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[2015] ZAGPPHC 289
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RZT Zelpy 4094 (Proprietary) Limited v Lester (61061/2014) [2015] ZAGPPHC 289 (30 April 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
Case Number:
61061/2014
Date: 30 April
2015
Reportable
Of interest to
other judges
In the matter
between:
RZT
ZELRY 4094 (PROPRIETARY)
LIMITED
...........................................................................
Applicant
and
NORMAN
MARCUS
LESTER
......................................................................................................
Respondent
JUDGMENT
MAKHUBELE
AJ
INTRODUCTION
[1] This is an
application for confirming of the cancellation of the agreement of
sale of movables entered into between the parties
and return of items
sold.
[2] The exact nature
of the relief sought in the Notice of Motion (which I deem fit to
reproduce verbatim ) reads as follows:
"1.1 That
the cancellation of the Agreement of Sale annexed to the Founding
Affidavit as Annexure "FA3” be
and
is hereby confirmed.
1.2 THAT the
Respondent be and is hereby Ordered to immediately return the items
listed in Annexure "A” to Annexure
“
FA3"
to the Founding Affidavit to the Applicant
1.3 That should
the Respondent fail to comply with 1.2 above within 3 days of service
of an Order granted herein upon the Respondent,
the Sheriff of the
above Honourable Court is authorised and Ordered to enter upon the
Respondent's premises situated at 509 Longdown
Road
,
Cornwall Hill Estate
,
Pretoria, GAUTENG and to remove the items listed in
Annexure “A” to Annexure “FA3" to the Founding
Affidavit
and to deliver same to the Applicant
1.4 THAT the
costs of this application
be
paid by the Respondent on the scale as between Attorney and
Client
1.5 THAT further
and /or alternative relief be granted”
[3] The application
is opposed by the respondent who has filed an affidavit in this
regard.
[4] The applicant
did not file a replying affidavit.
Point in limine:
Founding affidavit not properly attested
[5]
When the hearing commenced, counsel for the applicant,! Mr Van
Rooyen), indicated that he had a discussion with counsel for
the
respondent,( Mr Avvakoumides) wherein the latter informed him that he
intended to raise a point
in
limine
with
regard to the commissioning of the founding affidavit. The objection
relates to reference to the deponent as a “he"
whereas she
is a female. The parties agreed that this issue should be decided
first.
[6]
I was urged to draw an inference that the deponent did not appear
before the police officer who commissioned the affidavit because
if
she did, he would have realized that it is a
“
she”
not
a “he". Mr Avvakoumides referred me to the judgment of
Kathree-Setiloane J in the matter of
Absa
Bank Ltd v Botha NO. & Others
2013 (5) SA 563
(GNP)
to
advance this contention. He argued that there was no basis for the
court to accept that the deponent appeared before the commissioner
of
oaths.
[7] On what the
court was supposed to do under the circumstances, Mr Avvakoumides
contended that according to authorities, there
are three options; the
first is for the affidavit to be re-drawn and have it commissioned ,
secondly, it may be commissioned again
and thirdly, the deponent may
be ordered to come to court and give oral evidence.
[8] In conclusion,
Mr Avvakoumides submitted that under the circumstances, I should
order that the deponent re-attest to the affidavit.
[9]
In response to the
objection,
Mr
Van Rooyen argued that the applicant was prejudiced because the
objection was not raised in the opposing affidavit to afford
the
applicant an opportunity to rectify the situation that is clearly a
mistake. The point in limine was opportunistic. The respondent
should
have filed a Rule 30 (1) and (2) Notice before taking any further
steps.
The Absa case is
distinguishable on the basis that the court was dealing with a
summary judgment application and the court ordered
compliance with
regulations of attesting to affidavits due to the draconian nature of
such applications.
It
was argued further that the court has a discretion to condone
non-compliance with this requirement as was decided in the matter
of
Lohrman v Vaal
Ontwikkeling
1979 (3) SA 391
(T)
.
