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[2012] ZASCA 112
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Hanuscke Beleggings CC v Kungwini Local Municipality (512/2011) [2012] ZASCA 112 (12 September 2012)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case
No: 512/2011
In
the matter between:
HANUSCKE BELEGGINGS CC
..................................................................................
Appellant
and
KUNGWINI LOCAL MUNICIPALITY
.......................................................................
Respondent
Neutral citation:
Hanuscke v
Kungwini
(512/2011)
[2012] ZASCA 112
(12 September 2012)
Coram:
Brand, Snyders, Malan,
Shongwe and Theron JJA
Heard:
20 August 2012
Delivered: 12 September 2012
Summary: Agreement for purchase of
land – suspensive conditions – non-fulfilment within a
reasonable time – agreement
lapsing
_________________________________________________________________________
ORDER
On appeal from:
The North
Gauteng High Court, Pretoria (RD Claassen J sitting as court of first
instance):
The appeal is dismissed
with costs.
_________________________________________________________________________
JUDGMENT
Malan JA (Brand, Snyders,
Shongwe and Theron JJA concurring):
[1] This is an appeal
against the judgment of RD Claassen J dismissing with costs, the
appellant’s claim against the respondent
local authority (the
‘municipality’) for the transfer of a certain immovable
property. The appeal is with his leave.
[2] On 25 April 1996 the
appellant corporation entered into an agreement of sale with the
municipality in terms of which the latter
sold to the appellant a
certain piece of municipal land in Bronkhorstspruit for an amount of
R300 000. The agreement was subject
to three suspensive
conditions. The first was that there had to be compliance with s
79(18) of the Local Government Ordinance 17
of 1939 (clause 13.1).
The second was that the property be rezoned from ‘public open
space’ to ‘business 1’
in terms of s 56(1) of the
Town-Planning and Townships Ordinance 15 of 1986 (clause 13.2). The
third condition entailed that the
property, a park, be closed
permanently pursuant to s 66 of the Local Government Ordinance
(clause 13.3). Sections 79(18) and 66
of the Local Government
Ordinance respectively deal with the procedures to be followed when
municipal land is alienated and with
the closure of, inter alia,
parks. Section 56(1) of the Town-Planning and Townships Ordinance is
concerned with the procedures
to be followed when property is
rezoned.
[3] Other terms of the
agreement provided that the purchaser had to bear the cost of the
closure of the park and the rezoning of
the property (clause 14.1).
The purchaser had to provide a site development plan for approval by
the municipality (clause 14.2).
All the expenses in providing
additional external bulk services were to be for the account of the
purchaser (clause 14.3). The
purchaser also had to commence with the
construction of buildings to the value of R1 million within one year
of rezoning of the
property and to complete them within a year of
commencing construction (clause 14.4). It was also provided that the
property could
be used for business purposes only (clause 14.5).
[4] It was common cause
between the parties that two of the suspensive conditions, ie those
in clauses 13.2 and 13.3, had not been
fulfilled. The appellant
instituted action claiming that the municipality be ordered to take
all steps necessary to ensure that
the property be rezoned in terms
of the provisions of s 56(1) of the Town-Planning and Townships
Ordinance; that the property be
closed permanently pursuant to s 66
of the Local Government Ordinance; and that the municipality, within
60 days of complying with
the two previous orders, complete and
submit the required transfer documents to the appellant against
delivery of an approved bank
guarantee for the purchase price. (It
was common cause between the parties that the first condition had
been fulfilled and that
the municipality had waived the requirement
that a site development programme be delivered.) In its particulars
of claim the appellant
alleged that on 26 May 2004 it demanded that
the municipality comply with the two conditions concluding with the
statement that
it had elected to keep the agreement in force and that
it was entitled to an order for specific performance because a
reasonable
time for the fulfilment of the suspensive conditions had
already lapsed.
