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[2017] ZANCHC 63
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Abrinah 7804 (Pty) Ltd v Kapa Koni Investments CC (717/2016) [2017] ZANCHC 63; 2018 (3) SA 108 (NCK) (1 December 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
(Northern
Cape High Court, Kimberley)
CASE
NO:
717/2016
DATE
HEARD:
20
November 2017
DATE
DELIVERED:
1
December 2017
In
the matter between:
ABRINAH
7804 (PTY)
LTD
Appellant
and
KAPA
KONI INVESTMENTS
CC
Respondent
Coram:
Olivier
J
et
Phatshoane ADJP
et
Pakati
J
JUDGMENT
Olivier
J:
[1.]
On
4 August 2015 the appellant, Abrinah 7804 (Pty) Ltd, and the
respondent, Kapa Koni Investments CC, concluded a written contract
in
terms of which the appellant sold to the respondent fixed property.
[2.]
In
terms of clause 4 of the contract the “
agreement
(was)
subject
to the condition that the Purchaser obtains from a bank or other
financial institution a loan for not less than R5 000 000.00
… in principal within 6 … months of signing of this
agreement, to be secured by the registration of a mortgage bond
over
the property to be registered simultaneously with transfer
”.
[3.]
On
the papers it was not in dispute that the provisions of clause 4
constituted a suspensive condition. It does indeed in
my view
appear to have rendered “
the
agreement subject to a suspensive condition, in that the operation of
the obligation flowing from
(the
agreement)
is
suspended, pending the happening of the uncertain future event which,
in the present matter, was the loan approval by the financial
institution
”
[1]
.
Compliance with clause 4 was clearly a “
precondition
”
for the coming into operation of the contract, and of the appellant’s
obligations in terms thereof. I will deal
with the contrary
submission of Mr Coetzee SC, counsel for the respondent, at a later
stage.
[4.]
It
was common cause that the condition was not fulfilled within the 6
month period stipulated in clause 4. On 5 February 2016
the
respondent informed the appellant that it had only managed to secure
a loan in the amount of R4 500 000.00.
[5.]
On
10 February 2016 a meeting took place between Mr Tsebane on behalf of
the appellant and Mr Solani on behalf of the respondent.
The
fact that the respondent had only succeeded to secure a loan in the
amount of R4 500 000.00 was discussed.
[6.]
In
the founding affidavit Mr Solani’s stated that Mr Tsebane had
insisted that the respondent obtain financing for the balance
of
R500 000.00. According to him Mr Tsebane did, however,
undertake to discuss the issue with his wife and to revert
to him.
[7.]
Mr
Tsebane’s evidence contradicted this. He denied having
undertaken to discuss “
the
matter
”
with his wife or to revert to Mr Solani in this regard.
According to him he had insisted on the full purchase price
in the
written contract.
[8.]
In
reply Mr Solani admitted that Mr Tsebane had not at the meeting been
prepared to reduce the purchase price.
[9.]
In
view of the fact that the respondent claimed final relief, and that
Mr Tsebane’s version of the events at the meeting could
in my
view not be said to have been so “
far-fetched
or clearly untenable that the Court is justified in rejecting them
merely on the papers
“
[2]
,
Mr Tsebane’s version of the events at the meeting had to be
accepted as correct
[3]
.
[10.]
In
any event, and if the probabilities were to be considered, the
question would be why Mr Tsebane would have undertaken to discuss
the
issue of the purchase price with his wife and then to revert to Mr
Solani in this regard if he had already, at the very same
meeting,
made it clear that a reduction of the purchase price
[4]
was out of the question.
[11.]
Shortly
after the meeting
[5]
a
telephonic discussion took place between Mr Solani and Mr Tsebane’s
wife. Mr Solani’s version in this regard
is that Mrs
Tsebane phoned him and that her “
attitude
”
was “
that
the agreement is still proceeding and
(the
respondent has)
to
find the remainder of the purchase price
”.
[12.]
Mr
Tsebane denied that his wife called Mr Solani. According to him
it was Mr Solani who had called her and who had requested
her to
persuade Mr Tsebane to accept a lower price. Mr Tsebane
furthermore stated that his wife had responded by telling
Mr Solani
to deal only with her husband in this regard.
[13.]
The
appellant did not attach a confirmatory affidavit by his wife to the
answering affidavit, and the respondent submitted that
Mr Tsebane’s
evidence about the telephonic discussion therefore constituted
hearsay evidence and that it should be struck.
[14.]
It
was not Mr Tsebane’s evidence that his knowledge of the call
and of the contents of the discussion was based on what he
had been
told by his wife. He may well have been with her at the time of
the call.
[15.]
Mr
Tsebane’s evidence in this regard was not struck or ruled
inadmissible by the court
a
quo
and
I see no basis for interfering in this regard. There is in any
event no counter-appeal by the respondent.
[16.]
This
means that there was a factual dispute regarding the call and the
contents of the conversation and that the trial court would
once
again have been constrained to decide the matter on the basis that Mr
Solani had called Mrs Tsebane and, more importantly,
that Mrs Tsebane
had never informed Mr Solani that “
the
agreement
(was)
still
proceeding
”
if the respondent could get financing for the shortfall of
R500 000.00.
[17.]
On
15 February 2016 the appellant’s attorney addressed a letter to
the respondent. In the letter it was pertinently
pointed out
that the condition in clause 4 had not been fulfilled. It was
furthermore stated that “
Against
the above background, we now afford you a period of 14 days to comply
with clause no 2 of the agreement, failure of which
(
sic
)
shall
result in the agreement being automatically cancelled
”.
[18.]
Clause
2 of the contract reads as follows:
“
The
purchase price is the sum of R5 000 000.00 … and
will be paid in cash and/or secured by a written guarantee
from a
bank or other financial institution, payable free of exchange,
against registration of transfer of the property into the
name of the
Purchaser and which guarantee shall be presented and/or cash shall be
payable by the Purchaser to the Seller’s
hereinafter appointed
conveyancers within 14 … days from date of being requested to
do so by the conveyancers
”
[19.]
