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[2011] ZAKZDHC 1
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B B S Empangeni (Formerly Z T C Cashbuild CC) v Phoenix Industrial Park (Pty) Ltd and Another (8945/2006) [2011] ZAKZDHC 1 (6 January 2011)
IN THE KWAZULU-NATAL
HIGH COURT, DURBAN
REPUBLIC OF SOUTH
AFRICA
CASE NO. 8945/2006
In the matter between:
B B S EMPANGENI
(Formerly Z T C
CASHBUILD CC)
…........................................
PLAINTIFF
and
PHOENIX INDUSTRIAL
PARK (PTY) LTD.
…............
FIRST
DEFENDANT
MORELAND ESTATES (PTY)
LTD
.
…..................
SECOND
DEFENDANT
JUDGMENT
Delivered
on 06 January 2011
_____________________________________________________
SWAIN J
[1] The central issue in
this matter is whether the sale of a certain immovable property (the
property), by the first and second
defendants to the eThekwini
Municipality (eThekwini) on 18 October 2000, constituted a
repudiation of any obligations owed by the
defendants to the
plaintiff, in terms of an agreement of sale (the agreement) concluded
between the plaintiff and the defendants,
on 11 January 1990, in
which the property was sold by the defendants to the plaintiff.
[2] The plaintiff alleges
that as result of the defendants’ repudiation it cancelled the
agreement and, as a consequence advances
a claim for the return of
the deposit paid by it in the sum of R45,500.00 and damages in the
sum of R2,795,000.00 . It was common
cause that the plaintiff had
paid a deposit in this amount, as well as the quantum of plaintiff’s
damages.
[3] The defences advanced
by the defendants to the plaintiff’s claim were as follows:
[3.1] The defendants
validly cancelled the agreement prior to the subsequent sale of the
property to eThekwini.
[3.2] The claim of the
plaintiff had prescribed. This defence raised two distinct periods of
time, within which it was alleged that
two distinct causes of action
possessed by the plaintiff had prescribed, being:
[3.2.1] The period
between the date when the suspensive conditions in the agreement had
been satisfied, which it is common cause
was no later than 04 October
1994 and the date when the defendants’ transferred the property
to eThekwini, being 20 December
2002. It was alleged by the second
defendant that the plaintiff’s right to demand transfer of the
property had prescribed
during this period.
[3.2.2] The period
between the date when the defendants transferred the property to
eThekwini, being 20 December 2002 and the date
when the plaintiff
issued summons, being 21 August 2006. It was alleged by both
defendants that the plaintiff’s right to
claim cancellation of
the agreement, payment of the deposit and damages, had prescribed
during this period.
[3.3] The first defendant
alleged that the plaintiff waived and/or abandoned any rights it had
in terms of the agreement.
[3.4] The second
defendant alleged that the plaintiff was estopped from averring that
the conduct of the defendants, in selling
and transferring the
property to eThekwini was in breach of the agreement and gave rise to
contractual rights for the plaintiff.
[4] A determination of
these issues requires a careful analysis of the history of the
dispute between the parties, the salient features
of which are as
follows:
[4.1] In July 1990 the
plaintiff, represented by Mr. Balmer, requested a cancellation of the
agreement, on the grounds
“there was quite a lot of
negative publicity in the area, there was quite a lot unrest in the
area, and we felt that they
weren’t going ahead quick enough
with it and we just felt a little vulnerable, and so we suggested
that maybe we should be
cancelling this agreement and they refused to
entertain that idea so we said ‘well, that’s fine, we
will just continue
with it’ ”.
Record pg 27 lines 8 –
12
[4.2] The letter of
refusal dated 17 July 1990 was sent by Phoenix South Industrial Park,
which in the agreement is described as
the seller, being a joint
venture between the first and second defendants.
Agreement Exhibit “B”
pg 1
Letter Exhibit “B”
pg 99
[4.3] The cause of the
plaintiff’s feelings of
“vulnerability”
were, according to Mr. Balmer, the fact that the
plaintiff was sold the land on the basis that it was buying into an
industrial
park, similar to the one next door, namely Phoenix
Industrial Park, as depicted in a pamphlet which, it is common cause,
was Exhibit
“E”.
Record pg 24 lines 19
– 24
Mr. Balmer said the
essential services to be provided would be similar to Phoenix
Industrial Park.
Record pg 24 lines 23
– 24
[4.4] Mr. Balmer stated
that the pamphlet depicted a sisal barrier encircling the Industrial
Park and forty seven metre high mast
security lights.
Record pg 25 lines 17
– 24
Mr. Balmer agreed that
the plaintiff’s attitude was that the pamphlet (Exhibit “E”)
and what was told to him at
the time, was a representation to the
plaintiff with regard to what the sellers would do and what they
would provide
Record pg 92 lines 20
– 23
and conceded that as far
as services went, namely electricity, sewage and effluent disposal
were concerned, his recourse lay with
the local authority and not
with the defendants, and that this was not an issue.
Record pg 94 lines 21
– 23
Record pg 95 lines 2 -
3
[4.5] Mr. Forbes, on
behalf of the second defendant agreed that the brochure provided for
these security features and that the defendants
would install these
features, but not before transfer. They would be installed in time,
after
“enough”
transfers had taken
place in the Industrial Park.
Record pg 189 lines 7
– 12
Record pg 205 lines 14
– 22
Record pg 206 lines 4
– 19
He said the obligation to
install these features was an act of faith, or trust on both sides
and would be honoured because the plaintiff
was dealing with a
reputable company
Record pg 206 lines 10
– 16
He said that the
defendants had erected street lighting internally and would erect
high mast security at a later stage
Record pg 189 lines 10
– 12
Record pg 206 lines 20
– 24
but emphasised that the
defendants were not responsible for purchaser’s site security
in the Industrial Park.
Record pg 207 lines 6
– 13
He maintained that the
defendants had planted a sisal barrier, was unable to say when, but
it had not been successful as the plants
had died. He pointed out
that in the very nature of things the sisal plants would be very
small when planted, when transfer of
the property to the plaintiff
would take place.
Record pg 207 lines 19
to pg 208 line 9
When Mr. Harpur S C, who
appeared for the plaintiff, suggested to him that the plaintiff would
think that these security measures
would be in place at the time of
transfer, his response was that this would depend upon the terms of
the agreement, from which
the plaintiff would know what was to be
delivered.
Record pg 208 lines 12
– 18
[4.6] By letters dated 13
November 1990 and 29 November 1990 the defendants’ attorneys
informed the plaintiff that they were
in a position to proceed with
transfer of the property and requested a copy of the plaintiff’s
founding statement, to enable
them to do so, which request was
repeated.
Exhibit “B”
pgs 100 – 101
Mr. Balmer stated that
after receipt of these letters he consulted his attorneys because
there was no township development, as he
was led to believe there
would be and he felt it was premature to take transfer.
Record pg 27 line 13
to pg 28 line 2
[4.7] As a result the
plaintiff’s attorneys wrote to the defendants on 04 January
1991 in which the view that it was premature
to take transfer was
repeated
“as several of the aspects relating to the
establishment of the industrial park have not been completed and our
client will
not enjoy the privileges which were anticipated at the
time when it purchased the property”.
Concern was
expressed about the security arrangements and the following was
added:
“
We have been
asked to place on record that our client unequivocally accepts that
it is bound to take transfer. However, it asks
that this be delayed
until such time as there has been more meaningful progress in the
establishment of the industrial park as
a whole”.
Exhibit ”B”
pg 102
In evidence Mr. Balmer
stated that the aspects in question were that there was no lighting,
there was a limited amount of road,
there was no walling or hedge and
there was no homeowner’s association.
Record pg 28 lines 16
– 20
[4.8] The response to
this letter was a letter dated 22 March 1991 from the defendants’
attorneys giving notice to the plaintiff
to provide a guarantee for
payment of the balance of the purchase price within fourteen days.
