Summers and Another v Port Ferry Properties 78 (Pty) Limited (EL169/2014, ECD469/2014) [2018] ZAECELLC 1 (22 February 2018)

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[2018] ZAECELLC 1
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Summers and Another v Port Ferry Properties 78 (Pty) Limited (EL169/2014, ECD469/2014) [2018] ZAECELLC 1 (22 February 2018)

SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(EAST
LONDON CIRCUIT LOCAL DIVISION)
Case
No. EL 169/2014
ECD
469/2014
In
the matter between
BLAKE
GORDON SUMMERS

First Plaintiff
CLINTON
KEITH SUMMERS

Second Plaintiff
and
PORT
FERRY PROPERTIES 78 (PTY) LIMITED

Defendant
JUDGMENT
HARTLE
J
[1]
The
plaintiffs, who are brothers, purchased two separate erven from the
defendant in the Khamanga Bay Property Development, Cintsa,
resorting
under the administrative area of the Great Kei Municipality.
[2]
The
erven are numbered [...] and [...] Cintsa.  They were purchased
on 3 March 2004 and 7 May 2004 respectively.  Transfers
of the
erven were effected on 5 July 2005 and on 18 August 2004
respectively.
[3]
The
deeds of sale, pursuant to which each erf was purchased, were subject
to common suspensive conditions being fulfilled as soon
as possible
after the date of the last signature of the deeds, namely:
“
14.1
The provision by the Seller at its cost of infrastructural services
including water, electricity, sewerage and
roadworks in accordance
with the Local Authorities requirements.
(Sic)
14.2
The Seller obtaining the necessary financial support on Mortgage Bond
or otherwise to enable it to
complete the installation of services
referred to in paragraph 14.2 above.”
[1]
[4]
I
also highlight clause 13.1 under “Purchaser’s
Acknowledgment”, which is of some significance according to the

plaintiffs:
“
13.1
The Purchaser acknowledges that insofar as he will be the owner of a
property forming part of the
Khamanga
Bay Development
,
he will be obliged together with the owners of the other properties
in the development, to maintain and attend to general upkeep
of the
private roadways, parking areas and common facilities and amenities
such as lighting, security features, perimeter walls,
sewerage
systems, stormwater drains, cabling, the maintenance of garden areas,
water features and without derogating from the generality
hereof all
such improvements and structures not forming part of a property
purchased by purchasers in the Khamanga Bay Development.
To this end
the Purchaser agrees to become a member of the
Khamanga
Bay Home owners Association
consisting of all the owners of properties in the development which
Association shall meet at least on an annual basis in order
to
determine the financial requirements of the Association to fund
expenses of common structures, amenities, rates and taxes in
respect
of such structures and or amenities, insurances and all other
necessary expenses for which the Association shall be liable
by
virtue of its ownership of common areas and for the day to day
conduct of the development …”
[5]
Occupation
was to be given to the plaintiffs on registration of transfer, which
was to be effected by the seller’s conveyancers,
Messrs Bate
Chubb & Dickson Inc. of East London.  The further provisions
appear to be standard, including the usual acknowledgement
that the
deeds constitute the entire agreement and that any variations are to
be in writing and signed by both parties.
[6]
The
plaintiffs plead that they received transfer of the erven because it
was represented to them by the seller’s conveyancers
that the
suspensive condition referred to in clause 14.1 had been fulfilled.
They claim that the condition was however not
fulfilled in either
instance, a realization which only dawned on them in August 2013
after they had,
inter
alia
,
received a circular letter from the homeowners association’s
attorneys attaching a compliance notice issued by the Department
of
Economic Development, Environmental Affairs & Tourism (“the
Department”) calling attention to a number of compliance
issues
bearing upon the defendant’s obligation to provide
infrastructural services, and that the representation made to them
to
the contrary by the conveyancer was therefore false, because it had
in fact not been fulfilled.  This, in their expectation,
means
that the sales lapsed for want of compliance with the suspension
condition and that no lawful
causa
existed for registration of transfer into their names at the time
title in the properties passed to them.  Accordingly, they
claim
restitution entailing a refund of the purchase prices paid for each
erf, cancellation of the transfers and the necessary
re-transfers of
the properties back to the defendant at the latter’s expense.
Based on the defendant’s alleged
misrepresentation, they also
seek damages, being the wasted costs of the transfer and bond
registration costs, bond cancellation
costs, interest paid on the
putative mortgage bonds, and interest they would have earned on the
wasted costs.
[7]
Much
hinges on the interpretation of clause 14.1, the plaintiffs
contending that it means that the infrastructural services required

by the local authority were to have been put in place as a matter of
fact before the transfers could be registered, whereas the
defendant
contends for a different meaning, namely, that the actual
installation of the infrastructural services was not required
and
that the suspensive condition could be fulfilled by way of an
agreement concluded between it and the local authority that it
would
in due course attend to the installation of the infrastructural
services, such undertaking being underwritten by a guarantee
to
secure it doing so.
[8]
On
the basis of this interpretation contended for by the defendant, its
case is that the suspensive condition was indeed fulfilled
prior to
the transfers.  In the result there was no misrepresentation, or
rather it pleads that the representation that the
suspensive
condition had been fulfilled by it, through its arrangement with the
Great Kei Municipality to install what services
were necessary in due
course, was true.  Further and in any event the defendant pleads
that the transfers could only be effected,
and were effected, after
an endorsement of the relevant powers of attorney by the local
authority and the granting of certificates
by the Development
Tribunal to the effect that the requirements referred to in clause
14.1 had indeed been complied with.
Fulfilment was additionally
certified by the engineer of the development.  The defendant
pleads further that the plaintiffs
accepted transfer on the basis
that the suspensive condition had indeed been fulfilled.
[9]
The
defendant denies that the compliance notice issued by the Department
in or about March 2013 has any bearing upon the fulfilment
of this
condition.  It admits however that the Department issued a
directive that all construction at Khamanga Bay should
cease at that
point and that no further occupation of the properties was to be
allowed until the development’s sewerage treatment
facility was
completed.  The relevance of this will become apparent when I
summarise the evidence below.
[10]
The
following facts and circumstances are relied upon by the defendant as
being relevant both to its stance concerning the interpretation
of
the suspensive condition and its purported fulfilment thereof:
“
3.3.1.
The properties sold were defined as being “subject to the
conditions and servitudes mentioned or referred to in the
title Deeds
as registered in favour of the Seller or in prior Deeds to the
property or as endorsed on the General Plan of the Khamanga
Bay
Property Development of which the aforementioned erf forms a part.”
3.3.2.
The development was approved by the Eastern Cape Development Tribunal
on 24 April 2001 subject to Defendant “being
responsible for
provision of basic services to the area.”  This approval
is annexed as “PF1”.
[2]
3.3.3.
Such approval was endorsed and adopted by the Great Kei Municipality
on 6 February 2003.  A copy of this
endorsement is annexed as
“PF2”.
[3]
3.3.4.
This endorsement was substituted by the approval of 6 July 2004,
which is annexed as “PF3”.
[4]
3.3.5.
On or about 28 June 2004 Defendant
[5]
and Great Kei Municipality entered into an agreement relating to the
provision of services in a phased development.  A copy
of this
agreement is annexed as “PF4 new” and it is referred to
herein as “the phased development agreement”.
[6]
This agreement provided, inter alia, for the following:
3.3.5.1.
As an interim measure, the developer will provide for
defined phases
in the development a conservancy tank sewerage disposal system
complying with the requirements of the local authority;
3.3.5.2.
That, in view of the lack of potable water to service
the entire
development and the high cost of providing services, the parties have
agreed that the development will take place in
defined phases to be
agreed upon between the parties on the basis of availability of
services and the approval of environmental
authorities;
3.3.5.3.
The parties agree that, in order to expedite the sale
of erven in the
development, the developer may, subject to the provision of an
acceptable guarantee to be provided by the developer’s

attorneys in favour of the local authority covering the estimated
cost to complete services, transfer the undermentioned erven
to the
purchasers thereof;
3.3.5.4.
As soon as may be reasonably possible after the developer
has
completed the installation of the internal services in any phase of
the development, the developer shall supply the local authority
with
a certificate from the Consulting Engineers of the developer
certifying that such services have been provided in accordance
with
the standards approved by local authority and environmental
authorities and, upon receipt of such certificate, the local
authority undertakes to authorise the transfer of the erven included
in such phase, provided that the local authority shall at all
times
have the right, before authorising such transfer, to verify that the
desired services have been installed and provided to
its
satisfaction.
3.3.6.
Even [...] and [...] fall into the first phase of the development
referred to in this Agreement and Erf [...]
falls into phase 3 of the
development referred to in this Agreement.
[7]
3.4.
Plaintiffs were at all material times aware of the phased development
agreement and its terms.
3.5.
Transfer of the erven, which are the subject of this action, to
Plaintiffs took place in accordance
with the provisions of the phased
development agreement, and in particular Defendant pleads that:
3.5.1.
The consulting engineers sought clearance from the Great Kei
Municipality for the transfer of the properties
relevant to this
action, subject to the provision of the appropriate guarantee, by
letters dated 4 June 2004 and 25 April 2005
copies of which are
annexed as hereto marked “PF5a” and “PF5b”.
[8]
3.5.2.
Such clearance was in fact granted by the Great Kei Municipality and
was so endorsed upon the powers of attorney
relating to the transfers
of the properties relevant to this action;
[9]
3.5.3.
Fulfillment of all the conditions relevant to the establishment of
the township was certified by certificates
in terms of
section
38(1)(c)
and (d) of the
Development Facilitation Act 67 of 1995
;
[10]
3.5.4.
These endorsed powers of attorney, together with the certificates,
are annexed as “PF6” (ERF [...]),
“PF7” (ERF
[...]) and “PF8” (ERF [...]);
3.5.5.
As at 25 April 2005 a developer’s guarantee in the sum of R389
251.00 had been issued in respect of the
reticulation services, which
guarantee was accepted by the municipality as fulfilment of the
requirements imposed.”
(sic)
[11]
So
much for the pleadings in respect of the principal aspects.
[12]
The
defendant belatedly during the course of the trial also introduced a
special plea of prescription.  It asserts in this
respect that
“the evidence presented on behalf of the Plaintiff (obviously
predicated on the interpretation of the suspensive
condition which
they prefer) indicates that they knew or ought reasonably to have
known that the bulk services, which they contend
had to be provided,
were not provided and consequently the debt became due at the time
when transfer occurred and/or soon thereafter
and/or by no later than
January 2006.”  Since the action was only instituted
during February 2014, the defendant pleads
that the plaintiffs’
claims were by then prescribed.
[13]
No
formal response was delivered to the special plea, but I was informed
from the bar by Mr. de la Harpe, who appeared for the plaintiffs,

that they would fall back in their pleadings on what was alleged in
this respect, namely that it was represented to them that the

suspensive condition had been fulfilled and that they had relied upon
the representation as true and taken transfer of the properties
sans
any knowledge to the contrary that there was an issue with the
defendant’s compliance therewith.  It was only on 1 August

