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[2010] ZAGPPHC 134
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Marlow Projects CC v Van Rensburg and Others (44572/2009) [2010] ZAGPPHC 134 (23 September 2010)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
AND SOUTH GAUTENG HIGH COURT, PRETORIA)
DATE:
23 SEPTEMBER 2010
CASE
NO: 44572/2009
In
the matter between:
MARLOW
PROJECTS
CC
...............................................................................
PLAINTIFF
and
CAREL
SEBASTIAAN JANSER VAN
RENSBURG
.....................................
1
st
DEFENDANT
JOHANNES
CORNELUIS VAN
RENSBURG
................................................
2
nd
DEFENDANT
MARTHA
PETRONELLA VAN
RENSBURG
..................................................
3
rd
DEFENDANT
ALIDA
SUSAANA MAGRITHA VAN
NIEKERK
..............................................
4
th
DEFENDANT
JUDGMENT
PHATUDI,
J
[1]
The plaintiff instituted this action to claim back the amount paid to
the defendant towards the reduction of purchase price
as agreed in
terms of the agreement of sale.
[2]
Mr Swart
1
submits in his opening statement that the parties concluded an
agreement of sale of property (main agreement) amounting to R11,
500,000.00. Addenda
2
to the main agreement were later concluded. The plaintiff breached
the agreement as amended by addenda.
[3]
He refers me to paragraph 1 of the addendum marked
D
3
which
stipulate:
'A
further final extension of the period for full payment and\or
delivery of guarantees is hereby granted up and until 20 June 2008
before 16H30'.
[4]
He further submits as a matter of common cause that the plaintiff had
already paid R3, 950,000.00 at the time of the breach.
He refers me
to the plaintiff's prayers 2 that state:
'An
order determining that the defendants shall,...pay the amount of
R3,600,000 or such lesser amount..
.'.He
submits that an
error
in calculi
was
made and the plaintiff applies to amend the said prayer to read
R3,950,000.00.
[5]
He lastly submits that the plaintiff claims the monies so paid in
terms of The Conventional Penalties Act.
4
He concludes by submitting
that
the onus is on the plaintiff to prove that the defendant did not
suffer any damages and thus not entitled to retain the amount
so paid
as "rou Koop". He submits that the property, valued on the
20 June 2008, amount to R18.1 million whereas the
selling price is
R11, 500,000.00. As a result thereof, the plaintiff prays for full
refund.
[6]
The application to amend the Pleadings by replacing R3, 600,000.00 is
opposed. Mr Coertzen's
5
submissions in opposing the application lead to the plaintiff
abandoning the application.
[7]
Jacobus Frederick Goorsen, a full time property valuator testifies
that he was instructed by the plaintiff to evaluate Remaining
Extent
of Portion 63
6
(the Property). He sets out the procedure he used to come to R18.1
million as the open market value of the property.
[8]
He testifies by referring to his report
7
that the property has been rezoned from agricultural to residential,
though not proclaimed as yet. He used the comparable sales
method in
evaluating the property.
[9]
The property was valuated during the time when the country was
experiencing a recession. He says the market did not decline
but the
demand did. In short, the price of the market did not drop but the
demand did.
[10]
It transpired during cross-examination that the municipality valuates
the property in the amount of R5, 200,000.00. He could
not say why
the municipal valuation differed from his save to mention the method
he used. He could not provide the municipal valuation
of properties
he used in comparison.
[11]
The plaintiff closed his case. The defendant applies for absolution
from the instance. I dismissed the application.
[12]
Petrus Nel, who testifies for the defendants, says that he is a
developer and a neighbour to the defendants' property. He intended
to
buy the property. He approached the defendant in 2006 and made an
oral offer to purchase the property in the amount of R8, 5
million.
He did not pursue the offer because the defendant concluded an
agreement with the plaintiff.
[13]
He says there was no "bulk services" on the premises at the
time. He describes the bulk services as:
13.1
The
provisions made for storm water,
13.2
The
provision for bulk Sewerage,
13.3
The
provision for bulk water supply.
