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[2007] ZASCA 15
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Propfokus 49 (Pty) Ltd and Others v Wenhandel 4 (Pty) Ltd (103/06) [2007] ZASCA 15; [2007] SCA 15 (RSA);[2007] 3 All SA 18 (SCA) (20 March 2007)
Links to summary
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
CASE
NO 103/06
Not
reportable
In the matter
between:
Propfokus
49 (Pty) Limited
First
Appellant
thomas
nicholas john steynberg
Second
Appellant
david
johannes steynberg
Third
Appellant
and
Wenhandel
4 (Pty) Limited
Respondent
Coram
:
Nugent,
Van Heerden et Combrinck JJA
Heard:
27 February 2007
Delivered:
20 March 2007
Summary:
Written
agreement – rectification
–
requirements
for
Neutral
citation: This judgment may be referred to as
Propfokus
(Pty) Ltd v Wenhandel (Pty) Ltd
[2007]
SCA 15 (RSA)
JUDGMENT
VAN HEERDEN JA:
[1]
This
is an appeal against a judgment of the Cape High Court granting, on
application, an order for rectification of a written agreement
for
the sale of land. The agreement was entered into between the
first appellant (Propfokus 49 (Pty) (Ltd))
and
the respondent (Wenhandel 4 (Pty) (Ltd)) on 5 July 2004. The
second and third appellants are the only two shareholders
in
Propfokus. For the sake of convenience the appellants will
hereafter be referred to collectively as ‘Propfokus’
and
the respondent as ‘Wenhandel’.
[2]
In
terms of the agreement, Propfokus sold certain immovable property
known as Erf 1410 Kuils River, Western Cape (the property) to
Wenhandel, a property development company. The purchase price
was formulated as follows in clause 2 of the original agreement:
‘
Die
Koopprys is die bedrag van R1 000 000-00 (EEN MILJOEN Rand)
betaalbaar op datum van Registrasie van Oordrag in die koper se naam
plus 2 standaard eie titel wooneenhede alternatiewelik 3
deeltiteleenhede met ’n gesamentlike waarde van R800 000
(Agthonderd
Duisend Rand) op die verkoper of sy genomineerde se naam
oorgedra te word so spoedig as moontlik. Die verkoper moet die
eenhede op
plan nomineer binne 7 dae nadat die koper of sy agent
daartoe versoek.’
[3]
At
a later stage, the parties agreed to amend clause 2 of the written
agreement to provide for the delivery of two standard separate
title
units to the exclusion of any sectional title units. The words
‘
alternatiewelik
3 deeltiteleenhede’
were
deleted and the words ‘[s]ien aanhangsel A en B hierby aangeheg
vir besonderhede oor die 2 eenhede’ were inserted
at the end of
clause 2. There is an irreconcilable dispute on the papers
concerning the date upon which and the reasons why
this amendment was
effected.
[4]
In
a subsequent development Wenhandel brought an urgent application
consisting of two parts before the court
a
quo
.
The first part sought a rule
nisi
prohibiting
Propfokus from selling, burdening or alienating, or attempting to
sell, burden or alienate the property, or to alter or
attempt to
alter the status of the property in any way pending the final
determination of the second part of the application, to
which I will
refer as ‘the main application’. In the main
application, Wenhandel sought,
inter
alia
,
an order rectifying clause 2 of the agreement by amending the
first sentence of the clause to read as follows:
‘
Die
Koopprys is die bedrag van R1 800 000.00 betaalbaar op die datum van
registrasie van oordrag in die koper se naam, alternatiewelik
die
bedrag van R1 000 000-00 (EEN MILJOEN Rand) betaalbaar op datum van
registrasie van oordrag in die koper se naam plus 2 wooneenhede
in
die beoogde ontwikkeling met ’n gesamentlike waarde van R800
000-00 (Agthonderd Duisend Rand) op die verkoper of sy genomineerde
se naam oorgedra te word so spoedig as moontlik.’
