Brief Summary

Contract — Sale of property — Validity of agreement — Appellant's contention that suspensive condition regarding loan was not waived — Respondent alleged waiver of suspensive condition for his benefit — Court a quo found that the condition was exclusively for the respondent's benefit and that he effectively waived it — Appellants' appeal against the order declaring the agreement valid and binding dismissed, as the respondent's waiver was communicated within the stipulated period and the appellants failed to prove non-fulfilment of the condition.

Comprehensive Summary

Summary of Judgment

Introduction

The matter concerned an appeal to the High Court of South Africa (North Gauteng High Court, Pretoria) against an order granted by the court a quo (Neukircher AJ) on 23 May 2007. The order declared a written agreement of sale of immovable property to be valid and binding and directed the sellers to sign all documents necessary to effect transfer to the purchaser, with authorisation for the Sheriff to sign should they fail to do so.

The appellants were D H Brooks and A S Brooks (the sellers, who had been the respondents in the court a quo). The respondent was D W Jonker (the purchaser, who had been the applicant a quo). The appeal was brought with the leave of the court a quo.

The general subject-matter of the dispute was whether a suspensive condition in the sale agreement—requiring the purchaser to obtain a loan within a specified period—had been waived by the purchaser (and if so, whether such waiver rendered the agreement enforceable), thereby entitling the purchaser to final relief compelling transfer of the property. The appeal turned on whether, on the motion papers, the purchaser had established the factual basis necessary for final relief.

Material Facts

The parties concluded a written agreement of sale on 8 April 2005, in terms of which the appellants sold the relevant property to the respondent for R100 000, payable upon registration of transfer into the respondent’s name. The agreement contained, among other provisions, a clause (clause 11) stating that the document contained the whole agreement and that no modification, amendment, or change would be valid unless reduced to writing and signed by the parties.

A key contractual term was the suspensive condition (clause 14), which provided that the transaction was subject to the respondent obtaining a loan, with the property as security, for a minimum of R110 000 within 30 days from signature of the agreement. The agreement also contained a provision (clause 2) requiring the respondent to furnish acceptable guarantees to the conveyancer within 30 days after the approval of the loan referred to in clause 14.

The appellants appointed Mr Rene van Aswegen of Joubert & May as conveyancer for purposes of transfer under the agreement. On the accepted facts, his mandate was confined to conveyancing functions (receipt of guarantees and effecting transfer) and did not include authority to renegotiate or vary the agreement on the appellants’ behalf.

On 19 April 2005, the respondent entered into a second agreement of sale, selling the property to Mr and Mrs Wellard for R160 000, payable against transfer, and subject to payment of a R20 000 deposit on signature. The Wellards paid the deposit. For purposes of that second agreement, the respondent also appointed Mr van Aswegen to act as conveyancer.

It was common cause that the respondent did not apply for the loan contemplated by clause 14 (whether for R110 000 or any other amount) within the 30-day period, or thereafter. It was further common cause that the respondent did not inform the appellants that he had not applied for such a loan.

In early July 2005, the second appellant contacted Joubert & May to enquire whether guarantees had been furnished. Upon learning that they had not been furnished, the appellants delivered a letter dated 12 July 2005 in which they purported to cancel the agreement with effect from 8 May 2005 (being treated as the last date for obtaining the loan under clause 14). A staff member at Joubert & May thereafter requested the appellants to sign transfer documents, but they refused on the basis that they regarded the agreement as no longer binding.

On 21 July 2005, Mr van Aswegen demanded telephonically that the appellants sign the transfer documents, but they again refused and stated that another buyer had been found who would pay more than the respondent. The appellants then appointed Jan Tromp & Associates to act for them. Correspondence followed between the appellants’ attorneys and the respondent’s attorneys (Joubert & May and their Pretoria correspondents, Rooth & Wessels), in which various reasons were advanced on the respondent’s side as to why the agreement remained enforceable despite the absence of a loan.

The respondent, in his founding affidavit dated 26 October 2005, alleged for the first time that he had waived the loan suspensive condition. He alleged that on 26 April 2005 he consulted Mr van Aswegen, informed him that he had sold the property to the Wellards for cash, stated that he would not obtain the contemplated loan because he would pay the appellants in cash, and requested the conveyancer to proceed with registration of the property into the Wellards’ names.

The only material factual dispute identified by the appeal court concerned whether the respondent in fact consulted Mr van Aswegen on 26 April 2005 and waived the suspensive condition. The appellants were not present at that alleged meeting and therefore could not deny it from personal knowledge; they stated they had no knowledge of the allegation but denied it.

Legal Issues

The central legal questions on appeal were whether, on motion proceedings seeking final relief, the respondent had established (on the version that could properly be accepted) that he had waived the suspensive condition within the relevant period, thereby rendering the agreement operative and enforceable.

The court a quo had treated the matter as turning primarily on two issues: whether the suspensive condition was exclusively for the purchaser’s benefit (so that it could be abandoned), and if so, whether it had been effectively abandoned within 30 days and communicated to the conveyancer. On appeal, however, the decisive issue became a narrower factual and evidentiary question: whether the alleged waiver could be accepted on the motion papers in light of the applicable approach to factual disputes and credibility in motion proceedings.

