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[2019] ZAKZDHC 11
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Gravitek CC v Cartmel Investments CC and Others (7526/2015) [2019] ZAKZDHC 11 (21 June 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, DURBAN
CASE NO: 7526/2015
In
the matter
between:
GRAVITEK
CC
APPLICANT
(CK
No: 2000/002276/23)
and
CARTMEL
INVESTMENTS CC ( DEREGISTERED)
FIRST RESPONDENT
(CK
No: 1997/069277/23)
PRAVEEN
BHANPERSAD MAHARAJ
SECOND RESPONDENT
COMPANIES
and INTELLECTUAL
PROPERTY
COMMISSION
THIRD RESPONDENT
THE
REGISTRAR OF DEEDS,
PIETERMARITZBURG
FOURTH
RESPONDENT
ORDER
1.
The
rule
nisi
is confirmed in respect of prayers 1.1 to 1.5 of the applicant’s
notice of motion.
2.
The
issues pertaining to the orders sought in paragraphs 1.6 to 1.9 are
referred for the hearing of oral evidence to determine whether
the
conduct of the first and second respondents deliberately or
intentionally caused the fulfilment of the resolutive condition.
The
rule
nisi
in
respect of paragraphs 1.6 to 1.9 of the applicant’s notice of
motion is extended until confirmed or discharged.
3.
The costs occasioned by this application,. are reserved for the court
hearing
oral evidence.
JUDGMENT
Henriques
J
Introduction
[1]
The opposed application that serves before me is comprised of two
parts namely:-
(a)
the re-registration of a company, being the first respondent, which
was de-registered by
the third respondent, and;
(b)
the subsequent enforcement of a purchase and sale agreement relating
to the sale of an immovable
property described as Section No. 6 in
the Sectional Scheme known as Wentworth Park, by the first respondent
to the applicant.
The relief sought in the
applicant’s notice of motion
[2]
The applicant sought in its notice of motion a
rule
nisi
returnable on 29 October 2015, calling upon all interested
persons to show cause why an order should not be made in the
following
terms:-
‘
1.1
declaring the dissolution of the First Respondent to have been void
in terms of
Section 83(4)
of the
Companies Act, 71 of 2008
;
1.2
directing that the Second Respondent to sign all documents, and pay
all fees to the Third
Respondent and do all things necessary in order
to give effect to re-registration of the First Respondent;
1.3
directing the Third Respondent to restore the First Respondent’s
name into the register
of close corporations;
1.4
the assets of the First Respondent are no longer declared to be
bona
vacantia
and are re-vested in the close cooperation;
1.5
the liabilities of the First Respondent immediately prior to its
dissolution are declared
to re-invest in the close cooperation;
1.6
pursuant to the re-registration of the First Respondent, and upon
confirmation by the Third
Respondent that the re-registration has
taken place and that the records of the Third Respondent have been
updated to reflect the
correct status of the First Respondent, that
the First Respondent be ordered to transfer the immovable property
more fully described
as:
“
Section
no. SIX (6) as shown and more fully described on Sectional Plan No.
SS 359/97
, in the Scheme known as WENTWORTH PARK in respect of the
land and buildings situate at Wentworth, in the eThekwini
Municipality
of which section the floor area, according to the said
sectional plan, is ONE HUNDRED AND FORTY SEVEN (147) square metres in
extent
AND
an undivided share in the Scheme apportioned to the said section in
accordance with the participation quota as endorsed on the
said
Sectional Plan”
be
effected to the Applicant in accordance with the deed of sale of
immovable property concluded between the First Respondent and
the
Applicant on 28 May 2014.
1.7
directing the Second Respondent to sign the necessary documents and
take any such steps
required to give effect to the transfer of the
immovable property;
1.8
that the sheriff, Durban Coastal, be and is authorized to sign all
documents and do all
things necessary in order to comply with this
order;
1.9
that the First Respondent be and is hereby directed to pay the costs
of this application
on an attorney and client scale.’
[3]
On 29 October 2015, the application was adjourned
sine die
, in
view of the first and second respondents’ opposition and the
rule nisi
was extended until confirmed or discharged.
Re-registration of first respondent
[4]
It is clear from the contents of the affidavits filed of record, and
specifically
the first and second respondents’ heads of
argument, that the orders sought by the applicant for the
re-registration of the
first respondent and the concomitant orders as
set out in sub-paragraphs 1.1 to 1.5, are not in dispute.
[5]
The first respondent has further conceded its liability for paying
the applicant’s
costs occasioned by the grant of such orders.
[6]
As the parties are
ad
idem
that the first
respondent must be re-registered, it is apposite to mention that the
effect of re-registration of the first respondent
has a complete and
automatic retrospective effect on all activities of the first
respondent.
