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[2017] ZAFSHC 76
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Tsangarakis N.O. and Another v Kgato Project Management (Pty) Ltd and Another (1021/2017) [2017] ZAFSHC 76 (8 June 2017)
IN THE HIGH COURT
OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 1021/2017
In
the application between:
ANDRIANE
TSANGARAKIS N.O.
1
st
Applicant
STAMATIOS
TSANGARAKIS N.O.
[In
their respective capacities as Trustees for the time being of the
Andriane Tsangarakis Testamentary Trust, Number MT2527/2000]
and
2
nd
Applicant
KGATO
PROJECT MANAGEMENT (PTY) LTD
(Registration
number:
2015/024842/07
)
1
st
Respondent
NITATRIM
(PTY) LTD
(Registration
number:
2013/125451/07
)
2
nd
Respondent
CORAM:
RAMDEYAL, AJ
HEARD ON:
1 JUNE 2017
JUDGMENT BY:
RAMDEYAL, AJ
DELIVERED ON:
8 JUNE
2017
[1]
It is common cause in this matter that a written agreement of sale
was entered into between both the Applicant and the First
Respondent
in respect of immovable property; namely SS Namib immovable property;
namely SS Namib Unit 1, 2, 3, 4, 5, 6, 7, 8 King
Edward Road 1,
Willows, Bloemfontein on 29 July 2016. The property is a
building divided into Sectional Title Units in terms
of The Section
Title Act, as of 1986.
[2]
The property was sold to the First Respondent on the 11
th
of July 2016 at an auction for an amount of (Two Million and Five
Hundred Thousand Rands) R2 500 000.00.
[3]
It is further common cause that the First Respondent is in breach of
the agreement and the Applicant now seeks remedy in terms
of clause
13.2 of the said agreement.
(attached
in the papers as “FA2”).
[4]
The First Respondent was also, liable to pay the Auctioneers
Commission in the amount of R250 000.00; the application for
payment was brought to court on a separate application and made an
order of court.
[5]
In terms of clause 13 of the said agreement [Breach];
“
In
the event of the Purchaser being in breach of any of the conditions
hereof as at the due date thereof, the Seller or his/her/their
agent
will be entitled without prior notice to the Purchaser to:
13.1
Cancel the sale by written notice transmitted by fax to the
Purchaser’s fax number which appears on these conditions
and
all amounts paid by the Purchaser to date will be forfeited as
“roukoop” and genuine pre-estimated damages and
the
Seller reserves his/their rights to claim any further damages from
the Purchaser - or
13.2
Immediately claim the full purchase price and due compliance with the
terms and conditions thereof,
13.3
The Purchaser hereby undertakes to pay all attorney and clients
costs, tracing fees and collection charges incurred by the
Seller
and/or the auctioneer to obtain payment of the amounts due in terms
of these conditions including interest at the maximum
permissible
rate from date of signature hereof to date of payment.
”
[6]
The Applicant now seeks remedy in terms of clause 13.2 in the form of
specific performance for the First Respondent to provide
the bank
guarantee alternatively cash in the amount of R2,500 000.00
[7]
The First Respondent seeks a dismissal of the application of specific
performance on the grounds that the bank; namely First
National Bank
has made unfruitful promises of delivery of the bank guarantee of
R2,500 000.00 for the last 10 months and in endeavouring
to secure
the attendance of same have run into cash flow problems.
[8]
From the papers it is apparent that negotiations were entered into
between both parties for an extension of the period of deliverance
of
the guarantee; indicative of the First Respondent wanting to comply
with the contract to deliver payment.
[9]
It is not in dispute that the First Respondent indeed endeavoured to
secure the bank guarantee from FNB; FNB having assured
deliverance of
same but to no avail. The First Respondent, it appears, was at
the mercy of FNB to discharge its contractual
obligation to provide
the bank guarantee. Even the Applicant liaised with FNB and
received the response of assurance of the
deal.
[10]
The Applicant, however, disputes that the First Respondent has a cash
flow problem on the basis that he has 23 registered properties
on his
name and basically a wealthy man that can provide cash himself in
lieu of the bank guarantee.
[11]
To a large extent from the papers, it can be accepted that the First
Respondent does have cash flow problems currently; the
future of
monies owing to the First Respondent is indefinite.
The
earlier order of a court ordering the Respondent to pay the amount of
R250 000.00 has also resulted in non-compliance by
the First
Respondent.
[12]
Counsel for the Applicant argued that a cash flow problem can never
be equated to impossibility of performance and that should
a contract
be nullified on the basis of such then our law of contract would
bring uncertainty and commercial instability.
Hence such
contention cannot be entertained as a matter of legal principal.
[13]
Counsel for the First Respondent contends that the First Respondent
cannot perform now; should the court grant an order of
specific
performance the First Respondent will be unable to comply and will be
in contempt of court.
[14]
This court must now decide whether to grant the order of specific
performance together with the costs order as sought by the
Applicant.
[15]
In Christies, The law of Contract in South Africa 6
th
Edition Page 544, Specific Performance is defined as “
…
.
an order to perform a specified act – or to pay money in
pursuance of a contractual obligation.
”
In
general, an aggrieved party has a right to an order of specific
performance. Every party to a binding agreement who is
ready to
carry out its own obligation under it has a right to demand from the
other party, as far as is possible, a performance
of his undertaking
in terms of the contract.
(See
Benson
v SA Mutual Life Assurance Society
1986 (1) SA 776
(A) at 782 H-J)
[16]
In
Farmers’ Co-op Society (Reg) v Berry
1912 AD
343
– 350 It was held:
“…
that
the right to a plaintiff to the specific performance of a contract
where the defendant is in a position to do so is beyond
all doubt …
but courts exercise a discretion in determining whether or not
decrees of specific performance will be made.
They
will not, of course, be issued where it is impossible for the
defendant to comply with them and there are many cases in which
justice between the parties can be fully and conveniently done by an
award of damages. But that is a different thing from
saying
that a defendant who has broken his undertaking has the option to
purge his default by the payment of money…
”
In
Basson
and others v Hanna
2017 (3) SA 22
(SCA) page 22 It was also held that a claim for
damages in lieu of specific performance, is still competent in
circumstances.
[17]
Although a court will generally give effect to a plaintiff’s
choice to claim specific performance, it still maintains
a discretion
to refuse to decree specific performance in a fitting case.
See
Haynes
v King William's Town
Municipality
1951
(
2
)
SA
371 (A) at
378
Bensons
v SA Mutual Life Assurance Society
1986
(
1
)
SA
776
(A)
782 H-J
[18]
There are no rules that govern the exercise of the courts discretion
to order specific performance but a court must tread carefully
to
prevent an injustice resulting; if such order may operate unduly
harshly on the defendant or may not produce the desired effect
as
required by the Applicant.
[19]
In this case the papers do show that if such order of specific
performance be made, it may operate unduly harshly on the First
Respondent and may not produce the desired result required by the
applicant.
In
my view, this is a fitting case to refuse specific performance.
[20]
The contract (“FA2”) Clause 13.3, however, holds the
First Respondent liable to costs.
The
First Respondent too admits liability to the costs of this
application.
[21]
Accordingly the following orders are made:
1. Prayers 1 and 2 are
dismissed.
2. Prayer 4 is granted.
________________
T.
RAMDEYAL, AJ
On
behalf of the Applicants: Adv Zietsman
Instructed
by: EG Cooper Majiedt Inc
BLOEMFONTEIN
On
behalf of the 1
st
Respondent: Adv Fischer
Instructed
by: Peyper Attorneys
BLOEMFONTEIN