2013, after they received the circular letter from the attorneys
acting on behalf of the homeowner’s association which gave

cover to the compliance notice from the Department, indicating
non-compliance by the defendant with its requirements at least,
that
it then became known to them that the suspensive condition had in
fact not been fulfilled.
[14]
On
the issue of the interpretation of the suspensive condition, much of
what each party’s case is follows from what has been
pleaded
and the relevant documentation which speaks for itself.  Some of
the oral testimony has a particular bearing, but
was largely focused
on the fulfilment issue.
[15]
The
first plaintiff testified regarding the sales in which he was
implicated.
[11]
He and his
brother, the second plaintiff, signed the respective deeds of sale.
They were contacted afterwards by the conveyancer,
Mr. Warren, of
Bate Chubb & Dickson Inc., who advised them that all the
suspensive conditions had been met and that they could
attend at
their offices to sign off on the transfer documentation, which they
did. They paid the relevant costs attendant upon
registration of
transfer and the relevant mortgage bonds when these amounts were due.
Relying on Mr. Warren’s assurances
that the suspensive
condition had been fulfilled in each instance, they understood that
the infrastructural services were actually
in place.
[16]
They
found out in 2013, however, that this was not the case when they
received a circular letter from the homeowner’s association

informing them that there was a moratorium or embargo on building
houses in the resort going forward as there was a problem with
the
services.   It was at this point that they became aware of
a problem and immediately consulted their attorney of
record, Messrs
Bax Kaplan Attorneys, who on 8 August 2013 addressed a letter to the
other owners in the development, on behalf
of the trustees of the
home  owner’s association as well, calling attention to
the compliance notice which had been
issued by the Department dated
22 March 2013 in terms of
section 31
L of the Environmental
Management Act, No 107 of 1998, (“EMA”). In a nutshell
the notice spells out that the existing
sewage treatment facility is
unlawful and inadequate to provide for the sewerage requirements of
the Khamanga Bay Development and
poses the risk that that raw sewage
will spill over onto the Cintsa West beach which is a high use
recreational area for local
residents.  The developer is
instructed to stop and desist with its unlawful activities or to
lawfully regularize its affairs.
Bax Kaplan note in their
letter that this information has irregularly not been made known to
the owners and urges them to review
the compliance notice and to
comment on it.  It points out the trustees’ dilemma that
they will be unable to allow any
further construction on site in the
circumstances and that they had unwittingly approved the construction
of more than 19 units
oblivious to the prohibition outlined in the
compliance notice.
[12]
This
nascence of the problem led to the issue of the summons.
[17]
Under
cross examination the first plaintiff expressed the view that he
understood the suspensive condition to mean that services
to the
necessary standards “had to be done 100%”.  He
reiterated that the circular letter had brought with it
the clear
realization, for the first time, that the services had not been
completed by the developers whereas he and the first
plaintiff were
“under the impression that they had been completed.”
He deferred to the engineer who would be
able to confirm whether or
not the services were in fact in in accordance with what was required
in 2005.  He clarified that
he and his brother had stopped going
on site shortly after they had bought, as there was no reason for
them to go there. They never
built there; neither did they submit
plans towards this end.
[18]
He
agreed that he and his brother had attended a meeting on site on 16
July 2005 which was held on the lawn of one of the owners.
Leaving
aside that he has no recall of what was said at the meeting at the
time, the technical information which had been
discussed there would
not have assisted him to appreciate whether he was happy or not with
the services installed at that time
because he is not an expert or
even clued up regarding what the Red Book standards are. They had no
reason to distrust the developers
when they said thing were going to
be attended to. They were also not privy to what the specifications
were going to be and, regarding
the infrastructure, had no knowledge
of other owners’ projects in the development. They didn’t
check on what was done
and what wasn’t done.  In fact,
they had “no idea”.  No services were ever discussed
with them.  At
the end of the day they simply accepted the say
so of Mr. Warren that the condition in clause 14.1 had been met,
there being no
basis to doubt a “legal personality”
telling them that this was the case.  He reluctantly conceded
however that
it would seem from the minutes of the 2005 meeting that
the services were not 100% complete at that time.  The developer
did
however give the undertaking that they would be attended to down
the line and he was “happy” to accept these assurances.

They only noticed in 2013 that the developer appeared not to
have done what was promised.
[19]
Put
to him that the minutes of a later meeting of owners held on 14
January 2006, at which he and his brother were again present,
also
reflect that services were not 100% in by obvious implication based
on the assessment report raised at the time, he conceded
that he
could have heard that that was the case.  He was not prepared to
agree, however, that
he
knew
at that stage that they were not 100% in place (despite his
concession and waiver elicited during cross examination referred to

above), alluding instead to the moment in 2013 when he knew this for
sure.  He asserted that Mr. Warren had in any event assured
them
when they took transfer that the services were complete, as if to
suggest that there was no obligation on them to think about
it any
further once he had given that pledge.
[20]
Pressed
to deal with the issue of his been present at the meeting and not
expressing any dissatisfaction that the services were
by then (on the
plaintiffs’ understanding of the meaning of clause 14.1) not
completed, he resorted to his lack of technical
skill to know any
better and added that “his site” was not discussed at
that meeting.  This lack of knowledge
extends even to 2013 by
when he claims he was still none the wiser whether the developer had
completed the services or not.
Pressed again to confirm that in
2005 there were no services to their plots, he replied: “I’m
not saying that, I wouldn’t
know. I only know what Mr. Warren
led us to believe.”
[21]
He
maintained that he and his brother were first time developers and
knew nothing about developments at the time, let alone about

contracts or the sale of properties, asserting instead that he was
“just a normal man in the street”, a theme he repeated

several times during cross examination whenever he had to account for
what he knew or didn’t.
[22]
He
explained that a provision appearing in the deeds which reflects that
he and his brother were going to earn estate agents’
commission
on the sales was inserted by a director of the defendant as a ruse
for them to get a discount on the sale price.
He volunteered
that a director involved in the development had intimated that it
wasn’t his property and that he wasn’t
entitled to give a
discount, but this is how he could assist them to pay less for the
purchase prices.
[13]
[23]
Regarding
erf [...], which they sold after the issue of the action but which
was acquired together with the two erven
in
casu
,
he rationalized that they were entitled to sell this plot at a profit
(even though they had asserted no legal
causa
for this transfer either), because it was “in our name”.
Asked if he was satisfied that they had a valid sale
agreement
in place in respect of this plot on-sold by them he claimed not to be
happy with the agreement but asserted that legally
they were the
owners entitled to sell as they did.  He was astute to add
however that they are contesting the ownership which
was conferred on
them under false pretences.  He reasoned that he wasn’t
happy that they had sold this plot at a profit
as the putative owners
but claims that they “had to accept that this was the case
until (they) could prove otherwise.”
[24]
The
blame for his and his brother’s dilemma was placed squarely at
the feet of Mr. Warren who in his opinion had misled them.
[25]
Despite
the first plaintiff’s professed lack of awareness of “these
things,’ what was done and to what standard
(prefaced by the
refrain that he is a layman), he roundly criticized Mr. Warren for
failing in his duty as a conveyancer to check
whether the
municipality’s officials had done what they were supposed to
have done.  His lack of understanding did not
extend to the
import of Mr. Warren’s confirmation that the suspensive
condition had been fulfilled, however, because he appeared
to believe
that this excused them from having to “think about services
again”.
[26]
Tersia
van der Merwe testified on behalf of the plaintiffs. She too is an
owner of a property at Khamanga Bay.  She purchased
a plot in
January 2004 and commenced building a home on it in mid-June 2006.
Construction was completed about 9 months later.
She
discovered after the fact that her property was in phase 3. There
were some roads which existed at the time although
her erf was on a
gravel road, the surfacing of which was completed in 2009.  She
described the landscape at the time as being
“basically
undeveloped land”.  This accords with photographs taken by
her on 11 March 2007 when a truck arrived
from Johannesburg to
deliver her furniture.  She also submitted two photographs taken
in June of 2013 and 2014 respectively
which depict at the gated exit
outside the estate a storm water pipe leading onto the beach.
She claims to have not been
knowledgeable on storm water and
engineering requirements at the time.  As for the sewerage
system in place, she had been
told by one of the people involved in
the development, a Mr. Taylor, that there was a sump on the estate
for the catchment of sewage
which was gravity fed down to the bottom
of the estate and which was adequate for approximately 10 houses.
The sump was located
close to the beach access near one of the
gates.
[27]
By
2011 she was a trustee of the homeowner’s association and
happened to be privy to complaints from owners that there was
a smell
there from the sump overflowing.  This was in June/July and in
December during the holiday seasons when homeowners
came for
holidays, thus increasing the volume of sewage. The sump was emptied
initially twice and then three times a week. It was
drawn up per
“honey sucker” truck which was then transported away to a
sewer pond on Mr. Taylor’s farm across
the road, a fact she
discovered in 2010.  Her attempts to obtain proof that the pond
was a registered pond had come to naught.
[28]
She
could confirm in her capacity as trustee that storm water
reticulation plans were only submitted in 2007.  Although the

plan reflects two retention ponds, she could say that the larger of
the two was not yet in place in terms of full capacity. She
clarified
that another pond existed but on private property off the estate.
A gabion wall which is supposed to have been
built for the storm
water discharge management system according to the plan had not also
yet been constructed.
[29]
She
gave a context to the Department’s compliance notice.  It
fortuitously came to her attention as part of a bundle
of documents
that were given to the homeowner’s association as an interested
party when the application for a sewerage plant
was made.  She
noticed the document whilst perusing the basic assessment report
prepared by an environmental consultant appointed
by the developer.
She realized that it was important and circulated it to the owners.
Up until that point the association
had unwittingly been approving
building plans submitted to it for approval, actually in
contravention of the law she recognized,
because the compliance
notice had not been published to the association, the last approval
being around August 2013, just before
she became aware of the notice.
[30]
Negotiations
with the developers arising upon this unsatisfactory state of affairs
culminated in the developers providing an irrevocable
undertaking to
the Department and the association regarding the completion of the
infrastructure of the estate premised on an assurance
that a sum of
six million rand would be held in trust for these purposes.  The
witness accepted the undertaking on behalf
of the association on 5
February 2015 in her capacity as chairperson, which measure resulted
in the moratorium on building being
uplifted, at least to the extent
that 14 more houses could be built.
[31]
Although
the association is meant to take over all the infrastructural
facilities in the development once completed, she lamented
that they
had not received a single engineer’s certificate regarding the
execution of these works.  Although the last
undertaking was
signed in February 2015, she clarified that the work as at the date
of her testimony was not yet complete. The
sewerage plant and the
building of the reservoir were waiting approval from the Department.
The storm water had not yet been done
[32]
Concerning
water, she clarified that the estate gets water from three boreholes
and that they were using a borehole on Mr. Taylor’s
farm.
The registration for these boreholes had been done incorrectly before
and was in the process of being correctly registered
and licensed for
domestic use.
[33]
Under
cross examination she clarified that she was not aware that the
development was to have evolved in phases.
[34]
She
agreed that by the time she got to the property there was water if
she opened a tap, there was electricity and there was a sewerage

