Du Plessis NO and Another v Goldco Motor & Cycle Supplies (Pty) Ltd (372/08) [2009] ZASCA 62; 2009 (6) SA 617 (SCA); [2009] 4 All SA 203 (SCA) (29 May 2009)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2009
>>
[2009] ZASCA 62
|

|

Du Plessis NO and Another v Goldco Motor & Cycle Supplies (Pty) Ltd (372/08) [2009] ZASCA 62; 2009 (6) SA 617 (SCA); [2009] 4 All SA 203 (SCA) (29 May 2009)

Links to summary

THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case No: 372/08
JAN ABRAHAM DU PLESSIS N O First Appellant
NICOLAAS JOHANNES SMITH N O Second Appellant
and
GOLDCO MOTOR & CYCLE SUPPLIES (PTY) LTD Respondent
Neutral citation: Du Plessis & Smith NNO v Goldco Motor &
Cycle Supplies (372/2008)
[2009] ZASCA 62
(29 May 2009)
Coram: NAVSA, LEWIS and SNYDERS JJA and KROON and GRIESEL AJJA
Heard: 18 May 2009
Delivered: 29 May 2009
Summary:
Option to purchase immovable property deemed to
have been exercised by purchaser where seller has deliberately
frustrated exercise
in prescribed mode.
___________________________
__________________________
ORDER
On appeal from: Free State High Court (Kruger J sitting
as court of first instance).
The appeal is dismissed with costs, save that the order
of the high court is altered to read:
‘
(a) The option for the purchase by
the applicant of Shop 1, Prosperitas Gebou, 133D Jan Hofmeyr Road,
Welkom,
from the first
and second respondents, in their capacities as trustees of the
Prosperitas Trust, for the price of R4 840 000 plus
14 per cent VAT,
in terms of clause 5 of the agreement of lease between the parties,
dated 10 March 2005, is deemed to have been
exercised.
(b) The first and second respondents
are ordered to take all necessary steps to transfer the property
described in (a) to the applicant
against payment of R4 840 000 plus
VAT.
(c
)
The first and second respondents are ordered, jointly and severally,
to pay the costs of the application.’
JUDGMENTS
LEWIS JA (
NAVSA
and SNYDERS JJA and KROON AJA concurring)
[1] At issue in this appeal is the
validity and enforceability of an option to purchase immovable
property. The appellants are trustees
of a trust (Prosperitas) which
owns immovable property in Welkom. The respondent, Goldco Motor &
Cycle Supplies (Pty) Ltd (Goldco),
is a company that hired premises
in a building constructed on property owned by the trust. The
premises were constructed in accordance
with the spe
cifications
of Goldco’s chairperson, Mr Boyd Cooper.
[2] The background to the matter is
briefly this. Towards the end of 2004 the first appellant, Mr Jan du
Plessis, approached Cooper
and suggested that Goldco take premises in
a building that the trust proposed to construct in Welkom. Goldco’s
premises in Welkom
had recently burned down. A week later Cooper
visited the site and considered it to be suitable. Du Plessis offered
to build premises
that would be suitable for the business, and to
sell the building to Goldco. Subsequently it was agreed that Goldco
would hire
only a section of the building and that a sectional title
register would be opened in respect of the building: Goldco would
then
purchase a unit rather than the entire building. It was also
agreed that Goldco would occupy the premises as lessee before the

sectional title register was opened.
[3] Accordingly, a lease was prepared
by the trust’s attorney, Mr F Rossouw of Rossouw & Vennote Ing
(Rossouws) and was signed
by Cooper on 14 March 2005. The lease was
for a period of five years since the parties were not sure how long
it would take for
the sectional title register to be opened such that
the premises could be sold and transferred to Goldco. The premises to
be let
were described as follows:
‘’
n
Perseel
in die gebou, wat deur die verhuurder opgerig word te Erf 10671/A,
Jan Hofmeyrweg 133D, Welkom, soos uitgewys deur die verhuurder
aan
die huurder, groot ongeveer 1331 . . . vierkante meter’.
The lease elaborated on the description by stating that
the premises would be known as ‘winkel nommer 1, Prosperitas gebou,
Jan
Hofmeyerweg 133D, Welkom’. I shall revert to the description of
the premises in considering the enforceability of the option to

