Smith v Long (2290/2007) [2009] ZAECPEHC 8 (12 February 2009)

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[2009] ZAECPEHC 8
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Smith v Long (2290/2007) [2009] ZAECPEHC 8 (12 February 2009)

FORM A
FILING SHEET FOR EASTERN CAPE
DIVISION JUDGMENT
PARTIES
:
IVOR PARKIN SMITH vs WENDY MARGARET LONG
Case
Number:
2290/07
High
Court:
South
Eastern Cape Local Division. PE
DATE
HEARD:
2
February 2009
DATE
DELIVERED:
12
February 2009
JUDGE(S):
KROON
J
LEGAL
REPRESENTATIVES –
Appearances:
for
the Plaintiff :
ADV
M G SWANEPOEL
for
the Defendant :
ADV
A BEYLEVELD
Instructing
attorneys:
Plaintiff
:
MAUREEN
JANSEN
Defendant
:
PAGDENS
CASE
INFORMATION –
Nature
of proceedings: Civil trial
Topic:
Mora
interest
Key
Words:
Mora
interest on purchase price paid claimable after valid cancellation
of contract.
IN THE HIGH
COURT OF SOUTH AFRICA
(SOUTH
EASTERN CAPE LOCAL DIVISION)
CASE NO:
2290/2007
Date heard:
2 February 2009
Date delivered:
12 February 2009
In the matter
between:
IVOR PARKIN
SMITH Plaintiff
and
WENDY
MARGARET LONG Defendant
JUDGMENT
KROON
J:
The
issue in this matter is the extent of the plaintiff’s entitlement
to relief o
f
a particular nature consequent upon the cancellation by him of an
agreement in terms of which he purchased certain immovable
property
(“the property”) from the
defendant
.
The plaintiff’s
claim for a declarator that he had validly cancelled the agreement
was based on four alternative causes of action:
breach
of
warranties;
breach
of a material implied or tacit term;
fraudulent
misrepresentation / non-disclosure;
the
actio
redhibitoria
.
All
the causes of action were founded on alleged
substantial defects in the property.
In
addition to the said declarator the plaintiff claimed
(against retransfer of the property into the name of the defendant)
repayment of the sum of R2 950 000,00 being the purchase
price
paid by him for the property and certain further ancillary relief.
Included therein was a prayer for
mora
interest on the sum of R2 950 000,00.
In
her plea the
defendant
placed the plaintiff’s allegations relating to his causes of
action and his entitlement to any relief in dispute.
When
the matter was called, however, Mr
Beyleveld
,
for the defendant, placed before me a written open tender for the
settlement of the whole matter. Subject to what follows the
defendant
in effect conceded the validity of the
plaintiff
’s
claims. In respect of any liability in respect of
mora
interest paragraph 1.5 of the tender provided as follows:
“
that
the
D
efendant
pay the Plaintiff R150 000,00 being in respect of the difference
between the interest which the Plaintiff could have earned on
the
purchase price paid to the
Defendant
and the value of the Plaintiff’s occupation of the property,
including interest on the value of such monthly occupation.”
Mr
Swanepoel
,
for the plaintiff, intimated his inability to accept the tender
insofar as paragraph 1.5 was concerned, and he voiced concerns
about
the wording of certain other paragraphs in the tender which, he
said, might give rise to difficulty.
At
my behest the parties undertook to attempt to resolve their
remaining differences. The upshot was an agreement, in the form of
a draft order, which disposed of all the issues between the
parties
in favour of the plaintiff, save for the issue of liability for
mora
interest. On that score it was agreed that the basis on which
such interest should be paid, if any, would be determined by
me, my
conclusion to be recorded in
paragraph
3 of the final order to be made by me. The other paragraphs in my
order, as set out at the end of this judgment, reflect the
remainder
of the agreement reached by the parties.
The following
requires to be recorded:
By
letter dated 14 September 2007 addressed by his attorneys to the
defendant
the plaintiff advised the latter that he cancelled the agreement of
sale on substantially the same grounds as were subsequently