It is worth noting
that clause 2, as sought to be rectified, makes no mention of the
type of dwelling unit to be transferred.
[5]
The
rule
nisi
was
granted on 27 May 2005 by agreement between the parties. On 8
December 2005, Allie J granted an order for rectification
of the
agreement in the terms set out above, together with a further order
declaring the agreement as rectified to be valid and enforceable.
Propfokus was also ordered to do everything necessary to transfer the
property to Wenhandel within seven days of the date of the
order
‘teen betaling van die volle koopprys’, failing which the
Registrar of the High Court was ordered to take the necessary
steps
to effect the transfer on behalf of Propfokus. With the leave
of the High Court, Propfokus now appeals against this order.
[6]
Wenhandel
purchased the property for the purpose of erecting dwelling units
thereon. Prior to the amendment of the agreement
and for some
time thereafter, the parties laboured under the impression that the
relevant local authority would permit separate title
units to be
built upon the property. That impression was gained from
information which Wenhandel had received from the local
authority.
Pursuant to the agreement as amended, Propfokus chose two separate
title dwelling units off plan and, in October
2004, concluded
purchase and building agreements with Wenhandel in respect of each of
these units.
[7]
The
local authority thereafter decided to zone the property exclusively
for sectional title development. Propfokus apparently
became
aware of this decision only on 20 April 2005, when Wenhandel’s
attorney wrote to Propfokus’ attorney in respect
of the delays
relating to registration of transfer of the property and stated that:
‘
Ons
wil vir die rekord daarop wys dat dit nie langer eie titel eenhede is
nie, maar deeltitel eenhede ooreenkomstig die magtiging
deur die
plaaslike owerheid’
[8]
In
subsequent correspondence between the respective attorneys, Propfokus
referred to the amendment to the agreement and insisted that
it had
never intended to accept two sectional title units as part payment
for the property, but only two separate title units.
In these
circumstances, so Propfokus contended, the nature of the property
rights attached to the dwelling units had changed materially
from
that stipulated in the amended agreement. Propfokus accordingly
purported to cancel the agreement. Wenhandel subsequently
tendered to pay R1 800 000.00 against registration of transfer of the
property, but this was refused by Propfokus. Wenhandel
regarded
the cancellation as unlawful, while Propfokus adopted the stance
that, even if it were to be found that the agreement was
not validly
cancelled, it was on Wenhandel’s own version not possible for
it to perform in terms thereof.
[9]
After
settlement negotiations between the parties had failed, Wenhandel
launched the application culminating in the order which is
the
subject of this appeal.
[10]
At
the hearing before us, counsel for Wenhandel argued that, even in the
absence of rectification, a proper interpretation of the
agreement
between the parties entitled Wenhandel to an order that Propfokus
transfer the property to the former against payment of
‘the
full purchase price’ of R1 800 000. Relying on
a number of cases dealing with the legal nature of
so-called
‘trade-in agreements’ in the context of the sale of motor
vehicles,
[
1]
counsel
submitted that that the agreement, properly construed, provided for a
purchase price of R1 800 000, part of which was to be
paid, at the
option of the purchaser, in the form of two units. Thus, so it
was contended, Wenhandel as purchaser was entitled
to tender
R1 800 000 in payment of the purchase price if (for
example) transfer of the two units became impossible. According
to counsel, clause 2 had to be interpreted to mean that Wenhandel
always had the option of paying the ‘full purchase price’
of R1 800 000 in cash against registration of transfer of
the property.
[11]
I
do not think that this is the correct construction of the agreement.
The cases relied upon by counsel deal with a materially
different
factual matrix and are not in point.
[
2]
Moreover,
the construction sought to be placed on clause 2 of the agreement as
amended goes contrary to the well-established rules
for the
interpretation of contracts. As was stated by Joubert JA in
Coopers
& Lybrand & others v Bryant
[
3]
with
regard to the ‘golden rule’ of interpretation, the
language in the document is to be given its grammatical and ordinary
meaning, unless this would result in some absurdity, or some
repugnancy or inconsistency with the rest of the instrument.