purchase.
[4] Clause 5 of the lease reads:
‘
Opsie
om perseel te koop:
Die verhuurder verleen hiermee
‘n opsie aan die huurder om die perseel te koop teen ‘n koopsom
van R4,000,000.00 (vier miljoen
rand) plus BTW, welke koopprys sal
styg teen 10% (tien persent) per jaar vanaf 1 April 2005.
Hierdie opsie is onderworpe
daaraan:
dat die deeltitelregister ten
opsigte van die grond en gebou waarin die perseel geleë is,
geopen word binne 24 (vier en twintig)
maande na datum van
ondertekening van hierdie huurkontrak deur die verhuurder;
dat die
huurder hierdie opsie uitoefen deur ‘n skriftelike koopkontrak,
opgestel te word deur Mnre Rossouw & Vennote Ing
van Stateway
352, Welkom, 9459, by hulle kantore te onderteken binne 24 (vier en
twintig) maande na datum van ondertekening van
hierdie huurkontrak
deur die verhuurder;
dat die gemelde koopkontrak
opgestel sal word nadat die goedgekeurde deelplan deur die
Landmeters aan Rossouw & Vennote Ing
gelewer is en die koopsaak
sal omskryf word as ‘n deeltiteleenheid waarvan die deel ooreenkom
met die perseel wat verhuur word.’
I shall refer to this provision of the lease as ‘the
option clause’ even though it is contended by the trust that it did
not
confer an option at all – a question to which I shall revert.
[5] The dispute between the parties
arises from the failure by Rossouws to draw up the contract for the
sale of the premises envisaged
in the option clause within the
stipulated period (that is, before March 2007), despite Cooper’s
timeous
intimation that
Goldco wished to exercise the option and despite the receipt by
Rossouws of an approved sectional plan. Moreover,
the trust
subsequently refused to sell the premises to Goldco at the price that
had been agreed in the option clause. Goldco applied
to the Free
State High Court for an order compelling the trust and Rossouw to
draw up a written contract pursuant to the option,
tendering payment
of the purchase price which had escalated, in terms of an escalation
clause, to R4 840 000. Rossouws was cited
as the third respondent in
the court below. No order was made against it and it is not a party
to this appeal. The high court found
for Goldco, ordering that the
written contract envisaged in the option clause be drafted and that
steps be taken by the trust to
transfer the premises against payment
of the agreed price. The trust appeals with the leave of the high
court.
[6] The high court accepted Goldco’s version that
Cooper had advised Rossouw several times before March 2007 that it
wished to
exercise the option, but that Rossouw ignored the requests.
It also accepted the argument that the trust, through its attorney
and agent, had thus deliberately frustrated performance under the
contract, and should be compelled to perform.
[7] The factual background that emerges from the
founding affidavit of Cooper, and which is uncontested, is that after
the lease
containing the option clause was concluded, Cooper applied
to the Standard Bank, Welkom for finance for the purchase of the
premises.
The application was granted, subject to the conditions
(inter alia) that the written contract prescribed in the option
clause be
drawn up and that a sectional title register be opened for
the property. (The document approving the loan anticipated that the
premises would be bought in the name of another company – a shelf
company of which Cooper was a director, but nothing turns on
this
since it is Goldco that seeks relief and an order that the premises
be sold and transferred to it.) Goldco in fact took occupation
of
part of the premises before the lease commencement date (1 May 2005).
[8] When approval of financing was given by the bank,
Cooper took the documentation to Rossouws. He pointed out to Rossouw
that
the financing was dependent on the fulfilment of certain
conditions such as the opening of the sectional title register.
Rossouw
explained that he could not yet draft the contract because
the land surveyors had not provided a sectional plan, required for
the
opening of a sectional title register.
[9] Cooper then visited the land
surveyors in question, and the plan was completed by 28 July 2005 and
approved by the Surveyor
General on 24 August 2005. The plan was sent
by the land surveyors to Rossouw shortly afterwards. Rossouw’s
brother, Roelie Rossouw
(R Rossouw), also an attorney but with a
practice in Bloemfontein, was mandated to see to the opening of the
sectional title register.
Cooper visited him too to ensure the
opening of the register. R Rossouw explained that he could not
proceed without an instruction
from the trust. Cooper was assured by
Du Plessis and both Rossouw brothers that the process of opening the
register would be expedited.
Cooper considered that there was nothing
further that he needed to do. The trust denies that R Rossouw was
instructed to attend
to the opening of the sectional title register.
[10] It was only in July 2006, at a
function arranged by Standard Bank, that officials of the bank asked
why the transaction was
taking so long to complete. Rossouw was
present, as was Cooper. The bank officials asked about the apparent
delay in the opening
of the sectional title register. Rossouw
remained silent. And Cooper began to worry. The price was escalating.
He went to visit
Rossouw to ask about the delay, but was advised to
speak to his own attorney.
[11] Rossouw did not depose to an
affidavit and so we have no knowledge of his version of events. Du
Plessis responded that he had
asked Rossouw about the request made by
Cooper: the visit had taken place, he was told, after the option
period had expired. That
remains the trust’s position: the option
was not exercised timeously. In fact, even Cooper does not contend
that it was exercised
in
the prescribed mode
timeously.
[12] Although Goldco claimed in the court below that the
option had been exercised timeously, it is clear that no written
contract,
as contemplated in the option clause, had been drawn up by
Rossouws and signed by the parties. Goldco thus did not exercise the

