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[2005] ZAGPHC 116
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Lench and Another v Cohen and Another (A5009/05) [2005] ZAGPHC 116; 2006 (2) SA 99 (W) (10 November 2005)
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(WITWATERSRAND LOCAL DIVISION)
CASE NO: A5009/05
In the matter between:
STEWART CHARLES LENCH First Appellant
(First Respondent in the court a quo)
PAMELA PILLAY
Second Appellant
(Second Respondent in the court a quo)
and
RENATA COHEN First Respondent
(First Applicant in the court a quo)
CHARLES NIGEL COHEN
Second Respondent
(Second Applicant in the court a quo)
BORUCHOWITZ, J:
[1] This appeal concerns the validity of the cancellation of an agreement of sale. [2] In October 2003, the appellants sold an immovable property to the respondents for a purchase price of R1 675 000,00. The manner in which the price was to be paid is set out in clause 1 of the agreement of sale which reads:
“1.
The purchase price shall be the sum of R1,675,000-00 (one million six hundred and seventy five thousand
rand) (the PURCHASE PRICE) payable as follows:
1.1
cash on acceptance R30 000,00 (thirty thousand rand) (the DEPOSIT) to be deposited with the AGENT who shall hold it in accordance
with the provisions of the Estate Agents Act No. 112 of 1976 pending registration of transfer. The said DEPOSIT will be invested
in an interest bearing trust account for the benefit of the PURCHASER;
1.2
the balance of R1,645,000-00 (one million six hundred and forty five thousand rand) shall be paid against transfer and shall be secured by guarantees
acceptable to the conveyancer which shall be delivered by not later than 5th January 2004.”
[3] Clauses 8 and 8.1 of the agreement provide as follows:
“8.
If either party is in breach of any terms or conditions hereof (the Defaulting Party) and fails
to remedy such breach within ten (10) days of posting by pre-paid registered post or by hand delivery to the domicilium address of a written notice given by the other Party calling upon the Defaulting Party to remedy such breach, then:
8.1
if the PURCHASER is the Defaulting Party the SELLER shall be entitled, without prejudice to any other rights he may have, to cancel this agreement and
retain as rouwkoop any sums paid or deposited by the PURCHASER in terms hereof, less commission payable to the AGENT, or to enforce
this agreement and claim damages.”
[4] The domicilium citandi et executandi chosen by the respondents for the delivery of all notices and service process was “23 Sandalwood, 115 Ballyclaire Drive, Morningside”. [5] The respondents had until midnight on 5 January 2004 to furnish the requisite guarantees. As the guarantees had not been furnished by the late afternoon of 5 January 2004 the first appellant (Lench), purporting to act in terms of clause 8 of the agreement, addressed the following letter to the respondents:
“Dear Mr. and Mrs. Cohen,
Re: Agreement of Sale 49A Edward Rubenstein Drive.
I am concerned that the conveyancer has not received the guarantees for the purchase of the above property and as you are aware they
were due today. Without the guarantees I am unable to commit myself to another property deal that I am pursuing and may loose the
property altogether.
In terms of paragraph 1.2 of the Agreement of Sale dated 17th October 2003 the guarantees are to be delivered by not later than today 5th January 2004.
Should the guarantees not be received by today 5th January 2004 then you will be regarded as being in breach of paragraph 1.2 of the Agreement of Sale.
In this event you are hereby given notice in terms of paragraph 8 of the Agreement of Sale to furnish the required guarantees within ten days from the 6th January 2004. The ten day period expires on the 15th January 2004.
Should the guarantees not be furnished by the expiry of the ten day period (15th January 2004) then the agreement of sale will be regarded as having been cancelled by us as a result of your breach and will be of no further force or effect.
Your urgent attention in this matter is required. Yours sincerely, STEWART CHARLES LENCH Pp PAMELA PILLAY”
[6] Lench decided to hand-deliver the letter to the domicilium chosen by the respondents. The letter was enclosed in an A4 size envelope which had the names and physical address of the respondents
clearly typed thereon. The address stipulated by the respondents is their residence which is situated within a townhouse complex.
