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[2010] ZAGPPHC 99
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Riverspray Lifestyle Estate (Pty) Ltd v Auby (61073/2009) [2010] ZAGPPHC 99 (1 September 2010)
IN
THE HIGH COURT OF SOUTH AFRICA
/ES
(
NORTH
GAUTENG HIGH COURT. PRETORIA
)
CASE
NO: 61073/2009
DATE:01/09/2010
IN
THE MATTER BETWEEN
RIVERSPRAY
LIFESTYLE ESTATE (PTY) LTD APPLICANT
AND
WARWICK
MARK AUBY RESPONDENT
JUDGMENT
PRINSLOO.
J
[1]
The parties purported to enter into a written deed of sale in terms
of which the applicant sold to the respondent certain unit
number
B104, being a Residential Unit in the Sectional Title Scheme known as
Riverspray Apartments still to be erected on Portion
168 of the farm
Leeukuil no 596-IQ.
[2]
In terms of the deed of sale ("the contract") the purchase
price agreed upon is R675 000,00 in respect of which a
deposit of R15
000,00 had to be paid.
[3]
The respondent paid the deposit, but later resiled from the contract,
claiming that it is not enforceable, and also claims return
of the
deposit in terms of a counter-application.
[4]
The applicant seeks relief in the form of specific performance
crafted as follows in prayer 1 of the notice of motion:
"That
the respondent be and hereby is ordered to perform in accordance with
the terms and conditions as dictated by the agreement
between the
parties and is to pay the remaining amounts which are owing to the
applicant on the purchase price of the Sectional
Title Unit B104 on
portion 168 of farm Leeukuil no 596-IQ."
[5]
Before me Mr Harms appeared for the applicant, and Mr Hollander for
the respondent.
Some
remarks about the contract
[6]
The contract is divided into two sections. The first section ("the
First Part") runs into five clauses and it is followed
by a
second section ("the Second Part"), under the heading
"Terms and Conditions" again starting at clause
1 and
running into some twenty clauses with annexures.
[7]
Somewhat confusingly, clause 2 of the First Part provides that
the purchase price (of R675 000,00) is payable as follows:
"This
amount is payable as follows to the conveyancers:
2.1.1
a deposit by the Purchaser in the sum of R15 000,00 (fifteen thousand
rand) payable within 3 (three) Business Days after signature
hereof
by the purchaser;
2.1.2
the proceeds of the mortgage bond for the purchase of the Unit to be
registered simultaneously with transfer in the sum of
R735 000,00
(seven hundred and thirty five thousand rand).
2.2
Any other amounts (the balance of the purchase price) payable in
terms of this deed of sale should be paid by no later than
60 (sixty)
days before the target date for registration of transfer."
The
anticipated target date for registration of transfer is stated to be
1 June 2009 in clause 3 of the First Part.
Against
this background, it was argued by Mr Hollander, correctly in my view,
that it cannot be determined from the contract when
the rest of the
purchase price (other than the deposit of R15 000,00) is payable by
the applicant, ie whether it is on registration
of transfer or sixty
days before 1 June 2009.
[8]
Annexure "H" to the Second Part contains the following
provision underneath the specification of the amount of the
deposit:
"Deposits
are to be paid into the attorneys trust account within three days of
signing the Purchase Agreement.
The
contract will automatica
lly
lapse
if
this procedure is not adhered to
."
(Emphasis added.)
It
is common cause that the deposit was not paid within three days. The
respondent signed the contract on 12 October 2007, and paid
the
deposit only on 29 October 2007.
Clause
2.1 of the Second Part also provides that the purchaser shall pay the
deposit to the conveyancers within three days of signature
of the
contract by the purchaser.
[9]
It is common cause that the contract was signed on behalf of the
applicant (as seller) only on 6 February 2009, some fifteen
months
after the respondent, as purchaser, had signed the contract.
In
this regard it is appropriate to quote the provisions of clause 20.2
of the Second Part:
"The
purchaser's signature hereto constitutes an irrevocable offer to
purchase from the purchaser to the seller. This offer
may not be
withdrawn for a period of 24 (twenty four) months from date of the
purchaser signing this offer to purchase. The Seller
may therefore
accept such offer by signing this document in the said period."