option in the manner prescribed in the option clause. But Goldco
contends, and the high court found, that Rossouw deliberately
failed
to draw up the written contract timeously, and that ‘performance’
can be deemed to have occurred by virtue of the doctrine
of fictional
fulfilment. It is not entirely clear to me what the high court meant
when it concluded that performance was deemed
to have been made, but
I shall revert to this issue later in the judgment when dealing with
fictional fulfilment.
[13] The trust contends that the
option was not exercised and that the decision of the court below is
incorrect. It raises several
arguments in this regard: that the
option clause did not in fact constitute an option – a right to
purchase the premises simply
by indicating acceptance in writing –
but was merely an agreement to agree; that even if it was an option
it would not have resulted
in a binding contract because the
description of the premises was inadequate (an argument not made to
the court below and raised
at the last minute before the hearing of
the appeal by counsel for the trust); that Rossouw was Goldco’s
agent for the purpose
of drafting the contract for the sale of the
land; and that there was no deliberate failure to perform. I shall
deal with each
contention separately.
An option or an agreement to agree?
[14] The trust contends that because the option clause
required that a written contract for the purchase of the premises be
drawn
by Rossouws and signed by the parties within 24 months of the
date of the lease in order to exercise the option, no right was
actually
conferred on Goldco. Goldco could not, it was argued, bind
the trust simply by advising it that the option was being exercised.

The contention that there was no option at all lacks merit.
[15] The essence of an option is that
it is binding on the option grantor. It is an offer, in this case to
sell property, which
cannot be revoked. It is the option holder that
has the choice whether to exercise its right.
1
The principle is put thus by R H Christie:
2
‘
To
understand the true nature of an option it is best to analyse it into
two parts – an offer to enter into the main contract
together with
a concluded subsidiary contract (the contract of option) binding the
offeror to keep that offer open for a certain
period. On this
analysis it
is easy to see that the offeror is contractually bound to keep his
offer open, and if he breaks this contract of option by disabling

himself from performing it or by expressly or impliedly repudiating
it he will be liable for damages for breach of contract.’
[16] Could the trust with impunity have advised Goldco,
within the 24-month period, that it was not going to sell the
premises to
Goldco on the terms set out in the option clause? The
answer must be no: that if it did refuse to comply with its
undertaking it
would be guilty of breach of contract and liable to an
order for specific performance or damages.
[17] The fact that Goldco’s right
could not be exercised simply by notifying the trust (in writing)
does not mean that there was
no right conferred on Goldco. The
written contract envisaged in the option clause was, in my view, no
more than a prescribed mode
of acceptance: the conclusion of a
written contract, drafted by Rossouws, and signed by the parties.
3
That of course raises the question what the content of the written
contract envisaged by the parties would be. Usually an option
will
reflect all the material terms of the contract. Indeed, the option
clause did reflect the essential terms of a contract of
sale of
immovable property: the merx (whether the description is adequate is
a matter to which I shall return) and the price. What
other terms
would the additional contract contain?
[18] In my view it is not necessary
to answer the question, since I do not believe that it is necessary
for the parties now to enter
into the agreement originally envisaged.
But this does not mean that the trust is not bound by its undertaking
to sell the premises
at the price agreed. If the trust (through its
agent) deliberately frustrated the exercise of the option in the
prescribed mode,
the position is not that the option falls away, but
that the prescribed mode of acceptance ceases to be such. And since
the option
clause embodies all the essential terms of a contract of
sale it must be enforced on those terms.
Is the description of the
premises sufficien
t?
[19] Shortly before the hearing the
trust filed supplementary heads of argument in which counsel argued
that the premises could
not be identified without reference to the
negotiations between the parties, and their conduct, before the lease
was concluded.
The argument stems from the description of the
property (set out above) as premises in the building to be erected by
the trust
as pointed
out
by the trust to
Goldco. Of course, in order for a contract for the sale of land to
comply with
s 2(1)
of the
Alienation of Land Act 68 of 1981
, the
property sold must be identifiable from the description in the
contract itself. But it has long been settled law that objective

