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[2008] ZAWCHC 112
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Move-on UPS 56 (Pty) Ltd v Honey Attorneys (Cape Town) Inc. and Others (14255/2006) [2008] ZAWCHC 112 (21 November 2008)
IN
THE HIGH COURT OF SOUTH AFRICA (CAPE OF GOOD HOPE PROVINCIAL
DIVISION)
REPORTABLE
CASE
NO. 14255/2006
In
the matter between:
MOVE-ON
UPS 56 (PTY) LTD APPLICANT
And
HONEY
ATTORNEYS (CAPE TOWN) INC. 1
st
RESPONDENT
HERMAN
GROBLER 2
nd
RESPONDENT
THE
18
th
AT PRINCE'S GRANT (PTY) LTD 3
rd
RESPONDENT
JUDGMENT
DELIVERED ON 21 NOVEMBER 2008
DLODLO.
J
[1]
This is an application for an order directing the First Respondent,
alternatively the Third Respondent to pay to the applicant
the sum
of Two hundred and fifty thousand rands (R250 000.00) presently
being held in trust by the First Respondent. The Applicant
is
Move-On Ups 56 (Pty) Ltd., a company registered and incorporated
according the company laws of the Republic of South Africa
and has
its registered office situated at Unichem House, Gleneagles Park, 10
Flanders Drive, Mount Edgecombe, KwaZulu-Natal.
The First Respondent
(Honey Attorneys Inc. Cape Town) is a firm of Attorneys situated at
Tyger Valley Chambers One, 27 Willie
van Schoor Drive, Tiger Valley,
Cape Town, South Africa. The Second Respondent (Herman Grobler) is
an adult male businessman
and his full and further particulars are
unknown to Mr. Mark Douglas Carstens, the deponent of the Founding
Affidavit. The Third
Respondent is (The 18 at Prince's Grant (Pty)
Ltd.) a company registered and incorporated according to the company
laws of the
Republic of South Africa but its full and further
particulars are unknown to Mr. Carstens. The application is resisted
by the
first and Third Respondents. Mr. McClarty SC and Mr. Beyers
appeared for the Applicant and first and Third Respondents
respectively.
FACTUAL
BACKGROUND
[2]
On 28 March 2006 a written agreement was concluded between the
Applicant and the Second Respondent in terms whereof the Applicant
sold to the Second Respondent who was acting as a trustee on behalf
of a company to be formed (the Third Respondent) certain
immovable
property being Erf 215 Prince's Grant in the province of KwaZulu-
Natal for a purchase price of Nine million rands
(R9 million)
(Agreement of Sale, Annexure "B"). Clause 8.5 read with
Clause 3.3 of the Agreement provide that the First
Respondent would
be the conveyancing attorneys and would attend to the registration
of transfer of the property.
[3]
The Applicant provided the first Respondent with a written Power of
Attorney to pass transfer in terms whereof the Applicant
nominated
and appointed,
inter
alia,
Jacques
Du Toit of the First Respondent with power of substitution to be the
Applicant's attorney and agent to appear in the Applicant's
name,
place and stead at the office of the Registrar of Deeds in
Pietermaritzburg, KwaZulu-Natal to pass transfer to the Third
Respondent the property sold in terms of the Agreement of Sale. The
Power of Attorney read
inter
alia "and generally, for effecting the purposes aforesaid, to
do or cause to be done whatsoever shall be requisite,
as fully and
effectually, to all intends and purposes, as the transferor might or
could do if personally present and acting therein;
hereby ratifying,
allowing and confirming all and whatsoever the said agent(s) shall
lawfully do or cause to be done in the premises
by virtue of these
presence. "
[4]
Clause 7.1 of the Agreement provides that within seven (7) days of
the conclusion of the Agreement, the Second Respondent
would deposit
the sum of One Million rand (Rlmillion) with the First Respondent,
to be held in trust. In terms of Clause 7.3
of the Agreement, within
seven (7) days of the fulfilment of the suspensive conditions
referred to in Clause 4.1 of the Agreement
and/or before taking
transfer of the property, the Second Respondent would deliver
guarantees to the First Respondent, issued
by a South African
commercial bank, for payment of the balance of the purchase price
plus VAT and any other amounts owing. The
guarantee would be payable
upon written notification by the First Respondent to the bank which
issued the guarantee of registration
of transfer in terms of Clause
7.4 of the Agreement.
[5]
The registration of transfer of the property into the name of the
purchaser would be effected as soon as reasonably possible
but would
not in any event occur before the deposit had been paid to the First
Respondent and the bank guarantee had been provided
to the First
Respondent. The Applicant would not be required to transfer the
property into the name of the purchaser unless the
purchaser had
complied with all its obligations due for fulfilment in terms of the
Agreement. The deposit was paid to the First
Respondent by the
Second Respondent and the required guarantees were delivered by the
Second Respondent to the First Respondent.
On 11 August 2006 with
the First Respondent as conveyancer, registration of transfer of the
property was effected from the name
of the Applicant into the name
of the Third Respondent. However, the First Respondent failed to pay
the full purchase price to
the Applicant as against transfer of the
property and it withheld payment of the sum of Two hundred and fifty
thousand rands
(R250 000.00). Notwithstanding demand by the
Applicant for the First Respondent to pay the balance of the
purchase price, the
latter refuses to do so.
[6]
In retaining the aforesaid sum of Two hundred and fifty thousand
rands (R250 000.00), the First Respondent contends that it
did so
pursuant to an oral agreement with the Applicant that it could do
so. In this regard the First Respondent alleges that
it was
instructed by the Second Respondent to withhold the said Two hundred
and fifty thousand rands (R250 000.00) based on the
contention by
the Second Respondent that in breach of the Agreement the Applicant
had failed to provide electrical bulk services
to the property. A
dispute of fact exists concerning the Respondents' interpretation of
the relevant provisions of the Agreement
and whether the Applicant
was in breach of the Agreement. Further, a dispute of fact exists as
to whether or not an oral agreement
was concluded between the
Applicant and the First Respondent concerning the retention of the
amount of Two hundred and fifty
thousand rands (R250 000.00).
THE
FOUNDING AFFIDAVIT
[7]
This was deposed to by Mark Douglas Carstens (Mr. Carstens) who is a
Director of the Applicant Company and who was duly authorised
to do
so. Mr. Carstens emphatically denied that the Applicant ever
consented to the retention of part of the purchase price,
namely Two
hundred and fifty thousand rands (R250 000.00) and that transfer
only occurred on the basis of any such agreement.
Mr. Carstens
submitted that the First Respondent's contention that it acted with
the Applicant's consent does not bear scrutiny.
He brought it to the
Court's attention that the First Respondent informed the Applicant
that:
(i)
It
was instructed by the Second Respondent to withhold the said
Two
hundred and fifty thousand rands (R250 000.00).
(ii)
The
instruction from the Second Respondent was based on the
Second
Respondent's contention that, in breach of the agreement,
the
Applicant had failed to provide electrical bulk services to the
property.
