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[2021] ZAGPPHC 332
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Du Preez v Alpha Valencia (Pty) Ltd (26146/2020) [2021] ZAGPPHC 332 (21 May 2021)
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IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
Case
No:
26146/2020
REPORTABLE: NO
OF INTEREST TO OTHERS
JUDGES: NO
REVISED
DATE:
21/5/21
In
the matter between:
JOHANNES MATTHEUS
DU PREEZ
Applicant
and
ALPHA VALENCIA
(PTY) LTD
Respondent
JUDGMENT
FRANCIS-SUBBIAH,
AJ
[1]
The applicant
seeks specific performance
(payment and transfer) in terms of an agreement of sale of an
immovable property that was entered into
between the applicant and
the respondent. The respondent pleads that specific performance would
operate unreasonably hard on it
and would be inequitable under the
circumstances.
[2]
The hearing of the matter commenced with the respondent’s
application for referral
to mediation in terms of rule 41A of the
uniform rules of court. The nub of the application to mediate is to
re-negotiate a new residential
price of the property in light of the prevailing uncertainty relating
to the respondent’s approval
of the township development by the
City of Tshwane.
The application was
opposed on the basis that mediation will not assist the parties any
further. There is no point in further negotiation,
especially since
specific performance is being claimed due to the non-performance of
the respondent. Furthermore there is
concern that mediation
will give rise to more litigation between the parties.
[3]
As of 9 March 2020 a court may “direct the parties to consider
referral of a
dispute to mediation” in terms of rule 41A.
Although mediation has been
described as a voluntary process, the court may direct the parties to
consider mediation as a dispute
resolution mechanism when it is
clearly evident that such a procedure will benefit the parties and
move them closer to better resolving
the dispute by such mechanisms.
From the facts before this court I am of the view that it is
counter-
productive to force these parties into mediation on the basis that
they have already been negotiating since the signing
of their
contract and have reached a stage of impasse. Therefore the
application to refer the matter to mediation in terms of rule
41A is
refused.
[4]
It is trite that, in order for a party to succeed with a claim for
specific performance,
that party must allege and prove the terms of
the contract; and compliance with any antecedent or reciprocal
obligation, or must
tender compliance therewith. The Supreme Court of
Appeal confirmed this principle in
Nkengana
and another v Schnetler and another [
2011]
1 ALL SA 272
(SCA).
[5]
In this matter the specific performance arises from a written
agreement concluded
between the parties on 12 July 2017 for the sale
of applicant’s immovable property,[…], […], Ext
[…]
(the “
property
”) to the respondent. The
relevant terms of the Deed of Sale read as follows:
“
3.
PURCHASE PRICE
The
purchase price is the sum of R10 000 000.00 (TEN MILLION
RAND), (VAT included if applicable), payable by the Purchaser
as
follows:
3.1
A non-refundable deposit of R150 000.00 (ONE HUNDRED AND FIFTY
THOUSAND RAND) is payable
by 30 September 2018 after the fulfilment
of suspensive conditions referred to in sub-paragraph 4.1 and 4.2
below.
3.2
The balance of the purchase price to the amount of R9 850 000.00
(NINE MILLION
EIGHT HUNDRED AND FIFTY THOUSAND RAND) is payable by 30
September 2018 with an approved Bank guarantee(s) in favour of the
Seller
or his nominee, payable free of Bank Exchange at Pretoria upon
registration of transfer of the Property into the name of the
Purchaser.
Such guarantee(s) shall be delivered by the Purchaser to
and in the form or manner as directed by the Conveyancer.”
[6]
The agreement of sale was amended by two addendums.
The
first addendum was included in the deed of sale on 14 February 2018
which included at paragraph 3.3 read as follows:
“
The
purchaser is granted until 31 August 2018 to obtain the approval for
its application for township establishment. Should
any
objections be raised during the aforementioned period, not have been
satisfactorily disposed of, the purchaser, subject to
sub-paragraph
3.4 hereunder, may be granted extension to 31 March 2019 to furnish
approved bank guarantees for the purchase price
as contained in
sub-paragraph 3.2.”