system in place in that she could flush a toilet and the waste would
be taken away.  She conceded that she only came to know
of
issues with sewerage in 2011 in her official capacity.  She also
agreed that there were basic roads in place although there
was mud
when it rained.
[35]
The
plaintiffs finally adduced the expert testimony of Winnifred Muckle
who is a qualified and registered civil engineering technologist
with
experience in design work, project administration, contract
administration, quantities and the certification of works,
inter
alia
.
Although she was not involved in the development, she explained that
she had been requested by the plaintiffs’ attorneys
to assess
the relevant documentation (such as was available)
[14]
and to summarise what engineering services were required and to say
whether or not and when in her professional opinion these were
put in
place.
[36]
I
do not intend to repeat her expert report which she traversed in her
testimony but, in her opinion, and having regard to what
the
municipality says in the phased agreement concerning what the
expected infrastructural services were, she concludes that in
respect
of both phases 1A and 3, at the time of transfer, these services were
not complete.  Instead guarantees were put in
place before
clearance was sought for the transfers for amounts which were equal
to the engineer’s assessment of costs to
complete those in due
course.  However, the guarantees do not deal with water source
or sewerage in her opinion.
[37]
She
readily conceded under cross examination however that she could not
gainsay the evidence of the defendant’s engineer who
might say
that the services were in place according to the municipality’s
requirements at the time, albeit subject to a guarantee,
although she
expressed reservations about them being up to standard.  She
also conceded that developers did and do enter into
phased
development agreements with the municipality such as happened in this
instance, and that such agreements were lawful at
the time, or at
least permitted by the provisions of the DFA.
[38]
The
defendant adduced the testimony of six witnesses.  I will begin
with a summary of the evidence of the conveyancer who acted
on behalf
of the developer and who was instrumental in seeking clearance from
the municipality for the transfers of the plaintiffs’
plots at
the relevant times.
[39]
Mr.
John Angus Miles Warren is a director of Bate Chubb and Dickson and a
qualified attorney and conveyancer.  He was involved
from the
inception of the development.  He explained that there were four
Port Ferry companies registered, 71 being the primary
developing
company that would deal with the administration of the infrastructure
and which acquired subdivided and whole farms
for development.
The defendant is one of the four entities to which the property on
which Khamanga Bay is being developed
was transferred.  It and
the other three developing companies were expected to contribute to
the costs of the overall development.
[40]
It
was envisaged from the outset that the development was going to take
place in phases.  Various agreements were put in place
towards
this end and once the development was ready to be marketed, they
prepared a standard deed of sale. He worked with a template
which he
adapted, especially inserting the suspensive conditions in clause 14,
because it was necessary, so he explained, to have
clarity as to the
stage at which he could pass transfer.  He needed it to be clear
that this was going to happen once the
municipality was satisfied
that he could pass transfer in respect of each erf and that the
provision of these services had been
met according to their
requirements.  So much for the reason for clause 14.1.
[41]
He
related generically what he would have done in the case of each sale,
suggesting that he would have told the purchasers that
transfer could
only proceed when the suspensive condition had been fulfilled to the
satisfaction of the municipality and that there
were phases, more
exactly that some transfers would go through earlier than others,
depending on what phase the particular property
was in. He would have
been present at the signing of each agreement, as the deeds reflect
in the present instance.  The plaintiffs,
in the guise one or
other different entity had bought three plots over and above those
that are the subject of this action.  One
adjoining erf [...]
had a peculiar suspensive condition inserted at the instance of the
purchaser (who the first plaintiff said
was the second plaintiff)
that certain gum trees be removed before transfer could be effected.
In that matter the transfer
had been delayed quite substantially for
several months while they tussled over the fulfillment of the extra
condition even though
the municipality and the Development Tribunal
had already given clearance for their purposes.  In legal
correspondence which
passed on the issue it seems that the purchaser
was not prepared to accept that the agreement had lapsed for want of
compliance
with the suspensive condition which had not had a definite
time frame to it, but which the seller had sought to define to bring

the matter to a conclusion.
[42]
In
the instance of the relevant erven, after the communication was made
to him that the services had been completed as envisaged
in the deeds
to the satisfaction of the municipality, transfer documents were
prepared for signature. Powers of attorney were sent
to the
municipality in batches for approval and in the case of these two
erven the documents were returned to him endorsed by the
municipality
which signified to him that it was satisfied that the services had
indeed been completed to their satisfaction. The
designated officer
of the Development Tribunal also gave consent.  With these
clearances and endorsements, the way was cleared
for him to submit
his documents to the deeds office for registration, which he did, and
transfer was effected accordingly.
[43]
He
was involved in the preparation of the various guarantees which were
issued from time to time in favour of the municipality.
These
were required to be put in place by the developer to guarantee the
cost of completing what he called the “smaller items”

relating to particular phases in order to secure the completion of
that work with each batch ready for transfer.  These guarantees

would be substituted as the circumstances required to ensure ongoing
progress.  He acknowledged the significance of the phased

services agreement concluded by the main developing entity with the
municipality which spelt out that transfers would be effected
in
phases and that the guarantees provided would be phase specific to
cover the cost of items being minor of nature rather than
essential
services, which were then still incomplete.  He confirmed his
insistence that transfers could not be proceeded with
until accord
was reached with the municipality regarding these outstanding aspects
and the costs to complete these minor works.
[44]
He
firmly rejected any notion that that he had misled the plaintiffs or
concealed any facts or misrepresented to them that the condition
had
been fulfilled.
[45]
Under
cross examination he readily conceded that the agreements drafted by
him bear no mention at all of a phased development. However,
he
expressed the view that the meaning of clause 14.1, in line with the
defendant’s case, is “plain and simple”.
This
notwithstanding, he ultimately agreed, as he was firmly nudged into
conceding, that he had to accept - on the plaintiffs’

interpretation that all services had to be complete when transfer
went through, that the services were then not complete at the

defining moments.  He was not about to be coerced into agreeing
though that the necessary corollary was that he had erred
then in
telling the plaintiffs that the suspensive condition had been
fulfilled because of a wrong interpretation applied by him.
Rather,
he asserted that they accepted that the condition had been
fulfilled.  His recall of a discussion had with one of
the
brothers before coming in to sign the transfer documentation entailed
an acceptance that the essential services were complete
but that
there was a minor outstanding issue that would have been completed
shortly. The brother accepted that this was the position.
[46]
Mr.
Warren asserted that whereas the phased agreement was not yet in
place when the plaintiffs concluded the sale agreements, the
concept
of such a development was certainly “contemplated,” the
formal agreement being negotiated over a period of
time.
[47]
Although
the defendant did not qualify Mr. Warren as an expert witness, he
offered the view that in conveyancing practice it is
standard, as is
the term giving expression to this expectation in clause 14.1, that
no transfer can in fact take place until the
municipality is
satisfied that the services are in. Asked how the purchasers through
the home owner’s association could own
services if they weren’t
in, he suggested that they would be responsible for the upkeep of
such services as related to their
own property and which were in.
They would simply not be responsible for services in respect of
properties not yet transferred.
[48]
Asked
what proof he had in compliance with section 31(1) of the Land Use
Planning Ordinance, No. 15 of 1985 (“LUPO”)
which
requires a transferor before transfer to furnish proof to the local
authority concerned that any condition upon which the
application for
subdivision concerned was granted has been complied with, he asserted
that the endorsement by the municipality
of the power of attorney was
the necessary proof that they accepted that the services had been
completed to their satisfaction.
[49]
Whilst
accepting that his role as conveyancer requires him to act in the
interests of the seller and purchaser alike, he reasoned
that it was
not his responsibility to deal with the aspect of the engineer’s
certificates, neither was he responsible for
services.  He was
only one in a significant team of different professionals dealing
with various aspects coordinated by the
developers.  His
particular responsibility was to ensure that the local authority was
satisfied concerning the provision of
services.
[50]
Pressed
to agree that the very nature of providing a guarantee suggested that
the services were not completely installed (the guarantee
being the
sop as it were), he offered the view that the municipality did not
have to be satisfied that every single aspect of the
entire
infrastructure was complete.  He clarified that there are few
developments that ever go through to transfer where every
single
aspect is complete, but in this instance, he was confident to assert
that the services were completed to the satisfaction
of the
municipality as contemplated in clause 14.1. In his view this
condition means that the provision of infrastructural services
is
qualified by “when the local authority says its okay”.
That is how it works, he added, that is “the
system”.
[51]
He
believed that he had met his fiduciary duty to the purchasers by
ensuring that the municipality had communicated to him that
they were
satisfied that he could proceed with transfer because the
infrastructure was completed to their satisfaction.  He
added
that the plaintiffs were co-incidentally represented by their own
attorneys throughout the transaction, who happened to have
intimate
knowledge of the development.
[52]
He
appeared to have no knowledge of the provision in the phased
development agreement which requires in the third phase that the

developer is to provide a certificate to the local authority from its
consulting engineer certifying that such services have been
provided
in accordance with the standards approved by the municipality and
environmental authorities, again deferring to the engineer’s

own separate role played in the professional development team.  He
also claimed to be unaware of the Department’s letter
dated 8
June 2005, immediately predating the transfer of erf [...], warning
the defendant’s environmentalist, Mr. Selkirk,
that further
transfers above a number of 150 erven could not proceed until
all
the infrastructure was in place for the complete development as
approved.
[53]
Similarly,
he claimed to be unaware of a letter of the same date addressed by
the municipality to a Mr. Stanton, a client of his
and involved in
the development, evidently returning powers of attorney in respect of
certain erven including erf [...], which
indicates that further
transfers will only be authorized provided certain requirements are
met, namely, the submission of an engineering
services summary
report, an  onsite inspection and certification of phase 3, the
submission of a close off report for phases
1 - 3, a new services
agreement setting out the total development of the property being
concluded with the municipality and the
withdrawal of existing
guarantees in respect of erven already serviced and in respect of
which such guarantees were issued.
[54]
He
could not comment how it came to pass that despite these letter, or
in ignorance of them, the endorsement of the municipality
was
obtained on the 10
th
.
He was not prepared to concede that this information was possibly
withheld from him, suggesting rather that it wasn’t his

