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[2010] ZASCA 64
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Nkengana and Another v Schnetler and Another (65/09) [2010] ZASCA 64; [2011] 1 All SA 272 (SCA) (7 May 2010)
Links to summary
THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
judgment
Case
No: 65/09
JOSEPH
MNCEDISI NKENGANA
First Appellant
NOMBEKO
FELICIA NKENGANA
Second Appellant
and
STEPHANUS
VAN DER WALT SCHNETLER
First
Respondent
STANDARD
BANK OF SOUTH AFRICA LTD
Second
Respondent
Neutral
cita
tion:
Nkengana
v Schnetler
(65/09)
[2010] ZASCA 64
(7 May 2010)
Coram:
MPATI
P, MHLANTLA, SHONGWE and TSHIQI JJA and GRIESEL AJA
Heard:
22
February 2010
Delivered:
7
May 2010
Summary:
Contract – sale of land –
tender – whether tender of performance by purchasers
(appellants) was sufficient to
entitle them to specific performance.
____________________________________________________
______________
ORDER
____________________________________________________________________
On
appeal from:
Eastern Cape High Court
(Grahamstown) (Jansen, Sandi and Revelas JJ, sitting as court of
appeal):
1. The appeal succeeds with
costs, excluding the costs arising from the inclusion of volumes 2
and 3 as part of the record on appeal.
2. The order of the full court is
set aside and replaced with the following:
‘
(1) The
appeal succeeds with costs.
(2) The
order of the court below is set aside and replaced with the
following:
(a) The first respondent is
ordered to take all necessary steps and to sign all necessary
documents to effect transfer to the first
and second applicants of
the property, described as:
Portion 43,
Portion of Portion 43 of the farm Draaifontein No 407, in the
Division of Uitenhage, Eastern Cape Province
.
In
extent 5,8167 (five comma eight one six seven) hectares;
against the
furnishing
, by the first and second
appellants, of a guarantee for payment of the following amounts:
(i) R
89 805.17;
(ii) the
outstanding amount on the first respondent’s bond with the
second respondent (account number 214201481);
(i
ii) transfer
costs and transfer duty (if any) payable in respect of the said
transfer;
provided
that in the event of the aggregate amount referred to in paras (i)
and (ii) above not exceeding R260 000,
then the appellants are to pay to the first respondent an additional
amount equivalent
to the difference between R260 000 and the
aggregate amounts as set out in paras (i) and (ii) above;
(b) The second
respondent is ordered to take all necessary steps to facilitate the
cancellation of the mortgage bond registered
over the property
against the furnishing by the appellants of a guarantee for the
amount outstanding in respect of the mortgage
bond payable
against registration of transfer of the property into the name of the
first and second applicants;
(c) Should the
first and/or the second respondent fail to take the necessary steps
referred to in paras (a) and (b) above, the Sheriff
of this court is
authorised to sign any documents and to take such steps on their
behalf as may be necessary to give effect to
this order;
(d) The first and second
applicants are ordered jointly and severally to pay the costs
incurred by the first respondent up to and
including the date of
delivery of the applicants’ replying affidavit and the first
respondent is ordered to pay the applicants’
costs of the
application incurred after that date.’
____________________________________________________________________
JUDGMENT
____________________________________________________________________
Griesel
AJA
(MPATI P, MHLANTLA, SHONGWE
and
TSHIQI JJA
concurring):
This
is an appeal against a judgment of
the
full court of the Eastern Cape High Court, Grahamstown, dismissing
an appeal against a judgment of a single judge (Van der
Byl AJ).
1
This further appeal comes before us with special leave granted by
this court.
The
claim originates from a
written deed of
sale entered into on 22 December 2000 between the appellants (as
purchasers) and the first respondent and his
late wife (as
sellers).