Exhibit “B”
pg 103
Record pg 29 lines 10
– 15
On the same date a
further letter was sent by the defendants’ attorneys to the
plaintiff’s attorneys in which it was
recorded that no
warranties were given by the defendant in regard to security and
asserting that the security provided within the
industrial park, was
of a much higher standard than most industrial areas and that the
plaintiff had no grounds to delay transfer.
Exhibit “B”
pg 104
Record pg 30 lines 3 –
16
[4.9] By letter dated 12
April 1991 the defendants’ attorneys gave the plaintiff
fourteen days notice, in terms of Clause
17 of the agreement, calling
upon the plaintiff to furnish them with its founding statement and
the necessary guarantee for the
balance of the purchase price,
failing which the defendants would take such action as they would be
entitled to and to claim damages
from the plaintiff.
Bundle “B”
pg 105
Record pg 17
[4.10] Clause 17 provides
that in the event of a failure by the plaintiff to rectify the breach
within the specified period, the
defendants would have the right,
without any further notice, against tender of transfer, to sue for
the balance of the purchase
price, or sue for the cancellation of the
agreement and damages, or cancel the agreement without recourse to
legal proceedings
in which event all moneys paid by the plaintiff
would be forfeited by the plaintiff and retained by the defendants as
“a fair and reasonable assessment of the damages
sustained by”
the defendants.
Exhibit “B”
pg 23 – 24
Record pg 30 line 17
[4.11] The response of
the plaintiff’s attorneys by letter dated 29 April 1991 was to
state that the plaintiff did not wish
to create the impression that
it did not wish to proceed with transfer
“but it is
merely a matter of timing”.
A bank guarantee for
payment of the purchase price
“against transfer at some
later stage”
was offered. It was stated that once
the development of the township
“is more substantially
underway it would be more amenable to proceeding with this
development”.
The defendants were then asked to
delay transfer.
Exhibit “B”
pg 107
Record pg 30 line 20
and pg 31 line 15
Mr. Balmer confirmed that
the letter correctly reflected his attitude.
However, on 14 May 1991
the plaintiff’s attorney wrote to the defendants’
attorneys saying that the plaintiff had decided
to proceed with the
sale of the property, that a copy of the founding statement of the
plaintiff would be provided and guarantees
would be provided for
payment of the purchase price between 15 – 25 June 1991.
Exhibit “C”
pg 21
Record pg 49 line 23
and pg 50 line 11
This was then followed by
a letter from the plaintiff’s attorneys dated 18 July 1991 in
which they referred to the limited
amount of development at the site,
that financial institutions that Mr. Balmer had approached had
indicated their concern about
financing the project and offering on
behalf of the plaintiff to pay an additional R100,000.00, if transfer
could be delayed until
February the following year.
Exhibit “C”
pg 25
Mr. Balmer said that
Syfrets was one of the banks involved and they said it would be risky
to get involved until the development
was complete.
Record pg 52 lines 3 –
7
[4.12] Mr. Forbes stated
that this offer was accepted by the defendants and the defendants’
attorneys, by way of a letter
dated 07 October 1991 agreed to delay
the furnishing of the guarantee by the plaintiff to 28 February 1992
on condition that the
plaintiff paid the additional sum of
R100,000.00 by 18 October 1991.
Exhibit “B”
pg 108
Exhibit “C”
pg 30
Record pg 31 lines 15
– 20
Record pg 184 lines 1
– 4
Mr. Balmer initially said
that the plaintiff had not agreed to pay the additional amount, then
said he could not tell whether it
had
Record pg 31 lines 20
– 24
but later when cross
examined, he agreed that he was aware of the acceptance of the offer.
Record pg 130 lines 11
- 12
Mr. Forbes stated that
the plaintiff had never paid the sum of R100,000.00
Record pg 184 line 8
with which Mr. Balmer
agreed.
Record pg 130 line 15
[4.13] Thereafter, Mr.
Balmer by way of a letter dated 05 November 1991 wrote to the
plaintiff’s attorneys, in which he said
that when the land was
purchased a Mr. Clarkson, on behalf of the defendants, had shown him
Exhibit “E” which depicted
in detail that security would
be the same as Phoenix Industrial Park, there would be street
lighting, all roads in the development
would be tarred, all services
would be supplied to the lots and the development would be linked to
the Ntuzuma road by a tarred
road. It was stated that the plaintiff
would pay for the land
“when the development, as
originally shown, is completed”.
Exhibit “B”
pg 109 A
Record pg 32 lines 3 –
20.
Mr. Balmer confirmed that
these were his instructions and explained that what he was saying was
that he was told that it would look
like the industrial park over the
road, but it was nothing like that.
Record pg 83 lines 2 –
24
On 18 May 1992 the
defendants’ attorneys wrote to the plaintiff’s attorneys,
affording to the plaintiff fourteen days
within which to comply with
all of his obligations, failing which summons would be issued for
specific performance.
Exhibit “C”
pg 42
[4.14] The defendants
then launched application proceedings against the plaintiff on 13
August 1992 in which the defendant sought
an order directing the
plaintiff to pay the sum of R410,200.00, together with the transfer
costs, against transfer of the property
to the plaintiff.
Exhibit “F”
pg 1
Record pg 32 line 21
The plaintiff opposed the
application in which Mr. Balmer attested to the answering affidavit
dated 11 November 1992 in which he
raised the defence that Section
148 (2) of Ordinance No. 18 of 1976 had not been complied with, in
that the relevant certificate
was signed by the City Engineer, when
it should have been signed by the Town Clerk. As a consequence, the
defendants were unable
to give transfer of the property. In addition,
he raised the same defences based upon the contents of the brochure,
Exhibit “E”,
stating as regards the plaintiff’s
attitude
“
that it is
not obliged to take transfer until such time as the applicants give a
firm undertaking that they will comply with their
aforementioned
obligations”.
Exhibit “E”
pg 74 and pg 81
Record pg 33 lines 6 -
25
[4.15] Mr. Balmer then
went on in his answering affidavit to state that he accepted that the
agreement did not contain a clause
which required the defendants to
provide the said security facilities or roads, going on to state
“
However, in
the light of the above expressed common intention of the parties, it
is clear that such a clause ought to be included
in the agreement and
its omission was a result of common error”
and
claimed rectification of the agreement by the insertion of the
following clause:
“
The seller
is obliged, within a reasonable period of time from the fulfilment of
the suspensive conditions referred to in paragraph
9 hereof, to lay
out the roads, provide the security lights and sisal barriers
referred to in the advertising pamphlet handed to
the purchaser’s
representatives by the seller’s representatives during the
course of the negotiations leading up to
the sale”.
[4.16] No replying
affidavit was filed by the defendants, it seems because the
defendants were advised by Counsel in an opinion
dated 24 February
1993, that the defence raised by the plaintiff concerning the
certificate required in terms of Section 148 (2)
of the Ordinance No.
18 of 1976, was a good defence. Counsel advised that in the absence
of authorisation by the Council given
to the City Engineer to
discharge the functions of the Town Clerk, the property was not
registerable and the application would
fail.
Exhibit “C”
pgs 50 – 56
Mr. Forbes confirmed that
the defendants had received the opinion, which he together with Mr.
Quinton were aware of and that as
at 13 July 1993 Mr. Quinton stated
that the defendants agreed that
prima facie
the provisions of
the Ordinance had not been complied with and that strictly speaking
the property was not registerable.
Record pg 209 line 18
to pg 210 line 14
Mr. Balmer said that he
was never told by the defendants that this point, which was raised by
the plaintiff was well founded.
Record pg 54 lines 19
- 20
[4.17] No further steps
were taken by any party to the application and on 11 September 1992,
being the date specified in the notice
of motion, on which date the
defendants would seek relief if the matter was not opposed, the
matter was removed from the roll.
On 15 May 2007 the matter was
before Court again, at which hearing an order was taken by consent,
referring the issue of costs
for determination by the Court hearing
the present action.
