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[2014] ZACC 11
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Botha and Another v Rich N.O. and Others (CCT 89/13) [2014] ZACC 11; 2014 (4) SA 124 (CC); 2014 (7) BCLR 741 (CC) (17 April 2014)
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CONSTITUTIONAL COURT OF SOUTH AFRICA
Case CCT 89/13
In the matter between:
LORRAINE SOPHIE
BOTHA
.................................................................................
First
Applicant
KHULULEKANI LAUNDRY
CC
......................................................................
Second
Applicant
and
HENRY ROBINS RICH
N.O
................................................................................
First Respondent
JOHANNES JACOBUS WIESE HENDRIKS
N.O
.........................................
Second Respondent
MARTHA MAGRIETA HENDRIKS
N.O
............................................................
Third Respondent
Neutral citation:
Botha
and Another v Rich NO and Others
[2014]
ZACC 11
Coram:
Moseneke
ACJ, Skweyiya ADCJ, Cameron J, Dambuza AJ, Froneman J, Jafta J,
Madlanga J, Mhlantla AJ, Nkabinde J and Zondo J
Heard on:
20
November 2013
Decided on:
17
April 2014
Summary:
Alienation
of Land Act 68 of 1981
– interpretation of
section 27
–
right of purchaser to demand transfer – instalment sale
agreement – paid half of purchase price –
entitled to
demand transfer
Breach
of contract – forfeiture of monies paid –
constitutionality of cancellation clause – non-repayment of
amounts paid – disproportionate penalty for breach –
reciprocity in contract
ORDER
On appeal from the Northern Cape High Court, Kimberley (per Lacock
J):
1.
The
applications for condonation are granted.
2.
Leave to
appeal is granted.
3.
Leave to
adduce further evidence is refused.
4.
The appeal is
upheld.
5.
The orders of
the Northern Cape High Court, Kimberley and the Full Court of the
Northern Cape High Court, Kimberley are set aside.
6.
Mr Henry
Robins Rich NO, Mr Johannes Jacobus Wiese Hendriks NO and Ms Martha
Magrieta Hendriks NO (Trustees) are ordered to sign
all necessary
documents to effect the registration and transfer of Erf 4128,
De Aar (property) into the name of the first
applicant, Ms Lorraine
Sophie Botha (Ms Botha), against the simultaneous:
(i) Payment of all arrears owing and
outstanding amounts levied in respect of municipal rates, taxes and
service fees, under the
instalment sale agreement by Ms Botha to the
JJW Hendriks Trust IT2151/1995 (Trust); and
(ii) Registration of a first mortgage
bond over the property in favour of the Trust to secure the balance
of the purchase price
and interest thereon in terms of the agreement.
7.
The Trustees
are ordered to pay the applicants’ costs in the High Court,
Full Court, Supreme Court of Appeal and in this Court,
including,
where applicable, the costs of two counsel.
JUDGMENT
NKABINDE J (Moseneke ACJ, Skweyiya ADCJ, Cameron J, Dambuza AJ,
Froneman J, Jafta J, Madlanga J, Mhlantla AJ and Zondo J concurring):
Introduction
[1]
The applicants sought leave to appeal against a decision of the Full
Court of the Northern Cape High Court, Kimberley
[1]
(Full Court) dismissing the appeal with costs and effectively
confirming the decision of the Northern Cape High Court, Kimberley
[2]
(High Court) in favour of the respondents.
[3]
They also applied for leave to adduce further evidence on appeal.
The applicants and respondents applied for condonation
for their
delayed written submissions and opposing papers, respectively.
[2]
This
case concerns whether the respondents are obliged, in terms of
section 27(1) of the Alienation of Land Act
[4]
(Act), to register the transfer of the property in the name of the
first applicant after more than half of the purchase price of
the
immovable property had been paid. A determination of this
question requires us to interpret the section. In the
alternative, the matter concerns the constitutionality of an
enforcement of a cancellation clause in a contract of sale of
immovable
property where more than 50 per cent of the purchase price
had been paid. The applicants contended that cancellation, in
those circumstances, would be contrary to public policy. The
cancellation of the contract resulted in an order for the eviction
of
the applicants from the property. The declaration and order of
eviction made by the High Court, and confirmed by the Full
Court, are
the subject matter of this application for leave to appeal.
Parties
[3]
The
first applicant, Ms Lorraine Sophie Botha (Ms Botha), is the sole
member of the second applicant, Khululekani Laundry CC, a
close
corporation duly incorporated and registered in terms of the laws of
the Republic (collectively referred to as the applicants).
The
laundry service is operated from the property which is the subject
matter of these proceedings. The respondents,
[5]
all representing the JJW Hendriks Trust IT2151/1995 (Trust), are
collectively referred to as the Trustees.
Factual and litigation background
[4]
Central
to the appreciation of the issues is the sequence of material events
which I mention later. The facts are largely common
cause.
[6]
The Trust and Ms Botha concluded an instalment sale agreement
[7]
in terms of which—
(a)
immovable property, Erf 4128, De Aar, was
sold by the Trust to Ms Botha for the sum of R240 000;
(b)
the purchase price was payable in monthly
instalments of R4 000;
(c)
Ms Botha would insure the property against
all possible risks and would pay the premiums in respect thereof;
(d)
Ms Botha would not be entitled to lease the
property without the Trustees’ prior written permission;
(e)
Ms Botha would be liable for payment of all
amounts levied in respect of municipal rates, taxes and service fees;
(f)
transfer of the property would be effected
as soon as possible after payment of the purchase price and after
fulfilment by Ms Botha
of all of her obligations;
(g)
in the event of Ms Botha neglecting to make
any payment on the due date, she would be liable to pay interest on
the arrears calculated
according to the prescribed rate of interest;
(h)
Ms Botha would be entitled to claim
transfer of the property in terms of section 27 of the Act, after
half of the purchase price
had been paid; and
(i)
in the event of breach of the agreement by
Ms Botha, the Trustees would be entitled to cancel the agreement, in
which event Ms Botha
would forfeit in favour of the Trust all
payments effected in terms of the agreement.
[5]
The
applicants took occupation of the property in November 2003.
The first instalment was payable on 28 February 2004.
Ms Botha
paid her instalments until October 2007. She subsequently
defaulted in respect of payments due for November and
December
2007.
[8]
At that stage she
had paid more than half of the purchase price, a sum of approximately
R180 000.
[9]
Ms Botha’s
default prompted the Trust to issue summons in the Magistrates’
Court.
[6]
The
Trust successfully instituted proceedings against the applicants in
the Magistrates’ Court for cancellation of the contract,
their
eviction from the property and for forfeiture of the amount paid by
Ms Botha.
[10]
The tools
of trade of the second applicant were attached.
[7]
On
6 June 2008 Ms Botha obtained an interdict with costs in the High
Court which enabled her to resume occupation of the premises
on 10
June 2008, pending the finalisation of the appeal. The
applicants noted the appeal against the decision of the Magistrates’
Court but the Trust abandoned the judgment on 11 November 2008,
before the appeal was argued. The Trust was ordered
to pay the
costs of the interdictory application and the appeal proceedings.