Newlands
Surgical Clinic (Pty) Ltd v Peninsula Eye Clinic (Pty) Ltd
2015
(4) SA 34
(SCA) paras 22 and 29.
Issue
[7]
The remaining issue is accordingly whether the applicant is entitled
to enforce the
purchase and sale agreement concluded with the first
respondent and whether the applicant is entitled to the ancillary
relief as
set out in sub-paragraphs 1.6 to 1.9 of the applicant’s
notice of motion.
[8]
The first and second respondents, in opposing such relief relating to
the enforcement
of the purchase and sale agreement, raised various
disputes and advanced various reasons as to why the first respondent
should
not be bound by the provisions of the purchase and sale
agreement.
[9]
At the hearing of the application, they however constrained their
opposition and were
in agreement with the applicant, that the only
issue for determination was the interpretation of the construction of
clause H4
of the purchase and sale agreement, which reads as
follows:-
‘
The
seller and purchaser agree that the registration of transfer herein
shall take place by the 30 June 2014 only.’
[10] The
first and second respondents advanced the argument that on a proper
interpretation of the
said clause H4, same is a resolutive condition
and upon the fulfilment of such condition, the purchase and sale
agreement falls
away.
[11] The
applicant contended to the contrary that clause H4 did not in itself
create a default position
of invalidity of the purchase and sale
agreement and emphasised that it is evident from the first and second
respondents’
own conduct that they viewed the transaction as
valid and binding well after the date when transfer was to be
registered as stipulated
in clause H4.
[12]
Accordingly the essence of the dispute between the parties is the
limited issue of the interpretation
of clause H4. The resolution of
such dispute is dependent upon the analysis of clause H4 and the
effect of same.
Analysis
[13]
There are a number of standard clauses and conditions generally
included in contracts,
and invariably the precise consequences of the
different classes of conditions are often unknown to the parties
themselves resulting
in unanticipated consequences when the
contractual relationship between the parties unravels.
[14] In this
regard, there are two diametrically opposed conditions that are often
included in purchase and sale
agreements in respect of immovable
properties.
[15]
Given the issue to be determined in this matter, it is useful at this
juncture to deal with these
two conditions.
Suspensive Conditions
[16]
Suspensive conditions suspend the rights and obligations of
contracting parties until an uncertain
future event occurs.
Upon the occurrence of the event, the contract is brought into
existence
and the rights and obligations of the parties become
enforceable.
[17] The
effect of the non-fulfilment of a suspensive condition is that the
suspended rights and obligations
of the contracting parties never
come into existence. The following dictum in
Mia v Verimark
Holdings (Pty) Ltd
[2010] 1 All SA 280
(SCA) para 1 concisely
sets out the legal effect of a suspensive condition.
‘
The
conclusion of a contract subject to a suspensive condition creates “a
very real and definite contractual relationship”
between the
parties. Pending fulfilment of the suspensive condition the exigible
content of the contract is suspended. On fulfilment
of the condition
the contract becomes of full force and effect and enforceable by the
parties in accordance with its terms. No
action lies to compel a
party to fulfil a suspensive condition. If it is not fulfilled the
contract falls away and no claim for
damages flows from its failure.
In the absence of a stipulation to the contrary in the contract
itself, the only exception to that
is where the one party has
designedly prevented the fulfilment of the condition. In that event,
unless the circumstances show an
absence of
dolus
on the part of that party, the condition will be deemed to be
fulfilled as against that party and a claim for damages for breach
of
the contract is possible.’
[18]
To summarise, the general effect of the non-fulfilment of a
suspensive condition in a contract
is that such contract is
unenforceable. To quote Shakespeare ‘life cannot be breathed
into a corpse’.
Resolutive Conditions
[
19]
A resolutive condition is the antithesis of a suspensive condition.
The contract concluded between
the parties is immediately binding
with all rights and obligations coming into existence at the
inception of the contract and will
remain binding subject to the
future event in the stipulated condition being fulfilled.
[20] If
a resolutive condition is subsequently fulfilled, the agreement will
terminate immediately
with retrospective effect, with the contracting
parties being lawfully required to be restored to the position they
were in prior
to the conclusion of the agreement, that is the
status
quo ante.
[21] In
this regard the following authorities are of benefit:
Sealed
Africa (Pty) Ltd v Kelly & another
2006 (3) SA 65
(W);
Philmatt (Pty) Ltd v Mosselbank Developments CC
1996 (2) SA 15
(A) and
Johnston v Leal
1980 (3) SA 927
(A).
Applicant’s Submissions
[22] The
applicant’s counsel, Mr
Harrison
was at pains to
persuade the court to dispose of the matter on the papers and relied
primarily on the basis of the principle espoused
in
Fax
Directories (Pty) Ltd vs SA Fax Listings CC
1990 (2) SA 164
(D).
