THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
Reportable
Case No 574/02
In the matter between
PRETORIA EAST BUILDERS CC First Appellant
INFOGOLD INVESTMENTS CC Second Appellant
and
EDRIAAN STÉPHAN BASSON Respondent
Coram Brand JA, Jone s AJA and Southwood AJA
Heard 15 February 2004
Delivered 29 March 2004
Summary: Sale of res aliena ─ written agreement for the sale of
land belonging to another ─ no proof that owner authorized seller to
sell on its behalf ─ owner not bound ─ no enforceable contract
because counter-offer not accepted in writing ─ order for specific
performance against seller inappropriate where he cannot perform.
JUDGMENT
Jones AJA
2
JONES AJA:
[1] This appeal concerns a contra ct for the sale of immovable
property. On 10 May 2 002, in an urgent applic ation, the court a quo
granted a final interdict prohibiting the appellants from alienating the
immovable property to anybod y other than th e respondent, and
ordering them to give effect to a writte n agreement between the
parties (1) by permitting the resp ondent to occupy the property
forthwith, and (2) by register ing the property in the respondent’s
name. The appellants we re also ordered to pay costs. They now
appeal against this relief with leave from this court.
[2] The background fact s are for the most part common cause.
The second appellant, Infogold Investments 56 CC (‘Infogold’) is the
registered owner of erf No 6733, Woodland Es tate, Moreleta Park,
Pretoria. The first appellant, Preto ria East Builders CC (‘Pretoria
East Builders’) was the developer of the property, charged with
building a house on it. Mr F v an Schalkwyk is and was the sole
member of Infogold and Pretoria Ea st Builders. Acting in his
capacity as member of Pretoria East Builders he appointed his
sister, Ms G Badenhorst, as the project manager to oversee the
development. It was part of her mandate to make arrangements for
marketing the property. Her hus band was the builder. During
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November 2001, at a stage when the building work was under way
but not yet completed, an estate agent introduced the respondent to
her. In due course the respondent su bmitted a wri tten offer to
purchase the property for R 890 000-00. The offer was made to
Pretoria East Builders. It was sign ed and accepted on its behalf by
Ms Badenhorst. It contempl ated giving occupati on to the purchaser
on 1 May 2002, by whic h time the building woul d be completed. It
was conditional upon th e conclusion of the sale of the respondent’s
home by 30 April 2002 and upon a loan secured by a bond for R890
000-00 being app lied for on behalf of the seller and being granted.
The offer was in printed form with blank spaces to be filled in. It
contained paragraph No 18, which was headed ‘other conditions’
which had been left bl ank. Ms Badenhorst caused the following to
be inserted in the blank space: ‘This offer is subject to the
presentation of a specification list and the signing of a building
contract with Pretoria East Builder s/Bouers CC’. After making this
addition she placed her signatur e at the end of the document and
she initialled the insertion of paragraph 18. When the document was
returned to the resp ondent about a month later he noted the
addition of clause 18, but he did not initial or sign it.
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[3] The building work proceeded without inci dent or delay. The
respondent requested certain alter ations and extra work, which
were agreed to by Ms Ba denhorst and carried out by Pretoria East
Builders, some of it at the resp ondent’s expense. In time Ms
Badenhorst furnished him with a document headed ‘Specification
list of house on stand: 6 733, Woodlands Security Estates, Moreleta
Park’, but the parties at no stage entered into the written building
agreement contemplated by paragr aph 18. The respondent’s home
was sold before 30 April 2002 and produced a cash amount of R160
000-00 which the respondent decided to devote to the purchase
price of erf No 6733. He says that he therefor e did not need a loan
for the full amount of t he purchase price and that he applied for a
loan of R812 000-00 instead of t he R890 000-00 referred to in the
agreement of sale. The applicat ion for a loan and mortgage was
presented to a particular official of ABSA Bank at the insistence of
Ms Badenhorst, and was not made on behalf of the respondent but
in the name of Infogold. This was at Ms Badenhorst’s suggestion, to
leave open the possibility of the respondent in due course taking
over the close corporation owning the property in stead of taking
transfer of the proper ty. No agreement to that effect was however
reached, and the loan applic ation, though made in Infogold’s name,
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was considered and granted on the strength of the respondent’s
personal creditworthiness.