On 11 February 2009 the costs of the abandoned
appeal were taxed and
allocated in the sum of R23 125,96. The parties’
joint statement of facts reflects that
Ms Botha failed to make
payment of any further instalments, save in respect of January 2009,
from November 2007.
[11]
[8]
A
convenient date to start the sequence I mentioned earlier is 21 May
2008, the date on which Ms Botha exercised her rights in a
letter to
the Trust demanding transfer in terms of section 27(1) of the
Act.
[12]
It needs to be
emphasised that as at that date, Ms Botha had already paid
instalments in excess of half of the purchase price.
The letter
demanding transfer reads:
“
We are
acting on behalf of [Ms Botha] and refer to the above sale agreement.
Our client hereby wishes to exercise her right in terms of
paragraph 8.4 [incorporating section 27(1)] of the sale agreement
concluded
between herself and the [Trust] on 19 November 2003.
It is our instructions to demand from the [Trust] transfer of the
above
Erf on condition that simultaneously with the registration of
transfer there shall be registered in favour of the Trust a first
mortgage bond over the land to secure the balance of the purchase
price. We wish to advise that the terms of the bond shall
not
be more onerous than the conditions which applied in respect of the
contract dated 19 November 2003.”
[9]
This letter contains no expression
of intent regarding the payment of the amounts in arrears, the
interest payable thereon or the
amounts outstanding in respect of
municipal rates, taxes and service fees. The Trust did not
respond.
[10]
After
a lapse of more than three months from 21 May 2008 when the demand
for transfer was made, the Trustees responded by letter
dated 9
September 2008 reminding Ms Botha of the terms of the contract and
her breach thereof.
[13]
The
Trustees demanded payment of the arrear instalments in the sum of
R40 000. Ms Botha did not respond.
Almost five
months later the Trustees addressed another letter to Ms Botha, dated
23 February 2009, notifying her of their intention
to cancel the
contract. They asked the applicants to vacate the property on
an urgent basis and hand over the keys of the
property to the Trust’s
attorneys.
[14]
[11]
The
applicants responded by letter dated 3 March 2009 in which they
tendered payment of the balance of the purchase price in the
sum of
R56 000 together with interest as well as the outstanding amounts of
municipal rates, taxes and service fees against transfer
of the
property into Ms Botha’s name. The Trust did not respond to
this letter. Instead, it instituted motion proceedings
in the
High Court on 17 March 2009 seeking an order, among other
things, declaring the contract of sale cancelled, alternatively
that
the Court cancel the contract and that the applicants be evicted from
the property within seven days of the service of the
order.
[15]
[12]
The applicants opposed the
application. They filed a counter-application for an order
compelling the Trustees to register
the property and sign all
documents necessary for transferring the property into Ms Botha’s
name, together with costs.
They contended that they were
entitled to demand transfer of the property in terms of section 27(1)
because they had paid half
of the purchase price. On 4 May 2009
the applicants obtained an order compelling the Trust to provide
security for costs
in that application. These costs were taxed
on 12 November 2009 in the sum of R7 563,40.
[13]
Issues
for determination by the High Court included whether the letter of
23 February 2009 constituted a proper cancellation
notice
and whether the cancellation clause in the contract is contrary to
public policy and, as such, unconstitutional. The
Court also
considered the effect of the applicants’ offer dated
3 March 2009. On 13 November 2009 the High
Court
dismissed Ms Botha’s counter application. It
declared the contract of sale cancelled and ordered the applicants
to
vacate the property and pay costs.
[16]
The High Court refused leave to appeal with costs. On 4
December 2009 the applicants lodged an application for leave
to
appeal directly to this Court. The application was dismissed on
the basis that it was not in the interests of justice
to consider the
application at that stage.
Supreme Court of Appeal
[14]
The
applicants then applied for leave to appeal in the Supreme Court of
Appeal. In granting leave to appeal to the Full Court,
[17]
the Supreme Court of Appeal set aside the order of the High Court
dismissing the application for leave to appeal. The Supreme
Court of Appeal also set aside the costs order of the High Court in
the application for leave to appeal. It ordered the costs
of
the applications for leave to appeal in that Court and of the
petition before it to be costs in the appeal.
[18]
Full Court
[15]
On
appeal before the Full Court the applicants, contending that they had
paid more than 50 per cent of the purchase price of the
property,
argued, among other things, that section 27(1)
[19]
applied and that they were entitled to transfer of the property.
They argued that the High Court erred in (a) finding that
the letter
dated 23 February 2009 constituted an unequivocal notice of
cancellation; (b) adopting a narrow approach to
the
Barkhuizen
[20]
principle and thus failing to accept that the cancellation of the
contract was so unreasonable that its unfairness is manifest;
(c) failing to take into account the objective facts that the
cancellation is a violation of the applicants’ constitutional
rights to equality
[21]
and to
have their dignity respected and protected;
[22]
(d) not finding that the cancellation is oppressive, unreasonable and
falls foul of constitutional values; and (e) over-emphasising
the
right to freedom of contract and under-emphasising the apparent
injustice that would prevail if the contract were cancelled.
[23]
[16]
On
28 March 2013, the Full Court dismissed the appeal with costs,
including the costs of the application for leave to appeal in
the
High Court and the Supreme Court of Appeal.
[24]
The Full Court correctly found that the High Court laboured under the
misapprehension that the applicants’ demand for
transfer of the
property was made on 21 May 2009 instead of 21 May 2008.
[25]
It held, among other things, that although the argument supporting
the counter-application was not considered by the High
Court, there
was no merit in the counter-application.
[26]
As to whether the applicants met the requirements for specific
performance, the Full Court said that the ground of appeal
was
stillborn.
[27]
It found
against the applicants on their submissions that clause 8.4 of the
deed of sale entitled them to specific performance.
[28]
The Court held they had failed to prove that the enforcement of the
cancellation clause was in bad faith, unreasonable or
unfair,
impossible to fulfil, in violation of any rights or was contrary to
public policy.
[29]
[17]
The
Full Court held that the only remedies available to the purchaser are
those enumerated in section 27(3)
[30]
of the Act and that no provision is made for a claim for specific
performance whereby a seller can be directed to transfer the
property
sold to a purchaser upon demand in terms of section 27(1).
[31]
The Court held:
“
Once
the purchaser has paid at least 50 per cent of the purchase price, he
or she is furthermore entitled to demand from the seller
transfer of
the land, provided it is registrable, without tendering the balance
of the purchase price, but, instead, against the
registration of a
first mortgage bond over the land to secure the balance of the
purchase price and interest. However, should
the seller be
unable, fail or refuse to tender transfer within three months, a
claim for specific performance does not seem to
be available to the
purchaser. He or she may, however, elect to cancel the deed of
alienation in which case he or she will
be entitled to the relief
provided for in section 28(1).”
[32]
And:
“
[S]ection
27(1) of the [Act] does not give an immediately enforceable right to
transfer of the property when half the purchase price
has been paid.
The section enables the purchaser to ‘demand’
transfer on condition that a bond is registered
in favour of the
seller to secure the balance of the purchase price. If the
seller refuses to accept that, in terms of section
27(3), the
purchaser’s remedy is to cancel the sale.”
