Brief Summary

Contract — Sale of property — Urgent application for specific performance — Applicants sought to compel respondents to transfer property following full payment of purchase price — Respondents contended that payment was not made and sought to sell property to third party — Court found that no valid cancellation of sale agreement occurred and no notice of demand was issued as required by section 19(2)(c) of the Alienation of Land Act — Applicants entitled to enforce agreement and compel transfer of property.

Comprehensive Summary

Summary of Judgment

Introduction

This was an urgent application for final relief in the Gauteng Division of the High Court, Johannesburg, in which the applicants sought enforcement of a written agreement of sale of immovable property through an order of specific performance, coupled with ancillary relief to secure transfer and prevent further alienation pending transfer.

The applicants were Louis Egnacious Menyatso and Gaboitsewe Monica Menyatso. The principal opposing parties were the first and second respondents, Yusuf Mkhusei E Mphahlele and Petunia Sharon Ditlagonna Mphahlele, who were the sellers in the applicants’ sale agreement. The third respondent, Nomred Properties (Pty) Ltd, was cited because it had purchased the property from the first and second respondents and transfer was allegedly pending. The fourth respondent, Mostert Skosana Incorporated, and the fifth respondent, the Registrar of Deeds, Johannesburg, were also cited in relation to the transfer process and implementation of the relief.

The application was launched on 28 March 2022 as a matter of urgency and was heard on 13 April 2022, with judgment delivered on 20 April 2022. The dispute concerned whether the applicants were entitled to compel transfer under their 13 November 2020 sale agreement, notwithstanding the respondents’ denial of payment and the subsequent sale of the same property to Nomred Properties.

Material Facts

It was common cause that a written agreement of sale was concluded on 13 November 2020 between the applicants and the first and second respondents, in terms of which the applicants purchased a residential property described as ERF [....], Portion 4, Robinpark, Gauteng, held under Deed of Transfer T[....], for R780 000.00.

The court treated as material the contractual terms recording payment and occupation. Clause 4 recorded that the purchase price “has been paid to the sellers directly”. Clause 7.1 recorded that occupation and possession had been given to and taken by the purchasers, and contemplated that the purchasers would occupy the property until registration if occupation preceded transfer. Clause 17 recorded that no occupational rent was payable because of payment of the full purchase price to the sellers.

The applicants alleged that they had paid the purchase price in instalments, namely R740 000.00 (25 April 2018), R13 000.00 (14 December 2018), R22 000.00 (28 February 2019), and a further R7 000.00 in cash to the sellers’ transferring attorneys. The applicants’ explanation for paying into a nominated third-party account was that the sellers had instructed them (via a text message) to pay into an account of Toonserve (Pty) Ltd, although the applicants said the relevant phone had since been lost.

The applicants stated that on 3 February 2022 they became aware that the first and second respondents had sold the property to Nomred Properties notwithstanding the earlier sale to the applicants. They alleged that Nomred Properties was in the process of transferring the property, and that the first and second respondents refused, despite demand, to sign transfer documents in favour of the applicants.

The first and second respondents disputed both urgency and the substantive entitlement to transfer. They alleged that, in early 2018, the parties’ arrangement began with a lease (because the applicants would not qualify for a home loan), and that any suggestion in clause 4 that the purchase price was already paid was a mistake which they did not notice when signing. They further alleged that the applicants abandoned the property in late 2018 and indicated they were no longer interested in purchasing due to break-ins, whereafter the first and second respondents changed locks and gave occupation to Nomred Properties.

Nomred Properties’ director stated that Nomred purchased the property from the first and second respondents on 14 September 2021 for R400 000.00, that it was in the business of property trading, and that it subsequently sold the property onward on 5 November 2021 for R900 000.00, allegedly unaware of any dispute between the applicants and the first and second respondents. The affidavit also referred to security guards being deployed because of attempts by the applicants to gain access without consent.

In reply, the applicants relied on ongoing communications with the transferring attorneys (Bhika Calitz Inc) requesting updates on transfer during 2021 and 2022, and asserted that they moved out temporarily due to crime concerns rather than abandonment, while maintaining an intention to proceed with transfer.

Legal Issues

The court was required to determine whether the matter should be enrolled and heard as urgent and whether non-compliance with ordinary time periods and service should be condoned under Uniform Rule 6(12). This was primarily a procedural question involving the application of the urgency standard to the asserted risk of imminent transfer.

On the merits, the central question was whether the applicants were entitled to final relief compelling specific performance of the 13 November 2020 sale agreement, including the signing of transfer documents (or authorisation for the sheriff to sign), and an order directing the Registrar of Deeds to register transfer to the applicants.

A key subsidiary issue concerned the proper approach to disputed facts on motion when final relief is sought, specifically the application of the Plascon-Evans rule to the respondents’ denial that the purchase price had been paid.

The dispute involved both questions of fact (whether payment occurred, whether the applicants abandoned the transaction, and whether the sellers were entitled to treat the agreement as at an end) and the application of legal rules to the facts, including the effect of section 19(2)(c) of the Alienation of Land Act 68 of 1981 and contractual breach provisions on the sellers’ ability to cancel or resile and resell.

Court’s Reasoning

On urgency, the court accepted that the applicants’ complaint was that the first and second respondents were attempting to effect transfer to a third party, and that the applicants would not obtain substantial redress in due course if transfer occurred in the interim. On that basis, the court exercised its powers under Rule 6(12) to hear the matter urgently and condoned non-compliance with the ordinary rules relating to service and time periods.

