Rockbreakers and Parts (Pty) Ltd v Rolag Property Trading (Pty) Ltd (498/08) [2009] ZASCA 102; 2010 (2) SA 400 (SCA) ; [2010] 1 All SA 291 (SCA) (18 September 2009)

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Rockbreakers and Parts (Pty) Ltd v Rolag Property Trading (Pty) Ltd (498/08) [2009] ZASCA 102; 2010 (2) SA 400 (SCA) ; [2010] 1 All SA 291 (SCA) (18 September 2009)

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THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case No: 498/08
ROCKBREAKERS AND PARTS (PTY) LTD Appellant
and
ROLAG PROPERTY TRADING (PTY) LTD Respondent
Neutral citation:
Rockbreakers
and Parts (Pty) Ltd v Rolag Property Trading
(Pty)
Ltd
. (498/08)
[2009] ZASCA 102
(18 September
2009)
Coram:
HEHER,
PONNAN JJA, HURT, TSHIQI
et
WALLIS AJJA
Heard:
25 AUGUST
2009
Delivered:
18
SEPTEMBER 2009
Summary: Alienation of land
–
party accepting offer adding a suspensive
condition amounting to a counter offer
–
other
party not signing the amendment
–
contract
unenforceable for non-compliance with s 2(1) of
Alienation of Land
Act 68 of 1981
.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: Johannesburg High Court (Van Oosten J
sitting as court of
first instance).
1. The appeal is upheld with costs, including the costs
of two counsel.
2. The order of the court below is set aside and
substituted as follows:
2.1 The application is dismissed with costs.
______________________________________________________________
JUDGMENT
______________________________________________________________
TSHIQI
AJA (HEHER and PONNAN JJA and HURT and WALLIS AJJA concurring):
[1] This appeal concerns the validity of a
purchase and sale agreement in respect of immovable property, owned
by the appellant,
Rockbreakers and Parts (Pty) Ltd, and known to both
parties as 'Portion 54 of the Farm Roodekop No 139 IR measuring
49408m²'.
A written offer to purchase the property was signed on
behalf of the respondent, Rolag Property Trading (Pty) Ltd, on 20
October
2005 and by a representative of the appellant on 25 October
2005. This case arises because in so doing he added the following
words
in manuscript:
'This offer is accepted subject
to the seller obtaining registration of the subdivision of the
property.'
The manuscript insertion was neither initialled nor
countersigned by the respondent. Apart from the manuscript insertion
there is
no reference to a subdivision of the property in the
agreement, although the evidence shows that both parties were aware
of the
need for the property to be subdivided in order to give effect
to the sale.
[2] The requisite deposit was paid by the
respondent and the necessary guarantees were furnished for the
payment of the balance
of the purchase price. A conveyancer was
nominated to attend to the subdivision and transfer of the property.
The application for
subdivision was approved by the local authority
and the property to be sub-divided was then described as 'Portion 124
(a portion
of 29) of the Farm Roodekop No 139 IR' now measuring
37507m². The letter of approval was dated 16 May 2006 and
imposed certain
conditions. The one that gave rise to controversy is
contained in paragraph 3 and states:
'That a township be established
on proposed Portion 54 and that no development of any nature
whatsoever takes place on the property
before the township has been
promulgated.'
The appellant did not thereafter proceed
with further steps to ensure finality to the registration and
transfer process. From the
correspondence exchanged between the
parties it became clear that the appellant took the stance that the
quoted condition imposed
burdensome obligations and 'the offer to
purchase which was signed on 20 October 2005, was not accepted
unconditionally by the
sellers, Rockbreakers and Parts (Pty) Ltd on
25 October 2005 as the acceptance was made subject to the seller
obtaining registration
of the subdivision of the property'
1
.
That clearly conveyed the appellant's intention not to regard itself
as bound by the agreement.
[3] When the attitude of the appellant became clear to
the respondent, it applied to the Johannesburg High Court for an
order for
specific performance of the agreement. The appellant
opposed the application raising four defences which were all rejected
by the
court below. The appeal is brought with the leave of that
court. For the reasons that will become apparent it is only necessary

to deal with one of the defences.
[4] This defence is that the manuscript insertion was
material to any agreement and constituted a counter-offer which had
to be
in writing and signed by or on behalf of the parties in
compliance with s 2(1) of the Alienation of Land Act 68 of 1981 ('the
Act'),
and that the failure by the respondent to accept it or signal
its acceptance in writing rendered the contract unenforceable. The

respondent disputes that the manuscript insertion amounted to a
counter-offer and contends that it was surplusage amounting to
no
more than what was the common intention of the parties. The basis for
this contention is that both parties knew that the property
had to be
subdivided in order to give effect to the agreement.
