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[2015] ZAGPJHC 122
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Bernstein N.O and Another v Goldex 16 (Pty) Ltd and Another (2014/37846) [2015] ZAGPJHC 122 (4 June 2015)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 2014/37846
DATE:
04 JUNE 2015
In the matter
between:
ILAN
BERNSTEIN
N.O
..................................................................................................
First
Applicant
YARON
BERNSTEIN
N.O
.........................................................................................
Second
Applicant
And
GOLDEX
16 (PTY)
LTD
.............................................................................................
First
Respondent
THE
REGISTRAR OF DEEDS:
BLOEMFONTEIN
...........................................
Second
Respondent
J
U D G M E N T
KEIGHTLEY,
AJ
:
[1] This is an
application for specific performance arising out of a sale agreement
associated with a residential sectional title
development scheme,
known as Waterford, (“Waterford”) on the Vaal River.
[2] The applicants
are the trustees of the Bernfin Trust (“the Trust”).
The first respondent is Goldex 16 (Pty)
Ltd (“Goldex”).
The second respondent is the Registrar of Deeds, Bloemfontein.
The Registrar was joined
solely to give effect to the relief original
sought by the Trust. He has played no part in the proceedings.
[3] On 23 August
2012 the parties entered into the written sale agreement. The
ultimate purpose of the agreement was to secure
for the Trust a
Certificate of Registered Sectional Title in respect of a particular
unit in the Waterford development scheme.
[4] To this end, the
agreement included the following salient provisions:
[4.1] The Trust
purchased from Goldex, which was the developer of Waterford, a real
right of extension in respect of a particular
portion of the
development for the amount of R1,8 million.
[4.2] The real right
of extension was defined as meaning: “
that portion described
as site RR78 (site1) in extent 1191 square metres of the right to be
reserved by the seller upon the opening
of the sectional title
register to erect and complete a further building or buildings on the
common property in terms of section
25(1) of the (Sectional Titles
Act, 95 of 1986) Act and as shown on the plans
”.
[4.3] The land was
defined as meaning subdivision 9 (of 4) of the Farm Luciana 214,
District Parys, Free State Province (“the
Waterford land”).
[4.4] Pursuant to
the real right of extension, the Trust was obliged to construct a
dwelling house on the relevant portion of land
within two years.
[4.5] The Trust
would be entitled to cause a Certificate of Registered Sectional
Title to be registered in respect of its portion
once the
construction of the house was complete.
[5] At the
insistence of the Trust, an additional manuscript clause (“the
manuscript clause”) was included in the sale
agreement as
clause 17.5. It provided that:
“
It is
recorded that the Purchaser is attempting to arrive at an all
inclusive price of construction, including land and buildings
of the
house as per Annexure ‘A’ attached on specification
similar to the existing house, 14 Waterford and a large
boathouse and
fees at an all inclusive price of R4, 000, 000. 00 (VAT inclusive).
”
[6] In its founding
affidavit the Trust explains the context in which the manuscript
clause was included in the sale agreement.
During discussions
between the parties leading up to the conclusion of the agreement, Mr
Bernstein (acting as a trustee on behalf
of the Trust) advised one Mr
Sneech (Goldex’s representative) that if the Trust were to
invest in Waterford, its purchase
would have to include a boathouse.
Mr Sneech showed Mr Bernstein a particular existing boathouse (“the
boathouse”).
He told Mr Bernstein that the boathouse
would form part of the proposed sale agreement. The manuscript
clause was inserted
to give effect to this.
[7] Mr Sneech
confirms in a supporting affidavit that: “
the boathouse
formed part of the agreement of 23 August 2012. The intention
at the time of the signature of the …
agreement was to
give the Purchasers free and unencumbered ownership, and occupation
of the boathouse from the date of registration
”.
[8] The Trust duly
constructed a house on its section of the property. It also
took over the use of the boathouse.
[9] On 16 May 2013 a
Certificate of Registered Sectional Title was registered in the name
of the trustees of the Trust in respect
of a unit described as
Section No. 101 of the Waterford Sectional Plan in terms of section
25(11)(c) of the Sectional Titles Act.
It specifically records
that it relates to the land and building or buildings situated on
Portions 9 (4) of the Farm Luciana 214.
[10] In 2014 a
dispute arose between the parties regarding the issue of whether or
not the boathouse formed part of the sale agreement.
The Trust
asserted that it did, and demanded immediate transfer of the
boathouse at no cost to the Trust. Goldex disputed
that the
boathouse had formed part of the sale agreement. It took the
position that if the Trust wanted to take over the
boathouse, it
would have to pay an additional amount to Goldex. It issued an
invoice to the Trust in the amount of R150 000.
00 for the “sale
of boathouse for #1 Waterford.”
[11] This stalemate
led to the Trust instituting the present proceedings against Goldex.
In its original notice of motion,
the Trust sought an order directing
Goldex to take all steps necessary to transfer ownership of “the
large boathouse situated
at or near Stand No. 1, Waterford Estate,
forming part of subdivision 9 (of 4) of the Farm Luciana 214 ”
into the name of
the Trust.