This
case takes precedence because the ABSA case that the respondent
relies on is a judgment of a single judge.
[10] Mr Van Rooyen
pointed out several indications in the affidavit to the effect that
it was clearly identifiable that the deponent
was a female. The
commissioning stamp was clearly a mistake and appears to be a cut and
paste . It is not a situation where one
gender is deleted.
He also criticized
the commissioning of the respondent’s affidavit. The stamp is
dated 25 September 2009 whereas the certificate
is dated the 23
rd
,
a day before . Furthermore, the police officer has not indicated his
designation and address.
[11]
In reply,
Mr
Avvakoumides took exception to the personal attack that he was being
“opportunistic” by raising the point at this
stage. He
argued that he was obliged to raise any issue he comes across during
his preparations for a hearing even if it was not
raised on papers.
On whether the
respondent’s affidavit was properly commissioned, he argued
that that was not an issue because it was clear
that the affidavit
was prepared on 23
rd
but only commissioned the next day.
Finally, he argued
that a specific rank within the police service is not a requirement,
as long as it is clear that it was commissioned
by a police officer.
[12] I agree with
Mr. Avvakoumides that questions of law and procedure may be raised at
any stage , however, having considered the
issues, I exercised my
discretion in favour of the applicant and condoned the non-compliance
with commissioning of affidavits regulations..
ON THE MERITS
Common cause
issues
[13] From the
affidavit filed, the following facts are either common cause or not
seriously contended .
[14]
On 10 March 2014, the parties entered into an agreement of sale of
immovable property described as
“
Portion
509 , a portion of portion 338 of the farm Doornkloof 391
"
more commonly known as 509 Longdown Road, Cornwall Hill Estate for a
purchase consideration of RIO 500 000.00.
[15]
In terms of clause 3 of the agreement
1
,
the immovable property was sold "
together
with all fixtures of
a
permanent
nature
,
but
for those fixtures which the Purchaser will purchase from the Seller
in an independent and separate agreement
[16]
The “
independent
and separate agreement”
referred
to in clause 3 was entered into on the same date. This is the
agreement
2
that is the subject matter of this application. I will refer to this
as the movables agreement.
[17] In terms of the
movables agreement, the respondent purchased certain items listed in
Annexure “A” thereto for a
price consideration of R2 500
00.00 payable in two installments of R1 500 00.00 within 90 days of
the agreement and R1 000 000.00
within 120 days of the agreement.
[18] There are 12
items in Annexure A, described as follows:
" 1 Carpets
2 Curtains
3 Generator
4 Rosewood Dining
room table and 12 chairs
5 8 Air
conditioners and 1 Wine chiller unit
6 Bedroom Suite
7 2-piece Lounge
Suite and ottoman -Formal lounge
8 1
x
Sony
Bravia and I rear projection TV
9
Heat Exchanger and Chlorinator
10 Kitchen
Appliance - Siemens Induction glass top
Solar dome
Microwave Thermo fan oven Griddle Gas hob Deep Fryer Steamer Warmer
draw island extractor
11 10 x Camera
and pc system camera System
12 Rotel sound
system
[19] The sale of the
movables was subject to fulfillment of the suspensive conditions in
the immovable sale agreement. In terms
of clause 10 of the latter
agreement, the purchaser was required to raise a loan of R8 500
000,00 within 10 days of the signing
of the agreement.
This condition was
duly fulfilled.
[20] There was a
special condition in the immovable sale agreement with regard to the
condition of the property and fixtures at
date of transfer of the
property. Respondent's argument is that some of these conditions were
not fulfilled. This is the basis
of the counter-claim and alleged
dispute of facts. I will revert to this later.