[8]
Mr. Carstens averred that the Applicant's disputed the above
assertions. Mr. Carstens alerted the Court to the advice he
apparently received, namely that the First Respondent was obliged to
pay to the Applicant all the purchase price against registration
of
transfer of the property, failing which, the First Respondent should
have delayed the registration of transfer until such
time as any
disputes had been resolved between the parties. In his view, the
First Respondent has sought to justify its conduct
ex
poste facto
by
claiming that the Applicant consented to its retention of the Two
hundred and fifty thousand rands (R250 000.00).
[9]
According to Mr. Carstens clearly the First Respondent recognizes
that the only basis upon which it could have retained the
funds was
with the Applicant's consent and it relies on an alleged oral
consent by the Applicant to the retention of the Two
hundred and
fifty thousand rand (R250 000.00). Importantly, Mr. Carstens
maintained that the Applicant denied having given such
consent. He
contended that in any event such oral consent would not be
sufficient to relieve the First Respondent of its obligation
to pay
to the Applicant the full purchase price as against transfer of the
property. Mr. Carstens gave a chronology of events
as they unfolded.
I set out this chronology because it may be relevant when I consider
the merits of this application.
CHRONOLOGY
OF EVENTS (AS PER MR. CARSTENS)
[10]
On 8 August 2006, at four minutes past two in the afternoon
(2:04pm), the First Respondent sent an e-mail to the Applicant
care
of Mr.Carstens' e-mail address, with a pro-forma account attached
thereto. This e-mail is attached as
Annexure
"C"
to
the Founding Affidavit, whilst the copy of the pro-forma account is
Annexure
"D".
Mr.
Carstens contended that he never received the abovementioned e-mail
because he was then in Cape Town. But he hastened to add
that had he
received same he would not have objected because the pro-forma
account
(Annexure
"D")
was
in order. On 10 August 2006 at sixteen minutes past ten in the
morning (10:16am), according to Mr. Carstens, a further e-mail
was
sent by the First Respondent to the Applicant. This e-mail was also
not received by Mr. Carstens for the same reasons as
set out in the
aforegoing paragraph. A copy of this e-mail is attached to the
Founding Affidavit as
Annexure
"E"
and
it records:
"We
refer to our e-mail of 8 instant under cover of which we forwarded a
copy of our pro-forma final statement of account.
We confirm that
this transaction will register in the Deeds Office in
Pietermaritzburg on 11 instant. "
[11]
On 10 August 2006, the First Respondent sent yet a further e-mail to
the Applicant using Mr. Carstens' e-mail address and
this e-mail had
an attachment which was a letter. This is attached to the Founding
Affidavit as
Annexure
"F".
It
will be helpful to quote from the body of
Annexure
"F":
"We
refer to previous correspondence and again confirm that we will
register the property in the Pietermaritzburg Deeds Office
tomorrow
the 11
th
instant.
With
reference to the Deed of Sale dated 28 March 2006 and with specific
reference to paragraph 11 page 10 of the said agreement
the seller
warrants that the bulk services to the property is sufficient to
service the development in terms of the zoning status
and that the
purchaser is liable for the internal services and the connection
thereof and that all external services are available.
In terms of
the above we have confirmation from the purchaser's professionals
and specifically the electrical engineer that such
bulk services are
not available as warranted and that the cost for the electrical bulk
services to comply with the agreement
of sale is approximately an
amount of R250 000.00 which amount, on instructions of the
purchaser, we are instructed to hold such
monies in trust in your
name until installation is completed and the terms of the agreement
of sale have been fulfilled. As a
result of time constraints and the
fact that if registration does not take place tomorrow the 11
th
Deeds will be rejected in the Deeds Office which will result in a
re-lodgment and more time lost we will continue with registration
as
aforementioned except if a written instruction to the contrary is
received prior to registration, namely 9:00am on 11 August
2006. We
trust that you find the abovementioned in order. "
[12]
Mr. Carstens attached to the Founding papers as
Annexure
"G"
a
copy of the e-mail which had the letter quoted above as an
attachment.
Annexure
"G"
was
transmitted by the First Respondent to Mr. Carstens' e-mail address
at eighteen minutes to four the afternoon (3:42pm) on
10 August
2006. Mr. Carstens draws my attention to the portion of
Annexure
"F"
where
it refers to the retention of the Two hundred and fifty thousand
rand (R250 000.00)
"
...until installation is completed and the terms of the agreement of
sale have been fulfilled."
Of
significance is that nowhere in
Annexure
"F"
is
it stated that the retention of the Two hundred and fifty thousand
rand (R250 000.00) would endure until the dispute between
the
Applicant and the Second Respondent has been resolved. According to
Mr. Carstens, it is clear from
Annexure
"F"
that
the First Respondent assumed that the Second Respondent is correct
in its assertions. In this regard, it is the view of Mr.
Carstens
that the First Respondent acted in a partisan fashion on behalf of
the Second Respondent. Mr. Carstens added that he
(on behalf of the
Applicant) would never have agreed to the retention of the monies.
This would be his attitude even more so
when the retention thereof
was based upon the assumption that the Second Respondent was correct
in its assertions. To do so would
be prejudicial to the Applicant's
best interests.
[13]
Mr. Carstens expressed some concerns and he remains uninformed why
would the First Respondent wait until late in the afternoon
of the
day prior to registration to notify the Applicant of the Second
Respondent's contention. The latter conduct has never
been explained
by the First Respondent and it smacks of mischievous intent on the
part of the latter. On 11 August 2006 at eighteen
minutes past nine
(09:18) the First Respondent sent and e-mail to the Applicant on Mr.
Carstens' e-mail address. This e-mail
is attached to the Founding
papers as
Annexure
"H".
Mr.
Carstens contended that this e-mail too was never received by him.
This e-mail also had an attachment in the form of a letter.
This too
is attached to the Founding papers as
Annexure
"J"
and
it reads:
"We
confirm that the abovementioned transaction will today be registered
in the Deeds Office. Kindly let us have bank details
for payment of
balance of the purchase price. "
[14]
Mr. Carstens remarked that significantly
Annexure
"J"
supra
is
devoid of any mention of the Two hundred and fifty thousand rand
(R250 000.00) to be retained. Mr. Carstens had earlier on
been
advised by his business partner that transfer was to take place on
11 August 2006 hence he telephoned the First Respondent
at about
seventeen minutes to ten (09:43) to enquire about the transfer. It
was then that he learned for the very first time
that certain
e-mails informing him about transfer and attaching for his attention
a copy of the pro-forma account had been sent
to him. He was still
in Cape Town. He made it clear that he had not received any e-mails
and at eighteen minutes past ten (10:18)
at his request, a lady in
the conveyancing department of the First Respondent transmitted to
him (per telefax) a copy of the
amended pro-forma account which
reflected the retention by it of the sum of Two hundred and fifty
thousand rands (R250 000.00).
The copy of the telefax is attached to
the Founding papers as
Annexure
"K".
According
to Mr. Carstens, he was shocked at the sight of the content of
Annexure
"K",
resulting
in him urgently telephoning the First Respondent at nineteen minutes
past ten (10:19) the same day. He spoke to a certain
Mr. Jacques Du
Toit of the First Respondent and voiced his anger and disputed that
the First Respondent had any entitlement to
retain the sum of Two
hundred and fifty thousand rand (R250 000.00) or any amount at all.
