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[2011] ZASCA 208
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Park 2000 Development (Pty) Ltd v Page (905/2010) [2011] ZASCA 208 (29 November 2011)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 905/2010
In
the matter between:
PARK 2000 DEVELOPMENT
(PTY) LTD
….....................................................
Appellant
and
RODNEY WILMOT PAGE
…........................................................................
Respondent
Neutral citation:
Park
2000 v Page
(905/2010)
[2011] ZASCA 208
(29 November 2011)
Coram:
Brand,
Maya, Mhlantla, Malan and Theron JJA
Heard:
16
November 2011
Delivered: 29 November
2011
Summary:
Agreement
of purchase and sale – suspensive condition that purchaser
obtain bond – construction of agreement –
condition for
sole benefit of purchaser – no waiver of condition –
agreement lapsed on non-fulfilment.
___________________________________________________________________
ORDER
On appeal from:
Western Cape High Court, Cape Town, (Smit AJ sitting as
court of first instance) the following order is made:
1 The appeal is upheld
with costs, including the costs of two counsel where applicable,
except one half of all the costs relating
to the preparation, perusal
and use of the record on appeal.
2 The order of the court
below is set aside and replaced with the following order:
‘
(a)
The plaintiff’s claim is dismissed with costs;
(b) The interdict in case
10823/06 is set aside with costs;
(c) All costs orders
include the costs of two counsel where applicable.’
___________________________________________________________________
JUDGMENT
MALAN JA (Brand, Maya,
Mhlantla and Theron JJA concurring):
[1] In terms of a written
agreement entered into on 12 November 2003, the appellant, Park 2000
Development (Pty) Ltd, sold to the
respondent, Mr R W Page, 14
undeveloped stands in Klappersingel, Strandloperkruin for a
consideration of R990 000. In 2006
Mr Page instituted action in
the Western Cape High Court for transfer of the stands into his name,
tendering payment of the balance
of the purchase price. On 22 October
2010 Smit AJ gave judgment in favour of the purchaser, Mr Page. This
appeal is with his leave.
[2] This appeal concerns
the meaning of clause 10 of the agreement. It provides as follows:
‘
This sale is
subject to the purchaser(s) obtaining a bond of 80% of the purchase
price. Should such a bond not be granted within
7 (seven) days of
signature of this agreement, the seller(s) will have the right, but
will not be obliged, to cancel the sale,
in which case any deposit
already paid, with interest, will be paid back to the purchaser(s)
and no one party will have a claim
for damages due to such
cancellation against the other.’
[3] Mr Page paid the
agreed deposit of R99 000. It is common cause that he did not
apply for a bond. In his particulars of
claim he alleged that,
following the seven day period provided for in the second part of
clause 10, Park 2000 became entitled to
either cancel the sale or
enforce it. He alleged that Park 2000 elected not to cancel the sale
but to proceed with it. Park 2000,
on the other hand, pleaded that
clause 10 contained a suspensive condition that was not fulfilled and
that the agreement had therefore
lapsed. It pleaded, as an
alternative that, in the event of the agreement not having lapsed due
to non-fulfilment of the condition,
its conduct after becoming aware
that a bond had not been granted to Mr Page, displayed a clear
intention to cancel the agreement;
alternatively, it cancelled the
agreement by notice in the plea.
[4] The court below held
that because the parties had expressly agreed that the seller, Park
2000, would have the right to cancel
the agreement on non-fulfilment
of the condition, the agreement did not lapse when the condition was
not fulfilled. It found that,
on the facts, Park 2000 had elected to
affirm the agreement. It followed that, because it had done so, it
could not thereafter
cancel it and was bound by the agreement.
[5] It
was contended by Park 2000 that the condition referred to in clause
10 was suspensive resulting in the agreement lapsing
upon its
non-fulfilment. In advancing these contentions it relied upon the
judgments of Fannin J in
Florida
Road Shopping Centre (Pty) Ltd v Caine
1
and
Davis J in
Paradyskloof
Golf Estate (Pty) Ltd v Municipality of Stellenbosch
,
2
which
suggest that the second part of clause 10 was inserted
ex
abundanti cautela
.
In the alternative, it was submitted that the second part of clause
10 provided for the situation where the purchaser waived the
suspensive condition before expiry of the limitation period of seven
days. In the event of a waiver, the seller would have the
right to
cancel the agreement unilaterally.
[6] It
was argued on behalf of Mr Page that the only possible interpretation
of clause 10 was that the parties did not intend that
the agreement
would lapse after the seven day period in the event of a bond not
being granted but that the seller will ‘have
the right, but
will not be obliged, to cancel the sale’. This construction, it
was suggested, would be in accordance with
the rule of interpretation
requiring the language used to be given its grammatical and ordinary
meaning.
3
The
first part of clause 10 therefore contained not a true condition but
a term of the agreement imposing on the purchaser the obligation
to
obtain a bond. Should he fail to do so, the seller may exercise its
remedies in terms of clause 7 by placing the purchaser on
terms and,
failing compliance within ten days of giving notice of the breach,
cancel the agreement and reclaim the property, in
which event the
purchaser would forfeit all monies paid, and claim further damages
from the purchaser it may have suffered.