Mr. Forbes agreed that
the documentation indicated that from the time of the agreement in
1990 to October 1994, the defendants had
been unable to give transfer
of the property because of this problem.
Record pg 217 lines 5
– 10
[4.18] By December 1994
in the view of Mr. Forbes, it was clear that the plaintiff was
stalling for time.
Record pg 191 line 9
At this time a Mr.
Quinton, employed by the defendants, expressed the view that they
were getting nowhere and raised with Mr. Forbes
whether a bulk buyer
of other plots in the development would be interested in buying the
plaintiff’s plot.
Exhibit “C”
pg 92
Mr. Forbes was not in
favour of this and believed the sub-division allocated to the
plaintiff should be retained, so that a separate
certificate of
registered title should be taken out in this regard.
Record pg 192 lines 12
– 15
Mr. Forbes said a
separate C R T, in respect of the property was in fact taken out, so
it did not form part of the bulk sale to
another purchaser, so that
it could be delivered if Mr. Balmer would take transfer.
Record pg 192 lines 6
– 20
[4.19] Mr. Forbes stated
he therefore telephoned Mr. Balmer and asked him
“are
you going to take transfer?”
He said they were
becoming impatient and the matter had to come to an end.
Record pg 192 line 24
to pg 193 line 14
Mr. Forbes said he could
not clearly remember what was said, but the import was that he said
if
“they”
did not take transfer, he
would cancel the agreement. He said he was left with the impression
that Mr. Balmer would not take transfer
and they would have to follow
the cancellation route.
When cross-examined, Mr.
Forbes said that he had no recollection of saying to Mr. Balmer that
the agreement was cancelled and that
“
I most
probably would have said it, but I can’t tell the Court
outright that I know I said it”
Record pg 218 line 21
to pg 219 line 2
Record pg 193 line 15
to pg 194 line 9
and he agreed that he
could not be certain about what he said at all.
Record pg 219 lines 22
– 23
As regards the deposit
that had been paid, he stated that it was either in that
conversation, or another one, where Mr. Balmer said
he would get his
deposit back. He was of the view that Mr. Balmer would not, because
it would be forfeited as
“rouwkoop”.
Record pg 194 lines 10
– 20
In this regard, Mr.
Stewart S C put to Mr Balmer that
“
Because Mr.
Forbes says that he had a telephone conversation with you and you
wanted your deposit and he refused, saying that it
was kept, as he
put it ‘rouwkoop’ ”
to
which Mr. Balmer replied
“No, I definitely never asked for the deposit”
Record pg 107 lines 4
– 6
and if Mr. Forbes had
told him that his deposit was forfeited he would have objected.
Record pg 167 line 21
[4.20] As regards the
conversation Mr. Balmer said that
“way back in the early
days, and I can’t remember the period, Ken Forbes phoned me on
one occasion, and I can’t
put a date to it, and he said ‘are
you going to take transfer of this thing?’ and I said ‘No’,
I said ‘In
its present form no ways’ “.
Record pg 39 line 21
pg 40 line 1
He added that he would
not take transfer because
“I need things to be done”
Record pg 40 line 10
but he never said that he
had lost interest in the property and would not take transfer if they
did what they were supposed to do.
Record pg 40 lines 11
- 13
[4.21] Mr. Forbes, when
asked whether any letter of cancellation was sent, said he could not
confirm that. He said that at the time
of phoning Mr. Balmer he was
in the company of Mr. Quinton and Mr. McCowan and they had agreed to
cancel the agreement. He expected
the formal notice of cancellation
to be carried out by Mr. Quinton, who was the divisional secretary.
Record pg 194 line 21
Record pg 195 line 17
He said that Mr. Quinton
would not have sent the letter of cancellation himself, but would
have instructed their attorneys to do
so
Record pg 220 lines 13
– 15
and agreed that there was
no document on record, recording a cancellation
Record pg 225 lines 23
– 24
and conceded that Mr.
Balmer had never agreed to cancel the agreement.
Record pg 226 lines 17
– 18
Mr. Quinton confirmed
that in a discussion with Mr. Forbes and Mr. McCowan they had lost
patience and he had suggested that the
agreement be cancelled, with
which they all agreed.
Record pg 248 lines 9
– 10
Mr. Forbes was an
acquaintance of Mr. Balmer and Mr. Quinton said to Mr. Forbes, that
Mr. Forbes should say to Mr. Balmer they were
out of the deal and had
had enough. Mr. Forbes was going to cancel the agreement and it was
Mr. Quinton’s understanding that
he had done so by phone. He
said there was no record of a letter of a formal cancellation, was
unable to say anything further,
but it was probable that the
defendants’ attorneys, Livingstone Leandy, would have been
instructed to do so.
Record pg 239 line 11
to pg 241 line 19
Under cross examination,
he confirmed that he had given the instructions to Livingstone Leandy
to send the letter to the plaintiff
dated 12 April 1991, calling upon
the plaintiff to provide the necessary guarantee.
Exhibit “C”
pg 17
Record pg 244 lines 19
– 25
When it was put to him
that Mr. Forbes had said that he (Quinton) would implement the
cancellation of the agreement, he agreed that
it was the normal thing
for him to do. When asked whether Mr. Forbes was correct, he said he
could not remember, but Mr. Forbes
was going to tell Mr. Balmer. As
regards a formal notice of cancellation, he said this was not
discussed, but Mr. Forbes was going
to phone Mr. Balmer out of
courtesy. When the contradiction was again put to him, he said he
understood Mr. Forbes would phone
Mr. Balmer and he would usually
formally write and instruct Livingstone Leandy. He said it was
possible that a formal notice had
been sent because there were
missing documents.
Record pg 249 line 7
to pg 251 line 19
When asked by me, he said
he had no recollection of instructing the attorneys to cancel the
agreement.
Record pg 256 lines 8
– 10
Mr. Yarker, a member of
the defendants’ attorneys at the time, who was handling the
transfer of the property, said he could
have sent a cancellation
letter, but he did not remember whether he did or not.
Record pg 279 lines 20
– 22
[4.22] Mr. Balmer said no
notice whatsoever was given to him.
Record pg 39 line 20
He did however state that
the plaintiff left the address selected as its
domicilium citandi
et executandi
three years after the agreement was signed and only
by way of a letter dated 04 May 2000, did his attorney change this
address.
He agreed that if a notice of cancellation had been sent to
the original
domicilium citandi et executandi,
the prospects
are that the plaintiff would not have received it.
Record pg 68 line 5 to
pg 69 line 15
He did say that he knew
nothing about a cancellation of the agreement
Record pg 106 lines 13
– 19
and if he had received a
letter of cancellation he would have done something about it.
Record pg 168 line 24
[4.23] As regards the
application proceedings, the attitude of Mr. Balmer to the
application being left in abeyance, was as follows:
“
Okay. What
did you do during that period? --- Essentially I did nothing,
essentially I – they had put this issue – they
had made
application to the court so they had locked it up in the courts, I
sat and looked at it, I in fact carried on running
our businesses. In
fact, on two occasions during those years I went across the road and
rented premises in the Phoenix Industrial
Park, the one was to run a
Nik-Nak/knick-knack[?] business and the other one was to run a
distribution business and by having go
out there virtually every day
of my life I could see the property we had bought and I could see
that not a lot of progress was
being made, but it actually didn’t
phase me too badly because it suited me quite well to sit on the
issue and let it run.
So, I didn’t really have a big problem
with it, but in my opinion it wasn’t my responsibility to
extract this out of
the courts or to get it further down the line, I
was quite comfortable with the situation as it stood”
Record pg 34 lines 6 –
18
[4.24] Mr. Balmer said
that in 2005 he asked his attorney to find out what was going on with
this property in Phoenix Industrial
Park, because he would like to
solve the problem and settle the issue.