He reiterated that he did not consent
to the transfer taking place
subject to the retention of the Two hundred and fifty thousand rands
(R250 000.00). Subsequently
Mr. Carstens was sent a telefax from the
First Respondent, copy of which is
Annexure
"L"
to
the Founding papers.
Annexure
"L"
reads:
"
We refer to writer's telephone conversation today and confirm that
you are aware that the transaction will be registered
today. Kindly
let us have your concerns in writing so that we can take same up
with the purchaser. Kindly also let us have banking
details for
Move-On-Up 56 (Pty) Ltd for payment of the proceeds as per our
pro-forma statement of account."
[15]
On receiving a bank statement reflecting the amount which had been
deposited into the Applicant's account, Mr. Carstens discovered
that
the sum of Two hundred and fifty thousand rands (R250 000.00) had
been retained by the first Respondent. On 22 August 2006,
the First
Respondent wrote to the Applicant. A copy of this letter is
Annexure
"O"
to
the Founding papers and it reads:
"We
enclose herewith Electrical Consultant's letter indicating the
shortcomings in the installation pertaining to the abovementioned
property and as a result thereof a certain amount was withheld from
the purchase price payable to Move-On-Up 56 (Pty) Ltd (Mark
Carstens) in lieu of such installation. "
[16]
The author of the above quoted letter is Mr. Du Toit on behalf of
the First Respondent. Mr. Carstens remarked that Mr. Du
Toit failed
to mention in
Annexure
"O"
that
the retention was by consent. Mr. Carstens found the First
Respondent's conduct so unbecoming that he deemed it fit to have
the
First Respondent reported to the Cape Law Society. Mr. Carstens
stated that the Applicant is entitled (as per advice he received)
to
proceed by way of application proceedings as, notwithstanding the
First Respondent's reply to the complaint to the Cape Law
Society,
there is no cogent evidence upon which it can be construed that
there exists a
bona
fide
dispute
of fact between the parties. In conclusion Mr. Carstens reiterated
that in terms of the agreement of purchase and sale,
the First
Respondent was obliged to pay the purchase price to the Applicant as
against transfer of the property into the name
of the Second
Respondent and/or Third Respondent. He referred me to various
clauses in the Agreement of Purchase and Sale in
a clear endeavour
to support his contention. In conclusion Mr. Carstens unequivocally
stated as follows:
"On
any version of events, the R250 000,00 which is being held in Trust
by the First Respondent, is the property of the Applicant.
On the
First Respondent's version, the Second, alternatively, the Third
Respondent,
has no more than a spes to that money In
the
circumstance, the applicant is entitled to an Order directing the
First Respondent forthwith to pay to it the sum of R250
000,00
together
with all interests that has accrued thereon since 12 August 2006. "
THE
ANSWERING AFFIDAVIT
[17]
Mr. Herman Grobler, the Second Respondent, deposed to this Affidavit
having been authorized by the Third Respondent. He admitted
that an
agreement was entered into by and between the Applicant and the
Second Respondent, but added that he entered into the
agreement in
his capacity as trustee on behalf of a company to be formed. The
company which was to be formed was indeed formed
and it is the Third
Respondent in this matter. Mr. Grobler accused the Applicant of
having failed to disclose the correct description
of the property
purchased. He further accused the Applicant of failure to comply
with the terms of the agreement in certain respects.
Mr. Grobler
responding to the content of paragraph 15 of the Founding Affidavit
denied that there was any breach of obligations
by either the Second
Respondent or the Third Respondent but admitted that he is the one
who instructed the First Respondent to
retain an amount of Two
hundred and fifty thousand rands (R250 000,00) from the purchase
price. According to Mr. Grobler the
Applicant being represented by
Mr. Carstens, also agreed to this. He referred to Mr. Du Toit's
Affidavit filed on behalf of the
First Respondent. Responding to
paragraph 20 of the Founding papers, Mr. Grobler stated that he
instructed the First Respondent's
representative to advise the
Applicant that the deeds either be rejected from the Deeds Office
and the transfer not be registered
until the question of the
services had been sorted out or alternatively that an amount of Two
hundred and fifty thousand rands
(R250 000,00) be retained pending
the dispute being resolved and should the Applicant consent to such
retention of the monies,
then the transfer can go ahead and be
registered and the balance of the purchase price be retained. Mr.
Grobler attached to the
Answering Affidavit a letter written by Mr.
Willem Du Toit (an electrical consultant consulted by the Third
Respondent) indicating
the lack of services and the costs to install
such services, being the amount retained. The letter is
Annexure
"HG8"
attached
to the Answering papers. Mr. Grobler made it clear that he gathered
from Mr. Du Toit of the First Respondent that the
Applicant
confirmed that the transactions must be continued with and that the
money can be withheld until the dispute has been
resolved.
[18]
Mr. Grobler, for the convenience of the Court deemed it prudent to
briefly sketch the sequence of events as conveyed to him
by Mr. Du
Toit representing the First Respondent. He stated that on 8 August
2006, the First Respondent rendered an account to
the Applicant
which was dated 9 August 2006 and had same sent to the latter on 8
August 2006 (at 2:04pm) and he added that at
the time of the
rendering of the account, the First Respondent was not aware of the
problem as stated earlier on. In fact, Mr.
Grobler himself was not
aware of any problem. He averred that he only received confirmation
that a problem actually existed after
being contacted by Mr. Du Toit
of the First Respondent. On 10 August 2006 at 11:49am Mr. Carstens
was telephonically contacted
(by secretary to Mr. Du Toit) to advise
him about the problem and a message was left on his cellphone that
he should contact
the offices of the first Respondent urgently. Mr.
Grobler also referred to further e-mails and letters sent to the
Applicant
in this regard. He stated further that in order to reach
the Applicant another effort undertaken by the First Respondent was
to send an sms to Mr. Carstens of the Applicant from the phone owned
by Mr. Du Toit.
[19]
Importantly, Mr. Grobler emphasised that upon receipt of the sms,
Mr. Carstens called the First Respondent and advised Ms
Oosthuizen
(in the employ of the First Respondent) that he had not received any
of the documentation referred to by her during
the telephonic
conversation and requested the documents to be faxed to him at a
Cape Town fax number which Mr. Carstens supplied.
These were faxed
to Mr. Carstens, according to Mr. Grobler. These constituted five
(5) pages including the letter advising Mr.
Carstens of the Two
hundred and fifty thousand rands (R250 000,00) being withheld plus
the engineer's reports. This had an effect
that a telephonic
discussion took place between Mr. Jacques Du Toit of the First
Respondent and Mr. Carstens. According to Mr.
Grobler this
discussion took place in the presence of one Mr. Barhaschone. The
discussion was about problems encountered and
the option available
to the Applicant. According to Mr. Grobler the Applicant elected
that the transfer be proceeded with and
that the Two hundred and
fifty thousand rands (R250 000,00) be retained. A letter was
subsequently written by the First Respondent
which confirmed the
telephonic discussion and invited the Applicant to set out his
concerns in writing which concerns would be
taken up with the Third
Respondent.
