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[2014] ZAFSHC 66
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Prevance Capital (Pty) Ltd v Muller t/a Muller en Vennote (2998/2013) [2014] ZAFSHC 66 (15 May 2014)
FREE STATE
HIGH COURT, BLOEMFONTEIN
REPUBLIC OF
SOUTH AFRICA
Case No. : 2998/2013
In
the matter between:-
PREVANCE
CAPITAL (PTY) LTD
…..................................................................................
Applicant
and
WOUTER
JOHANNES ANDRIES MULLER
t/a
MULLER EN VENNOTE
….........................................................................................
Respondent
HEARD
ON:
8 MAY 2014
JUDGMENT
BY:
KRUGER, J
DELIVERED
ON:
15 MAY 2014
[1]
Applicant’s claim against respondent is based on a written
undertaking coupled to a “Discount of Sale Proceeds Agreement”
(the Agreement) in terms whereof applicant provided bridging finance
to the seller of fixed property and the sellers agreed that
the
proceeds of the sale be paid to the applicant. The respondent
was not a party to the Agreement. He only signed
Annexure C to
the Agreement, being a letter of undertaking. The respondent
was the attorney who dealt with the matter prior
to the registration
of transfer of the property. His mandate from the seller of the
property was terminated prior to the
date of registration. The
attorneys who attended to the transfer appointed by the sellers,
Messrs Van Wyk and Preller, instructed
respondent what to do with the
R1.2 million paid in by the purchaser.
[2]
The central question in this case is how the word “proceeds”
should be interpreted in the present circumstances.
In the
notice of motion the applicant claimed R1 200 000, being
the amount specified in the undertaking signed
by the respondent paid
into the respondent’s trust account by the purchaser. In
the answering affidavit the respondent
points out that the applicant
is only entitled to what remained after the charges against the
selling price had been deducted.
In the replying affidavit the
applicant accepts that the respondent could deduct the costs or
expenses ordinarily associated
with the sale of the property, being
(i) the amount of the mortgage bond recorded in item 9 of the
Information Schedule, being
Annexure A to the Agreement, namely
R890 119,35 and (ii) R70 000 agent’s commission and
(iii) R21 000 paid
to the local authority to obtain a clearance
certificate. Thus in the replying affidavit and in argument the
applicant claimed
R218 880,65, subtracting these amounts from
the R1 200 000 paid by the purchaser to the respondent.
[3]
The respondent says there was also a second mortgage bond of R200 000
with the same bondholder which had to be paid off,
which meant that
he retained only R9 252,73 after deductions, which amount he
paid to the transferring attorneys, Van Wyk
and Preller. Thus
the respondent says he retained no proceeds of the transfer which can
be paid to the applicant.
[4]
The applicant bases its claim on the contents of the Agreement, and
in particular Annexure A, the information schedule to that
agreement.
The basis upon which applicant holds the respondent liable is
the letter of undertaking, Schedule C to the agreement.
The
respondent does not dispute that he signed the letter of undertaking,
but says he was not provided with the Discount
of Sale Proceeds
Agreement when he signed Schedule C. He says only Schedule C
was presented to him for signature. The
applicant cannot
dispute this allegation, and Mr Hollander, who appeared for
applicant, accepted that respondent did not see the
Discount of Sale
Proceeds Agreement.
[5]
In the letter of undertaking signed by the respondent the following
is stated:
5.1
The respondent confirms that he has been instructed to attend to the
transfer of a property sold for R1 200 000 (Clause
A1).
5.2
The answer to the question whether mortgage cancellation figures have
been obtained “Yes/No or N/A” is not given.
5.3
The respondent acknowledges that the purchaser has deposited
R1 200 000 into his trust account (Clause A3).
5.4 Clause B 4
reads:
“
acknowledge
that in terms of the Sale, the Seller is entitled to be paid the
proceeds of the sale of the Property (‘the Proceeds’)
against transfer of the Property into the name of the Purchaser.”
5.5 Clause C 5
reads:
“
acknowledge
that we have been irrevocably authorised and instructed by the
Seller, pursuant to the Discount of Sale Proceeds Agreement
entered
into between the Seller and Prevance, to pay to Prevance the Proceeds
and undertake to pay such proceeds accordingly and
into Prevance’s
bank account..”
5.6
There are amounts mentioned which the respondent is to pay to the
applicant, depending on the date of registration of transfer,
and the
letter of undertaking also states that applicant may advise the
respondent as to the amount to be paid to it directly as
well as to
the seller. The applicant never sent such notification to the
respondent.
[6]
Mr Louw, for the respondent, refers to the decision of the Supreme
Court of Appeal in
Frans Jacobus
Kruger h/a Kruger Attorneys v Property Lawyer Services (Edms) Bpk
[2011] JOL 27347
(SCA) (27 May 2011), where a situation similar to
the facts in this case served before the court. Malan JA said
that the
real question is what the content of the undertaking was
(par [8]), and held that the undertaking amounted to no more than to
make
payment from the proceeds of the sales. The court held
that the undertaking was not to pay regardless, but to effect payment
from the proceeds of the sales (par [10]).
[7]
Mr Hollander, for applicant says the decision in
Kruger
supports applicant’s contentions in that it confirms that the
respondent incurred personal liability, and it confirms respondent’s
obligation to effect payment from the receipt of the proceeds of the
sale, and that the undertaking is to be interpreted in the
context of
the Discount of Sale Proceeds Agreement. Mr Hollander points out that
in the
Kruger
case the respondent attorney did not
receive the R500 000 he had agreed to pay over to the
institution which had provided
bridging finance, but in the present
case the respondent was the conveyancer who received the R1 200 000
purchase price.