[12] However,
subsequent developments introduced a spanner in the works for the
Trust.
[13] When Goldex
filed its answering affidavit, it transpired for the first time that
the boathouse is not situated on the Waterford
land at all. It
is actually situated on a separate piece of land, described in the
relevant titled deed as “
the remaining extent of portion 4
of the farm Luciana no. 214” (emphasis added). For
simplicity’s sake, I refer to this as “the boathouse
land”. The boathouse land is held by Goldex under
separate title from that in respect of the Waterford land.
The
sectional title plan for the Waterford development does not cover the
boathouse land.
[14] On this basis,
Goldex opposed the relief sought by the Trust. It averred in
its answering affidavit that the boathouse
could not be transferred
without a transfer of the land to which it has acceded. The
relief sought by the Trust would require
a transfer to the Trust of
the boathouse land. Goldex averred that it was never the
intention of the parties when they entered
into the sale agreement
that the Trust would purchase the boathouse land.
[15] Goldex raised a
second complication in its answering affidavit. It pointed out
that the boathouse land is zoned agricultural.
The Subdivision
of Agricultural Land Act 70 of 1970 requires consent by the relevant
authority for any subdivision of the boathouse
land. No consent
has been granted. Goldex relied on the absence of the requisite
consent as an additional basis for
opposing the relief sought.
[16] It is clear
that until the answering affidavit was filed the Trust had no idea
that the boathouse was not situated on the Waterford
land. The
deponent to the Trust’s replying affidavit, Mr Bernstein,
states that the Trust was “blissfully unaware”
of the
situation until then. Furthermore, he says, Goldex itself had
not raised this issue before.
[17] Despite the
changed factual scenario, the Trust persists in its efforts to obtain
an order of specific performance against
Goldex. It still seeks
an order directing Goldex to take the necessary steps to transfer
ownership of the boathouse to the
Trust. The only change in
this regard is that it now describes the boathouse as being situated
on or near the boathouse land.
[18] The attitude of
the Trust is that the changed facts do not change the legal
situation. It says that what the Trust is
entitled to is an
order compelling Goldex to take whatever steps are necessary to
ensure that the boathouse is transferred to it.
If that means
that a portion of the boathouse land must also be transferred to the
Trust then, in Mr Bernstein’s words, “so
be it”.
[19] The thrust of
the Trust’s case in this regard is that even though the parties
were unaware that the boathouse was not
situated on the Waterford
land, they intended that it would form part of the sale agreement.
The Trust argues that this intention
can be gleaned from the terms of
the agreement, and the context within which it came about. It
submits that, properly interpreted,
the agreement placed an
obligation on Goldex to ensure that the Trust acquired ownership of
the boathouse as part and parcel of
what it was purchasing, and
regardless of whether it was situated on the Waterford land or not.
It seeks to enforce Goldex’s
obligation in this regard, even if
this means that Goldex will have to transfer a portion of the
boathouse land to the Trust.
[20] The common
intention of the parties lies at the heart of every contract.
To succeed the Trust must establish that the
common intention of the
parties was that the Trust would acquire the boathouse regardless of
whether it was on the Waterford land
or not. The Trust must
show that this intention existed at the time that the agreement was
entered into.
[21] I accept, as
counsel for the Trust submitted, that Mr Sneech confirms Mr
Bernstein’s version that both parties intended
that the
boathouse would form part of the sale agreement. Mr Sneech also
confirms that the manuscript clause was inserted
to give effect to
this intention. Goldex does not refute this evidence in its
answering affidavit.
[22] If the
boathouse was situated on the Waterford land, this evidence of a
common intention may well have been sufficient for
the Trust to
establish its case.
[23] It may even
have been sufficient if the evidence showed that the parties were
aware at the time that there was some uncertainty
as to whether the
boathouse was situated on the Waterford land or not. In those
circumstances, the Trust conceivably could
have argued that the
manuscript clause was intended to place an obligation on Goldex to
transfer the boathouse to the Trust even
if it was subsequently found
not to be on the Waterford land.
[24] However, that
is not what we are dealing with in this case. On the contrary,
the evidence before me demonstrates that
when the sale agreement was
entered into neither of the parties had any idea that the boathouse
was not situated on the Waterford
land. At the time that Mr
Bernstein deposed to the founding affidavit he was blissfully
unaware, as he put it subsequently,
of the true facts. The same
is true of Mr Sneech. His affidavit makes no mention of the
land on which the boathouse
is situated.
[25] Mr Bernstein
stated in his replying affidavit that he only became aware that the
boathouse was not situated on the Waterford
land when Goldex filed
its answering affidavit. However, Mr Bernstein did not go
further to say that the parties had considered
this possibility and
its consequences at the time they entered into the sale agreement.
[26] The only
reasonable inference to draw from the evidence is that both Mr
Bernstein and Mr Sneech assumed at the time they negotiated
the sale
agreement that the boathouse was on the Waterford land. This
assumption was subsequently shown to have been incorrect.