In
my view it follows, from this stipulation, that there could not have
been a valid contract at any time before the document was
signed on
behalf of the applicant, as seller, on 6 February 2009.
In
this regard it is also useful to bear the provisions of
section 2(1)
of the
Alienation of Land Act 68 of 1981
in mind:
"No
alienation of land after the commencement of this section shall,
subject to the provisions of
section 28
, be of any force or effect
unless it is contained in a deed of alienation signed by the parties
thereto or by their agents acting
on their written authority."
[10]
Section 28
deals with the consequences of deeds of alienation which
are void or are terminated.
[11]
A clause which received a great deal of attention during the
proceedings before me, is clause 5 of the First Part which, under
the
heading "Suspensive Conditions" provides as follows:
"This
agreement is subject to the purchaser obtaining mortgage bond finance
from a financial institution in the amount of R735
000,00 (seven
hundred and thirty five thousand rand). Such bond to be approved in
principle within 21 (twenty one) days of signature
of this agreement
by the purchaser, or in any extended period which the seller at its
absolute discretion may allow without permission
of the purchaser."
[12]
With reference to clause 5 of the First Part,
supra,
the
following is stipulated in clause 3.1 of the Second Part:
"Should
an amount be inserted at clause 5 on page 3 regarding the obtainment
of a mortgage bond, then the agreement shall be
subject to a mortgage
bond
of
the said amount
being granted to the purchaser on normal terms and conditions as laid
down by a commercial bank on security of the property or
any other
acceptable security." (Emphasis added.)
[13]
It is common cause that the respondent, as purchaser, did not manage
to get a bond within twenty one days of signing the contract.
He duly
applied, but on 22 July 2008, long after expiry of the period of
suspension provided for in clause 5 of the First Part,
the manager of
Absa Bank, referring to respondent's home loan application, wrote as
follows to the latter:
"Based
on the information supplied and after careful evaluation of your
application, we regret to inform you that, primarily
for the reason
stated below, your application was not successful.
Your
current income is inadequate to repay the loan amount applied for
together with your other commitments. Your application was
regrettably unsuccessful."
[14]
It is this state of affairs which inspired the respondent, through
his accountant, to write to the applicant, only in February
2009,
advising that he would not be proceeding with the transaction because
he could not afford it. He also asked for his deposit
to be refunded.
In
response, the applicant's attorney informed the respondent that his
purported cancellation of the agreement was not accepted
and that
specific performance was demanded.
The
respondent took this letter to his attorney, who, on 30 June 2009,
wrote to the applicant's attorney expressing the view that,
where the
application for a bond had failed, the condition precedent (clause 5
of the First Part) had not been satisfied so that
the contract "has
ceased to be of any force and effect and the
status
quo ante
between
the parties falls to be restored". A refund of the deposit was
also demanded.
[15]
The applicant relies on the provisions of clause 3.2 of the Second
Part which reads as follows:
"In
the event of the bond not being granted or approved in principle by
the said date, the seller shall have the right to extend
the period
for further periods of 30 (thirty) days each, in order to obtain such
bond, without notice to the purchaser."
It
appears from the papers that after the refusal by Absa, dated 22 July
2008, to grant a bond to the respondent, the applicant's
consultants
managed, on 30 July 2008, to secure a bond in the amount of R607
500,00 for the respondent. Some time after this, the
respondent also
signed an undated "addendum to deed of sale" specifying
that a bond of R607 500.00 had been granted and
recognising that this
amount falls short of the R735 000,00 which is the "mortgage
loan amount indicated in contract".
It specifies that the
purchaser (respondent) "undertakes to deliver a Guarantee or
submit a Cash Payment for the abovementioned
short fall for payment
of the balance of the purchase price ..." The "short fall"
is stipulated to be Rl 12 500,00.
It
is clear that the "short fall" together with the amount of
the loan granted namely R607 500,00, only totals R720 000,00
as
opposed to the R735 000,00 stipulated in the suspensive condition
which is clause 5 of
Part 1.
This short fall also flies in the face
of clause 3.1 of the Second Part,
supra,
which
provides that "should an amount be inserted at clause 5 on page
3 regarding the obtainment of a mortgage bond, then the
agreement
shall be subject to a mortgage bond
of
the said amount
being
granted ..." (emphasis added).
