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[2021] ZASCA 30
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Chester v Snowy Owl Properties & Another (23/2020) [2021] ZASCA 30 (30 March 2021)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 23/2020
In the matter
between:
NEVILLE
JAMES CHESTER
APPELLANT
and
SNOWY OWL PROPERTIES 142 (Pty)
Ltd
FIRST RESPONDENT
ERICA ANN
LEFSON
SECOND RESPONDENT
Neutral citation:
Chester
v
Snowy
Owl
Properties
&
Another
(Case
no
23/2020)
[2021] ZASCA
30
(30 March 2021)
Coram:
PONNAN, MOCUMIE and SCHIPPERS JJA,
EKSTEEN and GOOSEN AJA
Heard:
2 March 2021
Delivered:
This judgment was handed down
electronically by circulation to the parties’ representatives
by email, publication on the Supreme
Court of Appeal website,
and release to SAFLII. The time and date
for hand down are deemed to be at 09h45 on 30 March 2021
.
Summary:
Contract
– interpretation of the words ‘subject to’ certain
condition precedents – non-fulfilment of a suspensive
condition
in a sale agreement.
ORDER
On appeal from:
Western
Cape Division of the High Court, Cape Town (Thulare AJ, sitting as a
court of first instance.)
The appeal is dismissed with costs.
JUDGMENT
Mocumie JA (Ponnan and Schippers JJA, Eksteen and
Goosen AJJ concurring)
[1]
This appeal concerns an agreement concluded between the appellant, Mr
Neville James Chester and the first respondent for the sale of
immovable property situated in Oranjezicht, Cape Town at a price
of
R22 250 000 (the sale agreement). The immovable property comprises a
‘Manor House’ (a heritage property dating back
to the
1760’s) together with an adjacent property (collectively ‘the
property’). The property is situated within
the Amphitheatre
Sectional Title Scheme (the Scheme), regulated by the Amphitheatre
Body Corporate (the Body Corporate) constituted
in terms of s 36 of
the Sectional Titles Act 95 of 1986 (the Act). The Scheme is part of
a broader residential property development
known as St John’s
Estate (the Estate). The owners of properties within the Estate,
including the Body Corporate, are members
of the St John’s Home
Owners Association (the HOA). Thulare AJ, sitting in the Western Cape
High Court Division, Cape Town
(the high court), dismissed the
appellant’s claims. The appeal is with leave of the court
below.
[2]
The appellant was the plaintiff in the high court. The first
respondent
is Snowy Owl Properties 142 (Pty) Ltd, a private company.
The second respondent, Ms Erica Ann Lefson (Ms Lefson), is a
shareholder
in the first respondent and its sole director. She is
also a homeowner in the Scheme.
[3]
The appellant claimed, as against the first respondent,
transfer of
the property and, in the alternative, as against the first and second
respondents jointly
and
severally, damages. In its plea, the first respondent asserted that
clause 22.1 of the sale agreement constituted a suspensive
condition,
the fulfilment of which had become impossible when the HOA had
resolved in a meeting of its trustees on 9 February
2016 not to
sign the undertaking envisaged by that provision. Thus, the sale
agreement was rendered void and the first respondent
was released
from its obligations.
[4]
The issue for determination in the appeal will
be best understood
against the common cause factual background that follows. In 2013,
before the sale of the property, Ms Lefson
put in motion a plan to
remove the property from the Scheme so that it would revert to the
land register as a separate erf. This
was to enable her to market the
property for a sale unencumbered by the provisions of the Act and the
Body Corporate’s rules.
The Act required an application for the
subdivision and the consent of all the members of the Body Corporate.
The Constitution
of the Body Corporate also required the consent of
all the members.
[5]
To obtain the consent of the members of the Body Corporate the first
respondent
and Ms Lefson agreed to furnish the Body Corporate and the
HOA with a series of undertakings. Ms Lefson also agreed to pay the
Body Corporate the sum of R300 000 as consideration for its members
agreeing to the removal of the property from the Scheme. She
furnished the Body Corporate with the written Undertakings and
Consents (the Undertaking) and the Body Corporate approved the
removal of the property from the Scheme. The dispute between the
parties turns on the refusal by the HOA to sign the envisaged
undertaking.