[14]
In order for these services to be in place, a section 101 agreement
must be concluded with the municipality. Section 101 Certificate
is
described as the right to open township register at the deeds office.
[15]
He further testifies that section 101 certificate cannot be issued
before the bulk services are in place. He says he knows
that the
property was not "serviced" at the time he made an offer.
He advised the defendant to "service" the
property.
[16]
He concedes under cross- examination that he did not know if the
property was "serviced" at the time the plaintiff
concluded
the deed of sale with the defendants.
[17]
Mr Swart submits that the only issue to determine is whether R3,
600,000.00 paid by the plaintiff to the defendant towards
reducing
the purchase price falls within the ambit of the Conventional
Penalties Act and if so, whether the penalty amount should
be reduced
by the court in the exercise of its discretion afforded to it by the
Act.
[18]
He submits further that the onus is indeed on the plaintiff to prove
that there is a breach of its contractual obligation that
renders the
amount paid towards the reduction of the purchase price fall within
the ambit of the Act. He further submits that the
plaintiff has the
onus of proving that the penalty is out of proportion to the
prejudice suffered by the defendants.
[19]
He submits that the defendant failed to demand compliance as provided
in terms of clause 17 of annexure A
8
from the plaintiff. Clause 17 provides:
'Indien
die Koper versuikm om te voldoen aan een of meer van die bepalings
van die ooreenkoms, sal die Verkoper geregtig wees om
die Koper
skriftelik per registreerde pos in kennis te stel om sodaninge
versuim reg te stel binne 10 (tien) dae na versending
van sodanige
kennisgewing aan die Koper te die adres vermeld in Klousule 20 welke
adres die Koper kies as domicilium citandi et
executandi.
Indien
die Koper na verstryking van genoemde tydperk volhard in sy versuim,
sal die Verkoper geregtig wees om die ooreenkoms summier
as
gekanselleer te beskou en
alle
gelde wat reeds deur die Koper aan die Verkoper betaal is, verbeur
word as rou koop en 'n ware vooruitberekening van skade
wat deur die
Verkoper gely is sonder benadeilling van die Verkoper se regte egter
om verdure skadevergoeding tee is.'
[20]
He further thereto submits that clause 2 of annexure D does not
replace clause 17. Clause 1 and 2 of annexure D state: '1.
A
further
final extention (extension) of the period for full payment and/or
delivery of guarantees is hereby granted up and until
20 June 2008
before 16h30. 2. If payment is not made/guarantees delivered as in
paragraph
1
of
this contract the whole agreement will lapse outomatically
(automatically) without any further notice.'
9
[21]
He submits that one of the plaintiff's contractual obligations was to
furnish guarantees on or before
20
June 2008 before 16h30.
He
says failure by the plaintiff to furnish the said guarantees within
the prescribed time constitute a breach of a contractual
obligation
which renders the claim to fall within the ambit of the Act.
[22]
Mr Coertzen submits in rebuttal that the plaintiff's failure to
deliver the guarantees does not constitute breach but a non
fulfilment of the contract. The contract lapsed as a result. He
submits that even the plaintiff allege the lapse of contract in
the
particulars of claim.
10
He says
the
Plaintiff is thus not entitled to a refund as the claim does not fall
within the ambit of the Act.
[23]
He refers me to
Plumbago
Financial Services (Pty) Ltd T/A Toshiba Rentals v Janap Joseph
T/Project Finance
11
where the court held that a penalty must arise from a breach of
contract. He lastly submits that the Plaintiff failed to prove
a
breach of contract. He, in fact, submits that the plaintiff did not
testify to that effect. There is no evidence tendered by
the
plaintiff in respect of the offer the defendant received in the
amount of R18, 5 million.
[24]
He further submits that there is no evidence that the plaintiff did
service the property after the agreement was concluded.
He says the
only evidence to that effect is that of Mr Nel.
