM:
HARMS, FARLAM JJA et VAN HEERDEN AJA

HEARD:
5 MARCH 2004

DELIVERED: 26 MARCH 2004

SUMMARY:
Acknowledgment of indebtedness and undertaking to pay in
specified instalments – whether creditor which rejects undertaking may sue on the
acknowledgment.
________________________________________________________

JUDGMENT
________________________________________________________

FARLAM JA

[1] This is an appeal from a judgment given by Majiedt J, with whom
Williams AJ concurred, in the Northern Cape Division, in which the
respondent’s appeal against a judgment given by an additional magistrate
for the district of Vryburg (Mr ES Morolong) in favour of  the appellant
was upheld.
[2] The respondent, which was at the relevant time an agricultural co-
operative, sued the appellant, who farmed in the Vryburg district, for
payment of an amount of R191 028.32, together with interest.
[3] Two causes of action, a main claim and an alternative claim, were
set out in the respondent’s summons. The main claim was in respect of
goods sold and delivered on credit. The alternative claim was based on a
written acknowledgment of debt signed by the appellant on 4 March
1994. As the amount claimed was beyond the normal jurisdiction of the
magistrate’s court in the case of both claims, the respondent alleged in its
particulars of claim that the appellant had consented to the magistrate’s
court’s jurisdiction.
[4] It is not necessary to say much about the respondent’s main claim.
At the trial the respondent did not succeed in proving its case in respect of
this claim against the appellant. The judgment in favour of the respondent
given on appeal by the court a quo does not refer in terms to the main
claim and clearly relates only to the alternative claim.
[5] The alternative claim was based upon a document signed by the

appellant on 4 March 1994, which was handed in at the trial as exhibit
‘A’. It was headed ‘Ooreenkoms om Skuld te Betaal’ and purported to be
an agreement between the appellant and the respondent. Its opening
words were:
‘Die partye kom soos volg ooreen’.
Then followed a paragraph headed:
Bedrag Verskuldig en Betaalreëling’.
This paragraph contained four subparagraphs. The first read as follows:
‘1
Ek erken hiermee dat ek waarlik en wettiglik die bedrag van R191 028.32 aan
Suid-Westelike
Transvaalse
Landboukoöperasie
Beperk
(hierna
die
SKULDEISER genoem) verskuldig is soos aangedui in gemelde Suid-
Westelike Transvaalse Landboukoöperasie Beperk se maandstaat aan my gerig
gedateer –.’
The second subparagraph read as follows:
‘Die skuldenaar onderneem om die voormelde skuld tesame met die koste wat hierna
gemeld word, te betaal by die kantore van die skuldeiser, Voortrekkerstraat, Posbus 5,
Leeudoringstad en wel as volg:
1. 4 (Vier) Paaiemente op 30 September 1994, 30 September 1995, 30
September 1996, 30 September 1997.
2. Rente teen 8% per jaar terugwerkend van November 1992.’
The portion following on the words ‘en wel as volg’ in the second
subparagraph and the amount (R191 028.32) in the first subparagraph
were handwritten; the remaining words were part of a cyclostyled form.
Subparagraph 3 of the document was irrelevant as it provided for a

situation where payments were to be made monthly. Subparagraph 4
provided that in certain circumstances the full balance of the debt and the
costs would become claimable and payable immediately.
[6] The second paragraph was headed: ‘Die skuldenaar onderneem
om’. Four subparagraphs followed. The first three dealt with the
respondent’s costs in recovering the debt. In the fourth subparagraph the
appellant renounced certain special defences available to debtors. The
third paragraph dealt with the allocation of payments made by the debtor,
first to interest then to capital. The fourth paragraph provided that the
agreement was not to be a novation of any existing obligation and gave
the respondent the choice of holding the appellant liable ‘op grond van
hierdie ooreenkoms’ or for any other judgment, debt, or cause of action.
Paragraph 6 of the document contained a consent to jurisdiction. It read
as follows:
‘Die skuldenaar stem kragtens Artikel 45 van Wet 32 van 1944, soos gewysig, toe dat
die skuldeiser enige regsgeding wat betrekking het op hierdie kontrak na eie keuse
kan instel in die Landdroshof van enige distrik wat kragtens genoemde Wet ten opsige
van die skuldenaar jurisdiksie het.’
[7] The appellant contended that the evidence relating to exhibit ‘A’
was inadmissible as it had been sent by his attorney to the respondent as
part of a settlement proposal, which had not been accepted by the
respondent. Instead, the respondent had made a counter-offer of

