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[2009] ZASCA 147
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Chretien and Another v Bell (52/09) [2009] ZASCA 147; [2010] 2 All SA 428 (SCA) ; 2011 (1) SA 54 (SCA) (26 November 2009)
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THE
SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH
AFRICA
JUDGMENT
Case No: 52/09
LUC
ARTHUR FRANCE CHRETIEN First Appellant
CAROL
ANNE CHRETIEN Second Appellant
and
LINDA
STEWART BELL Respondent
Neutral citation:
Chretien
v Bell
(52/09)
[2009] ZASCA 147
(26 November
2009).
Coram:
NAVSA, NUGENT,
PONNAN, MAYA JJA
et
TSHIQI AJA
Heard:
13 NOVEMBER 2009
Delivered:
26 NOVEMBER 2009
Summary:
Alienation of Land –
Purchase and Sale Agreement not stipulating time for payment –
contract unenforceable for non-compliance
with
s 2(1)
of the
Alienation of Land Act 68 of 1981
.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: High Court, Durban (Van Zyl J sitting as
court of first
instance).
1. The appeal is upheld with costs.
2. The order of the court below is set aside and
substituted as follows:
3. The application is dismissed with costs, including
the costs of two counsel.
_____________________________________________________
JUDGMENT
______________________________________________________________
TSHIQI AJA (NAVSA, NUGENT, PONNAN, MAYA JJA concurring):
[1] The issue in this appeal is whether a written
purchase and sale agreement between the appellants and the
respondent, is void
ab initio
for non-compliance with the provisions of
s 2(1)
of the
Alienation of
Land Act 68 of 1981
(‘the Act’)
[2] The appellant brought an application to the Durban
High Court for an order declaring the agreement enforceable and an
order
for the transfer of the property into her name. Her application
was upheld with costs, including the costs of two counsel and this
appeal is brought with leave of the court below.
[3] On 30 March 2005, the appellants, Luc Arthur France
and his wife Carol Anne Chretien, both property developers, entered
into
a written purchase and sale agreement with the respondent, Ms
Linda Stewart Bell for the sale of immovable property known as Erf
No
374, Ballitoville, South Ballito, KwaZulu Natal. The agreement was
recorded in a pre-printed form normally utilised by estate
agents,
containing blank spaces to be completed by the parties to record
specific terms of their agreement.
[4] The agreement contained the details of the parties,
a proper description of the property and set out the purchase price.
The
effect of the terms under the heading ‘Method of Payment of
Purchase Price’ was that no deposit was required to be paid,
that no loan was required to be obtained by the purchaser, and that
the full price would be paid in cash. This integral part of
the
agreement is reproduced hereunder:
The special conditions were inserted in manuscript in
Clause M(1) and M(2) and read :
'1.
The
parties have entered into a separate agreement in terms of which the
Seller is obliged to effect improvements on the said property
to the
value of R2,800 000,00 (Two Million, Eight Hundred Thousand
Rand) and other terms contained therein. [initialled]
2.
The
Purchaser & Seller have mutually agreed that the purchase price
payment details will be agreed upon in writing between the
two
relevant parties
by
not later than the 30/04/2005. This will be a cash payment.
[initialled]
Conditions of Contract'
[5] The agreement provided further in Clause 2.3 that ‘
the Purchaser shall not be entitled to take transfer of the property
until the whole of the purchase price and all other charges for which
he is liable have been paid in full or secured to the satisfaction
of
the seller'.
[6] As Clause M(1) pertains to a separate agreement
already concluded by the parties in relation to improvements to be
effected
on the land, the disputes that arose between the parties
concerning that separate agreement are immaterial for the
determination
of the validity of the purchase and sale agreement.
M(2) is the controversial clause, because, although it provides that
the parties
would conclude an agreement in writing regarding the
purchase price details before 30 April 2005, no such written
agreement was
ever concluded.
[7] During July 2005, Ms Bell paid the purchase price in
the amount of R1,3m to the nominated conveyancing attorney together
with
all costs and other amounts necessary to effect transfer into
her name. The first sign that the Chretiens no longer wished to
continue
with the agreement was conveyed by their attorney to Ms
Bell’s attorneys by way of a letter dated 13 June 2006. Para 3
of
the letter states:
'Our counsel has formed the
prima facie view that there is no contract between your client, Mrs
Bell and my clients, Mr and Mrs
Chretien. The basis for his view is
that the written document signed by our respective clients did not
stipulate in writing the
method of payment as is required by
legislation. If our counsel is correct, the purported agreement would
be void
ab initio
.'
