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[2015] ZAGPJHC 139
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Bray v Grand Aviation (Pty) Ltd and Another (07/28371) [2015] ZAGPJHC 139; [2015] 4 All SA 151 (GJ) (18 May 2015)
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IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION,
JOHANNESBURG
Case No: 07/28371
In
the matter between:
BRAY,
MICHAEL
GEOFFREY
Plaintiff
and
GRAND
AVIATION (PTY)
LTD
Defendant
and
DE
WET REITZ ATTORNEYS
Third
Party
JUDGMENT
BARNES AJ
INTRODUCTION
1.
This matter began its life as a motion
proceeding in November 2007 when the plaintiff launched an
application for an order compelling
the defendant to comply with the
provisions of a sale agreement concluded between the parties.
2.
The sale agreement has two components to
it: the sale of an erf in a residential estate being developed by the
defendant and the
construction of a dwelling on the erf. The
plaintiff paid the purchase price for the erf, transfer took place
and on 29 March
2005 the land was registered in the plaintiff’s
name. This occurred despite the fact that the sale agreement was
never signed
by the defendant. In his application, the plaintiff
effectively sought an order for specific performance compelling the
defendant
to build the dwelling on the erf in terms of the sale
agreement. The defendant opposed the application on the basis that,
not having
been signed by it, the sale agreement was invalid for lack
of compliance with
section 2(1)
of the
Alienation of Land Act 68 of
1981
, and counterclaimed for the return of the land. In the
alternative, the defendant contended that it had validly cancelled
the sale
agreement.
3.
There were a number of disputes of fact
between the parties on the papers and on 4 April 2008, this Court
referred the matter to
trial. On 28 May 2008, the plaintiff delivered
his declaration and thereafter on 30 June 2008 the defendant
delivered its plea
and counter-claim. In terms of his declaration,
the plaintiff seeks an order “
directing
the Defendant to erect a dwelling on Plaintiff’s immovable
property in accordance with its obligations as set out
in the
Agreement concluded between the parties.”
The defendant, for its part, seeks a declarator that the sale
agreement is null and void for lack of compliance with
section 2(1)
of the
Alienation of Land Act and
an order that the erf be
transferred back into its name. In the alternative, the defendant
seeks a declarator to the effect that
the sale agreement was validly
cancelled and that it accordingly has no obligation to build the
dwelling on the land.
4.
Following the delivery of the pleadings in
2008, there were various preliminary skirmishes between the parties
and a number of lengthy
postponements. The matter finally came before
me for trial on 1 December 2014 and ran for four days.
5.
The plaintiff, Mr Bray, gave evidence and
called Mr Wynand Nel, Senior Operations Manager for homeloans at
Nedbank, to testify on
his behalf. The defendant called its Chief
Executive Officer, Mr Dirk Prochassek, to testify on its behalf.
6.
De Wet Reitz Attorneys, the firm of
conveyancing attorneys that facilitated the transfer of the erf into
the plaintiff’s name
was initially joined as a third party in
the matter. Ultimately however, no relief was sought against the firm
and it played no
role in the trial.
7.
In what follows below, I will examine the
agreement of sale concluded between the parties. Thereafter, I will
set out the evidence
led and determine, to the extent necessary, the
factual disputes between the parties. Finally, I will address the
legal issues
that arise for determination.
THE AGREEMENT OF SALE
8.
The agreement of sale is a standard form
purchase agreement in respect of, “Emerald Estate,”
a residential estate
being developed by the defendant in Greenstone
Hill, […..], near Modderfontein on the East Rand of
Johannesburg.
9.
The agreement of sale comprises a “Deed
of Sale”; Annexure “A” (which as will become
evident below is essentially
a building contract); Annexure “B”
which is a schedule of building specifications and Annexure “C”
which specifies the electric fittings to be installed in the
dwelling.
[1]
10.
Clause 1 of the Deed of Sale is entitled
“Description of Property” and provides as follows:
“
ESTATE:
EMERALD ESTATE
ERF
NUMBER:
3.84
UNIT
TYPE :
E
MEASURING:
183 square metres
TOWNSHIP:
G[……]”
11.
Clause 2 of the Deed of Sale provides as
follows:
“
2
PURCHASE PRICE
“
2.1
The Purchase Price of the property and the cost of the construction
of the dwelling inclusive of VAT are made up
as follows:
Cost
of land
R 229 000 (two hundred and twenty nine thousand Rand)
Cost
of building
R 380 000 (three hundred and eighty thousand rand)
Total:
R639 450.00
2.2
The parties record that the construction and erection of
the dwelling house and outbuildings on the Property are
to be
governed by the terms and conditions contained in Annexure “A”
to this Deed of Sale.”
12.
Clause 3 of the Deed of Sale is entitled
“Payment of the Purchase Price” and provides as follows:
“
3.2
The purchase price is R639 450.00 payable as follows:
3.2.1
A fee of R5000 as stated in 3.1.1
3.2.2
A deposit… [which was not applicable in this case]
3.3
The balance of the purchase price shall be payable against the
registration of transfer
into the name of the Purchaser but
payment thereof is to be secured by means of a bank guarantee
approved by the Seller or
the Seller’s Conveyancers and to be
delivered to the Seller’s Conveyancers within 30 days of
signature hereof.
3.4
The approved Banker’s Guarantee or other
acceptable security for the full amount of the
building costs
referred to in 3.3 above entitles the Seller to receive progress
payments as the Works proceed in accordance with
the provisions set
out in the annexure hereto. In the circumstances where the building
is self-financed by the Purchaser the Seller
shall be entitled to
obtain from the Purchaser a guarantee that payment will be effected
timeously.”
13.
The annexure referred to in clause 3.4
above is Annexure “A” to the Deed of Sale. Annexure “A”
defines “
the Works”
as
“
the erection of a dwelling house
that is to be executed on the property in accordance with the
provisions of this Annexure.”
14.
Clause 3 of Annexure “A” deals
with plans and drawings. Clause 3.1 provides that:
“
The
Purchaser hereby specifically and separately authorises the Seller to
prepare working drawings for the Works and to submit such
plans for
and on behalf of the Purchaser for approval to the Local Authority
concerned.”
15.
Annexure “A” goes on to
regulate the commencement, execution and completion of the Works.
16.
Clause 9 of Annexure “A” is
entitled “Payment” and provides as follows
“
9
PAYMENT
The
Seller shall, upon reaching the stages of completion of the Works for
which payment is to be effected in terms of the Annexure,
make
written application to the Purchaser for such payment. Payment of the
Annexure Sum shall be made to the Seller as set out
below and the
method of payment shall be determined by the manner in which finance
has been secured:
9.1
Finance by mortgage
bond or self-financed
Payment
to the Seller, if financed by a Bank, shall be made according to the
methods and rules for interim payment prescribed by
them and if it is
financed by the Purchaser the following methods of payment shall
apply…..”