[27] That the
parties both mistakenly assumed that the boathouse was on the
Waterford land is supported by the terms of the sale
agreement.
As I have already indicated, the only land referred to and dealt with
in the sale agreement is the Waterford land.
The Trust’s
real right of extension is linked specifically to a particular
portion of the Waterford land, viz. site 1.
The Certificate of
Sectional Title subsequently registered is in respect only of this
portion of the Waterford land.
[28] In the
circumstances, there is nothing in the agreement to indicate that the
parties foresaw the possibility that the boathouse
was on land other
than the Waterford land. There is certainly nothing in the
agreement to indicate that they considered what
the respective rights
and obligations of the parties would be if the boathouse turned out
not to be situated on the Waterford land
at all. All
indications from the agreement are that the rights and obligations of
the parties would be restricted to the
Waterford land.
[29]
From
the context within which the sale agreement came about, as well as
from the terms of the agreement itself, I can only conclude
that
whatever agreement the parties thought they had reached in respect of
the boathouse this was flawed by a common mistake.
A common
mistake exists in circumstances where the parties reach agreement on
an issue but they are both under the same fundamental
misapprehension
about an underlying fact.
[1]
[30] In this case,
the parties both mistakenly thought that the boathouse was situated
on the Waterford land. The evidence
of the Trust indicates that
the parties intended that the boathouse would form part of the
agreement. However, that intention
was formed on the mistaken
assumption that the boathouse fell within Waterford. As a
result of this assumption, the parties
did not consider what the
position would be if, as it subsequently transpired was the case, the
boathouse was actually situated
on a different property altogether,
falling outside Waterford. There is no evidence from Mr
Bernstein or Mr Sneech that they
ever did. The terms of the
sale agreement also indicate that they did not consider this
possibility. Had the parties
done so, I would have expected the
sale agreement to contain specific provisions to deal with the
situation. There are none, either
in the manuscript clause or
elsewhere.
[31]
Common
mistake vitiates the relevant agreement, and it may be treated as
invalid.
[2]
The present case indicates why this is so. The inevitable consequence
of the parties’ mistaken belief is that there is an
absence of
consensus on the critical issue for this case, viz. the parties’
respective rights and obligations in respect
of the boathouse when in
reality it is
not
situated on the Waterford land.
[32] For these
reasons I cannot accept the Trust’s submissions that the
parties intended that the Trust would acquire the
boathouse
regardless of where it was situated. I find that there was no
obligation on Goldex to transfer ownership of the boathouse
in
circumstances where this would also necessarily entail a transfer of
the boathouse land, or a portion of it, to the Trust. In
the absence
of this obligation, the Trust’s claim for specific performance
must fail.
[33]
In
light of this finding, it is unnecessary for me to give detailed
consideration to Goldex’s alternative defence based on
the
Subdivision of Agricultural Land Act. It seems to me that this Act is
a further obstacle to accepting the interpretation of
the sale
agreement relied on by the Trust. Transfer of the boathouse to the
Trust would inevitably require a subdivision of the
boathouse land.
This is prohibited under the Act without prior ministerial
consent.
[3]
It is common cause that this consent has not been obtained in respect
of the boathouse land. In the circumstances, the parties
could not
validly have agreed that Goldex would be under an obligation
subsequently to obtain the necessary consent in order to
effect a
transfer of the boathouse to the Trust. An agreement of this nature
is unenforceable, and for this reason too, the Trust’s
claim
for specific performance is ill-founded.
[34] As far as costs
are concerned, counsel for the Trust submitted that if I dismiss the
application, I should nonetheless not
hold the Trust liable for the
costs of the application, at least up until the answering affidavit
was filed. He submitted
that the Trust should not be mulcted in
costs for an application based on facts that were not brought to the
attention of the Trust
until the answering affidavit was filed.
[35] I see no reason
in this case why the usual order of costs should not be made.
The Trust persisted in its relief, subject
to a relatively minor
amendment, after the answering affidavit was filed. In my view,
it is appropriate that the costs of
its application should follow the
outcome of that application.
[36] I make the
following order:
(a) The application
is dismissed with costs.
R M
KEIGHTLEY
ACTING JUDGE OF
THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
Date
Heard: 1 June 2015
Date
of Judgment: 4 June 2015
Counsel
for the Applicants: K. Ioulianou
Instructed
by: Rene Kyriakou Attorneys, Rosebank
Counsel
for Respondent: SF Mouton
Instructed
by: Max Lourens Attorneys, Stellenbosch
[1]
A J Kerr
The
Principles of the Law of Contract
(6
th
ed) p255
[2]
Dickenson
Motors (Pty) Ltd v Oberholzer
1952 (1) SA 443
(A)
[3]
Section 1(e)(i) of the Subdivision of Agricultural Land Act 70 of
1970 provides, in relevant part that:
“
no
portion of agricultural land, whether surveyed or not, and whether
there is any building thereon or not, shall be sold …
unless
the Minister has consented in writing.”