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[2012] ZAFSHC 8
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Dos Santos NO and Others v Aucor (Bloemfontein) (edms) Bpk and Another (2916/2010) [2012] ZAFSHC 8 (2 February 2012)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No.: 2916/2010
In the matter between:
MNR JOSé
CARLOS DOS SANTOS N.O.
…...........................
First
Plaintiff
MEV ADRIENA
CATHARINA DOS SANTOS N.O.
….........
Second
Plaintiff
MNR PIETER GIDEON
NAGEL N.O.
…..................................
Third
Plaintiff
and
AUCOR
(BLOEMFONTEIN) (EDMS) BPK
…......................
First
Defendant
JGPR EIENDOMME
(EDMS) BPK
….............................
Second
Defendant
JUDGMENT:
LEKALE, J
HEARD ON:
24 & 25 JANUARY 2012
_______________________________________________________
DELIVERED ON:
2 FEBRUARY 2012
_______________________________________________________
INTRODUCTION AND
BACKGROUND
[1] This is an action for
refund of a deposit advanced on the purchase of an immovable property
at a public auction held by the
first defendant on the 13
th
June 2007.
[2] The property involved
belonged to the second defendant who entrusted it to the first
defendant, as a company carrying on business
as auctioneers in
Bloemfontein, for sale.
[3] Plaintiffs are the
trustees of High and Dry Trust (trust) which was the highest bidder
at the auction. At all times material
to the auction the trust was
duly represented by the first plaintiff who was accompanied by one,
Mr. Hilton Kotzé (Kotzé).
[4] The first plaintiff
offered R2,7 million for the property, which is situated in
Standerton and was subject to a lease contract
in favour of South
African Breweries (SAB), and paid R270 000,00 as a deposit upon
signing the Conditions of Sale (the offer).
[5] The offer was
irrevocable and expressly remained open for acceptance by the second
defendant within seven days after 13 June
2007.
[6] The seller, however,
only signed the offer in acceptance on the 8
th
day
viz
the 21
st
June 2007.
[7] A dispute,
thereafter, ensued between the parties. The trust first sought to
resile from the deal on the basis of an alleged
material
non-disclosure. The plaintiffs later claimed a refund of the deposit
on the ground that there existed no sale contract
because the offer
had lapsed when the seller purported to accept it.
[8] On or about the 15
th
October 2008 the trust, through the first plaintiff and Kotzé,
issued summons against the first defendant under Case no.
6316/08
claiming, in the alternative, a refund of the deposit on the basis
that there existed no sale contract. This action was,
however,
eventually withdrawn. (See pages 54 and 77 of exhibit “A”
viz
first defendant’s bundle of documents.)
[9] On the 11
th
June 2010 the plaintiffs eventually issued summons herein against
both the auctioneer and the seller as first and second defendants
respectively claiming a refund in terms of clause 12 of the offer.
[10] First defendant
resists the claim on the grounds that it is not liable for refunding
the deposit because a legally valid sale
contract was concluded when
the second defendant properly accepted the offer and that, in any
event, it was, at all material times,
acting as a fully authorised
agent of a disclosed principal
viz
second defendant when it
received the deposit.
[11] On its part the
second defendant initially denied that it did not accept the offer
within the prescribed time period and, further,
maintained that the
first defendant was liable for payment of a refund because it was an
independent contracting party when it
accepted the deposit.
[12] The parties,
eventually, held a pre-trial conference in terms of which they
crystallised the questions to be determined by
the court.
[13] At the outset of the
trial the parties submitted minutes of further pre-trial conference
in terms of which the second defendant
admits that there existed no
valid and binding sale contract because of its late acceptance of the
offer. The first defendant,
on its part, maintains that there existed
such a contract. The plaintiffs, thereafter, withdrew the action
against the second defendant
who accepted the withdrawal subject to
the question of costs being left for determination by the court.
DISPUTE
[14] In the pre-trial
minute the parties effectively couched the legal questions to be
determined in the following terms:
14.1 whether or not a
contract was concluded between the trust and the second defendant; if
not
14.2 who of the
defendants is obliged to refund the deposit paid by the trust.