[33]
[18]
The
applicants’ application for leave to appeal to the Supreme
Court of Appeal was dismissed with costs on 18 June 2013.
[34]
In this Court
[19]
The applicants seek leave to appeal
the decision of the Full Court and to adduce further evidence on
appeal. Their main contention
is that the enforcement of the
cancellation clause, where more than 50 per cent of the purchase
price has been paid, and in the
face of a demand for a transfer
pursuant to section 27, is contrary to public policy. In the
alternative, and in the event
of the Court finding that the Trust was
entitled to cancel the contract, it was contended that cancellation
without restitution
of the amount paid towards the purchase price is
contrary to public policy. The cancellation of the contract, so
the argument
continued, is inimical to the interests of the
community, contrary to public policy and thus unenforceable. The
applicants argued
that their constitutional rights were violated as a
result of the enforcement of the cancellation clause.
[20]
In their opposition, the Trustees
conceded that the matter raises a constitutional issue but argued
that it is not in the interests
of justice to grant leave to appeal
because of lack of prospects of success.
Issues
[21]
The preliminary issues are whether
(a) condonation for the delayed applicants’ written submissions
should be granted; (b)
leave to appeal should be granted; and
(c) leave to adduce further evidence should be granted. The
primary issue is whether,
under section 27(1), the Trustees were
obliged to register the property in Ms Botha’s name against
registration of a mortgage
bond in their favour. In the
alternative the question is whether enforcement of the cancellation
clause was unreasonable,
unfair and unconstitutional, if so, whether
Ms Botha was entitled to restitution of the money paid.
Condonation
[22]
The
applicants sought condonation for the late filing of their written
submissions.
[35]
The
explanation for the delay is that the applicants’ attorneys
were unable to brief counsel to prepare written submissions
timeously, due to delays in securing funding. The Trustees also
sought condonation for their delay of 74 days in the filing
of their
notice of intention to oppose.
[36]
They explain that this was due to an administrative oversight in the
office of their attorneys. The applications for
condonation are
unopposed. The delay in respect of the filing of the
applicants’ written submissions was not excessive.
[37]
Although the delay in respect of the filing of the notice of
intention to oppose is somewhat long, the applicants did not
oppose
the Trustees’ application for condonation. Neither the
Trustees nor the applicants are prejudiced by the delays.
It is
thus in the interests of justice to grant the applications for
condonation.
Leave to appeal
[23]
At
the heart of the case is whether Ms Botha was entitled to transfer of
the property in terms of section 27(1). The determination
of
the issue depends on a proper interpretation of that section.
The issue at stake entails the constitutionality of the
enforcement
of a cancellation clause in a contract of a sale of immovable
property in circumstances where more than half of the
purchase price
was paid and demand for transfer of the property in terms of section
27(1) was refused by the seller. Also
at issue is the question
regarding restitution of the amounts paid if Ms Botha is not entitled
to transfer, in particular whether
forfeiture of the amounts paid is
contrary to public policy and thus unconstitutional. Public
policy requires that parties
should in general comply with
contractual obligations that have been freely and voluntarily
undertaken.
[38]
There
can be no doubt that the matter raises constitutional issues.
[24]
All
law, including the common law of contract, derives its force from the
Constitution and is thus subject to constitutional control.
[39]
It is of public importance to determine whether cancellation of a
contract, governed by the Act, and the resultant forfeiture
of the
payments – of more than half of the purchase price of the
property – is fair and thus constitutionally compliant.
The prospects of success, albeit not decisive, are good. It is
therefore in the interests of justice to grant leave to appeal.
Leave to adduce new evidence
[25]
The
additional evidence sought to be adduced related to the three costs
orders in favour of the applicants. They amounted
to the unpaid
sum of R80 680,27, emanating from the same set of facts between
the parties. It is argued that the amount
is due and payable.
The applicants stated that when the opposing affidavit was drafted in
the High Court, they believed that
there was no need specifically to
include in the affidavit the fact that all three costs orders
remained due and payable because
the taxed and allocated costs orders
formed part of the court file. That amount allegedly exceeded
R71 301,74, consisting
of the balance of the purchase price in
the sum of R48 000
[40]
plus municipal rates and taxes, in the sum of R23 301,94.
[26]
The applicants argued that the
Trustees in fact owed them a sum of R9 378,33 after set-off.
They submitted that the Full
Court erred in holding that the
indebtedness in respect of legal fees was never raised in the form of
a set-off defence.
It is submitted that the Full Court
misdirected itself in finding that the indebtedness of the
respondents in the form of legal
fees is of no consequence.
[27]
In the statement of agreed factual
findings, the parties accepted that the indebtedness of the Trustees
to Ms Botha in respect of
legal fees is of no consequence and no
reliance was placed on set-off as payment of the arrear instalments.
This, in my view,
rendered the introduction of new evidence moot.
In any event, the applicants persisted neither with the application
nor the
set-off argument. As a result, the application to
tender further evidence should be dismissed.
Interpretive approach
[28]
The
Constitution is located in a history which involves the transition
from a society based on injustice and exclusion from the
democratic
process to one founded on the supremacy of the Constitution, the rule
of law and the values of human dignity and equality.
[41]
The guidance provided by section 39(2) of the Constitution to
statutory interpretation under our constitutional order means
that
all statutes must be interpreted through the prism of the Bill of
Rights.
[42]
Section
39(2) reads:
“
When
interpreting any legislation, and when developing the common law or
customary law, every court, tribunal or forum must promote
the
spirit, purport and objects of the Bill of Rights.”
It follows that when we interpret section 27(1) of the Act we must
promote the spirit, purport and objects of the Bill of Rights.
[29]
The
general rule of statutory construction is that courts will give
unambiguous provisions of a statute their plain meaning unless
that
meaning creates a result that is contrary to the purpose of the
statute itself or when it leads to an absurd result.
[43]
The legislative history, as set out below, in addition to the plain
language, is also helpful in interpreting relevant provisions
of a
statute. Before one interprets this section, it is important to
highlight the purpose of the Act and set out, briefly,
its
background.
[44]
[30]
The
1970s in South Africa were marked by the collapse of large
township development companies that resulted in devastating
financial losses for many individuals. Then, as now, matters
concerning alienation of land or immovable property on instalments
were regulated by legislation. When the repealed Sale of Land
on Instalments Act
[45]
(1971
Act) was enacted, land sold on instalments was not registrable in the
name of the purchaser at the date of sale. This
resulted in
purchasers not obtaining a right to enforce transfer of the land into
their names in circumstances where an unreasonably
long time may have
passed after the signing of the contract of sale. The 1971 Act
was enacted to protect the interests, not
only of the purchaser but
also of the seller. However, the 1971 Act was
problematic.
[46]
[31]
A
Commission of Inquiry was appointed to investigate and make
recommendations regarding the efficacy of the 1971 Act and the
succeeding
Development Schemes Bill of 1977.
[47]
Its recommendations were incorporated into the Alienation of Land
Bill (Bill) and would inform the current Act. The
purpose of
the Bill was to afford purchasers of land sufficient protection.
In order to carry the protection to its logical
conclusion,
purchasers became entitled to cancel the contract if, for whatever
reason, the seller was unable to give transfer.