[7]
It is evident from the surrounding circumstances that the respondent
did not deliver
the bank guarantees and the parties once again
entered in a further agreement by way of the second addendum.
[8]
The second addendum signed on 15 May 2019 read as follows:
“
3.5
The Purchaser is granted a further extension of time and until 31
March 2020 to deliver the required
guarantees as contained in clause
3.2 above.
3.6
A further deposit in the amount of R500 000.00 (Five Hundred Thousand
Rand) is payable upon
signature of this agreement.
3.7
The Purchaser shall in addition to the deposits already paid, pay to
the Seller a monthly
amount of R50,000.00 (Fifty Thousand Rand) from
1 June 2019 until date of delivery of the required guarantees.
3.8
The payments made in terms of clause 3.6 and 3.7 above to be deducted
from the Purchase
Price.”
[9]
It is not in dispute from the wording of the agreement and the
addenda, that the parties
accepted that guarantees had to be
delivered after the township development application had been
authorised and finalised, and
that the parties had accepted at the
time of the signing of the second addendum, that the time periods
(June 2019 to 31 March 2020)
laid down would be sufficiently long
enough for that to occur.
[10]
However this did not happen and the respondent failed to deliver the
guarantees by 31 March 2020.
Directly, the applicant sought delivery
of the guarantees from the respondent. This is evident from the
correspondence between
the parties. Notwithstanding, the guarantees
have not been delivered and the applicant proceeds to seek specific
performance for
the outstanding purchase amount and the transfer of
the property be effected in the name of the respondent.
Specific
performance
[11]
A court must exercise its discretion as to whether specific
performance should be granted or not judicially
upon a consideration
of all the relevant facts. It was held in
Haynes
v King Williamstown Municipality
1951
(2) SA 371
(A) at 378G that:
"It
is, however, equally settled law with us that although the Court will
as far as possible give effect to a plaintiff's choice
to claim
specific performance it has a discretion in a fitting case to refuse
to decree specific performance and leave the plaintiff
to claim and
prove his
id quad
interest. The discretion which a Court enjoys although it must be
exercised judicially is not confined to specific types of cases,
nor
is it circumscribed by rigid rules. Each case must be judged in the
light of its own circumstances. As examples of the grounds
on which
the Courts have exercised their discretion in refusing to order
specific performance, although performance was not impossible,
may be
mentioned: (a) where damages would adequately compensate the
plaintiff; (b) where it would be difficult for the Court to
enforce
its decree; (c) where the thing claimed can readily be bought
anywhere; (d) where specific performance entails the rendering
of
services of a personal nature…(e) where it would operate
unreasonably hardly on the defendant, or where the agreement
giving
rise to the claim is unreasonable, or where the decree would produce
injustice, or would be inequitable under all the circumstances.”
[12]
In considering an application for specific performance it was held in
Tamarillo (Pty) Ltd v BN
Aitken (Pty) Ltd
1982
(1) SA 398
(AD) at 442 that the
onus will
rest on the respondent to allege and prove why the order for specific
performance should not be granted.
In this regard
the respondent raises principally the following four defences, namely
the tacit term test, the approval of the township
establishment
defence, impossibility of performance defence and the undue hardship
defence.
The
tacit term defence
[13]
A tacit term is an unexpressed provision of the contract and has been
defined in
Alfred McAlpine and Son (Pty) Ltd v
Transvaal Provincial Administration
1974 (3)
SA 506
(A) at
531 to 532
as
follows:
“
An
express provision of the contract which derives from the common
intention of the parties, as inferred by the court from the express
terms of the contract and the surrounding circumstances. In supplying
such an implied term, the court, in truth, declares the whole
contract entered into between the parties.”
The
court also referred to the common law test for determining whether a
tacit term exists or not, as the “officious bystander”
test.