[21] The respondent
paid a total amount of R1,7 million in three installments of R1 300
000.00, R200 000.00 and R200 000.00 on 11
June 2014, 1 July 2014 and
16 July 2014 respectively.
The outstanding
amount is R800 000.00
[22]
On 22 July 2014, the applicant’s attorneys of record sent an
email
3
to the respondent and demanded payment of the outstanding balance
"plus
interest within 14 days after date hereof, failing which our client
shall exercise its rights as provided for in terms
of the aforesaid
agreement”
[23]
The respondent’s attorney replied to this email on 28 July 2014
by email.
4
,
part of which reads as follows:
"
3. In terms of douse 17 of the deed of sale, certain
special conditions were inserted into the agreement Our instructions
are that
your client has not complied with the terms thereof.
4. In addition
,
your client has deliberately caused damage to the property
of our client subsequent to the vacation thereof by your client.
5. The damages
sustained by our client pertains to the following:
5.1 Your client
removed turf from the paddock and removed grass lumps that were laid
after registration of the property;
5.2 Two geysers
in the back room and servant's room and related electrical issues
pertaining to underfloor heating switches not
operational;
5.3 Incomplete
painting of house outside walls;
5.4 Damp related
issues in the bathroom, toilet and wine cellar;
5.5 Irrigation
system not functional due to broken pipes;
5.6 Replacement
of stables that were removed after registration of transfer by your
client;
5.7 Removal of
rubbish by your client’
6. The total
pertaining thereto is in the sum of R329
499.
50 in accordance with attached expenses incurred by our
client and quotations.
7. Accordingly
,
our client will effect payment to your client in the sum of
R470 500
. 50
in final
settlement of this matter”
[24] The
respondent’s attorneys attached various quotations to prove the
amount of R329 499.50 that was alleged to be damages
suffered by the
respondent. These are for replacement of two geysers, underfloor
heating, paint and labour, damp proofing, irrigation,
stables, turf
and charges by City of Tshwane for removal of rubbish .
[25]
On 04 August 2014, the applicant’s attorneys sent an email in
response to the respondent's and stated amongst other things
that the
applicant denies the allegations in paragraph 5 of the respondent’s
email and does not accept the offer of settlement.
They demanded
payment of the outstanding amount (R800 000.00), failing which the
applicant would "
cancel
the relevant agreement of sale and proceed with High Court
proceedings to protect our client’s rights”
[26] On 12 August
2014, the applicant’s attorneys proceeded to cancel the
agreement by email.
BASIS FOR RELIEF
SOUGHT AND APPLICANT’S SUBMISSIONS THEREOF
[27] The applicant
relies on its ownership of the movables and that the agreement
provides that on breach of the terms and conditions
thereof, it is
entitled obtain immediate return of the items sold.
Reference was made
to clauses 4.1 and 4.3 of the movables agreement in this regard which
read as follows:
“
4.1
Ownership in and to the items shall, at all times, remain vested in
the Seller, until the purchaser has made payment in full
of the
Purchase Consideration,.
4.3 In the event
of any default in respect of any of the terms of this agreement (ali
of which is agreed to be material} on the
part of the Purchaser, the
Seller shall, without prejudice to any other rights it may have, and
without notice to the Purchaser,
be entitled to obtain immediate
return of the items, insofar as payment for the same has not been
made in full by the Purchaser"
[28] In his written
and oral argument, Mr Van Rooyen argued that the applicant is not
claiming any monetary relief nor a penalty
in terms of the
Conventional Penalties Act, 15 of 1962 (as amended) ("the
Penalties Act") from the respondent, but merely
vindicating its
property in terms of the agreement.
[29] The applicant
will, upon delivery of the items, assess whether the value of the
items has been diminished or destroyed and
if necessary, institute a
claim for damages against the respondent.
[30] The applicant
has not yet decided whether it will retain the R1,7M that the
respondent has already paid. This wil be done after
assessment of the
value of the items. If the applicant so decides, then it will at best
for the respondent, a penalty under the
Penalties Act.
Reference was made
to clause 6.2 of the movables agreement that reads as follows:
"
In
the event of such cancellation-
6.2.1 the
Purchaser shall deliver
possess/on
of the items to the SELLER at the PURCHASER'S
expense.