[32]
A significant protection introduced
by the Bill found its way into section 20 of the Act, in terms of
which the deed of alienation
defined as a contract was to be recorded
in the Deeds Office. This gave purchasers the preferent claim
over any mortgagee
whose mortgage bond was registered against the
title of the seller if the latter were insolvent or if the land were
sold in execution.
Moreover, section 27 of the Bill (later
retained as part of the Act) afforded purchasers of land more
protection when certain jurisdictional
facts are met. The
registration of transfer, in terms of section 27(1) of the Act, is
conditional upon the registration of
a first mortgage bond over the
property to secure the balance of the purchase price, plus interest,
in favour of the seller.
I deal with this in more detail
shortly when I interpret section 27(1) to determine whether Ms Botha
is entitled to transfer of
the property.
Meaning of section 27(1)
[33]
Section 27(1) provides for the
rights of a purchaser who has paid to the seller not less than half
of the purchase price of the
property in question. It reads:
“
Any
purchaser who in terms of a deed of alienation has undertaken to pay
the purchase price of land in specified instalments over
a period in
the future and who has paid to the seller in such instalments not
less than 50 per cent of the purchase price, shall,
if the land is
registrable, be entitled to demand from the seller transfer of the
land on condition that simultaneously with the
registration of the
transfer there shall be registered in favour of the seller a first
mortgage bond over the land to secure the
balance of the purchase
price and interest in terms of the deed of alienation.
”
[34]
A
plain reading of section 27(1) reveals that it seeks to protect the
rights of a purchaser who has paid not less than half of the
purchase
price. The section states that a purchaser “
shall
. . . be entitled to
demand
. . . transfer” (emphasis added). Plainly, this section
requires the presence of the following jurisdictional facts
before
the purchaser can enjoy the protection under it. First, the
purchaser must have undertaken to pay the purchase price
in specified
instalments. Second, the purchaser must have paid to the seller
in such instalments not less than 50 per cent
of the purchase price.
Third, the property in question must be registrable.
[48]
Section 27(1) itself does not state any other requirement.
[35]
Section
27(1) should not be read in isolation.
[49]
An examination of section 27(3) reveals that it provides a
further protection to a purchaser. The word “may”
in section 27(3) is used to give a purchaser power.
[50]
This view is fortified by the words “shall” and “may”,
the use of which in the same section is not
insignificant. It
needs to be stressed however that courts may, in appropriate
circumstances, construe the word “may”
as mandatory even
though it is permissive on the face of the section.
[51]
[36]
It
is thus correct that the purchaser is entitled to cancel the deed of
alienation in terms of section 27(3) and in terms of section
28(1) to
recover from the seller, among other things, that which she has paid
plus interest on any payment made,
[52]
as suggested in
Dongwe.
[53]
But the argument advanced by the Trustees, relying on
Dongwe
and
academic authority,
[54]
is
that the purchaser’s
only
remedy if the seller refuses to honour her demand for transfer is
cancellation. This, they said, follows from the fact that
the
section only mentions cancellation. It does not mention
specific performance. But specific performance is what
Ms Botha
sought in her counter application. Essentially, she sought
an order compelling the Trustees to register the
property and sign
all documents necessary for transferring the property into her name.
[37]
The
Trustees’ argument cannot be sustained. The starting
point is that at common law a contracting party is entitled
to
specific performance in respect of any contractual right.
[55]
Section 27(1) creates a contractual right implied by law. The
purchaser is therefore entitled to specific performance
in respect of
that right unless the legislation means to depart from the common-law
position. The section indicates no meaning
of this kind.
[38]
It is true that section 27(3)
expressly mentions cancellation only, and does not itemise specific
performance. But there is no reason
to infer that the provision means
to exhaust the purchaser’s remedies. Cancellation is a remedy
that exists at common law.
The subsection clarifies and adds
significant content to it. First, the subsection inserts a time
period. It prescribes
that the purchaser’s right to
cancel arises three months after the receipt of the demand by the
seller. This specific
time period adds urgency to the seller’s
obligation to transfer. It is a legislative intervention
designed to strengthen
the purchaser’s position beyond the
common law. Second, section 27(3) provides that in case of
cancellation, the parties
are entitled to the relief provided for in
section 28(1). And indeed, finally, had section 27(3) not been
enacted, it would
not be obvious that cancellation arises in this
context at all. This is because at common law cancellation is
available as
a remedy only where the breach is material.
Whether a particular breach is material often proves to be a
difficult and contested
question. Section 27(3) answers it for
us, to the plain benefit of the purchaser.
[39]
It
needs to be stressed that section 27(3) does not enumerate the only
remedies available to a purchaser in the circumstances of
Ms Botha.
The section does provide a purchaser with additional optional
protection: the purchaser “
may
cancel” the contract of sale if the seller fails or refuses to
tender transfer within three months of receipt of the demand
referred
to in section 27(1).
[56]
Section 27(3) therefore serves three important purposes
relating to the concretisation of the purchaser’s right to
cancel. There is no reason to infer that the provision sought
to limit the purchaser’s remedies to cancellation, and
to
exclude specific performance. It is doing something else
entirely: it adds to the purchaser’s arsenal, without taking
anything out of it.
[40]
The
Act, in regulating the alienation of land in certain circumstances
and providing for matters connected therewith,
[57]
especially in section 27(1), exhibits a concern for the protection of
the rights of a purchaser who has partially paid the purchase
price
of immovable property
.
The construction above is consistent with the wording and purpose of
the section for the protection of the rights of purchasers
and does
not defeat the clear purpose of the Act.
[58]
Moreover, the interpretation is consistent with the object of our
Constitution that contracting parties are treated with
equal worth
and concern. By contrast, the interpretation contended for by
the Trustees defeats that purpose. It leaves
a purchaser of
immovable property, such as Ms Botha, who has paid most of the
purchase price and whose lawful entitlement has been
ignored by the
seller, without the standard remedy afforded by our law of contract.
This would be anomalous in a piece of
legislation that has been
enacted to protect precisely those in Ms Botha’s position.
[41]
Ms Botha elected to invoke section
27(1) and indeed persisted with her demand for the transfer of the
property. At no stage
did she capitulate and rely on the
further protection in terms of section 27(3). Instead she
sought a remedy that would compel
the Trustees to register the
property and sign all documents necessary for transferring that
property into her name. The
Full Court was incorrect in holding
that section 27(1) does not afford her that remedy. That
conclusion is inconsistent
with the constitutional injunction for
courts, when interpreting any legislation, to promote the spirit,
purport and objects of
the Bill of Rights.
Is Ms Botha entitled to specific performance even though she is
in arrears?
[42]
But,
even though Ms Botha is in principle entitled to specific
performance, the Trustees raised a defence. They contended
that
if it is accepted that the demand in terms of section 27(1) confers
the right to transfer of the property, then in order to
be a proper
demand, the purchaser should have rectified her breach before the
demand. They submitted further that the fact
that payment was
not made
[59]
or even tendered
simultaneously with the demand means that there was no proper demand
giving rise to any right for specific performance.
[43]
It
is true that Ms Botha was in arrears and had failed to rectify her
breach. It is an accepted principle of our law that
where a
contract creates reciprocal obligations, own performance or tender of
own performance by a claimant is a requirement for
the enforceability
of her claim for counter-performance.