At 167H-J the court held the following
‘
Brave
indeed is the advocate who will be prepared to gamble that the Court
shares his view of the law and the facts. This means
counsel will
almost invariably opt for the safer but more expensive course of
asking that the matter be referred to evidence. In
so doing he would
still be able to argue the legal point but at what cost to his
client, both in respect of time and money.
There are, it seems
to me, cases where the legal issues are so crisp and so far removed
from the conflict of fact that it would
be fair to both parties to
allow argument thereon
in
initio
.
If the applicant loses the legal battle he should not then be
penalised for having tried to save the costs involved in hearing
viva
voce
evidence. (Provided of course that his efforts were
bona
fide
and
well considered and not merely frivolous.)’
[23] Mr
Harrison
further contended that the interpretation of the
condition in clause H4 should be interpreted in the context of the
whole agreement
and relied on the now well-known dictum of Wallis JA
in
Natal Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) 593 (SCA) specifically para 18 of the judgment, where the court
said the following:
‘
A
sensible meaning is to be preferred to one that leads to insensible
or unbusinesslike results or undermines the apparent purpose
of the
document. Judges must be alert to, and guard against, the temptation
to substitute what they regard as reasonable, sensible
or
businesslike for the words actually used. To do so in regard to a
statute or statutory instrument is to cross the divide between
interpretation and legislation; in a contractual context it is to
make a contract for the parties other than the one they in fact
made.
The “inevitable point of departure is the language of the
provision itself”, read in context and having regard
to the
purpose of the provision and the background to the preparation and
production of the document.’
[24]
In addition
Mr
Harrison
submitted that the
context in which one must interpret the clause is to have regard to
the fact that the documents had been lodged
for registration at the
deeds office and they had to be withdrawn for reasons contained in
annexure ‘GAT8’, a letter
from the respondents attorney
to the conveyancing attorney,that is, on the basis that ‘the
Close Corporation has been deregistered
hence all contracts entered
into and documents signed are null and void’.
[25]
If one has regard to annexure ‘GAT14’, a letter from the
respondents attorney to
the applicants attorney, the second
respondent required the applicant to pay the arrear levies in
order for the transfer
to proceed. Mr
Harrison
submitted
that essentially one was dealing with an issue of ‘seller’s
remorse’. Never before had the issue of
the interpretation of
clause H4 been raised, nor the fact that the contract was null and
void.
[26]
He submitted therefore that the court ought to reject the first and
second respondents’
version on the papers as they stand. One
has to accept that the clause was never mentioned before in
correspondence but was only
raised in the answering affidavit. In
addition, if one has regard to pages 44 and 51 of the indexed papers,
correspondence exchanged
by the parties attorneys of record in
relation to the re-registration of the first respondent, there was no
response to these.
[27]
One must then look at the probabilities namely that if one has regard
to the correspondence and
the fact that this issue as to the effect
of the clause was only raised at a late stage, then the attitude of
the first and second
respondents to the letters exchanged meant that
the parties could not consider clause H4 to put an end to the
contract. It also
accords with clause J which is a non-variation
clause.
[28]
Applicant’s counsel further referred to the decision of
Kiloverter Sales (Pty) Ltd v MacKenzie’s Garage (Pty) Ltd
1975 (1) SA 223
(N) at 225E-F where Miller J dealt with the issue
of probability and held as follows:
‘
I
accept that “quiescence is not necessarily acquiescence”.
. . and that a party’s failure to reply to a letter
or to
repudiate or protest against conduct which is inconsistent with such
party’s rights, does not always justify an inference
adverse to
such party, for his silence may be due to negligence. But in general
where, according to ordinary commercial practice,
firm reaction to
the negation of the party’s contractual rights would be the
norm, such party’s silence or inaction,
unless it is
satisfactorily explained, would constitute an important factor in
assessing the probabilities and in the final determination
of the
dispute.’
[29]
Consequently, Mr
Harrison
submitted that on the probabilities
this defence was an afterthought and is indicative of ‘seller’s
remorse’
and is not a genuine defence. He submitted that one
must uphold the contract concluded between the parties so as to
ensure businesslike
behaviour.
Respondent’s
Submissions
[30] Mr
Hollis
SC on behalf of the first and second respondents
limited his argument to the submission that the effect of clause H4
is a resolutive
condition which, if fulfilled, rendered the purchase
and sale agreement ineffective with the result that the agreement
fell away,
hence the need for a formal cancellation of the agreement
nugatory and unnecessary.
Analysis
[31] In
analysing the authorities and submissions by both counsel, I cannot
find merit in the applicant’s
submissions regarding the nature
and exigency of clause H4. The said clause clearly envisaged a
specific date when transfer of
the property was to be affected and
for all intents and purposes meets the criteria of a resolutive
condition.