17.
Clause 9.1 goes on to prescribe the method
of payment that is applicable if the construction is self-financed by
the purchaser.
18.
As will become apparent below, the
agreement of sale is far from a model of clarity in certain important
respects. However, what
is clear from the above is that separate
prices are fixed for the sale of the land and the construction of the
dwelling respectively.
It is also clear that separate and distinct
performances are required in respect of the two components of the
deal. Therefore,
although the sale of land and the construction of
the dwelling are both contained in the same agreement and are linked
in a practical
sense, juristically they are separate agreements with
independent sets of reciprocal rights and obligations.
[2]
The agreement of sale accordingly comprises two notionally divisible
contracts: one for the sale of land, which is largely contained
in
the Deed of Sale and one for the construction of the dwelling on the
land, which is largely contained in Annexure “A”.
THE EVIDENCE
19.
The plaintiff testified that he sought to
purchase an erf in the defendant’s Emerald Estate development,
and a dwelling to
be constructed thereon, for investment purposes.
On 28 September 2003, the plaintiff signed the sale
agreement.
20.
The sale agreement was never signed by the
defendant. Mr Prochassek, the defendant’s CEO who testified on
its behalf, could
not explain how this had happened. He conceded that
the defendant was at all material times under the impression that it
had signed
the agreement and that a valid and binding agreement of
sale had been concluded with the plaintiff. This, as will become
evident
below, is borne out by the defendant’s conduct.
21.
It appears that it was only after the
plaintiff had instituted proceedings against the defendant for
specific performance, that
the defendant realised that it had not
signed the agreement and then contended, rather conveniently, that it
was invalid for lack
of compliance with the
Alienation of Land Act.
>
22.
The cost of the erf and the dwelling have
been set out above. It is apparent that when these figures are added
together they come
to a total of R609 000.00 and not R639 450.00 as
is reflected in clause 2 of the Deed of Sale. The difference is
explained by an
additional premium which was imposed by reason of the
fact the plaintiff’s dwelling was to be constructed in the
third and
final phase of the development. The cost of the plaintiff’s
dwelling was therefore in actual fact R410 450.00 and the total
cost
of the erf and the dwelling is correctly reflected as R639 450.00 in
the sale agreement. This was common cause between the
parties.
23.
As set out above, the agreement of sale
describes the plaintiff’s dwelling as a “Unit Type E
measuring approximately
183 square metres.” The evidence was
that the plaintiff selected a type E unit from among unit options A,
B, C, D and E offered
by the defendant. It was common cause that the
defendant provided the plaintiff with its building plan for the type
E unit and
that this plan formed part of the plaintiff’s
application for his bond and building loan.
24.
The plaintiff duly obtained, from Nedbank,
a mortgage bond over the erf and a building loan for the construction
of the dwelling.
The details of this are confirmed in a letter from
Nedbank to De Wet Reitz, the defendant’s conveyancing
attorneys, dated
2 March 2004, as follows:
“
Kindly
attend to the registration of a mortgage bond for the sum of R639
450.00 in accordance with the annexed agreement of loan
and the
standard procedures applicable to homeloans as set out in the bank’s
guide to conveyancers.
Special
instructions:
1.
An amount of R410
540.00 will be retained and advanced as work progresses from time to
time.
2.
An amount of R 229
000.00 is available for guarantees/payment.
…
..”
25.
On 11 October 2004, Nedbank issued a
guarantee to De Wet Reitz Attorneys for the amount of R229 000.00,
the purchase price of the
erf, subject to the following transactions
being registered simultaneously:
“
Registrations:
(a)
Cancellation of
all existing bonds over ERF [........], GREENSTONE HILL,[........].
(b)
Registration of
transfer of the aforesaid property into the name of MICHAEL GEOFFRY
BRAY.
(c)
Registration of a First
mortgage bond over the aforesaid property in favour of Nedbank
Limited by MICHAEL GEOFFRY BRAY for R 639
450.00”
26.
On 29 March 2005 the mortgage bond over Erf
[........], Greenstone Hill,[........] was registered in favour of
Nedbank and the erf
was registered in the plaintiff’s name.
27.
Meanwhile, on 26 January 2005, a letter had
been sent by Mr Charles Lopion of the defendant to all purchasers in
the development,
including the plaintiff. The subject of the letter
was “
the process for finalising
building alterations and plans.”
The letter stated that different processes were applicable depending
on whether units had been scheduled for construction in phase
1, 2 or
3 of the development. “Phase 3 clients,” which included
the plaintiff, were advised that they would be contacted
in March
2005 “
to finalise alterations and
placement of houses on stands.”
28.
In the months that followed, discussions
ensued between the plaintiff and Mr Lopion regarding the alterations
that the plaintiff
wanted made to his type E unit. On 8 June
2005 Mr Lopion sent the plaintiff an e-mail attaching a “revised
quote and
floor plan” which incorporated the alterations sought
by the plaintiff.
29.
The defendant’s quote for the
alterations came to a total of R79 590.00. There were however two
items that had not been quoted.
These were “kitchen
customisation” and “additional paving.” The words
“to quote” were inserted
alongside these items. The
quote provided further as follows:
“
It
is hereby agreed that the purchaser will provide the funds required
for this quote within 7 days prior to commencement of the
building of
the unit. Should this not occur, the original standard unit will be
built on the property, with the purchaser liable
for payment
thereof.”
30.
Mr Lopion’s e-mail of 8 June 2005
asked the plaintiff to sign the quote and fax it back to him.
Evidently, the plaintiff did
not do so and on 13 June 2005 Mr Lopion
sent the plaintiff a further e-mail in which he stated as follows:
“
Signed
quotes have to be in my possession by 30 June 2005. If not, the
developer reserves the right to disregard your request for
alterations and build a standard unit in terms of your signed
purchase agreement.”
31.
The plaintiff testified that after
receiving this e-mail, he signed the quote, initialled the altered
floor plan and e-mailed both
back to Mr Lopion on 30 June 2005. The
quote signed by the plaintiff and dated 30 June 2005 formed part of
the trial bundle. The
plaintiff conceded that he could not produce an
e-mail which reflected his transmission of these documents to Mr
Lopion on 30 June
2005, but maintained that he had done so.
Importantly, it was not put to the plaintiff in cross examination by
the defendant that
he had not done so.
32.
Mr Prochassek, in his evidence, initially
sought to dispute that the plaintiff had sent the signed quote back
to Mr Lopion, however
he was eventually forced to concede that he
simply did not know whether the plaintiff had done so or not.
33.