[6]
The appellant had instructed an attorney and conveyancer, Ms Debora
Gouws
(Ms Gouws),
[1]
to prepare the sale agreement. Ms Gouws prepared the sale agreement
on the basis that transfer and payment of the full purchase
price to
Ms Lefson would take place when she had finalized the removal of the
property from the Scheme. The sale agreement also
provided that the
appellant would have the right to resile from the agreement if Ms
Lefson failed to complete the process within
twelve months.
[2]
[7]
Clause 22 of the sale agreement, upon which the appeal turns,
provides:
‘
22.
The whole of this Agreement is subject
to the following condition[s] precedent being met
prior
to the transfer date (and prior to the Purchaser having to furnish
the balance of the payment of the purchase price in cash
to the
Conveyancers as set out above):
22.1 The Seller furnishing the
Purchaser with a copy of the
signed
Undertakings and Consents
(“Undertaking”) provided by the Seller and Ms E Lefson to
and in favour of the Amphitheatre
Body Corporate and the St John’s
Home Owners Association (the
Association);
22.2 The Seller furnishing the
Purchaser with proof of the seller having met each and every
condition in the Undertaking,
including the payment of the
R300 000,00 to the said Body Corporate
22.3 The Seller obtaining
the written confirmation from the Association that the
Purchaser, as the owner of Property “A”, shall, in
perpetuity, be allowed unfettered access to Property “A”,
through the main security entrance for St John’s Estate (ie:
over land/roads owned by the Association). The Seller is to
ensure,
at its cost, that this right of access is embodied in the title deeds
of both property “A” (once the erf has
been created for
the Manor House) as well as in the title deed for the road erf
belonging to the Association; alternatively, that
this right of
access is embodied in the Constitution of the Association.
22.4 The Seller obtaining the written
confirmation from the Association that upon transfer of Property “A”,
as a separate erf to the Purchaser, that such erf shall remain a part
of the Association and accordingly the Purchaser shall become
a
member of the Association and shall be bound by its Constitution,
upon taking transfer of the erf. To this end, the Seller shall,
in
obtaining such written confirmation from the Association, also obtain
the Association’s confirmation that it shall amend
its
Constitution to include the erf (Property “A”).
22.5 The Seller simultaneously with or
before the transfer of the Properties to the Purchaser, sells and
transfers parking
bays 13 and 16 and store room 34 to other members
of The Amphitheatre sectional title scheme, as provided for in
paragraph B1.5
in the
Undertaking.’
(Emphasis added.)
[8]
Prior to the signing of the sale agreement, Ms Gouws requested
Mr Blackenberg
to provide her with a copy of a fully signed
Undertaking for her file. On 28 October 2014 the appellant asked Ms
Gouws if the Undertaking
had been signed by the Body Corporate and
HOA. Ms Gouws enquired of Mr Blackenberg, who assured her on the same
day that it had
been signed. But, subsequently, on 6 November
2014, she was informed that the copy that was signed by both the Body
Corporate
and HOA could not be found and that Ms Lefson would table
the matter at the next meeting of the Board of Trustees of the HOA.
[9]
On 21 November 2014 Ms Gouws, possessed of the Undertaking signed
only
by the Body Corporate, addressed an email to Mr Blackenberg with
a draft agreement of sale attached in which she said:
‘
Herewith
[the] draft agreement for you to go over and consider all conditions
and terms . . .’
On 27 November 2014, Mr Truter, one of the trustees confirmed that
the Undertaking was not signed by the HOA. Armed with this
information and knowledge, on the same day, Ms Gouws forged ahead and
emailed the offer to purchase the Manor House to Mr Blackenberg.
Ms
Lefson accepted the offer by signing the sale agreement on 3 December
2014.