[5] The municipality
filed a special plea of prescription: summons was issued only on 21
April 2006, some eleven years after conclusion
of the agreement. In
its plea, the municipality pleaded further that it was a tacit term
of the agreement that the suspensive conditions
had to be fulfilled
within a reasonable time of entering into the agreement and that the
appellant knew or ought to have known
during 1997 that, due to legal
disputes between the parties, the municipality had no intention of
proceeding with the agreement.
The plea concluded with the statement
that it was not open to the appellant to make an election and that
failure of the parties
to ‘meet the suspensive conditions’
resulted in the agreement lapsing. In its replication the appellant
pleaded that
its claim for specific performance only arose on the
municipality’s refusal to take the required steps to obtain
fulfilment
of the suspensive conditions: it refused to do so only
after summons was issued. The appellant also replicated that the
municipality’s
conduct was mala fide, unconscionable, in breach
of the spirit of the Constitution and, alternatively, that in terms
of
s 12(2)
and (3) of the
Prescription Act 68 of 1969
prescription
could only have commenced running after the municipality’s
failure to inform the appellant that it had no intention
of
proceeding with the sale.
[6] There was some
correspondence between the parties after conclusion of the agreement.
The appellant was informed on 20 June 1996
which attorneys were
instructed to proceed with the transfer. The municipality’s
attorneys informed the appellant on 13 August
1996 that the
municipality was proceeding with the sale. On 11 February 1997 the
municipality, in a letter to the appellant’s
auditors,
confirmed the municipalty’s intention to proceed with the sale
and procuring fulfilment of the suspensive conditions.
Eventually,
advertisements of the proposed closure of the property were placed in
the Provincial Gazette of 4 June 1997. Objections
to the closure were
made but on 26 February 1998 the municipality resolved in terms of s
66 of the Local Government Ordinance that
the park be closed
permanently and that in terms of s 56(1) of the Town-Planning and
Townships Ordinance the property be rezoned
from ‘public open
space’ to ‘business 1’. The municipality’s
attorneys wrote to the appellant on
9 February 1999 stating that the
municipality had to resolve whether to rezone the property and that
they would make the necessary
enquiries to ascertain whether it had
been done. On 29 September 1999 the Municipality’s attorneys
asked the appellant’s
representative, Mr Hoffeldt, whether he
had discussed the matter with Mr Mattheus (the town secretary) and
what his intentions
were. In his evidence Mr Hoffeldt recalled this
letter and his conversations with the town secretary and a Mr le Roux
of the municipality
and stated that he informed the latter that he
was awaiting fulfilment of the suspensive conditions so that he could
produce his
guarantees for transfer.
[7] Nothing of any
relevance transpired thereafter but on 26 May 2004 the appellant’s
attorneys demanded from the municipality
confirmation that the
closure of the park and the rezoning of the property had been
completed and tendered payment of the purchase
price. This was
followed by a letter dated 12 October 2004 to the municipality’s
attorneys requesting delivery of the transfer
documents for signature
by the appellant. This led to the municipality’s response on 9
February 2005 confirming that there
had not been fulfilment of the
suspensive conditions and suggesting that a meeting between the
parties be held to resolve the impasse.
On 15 February 2005 the reply
on behalf of the appellant followed stating that he was interested in
specific performance only:
‘
4. Ons
kliënt wens op rekord te plaas dat hy te alle tye sedert
sluiting van die Koopkontrak begerig was en steeds is om met
die
transaksie voort te gaan en tender ons kliënt alle redelike en
billike kostes waarvoor hy aanspreeklik is ingevolge die
Koopkontrak.
5. Aangesien daar geen tydperke bepaal
is waarbinne die terme van Klousules 13.2 en 13.3 van die Koopkontrak
aan voldoen moet word
nie, is ons klient die respekvolle mening
toegedaan dat sodanige nakoming binne ‘n redelike tyd moet
geskied en dat sodanige
redelike tyd nou verstryk het.