The
letter was responded to on 16 February 2016 in a letter by the
conveyancing attorneys, Haarhoffs Incorporated
[6]
,
Kimberley. A request was made on behalf of the respondent that
the purchase price be reduced
[7]
,
alternatively that the respondent be granted a further 28 days to
obtain financing for the balance of R500 000.00.
The
author of the letter expressed the view that termination of the
agreement would not be in the interest of either of the parties.
Insofar as this remark may have been made on the understanding that
the contract had not yet terminated at that stage, it would
have been
misconceived, as will in due course appear.
[20.]
In
a letter dated 22 February 2016 the appellant’s attorneys
responded that the appellant’s instructions were “
not
to vary the Deed of Sale
”.
[21.]
On
25 February 2016 the conveyancing attorneys informed the appellant’s
attorneys that the respondent had obtained funding
for the balance of
R500 000.00 and on 26 February 2016 the respondent’s
attorneys tendered payment of that amount, as
well as payment of the
transfer costs, upon lodging of the transfer for registration.
[22.]
On
3, 4 and 7 March 2016 the conveyancing attorneys addressed letters to
the appellant’s attorneys, requesting information
required for
the purposes of the registration of the transfer of the property to
the respondent.
[23.]
On
7 March 2017 the appellant’s attorneys responded by e-mail to
the conveyancing attorneys. It was stated that the
respondent
had “
still
… not complied with clause no 2, no 4 and no 9 of the Deeds
(
sic
)
of
sale respectively
”
and it was “
confirm
(ed)
the
Deed of sale is cancelled
”.
[24.]
The
respondent’s local attorneys responded to this in a letter
dated 14 March 2016. It was agreed that the provisions
of
clause 4 had indeed constituted a suspensive condition. As
regards the purported cancellation, and clearly with reference
to the
14 period afforded in the letter of 15 February 2016, the author of
the letter stated that the appellant’s attorneys
had had no
right to request a guarantee and/or the payment of the cash in terms
of clause 2, and that the purported cancellation
was therefore
unlawful.
[25.]
It
was against this background that the respondent then approached the
court
a quo
on
application for declaratory orders :
25.1
that the agreement concluded on 4
August 2015 was still valid
[8]
;
and
25.2
that the purported cancellation of the agreement on 7 March 2016 was
“
wrongful
”
[9]
.
[26.]
The
application was successful and the appellant was ordered to pay the
costs thereof
[10]
. In
the judgment of the court
a
quo
:
26.1
it was apparently accepted that the provisions of clause 4 had
constituted a suspensive
condition, and it was stated that it was “…
trite
that if a suspensive condition in a contract had not been fulfilled
by the date stipulated in the contract, then the agreement
automatically falls away
”;
26.2
reference was made to Mr Tsebane’s statement
[11]
that he had at the time of the meeting of 10 February 2016 been
“
contemplating
agreeing to revive the void
ab
initio
agreement
with the
(respondent)
,
if he was able to secure the full purchase price within a few days
…”
;
26.3
it was found that the contents of the letter of 15 February 2016 had
“…
breathed
new life into the corpse in writing
”
and that the granting of an opportunity to comply with clause 2
within 14 days had amounted to “
a
waiver or an extension of the period by 14 days
”.
It was held, with reference to
Van
Schalkwyk v Griessel
[12]
,
that the appellant was not entitled to “
aprobate
and reprobate
”;
the granting of the 14 days period apparently according to the
judgment having constituted an election not to exercise
the right to
cancel or a waiver of that right;
26.4
it was found that, having regarding to the circumstances of the
“’
agreement
’
…
(of)
10 February 2016 …
the
respondent had not summarily terminated the agreement”
and
that, while Mr Tsebane may at the time of the meeting of 10 February
merely have been contemplating to revive the contract,
he had in fact
subsequently done so – presumably once more a reference to the
letter of 15 February 2016, and the 14 day
period granted therein;
26.5
it was held that, against this background and in view of the fact
that loans for the full
purchase price and the transfer of costs had
in fact subsequent to the letter of 15 February 2016 and “
before
the cut-off period
”
stipulated therein been secured, it could not be said that the
respondent had failed to comply “
with
the stipulated conditions
”.
[27.]
The
appellant’s subsequent application for leave to appeal was
dismissed with costs, but on application to the Supreme Court
of
Appeal in terms of section 17(2)(b) of the
Superior
Courts Act
[13]
leave was granted to appeal to a full court of this division.
[28.]
The
grounds of appeal are basically that:
28.1
An extension of the period in clause 4 had never been agreed upon
before the expiry thereof.
In the result the agreement had
become null and void when the period in clause 4 expired. An
extension of the period after
the expiry thereof would legally not
have been possible;
28.2
The agreement had not been revived; and
28.3
The contract (presumably insofar as it may still have been valid) had
been cancelled when
the respondent had not by the end of the period
granted in the letter of 15 February 2016 complied with clause 2.
[29.]
In
Swart
v Starbuck and Others
[14]
it was held that “
The
effect of the suspensive condition in each offer was that, if the
consent were not obtained, the contracts would be regarded
as though
they had not been written
”
and
it was
reaffirmed
that “…
generally
speaking, a suspensive condition suspends the operation of all
obligations flowing from a contract until the occurrence
of a future
uncertain event.
If
the uncertain future event does not occur, the obligations never come
into operation
”
[15]
.
In
Southern
Era Resources Ltd v Farndell NO
[16]
it was held that “
Fulfillment
of a suspensive condition results in the contract being enforceable.
And, normally,
if
the condition fails and the parties have not agreed otherwise, the
contract is rendered void
”
[17]
.
[30.]
The
result of the non-fulfillment of a suspensive condition can be
compared to the result of the fulfilment of a resolutive condition,
where “
the
whole transaction inter partes
(is
regarded)
as
if the absolute contract had never existed
”
[18]
.
[31.]