PLAINTIFFS’
CASE
[15] The first defendant
testified that following the successful bid on behalf of the trust,
he and Kotzé were approached
by the officials of Absa at the
auction with an offer of financial assistance if they required the
same. The said officials further
informed them that they would liaise
with first defendant to secure the documentation in order to process
and finalise the application.
They later learned from Absa officials
that the offer had been accepted. This information was later
confirmed by the first defendant’s
Johnny Bateman (Bateman)
who, however, did not furnish them with any documents to that effect.
It later transpired that the lease
contract in favour of SAB was not
going to be renewed and was of a limited duration. This state of
affairs did not bode well with
Absa and it, eventually, declined
financial assistance. They eventually involved attorneys to help them
to withdraw from the deal
to no avail. It was only after they had
instructed a second firm of attorneys that they established that
their offer was accepted
one day too late and, as such, had lapsed by
the time it was signed by the second defendant. He never condoned the
late acceptance
of the offer.
[16] Mr. Wessels contends
that, in law, no agreement comes into existence until and unless an
offer has been accepted. Once the
time prescribed for the acceptance
of the offer expires, the offer lapses and is no longer available for
acceptance. According
to case law an auction sale entails three
contracts
viz
an agency or mandate agreement between the
seller, as the principal, and the auctioneer, as the agent; the sale
agreement between
the seller and the purchaser and the contract
between the purchaser, as the highest bidder and the auctioneer.
There was no sale
contract between the second defendant as the seller
and the plaintiffs and, as such, the second defendant is not liable
for payment
of the refund. The trust could not have ratified the
transaction because it was not aware of the fact that the offer was
accepted
late. It could equally not condone the late signing of the
offer because it was not aware of the lateness.
[17] Mr. Wessels,
further, submits that the plaintiffs were justified in citing the
seller as the second defendant because, in law,
auctioneers are
always agents and the second defendant was disclosed in the offer as
the principal. The plaintiffs further did
not know where the deposit
was until the relevant disclosures were made in the pleadings.
[18] It is further
contended for the plaintiffs that the circumstances of the present
matter warrants a special costs order against
the first defendant
because it,
inter
alia, was mendacious in its conduct insofar
as it maintained, throughout the trial, that there existed a sale
contract between the
trust and the second defendant when that was
clearly not the case.
FIRST DEFENDANT’S
CASE
[19] Mr. Johnny Bateman
testified that he was head of property division with the first
defendant at the relevant time and handled
the auction. To his
knowledge an offer lapses if it is not accepted timeously. The
acceptance was signed a day late. Once he had
signed the offer as the
auctioneer his work was done and he had no further dealings with the
matter. Normally he would have told
a person in the position of Kotzé
that the offer was, in principle, accepted and that they only had to
wait for written
acceptance. After the plaintiffs had refused to
proceed with the sale, the property was sold to SAB for R3 million.
He only learned
five or six days before the trial, when he consulted
with the first defendant’s lawyers, that the plaintiffs were,
among
others, raising the fact that the acceptance was signed late.
He never told Kotzé and the first plaintiff that the offer
was
not accepted timeously.
[20] Mr. Grewar,
effectively, maintains that the trust accepted the late signing of
the offer by the seller because, by making simple
and reasonable
enquiries, the first plaintiff ought to have established that the
offer was accepted late.
[21] It is, further,
contended by Mr. Grewar that the first defendant is not liable for
repayment of the deposit because it was,
in law, an agent of the
disclosed principal. His attitude is effectively that the plaintiffs
are barking up the wrong tree and
should not have released the second
defendant as it would be liable for refunding the deposit if the
court finds that no valid
contract eventuated from the late
acceptance of the offer.
APPLICABLE
PRINCIPLES
[22] The parties are,
effectively, in agreement that, in law, an offer which is not
accepted within the prescribed time period lapses
in the absence of
any consent to the contrary by the offeror. (See
LAWS
v RUTHERFURD
1924 AD 261
at 262 and
MANNA
v LOTTER AND ANOTHER
2007 (4) SA 315
(C)).
[23] Ratification, just
like condonation, can only take place if the person, whose assent or
authority is required in order for
the contract to be validated, is
aware of and
“
gives his
mind specifically enough to the contract
”
sought to be ratified.