In the circumstances, I accept the
plaintiff’s evidence that he signed the quote and the revised
floor plan and e-mailed them
back to Mr Lopion on 30 June 2005.
34.
Thereafter, the development stalled causing
the plaintiff, in September 2005, to write to Nedbank and ask for the
effective date
of his bond to be extended. The plaintiff attached a
supporting letter from the defendant which confirmed that the
development
had been delayed and that phase 3 was now only
scheduled to commence in January 2006. In October 2005, Nedbank
advised
the plaintiff that it would extend the bond to 1 May 2006.
35.
1 May 2006 came and went and still the
development stalled. On 9 June 2006 the plaintiff wrote to Nedbank
requesting that his bond
be extended to April 2007. Again the
plaintiff attached a supporting letter from the defendant, dated 31
May 2006, which stated
that phase 3 of the development was now only
scheduled to commence in January 2007. Nedbank agreed to extend the
bond to 1 April
2007.
36.
The plaintiff testified that he had
purchased the property for investment purposes and so was not overly
concerned about these delays.
37.
Meanwhile, on 30 May 2006, the plaintiff
had received an e-mail from Ms Linda Weiland of the defendant which
attached detailed plans
of the plaintiff’s unit, incorporating
the alterations he sought. Ms Weiland’s e-mail asked the
plaintiff to check
the plans and advise whether they were in order.
The plaintiff testified that he responded to Ms Weiland on the same
day
and advised that the plans looked good but that he still needed
to go through them in detail. The plaintiff testified that he also
asked Ms Weiland for a revised quote for the alterations and for a
letter for his bank stating that due to further delays the
construction of phase 3 would now only commence in January 2007. As
we have seen above, the plaintiff received such a letter from
the
defendant the very next day, viz 31 May 2006, and Nedbank ultimately
agreed to extend the bond.
38.
On 24 August 2006, the plaintiff received
an e-mail from Ms Weiland. Attached was defendant’s revised
quote for the alterations.
The revised quote was incorporated into an
Addendum to the Deed of Sale which the plaintiff was requested to
sign.
39.
The revised quote was however identical to
the initial quote in respect of the items quoted, their description
and cost. Furthermore,
the two items which had not been quoted in the
initial quote, viz “kitchen customisation” and
“additional paving”
had still not been quoted. The only
difference between the initial quote and the revised quote was that
the revised quote included
as a new item 24 a “modification
fee” in the amount of R110 000.00. This took the total
quote up from R79 590.00
to R189 590.00.
40.
What this modification fee was for was the
subject of a dispute between the parties. It was common cause that
the defendant sought
to impose the modification fee not only on the
plaintiff but also on other purchasers in phase 3 of the development.
The plaintiff
testified that he was told by Mr Prochassek that the
fee was imposed in order to cover the increased building costs which
had arisen
as a result of the delay in the development. In his
evidence, Mr Prochassek vehemently denied this. He testified that the
modification
fee was for the “basket of finishes” to be
applied to the plaintiff’s unit (as well as other units in
phase 3
of the development) and that the plaintiff had been informed
of this. Mr Prochassek’s evidence in this regard was wholly
unsatisfactory. He was evasive when asked what the “basket
of finishes” comprised of and could give no detail.
Moreover,
it was put to Mr Prochassek in cross examination that his answering
affidavit created the impression that the modification
fee was indeed
to cover increased building costs and that there was no mention there
of it being for a “basket of finishes.”
Mr Prochassek did
not merely create this impression in his answering affidavit, he said
so in terms. Thus in response to the plaintiff’s
statement in
his founding affidavit that he refused to accept the defendant’s
revised quote, Mr Prochassek said the following:
“
What
the Applicant omits to mention, is that I told him, that due to the
undue delay in the commencement of the building and more
specifically
due to the fact that there had been an increase in building costs,
the Applicant would have to pay for such increased
building costs.”
41.
Mr Prochassek could not explain this
contradiction. Mr Prochassek could also not explain why he had
not stated in his answering
affidavit – or anywhere else –
that the modification fee was to cover the “basket of
finishes.”
42.
Mr Prochassek’s evidence on this
score therefore falls to be rejected. I accordingly accept the
plaintiff’s version
that he was told by Mr Prochassek that the
modification fee was to cover the increased building costs that had
arisen as a result
of the delay in the development.
43.
The next dispute between the parties was
whether or not the plaintiff had agreed to pay the modification fee.
44.
The plaintiff testified that he regarded
the modification fee as unacceptable, was not prepared to pay it and
told the defendant
so. The plaintiff testified that he could
not recall precisely who he had communicated his attitude to,
although it would
likely have been Mr Lopion or Ms Weiland. The
plaintiff testified that this communication must have been oral.
Certainly, there
is nothing in writing before me which records an
objection by the plaintiff to the modification fee.
45.
The defendant disputed this. In his
evidence in chief Mr Prochassek referred to what he claimed was a
file note in Ms Weiland’s
handwriting. The note appears to be
dated 27 March 2006 and states “
M
R Bray phones, happy to pay mod fee.”
Mr
Prochassek contended that this established both that the plaintiff
had been sent the addendum much earlier than he claimed
and that the
plaintiff was happy to pay the modification fee. Notably, however Ms
Weiland, who would have had personal knowledge
of this, was not
called to testify. No explanation was given for this. Furthermore, it
was not put to the plaintiff that he had
been prepared to pay the
modification fee and that he had communicated this to Ms Weiland. Mr
Novitz, who appeared for the defendant,
argued that it was not
necessary to put this to the plaintiff because Ms Weiland’s
note, which had been attached to the defendant’s
answering
affidavit had not been disputed by the plaintiff in reply. Mr Novitz
submitted that in a matter such as this, which had
commenced as an
application proceeding and had thereafter been referred to trial,
reliance could be placed on the fact that a matter
had not been
disputed on the papers and in those circumstances it was not
necessary to take the matter up with the relevant witness.
This is
not correct. The correct position is that where a motion proceeding
has been referred to trial, the affidavits filed therein
are of no
probative value save for admissions contained therein.
[3]
The plaintiff did not admit on affidavit that he
had been prepared to pay the modification fee.
46.
In the witness box, the plaintiff was
adamant that the first time he saw the modification fee was when Ms
Weiland e-mailed him the
addendum on 24 August 2006, that he regarded
it as unacceptable, was not prepared to pay it and told the defendant
so. If the defendant
sought to challenge this, it needed to put its
version to the plaintiff in cross examination. It did not.
47.
Matters did not improve for the defendant
when Mr Prochassek testified, for the first time in cross
examination, that he had
had a meeting with the plaintiff sometime in
2005 during which he had showed him the addendum and the plaintiff
had raised no objection
to the modification fee. Here again Mr
Prochassek was vague about the details of this meeting. But in any
event, this too was never
put to the plaintiff.
