Swanepoel v Nameng (43/2009) [2009] ZASCA 101; 2010 (3) SA 124 (SCA) ; [2010] 1 All SA 345 (SCA) (18 September 2009)

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[2009] ZASCA 101
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Swanepoel v Nameng (43/2009) [2009] ZASCA 101; 2010 (3) SA 124 (SCA) ; [2010] 1 All SA 345 (SCA) (18 September 2009)

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THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case No:
43/2009
JACOBUS CORNELIUS SWANEPOEL
Appellant
and
SUNNYBOY SOLOMON NAMENG
Respondent
Neutral citation:
Swanepoel
v Nameng
(43/2009)
[2009] ZASCA 101
(18 September 2009)
Coram:
Mthiyane,
Nugent, Ponnan, Snyders JJA and Griesel AJA
Heard:
1
September 2009
Delivered:
18
September 2009
Summary:
A
greement
of sale of immovable property ─ property incorrectly described but
subsequently amended by the parties ─ whether formalities
prescribed by
s 2(1)
of the
Alienation of Land Act 68 of 1981
complied with ─ agreement subject to suspensive condition requiring
bond approval by certain date ─ whether suspensive condition
fulfilled.
_____________________________________________________________________
ORDER
On appeal from:
Johannesburg
High Court (Motloung
AJ sitting as court of first instance).
1 Save to the extent set out in
paragraph 2 hereof, the appeal is dismissed with costs.
2 The order in paragraph 5 that
‘costs of the application are to be paid by the respondent on the
scale as between attorney and
client’ is set aside and replaced
with the following:
‘
5 Costs of the application are
to be paid by the respondent.’
___________________________________________________________
JUDGMENT
MTHIYANE JA (NUGENT, PONNAN,
SNYDERS JJA and GRIESEL AJA concurring):
[1] The issue in this appeal is
whether an agreement of sale of immovable property entered into
between the parties is valid and if
so, whether the agreement lapsed
for alleged failure to comply with the suspensive condition contained
in the agreement. The Johannesburg
High Court (Motloung AJ) held that
the agreement complied with s 2(1) of the Alienation of Land Act 68
of 1981 (‘the Act’) and
that the suspensive condition had been
fulfilled.
[2] On 26 July 2006 the appellant
sold to the respondent immovable property described as erf 1172
Greenstone Hill, for the sum of
R470 000. The sale agreement was
subject to a suspensive condition in terms of which the respondent
had to obtain approval of a loan
by not later than 16 August 2006
against registration of a first mortgage loan over the property. The
agreement further provided
that if the bond was not approved by that
date, an automatic extension of a further six working days would be
allowed to enable the
estate agent to obtain the relevant bond
approval. Such extension thus allowed for fulfilment of the
suspensive condition by 24 August
2006.
[3] Subsequent to the approval of
the loan on 18 August 2006 the estate agent who brokered the sale
between the parties discovered
that the property had been incorrectly
described in the agreement as erf 1172 instead of 1173. The agreement
was then amended by
the parties on 22 August 2006 to reflect the
property sold as erf 1173.
[4] Consequently it became
necessary to also correct the loan documentation at the bank to
reflect the mortgaged property as erf 1173.
Accordingly the
respondent was on application issued with a fresh approval of the
loan on 24 October 2006 in respect of erf 1173.
[5] In the meantime the estate
agents had on 18 October 2006 instructed the conveyancers, Biccari
Bollo Mariano Inc to proceed with
the transfer of the property into
the respondent’s name. On 30 and 31 October 2006 the appellant and
the respondent respectively
signed transfer documentation so as to
effect transfer of the property to the respondent.
[6] It appears that there was
thereafter considerable delay in effecting the transfer of the
property. This prompted the appellant
to write to the respondent in
July 2007 threatening to cancel the agreement on the grounds of
unreasonable delay. The concluding
portion of the letter contains the
following ultimatum:
‘
I hereby give you
notice in terms of clause 9 of the offer to purchase to lodge the
transaction in the relevant deeds office within
10 days from the date
hereof failing . . . [which] . . . I will have to cancel this
agreement. A copy of the letter will also be
addressed to the
transferring attorneys.’
[7] The respondent wrote back to
the appellant denying that he was to blame for the delay and
disputing the appellant’s right to
cancel. On 2 August 2007 the
respondent instructed the conveyancers, in view of the dispute that
had arisen, not to proceed with
the transfer, until they received
further written instructions from him.
[8] By letter dated 18 August
2007 the respondent attempted to stave off the cancellation, by
reiterating that he was not to blame
for the delay and insisting that
he had signed all the necessary transfer documents in October 2006.
This however failed to elicit
any positive reaction from the
appellant. Similarly the conveyancer’s attempts to explain the
delay met with similar rebuff. The
parties remained deadlocked.