[5] Section 2(1) of the Act reads:
'No alienation of
land after the commencement of this section shall, subject to the
provisions of section 28, 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.'
[6] In
Johnston v
Leal
2
Corbett JA summed up the legal effect of the predecessor to s 2(1)
which was materially the same terms as follows:
'It has been held ─
and in my opinion correctly so ─ that what s 1(1), or its
predecessors, require is that the whole contract
of sale, or at any
rate all the material terms thereof, be reduced to writing (see
Joubert v Steenkamp
1909 TS 169
at 171;
Coronel
v Kaufman
1920 TPD
207
at 209, 210;
Veenstra
v Collins
1938 TPD
458
at 460;
King v
Potgieter
1950 (3) SA
7
(T) at 10 and 14 and the cases there cited;
Jammine
v Lowrie
1958 (2) SA
430
(T) at 431;
Meyer
v Kirner
1974 (4) SA
90
(N) at 97G-98D). It is not necessary that the terms of the
contract be all contained in one document, but, if there are more
than
one document, these documents, read together, must fully record
the contract (see
Coronel
v Kaufman
(
supra
at 209);
Meyer v
Kirner
(
supra
at 97E-F)). The material terms of the contract are not confined to
those prescribing the
essentialia
of a contract of sale, viz the parties to the contract, the
merx
and the
pretium
,
but include, in addition, all other material terms (see
King
v Potgieter
(
supra
at 14C);
Meyer v
Kirner
(
supra
at 97-9)).
It is not easy
to define what constitutes a material term. Nor is it necessary in
the present case to do so since clause 11, upon
which the dispute
turns and which has the effect (if operative) of suspending the whole
contract pending fulfilment of a condition
as to the procurement of a
loan on the security of a first mortgage bond to be passed over the
property sold and also of causing
the contract to be "automatically
cancelled" in the event of such a loan not being obtained, would
clearly constitute
a material term of the contract. It is also not
necessary in this case to consider at any length the degree of
precision with which
the writing must set forth the terms of the
contract, particularly the
essentialia
, in order
to comply with s 1 (1), since this is not an issue which arises here.
Generally speaking these terms ─ and especially the
essentialia
─ must be set forth with sufficient accuracy and particularity to
enable the identity of the parties, the amount of the purchase
price
and the identity of the subject-matter of the contract, as also the
force and effect of other material terms of the contract,
to be
ascertained without recourse to evidence of an oral
consensus
between the parties (see
Van
Wyk v Rottcher's Saw Mills (Pty) Ltd
1948 (1) SA 983
(A) at 989-990, 995-6;
King
v Potgieter
(
supra
at 14D-E);
Magwaza v
Heenan
1979 (2) SA
1019
(A) at 1023C-G and the authorities there cited).'
[7] In
Van Leeuwen
Pipe and Tube (Pty) Ltd v Mulroy
3
Nienaber J said:
'The sale is an alienation of
land. To be valid its terms must be in writing and signed. That means
that every term that is conceived
by the parties to form part of the
sale must comply with the prescribed statutory formalities. If any
particular term does not
so comply, the term itself is void and so is
the sale as a whole – at any rate if the offending term is a
material one that cannot
be severed from the enforceable portion of
the contract. ... A term that relates to the performance and thus to
the obligations
of any of the respective parties, such as a term
incorporating a suspensive or resolutive condition, would be a
material term.'
[8] In order to determine whether the
defence raised can be sustained it is necessary to determine the
effect of the manuscript
insertion on the rights and obligations of
both parties. It follows from the authorities cited above that if the
manuscript insertion
embodied a material alteration to the
contractual terms and thus constituted a counter-offer that was never
accepted in writing,
then the contract would be unenforceable.
[9] The
contract as initially signed by the respondent made no mention of
subdivision. In the absence of the subdivision, foreshadowed
by the
manuscript insertion, the property described as 'Portion 54 of the
Farm Roodekop No 139 IR' would not be separated from
the rest of the
farm and consequently could not be transferred to the respondent.
This would affect the material obligations of
the appellant, which
would still be obliged to make good its part of the bargain. The
insertion of the clause in manuscript therefore
served to protect the
appellant from an action for damages in the event that the
subdivision did not materialise. There is therefore
no doubt in the
circumstances of this case that the manuscript insertion is material
and amounted to a counter-offer.