[12]
In
this case, giving the wording of clause 2 (as amended), its
grammatical and ordinary meaning does not result in any ambiguity,
absurdity or inconsistency with the rest of the agreement. The
wording of clause 2 is clear: the purchase price of the property
is
R1 000 000 plus two separate title dwelling units in the
proposed development (as nominated by the seller off plan and
with a
combined value of R800 000)
[
4]
.
The construction contended for by counsel would have made no
commercial sense for Propfokus. Not only would Wenhandel
have
had the benefit of not being obliged to pay the full price in cash
‘up front’ upon registration of transfer but,
should the
value of the dwelling units increase after the date of conclusion of
the agreement, Propfokus would be unable to insist
on reaping the
benefit of this increase in value. To my mind, such an
interpretation would in fact conflict with the ‘nature
and
purpose’ of clause 2 as amended.
[13]
I
turn now to the aspect of rectification. In order to succeed
with its claim for rectification, Wenhandel had to allege and
prove
the following:
(a)
that an agreement had been concluded between the parties and reduced
to writing;
(b)
that the written document does not reflect the true intention of the
parties – this
requires that the common continuing intention of
the parties, as it existed at the time when the agreement was reduced
to writing,
be established;
(c)
an intention by both parties to reduce the agreement to writing –
in the present case,
the agreement was for the sale of land and,
therefore, had to be in writing in order to be valid and binding;
(d)
a mistake in drafting the document, which mistake could have been the
result of an intentional
act of the other party or a
bona
fide
common
error; and
(e)
the actual wording of the true agreement.
[
5]
[14]
It
is to requirement (b) that I immediately turn for it seems to me that
it is at that level that the case for rectification fails.
[15]
Propfokus’
case throughout the proceedings was that the true agreement between
the parties is correctly reflected in the written
agreement, as
amended. Wenhandel never disputed this stance during the course of
the correspondence exchanged between the parties’
respective
attorneys. So, for example, when Propfokus’ attorney, in
a letter dated 8 April 2005, purported to put Wenhandel
to terms as a
result of ‘die onnodige vertraging in hierdie oordrag’
and (incorrectly) claimed payment of R1 800 000
within 14
days ‘in terme van klousule 12 van die koopkontrak’, the
response of Wenhandel’s attorney was to suggest
that the sum of
R1 000 000 immediately be placed in trust for Propfokus’
benefit pending registration of transfer
of the property, and further
to refer to ‘die eenhede wat u kliënt toekom’.
Moreover, after Propfokus’
attorney had purported to cancel the
agreement on its behalf, Wenhandel’s attorney threatened
Propfokus, on 5 May 2005, with
‘’n aansoek vir ‘n
verklarende bevel dat gemelde koopkontrak geldig en afdwingbaar is en
vir ‘n bevel wat
oordrag gelas’
.
There
is nothing in the correspondence preceding the launch of the
proceedings by Wenhandel to indicate that it was of the view that
the
written agreement as amended did not
reflect
the common intention of the parties and, accordingly, fell to be
rectified.
[16]
As
was contended by counsel for Propfokus, notwithstanding the fact that
Propfokus’ attitude towards clause 2 of the written
agreement
as amended was conveyed several times to Wenhandel, the latter did
not challenge this attitude at any time prior to the
launch of the
application. On the contrary, the issue of rectification was
raised by Wenhandel for the very first time in the
notice of motion.
That being so, Wenhandel could hardly have established that
its
intention,
independently of Propfokus, was different to that reflected in the
written agreement as amended. Much less could
Wenhandel have
established that
both
parties
had an intention which differed to that appearing from the (amended)
written agreement.