responsibility.  He was firm  that he would not have passed
transfer in respect of erf [...] had he known that he should
not have
done so.
[55]
Mr.
Christiaan Johannes van den Berg was employed by the Great Kei
Municipality (amongst other local governments) and the provincial

department of local government in or about 2013/2014 as a consultant
to mentor struggling municipalities that did not have the
capacity to
deal with town planning matters.  His particular experience is
in the field of local government.  In this
role and capacity he
got alongside Mr. Dicks, who was head of local government
administration in the Great Kei Municipality at
the time, basically
performing the duties of the municipality’s town planner.
He would assist in preparing documents
and getting approvals relating
to rezoning, sub division, town planning applications and the like.
[56]
He
was familiar with the application by the Khamanga Bay Developers to
approve a holiday resort.  He was aware that when the
township
was approved by the Development Tribunal the Registrar of Deeds had
insisted on a duplicate approval for the sub-division
pursuant to
section 25 of the LUPO, which was necessary to enable the
municipality to control the development.  The Tribunal
in posing
conditions had merely required that basic services be provided.
He adverted to the provisions of the Municipal
Systems Act
[15]
which defines basic services as those needed to sustain a basic level
of existence.  In his view this was obviously not acceptable
in
terms of the high-class holiday resort development envisaged.
It was the practice in terms of the DFA at the time to allow

developments in phases, subject to municipal control.  There had
to be standards set however (to exercise this control) which
could
only be achieved by way of a service level agreement.
[57]
Generally
the transfer process commenced with the submission by the
transferring attorney of the power of attorney signed by the
seller.
In respect of this development the municipality maintained a data
base to ensure that only those erven approved or
allowed in a
particular phase were approved by it for purpose of transferring.
When a power of attorney came in they would
first check if it was in
an approved phase.  The power of attorney would then be
forwarded to the engineering assistant or
technical adviser for
checking whether the services as agreed upon were installed.
Once the certificate was obtained from
the engineer or technician of
the municipality, it would next be taken to the Development Tribunal
for signature in terms of the
Development Facilitation Act, No. 67 of
1995 (“DFA”).  Mr. Mfenyo, the incumbent at the
time, had to certify (a)
that the municipality was happy with the
services and (b) that its requirements had been complied with.
[58]
If
their technical manager, Mr. Roberts, made a report that he was happy
that the services had been provided for in accordance with
the
service level agreement, once his approval was reported, the
municipal manager or the finance officer would then endorse the
power
of attorney thereby allowing transfer to be effected.  This
endorsement constituted the necessary authorization to the

conveyancer to proceed to registration of the particular erf in the
deeds office.
[59]
He
acknowledged the official stamp of the municipality and endorsements
in the case of the two transfers in contention on the relevant
powers
of attorney.  DFA approval was also apparent.
[60]
The
fact that transfers were registered in the development up to phases
five and six confirmed for him that the earlier phases had
been
completed to the satisfaction of the municipality, and that the
services were of the required standard. He explained that
in big
schemes certain aspects of the services, expected to cater for the
greater number of erven, would be developed in a certain
phase, in a
certain manner, to the satisfaction of the municipality.
[61]
He
personally has dealt with many developments and could say without
reservation that the municipality was particularly careful
in its
control of developments, to the extent that they were capable of
doing so, in ensuring that their requirements were complied
with.
This is because ultimately the development would be handed over to a
homeowner’s association and they did not
want the association
and future owners to suffer because of their negligence.
[62]
Under
cross examination he agreed that until the conclusion of the phased
development agreement there was no phased development.
He
clarified that the agreement took some time to get into place.
When it was pointed out to him that the approval of the
development
by the DFA also makes no mention of any phased development he pointed
out that that would be correct because this aspect
is usually left to
the municipality and the developer to agree on as is provided for in
the DFA.
[63]
He
himself did not check to see that the services of Phase A1 were in,
because that was for the engineering Department to oversee.
He
could not verify if by the time the power of attorney in respect of
erf [...] was endorsed on 6 July 2004 the work outstanding
as at 13
May 2004 and in respect of which a guarantee had been issued for
phase 1, had been completed.  He noted however that
the phased
agreement allowed for any outstanding work to be completed at the
cost of the developer, which was the exact reason
for which a
guarantee would be given.
[64]
He
did not agree that the guarantee put in place based on the assessment
of costs by the engineer to complete the services dated
24 August
2005 in respect of the phases mentioned in the letter showed
unequivocally that the services were not complete.
Rather, so
he clarified, it showed that the services were being installed to the
permitted or desired standard by the municipal
engineer as required
at the time.  He pointed out that there is no standard of
services in any approval except the DFA approval
which refers to the
Red Book standard, which is a much lower standard of service.
[65]
He
maintained that when the relevant powers of attorney were endorsed,
Mr. Roberts was satisfied that those erven had been serviced
to his
satisfaction and to the agreed upon standard which the engineers had
looked at. It was not for them to second guess the
certificate that
the services were in.  They had to rely on the abilities of
their technical officials to report accurately
and this is precisely
what happened.  They would also subsequently get reports or
memoranda from their engineer who would
go on site and certify that
he was happy with the standard of services.
[66]
As
for the municipality’s letter to Mr. Stanton returning the
powers of attorney and posing conditions in respect of transfers

going forward (which appears to have been generated about the time
that erf [...] was in the process of being transferred), he
proposed
that it could have been that the municipality allowed these powers to
go through with the rider indicated by them in their
letter because
they were already in the pipeline.  He added that powers of
attorney are submitted a long time before they
are actually returned
to the conveyancer, leaving the possibility for much to happen
in-between.
[67]
Finally,
he expressed the view that if the municipality recorded and returned
the powers of attorney to the conveyancer it meant
that their
requirements had been met and that the transfer could be registered.
Conversely if there was an issue with the
services
satisfactorily being in place, the powers of attorney would not have
been endorsed.  Instead, the transfers would
have been stopped
and further enquiries made, which is exactly what ultimately happened
when the municipality put its foot down
and indicated that no further
powers would be endorsed for transfer  until they were satisfied
that they had an engineer’s
certificate.
[68]
Mr.
van der Merwe is the civil engineer employed by the developers who
was involved in the development from design phase.
He was
instrumental in getting the plans for essential services approved by
the municipality, and thereafter assisted with the
implementation of
the project.
[69]
He
identified his letter seeking clearance from the municipality to
allow the transfer of erf [...], amongst others, which he pointed
out
was “on the backing of a guarantee” for the value of the
outstanding services prior to those services being 100%
complete.
He acknowledged that the clearance was in fact given.  He was
involved at this critical point, and later when
it came to the
transfer of erf [...] as well, to the extent that he needed to
establish the value of the guarantees in order to
get the services
clearances to be issued by the municipality.  Before doing so he
inspected the services for completion and
identified what was not yet
completed in order to ascertain a value of that based on current
rates in the industry.  As far
as he was concerned the services
were substantially complete except for a few minor items that were
then outstanding.  He
was satisfied that the owners taking
transfer on this basis would have been able to build houses because
the access to services
would be there, save for the minor items that
were still required to be attended to.
[70]
Services
obviously had to be completed prior to houses being connected to the
services.  In all instances this ritual of sign-off
was on a
phase specific basis.
[71]
There
were to his knowledge items outside of the reticulation system that
still needed to be put in place.  As for the sewerage
system the
plan was changed from an initial septic tank for each individual plot
to a communal service tank.  This was not
installed in 2004/2005
(as appears from the guarantees), but in his view there was a
facility with a limited capacity in place
which was functional.
[72]
Under
cross examination he indicated that they never got anything in
writing from the municipality for the design of the roads and
storm
water systems, but explained that there is such a thing as a deemed
approval of a plan when the municipality does not respond
within a
certain period.  Plans for retention ponds as a means to
properly manage the storm water run-off were done, but only
in 2007.
He explained though that his plans, i.e. the complete set of drawings
for the entire infrastructural services in
2004, were sent in a
piecemeal fashion. There was a design specification for the roads, a
reticulation network for waste water,
the treatment process for the
sewerage system, and the conservancy tank which was added at the
bottom of the site because there
was uncertainty about what would
finally happen, i.e. whether the waste would be treated on or off the
estate property.
[73]
He
acknowledged that it was he who on 23 April 2003 addressed the
municipality with a view to introducing a phased development approach

in order to accelerate the process of transfer of individual erven to
purchasers and earlier endorsement by way of the necessary
service
clearance certificate on the back of a guarantee, in an acceptable
format, to cover the cost of all outstanding items that
could affect
the endorsement of the powers of attorney.  The values to be
indicated would have to adequate to ensure that
the outstanding items
could be completed by the municipality should the development fail to
complete these aspects.  At the
time such an approach was
gaining popularity in other municipalities so that the process of
registration could run concurrently
with the installation of services
to ensure an “early delivery”.  This suggestion of
his, as it turned out, was
taken up by the municipality and is
reflected in the phased development agreement.
[74]
He
agreed that the first guarantee did not account for the final
completion of Khamanga Drive in the development, but noted that
this
was done in phases as well.
[75]
He
accepted that clause 13 of the phased development agreement required
a certificate from the consulting engineer or the developer
to the
effect that the said services had been provided in accordance with
the standards approved by the local authority and the
environmental
authorities.  He had however never furnished a certificate of
completion in the sense of final completion, but
in his view the
letters of guarantee stood in place of such certificates.
[76]
Adverting
to the letter addressed by the municipal manager to Mr. Stanton
warning that no further transfer would be accommodated,
he could not
recall having submitted a registered certificate of completion in
respect of the initial services to phase 3 as required,
only the
estimates of costs, namely the guarantees.  Neither could he
recall having written a services summary report which
the municipal
manager had indicated needed to be provided in order to stipulate the
required services of each phase, 1A to 3, as
against certified
completion achieved on site.
[77]
Once
he had issued these guarantees he believed it was a “legal
matter”.  By this he meant that if the municipality
was
satisfied, it could then endorse the deeds of transfer so that the
properties could be transferred.  The process thereafter,
once
the work was completed, was to issue a certificate (when 100%
complete I understood him to mean) and to consequently withdraw
the
guarantee.  Asked why he continued to issue such letters of
estimates and guarantees regarding phase 1A even after the
transfers
of this phase had gone through, he explained that phase 1A was
“rolled in” with the other phases in subsequent