[20]
Mr. Grobler averred that the Third Respondent was entitled to
instruct the conveyancer to withhold the monies which would
then in
effect constitute a breach in terms of the agreement in that the
full purchase price had not been paid by the Purchaser
to the
Seller. Concluding his Affidavit Mr. Grobler stated the following:
"I
am advised that this is a question of law and will be dealt with at
the hearing of the application. I, however, again
reiterate my
instructions to retain the money which could then be construed as a
breach of the agreement. The Applicant would
have its recourse
against the Third Respondent in terms of Contract Law and as such it
was not a variation of the agreement.
To the extent that the
Applicant consented to the retention of the amount of R250 000,00
the contract does not preclude the Applicant
from orally waiving any
of its rights in terms of the agreement which it elected to do by
consenting to the retention of a certain
portion of the purchase
price and which waiver was done explicitly by giving the consent,
alternatively impliedly through its
conduct."
Mr.
Jacques Du Toit (a practising attorney and director in the First
Respondent's firm) deposed to an Affidavit verifying the
assertions
contained in Mr. Grobler's Affidavit. Mr. Nicholas Harvey Barnschone
(another attorney and as such director of the
First Respondent)
confirmed the correctness of the Answering Affidavit deposed to by
Mr. Grobler.
THE
REPLYING AFFIDAVIT
[21]
Mr. Carstens in reply made it clear that what the Applicant sold to
the Second Respondent was a vacant land, in respect of
which there
was an approved development plan for the construction of twenty five
(25) residential units. He maintained that it
is correct that
portion 1 of Erf 215 has to be transferred to the Prince's Grant
Home Owner's Association because that piece
of property has on it
the club house, swimming pool, tennis court and squash court which
all of the residents of Prince's Grant
share as a sporting and
relaxation facility. Mr. Carstens enlightened the Court that the
Second Respondent already owned property
within prince's Grant
before he came to buy the property referred to in this application
and he knew very well that the club
house and sporting facilities
were to be shared by all residents and were not included in the
property sold to him. He also brought
it to the notice of the Court
that an estate agent named Martin Petersen, who also lives and works
at Prince's Grant, had assisted
the Applicant in marketing the
twenty five (25) residential units which the Applicant had intended
to construct on the property.
The Second Respondent (in fact)
approached the Applicant through Mr. Petersen with a proposal to buy
the property from the Applicant.
According to Mr. Carstens the
Second Respondent certainly must have known whether through Mr.
Petersen or from his own observation
that the club house and
sporting facilities did not form part of the property sold. Mr.
Carstens referred the Court to
Annexure
"Bl"
to
the Agreement of Sale which depicts the layout of the 25 residential
units and shows the club house and sporting facilities
as a separate
entity adjacent to the property sold.
[22]
Mr. Carstens emphatically denied that the Applicant failed to comply
with Clause 11 of the agreement and he added that there
is an 1lkv
power line which runs along the boundary of the property sold to the
Third Respondent and that is the bulk service
of electricity which
the Applicant warranted in the Agreement of Sale. Mr. Carstens
reiterated that the Second and Third Respondents
knew very well that
the land itself was vacant and that there was electrical substation
on the property. In his view, if the
Second Respondent expected to
see such a substation, then he would have raised the matter before
contracting with the Applicant.
Mr. Carstens invited my attention to
the fact that Clause 11 of the Agreement of Sale makes it quite
clear that the purchaser
was responsible for the connection of
internal services to the external services as well as the payment of
connection fees. Concluding
on this aspect Mr. Carstens stated
categorically thus:
"The
bulk electrical supply is in place and it is up to the Third
Respondent to design, install, and pay for, whatever installation
it
needs to connect the bulk electrical supply, at the boundary, to
whatever distribution network the Third Respondent requires
for its
development. "
[23]
He reiterated that he never consented to the retention of the money
at all. He drew the Court's attention to what he called
"the
vagueness of the alleged retention agreement and pointed out that
nothing is said as to what will happen if the dispute
is not
"resolved". He pointed out that it is clear that the
parties disagree over the interpretation of the Agreement
of Sale
but the Third Respondent has done nothing to have the matter decided
by legal proceedings, nor has it instituted any
action for damages.
Mr. Carstens specifically denied that Mr. Du Toit sketched options
available to the applicant in his telephone
conversation with him
referred to in paragraph 24.3.9 of the Answering Affidavit.
According to Mr. Carstens Mr. Du Toit simply
told him that he had
been instructed by the buyer to withhold the sum of Two hundred and
fifty thousand rands (R250 000,00) in
respect of the purchase price
because of the alleged electrical problem. Importantly, contended
Mr. Carstens, Mr. Du Toit did
not say that unless the former
consented to the retention registration of transfer would not
proceed. In fact (according to Mr.
Carstens) the question of
registration of transfer was not even discussed.
[24]
Responding to paragraph 26.3 of the Answering Affidavit Mr. Carstens
remarked that the Second Respondent gives the "game
away"
in that he seemingly suggests that the basis upon which the Two
hundred and fifty thousand rands (R250 000,00) was
retained was
because the First Respondent was instructed to do so by the Third
Respondent. Concluding on this aspect Mr. Carstens
contended as
follows:
"I
have already said that, because the sum of R250 000,00 is being held
by the First Respondent in its Trust account, in
the name of the
Applicant, and on its behalf, the First Respondent is obliged to
repay that sum to the Applicant, simply because
the First Respondent
no longer has any mandate (if it ever had one), to hold that sum on
behalf of the Applicant. "
Mr.
Carstens reiterated that in the advice he received, the whole of the
purchase price of the property became due, owing and
payable by the
Third Respondent to the applicant, simultaneously with registration
of transfer but the Respondents now allege
that part of the purchase
price (i.e. R250 000,00) would not be paid against registration of
transfer, but would be retained
in Trust pending an unspecified
resolution of the electrical problem. Mr. Carstens added the
following:
"I
am advised that because this alleged arrangement, and the
Applicant's alleged consent thereto, was never reduced to writing,
it is not binding on any of the parties and the Applicant is thus
entitled to payment of the purchase price, in full. "
[25]
In Mr. Carstens' view if it is the case of the Respondent that the
sum of Two hundred and fifty thousand rands (R250 000,00)
was
retained by the First Respondent upon the Third Respondent's
instructions, (without the need for any consent from the Applicant)
then the Third Respondent is simply in breach of the contract of
sale and it is obliged to pay the balance of the purchase price.
Furthermore, Mr. Carstens contended that if it is the Third
Respondent's case that the money was withheld in terms of the
agreement
to which it is said that the Applicant consented, then
that is an unenforceable variation of the Agreement of Sale. Mr.
Carstens
denied that the Applicant waived any of its rights and
hastened to add that any alleged oral waiver is not enforceable in
this
instance.