6. Geliewe kennis te neem dat ons
kliënt slegs wens dat volvoering van die bepalings van die
Koopkontrak moet geskied en dat
ons kliënt nie begerig is om in
enige onderhandelinge en of gesprekke tot onderhandelinge betrokke te
raak met die oog op
enige verdere ooreenkomste nie.’
No correspondence of any
significance followed. Summons was issued on 21 April 2006.
[8] At the trial the
respondent’s attorney of record, Dr A D de Swardt, and Mr R
Hoffeldt, the sole member of the appellant,
testified. RD CLaassen J
found for the municipality holding both that the agreement had lapsed
and that the appellant’s claim
had prescribed.
[9] Dr De Swart testified
that the municipality resolved to rezone the property and close the
park but that these resolutions were
never published as was required
by the ordinances. He explained the background of the transaction
between the parties. The town
clerk, a Dr Senekal, left the
municpality’s employment on the day the agreement was signed.
Litigation between him and the
municipality followed. Mr Hoffeldt
supported Dr Senekal and, as Dr De Swart explained, there was a
perception in 1997/8 that
Mr Hoffeldt opposed everything the council
did. Nevertheless, at its meeting of 26 February 1998 the council
resolved to close
the park and rezone the property. No further steps
were, however, taken to give effect to these resolutions. Another
issue at that
time concerned a pamphlet published by the Democratic
Alliance on the day before the 5 December 2000 elections concerning a
certain
city counsellor. This led to litigation with the counsellor
succeeding in a claim for defamation. Mr Hoffeldt was not cited but
it emerged from the evidence that he had sponsored the publication. A
third issue concerned a dispute between the municipality
and a Mr
Dewald Hattingh, a property developer. Mr Hoffeldt also supported Mr
Hattingh. Thus, between the years 2000 and 2002 there
were a number
of disputes between the council of the Municipality and Mr Hoffeldt,
and Dr De Swardt’s perception was that
there was ‘a very
great animosity’ between them. His firm of attorneys were
initially asked to see to the transfer
of the property but after 1999
until 2004 no word passed between the parties concerning the
property.
[10] With reference to
the correspondence received in 1999, Mr Hoffeldt, a local
businessman, testified that he had seen the purchase
of the property
as a long term investment because he knew that he would require
additional space for his garages and workshops
in future.
‘
[I]n 1999
het ek toe ek die brief ontvang toe weet ek dat die stadsraad is nog
besig met hierdie proses en vir my het dit nie saak
gemaak omdat
hulle baklei by die stadsraad of hofsake het of wat ook al nie, ek
was tevrede om te wag, want my belegging, ek het
minstens ‘n
kontrak wat ek geteken het en my kontrak onder andere sê dit
ook dat die stadsraad sal my in kennis stel
as daar enigiets is wat
ek moet doen en my op terme plaas wat hulle in elk geval nooit gedoen
het nie, maar so vir my het die proses
net aangegaan en ek het gewag,
geduldig sit en wag om te sê ek wag tot julle nou al hierdie
opskortende voorwaardes nakom
sodat ek dan maar kan oordrag neem en
dan volgens die kontrak dan net kan ten volle uitvoer dan.’
The longer it took to
fulfil the conditions the better off he was. He did not have to pay
tax on the property pending their fulfilment
and the price remained
fixed. He was never informed by any official of the municipality that
they were not proceeding with the
sale. In 2004 he thought that the
time had come to expand his business premises and he requested his
attorney to demand performance
of the agreement of sale.
[11]
An
agreement of purchase and sale subject to a suspensive condition is
not a sale pending fulfilment of the condition 'but there
is
nevertheless created "a very real and definite contractual
relationship" which, on fulfilment of the condition, develops
into the relationship of seller and purchaser . . .'.
1
Non-fulfilment of the
suspensive condition renders the agreement void from inception,
unless the parties have agreed otherwise.