(Compare
VAN DYK v SOUTH AFRICAN RAILWAYS
AND HARBOURS
1956 (4) SA 410
(W) at 412
F.)
[24] Ratification may
take the form of “word” or “an action”. Where
it is not expressed in words it can
be inferred from the actions of
the person whose assent is necessary. (See
STUTTAFORD
& CO v
OBERHOLZER
1921
CPD
855.)
[25] For condonation of
late acceptance of an offer to take place, the person alleged to have
condoned or accepted the irregular
acceptance must have been aware of
the relevant defect or irregularity alleged to have been condoned as
the case is with alleged
waiver of a right or benefit. (Compare
MANNA
v LOTTER
,
supra
.)
[26] The time prescribed
for acceptance of an offer benefits the offeror who can elect to
waive it at his own discretion by accepting
a late acceptance of the
offer by the offeree. (See
MANNA v LOTTER
,
supra
,
at par. [26].)
[27] There is a
presumption against waiver and the onus, as in the case of
ratification and condonation, is on the party alleging
it to prove
that the person alleged to have waived his right or benefit decided
to do so with full knowledge of the right or benefit
in question. See
LAWS v RUTHERFURD
,
supra
, at 263 and
BORSTLAP
v SPANGENBERG EN ANDERE
1974 (3) SA 695
(A) at 704.)
[28] The offer provides
as follows in clause 12:
“
... In
the event of the sale not being confirmed by the seller, the amount
paid by the purchaser will be refunded to the purchaser
exclusive of
interest.
”
FINDINGS
[29] The parties are
effectively in agreement that the offer was accepted one day too late
by which time it had lapsed.
[30] In my view, where
the offeree purports to accept an offer outside the time prescribed
for acceptance of the same and, thereafter,
maintains that a valid
contract ensued therefrom, the question is whether or not the offeror
condoned or agreed to the late acceptance
and, thereby, validated the
contract.
[31] First defendant
effectively contends that the trust condoned or accepted the
irregular acceptance with the result that a sale
contract eventuated.
[32] There is no direct
evidence of condonation or acceptance of the late acceptance of the
offer. The first defendant draws an
inference of condonation or
acceptance from its perception that the trust, through the first
plaintiff, ought to have established
the fact of the delay in
accepting the offer with relative ease as well as the fact that, as
at the 27
th
November 2007, when its erstwhile attorneys
wrote to the first defendant, the trust regarded itself contractually
bound to the
seller in a sale insofar as it sought to cancel the
contract on the basis of alleged material non-disclosure.
[33] It is, however, not
in dispute that, when the said letter was directed to the first
defendant, the trust was not aware of the
irregular acceptance. In
this regard the first plaintiff and Bateman are in effective
agreement that that fact was not disclosed
and the latter only
announced that the offer had been accepted.
[34] Bateman, further,
testified that he was always under the impression that the offer was
accepted properly and timeously. He
further did not dispute that he
never gave the first plaintiff or Kotzé a copy of the offer
signed by the seller.
[35] There is, therefore,
no evidence from which it can, in law and/or equity, be inferred that
the trust, through the plaintiffs,
condoned and accepted the late
acceptance of the offer.
[36] The late acceptance
of an offer is treated by some academic writers and foreign
authorities as a counter-offer which may be
accepted or rejected by
the original offeror at will. (See Kahn “
Some Mysteries of
Offer and Acceptance
”
(1955) 72 SALJ 246
at 268 – 269
referred to with approval in Christie’s
The Law of Contract
in South Africa
6
th
Edition, p. 51.)
[37] Even if the late
acceptance herein is regarded as a counter offer there is no
evidence, direct or circumstantial, to suggest
that same was accepted
by the trust.
[38] Whether one treats
the acceptance of the late acceptance of an offer as a simple
condonation of the delay involved or a waiver
of the “
exclusive
benefit
” or acceptance of “
a counter-offer
”
the end result is essentially the same. They all require a conscious
and informed decision on the part of the person alleged
to have
condoned the delay, waived a benefit or accepted the counter-offer.
[39] There is, therefore,
no sale contract concluded between the second defendant as the seller
and the trust.
REFUND
[40] The next inquiry is
whether or not the first defendant is liable for payment of the
refund now that the second defendant is
no longer before the court.
