Bekker v Schmidt Bou Ontwikkelings CC and Others (3862/05) [2006] ZAWCHC 37; [2007] 4 All SA 1231 (C); 2007 (1) SA 600 (C) (24 August 2006)

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[2006] ZAWCHC 37
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Bekker v Schmidt Bou Ontwikkelings CC and Others (3862/05) [2006] ZAWCHC 37; [2007] 4 All SA 1231 (C); 2007 (1) SA 600 (C) (24 August 2006)

REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE
PROVINCIAL DIVISION)
Case No.:
3862/2005
In this
matter between:
LINDA
ANN BEKKER
Applicant
And
SCHMIDT
BOU ONTWIKKELINGS CC
First
Respondent
ANDRÉ KLEYNHANS
Second Respondent
THE REGISTRAR OF DEED, CAPE TOWN
Third Respondent
Coram: YEKISO
J
Heard: 1
September 2005
Delivered: 24
August 2006
Summary:
The
Housing Consumers Protection
Measures Act, 95 of 1998
–
section 10
thereof.
Section 10
cannot be interpreted
to mean that a deed of sale concluded between the housing consumer
and the home builder invalid by reason only
of omission on the part
of the home builder to enrol with the National Home Builders
Registration Council.
- ignorance on the part of the
home builder to comply with the provisions of the
Housing Consumers
Protection Measures Act is
no justification to conclude that such
deed of sale invalid in circumstances where the home builder ought to
have been aware of the
laws regulating the building industry.
Deed of sale – cancellation
clause – seller needs to strictly comply with the provisions of the
cancellation clause for cancellation
in terms of the cancellation
clause to be valid.
JUDGMENT DELIVERED ON 24 AUGUST 2006
YEKISO, J
[1] On 4 May 2005 the
applicant, who is described in the founding affidavit as an adult
female estate agent, residing at 9c Hope Street,
Hunter’s Home,
Knysna, launched an application out of this Court, on urgent basis,
for a rule
nisi
interdicting and restraining the first
respondent from alienating, transferring or causing to be transferred
to any person or entity,
the first respondent’s right, title, and
interest in a certain immovable property situate at and commonly
known as Unit 9, Meedingspark
Townhouse Complex, Sedgefield, being
erf 4088, Sedgefield, in the province of the Western Cape. The rule
nisi
was intended to operate as an interim interdict pending
resolution of certain disputes, in the normal course, then existing
between
the applicant and the first respondent.
[2] The relief sought in
the normal course is for a declarator declaring that a deed of sale
concluded between the applicant and the
first respondent at Knysna on
18 July 2003 relating to the sale of the property described in the
preceding paragraph is valid and
binding on the parties and that an
amount of R 10,000-00 paid to the second respondent on behalf of the
applicant, which has since
been appropriated by the second respondent
as fees, be re-instated as a deposit in terms of clause 2 of the deed
of sale. The further
relief sought against the first respondent
and/or the second respondent is an order ordering the first and/or
the second respondent
to make available to the applicant the entire
original deed of sale, including the addendum thereto, concluded
between the applicant
and the first respondent.
[3] The first respondent
is a Close Corporation, duly incorporated in terms of the
Close
Corporations Act, 69 of 1984
. It appears on basis of the papers
that a Casper Johannes Schmidt is a sole member of the close
corporation. The registered office
of the first respondent is not
apparent on basis of the papers save that the first respondent, in
terms of the deed of sale, chose
a postal address at Sedgefield Post
Office as its
domicilium citandi et executandi.
[4] The second respondent
is described in the founding affidavit as an attorney of this Court,
practising as such under the name and
style of André Kleynhans at
Sedgefield Business Centre, Sedgefield.
THE DISPUTE
[5] The first leg of the
dispute between the applicant and the first respondent essentially
relates to the enforceability of the deed
of sale concluded between
the applicant and the first respondent, which deed of sale the first
respondent alleges in its opposing
papers is not enforceable since
same has since been cancelled due to breach by the applicant of the
material terms and conditions
thereof.
