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[2021] ZASCA 41
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Tramore Property Group (Pty) Ltd v Vosloorus Square CC (235/2020) [2021] ZASCA 41 (13 April 2021)
THE SUPREME
COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case no:
235/2020
In the matter between:
TRAMORE PROPERTY GROUP
(PTY) LTD
APPELLANT
and
VOSLOORUS
SQUARE CC
RESPONDENT
Neutral citation:
Tramore
Property Group (Pty) Ltd v Vosloorus Square CC
(Case
no 235/2020)
[2021] ZASCA 41
(13 April 2021)
Coram:
MBHA,
NICHOLLS and MBATHA JJA and GORVEN and GOOSEN AJJA
Heard
:
11 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 SAFLI. The date and time for
hand-down is deemed to be 10h00 on 13 April
2021.
Summary:
Contract – Property Law – enforceability of
contract of sale of property of another – no basis for
cancellation
– locus standi – seller disposed of rights
to require owner to transfer under sale agreement – owner
withdrew
opposition to transfer – claim for transfer
enforceable.
ORDER
On
appeal from:
Gauteng Division of the
High Court, Pretoria (Neukircher J, Tuchten and Teffo JJ concurring,
sitting as Full Court):
The
appeal is dismissed with costs.
JUDGMENT
Gorven AJA
(Mbha, Nicholls and Mbatha JJA and Goosen AJA concurring):
[1]
On 17 September 1991, the City Council of
Vosloorus (the council) and Permprop (Pty) Ltd (Permprop) concluded a
written agreement.
It was termed an ‘Agreement of Exchange of
Land by Leasehold’ (the exchange agreement). At the time,
Permprop owned
certain land, which the council required. As a result,
specified properties owned by Permprop (the Tramore properties) were
to
be disposed of to the council. In turn, specified properties owned
by the council (the council properties) were to be disposed of
to
Permprop. The agreement was that the transfers should be
simultaneous. No money was to change hands. The council took
occupation
of the Tramore properties pursuant to the exchange
agreement. It erected a large school on these properties. No
transfers of any
of the properties concerned have taken place.
[2]
The Ekhuruleni Metropolitan Municipality (the
municipality) is the successor in title to the council. Permprop
changed its name
to that of the appellant (Tramore).
[3]
On 7 April 2000, Tramore and the respondent
(Vosloorus Square) concluded two written agreements. Both were styled
‘Agreement
of Sale of Land’. In one, Tramore agreed to
sell to Vosloorus Square the council properties (the sale agreement).
All of
the council properties are undeveloped. In the other, Tramore
agreed to sell to Vosloorus Square certain other properties. The
second sale agreement is not relevant to the present matter.
[4]
On 19 September 2012, the Gauteng Department of
Housing proclaimed a township (the township), which included the
council properties.
Certain properties were made subject to special
conditions in the proclamation. These included the requirement that:
‘The internal roads
on the erf shall be constructed and maintained by the registered
owner to the satisfaction of the local
authority . . . .’
It is common
cause that the rights in the council properties have been converted
from leasehold to outright ownership.
[5]
Vosloorus Square requested that Tramore transfer
the council properties to it. Tramore refused to do so. This prompted
an application
to the Gauteng Division of the High Court, Pretoria,
in which Vosloorus Square sought the following relief:
[1]
‘1.
The Registrar of Deeds, Johannesburg, shall simultaneously record and
give effect
to the following transfers of property:
a.
Erven 21686 to 21708 Vosloorus Extension 29 be transferred from [the
municipality]
to [Vosloorus Square]; being first transferred (insofar
as is necessary) from [the municipality] to [Tramore];
b.
Erven 14258, 14259, 14260 and 14261, Vosloorus Extension 30, be
transferred from
[Tramore] to [the municipality];
c.
In the event of any of the aforenamed Respondents do not sign
whatever
documents and deeds might normally be required to effect the
aforesaid transfers and registrations, the Sheriff having
jurisdiction
. . . shall execute and sign such documents in their
stead.
2.
Costs of the application are to be paid by [Tramore].’
Both Tramore
and the municipality were cited as respondents in the application.
Both opposed it and delivered answering affidavits,
after which the
municipality withdrew its opposition, leaving Tramore as the only
party opposing.