Record pg 37 lines 20 –
25
Mr. Balmer explained that
the reason he had asked his attorney to investigate this was because
he had been out there to look at
some other premises for renting
“and, you know, it kind of jolted my memory”
so
he asked his attorney to investigate it.
Record pg 107 lines 11
– 20
As a result his attorney
did a deeds search and established on 04 November 2005 that the
defendants had sold the property to eThekwini.
Record pg 38 lines 1 –
15
Exhibit “A”
pg 22
[4.25] When asked why he
did not make any enquiries about the property at an earlier time, he
reiterated what he had previously
said, but in the following words:
“
Ja,
basically in the nineties when this thing got locked up in the courts
I then sat back and watched the property because I used
to go out to
Phoenix Industrial Park across the road, so I knew the progress that
was happening and there was no progress, and
I was quite comfortable
with it at that point because I felt that if it stayed in the courts
it wasn’t a negative for me,
I didn’t’ have to pay
interest on it, in fact I didn’t have to pay for the property
either, so I was quite comfortable
about it staying in the courts, I
didn’t have a problem with it. And I also just felt that I
wasn’t my responsibility
to actually – to get in and stir
the pot, as you could say, at that point”.
Record pg 38 line 21
to pg 39 line 5
When cross-examined, Mr.
Balmer said that despite the time between November 1992, when he
delivered his answering affidavit and
November 2005, being thirteen
years, he still expected the sellers to own the property because they
had a contract with him. He
agreed that the sellers could not be
getting any income from the property and it was possible that the
sellers were paying rates
on the property.
Record pg 109 line 16
– pg 110 line 12
He agreed that in the
period November 1992 to November 2005, he never made any enquiries of
the sellers as to what was happening,
he never made any enquiries of
the Lot Owners Association, he never did a deeds search and never
enquired of the local authority.
Record pg 112 line 7 –
line 15
He agreed that if he had
enquired of the sellers in 2000 as to what was happening, they may
have told him they intended transferring
the property to somebody
else.
Record pg 113 lines 2
– 5
He maintained that he had
acted reasonably well and disagreed with the proposition that it
would have been reasonable of him to
enquire at least once a year.
Record pg 113 –
lines 11 – 23.
He agreed that there was
no circumstance or fact which occurred after October 1994 and prior
to transfer of the property to eThekwini,
from which the sellers
would know, or should have known, that he still wanted the property
Record pg 119 lines 1
– 5
and conceded that his
interest could have been sparked by the news of the new Bridge City
development, on part of what had been
Phoenix South Industrial Park
Record pg 119 lines 13
– 25
but the announcement did
not strike him as significant, because it did not happen in the
development, but along side it.
Record pg 122 line 21
Record pg 123 line 3
[4.26] After establishing
that the property had been sold he asked his attorney to
“at
least start by finding out about where our deposit was”.
Record pg 39 line 10
His attorney then wrote
to the defendants’ former attorneys, stating that Mr. Balmer
would like his deposit refunded.
Exhibit “B”
pg 120
Record pg 41 lines 1 –
18
Further correspondence
was exchanged in which the claim advanced was for the return of the
deposit.
Record pg 43 lines 3 –
4
No response was received
from the second defendant for several months
Record pg 45 lines 8 –
9
and after further delays
a letter was written by the plaintiff’s attorneys dated 11 July
2006, in which it was alleged that
the defendants repudiated the
agreement by re-selling the property, the plaintiff accepted the
repudiation and elected to cancel
and to claim restitution and
damages, being the deposit of R45,500.00, as well as damages in the
sum of R390,000.00
Exhibit “B”
pg 133
Record pg 47 line 16
to pg 48 line 22
[5] Having set out the
history of the matter, I now turn to consider the defences set out in
paragraph 3
supra.
[6] Did the defendants
validly cancel the agreement prior to the subsequent sale of the
property to eThekwini?
[6.1] In terms of Clause
17 of the agreement, the defendants were obliged to afford to the
plaintiff a period of fourteen days within
which to rectify any
breach. This the defendants did by way of the letter dated 12 April
1991 as well as the letter dated 18 May
1992.
[6.2] As a consequence of
the plaintiff’s failure to furnish the founding statement of
the plaintiff, as well as the necessary
guarantee, the defendants
elected to claim specific performance and did so, by way of the
application proceedings on 13 August
1992.
[6.3] It is clear that
the issue of a summons for specific performance does not bar a
subsequent claim for cancellation and damages,
if the plaintiff’s
change of mind follows from the defendants’ persistence in his
refusal to perform.
Christie - The Law
of Contract in South Africa
5
th
Edition, pg 541
Cohen v Orlowski
1930 SWA 125
[6.4] Consequently, the
defendants were entitled to change their election and to decide at
the meeting in December 1994, to cancel
the agreement rather than
enforce it, assuming without deciding, for present purposes that the
plaintiff’s conduct constituted
an unjustifiable refusal to
perform.
[6.5] It is clear,
however that the notice period provided for in Clause 17 is an
essential part of the defendants’ cause
of action.
Henriques v Lopes
1978 (3) SA 356
(W) at
358 C
This is so, because
whether the debtor is
in mora
, depends strictly on whether the
creditor has taken the action required by the contract.
Christie
supra
at pg 499
[6.6] I put it to Mr.
Stewart S C that the defendants, on changing their election from
enforcement to cancellation of the contract,
were obliged to give a
further notice to the plaintiff, advising it that in the event of a
failure to perform within a period of
fourteen days, the defendants
would cancel the agreement.
[6.7] His response was
that where the failure to perform by the plaintiff amounted to a
repudiation of the agreement, no further
demand was necessary. This
proposition is undoubtedly correct, because in the words of Christie
“
No useful
purpose could be served by demanding that a debtor perform that which
he has evinced an unequivocal intention not to perform,
and it can
come as no surprise to him to be told by the Court that his own
repudiation put him
in
mora
”.
Christie
supra
at pg 501
[6.8] However, there are
two very important distinguishing features in the present case.
Namely, a change of election, as well as
the notice period required
in terms of Clause 17. Surely the plaintiff was entitled to be
afforded the opportunity to rectify its
default, when faced with an
intention to cancel the contract and not one to enforce it? The cause
of action to claim cancellation
and damages, differs entirely from
the cause of action to enforce the agreement and consequently a
further notice in terms of Clause
17 would equa lly seem to be a
necessary part of the defendants’ cause of action.
[6.9] In my view
therefore, any purported cancellation of the agreement by the
defendants was invalid, because it was not preceded
by the requisite
notice in terms of Clause 17.
[6.10] In any event, I am
not persuaded on the evidence that the defendants discharged the onus
resting upon them of proving that
they had given notice to the
plaintiff, of the cancellation of the agreement.
[6.11] Mr. Forbes said
that he had no recollection of telling Mr. Balmer that the agreement
was cancelled but
“most probably would have said it”.
All that Mr. Quinton could add was that it was his
understanding that Mr. Forbes had cancelled the agreement by
telephone. According
to Mr. Balmer, all that Mr. Forbes asked was
whether he was going to take transfer, to which he replied that he
would not
“in its present form”.
[6.12] As regards a
formal letter of cancellation ever having been sent to Mr. Balmer,
Mr. Forbes said he expected Mr. Quinton to
carry this out. Mr.
Quinton agreed that it was the normal thing for him to do. It was
possible that formal notice had been sent,
but he had no recollection
of instructing the attorneys to cancel the agreement.
[6.13] Mr. Yarker said he
could have sent a letter of cancellation, but could not remember
whether he did or not.
[6.14] Mr. Balmer said
that no notice of cancellation was ever given to him and if he had
received one, he would have done something
about it. He conceded that
the plaintiff had moved from the address selected as its
domicilium
citandi et executandi
three years after the
agreement was concluded and that if the notice had been sent there,
the prospects were that the plaintiff
would not have received it. I
find it grossly improbable however that the defendants’
attorneys would have sent such a notice
to the
domicilium
address, rather than to the plaintiff’s attorneys,
when regard is had to the fact that the parties had been embroiled in
litigation
for some time, (in the form of the application
proceedings), at the time when such a notice would have been sent,
i.e. December
1994.
