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[2016] ZAGPPHC 1015
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Van Niekerk v W en A Le Roux Slaghuis (Pty) Ltd and Another (73622/2015) [2016] ZAGPPHC 1015 (7 November 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
Case
Number: 73622/2015
Date:
7 November 2016
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
In
the matter between:
CLJ
VAN
NIEKERK
Applicant
And
W
EN A LE ROUX SLAGHUIS (PTY)
LTD
1
st
Respondent
VANS
AUCTIONEERS GAUTENG
CC
2
nd
Respondent
JUDGEMENT
DU
PLESSIS, AJ
1.
The
applicant submitted a bid of R 3.3 million on an auction held on 14
May 2015 on what was described as
"Lot 1: Property consisting
of- Double story building with offices, butchery with cold room and
freezer room, storage rooms,
bakery, cell phone tower with rental
income, staff changing/rest rooms, parking for customers and more".
The Auctioneers note read:
"Well established butchery,
ideal opportunity to purchase a fully operational and equipped
butchery and bakery."
2.
The
butchery up for auction originally belonged to the First Respondent
who instructed the Second Respondent, Van's Auctioneers,
to conduct
the sale of the property.
3.
On
the same day, 14 May 2015, the Applicant (Buyer) signed an "Agreement
and Conditions of Sale in respect of immovable property".
On the
same day the Applicant also paid an amount of R 612 150.33 as was
required by the Agreement and described in the Agreement
as R 330
000.00 as a 10% deposit on the total of the purchase price, R 247
500.00 as 7.5% of the purchase price as the Auctioneer's
commission
and R 34 650.00 as 14% VAT on the commission alone.
4.
When
the Applicant visited the property on 18 May 2015, four days after
the auction, he found that the two cool rooms and freezer
room of the
property that he bought were in the process of being removed and were
damaged as parts were already removed from the
cool rooms and the
freezer rooms. The rails and hooks affixed to the roof of the
butchery and on which the animals' carcasses were
transported were
also removed.
5.
The
Applicant immediately on 19 May 2015 informed the Seller and the
Auctioneer (First and Second Respondents) in writing of the
damage
and informed the Respondents that they regarded this conduct by the
Applicant as a repudiation of the Agreement between
the parties.
6.
Further
in the letter dated 19 May 2015 the Applicant instructs the Attorneys
for the First and Second Respondents to regard the
Agreement as null
and void and that no further steps should be taken to have the
Agreement signed by the Seller and that the amount
of R 612 150.00
should be paid back to the attorneys on behalf of the Applicant.
7.
It
appeared that the 2nd Respondent sold the cold and freezer rooms at a
second auction to a third party on the same day. The 2nd
Respondent
admitted that he made a mistake
"dat Mnr Harding 'n tout
gemaak het in die hantering van die veiling deur onder andere die
koe/kamers en/of vrieskamer k/aarblyklik
te verkoop aan 'n ander
koper".
8.
The
written Offer to Buy, was signed by the Applicant on the day of the
auction on 14 May 2015. Clause 2.1 of this document determines
that
"the Purchaser is unconditionally and irrevocably bound to
this offer for a period of 14 calendar days (the calculation of which
excludes the date of signature hereof by the Purchaser) and the offer
is open for acceptance by the Seller at any time during this
period."
9.
Furthermore
in Clause 13.3 of the Agreement and Conditions of Sale, it is
determined that
"in the event of cancellation of this
Agreement, the Purchaser shall forfeit all monies paid, including
commission paid in
terms of this Agreement to the Seller and/or the
Auctioneer as liquidated damages."
10.
Despite
the request of the Applicant to the Respondents attorney in the
letter to the First and Second Respondents dated 19 May
2015, that no
further steps should be taken to have the Agreement signed by the
Seller, the Seller did sign and accepted the offer
on 27 May 2015,
one day before expiry of the 14-day period as provided for in the
Agreement referred to above.
11.