48.
What is not in dispute between the parties
is that the plaintiff never signed the addendum to the
agreement. If the
plaintiff had had no difficulty with the
modification fee it is difficult to understand why he would not have
signed the addendum.
There is no suggestion on the evidence that the
plaintiff had any other complaint in relation to the deal. I am
therefore of the
view that the probabilities also support the
plaintiff’s version on this score.
49.
For all of the above reasons, I accept the
plaintiff’s version that he was not prepared to pay the
modification fee and that
he communicated this to the defendant.
50.
Following Ms Weiland’s e-mail to the
plaintiff on 24 August 2006, there was no written communication
between the parties for
a period of eight months. On 23 April
2007 the defendant addressed a letter to the plaintiff in the
following terms:
“
We
hereby correspond on a strictly without prejudice basis and advise as
follows”
1.
We wish to schedule
your unit into our construction program and require you, in terms of
Clause 5.1 of Annexure A to Deed of Sale,
to provide us with an
approved Banker’s Guarantee or other acceptable security for
the full amount of the building cost from
a recognised Financial
Institution referred to in clause 3.4 of the Deed of Sale. This
Banker’s Guarantee should be in the
format of the pro-forma
document attached hereto. Please note that the suitability of the
said recognised financial institution
will be within our sole and
absolute discretion.
2.
The above Banker’s
Guarantee is required in terms of the Deed of Sale in order for us to
waive our builder’s lien over
the work in favour of the
registered bond holder. Financial institutions usually insist on us
waiving our builder’s lien
over the work before they will make
any progress payments.
3.
Please further note
that we require your urgent response to the aforegoing within the
next seven day period, in order that we may
schedule your unit into
our construction program and commence with the Works.
Alternative
options available to clients whose properties have transferred prior
to June 2005 are as follows:
·
Clients can
elect to utilise their own builder to construct their unit. A
Memorandum of Agreement will have to be entered into with
the
Developer, cancelling the Building component of the Deed of Sale.
This can be done on an individual request. All obligations
towards
the Home Owners Association remain in force.
·
Clients can
cancel their building contract with the Developer and sell their
stand out of hand through an Estate Agent approved
by the Home Owners
Association if they so wish. All obligations to the Home Owners
Association remain in force.”
51.
The Banker’s Guarantee attached to
the letter as a
pro forma
was a demand guarantee. In other words, what the defendant now sought
from the plaintiff was a demand guarantee for the full amount
of the
building costs.
52.
The plaintiff testified that he was
surprised by this letter because, as the defendant well knew,
security for the cost of the building
had been in place from an early
stage and progress payments would be released once construction
commenced. The plaintiff
testified that the defendant had
always been aware of this and had never suggested that those
financial arrangements were inadequate
or that anything else was
required. The plaintiff advised Ms Weiland that he would
respond to the defendant’s letter
within 7 days. In the event,
the plaintiff did not do so and exactly 7 days later, on 7 May 2007,
the plaintiff received another
letter from the defendant. This letter
repeated that the defendant required an “
approved
Banker’s Guarantee or other acceptable security for the full
amount of the building cost from a recognised Financial
Institution
referred to in clause 3.4 of the Deed of Sale”
and that “
this Banker’s
Guarantee should be in the format of the pro-forma document attached
hereto.”
The letter went on
to state the following;
“
If
you are not able to comply with our Banker’s Guarantee
requirements in this regard, then we have no alternative but to
place
you on written notice as we hereby do that you are afforded seven
days after this registered letter has been received by
you to furnish
the suitable guarantee which Banker’s Guarantee must be to our
satisfaction.
In
the event of you failing to comply with the aforegoing, then and as
is provided for in terms of clause 8 of the Deed of Sale,
you shall
be in breach in that you are unable to provide a Banker’s
Guarantee to give effect to Annexure A of the Deed of
Sale and that
the Deed of Sale shall thereafter immediately be cancelled. We shall
be entitled to proceed against you and claim
may damages which we may
suffer as a result of your breach.”
53.
The plaintiff did not provide a written
response within 7 days. On 17 May 2007 the defendant wrote a further
letter to the plaintiff
in terms of which it purported to cancel the
agreement of sale. It did so in the following terms:
“
Due
to your failure to provide the Banker’s Guarantee requested in
our letter dated 7 May 2007 we hereby cancel the Deed of
Sale in
terms of Clause 8.
We
reserve all our rights to claim any damages which may have been
suffered as a result of the cancellation of the Deed of Sale.”
54.
This provoked a flurry of e-mails from the
plaintiff to Ms Weiland. He protested that “
the
bond on the property has been in place since day one, it is ready for
release on submission of proof that building is proceeding.”
The plaintiff also placed on record that he “
did
not accept the defendant’s attempted cancellation of the
building contract”
and requested
a meeting with the defendant to discuss the matter.
55.
A meeting was eventually held between the
plaintiff and Mr Prochassek on 13 June 2007. The matter could not be
resolved.
THE LEGAL ISSUES TO BE
DETERMINED
56.
Against that background, and having regard
to the relief sought by the parties, four issues arise for
determination. They are the
following:
56.1
Has ownership of the land been validly
transferred to the plaintiff?
56.2
Did the parties conclude a contract for the
construction of a dwelling on the land and if so on what terms?
56.3
If such a contract was concluded between
the parties, was it validly cancelled by the defendant?
56.4
If such contract was not validly cancelled
by the defendant, is the plaintiff entitled to specific performance
and if so in what
form?
57.
I will address each of these issues in turn
below.
HAS OWNERSHIP OF THE
LAND BEEN VALIDLY TRANSFERRED TO THE PLAINTIFF?
58.
Logically, the first question which arises
is whether ownership of Erf [........], Greenstone Hill,[........]
has been validly transferred
to the plaintiff. If it has, then
the defendant’s counterclaim cannot succeed.
59.
This question falls to be answered with
reference to the abstract theory of transfer, which at least since
the SCA judgment in
Legator McKenna and
Another v Shea and Others
2010 (1) SA 35
(SCA)
has been held to apply to immovable as well as movable property in
our law.
60.
In
Legator
McKenna,
the SCA explained the
requirements for the passing of ownership in terms of the abstract
theory of transfer as follows:
“
In
accordance with the abstract theory the requirements for the passing
of ownership are twofold, namely delivery – which
in the case
of immovable property is effected by registration of transfer in the
deeds office – coupled with a so-called
real agreement or
‘saaklike ooreenkoms.’ The essential elements of the real
agreement are an intention on the part
of the transferor to transfer
ownership and an intention on the part of the transferee to become
the owner of the property. Broadly
stated the principles applicable
to agreements in general also apply to real agreements. Although the
abstract theory does not
require a valid underlying contract, eg
sale, ownership will not pass – despite registration of
transfer – if there
is a defect in the real agreement.”
