Coetzee v van der Walt (2589/2004) [2004] ZAFSHC 112 (25 November 2004)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2004
>>
[2004] ZAFSHC 112
|

|

Coetzee v van der Walt (2589/2004) [2004] ZAFSHC 112 (25 November 2004)

IN THE HIGH COURT
OF SOUTH AFRICA
(ORANGE
FREE STATE PROVINCIAL DIVISION)
Case No. : 2589/2004
In
the matter between:
ABRAHAM
WILLEM ADRIAAN COETZEE
APPLICANT
and
ANNA
CATHARINA VAN DER WALT
RESPONDENT
HEARD ON:
21
OCTOBER 2004
JUDGMENT:
MUSI
J
DELIVERED ON:
25
NOVEMBER 2004
[1] On 27 June 2003 the
parties hereto entered into a Deed of Sale of a fixed property
described as “Gedeelte 1 van die plaas Joy,
distrik Bloemfontein”
(the property) in terms of which the purchaser (the applicant)
purchased the property from the seller (the
respondent) for an agreed
amount of R103 000,00. A dispute has developed between the parties
with the respondent alleging that the
contract has lapsed. The
applicant disputes this and has launched the instant application
whereby he seeks an order declaring the
contract to be valid and
ancillary relief.
[2] Clause 2 of the
contract provides for the mode of payment and reads as follows:
“
2.
Koopprys
Die koopprys is die bedrag van R103
000,00 wat deur die koper aan die verkoper soos volg betaalbaar is:
Die deposito sal deur die Verkoper
se prokureur in ‘n rentelewende trustrekening gehou word in
afwagting van oordrag van eiendom,
op welke datum hierdie bedrag
deel van die koopprys sal uitmaak. Enige rente op hierdie gelde
sal vir die krediet van die Koper
wees, en/of
‘
n
Waarborg of waarborge, wat vir die Verkoper aanvaarbaar is,
vir die balans van die koopprys moet binne 14 dae na aanvang
aan
die oordragsprokureur oorhandig word, welke waarborg/e vry van
wisselkoers betaalbaar sal wees teen registrasie van transport
van
die eiendom in die naam van die Koper.”
The contract was also
made subject to suspensive conditions which are set out in clause 16,
which reads as follows:
“
16.
Spesiale
Voorwaardes
16.1 Hierdie kontrak is onderworpe aan
die verkryging van ‘n lening ten bedrae van R103 000,00 by ‘n
bank of ander finansiële
instelling binne 30 dae vanaf
ondertekening.
16.2 Indien die koper nie ‘n lening
kan bekom nie, sal hierdie Koopkontrak verval.
16.3 Hierdie kontrak is onderworpe aan
toestemming tot Onderverdeling deur Eerste Nasionale Bank, die
verbandhouer.
16.4 Hierdie kontrak is onderworpe aan
suksesvolle onderverdeling op die bestaande eiendom bekend as 1401
Groenvlei.”
Clause 10 is entitled
“kontrakbreuk” and deals with what would happen in the event of
breach of contract.
The factual background
of what transpired after conclusion of the agreement is not in
dispute and is as set out here under.
[3] Mr. Paul Dirk Wouter
Myburgh, an attorney who represented the purchaser at conclusion of
the contract, has been the purchaser’s
attorney throughout and is
representing him even in these proceedings, was appointed by the
parties as the transferring attorney
in terms of clause 2 of the
contract. He thus took full responsibility for implementation of the
terms of the contract. He, as
attorney for the purchaser, also had
to see to it that his client fulfilled these suspensive conditions.
[4] It is common cause
that no deposit, let alone the full purchase price, was paid into the
trust account of the transferring attorney.
No bond was obtained
from a bank or other financial institution before the expiry of the
30 days from date of signature of the contract
and no guarantees were
furnished.