SUBMISSIONS
AND APPLICABLE LEGAL PRINCIPLES
[26]
Mr. Beyers premised his argument on the dispute of fact in this
matter. He submitted that in these circumstances the well
established approach is that set out in
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 634E to 635C, namely: "The appellant
nevertheless sought a final interdict, together with ancillary
relief, on the
papers and without resort to oral evidence. In such a
case the general rule was stated by Van Wyk J (with whom De Villiers
JP
and Rosenow J concurred) in
Stellenbosch
Farmers' Winery Ltd v Stellenvale Winery (Pty) Ltd
1957
(4) SA 234
(C) at 235E-G, to be:
"
...where there is a dispute as to the facts a final interdict should
only be granted in notice of motion proceedings if
the facts as
stated by the respondents together with the admitted facts in the
applicant's affidavits justify such an order ...Where
it is clear
that facts, though not formally admitted, cannot be denied, they
must be regarded as admitted. This rule has been
referred to several
times by this Court (see Burnkloof Caterers (Pty) Ltd v Horseshoe
Caterers (Green Point) G (Pty) Ltd
1976 (2) SA 930
(A) at 938A-B;
Tamarillo (Pty) Ltd v BN Aitkin (Pty) Ltd
1982 (1) SA 398
(A) at 430
- 1; Associated South African Bakeries (Pty) Ltd v Oryx &
Vereinigte Backereien (Pty) Ltd en Andere
1982 (3) SA 893
(A) at
923G-924D). It seems to me, however, that this formulation of the
general rule, and particularly the second sentence thereof,
requires
some clarification and, perhaps, qualification. It is correct that,
where in proceedings on notice of motion disputes
of fact have
arisen on the affidavits, a final order, whether it be an interdict
or some other form of relief may be granted
if those facts averred
in the applicant's affidavits which have been admitted by the
respondent, together with the facts alleged
by the respondent,
justify such an order "
[27]
I fully agree with Mr. Beyers that upto now the test normally
employed to resolve issues between litigants in circumstances
where
there exists a dispute of fact, is the one set out in
Plascon-Evans
Paints
partially
quoted supra. It was not my understanding though that Mr. McClarty
SC disputed this assertion either. His contention
is not difficult
to comprehend. He actually submitted that notwithstanding the
dispute of fact on the papers, the Applicant is
entitled to request
the Court to decide the issues without resorting to oral evidence if
it can and to permit the matter to go
to oral evidence if it cannot.
In this regard Mr. McClarty SC referred me to
Kalil
v Decotex (Pty) Ltd and Another
1988
(1) SA 943
(A) at 981 D-G where Corbett JA (as he then was) observed
as follows:
"It
has been held in a number of cases that an application to refer a
matter to evidence should be made at the outset and
not after
argument on the merits (see Di Meo v Capri Restaurant
1961 (4) SA
614
(N) at 615H-616A; De Beers Industrial Diamond Division (Pty) Ltd
v Ishizuka
1980 (2) SA 191
(T) at 204C-206D; Spie Batignolles
Societe Anonyme v Van Niekerk: In re Van Niekerk v SA Yster en Staal
Industriele Korporasie
Bpk en Andere
1980 (2) SA 441
(NC) at 448E-G;
Erasmus v Pentamed Investments (Pty) Ltd (supra at 180H); Hymie
Tucker Finance Co (Pty) Ltd v Alloyex (Pty) Ltd
1981 (4) SA 175
(N)
at 179B-E; cf Klep Valves (Pty) Ltd v Saunders Valve Co Ltd
1987 (2)
SA 1
(A) at 241-25D). This is no doubt a salutary general rule, but
I do not regard it as an inflexible one. I am inclined to agree
with
the following remarks of Didcott J in the Hymie Tucker case supra at
179D:
'One
can conceive of cases on the other hand, exceptional perhaps,
...when to ask the Court to decide the issues without oral
evidence
if it can, and to permit such if it cannot, may be more convenient
to it as well as the litigants. Much depends on the
particular
enquiry and its scope.
[28]
In Mr. Beyers' submission the Applicant seeks, (as against the Third
Respondent) an order for specific performance of the
Agreement of
Sale, and (in the alternative) as against the First Respondent, an
order that the retained amount be paid to it.
In his submission
after having accepted the benefits of the agreement of 11 August
2006, namely, receipt of the purchase price
(less retention),
cancellation of its bonds and defective performance in terms of the
Deed of Sale, the Applicant now refuses
to comply with the only
rider attached thereto, being the retention of the purchase price.
Mr. Beyers described the Applicant's
conduct as manifest inequity. I
consider these submissions later-on in this Judgment.
[29]
According to Mr. Beyers, it is of decisive importance in this matter
to properly distinguish between, on the one hand, the
rights and
obligations which arise as between the parties to the Agreement of
Sale, (that is as between the Applicant and the
Third Respondent)
and on the other hand, the rights and obligations which arise in
respect of the agreement of what he called
mandate which subsisted
between the Applicant and the First Respondent, and the latter and
the Third Respondent respectively.
He emphasised that whilst the
First Respondent may have been nominated by the parties to act as
conveyancer in terms of the Agreement
of Sale (the First Respondent
was not a party to the Agreement of Sale) it could not be burdened
with any contractual obligations
which may have arisen from the said
Agreement of Sale. 1 accept that the First Respondent was not party
to the Agreement of Purchase
and Sale. But I hasten to add that the
First Respondent knew or should be taken to have known what the
agreement between the
parties is because it is armed with the copy
of such agreement. I take note of Mr. Beyers' submission that
whether the Applicant
is entitled to payment by the Third Respondent
of the balance of the purchase price in terms of the Agreement of
Sale stands
to be determined with reference to the provisions of the
Agreement of Sale.
[30]
In Mr. Beyers' submission even if the events of 11 August 2006 were
to be given no relevance, the Applicant would still be
barred from
exacting full performance from the Third Respondent until it had
itself complied fully with its obligations in terms
of the Agreement
of Sale or tendered to do so. In this regard I was referred to
BK
Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk
1979
(1) SA 391
(A) at 418-419. According to Mr. Beyers what the parties
are said to have agreed to on 11 August 2006 does not amount to
variation
of the Agreement of Purchase and Sale. In his view there
is no reason why in the instant case the agreement of 11 August 2006
could not have had the effect of a waiver or estoppel. He referred
me to
Van
Der Watt
v
Minnaar
1954
(3) SA OPD 932 at 937A-938F where the following formulation appears:
"As
enige afleiding van die gemelde beslissings gedoen kan word, dan
skyn dit die volgende te wees: Waar die betrokke partye
in staat en
gewillig is om die bepalings van die geskrewe kontrak stiptelik na
te kom en waar enige van sodanige bepalings, op
versoek van een van
die partye daartoe en deur vergunning van die ander party, op n
ander as die voorgeskrewe wyse ten voile
nagekom is, dan kan die
feit van geskrewe kontrak-bepalings gewysing word in die sin dat n
bepaling daaronder opgehef en 'n mondelinge
verpligting in die plek
daarvan gestel word, dan bestaan daar geen geskrewe kontrak wat
sowel die oorspronklike ooreenkoms en
die wysiging dek nie en
derhalwe voldoen sodanige gewysigde kontrak nie aan die beplaings
van art. 49 van die Ordonnansie nie.
Hierdie afleiding skyn ook
geregverdig te word deur die inhoud van paragrawe 593 en 595 van
Williston Contracts (verbeterde uitgawe,
deel 2) waar die geleerde
skrywer aandui dat waar die geskrewe ooreenkoms, soos deur die
daaropvolgende mondelinge kontrak gewysig,
ten voile nagekom is,
sodanige nakoming die uitwerking het.