[9] The deadlock culminated in an
application to the Johannesburg High Court in which the respondent
sought an order declaring that
the appellant’s purported
cancellation of the agreement was invalid and an order to enforce
specific performance. The appellant
opposed the application, at that
stage, on two grounds. First, he contended that there had been an
unreasonable delay in effecting
the transfer, which delay he
attributed to the respondent and the conveyancers. Second, the
appellant contended that even if a reasonable
time had not elapsed
for the transfer of the property, he was entitled to avoid the
agreement, because it had lapsed for non-fulfilment
of the suspensive
condition contained in clause 13.1. The sub-clause provided that the
respondent had to obtain approval of a bond
by not later than 24
August 2006.
[10] As already indicated the
High Court found that the suspensive condition had been fulfilled in
that the home loan in respect of
erf 1172 had been approved
timeously. The learned judge held that the suspensive condition had
been fulfilled and that the agreement
between the appellant and the
respondent was valid and binding and granted the relief claimed. The
appellant was consequently ordered
to pay costs on an attorney and
client scale.
[11] With leave granted by this
Court the appellant now appeals the above ruling. The appellant’s
challenge in the appeal stands
on two legs. First, it is contended
that the agreement prior to its amendment was invalid for failure to
comply with the provisions
of s 2(1) of the Act in that the property
sold (erf 1173) cannot be identified by reference to the written
agreement, as it was prior
to the amendment. Second, and
alternatively, even if the agreement between the parties (in its
unamended form) complied with s 2(1)
of the Act, it nevertheless
lapsed because the suspensive condition to which it was subject, was
not timeously fulfilled. This because
approval of the loan in respect
of the property erf 1173 (after the amendment) took place on 24
September 2006, whereas clause 13.1
of the agreement required that it
occur by not later than 16 August 2006 or within the extended time
provided for therein, that is
24 August 2006.
[12] Before discussing the
appellant’s submission on the first point relating to the alleged
invalidity based on non-compliance
with the provisions of s 2(1) of
the Act, it is necessary to quote the relevant subsection and to make
a few general observations.
The subsection reads as follows:
‘
No alienation of
land . . . shall . . . be of any force or effect unless it is
contained in a deed of alienation signed by the parties
thereto or by
their agents acting on their written authority.’
[13] The subsection has been the
subject of comment in a number of decisions of this court and the
high court. For purposes of the
decision in this case it is not
necessary to embark on a comprehensive analysis of the subsection
because the issue raised by the
respondent bears solely on the
description of the
res
vendita.
The test for
compliance with the subsection as laid down by this court over the
years is a simple one. If an immovable property can
be identified by
reference to the terms of the agreement, without recourse to evidence
from the contracting parties as to their negotiations
and consensus,
the provisions of law are met. (
Clements
v Simpson
1971
(3) SA 1
(A) at 7F–G.)
The subsection does not, however, ‘require a written contract of
sale to contain, under pain of nullity,
faultless
description of the property sold couched in meticulously accurate
terms’.
[Emphasis
added]
(
Headerman
(Vryburg) (Pty) Ltd v Ping Bai
1997
(3) SA 1004
(SCA) at 1009B.)
[14] The objective of the
subsection is to achieve certainty in ‘transactions involving the
sales of fixed property, as to the terms
agreed upon and thus avoid
or minimise the possibility of . . . fraud or unnecessary
litigation’. (
Intercontinental
Exports (Pty) Ltd v Fowles
1999
(2) SA 1045
(SCA) at 1051D)
─ hence the requirement that all agreements relating to the sale of
land be reduced to writing and signed by the parties thereto
or by
their agents on their written authority.
[15] In the present matter all
the essential elements for the conclusion of a valid agreement for
the sale of land were present. The
agreement was in writing and
signed by the parties thereto as required by the subsection. More
importantly there was reference in
the parties’ agreement to an
identifiable property, (erf 1172) albeit in error. Thus standing
alone, the agreement sufficiently
described the subject-matter sold
to enable identification of it on the ground. The purchase price of
the property (R470 000) was
set out and so were details of how
payment was to be effected. Clearly, there was certainty on all the
formal elements required by
the subsection. On the face of it
therefore, the agreement of the parties complied with the subsection.
[16] As the agreement of sale on
the face of it complied with s 2(1) of the Act, it was permissible
for it to have been amended or
rectified, by substituting the correct
description of the property sold (
Magwaza
v Heenan
1979
(2) SA 1019
(A).