[6] The second leg of the
dispute relates to the validity of the deed of sale itself, it being
contended on behalf of the first respondent
that same is void
ab
initio,
and as such unenforceable as its terms and conditions are
in conflict with the provisions of the Housing Consumers Protection
Measures
Act, 95 of 1998 (the Act) and that, in view thereof, the
agreement thus concluded is
contra bonos mores,
invalid and
incapable of enforcement.
[7] The best approach to
deal with these issues, in my view, will be, in the first instance,
to determine if the agreement concluded
between the applicant and the
first respondent has since been cancelled. If it appears that any
purported cancellation of the agreement
was not valid in the sense
that such purported cancellation was not strictly in accordance with
the provisions of the cancellation
clause of the agreement, the next
issue to determine will be if indeed the agreement is
contra bonos
mores,
invalid and unenforceable because of conflict of its terms
and conditions with the provisions of the Act as contended on behalf
of
the first respondent.
[8] On Friday, 13 May
2005 Ndita AJ, as she then was, and by consent between the parties,
granted a rule
nisi
restraining the first respondent from
alienating its right, title and interest in the property in dispute
pending the hearing of the
matter on 1 September 2005. On the
latter date the matter was argued before me. After hearing argument
on behalf of the parties,
I reserved judgment. In the paragraphs
which follow, is my judgment in the matter.
ALLEGED
CANCELLATION OF THE AGREEMENT
[9] For sake of
completeness I should point out that the agreed purchase price in
respect of the property which is the subject of
the dispute between
the parties was in an amount of R 365,000-00. The agreement is
subject to payment of a deposit in an amount
of R 10,000-00. The
balance of the purchase price was to have been paid by way of
progressive instalments as set out in clause
3 of the deed of sale.
The amount of R 10,000-00, payable as a deposit in terms of clause 2
of the agreement, was paid into the
trust account of the second
respondent who, at all material times, acted on behalf of the first
respondent. The aforementioned
payment was made by one S W Van der
Merwe who, incidentally, is the former husband of the applicant.
[10] The remedies
available to the seller, in the event of breach, are contained in
clause 10 of the deed of sale. Clause 10 of
the deed of sale
provides as follows under the heading “Breach”:
“
10 BREACH
Should the PURCHASER fail
to make any payments provided for herein, or otherwise commit a
breach of any of the conditions hereof,
and remain in default for 7
(SEVEN) days after dispatch of a written notice by registered post,
requiring the PURCHASER to make such
payment or to remedy any other
breach, the SELLER shall be entitled to, and without prejudice to any
other rights available by Law:
10.1 claim immediate
payment of the entire balance outstanding although not otherwise due
by the PURCHASER under this Deed of Sale;
or
10.2 cancel this Deed of
Sale and retain all amounts paid by the PRUCASHER as roukoop or a
genuine pre-estimate of damage suffered
by the SELLER, and further
the PURCHASER shall not be entitled to compensation from the SELLER
for any improvements of whatever nature
he may have caused on the
property, whether with or without the SELLER’S consent; and
10.3 Claim payment of the
arrear instalments due under this Deed of Sale, which will be
regarded as a portion of the pre-estimated
damage;
10.4 Alternative to the
above, the SELLER shall be entitled to cancel this Deed of Sale and
to recover any damage that the SELLER
may have suffered as a result
of the breach of the PURCHASER, from the PURCHASER.”
[11] The breach clause
referred to in the preceding paragraph contemplates placing the
purchaser in
mora
in the event of breach. It provides that
the seller, in the event of a breach of any material term and
condition by the purchaser,
shall call on the purchaser to remedy
such breach within seven (7) days of despatch of a notice calling on
her to remedy the breach.
The notice must stipulate the nature of
the breach. The notice should be sent to the purchaser per prepaid
registered post.