"...as
a satisfaction of the liability on the original contract. The
Statute of Frauds does not apply to fully executed contracts,
so
that when the oral agreement has been performed its performance has
the effect the parties agreed it should have. "
In
die laasgenoemde paragraaf kom die volgende voor:
"If
an oral agreement were made it would not be enforceable as a
contract, but might nevertheless operate as a continuing
cause for
non-performance of the written agreement. It seems essential,
however, that B"
(d.w.s.
die party wat die gewysigde bepaling nagekom het op versoek van die
ander party, A)
"...could,
and presumably would have performed the condition or obligation on
his part, had it not been for A's action. Otherwise
A has not caused
B's failure to perform. ...On theories of waiver or estoppel it is
generally held that to the extent that a.
failure to perform has
been caused by either party, he cannot take advantage of the
non-performance. "
Minder
bevredigend is die verklaring van Cheshire en Fifoot, Law of
Contracts, bl. 363, tot die volgende effek:
"The
answer to this question depends upon a distinction which in certain
circumstances may be a little subtle. We have to
ask ourselves
whether the parties have supplanted or made a specific alteration in
the original contract, or whether what has
happened is that one
party, without in any sense binding himself, has agreed to wait
longer for performance by the other. "
In
die Restatement of the Law (Contracts, para. 224) word die volgende
neergele:
"The
performance of a condition qualifying a promise in a contract within
the Statute may be excused by an oral agreement
or permission of the
promisor that the condition need not be performed, if the agreement
or permission is given while performance
of the condition is
possible, and in reliance on the agreement or permission, while it
is unrevoked, the promise materially changes
his position. "
In
die Permanent Edition tot hierdie opus word die saak van Lampasona v
Capriotti,
296 Mass. 34
, 38, aangehaal waar die beslissing op
estoppel gegrond is. Die opsomming van die saak van Gulf Production
Co. V Continental Oil
Co.,
139 Tex, 183
, 191, is soos volg:
"Conditions
in written oil and gas lease that lessee must pay certain sums in
cash may be orally changed by lessor who agreed
to accept lessee's
syndicate certificates ".
Sien
verder Leake, Contracts (8ste uitgawe, bll. 616-617).
Op
bl. 585 van Phipson, op cit., kom die volgende voor:
"A
agrees in writing to sell land to B. An oral agreement made at the
time
that B might set off a debt owed him by A against the purchase
money
is (probably) admissible".
Die
saak van In re Taylor: Ex parte Norvell, 1910
(I)
K.B.
562 op bl. 569, bevat die volgende woorde van PHILLIMORE, R., ten
opsigte van 'n saak waar die koper onderneem het om £800
vir
vier huise te betaal en waar die verkoper aan hom 'n bedrag van £257
12s. 4d. geskuld het:
"We
are aware of opinion that the appellant Norvell has to the extent of
£257 12s. 4d. Performed all that was on his
part to be done,
and that he is entitled to say that the sum which he had to pay
arose from an obligation on his part which to
the extent of £257
12s. 4d. Has been extinguished by a set-off against the obligation
of the bankrupt to pay him that sum.
"
Sover
my beken is, het ons Howe nog nie direk die punt hier in geskil,
beslis nie. Die Engelse sake word egter in die algemeen
as leidrade
in soortgelyke vraagstukke aanvaar. (Sien bv du Plessis v Nel,
1952
(1) SA 513
(A.A). In die pasaangehaalde saak het VAN DEN HEEVER,
R.A., op bl. 539 die algemene stelling soos volg uitgedruk: "Where
the written contract purports to reflect the whole contract on a
particular subject matter between the parties, where the pleadings
aver that it is the whole contract or the Court is satisfied that it
is, no additional or conflicting oral terms may be proved:
in that
manner greater and lesser performances than those promised in the
written contract may not be proved".
Na
my beskeie mening bevat hierdie stelling geen weerspreking van die
afleiding uit die Engelse en Amerikaanse beslissings, hierbo
uiteengesit, nie. As in ag geneem word dat in terme van Le Grange v
Pretorius, 1943 T.P.A. 223, 'n ooreenkoms wat onder die bepalings
van die Transvaalse Proklamasie 8 van 1902, art. 30, in geskrif
opgestel moet word, geldig deur n mondelinge ooreenkoms tussen
die
partye ingetrek of kanselleer word, dan kan dit na my mening met
eweveel regverdiging konstateer word dat 'n enkel oorblywende
verpligting onder sodanige skriftelike ooreenkoms ook by wyse van
mondelinge kontrak geheel-en-al gedelg kan word of by wyse
van
afstandoening daarvan of by wyse van nakoming deur vervangde
prestasie wat deur die teenparty aanvaar word as prestasie onder
die
geskrewe kontrak of deur skuldvergelyking. "
[31]
Mr. McClarty SC submitted that for the purposes of this application
the merits of the disputed facts are irrelevant by reason
of the
fact that in terms of the Agreement of Sale the First Respondent was
obliged to pay the purchase price to the Applicant
against
registration of the property into the name of the Third Respondent.
This submission must necessarily be understood in
the context of
Clause 22 of the agreement which provides as follows:
"22.
General
22.1
Sole
record of agreement
This
agreement constitutes the sole record of the agreement between the
parties with regard to the subject matter hereof. No party
shall be
bound by any express or implied term, representation, warranty,
promise or the like not recorded herein.
22.2
No
amendments except in writing
No
addition to, variation of or agreed cancellation of this agreement,
including this clause 22.2, shall be of any force or effect
unless
in writing and signed by or on behalf of the parties.
22.3
Waivers
No
relaxation or indulgence which any party may grant to any other
shall constitute a waiver of the rights of that party and shall
not
preclude that party from exercising any rights which may have arisen
in the past or which may arise in the future.
22.4
22.5
Approvals
and Consents
An
approval or consent given by a party under the agreement shall only
be valid if in writing and shall not relieve the other
party from
responsibility for complying with the requirements of this
agreements nor shall it be construed as a waiver of any
rights under
this agreement except as and to the extent otherwise expressly
provided in such approval or consent, or elsewhere
in this
agreement. "
[32]
From the above quoted Clause it is abundantly clear that for any
consent (as alleged by the First Respondent) to be of any
force and
effect, it would have had to have been in writing and appropriately
signed by the parties because it would constitute
a variation of
Clause 7.4 read with Clauses 8.1 and 8.2 of the agreement above
referred to. The provisions of Clauses 7.4, 8.1
and 8.2 of the
Agreement of Sale are relevant in my determination of this
application. It is prudent that 1 set them out infra
for purposes of
easy reference. These clauses contain the following provisions:
"7.4
The guarantee shall be payable upon written notification by the
Attorneys to the bank which issued the guarantee (the
"guarantor")
of (sic) registration of transfer with simultaneous registration of
cancellation of any existing mortgage
bonds registered over the
Property and, if required by the Purchaser, the simultaneous
registration of a first mortgage bond
over the Property. "
"8.1
Registration of transfer of the Property in the name of the
Purchaser shall be effected by the Attorneys as soon as
is
reasonably possible, but shall in any event not occur before the
deposit has been paid to the Attorneys and the bank guarantee
referred to in clause 8 has been provided to the Attorneys.