Applicant
applies for a Declaratory Order that the Applicant withdrew his bid
made on 14 May 2015 on the property as referred to
above properly and
lawfully, alternatively request a Declaratory Order that the
Applicant cancelled the Agreement in respect of
the property properly
and lawfully and finally that the Respondents be ordered to repay the
amount of R 612 150.00 to the Applicant
within two days from the date
of this order the one paying the other to be absolved.
12.
The
Respondents deny that the Applicant is entitled to the relief and
they submit that the offer made by the Applicant was rendered
irrevocable by Clause 2.1 and that any attempt to withdraw such an
offer would be ineffective.
13.
As
far as repayment of the monies paid by the Applicant are concerned,
the Respondents rely on Clause 13.3 of the written Sale Agreement
stating that the payment may be retained as pre-estimated damages.
The view of the Respondents are that should the Applicant want
to lay
claim to the monies paid to the Respondents he would have to issue a
summons in Accordance of Section 3 of the Convention
of Penalties
Act, 1962, claiming that the pre estimating damages are
disproportionate to the actual damages suffered by the
Respondents.
14.
The
Respondents deny that the Applicant may rely on a repudiation by the
Respondents as it presupposes the existence of a valid
and binding
Sale Agreement. The Respondent submits that, so the argument goes, by
the time the alleged repudiation took place,
the Applicant's offer
had not yet been accepted, and there was accordingly at the relevant
time no binding Agreement capable of
been repudiated. The alleged
repudiation occurred on 14 May 2015 and the Applicant's offer was
only accepted on 27 May 2015. Therefore,
so the Respondent says,
their conduct was not capable of being construed as repudiation - at
least not until they accepted the
offer. In addition to the above
argument, the Respondents also submit that when the Applicant
informed the Respondent that he did
not regard himself as bound by
the Sale Agreement, that conduct constituted a repudiation of the
Agreement, and, because the Respondents
had no appetite to become
involved in litigation to force the unwilling Purchaser to take
transfer of the immovable property, they
accepted the Applicant's
repudiation of the Agreement of Sale.
15.
The
question that needs answer is whether the Offer to Buy as signed by
the Applicant on 14 May 2015 constitutes an Agreement susceptible
to
repudiation, and if so what the consequences of such repudiation (if
ever there was repudiation) would be on the irrevocability
Clause and
the Forfeiture Clause.
16.
The
Offer to Buy was made at the auction and confirmed in a document
titled
"Agreement and Conditions of Sale in Respect of
Immovable Property"
.It was signed by the Applicant and by
the Second Respondent ,Van's Auctioneers on the same day ,14 May
2015. By signing the aforementioned
Agreement, the Purchaser became
obliged to immediately make payment to the Auctioneer and to the
Seller of certain amounts. To
the Seller, the Purchaser had to pay a
10% deposit and to the Auctioneer he had to pay 7.5% of the purchase
price as commission
and in addition to the above he had to pay 14%
value-added tax on the commission alone. This the Purchaser did on
the same day
14 May 2015.
17.
The
Purchaser became obliged to honor the Agreement that the Offer to
Purchase remain open for acceptance by the Seller, for a period
of 14
days and submitted himself to the consequences of the Forfeiture
Clause already referred to above. A valid and binding Offer
to
Purchase and/or Agreement therefore came into existence between the
Purchaser/Bidder on the one hand and the Seller and Auctioneer
on the
other hand. This Agreement created rights and obligations. Although
it is so that the Offer to Purchase still had to be
accepted, the
Offer to Purchase became a valid and binding Agreement when the
Applicant paid the commission, paid the deposit and
the VAT as
prescribed in paragraph 9.2 of the Agreement. I find that this
Agreement between the parties was an Agreement susceptible
to
repudiation.
18.
If
the Agreement referred to above was susceptible to repudiation, the
question arises whether the conduct of the Auctioneer in
selling the
cold room and the freezer room and some of the attachments to the
property that was bought by the Purchaser in a subsequent
auction may
be regarded as a repudiation of the original Agreement.