[6]
The court of first instance, per Mavundla J,
dismissed the application with costs on the basis that Vosloorus
Square lacked the
requisite
locus standi
to obtain the relief sought. He granted leave to appeal to the Full
Court of the Gauteng Division, Pretoria. That court, per Neukircher
J, with Tuchten and Teffo JJ concurring, upheld the appeal and
substituted the following order for that of the court of first
instance:
‘2.1
[T]hat the [municipality] and [Tramore] are ordered to take all steps
necessary to transfer
to each other the land envisaged in the
Exchange Agreement dated 1991 and that
pari passu
therewith
[Tramore] shall pass transfer of the properties received from [the
municipality] to [Vosloorus Square];
2.2
the Services Agreement signed by [the municipality] and [Tramore]
respectively on 29 May
2013 and 14 February 2014 remains
in
esse
and is ceded and assigned from [Tramore] to [Vosloorus
Square];
2.3
[Tramore] is ordered to pay [Vosloorus Square’s] costs.’
It is this
order which is appealed against by Tramore with the special leave of
this court. The municipality takes no part in the
appeal.
[7]
As will have become apparent, much time has
elapsed since the exchange agreement was concluded in 1991. This,
also, since the sale
agreement was concluded in 2000 and the
proclamation of the township took place in 2012. After the conclusion
of the sale agreement,
negotiations took place between Vosloorus
Square and the municipality. In these, the municipality was clearly
aware of the sale
agreement and that it was Vosloorus Square, and not
Tramore, that would develop the council properties. As will be seen,
the municipality
has never objected to Vosloorus Square being the
developer of the council properties.
[8]
The main substantive ground on which Tramore
opposed the application was that the sale agreement was cancelled on
8 July 2014. It
claimed that Vosloorus Square had breached its
obligations under the sale agreement. The purported breach was of
clause 10.3 of
the sale agreement. This provides:
‘The purchaser
undertakes to provide guarantees for internal services and bulk
contributions as may be required by the local
authority pursuant to
proclamation of the township or subdivision and transfer of the
property within 14 days of being called upon
to do so by the seller.’
Tramore
claimed that Vosloorus Square failed to provide the requisite
guarantees when called upon by Tramore to do so. In support
of this
claim, Tramore called in aid a series of email communications.
[9]
Before dealing with the communications on which
Tramore relies, it will assist to provide some context. Vosloorus
Square applied
to the municipality for the rezoning of the council
properties to residential within a township. On 6 October 2011, Ms
Dowd, the
Manager: Corporate and Legal Services for the municipality,
wrote to the representative of Vosloorus Square saying that she would
recommend Vosloorus’ rezoning application to the Department
City Planning, subject to the submission of certain documents.
Vosloorus Square provided the required documents. The township was
accordingly proclaimed on 19 September 2012. On 10 October 2012,
Ms
Dowd requested the Director: Planning Water Services to furnish her
with conditions he wished to be included in the services
agreement.
In this communication she indicated that Tramore had sold the council
properties to Vosloorus Square but that, because
the exchange
agreement had not been amended to substitute the latter for Tramore,
the services agreement would have to be concluded
between the
municipality and Tramore.
[10]
The municipality then set out certain
requirements for the services to be provided by Vosloorus Square when
it developed the council
properties. As a result, Vosloorus Square
furnished the municipality with the following reports:
(a) A storm
water report;
(b) A water
and sewer report;
(c) An
electricity reticulation report; and
(d) A
dolomite stability investigation report.
These were
considered and approved by the municipality prior to preparation of
the services agreement referred to below. The cost
to Vosloorus
Square of obtaining the various reports exceeded R1 127 813.48.
[11]
On 29 May 2013, after receiving and approving the
said reports, the municipality signed what is referred to as a
Services Agreement
(the services agreement) which, as foreshadowed in
Ms Dowds’s letter of 10 October 2012, reflected Tramore as the
other party.
In the services agreement, the municipality fixed a
guarantee for ‘all defects occurring in the roads and
storm-water’
at R485 000. Although the services agreement
requires many other services from the developer, no further
guarantees are fixed in
it concerning those other services. At this
stage only the municipality had signed the services agreement.
