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[2013] ZAKZPHC 66
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Holtzhausen v Chetty and Another (AR 256/2013) [2013] ZAKZPHC 66 (6 December 2013)
IN
HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE NO: AR 256/2013
NOT REPORTABLE
DATE:
06/12/2013
In
the matter between:
MARTHINUS
JACOB HOLTZHAUSEN
.........................................
Appellant
And
VISHNU
PERUMAL CHETTY
............................................
First
Respondent
VENILLA
CHETTY
........................................................
Second
Respondent
JUDGMENT
GORVEN
J
[1]
On 22 August 2011 the two respondents, who are married to each other
in community of property, arrived at the office of the
appellant.
They arrived without forewarning, wishing to purchase immovable
property. The appellant is an estate agent. With him
at the time was
a bond originator. The respondents there and then signed an offer to
purchase an immovable property (the property)
on a pro forma document
produced to them by the appellant. The offer was accepted by the
seller who signed the document signifying
acceptance the following
day (the first agreement). The first agreement reflects the sale
price as R2.5m payable in cash.
[2]
On 24 August 2012, the respondents and the seller concluded a
virtually identical agreement (the agreement) by completing various
places on a new copy of the same pro forma document. The only
material difference was that the purchase price for the property
was
reduced to R1.5m and an addendum was concluded dealing with the sale
of certain movable items on the property for the sum of
R1m. It is
common cause that the agreement has not been proceeded with. The
respondents do not wish to enforce it. It appears that
the seller
holds the same view, although the seller did not give evidence at the
trial and nothing in this judgment should be construed
as a finding
which is binding on him. The failure to proceed with the agreement
gave rise to an action brought in the Newcastle
Magistrate’s
Court. The action was for payment of commission in the sum of R100
000 arising from the agreement. The claim
was dismissed with costs.
This appeal is against that judgment.
[3]
The Particulars of Claim plead the term of the agreement relied upon
as follows:
‘
The
Plaintiff would have the right to recover the commission from the
First and the Second Defendant in the event of the First and
the
Second Defendant cancelling the agreement or in the event of the
Seller cancelling the agreement as a result of the First and
the
Second Defendant’s breach of the agreement’.
Paragraph
7 of the Particulars of Claim, which is relied upon to show that the
commission is payable, reads as follows:
‘
The
First and the Second Defendant did wrongfully and/or unlawfully
cancel the agreement, alternatively the First and the Second
Defendant failed and refused to carry out their obligations in terms
of the agreement resulting in the Seller cancelling the agreement’.
[4]
From the Particulars of Claim, it appeared that the claim was based
on the provisions of clause 7.3.1, which formed part of
the breach
clause in the agreement. In argument Mr Joubert, who appeared for the
appellant on appeal but not in the trial court,
confirmed this to be
the case and did not rely on the provisions of clause 10 or clause
7.3.2, both of which also deal with the
question of commission. The
former provides that the seller is liable to pay the commission if
the transfer takes place and the
latter that the purchaser and seller
are jointly and severally liable for the commission if the agreement
is consensually cancelled.
Clause 7.3.1, corrected to exclude
grammatical errors, reads as follows:
‘
7.3 Notwithstanding
anything to the contrary contained in Clause 13, if this agreement is
cancelled at any time
7.3.1 as
a result of fault on the part of either the Purchaser or the Seller,
the Estate Agent will be entitled to payment of the
commission from
the party at fault…’
The
reference to clause 13 is just one example of the poor drafting of
the pro forma document. It appears that it should be a reference
to
clause 10.
[5]
The basis of the claim was therefore that the agreement was
cancelled, in terms of clause 7.3.1., as a result of fault on the
part of the respondents even though it was not pleaded as clearly as
this.
[6]
The respondents raised a number of defences. Some were not persisted
in and require no further comment. Those persisted in were
as
follows. First, that the agreement is void for vagueness. Secondly,
that the agreement contains a suspensive condition requiring
the
respondents to raise a loan and that, through no fault of their own,
this condition was not met resulting in the agreement
falling away.
Thirdly, that the agreement is null and void as a result of a
material misrepresentation or misrepresentations made
by the
appellant.
[7]
It is clear from the pleadings that the onus was on the appellant to
prove that the respondents were liable for payment of the
commission.