19.
Before
determining whether the conduct of the Second Respondent maybe
regarded as a repudiation of his contractual obligations,
it is
opportune to reiterate the requirements for repudiation of
contractual obligations as referred to in
Datacolor International
(Pty) Ltd v lntamarket (Pty) Ltd
[2000] ZASCA 82
;
2001 (2) SA 284
(CSA) at 294 (E -
H):
"Conceivably, it
could therefore happen that one party, in truth intending to
repudiate (as he later confesses), expressed
himself so
inconclusively that he is afterwards held not to have done so;
conversely, that his conduct may justify the inference
that he did
not propose to perform even though he can afterwards demonstrate his
good faith and his best intentions at the time.
The emphasis is not
on the repudiating party's state of mind, on what he subjectively
intended, but on what someone in the position
of the innocent party
would think he intended to do; repudiation is accordingly not a
matter of intention, it is a matter of perception.
The perception is
that of a reasonable person placed in the position of the aggrieved
party. The test is whether such a notional
reasonable person would
conclude that proper performance (in accordance with a true
interpretation of the Agreement) will not be
forthcoming. The
inferred intention accordingly serves as the criterion for
determining the nature of the threatened actual breach."
20.
The
Applicant submits that when the Second Respondent sold the cold room
and freezer room in a second auction, and the First Respondent
accepted the sale, that conduct was a repudiation of the first
auction. The Applicant recorded in the founding affidavit:
"the
Lot on which I had bid on and which bid was accepted, was auctioned
later separately the same day, I was not present as
I left the
premises, the Respondents [First and Second Respondent
-
my
emphasis] accepted the bid for the said items/parts; the Buyer of the
said equipment/parts removed the items/parts".
21.
The
Second Respondent's answer to these allegations were simply
"I
was not in charge of this part of the auction as one of my business
partners, Mr Leon Anton Shand (Mr Shand), deals with
the sale of such
assets. Mr Shand continued with the sale of the loose assets in my
absence".
I
have already referred to the Second Respondent admitting the second
auction of the same property.
22.
In
the Answering Affidavit the Respondents say
"when I was
informed of the fact that the cold and freezer rooms were removed, I
immediately instructed the person at the scene
to halt the removal"
and because the sale of the cold and freezer rooms took place as
a result of an error on the Auctioneer's pamphlet, the Second
Respondent
decided to take action and restore the immovable property
to the condition that it was in when the auction took place. This
however
never happened as the Respondent subjectively believed he was
entitled to sell the fixed rails and hooks from the butchery as they
were movables.
23.
Irrespective
of the subjective belief of the Respondent subsequent to the first
auction, they after the first auction declared that
they don't have
any intention to deliver the butchery to the Applicant in the
condition it was sold in.
24.
Even
after being alerted to the conduct described as repudiation (auction
of the cold and freezer rooms in the second auction),
the
respondents' tender to perform was unequivocal less than is due.
25.
The
Applicant submitted that when the cold room and freezer room were
sold in a separate auction on the same day as the first auction
the
Respondents accepted the bid for the said items/part.
The
response in the answering affidavit is simply:
"I deny the
accuracy Applicant’s attempted summary of the events."
26.
The
repudiation and/or the actions and conduct of the Respondents
understood by the Applicant as repudiation, is a matter of perception
of a reasonable person placed in the position of the Applicant. The
Applicant immediately on 19 May 2015 informed the Respondents
that
their conduct is understood by the Applicant as a repudiation and
that as a consequence they no longer regard themselves as
bound by
the Agreement.
27.
Although
the Respondents conduct that constitutes the repudiation (in the eyes
of the Applicant) is explained in the answering affidavit,
this Court
still has regard to the context in which the conduct occurred. I take
cognisance of the background circumstances which
explains the
circumstances in which the auction occurred on 14 May 2015 as well as
to the matters probably present in the minds
of the parties when they
contracted. I was referred to the Auctioneer's pamphlet that
described Lot 1 bought by the Applicant as
"a
butchery with
cold room and freezer room".