evidence may be adduced to identify the property. These principles
relate also to options:
Hirschowitz
v Moolman
.
4
This court has often reiterated the principle that regard may be had
to objective evidence to correlate the description in the
document
with the actual property sold. In
Vermeulen
v Goose Valley Investments (Pty) Ltd
5
Marais JA said
:
‘
What
requires to be emphasised yet again is that evidence going to
facilitation
of the task of relating the description of the
res
vendita
given by the parties in their written agreement to an area on the
ground is not objectionable provided that it does not relate
to the
negotiations between the parties or an
ex
post facto
attempt to discover their consensus, and provided further that no
breach of the parol evidence rule is involved. As long ago as
1948
this Court in
Van
Wyk v Rottcher’s Saw Mills (Pty) Ltd
6
.
. . recognised that a statutory provision that a contract of sale of
land must be in writing “cannot mean that the only evidence
by
which the property can be identified must be contained in the writing
. . .‘ .
7
[20] There is no need, in
ascertaining precisely what and where the premises are, to resort to
the negotiations between the parties.
There is clear objective
evidence. Goldco had in fact occupied the premises pursuant to the
lease. Moreover, the premises are described
also as Shop 1,
Prosperitas Building
,
and the street address is also set out. As Goldco submits, the merx
is determinable simply by having regard to the building plan.
There
can be no uncertainty as to what the merx was. This contention must
thus fail.
Was Rossouw the trust’s agent?
[21] This question is germane to the
application of ‘fictional fulfilment’. The high court found that
Rossouw was the trust’s
agent, and that his failure to draw up the
written contract was attributable to the trust. The trust denied that
Rossouw was required
to act as its attorney and agent. On the
contrary, it asserted, he was Goldco’s agent
since
only Goldco could give him the instruction to draft the contract.
The facts do not support the argument. It is clear that
Rossouw acted
on behalf of the trust, and on its instructions, in drafting the
lease agreement. It was the contract prepared by
him that provided
that the mode of exercising the option was through the signature of a
written contract signed by the parties.
And, importantly and
understandably, subclause (c) of the option clause provided that the
contract would be prepared after the
sectional title plan had been
delivered to Rossouws by the land surveyors. Throughout, it was
clearly envisaged that Rossouws were
the agent of the trust, and in
correspondence Rossouw referred to the trust as his client. Indeed,
Goldco could not exercise the
option without the cooperation of
Rossouws. The court below thus correctly found that Rossouws was the
agent, as the attorney,
of the trust.
Fictional fulfilment: frustration of the exercise of
a right
[22] That brings me to the question
whether the court was correct in finding that the doctrine of
fictional fulfilment was applicable.
The high court found that where
a contract is subject to a condition that both parties sign it, one
party cannot escape the contract
by making it impossible for the
other to sign.
8
In such a case, it held, it would be assumed that the party refusing
to comply had in fact performed.
[23] It is important to understand,
however, that the drafting of a written contract to be signed by the
trust and Goldco was not
a condition in the true sense. A condition
is an uncertain future event. On fulfilment, a contract may come into
operation (in
which case the condition is termed suspensive) or it
may be terminated (a resolutive condition). In this case the exercise
of the
option was subject to one condition – the opening of the
sectional title register. It was also dependent on the performance by

the trust of an obligation: procuring a written contract, on the
terms set out in the option itself, drawn by Rossouws, to be signed

by the parties. But that is not a true condition. Thus once Goldco
intimated to the trust or its attorney that it wished to exercise
the
option, and once the approved sectional plan was provided by the land
surveyors to Rossouws, there was an obligation imposed
on the trust
to ensure that the written contract was prepared and signed by it. If
anything was then frustrated it was Goldco’s
right to exercise the
option, which was rendered impossible by the failure of the trust to
ensure that the prescribed mode of exercise
was available to Goldco
in the agreed period.
[24] There is ample authority for the
extension of the doctrine of fictional fulfilment of conditions to
the situation where there
is deliberate frustration of contractual
performance. In
Koenig
v Johnson
9
the payment of the balance of the price of shares in a company by the
purchaser was to be made on the delivery to it of two patents.