The
Seller will not be required to transfer the Property into the name
of the Purchaser unless the Purchaser has complied with
all its
obligations due for fulfilment in terms hereof. "
Clearly
on a proper construction of Clauses 7.4, 8.1 and 8.2
supra
payment
of the purchase price is to be made on transfer. There is no
provision indeed in the agreement under consideration for
the
retention of any monies pending the resolution of disputes
concerning performance by either party. See also:
SA
Sentrale Ko-op Graanmaatskappy Bpk v Shifren en Andere
1964
(4) SA 760
(A);
Brisley
v Drotsky
2002
(4) SA 1
(SCA);
HNR
Properties CC and Another v Standard Bank of South Africa Ltd
2004
(4) SA 471
(SCA);
Cecil
Nurse (Pty) Ltd v Nkola
2008
(2) SA 441
(SCA);
De
Villiers v McKay NO and Another
[2008] ZASCA 16
;
2008
(4) SA 161
(SCA).
[33]
The above cited authorities definitely held that the effect of a
non-variation clause such as the one in the instant matter
is that
an oral variation of the agreement must be left out of account and
is irrelevant in law in proceedings to enforce the
terms of the
contract. See particularly:
De
Villiers v McKay
supra
at
163E. On the basis of
inter
alia
the
above authorities Mr. McClarty SC contended that the alleged oral
agreement is irrelevant and the Applicant is entitled to
payment of
the full purchase price without any retention. I am inclined to
identify myself with this contention by Mr. McClarty
SC. Mr. Beyers
did his best in painting a picture that what is alleged purportedly
happened (i.e. the alleged oral agreement
for the retention of the
portion of the purchase price) did not amount to the variation of
the contract of sale. I find this
to be nothing but naked variation
of the contract of sale. This is unlawful and thus would have no
force and effect in law particularly
in proceedings aimed at
enforcing the terms of the contract between two (2) litigants who
bound themselves contractually. In
any event, the alleged oral
agreement conflicts with the provisions of Clause 22.3
supra
of
the Agreement of Sale which stipulate that no addition to, variation
of, or agreed cancellation of this agreement shall be
of any force
or effect unless in writing and signed by or on behalf of the
parties. Mr. Beyers was critical about any reference
to the
Alienation of Land Act 68 of 1981
. This is the legislation which, in
my view, falls to be considered as well. We are undeniably dealing
with the landed property
in the instant matter. Because the subject
matter of the Agreement of Sale as such concerns landed property,
the alienation of
land and the formalities prescribed by the
provisions of that Act are applicable. See:
Section
2
(1) of the
Alienation of Land Act.
The
general object of the Act is directed against the uncertainty,
disputes and possible malpractices. See:
Clements
v Simpson
1971
(3) SA 1
(A) at 7 where the following appears:
"1.
The section is directed against uncertainty, disputes and possible
malpractices.
"Dit
kan aangeneem word, meen ek, dat die oogmerk van hierdie artikel is
om, sover doenlike altans, onsekerheid en geskille
omtrent die
inhoud van sulke kontrakte te voorkom en moontlike wanpraktyke teen
te werk. ...Die Wetgewer kon nouliks gemeen het
dat dit alle
onsekerheid, alle geskille en alle wanpraktyke sou besweer, en dit
kan wees dat die mate waarin die oogmerk bereik
is en bereik word,
heelwat te wense oorlaat, maar dit neem nie weg nie dat bogenoemde
wel die oogmerk is.: - per STEYN, C.J.
in Neethling v Klopper en
Andere,
1967 (4) SA 459
(A.D.) atp.464E "
See
also:
Christie
- The Law of Contract in South Africa
(5
edition page 111).
[34]
In the above regard, Mr. McClarty SC referred me to
Jones
v Wykland Properties
1998
(2) SA 355
(C) at 358-359 where Knoll AJ (as she then was) stated
the following concerning the issue of whether a term in a contract
is
material:
"In
my judgment, in order to decide whether a term of a contract is
'material 'for the purposes of
s2(l)
of the Act, the following
questions require to be answered positively:
did
the parties apply their minds to the term?
Did
they agree, either expressly or impliedly,
(i)
that
the term should form part of their contract; and
(ii)
be
binding on them?
It
should be noted that this only applies to those terms which are not
naturalia, i.e. flowing by law from the essential terms
of the
contract. Naturalia are not required to be reduced to writing. "
There
is no dispute whatsoever that in an Agreement of Sale of land such
as the one pertaining to this case, the purchase price
and the
payment thereof are most certainly the essential/material terms of
the contract. Hence there are clauses of the agreement
that are
devoted to such essential/material terms. Quite apart from the
relevant provision in the agreement in this regard (referred
to
earlier on)
Section 2
(1) of the
Alienation of Land Act provides
that any oral variation thereof which is not reduced to writing and
signed by the parties is of no force and effect.
[35]
With regard to what is perceived to constitute disputed facts in
this matter, I hold the view that it falls outside the ambit
of what
I must determine. The parties bound themselves in the Agreement of
Sale. This agreement constitutes the sole record of
the agreement
between the parties with regard to the subject matter at hand. It is
not comprehendible to now accuse the Applicant
of having breached
the agreement. The Agreement of Sale has its own built-in mechanism
which stipulates how the breaches are
to be dealt with. For an
example, Clause 15 of the Agreement of Sale provides as follows:
"
15.1
Should either party fail to perform any obligations in terms of this
Agreement on due date or fail to comply with any other
term or
condition of this Agreement for a period of seven (7) days after
delivery of a written notice whereby he is required
to comply with
such terms or conditions, the aggrieved party shall be entitled,
without any further notice and without prejudice
to any other
rights, to cancel this Agreement, and claim damages from the
defaulting party.
15.2
In any event of a default by the Purchaser and consequent
cancellation of this Agreement, the Seller shall be entitled,
without prejudice to any of its rights, to retain as a pre-estimate
of its damages, any deposit paid in terms hereof. "
The
two (2) contracting parties who have bound themselves contractually
cannot be allowed to simply ignore the written agreement
and agree
differently orally about the subject matter of the written
agreement. According to the written agreement if the Applicant
had
breached the agreement, there simply would have been no registration
of transfer. The Third Respondent cannot be allowed
to have its own
way. Registration of transfer takes place simultaneously with the
payment of the purchase price. That, in simple
terms, means that
landed property is sold for cash. For the Third Respondent to
receive transfer and instructs that a portion
of the purchase price
be withheld from the seller is simply acting not only
mala
fide,
but
also unlawfully vis-a-vis the other contracting party. One only
needs to read
Annexure
"F"
to
know how it came about that a portion of the purchase price in this
matter was withheld. The First Respondent made it clear
that
"on
instruction of the purchaser, we are instructed to hold such monies
in trust... ".
It
is, in my Judgment, unlawful to have withheld the Applicant's money
on the basis of instruction by the purchaser. If the contents
of
Annexure
"F"
quoted
above are anything at all to go by, then the First Respondent
suffered from an error of Judgment in this regard. I want
to state
it categorically that the Agreement of Sale which constitutes the
subject matter of this litigation is written in a
clear and
unambiguous language. I cannot accept that there is any possibility
of a dispute of fact as to the interpretation of
the clauses
thereof. In terms of Clause 3.3 of the Agreement of Sale the First
Respondent are the Attorneys for purposes of payment
of the deposit
and delivery of the guarantees and thereafter are dutied to effect
registration of transfer of the property into
the name of the
purchaser (See: Clauses 7 and 8 of the Agreement). It is common
cause that the Applicant furnished the First
Respondent with a power
of attorney to pass transfer of the property from the Applicant to
the Third Respondent.