28.
The
Respondents also admit that the sale of the cold and freezer rooms
took place as a result of an error reflected on the Auctioneer's
pamphlet. The Respondents however do not indicate what the error on
the Auctioneer's pamphlet was, particularly as they remain
with the
view that although they sold the cold room and the freezer room the
rails and hooks still fixed to the roof of the butchery
are to be
regarded as moveable. As a result, so the argument goes, they do not
intend to, or need to replace them and is their
sale not conduct
worthy of repudiation, and can the second auction of the cold and
freezer rooms not be regarded as conduct that
constitutes
repudiation, as they always intended to fix the damage and deliver to
the Applicant.
29.
I
do not agree with this submission. The cold and freezer rooms were
again auctioned, and the new buyer was busy removing the cold
room
and the freezer room, when the Applicant communicated his perception
of the Respondents' conduct as constituting repudiation.
30.
The
applicant submitted that the rails and the hooks are in any event
immoveable as it was custom made for that particular cold
room and
freezer room, and it was fixed by means of special fixations.
31.
Although
the rails and hooks could be removed they were fixed with special
fixations. The applicant recorded in paragraph 13 of
the founding
affidavit,
"these rails and hooks are specialized equipment
and were fixed fixations to the building. The rails were permanently
fixed."
32.
The
Respondent's answer to these allegations are found in the Answering
Affidavit where they expressed the view (without any explanation)
that the rails and hooks never formed part of the immovable property
and that because the Applicant never referred to the rails
and hooks
in its Letter of Demand alleging breach and/or a repudiation of the
Agreement, the Respondents are of the opinion
"there is
accordingly no sound reason to elaborate on the rails and hooks."
For all intents and purposes the submission by the Applicant as
to the nature of the rails and hooks therefore remains unchallenged
and in any event on closer scrutiny of the letter dated 19 May 2015
Applicant described his intention and the purpose for which
he bought
the property as follows:
"op datum van veiling het ans
kliente die eiendom behoorlik besigtig en ham deeglik vergewis van
die aard en toestand van die
eiendom wat verkoop sou word. Daar was
twee koelkamers en een vrieskamer, wat vas aan die geboue van die
eiendom geinstalleer en
geheg was en in volle werkende toestand was.
Die koop van die eiendom in die toestand waarin dit was op datum van
veiling was 'n
materiele en wesenlike aspek en die beweegrede tot en
motief waarom ans klient die eiendom wou koop."
It is not in
dispute that the cold rooms and the freezer rooms were sold as a
butchery and that it was advertised as such.
As
the description of the cold room and freezer rooms and the nature of
the rails and the hooks used on the rails are not in dispute,
(not
whether they are moveable or immoveable, but rather how constructed
and how affixed) this Court may determine on the papers
before it
whether the rails and the hooks became immovable when affixed to the
roof of the cold rooms and freezer rooms.
Van Der Westhuizen AJ in
Unimark Distributors (Pty) Ltd vs Erf 94, Silvertondale (Pty) Ltd
1999 (2) SA 986
(TPD) at (E - F)
remarked as follows regarding
the approach to determine whether a movable thing which is affixed to
an immovable thing loses its
identity and become an integral part of
the immovable thing. Three factors are set to be relevant namely
(objectively):
"(1) the nature of the thing which is attached
or annexed, and (2) the manner of its annexation, and (subjectively)
(3) the
intention of the owner of the movable thing at the time its
annexation."
Accepting the nature of the rails and the hooks
and the fact that it has been custom made for the particular cold
Rooms and freezer
Rooms and for a particular purpose, and although
the intention of the owner/Seller of the units was not before Court,
there can
be no doubt that the rails and the hooks were affixed to
the units to ensure that the units can be used for the purpose for
which
they were manufactured.