embraced in his particulars of claim, and claimed consequential
relief. Restitution was tendered.
The claims
were rejected by the defendant, a stance in which she persisted
until the open tender referred to earlier was made.
Transfer
of the property into the plaintiff’s name was effected on 26
April 2007.
To
date the plaintiff has remained in occupation of the property.
The
agreement of sale provided that should the plaintiff take
occupation of the property prior to transfer thereof into his
name
the plaintiff would pay occupational interest in the sum of R7
000,00 per month in respect of the period in question.
While
the body of the plaintiff’s particulars of claim made no express
reference to an entitlement to the payment of
mora
interest on the purchase price paid by the plaintiff, prayer 2 of
the particulars of claim sought payment of such interest
calculated
at the legal rate of 15,5%
per
annum
as
from 15 September 2007, alternatively at such rate and from such
date as this Court may determine. The defendant’s plea
merely
prayed that all the plaintiff’s claims, including that in respect
of
mora
interest, be dismissed.
Mr
Swanepoel
referred me to the decision in
Thoroughbred
Breeders’ Association v Price Waterhouse
2001 (4) SA 551
(SCA) at 594C- 595A. It was there noted that our
courts accept without requiring special proof that a party who has
been deprived
of the use of his capital for a period of time has
suffered a loss and that in the normal course of events such party
will be
compensated for his loss by an award of
mora
interest (as to which see
Bellairs
v Hodnett and Another
1978
(1) SA 1109
(A) at 11450D-H). It was further held that the relevant
party in that case was entitled to
mora
interest at the rate prescribed pursuant to the provisions of
s 1
of
the
Prescribed Rate of Interest Act 55 of 1975
, ie 15,5%
per
annum
,
and that the interest should be calculated as from the date when
mora
commenced (as to which see
West
Rand Estates Ltd v New Zealand Insurance Co Ltd
1926
AD 173
at 182, which case further affirmed the rule that where a
letter of demand has been sent
mora
commences on the date of receipt of the letter, or,
in the absence of a letter of demand, on the date of service of the
summons).
Counsel
submitted that the plaintiff’s letter of 14 September 2007, which
the defendant has now conceded validly cancelled the
agreement of
sale and which implicitly demanded
inter
alia
repayment
of the purchase price of R2 950 000,00, (a liquidated amount)
constituted the necessary letter of demand. Accordingly,
in terms
of the authorities referred to in the previous paragraph the
defendant’s
mora
commenced on 15 September 2007 and the plaintiff was entitled to
mora
interest calculated from that date.
Mr
Beyleveld
very properly referred me to the judgment in
Baker
v Probert
1985 (3) SA 429
(A). In that matter the Appellate Division affirmed
the principle that a purchaser has the right to claim repayment of
the purchase
price pursuant to a valid cancellation of a contract of
sale and confirmed the decision of the Provincial Division which
inter
alia
included
an order that the seller pay
mora
interest on the sum in question calculated as from the date of
cancellation. Similarly, counsel also properly referred me to
the
judgment in
Davidson
v Bonafede
1981 (2) SA 501
(C) in which
inter
alia
an
order for payment of
mora
interest on the purchase price was granted in favour of a purchaser
who had validly cancelled a contract of sale and claimed
repayment
of the purchase price.
In
terms of the judgment in the latter case the purchaser was ordered
to credit the seller with the amount of the rental he received
from
the lease of the property in question (such credit having been
reflected by the purchaser in his particulars of claim).
Mr
Beyleveld
invoked this decision in support of his submission that the
plaintiff’s claim for
mora
interest should be reduced by the value of the plaintiff’s
occupation of the property. Such value, so it was contended, should

be fixed in the sum of R7000,00 per month, that having been the
occupational interest stipulated in the agreement between the

parties.
It
is unnecessary for me to give consideration to the fact that it was
the defendant, by her rejection of the plaintiff’s valid

cancellation of the agreement, who obliged the latter to remain in
occupation of the property or the fact that what the plaintiff

