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[2017] ZAECPEHC 35
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Binta v Hlasela and Another (1776/2016) [2017] ZAECPEHC 35 (11 July 2017)
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IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE LOCAL DIVISION – PORT ELIZABETH
Case
No.: 1776/2016
In
the matter between:
XOLELWA
NEON BINTA
Applicant
and
WELCOME MCEDISI HLASELA
First
Respondent
THE
DEEDS OFFICE, CAPE TOWN
Second
Respondent
JUDGMENT
Cancellation
of deed of sale by seller of immovable property – sale subject
to suspensive condition of purchaser obtaining
housing subsidy –
reliance on principle of
pacta
sunt servanda
and
doctrine of fictional fulfilment is misplaced – permissible for
judge to
mero
motu
raise the egregious nature of terms of agreement as justifying seller
to resile from such terms.
REVELAS
J
:
[1]
The
applicant and the first respondent concluded an agreement on 17 July
2013 in terms whereof the first respondent sold his property,
known
as [...] M. S., Ikamvelihle, Motherwell
(“the
property”)
to
the applicant. In circumstances that will be set out below,
transfer of the property did not take place and the applicant
approached this Court for the following orders:
“
1.
That the Respondent
(sic)
takes all the necessary steps to pass transfer of the [property] to
the Applicant;
3.
That should the Respondent
(sic)
fail within 7 days of granting of this Order take
(sic)
the necessary steps, the Sheriff be authorized to take such steps on
the Respondents’
(sic)
behalf.”
In
paragraph 2 of the notice of motion the applicant sought a costs
order against “
the
Respondent”.
[2]
The
relevant terms of the deed of sale concluded between the applicant
and the first respondent were the following:
[3]
Clause
1 of the deed of sale provided that the purchase price of the
property was R96,000.00 and was payable by the purchaser (i.e.
the
first respondent) to the seller in cash “
on
receipt of the subsidy money from the Department of Human
Settlements”
(“
the
Department”
).
[4]
Clause
13 of the deed of sale contained a condition to the effect that
transfer would only pass once the full purchase price was
paid.
Clause 13 also made provision for the same condition as contained in
clause 1, i.e. that the sale was subject to the applicant
being
granted a housing subsidy for the value of the purchase price by the
Department. The applicant’s securement of
a subsidy was
thus a suspensive condition of the deed of sale. No
provision was made for occupational rental should
the applicant take
possession of the property, which she did. In fact, clause 3 of
the agreement expressly excluded occupational
rental.
[5]
After
almost two years, when the subsidy was still not made available by
the Department, the first respondent sought legal advice.
On 22
June 2015 the transferring attorneys
(“Lexicon
Attorneys”)
assured
“
Legalwise”
,
the attorneys representing the first respondent, that the applicant’s
subsidy had been approved by the Department on 18
March 2015 and that
they “
have
been requesting the approval letter since to enable us to proceed
with the transfer of the property to [the applicant]”
and
that they “
have
not received same as yet”.
[6]
Even
though the deed of sale was entered into in the middle of July 2013,
the applicant eventually received the approval of the
subsidy from
the Department only on 18 January 2016, more than two and a half
years after the sale was concluded. In the
interim, the
applicant had taken occupation of the property and had paid no rental
to the first respondent, as stated in a letter
addressed to the
applicant by the respondent’s attorneys. To date the
purchase price has not been paid or tendered
by the applicant.
[7]
The
first respondent stated in his answering affidavit that isiXhosa was
his “
home
language”
and Ms Clarisse Hattingh of Lexicon Attorneys “
tried
to explain the context of the deed to [him], in English, and that
whilst [he] understood that the Applicant intended to fund
the
purchase of the property with a Housing Subsidy, it was never
explained to [him] how long the process would take. [He]
was
under the impression that [he] would receive the purchase price
within a short period of time”.
He
also denied that he, in the aforesaid circumstances, agreed that the
purchase price would be paid only
after
the
transfer of the property had been registered, as provided for in the
deed of sale.
[8]
According
to the first respondent, he had on various occasions, advised the
applicant that he no longer wished to be bound by the
terms of the
deed of sale and wished to cancel it, but he was always referred to
Ms Hattingh to discuss the matter. It is
common cause that the
first respondent met with Ms Hattingh with regard to his intended
cancellation of the deed of sale.
The applicant did not attend
the proposed meeting.
[9]
The
first respondent subsequently, on 14 March 2016, gave written notice
to Lexicon Attorneys, that he was cancelling the agreement
of sale
due to the applicant’s failure “
to
pay the purchase price as agreed and the time for payment of the
purchase price has since lapsed”.