[12]
The sequence of the communications and events
relied on by Tramore to support its assertion of a breach of clause
10.3 of the sale
agreement follows.
(a) On 29 May
2013, the municipality signed the services agreement, fixing the
above guarantee at R485 000.
(b) On 29
July 2013, a representative of Vosloorus Square sent an email to
Tramore, copied to the municipality. In it, Vosloorus
Square
indicated that it was prepared to issue an irrevocable guarantee.
(c) On 31
July 2013, Tramore sent an email to Vosloorus Square and copied the
municipality. In the section headed ‘Council
Guarantees’,
it said that the consulting engineers of Vosloorus Square should ‘now
establish the cost of the internal
services and council should agree
to the services and the cost thereof and the amount of the guarantee
they require’. It
went on to say that it required a letter from
the municipality confirming this.
(d) On 12
August 2013, Vosloorus sent an email to Tramore confirming that the
consulting engineers were engaged in the suggested
process.
(e) On 16
October 2013, Vosloorus Square sent an email to the municipality and
copied Tramore. The email referred to that of Tramore
of 31 July 2013
and said:
‘[W]e confirm that
we have established the cost of the internal services and further
confirm we are prepared to issue the
required irrevocable bank
guarantees to council as stipulated on the service agreement.
Can you kindly confirm
this as stated by Mr Roye in his mail below, dated 31
st
July 2013 and request his availability any time next week for the
signing of the service agreement at your office.’
It also
confirmed that it was prepared to enter into a cession of the
services agreement.
(f) The
response from the municipality, sent by Ms Dowd on 18 October 2013,
is to the effect that, since the municipality had signed
the services
agreement, Tramore should do so. The municipality did not respond to
the question raised by Vosloorus Square concerning
what had been said
of guarantees in the email of Tramore dated 31 July 2013.
(g) This
reply caused Tramore and Vosloorus Square to draft an addendum to the
services agreement. This sought to substitute Vosloorus
Square as the
developer and provided that the municipality agreed to this
substitution and to Vosloorus Square taking over all
of the
obligations of the developer under the services agreement. A copy of
the draft addendum was sent to the municipality for
approval on 31
October 2013.
(h) No
response from the municipality was put up in the papers.
(i) Tramore
signed both the services agreement and the addendum on 14 February
2014. Vosloorus Square had signed the addendum a
few days before. The
addendum has not been signed by the municipality but there is no
indication that it objects to it. All indications
are to the
contrary, and Vosloorus Square stated in the application, without
challenge, that the municipality had no objection
to it.
(j) On 19
June 2014, attorneys for Tramore addressed a letter (the breach
letter) to Vosloorus Square. It recorded that the latter
had breached
clause 10.3 of the sale agreement by failing ‘to furnish
guarantees for the internal services and bulk contributions
within 14
days of being called upon by the seller to do so’. It contended
that the ‘most recent occasion’ on
which Vosloorus Square
had been called upon by Tramore to provide guarantees was ‘at a
meeting . . . on or about July 2013’.
It also indicated that
the terms of the guarantees must be acceptable to Tramore and the
municipality and called upon Vosloorus
Square to remedy the breach
and furnish the required guarantees within 7 days.
(k) On 8 July
2014 the said attorneys delivered a letter to Vosloorus Square
purporting to cancel the sale agreement on the basis
that Vosloorus
Square had ‘failed to furnish the guarantees for the internal
services and bulk contributions within the specified
7 days as
demanded.’
[13]
The contentions of Tramore concerning
cancellation must be considered against this background. Tramore
claims that clause 10.3 entitled
it to call upon Vosloorus Square to
provide guarantees. What is required of Vosloorus Square by clause
10.3 is that it ‘provide
guarantees . . . as may be required by
the local authority’. This, of course, means that, until the
municipality requires
guarantees, Vosloorus Square is not obliged to
provide them. The necessary corollary to this is that Tramore is not
entitled to
call upon Vosloorus Square to do so.