[60]
This is an instance of the principle of reciprocity. The other
side of the coin is that the party from whom performance
is claimed
may raise the failure of counter-performance as a defence.
[61]
This defence is well known as the exception of a non-performed
contract (
exceptio
non adimpleti contractus
)
.
In bilateral contracts the obligations of parties are prima
facie reciprocal.
[62]
For the principle to operate the obligations of the parties must be
reciprocal in the sense that performance of the one cannot
be
enforced without performance of the other.
[63]
The question remains whether the purchaser’s entitlement
under section 27(1) is reciprocal to her obligation to pay
the
instalments timeously. In other words, could the Trustees raise
the
exceptio
non adimpleti contractus
as a defence to Ms Botha’s demand for transfer? In my
view they could.
[44]
The Act is premised on an instalment
sale agreement of immovable property between a purchaser and seller.
Nothing in the Act
suggests that the application of its provisions in
relation to rights and entitlements of either purchasers or sellers
is based
on anything other than proper performance of their
respective obligations in terms of the contract of sale. As I
have already
explained, there is a presumption that obligations in
bilateral contracts are reciprocal. The presumption is not
rebutted
here. If anything, section 27(1) indicates that the
seller’s obligation to give transfer and the purchaser’s
obligation to pay instalments timeously are intimately
interconnected. That is why the purchaser is entitled to
transfer
only “on condition that simultaneously with the
registration of transfer there shall be registered in favour of the
seller
a first mortgage bond over the land to secure the balance of
the purchase price and interest”. The section thus
recognises
that it would be unfair for the purchaser to maintain her
rights in the property if she falls into arrears. It follows
inexorably
that the provision does not allow the purchaser to obtain
rights in the property unless she first purges her arrears.
[45]
To
the extent that the rigid application of the principle of reciprocity
may in particular circumstances lead to injustice, our
law of
contract, based as it is on the principle of good faith,
[64]
contains the necessary flexibility to ensure fairness. In
Tuckers
Land and Development Corporation
[65]
it was pointed out that the concepts of justice, reasonableness and
fairness historically constituted good faith in contract.
The
principle of reciprocity originated in these notions. This
accords with the requirements of good faith.
[46]
The Act seeks to ensure fairness
between sellers and purchasers. Its provisions are in
accordance with the constitutional
values of reciprocal recognition
of the dignity, freedom and equal worth of others, in this case those
of the respective contracting
parties. The principle of
reciprocity falls squarely within this understanding of good faith
and freedom of contract, based
on one’s own dignity and freedom
as well as respect for the dignity and freedom of others.
Bilateral contracts are
almost invariably cooperative ventures where
two parties have reached a deal involving performances by each in
order to benefit
both. Honouring that contract cannot therefore
be a matter of each side pursuing his or her own self-interest
without regard
to the other party’s interests. Good faith
is the lens through which we come to understand contracts in that
way. In
this case, good faith is given expression through the
principle of reciprocity and the
exceptio
non adimpleti contractus.
[47]
Ms Botha’s demand in terms of
section 27(1), dated 21 May 2008, was made with the statutorily
tendered condition that, simultaneously
with the registration of the
transfer, there would be registration in favour of the Trust of a
first mortgage bond over the land
to secure the balance of the
purchase price plus interest thereon. This would of course not
constitute payment and would
not cure the breaches of arrear
payments, but it would have appreciable ameliorative effects for the
Trust.
[48]
It
would serve as security for future instalment payments.
[66]
To this end, it bears mentioning that Ms Botha had made a written
tender for payment of the balance of the purchase price
together with
interest. Notably, this tender was on condition that the
balance and the “municipal balance”,
[67]
that is to say, outstanding amounts levied in respect of municipal
rates, taxes and service fees, would be paid on the date of
registration of the property in her name.
[68]
The payment of the arrear instalment and “municipal balance”
is important otherwise an order to transfer the
property without more
would still leave Ms Botha in immediate breach and liable to
immediate execution on the property by the Trust
for payment of what
she still owes.
[49]
In
my view, to deprive Ms Botha of the opportunity to have the property
transferred to her under section 27(1) and in the process
cure her
breach in regard to the arrears, would be a disproportionate sanction
in relation to the considerable portion of the purchase
price she has
already paid and would thus be unfair. The other side of the
coin is, however, that it would be equally disproportionate
to allow
registration of transfer, without making that registration
conditional upon payment of the arrears and the outstanding
amounts
levied in municipal rates, taxes and service fees. Accordingly,
an appropriate order in this regard will be made.
The condition
that Ms Botha must pay the arrears and all municipal balances, set
out in our order, on top of the statutory requirement
that a bond be
registered, constitutes an equitable exercise of the discretion a
court has
[69]
to avoid undue
hardship to the Trustees.
[70]
Cancellation
[50]
It
is another manifestation of the principle of reciprocity that where a
contract has been lawfully cancelled, mutual obligations
arise to
restore the respective performances. Relying on the forfeiture
clause in the agreement,
[71]
the Trust made no tender of repayment of what it had received. Ms
Botha argued that the forfeiture clause is unfair and
unconstitutional, alternatively that it is a disproportionate penalty
that falls to be equitably reduced in terms of the Conventional
Penalties Act
[72]
(CPA).
[51]
For the same reasons mentioned
above, granting cancellation – and therefore, in this case,
forfeiture – in circumstances
where three-quarters of the
purchase price has already been paid would be a disproportionate
penalty for the breach. In their
application for cancellation
the Trustees did not properly address the disproportionate burden
their claim for relief would have
on Ms Botha. They took the
view that the question of forfeiture and restitution was independent
of, and logically anterior
to, the question of cancellation. That
was a fundamental error. The fairness of awarding cancellation
is self-evidently
linked to the consequences of doing so. The
Trustees’ stance therefore meant that they could not justify
this Court’s
awarding the relief they sought. In view of
the above the cancellation application must fail.
Costs
[52]
The
applicants have been successful in this Court. I am of the view
that the costs of this application should follow the result.
The
Supreme Court of Appeal set aside the costs order of the High Court
and ordered the costs of the application for leave
to appeal before
it and in the High Court to be costs in the appeal.
[73]
Accordingly, the Trustees are to pay the costs of the application for
leave to appeal in the High Court and the Supreme Court
of Appeal and
the costs of the appeal before the Full Bench and this Court,
including, where applicable, the costs of two counsel.
Order
[53]
The following
order is made:
1.
The
applications for condonation are granted.
2.
Leave to
appeal is granted.
3.
Leave to
adduce further evidence is refused.
4.
The appeal is
upheld.
5.
The orders of
the Northern Cape High Court, Kimberley and the Full Court of the
Northern Cape High Court, Kimberley are set aside.
6.
