Krügel Heinsen Incorporated v Thompson and Another

Krügel Heinsen Incorporated (the appellant), a firm of attorneys, was appointed as conveyancer for the transfer of mortgaged property owned by Couples Investment CC (the second respondent). The property was subject to a mortgage bond in favour of FirstRand Bank. An agreement of compromise was concluded between Couples and FirstRand on 5 December 2014, whereby R2,350,000 would be paid to FirstRand upon registration of transfer, and R500,000 would be retained by Krügel Heinsen in an interest-bearing trust account until the liquidation and distribution account in the winding up of ILIPS (a related company) was confirmed. Only once confirmed could FirstRand claim up to R500,000 from the trust account. In February 2017, before the account was confirmed, FirstRand's attorneys erroneously instructed Krügel Heinsen to pay over the R500,000, which Krügel Heinsen did. Couples claimed that FirstRand had repudiated the agreement of compromise by appropriating the money, which Couples accepted, and sought payment of R500,000 plus interest from Krügel Heinsen and/or FirstRand. The high court dismissed the application. The full court upheld an appeal against Krügel Heinsen and ordered it to pay R500,000 plus interest. Before this Court, it emerged that Couples had subsequently settled with FirstRand, agreeing to release the R500,000 held in trust by FirstRand's attorneys to the liquidators of ILIPS in exchange for being released from all suretyship obligations to FirstRand and Wesbank.

• Whether further evidence relating to events post-dating the judgment of the court a quo could be admitted on appeal
• Whether the full court was correct in finding that FirstRand had repudiated the agreement of compromise
• Whether Krügel Heinsen breached its mandate to Couples by prematurely releasing the R500,000 from trust
• Whether Couples suffered any damages as a result of the alleged breach by Krügel Heinsen in light of the subsequent settlement with FirstRand

1. The application to adduce further evidence on appeal is granted. 2. The appeal is upheld with costs, including the costs of the application to adduce further evidence on appeal. 3. The order of the full court is set aside and replaced with the following order: 'The appeal is dismissed with costs.'

An appellate court has discretion under s 19(b) of the Superior Courts Act 10 of 2013 to receive further evidence relating to facts and circumstances that arose after the judgment of the court a quo, where there are special and exceptional circumstances. Such evidence should be weighty, material, and credible, and should only be admitted sparingly. Where evidence shows that a party suffered no actual damages as a result of an alleged breach of contract (in this case, because the party subsequently utilized the funds in question to secure its release from other obligations), no claim for damages can succeed. A claim for damages requires proof of actual loss suffered by the claimant.

The Court made critical observations about the conduct of Couples and Ms Thompson, describing their attempt to exclude evidence of the settlement and to extract a further R500,000 while having already benefited from the funds as 'cynical' and conduct 'to be deprecated'. The Court noted that the full court had failed to properly apply the test for repudiation of contract as set out in Datacolor International (Pty) Ltd v Intamarket (Pty) Ltd 2001 (2) SA 284 (SCA), which requires an objective assessment of whether conduct is 'clearcut and unequivocal' and not equally consistent with another feasible hypothesis. The Court observed that there was 'no easy answer' to whether FirstRand's conduct was repudiatory, particularly given that FirstRand had corrected its error by placing the funds back into trust on the same terms. The Court noted that the language of 'duty of care' used by the full court was not apposite to a claim for breach of mandate. The Court also commented that cancellation of the compromise agreement would not have freed Couples from its suretyship obligations, as the suretyship remained extant.

This case is significant in South African law for clarifying the circumstances in which an appellate court may receive further evidence relating to events that occurred after the judgment of the court a quo. Following Rail Commuters Action Group v Transnet Ltd t/a Metrorail, the Court confirmed that such evidence may be admitted in special and exceptional circumstances where it is weighty, material, and credible, and where the interests of justice demand it. The case demonstrates that where post-judgment events fundamentally alter the factual matrix (such as by showing that no actual loss was suffered), courts will exercise their discretion to admit such evidence. The case also illustrates the importance of candor and good faith in litigation, particularly where parties attempt to conceal material facts that would defeat their claims. It reinforces the principle that damages claims require proof of actual loss suffered.