settlement to the appellant, which he had not accepted.
[8] At the end of the respondent’s case in the magistrate’s court, the
appellant’s attorney applied for his client to be absolved from the
instance. This application was granted by the magistrate who held that he
had no jurisdiction to hear the matter as the consent to jurisdiction, which
was contained in paragraph 6 of exhibit ‘A’ had been part of an offer
made to the respondent which it had rejected. This being so, no
agreement had been concluded between the parties and the respondent
could not rely on ‘portions’ of any such ‘agreement’.
[9] The respondent successfully appealed against this judgment to the
Northern Cape Division. In its judgment, which was given by Olivier AJ,
with whom Malherbe J concurred, it was held that the second
subparagraph of paragraph 1 of exhibit ‘A’ could be severed from the
remaining portions thereof. The judgment is reported as Suidwestelike
Transvaalse Landboukoöperasie v Kotzé [2000] 1 All SA 170 (NC).
[10] After this judgment was given the trial proceeded in the
magistrate’s court and the appellant and his brother testified.
[11] At close of the appellant’s case the magistrate gave judgment,
dismissing both the respondent’s main claim and the alternative claim. He
found that the whole of exhibit ‘A’ was privileged and that evidence
thereof was inadmissible.
[12] The respondent appealed for the second time to the court a quo,

which once again upheld the respondent’s appeal. It found, as had Olivier
AJ in the earlier appeal, that the subparagraph containing the admission
of indebtedness as well as the consent to jurisdiction were not part of the
settlement negotiations between the parties.
[13] Majiedt J quoted with approval the following passages from the
judgment of Olivier AJ:
‘Daar kan myns insiens nie twyfel daaroor bestaan nie dat dit wat deur die appellant
onaanvaarbaar gevind is in die dokument wat voorgelê is deur die respondent
inderdaad net die wyse van betaling was. Oor die res van die dokument was daar geen
verskil of geskil tussen die betrokkenes nie. Die wyse van betaling, soos voorgestel
deur die respondent, was klaarblyklik ’n onderskeibare gedeelte tot die erkenning van
die verskuldigheid en die onderneming om te betaal, saamgelees met die orige
paragrawe van die dokument. Die respondent se gebondenheid by wyse van ’n
erkenning van skuld en onderneming om te betaal (sien ook Chapman Dyer Miles &
Moorhead Inc v Highmark Investment Holdings CC and Others 1998 (3) SA 608 (D)
op 612G), verdere ondernemings en afstanddoening, insluitende die toestemming tot
jurisdiksie van die Landdroshof, kan gevolglik met reg onderskei word van die
betalingswyse soos deur die respondent voorgestel aan die appellant. (Sien in hierdie
verband Vogel NO v Volkerz 1977 (1) SA 537 (T) op 548F).’
‘Gevolglik stel die onderhawige dokument soos deur die respondent op 4 Maart 1994
onderteken ’n geldige en afdwingbare erkenning van verskuldigheid met ’n
onderneming om te betaal daar, welke dokument ook skriftelike toestemming deur die
respondent tot jurisdiksie van die Landdroshof ingesluit het.’
[14] After also referring to Polverini v General Accident Insurance Co