Could
this consequence of the non-fulfilment of a suspensive condition be
prevented by waiver of the benefit of such a condition
or, in the
event that the suspensive condition had already failed, in a manner
of speaking be undone by such a waiver?
[32.]
There
is no doubt that it would be possible where such a condition is for
the sole benefit of one party and where that party waives
it before
the expiry date stipulated in the contract
[19]
.
[33.]
Even
if the part of such a condition that stipulates an expiry date could
be argued to have been intended for the partial benefit
of the
seller, the purchaser would still be entitled to waive the benefit
afforded to it by the part of the condition that renders
the coming
into operation of the contract subject to the purchaser obtaining a
loan
[20]
.
[34.]
That
the protection afforded by such a suspensive condition can in
principal be waived is therefore beyond doubt, but the question
is
whether such right could be exercised after the agreed (or timeously
extended) expiry date for the fulfilment of the condition.
[35.]
In
Wax
v Goldman
[21]
,
and other cases that followed it in that division, it was held that
waiver could indeed also take place after such an expiry date
[22]
.
[36.]
In
Mekwa
Nominees v Roberts (1)
[23]
it was however held
[24]
, with
reference to
Phillips
v Townsend
[25]
and
Meyer
v Barnardo and Another
[26]
,
that a contract that had lapsed due to the non-fulfillment of a
suspensive condition could not be revived by waiving the suspensive
condition at that stage
[27]
.
[37.]
This
controversy was effectively settled in
Trans-Natal
Steenkoolkorporasie Beperk v Lombaard en ‘n Ander
[28]
,
where the
Phillips
and
Mekwa
judgments,
as well as the judgment to the same effect in
Meyer
v Barnardo and Another
[29]
,
were
approved
[30]
.
[38.]
On
the respondent’s own version there had clearly been no attempt
on the part of either of the parties to waive the benefit
of clause 4
before the expiry date stipulated therein (and it was never the
respondent’s case that the expiry date in clause
4 had been
extended before then).
[39.]
The
fact that Mr Solani had after the expiry date attempted to persuade
Mr Tsebane to accept a lesser purchase price, alternatively
to grant
a further period within which to secure the balance of the purchase
price, is a clear indication that Mr Solani even after
the expiry
date had no desire to bind the respondent to the contract if the
appellant would not accept a lesser purchase price,
or if the
respondent could not at that stage obtain financing for the balance
of the purchase price.
[40.]
On
the evidence it is therefore clear that the respondent could not be
said to have abandoned its benefit in terms of clause 4 at
that
stage. The respondent would in any event, as already shown, not
have been entitled to rely on a waiver on its part that
had
purportedly occurred after the expiry date. It was in fact also
not alleged, either in the founding affidavit or in the
replying
affidavit, that the respondent itself had waived its benefit and
protection in terms of clause 4.
[41.]
Instead
it was contended, and only in reply, that the letter of 15 February
2016, and the fact that it afforded the respondent
a period of 14
days from that date to comply with clause 2, “
by
necessary implication
”
indicated that the appellant “
was
no longer relying
”
on the respondent’s non-fulfillment of the suspensive condition
in clause 4.
[42.]
The
respondent therefore, instead of claiming that it had itself at any
time waived the protection afforded by clause 4, effectively
claimed
that the appellant had waived its common law right to rely on the
respondent’s failure to comply with the suspensive
condition.
This is clearly also what the court
a
quo
in
effect found to have been the position, when reference was made to “
a
person who has waived his accrued right to cancel or has elected
after such accrual not to enforce (that) right
”.
[43.]
Even
though it is of course trite that an applicant generally has to make
out its case, and set out its cause of action, in its
founding
affidavit, I will very briefly deal with this contention.
[44.]
The
respondent bore the onus to prove that the conduct of Mr Tsebane at
the meeting and/or in granting the 14 day period in the
letter,
“
constituted
a renunciation of a right or legal advantage
”
[31]
.
In assessing a waiver defence not only the probabilities must
be considered, but also “
the
factual presumption that a party is not likely deemed to have waived
his rights … Clear evidence of waiver is required
”
[32]
.
[45.]
As
regards the reference of the court
a
quo
to
an “
agreement
”
on 10 February 2016, in other words the date of the meeting, the
respondent would not on the papers, and on the appellant’s
version of the events during and after the meeting, in my view have
discharged its onus to prove such a waiver, on the part of
the
appellant, that had occurred at the meeting. Mr Tsebane’s
conduct at the meeting could certainly not be said to
have justified
the inference of an intention on his part to waive the right to rely
on the failure of the suspensive condition
at that stage.
[46.]
As
regards the letter of 15 February 2016 the fact that the appellant’s
attorney had, in the very same letter, pertinently
recorded that
clause 4 had not been complied with, is in my view objectively
[33]
irreconcilable with an intention to waive the right to rely on that
as a defence.
[47.]
The
fact is, in any event, that the non-fulfilment of the suspensive
condition in clause 4 within the stipulated period (which was
never
extended within that period) resulted in the contract never coming
into operation or being rendered null and void.
This happened
by law and automatically, and would not at that stage, in other words
after the expiry of the period stipulated in
clause 4, have been
subject to an election on the part of the appellant. Thereafter the
appellant, just like the respondent and
for the same reasons, would
not have been able to waive any right that it may earlier have had in
respect of the contract.
“
The condition
….. was clearly a condition inserted for the benefit of the
purchaser. When it was not fulfilled the agreement
lapsed. The
lapsing of the agreement could not possibly have given rise to a
right on the part of the seller which could unilaterally
be waived by
the seller, thereby resurrecting the agreement, …“ :
Fairoaks
Investment Holdings (Pty) and Another v Oliver and others
[34]
“
An
agreement subject to a suspensive condition automatically falls away
if the condition is not fulfilled by the date fixed by the
parties
for its fulfilment (Meyer v Barnardo and Another
1984
(2) SA 580
(N)
).
It follows, therefore, that nothing which is done after the date
fixed for the fulfilment of the condition can affect the position.