2
In terms of the contract the appellants bought the property in
question, situated in Uitenhage, from the respondent at a purchase
price of R260 000. This amount was payable in four equal
monthly instalments of R50 000 with effect from 31 December
2000, with a final instalment of R60 000 due on 30 April 2001.
Soon
after the conclusion of the agreement it became apparent
that
the appellants were not in a position to make payment of the
instalments as stipulated in the contract. It is common cause
that
the parties thereupon concluded an oral agreement to the effect
that, instead of paying the purchase price by way of the
instalments
and on the dates as originally agreed, the appellants would pay the
respondent’s monthly bond instalments
to Standard Bank.
(It appears from the evidence that the outstanding balance in
respect of the bond amounted at that stage to
R203 635.76.)
There
is a dispute between the parties as to the exact terms of the oral
agreement, to which I shall revert later. It is common
cause,
however, that the appellants did in fact make certain payments into
the respondent’s bond account with Standard
Bank, albeit
somewhat irregularly and in varying amounts. By February 2007 the
appellants claimed to have paid a total amount
of some R238 054.83
towards the purchase price. Through their attorneys, they
accordingly addressed a letter of demand to
the respondent claiming
transfer of the property against payment of the outstanding balance
of R21 945.17. The appellants
received no response to their
tender and they accordingly proceeded to launch the application
which gave rise to the present
appeal, claiming specific performance
in terms of the deed of sale.
The
appellants attached a schedule to
their
founding affidavit showing how the amount of R238 054.83 was
made up. They also, in the founding affidavit, increased
their
original offer by tendering, in addition, payment of the
balance outstanding on the mortgage bond registered
in favour
of Standard Bank, together with all transfer costs and transfer
duty. (The outstanding balance on the bond at that
stage, according
to the respondent, amounted to R180 282.72.)
I
n
his answering affidavit, the respondent furnished his version of the
oral agreement. He alleged that, because the appellants
could not
manage to pay the purchase price as stipulated and because the
appellants had already taken occupation of the property,
it was
agreed that the appellants would pay the monthly instalments owing
in respect of the respondent’s mortgage bond
with the bank
until such time as the appellants could manage to pay the full
purchase price. According to the respondent, the
instalments would
be paid as occupational rent.
3
With reference to the appellants’ schedule of payments, the
respondent disputed some of the alleged payments and denied
that a
total amount of R238 054.83 had been paid, as claimed by the
appellants. In this regard he pointed out –
that some
payments reflected i
n the appellants’
schedule, totalling R40 100, had been made in respect of the
sale of movables (furniture, etc) to
the appellants;
that some of
the
alleged payments reflected in the
schedule had been reversed by the bank;
that a
payment of R23 117.06, reflected in the schedule and made on 10
December 2004, was in respect of legal costs incurred
in order to
stave off a pending sale in execution because the bond instalments
were in arrear;
that further payments made by
the appellants, totalling some R31 000, were not reflected in
their schedule.
In
summary, he denied that the tender made by the appellants was
sufficient
and accordingly denied that he
was liable to pass transfer of the property to them.
In
reply, the appellants
categorically denied
that there was any agreement to pay occupational interest. They
pointed out, instead, that payment of the
bond instalments comprised
capital as well as interest. In paying the bond instalments,
therefore, they would at the same time
be reducing the capital
outstanding. As for the schedule of payments actually made, they
accepted the correctness of the respondent’s
allegations
in paras (b) and (d) above. They accordingly drew up an amended
reconciliation, resulting in an increased tender
of payment of an
additional amount of R67 860.
From
the way in which the matter was presented in the papers and from the
reasoning of the courts below, it would seem as if the
focus largely
fell on the numerous factual disputes regarding past payments and on
the exact term
s of the oral agreement. In
this regard, many arithmetical calculations were done by counsel on
both sides in an attempt to demonstrate
that the appellants’
tender was or was not sufficient. The appellants also argued that
the oral agreement, insofar as it
purported to vary the original
contract of sale, was of no force and effect. They accordingly
sought to enforce the original
deed of sale. The respondent, on the
other hand, contended that the oral agreement pertained solely to
the payment of occupational
interest and that agreements of
that nature may validly be concluded orally. In the court of first
instance, Van der Byl
AJ accepted the respondent’s version
regarding the terms of the oral agreement in accordance with the
principles laid down
in
Plascon-Evans
.