[6.15] I am therefore
satisfied on the evidence that the defendants have failed to
discharge the onus of proving the cancellation
of the agreement.
[6.16] A further
submission by Mr. Stewart S C in this regard, was that even if the
defendants’ decision to cancel was not
communicated to the
plaintiff at the time, i.e. late 1994 or 1995, it was however
communicated to the plaintiff when the plaintiff
learnt of the
transfer to eThekwini, such transfer being consistent only with the
agreement previously having been cancelled. It
is clear that a notice
of cancellation only takes effect from the time it is communicated to
the other party.
Swart v Vosloo
1965 (1) SA 100
(A)
at 105 g
[6.17] This argument
proverbially puts the cart before the horse. The issue is whether at
the time the defendants sold the property
to eThekwini the agreement
was still binding, or had been validly cancelled by the defendants.
If the former, the defendants’
conduct constituted a
repudiation of the agreement, entitling the plaintiff (leaving aside
the issue of prescription) to cancel
the agreement. It cannot be said
that the plaintiff’s discovery of the repudiation, constituted
receipt by the plaintiff
of the defendants’ previously
unconveyed intention to cancel.
[6.18] In the light of
the conclusions I have reached in this regard, it becomes unnecessary
for me to consider whether the conduct
of the plaintiff in refusing
to take transfer at that stage (for the reasons set out in the
plaintiff’s opposing affidavit
in the application proceedings),
constituted a repudiation of the agreement, entitling the defendants’
to cancel the agreement.
[7] Turning to the issue
of prescription. As pointed out above, two distinct periods,
associated with two distinct claims, are in
issue.
[7.1] In the first period
between the date when the suspensive conditions in the agreement had
been satisfied, which was no later
than 04 October 1994, and the date
when the defendants transferred the property to eThekwini, being 20
December 2002, the second
defendant alleged that the plaintiff’s
right to demand transfer of the property, had prescribed during this
period.
[7.2] In the second
period between the date when the defendants transferred the property
to eThekwini, being 20 December 2002 and
the date when the plaintiff
issued summons, being 21 August 2006, both defendants allege that the
plaintiff’s right to claim
cancellation of the agreement,
payment of the deposit and damages, had prescribed during this
period.
[8] In regard to the
first period the following issues arise:
(a) When precisely did
prescription begin to run in respect of the plaintiff’s claim
to transfer of the property?
(i) Whether the plaintiff
was aware of the fulfilment of the suspensive conditions, or could
have acquired this knowledge by exercising
reasonable care.
Second Defendants’
Plea paras 3.2 – 3.5
(ii) Whether the
defendants wilfully prevented the plaintiff from becoming aware of
the fulfilment of the suspensive conditions.
(b) What effect, if any,
did the launch of the application proceedings have upon the running
of prescription?
(i) Did the launch of the
application proceedings interrupt the running of prescription in
terms of Section 15 (1) of the Prescription
Act No. 68 of 1969.
(ii) Did these
proceedings constitute an ongoing acknowledgement of liability by the
defendants to the plaintiff, to transfer the
property to the
plaintiff and thereby interrupt the running of prescription?
(iii) Did the fact that
the plaintiff had raised as a defence in the application proceedings,
rectification of the agreement, have
the effect of preventing the
running of prescription?
[9] It should be noted
that the plaintiff did not plead that the institution of the
application proceedings by the defendants, to
obtain payment of the
purchase price by the plaintiff and to compel the plaintiff to take
transfer, constituted an interruption
of the running of prescription
in terms of
Section 15
(1) of the
Prescription Act No. 68 of 1969
.
However, the parties appear to have approached this matter on the
basis that this is an issue to be decided.
Second Defendant’s
supplementary note
Plaintiff’s
supplementary note
I will therefore deal
with this issue.
[10] The additional issue
of whether the defendants wilfully prevented the plaintiff from
coming to know of the existence of the
debt, relates to the so-called
second period, as it is only raised in connection with the averment
made by the plaintiff in its
particulars of claim, that it only
became aware of the breach and repudiation of the agreement on 04
November 2005, when it established
that the defendants had
transferred the property to eThekwini.
Plaintiff’s
particulars of claim – para 8
Pleadings pg 6
1
st
Defendant’s special plea – paras 5 and 6
Pleadings pgs 43 to 44
Plaintiff’s
replication paras (j) and (k)
Pleadings pgs 56 to 57
2
nd
Defendant’s plea para 3.5
Pleadings pg 59
Plaintiff’s
replication paras (j) and (k)
Pleadings pgs 70 to 71
It seems to me however,
that in fairness to all of the parties I should also consider this
issue in relation to the so-called first
period. In the very nature
of things, particularly when considering whether the present claim of
the plaintiff prescribed during
the so-called second period, it would
be artificial to draw a rigid line between these periods. I have
therefore included it as
an issue to be decided in this regard
[11] When precisely did
prescription begin to run in respect of the plaintiff’s claim
to transfer of the property?
[11.1] Extinctive
prescription commences to run as soon as the debt is due and in its
broadest sense a
“debt”
in the Act
refers to an obligation to do something, whether by payment or by the
delivery of goods or services, or not to do something.
H M B M P
Properties (Pty) Ltd. v King
1981 (1) SA 906
(N)
at 909 A – B
A debt is
“due”
when it is claimable by the creditor and payable by the
debtor
H M B M P Properties
supra
at 909 C – D
A debt is only due when
the creditor’s cause of action is complete. The creditor must
be in a position to claim payment forthwith
and the debtor must not
have a defence to the claim for immediate payment.
The Law of South
Africa
Volume 21 –
First re-issue para 142
Evins v Shield
Insurance Company Ltd.
1980 (2) SA 814
(A)
at 838
The cause of action must
be complete at the stage when summons is served.
Santam Insurance
Company Ltd. v Vilakazi
1967 (1) SA 246
(A)
[11.2] It is therefore
clear the defendants’ cause of action was only complete on 04
October 1994 when the condition in Clause
10 (a) of the agreement,
that the local authority must have consented to the transfer, was
fulfilled. The defendants’ cause
of action to demand payment of
the purchase price, as against the reciprocal obligation to transfer
the property, was therefore
only complete on this day. It should be
borne in mind that as regards the payment of the purchase price, the
plaintiff is the debtor
and the defendants are the creditors.
Consequently, as regards payment of the purchase price, the debt of
the plaintiff, as well
as the corollary of that debt, being the
defendants’ right of action to claim payment, would begin to
prescribe on that date
and would be extinguished simultaneously with
the debt.
Lawsa
supra
at para 140
The obligation to give
transfer and its corollary, the right to take transfer, must
inevitably also be extinguished simultaneously
with the prescription
of the right to receive payment and the obligation to make payment.
This is because Section 13 (2) of the
Act provides for the
simultaneous prescription of reciprocal debts.
[11.3] Prescription
consequently began to run in respect of the defendants’ right
to claim payment, as well as the plaintiff’s
right to claim
transfer, on 04 October 1994.
[12] Was the plaintiff
aware of the fulfilment of the suspensive conditions on 04 October
1994, or could the plaintiff have acquired
this knowledge by
exercising reasonable care?
[12.1] Of significance in
this regard is that the telephone conversation between Mr. Forbes and
Mr. Balmer took place during December
1994, shortly after a
certificate of registered title had been issued in respect of the
property. Mr. Forbes phoned Mr. Balmer
to ask if he was prepared to
take transfer. According to Mr. Balmer he said he would not
“in
its present form”
and because he needed
“things
to be done”.
[12.2] On the evidence
there is consequently no indication that Mr. Forbes told Mr. Balmer
that the suspensive condition had been
fulfilled and that Section 148
(2) of the Ordinance had been satisfied. What is clear however, is
that Mr. Balmer’s refusal
to take transfer had nothing to do
with this issue, but rather lay in the issue of security, that he
wanted attended to before
he would take transfer.