[7] 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.'
4
Non-fulfilment of the
suspensive condition, however, renders the agreement void from
inception, unless the parties have agreed otherwise.
[8] I have not been
persuaded that the two judgments relied upon by Park 2000 in
constructing clause 10 are of particular assistance.
They concern
specific clauses which had to be construed in the context of the
other terms of those agreements.
[9] Clause 10 is worded
in different terms. It must be interpreted according to the accepted
canons of construction. The language
used must be given its
grammatical and ordinary meaning in the context of the whole
agreement.
5
Every word used and, it follows, both sentences of clause 10 must be
given meaning.
6
[10] Clause 10 does not
contain the heading ‘suspensive condition’ one often
encounters in matters of this kind. Nothing
turns on it: none of the
clauses in the agreement has headings. The separate clauses in the
agreement follow the introductory words
that the purchaser buys and
the seller sells the property ‘on the following terms and
conditions’. Whether a specific
clause contains a term or a
condition depends on the words of the clause itself.
7
Clause 10 states that the sale ‘is subject to the purchaser(s)
obtaining a bond of 80% of the purchase price’. The
purpose of
this provision is clear. It is to subject the conclusion of the
agreement of sale to the purchaser’s obtaining
a bond of 80 per
cent of the purchase price. It is a typical condition in agreements
for the sale of immovable property.
8
As was said by Schock J in
Philips v Townsend
:
9
‘
The
second special condition speaks of a 90% bond by a building society.
Having regard to the manifest object of the condition,
namely to
ensure that plaintiff could meet his obligations under the contract,
that he could carry out what was there required
under the contract,
and in particular under clause 2
(b)
of
the contract, the meaning of a 90% bond becomes clear. It was a
mortgage loan, that is a loan secured by a mortgage bond for
an
amount equal to 90% of the purchase price. Moreover, as this amount
was in terms of the contract payable against registration
of transfer
on 1 January 1980, it was a loan of 90% of the balance of the
purchase price available to meet the plaintiff’s
obligation on
1 January 1980. That is quite obviously what was meant by this term
“90% bond”; it is the only reasonable
meaning that can be
given to this clause.’
To hold that the first
part of clause 10 contains a term of the agreement obliging the
purchaser to obtain a bond, and not a suspensive
condition, would not
only fly in the face of its clear wording but would also be, as
counsel for Park 2000 put it, commercial nonsense.
The effect of such
an interpretation is that the purchaser would run the risk of being
bound to the contract without having obtained
the bond and be
subjected to the terms of clause 7 entitling the seller to place him
on terms and, on non-compliance after notice,
to liability for
damages and forfeiture of the monies paid. This could not have been
the intention of the parties.
[11] A clause or
condition that is exclusively for the benefit of one party may be
waived by that party.
10
The condition contained in the first part of clause 10 is obviously
for the sole benefit of the purchaser. Although the seller
may also
have an interest in the fulfilment or non-fulfilment of the condition
and the time limit imposed, the benefit of the ‘substance’
of the condition in the first part of clause 10 is solely for the
purchaser.
11
The seller’s interest is protected by the second part of clause
10. Since it is for his sole benefit, the condition may be
waived by
the purchaser, thereby rendering the agreement unconditional. But any
waiver must take place before the cut-off time
provided for in the
agreement, in this case within seven days of signature of the
agreement, because the agreement would otherwise
have lapsed on
non-fulfilment of the condition.
12
As it was expressed by Marais J in
Westmore v Crestanello &
others
:
13
‘
I
do not readily comprehend how a purchaser could unilaterally waive a
clause of a lapsed or defunct agreement (which by definition
no
longer exists) and by so doing unilaterally miraculously breathe new
life into the corpse; and even worse, possibly ambush the
unsuspecting seller who, acting in the belief that the contract means
what it says, has resold the property in question.’
[12] The seller has an
interest in the time limit for fulfilment of the condition. Its
object is to ensure certainty so that he
would know at that date
whether or not he has a firm buyer. If a waiver after non-fulfilment
of the condition were to be permitted
the position would be that the
seller would be liable after non-fulfilment of the condition but the
purchaser not. Such a situation
would not only be untenable but also
make no commercial sense.
14
Certainty is achieved by the rule
15
—
‘
that
any waiver must occur on or before the condition date, or at least
before the contract is actually brought to an end (if it
is not
automatically void). … [The seller’s] only legitimate
interest is in knowing whether the transaction is to
proceed or not.’
[13] There is no
contradiction between the two parts of clause 10. The second part, on
the face of it, may seem to assume that the
agreement continues
despite non-fulfilment of the condition. But this appearance is not
real. The first part suspends the coming
into operation of the
sale
on the purchaser’s obtaining a bond. Should no bond be
obtained within the period of seven days the agreement lapses. The
second part entitles the seller to cancel the
sale
should a
bond not be granted within seven days. There can only be a
sale
after non-fulfilment of the condition if the purchaser has waived it
prior to the cut-off date thereby rendering the agreement
unconditional.