[41] Mr. Wessels,
effectively, submits that first defendant is obliged to refund the
deposit on the basis of the contract existing
between it and the
trust as reflected in the offer as well as the fact that it kept the
money in trust and never paid it over to
the second defendant as the
seller.
[42] Mr. Grewar counters
that the first defendant was an agent of the second defendant and, in
law, cannot and should not be before
the court.
[43] In reply, Mr.
Wessels contends that only where there exists a sale contract between
the purchaser and the seller and the former
seeks to enforce the same
would the former, in law, be constrained to follow the seller as the
principal.
[44] I am in respectful
agreement with Mr. Wessels because the plaintiffs do not seek to
enforce a sale agreement. They are simply
relying on that part of the
offer which constitutes an agreement between the trust and the first
defendant as the auctioneer. The
second defendant, as the prospective
seller, never got to the party because it did no accept the offer
timeously. Its mandate to
the first defendant was for the sale of the
property which never took place. (See
SPRINGFIELD OMNIBUS
SERVICE DURBAN CC v PETER MASKELL AUCTION CC AND ANOTHER
2006
(4) SA 186
(N)).
[45] A proper reading of
the offer in its entirety reveals that a refund is only payable when
the sale is not confirmed by the seller
after a deposit has been paid
to the first defendant as the auctioneers.
[46] The mere fact that
the first defendant was an agent of the second defendant does not,
necessarily, mean that it was an agent
for purposes of receiving the
deposit on behalf of the second defendant. (See generally
BAKER
v PROBERT
1985 (3) SA 429
(A) at
439 C – F.)
[47] A
further scrutiny of the offer shows that the first defendant, as the
auctioneer, was entitled to deduct its 10% commission
(plus VAT) and
costs from the deposit advanced by the trust on acceptance by the
second defendant of the offer. (
See
clause 13 of the offer and clause 6.2 of the mandate signed by the
second defendant in favour of the first defendant included
in exhibit
“A”.
)
[48]
It follows, in my view, from the above that the offer created an
agreement, upon the signing thereof by the auctioneer, between
the
trust and the first defendant with regard to the payment of the
latter’s commission as well as the deposit. It was, further,
clearly intended by the trust and the first defendant that the
deposit was not to be paid over to the seller until and unless the
sale had been confirmed and the first defendant had deducted its
commission, among others, therefrom. It is, furthermore, common
cause
that the deposit was held in trust by the first defendant in line
with clause 6.2 of the mandate. (See
SPRINGFIELD OMNIBUS
SERVICE DURBAN CC v PETER MASKELL AUCTION CC AND ANOTHER
,
supra
.)
[49] The first defendant
is, therefore, liable to the plaintiffs for the refund.
COSTS
[50] The plaintiffs
effectively contend that a special costs order against the first
defendant is justified. In this regard they
submit that the first
defendant was mendacious and/or vexatious insofar as it was clear
from simple arithmetic exercise that the
seven day period expired on
20 June 2007 while the purported acceptance of the offer only took
place on 21 June 2007. Mr. Wessels,
further, submits that it was
necessary for Mr. Kotzé to travel from Nelspruit where he is
currently based in order to make
himself readily available for trial,
if necessary.
[51] Mr. Grewar,
effectively, contends that there is no cause for a special order of
costs to be made and leaves the general issue
of costs to the
discretion of the court.
[52] During the
cross-examination of the first plaintiff, Mr. Wessels gave notice
that the plaintiffs intended to apply for such
an order on the basis
of,
inter alia
, irrelevant questions put to the said witness.
[53] In argument Mr.
Wessels, further, relies on the evidence of Bateman to the effect
that he was only consulted five or six days
before trial and
concludes that the first defendant’s defence was spurious. This
contention is challenged by Mr. Grewar on
the basis that this piece
of evidence is irrelevant.
[54] I am of the view
that Bateman’s evidence is relevant to the issue to the extent
that only his evidence could, reasonably
possibly, have formed the
basis for the first defendant’s defence that a sale contract
was concluded. In this regard it should
be recalled that the date
inserted in the offer as the date on which same was accepted by the
second defendant clearly falls outside
the prescribed time period.