Delivery could not be made without signatures to certain documents.
The company that could procure signature refused to do so because
it
believed that the patents were invalid. Wessels CJ held that although
the company genuinely believed this to be the case, the
‘condition’
of signature should be deemed to have occurred. Although the court
used the word ‘condition’ it is clear that
what was referred to
was an obligation to ensure signature.
10
[25] Similarly, in
East
Asiatic Co Ltd v Hansen
11
the court found that where a buyer prevented a seller from performing
a term of their contract of sale, on which payment of the
price was
dependent, the seller was deemed to have performed.
12
Hathorn J said that both the doctrine of fictional fulfilment and
that of deemed performance spring from what Kotze JA described
in
MacDuff & Co Ltd
v Johannesburg Consolidated Investment Co Ltd
13
as ‘a branch of the broad equitable rule of our law that no one can
take advantage of his own wrong, for it is unjust and contrary
to
good faith that he should do so’.
[26] Thus although there is a
distinction between a refusal to perform an obligation upon which
another party’s performance is
dependent, and which amounts to a
breach of contract such that performance can be compelled (or damages
awarded), on the one hand,
and the fulfilment of a condition, on the
other, in some cases, because of the deliberate frustration by a
party of the other’s
right, performance will be deemed to have
occurred or performance will be ordered by a court.
14
Christie
15
suggests that the doctrine of fictional fulfilment applicable to
conditions has breached the division between fulfilment of a
condition and performance of a term because ‘the facts sometimes
call for the doctrine to be applied when what has not been fulfilled,

due to the deliberate action or inaction of one party, is really a
term of the contract’.
[27] Christie concludes that the doctrine of fictional
fulfilment
‘
. . . applies equally to
true conditions precedent and to terms of the contract that operate
as conditions precedent; that in either
case it will apply when there
has been bad faith; it will also apply when there has been deliberate
intention no matter the motive,
unless the terms of the contract and
the surrounding circumstances indicate to the contrary; . . . and at
all levels no distinction
is drawn between acts and omissions’.
[28] Had Goldco sued the trust to
compel performance before the expiry of the option period there is no
doubt that the court would
have compelled the trust to ensure
compliance with the option clause. But it did not do so, and its
efforts to ensure compliance
were thwarted by Rossouw, the trusts’s
agent. In my view, it would be inequitable to allow the trust to
escape its obligation
through deliberately frustrating Goldco’s
right to exercise the option. The trust was in a position to ensure
that the written
contract, a ‘condition’ precedent to the
exercise of the option, was prepared by Rossouws and signed by it.
The deliberate
frustration of the exercise by Goldco of its right in the prescribed
mode requires that Goldco be deemed to have
done so. The effect of
the application of fictional fulfilment is thus to bind the trust
after the expiry of the option period
because of its frustration of
the right to exercise the option timeously.
[29] I accordingly conclude that the
court below was correct in finding that this was a case where the
doctrine of fictional fulfilment
is applicable. On the undisputed
facts Goldco timeously attempted to exercise its option. It is only
because Rossouw, acting as
the trust’s agent and attorney,
deliberately frustrated Goldco’s attempt to exercise its right that
there was not compliance
with the option clause before its expiry.
The trust cannot rely on the deliberate failure of its agent to draw
up a written contract
for the sale of the premises in order to escape
its obligation to sell the premises to Goldco.
16
[30] But nor, in my view, can the court order (as the
high court did) that the parties enter into the written agreement
envisaged
in the option clause, because it cannot compel agreement on
terms to be negotiated subsequently. As I see the position, as
indicated
earlier, the prescribed mode of exercise of the option –
the signing by both parties of a written contract drafted by Rossouws

– is effectively dispensed with (or, to put the same notion
differently, deemed to have been complied with) as a result of the

trust’s frustration of the exercise of the option in that mode
within the agreed time.
[31] The result is that the terms of
the sale of the premises are to be found in the option clause itself,
as well, of course, as
in the common law rules governing sales. It
follows that the appeal must be dismissed, but the order of the high
court changed
to reflect the findings of this court.
[32] The appeal is dismissed with
costs, save that the order of the high court is altered to read:
‘
(a) The option for the purchase by
the applicant of Shop 1, Prosperitas Gebou, 133D Jan Hofmeyr Road,
Welkom,
from the first
and second respondents, in their capacities as trustees of the
Prosperitas Trust, for the price of R4 840 000 plus
14 per cent VAT,
in terms of clause 5 of the agreement of lease between the parties,
dated 10 March 2005, is deemed to have been
exercised.
(b) The first and second respondents
are ordered to take all necessary steps to transfer the property
described in (a) to the applicant
against payment of R4 840 000 plus
VAT.
(c
)
The first and second respondents are ordered, jointly and severally,
to pay the costs of the application.’
-------------------------
C H Lewis
Judge of Appeal
GRIESEL
AJA (dissenting)
[33] I have had the advantage of reading the judgment of
my colleague Lewis JA but respectfully disagree with her
conclusion
that the appeal should fail.
[34] Where I differ from my colleague is with regard to
the validity of the option clause in question.
17
In order to be enforceable, an option must be such that the
sub­stantive contract – whether sale, lease, or some other form