4
He also accepted the respondent’s contentions regarding the
validity of the oral agreement. In the result, so it was held,
the
appellants’ tender fell far short of the purchase price of
R260 000, with the result that the application was
dismissed
with costs. On appeal, the full court confirmed this finding.
In
the view that I take of the matter, it is not necessary to come to
any final decision on
any of the disputes
regarding past payments, or on the question whether or not the oral
agreement is void. In my view, the true
issue for determination is
simply whether or not the appellants’ final tender, as
contained in their replying affidavit,
is sufficient.
In
this regard, counsel for the respondent protested, albeit somewhat
faintly, at the
fact that the respondent’s
further increased tender was raised for the first time in the
appellants’ replying affidavit,
the argument being based on
the trite principle that it is incumbent upon an applicant to make
out its case in its founding affidavit
and that ordinarily it is not
permissible to make or supplement a case in reply. In my view, there
are at least two answers to
this argument: first, the respondent did
not apply to strike out the new matter or to file a response
thereto, as he could have
done. Second, the rule on which the
respondent relies is not an absolute one. Thus, if the new matter in
the replying affidavit
is in answer to a defence raised by the
respondent and is not such that it should have been included in the
founding affidavit
in order to set out a cause of action, the court
will refuse an application to strike out.
5
In any event, the present tendency seems to permit greater
flexibility with regard to the admission of new matter, at least in
the absence of prejudice, and to apply the rule with a fair measure
of common sense.
6
What
happened in this instance was that the respondent, in his answering
affidavit, disputed some of the items forming part of
the
appellants’ reconciliation in respect of payments allegedly
made. In reply, the appellants accepted some of the respondent’s
corrections which, in turn, required a commensurate increase in the
tenders made earlier. In the circumstances, the appellants
were
entitled, in my view, to rely on the further tender contained in
their replying affidavit and the courts below erred in
failing to
attach due weight to such tender.
It
is settled law that every party to a binding contract who is ready
to carry out its own obligations under it has a right to
demand from
the other party, so far as it is possible, performance of that other
party’s obligations in terms of the
contract.
7
Accordingly it was not disputed on behalf of the respondent that,
for so long as the original deed of sale remains uncancelled
(as in
this instance), it remains open to the appellants – even at
this late stage – to claim specific performance
of the
original agreement while tendering performance of their reciprocal
obligations.
In
order to be a valid tender
where
performance consists of payment of money, the tender must be
for payment of the
full
amount owing, otherwise the creditor is entitled to refuse the
tender and the debtor is not entitled to specific performance.
8
Here, the appellants have, at different stages and in differing
amounts, tendered performance of their own obligations in terms
of
the contract. The final tender made on their behalf was for payment
of the outstanding balance on the bond (amounting to R180 282.72
as at 21 July 2007 – three days after the application was
launched) plus the amount of R21 945.17 originally offered,
plus the further amount of R67 860 tendered in the replying
affidavit. Thus the overall tender amounts to a total of
R270 087.89,
which quite clearly exceeds the amount of the
original purchase price. On the face of it, therefore, it would
appear as if the
tender made by the appellants was sufficient to
entitle them to specific performance – even if all disputes
regarding past
payments were to be disregarded.
During
argument before us, the question was raised with counsel for the
appellants
, on the assumption that they
were in
mora ex re
due to non-payment of the purchase price, whether the running of
interest
a tempore morae
did
not affect the calculation of the total amount owing by them.