[25]
I requested Mr Coertzen to explain to me the difference between a
contract terminating "by affliction of time" and
the one
terminating "due to a breach." He submits that failure to
deliver the guarantees as envisaged in terms of clause
2 of the
addendum, constitute "termination by affliction of time".
He refers me to
Southern
Era Resources Ltd v Farndell NO
12
[26]
Section 1 of the Conventional Penalties Act is headed "Stipulations
for penalties in case of breach of contract to be
enforceable
13
provides
that
'A
stipulation, hereinafter referred to as a penalty stipulation,
whereby it is provided that any person shall, in respect of an
act or
omission in conflict with a contractual obligation, be liable to pay
a sum of money...for the benefit of any other person...l
referred to
a creditor, either by way of penalty...shall... be capable of being
enforced...'
[27]
Sub section (2) provide that
'any
sum of money for the payment of which... a person may so become
liable,
is
in this Act referred to as a penalty."
Section
2(2) provides that
'a
person who accepts or is obliged to accept... non timeous performance
shall not be entitled to recover penalty in respect of
the ... delay,
unless the penalty was expressly stipulated for in respect of
that...delay.'
[28]
Both counsel refer me to section 3 and 4 which stipulates:
'3.
If upon the hearing of a claim for the penalty, it appears to the
court that such penalty is out of proportion to the prejudice
suffered by the creditor by reason of the act or omission in respect
of which the penalty was stipulated, the court may reduce
the penalty
to such extent as it may consider equitable in the circumstances...
"4. A stipulation whereby it is provided that
upon withdrawal
from an agreement by a party thereto under circumstances specified
therein, any other party thereto
shall
forfeit the right to claim restitution of anything performed by him
in terms of the agreement..."
[29]
In evaluating the evidence tendered and the submissions made by both
counsel, I find it inevitable to first consider as to
whether the
amount claimed by the plaintiff fall within the ambit of the Act.
14
[30]
The parties concluded an agreement with the proviso that obligates
the plaintiff to deliver the guarantees by the 20 June 2008
before
16h30. It is common cause that the plaintiff failed to deliver within
the stipulated time.
[31]
In order for the provisions of section to be applicable,
liability
must derive from breach of contract.
15
In
view of that authority, I am of the view that the plaintiff's failure
constitutes a breach of contract. I thus find that the
amount paid by
the plaintiff to the defendants in reduction of the purchase price
falls within the ambit of the Conventional Penalties
Act, 15 of 1962.
[32]
Considering as to whether the penalty amount should be reduced,
section 3 provides that
'the
court may reduce the penalty to such an extent as it
may
consider equitable in the circumstances'.
This
confers the court not only with the power but with the duty as well
to investigate the relationship between the penalty and
the prejudice
suffered by the defendant. The learned author says the court may
mero
motu
16
investigate
such damage. It is further stated that
to
consider whether the penalty is out of proportion to the prejudice
suffered by the creditor (defendants) section 3 does not confine
the
court to an investigation of the creditor's financial loss nor to
such prejudice as was in the contemplation of the parties
at the time
of contracting.'
[33]
The
merx
of
the main agreement is said to be a vacant agricultural land situated
at a rezonable area
17
,
if not rezoned. The purchase price fixed amounted to R11, Smillion.
The municipal value of the property amounts to R5, 2million
18
.
The plaintiff's expert witness valuates it at R18, 1 million
19
.
The defendants' witness
20
orally offered to buy the property at an amount of R8, 5million
rand
21
.
Notwithstanding all these, the defendants remain the owners of the
property. There is no evidence adduced that the defendants
suffered
damage or that the plaintiff caused irreparable harm to the property
as a result of the breach.
[34]
The case of Plumbago referred to by Mr Coertzen, the defendants had
leased photocopiers from the plaintiff and had defaulted
with
payments. It was held that
'a
court was entitled to raise and deal with the issue of whether a
penalty was excessive even where it had not been formally pleaded,
subject to it being fully canvassed in evidence and argument.'