[4]
(references omitted)
61.
In this case, delivery of the immovable
property in the form of registration of transfer in the deeds office
is clearly established.
Counsel for the plaintiff, Mr Kairinos,
submitted that the defendant’s intention to transfer ownership
is evidenced by it
giving its attorneys the necessary power of
attorney to effect transfer. The plaintiff, for his part, testified
that he intended
to receive ownership of the land and of course this
is borne out by his conduct. Mr Kairinos submitted that a real
agreement between
the parties is accordingly established. I agree.
There is, moreover, no suggestion, on the facts of this case, of the
real agreement
being tainted by any defect such as fraud. In my view
this is a clear case of the parties intending to transfer and receive
ownership
of the land in question. Mr Novitz, counsel for the
defendant, did not seriously contend otherwise. I am therefore
satisfied
that the requirements of the abstract theory of transfer of
property are met in this case.
62.
That however is not the end of the matter.
It is also necessary to have regard to
section 28(2)
of the
Alienation of Land Act which
provides as follows:
“
Any
alienation which does not comply with the provisions of
section 2(1)
shall in all respects be valid
ab
initio
if the
alienee had performed in full in terms of the deed of alienation or
contract and the land in question has been transferred
to the
alienee.”
63.
Transfer of the land having been
established, counsel focussed their energy on the question of whether
the second condition stipulated
in the section has been fulfilled:
viz whether the plaintiff has performed in full in terms of the sale
agreement. The argument
centered around whether the performance
contemplated by the section is confined to the obligations relating
to the sale of the
land or whether it includes the obligations
arising out of the building portion of the agreement. Mr Kairinos
took the former position
and argued that since there had clearly been
full performance of the land obligations,
section 28(2)
has been
complied with. Mr Novitz took the latter position and argued that
since (on his submission) the plaintiff had not fulfilled
certain
obligations arising out of the building portion of the agreement, the
condition in
section 28(2)
has not been met and the alienation is
invalid. Mr Novitz sought to rely, in support of his argument, on an
unreported judgment
by Blieden J in the matter of
McCreadie
and Another v Grand Aviation
handed
down on 25 November 2005. The judgment does not deal with
section
28(2)
of the
Alienation of Land Act and
is therefore not directly on
point.
64.
It is not necessary for me to decide
whether the performance contemplated in
section 28(2)
of the
Alienation of Land Act is
confined to the obligations relating to the
sale of land in all cases. This is because, in my view, Mr Novitz’s
argument
is, on the facts of this case, misconceived. This is so for
two reasons. Firstly, on a proper understanding of the sale agreement
in this case, there is no contract for the
sale
of a dwelling. The defendant agreed to construct a dwelling on an
erf, which by the time construction commenced, would have been
transferred to the plaintiff. The dwelling would accede to the erf
upon construction. Therefore, the defendant has never owned
and would
never own the dwelling and so properly understood could not have
agreed to alienate the unbuilt dwelling.
65.
Secondly, the sale agreement in this case
is not a unitary contract but is comprised of two notionally separate
contracts: one for
the sale of land and one for the construction of a
dwelling on the land. It is only in relation to the contract for the
sale of
land that the formality of signature is required. It follows
that it is only in relation to that contract that
section 2(1)
of the
Alienation of Land Act has
been breached and that
section 28(2)
is
triggered. There being no formalities required for the contract for
the construction of the dwelling, there can be no breach
of
section
2(1)
of the
Alienation of Land Act and
section 28(2)
does not come
into play.
66.
For those reasons, it is clear that the
performance contemplated by
section 28(2)
of the
Alienation of Land
Act is
, in this case, confined to the obligations in relation to the
sale of the land. There was no real dispute between the parties that
those obligations have been performed in full by the plaintiff. I am
therefore satisfied that the requirements of
section 28(2)
of the
Alienation of Land Act have
been met.
67.
What is the consequence of this? Mr
Kairinos submitted that the consequence is to render the agreement of
sale valid
ab initio.
I disagree. What is rendered valid
ab
initio
is the act of alienation, the
transfer of the land, not the underlying contract of sale. This is
clear from the section itself
which provides that “
any
alienation
which does not comply
with the provisions of
section 2(1)
shall
in all respects be valid ab initio if
….”
68.
The
Alienation of Land Act defines
“‘
alienate’” as
“in relation to land, sell, exchange or donate … and
‘alienation’ has a corresponding
meaning.”
“Contract” is defined as “ a deed of alienation
under which land is sold…..” and
“deed of
alienation” is defined as “a document or documents under
which land is alienated.”
Had the
legislature intended the underlying contract to be valid
ab
initio
in terms of
section 28(2)
it
would have used the terms “contract” or “deed of
alienation” rather than “alienation.”
69.
To conclude this section then, ownership of
the land has been validly transferred to the plaintiff both in terms
of the abstract
theory of transfer and
section 28(2)
of the
Alienation of Land Act. The
defendant’s counter claim can
therefore not succeed and falls to be dismissed.
70.
The effect of
section 28(2)
however is not
to render the contract of sale valid
ab
initio
but only the transfer itself.
There is accordingly no valid contract for the sale of the land
between the parties. The question
arises whether there is a valid
contract for the construction of a dwelling on the land. This brings
me to the next issue to be
determined.
DID THE PARTIES CONCLUDE
A CONTRACT FOR THE CONSTUCTION OF A DWELLING ON THE LAND AND IF SO ON
WHAT TERMS?
71.
In my view, the evidence establishes that
the parties reached a conscious accord, in September 2003, to
conclude a contract:
71.1
for the defendant to construct a type E
unit measuring 183 square metres on Erf [........], Greenstone
Hill,[........] at a cost
of R410 540.00;
71.2
on the terms set out in the sale
agreement.
72.
Even however, if it cannot be said that
such a contract was concluded expressly, l am satisfied that such a
contract was concluded
tacitly.
73.
Whether a tacit agreement has been
concluded is determined by considering the conduct of the parties in
the light of the relevant
circumstances. There must be evidence
that the parties intended to, and did, reach consensus on the terms
alleged.
Two different tests have been endorsed by the SCA to
determine whether a tacit agreement exists. The first is known as the
traditional
approach and was articulated by Corbett JA in
Standard
Bank of South Africa Ltd and Another v Ocean Commodities Inc and
Others
1983 (1) SA 276
(A) at 292B as
follows:
“
In
order to establish a tacit contract, it is necessary to show, by a
preponderance of probabilities, unequivocal conduct which
is capable
of no other reasonable interpretation than that the parties intended
to, and did in fact contract on the terms alleged.
It must be proved
that there was in fact consensus
ad
idem
.”