South Africa Ltd 1998 (3) SA 546 (W) at 550I-J and 551C Majiedt J said:
‘Die erkenning van verskuldigheid kan hoegenaamd nie deel wees van
skikkingsonderhandelinge nie. Dit is gemenesaak dat die Appellant [the present
respondent] die erkenning van verskuldigheid aanvaar het.’
[15] He then referred to Kapeller v Rondalie Versekeringskorporasie
van Suid-Afrika 1964 (4) SA 722 (T) and continued:
‘Wanneer bepaal moet word of  ’n dokument self vatbaar is vir privilegie, word ’n
objektiewe uitleg toegepas, d.w.s wat die dokument vir ’n redelike leser sou beteken
het;
Sien: Naidoo v Marine & Trade Insurance Co. Ltd. 1978 (3) SA666 (A) te 675.
Op sò ’n objektiewe uitleg kan bewysstuk A na my mening glad nie vatbaar wees vir
privilegie nie.
Vir die redes voormeld is ek die mening toegedaan dat die landdros gefouteer het deur
te bevind dat bewysstuk A skikkingsonderhandelinge daarstel. Bygevolg meen ek dat
die appèl gehandhaaf behoort te word.’
[16] The appellant’s counsel contended that as the respondent did not
accept the offer made to it by the appellant no contract came into
existence between the parties on the basis of which the respondent could
hold the appellant liable. It was contended further that it was not open to
the respondent unilaterally to amend the offer (by only relying on the
acknowledgement of indebtedness) and to accept it in an amended form.
Counsel also submitted that it was clear that exhibit ‘A’, which the
appellant sent to the respondent, emanated from settlement negotiations

and with the object on the part of the appellant to make a settlement
proposal. On the basis of these circumstances it was argued that the
document constituted a privileged document, which the respondent
obtained during privileged settlement negotiations. In view of the fact
that the document was privileged, evidence thereof was inadmissible and
it followed that the respondent could not rely upon it for the purposes of
its claim. In support of this contention reliance was placed on the decision
of this Court in Naidoo v Marine & Trade Insurance, supra.
[17] Counsel also argued that the approach of the court a quo (following
in this regard the judgment given in the first appeal, after the appellant
was absolved from the instance at the end of the respondent’s case), that
the contents of exhibit ‘A’ were severable, so that the respondent was
entitled to accept only the acknowledgement of debt portion and not also
the proposals for payment was not correct. He submitted that the
acknowledgement of indebtedness portion of exhibit ‘A’ was not
severable from the rest. Ex facie the document, he contended, it was clear
that the intention of the appellant was to acknowledge his indebtedness
and to agree to pay it in the manner set out therein if his offer as a whole
was accepted. The agreement to pay, which is contained in subparagraph
1.2 of the document, was specifically qualified by the manner of payment
which clearly constituted an essential term of the agreement and it could
not be separated from the preceding admission of liability contained in

subparagraph 1.1.
[18] In this regard counsel pointed out that the respondent’s cause of
action is not constituted by the admission of liability alone but by that
admission together with an undertaking to pay in terms of a proposal to
be accepted by the creditor. For this proposition he relied on the dictum of
Jansen JA in Adams v SA Motor Industry Employers Association 1981 (3)
SA 1189(A) at 1198B-G, which is in the following terms:
‘There is ample authority to the effect that an acknowledgment of debt, provided it is
coupled with an express or implied undertaking to pay that debt, gives rise to an
obligation in terms of that undertaking when it is accepted by the creditor; and it does
not matter whether the acknowledgment is by way of an admission of the correctness
of an account or otherwise. (Cf Divine Gates & Co Ltd v Beinkinstadt & Co 1932 AD
256; Somah Sachs (Wholesale) Ltd v Muller Phipps SA (Pty) Ltd 1945 TPD 284;
Mahomed Adam (Edms) Bpk v Raubenheimer 1966 (3) SA 646 (T).’
(The emphasis is mine.)
[19] On the other hand, counsel for the respondent contended that
subparagraph 1.2 of exhibit ‘A’ was severable from the rest of the
document, that it was accordingly open to the respondent to accept the
rest and that an agreement between the parties came into existence, which
included the consent to jurisdiction contained in paragraph 6.
[20] On the privilege point he submitted that it was important to
ascertain the ambit of the settlement negotiations and that the intention of
the parties in respect thereof had to be determined on the application of