When Lench arrived at the complex he could not obtain access to the unit occupied by the respondents. The only means of access was
through a large metal gate which was operated electronically. There was no guard or other person present who was authorised to open
the gate and there was no pedestrian entrance. Next to the gate was an intercom system. Lench endeavoured to use same but there was
no response. There was also no post-box in which Lench could leave the letter. In the circumstances Lench decided to append the letter
to the main gate of the complex by taping same to the two metal uprights in a manner so as not to obscure the names and address of
the respondents.
[7] The appellants aver that on 6 January 2004 they received the following facsimile transmission which was purportedly signed by the first respondent:
“Dear Pam,
As per your letter yesterday, we will provide the necessary guarantees within the ten day period. We confirm that we will be taken occupation on the 1st February 2004.
Yours sincerely,
RENATA COHEN”
[8] The first respondent denies being the author of this facsimile transmission, and both respondents are adamant that a transmission in these terms was not sent to the appellants. The respondents also deny having received the appellants’ letter of 5 January 2004. [9] It is common cause that the respondents did not effect timeous payment of the purchase price. The deposit of R30 000,00 was paid some time before 23 October 2003. On 16 January 2004 a sum of R145 000,00 was paid into the appellants attorneys trust account, and on the same day certain guarantees were furnished. These guarantees did not cover the full balance of the purchase price which was only paid on 19 January 2004. On that date a sum of R130 000,00 was remitted by the respondents bankers Investec to the appellants’ attorneys trust account. [10] On 19 January 2004 the appellants addressed the following letter to the respondents: “Mr. and Mrs. Cohen, Re: 49A Edward Rubenstein Drive We refer to our letter of the 5th January 2004 wherein you were advised that should you not remedy the breach in terms of the agreement of sale by the stipulated date then the sale would be cancelled in terms of the contract. This letters confirms our decision that the sale of the above property is cancelled.
Yours sincerely,
S LENCH/P PILLAY”
The respondents acknowledge that they received this letter. [11] Following the aforesaid exchange of correspondence the respondents launched an application in which they sought a declaratory order that the agreement of sale had not been lawfully cancelled. Also sought was a mandamus to compel the appellants to comply with their obligations and to pass transfer to them of the property sold.
[12] The application initially came before Snyders J who on 24 March 2004 referred same for the hearing of oral evidence on a number
of specified issues. It thereafter came before De Jager AJ (the court below) who by consent granted the following order:
“A separation of issues is ordered in terms of Rule 33(4) and this court will determine and make a ruling on the following issues:
1.
Whether the appellants were validly placed in mora by the respondents by means of a letter dated 5 January 2004 (Annexure ‘B’
to the respondents’ answering affidavit – page 63)?
2. Does Annexure ‘C’ (page 64 of respondents’ answering affidavit) represent a written acknowledgement of receipt of the mora letter referred to above?” (Annexure “C” is the facsimile transmission dated 6 January 2004.) [13] After the hearing of evidence the learned judge ruled as follows:
“1.
The letter dated 5 January 2004 is not a valid letter of demand as anticipated and prescribed in
clause 8 of the agreement of sale dated 16 October 2003. The applicant was therefore not validly placed in mora.
2.
The letter Annexure ‘C’ to the respondents’ answering affidavit represents a written acknowledgment of receipt of
the mora letter referred to.
3.
The parties are given leave to enrol the matter to argue an appropriate costs order in the light of the determination arrived at.
4.
If no arrangements for re-enrolment is made in consultation with the trial-judge and the deputy-judge-president within 7 days from the date hereof, the
following costs order will be applicable: The respondents shall pay the costs of the application and the hearing.”