If
the condition is held to have been fulfilled by the relevant date,
the contract is good and enforceable; if not, there is no
binding
contract between the parties thereto. No question of fictional
fulfilment can therefore arise by reason of the conduct
of one of the
parties to a contract after the date fixed for the fulfilment of the
condition
.”
:
Basson
v Remini and Another
[35]
[48.]
The
failure of the suspensive condition could therefore not have resulted
in the “
(accrual)
of (a) right to cancel
”,
as apparently found by the court
a
quo
.
[49.]
Mr
Solani furthermore, once again only in reply and in response to Mr
Tsebane’s averment that it had never been agreed to
extend the
period within which the suspensive condition
[36]
had to be fulfilled, claimed that the offer of a 14 day period in the
letter of 15 February 2016 amounted to an election on the
part of the
appellant to grant the respondent an extension of the period for the
fulfilment of the suspensive condition, which
election had been
“
accepted
”
by Mr Solani, “
either
explicitly, alternative by implication
”
[37]
.
[50.]
The
court
a quo
found
[38]
that the offer of a 14 day period in the letter of 15 February 2016
had “
constituted
a waiver or an extension of the period
”.
It is, with respect, not clear from the judgment as a whole what
“
period
”
was being referred to by the court
a
quo
in
making this finding. Although clause 4 was not in so many words
referred to in paragraph [17] of the judgment, the reference
(in the
same paragraph) to a “
suspensive
condition
”
could be argued to be an indication that it was found that the letter
had extended the period stipulated in clause 4.
In paragraph
[10] of the judgment, however, the court
a
quo
found
that the letter had “
afforded
(the respondent)
an
extension of a period of 14 days to comply with Clause 2 of the
agreement
”.
[51.]
Insofar
as the court
a
quo
may
however have found that the 14 day period “
afforded
”
in the letter effectively extended the period stipulated in clause 4
for the fulfilment of the suspensive condition, the
first problem
would be that the contract would, in the absence of any prior
extension of the expiry date in clause 4, have lapsed
or have been
rendered null and void when the suspensive condition had not been
fulfilled by the end of the 6 month period.
There would
thereafter, and at the time of the letter of 15 February 2016, not
have remained any contractual period that could
be “
extended
”.
[52.]
The
second problem would be that the letter quite clearly, in granting
the period of 14 days, referred to clause 2, and not to the
suspensive condition in clause 4. It in other words
purported
[39]
to afford the
respondent the opportunity to comply with the provisions of clause 2,
and not with the provisions of the suspensive
condition in clause 4.
[53.]
Even
if the consequences of the failure of clause 4 as a suspensive
condition could after the expiry date thereof in a manner of
speaking
have been undone by an extension of the period stipulated in clause
4, the fact is therefore that the letter in any event
never offered
to extend that period. Whatever Mr Solani may according to him
have “
accepted
”,
it could on the plain meaning of the contents of the letter not have
been an offer to extend the period stipulated in clause
4.
[54.]
The
further difficulty is that Mr Solani had, on the available and
undisputed evidence, in any event in fact not accepted the
“
extension
”
[40]
offered in the letter of 15 February 2016. The letter of 16
February 2016 had obviously been intended as a response to the
letter
of 15 February 2016, and although the author thereof was the
conveyancing attorney, the letter was clearly drafted on behalf
of
the respondent. In that letter the appellant was requested to
agree to reduce the purchase price to the amount in respect
of which
the respondent had at that stage been able to secure a bond,
alternatively to grant the respondent “
28
business days to obtain the remainder of the purchase price
”,
as “
14
Days might, …. , not be sufficient in this regard
”.
The letter of 16 February 2016 did not convey the acceptance by
the respondent of any period offered in the letter
of 15 February.
To the contrary, it in effect conveyed a counteroffer. The
letter of 16 February 2016 was responded
to by the appellant’s
attorneys in the letter of 22 February, and the refusal “
to
vary
”
the contract quite clearly constituted a rejection of the
counteroffer.
[55.]
It
follows that, insofar as the court
a
quo
found
that the letter of 15 February 2016 had constituted or had led to a
14 day extension of the period for the fulfilment of the
suspensive
condition in clause 4, such a finding would in my respectful view
have been wrong.
[56.]
As
will be seen below, if both parties had after the expiry of the
period in clause 4 desired to continue with the sale of the property
to the respondent, the only solution would have been to conclude a
new contract, albeit possibly on substantially the same terms
as the
lapsed contract. I will revert to this issue, but the fact is
that it was never the respondent’s case that a
new contract had
in some way come into existence after the meeting and/or the letter.
[57.]
It
was in fact also not the finding of the court
a
quo
that
a new agreement had in some way come into existence. The
finding of the court
a
quo
[41]
was
that “
new
life
”
had been breathed into the lapsed and null and void written contract
and had revived it.
[58.]
No
allegation of a revival of the written contract was made in the
founding affidavit. In the replying affidavit, Mr Solani
claimed that the appellant had, by granting an extension, accepted
“
that
the agreement was still alive, either by way of an extension of the
supply of guarantees or by incorporating the new extension
in
a contract which by implication was revived or concluded on the same
terms and conditions
”
[42]
.
[59.]
The
onus to prove this was also on the respondent
[43]
,
and a case to this effect should obviously have been made out in the
founding affidavit.
[60.]
As
already mentioned, the court
a
quo
nevertheless
found that the letter of 15 February 2016 had indeed constituted
a waiver of the appellant’s right to rely
on the
non-fulfillment of the suspensive condition in clause 4, and went on
to find that this had resulted in a revival of the
contract. It
was held that the letter had given the respondent until 29 February
2016 to comply with the agreement, and that
the fact that the
respondent had within that period obtained a loan for the balance of
R500 000.00 meant that “
it
cannot now be said that the
(respondent)
failed
to comply with the stipulated conditions
”
[44]
.
[61.]
In
the first place, and as already pointed out, the letter quite clearly
purported to extend the period for compliance with the
provisions of
clause 2 of the contract, and not those of clause 4. It could
therefore not in any way objectively have been
interpreted as having
been intended as a waiver of the appellant’s rights in respect
of the already failed suspensive condition
in clause 4.
