THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Not Reportable
Case No: 1078/2016

In the matter between:

BANNISTER’S PRINT (PTY) LIMITED                                                   APPELLANT

and

D & A CALENDARS CC                                                           FIRST RESPONDENT
DARRYL ALBERT BANNISTER                                         SECOND RESPONDENT

Neutral citation:  Bannister’s Print v D & A Calendars (1078/2016) [2018]
ZASCA 17 (15 March 2018)

Coram:
Lewis, Leach and Willis JJA and Pillay and Mothle AJJA
Heard:
6 March 2018
Delivered:
15  March 2018

Summary:   An agreement of settlement of litigation, forged by a lawyer for one of
the parties, cannot be relied on by the other party. It is a nullity.

___________________________________________________________________

ORDER

On appeal from: Gauteng Local Division of the High Court, Johannesburg (Mashile,
Masipa and Keightley JJ sitting as court of appeal):
The appeal is dismissed with the costs of two counsel.

JUDGMENT

Lewis JA (Leach and Willis JJA and Pillay and Mothle AJJA concurring)
[1] The facts giving rise to the litigation between the parties in this appeal are
extraordinary, but not in dispute. Two of the parties are corporate entities each
owned by members of the Bannister family. The appellant is Bannister’s Print (Pty)
Ltd (Print), controlled by Mr Sonny Bannister. The respondents are D & A Calendars
CC (Calendars), and Mr Darryl Bannister (Darryl) the son of Sonny Bannister. The
members of Calendars are Darryl and his wife. The Bannisters are not on good
terms and Print and Calendars have a dispute about various financial claims against
each other.

[2] In April 2011, Print instituted action against Calendars and Darryl as second
defendant in the South Gauteng High Court for payment of certain amounts, and
Calendars in turn raised various claims against Print. Darryl consulted Mr M Strauss,
an attorney working for Ian Levitt Attorneys (Levitt), and asked him to represent
Calendars and him in the litigation. Strauss delegated the matter to a professional
assistant working for Levitt. The professional assistant left the employ of Levitt in
2012.

[3] In June 2012 Levitt hired Mr Marc Lieberthal, who had completed his articles
of clerkship, but had not been admitted as an attorney because his previous

employer had refused to sign a certificate of good conduct. Mr Levitt was aware of
this, but the firm nonetheless gave the work of conducting the litigation on behalf of
Calendars to Lieberthal – something of which Mr Levitt maintained he was ignorant.

[4] Lieberthal advised Darryl in November 2012 that he would be dealing with the
matter, and Darryl and his wife consulted Lieberthal in that month. Lieberthal told
them that the trial had been set down for hearing in February 2013, but was unlikely
to proceed then. Darryl’s attempts to contact Lieberthal towards the end of 2012 and
at the beginning of 2013 were unsuccessful. He assumed that the trial was not
proceeding.

[5] Early in the morning on 5 February 2013, Darryl was phoned by Lieberthal,
who asked whether he had received an email allegedly sent by Lieberthal the
previous day. Darryl had not in fact received anything. Lieberthal advised that Print’s
attorney had sent him an agreement in an attempt to settle the litigation, such that
claims and counterclaims would be withdrawn. Lieberthal wanted the agreement
signed and sent to him immediately, as he needed it in court that morning. Darryl
said that Lieberthal sounded frantic. He was astonished that Print was willing to
withdraw its claim, but believed Lieberthal.

[6] Later in the day Darryl received an email with the draft settlement agreement
attached.  He printed it out on yellow scrap paper, and amended it by deleting
various provisions that would have left the claims against Calendars and him extant.
The effect of the draft, before Darryl amended it, would have been to record that
Calendars was indebted to Print in the sum of R846 626 plus interest, and that if it
were not paid within 30 days of the date of the agreement, the full sum claimed by
Print, some R2 390 707, would become due immediately. Darryl crossed these
provisions out, initialed the first to fourth pages with his deletions, and signed the
draft on the last page. He sent the amended draft to Lieberthal by fax.

[7] In about March, possibly April, of 2013 Lieberthal phoned Darryl and asked
him to send the signed original of the draft agreement to the Levitt offices.
Calendars’ driver delivered it there. Darryl heard nothing more until 10 May 2013,
when the sheriff of the high court arrived at the premises of Calendars with a writ of

execution. He phoned Lieberthal to ask why this had occurred. Lieberthal undertook
to investigate, and asked for a copy of the writ.