It is only in the event of the purchaser failing
to remedy the breach within seven (7) days of despatch of the notice
that the seller
can proceed to cancel the agreement and invoke any of
the remedies available as set out in the breach clause. The seller
must rely
on the provisions of the cancellation clause to cancel the
contract.
[12] Clause 15 of the
deed of sale, in turn, provides for the despatch of a written notice
by either party in the event of breach,
including those breaches
contemplated in clause 10 of the deed of sale. This clause provides
as follows under the heading “Notices”:
“
15 NOTICES
Written Notices
dispatched by prepaid registered post and addressed to the Domicilium
of the one PARTY to the PARTY shall be deemed
to have come to the
notice of such PARTY 7(SEVEN) days after the posting thereof. Such
notice shall be the correct method of communication
notwithstanding
the fact that it may not have reached the PARTY to whom it was
addressed or be communicated to his mind.”
It bears to be noted that
the notice contemplated in this clause should be addressed to the
party’s
domicilium.
STEPS TAKEN IN THE
ALLEGED CANCELLATION
[13] Numerous letters
were addressed to the applicant on behalf of the first respondent
which were intended either to place the applicant
in
mora,
thus
requiring the applicant to perform in terms of the contract or
purporting to cancel the agreement. The first such communication
was by way of a letter dated 29 September 2003. The letter was
despatched to the applicant by way of telefax transmission by the
second respondent, acting on behalf of the first respondent. The
letter seeks to demand that the applicant performs in terms of
her
obligations arising from the deed of sale. It does not specify in
specifically what respect the applicant is in default of
her
obligations. The letter does not comply with the provisions of
clause 10 and 15 of the deed of sale in that it was not sent
to the
applicant per prepaid registered post. It calls on the applicant to
remedy an unspecified breach within forty eight (48)
hours and not
within seven (7) days as provided for in the deed of sale. It was
despatched to the applicant per telefax transmission
to the
applicant’s then attorney instead of applicant’s
domicilium
as
provided in clause 15 of the deed of sale.
[14] The second such
purported notice of cancellation is by way of a telefax transmission
dated 16 October 2003. It calls on the
applicant to provide
guarantees by not later than Friday, 17 October 2003 failing which
notice of cancellation would be given.
The letter is not addressed
to the applicant’s
domicilium
but, instead, is transmitted
per telefax both to the applicant and her then attorneys. The deed
of sale does not make provision
for giving of guarantees so that the
applicant cannot be said to be in breach on the ground set out in the
letter. A notice calling
on the applicant to perform something not
required under the contract is not a valid notice and cannot be
relied upon to cancel the
agreement. Once again the pre-registered
post and the seven (7) days requirement has not been complied with.
[15] A letter of 7
November 2003 dispatched to the applicant per prepaid registered post
purports to give the applicant a notice of
intention to cancel the
agreement in terms of clause 12(4) of the contract. The deed of
sale does not have a clause 12(4) so that
no valid notice can be
given in terms of a clause which is non-existent. A further letter
of 27 November 2003 transmitted to the
applicant’s attorneys per
telefax, purports to cancel the agreement on the grounds of
applicant’s failure to perform in terms
of the contract.
Similarly, this letter was neither dispatched to the applicant per
prepaid registered post nor was it addressed
to the applicant’s
domicilium
as required in terms of the deed of sale. It
would appear that it is on the strength of this purported
cancellation that the first
respondent saw fit to offer the property
for sale to a third party.
[16] The
remedies available to the first respondent, in the event of breach,
are contained in clause 10 of the deed of sale. Before
the clause
comes into operation there must be a breach by the applicant. In
none of the correspondence addressed to the applicant
is it
stipulated, in specific terms, the nature of the breach complained
of. The seven (7) days notice required to remedy the breach
was not
complied with. At no stage was payment demanded from the applicant
other than a demand to give guarantee. More so, none
of the notices
addressed to the applicant requiring her to perform were addressed to
her
domicilium
as
provided for in the deed of sale. Accordingly, I cannot, under
these circumstances, find that the agreement concluded between
the
applicant and the first respondent was validly cancelled.
