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[2016] ZAWCHC 73
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Macakati v Larry and Others (6776/2016) [2016] ZAWCHC 73 (15 June 2016)
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
CASE
NO
: 6776/2016
DATE
:
15 JUNE 2016
In
the matter between:
NKOSIYABO
LEONARD
MACAKATI
..........................................................................
APPLICANT
And
MONIQUE MARCIA
LARRY
.................................................................................
1
st
RESPONDENT
A V DAWSON &
CO
................................................................................................
2
nd
RESPONDENT
REGISTRAR OF
DEEDS
........................................................................................
3
rd
RESPONDENT
EX TEMPORE JUDGMENT
ROGERS
J
In this
application the applicant seeks specific performance of a deed of
sale in which he is the purchaser and the first respondent
the
seller.
In the
hearing before me the applicant has been represented by his attorney,
Mr Sharuh, and the first respondent by Mr Walters.
The second and
third respondents abide the court’s decision.
Because
this is a claim for final relief, the matter must be decided on the
basis of the facts asserted by the respondent (which
is how I shall
refer to the first respondent) and by the applicant to the extent
that the applicant’s fact are admitted by
the respondent. I do
not think, though, that there are in fact any material disputes of
fact.
The
deed of sale was entered into during March 2015. Clause 2 required an
initial payment of R300 000 to be made within 30 days
of acceptance;
the balance was to be paid to the conveyancer when called for against
registration of the property to the purchaser.
In terms of clause 6
the costs of transfer were to be paid to the conveyancer at least 20
working days prior to the scheduled date
of transfer. There was a
suspensive condition relating to the sale of a property by the
applicant. That condition was timeously
fulfilled.
Clause
16.1 contained the following clause:
“
If the purchaser fails to pay any amount
due in terms of this agreement or commits any breach thereof and
fails to remedy same within
7 (seven) days of receipt of written
notice to this effect, then the seller shall forthwith be entitled,
but not obliged, without
prejudice to any other rights or remedies
which the seller may have in law, including the right to claim
damages, to cancel this
agreement, in which event the purchaser shall
forfeit all monies paid to the seller or his agents in terms hereof
as genuine pre-estimated
damages…”
Certain
other remedies were also set out.
As I
have said, the applicant paid the initial amount of R300 000. On
5 August 2015 he paid a further R200 000 towards the
purchase price.
However, he failed thereafter, despite numerous requests, to pay the
outstanding part of the purchase price, namely
R100 000. Furthermore,
on 9 April 2015 he was notified that the transfer costs would amount
to R12 020, 50 and this, too, he failed
to pay despite a number of
requests.
On 22
January 2016 the conveyancers, being the firm Yvette Cloete &
Associates (‘YCA’), addressed a letter to the
applicant
in which they demanded payment in the sum of R112 020, 50 within
seven days of receipt of the notice. The demanded
sum was the
outstanding balance of the purchase price, namely R100 000, and the
aforesaid costs of R12 020, 50. YCA’s
notice stated that,
failing payment within seven days, their instructions were to cancel
the agreement with immediate effect in
terms of clause 16.
Through
his present attorney, the applicant on 26 January 2016, in a letter
to YCA, requested an indulgence to the end of March
2016. YCA replied
on 27 January 2016 stating that their instructions were that the
respondent was not willing to indulge the applicant
with further
extensions as he had been given ample opportunity and that various
agreements had been entered into between the parties
to settle the
outstanding balance which the applicant had refused or failed to
comply with.
On 1
February 2016 the applicant caused a sum of R112 000 to be
transferred into YCA’s bank account. YCA confirmed on
10
February 2016 that the amount had been received and invested in their
trust account. The applicant’s attorney then directed
queries
to YCA to find out about the transfer. On 10 March 2016 YCA advised
the applicant’s attorney that upon applying for
a new rates
figure from the municipality they had ascertained that another firm
of attorneys (this was the second respondent firm
– ‘AVD’)
had already done so in relation to the a sale of the property to
different purchasers, ie new purchasers
of the property.
The
applicant’s attorney on 11 March 2016 threatened an application
to compel the respondent to pass transfer. It seems that
YCA battled
to obtain instructions from the respondent. There was then
communication between the applicant’s attorney and
the new
conveyancers, AVD, on 22 April 2016. AVD notified the applicant’s
attorney that they had obtained instructions from
the respondent to
proceed with registration to the new purchasers, their instructions
being that the sale to the applicant had
been cancelled.
The
present application was then launched as a matter of urgency on 25
April 2016. An interim order was granted on 28 April 2016,
at which
stage the respondent seems not yet to have had notice of the
application. The return day was extended on 13 May 2016 and
the
application for final relief was postponed for argument today.