[12.3] Of relevance in
deciding whether a reasonable man in the position of the plaintiff,
in the circumstances, could reasonably
be expected to have enquired
whether the requisite certificate of registered title had been
issued, are the following facts:
[12.3.1] Mr. Yarker
confirmed having written to Mr. Balmer by way of a letter dated 28
June 1994, in which he said that he understood
that the plaintiff’s
dispute with the sellers regarding certain aspects of the sale
agreement had been resolved and that
“you are willing
and wishing to take transfer”
Exhibit “B”
pg 113
Record pg 273 line 6
to pg 274 line 3
Mr. Yarker said that he
knew Mr. Balmer and he could not say what had led him to this
understanding, but he might have been advised
of this by his
litigation partner.
[12.3.2] In the letter he
enclosed the necessary documents and furnished the necessary details
to enable him to effect transfer.
[12.3.3] Mr. Balmer said
that he did not know where Mr.Yarker got the idea that the matter had
been resolved, but this was factually
incorrect.
Record pg 35 lines 7 –
17
Record pg 100 line 19
[12.3.4] Mr. Yarker then
received no response so he sent a further letter dated 17 October
1994 to Mr. Balmer, annexing a copy of
the letter dated 28 June 1994
and asking for a response.
Exhibit “B”
pg 119
Record pg 274 lines 10
to pg 275 line 1
[12.3.5] In this letter
Mr. Yarker referred to the fact that Mr. Balmer had undertaken at a
social function to get back to him.
Record pg 274 line 15
[12.3.6] Mr. Balmer
confirmed having received this letter and that he had said to Mr.
Yarker that he would get back to him.
Record pg 35 line 18
to pg 36 line 5
[12.3.7] Mr. Balmer
confirmed that he had written a note on this letter saying he had
phoned John Lister, his attorney, on 27 October
1994, who told him he
would contact Mr. Yarker.
Exhibit “B”
pg 119
Record pg 36 lines 6 –
16
[12.3.8] Mr. Yarker said
that Mr. Lister never phoned, but from a letter he received from Mr.
Quinton, dated 08 November 1994, he
confirmed that Mr. Lister wrote a
letter to him, in which Mr. Lister had made a proposal on behalf of
Mr. Balmer, which was rejected
by Mr. Quinton. He was unable to say
what the proposal was.
Record pg 275 lines 8
– 23
[12.3.9] Mr. Balmer said
he never heard anything further from Mr. Lister
Record pg 36 lines 19
– 20
Record pg 101 line 12
but agreed that Mr.
Lister had written to Mr. Yarker
Record pg 102 line 2
but said he had no idea
what his proposal was, and this was the first time he had seen this
Record pg 102 line 6
and agreed that his
proposal was not to pay and accept transfer
Record pg 103 lines 11
– 14
and that his attitude was
because of the complaints he had about the industrial township being
non-existent, until the defendants
fixed up these aspects, he was not
going to take transfer.
Record pg 102 line 17
Record pg 103 line 10
[12.3.10] Mr. Yarker then
replied to Mr. Quinton’s letter by letter dated 01 December
1994, in which he had asked for details
of Mr. Balmer’s
“certain other defences”,
enclosing a
copy of the relevant paragraphs of Mr. Balmer’s affidavit
dealing with the security aspects and the roads.
Record pg 276 linjs 5
– 15
Exhibit “C”
pg 92
[12.4] From the
aforegoing it must have been obvious to Mr. Balmer, that some two
years after the plaintiff had raised the issue
of the absence of the
relevant certificate of registered title, the defendants were ready
and willing to effect transfer to the
plaintiff. In addition, it is
quite clear that the defences the plaintiff persisted in had nothing
to do with the absence of the
relevant certificate and no reliance
was placed upon this aspect by Mr. Balmer, during the above
interaction.
This is particularly so
when regard is had to the fact that Mr. Balmer’s attitude was
that the defendants
“had locked it up in the courts”
and
“it suited me quite well to sit on the
issue and let it run”
and
“it wasn’t his
responsibility to extract it out of the courts”.
Record pg 34 lines 6 –
18
In the circumstances, I
disagree with the submission made by Mr. Harpur S C that the
defendants persisted in their misleading stance
of maintaining that
the engineer’s signature of the certificate was sufficient.
[12.5] In my view, a
reasonable man in the position of Mr. Balmer, could reasonably have
been expected to have made enquiries to
ascertain whether the
relevant certificate had been issued in the interim, at least by no
later than December 1994. The plaintiff
could accordingly have
acquired knowledge of this aspect by no later than December 1994.
[13] Did the defendants
wilfully prevent the plaintiff from coming to know of the fulfilment
of the suspensive conditions on 04
October 1994? In this context
“wilfully”
means
“deliberately”
or “
intentionally”
but
it does not mean
“fraudulently”
.
Lawsa
supra
at para 142
Jacobs
supra
at 250 J – 251 B
[13.1] When regard is had
to the evidence that the defendants were willing to go ahead with
transfer of the property, up until the
refusal of Mr. Balmer to take
transfer, during the telephone conversation with Mr. Forbes in
December 1994, which was two months
after the certificate of
registered title had been granted, it is clear that there could have
been no deliberate, or intentional
conduct, on the part of the
defendants to conceal this fact from the plaintiff. For what purpose
would the defendants deliberately
conceal this fact, when it is clear
that they wished to pass transfer to the plaintiff and, from a
procedural point of view, this
obstacle to effect transfer had been
resolved?
[14] What effect did the
launch of the application proceedings have upon the running of
prescription? Did the launch of these proceedings
interrupt the
running of prescription in terms of Section 15 (1) of the Act?
[14.1] The running of
prescription is interrupted
“by the service on the
debtor of any process whereby the creditor claims payment of the
debt”.
Section 51 of the Act
[14.2] In terms of
Section 15 (6) of the Act
“process”
includes
a notice of motion.
[14.3] As pointed out by
Mr. Stewart S C, it is clear that in order to interrupt prescription,
the process will only be effective
if at the time of the service, the
creditor has a complete cause of action.
Lawsa
supra
at
pg 147
In order to interrupt
prescription, there must at least be a right enforceable against the
debtor, in respect of which extinctive
prescription is running.
Neon & Cold
Cathode Illuminations (Pty) Ltd. v Ephron
1978 (1) SA 463
(A)
at 470 – 471
For the reasons set out
above, it is clear that prescription only began to run in respect of
the defendants’ right to claim
payment, as well as the
plaintiff’s right to claim transfer, on 04 October 1994.
According to the return of service in the
application proceedings,
the notice of motion was served upon the plaintiff on 25 August 1992.
Consequently, this did not have
the effect of interrupting the
running of prescription, because it had not, at that stage, commenced
running.
[14.4] The answer of Mr.
Harpur S C to this was that the plaintiff did not contend that the
service of the application proceedings
per se
interrupted
prescription, but the ongoing tender recorded therein, which
continued to be a full application, constituted the interruption
of
any running of prescription that may have occurred. Any running of
prescription was accordingly continuously interrupted. A
consideration of this argument falls within the next issue to be
considered.
[15] Did the application
proceedings constitute an ongoing acknowledgment of liability by the
defendants to the plaintiff, to transfer
the property to the
plaintiff and thereby interrupt the running of prescription?
[15.1] The plaintiff
pleads that the defendants made an ongoing admission of liability to
the plaintiff
“pursuant to the said agreement”
by
never withdrawing the application proceedings, with the result that
prescription has been interrupted.
Plaintiff’s
replication to first and second defendants’ pleas
Pleadings pgs 55 and
69
[15.2] Section 14 (2) of
the Act provides that if the running of prescription is interrupted
by an acknowledgement of liability,
prescription commences to run
afresh from the day on which the interruption takes place. The Act
does not envisage a situation
where the acknowledgement of liability
is
“ongoing”.