4
[10] We have been referred to the case of
Stalwo (Pty) Ltd v Wary Holdings (Pty) Ltd
5
to support a submission that, because both parties knew that the
subdivision was a precondition to the transfer of the property,
the
manuscript insertion is of no moment. However this case is
distinguishable from the case of
Stalwo
(supra) because 'the proposed subdivision' in
that case was expressly incorporated into the agreement and it was
agreed that a suspensive
condition, although omitted from the written
agreement, was indeed a term of the agreement between the parties.
[11] It therefore follows that the
manuscript insertion constituted a counter-offer that required
acceptance in writing by both
parties. In light of the fact that the
counter-offer was not accepted by the respondent, it follows that no
binding agreement was
concluded between the parties. This conclusion
disposes of the appeal and it is thus not necessary to deal with the
other issues
considered by the court below.
[12] Reference was made in argument to
correspondence from the respondent, referring the appellant to BOE
Bank regarding the issue
of guarantees, and a letter to BOE Bank
requesting a guarantee. Even if the letters could be read, and, to
the extent of their
relevance, incorporated into the agreement, both
deal with separate issues pertaining to the purchase and sale
agreement and are
silent on the issue of the subdivision. They cannot
be of assistance to respondent, in so far as the acceptance of the
counter-offer
is concerned. The status of the letters can best be
described as in
Jackson v Weilbach's
Executrix
6
where Innes CJ said, in relation to an attempt to use subsequent
documentation to overcome an absence of writing:
'But do these declarations of
purchaser and seller constitute such a contract? In form they
certainly do not; the declaration of
the seller is not an offer, and
the declaration of the purchaser is not an acceptance. Nor is there
anything to show that the parties,
when they signed these
declarations, intended to enter into any contract. The declarations
were signed for revenue purposes, and
they purport not to embody a
contract constituted in terms of the documents themselves, but to
record that a prior contract had
been entered into at a date therein
mentioned. . . It comes, then, to this – that these declarations do
not purport to contain
a contract: they were not intended by the
parties to do so, and if they constituted a contract there would be
two contracts in
this case instead of one. In my view the two parties
did not enter into the written contract which sec. 30 of Proclamation
8 of
1902 requires, and their verbal agreement was null and void.'
[13] I would therefore make the following order:
1. The appeal is upheld with costs, including the costs
of two counsel.
2. The order of the court below is set aside and
substituted as follows:
2.1 The application is dismissed with costs.
_______________________
Z L L TSHIQI
ACTING JUDGE OF APPEAL
WALLIS
AJA (HEHER JA concurring)
[14] I have had the advantage of
reading the judgment of my colleague Tshiqi AJA and I concur with her
reasoning and her conclusion.
I write separately because in one
respect my reasoning goes further than hers.
[15] It is correctly accepted by the
parties that the additional clause added to the draft offer, by Mr
Esprey, is a suspensive
condition. The effect of that is to create ‘a
very real and definite contractual relationship’ between the
parties.
7
Pending fulfilment of the suspensive condition the exigible content
of the contract is suspended.
8
On fulfilment of the condition the contract becomes of full force and
effect and enforceable by the parties in accordance with
its terms.
None of this is contentious.
[16] In a contract not subject to the condition inserted
by Mr Esprey, as my colleague points out, Rockbreakers would have
been
obliged to procure the subdivision of the property and its
transfer to Rolag. This is in accordance with the rule enunciated by

Pothier in the following terms:
‘
The
seller is bound to deliver the thing to the buyer if it is not
already in his possession; and as a necessary consequence of
this
obligation, to do, at his own expense, whatever may be necessary to
enable him to perform it.’
9
[17] The
contrast between the contract being subject to the suspensive
condition, inserted by Mr Esprey, and a situation where it
was not
subject to any such condition is apparent from these brief
descriptions of the differing legal consequences flowing from
the two
different situations. In order to circumvent the problem this poses
to the enforcement of the contract Rolag contended,
and this was
upheld by the court below, that in the absence of the additional
clause the offer, and hence any contract concluded
as a result of its
unequivocal acceptance, would in any event have been subject to a
suspensive condition, precisely the same as
that inserted in
manuscript by Mr Esprey, when he purported to accept the offer. In
forming that conclusion the court below relied
on the decision of
this Court in
Stalwo
.