I
raised with Mr Sharuh the question whether the new purchasers of the
property, the Jardins, should not have been joined since
the relief
sought by the applicant would have the effect that the respondent
could not give transfer to them. He was inclined to
agree that their
rights were affected by the relief claimed. In view of the
conclusion, I have reached on the application it is
unnecessary to
express a final view on whether the Jardins should have been joined
though I think they probably should have been.
The
respondent stated in her answering affidavit, which was filed on 11
May 2016, that when the seven day period mentioned in the
demand of
22 January 2016 expired and the applicant had still not paid the
demanded sum, she considered the agreement as cancelled.
She says she
was under the impression that the deed of sale was cancelled, which
is why she proceeded to sell the property to other
purchasers. She
says she had elected to cancel but it only came to light in the
course of preparing the answering papers that,
due to an oversight, a
further letter of cancellation had not actually been addressed to the
applicant. To the extent necessary
the cancellation was notified by
way of the answering papers and by way of a formal letter attached to
the answering papers.
The
respondent’s opposition is based on the applicant’s
failure to comply timeously with the demand of 22 January 2016
and
the respondent’s cancellation pursuant thereto. If one reads
the formal notice of cancellation as attached to the answering
papers
one might think that the only ground of cancellation asserted was
that the late payment of 1 February 2016 was short by
R20.50.
However, it is trite law that if a party is entitled to cancel, the
statement in the notice of cancellation of an incorrect
ground or of
one particular ground does not preclude the party from relying on
other grounds if they in fact existed at the time
of the cancellation
(see
Telcordia Technologies Inc v Telkom
SA Ltd
[2006] ZASCA 112
;
2007 (3) SA 266
(SCA) para 166).
.
Three
questions thus appear to fall for decision. (i) The first is
whether the late payment of R112 000 on 1 February
2016,
assuming for present purposes that it is to be treated as payment in
full, precluded the respondent from cancelling because
she had not
given notice of cancellation at the time the late payment was
received. (ii) The second point, if the first were
decided in
favour of the applicant, is whether his failure to pay the sum of
R20.50 entitled the respondent to cancel the contract.
(iii) A
third question is whether, if the respondent had the right to cancel
the contract, she lost that right because she
only formally gave
notice of the cancellation on 11 May 2016.
In
regard to the question whether the payment made on 1 February 2016
was late, seven calendar days, calculated from date of receipt
of the
letter of 22 January 2016, which on the applicant’s own version
was received the same date by email, takes one to
Friday 29 January
2016. If the relevant days are calendar days, payment on 1 February
2016 was late. Mr Sharuh submitted that I
should interpret the word
“days” in clause 16.1 as referring to court days because
notice under clause 16 would be
a precursor to legal action. I reject
that submission.
The
word “days” in its ordinary connotation refers to
calendar days. The word in clause 16.1 appears in a contract.
The
Interpretation Act 33 of 1957 thus does not apply because that Act
applies only to the interpretation of laws. In any event,
I may add,
the Interpretation Act in its reference to the computation of time
would not assist the applicant. The only grace which
the Act would
extend in the case of interpretation of laws is that if a period
would otherwise expire on a weekend or a public
holiday it is
extended to the next working day. In the present case the seven day
period expired on Friday 29 January 2016, which
was a working day.
Insofar
as the rules of court are concerned, the definition therein of court
day is expressly limited to the word “day”
where it
appears in the rules of court or court orders. In the Superior Courts
Act itself, the word “day” does not
mean a court day but
a calendar day. Accordingly, the payment on 1 February 2016 was late.
This
then raises the question whether the respondent was precluded from
cancelling because she had not notified the applicant that
she was
cancelling the contract prior to YCA’s receipt of the late
payment. Neither side in their heads of argument squarely
addressed
this issue or referred to the relevant authorities. The position is,
however, clear. Clause 16.1 of the deed of sale
is what is known in
our law as a
lex commissoria
,
namely a right to cancel the contract upon the happening of a
specified event, whether or not in common law the event in question
would justify cancellation. The general understanding of the
expression
lex commissoria
will
be found in the work by Van der Merwe et al
Contract:
General Principles
4
th
Edition at 299 and footnote 129.
If a
debtor fails to comply with the time period contained in a
lex
commissoria,
the creditor, upon the
expiry of that period, has an accrued right to cancel the contract.
Late performance by the debtor cannot
deprive the creditor of this
right. This was settled in the case of
Boland
Bank Limited v Pienaar
1988 (3) SA 618
(A). See also
Van Wyk v Botha &
Others
2005 (2) All SA 320
(C) paras
53-55;
Galaxias Properties CC v Georgiou
2013 ZAGPJHC 399 para 38 which is a judgment of the full bench of the
Gauteng High Court. The general rule is also referred to
by the
learned authors of
Contract: General
Principles
op cit at 356-357.
