Rapp, Rapp & Rapp v Li No. DCCIV-01-1448 - [2004] SADC 27

Milan Rapp, Slavka Rapp and Peter Rapp v Ping Li
[2004] SADC 27
Judge Clayton
Civil

The claim of the plaintiffs as set out in the original Particulars of Claim is for recovery of a loan of $377,500 and interest evidenced by a written agreement entered into by the parties on 19 February 1999. The written agreement relied upon is described as a Share Mortgage Agreement. By an amendment made at trial, the plaintiffs added allegations that “the agreement” consisted of a written Sale of Shares Agreement and a written Share Mortgage Agreement which were either executed on behalf of the defendant by her agent, Kevin Cheung (the defendant’s husband), on 19 February 1999, or alternatively, were novated to the defendant on or about 14 April 1999, or in the further alternative, were a tripartide agreement between the plaintiffs, the defendant and Kevin Cheung, by which the defendant agreed to accept the rights, benefits and obligations undertaken by Kevin Cheung on 19 February 1999, under agreements in his own right.
In her defence, the defendant admits that she signed an agreement dated 19 February 1999. She denies that she was advanced the sum of $377,500 or any other sum, by the plaintiffs. The defendant says that she had a limited ability to read English, that she was given no independent explanation of the terms of the agreement, that she believed the agreement related to the purchase by her of an interest in a business and that she did not understand the agreement to constitute any undertaking by her to pay money to the plaintiffs. She says that the money, which is the subject of the purported loan, represented the outstanding purchase price owed by Kevin Cheung, in respect of shares which were the subject of Share Sale Agreements. She says she had no knowledge of the worth of security which was shares in Ocean Foods Pty Ltd. She also says that her husband, as agent for the plaintiffs, misrepresented the nature of the agreement so that the agreement was harsh and unconscionable and was induced by misleading statements for which the plaintiffs are liable. By an amendment to the Defence made at trial she alleges that the agreement was entered into by the parties under a common mistake, namely, that the defendant could acquire all the issued shares in Ocean Foods Pty Ltd.
In their Reply, which pre-dates the amendments made to the Particulars of Claim at trial, the plaintiffs say that the defendant signed the agreement as part of a single transaction which recorded the purchase by her of an interest in a business upon usual commercial terms, including an obligation to pay the purchase price. They say that she did not pay the whole of the purchase price on the day she acquired the shares because the agreement provided partial vendor finance. They also say her husband acted as her attorney and not as the plaintiffs’ agent (as alleged in the defence). Finally, the plaintiffs say that the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2004] SADC 27
Decision Date: 20 February 2004

CaseChat Overview and Summary

The plaintiffs, Milan, Slavka and Peter Rapp, commenced proceedings against Ping Li seeking recovery of a loan of $377,500 and interest, pursuant to a written agreement entered into by the parties. Li admitted signing an agreement but denied being advanced the sum of $377,500 by the plaintiffs and that she had any obligation to repay money to them. She claimed that the agreement was harsh and unconscionable and induced by misleading statements. Li further pleaded that the agreement was entered into under a common mistake. The plaintiffs amended their claim at trial to allege a novation or a tripartide agreement whereby Li had accepted the rights, benefits and obligations undertaken by Kevin Cheung on 19 February 1999, under agreements in his own right. The court had to decide whether the plaintiffs were entitled to judgment against Li in the sum of $377,500. The court found that Kevin Cheung was the contracting party and that Li did not incur any liability by reason of the documents signed by Kevin Cheung. The court found that the end result of the settlement on 19 February 1999, was that the plaintiffs had entered into and completed a Share Sale Agreement with Kevin Cheung. The court found that after 19 February 1999, the plaintiffs and Ping Li entered into a further contract which was partly in writing, partly oral and partly to be implied. The relevant terms were that Ping Li would purchase the shares from the plaintiffs on the terms set out in the Sale of Shares Agreement, to which she added her signature. The court found that Ping Li accepted the plaintiffs’ offer, became purchaser of the shares and performed the contract. The court rejected the defendant’s defences based on non est factum, a misunderstanding of the document, misrepresentation, misleading statements, mistake and the rule in Yerkey v Jones. The court found that she was liable to the plaintiffs by reason of the express terms of the Share Mortgage Agreement. There will be judgment for the plaintiffs against Ping Li in the sum of $377,500.

Orders