[62.]
Secondly,
and as already said, the contents of the letter itself would not in
my view have justified the inference that the appellant
had thereby
abandoned its right to raise the defence that the agreement had
lapsed, not come into existence or had been rendered
null and void as
a result of the failure of the condition in clause 4.
[63.]
Thirdly,
and insofar as the court
a
quo
found
that the respondent had complied with the request in the letter, that
would in any event in my respectful view have been wrong.
The
letter, and clause 2, required the respondent to do more than to
merely secure a loan or loans for the full purchase price.
It
in effect afforded the respondent 14 days within which to pay the
purchase price to the conveyancers in cash, alternatively
to deliver
to the conveyancers guarantees for payment of the purchase price.
This the respondent had undeniably not done,
which means that even if
the contents of the letter could be seen as an extension of time
(which, as already pointed out, would
in any event legally not have
been possible), the respondent would not have complied with what it
had been required to do within
that time.
[64.]
The
finding of the court
a
quo
that
the appellant had not “
summarily
terminated the agreement
”
[45]
was also, with respect, not in accordance with the legal principles
applicable in the event of the non-fulfillment of a suspensive
condition within the time stipulated in a contract, alternatively
within any extended period that may have been agreed upon prior
to
the expiry of the period stipulated in the contract. As already
pointed out, such a contract would automatically lapse,
fall away or
become null and void. It would not have been necessary, or in
fact legally possible, for the appellant to terminate
the agreement
in such circumstances.
[65.]
It
would in any event not in law have been possible to revive the
contract in the manner suggested by the court
a
quo
.
In the
Westmore
case
[46]
Marais J expressed
himself as follows in respect of the proposition of a revival of a
contract in such a manner:
“
I
do not readily comprehend how a purchaser could unilaterally waive a
clause of a lapsed or defunct agreement (which by definition
no
longer exists) and by doing so unilaterally miraculously
breathe
new life into the corpse
”
(My emphasis)
[47]
.
[66.]
In
the
McPherson
judgment
[48]
it was also held
that a lapsed agreement could not simply be revived. A new
agreement would in effect have to be concluded.
It was held
that the parties could conclude such a new agreement on the same
conditions as those contained in the lapsed agreement
or by
incorporating those terms, but then they would have to eliminate or
amend the condition (especially the cut-off date, which
would already
have passed by then) that had led to the lapsing of the initial
contract; otherwise the new agreement would simply
immediately
self-destruct due to the non-fulfilment of the suspensive condition.
It was also held that, where the contract
is by law required to be in
writing, an oral agreement to eliminate or to amend a material clause
of the lapsed agreement would
not be possible. It would have to
be in writing and signed by both parties
[49]
.
[67.]
In
Cronje
v
Tuckers Land and Development Corporation (Pty) Ltd
[50]
it was also held that the revival of the whole of a lapsed agreement
would necessarily include the revival of the suspensive condition
in
it that had caused the agreement to lapse and, because the period
stipulated in that condition would already have expired, the
revived
contract would immediately terminate or “
self-destruct
”.
[68.]
The
following passages in
Marais
v Kovacs Investments 724 (Pty) Ltd
[51]
are also instructive in this regard:
“
In
the present matter there is no suggestion that any waiver of the
non-fulfilment of clause 4.1 of the deed of sale took place
on or
before 15 August 2005. It follows, in my view, that on that day the
deed of sale automatically “fell away”, lapsed
and became
a dead letter.
It
could be revived only by a fresh agreement between the parties. The
respondent could not, after 15 August 2005, “unilaterally
miraculously breathe new life into the corpse” (Westmore v
Crestanello and others 1995 (2) SA 733 (W) at 736A–B).
It is the respondent’s case, however, that there was, indeed,
an agreement between the parties to “waive” fulfilment
of
the suspensive conditions; this agreement, it is contended by Mr
Dickerson, was tacit and is evidenced by both parties’
conduct
in proceeding, for some months, as if the conditions had, indeed,
been fulfilled.
”
[52]
“
The
second
difficulty which I have with Mr Dickerson’s argument is that
the subject-matter of the deed of sale was immovable property.
In
terms of
section
2(1)
of the
Alienation of Land Act
68
of 1981
,
no alienation of land is of any force or effect “unless it is
contained in a deed of alienation signed by the parties thereto
or by
their agents acting on their written authority”. ……..
These formalities apply also, of course, to an
amendment of a deed of
alienation. The agreement of the parties relied on by the respondent
in terms of which they allegedly agreed
to regard the deed of sale as
valid and effective despite the non-fulfilment of the suspensive
condition in clause 4.1, was not
reduced to writing or signed by or
on behalf of either of them: it is the respondent’s case that
it was tacitly concluded,
as evidenced by their conduct. If I am
correct in holding that any such agreement would necessarily have
constituted an amendment
of the deed of sale (as I do), it follows
that it was invalid and of no force or effect for lack of compliance
with the required
statutory formalities
”
[53]
[69.]
The
finding in paragraph [18] of the judgment of the court
a
quo
that
the appellant had, in “
the
circumstances surrounding the ‘agreement’ from
10 February 2016
”,
revived “
the
contract
”,
clearly implies a finding that the whole of the lapsed contract,
including clause 4, had been revived. As already
pointed out, a
“
revival
”
in these terms would have led to the written contract immediately
again lapsing and “
self-destructing
”,
and the written contract would accordingly at the time of the
application not have been valid.
[70.]
The
respondent’s contentions in this regard, in paragraph 29 of the
replying affidavit, were:
69.1
that Mr Tsebane had, when the 14 day period was offered in the letter
of 15 February
2016, “
accepted
”
that the agreement was at that stage “
still
alive
”;
alternatively
69.2
that the granting of the 14 day period amounted to the incorporation
of such an “
extension
”
into the lapsed contract, thereby reviving it “
on
the same terms and conditions
”,
or to the incorporation of the said period into a (new) contract that
was thereby concluded “
on
the same terms and conditions
”.