[14]
Accordingly, the tacit term test can only be implied if it is
necessary in the business sense
to give efficacy to the contract. The
express terms of the contract must be considered as well as the
surrounding circumstances
and a full proper interpretation of the
contract itself. Not only the surrounding circumstances, but it was
held in
Starways Trading 21
CC (in liquidation) v Pearl Island Trading 714 (Pty) Ltd
2019 (2) SA 650
(SCA), that the
subsequent conduct of the parties must
also be considered whether the contract contains a tacit term.
There must be an inference that the parties must have
intended, the implied stipulation in question, with reference to the
contract
itself and the circumstances surrounding the contract.
[15]
Reading in the tacit test clause, the respondent argues that the
suspensive conditions in the
clauses related to the obtaining of the
approval of the township development, especially in light of
objections that may be raised.
This was amended in the first addendum
whereby the purchaser was granted until 31 August 2018 to obtain
approval for the township
establishment, and if there were
objections, extension could be given for the furnishing of guarantees
to 31 March 2019. The second
addendum also included a clause for the
further extension of time and until 31 March 2020 to deliver the
required guarantees. Therefore
the parties clearly had in mind that a
period of 7 months would be necessary for purposes of finalising a
tribunal hearing, and
that the provision of guarantees will only be
required after the development has been approved at a tribunal
hearing.
[16]
On the contrary the applicants submit that it is for that very reason
the Deed of Sale was expressly
amended in the first addendum to
delete any suspensive conditions. And the suspensive conditions were
to the benefit of the respondent.
When the respondent requested a
further extension of time, the parties expressly agreed thereto and
the Deed of Sale was again
amended accordingly by the respective
second addendum. If the respondent’s performance was dependent
on the approval of the
township establishment application, this would
have been so stated and there would have been no need for the
addendum.
[17]
Herein lies the dispute between the parties. Respondent’s
argument is that the guarantees
will only become due and deliverable
upon approval of the township establishment at the tribunal hearing.
Whereas the applicant
says that the suspensive condition was removed
by setting a fixed cut-off date for delivery of the guarantees to 31
March 2019,
followed by a further indulgence by setting the cut-off
date to 31 March 2020. As a result from that date onwards the concern
for
the approval of its application for township establishment rested
solely within the hands of the respondent and placed no condition
on
the applicant.
[18]
Applicant asserts that from the actions of Ms
Sutton, from the respondent, she was well aware that the delivery
of
the guarantees was an independent obligation which was due by a
specific date. This is why, when informed on 31 March 2020 that
such
guarantees were due, Ms Sutton replied: “
What?
Ek het dit as einde Junie
?” and later
undertook to provide the necessary guarantees by Friday, 3 April
2020.
[19]
I am in agreement with the applicant that from a reading of the Deed
of Sale with the addenda
no such conditions are expressly stated,
impliedly or tacitly expressed. Clause 17 of the Deed of Sale
specifically provides that
the contract of sale constitutes the
entire agreement between the parties and that there are no other
conditions, stipulations,
warranties or representations whatsoever
made other than such as may be included herein and signed by the
parties.
[20]
From a plain and contextual reading of the original deed of sale
inclusive of the addenda, it
clarified the suspensive condition for
providing the guarantees. It therefore was no longer dependent upon
the approval for its
application for township establishment by the
City of Tshwane but set the cut- off date for delivery of the
guarantees. Hence the
delivery of the guarantees was an independent
obligation which had to be compiled with by respondent on or before
31 March 2020.
In my view this is an express term of the whole Deed
of Sale and does not require reliance upon a tacit term in any manner
whatsoever.
[21]
The respondent further argues that since it pays the amount of
R50 000.00 per month to the
applicant long after the 31 March
2020 cut-off date, this is evident that the delivery of the
guarantees are conditional upon the
approval of the township
establishment. Respondent submits that by not furnishing the
guarantees on 31 March 2020, if it constituted
a breach of contract,
the applicant should not have accepted further monthly payments of
R50 000.00. By accepting such payments,
the applicant in fact
has acted directly in accordance with the tacit term consideration.