[14] It follows that the
first part of clause 10 which makes the agreement subject to the
purchaser obtaining a bond for 80 per
cent of the purchase price
within seven days of signature is a suspensive condition solely for
the benefit of the purchaser. On
non-fulfilment of the condition the
agreement will lapse. The purchaser may, however, waive the condition
provided he does so prior
to the seven day cut-off period. If the
condition is waived within this period the agreement becomes
unconditional and an agreement
of sale comes into being. In the event
of a waiver a bond will not have been granted and the seller will not
have the benefit of
a loan by a financial institution to the
purchaser but will have to rely on the latter’s ability to pay
the full purchase
price. In such an event the seller may wish to
exercise the right to cancel stipulated for in the second part of
clause 10. This
construction gives effect to both parts of clause 10
and, seen against the factual matrix of the case, provides an
example of why Park 2000
would have preferred to cancel the agreement: it had to obtain a
number of pre-sales (ie sales where bonds
have been granted as
opposed to unconditional sales) which would have satisfied its
financiers. It is common cause that the purchaser,
Mr Page, did not
waive the condition. The sale therefore lapsed on 19 November 2003.
In view of this conclusion it is not necessary
to deal with the
factual argument whether Park 2000 had elected to proceed with the
agreement of sale.
[15] In the result the
appeal is upheld with costs. It follows that the interdict granted by
the court below under case 10823/06
should be set aside with costs.
In view of the state of the record on appeal the appellant should be
deprived of part of the costs
of the record.
[16] The following order
is made:
1 The appeal is upheld
with costs, including the costs of two counsel where applicable,
except one half of all the costs relating
to the preparation, perusal
and use of the record on appeal.
2 The order of the court
below is set aside and replaced with the following order:
‘
(a)
The plaintiff’s claim is dismissed with costs;
(b) The interdict in case
10823/06 is set aside with costs;
(c) All costs orders
include the costs of two counsel where applicable.’
________________
F R MALAN
JUDGE OF APPEAL
APPEARANCES:
For Appellant: W G Burger
SC
Instructed by:
Marais, Müller
Yekiso Inc
Cape Town
c/o E G Cooper Majiedt
Inc
Bloemfontein
For Respondent: D J
Coetsee
Instructed by:
Millers Inc
Cape Town
c/o Rosendorff &
Reitz Barry
Bloemfontein
1
Florida
Road Shopping Shopping Centre (Pty) Ltd v Caine
1
968
(4) SA 587
(N).
2
Paradyskloof
Golf Estate (Pty) Ltd v Municipality of Stellenbosch
Case
6730/2007
Western Cape High Court (11 Augustus
2008).
3
Coopers
& Lybrand v Bryant
[1995] ZASCA 64
;
1995 (3) SA 761
(A) at 767E-768E.
4
Corondimas
& another v Badat
1946 AD 548
at 558-9 cited with approval
in
Paradyskloof Golf Estate (Pty) Ltd v Municipality of
Stellenbosch
2011 (2) SA 525
(SCA)
para 17.
5
Coopers
& Lybrand v Bryant
[1995] ZASCA 64
;
1995 (3) SA 761
(A) at 767E-768E;
Swart v Cape Fabrix
(Pty) Ltd
1979 (1) SA 195
(A) at 202C.
6
Wellworths
Bazaars Ltd v Chandler’s Ltd & another
1947
(2) SA 37
(A) at 43.
7
On
the distinction between a term and a condition, see
Design
and Planning Service v Kruger
1974 (1)
SA 689
(T) at 695A-F;
Meyer v Barnardo
& another
1984 (2) SA 580
(N) at
584B-F.
8
Eg
Wacks v Goldman
1965
(4) SA 386
(W);
Van Jaarsveld v Coetzee
1973 (3) SA 241
(A).
9
Phillips
v
Townsend
1983
(3) SA 403
(C) at 407E-F.
10
Trans-Natal
Steenkoolkorporasie Bpk v Lombaard
1988
(3) SA 625
(A) at 640;
Ming-Chieh Shen
v Meyer
1992 (3) SA 496
(W) at 498A-B;
Van Jaarsveld v Coetzee
1973
(3) SA 241
(A) at 243F-G;
Westmore v
Crestanello & others
1995 (2) SA
733
(W) at 736F-G.
11
Globe
Holdings Ltd v Floratos
[1998] 3 NZLR
331
(CA) at 339 and see, in particular,
Westmore
v Crestanello & others
1995 (2) SA
733
(W) at 736H-737J and 739B-C.
12
Phillips
v
Townsend
1983
(3) SA 403
(C) at 408D-409A;
Meyer v
Barnardo & another
1984 (2) SA 580
(N) at 586-7;
Mekwa Nominees v Roberts
1985 (2) SA 498
(W) at 501-2;
Westmore
v Crestanello & others
1995 (2) SA
733
(W) at 736A-B.
13
At
736A-B.
14
Phillips
v
Townsend
1983
(3) SA 403
(C) at 408D-409A.
15
Globe
Holdings Ltd v Floratos
[1998] 3 NZLR
331
(CA) at 339. Cf
Meyer v Barnardo &
another
1984 (2) SA 580
(N) at 584F-H.