In doing so he was obliged to prove, on a balance of probabilities,
the terms of the agreement, including the absence
of the suspensive
condition relied upon by the respondents. In addition, he had to
prove that the agreement was not void for vagueness.
If he succeeded
in these endeavours, he had to prove both that the agreement was
cancelled and that it was cancelled as a result
of fault on the part
of the respondents. If the appellant discharged the onus on all of
these issues, the onus would then shift
to the respondents to prove
that the agreement was null and void as a result of the pleaded
misrepresentation or misrepresentations
on the part of the appellant.
[8]
In the view I take of the matter, I do not find it necessary to deal
at any length with the issues of the suspensive condition
and alleged
vagueness. As to the latter, two comments may be germane. First, the
agreement is exceptionally poorly drafted. The
appellant would be
well advised to have similar agreements drafted by competent
professionals rather than to rely on this pro forma
document which is
riddled with grammatical and other errors. Secondly, there seems to
be little, if any, merit in the respondents’
contentions of the
agreement being void for vagueness. The nub of the matter on appeal
was whether the appellant proved the cancellation
of the agreement
and that the cancellation was as a result of fault on the part of the
respondent. In this regard there were different
versions placed
before the trial court. The evidence on these points can be
summarised as follows.
[9]
The appellant testified that, shortly after the agreement was
concluded, the second respondent indicated to him that the
respondents
did not want to go ahead but wanted to cancel the
agreement. When asked why this was the case, she claimed that they
had a period
of seven days to consider whether or not to abide by the
agreement. The appellant responded that they could not cancel it and
that
he would take them to court. The first respondent then invited
him to do so. In cross-examination by Mr Leppan, who appeared for
the
respondents at both the trial and the appeal, the appellant was asked
whether the seller had ever indicated that he wished
to cancel and he
denied that this was the case.
[10]
The evidence of the respondents was to the effect that they had
intended to raise a loan from their bank, without which they
could
not afford to pay for both the property and the goods dealt with in
the addendum. The bank required a set of financial statements
and
these could only be furnished to the bank by January 2012. On 30
August 2011 they told the appellant this and he undertook
to speak to
the seller about it. The next day they received a letter from
attorneys purporting to represent the seller and demanding
payment of
the full purchase price within 14 days. The letter was not put up in
evidence. When asked in cross-examination what
the letter said would
happen if payment was not effected within 14 days, the first
respondent stated that it said that action would
be taken against
him. The second respondent was asked in cross-examination whether the
letter said that if the respondents did
not comply with their
obligations, certain legal steps would follow. She agreed with this
proposition.
[11]
The first respondent was asked who terminated the agreement. His
response was ‘The seller was upset with us, chased us
from his
smallholding and told us he wants to have nothing to do with us
anymore.’ This, of course, does not amount to a
cancellation.
The first respondent was then asked a leading question by Mr Leppan,
‘Right, and in those circumstances did
you accept his
termination?’ to which the response was ‘I mean, it was
his property and he would not sell it to us.’
Finally, in
summary, Mr Leppan put a further leading question to the first
respondent, ‘So ultimately, then the – as
you have
testified, the seller then terminated this agreement and you accepted
that?’ and he replied ‘I accepted it,
yes.’
[12]
The second respondent was sitting in court while the first respondent
testified. Her version of the cancellation unfolded as
follows. She
was asked by Mr Leppan, ‘Who cancelled this agreement,
ultimately?’ to which she replied, ‘The seller.’
She was then asked, ‘And when he cancelled what did you and the
first defendant do about that?’ She replied, ‘There
was
nothing we could do because he was very harsh and rude to us.’
Then, ‘Did you accept it?’ and she said ‘Yes,
we
did.’ She denied that the respondents had done anything to
jeopardise the sale. This was not challenged in cross-examination.
All that was put to her was that the respondents cancelled the
agreement, which she denied.
[13]
In the main basis pleaded in paragraph 7 of the particulars of claim,
the appellant claimed that the respondents wrongfully
and unlawfully
cancelled the agreement. The alternative averment was that they
‘failed and refused to carry out their obligations
in terms of
the agreement resulting in the Seller cancelling the agreement’.