6.2.2 any amounts
paid by the PURCHASER to the SELLER shall be forfeited to the SELLER
as “roukoop" or a genuine pre-estimate
of liquidated
damages or, alternatively, at the SELLER’S option, the SELLER
shall be entitled to claim and recover such damages
as the SELLER may
have
suffered, pending
the
determination of which the SELLER shall be entitled to retain all
such amounts to be set off against the said damages upon the
determination thereof"
[31] The claim
arises from ownership of the goods. The fact that the respondent has
paid a substantial amount and only owes a fraction
of the purchase
price is not an issue.
[32] Any
counterclaim the respondent may have against the applicant in respect
of the immovable sale agreement is not linked to
the current
application and cannot be a defence against the claim. The counter
claim will be relevant in the next stage of the
proceedings where the
applicant may decide to proceed either on roukoop or damages claim.
[33]
In any event, the respondent has not instituted the counter claim it
seeks to rely on as a defence . I was referred to paragraph
323F-325A-B of the judgment of Joffe J in the matter of
Swissborough
Diamond Mines
(Pty)
Ltd & Others v Government of the Republic of South Africa &
Others
1999
(2)
SA 279
to
advance a contention that the affidavit of the respondent does not
contain facts to support the allegations about the counterclaim.
[34]
The door will not be shut on the respondent to claim his R1.7M or to
raise the defences that he raised in this application
at a later
stage. Reference was made to the matter of
Matthews
v Pretorius
1984 (3) SA 547
(W)
DEFENCES RAISED
AND RESPONDENT'S SUBMISSIONS THEREOF
[35] The first
defence raised in the answering affidavit is that there are factual
disputes with regard to the agreement of sale
upon which the
applicant relies and the damages suffered by the respondent in terms
of the immovable sale agreement.
[36] The two sale
agreements are inextricably linked.
[37]
The applicant has not tendered the repayment of the amounts paid and
relies on clause 6.2.2 for retaining it as
“
roukoop”.
[37.1]
Applicant has stated that this application is based on its ownership
of the movables. (Rei vindicatio) If I make a finding
that this is
correct, then the argument that it should tender payment of the
amount paid by the respondent would in my view not
be correct
(See:
Quartermark
Investments (PM Ltd v Mkhwanazi and
Another
2014 (3)SA
96 (SCA)
at
104D-105B-E, paragraphs f231-f251
and
[26]
See
also: Rhoode v De Kock and Another
2013 (31 SA 123
(SCA
at
131B-E paragraph 24.
[38] The outstanding
amount in respect of the movables sale agreement stands to be reduced
in terms of the Penalties Act.
[39]
The respondent has tendered payment of R470 500.50 to settle the
applicant’s claim . This is the balance taking into
account the
damages suffered by the respondent as a result of the applicant’s
conduct in relation to the immovable sale agreement.
The applicant
refused to accept this offer. The refusal constitutes
"mora
creditoris”.
[40] It is not
equitable for the applicant to retain the amount of R1,7M and obtain
return of the movables furniture. For this reason,
the Penalties Act
should apply. The respondent has already paid the full purchase price
in respect of the immovable sale agreement.
[41]
In his written and oral argument, Mr Avvakoumides argued that
applicant was obliged to make an election in terms of clause
6.2.2 of
the movables agreement with regard to what it intends to do after
cancelling the agreement. Respondent cannot be expected
to return the
goods and wait indefinitely for applicant to decide whether the
amount will be forfeited as
roukoop
or
whether there will be a claim for damages.
[42] Applicant is
not entitled to base its claim on reservation of ownership clause.
The letter of demand indicated that the cancellation
was based on
breach of the agreement, as such, the applicant is obliged to
exercise the options and remedies in terms of clause
6.2.
[43] Applicant seeks
and is not entitled to the final relief it seeks as this is not a
vindication application.
[44] The two
agreements are interlinked because if the first (immovable property
sale) was not concluded, the movables agreement
would not have been
concluded.