[5] What
happened is briefly the following and this is the account given by
the applicant:
He had arranged to pay
an amount of R26 000,00 into the trust account of his attorney as a
deposit, but was advised not to do so,
but to rather invest it
himself and make it available when called upon to do so. He had
applied for a bank loan to raise the purchase
price, but the bank
could only grant him 75% of the purchase price, which is why he had
wanted to pay the R26 000,00 deposit aforesaid.
The balance of the
purchase price would thus be covered by a bond to be raised against
the property. To date, however, he has not
been called upon to pay
the deposit or any amount at all. As for the bank loan or bond, his
application was approved on 1 October
2003 as per letter from the
Standard Bank, annexure “G” to the founding affidavit. However,
no bond has been registered, nor
can it be before the conditions set
out in clause 16.3 and 16.4 are fulfilled. In respect of the
condition under 16.3, the permission
of the FNB, which holds a bond
over the property, has not been obtained. It is said that such
permission is a mere formality. Regarding
16.4 the subdivision has
not been done either. The applicant goes on to outline the steps
that had been taken over a period of more
than a year to try to
fulfil the latter condition. The failure to effect a subdivision is
not attributed to any fault on the part
of the respondent, but rather
to negligence on the part of people engaged by the applicant’s
attorney to do that.
[6] The respondent’s
case is that the contract lapsed when the applicant failed to obtain
a bank loan to cover the purchase price
by 28 July 2003. She
interprets clauses 16.1 and 16.2 to mean that if the applicant had
not obtained the loan by then, the contract
lapsed due to non
fulfilment of the suspensive condition. She triggered the instant
application through a letter addressed by her
attorneys of record to
the applicant’s attorney dated 3 June 2004, annexure “B” to the
founding affidavit. In that letter
the applicant was informed of the
attitude that the contract had lapsed and reliance was placed
specifically on clause 16.1 (and
by implication 16.2). The wording
of the last paragraph of the letter is significant and I quote:
“
Sonder
om te verwys na paragrawe 16.3 en 16.4 van gemelde aanbod om te koop,
berus ons kliënt
op
hierdie stadium
slegs op
paragraaf 16.1.” (my own emphasis.)
Several letters were
subsequently exchanged between the attorneys of the parties, but the
respondent persisted in her attitude that
the contract had lapsed.
[7] The crux of the
matter is whether the wording of clause 16.1 has the effect that once
a bank loan was not obtained to cover the
full purchase price by the
cut off date, the contract lapsed. This is a critical question for
if the answer thereto is in the affirmative
that may be the end of
the matter. Mr. Greyling, for the applicant, argued that the clause
does not have such an effect, whereas
Mr. Human, for the respondent,
argued that that is precisely what it means. Both counsel cited a
number of cases in support of their
respective submissions. To my
mind, two of the cases, one cited by counsel for the applicant and
another cited by counsel for the
respondent, would be decisive of the
issue and I intend confining my discussion to those two cases.
[8] The case cited by Mr.
Greyling appears in his supplementary Heads of Argument and is that
of
MIA
v D J L PROPERTIES (WALTLOO) (PTY) LTD AND ANOTHER
2000 (4) SA 220
TPD.
Briefly the facts of this case were as follows:
The
agreement contained a suspensive condition that the purchaser would
obtain a bank bond for an amount less than the purchase price
within
a specific period (cut off date). He, however, applied for an amount
higher than that stipulated in the condition. The Court
held that
the condition was for the protection of the purchaser and he could
waive it. His conduct in applying for an amount higher
than that
stipulated, was held to amount to a waiver of such protection and the
suspensive condition was deemed to have been fulfilled
thereby.
Hence the seller could not cancel the contract on that account.
There was a further term that stipulated that the purchaser
had to
furnish guarantees for the full purchase price within a specific
period. He failed to do so and it was held that this amounted
to
breach of contract entitling the seller on that account to cancel the
contract by following the procedure laid down therein.
I should
point out that the Court also dealt with the question of the
applicability of the doctrine of fictional fulfilment of suspensive
conditions and made findings in regard thereto based on the facts of
that case. Such facts are absent in the instant case and the
doctrine has no application.