74. However, in
Joel
Melamed and Hurwitz v Cleveland Estates (Pty) Ltd; Joel Melamed v
Vorner Investments (Pty) Ltd
[1984] ZASCA 4
;
1984 (3)
SA 155
(A) at 165B-C, the AD, also per Corbett JA, articulated a
somewhat less stringent test in the following terms:
“
In
this connection it is stated that a court may hold that a tacit
contract has been established where, by a process of inference,
it
concludes that the most plausible probable conclusion from all the
relevant proved facts and circumstances, is that a contract
came into
existence.”
75.
As the Cape Provincial Division held in
Muller v Pam Snyman Eiendomskonsultante
(Pty) Ltd
2001 (1) SA 313
(C)
“
proof of the primary facts on a
balance of probabilities is required by either test and the main
difference between them lies in
the strength of the inferences to be
drawn from the facts so proved.”
[5]
76.
Thus, the difference between the two tests
lies in whether the inference to be drawn from the proved facts must
be one that is capable
of no other reasonable interpretation or
whether it may be the most plausible probable conclusion. In
this case, it is not
necessary for me to consider the merits and
de-merits of the two tests as I am satisfied that the more stringent
test is met here.
77.
The plaintiff signed the sale agreement.
There can be no clearer indication that he intended to contract on
the terms set out in
the agreement. While the defendant did not sign
the agreement, it clearly indicated by its conduct that it contracted
to construct
a standard type E unit on the plaintiff’s erf on
the terms set out in the agreement. As we have seen above, the
defendant
was prepared to entertain alterations to the standard unit,
however it repeatedly stated that if certain stipulations were not
met it reserved the right to build the standard unit in terms of the
sale agreement. There can be no clearer indication of this
than the
e-mail from Mr Lopion to the plaintiff dated 13 June 2005 which
stated as follows:
“
Signed
quotes have to be in my possession by 30 June 2005. If not, the
developer reserves the right to disregard your request for
alterations and build a standard unit in terms of your signed
purchase agreement.”
78.
Importantly, Mr Prochassek conceded under
cross examination that if there was no agreement between the parties
on the alterations,
the defendant was
obliged
to build a standard E type unit on the plaintiff’s erf.
79.
This brings me to the next question: namely
whether the parties did reach agreement on the alterations to be made
to the standard
unit. It was submitted on behalf of the plaintiff
that agreement was reached in this regard, on the terms of the
initial quote
signed by the plaintiff on 30 June 2005. The argument
here was that the presentation of the quote by the defendant to the
plaintiff
on 8 June 2005 constituted the offer, and that by signing
the quote and sending back to the defendant on 30 June 2005, the
plaintiff
accepted the offer, thus concluding the agreement. As noted
above, I have accepted the plaintiff’s version that he signed
the quote and sent it back to the defendant on 30 June 2005. The
difficulty however is that in terms of the initial quote, there
were
two items that had not been quoted. These were “kitchen
customisation” and “additional paving.” In
the
absence of these items having been quoted and the quotes having been
accepted by the plaintiff, I do not think it can be said
that there
was agreement between the parties on the cost of the alterations as
at 30 June 2005.
80.
The plaintiff did not contend that the
parties reached agreement on the alterations after 30 June 2005. Nor
could he. After June
2005, a dispute arose between the parties
regarding the modification fee, which the defendant demanded and the
plaintiff refused
to pay. There were still no figures for “kitchen
customisation” and “additional paving.” An addendum
was
prepared but never signed.
81.
For all these reasons, I am of the view
that the parties did not reach agreement on the alterations to be
made to the standard unit.
There was however a valid and binding
contract between the parties for the construction of a standard type
E unit on the erf at
a cost of R410 450.00. The next question which
arises is whether that contract was validly cancelled by the
defendant.
WAS THE CONTRACT FOR THE
CONSTUCTION OF THE DWELLING VALIDLY CANCELLED BY THE DEFENDANT?
82.
The defendant purported to cancel the
agreement on the basis that it was entitled, prior to commencing
construction, to a demand
guarantee for the full amount for the
building costs, and that despite demand, the plaintiff failed to
provide this.
83.
For its contention that it was entitled to
a demand guarantee for the full amount of the building costs, the
defendant relied on
clause 3 of the Deed of Sale
[6]
and in particular clause 3.3 thereof which provides that “
the
balance of the purchase price shall be payable against the
registration of transfer into the name of the Purchaser but payment
thereof is to be secured by means of a bank guarantee…”
The defendant submitted that since the purchase price is
stipulated as R639 450 000 in clause 3.2 (this was inserted by hand),
clause 3.3 clearly entitled it to a bank guarantee for the cost of
the erf
and
the building costs. The defendant submitted that this reading is
reinforced by the portion of clause 3.4 of the Deed of Sale which
provides that “
the approved
Banker’s Guarantee or other acceptable security for the full
amount of the building costs referred to in 3.3
above…..”
84.
The defendant submitted that it needed a
demand guarantee in order for it to waive its builder’s lien in
favour of the registered
bondholder since financial institutions,
including Nedbank, required it to waive its builder’s lien
before they would make
progress payments.
85.
The plaintiff submitted that the agreement
could not be interpreted in the manner contended for by the
defendant. Mr Kairinos pointed
out that clause 9 of Annexure “A”
explicitly entitled the plaintiff to finance the construction of the
dwelling by
means of a mortgage bond and a building loan as he had
done. The defendant had been aware of the financial arrangements made
by
the plaintiff for an extended period of time and had never
suggested that they were inadequate or that anything else was
required.
Mr Kairinos submitted that the security furnished by the
plaintiff constituted “acceptable security” within the
meaning
of clause 3.4 of the Deed of Sale.
86.
It was submitted further that there could
be no necessity for the defendant to have a demand guarantee for the
building costs when
the plaintiff bound himself, in terms of clause
9.2 of Annexure “A”, to sign the authority for interim
payments as
and when required by the defendant.
[7]
87.
Ultimately, the plaintiff contended that
the defendant had had no legal entitlement to insist on a demand
guarantee and that its
purported cancellation of the agreement was
therefore invalid.
88.
In order to decide whether the defendant’s
cancellation of the agreement was valid, it is accordingly necessary
for me to
interpret clause 3 of the Deed of Sale.
89.
It is necessary to begin by setting out the
correct approach to the interpretation of contracts. In
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA)
(“Endumeni”)
the SCA provided a comprehensive exposition of the rules of
interpretation applicable to contracts in our law:
“
The
present state of the law can be expressed as follows: Interpretation
is the process of attributing meaning to the words used
in a
document, be it legislation, some other statutory instrument, or
contract, having regard to the context provided by reading
a
particular provision or provisions in the light of the document as a
whole and the circumstances attendant upon its coming into
existence.