[45] There were
three special conditions in the immovable sale agreement. The
applicant breached certain conditions therein, causing
the respondent
to suffer damages. The damages were quantified. When told about them,
applicant’s response was to deny the
claim and indicate that it
does not intend to litigate by correspondence. Applicant was aware of
the counter claim when it cancelled
the agreement for sale of
movables and subsequently launched the current proceedings.
[46]
Applicant should have asked for interim relief, pending assessment of
damages suffered. If final relief is granted, respondent
will have to
wait indefinitely as nothing obliges the applicant to come back to
court to make an election in terms of clause
6.2.
[47]
The final relief sought renders the court powerless as it cannot
exercise its discretion in terms of section 3 of the Penalties
Act. I
was referred to the matter of
National
Director of Public Prosecutions v Zuma
[2009] ZASCA 1
;
2009 (2) SA 277
(SCA) at 290D
para (26)
for
a contention that the dispute cannot be resolved on the papers before
me, particularly that final, and not interim relief is
sought.
ISSUES IN DISPUTE
AND FOR DETERMINATION
[48] Whether there
are disputes of fact with regard to the movables sale agreement as
contended by the respondent and whether the
two sale agreements are
linked.
[49]
Whether clause 4 of the movables agreement entitles the applicant to
cancel the movables agreement and obtain return of the
movables . Put
differently, whether there has been compliance with the breach and
cancellation clause
6.2
and
whether the failure to make an election in terms of the said clause
is fatal to applicant's case.
[50] Whether the
Penalties Act is applicable in the current proceedings.
[51] Whether the
respondent's counterclaim in the immovable sale agreement is a valid
defence in the current application.
ANALYSIS OF
EVIDENCE AND FINDINGS
The disputes of
fact
[52] The
respondent’s (Annexures “FA5” and NL1” to
their respective affidavits) response to applicant’s
notice of
breach (Annexure “FA 4”) did not address the issue of
whether there has been a breach of the movables sale
agreement or
not. Instead, the respondent raised the issue of applicant’s
breach of the special conditions in the immovable
sale agreement.
There may or may not have been such a breach in the immovable
property sale agreement, but in my view, that was
not the answer to a
claim based on the movables agreement.
[53] Applicant does
not rely on the sale of immovable property agreement. Consequently,
in my view, the disputes in that agreement
have nothing to do with
this application. They would, in my view arise in the determination
of the issue of forfeiture of the amount
that the respondent has
already paid and whether such would be proportionate to the breach in
view of the counter-claim.
Basis of this
application
[54] The other
defences are based on whether the applicant's cause of action lies on
the reservation of ownership of the movables
or cancellation of the
agreement and whether failure to make an election in terms of clause
6.2 is fatal to the application before
me.
[55] In terms of the
Notice of Motion, the relief applicant effectively seeks is
confirmation of cancellation of the agreement (which
is not
contested) and return of the items sold (which is contested on the
basis of failure to make an election in terms of clause
6.2.
[56]
However, as I have stated above, applicant contends that it relies on
clause
4
of
the movables agreement. This clause does not say anything about
cancellation of the agreement. It entitles applicant to demand
return
of the items sold on default of any terms and conditions of the
agreement.
[57]
The letter of demand (Annexure FA4") does not make reference to
cancellation of the agreement. After demanding payment
of the
outstanding amount, It simply states that
“
....failing
which our client shall exercise its rights as provided for in terms
of the aforesaid agreement
[58] The next
email (FA 6) threatened cancellation of the agreement. This was done
in the subsequent email (FA 7).
[59] The respondent
contends that since the agreement was cancelled, applicant cannot
rely on the reservation of ownership clause
to bring this
application, but rather on the cancellation clause (Clause 6 of the
movables agreement) which gives it a right not
only to claim return
of the property but also obliges it to make an election with regard
to what it intends to do with the amounts
that the respondent has
already paid.