For a cancellation as a result of breach certain
steps must be taken.
When a party is in default, the other party is required to place them
on terms to remedy their default. In
the present matter the breach
clause, clause 7.2, required the respondents to be put on terms to
remedy their breach within a period
of 14 days. It did not, however,
provide for cancellation if the defaulting party failed to do so. It
provided for enforcement
or a claim for damages in that event. A
specific demand was therefore necessary. Once the period for
remedying the default had
elapsed without it being remedied, the
innocent party would, according to our law, be put to an election
either to enforce the
agreement or to cancel it. Any notification of
cancellation would need to be clear and unequivocal. Cancellation
would only take
effect from the date on which it is communicated to
the defaulting party.
[14]
On the second basis for cancellation, the appellant would need to
prove a repudiation of the agreement on the part of the respondents.
If this was proved, he would need to prove that the seller accepted
this repudiation, elected to cancel and did cancel. Once again,
notice of the cancellation would need to be given to the respondents
by or on behalf of the seller.
[15]
On any version, the agreement was not cancelled by placing the
respondents on terms to remedy their default. The only evidence
that
they were placed on terms related to the letter received by them on
31 August 2011. From the evidence as to the contents
of that letter
referred to in evidence but not proved, it appears that a demand was
made to remedy the failure to pay the purchase
price. But no
indication was given that, failing compliance within 14 days or any
other time, the seller would cancel. Still less
was there any
evidence at all that the seller then elected to cancel and
communicated to the respondents that he was cancelling
the agreement.
In addition, the evidence does not show a repudiation on the part of
the respondents which was accepted by the seller
and that the seller
communicated that he was cancelling the agreement to the respondents.
When this was put to Mr Joubert, in argument,
he immediately conceded
that this was the position.
[16]
Since the appellant founded his claim foursquare on the provisions of
clause 7.3.1., before any evidence concerning fault became
relevant,
he was required to prove the cancellation. Since he did not do so,
all the evidence led concerning whose fault it was
that the parties
did not proceed with the agreement was irrelevant. It is also not
necessary to make a finding whether, and, if
so, on what basis, the
agreement was cancelled.
[17]
The learned magistrate gave what can most charitably be described as
extremely terse reasons, in her judgment, under Rule 51(1)
and in a
document headed ‘Reasons of Appeal’. In the former she
said the following:
‘
The
plaintiff is relying on a written agreement.
The
plaintiff did not in any (sic) opinion prove his case before the
court and his claim is dismissed with costs.’
In
the second document, she said the following:
‘
I
am not satisfied that plaintiff has proved that the defendants
withdrew from the sale unlawfully or that he is entitled to payment
in the form of the commission.
Defendants
were good witnesses. They made a favourable impression on the court.
I accept the evidence in respect of financing. I
found on a balance
of probabilities that the defendants were applying for funds or
financing and that the plaintiff was aware of
this.
The
plaintiff in my opinion failed to prove his case and therefore his
claim was dismissed.’
The
reasons given in the third document were as follows:
‘
I
confirm that I could not find that the defendant was both willing and
able. It is clear in my opinion that he was not able at
the time.
Therefore
I cannot find that the defendant owes the plaintiff R100 000 (one
hundred thousand) rand.’
[18]
This reasoning does not begin to address the issues in the matter.
What was crucial in the trial and the appeal was the two
issues dealt
with immediately above. Did the appellant prove that the agreement
was cancelled as claimed? If so, did he prove that
it was cancelled
due to the fault of the respondents? If the answer to both is not in
the affirmative, the action could not succeed.
Even so, it is not the
reasons of a lower court which result in an appeal succeeding or not,
it is the outcome. The outcome was
correct, even though not well
reasoned.
[19]
There is no need, accordingly, to consider any of the defences raised
by the respondents.
In
the result, the appeal is dismissed with costs.
GORVEN
J
I
agree:
KOEN
J
DATE
OF HEARING: 2 December 2013
DATE
OF JUDGMENT: 6 December 2013
FOR
THE APPELLANT: DB Joubert instructed by FREDERICK BADENHORST
ATTORNEYS
FOR
THE RESPONDENTS: GJ Leppan instructed by ALLEN KELLY ATTORNEYS.