From
this it follows that at the end of Friday 29 January 2016 the
respondent acquired a right to cancel the deed of sale which
the
applicant could not cure by late payment.
It is
convenient next to consider the question whether the respondent lost
this right because she only gave formal notice of cancellation
on 11
May 2016. The general principle is that a delay, even an unreasonable
delay, in exercising a right of cancellation will not
deprive the
party of the right to cancel. The right will only be lost if, in all
the circumstances, it can be shown by the other
side that the party
with the right to cancel elected to abide by the contract rather than
cancel it. The passing of time may be
one of the factors from which
such an election can be inferred but the passing of time does not in
itself lead to that conclusion.
See
Mahabeer
v Sharma
1995 (3) SA 729
(A) at 736.
The
applicant did not in his papers allege that the respondent had waived
her right to cancel or had elected to abide by the contract.
On the
assumption that the point is nevertheless open to the applicant,
based on the evidence before me I do not think that the
applicant has
established that the respondent elected to abide by the contract
rather than cancel it. The demand of 22 January
2016 was written
against a backdrop of a delay of many months and a number of previous
demands. When the applicant sought an indulgence
and a further
extension of time on 26 January 2016, this was promptly refused in
uncompromising terms.
Although
YCA, who had been appointed to deal with the transfer of the property
to the applicant, received the money into their trust
account, that
was because it was an electronic transfer of funds. Although YCA
acknowledged that they had received the money, it
does not appear
that they had instructions to take further steps to process the
transfer of the property to the applicant. The
Investec account, into
which
inter alia
the
sum of R112 000 was paid and which seems to have been held in
trust for the applicant, does not show any withdrawals for
expenses
after 1 February 2016.
We know
that the respondent proceeded to sell the property to new purchasers.
That is indicative of an intention not to abide by
the sale to the
applicant. Although not communicated by way of a formal notice of
cancellation, the fact of the sale to new purchasers
was apparent in
the communication by YCA to the applicant’s attorney on 10
March 2016. As I have indicated, on 22 April 2016
there was an
unequivocal statement by the new conveyancers, AVD, that according to
their instructions the agreement with the applicant
had been
cancelled.
While
the respondent’s subjective intentions may not be decisive, it
is clear that subjectively she did not intend to abide
by the
contract. Also, I do not think there were enough other circumstances
which would have created in the mind of a reasonable
person in the
applicant’s position a belief that the respondent had
positively elected to abide by the contract.
Accordingly,
I do not think that the respondent lost her right to cancel, even if
the first proper act of cancellation was the letter
of 11 May 2016.
In the
light of this conclusion it is unnecessary to decide whether, if I
had decided the above issues against the respondent, I
could have
held that the applicant nevertheless failed to purge his default
because he short-paid by R20.50. I must say that if
I had been
compelled to decide that question I think I would have decided it
against the respondent. Although the contract does
say that the right
of cancellation arises if the purchaser fails to pay “any
amount” due in terms of the agreement,
this must surely still
be subject to the maxim
de minimis non
curat lex,
a maxim which finds
application in a diverse range of legal contexts. I cannot believe
that the parties could have intended such
an infinitesimal short
payment to be the sort of non-payment to which clause 16 would apply.
This is not to say that the applicant
was not still obliged to pay
that additional sum but I very much doubt whether the respondent was
entitled to cancel on that basis.
It is
also unnecessary, in the light of the conclusions I have reached, to
decide whether the short payment of R20.50 was not in
any event
covered by interest which had accrued on the amount held in trust by
the conveyancers in the Investec account previously
mentioned.
From
everything I have said, it follows that the application cannot
succeed.
In
regard to costs, it seems unnecessary to make any order in relation
to 28 April 2016 because the respondent had not as yet engaged
attorneys and thus did not incur costs in respect of that day. In
regard to the costs of 13 May 2016, on which occasion the case
was
postponed to today, I think costs should follow the result.
One
final matter concerns the applicant’s heads of argument. I
indicated to Mr Sharuh during argument that I did not feel
that his
client should be obliged to bear the costs of their preparation or of
the appearance today. I took Mr Sharuh through his
heads of argument,
indicating why a number of the issues he had addressed did not arise
in this case at all and why on a number
of issues which might have
been relevant the submissions appeared to be based on American or
English law rather than our own law.
Mr Sharuh was inclined to leave
this in my hands. I do not intend to make any formal order but my
direction to him is that he should
not charge his client for the
preparation of heads or for his appearance today. He is, of course,
entitled, in accordance with
any agreement he has with his client, to
charge for the preparation of the affidavits in the application.
The
following order is therefore made.
THE
application is dismissed with costs including the costs reserved on
13 May 2016
.
ROGERS
J