Turning to the merits, the court treated section 19(2)(c) of the Alienation of Land Act 68 of 1981 and the contract’s breach clause as significant. The court noted that, under section 19(2)(c), a seller is not entitled, by reason of the purchaser’s breach, to enforce certain penalty-type provisions, terminate the contract, or sue for damages unless the seller has notified the purchaser of the breach by letter, demanded rectification, and the purchaser failed to comply. The court considered clause 16 of the agreement to be consistent with this statutory approach. The reasoning proceeded on the basis that there was no preceding notice of demand and no properly established cancellation before the subsequent sale.

In addressing the respondents’ contention that clause 4’s statement of payment was a mistake, the court emphasised that the sellers had not adequately dealt with clause 17, which also indicated full payment (via the non-payment of occupational rent because of full payment). The court further observed that rectification is available where a written agreement does not correctly record the parties’ intended agreement due to a common mistake, but found it material that the first and second respondents had made no attempt to seek rectification of the agreement before selling to Nomred Properties on the basis of the alleged error.

The court then applied the Plascon-Evans approach for final relief on motion. It concluded that the factual dispute raised by the first and second respondents regarding non-payment was untenable, palpably implausible, and capable of rejection on the papers. The court considered it improbable that the applicants would pay large sums to an unrelated account yet persist over time in demanding transfer through the sellers’ transferring attorneys, as reflected in the email correspondence.

On the remedy, the court restated that specific performance is discretionary and must be exercised judicially with reference to all relevant circumstances. The court found that the prerequisites for final relief had been established, identifying a clear right, an apprehension of harm linked to pending transfer, and an overall balance favouring enforcement. In addition, the court relied on the principle articulated in Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others that contracts freely and voluntarily entered into should be honoured, supporting enforcement of the sale agreement in the circumstances.

Outcome and Relief

The court granted the application as urgent, condoned non-compliance with the rules in terms of Uniform Rule 6(12), and ordered the first and second respondents to give effect to the 13 November 2020 contract of sale.

The court directed the first and second respondents to sign the transfer documents within three days of service of the order, failing which the sheriff was authorised and directed to sign on their behalf. The Registrar of Deeds, Johannesburg was directed to give effect to the order by transferring the property from the first and second respondents to the applicants.

Pending transfer, the first and second respondents were interdicted from selling, alienating, or encumbering the property, including instructing any third party to do so.

The first and second respondents were ordered to pay the applicants’ costs on the attorney and client scale.

Cases Cited

Maharaj v Tongaat Development Corporation 1976 (4) SA 994 (A).

Glen Anil Finance (Pty) Limited v Joint Liquidators Glen Anil Development Corporation Limited (In Liquidation) 1981 (1) SA 171 (AD).

Miller v Hall [1984] 1 All SA 132 (D).

Bekazaku Properties (Pty) Ltd v Pam Golding Properties (Pty) Ltd 1996 (2) SA 537 (C).

Boundary Financing Ltd v Protea Property Holdings (Pty) Ltd [2009] 2 All SA 7 (SCA).

Ex parte Neethling & Others 1951 (4) SA 331 (A).

Benson v SA Mutual Life Assurance Society 1986 (1) SA 776 (A).

Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others 2022 (1) SA 100 (SCA).

Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A).

Legislation Cited

Alienation of Land Act 68 of 1981, section 19(2)(c).

Rules of Court Cited

Uniform Rules of Court, Rule 6(12).

Held

The court held that the application warranted urgent enrolment because the applicants faced prejudice through the risk of transfer of the property to others, and they would not be afforded substantial redress in due course if transfer proceeded.

On the merits, the court held that the first and second respondents’ denial of payment raised a factual dispute that was implausible on the papers and could be rejected under the Plascon-Evans approach. The court further held that there was no demonstrated compliance with the statutory and contractual requirements governing breach and cancellation, and that the respondents’ reliance on an alleged mistake in the written agreement was not supported by any pursued claim for rectification.

The court held that the applicants were entitled to specific performance of the sale agreement, including compelled signature of transfer documentation (or sheriff’s signature in default), a directive to the Registrar of Deeds to register transfer to the applicants, and interim interdictory protection against further alienation or encumbrance pending transfer, with punitive costs against the first and second respondents.

LEGAL PRINCIPLES

The judgment applied the principle that an urgent court may, under Uniform Rule 6(12), condone non-compliance with ordinary forms and service/time periods where the applicant demonstrates urgency and a lack of substantial redress in due course.

It applied section 19(2)(c) of the Alienation of Land Act 68 of 1981 as limiting a seller’s entitlement to take certain enforcement steps arising from a purchaser’s breach, unless the purchaser has been notified of the breach by letter, called upon to remedy it, and failed to comply. The judgment treated the contractual breach clause as aligned with this statutory protective framework.

It reiterated the contractual doctrine of election upon breach, namely that an innocent party must choose between cancellation and enforcement, and that the chosen remedy excludes the inconsistent alternative unless the other party consents.

It affirmed that rectification is, in principle, available where a written agreement incorrectly records the parties’ intended agreement due to common mistake, but treated the absence of any pursued rectification as significant in evaluating the respondents’ reliance on an alleged drafting error.

It applied the Plascon-Evans rule governing final relief on motion, and accepted that denials may be rejected where they are so implausible that they cannot credibly raise a genuine dispute of fact on the papers.

It applied the principle that specific performance is a discretionary remedy which must be granted or refused through a judicial evaluation of relevant circumstances, and reinforced the broader principle that contracts freely and voluntarily concluded should be honoured and enforced.

Menyatso and Others v Mphahlele and Others (2022/093) [2022] ZAGPJHC 255 (20 April 2022)