[10] The
appellant paid the required deposit and Ms Lefson initiated the
process of removing
the property from the Scheme by briefing a town
planner to attend to obtaining the necessary regulatory approvals,
including the
subdivision of the property. This process proved to be
slower than Ms Lefson anticipated. She became frustrated and asked
the appellant
on various occasions during 2015 to take transfer of
the property before the subdivision was completed. The appellant
declined
on each occasion.
[11] On 30
October 2015 Mr Blackenberg formally informed Ms Gouws that the HOA
had never
signed the agreement as the parties contemplated. On
9 November 2015, according to the minutes of the trustees of the
HOA,
a resolution was adopted not to sign the agreement at that
stage, pending legal advice. In a letter dated 27 November 2015, Mr
Blackenberg informed Ms Gouws of that decision of the HOA.
[12] On 30
November 2015, the appellant proposed a written amendment to the sale
agreement
to the effect that he takes transfer of the property as
sections, exactly as Ms Lefson had proposed unsuccessfully much
earlier
in the year; and that the reversion of the land register only
occurs thereafter subject to certain new terms. On 3 December 2015,
Ms Lefson rejected the proposal and asserted that clause 22.1 was a
suspensive condition and that the sale agreement had lapsed
because
it had become impossible for her to furnish the appellant with a copy
of the Undertaking signed by the HOA. She advised
the appellant that
‘[i]n view of the fact that St John’s Home Owners
Association will not sign the Agreement of the
Undertaking in its
present format, the seller is unable to perform in terms of the
suspensive conditions due to the circumstances
beyond her control and
the sale, in its present format, has therefore lapsed . . .’.
[13] On 9
February 2016 the trustees of the HOA formally resolved that the sale
agreement
was not in the interests of the homeowners in the Estate
and that the Undertaking will not be signed. This precipitated the
proceedings
before the high court.
[14] In its
judgment, the high court found in favour of the respondents. It found
that:
“
(a)
clause 22.1 constitutes a suspensive condition; (b) the HOA’s
decision not to sign the Undertakings and Consents Agreement
rendered
the fulfilment of the condition impossible; (c) clause 22.1 was not
solely for the benefit of the plaintiff and therefore
not susceptible
to waiver by him; (d) the plaintiff had not proved fictional
fulfilment of the condition in clause 22.1; and (e)
the HOA as the
body vested with the interests of all home owners in the Scheme had
to sign the Undertakings and consent agreement
for the sale agreement
to be enforceable between the parties. As a result, it dismissed the
appellant’s claim.”
[15] A good
place to start is the introduction to the sale agreement. It
stipulates that
‘‘[t]he whole of this agreement is
subject to
the following condition precedents being met prior
to the transfer date (and prior to the purchaser having to furnish
the balance
of the payment of the purchase price in cash to the
conveyancers . . .)’. (Emphasis added.)
[16] Clause
22.1 cannot be read in isolation but must be read in conjunction with
clauses
22.2 and 22.3 which provide respectively, that the seller
must meet each and every condition in the Undertaking and obtain
confirmation
from the HOA. The two clauses cater for the interests of
the other owners and the HOA. It must also be read with Part C1 of
the
Undertaking, which states unequivocally that ‘[s]he [Ms
Lefson]
shall
take all the steps and do all the things
necessary in her capacity as a Director of the company and in her
personal capacity to
ensure that the company and all persons who
purchase or acquire from the company any part of the land to be
removed from the Scheme
comply with their obligations towards the
Body Corporate and the HOA as set out in paragraph B above. . .’.
(Emphasis added.)
[17] Also by
making provision for three signatures the parties evidently
contemplated
that it had to be signed by the three parties i.e. Ms
Lefson (on behalf of the first respondent), the Body Corporate and
the HOA.
The latter is the body that represented home owners and was
responsible to oversee the interests of all its members. Thus, the
HOA is the most appropriate body to approve or give consent to the
sale of the property under conditions that were beneficial to
the
members.