33.
The
declared nature of the rails and hooks, the manner in which they were
affixed and the purpose for which they were affixed to
the relevant
units rendered the rails and hooks immovable. The declared intention
of the Respondents not to provide the Applicant
with what was
auctioned initially justifies the conclusion that their conduct at
the second auction, selling the cold rooms and
freezer rooms
including the rails and hooks affixed to the roof of the butchery,
constituted repudiation. There was consequently
an unequivocal tender
by the Respondents to perform less than is due. The perception of the
Applicant that proper performance in
accordance with the true purpose
of the Agreement will not be forthcoming was a reasonable conclusion.
34.
When
considering the conduct of the Respondents, cognisance is taken of
the remark of McCardie J in
In Re: Rubel Bronze and Metal Company
and Vos [1918] 1KB at 322:
"the doctrine of repudiation
must of course be applied in a just and reasonable manner. A dispute
as to one or several minor
provisions in an elaborate contract or a
refusal to act upon what is subsequently be held to be the proper
interpretation of such
provisions should not as a rule be deemed to
amount to repudiation
...
but, as already indicated, a
deliberate breach of a single provision in a contract may under
special circumstances, and particularly
if the provision be
important, amount to a repudiation of the whole bargain... In every
case the question of repudiation must depend
on the character of the
contract, the number and weight of the wrongful acts or assertions,
the intention indicated by such acts
or words, the deliberation or
otherwise with which they are committed or uttered, and the general
circumstances of the case."
35.
The
Respondent referred me to the short test for repudiation as described
by Williamson J in
Street vs Dublin 1961(2) SA 4(W) 10:
"the test
as
to whether conduct amounts to such
a
repudiation
(as
justifies cancellation)
is
whether fairly interpreted it
exhibits
a
deliberate and unequivocal intention no longer to
be bound."
Although
this test refers to a deliberate and unequivocal intention no longer
to be bound, Rabie JA in
Van Rooyen vs Minister van Openbare Werke
en Gemeenskapsbou 1978(2) SA 835(A) 845(A - 8)
added the
following:
"om
'n ooreenkoms
te repudieer hoef daar nie,
soos
in die aangehaalde woorde uit
Freeth
vs
Burr te kenne gegee word, 'n subjektiewe bedoeling
te
wees
om 'n einde aan die ooreenkoms te maak nie. Waar 'n
party, byvoorbeeld, weier om 'n belangrike bepaling van 'n ooreenkoms
na te
kom,
sou sy
optrede regtens op 'n repudiering van die
ooreenkoms kon neerkom, al
sou
hy oak meen dat hy
sy
verpligtinge behoorlik nakom."
In
Highveld 7 Property (Pty) Ltd vs Bailes
1999 (4) SA 1307
(SCA)
the
test was described as:
"apart from the
fact that it
is a
question of law, to be decided by the Court,
whether the Respondents' conduct constituted
a
repudiation,
the test which
has
to be applied to determine whether the
original Agreement
was
repudiated
is
an objective one.
It follows that even
a
bona fide, subjective intention not to
repudiate the Agreement would not assist the Respondent if he acted
in such a way as to lead
a
reasonable person to the conclusion
that he did not intend to fulfill his part of the original
Agreement."
Wille
Principles of South African Law,
9th
Edition: Francois de Bois
and Others, at page 866 and 867
remarks (with which remark I
agree):
"if the innocent party accepts
a
repudiation
a
contract comes to an end only on communication of
a
decision
to the other party, the normal consequences of a decision ensued.
The innocent party need not give the guilty
party an opportunity to
retract the repudiation, nor can the guilty party rely on
a
general forfeiture Clause entitling him to written notice and time
to remedy his default."
36.
In
this matter the repudiation took place before performance was due and
this is sometimes described as anticipatory breach and
may take the
form of a statement that the party concerned is not going to carry
out the contract, or an equivocal tender to perform
less than is due,
or as in this matter the taking of an action (the second auction)
inconsistent with the intention to perform.