[17]
Moreover,
clause 2 of the agreement, as rectified by the High Court, gives
Wenhandel the choice of either paying R1 800 000
against
transfer, alternatively R1 000 000 plus two units in
the envisaged development. As indicated above,
the units would
of course be sectional title units. The papers do not, however,
establish that, at any stage after the amendment
of clause 2 by the
deletion of the reference to three sectional title units, Propfokus
was prepared to accept two sectional title
units. On the
contrary, in its answering affidavit, Propfokus dealt in detail with
its reasons for not being prepared to accept
sectional title units
and claimed that, since August 2004, it was not interested in
sectional title units at all and that the agreement
was accordingly
expressly amended, as set out above.
[18]
Insofar
as there may be any factual dispute in this regard, the matter must
be decided on the version advanced by Propfokus.
[
6]
As
pointed out by counsel for Propfokus, the deponent to the answering
affidavit filed on its behalf stated the following in opposition
to
Wenhandel’s claim for rectification:
‘
Dit
word ontken dat daar enige grondslag bestaan waarop hierdie agbare
Hof genader kan word vir die rektifikasie van klousule 2 van
die
koopkontrak. Daar word nie namens die Appellant verwys na enige feite
wat daarop dui dat die koopkontrak, aanhangsel CM1, soos
uitdruklik
gewysig deur die verdere kontrak, aanhangsel CM3, nie die
gemeenskaplike bedoeling van die partye weerspieël nie.
Daar
word ook nie beweer of bewys dat die bewoording van aanhangsel CM3
verkeerd of foutief is as gevolg van ‘n gemeenskaplike
dwaling
veroorsaak deur die Respondente nie.’
[19]
It
cannot be said that Propfokus’ allegations or denials of the
facts relevant to the aspect of rectification are so far-fetched
or
clearly untenable that the court would be justified in rejecting them
merely on the papers.
[
7]
Applying
the
Plascon-Evans
rule,
it is thus clear that the papers before the court do not establish
the essentials of rectification and that Wenhandel’s
claim
should not have succeeded.
[20]
It
follows that the appeal must be upheld. As far as costs are
concerned, although Propfokus was represented before us –
and,
it would appear, in the High Court – by two counsel, I do not
consider that the nature and complexity of the matter warranted
the
employment of more than one counsel.
Order
[21]
In
the circumstances, the following order is made:
1.
The
appeal is upheld with costs.
2.
The order made by the Cape High Court on 8 December
2005
is set aside and substituted with the following:
‘
The
application is dismissed with costs.’
B
J VAN HEERDEN
JUDGE
OF APPEAL
CONCUR:
NUGENT JA
COMBRINCK JA
[
1]
Viz where the parties to a contract of sale of a
motor vehicle agree that the purchase price is to be paid partly in
cash and partly
by the trade-in by the purchaser of another motor
vehicle: see
Antonie v The Price
Controller & Another
1946 TPD 190
;
Massyn’s Motors v Van Rooyen
1965
(3) SA 717
(O);
Wastie v Security
Motors (Pty) Ltd
1972 (2) SA 129
(C);
Mountbatten Investments (Pty) Ltd v
Mahomed
1989 (1) SA 172
(D). See also
G J Dawson (Clapham) Ltd v H & G
Dutfield
[1936] 2 All ER 232 (KB).
[
2]
Quite apart from any other differences, a
trade-in motor vehicle is generally an asset which will not
appreciate in value over time,
while in this case, it is common
cause that the units in the proposed development could very well
increase in value after the conclusion
of the agreement.
[
3]
[1995] ZASCA 64
;
1995 (3) SA 761
(A) at 767E–768A.
[
4]
It is common cause on the papers that the
reference in clause 2 to ‘a combined value of R800 000’
meant a
minimum
combined
value.
[
5]
LTC Harms
Amler’s
Precedents of Pleadings
6ed (2003) p
298-299 and the cases there cited.
[
6]
Plascon-Evans Paints Ltd v Van Riebeeck Paints
(Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at
634C-635C.
[
7]
See
Plascon-Evans
Paints
above at 635C.