Although this aspect was not pertinently raised by any of the
parties on the papers or canvassed in the written heads of argument,
the answer appears to be that there can be no
mora
ex re
if the creditor has expressly or
tacitly waived his right to rely on the time clause or is estopped
from relying on it.
9
On the facts of the present case it appears to be clear, on the
respondent’s own version, that this is indeed what happened:
the respondent, in failing strictly to enforce the terms of the
original agreement and in accepting payment of bond instalments
instead, had unequivocally waived his right to rely on the time
clause. The fact that this may have happened orally or by conduct,
does not invalidate such waiver.
10
In the circumstances, it would appear that the respondent would be
precluded from relying on the principles of
mora
ex re
. Had he sought to deny that he
had waived reliance on the original time clause, he could have been
met with a successful reply
based on estoppel. However, in view of
the fact that none of these aspects have been pertinently raised on
the papers or fully
argued before us, it is not necessary to express
any final views in this regard and I accordingly approach the matter
on the
basis that the issue of
mora
interest is irrelevant to a determination of the present appeal.
It
follows from the foregoing that the appellants are
,
in principle, entitled to an order for specific performance,
essentially in the terms set out in the notice of motion. In view
of
the lapse of time since these proceedings were launched, it is
uncertain what the current position is regarding the balance
on the
bond. To the extent that the current balance owing in respect of the
bond may be less than the balance as at the time
the tender was
made, counsel for the appellants made a proposal which, in my view,
overcomes this difficulty. He suggested that
the appellants be
ordered to pay the amounts tendered in their replying affidavit,
11
provided that should the aggregate of the amounts tendered be less
than the original purchase price of R260 000, then the
appellants are to pay to the respondent an additional amount
equivalent to the difference between R260 000 and the aggregate
amount of the tender. A provision to this effect will accordingly be
incorporated in the order that I propose to make.
I
wish to emphasise that, insofar as we have found it unnecessary to
resolve the factual disputes between the parties arising from
collateral agreements regarding the purchase of furniture, the
payment of rent and so on, nothing in this judgment should be
seen
as precluding the respondent, if so advised, from pursuing his
remedies arising from such disputes. I might mention, though,
that I
am not persuaded that the court below (and the court of first
instance) was wrong in holding that the oral agreement relating
to
occupational rent did not constitute a variation of the written
agreement of sale.
With
regard to costs, it is necessary
briefly
to refer to two aspects: first, given the fact that the appellants’
first two tenders were clearly inadequate,
the respondent was
entitled to resist the claim for specific performance until delivery
of the appellants’ replying affidavit.
It would accordingly be
fair, in my view, to hold the appellants liable for the costs
incurred up to and including the date of
their final tender
(coinciding with delivery of their replying affidavit) and to order
the respondent to pay the costs incurred
subsequent to that date.
The second aspect relates to the record on appeal. Included in the
record before us, in volumes 2 and
3, was a full transcript of the
oral arguments of counsel before both courts below as well as a copy
of the petition for special
leave to appeal to this court, together
with the affidavit filed in opposition thereto. It is clear from the
correspondence that
those documents were included as part of
the record at the appellants’ insistence. In my view, they
were ill-advised
to do so, bearing in mind this court’s
repeated admonitions against the inclusion of unnecessary
documents in appeal
records.
12
In the circumstances, it would not be unfair to disallow the costs
arising from the inclusion of volumes 2 and 3 as part of the
record.
For
the
se reasons I make the following order:
1. The appeal succeeds with
costs, excluding the costs arising from the inclusion of volumes 2
and 3 as part of the record on appeal.
2. The order of the full court is
set aside and replaced with the following:
‘
(1) The
appeal succeeds with costs.
(2) The
order of the court below is set aside and replaced with the
following:
(a) The first respondent is
ordered to take all necessary steps and to sign all necessary
documents to effect transfer to the first
and second applicants of
the property, described as:
Portion 43,
Portion of Portion 43 of the farm Draaifontein No 407, in the
Division of Uitenhage, Eastern Cape Province.