[8] Darryl managed to obtain a copy of the court order that had given rise to the
writ. It transpired that it was in the form of the draft that had been sent to him by
Lieberthal in early February, emanating from Print’s attorneys, and the amendments
made by Darryl were not reflected in the agreement in the court file. It became
common cause that Lieberthal had forged Darryl’s initials on the document submitted
to court, but had used the last page which Darryl had signed. The entire document
was thus a fiction created by Lieberthal.

[9] When the action was called at roll call before Mojapelo DJP in the then South
Gauteng High Court, Print and Calendars were represented by counsel. They
advised the Deputy Judge President that the matter had been settled. But the
original of the alleged agreement of settlement was not in the file so the matter stood
down until a copy was transmitted by fax to the court building, and was then handed
up. The court made the alleged agreement an order of court, provided that it was not
uplifted until the original was placed in the court file. The original document that
Lieberthal possessed, delivered to him by Calendars, was never placed in the court
file. The signed yellow scrap paper draft was found some time after his departure
from Levitt, hidden behind a cupboard.

[10] In early July 2013, Calendars and Darryl applied to the South Gauteng High
Court for an order declaring the agreement of settlement to have been fraudulently
created and void ab initio. Satchwell J granted the application. Darryl deposed to the
founding affidavit and Ian Levitt deposed to a supplementary affidavit in support of
the application. Levitt made much of his ignorance of the matter, and advised that
when he had discovered the way in which Lieberthal had dealt with his clients, he
had instituted disciplinary proceedings against Lieberthal, and appointed someone to
chair a disciplinary hearing. The details of what happened are not germane to this
appeal. Suffice it to say that Lieberthal did not appear at his hearing, and regarded
himself as dismissed. He subsequently wrote to Levitt apologizing for his behaviour,
which he claimed was the result of a psychiatric disorder. It is not necessary to deal

with the question whether Levitt was to blame for the whole fiasco. A claim against
him is not before us.

[11] Print opposed the application for an order that the alleged agreement of
settlement was a nullity. It argued that, although the agreement might have been
obtained fraudulently, Calendars and Darryl had led it reasonably to believe that
Lieberthal had authority to conclude the agreement, and were thus estopped from
asserting its invalidity. Sonny Bannister, in his answering affidavit, contended that
Calendars and Darryl had authorized Lieberthal to act on their behalf, and that Print
was entitled to accept that he was acting on their instructions. Print, he contended,
had been detrimentally affected by Lieberthal’s conduct.

[12] The legal principle underlying Print’s attempt to enforce the ‘agreement’ is that
a party to an agreement of settlement of litigation can be held bound by it on the
basis of estoppel, despite the fact that the agreement that was allegedly made an
order of court was forged by the legal representative of that party. Satchwell J had
not found on the basis of this principle, holding that the agreement was a nullity and
that Calendars and Darryl had not agreed to it at all.

[13] Satchwell J held that ‘fraud unravels all’ and that the agreement did not result
from consensus between the parties. She distinguished the application before her
from MEC v Kruizenga 2010 (4) SA 122 (SCA) where this court had held that where
a litigant clothes a legal representative with authority to conduct litigation but
exceeds his mandate, the other party may rely on the ‘aura of authority’ accorded to
him or her. She considered that this was not such a case since the agreement was in
fact forged. She also refused to grant leave to appeal. This court did grant such
leave to a full court (in what is now the Gauteng Local Division of the High Court)
and the appeal was dismissed.

[14] The argument advanced before the full court (Masipa, Mashile and Keightley
JJ) was that Satchwell J had not taken into account the principles of agency by
estoppel. The full court dismissed the appeal on the basis that the elements of
estoppel had not been shown. This court, rather surprisingly, gave special leave to
appeal to it against the decision of the full court.