[10]
The
first respondent had visited Lexicon Attorneys earlier in the year,
on 20 January 2016, and was advised by Ms Clarisse Hattingh
that the
applicant was not in breach of the agreement since the delay “
was
with the department”.
The
first respondent and his brother also visited Lexicon Attorneys the
following month on 9 February 2016, and the first respondent’s
brother advised Ms Hattingh that the property was a family house and
that the family no longer wished to sell the property.
[11]
During
a later meeting where the applicant was present, the first respondent
refused to sign the transfer documents by virtue of
his cancellation
of the deed of sale which he deemed valid. The parties also discussed
the fact that whilst the applicant was in
occupation of the property,
she effected certain renovations to the property and the first
respondent assured the applicant that
he and his family were prepared
to compensate her for the costs of the renovations, provided she
vacated the property. The
applicant persisted in her
stance that she was entitled to ownership of the property.
[12]
The
applicant contends that she has complied with her obligations in
terms of the agreement of sale and that the conditions set
out in
clause 13 of the Deed of Sale had been met on 18 January 2016 when
she received her subsidy. Her approach to the matter
is simply
that
pacta
sunt servanda
and
that the first respondent’s purported cancellation of the
agreement was of no force or effect. She maintains that
the
first respondent is contractually bound to transfer the property now
that she was able to pay the purchase price, as her subsidy
had been
approved albeit belatedly.
[13]
The
first respondent argues that his cancellation of the agreement was a
valid one, justified in the circumstances, because the
applicant did
not pay the purchase price within a reasonable time. As
far as the first respondent is concerned, the
applicant has failed to
comply with her obligations in terms of the deed of sale.
Discussion
[14]
In
its letter of approval dated 18 January 2016 and referred to
previously, the Department informed the applicant that her
application
for a housing subsidy had been approved in the amount of
R160,573.00, subject to certain conditions. The condition most
relevant
to the present application was that she registered a
property “
before
18
April 2016
,
failing which the subsidy approval will be cancelled without further
notice. You are given a period of three months to register
this
property (starting from today 18.1.2016 to 18.04.2016
)”.
[15]
When
the present application was served and filed during May 2016, the
subsidy approval from the Department has already lapsed and
had thus
been cancelled. Even though the applicant has to date not
tendered payment of the purchase price, she nonetheless
demands to
have the property transferred into her name.
[16]
It
was argued on the applicant’s behalf that the first
respondent's deliberate refusal to sign transfer papers, was the
direct
cause of her non-fulfilment of the suspensive condition
contained in both clauses 1 and 13 of the deed of sale and
accordingly,
the doctrine of fictional fulfilment finds application.
[17]
The
principle of fictional fulfillment has its origins in the Roman
principle that a party to a conditional contract has a
spes
that his contractual rights will become enforceable.
[1]
Fictional fulfilment can be relied upon to prevent a
party to a conditional contract from deliberately preventing the
fulfilment of the conditional precedent "
and
blithely maintaining that he is not bound by the contract because the
condition has not been fulfilled
”.
[2]
[18]
In
MacDuff
& Co Ltd (In Liquidation) v Johannesburg Consolidated Investment
Co Ltd
,
[3]
the doctrine prominently featured for the first time in our law. At
591 Innis CJ described the legal position regarding
fictional
fulfilment thus:
"[By]
our law a condition is deemed to be fulfilled as against a person who
would, subject to its fulfilment, be bound by an
obligation, and who
has designedly prevented its fulfilment, unless the nature of the
contract or the circumstances show an absence
of
dolus
".
[19]
The
learned Chief Justice also stressed in his judgment in
MacDuff,
that
dolus
was used in this context, in its wider sense, which is not limited to
fraud or a lack of good faith, but included any deliberate
and
calculated actions which prevented the fulfilment of the
condition.
[4]
[20]
In
the
Scott
and Another v Poupard and Another,
[5]
Holmes JA set out what a plaintiff must prove to successfully invoke
the doctrine of fictional fulfilment. These are:
(a)
non–fulfilment
of the condition
(b)
the
defendant’s breach of his duty with an intention to frustrate
the fulfilment, and
(c)
a
causal link between (a) and (b).
[21]
In
the matter under consideration the facts tend to militate against a
successful invocation of the doctrine in question. It
has not
been shown that the first respondent cancelled the agreement with the
intention to frustrate the applicant from obtaining
transfer of his
property. In the absence of evidence to the contrary (in the form of
an affidavit by Ms Hattingh) it can be accepted
that the first
respondent did not understand the exact nature of the terms of the
contract when it was explained to him in English.