22
The
court further held that
'the
best method of determining whether a penalty was excessive was to
compare what the plaintiff's position would have been had
the
defendant not defaulted and what the plaintiff's position would be'
23
[35]
In my evaluation of this authority coupled with the evidence and
arguments tendered, I find the defendants position a "better
position" in that the property would have been sold at a price
higher than the municipal value with R8, 5million as the lowest.
The
defendants would not have suffered damage in accepting the said
offer. They will not suffer any damage as the property still
stands
vacant. The property may still be sold at what ever the value they
deem appropriate. The price of the market did not drop.
The
defendants have, as a result, suffered no prejudice due to
plaintiff's breach of contract. There exists no reason why I should
not order the defendants to repay to the plaintiff the full amount as
claimed.
[36]
The plaintiff claims interest on the amount claimed from 15 January
2009 being the mora date as agreed at the pre trial conference.
Paragraph 1.4 of the pre trial minute state:
'Plaintiff
request defendants to admit that plaintiff demanded
repayment
of
the amount of R3,950,000.00 on 14 January 2009 by way of letter
forwarded by plaintiff's attorney to the defendants' attorney.'
The
defendants admitted.
[37]
In my analysis of the wording of paragraph 1.4 and the letter of
demand, I find the plaintiff having demanded a higher amount
than the
amount claimed in the summons. I thus find granting interest
calculable from 15 January 2009 unjustifiable and the claim
stands to
be dismissed.
[38]
It is trite that costs follow the event. Both counsel submit that the
party succeeding be entitled to the costs including the
costs
occasioned by the abandoned application to amend and the defendants
application for absolution from the instance. Mr Swart
claims the
qualifying fees and costs of senior counsel.
[39]
I thus make the following order.
39.1
The
defendants are jointly and severally ordered to repay to the
plaintiff an amount of R3, 600,000.00.
39.2
If
payment is not effected within seven days from date of this order,
interest be calculated on the amount of R3,600,000.00 at a
rate of
15.5% from the seventh (7) day a
tempore
morae
to
date of payment.
39.3
The
defendant is liable for the plaintiff's costs including the costs of
expert witness (Mr Goorsen) and costs occasioned by the
employment of
senior counsel
AML
PHATUDI
JUDGE
OF THE NORTH GAUTENG HIGH COURT
Heard
on
:
17 and 20 SEPTEMBER 2010
For
the Appellant
:
Adv Swart
Instructed
by
:
Messrs
For
the Respondent
:
Adv Coertzen
Instructed
by
:
Messrs
Date
of Judgment
:
23 SEPTEMBER 2010
1
Adv
BH Swart SC, plaintiffs counsel
2
Annexure
B dated 6 November 2007 (page 33 Pleadings bundle): annexure C dated
12 February 2008 (page 35 Pleadings bundle) and
annexure D dated 16
April 2008 (page 37 pleadings bundle).
3
Page
37
4
Act
15 of 1962
5
|
Adv Y Coertzen. the defendants' counsel
6
Remaining
extent of Portion 62 of 301 JR, Dean De Wet Nel Road, Theresapark
Pretoria.
7
Report
headed Open Market Valuation page 95-112. Plaintiff bundle.
8
Main
agreement
9
Words
in brackets are my insertion for correct spelling.
10
Paragraph
20.2 at page 15
11
2008(3)
SA 47 (CPD)
12
2010 (4) SA 200
SC A paragraphs 11 and 12
13
My
evaluation
14
Conventional
Penalties Act
15
Christie.
The Law of Contract in South Africa. Page 562
16
Page
563
17
Rezonable
to residential area
18
Page
98 plaintiff s bundle. As per Me Sue Putter.
19
Mr.
Goorsen report and testimony
20
Mr.
Nel
21
Offered
to buy it unrezoned
22
Paragraph [18] page 53
23
Paragraph
[31] page 5