In extent 5,8167
(five comma eight one six seven) hectares;
against the
furnishing, by the first and second appellants, of a guarantee for
payment of the following amounts:
(i) R
89 805.17;
(ii) the
outstanding amount on the first respondent’s bond with the
second respondent (account number 214201481);
(i
ii) transfer
costs and transfer duty (if any) payable in respect of the said
transfer;
provided that
in the event of the aggregate amount referred to in paras (i)
and
(ii) above not exceeding R260 000, then the appellants are to
pay to the first respondent an additional amount equivalent
to the
difference between R260 000 and the aggregate amounts as set out
in paras (i) and (ii) above;
(b) The second
respondent is ordered to take all necessary steps to facilitate the
cancellation of the mortgage bond registered
over the property
against the furnishing by the appellants of a guarantee for the
amount outstanding in respect of the mortgage
bond payable
against registration of transfer of the property into the name of the
first and second applicants;
(c)
Should
the first and/or the second respondent fail to take the necessary
steps, referred to in paras (a) and (b) above, the Sheriff
of this
court is authorised to sign any documents and to take such steps on
their behalf as may be necessary to give effect to
this order;
(d) The
first
and second applicants are ordered jointly and severally to pay the
costs incurred by the first respondent up to and including
the date
of delivery of the applicants’ replying affidavit and the first
respondent is ordered to pay the applicants’
costs of the
application incurred after that date.’
B
M Griesel
Acting
Judge of Appeal
APPEARANCES:
FOR APPELLANT:
A Beyleveld SC
Instructed
by:
Spilkins
Inc, Port Elizabeth
Naudes
Attorneys, Bloemfontein
FOR
RESPONDENT: G Jacobs
Instructed
by: Riette Oosthuizen Attorneys, Pretoria
Spangenberg
Zietsman & Bloem, Bloemfontein
1
The judgment of the full court has been reported as
Nkengana and
another v Schnetler and another
[2008] ZAECHC 160
; 2008 JDR 1241
(E).
2
Standard Bank of South Africa Limited, who holds a mortgage bond
over the property in question, was joined as the second respondent,
but took no part in the litigation. For convenience I accordingly
refer to the first respondent simply as ‘the respondent’
and to the second respondent as ‘Standard Bank’ or
simply ‘the bank’.
3
This is how the respondent expressed the terms of the oral
agreement:
‘
Wat wel ooreengekom was,
is dat die applikante tegemoet gekom sou word aangesien hulle nie
daarin kon slaag om die koopprys soos
wat ooreengekom is te betaal
nie en omdat hulle okkupasie van die perseel gehad het, is daar
ooreengekom dat hulle die maandelikse
verbandpaaiement sal betaal as
okkupasiehuur tot en met hulle die geleentheid het om die koopprys
te bekom.’
4
Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 634E–I.
5
Cilliers et al,
Herbstein &Van Winsen: The Civil Practice of
the High Courts of South Africa
5 ed Vol 1 p 440.
6
Harms
Civil Practice in the Supreme Court
B6.37;
Smith v
Kwanonqubela Town Council
[1999] 4 All SA 331
; 1999 (4) SA 947
(SCA) para 15.
7
Farmers’ Co-operative Society v Berry
1912 AD 343
at
350.
8
See Christie
The Law of Contract in South Africa
5 ed p 405.
9
Christie op cit p 500.
10
Cf
Barnard v Thelander
1977 (3) SA 932
(C) at 940F–G
and the authorities referred to therein.
11
See paras 7 and 13 above.
12
See eg
Government of the RSA v Maskam Boukontrakteurs (Edms) Bpk
1984 (1) SA 680
(A) at 692E–693A;
Salviati &
Santori (Pty) Ltd v Primesite Outdoor Advertising (Pty) Ltd
2001
(3) SA 766
(SCA) paras 16–17.