[14]
Tramore submitted that the services agreement
showed that the municipality had fixed the amount of the guarantee
for ‘defects
occurring in the roads and storm-water’ at
R485 000. This, it said, showed that the municipality had ‘required’
the guarantees. But this clearly did not call for them to be
furnished at this stage. During argument, Tramore was constrained
to
concede that there is no evidence that the municipality had called
for any guarantees. As such, it cannot be said that it had
‘required’
the guarantees at the time Tramore purported to call for the
guarantees and, based on the failure of Vosloorus
Square to provide
them, to cancel the sale agreement.
[15]
Tramore then submitted that the amount of the
guarantee had been fixed. But Tramore did not itself treat the
services agreement
as determinative of the amount or amounts.
Subsequent to signature by the municipality of the services
agreement, on 31 July 2013,
it sent an email to Vosloorus Square and
the municipality. It stated that, after the consulting engineers of
Vosloorus Square had
established the cost of the internal services,
‘council should agree to the services and the cost thereof and
the amount
of the guarantee they require’. This was sent on the
last day of the month during which Tramore claimed that it had
demanded
that Vosloorus Square furnish the guarantees. There could
clearly have been no breach based on the amount of the guarantees
having
been clarified.
[16]
Further, Vosloorus Square had tendered the
requisite guarantees in the email to the municipality of 16 October
2013. This referred
to the email of Tramore of 31 July 2013, which
stated that the municipality should agree the amount. The
municipality did not respond
to this tender by Vosloorus Square and
specify the amount it would require. Nor did it indicate that it
required that the guarantees
be furnished at that stage.
[17]
Finally, in the breach letter the attorneys for
Tramore indicated that the terms of any guarantee must be acceptable.
There is no
assertion, let alone evidence, that any terms were ever
agreed. All that was put up in the papers was a
pro
forma
document headed ‘Guarantee’,
which is in the form of a deed of suretyship, for damages sustained
by the municipality
by non-performance of obligations under an
unspecified memorandum of agreement concluded between the
municipality and the ‘Township
Owner’ for an unspecified
amount. It also includes a suretyship for the obligation to construct
a ‘consumer communal
substation’, referencing clause
1.1.4 of the ‘Contract’. No such clause appears in the
services agreement and
no such provision is required of the
developer. It is clear, accordingly, that no agreement had been
reached on the terms of any
guarantees to be furnished by Vosloorus
Square.
[18]
This means that Tramore did not show that the
municipality had requested that the guarantees be furnished. It did
not show that
the amount had been finally specified and it did not
show that any terms had been suggested by the municipality or agreed
between
it and either Tramore or Vosloorus Square. It was therefore
not competent for Tramore to have demanded guarantees under clause
10.3 because there is no indication that the guarantees were
‘required by the local authority’. There is thus no basis
on which Tramore was entitled to cancel the sale agreement. Vosloorus
Square correctly regarded the purported cancellation as a
repudiation
of the sale agreement and elected to enforce it.
[19]
Two further substantive defences to the claim in
the application to specific performance of the sale agreement were
raised. First,
Tramore claimed that Vosloorus Square had not
performed its reciprocal obligations. As such, it could not require
Tramore to perform
its obligations. The reciprocal obligation relied
upon by Tramore was that of Vosloorus Square to provide guarantees
under clause
10.3. In essence, this raises the same issue of
non-compliance on which the defence of cancellation was founded. It
must accordingly
meet the same fate as that defence. Secondly,
Tramore contended that there was a statutory bar to the relief sought
but abandoned
this defence at the outset of the hearing before us. In
my view, this abandonment was correct. Nothing more need accordingly
be
said about it. The substantive defences raised by Tramore were
thus correctly dismissed by the full court.
[20]
The issue on which the court of first instance
found against Vosloorus Square was that there was no contractual
privity between
it and the municipality. For this reason, it lacked
the requisite
locus standi
to enforce transfer from the municipality to Tramore, which is a
necessary precursor to enforcing the sale agreement. This point
was
taken in the papers only by the municipality and not by Tramore. As
indicated, the municipality withdrew its opposition to
the
application and has elected not to join in this appeal. This despite
the order requiring it to transfer the council properties
to Tramore
against transfer of the Tramore properties to it. Tramore, however,
relied on it as a point of law as it is entitled
to do. In essence,
the argument is that the exchange agreement was concluded between
Tramore and the municipality. Because Vosloorus
Square was not a
party to it, only Tramore could enforce performance by the
municipality. This defence must now be considered.