[17] The
purpose of a notice requiring a purchaser to remedy a default is to
inform the recipient of that notice of what is required
of him or her
in order to avoid the consequences of default. It should be couched
in such terms as to leave him or her in no doubt
as to what is
required, or otherwise the notice will not be such as is contemplated
in the contract. (See
Godbold v Tomson
1970(1) SA 60(D) 65 C-D) In my view, the
first respondent clearly failed to strictly comply with the
provisions of the cancellation
clause so that under no circumstances
can it be said that the deed of sale concluded between the applicant
and the first respondent
was validly cancelled as the first
respondent seeks to contend.
THE
HOUSING
CONSUMERS PROTECTION MEASURES ACT
[18] The
initial position adopted by the first respondent was that the
provisions of the Act do not apply to the transaction concluded
between the applicant and the first respondent. The first
respondent, it would appear, adopted this position because the
construction
on the site on which the applicant’s dwelling was to
be erected commenced before the Act came into operation. This is
confirmed
by the applicant who states in her founding affidavit that
shortly before she signed the deed of sale, she had visited the site
on
which the dwelling was to be erected. She had established that
the construction on the site had been done up to the floor slab
level, but no further building work had been done. She states
further in her affidavit that Casper Johannes Schmidt, a member of
the first respondent, had met her on site and indicated to her that
the slab had been laid some two years earlier.
[19] Shortly
after the conclusion of the deed of sale, the applicant applied for a
bond with a financial institution. Before the
financial institution
would approve the bond application, it need proof that the home
builder, it being the first respondent in the
instance of this
matter, was issued with an enrolment certificate by the National Home
Builders Registration Council (“the Council”).
The first
respondent had not applied for enrolment with the Council, and in
view thereof, it could not provide the applicant with
proof of
enrolment as required by the bank. The first respondent held the
view that proof of enrolment was not necessary as the
construction on
the property purchased by the applicant had commenced before the
provisions of the Act came into effect. This attitude
resulted in
the applicant not being able to access a bond to enable her to fulfil
her financial obligations in terms of the contract.
[20] The
first respondent was, in the course of time, legally advised that the
provisions of the Act do indeed apply to the transaction.
Once such
advice was given, the first respondent adopted the attitude that the
deed of sale concluded between it and the applicant
is invalid on the
ground the terms and conditions of the deed of sale are in conflict
with the provisions of section 10 of the Act
which prohibit the
carrying on of business by a home builder if the requirement relating
to the enrolment with the Council in terms
of section 14 of the Act
have not been complied with. For this reason, the first respondent
became of the view that the deed of
sale concluded between it and the
applicant is
contra
bonos mores,
invalid and thus incapable of enforcement.
[21] In adopting the view
that the agreement is not enforceable for the reasons stated in the
preceding paragraph, the first respondent
relies on the provisions of
section 10 of the Act which provide as follows:
“
10. Registration
of home builders
(1) No person shall –
(a) carry on the
business of a home builder; or
(b) receive any
consideration in terms of any agreement with a housing consumer in
respect of the sale or construction of a home,
unless that person is a
registered home builder.
(2) No home builder shall
construct a home unless that home builder is a registered home
builder.”
[22] Home builder, in
turn, is defined in the definition section of the Act to mean a
person who carries on the business of a home
builder.
[23] In further advancing
its defence, the first respondent contends that it is a home builder
as defined in the Act except that it
is not enrolled as a home
builder in terms of section 14 of the Act and thus prohibited from
carrying on the business of a home builder.