[14] The appellants appeal with leave of the court below against the finding that the letter dated 5 January 2004 is not a valid letter of demand as prescribed in clause 8 of the agreement of sale, and that the respondents were not validly placed in mora. The respondents cross-appeal against the finding that Annexure “C” to the respondents’ answering affidavit (the facsimile transmission dated 6 January 2004) represents a written acknowledgement of receipt of the appellants’ letter. [15] The court below concluded that the appellants’ letter of 5 January 2004 was prematurely sent. It reasoned that a party seeking to enforce a lex commissoria had strictly to adhere to the conditions entitling it to do so. Clause 8.1 stipulates that notice may be given “if either party is in breach of any terms or conditions hereof …”. This wording precluded the making of a demand or issuing of a notice if the breach was not in existence. As the respondents had until midnight on 5 January 2004 within which to provide the requisite guarantees Lench’s letter, which was purportedly delivered to the respondents at about 17h00 on 5 January 2004, was premature and ineffectual. [16] The learned judge also was of the view that the appellants’ letter was defective in that it afforded the respondents less time than they were entitled in order to provide the guarantees. The letter erroneously stipulated that the ten day period in clause 8 was to expire on 15 January 2004 whereas in fact, based on the proper legal rules of computation, the respondents were entitled to deliver the guarantees by 16 January 2004. The learned judge placed reliance on Nell v Mulbarton Gardens (Pty) Ltd 1976 (1) SA 294 (W) at 297H. where in relation to a similarly worded provision it was held that the period was to be calculated so that the day of posting or delivery of the letter should be excluded. [17] It is my respectful opinion the court below fell into error by failing to give effect to the true import of the appellants’ letter of 5 January 2004. On a proper interpretation thereof the notice was only intended to have effect if and when the respondents fell into breach. In the third and fourth paragraphs thereof the respondents were specifically informed that should the guarantees not be received by 5 January 2004 they would be “regarded as being in breach” and in this event were given notice to furnish the required guarantees within ten days from 6 January 2004. Although the letter was prematurely delivered, in the sense that the respondents had until midnight on 5 January 2004 to deliver their guarantees, once they fell into breach the appellants had every right to invoke the notice provision and the notice given would have become effectual. Compare Phone-A-Copy Worldwide (Pty) Ltd v Orkin and Another 1986 (1) SA 729 (A) at 751A-C.
[18] The fact that the respondents were given until 15 January 2004 to comply with their obligations is also of little consequence.
The mention of an inadequate or wrong period in which to remedy the default does not invalidate the notice. It was not a requirement
of clause 8 that a date for compliance be fixed. All that was required was that the respondents be given notice of their breach.
The mistaken signification of the period in such circumstances does not invalidate the act placing the respondents in mora. See Tangney and Others v Zive’s Trustee;
1961 (1) SA 449 (W) at 453F-H. and S A Wimpy (Pty) Ltd Tzouras.
1977 (4) SA 244 (W) at 249A-C and cases there cited.
[19] It was permissible for the appellants to indicate in advance in their letter of 5 January 2004 that the agreement would be regarded as cancelled if the guarantees were not furnished by the expiry of the ten day period. In Nel v Cloete 1972 (2) SA 150 (A) at 163H-164A. it was held that where a creditor envisages possible cancellation as a result of mora it can, in the notice placing the debtor in mora, also state that on failure to perform within the period fixed that it reserves the right to withdraw from the contract. The fact that the purported cancellation may have been premature in the sense that the appellants stated that they would regard the contract as cancelled after the ten day period made no difference. Once the respondents fell into breach the cancellation became effectual, since at that stage the appellants still intended to cancel the contract. Their continued intention to cancel is evident from the letter of 19 January 2004. The position that obtains is aptly described by Viljoen J in Chesterfield Investments (Pty) Ltd v Venter: 1972 (2) SA 19 (W) at 26H-27A.
“… (I)t is to my mind immaterial whether the seller relies on the original premature cancellation or whether he cancels afresh after the time for performance has expired, because the premature cancellation has in the meantime matured into a perfectly effectual cancellation and his persistence in his former attitude shows that that he is still of the same mind as before – a state of mind which, subject to the reservations stated above, he could have
altered, if he had so wished, after the date of maturity of the right to cancel.”