37.
The
Respondents rely on the Forfeiture Clause to retain the monies paid
by the Applicant. I do not agree with this conclusion ,
the
Forfeiture Clause not apply where it is not the Purchaser/Applicant
who fail to perform but the Respondents who failed to perform
in
terms of the Agreement and/or conducts themselves in a manner that
constitutes repudiation. To give the wording of paragraph
13.3 any
other meaning would enable the wrongdoer to profit from his own
wrongdoing by committing a breach and damaging the property
against
the wishes of the innocent party.
38.
The
reliance on Clause 2.1 rendering the Agreement irrevocable can for
the same reason not disqualify the Applicant from the relying
on the
repudiation of the First and Second Respondents. To give the wording
of paragraph 2.1 any other meaning would enable the
First and Second
Respondents to act in a manner that would constitute a repudiation
but nevertheless to enable them to profit from
their own wrongdoing
to the detriment of the innocent party, the Purchaser: The phrase
"the offer is open for acceptance by the Seller at any time
during this period"
where it appears in the irrevocability
Clause could only mean that the offer remains open for as long as the
Seller acts in accordance
with the Agreement. It is no carte blanche
for the Seller to act in a manner that might be regarded as
anticipatory breach or breach
justifying cancellation, but at the
same time entitling the seller to accept the offer, despite his
conduct.
39.
The
Respondents reference to the conventional Penalties Act 1962 was not
seriously advanced in argument by the Respondent. I agree
with the
Applicant that this Act is not applicable as the Applicant denies
that he is or ever was in breach of the Contract. This
was never
seriously challenged by the Respondent.
40.
I
was referred to various disputes of fact by the Respondent that would
need an order that the matter be referred to evidence. The
facts that
I was referred to however refers to matters that took place after the
repudiation and the communication of the acceptance
of the
repudiation by the Applicant to the Respondent. Whether the damages
are of the extent as averred by the Applicant or not
might be aspects
that can only be dealt with by way of evidence, but the facts
necessary to prove repudiation and/or conduct that
constitutes
repudiation is not in dispute. No necessity therefore exist for the
matter to be referred to evidence.
41.
Having
considered the papers before me and the submissions made by Counsel
both for Applicant and the Respondents, I make the following
order:
(a)
Applicant cancelled the Agreement in respect of the property
at 554 Souter Street, Pretoria West, dated 14 May 2015 properly and
lawfully;
(b)
The First and Second Respondents are ordered to pay to the
Applicant the amount of R 612 150.00 within 14 days from the date of
this Order, the one paying the other to be absolved;
(c)
The First and Second Respondents are ordered to pay the
Applicant's costs jointly and severally, the one paying the other to
e absolved.
For
Applicant: LT Pretorius Attorneys
Adv
SA Visser
For
First and Second Respondent : Thys Cronje Attorneys
Adv
J Vorster.
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG DIVISION PRETORIA
Case
number: 73622/2015
In
the matter between : -
C.L.J
VAN
NIEKERK
Applicant
and
W
EN A LE ROUX SLAGHUIS (PTY) LTD
First
Respondent
VAN'S
AUCTIONEERS GAUTENG CC
Second
Respondent
RESPONDENTS'
SUPPLEMENTARY
PRACTICE NOTE
1.
Allocation for hearing
:
The
Respondents herewith humbly request that this opposed motion be heard
on
Monday
9
May 2016.
The
request is made so as to enable the Respondents' representatives to
attend the hearing of the application - the relevant representatives
are unavailable later in the week.
The
request is made on condition that it does not inconvenience the
Honourable Court.
The
request has also been discussed with Applicant's counsel.
J.
Vorster
Respondents'
Counsel
Brooklyn
Chambers
Pretoria
082
904 0997
(012)
452 8700
3
May 2016