[32] It
is instructive to note that clause J of the purchase and sale
agreement specifically excluded
suspensive conditions, and not
resolutive conditions, hence it cannot be reasonably concluded that
clause H4 is not a resolutive
condition.
[33] A
finding that clause H4 is a resolutive condition means that the
purchase and sale agreement
did in fact fall away upon the fulfilment
of the condition. However, the effect of clause H4 and the finding
that same is a resolutive
condition is not dispositive of the dispute
between the parties because the conduct of the parties and
specifically the sellers,
being the first and second respondents,
needs to be investigated to ascertain whether such conduct
deliberately or intentionally
caused the fulfilment of the resolutive
condition thereby rendering the purchase and sale agreement
pro
non-scripto.
[34]
Conduct of the parties is an integral requirement and a party’s
obligation to perform in
terms of its contractual obligations cannot
be excused or suspended in circumstances where such party obtains an
unfair advantage
from its own unlawful conduct. The decision in
Comwezi
Security Services (Pty) Ltd v Cape Empowerment Trust
(182/13)
[2014] ZASCA 22
(28 March 2014) para 12,
is
instructive in this regard:
‘
The
rationale for this rule is twofold: A party to a contract
should not by its own unlawful conduct be allowed to obtain
an
advantage for himself to the disadvantage of his counterpart. “It
is a fundamental principle of our law that no man can
take advantage
of his own wrong” and “to permit the repudiating party to
take advantage of the other side’s failure
to do something,
when that failure is attributable to his own repudiation, is to
reward him for his repudiation”. The converse
is that the
innocent party is not expected to make the effort or incur the
expense of performing some act when, by reason of the
repudiation,
“it has become nothing but an idle gesture”. This is
consistent with the general principle that the law
does not require
the performance of a futile or useless act. These principles are of
general application and may find application
in a variety of
circumstances. The doctrine of fictional fulfilment of contractual
terms is, for example, similarly based on the
principle that a
contractant cannot take advantage of its own wrongful conduct to
escape the consequences of the contract.’
(Footnotes omitted)
[35]
There are clearly irresolvable disputes of fact regarding the conduct
of the first and second
respondent, from inception of the purchase
and sale agreement, as to whether the second respondent had knowledge
of the de-registration
of the first respondent at the time of
concluding the purchase and sale agreement and their conduct
in the performance
of the obligations in terms of the agreement.
[36] The
dispute of facts on the papers relates further to the delay in the
conveyancing process as
evident by the correspondence from the
conveyancing attorney, the unresolved issue of outstanding levy
payments owed by the first
respondent, and the conduct of the parties
subsequent to the date of fulfilment of the resolutive condition.
[37] In
my considered view, it is both necessary, pragmatic and in the
interests of justice that such
disputes be resolved in a forum
enjoying the benefit of hearing the evidence of the parties.
Costs
[38]
Whilst the applicant and first and second respondents were in
agreement that the latter should
be directed to pay the costs of the
confirmation of the rule in respect of prayers 1.1 to 1.5, it would
not be practical in my
view to deal with the issue of costs on a
piecemeal basis.
[39] In
view of the referral of the issues relating to the relief sought in
paragraphs 1.6 to 1.9
in the
rule nisi
to the hearing of oral
evidence, it would be appropriate that the court hearing the oral
evidence determines holistically the issue
of costs. Costs should
accordingly be reserved.
[40] In
view of the aforegoing, the following orders will issue:-
(a)
The
rule
nisi
is confirmed in respect of prayers 1.1 to
1.5 of the applicant’s notice of motion.
(b)
The issues pertaining to the orders sought in paragraphs 1.6 to 1.9
are referred for the
hearing of oral evidence to determine whether
the conduct of the first and second respondents deliberately or
intentionally caused
the fulfilment of the resolutive condition. The
rule nisi
in respect of paragraphs 1.6 to 1.9 of the
applicant’s notice of motion is extended until confirmed or
discharged.
(c)
The costs occasioned by
this application, are reserved for the court hearing oral evidence.
Henriques J
Case
Information
Date
of hearing:
27 March 2017
Date
of judgment:
21 June 2019
Applicant’s
Counsel:
G M Harrison
Instructed by :
Sanjay Lorick &
Partners
89 Juniper Road, Essenwood
Durban
Ref:
SL/GO247/15/ry
Tel: 031 2074050
Fax: 031 207
2301
e-mail:
lorick@icon.co.za
First
and Second Respondent’s Counsel : N D Hollis SC
Instructed
by:
A B Maharajh Attorneys
767 Marine Drive, Treasure Beach,
Bluff, Durban
Ref:
AB Maharajh
Tel: 031 467 7282
Fax: 031 467 7282
Email: abm.att@vodamail.co.za