It is
hardly plausible that the first respondent would agree to a contract
which obliged him to wait an indefinite
period for payment of the
purchase price, while the plaintiff lived in his house without paying
any rental and the value of the
property increased. It
also has to be accepted, for a similar lack of evidence to the
contrary, that the first respondent
did not realize that he would
only be paid the purchase price after registration of the transfer, a
most unusual term in any agreement
of sale of a property.
[22]
The
terms of the agreement in question were clearly skewed in favour of
the applicant. The first respondent, on the
other hand,
now finds himself in the very precarious position (as a result of the
egregious terms of the deed of sale) where it
is expected of him to
transfer his property into the name of a purchaser without any
reciprocal performance on her part, such as
paying for it. The
first respondent’s cancellation of the contract does not
constitute
mala
fides
in these circumstances. The first respondent’s
cancellation of the agreement was calculated to protect his own
interests
which, given the facts, was entirely justified,
consequently the doctrine of fictional fulfillment accordingly finds
no application
to the facts in the present matter.
[23]
During
the presentation of their arguments, I raised an additional issue
with both counsel, i.e. whether the terms and consequences
of the
contract in question, despite being lawfully concluded, could be
considered as not binding on the basis they are seem unduly
harsh,
unfair and contrary to public policy. Counsel for both parties,
were given the opportunity to file supplementary heads
of argument in
order to deal with the point raised and they provided me with most
helpful heads of argument. I am very grateful
to them for their
efforts in this regard.
The
Supplementary Arguments
[24]
The
applicant argued that:
(a)
The
respondent had not pleaded the harshness of the terms of the
agreement aforesaid, and was thus precluded from relying on the
point
raised
mero
motu.
In
addition, it was submitted that the determination of fairness under a
constitutional setting was not dependent on the personal
views of the
judge. Also, the first respondent did not demonstrate that any
of his constitutional rights were offended;
(b)
The
first respondent did not at any stage seek relief in the form of a
declarator in a counter-application declaring the deed of
sale to be
cancelled;
(c)
The first respondent never placed the applicant in
mora
by:
(i)
identifying the performance expected of her;
(ii) allowing her
a reasonable time to perform;
(iii)
stating unequivocally that failure to heed his demand would result in
a cancellation of the deed of sale.
[6]
[25]
The
aforesaid submissions of counsel for the applicant are dealt with as
follows: A respondent is not, as a rule, prevented
from
relying on a defence which he did not raise in the papers, and which
was for the first time raised
mero
motu
by
the court. Where a point of law is apparent or obvious on the papers,
but the parties do not deal with it and proceed on a different
or
incorrect perception of what the law should be, a court is obliged to
raise the point of law
mero
motu
and
require the parties to deal therewith.
[7]
Moreover, “
judges
are not umpires whose sole function is to ensure that the rules of
the game are observed by both sides, but they are administrators
of
justice who are tasked with seeing that justice is done”
.
[8]
In the circumstances of this case, as demonstrated above, it was
permissible to raise the point in question
mero
motu
during
argument.
[26]
A
court, generally, has no discretion to refuse the enforcement of a
term contained in a lawfully concluded agreement
[9]
and the principle of
pacta
sunt servanda
will
generally be accepted by the courts as the governing principle in the
determination of the contractual obligations between
parties. Courts
faced with the question whether or not to enforce a term breached by
one of the parties in this context,
are concerned with assessing the
effect of the order enforcing an agreement in the light of the
dictates of public policy.
It is trite that an
agreement is contrary to public policy if it is opposed to the
interests of the state, or of justice
or of the public.
[10]
[27]
A
contract can stipulate a performance which in itself is not illegal
or immoral, but is one which the courts would not enforce
on the
grounds of expedience, because the performance will detrimentally
affect the interests of the community.
Public
policy does not require the courts to penalize the party seeking
enforcement, by declining to do so, because at the time
when the
agreement was concluded, it may have been worded in such a way, that
it was impossible to predict with any accuracy whether
or not it
would be reasonable to enforce it when the event of its enforcement
arrives.
[11]
This was evidenced in the present case when the egregious
nature of the terms came to light only after years had passed.
If there was expeditious performance by the Department and the
applicant, in accordance with time periods stipulated in the
agreement,
unfairness would not have been an issue.
[28]
Courts
will decline to enforce a contractual term that is unduly harsh or
unfair or oppressive, and the
onus
is upon the party seeking to avoid the enforcement of a clause, to
demonstrate the harshness or unfairness of its terms.