guarantees.  This did not necessarily mean however that there
were still outstanding aspects of the works in respect of phases
1A,
or 3 for that matter.  He would mention these phases in later
guarantees because it needed to be clear to the municipality
that
transfers of erven in these earlier phases could still happen.
[78]
He
could not state with certainty whether work identified by the first
two guarantees in any of the particular phases was still
outstanding
or not by the date of his testimony.  He claimed not to have the
drawings.
[79]
He
agreed that he would have had a hand in inputting the R6 million
guarantee as well.
[80]
The
defendant also adduced the evidence of Mr. Steven Roberts who was in
the employ of the Great Kei Municipality from 2002 until
2007 as
their technical manager.  He is a qualified civil engineer.  His
job entailed everything to do with infrastructure
within the
municipal area of administration including the management and control
of same, whether existing or planned in the future.
[81]
He
explained that there was a very high demand on the East coast for
developable property at the relevant time and that the municipality

had a major obstacle in that there was no available infrastructure in
place.  It accordingly fell to developers to fund and
provide
bulk infrastructure.  Many of the existing developments that
they inherited from their predecessor did not have adequate
bulk
infrastructure.  The municipality had to provide access to
adequate infrastructure for all.  It also had to ensure
that
developers providing their own infrastructure would do so to an
adequate level.  Khamanga Bay was seen at the time as
the “next
level” of development.  Many of the developments before
had entailed the conversion of existing facilities
into a different
type of ownership, but Khamanga Bay was starting from scratch and
providing everything of its own.  They
were mindful that they
were going to be facing a lot more challenging developments than
this, but saw the Khamanga Bay development
as a test case to ensure
that the municipality could exercise control in a rational manner,
not in an “
ad
hoc
”
manner as had been done by its predecessor.
[82]
He
personally had input in the initial design phase of the development.
He explained commonly how a developer would initially
propose a
development. This would invite comment from his Department and they
would indicate what further requirements the municipality
might
have.  Thereafter the administrative processes would be followed
through the various Departments to ensure that the
developer gets an
approval.  Once granted it would be up to the municipality to
ascertain that the services are being implemented
and that its
requirements are being met. As for transfers, they considered this
the most critical stage because once transfer passes
the municipality
loses control over what happens in the development. Unlike the older
systems -which entailed a one-time approval
and that was that, they
now had a specific checklist in which there were specified phases,
each with its own requirements.  For
the first time they also
augmented with construction guarantees to the value of outstanding
work.  This represented a departure
from the past where they had
previously relied on the good faith of the developer to follow
through. The envisaged guarantee would
have to be sufficient for the
municipality to engage contractors itself to supply what the
developer fell short of.  This
novel approach entailed strict
control of the development from the municipality’s side.
[83]
The
concept of the phased agreement was something that they had to
consider in terms of bigger developments where there was not
an
existing infrastructure to plug into, but where an overall bulk
infrastructure had to be supplied.  It would not make financial

or technical sense for the developer to do the whole thing all at
once and they had to give recognition to the unique features
of each
development.  For example, sewerage works would be suspended
until a certain flow could be reached whereby the plants
would be
able to technically operate.  Roads would be done to a lower
standard bearing in mind that heavy vehicles would cause
them damage
during the construction phase, only to be finalized properly at the
end of the project.  He described the phasing
as a case of
financial necessity from the developer’s point of view.
The municipality was however happy to accommodate
a developer on this
basis, recognizing that if the development fails, the municipality
loses.
[84]
In
the case of the Khamanga Bay development he attended regular site
meetings convened by the developer.  In the initial construction

phase there would also be fixed meetings of their own and they would
inspect progress on the site.
[85]
With
reference to the first letter of the developer dated 4 June 2004
requesting clearance for transfer to be allowed in Phase 1A,
he
explained generically again that such a letter would serve as the
engineer’s certificate for the relevant phase that the
services
are in at that stage as well as an assessment of the value of works
still to be completed which would in turn be covered
by the
guarantee.   He would go and physically verify this on site
and then send a report back to the manager allowing
him to release
the property, which was the case for this particular batch of erven
including erf [...].  By the endorsement
the municipality
indicated that its infrastructural requirements had been met.
He was the person making these inspections
and submitting the
reports.  They were careful to keep effective control in this
manner to avoid being on the hook themselves
later on to provide the
services.
[86]
Regarding
the next letter dated 25 April 2005 in which clearance was sought in
respect of phases 1A, 2 and 3, which would include
erf [...], he was
prompted to suggest that the same applied.  The municipality was
satisfied after he did the physical inspection
on site that its
requirements in respect of infrastructural services were met up to
the end of the relevant phases.  He confirmed
with reference to
photographs that this is what the development looked like at the time
in 2004 within a week of his inspection.
[87]
He
clarified regarding a memorandum which he addressed to the municipal
manager dated 31 May 2005 regarding the development that,
despite
concerns raised, none of his comments regarding internal services
were intended to indicate that there was in his view
not compliance
with his Department’s requirements in respect of those erven
covered up to phase 3, including erven [...]
and [...].
[16]
To the contrary, the requirements were met at that stage for
the relevant number of erven.  In any event, he was further

satisfied that the water for the development was suitable for human
consumption.
[88]
He
was satisfied that the level of services provided in what had been
constructed until then was of a much higher standard than
any other
developments overseen by them at the time.  He was impressed by
the “extra care” that he saw the contractor
going into
there and the quality of work in his view was above what he would
have expected from a commercial contractor.
[89]
He
added that as far as he was concerned, infrastructural services for
those erven the transfers of which were already approved,
were
available to these owners who would have been in a position to build,
albeit he would have carefully considered their building
plans
relative to the overall interests of the development.
[90]
Under
cross examination he readily conceded that the infrastructure at
Khamanga Bay was not completed even as at the date of his
testimony,
but he qualified this concession with regard to how they approached
the issue of endorsements being in accordance with
their requirements
at each relevant phase.
[91]
He
agreed that there might possibly not be approved drawings which were
submitted by Mr. van der Merwe, the civil engineer whose
services
were retained by the developer who designed the infrastructural
works.  However he suggested that the drawings would
probably
have been approved as part of the written approval, thus suggesting
an implied approval.  He acknowledged that none
of the formal
approvals by the municipality or the Development Tribunal refer to
drawings.
[92]
With
reference to the phased development agreement he confirmed his
understanding to be that a development in phases entails the

completion of the infrastructure in each phase and then transfer but
completion meaning complete to the satisfaction of the controlling

authority.  Satisfaction in his view would mean that if there
are certain outstanding items of work, the guarantee in place
would
cover the cost of these.  He explained further that, in
practical terms, the only aspects that they would allow to go
under
guarantee would be things which are not practical to complete at that
stage, for example a main road through the development
which could
not be done at the beginning of the project because it would be
destroyed during the construction of the development.
[93]
He
agreed that what the phased development agreement provided for was
that the relevant properties could be transferred on the strength
of
the guarantee.  He clarified that although the second guarantee
tendered and accepted in 2005 also refers to Phase 1A (given
the
impression in Mr. de la Harpe’s view that a year later these
services guaranteed had still not been installed), the works

specified at that point would have been completely different.
They would probably have affected the relevant phases mentioned
or
even random erven.  In his view there would have been further
progress as further phases were developed which would be
a logical
progression.
[94]
Even
absent a formal certificate from the consulting engineer, required in
terms of paragraph 13 of the phased development agreement,
he was not
fussed that this was an issue because as far as he is concerned the
letters generated by the engineer - who had designed
the development
and who was supervising the works, giving a summary of the works
completed and still necessary, constituted such
a certificate.
From that summary they could assess whether they were happy with the
completion at that stage and whether
or not there was compliance with
their requirements.  Asked to state where it says the works are
complete, he clarified that
it does not have to say that it is
complete.  As far as he is concerned a certificate of completion
is a formal document issued
at the end of the job.  He disagreed
that the terminology used in the services phased development
agreement was correct.
[95]
When
it was pointed out to him that the letter seeking clearance for
transfer in Phases 1A, 1B and 2 and 3 does not even deal with

pollution control but is for reticulation services only, he explained
that that was a bulk supply for the future phases after these
under
discussion and that it was also secured by a separate guarantee with
the developer.  He reiterated that whatever one
would call it,
the summaries of works were acceptable for their purposes and were
accepted by the Land Use Planning Committee as
a certificate, whether
right or wrong.
[96]
He
disagreed that there was an issue with the water service.  Asked
if he was monitoring the sewerage system which would be
a full
waterborne system he clarified that he was monitoring the first three
phases at that stage which entailed the provision
only of a
conservancy tank.
[97]
He
disagreed strongly that the prerequisites for the necessary approvals
were not complied with and also that the interpretation
of the
municipality’s requirements was loosely based on whatever he
thought was okay.  Instead he reiterated that their
requirements
were specifically based on the agreed terms.  He pointed out
that the municipality was represented by four people
who were making
the decisions and signing the documentation.  Apart from
himself, there was full input from the administration
department,
from town planning (represented by a representative in Bhisho because
they did not have a town planner), and by the
building control
officer when he was available or when he could get one appointed.
[98]
In
response to the suggestion that transfers were authorized at Phase 3
after his memorandum, without a water treatment works having
been put
in place, he suggested that it was quite possible phase-wise that the
treatment works would not have been required by
that date.
[99]
He
disagreed with the postulation that because matters culminated in the
guarantee being issued to the homeowner’s association
for the
sum of R6 million to cover the outstanding works in 2015 that this
accorded with the plaintiff’s view that the infrastructural

works were still not in.  It is his view that they were just not
complete.  He added that the requirements of those services
had
probably also had changed quite significantly over a ten year
period.  However, his involvement ended in 2007.
[100]
He
denied that in his time transfers were authorized before the
infrastructural works were complete to the municipality’s

satisfaction.
[101]
As
much as Mr. de la Harpe sought to get Mr. Wayne Selkirk, an
independent pollution control officer hired by the Department of