It is because of this
omission that it is contended on behalf of the first respondent that
it had no capacity to conclude the deed
of sale with the applicant in
the manner it did. The Act contains a rather lengthy definition of
the term “business of a home
builder” but the most pertinent
aspects of the definition relative to these proceedings are those
contained in paragraphs (a),
(b) and (c) of the definition. The
Act, in the paragraphs stated, defines the term as follows:
“’
Business of a
home builder’ means –
(a) to construct or to
undertake to construct a home or to cause a home to be constructed
for any person;
(b) to construct a home
for purposes of sale or otherwise disposing of such home;
(c) to sell or to
otherwise dispose of a home contemplated in paragraph (a) or (b) as a
principal; …”
[24] The first respondent
is not a building contractor but a property developer. In the
instance of this matter the first respondent
caused a home to be
constructed for the applicant using the vehicle of a sister close
corporation in the form of Schmidt Boukontrakteure
cc. The deed of
sale concluded between the applicant and the first respondent thus
facilitates the conclusion of a building contract
between the first
respondent and the building contractor. For this reason the first
respondent qualifies and falls squarely within
the definition of a
“home builder” except that, at the time of the conclusion of the
deed of sale, the first respondent was not
enrolled as a home builder
with the Council as is required in terms of section 14 of the Act.
The question then is whether the
first respondent had the capacity to
conclude the deed of sale with the applicant as it did by virtue of
this omission. This then
leads to the merit of the first
respondent’s defence based on the invalidity of the agreement.
MERIT OF THE
DEFENCE OF INVALIDITY
[25] In my view, the
answer to the question posed in the preceding paragraph is whether it
was absolutely impossible or relatively
impossible for the first
respondent to perform in terms of the contract. The first
respondent, when it became evident to it that
the Act does apply to
the transaction concluded between it and the applicant, could simply
have enrolled with the Council and be
issued with the enrolment
certificate. Had the first respondent done so, not only would the
first respondent, as a home builder,
derive the benefit arising from
enrolment as the home builder, as for an example, recognition as an
entity in the eyes of the bank,
but that such enrolment would
facilitate access by the applicant to the necessary funds to enable
her to comply with her financial
obligations. Had the first
respondent opted for this option, it would have made it possible for
the first respondent to perform
in terms of the contract. There
would thus have been no question of the first respondent being unable
to perform in terms of the
contract and, similarly, the applicant
would have no problem in having her application for a bond approved.
[26] In the second
instance, the definition of the term “home builder” is wide
enough as not to require the first respondent to
physically undertake
the construction of the applicant’s dwelling. The first respondent
could have caused the dwelling to be constructed
in the same fashion
it did with the conclusion of the building agreement with Schmidt
Boukontrakteure cc. Schmidt Boukontrakteure
cc is registered with
the Council so that, in terms of the wide definition of “home
builder” it cannot be said that, at the time
of the conclusion of
the deed of sale, the first respondent was not carrying on the
business of a home builder as contemplated in
section 10 of the Act.
[27] Section 10 of the
Act merely imposes an obligation on the builder to enrol with the
Council in order to afford the housing consumer
the protection of a
warranty imposed on the home builder in terms of the Act. The
legislature could never have contemplated that
failure, or omission
by the home builder, either deliberately or through ignorance, to
comply with the provisions of the Act should
result in the invalidity
of the agreement contemplated in section 13 of the Act to the
detriment and the prejudice of the housing
consumer. It is thus, my
considered view that there is no merit in the defence of the
invalidity of the deed of sale which the
first respondent seeks to
invoke.
[28] Registration with
the Council is an internal matter which properly would have been done
internally within the first respondent.
It purely is an internal
matter which the outsiders, such as the applicant, could not be
expected to have had actual or constructive
knowledge. It would be
unfair to the applicant to hold the deed of sale invalid solely by
reason of the fact that the first respondent,
through ignorance of
the practice in the building industry, omitted or failed to enrol
with the Council. To hold otherwise would
place the applicant at a
disadvantage and deprive her of the protection in respect of a
commercial decision she made in good faith
on the assumption that the
first respondent would have no hindrance in discharging its
obligations.