[71.]
The
first contention is without any merit. Whatever Mr Tsebane may
have believed and “
accepted
”
would not have made any difference to the legal consequences of the
non-fulfillment of the suspensive condition. In
any event, Mr
Tsebane’s statement that he had contemplated reviving the
agreement that was according to him at that stage
void
ab
initio
[54]
,
militates against him having been under an impression that the
contract was “
still
alive
”
after the expiry date stipulated in clause 4. The 14 day period was
clearly granted, as far as Mr Tsebane was concerned,
with a view to
possibly reviving the contract. The statements by the
appellant’s attorneys in their letters that the
contract would
not be varied, and later that the contract was cancelled, were
misconceived and not in accordance with the law,
because the contract
at that stage no longer existed .
[72.]
As
regards the second contention, the revival of the lapsed contract on
the “
same
terms and conditions
”
would, as already explained, have led to the revived contract
immediately lapsing once again, because the 6 month period
in clause
4 would have had to be calculated from the date of the “
signing
”
of that contract, and would therefore already have expired.
[73.]
The
allegation of the “
incorporation
”
into the “
revived
”
contract of the 14 day period offered in the letter of 15 February
2016 would not have made any difference to this result.
It had,
as already mentioned, clearly not been offered as a period within
which to comply with clause 4 of the contract, and it
could therefore
by no stretch of the imagination be said to have extended the period
therein with 14 days.
[74.]
Mr
Coetzee based his entire argument, if I understood it correctly, on
submissions that the appellant’s offer of the 14 day
period in
the letter of 15 February 2016 is indicative of an understanding, on
the part of the appellant, that failure of the condition
in clause 4
had not resulted in the lapsing of the contract and that that in turn
implies that the appellant had in fact in concluding
the contract not
intended the provisions of clause 4 to constitute a suspended
condition.
[75.]
The
first problem with this argument is that it is in conflict with the
case that Mr Solani attempted to make out in his replying
affidavit.
The gist of what Mr Solani stated was clearly that the failure of the
condition in clause 4 had indeed resulted
in the appellant being
entitled to avoid the contract on the basis of such failure, but that
the appellant had chosen not to exercise
that right. Mr Solani
did not challenge the description in the answering affidavit of the
provisions of clause 4 as a suspensive
condition. In his replying
affidavit he himself in fact referred to those provisions as a
suspensive condition
[55]
.
[76.]
Furthermore
Mr Solani in his founding affidavit referred to, and clearly relied
on, the contents of the letter that his attorneys
had addressed to
the appellant on 14 March 2016, and in that letter the author also
described the provisions of clause 4 as a suspensive
condition.
[77.]
The
offer of a 14 day period can also not be viewed in isolation when
considering whether the appellant had intended clause 4 to
be a
suspensive condition. Mr Tsebane’s statements that the
clause had constituted a suspensive condition and that
the failure
thereof had resulted in the agreement being rendered void
ab
initio
are
clearly irreconcilable with an understanding that the clause had in
fact not constituted a suspensive condition.
[78.]
As
already indicated, the provisions of clause 4 comply with the trite
test for determining whether provisions can be interpreted
as having
been intended as a suspensive condition
[56]
.
[79.]
Mr
Coetzee conceded that, should it be found that clause 4 was indeed a
suspensive condition, it would effectively put an end to
the
respondent’s case on appeal.
[80.]
It
follows that I am of the view :
80.1
that the provisions of clause 4 were intended to suspend the
operation of the contract until a loan or loans had been
obtained for
the full purchase price;
80.2
that failure of that condition resulted in the contract not coming
into operation and in effect falling away, lapsing and/or
being
rendered null and void;
80.3
that the finding that the contract had been revived in the manner
suggested by the court
a
quo
,
was wrong; and
80.4
that the order that the contract “
concluded
on 04 August 2015
(was)
still
valid
”
should not have been granted.
[81.]
Mr
Solani’s alternative contention that a new contract had been
concluded, once again on the “
same
terms and conditions
”
as those in the lapsed contract, when the 14 day period was
granted and allegedly accepted by him, presents different
problems.
[82.]
Mr
Solani did not explain when and how the offer was allegedly accepted.
[83.]
The
contents of the letter of 16 February 2016 would, as already
mentioned, have constituted an implied rejection of the offer of
a
period of 14 days in the letter of 15 February 2016.
[84.]
Furthermore,
and even if the letter of 15 February 2016 could be argued to
have been a written offer by the appellant to conclude
such a new
contract, there was no allegation that the alleged acceptance thereof
was also in writing. In fact, on all indications
it would not
have been. The “
new
”
agreement would then have been invalid, because it would not have
been in writing and signed by both parties, and would
therefore not
have complied with the requirements of
section 2(1)
of the
Alienation
of Land Act
[57
]
.
[85.]
A
further problem is that it was the appellant’s attorneys who
had through the letter of 15 February 2016 “
afforded
(the respondent) a period of 14 days to comply with clause no 2 of
the agreement
”,
the clear implication being that the appellant required the
respondent to pay the full purchase price in cash, or deliver
guarantees, within 14 days of the date of that letter
[58]
.
[86.]
This
would have amounted to a contractual term substantially different
from clause 2 of the lapsed contract. Clause
2 of the
lapsed contract provided for such a request by the conveyancers
(appointed by the appellant), and the author of the letter
of 15
February 2016 was not the appointed conveyancer, as intended in
clause 2 and clause 8
[59]
of
the written contract. The respondent’s attorneys in fact
acknowledged this
[60]
when
pointing out that the appellant’s attorneys would not in terms
of clause 2 of the (lapsed) contract have had the right
to demand the
payment of the cash or the furnishing of guarantees.
[87.]