occupied was a defective property. The short answer to Mr
Beyleveld
’s
argument is two-fold in nature.
First,
in my judgment Mr
Swanepoel
correctly argued that it is not open to the defendant to rely on the
argument presented by Mr
Beyleveld
where the defendant did not in her pleadings raise the issue that
the
mora
interest claimed by the plaintiff fell to be reduced by the value of
the plaintiff’s occupation of the property. Had she done
so the
plaintiff would no doubt have filed a replication and would have
come to court prepared to deal with the issue.
Second,
it is not correct in law to contend that the value of the
plaintiff’s occupation of the property is represented by the

occupational interest stipulated in the agreement. As was stated in
Thompson
v
Scholtz
[1998] ZASCA 87
;
1999 (1) SA 232
(SCA) (to which Mr
Beyleveld
also referred me) at 244D.
“
The occupational interest
in turn is related not to the use of the property sold but to the
purchase price, which again is related
to the value of the property
and not to its temporary use.”
One
last aspect requires to be mentioned. Had the defendant accepted
the plaintiff’s cancellation of the agreement she would
only have
become obliged to repay the purchase price to the plaintiff on
retransfer of the property to her. In terms of the
settlement
reached between the parties (see paragraph 2 of the order set out
below) repayment of the purchase price is to be
effected against
registration of the retransfer of the property to the defendant,
such retransfer to occur by no later than 1
July 2009, a period of
five months after the settlement was reached. In my judgment it
would be fair to both parties to adopt
a similar period in fixing
the date on which the defendant’s
mora
commenced.
In the result,
the following order is issued:
1. It
is declared that the written agreement of sale concluded between the
parties on 24 January 2007 (“PC1”), as amended by
the addendum
dated 6 February 2007 (“PC2”), was validly cancelled by the
plaintiff.
2.
The
defendant is directed to repay the purchase price of R2 950 000,00 to
the plaintiff against registration of the retransfer of
the property
from the plaintiff to the defendant, which retransfer shall occur by
no later than 1 July 2009 at the defendant’s
cost.
The
defendant is ordered to pay to the plaintiff
mora
interest
on the said sum of R2 950 000,00 at the rate of 15.5%
per
annum
calculated as from 15 February 2008 until the date of payment.
It
is recorded that the parties will approach the
South
African Revenue Service (“SARS”) for a refund of the transfer
duty of R181 000,00 which the plaintiff paid in respect
of the
transfer of the property from the defendant to him on 26 April
2007, but in the event of SARS not being prepared to refund
the said
amount to the plaintiff for any reason whatsoever within a period of
ninety calendar days from date of this order, the
defendant shall be
liable to pay the amount of R181 000,00 to the plaintiff. In the
event of SARS reversing its decision and
subsequently refunding the
amount of R181 000,00 to the plaintiff, the plaintiff shall pay the
amount over to the defendant within
a period of fourteen calendar
days after receiving the refund from SARS.
The
defendant is directed to pay an amount of R14 922,00 (being the
amount which was paid by the plaintiff in respect of conveyancing

fees to the conveyancing attorneys that were appointed by the
defendant) to the plaintiff, together with interest thereon at
the
prevailing
mora
interest rate of 15.5%
per
annum
,
from 15 October 2007 to date of final payment.
The
defendant is directed to pay an agreed amount of R10
773,00 to the plaintiff in respect of the engineers’ reports
of
Malherbe and Ras that were obtained by the plaintiff prior to the
issue of summons.
The
defendant is further directed to pay the plaintiff’s costs of suit
which costs shall include:
the fees of
the following experts, including their qualifying fees (if any):
Hugo Ras
(engineer);
James Kohler
and Paul Haines of Cornerstone Architects;
Frank Johnston
(quantity surveyor);
Craig Weetman
(valuer).
(
The
issue whether the costs of Geoff Coombe-Davis (architect) were
reasonably incurred on a party and party scale will be argued
in
front of the Taxing Master).
the
costs of one
inspection
in
loco
,
attended by plaintiff’s counsel and attorney.
t
he
costs of the plans and photographs which are contained in the
plaintiff’s bundle of documents.
_________________
F KROON
Judge of the
High Court
APPEARANCES:
For
the plaintiff:
A
dv
Swanepoel
instructed
by
Maureen
Jansen Attorneys
For
the defendant:
Adv
Beyleveld instructed by
Pagdens
Attorneys