[4] In early April 2002 the house wa s all but completely built. The
respondent was obliged to vacate hi s home to give occupation to
the new owners by the end of April 2002, and he made
arrangements accordingl y. He was ready to ta ke occupation of erf
No 6733 on 1 May 2002 . In mid April 2002 Ms Badenhorst called
upon him to agree to change th e firm of attorneys who had been
instructed to do the conveyancing wo rk. After taking advice from his
attorneys and from the official at ABSA Bank, and because he
wished to avoid any delay in th e transfer process, he notified
Pretoria East Builders and its at torneys that he was no t prepared to
agree to change the conveyancer. Shortly th ereafter, he became
aware, from communic ations made to him by the estate agent and
Ms Badenhorst’s attorneys, that Pretoria East Builders intended to
cancel the agreement, and, later, th at it had indeed cancelled it. In
consequence, his attorney s wrote to Pretoria East Builders, calling
for its assurance that it would honour the agre ement, and advising
that failing such assurance the re spondent intended to bring an
urgent application. On 22 April 2002, Infogold’s attorneys replied to
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his attorneys in the following terms:
‘1 Mnr JFV Van Schalkwyk, synde die enigste lid van the voormeld BK, het
geen kontrak met Mnr Basson geteken nie en gevolglik nie gebonde gehou
word aan enige koopooreenkoms.
2 Ons kliënt het geen magtiging verleen vir die sluit van ‘n
koopooreenkoms nie.
3 U kliënt het derhalwe geen reg tot afdwinging en sal enige so poging
teengestaan word.’
This letter came as a complete surprise. It is common cause that Ms
Badenhorst had at no stage disclosed to th e respondent that
Pretoria East Builders was not the registered owner of erf No 6733.
The letter led his attorneys to make enquiries, and they established
the true position. Their enquiries also confirmed that Ms Badenhorst
was in the process of tr ying to sell erf No 6733 to other would-be
buyers. The upshot was the present application.
[5] I shall first deal with the liability of the second appellant,
Infogold. Infogold’s case is simply stat ed: it was the owner of the
property; it was not a par ty to the sale; it is not bound it by the sale;
and it did not authorize Ms Badenhorst to act for it as its agent,
whether in the sale or for any other purpose. Mr Du Toit’s counter-
argument is that Infogold is bound to the sale as the undisclosed
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principal of its agent, Pretoria East Builders. The counter-argument
is in my view unsound.
[6] During the course of presenting his argument Mr Du Toit for
the respondent addressed the question whether the provisions of s
2 of the Alienation of Land Ac t No 68 of 1981 preclude the
application of the doctri ne of the undisclosed pr incipal in a sale of
land because it requires disclosure of the identity of the principal in
the written deed of alienation.
1 It is, however, not necessary to
consider the point because the undisputed facts do not show that
when the contract of sale was conc luded either Ms Badenhorst or
Pretoria East Buil ders was acting as t he agent of Infogold. The
respondent did not allege in th e founding affidavit that Ms
Badenhorst was authorized to act as the agent of both Infogold and
Pretoria East Builders. Only in his replying affi davit, in dealing with
Ms Badenhorst’s denial that she was not acting on behalf of
Infogold and was not autho rized by Infogold to sell the property, is
this suggested, and then by inference and not as a statement of
fact. The argument is that Van Scha lkwyk, as sole member of
Pretoria East Builders, authorized Ms Badenhorst to act as project
1 He referred to the issues raised in Grossman v Baruch and another 1978 (4) SA 340
(W); Muller en ‘n ander v Pienaar 1968 (3) SA 195 (A) 204E-H; Durity Alpha (Pty) Ltd v Vagg
1989 (4) SA 1066 (N); and Durity Alpha (Pty) Ltd v Vagg 1991 (2) SA 840 (A) 842H.
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manager to build the house on erf 6733 and to enter into the
agreement of sale in terms of which Pretoria East Builders sold erf
6733 to the respon dent. He therefore knew, in his capacity as sole
member of Pretoria East Build ers, that Ms Badenhorst had sold
Infogold’s property to the respondent. Thi s knowledge must be
imputed to Van Schalkwyk in his capacity as sole member of
Infogold. Infogold must be taken to have b een aware all along that
Pretoria East Builder s had sold its property to the respondent
despite Van Schalkwyk’s denial of th is in his affidav it on behalf of
Infogold. This know ledge, and its failu re to object to Pretoria East
Builders actions in selling its property , it is argued, gives rise to an
inference that it went along with the arrang ement and must have
authorized Pretoria East Builders to act as its agent.
[7] Mr Du Toit’s submissions are founded on innuendo and on
inferences which, he suggests, shou ld be drawn from the facts
alleged. However, these are mo tion proceedings and the general
rule formulated in Plascon-Evans Paints Limited v Van Riebeeck
Paints (Proprietary) Limited 2 must be applied. In the circumstances
of this case it is not permissible on the papers to go behind the
evidence of Van Schalkwyk and Ms Ba denhorst that at no stage
2 1984 (3) SA 623 (AD), at 634E-635C .
