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
>>
2020
>>
[2020] ZAGPJHC 182
|
|
Ro Swika Investment Properties (Pty) Ltd v Vasanjee Properties CC (2019/30400) [2020] ZAGPJHC 182 (18 May 2020)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Case
No.: 2019/30400
In
the matter between:
Ro
Swika Investment Properties (Pty) Ltd
Applicant
and
Vasanjee
Properties CC
Respondent
JUDGMENT
Vally
J
Introduction
[1]
This
matter concerns the interpretation of a written agreement. The facts
are few and free of any complexities.
Facts
that are not disputed
[2]
On
30 July 2018 the applicant and the respondent concluded a written
contract, in terms of which the respondent was to build a residence
on a certain property owned by the applicant (the building contract).
The relevant terms of the contract are:
a.
The
respondent would construct the residence for the applicant.
b.
The
applicant would pay the contract sum of R12 000 000.00 for
the construction, which amount would be paid in five instalments,
the
first being a deposit of R1 200 000.00 (the deposit) before
commencement of the construction or “
before
December 2018
”.
The rest would be paid as the construction work was in progress with
the final payment taking place upon completion of
the work.
c.
A
number of suspensive conditions were incorporated into the contract.
The clause specifying these conditions reads:
“
13
SUSPENSIVE CONDITIONS
13.1 This
contract is entered into subject to the following conditions being
met
13.1.1 the
fulfilment of all suspensive conditions in the agreement of sale
concluded with the OWNER in respect of the PROPERTY
(if applicable);
13.1.2 the
registration of the mortgage bond referred to in the deed of sale of
the PROPERTY (if applicable);
13.1.3 the
approval of working drawings by the local authority;
13.1.4 the
provision of SERVICES.
13.2 In the
event that any of the above conditions are not fulfilled within one
hundred and eighty (180) days from the [date when
contract was
concluded] this agreement shall be of no force and effect.
…
19 OWNER’S
DEFAULT
19.1 Should the
OWNER commit a breach of any of the terms of this contract, all of
which terms shall be material, and not rectify
such breach after
having been given SEVEN (7) days’ notice by registered post to
do so, the BUILDER shall be entitled forthwith
to give the OWNER, per
registered post, written notice of the termination of this contract,
without prejudice to any other rights
which the BUILDER may have in
terms of this contract or in law.
19.2 Failure by
the OWNER to make any payment due shall entitle the BUILDER, on
giving SEVEN (7) days’ written notice to the
OWNER to cease
work under this contract until payment shall have been made to the
BUILDER. The time during which such works shall
cease shall operate
as an automatic extension of time for completion and occupation,
unless the contract specifies to the contrary
in writing.
”
[3]
The
contract contains the usual non-variation clause.
[4]
On
11 September 2018 the applicant paid only R500 000.00 of the
deposit that was due. The applicant failed to pay the rest
of the
deposit before “
December
2018
”.
The respondent did not invoke the provisions of clause 19.1, which
entitled it to terminate the contract, nor did it furnish
the
applicant with a written notice calling on the applicant to purge its
default within seven days. The respondent in the meantime
had not
commenced with the construction.
[5]
The
conditions set out in 13.1.3 (the approval of working drawing by the
local authority) and 13.1.4 (the provision of services
to the
property) of the contract were not fulfilled. The applicant took the
view that the contract had lapsed as a result of the
failure of these
conditions. It accordingly asked that the R500 000.00, less any
legitimate expenses the respondent had been
forced to bear as a
result of the conclusion of the contract, should be returned to it.
The applicant accepts that a town planner
was engaged by the
respondent, and was paid R7 000.00 by the respondent. The
respondent refused to refund the applicant. It
adopted the view that
the contract was still alive and requested that the applicant perform
its obligations in terms of the contract
and tendered reciprocal
performance.
Is
the contract still alive?
[6]
The
respondent’s contention is that as long as the full deposit
amount remained outstanding its obligations were suspended,
as were
the rest of the conditions set out in clause 13. This it says is the
outcome of the automatic operation of clause 19.2.
According to it,
the provisions of clause 19.2 entitled it to halt the construction
process when the applicant had failed to comply
with its obligations,
and until the default was purged the respondent need not resume the
construction process. And, since the
applicant had failed to comply
with its obligations, until it rectified its default the contract as
a whole remains suspended.
The respondent acknowledged that it is
required to call upon the applicant in writing to remedy its default
within seven (7) days.
[7]
There
are a number of problems with this contention. Firstly, the
respondent did not furnish the written notice to the applicant,
and
hence the operation of the clause did not take effect. Secondly, even
if it had done so, all the provisions allow for is an
automatic
extension of the completion date for the construction. Thirdly, the
provisions of this clause do not affect or relate
to the provisions
of clause 13, the suspensive conditions clause.
[8]
This
then leaves us with the consequence of the operation of clause 13. It
is common cause that the conditions set out in sub-clauses
13.1.3 and
13.1.4 were not fulfilled. In consequence, the contract, by operation
of sub-clause 13.2, was nullified. That is clearly
what the parties
intended. In a sentence, the contract was no longer alive one hundred
and eighty days after the suspensive conditions
failed. The applicant
is entitled to a declarator to this effect.
Is
the applicant entitled to a refund?
[9]
There
is no provision in the contract as to which party should bear any
costs, or which party is entitled to any payment should
the contract
be nullified as a result of clause 13.2 taking effect.
Unsurprisingly, the respondent does not claim that it is entitled
to
keep the monies paid to it. It therefore has no cause to receive the
money. However, it had, in anticipation of the suspensive
conditions
as well as all the obligations of the parties being fulfilled,
advanced R7 000.00 to a town planner. The applicant
agrees that
it should bear the costs of the town planner’s services. As for
the rest of the money, the respondent should
return it.
Order
[10]
The
following order is made.
a.
The
building contract that was concluded between the applicant and the
respondent on 30 July 2018 is of no force or effect.
b.
The
respondent is to pay the applicant the sum of R493 000.00
c.
The
respondent is to pay the applicant interest on the sum of R493 000.00
at the prescribed rate of 10% per annum from 12 March
2019 to date of
payment in full.
d.
The
respondent is to pay the costs of suit.
_________________
Vally
J
Dates
of hearing: 20 April 2020
Date
of judgment: 18 May 2020
For
the Applicant: Adv MCJ Kerckhoven
Instructed
by: Cliffe Dekker Hofmeyr Inc
For
the Respondent: Adv CL Makram-Jooste
Instructed
by: Leon’s Law Chambers