As it was put–
2
‘
In my view,
when a suspensive condition, of a kind which has not been inserted in
the contract for the benefit of one of the parties
only, remains
unfulfilled after the lapse of a reasonable time for fulfilment, the
contract is discharged automatically, by virtue
of an implied term to
that effect, unless there is something in the contract negativing the
implication of such a term, and subject
to the possibility of
fictional fulfilment of the condition by reason of the conduct or
inaction of either of the parties. Ordinarily,
no action on the part
of either of the parties equivalent to a placing
in
mora
of
the other in relation to the fulfilment of the condition as such is
required before the contract comes to an end.’
[12]
It
seems to me that the suspensive conditions relied upon were inserted
in the agreement for the benefit of both parties.
3
There
is no express duty on either of the parties to procure fulfilment of
the suspensive conditions. Fulfilment of the two outstanding
conditions is subject to a process in which the public interest and
that of others must also be considered. For this reason there
is no
room for the application of the doctrine of fictional fulfilment of a
condition in this case,
4
and
counsel for the appellant did not rely on it. Nor was it pleaded.
Although no express duty was placed on the municipality to
procure
fulfilment of the condition, the fact that the municipality was the
owner of the property, leads to the importation of
a tacit term in
the agreement that it would take all reasonable steps to attempt to
procure their fulfilment.
5
This
was accepted by both parties.
[13]
It was argued on behalf of the municipality that this duty incumbent
on the municipality constituted a ‘debt’ in
terms of the
Prescription Act 68 of 1969
6
that
prescribed three years after it became due
(sections 11(d)
and
12
(1)). Where no time for performance is stated a debt is generally
due on conclusion of the contract,
7
or, as
it has been said, ‘[a] right to claim performance under a
contract ordinarily becomes due according to its terms or,
if nothing
is said, within a reasonable time, which, in appropriate
circumstances, can be immediately…’.
8
It is
not necessary to place the debtor in mora to ensure that a debt
becomes ‘due’.
9
It was
contended that the debt, ie the duty of the municipality to take
steps to procure fulfilment of the conditions, arose immediately
on
contracting, alternatively, within a reasonable time of conclusion of
the agreement so that the debt had been discharged by
prescription by
the time summons was issued.
[14] I
do not find it necessary to decide the matter on the basis of
prescription. The evidence of Dr De Swart was that suspensive
conditions of the kind in question would normally be fulfilled within
a period of two or at most three years from the time of contracting.
This evidence was hardly challenged except for some remarks by Mr
Hoffeldt that the new employees of the municipality were not
particularly experienced in matters of this kind. It was also common
cause that a reasonable time for fulfilment of the suspensive
conditions had already lapsed by the time summons was issued. In
fact, as I have said, the appellant’s particulars of claim
contain the averment that a reasonable time for fulfilment had
already lapsed. It is clear that, given the fluctuating value of
the
property, the parties to the agreement of sale could not have
intended the agreement ‘to hang in the air for an indefinite
period’.
10
To
ascertain whether a reasonable time has lapsed the peculiar
circumstances of each case must be considered. It was said that
important factors to be considered are the contemplation of each of
the parties at the time of entering into the contract; and their
commercial interests. But the approach is not entirely subjective
because, although one of the parties may not have contemplated
any
particular difficulty, if it was reasonably foreseeable it must be
accounted for.
11
[15] Mr Hoffeldt’s
evidence was that he regarded the purchase of the property as a
long-term investment and that he was in
no hurry to obtain transfer.