[60]
In terms
Of
Clause
6.2.2
“any amounts
paid by the PURCHASER to the SELLER
shall be forfeited to the SELLER as “roukoop
”
or
a
genuine pre-estimate of liquidated damages or,
alternatively, at the SELLER’S option, the SELLER shall be
entitled to claim
and recover such damages as the SELLER may have
suffered
, pencf/ng
the
determination of which the SELLER shall be entitled to retain all
such amounts to be set off against the said damages upon the
determination thereof"
[61] The failure to
make an election, according to respondent’s argument, makes it
impossible for the court to exercise its
discretion in terms of the
Penalties Act to reduce the amount payable by the respondent on the
basis of the counter claim in terms
of the immovable sale agreement.
[62] The applicant’s
answer to this is that it is not seeking a forfeiture of the amount
paid by the respondent. This (the
election in terms of clause 6.2)
will be done in terms of subsequent proceedings after it has assessed
its damages after obtaining
return of the movables sold and now in
possession of the respondent.
Application of
the Penalties Act and counter-claim
[63] In my view, the
applicant’s argument that it will make an election in
subsequent proceedings is misplaced. As I have
already stated above,
applicant chose to cancel the agreement, and as counsel for the
respondent correctly pointed out, this comes
with an obligation to
proceed by way of the options in clause 6.2.2.
[64] I also agree
with counsel for the respondent's contention that the application as
it stands cannot be properly adjudicated
because I cannot, in a
vacuum begin to assess whether there should be forfeiture of the
amounts paid or not, and if yes, how much.
In any event, no
relief is sought in this regard.
[65]
Even if this application was based on cancellation and not
rei
vindicatio,
the
absence of an election with regard to the money paid would still pose
a difficulty for the applicant. An order to confirm cancellation
of
the agreement would not put the dispute between the parties to rest.
[66] The disputes of
facts that are likely to arise in my view relate to whether the
damages in the immovable agreement should be
taken into account when
the court makes a determination on the appropriateness of the penalty
to the breach in terms of the forfeiture
clause.
This
dispute was foreseeable and even if there was a proper application
before me, it would not be resolved in motion proceedings
(
See
:
Shirley
v Virginia Trust (Edms) Bpk
1978 (2) SA 357
(T))
[67] I do not think
that the issue of cancellation and forfeiture should be decided
separately as applicant suggests.
[68]
The question of whether the penalty is proportionate to the breach
was considered by the Constitutional Court in the matter
of
Botha
and Another v Rich NO and Others 2014 f41 SA 124 fCCl
at
146A-E , paragraphs [50 ]and [51].
The court held that
taking into account the amount that had already been paid, forfeiture
would be a disproportionate penalty for
the breach. Furthermore,
cancellation is linked to the consequences.
[69] I am raising
all these issues not with the intention to decide on them, but to
make a point that the application before me
is misplaced and
mischaracterized. The piecemeal litigation approach suggested by the
applicant is not appropriate for reasons
stated above.
[69] The
counter-claim may be a defence and a justification on the question of
whether forfeiture of the money paid is proportionate
to the breach.
This, like the issue
of application of the Penalties Act is an academic question at the
moment because no relief is sought in that
regard.
CONCLUSION
[70] The relief
sought in the Notice of Motion cannot succeed . Consequently, I make
the following order;
1. The application
is dismissed with costs.
TAN MAKHUBELE
Acting Judge of the
High Court
Date of hearing: 04
March 2015
Judgment delivered
on: 30 April 2015
APPEARANCES:
Applicant:
Advocate J Van Rooyen
Instructed by: Donn
E Bruwer Attorney
PRETORIA
Respondent:
Advocate GT Avvakoumides
Instructed by: Mark
Efstratiou Incorporated
PRETORIA
1
Annexure
NL3 to the respondent's answering affidavit
2
Annexure
FA3 to the Founding affidavit
3
Annexure
FA 4 to the Founding affidavit
4
Annexure
FA 5 to the Founding Affidavit