Gibbs and Another v Vantyi and Others (2555/07) [2009] ZAECPEHC 23; 2010 (2) SA 606 (ECP) (25 May 2009)

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[2009] ZAECPEHC 23
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Gibbs and Another v Vantyi and Others (2555/07) [2009] ZAECPEHC 23; 2010 (2) SA 606 (ECP) (25 May 2009)

FORM A
FILING SHEET FOR EASTERN CAPE,
PORT ELIZABETH
PARTIES
:
MATTHEW GIBBS + 1 V NOLIVIA R VANTYI + 2
REPORTABLE
Case
Number:
2555/07
High
Court:
EASTERN
CAPE, PORT ELIZABETH
DATE
HEARD:
25
MAY 2009
DATE
DELIVERED:
28
MAY 2009
JUDGE(S):
JANSEN
J
LEGAL
REPRESENTATIVES –
Appearances:
for
the Applicant(s):
ADV
S C RORKE JOOSTE
for
the Respondent(s):
ADV
A BEYLEVELD
Instructing
attorneys:
Applicant(s):
GOLDBERG
& DE VILLIERS
Respondent(s):
KAPLAN
BLUMBERG
CASE
INFORMATION -
Nature
of proceedings
:
Key
Words
:
Summary:
IN
THE HIGH COURT OF SOUTH AFRICA
REPORTABLE
EASTERN
CAPE, PORT ELIZABETH
Case No.: 2555/07
Date
delivered: 28 May 2009
In
the matter between:
MATTHEW
GIBBS
First Plaintiff
ZILINDILE
MAKAPELA
Second
Plaintiff
and
NOLIVIA
RICHMOND VANTYI
First
Defendant
THEMBISA
TRYPHINA VANTYI
Second Defendant
ABM
REAL ESTATE AND
AUCTIONEERS
(PTY) LTD
Third
Defendant
JUDGMENT
JANSEN,
J:
The evidence in
this matter has been presented by way of a stated case in terms of
Rule 33(1) of the Rules of Court. The only issue
for determination
is whether or not a valid and binding agreement of sale was concluded
between the plaintiffs and the first and
second defendants in respect
of the latters’ immovable property.
The first and
second defendants were the joint owners of an immovable property
being Erf 9182 Motherwell. The defendants put the
property up for
sale at a public auction on 8 September 2005. The auction sale was
conducted by the third defendant. It was conducted
subject to
Conditions of Sale which Conditions of Sale were prepared by the
third defendant and read out by the auctioneer, a representative
of
the third defendant prior to commencement of the auction. The
property was knocked down to the plaintiffs on their bid of R1,6

million. As they were required to do in terms of the Conditions of
Sale the plaintiffs paid to the third defendant on

8 September 2005 the sum of R225 920,00 made up of the third
defendant’s auctioneer’s commission in an amount of
R145 920,00
and a deposit on the purchase price in the sum of R80 000,00.
In terms of Clause
12 of the Conditions of Sale the purchase of the property was subject
to the approval of the first and second
defendants by 12h00 on
Monday, 19 September 2005. It further provides that should the sale
not be confirmed, all monies paid by
the purchaser shall immediately
be refunded to the purchaser free of interest unless otherwise agreed
upon. Clause 28 of the Conditions
of Sale reads as follows:
“
All offers for a
higher purchase price made after the public auction but before
acceptance by the
Seller
,
will be made to the
Auctioneer
.
No offers will be considered by the
Seller
unless such offers are made to the
Auctioneer
.
The highest bidder at the auction will have the right of first
refusal during the acceptance period.”
On 15 and 19
September, during the acceptance period, the third defendant received
two improved offers from an enterprise, Sizabantu
Trust, to purchase
the property and these offers were referred by the third defendant to
the plaintiffs to allow them to consider
their right of first refusal
as provided for in terms of Clause 28. The plaintiffs, in writing,
on 19 September 2005 offered to
purchase the property for a purchase
consideration of R2,3 million. The parties are at
ad
idem
that no binding agreement was concluded as a consequence of any of
these three offers.
On 19
September
2005, prior to the deadline of 12h00 referred to in Clause 12, the
first plaintiff, who was not in Port Elizabeth at the
time, orally
exercised his rights in terms of Clause 12 and offered an increased
price consideration of R3 950 000,00 during a
process concluded by a
teleconference between the third defendant, represented by one
Ben-Mazwi, the first plaintiff representing
the plaintiffs, the first
defendant representing the first and second defendants, and a
representative of Sizabantu Trust, which
offer was orally accepted
and confirmed by the third defendant on behalf of the first and
second defendants. It is common cause
that the Conditions of Sale
were not then signed.
The first plaintiff
subjectively anticipated that a written agreement of sale was
necessary and had to be concluded. Therefore
,
on 22 September 2005 the plaintiffs submitted to the defendants the
Conditions of Sale, duly signed by them, to which an addendum
was
annexed providing for certain suspensive conditions which the
plaintiffs required. The Conditions of Sale reflected that it
was
open for acceptance by the first and second defendants until
26 September 2005. On 26 September the defendants
returned the
Conditions of Sale to the plaintiffs, duly signed, but with the
addendum and all references thereto deleted. The
defendants did not
demand specific performance from the plaintiffs, and cancelled the
agreement. They remain the owners of the
property.
It is common cause
that the exchange of the Conditions of Sale on 22 and 26 September
between the plaintiffs and the defendants
did not constitute a
written Agreement of Sale.
It is the
plaintiffs’ contention that (a) an oral agreement was concluded
between the parties on 19 September 2005 for the sale
of the property
by the first and second defendants to the plaintiffs for a purchase
consideration of R3 950 000,00; (b) the conclusion
of that oral
agreement of 19 September 2005 does not form part of the public
auction conducted on 8 September 2005 and that, therefore,
the
provisions of
section 3(1)
of the
Alienation of Land Act No. 68 of
1981
do not apply; (c) the oral agreement of 19 September 2005 is
accordingly invalid for want of compliance with section 2(1) of the