In addition the applicant waived
his right to seek relief as a result
of the alleged breach of contract because of the continued acceptance
of R50 000.00 per month.
[22]
I cannot find that this argument bears any merit on the basis that
the R50 000.00 paid monthly
is not an additional payment for the late
delivery of the guarantees but a payment toward the purchase price.
This is expressly
set out in the Deed of Sale at clause 3.8 that “
The
payments made in terms of clause 3.6 and 3.7 above to be deducted
from the Purchase Price
.” It therefore
has no bearing on the delivery of the guarantees past the cut -off
date of 31 March 2020.
Township
establishment defence
[23]
From the surrounding circumstances, the respondent alleges that the
parties knew after signing
of the second addendum that there were
extreme difficulties in obtaining dates for a City Council tribunal
hearing. Further that
the respondent had done everything in its power
to obtain the necessary permission for the township development and
the cause of
delay was solely attributable to the City Council even
before 26 March 2020 when the national lockdown commenced due to
COVID 19.
By 31 March 2020 the City Council had not finalised the
approval of the township development. The plight of securing a
date
for a tribunal hearing was exacerbated after the country wide
lockdown. However it is currently a question of time before
a
tribunal hearing would be possible and that the time periods for
guarantees be extended on that basis.
[24]
The respondent contends that it has spent much money, time and effort
on the development, and
that the reason why the tribunal has not
considered the application yet, was purely and simply as a result of
the recalcitrance
of the City Council, the breach of their statutory
and constitutional duties, and the countrywide lockdown.
Respondent therefore
submits that specific performance should not be
granted under these circumstances as it was not possible for the
respondent to
perform.
Impossibility
of performance
[25]
The general principles of impossibility of performance were
succinctly stated by Scott JA in
MV Snow Crystal Transnet Ltd t/a
National Ports Authority v Owner of MV Snow Crystal
[2008] ZASCA 27
;
2008 (4) SA
111
(SCA), as follows:
‘
As a general
rule impossibility of performance brought about by vis major or casus
fortuitus will excuse performance of a contract.
But it will not
always do so. In each case it is necessary to “look to the
nature of the contract, the relation of the parties,
the
circumstances of the case, and the nature of the impossibility
invoked by the defendant, to see whether the general rule ought,
in
the particular circumstances of the case, to be applied”. The
rule will not avail a defendant if the impossibility is
self-created;
nor will it avail the defendant if the impossibility is due to his or
her fault. Save possibly in circumstances where
a plaintiff seeks
specific performance, the onus of proving the impossibility will lie
upon the defendant.’
[26]
Mere incapacity to perform does not render performance impossible.
Respondent states that it
is clear under the circumstances of this
case that the impossibility to perform by providing guarantees on the
basis of approval
of the township development was not self-created,
and was made impossible as a result of the actions of the City
Council and the
delays caused in setting down hearings of the
tribunal. The provision of guarantees was always linked to the
permission for the
township development, and it was objectively
impossible to comply therewith before 31 March 2020, because the
development
had not been approved at that time. Therefore the
respondent must be excused from such performance and the respondent
cannot be
said to have breached the agreement by not delivering
guarantees on or before 31 March 2020.
[27]
The applicant’s contention that respondent’s obligation
to deliver the guarantees
is independent of the respondent’s
township application approval and that any difficulties faced by the
respondent with the
City of Tshwane as a result of it failing to hold
tribunals after the 31 March 2020 have no bearing on its failure to
deliver the
guarantees. I agree with the applicant’s
contention. The lockdown commenced a mere 5 days before the
respondent’s
due date to deliver the guarantees on 31 March
2020. The respondent fails to allege any cogent reason why it ought
to be excused
from performing its obligations under the Deed of Sale
as a result of COVID-19 and rendering the delivery of the guarantees
absolutely
impossible. Neither is there any indication that a
tribunal date had already been set for hearing of the township
application.