of contract – comes into existence without more by mere acceptance
of the offer; that is, by exercise of the option by the grantee.
18
As stated in
Brandt v Spies
:
19
‘
Through the option the
grantee acquires the right to accept the offer to sell at any time
during the stipulated period; and if this
right is exercised a
contract of purchase and sale is immediately brought into being. It
follows that the offer must be one which
is capable of resulting in a
valid contract of sale from the fact of acceptance by the person to
whom the offer is made.’
[35] It is not open to dispute that the option clause in
this case contains all the
essentialia
of
a contract of sale. My colleague appears to regard this as sufficient
whereas I respectfully hold a different view. It is settled
law that,
in order to comply with the provisions of
s 2(1)
of the
Alienation of Land Act 68 of 1981
, ‘the whole contract of sale, or
at any rate all the material terms thereof’ must be in writing.
20
As explained by Corbett JA in
Johnston v
Leal
:
21
‘
The material terms of the
contract are not confined to those prescribing the
essentialia
of a contract of sale, viz the parties to the contact, the
merx
and the
pretium
, but include, in addition, all other material
terms…. It is not easy to define what constitutes a material term.’
What emerges clearly from the cases, though, is that ‘a
material term is not necessarily one of the essentials – parties,
property
and price – of a contract of sale’.
22
[36] It follows that, in order to serve as the basis for
a valid contract of sale, an option to buy land must not only contain
all
the
essentialia
of
a deed of sale; it must also contain all the other material terms
thereof. I accordingly agree with my colleague that ‘[u]sually
an
option will reflect all the material terms of the contract’
23
– as indeed it should. It is with the next part of her reasoning
that I have a difficulty. After pointing out that ‘the option

clause did reflect the essential terms of a contract of sale of
immovable property’, my colleague asks rheto­rically: ‘What

other terms would the additional contract contain?’ In my view, it
is not necessary for us to speculate as to what those other
terms
might be. It was for Goldco, as applicant in the court below, to
prove the contract which it seeks to enforce.
24
This means that it had to satisfy the court that the parties had
intended that the further written contract would in fact
not
contain any­thing more than what is already contained in the
lease, ie the bare
essentialia
.
[37] In my view, Goldco has failed to discharge that
onus. First, the interpretation that no further material terms were
necessary
would make a further written agreement completely
superfluous. Second, such an inter­pretation is contradicted by
the background
circum­stances. It appears from a letter dated 1
December 2004 attached to the founding affidavit that the trust at
that stage
offered to sell a portion of the property – identified
with reference to erf number, surface area, dimensions and street
frontage
– to Goldco at a stipulated price of R2,45 million
excluding VAT and on certain further conditions outlined in the
letter.
The trust described this offer as ‘
ons
skriftelike aanbod
in
konsep
vir verkoop’
of the property (emphasis added). Significantly, the penultimate
para­graph of the letter reads as follows:
‘
Indien
hierdie hoofbeginsels aanvaarbaar is, sal die partye toetree tot [’n]
kontrak met volle detail
soos opgestel deur die oordragprokureurs Rossouw & Vennote
Welkom.
’ (Emphasis added).
[38] Those ‘hoofbeginsels’ were indeed acceptable to
Goldco. How­ever, instead of the detailed contract of sale
envisaged
in the letter, the parties some 3½ months later
entered into the lease, containing the option clause in question.
Having
regard to these background circumstances, there can be little
doubt that the ‘skriftelike kontrak’ contemplated by the option