Alienation of Land Act; and (d) the plaintiffs are accordingly
entitled to repayment of the sum of R225 920,00 paid to the third

defendant, referred to above, as prayed for in the Particulars of
Claim.
It is the
defendants contention that (a) the conclusion of the oral agreement
of 19 September 2005 in terms of the provisions of
Clause 28 forms
part of the public auction conducted on 8 September 2005 and that,
therefore, the provisions of section 3(1) of
the Alienation of Land
Act apply; (b) in light of the provisions of section 3(1) the
provisions of
section 2(1)
of the
Alienation of Land Act do
not apply
to the oral agreement of 19 September 2005 which oral agreement is
accordingly valid and binding upon the parties and;
(c) that the
third defendant is accordingly entitled to payment of R134 320,00 as
prayed for in the third defendant’s counter-claim,
being the
difference between the auctioneer’s commission calculated on the
purchase price of R3 950 000,00 and the auctioneer’s
commission
already paid on 8 September 2005.
It is trite that
generally an agreement alienating land must in terms of
section 2
of
the
Alienation of Land Act be
reduced to writing for it to be a valid
agreement. The rule is directed against uncertainty, dispute and
possible malpractices.
That was emphasised in the well-known case of
Clements
v Simpson
1971 (3) SA 1
(AD) at p. 7A. There is an exception to this general
rule.
Section 3(1)
of the Act provides that the provisions of
section 2
do not apply to the sale of land by public auction.
It was correctly
pointed out by Mr
Beyleveld
,
on behalf of the defendants, that it is trite that the Conditions of
Sale regulates an auction and are the “rules of the game”
so to
speak. He referred to
Estate
Francis v Land Sales (Pty) Ltd and Others
1940 (NPD) 441 at 457 where the following was stated by Broome J:
“
An auction is a
form of competitive bargaining with the object of a contract of sale
resulting carried out in accordance with certain
rules. These rules
are the conditions of sale. They are framed by the seller to
represent the terms upon which he is prepared
to submit his property
to competition. They are, so to speak, the rules of the game and
they bind all the parties.”
Mr
Beyleveld
further referred to the decision of
Shandel
v Jacobs and Another
1949
(1) SA 320
(N) at 325 where the following was stated by Carlisle J:
“
The conditions
of sale are agreed upon in the first instance between the seller and
the auctioneer and between these two they rest
upon a contractual
basis. When goods are offered for sale pursuant to them, they form
the basis of bargaining carried out between
the auctioneer and the
bidders.”
The Conditions of
Sale are either displayed, announced or read out by the auctioneer
and they bind purchasers whether they in fact
know them or not. A
sale on the terms as set out in the Conditions of Sale results on
“the fall of the hammer” and the contract
is a verbal contract.
See
Clarke
v C P Perks and Son
1965
(3) SA 397
(ECD) at 400D. The contractual business of a public
auction is in fact concluded when the hammer falls.
In my view, Mr
Rorke
,
appearing
on behalf of the plaintiffs, was correct in his submission that the
Conditions of Sale applicable in the instant matter,
and in
particular Clause 28 thereof, provide for a separate process of
bargaining subsequent to the fall of the hammer. Clause
28 refers
specifically to offers for a higher purchase price to be made after
the public auction. No restriction is placed on
the bidders entitled
to make an offer for a higher purchase price. The bidder who comes
up with such a higher offer might not
have been present at the
original public auction at all. On the facts set out in the stated
case, it is common cause that two
improved offers were received from
the Sizabantu Trust. It is not known whether Sizabantu Trust was
present at the auction. It
is not known whether Sizabantu Trust was
aware of the Conditions of Sale. There is therefore no merit in the
submission made on
behalf of the defendants that all parties
concerned agreed that the auction sale could be extended beyond the
actual day on which
the auction was held. It is not known whether
Sizabantu Trust was a party concerned.
An extended auction
sale is
not guaranteed to be transparent or open to the public. Such a
separate process can hardly be said to be a public auction as
contemplated by
section 3(1)
of the
Alienation of Land Act. I
agree
with the submission on behalf of the plaintiffs that a contention
that such a separate and subsequent bargaining process
may ultimately
result in a subsequent valid oral agreement being concluded, as
contended by the defendants, is to open a door for
the very mischief
which
section 2(1)
of the Act was designed to avoid. Uncertainty,
disputes and possible malpractices against which
section 2(1)
is
directed may creep into the agreement. The exception to the general
rule provided for in
section 2(1)
of the Act is premised on the
notion that because an Agreement of Sale at a public auction is
concluded publicly at the fall of
the auctioneer’s hammer there is
little scope for uncertainty, disputes or malpractices. The process
has been conducted in public.
The Conditions of Sale have been read
publicly to those present who accept those conditions by their
continued participation in
the procedure. The procedure is concluded
formally in public when the auctioneer’s hammer falls. See in this
regard
Schuurman
v Davey
1908 T.S. 665
at 667-668, quoted with approval by O’Hagan J in
Sugden
v Beaconhurst Dairies (Pty) Ltd
1963
(2) SA 174
at 185F-G.
Mr
Beyleveld
relied on
Sugden
’s
case in support of the defendants’ case. In
Sugden
’s
case
the Conditions of Sale provided that the auctioneer was not obliged
to accept the highest bid, but the bidder was bound to
keep his offer
open for a stated period during which the auctioneer might convey the
seller’s acceptance of the bid by signing
the memorandum attached
to the Conditions of Sale. I agree with the submission on behalf of
the plaintiff by Mr
Rorke
that the process contemplated by Clause 28 is to be distinguished
from that in the
Sugden
case. No further negotiations were in that case permitted between
the parties. Therefore, the auction, in terms of the judgment,