Mr Henry
Robins Rich NO, Mr Johannes Jacobus Wiese Hendriks NO and Ms Martha
Magrieta Hendriks NO (Trustees) are ordered to sign
all necessary
documents to effect the registration and transfer of Erf 4128,
De Aar (property) into the name of the first
applicant, Ms Lorraine
Sophie Botha (Ms Botha), against the simultaneous:
(i) Payment of all arrears owing and
outstanding amounts levied in respect of municipal rates, taxes and
service fees, under the
instalment sale agreement by Ms Botha to the
JJW Hendriks Trust IT2151/1995 (Trust); and
(ii) Registration of a first mortgage
bond over the property in favour of the Trust to secure the balance
of the purchase price
and interest thereon in terms of the agreement.
7.
The
Trustees are ordered to pay the applicants’ costs in the High
Court, Full Court, Supreme Court of Appeal and in this Court,
including, where applicable, the costs of two counsel.
For the Applicants:
Advocate D Potgieter SC and Advocate G Potgieter instructed by
Towell & Groenewaldt.
For the Respondents:
Advocate J van Niekerk SC instructed by Haarhoffs Inc.
[1]
Botha
and Another v Rich NO and Others
,
Case No. 476/2009, 28 March 2013, as yet unreported (Full Court
judgment).
[2]
Rich
NO and Others v Botha and Another
[2009]
ZANCHC 79
(High Court judgment).
[3]
The
applicants had previously approached this Court for leave to appeal
against the decision of the High Court. On 20 January
2010
this Court dismissed the application on the basis that it was not in
the interests of justice to hear the matter at that
stage. At
that time, the applicant had not exhausted the normal appeal
processes.
[4]
68
of 1981.
[5]
Messrs
Henry Robins Rich and Johannes Jacobus Wiese Hendriks as well as Ms
Martha Magrieta Hendriks.
[6]
These
facts appear from the agreed statement of facts of the High Court’s
factual findings and are common cause on the papers.
[7]
The
sale agreement, recorded in Afrikaans, was concluded on 19 November
2003. The relevant terms thereof read:
“
3. KOOPSOM EN WYSE VAN BETALING
Die Koopprys is die bedrag van R240 000 (Tweehonderd en
veertigduisend Rand), welke genoemde bedrag deur die Koper aan die
Verkoper as volg betaalbaar sal wees.
Die Koper sal geen deposito betaal nie en die volle koopsom sal
in maandelikse paaiemente van R4 000 (Vierduisend Rand) per maand
betaalbaar wees onderhewig aan die voorwaardes hierin vervat. Die
eerste betaling sal geskied voor of op 28 Februarie
2004 en
daarna voor of op die laaste dag van iedere en elke daaropvolgende
maand.
. . .
7. OORDRAG VAN EIENDOM
Die Verkoper moet op tekening van hierdie ooreenkoms kragtens
Artikel 20 van die wet bewerkstellig. Die Verkoper mag nie na
datum van ondertekening van hierdie ooreenkoms die eiendom met ’n
verband of ’n verdere verband beswaar nie. Oordrag
van
die eiendom word deur die Verkoper se aktebesorgers bewerkstellig so
spoedig moontlik na betaling van die koopsom en teen
nakoming deur
die Kopers van al sy verpligtinge ingevolge hierdie ooreenkoms.
8. BETALING
Alle betalings kragtens hierdie ooreenkoms sal vry van bankkoste
of kommissie en sonder enige ander aftrekkings of verrekenings
aan
die Verkoper gemaak word in die rekening . . . by enige adres wat
die Verkoper van tyd tot tyd skriftelik mag aandui. Alle
betalings deur die Koper gemaak sal eerstens, volgens die Verkoper
se diskressie, aangewend word ter voldoening van die koste
(anders
as die koopsom) waarvoor die Kopers ingevolge hierdie ooreenkoms
aanspreeklik is, tweedens ter voldoening van die koopsom.
Die Kopers is ten alle tye geregtig:
1.
Om
’n betaling te maak voor die datum waarop dit ingevolge
hierdie ooreeenkoms gemaak moet word;
2.
Om
groter betalings te maak as die waarvoor hierdie ooreenkoms
voorsiening maak;
3.
Om
betaling van al die bedrae verskuldig ingevolge hierdie ooreenkoms
aan te bied en te eis dat transport van die eiendom aan
hom (die
Koper) teen sodanige betaling gegee word; of
4.
Om
transport van die eiendom ingevolge Artikel 27 van die Wet te eis
wanneer hy ten minste een helfte van die koopprys betaal
het.
. . .
10. VOOR-OORDRAG VAN DIE EIENDOM OP DIE NAAM VAN DIE KOPER
. . .
10.3 Mag die Kopers nie die eiendom sonder die voorafgaande
skriftelike toestemming van die Verkoper verhuur nie.
10.4 Mag die Kopers nie in die geheel of gedeeltelik van die
besit of okkupasie van die eiendom afstand doen sonder die
voorafgaande
skriftelike toestemming van die Verkoper nie.
Geen toestemming wat die Verkoper kragtens die voorafgaande
bepalings mag
gee onthef die Kopers van enige van julle verpligtinge
kragtens hierdie ooreenkoms nie.
11. RISIKO
11.1 Die risiko, wins en verlies van die eiendom gaan op die
okkupasiedatum op die Kopers oor. Die Kopers is vanaf die
okkupasiedatum
verplig om te reël vir die behoorlike
versekering van eiendom teen alle risiko’s.
11.2 Vanaf die okkupasiedatum sal die Kopers aanspreeklik wees
vir die betaling van alle erfbelastings, verdere munisipale heffings
en rekeninge ten opsigte van dienste wat gelewer word.
. . .
13. KONTRAKBREUK
. . .
13.2.1 Verbeur die Kopers die bedrag of bedrae wat reeds
deur hulle betaal is aan die Verkoper.”
[8]
The
applicants contended that the Trust is precluded from recovering the
instalments, amounting to R8 000, for these two months
pursuant to
its abandonment of the Magistrates’ Court judgment. The
Trust denied that the claim for the two months
was abandoned and
said that the argument was, in law, misconceived.
[9]
The
R180 000 is reckoned from 28 February 2004, the date on which
the first instalment was due, until October 2007.
[10]
The
judgment was obtained on 3 April 2008.
[11]
The
parties’ statement of agreed factual findings at para 3.7.
This is also reflected in the Trustees’ letter
addressed to Ms
Botha dated 9 September 2008.
[12]
Section
27 is set out at n 19 below. It is incorporated in clause 8.4
of the contract which reads:
“
Die kopers is ten alle tye geregtig . .
. [o]m transport van die eiendom ingevolge Artikel 27 van die Wet te
eis wanneer hy ten
minste een helfte van die koopprys betaal het.”
[13]
This
letter was in compliance with section 19 of the Act which requires
the seller to do three things if termination of the contract
is
desired. The seller must (a) notify the purchaser of the
breach; (b) demand rectification of the breach; and (c) prove
that
the purchaser has failed to comply with such demand.
[14]
The
notice reads:
“
Ons verwys u vriendelik na ons skrywe
van 9 September 2008.
In voormelde skrywe het ons u versoek om binne 30 dae die gebreke
wat daarin vermeld was te herstel en het ons u ook verwittig dat
ons
voornemens is om u kontrak te kanselleer en skadevergoeding te
vorder.
Ondanks ons versoek en meer as vyf maande nou reeds verloop en
steeds het u nie die gebreke herstel nie. Dit blyk ook dat
u
nog steeds die eiendom okkupeer.