The
“
incorporation
”
of the 14 day “extension” as a contractual term in the
manner suggested by the respondent and accepted by the
court
a
quo, viz
that
the 14 day period started on the date of the letter, would also have
amounted to the incorporation of a term materially different
from
clause 2 of the lapsed contract, and arguably even in the
substitution of clause 2, because clause 2 of the written contract
provided that the 14 day period would run from the date of a request
by the conveyancing attorneys that the purchaser pay the purchase
price in cash or deliver guarantees for such payment.
Amendments like these would have had to be in writing and signed by
both parties.
[88.]
In
any event, the respondent never sought a declaratory order to the
effect that a new agreement had been concluded and was valid
at the
time of the application.
[89.]
This
brings me to the finding of the court
a
quo
that,
because the respondent had managed to obtain financing for the full
purchase price within the period of 14 days from
the letter of
15 February 2016, “
equity
require
(d)
that
the property be transferred to it
”
[61]
.
[90.]
In
this regard I would refer to the
Meyer
case
[62]
, with which I
respectfully agree and in which it was held
[63]
that equity played no role in circumstances like these and that what
is relevant is “
the
intention of the parties at the time of contracting
”.
It was further held
[64]
that
“
the
fact that in the result the loan was only one day late, that
provision is made for her to call for a guarantee to secure payment,
and that she has in the result not suffered any prejudice is
irrelevant if one bears in mind, as in my view one must, that
it
is the intention of the parties at the time of contracting which is
the determining factor
”
[65]
.
[91.]
In
the present matter the intention of the parties at the time of the
conclusion of the agreement had clearly been that the coming
into
operation of the agreement, and therefore of the respondent’s
right to the transfer of the property into its name, was
not only
“
subject
”
to the respondent obtaining a loan or loans for the full purchase
price, but also to that happening within the stipulated
period.
The issue of time had therefore clearly been important and the
parties had, at that stage, clearly intended that
there should within
6 months of the signing of the contract be certainty as regards the
respondent’s ability to pay the purchase
price.
[92.]
This
brings me to the declaratory order that the cancellation of the
agreement on 7 March 2016 was “
wrongful
”.
No clear reason/s can be discerned from the judgment for this order.
The only inference that can be drawn is
that the court
a
quo
found
that the respondent had, by securing the required amount “
before
the cut-off period
”
and “
within
the extended period
”,
complied with “
the
stipulated provisions
”
of what the court
a
quo
had
viewed as the revived written contract
[66]
,
and that the contract would therefore not have been susceptible to
cancellation on the basis that there had not been compliance
as
required in the letter of 15 February 2016.
[93.]
As I have
already said, the respondent in fact did not comply with the request
in the letter. It did not within the “
extended
”
period of 14 days comply with clause 2 of the agreement, in other
words by paying to the conveyancers the purchase price
in cash or by
delivering to them guarantees for such payment, as requested.
[94.]
In my
view the cancellation would therefore, if the contract had at that
stage been valid and in existence, indeed not have been
unlawful on
this particular basis.
[95.]
As
already mentioned, the respondent’s attorneys took the
stand
[67]
that the appellant’s
attorneys had not in terms of clause 2 of the contract been entitled
to demand that the respondent comply
with clause 2, and it appears as
if it was on that ground that they stated in their letter of 14 March
2016 that the cancellation
of the contract on the basis of a failure
to comply with the demand in the letter, would have been unlawful.
[96.]
In view
of my conclusion above that the agreement of 4 August 2015 fell away
or lapsed when the suspensive condition failed, it
is unnecessary to
decide this point.
[97.]
The
contract no longer existed after the expiry of the 6 month period
stipulated in clause 4. At the time of the letter of
15 February 2016 there was therefore no clause 2 to comply with,
and at the time of the letter of 7 March 2016 there would
have been
no clause 9 in terms of which the appellant could have had a right to
cancel
[68]
. There had,
at the time of the purported cancellation, existed no contract which
could be cancelled.
[98.]
In my
view
court
a quo
should
therefore have found that the contract of 4 August 2015 had lapsed,
that it had not been revived and that it had no longer
existed at the
time of the application, and should on this basis have dismissed the
application in respect of both declaratory
orders sought by the
respondent.
[99.]
There
would then, in my view, not have been any reason why the appellant
should not have been awarded costs in the application.
[100.]
It
follows that I am of the view that the appeal should succeed and that
the orders of the
court
a quo
should
be set aside, and substituted with an order that the application is
dismissed with costs.
[101.]
There
is no reason why the costs of the appeal should not follow this
result.
[102.]
When
leave to appeal was granted the costs order against the appellant in
the unsuccessful application for leave to appeal was not
varied in
terms of section 17(2)(b) of the Superior Court Act, which provides
that, if leave to appeal is granted by the Supreme
Court of Appeal,
it “
may
vary any order as to costs made by the judge or judges concerned in
refusing leave”
.
The subject of the appeal that the appellant was granted leave to
pursue is the main application, and not the application
for leave to
appeal. In the circumstances it would unfortunately not in my
view be competent for this court to order that
those costs be costs
in the appeal. It would be up to the appellant to decide
whether to approach the Supreme Court of Appeal
in this regard.
[103.]
The
following orders are therefore made:
1.
THE
APPEAL SUCCEEDS AND THE ORDERS OF 14 OCTOBER 2016 THAT:
“
1.
The agreement between the Kapa Koni Investments CC and Abrinah 7804
(Pty) Ltd
concluded on 04 August 2015 is still valid;
2.
The purported cancellation of the agreement by Abrinah 7804 (Pty)
Ltd
on 07 March 2016 was wrongful;
3.
Abrinah 7804 (Pty) Ltd pays the costs of this application on the
party and party scale
”
.
ARE
SET ASIDE AND SUBSTITUTED WITH THE FOLLOWING ORDER:
“
The
application is dismissed with costs.”
2.
THE
RESPONDENT IS ORDERED TO PAY THE COSTS OF THE APPEAL.
______________________
C
J OLIVIER
JUDGE
NORTHERN
CAPE DIVISION
I
concur.
______________________________
V
M PHATSHOANE
ACTING
DEPUTY JUDGE PRESIDENT
NORTHERN
CAPE DIVISION
I
concur.