Environmental Affairs in 2002 to police the development at Khamanga
Bay for environmental compliance, to agree that the infrastructural

services were not in accordance with the requirements of the law, or
SABS standards for water, or otherwise came up short at the
time of
the transfer of the relevant erven, he confirmed in his testimony
that there was no breach in respect of any of the essential
services
at the defining moments.
[102]
His
concern was to ensure that the requirements postulated in the Record
of Decision for the development, and also in the environmental

management plan, were met by the developers.
[103]
In
respect of water, a borehole referred to as Taylor’s Caravan
Park had been allocated for use by the development.
It had a
total yield of 64 cubic metres per day and was registered with the
Department of Water Affairs.  There was also a
second borehole
in Inkwenkwezi Game Reserve with a yield of 129 cubic metres per
day.  This too was registered with the Department
of Water
Affairs in 2004.  Both boreholes were reserved for the use of
the development.  As for Zones 1A, B and 3, the
reticulation for
the water supply was by then in place and potable class 1 water was
available.
[104]
The
sewer reticulation was also in place for phases 1A, 1 B and 3.
There was a requirement for future phases for the provision
of a
treatment facility, but the municipality as per letter dated 31 May
2005, was satisfied that the conservancy tank approach
could be used
until such time as 60 erven were developed.  As far as he was
concerned there was compliance by the developer
in respect of this
service at the relevant moments.
[105]
The
storm water systems for those phases were also in place.
[106]
Under
cross examination he conceded without hesitation that, subsequent to
his role played at the time, he had become involved,
in 2002/2008, in
offering professional services to the developers.  In this
respect he had prepared a proposal with regard
to future sewerage
treatment and also facilitated various discussions with regard to the
upgrading of the storm water management
system.
[107]
Finally
the defendant adduced the evidence of Sharon Russel, a control
scientific technician in the employ of the Department of
Water
Affairs and Sanitation, who confirmed that, in respect of the period
2004/2005, the borehole in use that fed the development
was
registered with the Department, which thereby authorized it to use
the water pending the Department’s verification and
validation
processes which were underway even as at the date of her testimony.
The borehole in favour of the development
at the Inkwenkwezi Game
Reserve was also registered, under the Keith Stanton Family Trust,
but according to her it was not being
utilized at the development at
the defining moments.  As for the standard of the water, it was
classified class 1 and was,
therefore, fit for human consumption.
[108]
She
agreed that in terms of the Water Act, all water use, not just
emanating from boreholes, was presently required to be registered

with the Department and that there was also now a licensing process,
apart from registration.
[109]
Even
though in respect of the relevant erven a licence was not in
existence in 2004/2005, there was, by the time of her testimony,
an
application pending in this respect.  Further, although the
development is incorrectly registered for a schedule 1 use,
this was
going to be corrected through the licensing and verification process
which was underway.  Schedule 1 water use is
not billable, but
the development was certainly going to attract payment of the
necessary tariffs going back to date of registration
once this aspect
of the licencing was finalized, which was in the final processes
according to her.
[110]
In
2003 SABS used her own department’s classification system until
such time as theirs came into effect in 2004.  They
had tested
the development’s water at the time of the transfers using the
standards applied by the Department and it was
indeed class 1 water.
[111]
That
concluded the evidence.
[112]
I
commence with the issue of the interpretation of the suspensive
condition in clause 14.1.
[113]
In
Natal Joint Municipal Pension Fund v Endumeni Municipality
[17]
the Supreme Court of Appeal per Wallis JA set out the correct
approach to be adopted in respect of the interpretation of documents

as follows:
“
[18]
The present state of the law can be expressed as follows.
Interpretation is the process of attributing meaning
to the words
used in a document, be it legislation, some other statutory
instrument, or contract, having regard to the context
provided by
reading the particular provision or provisions in the light of the
document as a whole and the circumstances attendant
upon its coming
into existence. Whatever the nature of the document, consideration
must be given to the language used in the light
of the ordinary rules
of grammar and syntax; the context in which the provision appears;
the apparent purpose to which it is directed
and the material known
to those responsible for its production.
Where
more than one meaning is possible each
possibility
must be weighed in the light of all these factors. The process is
objective not subjective. 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.
…
[20]
Unlike the trial judge I have deliberately avoided using the
conventional description of this
process as one of ascertaining the
intention of the legislature or the draftsman, nor would I use its
counterpart in a contractual
setting, ‘the intention of the
contracting parties’, because these expressions are misnomers,
insofar as they convey
or are understood to convey that
interpretation involves an enquiry into the mind of the legislature
or the contracting parties.
The reason is that the enquiry is
restricted to ascertaining the meaning of the language of the
provision itself.”
[114]
The
endeavor is not to ascertain what the intention of the parties was,
but rather what the language used in the contract means.
[18]
Indeed, what the parties and those who testified think with
hindsight, or believe regarding the meaning to be attached to
the
clauses of the agreement, and thus what their intention was, is not
of any assistance in the exercise.
[115]
In
Bothma-Batho Transport (Edms) Bpk v S Bothma en Seun Transport (Edms)
Bpk
[19]
the Supreme Court of
Appeal emphasized that while the starting point are the words of the
document, which are the only relevant
medium through which the
parties have expressed their contractual intentions, the process of
interpretation does not stop at a
perceived literal meaning of those
words
,
but are considered in the light of all the relevant and admissible
contexts, including the circumstances in which the document
came into
being
.
Wallis J writing in that judgment as well noted that the former
distinction between permissible background and surrounding

circumstances was never very clear and has since fallen away.
Interpretation is no longer a process that occurs in stages
but is
instead “essentially one unitary exercise”.
[116]
With
these pointers in mind I proceed to deal with the issue of the
interpretation of clause 14.1.
[117]
It
is not in contention that the Great Kei Municipality is the local
authority envisaged in the clause and that the infrastructural

services contemplated include water, electricity, sewerage and road
works.  The difference in opinion centers on what is meant
by
“the provision by the seller” at its costs of these
services, as further qualified by the phrase “in accordance

with the local authority’s requirements”.
[118]
It
is common cause that the local authority can only impose requirements
in accordance with what the law provides.  Factually
what those
requirements are or were, or rather the detail of the services
required by the municipality, are similarly not in contention.

These requirements are spelt out in the phased development agreement
and appear to be accepted by the parties as the “what”
of
the municipality’s requirements.
[119]
The
qualification “in accordance with the local authority’s
requirements” directs whose requirements are to control
the
provision by the seller of the services at its costs, namely those of
the local authority.
[120]
The
ordinary popular and grammatical meaning of the word “provision”
is “the action of providing or supplying”,
“something
supplied or provided”
[20]
.
It is plain however that the provision in this instance, the action
word, is qualified by the phrase “in accordance
with the local
authority’s requirements”.  It cannot be read in
isolation.
[121]
The
ordinary popular and grammatical meaning of “requirement”
is “a thing that is needed or wanted”, “a
thing
that is compulsory” and “a necessary condition”.
[21]
[122]
The
ordinary popular and grammatical meaning of the phrase “in
accordance with” is “in a way that agrees with
or follows
(something, such as a rule or request); or something is done in
accordance with a particular rule or system, it is done
in the way
that the rule or system says that it should be done; in accordance
with a rule, law, wish etc.
[22]
[123]
The
suspensive condition is self-evidently for the benefit of the
purchaser and poses on the seller an obligation to provide the

infrastructure at its costs at the direction of the local authority
as it were.  The condition is sub-clause 2 is for the
benefit of
the seller, its stated purpose being to enable it to secure the
necessary finance to enable it to complete the installation
of
services referred to in clause 14.1.  Mr. de la Harpe suggested
that this objective informs the interpretation of clause
14.1 because
it is envisaged by the last suspensive condition in 14.2 that the
seller will obtain the financial support to complete
the installation
of the necessary services, which, in turn, presupposes that the
seller had not, at the time when the agreements
of sale were
concluded, either began or completed the installation of the required
infrastructural services.  A further indication
that they were
not yet complete, so he submitted, is evident from the expectation
that the suspensive conditions were to be fulfilled
“as soon as
possible” after the signing of the agreements.  I think it
can safely be assumed, on everyone’s
version, however, that
when the deeds of sale were signed, the construction of the
development was still in its infancy and that
the services as
designed (or contemplated) were still to be provided or completed.
[124]
It
is also not in contention between the parties that the obvious
purpose of the purchases was for the plaintiffs to acquire plots

which would be developed by the construction of holiday homes on them
in due course, given the approval of the township as a holiday

resort, and that essential services would be necessary to enable that
objective.  It follows logically that without the services
in
place, the erven could not be put to the purpose of the purchases.
[125]
Also
not in contention is that the erven purchased are not independent
erven but instead form part of the Khamanga Bay Property

Development.  This perspective is endorsed by clause 13.1 of the
deeds which envisages that each transferee will be the owner
of a
property forming part of that development, and that each is obliged
together with the others to become a member of a homeowner’s

association consisting of all of the owners having common objectives
in relation to the upkeep of the services, facilities and
amenities
as well as the day to day conduct of the association’s
business.
[126]
So
too, the obvious purpose for the inclusion in the deeds of sale of
clauses 14.1 and 2 was to fix a time or event by when the
sales would
become effective. This must be so because the very nature of a
suspensive condition is that the operation of a contract
is suspended
subject to the occurrence of a future event.  Only if and when
the condition has been fulfilled will an enforceable
contract exist.
[127]
What
the conditions in this instance both contemplate is that for the
deeds of sale to become enforceable, something has to occur
or be
achieved by the seller at its cost.  In respect of clause 14.1
it is the provision by the developer of the infrastructural
services
at its cost in accordance with the local authority’s
requirements.  It is common cause that the condition in
clause
14.2 was fulfilled, however, and that the issue of the seller’s
financial ability to provide the services is not in
contention.
[128]
A
sensible meaning also requires one to have regard to the legal
sub-text which applied at the time in respect of property
developments
generally, the erven in this instance obviously forming
part of an approved township development, and the conditions of
establishment
more specifically.
[23]
[129]
It
is accepted that the development was approved by the Eastern Cape
Development Tribunal (“the Tribunal”) in terms
of
sections 33 and 34 of the Development Facilitation Act, No. 67 of
1995 (“DFA”).  The provisions of the DFA
have been
declared to be in conflict with the Constitution,
[24]
but section 33 of the DFA provided that the Tribunal could at its
discretion impose conditions for the establishment of,
inter
alia
,
engineering services and the provision of streets.  Section 40
of the DFA required a certain legal comity between the developer
and
the municipality as is evidenced from this clause:
“
40.
Engineering services.—
(1) Every land
development area shall be provided with the engineering services
agreed upon between the land development applicant and the local
government body in a services agreement complying with the prescribed

guidelines and approved by a tribunal.
(2) Subject to any
exemption authorised by a tribunal in relation to a particular
services agreement—
(a)
the land development applicant shall provide the engineering services
classified by regulation as internal services;”
(Emphasis
added)
[130]
In
this instance the approval of the development was given in the form
of
Annexure
“PF1” to the defendant’s plea on 24 April
2001.
[25]
It was subject
to the developer being responsible for the provision of basic
services to the area, the water activities being
in compliance with
the Water Service Act, and all engineering services complying with
the relevant SABS codes.  These are
self-evidently conditions
for the approval of the development and are not to be conflated for
present purposes with the suspensive
conditions in 14.1, although the
provision of services as agreed between municipality and developer
have an obvious correlation.
[131]
The
township approval was also given “subject to”,
“conditions of establishment applicable … in line with

all guidelines outlined in annexure “N” to the DFA
regulations”.  These regulations in turn provide that:

“conditions imposed by various departments and parties and
imposed by the Tribunal shall be complied with before any rights
may
be exercised”.  In the relevant context the rights to be
exercised must be the right to take transfer of the sub-divided
erven
in the approved development, but only upon fulfilment of the
suspensive condition obviously.
[132]
It
is also necessary to set out the provisions of section 38 of the DFA,
as it provides a context to the phased development agreement
and its
permissibility. The relevant portions provide that:
“
38(1)
- A registrar shall commence registration of ownership of land in a
land development area, when—
(a)
a general plan of the land development area has been approved or
provisionally approved;
(b)
a subdivided register for the land development area has been opened;
(c)
the designated officer has informed the registrar that any conditions
of establishment
relating to the land development application and
which have to be complied with prior to the commencement of such
registration,
have been complied with; and
(d)
the designated officer has informed the registrar that the respective
obligations of the land
development applicant and the relevant local
government body to provide the engineering services contemplated in
section 40, have
been fulfilled.
(2) Despite the
provisions of subsection (1), a registrar shall commence transfer of
initial ownership of erven in a land development
area when—
(a)
…;
(b)
…;
(c)
…;
(d)
the designated officer has informed the registrar that the land
development applicant, or the
relevant local government body, as the
case may be, has delivered to the designated officer—
(i)
a guarantee in the prescribed form in favour of that surveyor,
conveyancer,
professional engineer, local government body or other
person determined by the designated officer, and issued by a
financial institution
or other guarantor acceptable to the designated
officer, in an amount sufficient to cover the costs of—
(aa)
…
(bb)
complying with conditions of establishment; and
(cc)
fulfilling the respective obligations of the land development
applicant and the relevant local government
body to provide the
engineering services contemplated in section 40; and
(ii)
the powers of attorney and other documents prescribed or necessary to
enable the
person in whose favour such guarantee is made to perform
the acts contemplated in subparagraph (i);”
[133]
A
different condition is imposed in section 31(1) of LUPO, which
provides that:
“
31(1)
– Before registration by virtue of a sub-division in respect of
which an application has been granted under Section
25 is effected by
the registrar of deeds concerned, the transferor shall furnish proof
to the Local Authority concerned that any
condition on which the
application for subdivision concerned was granted, has been
complied
with, and no written authority under Section 96(1) of the Municipal
Ordinance, 1974, … or section 96(1) of the Divisional
Councils
Ordinance, 1976, … shall be issued unless such proof has been
furnished.”
[134]
Evidently
the last requirement poses the legal prescripts for the transfer of
subdivided erven, and does not assist in determining
what clause 14.1
means.  The issue of transfer only arises upon fulfilment of the
suspensive condition, the interpretation
of which is first in
contention.
[135]
What
the provisions above cumulatively demonstrate is the overarching
responsibility of the local authority to oversee the process
before
the critical moment of transfer and then to vouch for compliance. It
also reflects that the municipality is given the power
within a
certain sub-set to enter into a services agreement to ensure that it
meets the objective of exercising control over the
process by
directing the developer to do what it requires. It is the entity that
is ultimately responsible to ensure that the necessary
engineering
services are provided, or guaranteed, and that the conditions of
establishment are also met. The buck stops with it
as it were.
[136]
Finally,
in respect of aspects that are obvious from the deeds of sale and
require no clarification, it is common cause, firstly,
that they do
not refer to a phased development at all.  This absence is of no
significance to my mind, however, once it is
accepted that the
municipality was entitled to conclude an obviously separate services
agreement with the developer to allow the
development to evolve in
phases, and to exact its measure of satisfaction by accepting
guarantees in amounts sufficient to provide
for those services in
pursuit of its own obligation to oversee compliance with all the
conditions of the sub-division.  This
could happen at any stage
prior to transfer of initial ownership of erven in such a
development. What is recognized in the deeds
is that the relevant
erven form part of the approved development and follow that approval
and its necessary sequelae.
[137]
Secondly,
the deeds do not employ the words read into them by the first
plaintiff according to his testimony, namely that the provision
by
the seller of the infrastructural services
had
to be in 100%
,
as he put it.  I have already pointed out above that the
provision of the services cannot be viewed as a standalone condition

for fulfilment.  Rather the act of providing those services is
subject to another layer, which is that it must be done in
accordance
with the local authority’s requirements. The plaintiffs on the
one hand defer to the phased development agreement
as determining
what services had to be provided, but on the other hand ignore the
obvious implication of that acceptance, which
is that the services
would be provided, in accordance with the municipality’s
requirements, on a phased basis, and subject
to guarantees being
provided in lieu of the works being completed 100% at the time of
transfer in each phase.
[138]
That
brings me to the context at the relevant time when the agreements of
sale were concluded or the factual matrix as counsel sought
to call
it.
[139]
On
this issue, the import and significance of the phased development
agreement cannot be overlooked, even though this agreement
was only
put in place after the signing of the deeds of sale.  What is
however not in dispute, and can safely be accepted
from the evidence
- even if the plaintiffs maintain that they had no personal knowledge
that the development was being marketed
as a phased development, is
that the concept of a phased development and more importantly an
arrangement to provide guarantees
in lieu of completed services (even
if it was a “pretence” as suggested by Mr. de la Harpe),
was already known to all
the players in the development before the
deeds of sale
in
casu
were signed.
[140]
Attention
was drawn by Mr. van der Merwe in his evidence to the letter
addressed by him to the Great Kei Municipality dated 23 April
2003 in
which the genesis for the phased development agreement appears.
Its full contents bears repeating:
“
Sonnekus
and Torien cc. are acting as the consulting engineers for the
installation of services to this development.  Good
progress is
currently being made on the installation of the bulk services and
phase 1 internal services.
The
Developer is keen to accelerate the process of transfer of individual
erven to purchasers in order to maintain the existing
momentum on the
sale of these properties.  These transfers can however not be
registered until such time as the endorsement
of the Powers of
Attorney which again is dependent on the issue of the Services
Clearance Certificate.  In order to accelerate
this process, the
Developer is requesting approval to lodge a guarantee, in an
acceptable format, with the municipality to cover
the costs of all
outstanding items that could effect the endorsement of the Powers of
Attorney.  The value of the guarantee
shall be sufficient to
ensure that the outstanding items could be completed by the
municipality or other nominated parties should
the Developer fail to
complete.
This
approach has previously been implemented successfully by the Buffalo
City Municipality and is becoming very popular with Developers
as the
process of registration can run concurrently with the installation to
ensure an early delivery.
Could
you please consider this request and provide us any requirements that
you wish to impose should you agree to the principle.”
[141]
This
critical letter self-evidently pre-dates the signing of the deeds in
question and sets the tone for the municipality putting
down its
requirements in the phased development agreement.
[142]
It
is further consistent with the evidence as a whole that the
developer’s dealing with the municipality was evolving on a

continual basis with each of them giving and taking along the way.
This reciprocity was confirmed in the testimony of Messrs.
van den
Berg and Roberts who explained that the municipality did not have the
capacity at the time to provide decent infrastructural
services for
new developments to plug into and that it was keen to give the
developers
in
casu
a hand up as it were. This was to be a mutually beneficial
arrangement.  The developers would be given the space and time

to achieve their purposes by developing in phases, and the
municipality would be getting something of value in return. In the
meantime it would maintain the necessary control through the services
agreement.
[143]
The
special role played by the municipality in this respect, as the
ultimate controller of the process, assures me that the phrase
“in
accordance with (their) requirements” qualifies that they and
only they could determine when the event or occurrence
suspended by
the operation of the suspensive condition had arrived.  This
fits in with the defendant’s case that the
developer does what
it must, until and when the municipality says it is satisfied that,
in respect of the erven in that specific
phase, transfer could be
effected or not.  The unchallenged evidence is that this is also
the practice in the industry, namely
that the municipality has the
final say regarding the standard of infrastructural services and when
these are provided to its satisfaction.
The fact that the
municipality came around to the popular approach of providing
guarantees in lieu of actual services, also confirms
to my mind the
fluidity of the arrangement between the developer and municipality
and the manner in which the municipality could
control its oversight,
rendering what the developer was doing at all stages of the project
as time went on, “in accordance
with (its) requirements”.
[144]
The
plaintiffs’ expert, Ms. Muckle, could not gainsay that such an
arrangement, between the developer and municipality for
the provision
of infrastructural
services
inter alia
in a phased incremental manner, and even on the basis of a fictional
fulfilment as it were by the giving of guarantees was both
legally
permissible, and accorded with her experience of what happens in the
industry.
[145]
Mr.
Warren also confirmed in his testimony that, in practice, the moment
of the fulfillment of the suspensive condition is when
the
municipality say it accepts that the provision of services it is met
to its satisfaction, subject to the guarantees being put
in place to
meet the particular exigencies in each instance.  This fits in
seamlessly with the reason offered by him for including
the condition
in the deeds, namely that someone, and that being the municipality,
had to say when it was satisfied that transfer
could be passed, not
of a separate standalone property, but of erven in a
multi-dimensional and large resort development, the control
of which
development the municipality was overseeing.
[146]
When
this background is taken into account, it makes sense that the
“provision of services…. in accordance with the

municipality’s requirements”, means that they have the
final say and that such provision  cannot meet the target
unless
and until they confirm as much.
[147]
The
alternate interpretation contended for by the plaintiffs, namely that
the services had to be in 100%, appears to me to be strained
and
divorced from the bigger picture, which is the mutually beneficial
arrangement between developer and municipality.  The
phased
development agreement is but only a manifestation of what they
considered their requirements were and how they would oversee
the
development.
[148]
The
fact that there is no contractual privity between the plaintiffs and
the developing entity in that phased development agreement
is further
neither here nor there.  The municipality was indeed obliged to
record the specifics of how services would be provided
and what their
expectations were, and how they would control the process, in a
separate services agreement. The role of the primary
developing
entity which concluded that agreement with the municipality was aptly
explained in the evidence.
[149]
In
the result I am satisfied that the defendant’s interpretation
of the phrase “the provision of services … in
accordance
with the local authority’s requirements”, means that the
actual installation of the services was not required,
but that the
condition could be fulfilled by way of that phased development
agreement  between its primary developing entity
and the
municipality that it would in due course attend to the installation
of the infrastructural services in respect of the relevant
erven,
such undertaking being underwritten by the guarantees to secure it
doing so. It follows from this that when the municipality
indicated
that its requirements were met to its satisfaction in the case of
each plot, that this was the defining moment when the
agreements in
contention became enforceable and transfer could then be effected.
[150]
This
is the ordinary grammatical meaning of the condition in my view and
is the only one which in my view makes business sense in
all the
circumstances.  It is also the only meaning which accords with
the stated purpose for the inclusion of the condition
in the
agreements, namely to earmark when transfer to the purchaser of an
erf could take place.  The interpretation also facilely
accords
with the factual matrix within which the deeds were concluded
.
[151]
The
party relying upon a contract and, if the contract is subject to a
suspensive condition, the fulfilment of that suspensive condition