10
[18] The
issue in
Stalwo
was
whether an agreement failed to comply with the requirements of the
Alienation of Land Act, because
the parties had omitted to
incorporate expressly in the written document a suspensive condition
making the sale subject to sub-division
of the land sold from a
larger property. There was no dispute between the parties that their
agreement was subject to such a suspensive
condition, but it was
contended that the failure to incorporate it expressly in the written
document meant that there had been
non-compliance with the
requirement of writing in the statute, resulting in the contract
being void and unenforceable. This Court
rejected that contention on
the basis that in consequence of the parties’ agreement on the
suspensive condition, taken in conjunction
with the express reference
to a sub-division in the description of the property sold, the
contract was subject to a tacit term
embodying such suspensive
condition and as ‘a tacit term, once found to exist, is simply read
or blended into the contract: as
such it is "contained" in
the written deed. Not being an adjunct to but an integrated part of
the contract, a tacit term
does not … fall foul of … the
[Alienation of Land] Act.’
11
[19] In
reaching that conclusion the court applied the well-established
principles governing the circumstances in which a tacit
term is
implied into a contract as laid down in a number of decisions of this
Court.
12
Those principles are equally applicable to the contention in this
case that the offer as submitted would, if accepted without
qualification, have resulted in a contract subject to a suspensive
condition by virtue of a tacit term to that effect, with the
result
that the additional clause was mere surplusage. In considering that
question the only background fact external to the agreement
relied on
by Rolag is that both parties were aware at all times that it would
be necessary to effect a sub-division in order for
Rockbreakers to
give transfer of the property that was the subject of the sale.
[20] In
Wilkins v Voges
13
Nienaber JA said that:
‘
A
tacit term, one so self-evident as to go without saying, can be
actual or imputed. It is actual if both parties thought about
a
matter which is pertinent but did not bother to declare their assent.
It is imputed if they would have assented about such a
matter if only
they had thought about it - which they did not do because they
overlooked a present fact or failed to anticipate
a future one.’
Any
tacit term in the present case must fall within the second category
because, apart from the fact that the parties both knew
that
sub-division was necessary, there is no evidence that they in fact
addressed their minds to the matter before the offer was
submitted or
gave any consideration to what was to happen if sub-division could
not be effected. That serves to distinguish the
case from
Stalwo
where the parties had agreed that their contract would be subject to
a suspensive condition and had therefore addressed their minds
to the
issue but not declared their assent.
[21] Logically
it is difficult to speak of imputing a term into a contract until one
has reached the conclusion that a binding contract
exists. In
considering the contention on behalf of Rolag one must necessarily
approach the matter on the basis of a consideration
of the agreement
that would have resulted if, instead of inserting the suspensive
condition, Mr Esprey had simply accepted the
offer as it stood,
thereby bringing into existence a contract that, in its written
manifestation, did not contain the suspensive
condition. One must
then ask whether, on a consideration of the express terms of that
contract in the light of admissible evidence
of surrounding
circumstances, a tacit term should be imputed to the parties that
their agreement would be ‘
subject to the seller
obtaining registration of the subdivision of the property.'
[22]
Whilst
it would not be uncommon in ordinary commercial practice for a matter
such as the sub-division in this case to be the subject
of a
suspensive condition, the mere fact that it might, or even would, be
reasonable to include such a provision in the contract
is not a basis
for imputing a tacit suspensive condition to the parties. The
property had been marketed for a number of years as
a separate
sub-division and reference to the plan shows that it is bounded on
three sides by public roads and is separated from
the balance of the
property by a railway line. A sub-divisional diagram had been drawn
up in 1967 and submitted to the local authority
but, for reasons not
explained in the papers, that had not been taken further. There is no
indication that the parties foresaw
any possible problems in
obtaining sub-divisional approval or, until Mr Esprey inserted the
additional clause, that they contemplated
the possibility that such
approval might not be forthcoming. In those circumstances it is not
possible to draw the inference that
if the matter had been raised at
the outset they would have agreed that in the event of sub-division
not being procured the contract
would simply have fallen away. Whilst
Rolag was clearly eager, as its conduct shows, to pursue the contract
once sub-divisional
approval had been obtained, that cannot be taken
as indicating retrospectively that it would have been agreeable from
the outset
to walk away from the transaction if approval was not
forthcoming. It might have insisted on the contract being
unconditional and
Rockbreakers might have been willing to accept
this, because it did not foresee any difficulty in obtaining
sub-divisional approval.
Alternatively, Rolag could have suggested a
suspensive condition in different terms or demanded some compensation
for out-of-pocket
expenses in planning the development of the
property. Other possibilities are conceivable. Nothing suggests that
the necessary
response of both parties to the question posed by the
hypothetical bystander would have been to say: ‘Of course our
agreement
is subject to sub-division being obtained. That is too
obvious for us to need to say it.’ Indeed, had they said that, it
is by
no means clear that they would have meant by this statement
that the contract was subject to a suspensive condition. It is
capable
of meaning simply that they knew that a failure to obtain
sub-division would render performance impossible, without necessarily

exempting Rockbreakers from a liability to pay damages for
non-performance of their obligation to transfer the property to
Rolag.