clause is the same as the ‘kontrak met volle detail’ referred to
in the letter of 1 December 2004. The inference is irresistible
that
further material terms and conditions, in addition to the
essentialia
already agreed upon, had indeed been contemplated by the parties when
the lease was signed. In these circumstances, it is insufficient
to
hold, as my colleague does: ‘And since the option clause em­bodies
all the essential terms of a contract of sale it must
be enforced on
those terms’.
25
The question to be answered is a different one, namely whether the
option clause in fact embodies all the
material
terms of the contemplated contract of sale; not just the
essentialia
.
To my mind, the answer to this question is no.
[39] For these reasons I am, with respect, unable to
agree with my colleague’s further statement that ‘the written
contract
envisaged in the option clause was . . . no
more than a prescribed mode of acceptance’.
26
It is true that clause 5(b) tends to create that impression, but then
it should immediately be pointed out that the clause is notable
for
its ineptitude rather than its precision. Before acceptance can take
place in the manner prescribed by the option clause, a
further
written contract between the parties was required, with neither
guide­lines as to the content of such contract nor
any
deadlock-breaking mechanism in the event of deadlock between the
parties. In these circumstances, the option granted in terms
of
clause 5(b) is, in my view, nothing more than an agreement to agree,
which is insufficient to serve as the basis for a binding
agreement
of sale. Put differently, the option is not of such a nature that it
is capable of resulting in a valid contract of sale
from the mere
fact of acceptance thereof. All of these features, in my view, are
entirely destructive of a valid and binding option.
27
[40] Had it not been for the provisions of clause 5(b),
I would have had little hesitation in holding that a valid option had
been
granted in favour of Goldco. Clause 5(b), however, makes it
clear that the offer to sell, as it stands, does not purport to
contain
the entire offer by the offeror. Without a complete offer, it
is impossible to have a valid contract of sale complying with the

provisions of Act 68 of 1981. For these reasons I conclude that the
option in question is unenforceable.
[41] Having said that, I now wish to deal briefly with
the relief claimed in prayer 1 of the notice of motion, as ordered by
the
court a quo. It reads as follows:
‘
[D]at die respondente gelas
word
om binne tien (10) dae na datum van die
verlening van hierdie bevel ’n skriftelike koopkontrak ter
uitvoering van die opsie soos
beliggaam in klousule 5 van die
huurkontrak tussen die partye . . . aan [die
respondent
] voor
te lê vir ondertekening teen ’n koopprys
van
R4 840 000 plus 14% BTW’.
[42] My colleague, with respect rightly, recoils from
the prospect of compelling agreement ‘on terms to be negotiated
subsequently’.
28
Her suggested solution, as contained in para (a) of the proposed
order, is, however, equally un­palatable. Leaving aside the

question whether this Court should, in the exercise of its powers on
appeal,
29
mero motu
amend in any
material way the relief claimed and granted in the court below, the
proposed order seeks to dispense with the peremptory
requirement of a
written acceptance of the option.
30
More­over, the proposed order seeks to impose upon the parties a
written contract containing only the
essentialia
of a contract of sale whereas the evidence reveals, on a balance of
probability, that further material terms were contem­plated.
[43] In these circumstances, I would respectfully echo
the words of Botha JA in his minority judgment in
Soteriou
v Retco Poyntons (Pty) Ltd
:
31
‘
No doubt the parties intended
the clause to have business efficacy. But then, they no doubt did not
realise that an agreement to
agree was devoid of legal effect. The
Court is powerless to correct their error for them. While the Court
will strive not to be
a destroyer of bargains, it can never be the
creator of them.’
[44] For these reasons, I would uphold the appeal, set
aside the order of the court below and sub­stitute it with the
following:
‘
The application is dismissed with costs.’
----------------------
B M Griesel
Acting Judge of Appeal
NAVSA JA (LEWIS and SNYDERS JJA and KROON AJA
concurring)
[45] I have had the benefit of reading the judgments of
my colleagues Lewis JA and Griesel AJA. I agree with the reasoning
and conclusions
reached by the former and I am in respectful
disagreement with the latter. I am constrained to add the comments
that follow.
[46] First, it is important to note that up until the
present appeal Prosperitas had not contended that there were any
terms, over
and above those contained in the option, which still had
to be agreed upon. It is clear, both from the founding and answering
affidavits,
that it was envisaged that it would take up to 18 months
for the sectional title register to be opened to enable a deed of
sale
to be completed and that the parties provided a 24-month period
to that end. Factually, the only defence presented in the answering