[9] Mr. Human referred to
the case of
WESTMORE
v CRESTANELLO AND OTHERS
1995 (2) SA 733
WLD.
The
facts of this case were briefly that the contract contained a
suspensive condition in terms of which the purchaser had to obtain
a
bank bond by a specific date to cover the full purchase price. Prior
to the cut off date the purchaser advised the seller that
he had
raised a bond for an amount less than the full purchase price, but
that he would furnish guarantees for the full purchase
price by the
date by which such guarantees had to be furnished in terms of another
clause in the contract. It was held, as in
MIA
supra
,
that the suspensive condition was for the protection of the purchaser
and that he could waive it. It was further held that by raising
a
bond for an amount less than that stipulated and opting to provide
guarantees for the full purchase price, the purchaser had waived
the
protection of the condition precedent. The condition was thus
fulfilled and the validity of the contract confirmed.
[10] The basic rule in
the interpretation of contracts was followed in both cases and was
stated as follows by De Villiers J. in the
MIA
case at p. 228 E – F:
“
It
must, of course, be borne in mind that in an action on a contract,
the rule of interpretation is to ascertain, not what the parties’
intention was, but what the language used in the contract means, i e
what their intention was as expressed in the contract (
WORMAN
v HUGHES AND OTHERS
1948 (3) SA 495
(A) at 505).
Furthermore,
such intention must be garnered from the contract as a whole.”
The real difference
between these two cases, lies in the question of when should a
purchaser, for whose protection the suspensive
condition of the
nature in question is meant, waive the protection. This issue was
not pertinently dealt with in
MIA
,
but it
does appear from the record that the purchaser waived such protection
prior to the cut off date. The issue was pertinently
discussed in
WESTMORE
and it was held that the purchaser must waive the protection of the
suspensive condition prior to the cut off date. If he does not,
the
condition cannot be supposed to have been fulfilled and the contract
would lapse upon expiry of the cut off date. Marais J.
made it clear
that the insertion in a “subject-to-bond” clause of a time limit
is of cardinal importance and specifically dissented
from the
judgment in
WACKS
v GOLDMAN
1965
(4) SA 386
W,
which
had laid down that the purchaser could waive such a clause after the
cut off date. The learned judge expressed himself as follows
at 736
A – B:
“
I
do not readily comprehend how a purchaser could unilaterally waive a
clause of a lapsed or defunct agreement (which by definition
no
longer exists) and by so doing unilaterally, miraculously breathe new
life into the corpse; and even worse, possibly ambush the
unsuspecting seller who, acting in the belief that the contract means
what it says, has resold the property in question.”
In my view, this
statement of the law by Marais J. is correct and I will follow it.
[11] Reverting to the
facts of the instant case, clause 2 of the contract purports to
provide for the mode of payment of the purchase
price. 2.1 thereof
says that a deposit shall be paid into a trust account of the
transferring attorney to be kept by him pending
transfer. It does
not stipulate the amount of the deposit, not does it stipulate when
it is to be paid. 2.2 thereof state that
a guarantee (presumably for
the balance where a deposit has been paid) or guarantees for the full
purchase price shall be furnished
within 14 days of demand by the
transferring attorney. There is no time limit for the furnishing of
such guarantees, so that presumably
it will be up to the transferring
attorney to decide when to call for same. The result would be that
if he does not call for the
furnishing of the guarantees, the matter
could stall forever, which is absurd. The clause is clearly vague
and it could never have
been the intention of the parties that such a
state of affairs could come to pass. Clause 2 must therefore be read
in conjunction
with clause 16.1. In terms of the latter clause, the
purchaser must obtain a bank loan covering the full purchase price of
R103
000,00 within 30 days of signature of the contract. Such cut
off date is 28 July 2003. Read with clause 2, it means that the
purchaser
has an option of raising the full purchase price by way of
a bond or providing guarantees for its full value. Whichever option
he
chooses, must be exercised by the cut off date. The subject to
bond clause condition 16.1 was for the protection of the applicant
and he could have waived it by raising the purchase price in whatever
way he wanted, pay it in cash or providing guarantees for its
full
value. But he had to do all this by not later than 28 July 2003. If
he failed to obtain a bank loan as stipulated or to waive
the
protection of the condition by the cut off date, the peremptory
language of clause 16.2 would take effect and the contract would
lapse.