Accordingly, the dispute was primarily one of application of the motion-proceedings fact-finding rules to contested facts, including an assessment of whether a particular factual allegation (waiver) could be accepted as sufficiently credible where it was not directly denied from personal knowledge but was disputed and contradicted by surrounding objective circumstances and correspondence.

Court’s Reasoning

The appeal court approached the matter on the basis that the respondent sought final relief on notice of motion, and that such relief could only be granted if justified by the facts as determined in accordance with the rule in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd. The court emphasised that final relief may be granted on the basis of facts admitted by the respondent’s opponent together with the opponent’s version, and that where a respondent cannot from personal knowledge deny allegations and does not seek referral to cross-examination, a court may accept the applicant’s factual averments if satisfied of their inherent credibility.

Applying that approach, the court identified that the respondent’s alleged waiver of the suspensive condition was a vital element of his cause of action as advanced in the founding affidavit. The appeal court therefore examined whether the waiver allegation could be accepted as inherently credible in context.

The court considered the surrounding chronology and correspondence, and noted that during the period 12 July 2005 to 25 October 2005, the respondent’s attorneys advanced various contentions to resist the appellants’ stance that the agreement had lapsed due to non-fulfilment of the loan condition. Despite repeated assertions by the appellants’ attorneys that the agreement had lapsed for failure to obtain a loan as required by clause 14, the respondent’s legal representatives did not directly meet that point by stating that the respondent had waived the condition on 26 April 2005. The appeal court treated that as a significant contextual feature undermining the later waiver allegation.

The court further relied on the affidavit and communications attributed to Mr van Aswegen. In particular, it highlighted that Mr van Aswegen had asserted that the suspensive condition had been fulfilled by the respondent selling the property for cash, which the court regarded as contradictory to the respondent’s later case that the suspensive condition had been waived. The court treated “fulfilment” and “waiver” as contradictory ideas in this context and regarded the contradiction as damaging to the credibility of the respondent’s asserted waiver.

Another important consideration for the court was the absence of contemporaneous conduct consistent with the alleged waiver. If the respondent had waived the condition on 26 April 2005, the court considered it significant that Mr van Aswegen did not report that important development to the appellants (as his clients in relation to the first agreement) and did not immediately arrange for the furnishing of guarantees and payment of transfer costs within the relevant timeframes suggested by the agreement’s structure. This absence of immediate steps, in the court’s view, further weakened the credibility of the respondent’s assertion.

Against that background, the court concluded that the respondent’s allegation of an express waiver on 26 April 2005 was a bald statement lacking an adequate factual basis on the papers and contradicted by the communications and positions previously taken. As a result, even applying the principle that an allegation not denied from personal knowledge may sometimes be accepted if inherently credible, the appeal court held that it could not accept that the respondent had waived the suspensive condition.

Having found that waiver was not established on the motion papers, the court held that the respondent had not proved an essential element of his cause of action. The court stated that this conclusion was dispositive and made it unnecessary to decide the further issues addressed by the court a quo, namely whether the condition was exclusively for the purchaser’s benefit and whether communication of waiver to the appellants’ conveyancer constituted effective waiver.

Outcome and Relief

The appeal was upheld. The order of the court a quo was set aside and replaced with an order that the application is dismissed with costs.

Cases Cited

Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (A).

Legislation Cited

No legislation was cited in the judgment.

Rules of Court Cited

No specific rules of court were cited in the judgment.

Held

The court held that, in motion proceedings for final relief, the respondent bore the burden of establishing the factual foundation for enforcement of the agreement as pleaded. The respondent’s case depended on proving that he had waived the suspensive condition requiring him to obtain a loan within 30 days.

On the papers, the allegation of waiver (said to have occurred on 26 April 2005) could not be accepted as inherently credible when assessed against the contemporaneous correspondence and the conveyancer’s stated position suggesting “fulfilment” rather than waiver, as well as the absence of timely reporting or steps consistent with waiver. Because waiver was not established, the respondent failed on a vital element of his cause of action and was not entitled to final relief compelling transfer.

LEGAL PRINCIPLES

The judgment applied the principle that final relief on notice of motion may be granted only on the factual basis determined in accordance with the approach in Plascon-Evans, namely on the applicant’s allegations insofar as they are admitted, together with the respondent’s version, and with due regard to when an applicant’s averment may be accepted despite an inability by the respondent to deny it from personal knowledge.

The judgment further applied the principle (as a matter of evaluation on the motion papers) that where a party relies on an alleged waiver as a decisive factual foundation for relief, the court must be able to accept that allegation as having a sufficient factual basis and inherent credibility. Where the alleged waiver is contradicted by contemporaneous communications and surrounding circumstances on the papers, the court may decline to accept it, with the result that the party relying on waiver fails to establish an essential element for final relief.

Brooks and Another v Jonker (A843/07) [2009] ZAGPPHC 329 (25 September 2009)