In
practical terms this means that once it is accepted that the clause
does not violate public policy and non-compliance with the
clause is
established, the claimant is required to show that in the
circumstances of the case there was a good reason for the failure
to
comply.
[12]
[29]
The
flaws in the deed of sale which renders its terms egregious:
(a)
the
fact that the agreement contains no time limits or dates for
performance;
(b)
that
occupational rental is specifically excluded; and
(c)
that
payment of the purchase price will be made only
after
registration of transfer of the property into the applicant’s
name – a most imprudent term for any seller of immovable
property to agree to.
Since
the subsidy took almost three years to be approved and has now
lapsed, the enforcement of the contract has become untenable,
four
years after its conclusion.
[30]
The
applicant’s argument that none of the first respondent’s
constitutional rights have been offended, is incorrect.
Clearly
they have been. Section 25(1) of the Constitution guarantees
the right not to be deprived of property. In addition
section
39(1) enjoins the courts to interpret and develop the common law in
accordance with constitutional values.
[31]
Although
not raised on the papers or in argument, I considered whether the
applicant’s right to have access to adequate housing
would be
affected if the enforcement of the terms of the agreement is
declined. She would be prejudiced as can be expected,
but not
as to the extent that the first respondent would be irreversibly
prejudiced, if I were to grant the relief sought by the
applicant.
The applicant has already been approved as a suitable recipient of a
housing subsidy from the Department on one
occasion, and she may very
well be granted another subsidy with which she could purchase a
different house. In balancing
their constitutional rights
against each other, the first respondent’s rights require
protection, whereas the applicant has
other remedies at her
disposal.
[32]
The
applicant’s complaint that the first respondent did not place
her in
mora
first, before cancelling the deed of sale is without merit.
Clause 7 makes provision for cancellation “
forthwith”
,
in the event of the purchaser’s default. No provision is
made for
mora
in
the contract
.
The
first respondent waited for more than two years for payment in terms
of the agreement. He arranged meetings with the transferring
attorneys, to which the applicant was invited, but did not attend. To
place the applicant in
mora
before cancelling the agreement would have been futile, in any event,
since the applicant’s compliance was dependent on the
Department’s performance which was not forthcoming. Hence
the cancellation. The applicant and Ms Hattingh knew
full well
that the first respondent had intended to cancel the agreement, as
borne out by the explanation by Ms Hattingh, to the
first respondent,
that it was not the plaintiff’s fault that her subsidy had not
been approved, but that it was the Department
who was at fault.
[33]
Lastly
the applicant’s complaint that first respondent did not seek an
order declaring the contract as cancelled is of no
consequence. The
omission is not fatal to his case and does not assist the applicant
either. On its own, it is
not a sufficient ground upon which to
grant the applicant the relief she seeks.
Conclusion
[34]
For
all the reasons set out above, the application cannot succeed.
[35]
Accordingly
the following order is made:
The
application is dismissed with costs.
_____________________
E
REVELAS
Judge
of the High Court
Appearances
:
For
the applicant: Adv C van Rooyen instructed by Noble Sikwela
Attorneys, Port Elizabeth
For
the first respondent: Mr V Naidu instructed by Legal Aid South
Africa, Port Elizabeth
Date
heard: 25 May 2017
Last
set of Supplementary Heads of Argument received: 09 June 2017
Date
delivered: 11 July 2017
[1]
Inst
3 15 4
[2]
Christie’s
Law of Contract in South Africa, 6
th
edition at 153
[3]
1924
AD 573
[4]
At 589-590
[5]
1971 (2) SA 373
(A) at 379
[6]
Christie at 534
et
seq
(
Mora
ex persona)
[7]
CUSA v Tao
Ying Metal Industries and Others
[2008] ZACC 15
;
2009
(2) SA 204
(CC) at paragraph
[68]
.
[8]
R v Hepworth
1928
AD 265
at 277;
Quartermark
Investments (Pty) Ltd v Mkhwanazi and another
[2014] 1 All SA 22
(SCA) at paragraph [20].
[9]
South African
Permanent Building Society v Powell and Others
1986
(1) SA 722 (A).
[10]
Wille :
Principles of South African Law 7
th
Edition.
[11]
National
Chemsearch (SA) (Pty) Ltd v Borrowman and Another
1979
(3) SA 1092
(T) at 1107 E – H;
Brisley
v Drotsky
2002
(4) SA 1 (SCA).
[12]
Barkhuizen v
Napier
2007
(5) SA 232
(CC) at paragraphs [56] to [58].