[18] Moreover,
Part B3.9, B3.10 and B 3.11 of the Undertaking provided that:
‘
B3.9 They
[the parties to the agreement] shall signify the individual
acceptance by the Body Corporate
of the benefits conferred upon it in
this document, whereupon the Body Corporate shall be individually
entitled to enforce the
provisions hereof against the company and
each and every subsequent successive owner in perpetuity of any part
of the land to be
removed from the Scheme irrespective of whether or
not the HoA also accepts such benefits. For this purpose, and to the
extent
necessary, the Chairman for the time being of the Body
Corporate shall at any time in the future be entitled to accept the
benefits
conferred upon the Body Corporate in this document as
against any such subsequent successive owner; whereupon it
shall
be individually entitled to enforce the provisions hereof against any
such subsequent owner . . .
B3.10 They [the parties to the agreement]
consent and agree that the provisions of paragraph B3.9 above
shall also apply to the Chairman of the HOA and to the HOA
mutatis
mutandis
as if they were the Chairman of the Body Corporate and
the Body Corporate respectively.
B3.11 They [the parties to the
agreement] consent and agree that this document constitutes
the sole
memorial of the agreement hereby constituted between the parties
hereto in relation to the subject matter hereof, and
that the terms
hereof shall only be capable of subsequent variation by way of
written agreement concluded between the Body Corporate,
the HOA and
all of the current owners of all the land to be removed from the
Scheme . . .’
[19] In short,
on a straight forward interpretation of clause 22.1, read in context,
the
logical conclusion must be, absent the Undertaking signed by all
the parties, there could be no valid and enforceable sale agreement.
To interpret the words ‘subject to’ other than as
contemplated by the parties, would give the clause a construction
which is not commercially sensible.
[20]
I therefore conclude that clause 22.1 is a suspensive condition. When
the HoA refused to sign the Undertaking,
it became impossible for Ms
Lefson to transfer the property. It was contended, in the
alternative, that the condition which was
for the sole benefit of the
appellant, had been waived by him. I cannot agree. In my view, the
requirement that the Body Corporate
and HOA had to signify their
assent had obviously been inserted for the benefit of their members.
Thus assuming that the evidence
established the waiver (which to my
mind it did not), the condition was not solely for the benefit of the
appellant and therefore
not his to waive. The result is that the
obligations never came into operation.
[3]
This conclusion disposes of the appeal.
[21]
In conclusion it is necessary to reiterate what was stated in
KPMG
Chartered Accountants (SA) v Securefin Ltd & another
[4]
:
‘
First,
the
integration (or
parol evidence) rule remains part of our law.
[5]
However, it is frequently
ignored
by practitioners and seldom enforced by trial courts. If a document
was intended to provide a complete memorial of a jural
act, extrinsic
evidence may not contradict, add to or modify its meaning (
Johnson
v Leal
1980 (3) SA 927
(A) at 943B).
Second, interpretation is a
matter
of law and not of fact and, accordingly, interpretation is a matter
for the court and not for witnesses (or, as said in common-law
jurisprudence, it is not a jury question: Hodge M Malek (ed)
Phipson
on Evidence
(16 ed 2005)
paras
33-64).
Third, the rules about admissibility
of
evidence in this regard do not depend on the nature of the document,
whether statute, contract or patent (
Johnson
& Johnson (Pty) Ltd v Kimberly-Clark Corporation and
Kimberly-Clark of South Africa (Pty) Ltd
1985
BP 126 (A) ([1985] ZASCA 132 (at
www.saflii.org.za
), 1985 Burrell Patent Cases 126
(A)). Fourth, to the extent that evidence may be admissible to
contextualise the document (since
“context is everything”)
to establish its factual matrix or purpose or for purposes of
identification, “
one must use it
as conservatively as possible
”
(
Delmas Milling Co Ltd v Du Plessis
1955
(3) SA 447
(A) at 455B-C). The time has arrived for us to accept that
there is no
merit
in trying to distinguish between “background circumstances”
and “surrounding circumstances”. The distinction
is
artificial and, in addition, both terms are vague and confusing.