However, it is clear
that at common law it is possible for prescription to be repeatedly
interrupted and that upon each interruption
prescription begins to
run
de novo
, because
the effect of an interruption of prescription is to blot out the time
which has already run.
Backoolal v Cassim
N O & others
1977 (2) SA 297
(D)
at 300 E - G
[15.3] In order to decide
whether there has been an acknowledgement of liability, such as to
effect an interruption of the running
of prescription, the enquiry is
a factual one with regard to the intention of the debtor.
Lawsa
supra
at para 145
Agnew v Union &
South West Africa Insurance Co. Ltd.
1977 (1) SA 617
(A)
at 623 A – B
As stated by Broome J P
in
Petzer v Radford
(Pty) Limited
1953 (4) SA 314
(N)
at 318 D – E
“
what we are
concerned with is the state of mind of the debtor: did he intend to
admit that the debt was in existence and that he
was liable
therefor”.
[15.4] At the time of the
launch of the application proceedings, the acknowledgement of
liability by the defendants to pass transfer
to the plaintiff, was
conditional upon the performance by the defendant of its reciprocal
obligation, to pay the purchase price
and to secure the performance
of such obligation, by the furnishing of the requisite guarantee, as
well as to pay the transfer
costs. For the reasons set out above, the
plaintiff maintained that it was not obliged at that stage to furnish
any guarantee,
to secure payment of the purchase price.
[15.5] For the purposes
of the present enquiry, the issue of whether the plaintiff was
justified in its refusal to take transfer
and pay the purchase price
is irrelevant, because we are concerned with establishing by way of a
factual enquiry, what the state
of mind of the defendants was. The
defendants quite clearly never intended to acknowledge an
unconditional liability to effect
transfer to the plaintiff. From a
reading of the opposing affidavit filed by the plaintiff in the
application proceedings, the
plaintiff adopted the stance that it was
not obliged to provide the requisite guarantee for the reasons set
out above, and asked
for the application to be dismissed with costs.
Exhibit “F”
pg 84 para 15
It is common cause that
the application was then left in abeyance by all of the parties, with
the issues defined in this manner.
[15.6] In my view,
because the defendants never had in mind an unconditional
acknowledgement of liability to pass transfer and any
acknowledgement
was predicated upon an unconditional acceptance by the plaintiff of
an obligation to furnish a guarantee to secure
payment of the
purchase price and pay the transfer costs, which never occurred, the
running of prescription was not interrupted
in terms of Section 14
(1) of the Act.
[15.7] A further argument
of Mr. Harpur S C in this regard has to be considered. That is that
as a consequence of the application
proceedings, the issues between
the parties
vis a vis
the
agreement, had been frozen by the operation of
litis
contestatio
and the application was still
sub
judice
. The argument advanced was that when a
matter is subject to litigation and
litis
contestatio
has been reached, as in the
present application, the issues between the parties are frozen and
the rights of the parties preserved
as at that time. It is submitted
that if the plaintiff’s rights in terms of the agreement, had
not prescribed at that time,
they could not have prescribed
thereafter, unless the application proceedings had subsequently been
dismissed. This proposition
is undoubtedly correct, provided of
course that the institution of the application proceedings, had the
effect of interrupting
the running of prescription, in the first
place.
[15.8] Consequently, the
submission of Mr. Harpur S C that because
litis
contestatio
had occurred at the latest by the
end of 1992 and
“the position between the parties was
frozen as at that time”
, with the result that
prescription could not have commenced running thereafter on 04
October 1994, (as contended for by the second
defendant), overlooks
the fact that for the reasons set out above, the service of the
notice of motion did not have any effect
upon the running of
prescription. The case of
van Rensburg v
Condoprops 42 (Pty) Limited
2009 (6) SA 539
(E)
at 547 B – D
relied upon by Mr. Harpur
S C, is clearly distinguishable, as Leach J (as he then was) found
that the summons in that case, had
interrupted the running of
prescription,
“in respect of such debt”.
[15.9] A further argument
of Mr. Harpur S C in this regard was the following: the running of
prescription was prevented by the raising
of the defence of
rectification by the plaintiff, in the application proceedings. As
pleaded the issue is as follows
“
Since the
claim for rectification cannot (as a matter of law) prescribe, the
plaintiff’s claims under the agreement could
not have
prescribed and did not prescribe”.
Plaintiff’s
replication to first and second defendants’ pleas
Pleadings pgs 56 and
70
[15.10] The authority
relied upon by Mr. Harpur S C, namely
Boundary Financing
Ltd v Protea Property Holdings (Pty) Ltd.
2009 (3) SA
447(SCA)
simply decided that
prescription does not run against a claim for rectification of a
contract. It is no authority for the proposition
that a claim for
rectification of a contract, prevents the running of prescription in
respect of a cause of action, founded upon
such unrectified contract.
There is accordingly no substance in the argument.
[16] I am accordingly
satisfied that the defendants have discharged the onus of proving
that prescription of the plaintiff’s
claim to transfer of the
property commenced running on 04 October 1994 and was completed by
the 04 October 1997. I am fortified
in this view by the principle
that prescription is intended to penalise
“the negligent
creditor”.
It is clear from the evidence of
Mr.Balmer that he was content to leave matters as they stood, because
it suited him not to take
transfer until the development of the
industrial township had progressed. When regard is had to the fact
that the agreement was
concluded on 11 January 1990, the application
proceedings were instituted on 11 August 1992, the answering
affidavit of Mr. Balmer
was filed on 12 November 1992 and thereafter
there was no contact between the parties until Mr. Forbes asked Mr.
Balmer in December
1994, whether he was prepared to take transfer, to
which Mr. Balmer indicated he would not, it is astonishing that only
on 02 November
2005 did Mr. Balmer ask his attorney to investigate
what had happened to the transaction. In my view, such an inordinate
delay
leads to the reasonable inference being drawn that Mr. Balmer
intentionally refrained from making enquiries, because he anticipated
that to do so, could lead to renewed demands for him to take
transfer. In this context Mr. Balmer may be regarded as a
“negligent
creditor”.
I am also fortified in
this view by the words of Grosskopf A J A (as he then was) in the
case of
Murray &
Roberts Construction (Cape) (Pty) Ltd.
v
Upington
Municipality
1984 (1) SA 571
(A)
at 578
where he had the
following to say when referring to the purpose of extinctive
prescription
“…
its
main practical purpose is to promote certainty in the ordinary
affairs of people. Where a creditor lays claim to a debt which
has
been due for a long period, doubts may exist as to whether a valid
debt ever arose, or, if it did, whether it has been discharged.
The
alleged debtor may have come to assume that no claim would be made,
witnesses may have died, memories would have faded, documents
or
receipts may have been lost etc. These sources of uncertainty are
reduced by imposing a time-limit on the existence of a debt,
and the
relevant time-limits reflect, to some extent, the degree of
uncertainty to which a particular type of debt is ordinarily
subject”.
It is clear from the
evidence that the defendants assumed that no claim would made by the
plaintiff and that the memories of the
witnesses have faded in
respect of important issues. In addition, a repeated theme in the
evidence was that documents had become
lost during the long
intervening period.
As a consequence, the
defendants’ conduct in selling the property to eThekwini did
not constitute a repudiation by the defendants
of their obligation to
the plaintiff in terms of the agreement.
[17] Turning to the
so-called second period of prescription, which relates to the period
between the date when the defendants transferred
the property to
eThekwini, being 20 December 2002, and the date when the plaintiff
issued summons, being 21 August 2006. Both defendants
pleaded that
the plaintiff’s right to claim cancellation of the agreement,
payment of the deposit and damages, had prescribed
during this
period. In the light of the conclusion I have reached as to the
prescription of the plaintiff’s right to claim
transfer, it may
appear to be unnecessary to decide this point, but I will do so for
the sake of completeness.