[21]
Tramore requested transfer of the council
properties sometime prior to 20 January 2014. The response of the
municipality on that
date said that ‘the properties . . . will
not be transferred to yourself in order for you to transfer the
properties which
you sold to Vusi Khumalo, until such time as the
properties in Vosloorus X30 are transferred to the council.’ In
other words,
the municipality simply required the simultaneous
transfer of Tramore’s properties if Tramore wished to obtain
transfer of
the council properties. This was required under the
exchange agreement. No other bar to the request for transfer was
raised or
has since been raised. It should be mentioned that Vusi
Khumalo, mentioned in this communication, has at all times
represented
Vosloorus Square.
[22]
In considering this defence, an evaluation of the
obligations of Tramore under the sale agreement is required, along
with the context
in which it was concluded. While a person may sell
property belonging to another, the usual position is that the only
obligation
resting on the seller is to give possession to the
purchaser and to indemnify the purchaser against eviction by the
owner. The
seller is generally not obliged to transfer ownership to
the purchaser. This position was established as far back as 1897 in
the
matter of
Theron and Du
Plessis v Schoombie
,
[2]
where De Villiers CJ, beginning with
a quotation from
Benjamin on Sales
,
[3]
said:
“On the completion
of the contract of sale,” he says, “the vendor was bound
simply to deliver possession, and
the buyer had no right to object
that the vendor was not owner. But the possession thus to be
transferred was something more than
the mere manual delivery, and the
Romans had a special term for it; it must be
vacua possessio,
a
free and undisturbed possession, not in contest when delivered. And
if the vendor knew that he was not the owner and made a sale
to a
buyer ignorant of that fact, so as wilfully to expose the latter to
the danger of eviction, the vendor's conduct was deemed
fraudulent,
and the buyer was authorised to bring an equitable suit,
ex empto,
without waiting for an eviction.” These principles have not
been materially modified by the Dutch law. Under that law the sale
of
a thing belonging to another was not illegal if made
bona fide,
but was subject to the buyer's right to be indemnified against
eviction.’
[4]
In the sale
agreement, however, Tramore went further than undertaking to give
possession of the council properties to Vosloorus
Square. This had
already taken place. Tramore did not only sell the council properties
but undertook that Vosloorus Square would
obtain transfer.
[23]
In the founding affidavit, Vosloorus Square
asserted that the sale agreement ‘constitutes a complete sale
and alienation to
the Applicant of all rights, title and interest
that Tramore has or had (in terms of the Exchange Agreement) in the
Council Land’.
This assertion was not challenged by Tramore but
must, of course, be consistent with the sale agreement.
[24]
The sale agreement is not particularly elegantly
drafted but certain factors bearing on its interpretation make the
assertion more
probable than not. The property sold is described as
‘proposed erven’ in the still undeclared township. It
requires
Vosloorus Square to finalise the township at its own cost.
It requires Vosloorus to provide the guarantees required by the
municipality
of Tramore in the exchange agreement ‘pursuant to
proclamation of the township’. It also requires that Vosloorus
Square
conclude a services agreement with the municipality. All of
these are consistent with a disposal of the rights of Tramore under
the exchange agreement. It can hardly be considered that the sale
agreement would allow Vosloorus Square to deal directly with
the
municipality concerning land to which Tramore was entitled under the
exchange agreement, unless Tramore had disposed of its
rights under
that agreement to Vosloorus Square. This is further buttressed by the
addendum to the services agreement in which
Tramore cedes and assigns
its rights under the services agreement to Vosloorus Square.
[25]
And this was recognised by the municipality; it
undertook negotiations with Vosloorus Square concerning property
which it had agreed
to transfer to Tramore. The negotiations related
specifically to the application of Vosloorus Square, and not Tramore,
to have
the township proclaimed. Ms Dowd called on Vosloorus Square,
not Tramore, to submit documents before she would recommend the
proclamation
of the township. Having received the requisite documents
from Vosloorus Square, she recommended proclamation, which took place
shortly thereafter. Straight after it was proclaimed, she wrote to
the Director: Planning Water Services enquiring what he required
in a
services agreement. The municipality then requested reports from
Vosloorus Square and approved them before drafting the services
agreement, which dealt with the services covered by the reports.