For the first defendant to have pleaded and persisted that there
existed a sale contract it, most probably,
needed to consult with
Bateman as the first port of call insofar as he was undisputedly the
only one who dealt with the matter
and interacted with the first
plaintiff and Kotzé.
[55] Bateman’s
evidence does not support first defendant’s defence. It follows
that, had he been consulted earlier,
his statement would have, most
probably, determined the fate of this matter sooner than later.
[56] The first defendant
persisted in this contention notwithstanding the second defendant’s
admission to the contrary at
the further pre-trial conference held on
6 December 2011. The first defendant stuck to its guns even after
Bateman, its sole witness,
had testified that the offer had lapsed as
at the date when the seller signed it.
[57] The conduct of the
first defendant in this regard cannot be tolerated and, in my
judgment, calls for a clear sign of disapproval.
In my view and
experience such conduct smacks of vexatiousness. It is further worth
noting that the property in question was, eventually,
sold by the
first defendant without any formal cancellation of any agreement
between the trust and the second defendant. If the
first defendant
genuinely believed that there existed a valid sale agreement, one
would reasonably expect some effort on its part
to ensure
cancellation of such a contract before proceeding with the sale.
[58]
In the circumstances I am in respectful agreement with Mr. Wessels
that an order that the first defendant should bear the costs
on the
scale as between attorney and client is justified. (Compare
FRIEDERICH KLING GmbH v CONTINENTAL JEWELLERY
MANUFACTURERS; SPEIDEL GmbH v CONTINENTAL JEWELLERY MANUFACTURERS
1995 (4) SA 966
(C)
).
[59] I am, further,
persuaded that plaintiffs were justified in joining the second
defendant in the proceedings. In this regard
it should be noted,
among others, that the second defendant initially denied, in its
plea, that it did not accept the offer within
the prescribed period.
It admitted that no valid sale contract followed as a result of
failure, on its part, to accept the offer
timeously only on 6
December 2011.
[60] The second defendant
is generally entitled to its party-and-party costs.
INTEREST
[61] The plaintiffs pray
that interest be levied on the refund from 21 June 2007
alternatively, from 21 July 2007 and further alternatively
for the
period of delay until date of final payment.
[62] The first defendant
did not deal specifically with this issue.
[63] I am satisfied from
available evidence that the first defendant became aware or ought
reasonably to have become aware of the
irregular acceptance of the
offer on or about the 15
th
November 2008 when summons in
Case no. 6316/08 was issued against it.
[64] It is, however,
clear from clause 12 of the offer that a refund payable upon
non-confirmation of the sale does not include
interest. In my view,
the offer contemplated a situation where the seller outrightly
refuses to confirm or accept the offer and
the refund is, therefore,
made within a reasonable time thereafter. In this case there was no
outright rejection of the offer.
A refund was, thus, payable within a
reasonable time after the discovery of the delay in the acceptance of
the offer. In my view
equity, in the interpretation of clause 12 of
the offer, demands that interest be charged on the refund from the
28
th
November 2008, being one month from the date on which
the first defendant can reasonably be expected to have acquired
knowledge
of the irregular acceptance of the offer. In this regard it
should be noted from page 70 of exhibit “A” that first
defendant entered appearance to defend the matter in Case no. 6316/08
on the 28
th
October 2008.
ORDER
[65] In the result
judgment is granted against the first defendant in favour of the
plaintiffs for:
65.1 payment of R270
000,00;
65.2 interest on the said
sum at the prescribed rate of interest from 28 November 2008 to date
of final payment.
[66] First defendant is
ordered to pay the plaintiffs’ costs of the action on the scale
as between attorney and client;
[67] The first defendant
is, further, ordered to pay the costs of the second defendant JGPR
Eiendomme (Edms) Bpk on the scale as
between party-and-party.
______________
L. J. LEKALE, J
On behalf of plaintiffs:
Adv. M.H. Wessels SC
Instructed by:
Rossouws Attorneys
Bloemfontein
On behalf of first
defendant:
Adv. D. Grewar
Instructed by:
Schoeman Maree Attorneys
Bloemfontein
On behalf of second
defendant:
Adv. S. Grobler
Instructed by:
Van Deventer Thoabala
BLOEMFONTEIN
/sp