bears the onus of proof of both the terms of the contract and the
fulfilment of the suspensive condition.  In this matter
the
Plaintiffs claim that the suspensive condition was not fulfilled
(even on the interpretation contended for by the defendant)
and the
Defendant claims that it was.  In such circumstances it is trite
law that the onus falls on the Defendant, who relies
upon the
fulfilment of the suspensive condition to prove that fulfilment.
That must be so because there is no onus to prove
the negative.
[26]
[152]
Given
my finding on the interpretation issue, it can hardly be gainsaid
that in the case of these two transfers the condition was
fulfilled
when the municipality said the services in respect of each erf were
provided in accordance with their requirements at
the defining
moments.
[153]
In
my view it is entirely irrelevant that it might now appear that the
municipality should not have endorsed the powers of attorney
for the
various reasons contended for by the plaintiffs.  The
defendant’s stance (confirmed by those who testified regarding

the municipality’s role in the process) is that once it is
accepted that their interpretation of what the condition in clause

14.1 means prevails, the suspensive condition was then met by the
endorsements by the municipality that the transfers could then
be
effected, whether right or wrong.
[154]
I
am inclined to agree with this assertion.  It is the end of the
matter insofar as this litigation is concerned, but that
does not
mean that the owners or the home owner’s association are
without their rights to vindicate their positions if they
feel
aggrieved.
[155]
Neither
can it be suggested, on the basis of my finding on the interpretation
issue, that Mr. Warren made a misrepresentation to
the plaintiffs
when he said that the suspensive condition had been fulfilled.
He was entitled to rely on the Municipality’s
say so in
conjunction with all the role players that they were satisfied that
the services were provided in accordance with their
requirements,
which approval was confirmed by endorsing the relevant powers of
attorney in each instance. Even the absence of any
formal engineer’s
certificate does not detract from those endorsements.
[156]
Finally,
it appears to me to be unnecessary to determine the issue of
prescription in all the circumstances.  Had I found in
favour of
the plaintiffs on the interpretation issue, however, I daresay that I
would have had a problem concluding that neither
actual nor
constructive knowledge could have been imputed to them in
circumstances where the first plaintiff conceded that they
were aware
that the services were by the dates of the earliest meetings of the
owners in 2005/2006 not 100% in.  Indeed on
his own version the
first plaintiff  was prepared to accept at the time that certain
works even after transfer would be completed
“down the line”,
a concession in itself that the services were not 100% in.
[157]
In
the premises I issue the following order:
1.
The
plaintiffs’ action is dismissed with costs.
________________
B
HARTLE
JUDGE
OF THE HIGH COURT
DATE OF
HEARING:
12, 13, 14 & 15 September 2016 and
9 & 10 March 2017
DATE
OF JUDGMENT:
22 February 2018
APPEARANCES
:
For
the plaintiff:   Mr. D H de la Harpe instructed by Bax
Kaplan Russell Inc, East London (ref. SLN Clarke/sd/MAY11050).
For
the defendants:  Mr. A D Schoeman instructed by Bate Chubb &
Dickson Inc, East London (ref. Mr. Kretzman/P128/Mat12314).
[1]
It is common
cause that this should have been a reference to the preceding
sub-clause, 14.1 and it was read accordingly.
The second
condition is not in contention.
[2]
The annexure
is a letter addressed by the Eastern Cape Development Tribunal to
“Settlement Planning Services” concerning
the
defendant’s application for the establishment of a land
development area in respect of Khamanga Bay.  It advises
that
the Tribunal has in terms of sections 33(1) and 34 of the
Development Facilitation Act, No. 67 of 1995 (“DFA”),

considered the application for,
inter
alia
,
a township establishment. The next paragraph goes on to state that
“this approval”, which is assumed from the context,
is
subject to,
inter
alia
,
the company being responsible for provision of basic services to the
area; water activities to be in compliance with the Water
Services
Act; and engineering services to comply with relevant SABS Codes and
Redbook Guidelines for engineering services and
amenities.
[3]
This approval
for the township establishment by the Tribunal is confirmed by the
municipality and is regarded as its own approval
in terms of section
25(1) of Ordinance 15 of 1985 (”LUPO”).  It notes
that the conditions contained therein
are also the Minister’s,
being conditions pursuant to section 42(1) of LUPO and then
obviously the rezoning.
[4]
The letter
confirms the condition stated in the preceding paragraph, and adds
that two further conditions which it requires be
inserted in the
title deeds, namely that the approval is subject to the conditions
contained in regulations 3.4 and 3.5 of the
Scheme Regulations
contained in PN 1047/88 promulgated in terms of section 7(2) of
LUPO; and the erf being used to the purpose
permitted in terms of
the zoning scheme.
[5]
This
agreement on the face of it is between a different development
entity than the defendant, and the municipality, and post-dates
the
dates of the sales in this litigation.  This is common cause
between the parties.
[6]
I have adopted the same
nomenclature for the agreement in my judgment.
[7]
It emerged from the evidence
that the same relief had initially been sought in the action in
respect of erf 1531, but that the
plaintiffs had on-sold this
property during the course of the litigation.
[8]
In the first of these
communications dated 4 June 2004 (“the first guarantee”)
the engineer on behalf of the developer
seeks clearance from the
municipality) on the strength of a “Developers Guarantee”
to allow transfer of the erven
in phase 1A (which includes erf
1525), 1B and 2.  (In the introduction the engineer clarifies
that the developer has after
consultation with the municipality
“decided to alter the phasing for transfer purposes”
with the new phasing reflected
below.) An assessment of costs of
outstanding work for storm water, sewers, and water as at 11 May
2004 is provided in a total
value of R185 250,00 and
constitutes the value of the guarantee put in place to ensure
transfer of the listed erven.
The second communication dated
25 April 2005 (“the second guarantee”) follows the same
approach. It relates to phases
1A, B, 2 and 3 and includes both
erven in contention in this action.  It estimates costs of
outstanding work as at 25 April
2005 (which postdates the transfer
of erf 1525), and relates to roadworks, storm water, sewers and
electrical. The value of the
guarantee is R385 291.00.
[9]
The certificates issued by the
municipality are dated 6 July 2004 in respect of erf 1525, and 10
June 2005 in respect of erf 1445.
On the face of it the
endorsements are effected on the premise that the provisions of
section 31 (1) of LUPO have been complied
with in respect of the
subdivisions concerned. An endorsement by the Development Tribunal
dated 15 June 2005 also appears on
the power of attorney in respect
of erf 1445. A separate certificate issued in terms of section 38
(1) of the DFA relative
,
inter alia
, to erf
1525 was put up by the defendant as proof that the Tribunal on 2
July 2004 was satisfied that the conditions of establishment
of the
township concerning each erf  reflected therein had been
complied with, and that the respective obligations of the
defendant
and the Great Kei Municipality to provide the engineering services
contemplated in section 40 of the DFA, if applicable,
had been
fulfilled.
[10]
See fn 9 above.
[11]
The second plaintiff did not
testify.
[12]
The letter and compliance notice
are marked annexures “POC4.1” and “POC 4.2”
to the plaintiffs’
particulars of claim respectively.
The letter is dated 8 August 2013.  The compliance notice is
dated 22 March 2013
and is directed to the developers of the main
developing entity, Port Ferry Properties 71 (Pty) Ltd.
[13]
Interestingly, the discounts
offered were not factored in in the proposed restitution by the
parties reflected in the prayers,
assuming the plaintiffs benefitted
from the commissions stipulated.
[14]
There was an issue with missing documentation from the
municipality’s formal files.
[15]
No. 32 of 2000.
[16]
The concern
raised by him in the memorandum is that “certain of the
service requirements are not clearly specified or, possibly,
clearly
understood.  There also may be certain contradictory issues
arising out of the previous service agreement”.
He goes
on to refer to the two levels of approval being proposed namely for
transfer versus the number of dwellings allowed to
be developed and
adds the concern that “the developer is effectively requesting
the approval for transfer of increasing
numbers of erven while
proposing the same number of dwellings being permitted for
construction”.  He sounds the caution
that “it is
an accepted principle of residential developments that a
construction of dwellings will not take place immediately
and
generally proceeds relatively slowly”.  In this regard
the number of dwellings permitted to be constructed should
be
clearly stated and can in effect be viewed as an “insurance
clause”.  It is on this basis that he proposes
the three
point course to be followed which entails an approval for transfer
of the proposed Phase 3 erven as follows:
“
(a)
The developer providing an engineering services summary report.
This report needs to clearly stipulate the required
services for
each phase to date [1A – 3] as against the certified
completion achieved on-site.  This is to include
work
descriptions as well as values to enable the Municipality to monitor
the situation more effectively.
(b)
The completion of phase 3 is required to be certified as above and
inspected on-site.  The developer is required
to convene a
meeting on-site at the completion of Phase 3 in order that the
entire development to date can be assessed in terms
of general
conditions of approval, specific engineering requirements and EMP
requirements.  At the conclusion of the meeting
the developer
will be required to submit a close-off report for Phases 1 to 3…
(c)
No further authorization for transfers be granted subsequent to
phase 3 until the above conditions are satisfactorily
met.”
[17]
2012 (4) SA
593
paras [18] and [20]
[18]
Shakawa Hunting and Game Lodge
(Pty) Ltd v Askari Adventures CC
[2015]
JOL 33131
(SCA) and Worman v Hughes and Others
1948 (3) SA 495
(A)
at 505.
[19]
2014 (2) SA
494
SCA at par [12].
[20]
Concise
Oxford English Dictionary
[21]
Concise
Oxford English Dictionary
[22]
https://www.collinsdictionary.com
[23]
See definition of “land development area”, “land
development application” and “land development”
in
section 1 of the DFA.
[24]
Johannesburg
Metropolitan Municipality v Gauteng Development Tribunal and Others
2010 (6) SA 182 (CC)
[25]
See footnote
2 above.
[26]
Resisto
Dairy (Pty) Ltd & Auto Protect Insurance Co Ltd 1963(1) SA 632
(A) at 644 G