Sim Road Investments CC v Morgan Air Cargo (Pty) Ltd

Sim Road Investments CC, the owner of an agricultural holding in Pomona, mandated auctioneers (Venditor) to sell the property by auction. Advertisements placed in national newspapers described the property as a commercial property earmarked for light industrial use. In truth, the property was zoned agricultural and not earmarked for light industry, a fact known to Sim Road and Venditor before the auction. Morgan Air Cargo (Pty) Ltd, seeking land near OR Tambo International Airport to build a warehouse, relied on these representations and purchased the property at auction for R2 million, paying a deposit and auctioneer’s commission. After discovering the true zoning, Morgan Air sought to cancel the contract and recover the amounts paid. Sim Road relied on voetstoots, non-reliance, and entire-agreement clauses to resist cancellation.

The appeal was dismissed with costs. Morgan Air was entitled to rescind the sale agreement and recover the deposit and auctioneer’s commission paid.

The case reaffirms fundamental principles of South African contract law that liability for fraudulent misrepresentation cannot be excluded by voetstoots, non-reliance, or entire-agreement clauses. It clarifies the doctrinal distinction between mistake and fraud, correcting the tendency to treat negligence or misrepresentation as giving rise to iustus error where fraud is present.