______________________
B
M PAKATI
JUDGE
NORTHERN
CAPE DIVISION
For the
Appellant:
Adv A J Van Tonder
(Instructed by
Towell & Groenewaldt Attorneys)
For the
Respondent:
Adv W J Coetzee SC
(Instructed by
Towell & Groenewaldt Attorneys
)
[1]
Kootbodien and Another v Mitchell’s Plain Electrical
Plumbing and Building CC and Others
2011 (4) SA 624
(WCC) para
[44]
[2]
Plascon-Evans Paints Ltd v Van Riebeeck Paints
(Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 635 C
[3]
Compare
Gower and Another v Gowar and Others
2016 (5) SA 225
(SCA) para [36]
[4]
Presumably to the amount for which a loan had at that stage been
secured.
[5]
Possibly on 12 February 2016.
[6]
The attorneys appointed by the appellant as the conveyancers (See
clauses 2 and 8 of the written contract).
[7]
Presumably to the amount of the loan that had
been secured.
[8]
Prayer 1 of the notice of motion.
[9]
Prayer 2 of the notice of motion.
[10]
The notice of motion did not contain a prayer for costs. It
was only in the replying affidavit that Mr Solani requested
that the
relief sought in the notice of motion be granted with costs.
[11]
In his answering affidavit.
[12]
1948 (1) SA 460
(A) at 473
[13]
10 of 2013
[14]
2017 (5) SA 370
(CC) para [6] and footnote 5
[15]
My emphasis.
[16]
2010 (4) SA 200
(SCA) para [11]
[17]
My emphasis.
[18]
See the quote from
Wessels on Contract
(Volume 1) in
Amoretti
v Tuckers Land and Development Corporation (Pty) Ltd
1980 (2) SA
330
(W) at 332 to 333
[19]
Manna v Lotter and Another
2007 (4) SA 315
(C);
Kootbodien
and Another v Mitchell’s Plain Electrical Plumbing and
Building CC and Others
, footnote 1
supra
, para [49]
[20]
Compare
Meyer v Barnardo and Another
1984 (2) SA 580
(N) and
Westmore v Crestanello and Others
1995 (2) SA 733 (W)
[21]
1965 (4) SA 386
(W)
[22]
See also
Alessandrello v Hewitt
1981 (4) SA 97 (W)
[23]
1985 (2) SA 498 (W)
[24]
At 501
[25]
1983 (3) SA 483
(C) ([1983] 1 All SA 8 (C))
[26]
Reference in footnote 20
supra
.
[27]
See also
Marais v Kovacs
Investments 724 (Pty) Ltd
[2009] 1 All SA 174
(C);
[zRPz]
Marais
v Van Niekerk
1991 (3) SA 724 (E)
[28]
1988 (3) SA 625
(A) ([1988] 2 All SA 475 (A))
[29]
Reference in footnote 20
supra
.
[30]
AT 640; See also
McPherson v Khanyise Capital (Pty) Ltd
2010
JDR 0060 (GSJ) para [23]
[31]
Nkata v Firstrand Bank Ltd
2016 (4) SA 257
(CC), footnote 50
[32]
Witon Chemicals (Proprietary) Ltd v Rebuff (Proprietary) Ltd
2002 JDR 0625 (T) at p 12
[33]
“
The test to determine intention to waive has been said to
be objective …. That means, first, that intention to
waive,
like intention generally, is adjudged by its outward
manifestations …; secondly, that mental reservations, not
communicated,
are of no legal consequence …; and, thirdly,
that the outward manifestations of intention are adjudged from the
perspective
of the other party concerned, that is to say, from the
perspective of the latter’s notional alter-ego, the reasonable
person
standing in his shoes
”:
Road Accident Fund v
Mothupi
2000 (4) SA 38
(SCA) at 49H
.
[34]
[2008] ZASCA 41
;
2008 (4) SA 302
(SCA) para [22]
[35]
[zRPz]
1992
(2) SA 322
(N) at 327 B - D
[36]
In other words clause 4 of the written contract.
[37]
See paragraphs [16] and [17] of the answering affidavit and
paragraphs [13] and [14] of the replying affidavit.
[38]
In paragraph [17] of the judgment.
[39]
I use this word advisedly, because the contract, including clause 2,
had by then already lapsed.
[40]
Irrespective of whether it was granted in respect of the period
stipulated in clause 2 or in respect of the period stipulated
in
clause 4.
[41]
See paragraphs [17] and [18] of the judgment.
[42]
My emphasis.
[43]
Compare
Amoretti v Tuckers Land and Development Corporation (Pty)
Ltd
, footnote 18
supra,
at 331H – I
[44]
See para [17] of the judgment of the court
a quo
.
[45]
See para [18] of the judgment of the court
a quo
.
[46]
Reference in footnote 20
supra
.
[47]
At 736A
[48]
Reference in footnote 30
supra
.
[49]
See also
[50]
1981 (1) SA 256 (W)
[51]
Reference in footnote 27
supra
.
[52]
At 179 – 180 of the judgment.
[53]
At p 180 of the judgment.
[54]
Replying affidavit: paragraph 24.3.
[55]
Record : p 074
[56]
See para [3]
supra
.
[57]
68 of 1981; Compare
Marais
v Kovacs Investments 724 (Pty) Ltd
, footnote 27
supra
[58]
That is what the respondent could in terms of clause 2 have been
requested to do.
[59]
Which recorded that Haarhoffs Incorporated would be the conveyancing
attorneys.
[60]
In their letter dated 14 March 2016.
[61]
Para [18] of the judgment.
[62]
Reference in footnote 20
supra
.
[63]
At 586B
[64]
At 586C
[65]
My emphasis.
[66]
See paragraphs [17 and [18].
[67]
In their letter of 14 March 2016.
[68]
Clause 9 of the contract of 4 August 2015 provided,
inter
alia
, that if the purchaser failed to furnish a
guarantee as required in clause 2 within 14 days, the seller would
be entitled to
declare the sale cancelled, without notice.