[36]
From the aforegoing alone it is fair to say that "for purposes
of passing transfer and dealing with the deposit and
guarantee, the
First Respondent was acting as the Applicant's attorney and agent.
This remains the position despite the fact
that the purchaser (the
Third Respondent in this matter) pays the First Respondent's fees
for attending to transfer and all ancillary
matters. It is a
questionable practice (to say the least) on the part of the First
Respondent whether or not it could take instructions
from the Second
or Third Respondent with regard to the payment of the purchase price
as alleged by the Second Respondent. In
its capacity as the
Applicant's conveyancing attorneys, the First Respondent was
certainly obliged at all times to deal with
the deposit and
guarantee as provided for in the Agreement of Sale. This, the First
Respondent acknowledged in
Annexure
"F"
attached
to the Founding papers wherein it recorded that it was instructed to
hold the sum of Two hundred and fifty thousand rands
(R250 000,00)
in trust "in your name". Indeed the First Respondent is
holding the money in trust for and on behalf
of the Applicant. Even
the interests earned by this money are for the account of the
Applicant. It does not matter from what
angle one looks at this
money. On any version of the events the sum of Two hundred and fifty
thousand rands (R250 000,00), the
subject matter of this application
is and it remains the property of the Applicant. It can only be
further kept in the First
Respondent's trust account if its owner,
the Applicant, so instructs. It would appear from the papers in this
matter, that the
Applicant never gave instruction that the Two
hundred and fifty thousand rands (R250 000,00) be kept in trust. If
I accept the
latter position to be the true state of affairs, then
this means that the First Respondent is acting unlawfully by
withholding
this money. The money should have been dealt with in
terms of the written Agreement of Sale signed by the parties. Trust
money
in the possession of an attorney should be available to his
client the instant it becomes payable. Trust money is generally
payable
before and not after demand.
See
in this regard:
Incorporated
Law Society, Transvaal v Visser and Others; Incorporated Law
Society, Transvaal v Viljoen
1958
(4) SA 115
(T) at 118F-H where the following important formulation
appears:
"When
trust money is handed to a firm it is the duty of the firm to keep
it in its possession and to use it for no other
purpose than that of
the trust. The position is, however, not the same in a case where a
specific article is handed over which
must subsequently be returned
or accounted for. The firm fulfils its duty if it accounts for or
returns an equivalent amount.
It is inherent in such a trust that
the firm should at all times have available liquid funds in an
equivalent amount. The very
essence of a trust is the absence of
risk. I am in respectful agreement with HATHORN, J, where he states
in the case of
Incorporated
Law Society
v
Stalker,
1932
N.P.D. 594
(at p.606), that it is imperative that trust moneys in
the possession of an attorney should be available to his clients the
instant
they become payable and that they are generally payable
before and not after demand. If a deficit existed in respect of
trust
moneys for which the respondents were not responsible but for
which they were liable, they had no right to use moneys entrusted
to
them for a particular purpose, to satisfy trust creditors in respect
of whose moneys the deficit existed. If they did use
it in this
manner they would be guilty of theft because they would then be
using moneys of their clients to satisfy their own
obligations
towards other clients. "
In
Law
Society, Transvaal
v
Matthews
1989
(4) SA 389
(T) at 394 Kirk-Cohen J
inter
alia
observed
as follows in this regard:
"/
deal now with the duty of an attorney in regard to trust money.
Section 78 (J) of the Attorneys Act obliges an attorney
to maintain
a separate trust account and to deposit therein money held or
received by him on account of any person. Where trust
money is paid
to an attorney it is his duty to keep it in his possession and to
use it for no other purpose than that of the
trust. It is inherent
in such a trust that the attorney should at all times have available
liquid funds in an equivalent amount.
The very essence of a trust is
the absence of risk. It is imperative that trust money in the
possession of an attorney should
be available to his client the
instant it becomes payable. Trust money is generally payable before
and not after demand. See
Incorporated Law Society, Transvaal v
Visser and Others; Incorporated Law Society, Transvaal
v
Viljoen
1958 (4) SA 115
(T) at 118F-H. An attorney's duty in regard to the
preservation of trust money is a fundamental, positive and
unqualified duty.
"
[37]
For purposes of completeness I must also have regard to the
following observation of note in
Goodriche
and Son v Auto Protection Insurance Company Ltd
(in
liquidation)
1967 (2) SA 501
(W) at 504E:
"Although
the client may, broadly speaking, not prescribe the manner in which
the services are to be rendered, the attorney
must at all stages of
the matter act according to the instructions of the client (subject
to the limitation that he must not
carry out improper instructions).
That is why he has a duty to report to his client when it is
reasonable and necessary. "
I
undoubtedly fully associate myself with the above sentiments from
our case law. They properly and in the most eloquent language
make
it clear what the true legal position is when it comes to moneys
held in trust by attorneys for and on behalf of their clients.
This
applies with full force in the instant matter. See also:
LAWSA
First Reissue Vol. 14,
para
450 page 402-403).
Therefore,
even if I accept that there was an oral agreement (I do not accept
this) to retain the money in trust, the First Respondent's
mandate
to do so has been terminated and it has been instructed to repay the
sum of Two hundred and fifty thousand rands (R250
000,00). How can
it refuse to do so?
COSTS
[38]
Mr. Beyers submitted that this Court should resort to a punitive
cost order against the Applicant in that it proceeded to
bring this
matter to Court by way of motion when it knew or ought to have known
that inherent in the matter was a dispute of
fact. According to Mr.
Beyers the matter should have been initiated by way of action in
view of the dispute of fact. On the other
hand Mr. McClarty SC
submitted that having regard to the provisions of the non-variation
clause in the Agreement of Sale, the
provisions of the Alienation of
Lands Act and the duties of the First Respondent as conveyancers
towards the Applicant, it was
reasonable for the Applicant to have
sought relief by way of application proceedings rather than by way
of action. The general
rule is that a successful party is entitled
to its costs. In view of the conclusion I have reached on the merits
of this matter,
it is not necessary to consider Mr. Beyer's
submission in this regard. The Applicant is, in my view, entitled to
its costs in
this matter.
ORDER
[39]
In the circumstances 1 make the following order:
(a)
The First Respondent, alternatively the Third Respondent be and is
hereby directed forthwith to pay to the Applicant the sum
of Two
hundred and fifty thousand rands (R250 000.00) presently being held
in Trust.
(b)The
First Respondent, alternatively the Third Respondent, is directed to
pay interest on the aforesaid sum of Two hundred and
fifty thousand
rands (R250 000.00) calculated at the rate of 15.5% from 12 August
2006 to date of payment, both dates inclusive.
(c)The
First Respondent, alternatively the Second Respondent, alternatively
the First, Second and Third Respondents jointly and
severally, are
directed to pay the costs of this application on the attorney and
client scale.
DLODLO,
J