[15] The full court also held that Kruizenga was distinguishable from the matter on
appeal before it. In Kruizenga this court held that in order to hold a principal liable on
the basis of an agent’s apparent authority, the representation that induced reliance
on that authority had to be rooted in the words and conduct of the principal – in this
case Calendars and Darryl. Cachalia JA said (para 11):
‘[I]t would appear that our courts have dealt with questions relating to the actual authority of
an attorney to transact on a client’s behalf in the following manner: attorneys generally do
not have implied authority to settle or compromise a claim without the consent of the client.
However, the instruction to an attorney to sue or defend a claim may include the implied
authority to do so, provided the attorney acts in good faith. And the courts have said that
they will set aside a settlement or compromise that does not have the client’s authority
where, objectively viewed, it appears that the agreement is unjust and not in the client’s best
interests.’

[16] Dealing with ostensible authority (agency by estoppel), Cachalia JA said
(para 20):
‘I accept that in this matter, by agreeing to the settlement, the State attorney not only
exceeded his actual authority, but did so against the express instructions of his principal. As
opprobrious as this conduct was, I cannot see how this has any bearing on the respondents’
estoppel defence. The proper approach is to consider whether the conduct of the party who
is trying to resile from the agreement has led the other party to reasonably believe that he
was binding himself. Viewed in this way it matters not whether the attorney acting for the
principal exceeds his actual authority, or does so against the client’s express instructions.
The consequence for the other party, who is unaware of any limitation of authority, and has
no reasonable basis to question the attorney’s authority, is the same. That party is entitled to
assume . . . that the attorney who is attending the conference clothed with an “aura of
authority” has the necessary authority to do what attorneys usually do at pretrial conferences
. . .’.

[17] In this matter, Calendars and Darryl might have given the impression that
Lieberthal had the authority to represent them in litigation. But that is not what Print
relied on. It relied on a piece of paper purporting to be an agreement of settlement
actually signed by the other parties. What in fact they were relying on, however, was
a document forged by the person representing the other party.  They were not
relying on conduct that clothed Lieberthal with an aura of authority. Far from it.

[18] It must be made clear that the statements of the court of first instance and that
of the full court on appeal to it, that ‘fraud unravels all’, cannot be taken at face value.
Fraud certainly unravels a contract induced by a party to it. But if a party to an
agreement of settlement is misled by the conduct of the other party, in appearing to
clothe a legal representative with authority to settle litigation, and the legal
representative dishonestly exceeds his mandate or goes against express
instructions, as in Kruizenga, the effect of the dishonesty does not necessarily
unravel an agreement between the parties.

[19] As Cameron J said, in Absa Bank Ltd v Moore 2017 (1) SA 255 (CC) para 39,
referring to the maxim ‘fraud unravels all’:
‘The maxim is not a flame-thrower, withering all within reach. Fraud unravels all directly
within its compass, but only between victim and perpetrator, at the instance of the victim.
Whether fraud unravels a contract depends on the victim, not the fraudster or third parties.’

[20] Where a lawyer exceeds his or her mandate, or acts against express
instructions, but nonetheless concludes an agreement on behalf of a client, the client
may be precluded – estopped – by the other party from denying the lawyer’s
authority. That is because it is a proper agreement, on which consensus between
them has been reached.

[21] That is not what happened in this strange matter. The purported agreement of
settlement was a forged document, and cannot give rise to liability on the part of
Calendars and Darryl. It bore no resemblance to the agreement that Darryl intended
to conclude, embodied in the document with deleted provisions, and which he
signed. This conclusion is buttressed by the order of the Deputy Judge President
that the agreement should not be uplifted before the original was placed in the court
file. The original was not ever placed there because it was hidden behind a cupboard
in the Levitt offices. If Print has suffered any loss at the hands of Lieberthal it has
other remedies at its disposal.

[22] Calendars and Darryl have asked for the costs of two counsel who were
required, they argue, to defend the reputation of Levitt. They also argue that Print

knew it was relying on a forgery, and should not have pursued the second appeal. I
agree that the employment of two counsel was necessary in the circumstances.

[23] The appeal is dismissed with the costs of two counsel.

_________________________
C H Lewis
Judge of Appeal

APPEARANCES
For Appellant:

M M Segal

Instructed by:

Schoonees, Belling & Georgiev, Maraisburg

Phatshoane Henney Attorneys, Bloemfontein

For Respondent:

G I Hoffman SC, with him J L Kaplan

Instructed by:

Ian Levitt & Associates, Sandton

Lovius Block Attorneys, Bloemfontein