Mr Hollander says the reason why the respondent
attorney in
Kruger
was not obliged to make payment was
essentially because he never received the proceeds of the sale of the
properties. He
says
Kruger
dealt with proceeds to
be paid, as opposed to this case, where the question relates to
proceeds received. Mr Hollander contends
that in the present
case it was envisaged that from the monies generated from the sale
costs or expenses ordinarily associated
with the sale of the property
will have to be incurred and paid to the conveyancer. Mr
Hollander says the “proceeds”
can easily be ascertained,
being the R1 200 000, less the amount of the specified
mortgage bond (R890 119,35) as
recorded in the Information
Schedule, Annexure A to the Agreement, and the R70 000 agent’s
commission and R21 000
payment to the local authority recorded
in the respondent’s account (WM3). Mr Hollander’s
argument is that the
respondent is bound by the R890 119,35
stated in item 9 in the Information Schedule to the Agreement. In
addition to that
Mr Hollander then allows the two amounts mentioned
in the respondent’s statement, namely the agent’s
commission and
the clearance rates for the local authority.
According to him the respondent was not allowed to deduct the
expenses associated
with the second bond. This submission is
apparently made because those expenses are not mentioned in the
Information Schedule.
[8]
Mr Hollander says what documents the respondent saw is irrelevant.
The undertaking signed by the respondent, Annexure
C, is a
personal undertaking by the respondent. Only one bond was
envisaged when the undertaking was signed, for which the
amount of
R890 119,35 is allowed in item 9. Mr Hollander relied on
warranties by the seller detailed in clauses 4 and
5 of the
Agreement. It must however be borne in mind that the respondent
says he never read that Agreement, and the undertakings
made by the
sellers cannot be held against the respondent. Mr Hollander
says the respondent should not have paid for the
release of the
second bond. The simple answer to this submission is that then
the property could not have been transferred,
because property cannot
be transferred if all bonds are not cancelled, as provided for in
section 56(1)
of the
Deeds Registries Act 47 of 1937
. Further,
it must be noted that in the founding affidavit the applicant does
not allege that the respondent agreed to the
Discount of Sale
Proceeds Agreement.
[9]
Mr Louw referred to
Rodel Financial Services (Pty) Ltd v Stupel
and Berman Inc. and Another
[2011] 43229 South Gauteng, (28
October 2013) where the conveyancing attorney signed the main
agreement, and where there was a
tri-partite agreement. Here
the applicant accepts that the respondent was not a party to the main
agreement and never read
it. The respondent only signed the
letter of undertaking. The nature of respondent’s
undertaking makes it clear
that he could only pay what he received.
[10]
On 22 October 2012 the respondent was informed by the attorneys
acting for the bondholder (Standard Bank) that payment of R890 119,35
was required to cancel the bond. The Discount of Sale Proceeds
Agreement was signed by the applicant on 31 October 2012,
and this
amount appears at item 9 in the Information schedule to that
agreement. However, on 21 November 2012 the Standard
Bank’s
attorneys notified the respondent that there was another mortgage
bond for which an additional guarantee was required.
[11]
The amount which the respondent had to pay Standard Bank for
cancellation of the bond was R1 099 747,27 as is indicated
on respondent’s account. The balance left after those
expenses had been paid was R9 252,73, which the respondent
paid
to the attorneys who attended to the transfer of the property, Messrs
Van Wyk and Preller, on their instructions. Respondent
points
out that the applicant never notified him of the amount payable to
it.
CONCLUSIONS
[12]
When transfer of fixed property is to take place, the conveyancers
acting for the bondholder and the seller respectively arrange
that
payment be made for the outstanding bond amount, including interest
as up to an agreed date by the bondholder. Only
after that
payment has been made can transfer take place.
[13]
Applicant was entitled to the proceeds of the sale of the property.
“Proceeds” is defined in the letter of
undertaking
as being the proceeds of the sale. Section 56(1) of the Deeds
Registry Act 47 of 1937 provides: “No transfer
of mortgaged
land shall be attested or executed by the registrar… until the
bond has been cancelled...” A mortgage
is extinguished by the
transfer of the property (
Wille’s
Law of Mortgage and Pledge in South Africa
3
rd
Ed
by Scott and Scott (1987) 185). The transfer can only be
effected after the bonds over the property have been cancelled.
The
“proceeds” is the amount remaining after the payment for
the release of the bonds and other expenses have
been made.
[14]
The applicant’s case in reply is that respondent was not
entitled to subtract the money associated with the cancellation
of
the second bond, because it was not referred to in the Information
Schedule to the Agreement. The Information schedule
contained
what the parties at the time of signature thereof believed to be the
cancellation fees. The fact that the Bank
had overlooked the
existence of the second bond is not the fault of the respondent. The
respondent is not bound by the figure
stated in item 9 of the
Information schedule because he was not a party to the Discount of
Sale Proceeds Agreement. The respondent
is liable to pay only
the proceeds. The proceeds can only be calculated after all
bonds and other expenses have been paid.
The claim of the
applicant for R218 880,65 must be rejected. As to the
amount of R9 252,73 which remained
after other expenses had been
paid, and which amount was paid to the transferring attorneys, on the
papers the applicant has not
shown that that amount is not
part of the expenses relating to the transfer. That amount was
paid to the transferring
attorneys, and one has to accept on the
papers that it was part of the transfer costs, thus not forming part
of the proceeds of
the sale. The applicant is not entitled to any
money from the respondent.
ORDER
1.
The application is dismissed with costs.
____________
A.
KRUGER, J
On
behalf of applicant: Adv L Hollander
Instructed
by:
Symington & De
Kok
BLOEMFONTEIN
On
behalf of respondent: Adv MC Louw
Instructed
by:
Van
Deventer & Thoabala Inc.
BLOEMFONTEIN