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was Ms Badenhorst authorized to act on behalf of Infogold. There is
thus a dispute about th e fundamental facts. Even if it is possible to
reject Van Schalkwyk’s denial that he was aware that the
respondent had purchased In fogold’s property on the ground that it
is ‘so far-fetched or clearly untenabl e that the Court is justified in
rejecting [it] merely on the papers’3, there is no such justification for
rejecting the evidence on behalf of the appell ants that at no stage
was Ms Badenhorst autho rized to contract on behalf of Infogold,
whether in her capacity as agent for Pretoria East Builders or at all.
[8] In my view Infogold’s knowledge, if it ha d such knowledge,
that somebody else had sold its pro perty would not be sufficient in
the circumstances of this case fo r an inference that Infogold must
have authorized the sa le. The result is that whether or not it is
permissible to hold an undisclosed principal to an agreement for the
sale of land there is no evidence to show that the seller acted or
was authorized to act on behalf of the alleged undisclosed principal.
This being so, there is no basis on which to hold t hat Infogold is
liable to the respondent in terms of the agreement of sale.
[9] A number of submissions were made regarding the liability of
the first appellant, Pretor ia East Builders. I thin k that it is necessary
3 Plascon-Evans Paints Limited v Van Riebeeck Paints (Proprietary) Limited at 635C.
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to deal with only two of them. The first is that on the facts there was
no enforceable contract between the respondent and Pretoria East
Builders. The insertion of paragrap h 18 in the offer made by the
respondent and submitted to Ms Badenhorst on behalf of Pretoria
East Builders amounted to a counter-offer wh ich was not accepted
by him in writing. This means that the provisions of s 2(1) of the Act
were not complied with, and no enforceable contract came into
being. There can be no doubt, to my way of th inking, that the
insertion of paragraph 18 alters the whole co ntent of the contract. It
couples the original offer to buy the land with the building of a house
on the land, and make s these two things dependen t on each other.
It therefore amounts to a rejection of the or iginal offer and the
submission of a different offer with a different content and different
obligations. This distin guishes this case from Menelaou v Gerber
and others 4 upon which Mr Du Toit relied. See also Admin Estate
Agents t/a Larry Lambrou v Brennan.5 Mr Du Toit’s further argument
that ex facie the document the respondent’ s signature at the end
should be taken as an acceptance of everyt hing contained in the
document that preceded it is entirely artificial in the lig ht of the
known and accepted fact that paragraph 18 was inserted after he
had signed it.
4 1988 (3) SA 342 (T).
5 1997 (2) SA 922 (E).
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[10] Secondly, Mr Wagener argued on behalf of the appellants that
the court should not have issued an order for spec ific performance
because, in the circumstances of this case, it cannot be carried out.
The rule is set out in Shakinovsky v Lawson and Smulowitz 6 as
follows:
‘Now a plaintiff has always the right to claim specific performance of a contract
which the defendant has refused to carry out, but it is in the discretion of the
Court either to grant such an order or not. It will certainly not decree specific
performance where the subject-matter has been disposed of to a bona fide
purchaser, or where it is impossible for specific performance to be effected; in
such cases it will allow an alternative of damages.’
The owner of the proper ty, Infogold, has made its attitude perfectly
clear that it has no intention of performing Pretoria East Builders’
contract with the re spondent, and that it has no intention of itself
selling to the respondent. It advised the respondent of its attitude
before the commencement of pr oceedings, which should have
alerted the respondent of the possib ility of confining himself to an
action for damages, an d it repeated its attitude under oath in the
opposing papers (through the evidence of Van Schalkwyk). In these
6 1904 TS 326, 330 per Innes CJ, Solomon & Wessels JJ concurring. See also Rissik v
Pretoria Municipal Council 1907 TS 1024, 1037 per Wessels J (with specific reference to the
sale of property belonging to another), Tamarillo (Pty) Ltd v BN Aitken (Pty) Ltd 1982 (1) SA
398 (A) 441D--443F per Miller JA, and Benson v SA Mutual Life Assurance Society 1986 (1)
SA 776 (A) 783E-G per Hefer JA.
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circumstances, an orde r for specific performa nce against Pretoria
East Builders is futile. It should not have been granted.
[11] In the result, the appeal of both appe llants is allowed with
costs. The order of the court a quo is set aside and will be replaced
with an order that the application is dismissed with costs.
RJW JONES
Acting Judge of Appeal
CONCURRED: BRAND JA
SOUTHWOOD AJA