Viljoen J continues as follows at 27E:
“The original cancellation may be premature and of no force or effect, but if, at the date on which the seller is entitled to cancel, he evinces an attitude that the contract has been cancelled, I do not think
it matters whether he relies on the original premature cancellation or on a fresh cancellation, save, maybe, if the date upon which his cause of acts arose becomes
important.”
[20] I turn now to the question whether there has been proper delivery of the appellants’ letter. It is settled law that unless the contrary is agreed a notice of cancellation has to be brought to the mind of the debtor. The respondents have chosen a domicilium citandi et executandi for the delivery of all documents and process. The purpose thereof is to relieve the party causing service of the notice from the burden of proving actual receipt. All that is required of a party relying on a domicilium is to effect delivery in the manner required by the contract. See Loryan (Pty) Ltd v Solarsh Tea and Coffee (Pty) Ltd. 1984 (3) SA 834 (W) at 847G-H and cases there cited. By choosing a domicilium the respondents have taken upon themselves the risk that the notice may not come to their attention. [21] Clause 8 of the agreement requires that there be “hand delivery to the domicilium address of a written notice …”. What this presupposes is hand-delivery in any appropriate manner by which in the ordinary course the notice would come to the attention of and be received by the respondents. Acceptable methods would include handing of the notice to a responsible employee, pushing it under the front door, or by placing it in a mailbox. Loryan supra at 849B. But what is the position where none of these methods of delivery is possible? In the present case the chosen domicilium chosen is a unit which is situated within a complex of townhouses and which is inaccessible to members of the public. Access to the respondents’ unit could only be obtained through a main gate which was restricted to townhouse owners or authorised persons and there was no pedestrian entrance. There was no post-box at which the notice could be left. Attempts made by Lench to raise the respondents by means of the intercom system proved futile. I am satisfied that in these circumstances the only obvious and reasonable method to effect delivery would have been to affix the notice to the main gate as Lench had done. Appending the letter to the main gate was an appropriate method of ensuring that same would in the ordinary course come to the attention of and be received by the respondents. [22] Even in cases involving unoccupied or vacant land it has been held to be sufficient service if the document is affixed to a door, wall or pole. In the case of I’ons v Freeman and Frock 1916 WLD 64. the domicilium chosen was a vacant plot of ground and the defendants no longer used the premises. Service was affected by affixing the summons to a pole. In Lindup v Lowe 1935 NPD 189. it was held that where service is effected at a domicilium citandi chosen by the defendant which is not in occupation by the defendant or any person who can be regarded as representing him a copy of a summons should be left at that place or where the place is vacant, affixed to the door or wall. In the present case the domicilium chosen is not vacant land or property which is unoccupied and in the circumstances the case for attaching the written notice to the main gate is stronger. [23] It follows (1) that the appellants’ letter dated 5 January 2004 embodied a valid notice as prescribed in clause 8 of the agreement of sale; (2) that such notice was properly delivered to the respondents at their chosen domicilium and (3) that the respondents were validly placed in mora by the appellants. The agreement of sale dated 16 October 2003 was accordingly validly cancelled by the appellants. These findings render it unnecessary to give consideration to the cross-appeal which falls to be dismissed.
[24] For these reasons the application in the court below should have been dismissed and the appeal must succeed.
[25] The following order is made: 1.
The appeal is upheld with costs.
2.
The order of the court below is set aside and substituted by the following:
“The application under case number 04/2048 is dismissed with costs.
3.
The cross-appeal is dismissed with costs.
_________________________
P BORUCHOWITZ
JUDGE OF THE HIGH COURT
I agree:
_________________________
K SATCHWELL
JUDGE OF THE HIGH COURT I agree: _________________________
B H MBHA
JUDGE OF THE HIGH COURT FOR THE APPELLANTS ADV J L KAPLAN INSTRUCTED BY M A CIROTA ATTORNEYS FOR THE RESPONDENTS ADV E F DIPPENAAR INSTRUCTED BY HORWITZ INC DATE OF HEARING 7 SEPTEMBER 2005 DATE OF JUDGMENT 10 NOVEMBER 2005 |