[29] Even if the
conclusion I have reached in the preceding paragraphs is wrong, which
in my view is not, it nonetheless is indeed
so, as submitted by
Mr
Seale
, that the contract concluded between the applicant and the
first respondent consists of two parts: being the sale of the
immovable
property on the one hand and the construction of the
building on the other hand. These two aspects are severable. The
sale of
the immovable property aspect may thus stand and the
construction aspect may be severed from the whole. That would leave
the deed
of sale in tact, perfectly legal and legally enforceable.
RE-INSTATEMENT OF
DEPOSIT PAID
[30] Much has been said
about payment of an amount of R 10,000-00. The applicant claims in
both her founding and replying affidavit
that payment of the amount
of R 10,000-00 was intended as a deposit as required in terms of
clause 2 of the deed of sale. The first
and second respondent, on
the other hand, claim that the amount of R 10,000-00 was intended to
cover fees which would be due to the
second respondent and that
Schalk van der Merwe, who actually paid the amount of behalf of the
applicant, was made aware of this
arrangement. Van der Merwe denies
this arrangement in his affidavit in support of this issue in the
applicant’s replying affidavit.
[31] It is common
conveyancing practice that conveyancers charge their fees on the
passing of transfer once transfer has been effected
and payment
obligations are discharged by the parties involved. The explanation
by the respondents as regards how the amount of
R 10,000-00 landed
into the second respondent’s business account is just not plausible
and does not make sense. I am in perfect
agreement with
Mr
Seale,
in his submissions, that on the preponderance of
probabilities, the amount of R 10,000-00 was paid and accepted
as a deposit.
The second respondent thus had no mandate to transfer
the aforementioned amount into his business account.
[32] As to the addendum
to the deed of sale, the first respondent does not dispute the fact
that same was concluded save that same
appears to have been mislaid.
It appears that the addendum could not be found despite what appears
to have been a diligent effort
to do so. In view thereof, I am of
the view that no purpose will be served by ordering production
thereof.
[33] It therefore
follows, in my view, that the applicant has established a clear right
arising from the deed of sale concluded between
her and the first
respondent; that the deed of sale is valid and binding on the parties
and that the applicant has made out a case
for the relief as prayed
for in the Notice of Motion.
[34] In the result I make
the following order:
[34.1] The rule
nisi
granted on 13 May 2005 is confirmed.
[34.2] It is hereby
declared that the deed of sale concluded between the applicant and
the first respondent at Sedgefield on 18
July 2003, together with the
addendum thereto, is valid, of force and effect and binding on the
parties.
[34.3] The first
respondent is ordered to transfer, or cause to be transferred to the
applicant the first respondent’s right,
title and interest in the
property fully described in the deed of sale and in doing so to sign
all documentation and to take all
steps necessary in order to enable
the applicant to take and to receive registration of the property
into the applicant’s name
against performance by the applicant of
her counter obligations in terms of the deed of sale.
[34.4] The first
respondent is ordered to indicate to the applicant or her attorneys
of record within fourteen (14) days of the
granting of this order as
to when the first respondent will commence taking steps to transfer
or cause the property referred to in
the preceding paragraph
transferred to the applicant.
[34.5] Should the
first respondent fail to give the indication contemplated in the
preceding paragraph within fourteen (14) days
of the granting of this
order, the Sheriff of this Court for the magisterial district of
Knysna, is authorised and directed to take
steps to have the property
referred to in the preceding paragraphs transferred to the applicant
and in doing so sign all such documentation
necessary to effect
transfer and to take all such steps as are required to effect
registration of transfer of the property into the
name of the
applicant.
[34.6] The second
respondent is ordered to repay into the trust account of the
applicant the amount of R 10,000-00 transferred
from the applicant’s
trust account in lieu of fees, together with interest thereon at the
applicable rate reckoned from date of
this order.
[34.7] The first
respondent is ordered to pay applicant’s costs on a party and party
scale, duly taxed or as agreed.
…………………
..
NJ Yekiso, J