About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2010
>>
[2010] ZAGPJHC 145
|
|
Waz Props (Pty) Limited and Another v Sentinel Mining Industry Retirement Fund and Another (31309/10) [2010] ZAGPJHC 145 (18 November 2010)
IN THE
HIGH
COURT OF SOUTH AFRICA (
SOUTH
GAUTENG
)
JOHANNESBURG
REP0RTABLE
(in electronic reports only)
CASE NO
:
31309/10
DATE
: 2010-11-18
I
n the matter between
WAZ PROPS (PTY)
LIMITED
......................................................
1
st
Applicant
WERLEX PROPERTIES (PTY)
LIMITED
.................................
2
nd
Applicant
and
SENTINEL MINING INDUSTRY RETIREMENT
FUND
......
1
st
Respondent
FLUXMANS ATTORNEYS
INC
..............................................
2
nd
Respondent
_________________________________________________________
J U D G M E N T
_________________________________________________________
WILLIS
, J
:
1. The applicants have
approached the Court by way of motion proceedings seeking an order
for the payment of R207 810.25 together
with interest and costs.
The first applicant is the registered owner of certain properties in
the Elton Guild area in Johannesburg.
It applied to the Local
Authority to receive permission to rezone the properties for the
development of a sectional title complex.
The first respondent, as
the owner of the Melrose Arch development, which was planning to
upgrade Park Road, Birnam, near to these
properties, lodged an
objection to the first applicant’s rezoning application.
2. The matter was
settled, and an agreement concluded between the parties. The
relevant clauses of this agreement read as follows:
“3. The owner (Waz Props (Pty) Limited), the first applicant,
agrees and undertakes to effect payment of its pro rata share
of the
Park Road upgrading project, the total cost in an amount of
R115 531.87.
4. Method of payment. The owner will secure its obligations in terms
of this agreement in either of the following manners:
4.1 the owner shall within seven days of signature hereto, either:-
4.1.1 effect payment by way of a bank transfer,
which the owner undertakes to effect directly into the account of the
attorneys,
Nedbank, Rosebank branch, branch code 195805, account
number 1958506060, Northrand business branch, branch code 18905,
account
number 1489095596, which attorneys are hereby authorised to
invest such sum in an interest-bearing account with a registered bank
or financial institution in terms of section 78(2)(a) of the
Attorneys Act, 52 of 1978. The said account will be in the name of
Fluxmans Inc, with a reference to the aforesaid section of the
Attorneys Act, but will be identified with the name ‘Park
Road
Upgrading Project’, and the interest earned thereon will accrue
for the benefit of the Park Road Upgrading Project;
alternatively:
4.1.2 secure payment by way of a registered bank or financial
institution guarantee substantially similar to the draft guarantee
annexed as annexure B.”
3. In other words, the first applicant had a
choice. It could either advance the funds directly into the bank
account of the first
respondent’s attorney, or it could secure
payment by way of a bank guarantee. It needs to be noted, in
passing, that of
course a bank guarantee is not money, and this may
well explain why the choice is as it is. In other words, it may have
made sense
for the first applicant to have paid the money directly
into the trust account of the attorneys rather than to have incurred
the
costs of a bank guarantee. Nothing more needs to be said in this
regard.
4. The agreement also provided, after 4.1.2:
“or
4.2 The owner:-
4.2.1 agrees to register the following restrictive condition against
the title deed of the property, imposed by and in favour of
SMIRF.”
"SMIRF" is obviously an abbreviation
for the Sentinel Mining Institute Retirement Fund. It is common
cause that such
restrictive condition was not registered.
5. Clause 5 of the agreement provides as follows:
“
Non-completion of the Park Road Upgrading
Project.
5.1 In the event of the Park Road Upgrading
Project is not completed by 1 April 2009, then and in such event, the
interest-bearing
account referred to in 4.1.1 shall be closed, and
the amount referred to in 3, together with the owner’s pro rata
share of
the interest thereon, (less any administration charges)
shall be refunded to the owner.