[18] The issues that
arise in this regard are:
[18.1] Whether the
plaintiff could, by the exercise of reasonable care, have acquired
knowledge of the sale of the property to eThekwini
on 18 October 2000
and the subsequent transfer of the property by the defendants to
eThekwini on 20 December 2002, before the date
when plaintiff
acquired such knowledge, being 04 November 2005.
[18.2] Whether the
defendants wilfully prevented the plaintiff from acquiring such
knowledge, before plaintiff acquired such knowledge
on 04 November
2005.
[19] The evidence of Mr.
Balmer establishes that his attorney established on 04 November 2005,
that the defendants had sold the
property to eThekwini.
[20] When asked why he
had not made any earlier enquiries, Mr. Balmer said that if it stayed
in the courts it was not a negative
for him, as he did not have to
pay interest and did not have to pay the purchase price. He also said
that it was not his responsibility,
as he put it, to
“get
in and stir the pot”.
Despite the lapse of
thirteen years between when he filed his answering affidavit and when
he found out the property had been sold,
he said he still expected
the sellers to own the property, because they had a contract with
him. He agreed that the sellers could
not be getting any income from
the property and it was possible that they were paying rates on the
property. He also agreed that
if he had made enquiries of the sellers
in 2000 as to what was happening, they may have told him they
intended selling the property
to somebody else. He also agreed that
there was no circumstance or fact which occurred after October 1994
and prior to the transfer,
from which the sellers would know, or
should have known, that he still wanted the property. He however
disagreed with the proposition
that it would have been reasonable of
him to enquire at least once a year what had happened to the
property.
[21] I am again driven to
infer that Mr. Balmer consciously refrained from making any
enquiries, because he feared that to do so
would resuscitate the
demand by the defendants for the plaintiff to take transfer, which he
did not wish to do, because of what
he regarded as the inadequate
development of the project. When the inordinate delay of thirteen
years is considered in the light
of the facts set out in the
preceding paragraph, I am satisfied that a reasonable man in the
circumstances, could reasonably be
expected to have enquired of the
defendants what was happening with regard to the property, on at
least an annual basis. In the
light of the fact that the property was
sold to eThekwini on 18 October 2000, if this reasonable course had
been followed, the
plaintiff would have been aware during 2000 that
the defendants intended selling the property to eThekwini, or had
already done
so. At the very latest this information could have been
acquired by the end of 2001, by the exercise of reasonable care.
[22] Turning to the issue
of whether the defendants wilfully prevented the plaintiff from
acquiring such knowledge before 04 November
2005.
[22.1] On the evidence it
is clear that Mr. Forbes and Mr. Quinton had decided to cancel the
agreement in December 1994. Both of
them believed this had been
carried out by the other. Mr. Forbes, when asked what his response
would have been to any enquiry by
Mr. Balmer about the land, after
the discussion to cancel, said
“that the agreement has
been cancelled a long time ago”.
Record pg 198 lines 1
– 2
Mr. Quinton said that
“
It was
suggested that the agreement be cancelled and that is what I assume
has taken place, or that’s what I know took place
in fact”
Record pg 239 lines 16
– 17
[22.2] There could
consequently be no reason for the defendants to intentionally prevent
the plaintiff from coming to know of the
sale to eThekwini, because
they believed the sale agreement with the plaintiff had been brought
to an end, a considerable time
before this.
[23] Consequently, on the
basis that at the latest, the plaintiff by the exercise of reasonable
care could have established by the
end of 2001, the sale of the
property to eThekwini, and allowing the defendant a further
reasonable period of six months within
which to make its election to
treat the contract as at an end, prescription commenced running by no
later than 01 July 2002.
H M B M P Properties
supra
[24] Consequently, the
plaintiff’s claim for damages and repayment of the deposit
prescribed by no later than 30 June 2005,
whereas summons was only
served on 21 August 2006.
[25] Turning to the first
defendant’s defence that the plaintiff waived and/or abandoned
any rights it had in terms of the
agreement. Again, because of the
conclusion I have reached regarding the issue of prescription, it is
strictly unnecessary to consider
this issue, but I will do so for the
sake of completeness.
[25.1] Crucial to the
success of this defence is the requirement that the outward
manifestations of an intention to waive by the
plaintiff, of its
rights in terms of the Agreement, have to be adjudged from the
perspective of the defendants, or their notional
alter ego,
the reasonable person standing in their shoes.
Road Accident Fund
v Mathupi
2000 (4) SA 38
at
50 A
[25.2] However, a
reasonable person standing in the shoes of the defendants, in the
light of the evidence of both Mr. Forbes and
Mr. Quinton, that they
believed the agreement had been cancelled, would not be led to
believe that because of the plaintiff’s
inaction, it had waived
its rights under the agreement, but rather that it had accepted the
cancellation of the agreement. A subjective
belief that the agreement
had been validly cancelled, is irreconcilable with a reasonable
belief that the other party has waived
it rights under an agreement,
which the other party regards as binding and enforceable.
[25.3] The defence of
waiver by the plaintiff of its rights under the agreement, raised by
the first defendant, must accordingly
fail.
[26] Turning to the
defence of estoppel raised by the second defendant, namely that the
plaintiff is estopped from averring that
the conduct of the
defendants, in selling and transferring the property to eThekwini was
in breach of the agreement and gave rise
to contractual rights for
the plaintiff.
[26.1] At the heart of
this defence lies the requirement that in order to found an estoppel,
the representee (the defendants), should
have acted reasonably in
forming the impression they did, as a consequence of the
representation made by the representor (the plaintiff).
N B S Bank Limited
v Cape Produce Co. (Pty) Limited & others
2002 (1) SA 396
SCA
at 411 (J)
It is essential that the
representee (the defendants) should have been misled by the
representation made by the representor (the
plaintiff).
[26.2] Again however, it
is difficult to see how the defendants could have been misled, (by
what Mr. Stewart S C refers to as a
representation by silence), as a
result of the failure by the plaintiff to make enquiries, when for
the reasons set out above,
the defendants believed the agreement had
been validly cancelled. In this context a subjective belief that the
agreement had been
validly cancelled, is irreconcilable with a
reasonable belief that the other party by its silence, has
represented that it not
longer wishes to enforce its rights under a
binding and enforceable agreement.
[26.3] The defence of
estoppel raised by the second defendant must accordingly fail.
[27] Consequently, the
plaintiff’s claim must fail, in the light of my findings that:
[27.1] The plaintiff’s
claim to transfer of the property had prescribed, before the sale of
the property by the defendants
to eThekwini. As a consequence, the
sale of the property did not constitute a repudiation by the
defendants of their obligations
in terms of the agreement. The
plaintiff consequently had no claim for cancellation of the
agreement, together with payment of
damages and return of the
deposit.
[27.2] In any event, any
such claim by the plaintiff had prescribed before the service of the
summons in the present matter.
[28] As regards the costs
of the application proceedings, which were reserved for decision by
this Court, by virtue of the fact
that none of the parties pursued
these proceedings, which were allowed to lie dormant from 1992 until
2007, it would be just if
each of the parties were ordered to pay
their own costs.
The order I make is the
following:
The plaintiff’s
claim is dismissed.
The plaintiff is ordered
to pay the costs of the first and second defendants.
In the application
proceedings under Case No. 5541/1992, each of the parties is ordered
to pay their own costs.
___________
K. Swain J
/Appearances
Appearances:
For the Plaintiff :
Mr. G. D. Harpur S C
Instructed
by :
Pearce, Du Toit & Moodie
Durban
For the 1
st
Defendant
:
Mr. P. J. Combrinck
Instructed by :
Livingstone Leandy
Durban
For the 2
nd
Defendant :
Mr. A. M. Stewart S C
Instructed
by :
Garlicke & Bousefield Inc
Durban
Date of Hearing
:
19 - 20 October 2010
01 - 03 December 2010
Date of Filing of
Judgment :
06 January 2011