Consequently, everything tends to be admitted. The terms “context”
or “factual matrix” ought to suffice. (See
Van
der Westhuizen v Arnold
2002 (6) (SCA)
paras 22 and 23, and
Masstores (Pty) Ltd
v Murray & Roberts Construction (Pty) Ltd & another
[2008] ZASCA 94
;
[2008]
(6) SA 654
(SCA) para 7.).
’
(Emphasis
added.)’
[6]
[22] In this matter, despite the case
turning on a narrow point of interpretation, the parties succeeded
in
generating a record in excess of a thousand pages. Much of the
evidence was irrelevant to that narrow point.
[23] In the result, the
appeal is dismissed with costs.
BC MOCUMIE
JUDGE OF APPEAL
Appearances
Counsel for Appellant:
J G Dickerson SC and L C Kelly
Instructed by
Werksmans Attorneys, Cape Town
Lovius Block, Bloemfontein
Counsel for Respondents:
R J Howie
Instructed by
Matthew Walton & Associates Inc. Westlake
Honey Attorneys, Bloemfontein
[1]
Ms Gouws is the attorney and conveyancer who drew
up the Constitution of the Estate in November 2002 practising at
Mallinicks
Inc at that time and specialised in the field of
sectional title development.
[2]
Clause 10 of the sale agreement.
[3]
Generally speaking, a suspensive condition
suspends the operation of all obligations flowing from a contract
until occurrence
of a future uncertain event. If the uncertain
future event does not occur, the obligations never come into
operation. See
Swart v Starbuck and
Others
[2017] ZACC 23
;
2017 (5) SA 370
(CC) with reference to
Command
Protection Services (Gauteng) (Pty) Ltd t/a Maxi Security v
South
African Post Office
[2012] ZASCA 160
;
2013 (2) SA 133
(SCA) para 21;
Diggers
Development (Pty) v City of Matlosana
[2011]
ZASCA;
[2012] 1 All SA 428
(SCA) para 29;
Southern
Era Resources Ltd v Frandell NO
[2009]
ZASCA 150
;
2010 (4) SA 200
(SCA) para 11.
[4]
KPMG Chartered Accountants (SA) v Securefin
Ltd & another
[4]
[2009] ZASCA 7
;
2009 (4) SA 399
(SCA)
para 39.
[5]
The essence of parol evidence rule, is explained in R H Christie and
G B Bradfield
Christie’s Law of Contract in South Africa
7 ed (2016) at 226 as follows:
‘
Despite
its difficulties, it serves the important purposes of ensuring that
where the parties have decided that their contract
should be
recorded in writing and that such contract shall be the sole,
complete record
of
their agreement, their decision will be respected, and the resulting
document, or documents, will be accepted as the sole evidence
of the
terms of the contract.’
At page 228, the rule is qualified as follows:
‘
One
does
not
need
a
very
fertile
imagination to see how, necessary as the rule is, it can lead to
injustice
if
rigorously applied, by excluding evidence of what the parties really
agreed. It has therefore been the courts’ constant
endeavour
to prevent the rule being used as an engine of fraud by a party who
knows full well that the written contract does
not represent the
true agreement. In the nature of things, this endeavour to achieve a
fair result without destroying the advantages
inherent in written
contracts has led to some decisions that are difficult to reconcile.
Perhaps the best way to look at the
rule is to see it as a backstop
that comes into operation only in the absence of some more dominant
rule, giving way to the rules
concerning misrepresentation, fraud,
duress, undue influence, illegality or failure to comply with the
terms of a statute, mistake,
and rectification. If it did not do so,
none of these rules would apply to written contracts, which would be
absurd. In all such
cases, of course, the burden is on a party who
has signed a written contract to displace the maxim
caveat
subscriptor
by
proving lack of the necessary
animus
.’
For a useful discussion on the parol evidence rule, including
criticisms relating to its application and exceptions thereto,
see S
W J van der Merwe et al
Contract General Principles
4 ed
(2012) at 148 et seq.
[6]
City of Tshwane Metropolitan Municipality v
Blair Atholl Homeowners Association
[2018] ZASCA 176
;
[2019] 1 All SA 291
(SCA);
2019 (3) SA 398
(SCA)
para 64 and 65.