Ons versoek u dan nou op ’n dringende basis dat u die
eiendom sal ontruim voor of op Vrydag 27 Februarie 2009 om 12h00 en
dat u die sleutels by die kantore van Joseph & Van Rensburg te
Kerkstraat 41, De Aar sal aflewer.”
[15]
The
notice of motion reads:
“
Dat dit verklaar word dat die
koopkontrak gesluit tussen die [respondent en eerste applikant] op
19 November 2003 gekanseller
is, alternatiewelik dat dit deur
hierdie bevel gekanseller word.
Dat die eerste [applikant], en enige ander persoon wat Erf 4128,
De Aar, deur haar okkupeer, gelas word on die perseel binne sewe
dae
na beteking van hierdie bevel te ontruim tesame met al hul
besittings.
Dat indien die [eerste applikant] sou versuim om gevolg te gee
aan die bepalings hiervan, die Balju vir die distrik De Aar gemagtig
en gelas word om die [eerste applikant], en enige ander persoon wat
deur haar die voormelde erf okkupeer, tesame met al hul besittings
van die perseel te verwyder.
Dat die [eerste applikant], asook die tweede [applikant] indien
dit sou verkies om die aansoek te opponeer, gelas word om die koste
van die aansoek te betaal.”
[16]
The
order of the High Court reads:
“
1. The contract of sale concluded
between the [Trust and Ms Botha] on 19 November 2003 is declared
cancelled and is hereby cancelled.
2. [Ms Botha] and any other person that occupies Erf 4128, De
Aar through her must vacate the premises together with their
belongings,
within one month of this order.
3. In the event of [Ms Botha’s] failure to comply with
this order within the stipulated period, the sheriff for the
district
of De Aar is hereby authorised and ordered to remove [Ms
Botha] or any other person who occupies the premises through her
together
with their belongings, from the property.
4. The [applicants] jointly and severally pay the costs of this
application.”
[17]
Petition
Order dated 20 August 2010.
[18]
The
Petition Order reads:
“
Leave to appeal is granted to the Full
Court of the Northern Cape Division.
The costs of the court a quo in dismissing the application for
leave to appeal is set aside and the costs of the application for
leave to appeal in this court and the court a quo are costs in the
appeal. If the applicant does not proceed with the appeal,
the
applicant is to pay these costs.”
[19]
Section
27, in relevant part, reads:
“
(1) Any purchaser who in terms of a
deed of alienation has undertaken to pay the purchase price of land
in specified instalments
over a period in the future and who has
paid to the seller in such instalments not less than 50 per cent of
the purchase price,
shall, if the land is registrable,
be
entitled to demand
from the seller
transfer of the land on condition that simultaneously with the
registration of the transfer there shall be registered
in favour of
the seller a first mortgage bond over the land to secure the balance
of the purchase price and interest in terms
of the deed of
alienation.
(2) The conditions as to the rate of interest and redemption as
well as other conditions of the mortgage bond contemplated in
subsection (1), shall not be more onerous than the conditions which
applied in respect of the deed of alienation.
(3) If for whatever reason the seller is unable, fails or refuses
to tender transfer within three months of the receipt of the demand
referred to in subsection (1), the purchaser may cancel the relevant
deed of alienation, in which case the parties are entitled
to the
relief provided for in section 28(1): Provided that nothing
contained in this subsection shall detract from any additional
claim
for damages which the purchaser may have.” (Emphasis
added.)
[20]
Barkhuizen
v Napier
[2007]
ZACC 5
;
2007 (5) SA 323
(CC);
2007 (7) BCLR 691
(CC).
[21]
Section
9(1) of the Constitution reads:
“
Everyone is equal before the law and
has the right to equal protection and benefit of the law.”
[22]
Section
10 of the Constitution reads:
“
Everyone has inherent dignity and the
right to have their dignity respected and protected.”
[23]
Notice
of Appeal before the Full Court.
[24]
Full
Court judgment above n 1 at para 16.
[25]
Id
at para 5.
[26]
Id
at para 6.
[27]
Id
at para 9.
[28]
Id
at para 8.
[29]
Id
at para 13.
[30]
See
above n 19.
[31]
Full
Court judgment above n 1 at para 7.1.
[32]
Id.
See also Silberberg and Schoeman
The
Law of Property
4
ed
(Butterworths, Durban 2006) at 242.
[33]
Id.
See also
Dongwe
N.O. v Slater-Kinghorn N.O. and Another
[2009] ZAKZPHC 71 (
Dongwe
).
[34]
In
dismissing the application for leave to appeal, the Supreme Court of
Appeal said:
“
This Court does not give reasons for
its order in dismissing applications for condonation or leave to
appeal. This is in line
with international practice and does not
offend any constitutional principle.
Dismissal of an application for leave to appeal signifies that
this Court is of the view that the intended appeal has no reasonable
prospects of success and that there is no other compelling reason
why it should be heard.
An order such as this is, except for clerical errors, final and
cannot be reviewed by this Court”.
[35]
As
per the directions dated 20 August 2013, the written submissions
were due on 13 September 2013 but were only lodged on 26 September
2013.
[36]
In
terms of rule 19 of the Rules of this Court the opposing papers were
due to be lodged on 24 July 2013 but were only filed on
8 November
2013. Although the Trustees also sought condonation for the
late filing of the notice of intention to oppose,
their opposing
affidavit was lodged within the period provided for in the Rules.
The question of condonation in respect
of the filing of the notice
of intention to oppose does not therefore arise.
[37]
The
delays in respect of the filing of written submissions and opposing
papers were 8 and 74 days, respectively.
[38]
This
consideration, expressed in the maxim
pacta
sunt servanda,
gives
effect to the central constitutional values of freedom and dignity.
[39]
Barkhuizen
above
n 20 at para 15.
[40]
This
calculation by the applicants is based on the abandoned judgment and
the order of the Magistrates’ Court.
[41]
Investigating
Directorate: Serious Economic Offences and Others v Hyundai Motor
Distributors (Pty) Ltd and Others: In re Hyundai
Motor Distributors
(Pty) Ltd and Others v Smit NO and Others
[2000] ZACC 12
;
2001 (1) SA 545
(CC);
2000 (10) BCLR 1079
(CC) at
para 21.
[42]
Id.
[43]
SATAWU
and Another v Garvas and Others
[2012]
ZACC 13
;
2013 (1) SA 83
(CC);
2012 (8) BCLR 840
(CC) at para 37.
[44]
See
Van Rensburg and Treisman
The
Practitioner’s Guide to the Alienation of Land Act
2
ed
(Butterworths, Durban 1984).
[45]
72
of 1971.
[46]
Van
Rensburg and Treisman above n 44 at 1-2 and 7-9.
[47]
Id
at 2.
[48]
Section
1 of the Act defines “registrable”, in relation to land,
to mean “capable of being registered as the
subject of a
separate title deed in a deeds registry in that the requirements of
any law relating to such registration have been
complied with”.
[49]
See
South
African Police Service v Police and Prisons Civil Rights Union and
Another
[2011] ZACC 21
;
2011 (6) SA 1
(CC);
2011 (9) BCLR 992
(CC) at para
30.