remained a public auction. A very different process is contemplated
by Clause 28, namely a separate and private bargaining arrangement
in
which the public elements of transparency and openness have clearly
been lost. That being the case, an agreement entered into
during the
private bargaining arrangements cannot be said to be done at a public
auction as contemplated by
section 3(1)
of the Act. Mr
Beyleveld
,
in his heads of argument, correctly referred to the fact that the
auctioneer, subsequent to the bidding process on the day of
the
public auction, had in terms of Clause 28 the right and “…
opportunity to canvas further informal bids so to speak and
to
present them to the purchaser for acceptance ….”
On a proper
construction, the process contemplated by Clause 28 is entirely
different to and separate from the public auction and
cannot be
considered as part of the earlier process. This being the case, any
sale of the land concluded pursuant to the Clause
28 process must
comply with the formalities for the sale of immovable property as
provided for in
section 2(1)
of the Act.
Section 3(1)
does not find
application.
In the
circumstances, no valid agreement was concluded between the
plaintiffs and the defendants. The defendants were accordingly
not
entitled to receive the monies which they did and the defendants are
liable to reimburse the monies to the plaintiffs. On
18 December
2006 the plaintiffs demanded repayment of the monies but the
defendants failed to make repayment.
In the result, the following order is
made:
(a) The third defendant, alternatively
the first and second defendants jointly and severally the one paying
the other to be absolved,
is/are ordered to pay the plaintiffs the
sum of R225 920,00 with interest thereon at 15,5% per annum as from
18 December 2006 to
date of payment and costs of suit.
(b) The third defendant’s
counter-claim is dismissed with costs.
_____________________
J C H JANSEN
JUDGE OF THE HIGH COURT