[12] But what transpired
in this case? No deposit, whatsoever, was paid and no guarantees
have been furnished. No bank loan was
obtained before the cut off
date. Did the applicant waive the protection afforded by the
condition precedent? The applicant says
that he had enough funds to
pay the purchase price in the form of proceeds of sale of a house in
2002. But those funds were invested
in an offshore account and he
never before indicated that he would use them to pay the purchase
price. On the contrary, he went
ahead to obtain the stipulated bank
loan, the application for which was approved on 1 October 2003, some
two months after the cut
off date. In paragraph 13.3 of his founding
affidavit, the applicant suggests that he has thereby fulfilled the
suspensive condition,
which clearly shows that he had made no waiver
at all. This contradicts the averment in paragraph 10 of his
replying affidavit that
he had always wanted to pay cash for the
property. The averment was made
ex
post facto
.
The fact that he had the funds and still has them is irrelevant. He
did not offer to use the investments to pay the full purchase
price
or to provide guarantees for same prior to the cut off date.
[13] I hold therefore
that the applicant did not waive the protection of the suspensive
condition, same was not fulfilled and the
contract lapsed upon the
expiry of the cut off date on 28 July 2003. Whatever happened
thereafter was, to use a phrase borrowed
from Shakespeare, “much
ado about nothing” and could not “breathe new life into the
corpse”.
[14] Clause 10 of the
contract cannot assist the applicant either. This clause deals with
the procedure to be followed in the event
of breach of contract and
you cannot talk about breach of a lapsed contract. Insofar as it
purports to provide for condonation of
non fulfilment of the
suspensive condition in question, it is superseded by the clear and
peremptory language contained in clause
16.2. Perhaps clause 10
could have found application in respect of clauses 16.3 and 16.4 had
the contract survived beyond 28 July
2003, a matter over which I
express no firm view. That the respondent signed a power of attorney
for transfer of the property on
26 September 2003 and tried to follow
up on progress, is neither here nor there. She was an innocent,
ignorant lay person who did
not know her rights and who had put a
misplaced faith in the applicant’s attorney, who was only concerned
with the interests of
his own client. That ignorance and misplaced
faith nearly saw her property transferred to the applicant without
her getting a cent
for it. I say this because the applicant could
conceivably have paid the balance on the bond due to the FNB and
released the bond
and once subdivision had taken place, simply taken
transfer without paying a cent to the respondent.
[15] In view of the
conclusion to which I have come above, it is unnecessary to deal with
the further arguments addressed to me in
respect of clauses 16.3 and
16.4 of the contract. Suffice it to indicate that I am not impressed
with the explanations given by
the applicant’s attorney of record
for the inordinately long delay in obtaining the permission of the
FNB for the subdivision of
the property and why the subdivision has
not taken place more than a year after the transaction was signed. I
may add also that
in terms of the last paragraph of the letter dated
3 June 2004, annexure “B” to the founding affidavit, the
respondent reserved
the right to rely on clause 16.3 and 16.4 of the
contract and indeed she based her alternative opposition to the
application thereon.
The issues in regard thereto were moreover
fully canvassed at the hearing. I declined to pronounce myself
thereon purely as indicated
above.
[16] In the result, the
application is dismissed with costs.
___________
H.M. MUSI, J
On behalf of the
applicant: Adv. P. Greyling
Instructed
by:
Myburgh
Attorneys
BLOEMFONTEIN
On
behalf of the respondent: Adv. C.A. Human
Instructed
by:
Kramer
Weihmann & Joubert
BLOEMFONTEIN
/spieterse