[16]
To add to the confusion, there is also clause 3.3 of the Second Part,
evidently not relied upon by the applicant, which provides
that
should the transaction be subject to the obtainment of a mortgage
bond the purchaser grants the seller in conjunction with
the
"Mortgage Consultants", the sole right to apply for the
bond on behalf of the purchaser and the purchaser or any
third party
shall not be entitled to directly apply for the bond. This, of
course, flies in the face of the suspensive condition
which
stipulates that the purchaser must get the bond approved in principle
within twenty one days of signature of the agreement
by the
purchaser, "or in any extended period which the seller at its
absolute discretion may allow without permission of the
purchaser".
The
non-fulfillment of suspensive condition 5 of the First Part
[17]
It is, in my view, clear that the suspensive condition was not
fulfilled, in the sense that the purchaser did not manage to
obtain a
bond for R735 000,00 "in principle" within twenty one days
of him signing the contract.
[18]
The granting of the later facility of R607 500,00 plus the intended
cash payment of the short fall of Rl 12 500,00 still does
not amount
to satisfaction of the suspensive condition requiring R735 000,00
which requirement is reaffirmed in clause 3.1 of the
Second Part.
[19]
Moreover, although the applicant relies on clause 3.2 of the Second
Part, it does not allege in the founding affidavit that
it extended
the period for obtaining the bond "for further periods of thirty
days each" as intended by clause 3.2 of
the Second Part. This
point was raised on at least three occasions in the answering
affidavit. In paragraph 61.8 of the answering
affidavit the following
is stated by the respondent:
"This
would mean that the applicant, purportedly relying on clause 3.2 of
the offer for purchase, extended the period required
for fulfillment
of the suspensive condition for 'further periods of thirty days each'
on no less than eight occasions, all the
time 'without notice to the
purchaser' (none of which is in fact the applicant's case)."
In
its replying affidavit, the applicant did not effectively rebut this
argument. There are no allegations offered by the applicant,
either
in the founding affidavit or the replying affidavit, that these
extensions, in the spirit of clause 3.2, ever took place.
[20]
With regard to the last provision of the suspensive condition that
the seller can extend the period for obtaining the bond
at its
absolute discretion and without permission of the purchaser read with
the provision in clause 3.2 of the Second Part that
the seller can
extend the period mentioned in the suspensive condition without
notice to the purchaser, it was argued on behalf
of the respondent
that these provisions are
contra
honos mores
and
should be treated as
pro
non scripto.
In
this regard Mr Hollander referred me to
Murray
& Roberts Construction v Finat Properties
1991
1 SA 508
(AD) at 514G-H where the learned Judge of Appeal states:
"It
is no doubt a general principle of the law of obligations that, when
it depends entirely on the will of a party to an alleged
contract to
determine the extent of the prestation of either party, the purported
contract is void for vagueness. Obvious examples
of the application
of the principles are afforded by the law of sale …"
It
seems, judging by these remarks, that the entire contract may be void
for vagueness or, at least, the passages complained of.
if severable,
would be void for vagueness and not enforceable.
[21]
It was also argued on behalf of the respondent that the applicant was
not entitled to rely on clause 3.2 and the last provision
of the
suspensive condition, clause 5 of the First Part, in extending the
period for fulfillment of the suspensive condition, unless
and until
the applicant had signed and concluded the purported sale agreement,
which it only did on 6 February 2009.
This
is over and above the fact, as referred to earlier, that the
applicant did not make out a case for complying with clause 3.2
by
bringing about the consecutive thirty day extensions. It was argued
that any purported extension by the applicant of the period
for
fulfillment of the suspensive condition while the purported sale
agreement was still pending (ie not yet accepted by the applicant)
is
invalid and of no force or effect. This argument was also raised in
the answering affidavit, but there was no rebuttal in reply.
It
was argued that the purported sale agreement was discharged
automatically after the condition precedent remained unfulfilled
after the twenty one day period stipulated in clause 5 of the First
Part had expired. It was argued that as soon as the purported
sale
agreement was signed by the applicant on 6 February 2009, the twenty
one day period stipulated in clause 5 had already lapsed
and there
could not have been and were no extensions of the twenty one day
period in terms of either clause 5 or clause 3.2 of
the Second Part.