an objective test. In this regard the only admissible evidence before the
Court was contained in the correspondence which led up to the signing of
the document, the document itself and the letter together with which it
was sent by the appellant’s attorney to the respondent. He contended that
it was clear from this evidential material that only the manner of payment
was the subject of the negotiations and that the admission of
indebtedness, the undertaking to pay and the consent to jurisdiction stood
totally apart, as he put it, from any settlement negotiations. These
portions of the document were accordingly not privileged and evidence
could be led regarding them.
[21] In view of the conclusion to which I have come on the first point
argued by counsel for the appellant it is unnecessary to decide whether
the magistrate was correct in holding that the evidence regarding exhibit
‘A’  was inadmissible because it was privileged or whether Majiedt J was
correct in holding in the court a quo that the acknowledgement of
indebtedness and the accompanying consent to jurisdiction contained in
the document did not fall within the ambit of the settlement negotiations.
[22] Before I deal, however, with the first point argued by counsel for
the appellant it is necessary to say something about the judgment given in
the court a quo when the case came before it for the first time. Although
that judgment (which was not taken further on appeal because the
appellant was refused leave to appeal both by the court a quo and this

Court) contains a passage in which the point presently under discussion
was considered and decided in favour of the respondent, it must be
remembered that that judgment was given after the magistrate had
absolved the appellant from the instance at the end of the case for the
respondent. All that was relevant at that stage was whether there was
evidence on which a court could (not should) reasonably find in favour of
the respondent. Regarding the interpretation of a document the test at that
stage is whether the document can have that meaning and not what it
actually means. It follows that the ratio of that judgment cannot extend
beyond a finding that the document was capable of being so interpreted
(cf the test regarding the interpretation of a document at exception stage,
as formulated by this Court in Theunissen en andere v Transvaalse
Lewendehawe Koöp Bpk 1988 (2) SA 493(A) at 500E). Whether it should
be so interpreted was a matter for the Court at the end of the trial.
[23] In the judgment in question Olivier AJ rejected the point presently
under consideration by holding (at 175d-e) that, if one looked at the
appellant’s conduct taken as a whole, one could be satisfied that by
acknowledging liability the appellant also undertook to pay. Reference
was made to a dictum of Miller JA in Chemfos Ltd v Plaasfosfaat (Pty)
Ltd 1985 (3) SA 106 (A) at 115F where the following was said:
‘In the absence of any indications to the contrary the mere fact of an acknowledgment
of debt might in certain circumstances justify a conclusion that a debtor making the

acknowledgment intended thereby to signify that he undertook to make payment of
the sum admitted to be owing.’
[24] In my view, however, there are ‘indications to the contrary’ present
in this case. After acknowledging liability, the appellant undertook to pay
‘die voormelde skuld tesame met die koste was hierna gemeld word … by
die kantore van die skuldeiser . . . en wel as volg . . .’ (The emphasis is
mine.)
The undertaking to pay thus does not arise by implication but from
express words in the document which indicates how the appellant
proposed to do so. That proposal, which was in my view an inseparable
part of the undertaking, was rejected by the respondent. The express
undertaking to pay having been rejected, I cannot see on what basis one
can find that in addition thereto there is room also for an implied
undertaking which provides the respondent with its alternative cause of
action.
[25] In the circumstances I am satisfied that the respondent did not
succeed in establishing its cause of action on its alternative claim and that
the magistrate correctly dismissed its action.
[26] The following order is made:
The appeal succeeds with costs and the following order is substituted for
the order made in the court a quo:
‘The appeal is dismissed with costs.’

……………..
IG FARLAM
JUDGE OF APPEAL

CONCURRING
HARMS

JA
VAN HEERDEN  AJA