[26]
The fact that the services agreement reflected
that Tramore had the obligation to provide the services is consistent
with the legal
position. Ms Dowd, in her letter to the Director:
Planning Water Services, stated that Tramore had sold the council
properties
to Vosloorus Square and that, in terms of the sale
agreement, the latter ‘shall be obliged to conclude a services
agreement
with the Council’. She went on to say that the
exchange agreement ‘has not been amended to make provision for
the agreement
that exists between Messrs Tramore and Mr Khumalo and
therefore the Council is obliged to enter into a services agreement
with
Messrs Tramore . . .’.
[27]
Although this was not addressed in the judgment
of either of the courts below, or the heads of argument, or in
argument before us,
the position of Ms Dowd is correct. For the
municipality to be bound by any delegation of the obligations of
Tramore under the
exchange agreement to Vosloorus Square, it would
have to have accepted the delegation. This is because instead of
looking to Tramore
to perform its obligations, it would have to look
to Vosloorus Square to perform the obligations of Tramore under the
exchange
agreement. And because the municipality had not accepted the
delegation, the obligations remain those of Tramore. It is presumably
on that basis that she required that the services agreement should be
concluded between the municipality and Tramore, as Tramore
was
obliged to do under the exchange agreement. This is also why the
addendum to the services agreement drawn up by Tramore made
provision
for acceptance of the delegation of obligations contained in it by
the municipality. Because the municipality did not
sign the addendum,
the municipality remains entitled to look to Tramore to perform the
obligations resting on it under the services
agreement.
[28]
The position is, accordingly, that Tramore was
entitled to dispose of its rights under both the exchange agreement
and the services
agreement without acceptance by the municipality.
Vosloorus Square is entitled to enforce the rights of Tramore under
the exchange
agreement, including that the municipality transfer the
council properties to Tramore. But, until the municipality accepts
that
Tramore can delegate its obligations under those agreements to
Vosloorus Square, Tramore remains obligated. Vosloorus Square is
entitled to enforce the rights of Tramore under the exchange
agreement to transfer of the council properties and, by virtue of
the
sale agreement, to require Tramore to perform its reciprocal
obligation to transfer Tramore’s properties to the
municipality.
Specific performance of Tramore under the sale
agreement to perform its obligation to transfer the Tramore
properties to the municipality
requires Tramore to give effect to its
obligation to transfer the Tramore properties to the municipality.
All of this is what Vosloorus
Square sought to achieve in the
application and has been given effect in the order of the full court.
[29]
The municipality has nowhere indicated that it
would not be prepared to give effect to the exchange agreement, as
long as it obtains
transfer of Tramore’s properties. The only
other obligation of Tramore to the municipality under the exchange
agreement is
to sign a services agreement. This had already been
done. Vosloorus Square has undertaken to Tramore to perform its
obligations
under the services agreement by way of the addendum. The
proposed delegation of Tramore’s obligations is still capable
of
being accepted by the municipality by its signing the addendum.
[30]
In the result, it is my view that the full court
was correct, albeit for different reasons, to hold that Vosloorus
Square obtained
the rights of Tramore to enforce the exchange
agreement. This is presumably why the municipality, having initially
taken the point
that there was no contractual privity between it and
Vosloorus Square and that the latter could not enforce the exchange
agreement,
withdrew its opposition and elected not to take up the
cudgels in the appeal against the order of the full court
[31]
In the result, the appeal is dismissed with
costs.
GORVEN AJA
ACTING JUDGE OF
APPEAL
APPEARANCES
For
appellant:
H P West
Instructed
by:
Van Der Meer &
Schoonbee, Johannesburg
Lovius Block Incorporated, Bloemfontein
For
respondent:
B G Savvas
Instructed
by:
Venn & Muller
Incorporated, Pretoria
J L Jordaan Attorneys, Bloemfontein.
[1]
This is the relief applied for by the time the
hearing took place.
[2]
Theron and Du Plessis v Schoombie
(1897) 14 SC 193.
[3]
Benjamin on Sales
4 ed at 377.
[4]
Theron and Du Plessis v Schoombie
fn 2 above at 198-199.