He was prepared to wait. Not surpringly, there is no evidence to
suggest that the municipality also
contemplated a period of
indefinite suspension of the contract until such time as the
appellant required the property. That the
appellant would be prepared
to wait for such an inordinate period of time before requiring the
property was simply not reasonably
foreseeable and, although within
the contemplation of Mr Hoffeldt, not within that of the
municipality. The evidence is clear that
from 1999 until 2004 when
the appellant’s demand was made nothing transpired between the
parties with regard to the property
or fulfilment of the suspensive
conditions. It is correct that the municipality did not take further
steps to procure fulfilment
of the conditions but waited to see
whether the appellant would proceed with the sale. However, the
appellant could and, given
the relationship between Mr Hoffeldt and
the council, should have enquired whether progress was made and could
have demanded performance.
It did nothing of the kind and, in any
event, after its demand of 26 May 2004, waited until 2006 to have
summons issued. On any
basis a reasonable time for fulfilment of the
conditions had by that time already passed. It follows that the
agreement had lapsed
due to non-fulfilment of the suspensive
conditions it was subject to.
[16] In the result the
appeal is dismissed with costs.
__________
F R Malan
Judge of Appeal
APPEARANCES:
For Appellant: H S
Havenga SC
J Roux
Instructed
by:
Serfontein, Viljoen &
Swart
Brooklyn, Pretoria
McIntyre & Van der
Post
Bloemfontein
For
Respondent: J A Motepe
Instructed
by:
De Swardt Vögel
Myambo
Brooklyn, Pretoria
Symington & De Kok
Bloemfontein
1
Corondimas
& another v Badat
1946 AD 548
at 558-9 cited with approval
in
Paradyskloof Golf Estate (Pty) Ltd v Stellenbosch Municipality
2011 (2) SA 525
(SCA)
para 17. See also
Cardoso v Tuckers Land and Development
Corporation (Pty) Ltd
1981 (3) SA 54
(W) at 63E-G;
Design and Planning
Service v Kruger
1974 (1) SA 689
(T)
at 697G-H.
2
Design
and Planning Service v Kruger
1974 (1)
SA 689
(T) at 697G-H.
3
Meyer
v Barnardo & another
1984 (2) SA
580
(N) at 583C ff.
4
See
George Municipality v Freysen NO
1976
(2) SA 945
(A) at 958H-959E.
5
Design
and Planning Service v Kruger
1974 (1)
SA 689
(T) at 695C-F and 699G-H;
Meyer
v Barnardo & another
1984 (2) SA
580
(N) at 584C-F;
Thanolda Estates
(Pty) Ltd v Bouleigh 145 (Pty) Ltd
2001
(3) SA 196
(W) paras 17 ff.
6
Desai
NO v Desai & others
[1995] ZASCA 113
;
1996 (1) SA 141
(A) at 146I-147A;
Evins
v Shield Insurance Co Ltd
1979 (3) SA 1136
(W) at 1141F-G;
Kotzé
v Ongeskiktheidsfonds van die Universiteit van Stellenbosch
1996 (3) SA 252
(C) at 258H.
7
Cassim
v Kadir
1962 (2) SA 473
(N) at 475D-E; J C de Wet and A H van
Wyk
Die Suid-Afrikaanse Kontraktereg en Handelsreg
5 ed
(1992) at 160.
8
Munnikhuis
v Melamed NO
1998 (3) SA 873
(W) at
887E;
Phasha v Southern Metropolitan
Local Council of the Greater Johannesburg Metropolitan Council
2000
(2) SA 455
(W) at 477A-B;
Cardoso v
Tuckers Land and Development Corporation (Pty) Ltd
1981
(3) SA 54
(W) at 61G-H.
9
Standard
Finance Corporation of South Africa Ltd (In Liquidation) v Langeberg
Ko-operasie Bpk
1967 (4) SA 686
(A) at
691B-C;
10
Lanificio
Varam SA v Masurel Fils (Pty) Ltd
1952
(4) SA 655
(A) at 660H.
11
Cardoso
v Tuckers Land and Development Corporation (Pty) Ltd
1981
(3) SA 54
(W) at 67B-C;
Nel v Cloete
1972 (2) SA 150
(A) at 165G-H.