I find that these 5 days is insufficient time to render
the respondent’s obligation to have become objectively
impossible.
[28]
In
Unibank Savings &
Loan Ltd (formerly Community Bank) v ABSA Bank Ltd
2000 (4) SA 191
(W) at 198D
the court held
that impossibility is not implicit in a change of financial strength
or in commercial circumstances which cause the
respondent’s
compliance with its contractual obligations to be difficult,
expensive or unaffordable. Even so, the respondent
does not allege
that it cannot provide the guarantees for lack of financial
affordability, difficulty in securing guarantees but
merely that the
providing of the guarantees is dependent upon its township
application approval.
Undue
hardship
[29]
Both parties acknowledge that the respondent has invested a
considerable amount of time and money
in order to establish a
township on the property. By all accounts, it appears that the
respondent intends to proceed with its plan
for the establishment of
a township on the property, in spite of the City of Tshwane’s
recalcitrance. Should the applicant
terminate the Deed of Sale as a
result of the respondent’s breach and claim damages then it is
more likely that the respondent
will suffer damages of its own in the
form of the loss of its investment; and cause greater injustice to
the respondent than an
order for it to perform in terms of the Deed
of Sale.
[30]
The respondent does not allege or prove any facts which would render
its performance unreasonably
hard or which would produce injustice.
Accordingly, there is no undue hardship which the respondent stands
to suffer.
Conclusion
[31]
Respondent has failed to allege or prove any fact which negates the
applicant’s claim and
the relief it seeks. The respondent
is currently in breach of the unambiguously, clear, express and
unequivocal terms of
the sale agreement which stipulates that
respondent had to, by no later than 31 March 2020, deliver guarantees
to applicant. As
a result, the respondent has failed to discharge the
onus that specific performance in terms of its agreement with the
applicant
is unfair; will operate unreasonably hard, will produce
injustice or be inequitable under all circumstances.
[32]
Accordingly, the applicant is entitled to an order as sought in the
notice of motion.
As
a result the following order is made:
1.
It is declared that Respondent, at date of this
order, owes Applicant the sum of R7 900 000.00 (Seven
Million Nine Hundred
Thousand Rand) plus interest thereon
a
tempore morae
from date of demand, 6 April
2020 to date of payment, both days inclusive.
2.
It is ordered that Respondent:
2.1
within 7 (seven) days from date of this order pay
the sum of R7 900 000.00 (Seven Million Nine Hundred
Thousand Rand)
into the trust account of Applicant’s attorneys,
Messrs DP Du Plessis Incorporated (“DPI”) held at Nedbank
Limited
– Centurion, Account Number: […], Branch Code:
162-145 (Ref:P1057), the amount to be kept in trust and made payable
to Applicant upon the transfer of […], […] Extension
[…], Registration Division J.R. Province of Gauteng,
Measuring
8565 Square metres (“the Property”) into the name of
Respondent.
2.2
within 7 (seven) days after being so requested in
writing, sign all documentation and take all steps necessary in order
to effect
transfer of the Property into Respondent’s name
failing which the Sheriff of the High Court, Pretoria Central be
authorised
and directed to, on behalf of Respondent, take all such
steps and sign all such documentation as may be necessary.
2.3
after registration of the property in its name
and within 7 (seven) days after being so requested in writing, pay
the mora interest
referred to in paragraph 1 above into the trust
account of DPI.
2.4
Pay the costs of the application.
R.
FRANCIS-SUBBIAH
ACTING
JUDGE OF THE HIGH COURT OF SOUTH AFRICA
Counsel
for the
Applicant:
J G W Basson, SC
Counsel
for the
Respondent:
R Du Plessis, SC
Date
of
hearing:
18 May 2021
Date
of
judgment:
21 May 2021