affidavit is that the option had not been properly exercised by
Goldco and that it was solely to blame.
[47] Second, and perhaps more
importantly, the agreement which this court in
Driftwood
,
referred to in para 17 by Lewis JA, held to be enforceable was in
similar terms to the option in the present case.
32
The differences relate to commission, a suspensive condition relating
to the establishment of a township and, that the purchase
price was
payable upon registration. The first two aspects are inapplicable and
the latter is in any event the position at common
law.
[48] Third, other than the question of the description
of land which is dealt with by Lewis JA, it was never suggested that
the
contents of the option would otherwise not be in compliance with
the provisions of the
Alienation of Land Act 68 of 1981
.
[49] Fourth, Griesel AJA, in para 37
above, in interpreting the option had regard to ‘background
circumstances’. In particular,
he had regard to correspondence
preceding the conclusion of the lease. It is clear that the lease
signed on 14 March 2005 superseded
all prior negotiations and
agreements. It is the option contained in the lease that has to be
interpreted and applied. The option
is, in my view, clear and
unambiguous. It is to be given its grammatical and ordinary meaning
unless this would result in absurdity,
repugnancy or inconsistency
with the rest of the document. The circumstances in the present case
are not such as to exclude the
rule against extrinsic evidence in aid
of interpretation.
33
The question we were called upon to decide is whether the option was
an agreement to conclude an agreement. Lewis JA had regard
to the
terms of the option and in my view correctly concluded that it did
not.
[50] For all these reasons I concur in the judgment of
Lewis JA.
--------------------
M S Navsa
Judge of Appeal
Appearances:
For the Appellant: M H WESSELS SC
Instructed by: Rosendorff, Reitz & Barry
Bloemfontein
For the Respondent:  C Ploos van Amstel SC
Instructed by: Vermaak & Dennis
Bloemfontein
1
Cairns (Pty) Ltd v Playdon
1947 EDL 145.
2
The Law of Contract in South Africa
5 ed p 54.
3
See
Driftwood
Properties v McLean
1971 (3) SA 591
(A), and, most recently,
Withok Small
Farms (Pty) Ltd v Amber Sunrise Properties Ltd
[2008] ZASCA 131
(21 November
2008); 2009 (2) SA 504
(SCA) and
Pillay v Shaik
[2008] ZASCA159 (27 November 2008);
[2009] 2 All SA 65
(SCA).
4
1985 (3) SA 739
(A) at 765F-H and 767E-G.
5
2001 (3) SA 986
(SCA) para 14.
6
1948 (1) SA 983
(A) at 990.
7
See also, for example,
Headermans
(Vryburg) (Pty) Ltd v Ping Bai
1997
(3) SA 1004
(SCA) and
J R 209
Investments v Pine Villa Estates; Pine Villa Estates v J R 209
Investments
[2009] ZASCA 3
(26
February 2009);
[2009] 3 All SA 32
(SCA) para 19.
8
Relying
on
First National Bank Ltd v Avtjoglou
2000 (1) SA 989
(C), confirmed in this respect on appeal to the full
court in
Avtjoglou v First National
Bank of Southern Africa Ltd
[2002] 2
All SA 1
(C). This court found that that decision, which granted
provisional sentence, was not appealable:
2004 (2) SA 453
(SCA).
9
1935 AD 262.
10
See in this regard
Van
Heerden v Hermann
1953 (3) SA 180
(T)
at 187, where Ramsbottom J said that the delivery of the patent in
Koenig
was not a ‘condition properly so called’.
11
1933 NPD 297.
12
At 302.
13
1924 AD 573
at 611.
14
See
Scott v Poupard
1971(2) SA 373 (A) at 378H.
15
Op cit p 150.
16
Scott v Poupard
at 378G-H.
17
Quoted in para 4 above.
18
Hirschowitz v Moolman & others
1985 (3) SA 739
(A) at
767F. See also Van der Merwe
et al
Contract: General
Principles
3ed (2007) p 80.
19
1960 (4) SA 14
(E) at 16F–G, quoted with approval in
Venter v
Birchholtz
1972 (1) SA 276
(A) at 284A.
20
Johnston v Leal
1980 (3) SA 927
(A) at 937G and the cases
referred to therein.
21
At 937H.
22
Meyer v Kirner
1974 (4) SA 90
(N) at 98D, cited with approval
in
Johnston v Leal
at 937G–H.
23
Para 17 above.
24
This is a question which, according to Christie
op cit
p 154,
‘must now be regarded as settled’.
25
Para 18 above.
26
Para 17 above.
27
Compare
Letaba Sawmills (Edms) Bpk v Majovi (Edms) Bpk
[1992] ZASCA 195
;
1993
(1) SA 768
(A) at 773I–774A;
Namibian Minerals Corporation Ltd
v Benguela Concessions Ltd
[1996] ZASCA 140
;
1997
(2) SA 548
(A)
at 567A–C;
Premier, Free State and others v
Firechem Free State (Pty) Ltd
2000 (4) SA 413
(SCA) paras 35–36.
28
Para 30 above.
29
Section 22 of the Supreme Court Act 59 of 1959.
30
Hirschowitz v Moolman
, n 2 above, at 766D; Van der Merwe
et
al op cit
p 83–84.
31
1985 (2) SA 922
(A) at 936I–J.
32
At 595F-H.
33
See R H Christie (op cit) p 204 and the
discussion of
Coopers & Lybrand v
Bryant
[1995] ZASCA 64
;
1995 (3) SA 761
(A) at p 205.