Whatever the nature of the document, consideration must be given to
the language used in the light of the ordinary rules
of grammar and
syntax; the context in which the provision appears; the apparent
purpose to which it is directed and the material
known to those
responsible for its production. Where more than one meaning is
possible each possibility must be weighed in the
light of all these
factors. The process is objective, not subjective. A sensible
meaning is to be preferred to one which
leads to insensible or
unbusinesslike results or undermines the apparent purpose of the
document. Judges must be alert to,
and guard against, the
temptation to substitute what they regard as reasonable, sensible or
businesslike for the words actually
used. To do so in regard to a
statute or statutory instrument is to cross the divide between
interpretation and legislation; in
the contractual context it is to
make a contract for the parties other than the one they in fact made.
The ‘inevitable
point of departure is the language of the
provision itself’, read in context and having regard to the
purpose of the provision
and the background to the preparation and
production of the document.”
[8]
90.
I was referred in argument by Mr Kairinos
to the unreported judgment of the SCA in
Sakhiwo
Health Solutions (Limpopo) (Pty) Ltd v MEC of Health,
Limpopo Provincial Government
[2014]
ZASCA 206
, handed down on 28 November 2014, in which the SCA stressed
the following key principles of interpretation of contracts:
90.1
In interpreting a contract a court must
consider all of its provisions and not isolate any of them and
consider them in a
vacuum.
90.2
Even when there is no ambiguity in a
contract, in ascertaining what the parties’ intention is, a
court must have regard to
the factual matrix.
90.3
A contract must be interpreted so as to
give effect to its purpose and to make business sense.
91.
Interpretation ought to be conducted as a
single cohesive exercise and it is no longer appropriate to split the
process up into
different stages. Thus in
Bothma-Batho
Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
2014 (2) SA 494
(SCA), the SCA held as follows:
“
While
the starting point remains the words of the document, which are the
only relevant medium through which the parties have expressed
their
contractual intentions, the process of interpretation does not stop
at the perceived literal meaning of those words but considers
them in
the light of all relevant and admissible context, including the
circumstances in which the document came into being. The
former
distinction between permissible background and surrounding
circumstances, never very clear, has fallen away. Interpretation
is
no longer a process that occurs in stages but is ‘essentially
one unitary exercise.’”
[9]
92.
On the process of interpretation itself,
the SCA in
Endumeni
held
as follows:
“
Which
of the interpretational factors I have mentioned will predominate in
any given situation varies. Sometimes the language
of the
provision, when read in its particular context, seems clear and
admits of little if any ambiguity. Courts say in such cases
that they
adhere to the ordinary grammatical meaning of the words used……….The
expression can mean no
more than that, when the provision is
read in context, that is the appropriate meaning to give to the
language used. At the other
extreme, where the context makes it plain
that adhering to the meaning suggested by apparently plain language
would lead to glaring
absurdity, the court will ascribe a meaning to
the language that avoids the absurdity. This is said to involve a
departure from
the plain meaning of the words used. More accurately
it is either a restriction or extension of the language used by the
adoption
of a narrow or broad meaning of the words, the selection of
a less immediately apparent meaning or sometimes the correction of an
apparent error in the language used in order to avoid the identified
absurdity.” (references omitted)
[10]
93.
Applying these principles to the matter at
hand, I have three fundamental difficulties with the interpretation
contended for by
the defendant:
93.1
Firstly, the defendant’s
interpretation conflicts with a number of clauses in the sale
agreement. The first and most obvious
of these is clause 9 of
Annexure “A” which explicitly entitled the plaintiff to
finance the construction of the dwelling
by means of a mortgage bond
and a building loan as he did. The defendant’s interpretation
also conflicts with the words “
or
other acceptable security”
in
clause 3.4 of the Deed of Sale which must indicate that a demand
guarantee is not the only acceptable form of security. The
defendant’s interpretation fails to take account of the
distinction, which runs like a thread through the sale agreement,
between construction costs which are financed through a mortgage bond
and construction costs which are self-financed by a purchaser.
Both
methods of finance are clearly permitted. Thus clause 9.1 which is
entitled “
Finance by mortgage bond
or self-financed”
provides that
“
payment to the Seller, if
financed by a Bank, shall be made according to the methods and rules
for interim payments prescribed by
them…”
Where
payment is self-financed by a purchaser, clause 9 prescribes a
different method of payment. This distinction is also evident
in
clause 3.4 of the Deed of Sale which provides
inter
alia
that “
in
the circumstances where the building is self-financed by the
Purchaser the Seller shall be entitled to obtain from the Purchaser
a
guarantee that payment will be effected timeously.”
This would appear to indicate that a demand guarantee is required
only where the construction costs are self-financed by the purchaser.
If the defendant’s interpretation were correct and the sale
agreement required such a guarantee in all circumstances there
would
have been no need for the above sentence.
93.2
The second difficulty I have with the
defendant’s interpretation is that it is entirely at odds with
the conduct of the parties.
It is clear from the evidence that the
defendant was fully aware of the financial arrangements that the
plaintiff had made. Indeed,
on two occasions the defendant wrote
letters in support of the plaintiff’s requests to Nedbank to
extend the effective date
of the bond because the delays in the
commencement of construction. At no stage over an extended period of
time did the defendant
suggest to the plaintiff that the financial
arrangements he had made were inadequate or that anything else was
required. Notably,
when Mr Prochassek was asked under cross
examination what he understood clauses 3.3 and 3.4 of the Deed of
Sale to mean he gave
the following answer: “
We
were basically looking for security for the purchase price and the
buildings costs and for this we required a guarantee or other
acceptable security.”
This answer
reveals that it was not Mr Prochassek’s understanding that the
sale agreement required a demand guarantee in all
circumstances.
93.3
The third difficulty I have with the
defendant’s interpretation is that it simply does not make
business sense. The effect
of the defendant’s interpretation is
that it would be entitled to a demand guarantee for the full amount
of the building
costs before a single brick had been laid. Mr Nel,
Senior Operations Manager for Nedbank who gave evidence on behalf of
the plaintiff,
testified that Nedbank would never have issued a
guarantee for the full amount of the land portion and the building
costs. He testified
that the most that Nedbank would have done was
issue a guarantee for the land portion and that the balance would be
held on retention
and paid out in progress payments as the
construction progressed. When Mr Prochassek was asked whether he
considered it reasonable
for an agreement to require a demand
guarantee for the full amount of the building costs before a single
brick had been laid, he
answered that he personally would not have
signed such an agreement.
93.4
Finally, I am also not convinced that the
defendant’s position regarding the builder’s lien makes a
demand guarantee
a necessity. There can be no such necessity where,
as here, the plaintiff bound himself contractually to ensure that the
defendant
received progress payments for the building work.