[50]
See
South
African Police Service v Public Servants Association
[2006] ZACC 18
;
2007 (3) SA 521
(CC) (
SAPS
v PSA
)
at paras 14-6 and
Van
Rooyen and Others v The State and Others (General Council of the Bar
of South Africa Intervening)
[2002] ZACC 8
;
2002 (5) SA 246
(CC);
2002 (8) BCLR 810
(CC) at paras
181-2.
[51]
Wade
and Forsyth
Administrative
Law
8
ed
(Oxford University Press, Cape Town 2000) at 239:
“
The hallmark of discretionary power is
permissive language using words such as ‘may’ or ‘it
shall be lawful’,
as opposed to obligatory language such as
‘shall’. But this simple distinction is not always
a sure guide,
for there have been many decisions in which permissive
language has been construed as obligatory. This is not so much
because
one form of words is interpreted to mean its opposite, as
because the power conferred is, in the circumstances prescribed by
the Act, coupled with a duty to exercise it in a proper case.”
See also the minority judgment in
SAPS v PSA
above n 50 at
para 86.
[52]
Section
28(1) reads:
“
Subject
to the provisions of subsection (2), any person who has performed
partially or in full in terms of an alienation of land
which is of
no force or effect in terms of section 2(1), or a contract which has
been declared void in terms of the provisions
of
section
24
(1)(c),
or has been cancelled under this Act, is entitled to recover from
the other party that which he has performed under the
alienation or
contract, and—
(a) the alienee may in addition recover from
the alienator—
(i) interest at the prescribed rate on any
payment that he made in terms of the deed of alienation or contract
from the date of
the payment to the date of recovery;
(ii) a reasonable compensation for—
(aa)
necessary
expenditure he has incurred, with or without the authority of the
owner or alienator of the land, in regard to the preservation
of the
land or any improvement thereon; or
(bb) any improvement which enhances the market value of the land
and was effected by him on the land with the express or implied
consent of the said owner or alienator; and
(b) the alienator may in addition recover from the alienee—
(i) a reasonable compensation for the occupation, use or
enjoyment the alienee may have had of the land;
(ii) compensation for any damage caused intentionally or
negligently to the land by the alienee or any person for the actions
of whom the alienee may be liable.”
[53]
See
above n 33
.
[54]
Silberberg
and Schoeman above n 32 at 400.
[55]
See
Benson
v SA Mutual Life Assurance Society
1986 (1) SA 776
(A) at 782D and
Haynes
v King Williamstown Municipality
1951 (2) SA 371
(A).
[56]
Section
27(3) bears repetition. It reads:
“
If for whatever reason the seller is
unable, fails or refuses to tender transfer within three months of
the receipt of the demand
referred to in subsection (1), the
purchaser
may
cancel the relevant deed of alienation, in which case the parties
are entitled to the relief provided for in section 28(1): Provided
that nothing contained in this subsection shall detract from any
additional claim for damages which the purchaser may have.”
(Emphasis added.)
[57]
See
the long title to the Act.
[58]
See
Shaik
v Minister of Justice and Constitutional Development and Others
[2003] ZACC 24
;
2004 (3) SA 599
(CC);
2004 (4) BCLR 333
(CC) at para
18 where this Court echoed the well-recognised rule of statutory
construction formulated in
Chotabhai
v Union Government (Minister of Justice) and Registrar of Asiatics
1911
AD 13
at 24.
[59]
The
payment related to arrear monthly instalments and interest on the
arrear instalments and for the amounts levied in respect
of
municipal rates, taxes and service fees which should have been
tendered simultaneously with the demand.
[60]
BK
Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk
1979
(1) SA 391
AD (
BK
Tooling
)
at 419H.
[61]
In
BK
Tooling
id at 415H, Jansen JA made a convenient distinction between the
principle of reciprocity (“wederkerigheidsbeginsel”)
and
its application as a defence (“weerhoudingsreg”) to a
claim.
[62]
MAN
Truck & Bus (SA) (Pty) Ltd v Dorbyl Ltd t/a Dorbyl Transport
Products and Busaf
[2004] ZASCA 8
;
[2004] 2 All SA 113
(SCA) (
MAN
Truck
);
Grand
Mines (Pty) Ltd v Giddey NO
[1998]
ZASCA 99
;
1999
(1) SA 960
(SCA) at 971C-D; and
Rich
and Others v Lagerwey
1974
(4) SA 748
(A) at 761E-762A.
[63]
MAN
Truck
id at para 12.
[64]
It
has often been asserted by the courts that in our law all contracts
are subject to good faith. Taken at face value that
means that
the requirement of good faith underlies and informs the South
African law of contract. See Zimmermann “Good
Faith and
Equity” in Zimmermann and Visser (eds)
Southern
Cross: Civil Law and Common Law in South Africa
(Juta
& Co Ltd, Cape Town 1996) from 217-60. See also
Barkhuizen
above
n 20 and
Tuckers
Land and Development Corporation (Pty) Ltd v Hovis
1980 (1) SA 645
(A) at 651-2 (
Tuckers
Land and Development Corporation
).
Considerations of good faith have shaped the content and
development of existing legal concepts of contract in many ways.
See Zimmermann id at 239-60.
[65]
Tuckers
Land and Development Corporation
id
at 651E-F and 652C-G.
[66]
Section
27(1) speaks of the “balance of the purchase price”.
See also Van Rensburg and Treisman above n 44 at
184-5.
[67]
Referring
to outstanding amounts levied in respect of municipal rates, taxes
and service fees in terms of the parties’ agreement.
In
this regard see the terms of the instalment sale agreement at [4]
read with [11] regarding the written demand and tender.
[68]
Above
[4].
[69]
Section
172(1) empowers a court, when deciding a constitutional matter
within its powers, to make any order that is just and equitable.
See in this regard
Occupiers
of Saratoga Avenue v City of Johannesburg Metropolitan Municipality
and Another
[2012] ZACC 9
;
2012 (9) BCLR 951
(CC) and
Zondi
v MEC for Traditional and Local Government Affairs
and
Others
[2004]
ZACC 19
;
2005 (3) SA 589
(CC);
2005 (4) BCLR 347
(CC).
[70]
See
Haynes
above
n 55. Also see the discussion on the discretion of the courts
in Hutchison
The
Law of Contract in South Africa
(Oxford University Press, Cape Town 2009) at 321.
[71]
Clause
13.2.1 in the contract of sale provides that if Ms Botha breaches
the agreement the Trustees may cancel it, in which case
she forfeits
the amounts already paid by her to them.
[72]
15
of 1962. Section 3 provides:
“
If upon the hearing of a claim for a
penalty, it appears to the court that such penalty is out of
proportion to the prejudice
suffered by the creditor by reason of
the act or omission in respect of which the penalty was stipulated,
the court may reduce
the penalty to such an extent as it may
consider equitable in the circumstances: Provided that in
determining the extent of such
prejudice the court shall take into
consideration not only the creditor’s proprietary interest,
but every other rightful
interest which may be affected by the act
or omission in question.”
Section 4 states expressly that forfeiture clauses are penalty
clauses for the purpose of the CPA.
[73]
See
the Petition Order above n 18.