This deadlock culminated in the application by Ms Bell
to the court below.
[8]
Section 2(1)
of the Act provides:
'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.'
[9] The formal legal requirements of a contract of
purchase and sale have been analysed in a number of decisions and
were summed
up concisely in
Dijkstra v
Janowsky
:
1
'In regard to these requisites
certain legal principles have been settled by our Courts:
(i) The whole contract ─
or at least all the material terms ─ must be reduced to writing
(
Johnston v Leal
1980 (3) SA 927
(A) at 937C-G).
(ii) The Court must be able to
ascertain with reasonable certainty the terms of the contract. As
Colman J stated in
Burroughs
Machines Ltd v Chenille Corporation of SA (Pty) Ltd
1964 (1) SA 669
(W) in a passage cited with approval in
Clements
v Simpson
1971 (3) SA
1
(A) at 7E:
"inelegance, clumsy
draftsmanship or loose use of language in a commercial document
purporting to be a contract will not impair
its validity as long as
one can find therein, with reasonable certainty, the terms necessary
to constitute a valid contract".
(iii) There is no valid contract
where a material term has not been finally agreed upon, but is left
open for further negotiations
(
Jammine
v Lowrie
1958 (2) SA
430
(T) and authorities there cited).
(iv) The material terms are not
confined to the
essentialia
of the contract of sale (
Johnston's
case supra
at 937H).
(v) The manner of payment is
ordinarily a material term (
Patel
v Adam
1977 (2) SA
653
(A) at 666A-C).'
[10] In
Patel v Adam
(supra) the following was said:
2
'It has been held by this Court
that one of the terms of a contract of sale of land which has to be
in writing is the manner of
payment of the purchase price. (
Du
Plessis v Van Deventer
1960 (2) SA 544
(AD) at p 551A-B;
Neethling
v Klopper en Andere
1967 (4) SA 459
(AD) at p 465B-C.) In the agreement in issue in the
present case clause 3 provides that the purchase price "shall be
payable
in monthly instalments free of interest". The clause
contains no statement of the amount of the monthly instalments, and
there
are no other provisions in the agreement from which the amount,
or the period in which the purchase price has to be paid, can be
inferred. The agreement, it seems clear, leaves it to the purchaser
alone to decide what amount he wishes to pay every month, with
the
result that a court of law would not be able to determine the monthly
amount to be paid by him. Mr
Wulfsohn
,
for the plaintiff, relying,
inter
alia
, on what was
said in
Dawidowits v
Van Drimmelen
1913
TPD 672
, and
Towert v
Towert
1956 (1) SA
429
(W), contended that in these circumstances the agreement should
be held to be void for uncertainty. . ..'
[11] There is no doubt that the time within which
payment is to be made is a material term of the agreement. As appears
from the
agreement itself, the parties thought it so, and provided
for that to be determined and to be reduced into writing. This, as
stated
above, did not occur.
[12] It was submitted that because the parties have
stipulated that the payment will be a cash payment, in the absence of
further
agreement between the parties, the sellers could not have
expected anything better than cash against transfer of property into
the name of the purchaser. Whilst this submission echoes the position
in common law, it cannot be held to apply in the present matter.
It
was an express term of the agreement that the purchase price was
required to be paid before the obligation to transfer arose,
and
agreement still had to be reached in respect of the time of payment.
[13] Counsel for the respondent submitted that the term
‘purchase price payment details does not refer to the time of
payment
but rather the manner in which the cash payment would be made
ie bank guaranteed cheque, bank transfer etc. This argument is flawed
because even such payments are in fact cash payments. The term
therefore clearly referred to the time for payment which is logically
the only outstanding issue and which is clearly a material term
(
Patel v Adam
supra).
Consequently; as the agreement does not stipulate the time of
payment; it does not comply with
s 2
(1) of the Act and is
unenforceable.
[14] I accordingly make the following order:
1. The appeal is upheld with costs.
2. The order of the court below is set aside and
substituted as follows:
3. The application is dismissed with costs, including
the costs of two counsel.
_______________________
Z L L TSHIQI
ACTING JUDGE OF APPEAL
Appearances:
Counsel for Appellant: W Singh SC
Instructed by
Legator McKenna Incorporated, Durban
Matsepes Inc, Bloemfontein
Counsel for Respondent: A Horwitz SC
Instructed by
Michael Werner & Associates, Sandton
E G Cooper Majiedt Inc, Bloemfontein
1
1985 (3) 560 (C) at 564G-H and 565A.
2
666A-C.