[23] A
further relevant factor is that the offer was embodied in a written
document in a form conventionally used for transactions
of this type,
which specifically caters in clause 18 thereof for the eventuality
that the parties might wish to make their agreement
subject to a
suspensive condition. As the cases demonstrate a tacit term is not
lightly to be imputed to parties who have chosen
to embody their
agreement in writing. The reason is that one infers, from the fact
that they have chosen to adopt that course,
that they have thought
about its terms and the document reflects those terms.
[24] Those
considerations suffice to support the conclusion that by adding the
suspensive condition Mr Esprey, on behalf of Rockbreakers,
was
proposing to contract on materially different terms from those
offered by Rolag and hence that he made a counter-offer. That

conclusion finds support in cases, not only in this country but also
in England,
14
from which our courts have obtained much guidance in the field of
tacit conditions. It also renders it unnecessary to consider
whether
or in what circumstances it is ever possible by way of a tacit
condition to render a written contract, unconditional on
its face,
conditional or whether the imputation of such a condition would be
inconsistent with the written terms and hence amount
to an
impermissible amendment therof. Other than
Stalwo
,
which depends upon the unusual situation where the parties had in
fact agreed on a suspensive condition and then not incorporated
it in
the written contract,
I
have found no South African case where that has been done. My
researches in the English cases have only unearthed a single case

where that was the result and that in an
ex
tempore
judgment where the basic principles
were not canvassed.
15
Fortunately, it is unnecessary to express a final view on that
question as it raises important issues of principle on which we
have
not had the benefit of full argument.
[25] For
those additional reasons and those contained in her judgment I concur
in the order proposed by Tshiqi AJA.
________________________
M J D WALLIS
ACTING JUDGE OF APPEAL
Appearances:
Counsel for Appellant: A Horwitz SC
J L Kaplan
Instructed by
M H Cirota Attorney, Johannesburg
Lovius-Block, Bloemfontein
Counsel for Respondent: M W Verster
Instructed by
BMV Attorneys, Johannesburg
Peyper Attorneys Inc, Bloemfontein
1
Letter dated 10 May 2007 from J C Smit Inc De
Kock & Visser; Attorneys and Conveyancers acting on the
instructions of the
appellant.
2
1980 (3) SA 927
(A) at 937G-H; 938B-C.
3
1985 (3) SA 396
(D) at 400F-I.
4
Admin Estate Agents (Pty) Limited t/a Larry Lambrou v Brennan
1997 (2) SA 922
(E) at 928G-H.
5
2008 (1) SA 654
(SCA) at paras 8-12.
6
1907 TS 212
at 216-217.
7
Corondimas v Badat
1946 AD 548
at 551, 558-559;
Palm
Fifteen (Pty) Ltd v Cotton Tail Homes (Pty) Ltd
1978 (2) SA 872
(A) at 887.
8
Odendaalsrust Municipality v New Nigel Estate Gold Mining Co Ltd
1948 (2) SA 656
(O) at 665-667.
9
Contract of Sale
2.1.42 (Cushing’s translation 26);
Sauerlander v Townsend
1930 CPD 55
at 63;
Abdullah v Long
1931 CPD 305
at 308.
10
Stalwo (Pty) Ltd v Wary Holdings (Pty) Ltd
2008
(1) SA 654
(SCA) at paras 8-12.
11
Wilkins NO v Voges
[1994] ZASCA 53
;
1994 (3) SA 130
(A) at 144C-D.
12
Alfred McAlpine & Son (Pty) Ltd vTransvaal Provincial
Administration
1974 (3) SA 506
(A) at 532G-533C; Delfs v Kuehne &
Nagel (Pty) Ltd
1990 (1) SA 822
(A) at 827B-828B;
Wilkins NO
v Voges
[1994] ZASCA 53
;
1994 (3) SA 130
(A) at 136H-137D.
13
At 136H-I.
14
Charles H Windschuegl Ltd v Alexander Pickering & Co Ltd
[1950] 84 Lloyd's L Rep 89 (KB) at 93;
Brauer & Co (Great
Britain) Ltd v James Clark (Brush Materials) Ltd
[1952] 2 All ER
497
(CA),
15
Bentworth Finance Ltd v Lubert
[1967] 2 All ER 810
(CA). Such
a contention was argued but the point of principle was not decided
in
K C Sethia (1944) Ltd v Partabmull Rameshwar
[1950] 1 All
ER 51
(CA).