5.2 Upon the happening of the event referred to in 5.1 SMIRF
undertakes, at its cost and expense, to procure the cancellation of
the caveat referred to in 4.2.1.”
6.
4.2.1 refers to the
restrictive condition, which, as I have said, is common cause was not
registered and has fallen away. It is
common cause that the Park
Road Upgrading Project was not completed by 1 April 2009.
7.
The first applicant
arranged for a guarantee to be issued. The guarantee was issued by
ABSA Bank, acting on behalf of the second
applicant. A completion
certificate, certifying that the upgrade project had been completed
on 15 February 2010 was issued on
22 February 2010, some 10 months
after the date stipulated in the agreement. The first respondent
then called up the guarantee
from ABSA Bank on 6 April 2009, and ABSA
Bank paid in terms of that guarantee as it was required to do. It
paid the amount of
R207 810.35, being the sum referred to in the
agreement of R115 531.08 given, together with interest.
Notwithstanding demand,
the first respondent has failed to repay the
amount claimed by the applicant.
8.
The case of the
applicant is that it was necessarily a tacit term, if one reads the
agreement as a whole, that if the Park Road
Upgrading Project was not
completed by 1 April 2009, the first respondent would not call up the
guarantee. The reasoning is that
if the first applicant had paid
cash, that would have been refunded by reason of the fact that the
project was completed well after
1 April 2009. It makes no sense
whatsoever that the first respondent should still be entitled to call
up the guarantee.
9. I am mindful of the
fact that a Court must be very slow to imply a term in a contract
which is not found there. See
Union
Government (Minister of Railways) v Faux Limited
,
1916 AD 105
at 115. It seems to me to be clear that this case stands
or falls by the so-called “of course” test. In fact, if
I understood counsel for the parties correctly, they both agreed that
it stands or falls by the “of course” test. Of
course,
counsel for the applicant says that the “of course” test
operates in its favour, and counsel for the respondents
contended
that it operates in their favour. I have in mind the well-known
quote from
Shirlaw
v
Southern
Foundries
(1926)
Ltd,
[1939] 2 KB 206
at 227, where the
following sentiments were expressed:
“
If an officious bystander suggested some
express provision in the agreement, the parties would testily
suppress them with a common,
‘Oh, of
course’, and if asked at the time the contract was negotiated
what will happen if such a situation, both would
have responded, ‘Of
course so-and-so will happen. We did not trouble to say that, it is
too clear’.”
Similar views were
expressed in the well-known case of
Wilkins
NO v Voges
[1994] ZASCA 53
;
1994 (3) SA 130
(A) at 1368
to 1373.
10. To my mind, if one was to ask an innocent
bystander whether it must have been intended by the parties that if
the Park Road
Upgrading Project was not completed by 1 April 2009 and
if the first applicant paid a sum of money into an interest-bearing
trust
account and had been repaid, would it have been their intention
that the first respondent would not call up the guarantee issued
instead? To my mind the answer to this question has to be, “Of
course”. Accordingly, it seems to me that the applicants
have
to succeed.
11. It is common cause that there should be no
costs order against the second respondents, who were the attorneys
responsible for
the drawing up of the agreement. I entirely agree
with this sentiment. I also do not agree that costs should be
awarded on an
attorney and client scale, although my answer to the,
“Of course” question is, “Yes, of course". It
cannot
be said that there was an "unarguable case”. I do
not see why the first respondent should be penalised by attorney and
client costs.
12. The only aspect
that I need to clarify before making my final order is who gets the
money? Is it the first applicant or the
second applicant? After
some debate with counsel it was agreed that if I am to order a
payment of money, it is appropriate that
the payment of money should
be made to the second applicant, because the guarantee was issued on
behalf of the second applicant,
by ABSA Bank, and it is the second
applicant’s bank account that has been depleted.
13. Accordingly, the following order is made:
The first respondent is to pay to the second
applicant the sum of R207 810.35 together with interest thereon
calculated at the
rate of 15.5 per cent
a
tempore morae
and costs.