94.
For all of the above reasons, I am of the
view that the interpretation contended for by the defendant is
untenable and cannot be
accepted.
95.
The sale agreement, and clause 3 of the
Deed of Sale in particular, is no model of clarity. The clause must
however be interpreted
in the light of the provisions in the
agreement as a whole, in order to give effect to the purpose of the
agreement and in a manner
that makes business sense.
96.
Interpreted in this manner, I am of the
view that clause 3.3 is intended to deal with the method of payment
for the purchase price
of the erf only. This is apparent from the
reference in the clause to registration of transfer. Thus the clause
provides that “
the balance of the
purchase price shall be payable
against
the registration of transfer
into the name of the Purchaser but payment thereof is to be secured
by means of bank guarantee….”
In
my view the figure of R639 450.00 was erroneously inserted in clause
3.2 as the purchase price. What ought to have been inserted
there was
R229 000.00 – the purchase price for the land only.
97.
Turning to clause 3.4, I am of the view
that this clause was intended to deal with the method of payment for
the building costs
only and should not refer back to clause 3.3. In
other words, the portion of clause 3.4 which reads “referred to
in 3.3 above”
is an error.
98.
Interpreted in this way:
98.1
Clause 3.3 requires a bank guarantee for
the purchase price of the erf;
98.2
Clause 3.4 requires a bank guarantee or
other acceptable security for the full amount of the building costs;
98.3
Clause 3.4 provides that where the building
costs are to be self-financed by the purchaser, the seller must be
provided with a guarantee
that payment will be effected timeously.
99.
In the result, clause 3 of the Deed of Sale
does not require a demand guarantee in all circumstances, but only
possibly
where the building costs are to be self-financed by the purchaser. In
all other cases, “other acceptable security”
for the
building costs is sufficient.
100.
This interpretation coheres with the other
provisions of the agreement and its overall scheme which permits the
building costs to
be financed through a mortgage bond or
self-financed and explicitly provides that in the former case
“
payment may be made according to
the methods and rules for interim payments prescribed by the bank.”
It accords with the fundamental
purpose of the building contract as far as the seller is concerned
which is to ensure that
adequate security is in place for the
building costs and that progress payments are received as the
construction progresses. It
accords with the subsequent conduct of
the parties and certainly appears to be how both parties understood
the agreement. Finally,
it is an interpretation that makes business
sense. Conversely, it would not ordinarily make business sense for a
seller to be able
to insist on a demand guarantee for the full amount
of building costs before a single brick had been laid, particularly
in circumstances
where the purchaser had secured a mortgage bond over
the erf. It may however be justifiable from a business sense point of
view
to require a greater level of security from purchasers who are
self-financing the building costs.
101.
I am therefore of the view that the
plaintiff had provided acceptable security for the building costs in
terms of the agreement,
that the defendant had no entitlement to
insist on a demand guarantee from the plaintiff and that the
defendant’s purported
cancellation of the agreement was
accordingly invalid.
102.
I now turn to the question of the relief
that ought to be granted to the plaintiff.
IS THE PLAINTIFF
ENTITLED TO SPECIFIC PERFORMANCE AND IF SO IN WHAT FORM?
103. The defendant
raised a special pea to the effect that the agreement was “inchoate”
because no final drawings or
building plans were annexed to it. The
defendant contended that the consequence of this was that the relief
sought by the
plaintiff was not competent in law.
104.
The agreement does not explicitly state
that final drawings or building plans are required to be attached.
The reason for this seems
obvious: final drawings and plans would not
have been in existence at the time of the conclusion of the
agreement. This is clear
from clause 3.1 which provides that “
the
Purchaser authorises the Seller to prepare working drawings for the
Works and to submit such plans for and on behalf of the
Purchaser to
the Local Authority concerned.”
This was yet to be done at the time of the conclusion of the
agreement.
105.
The only plan that was in existence at the
time of the conclusion of the agreement was the defendant’s
building plan for the
type E unit. As stated above, it was common
cause that the defendant provided the plaintiff with this plan and
that it formed part
of the plaintiff’s application for his bond
and building loan.
106.
The agreement itself clearly identifies the
dwelling to be constructed as a type E unit. I do not think the
fact that the
defendant’s plan is not attached to the agreement
renders it inchoate. Mr Novitz did not refer me to any authority in
support
of such a proposition. There is accordingly no merit in the
special plea.
107.
Mr Novitz did not suggest that there was
any other reason why specific performance ought not to be granted in
this case. The parties
were
ad idem
on
the obligation to build. As stated above, Mr Prochassek conceded that
if the parties failed to reach agreement on the alterations,
the
defendant was obliged to build a standard unit in terms of the
agreement. The parties were also
ad
idem
on what is to be built – a
standard type E unit.
108.
As for costs, there was some argument over
the costs that have been reserved over the years. I am not convinced
that there is any
reason why those costs should not be costs in the
cause.
109.
I accordingly make the following order:
1.
The defendant’s counter-claim is
dismissed.
2.
The plaintiff’s claim succeeds.
3.
The defendant is ordered to do all things
necessary in preparation for and to effect the construction of a
standard type E unit
on Erf [........], Greenstone Hill,[........] at
a cost of R410 540.00 in terms of the agreement of sale concluded
between the
parties in September 2003.
4.
The defendant is ordered to pay the costs
of the action and the application that preceded it.
_____________________________________
H BARNES
Acting Judge of the High Court of South Africa
Gauteng Local Division, Johannesburg
Heard:
1 – 4 December 2014
Delivered:
18 May 2015
Appearances:
For the Plaintiff:
Adv G Kairinos SC
Attorneys:
Jurgens Bekker
Attorneys
For the Defendant:
Adv M Novitz
Attorneys:
Novitz Attorneys
[1]
The agreement of sale also comprises a document entitled “House
Rules” which is not material for purposes of this
judgment.
[2]
For the applicable principles in this regard see
Exdev (Pty) Ltd v Pekudei Investments
(Pty) Ltd
2011 (2) SA 282
(SCA) and
Nash v Golden Dumps (Pty) Ltd
1985 (3) SA 1
(A) at 23D-E.
[3]
Lekup Prop Co No 4 (Pty) Ltd v Wright
2012 (5) SA
246 (SCA)
[4]
At para 22.
[5]
At p 320.
[6]
The relevant portions of clause 3 have been quoted in paragraph 12
above.
[7]
Clause 9.2 of Annexure ‘A” provides
inter alia
as follows:
“
The Seller is hereby authorised to
receive interim draws from the Mortgagee/s and the Purchaser agrees
to sign the authority for
such payments as and when required by the
Seller.”
[8]
At para 18.
[9]
At para 12.
[10]
At para 25.