The respondent, Ms Patience Kgwadi, married the deceased, Mr Israel Kgwadi, on 14 May 1987 in community of property. Their marriage was dissolved on 25 October 1991 with a settlement agreement made an order of court. At the time of divorce, they jointly owned a property in Boksburg but the settlement agreement did not deal with its division. They verbally agreed that each would be entitled to half the value of the property and that Mr Kgwadi would pay the respondent her share, which he never did. On 25 September 2010, Mr Kgwadi married the applicant, Ms Ruth Eunice Sechoaro. He made a will on 2 October 2010 bequeathing 50% of his estate to the applicant. On 28 March 2012, the respondent was seriously injured in a motor vehicle accident and was admitted to hospital until September 2012. On 18 July 2012, while hospitalized and sedated for pain from a hip fracture dislocation, a messenger from a law firm brought a "variation agreement" for her signature. The respondent signed the document without reading it, assuming it reflected the prior verbal agreement. In fact, the agreement awarded the property solely to Mr Kgwadi for no value. Mr Kgwadi passed away on 29 September 2014. In May 2017, the respondent signed an offer to sell the property for R550,000. In January 2018, the transferring attorneys informed her that she was not entitled to 50% of the proceeds because the 2012 agreement awarded the property solely to the deceased. The respondent then challenged the enforceability of the 2012 agreement.
1. Paragraph 2 of the high court's order was set aside and replaced with an order directing Rorich Wolmarans Luderitz to pay the respondent 50% of the proceeds of the sale of the property held in its trust account within 30 days of finalization of the deceased's estate. 2. Save as aforesaid, the application for leave to appeal was dismissed with costs.
A unilateral mistake (error) in signing a contract will be reasonable (justus) and prevent the formation of a binding contract where: (1) the party making the mistake did not mislead the other party into believing they were binding themselves to the terms; (2) the other party knew or must have known of the mistake; (3) the other party caused the mistake, particularly through deliberate deception; and (4) the mistaken party could not reasonably have been expected to know the true contents of the agreement given the surrounding circumstances and their prior dealings with the other party. Where a party deliberately causes another party to sign an agreement containing terms wholly inconsistent with their prior agreement, knowing the signing party is in a vulnerable state and expecting the document to reflect their prior agreement, the signing party's mistake in not reading the document before signing is reasonable and excusable, and they will not be bound by the agreement.
The Court noted that despite the title given to the 2012 agreement as a "variation agreement," it was not actually a variation of the settlement agreement because the settlement agreement did not deal with the division of the property. The 2012 agreement was simply one in terms of which the respondent purportedly disposed of her half share in the property to Mr Kgwadi for no value. The Court observed that the applicant had no personal knowledge of the circumstances under which the agreement was signed by the respondent, and that the facts concerning how it came about that the respondent and Mr Kgwadi decided to amend their prior agreement were peculiarly within the knowledge of Mr Kgwadi and the applicant. The Court noted that the respondent acted consistently with her belief that she had not forfeited her share of the property by signing the 2017 offer to purchase in her capacity as seller and by immediately challenging the agreement when informed she was not entitled to proceeds of the sale.
This case is significant in South African contract law as it applies and reinforces the established principles regarding unilateral mistake (error) and when such a mistake will be considered reasonable (justus) to allow a party to escape contractual liability. The judgment emphasizes that where one party deliberately exploits another's vulnerable position and causes them to sign an agreement under a misapprehension as to its contents, particularly where the terms are wholly inconsistent with prior agreements, the mistake will be considered reasonable and the innocent party will not be bound. The case also demonstrates the court's willingness to resolve factual disputes on the papers where there is unchallenged evidence and the surrounding common cause facts make one version improbable. It illustrates the importance of good faith in contractual dealings and protects parties from being bound by agreements they did not genuinely intend to enter, particularly where the other party knew or should have known of the mistake.