)
Intercontinental
Exports (Pty) Ltd v Fowles
1999
(2) SA 1045
(SCA) para 10.) It therefore follows that the
determination of the question whether the formalities prescribed by
the subsection
have been complied with does not involve an enquiry
into the intention of the parties as to the property sold. Indeed the
section
makes no reference to intention. By omitting any reference to
intention in respect of the property sold the legislature was, I
think,
mindful of the fact that the parties could still amend their
agreement by, for example, exercising their common law right to
rectify
it, if they so wish, or make whatever corrections they
consider necessary. At the stage of determining whether the
formalities prescribed
in s 2(1) of the Act have been complied with
one is therefore not concerned with the question whether the property
identified in
the agreement as the
res
vendita
, is in fact
the property that the parties intended to sell to each other
ultimately. The appellant’s argument seems to be that
in order to
comply with s 2(1) of the Act the agreement had to reflect the
property sold as erf 1173 from the outset. The argument
ignores the
fact that the parties are as a matter of law entitled to amend or
rectify their agreement once a valid agreement was
concluded and the
section does not impose any bar to this. The fact that the agreement
had to comply with the formalities prescribed
by s 2(1) of the Act
did not mean that the description of the property could not be
corrected or rectified at any later stage. The
remarks of Smalberger
JA in
Intercontinental
Exports
are apposite:
‘
Rectification is
a well established common-law right.
It provides
an equitable remedy designed to correct the failure of a written
contract to reflect the true agreement between the parties
to the
contract. In thereby enables effect to be given to the parties’
actual agreement. . . ’.(
a
t
para 11).
[17] For the above reasons I
conclude that the agreement of sale entered into between the
appellant and the respondent complies with
the requirments of the
Alienation of Land Act and
was valid even prior to the amendment of
the property sold from erf 1172 to erf 1173. The appellant’s
contention that the agreement
did not comply with the provisions of
s
2(1)
is without merit.
[18] I turn to the appellant’s
second point. The appellant argues that the suspensive condition was
not fulfilled in that in terms
of clause 13.1 the bond in respect of
the property sold was not approved before 16 August 2006 or within
the automatic extension
period (24 August 2006). Because the
respondents only succeeded in obtaining approval of a home loan in
respect erf 1173 on 27 September
2006, the appellant submits that the
agreement had by then lapsed in terms of clause 14.2.
[19] In my view when the
respondent’s application for a loan was approved and the bank
furnished its guarantee in relation to erf
1172 the suspensive
condition was fulfilled, that being the necessary step to render what
was previously an inchoate agreement complete.
Once that occurred the
agreement was valid and enforceable. The only remaining obstacle to
the enforcement of the agreement in respect
of erf 1173 at that stage
was the incorrect description of the property sold as erf 1172
instead of erf 1173. The parties put paid
to that by amending the
agreement. The suspensive condition in clause 13.1 (that had already
been fulfilled) was not all of a sudden
revived by the granting of a
home loan in respect of erf 1173. In any event that is how the
parties saw the situation. In my view
the fact that on 30 and 31
October 2006 the parties signed transfer documents to give effect to
the transfer of the property into
the name of the respondent supports
this conclusion. When transfer was not effected by July 2007 the
respondent threatened to cancel
the agreement on the grounds of
unreasonable delay. Why, if one may ask rhetorically, would he do so
if he regarded the agreement
as having lapsed? The answer must surely
be that both parties regarded the suspensive condition as having been
fulfilled.
[20] To this may be added the
fact that it probably mattered little to the bank whether the loan
was in respect of erf 1172 or erf
1173. The application for a loan in
respect of erf 1173 was in my view, merely a means by which the bank
was putting its loan documentation
in line with the corrected
description of the property sold. Being a bank it could not do it in
any other way. A mortgage bond had
to be registered over erf 1173 to
secure the loan ─ an act which could hardly be viewed as reviving a
suspensive condition that
had already been fulfilled.
[21] For the above reasons I
conclude that the suspensive condition had been fulfilled by the time
the description of the property
was corrected and the argument to the
contrary is without merit.
[22] I turn to the question of
costs. It is not clear why the appellant was ordered to pay costs on
an attorney and client scale.
Counsel for the respondent was unable
to support this aspect of the judgment. It appears that the judge
took umbrage at the appellant
for taking points which he had not
raised initially when he sought to cancel the agreement. I do not
think that there was any justification
for penalising the appellant
for acting in the manner that he did if he considered this to advance
his case. His actions do not amount
to abuse of the process of court.
Accordingly a punitive costs order was not justified and falls to be
set aside.
[23] Accordingly the following
order is made:
1. Save to the extent set out in
paragraph 2 hereof, the appeal is dismissed with costs.
2. The order in paragraph 5 that
‘costs of the application are to be paid by the respondent on the
scale as between attorney and
client’ is set aside and replaced
with the following:
‘
5 Costs of the application are
to be paid by the respondent.’
____________________
KK MTHIYANE
JUDGE
OF APPEAL
Appearances:
For Appellant: JM Kilian
Instructed by:
Victor & Partners
Johannesburg
Symington & De Kok
Bloemfontein
For Respondent: NPG Redman
Instructed by:
Kgokong Nameng Tumagole Inc
Johannesburg
Lovius Block Bloemfontein