No valid and binding agreement came into being because by the time
that the applicant signed the purported sale
agreement the suspensive
condition contained in clause 5 had long since lapsed. With these
submissions I agree.
[22]
For these reasons, I have come to the conclusion, and I find, that
the purported agreement of sale ("the contract")
is
unenforceable so that the application, for this reason, must fail.
Other
defences raised on behalf of the respondent
[23]
I now turn to the other defences raised on behalf of the respondent.
I do so briefly, in view of my finding pronounced in the
previous
paragraphs.
The
contract lapsed because the deposit was not paid within three days
after signature of the contract by the respondent
[24]
I have quoted the relevant extracts from the contract where it is
provided, on three occasions, that the deposit must be paid
within
three days of signature of the contract by the respondent.
[25]
I have pointed out that it is common cause that the deposit was paid
well out of time. It is also of relevance to revisit the
provision in
annexure "H" to the contract,
supra,
to
the effect that the contract will automatically lapse if this
requirement of payment within three days is not met.
[26]
These provisions are couched in clear and unequivocal language. This
defence was raised explicitly in the opposing affidavit.
Nothing was
offered in rebuttal.
[27]
I see no reason why the defence is not a good one, which ought to
be upheld.
The
purported contract was voidable at the instance of the respondent
[28]
In paragraph 32 of the opposing affidavit, the respondent states
the following:
"I
am advised and submit further that in terms of
section 32(2)
read
with
section 32(2)(c)
of the
Sectional Titles Act, 95 of 1986
, by
virtue of the fact that the offer to purchase does not record the
participation quota in respect of the Unit sold in terms
of the offer
to purchase, the offer to purchase is voidable at my instance and I
hereby elect to void the offer to purchase."
[29]
In the replying affidavit, this allegation is met with a bare denial
and an undertaking to address further argument on the
point at the
hearing. No such argument was forthcoming.
[30]
Section 32(2)
of the
Sectional Titles Act,
supra
,
provides
that the participation quota of a section shall be a percentage
expressed in four decimal places, as determined by the
developer.
Where a developer alienates a unit in such a scheme before the
sectional title register is opened, the total of the
quotas allocated
to the respective sections and the participation quota of that unit
must be disclosed in the deed of alienation.
Where such disclosure is
not made, the deed of alienation shall be voidable at the option of
the purchaser. As illustrated, this
is what the purchaser did.
In
this regard, counsel for the respondent also referred me to
Rasmussen
v
Clear
Mandate Properties CC
2008
3 SA 147
(WLD) at 159E-G.
[31
] For the reasons mentioned, I consider this, too, to be a valid
defence and another reason why the application ought to fail.
[32]
Yet another defence was raised, to the effect that the purported
contract was void for vagueness,
inter
alia,
because
it contains conflicting provisions as to when the balance of the
purchase price will be payable. The extracts relating to
this
contradiction were quoted earlier in this judgment.
[33]
In view of the approach which I have adopted, I find it unnecessary
to deal any further with this additional defence.
[34]
In all the circumstances, I find that the application falls to be
dismissed.
[35]
Where I have found that the purported contract is null and void, and
unenforceable, alternatively has been voided at the instance
of the
respondent, I see no reason why the counter-application, aimed at
obtaining a refund of the deposit of R15 000,00, ought
not to be
upheld.
The
order
[36]
I make the following order:
1.
The application is dismissed.
2.
The counter-application is upheld, and the applicant is ordered to
pay the respondent the sum of Rl 5 000,00 plus interest of
15,5% per
annum calculated from the date of this order.
3.
The applicant is ordered to pay the costs of the application and the
counter-application.
WRC
PRINSLOO
JUDGE
OF THE NORTH GAUTENG HIGH COURT
61073-2009
HEARD
ON: 7 JUNE 2010
FOR
THE APPLICANT: C L H HARMS
INSTRUCTED
BY: HONEY ATTORNEYS
FOR
THE RESPONDENT: L HOLLANDER
INSTRUCTED
BY: EDELSTEIN BOSMAN INC