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IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

 

Case No: 59/2014

21/9/2015

NOT REPORTABLE

NOT OF INTEREST TO OTHER JUDGES

REVISED

 

 

In the matter between:

BONDEV MIDRAND (PTY) LIMITED                                                                     Applicant

and

SINKY MOSES LETSHOLO                                                                      First Respondent

LERATO LETSHOLO                                                                           Second Respondent

REGISTRAR OF DEEDS                                                                         Third Respondent

NQABA GUARANTEE SPV (PTY) LTD                                                Fourth Respondent

DATE OF HEARING                                                                                 03 AUGUST 2015

DATE OF JUDGMENT                                                                       21 SEPTEMBER 2015

 

JUDGMENT

 

MANAMELA AJ

 

Introduction

[1] The applicant, a property developer, sold for R440 000.00 what appears to be an empty piece of land in Midstream Estate[1] (the property) to the first and second respondents on 02 March 2010.[2] The transfer was registered on 10 July 2010. The transfer was subject to a few conditions, including the following:

“The Transferee and his Successors in Title will be liable to erect a dwelling on the property within 18 (EIGHTEEN) months from 27 March 2006, failing which the Transferor will be entitled, but not obliged to claim that the property is transferred to the Transferor at the cost of the Transferee against payment by the Transferor of the original purchase price, interest free. The Transferee shall not within the said period sell or transfer the property without the Transferor's written consent. This period can be extended at the discretion of the Developer.”[3]

[underlining added for emphasis]

[2] I henceforth refer to the condition quoted above as the building time limit. The applicant has decided to exercise the option in the building time limit and seeks re- transfer of the property back from the first and second respondents. As required as part of exercising this option, the applicant tenders the refund of the purchase price, but accordingly requires the re-transfer to be at the first and second respondents' expense. The application is opposed only by the first and second respondents, but is without prejudice to the rights of the fourth respondent as bondholder over the property.[4] The first and second respondents (the respondents) contend that the applicant is reneging from the latest arrangement or agreement to extend the building time limit, which couldn't be consummated due to a supervening impossibility. Therefore, a brief factual background of the matter is necessary.

 

Brief factual background

[3] The following is the brief background to this matter based on the common cause facts. As already stated above, the property was sold to the respondents on 02 March 2010 and registration of transfer of title passed on 10 July 2010.

[4] To give effect to the building time limit which has already passed by the date of transfer, the parties agreed on 19 April 2010 to extend the period by 12 months to 19 April 2011.[5]  However, the respondents could still not erect a dwelling on the property by the expiry of the extension. The applicant launched these proceedings in January 2014. Thereafter, there were interactions between the parties regarding a further extension. The conditions for this further extension are the critical part of a determination I have to make herein. There is contending views by the parties in this regard. I deal with these next.

 

Applicant's Case

[5] Chief amongst submissions on behalf of the applicant is that, despite the extensions and other delays before and after initiating these proceedings, the respondents have not only failed to erect a dwelling, but to furnish confirmation or proof of an approved building loan. The building loan was one of the conditions imposed by the applicant for the further extension of the building time limit sought by the respondents in February 2014.[6]

[6] It is common cause that three conditions were set by the applicant before granting another extension of the building time limit. The respondents were required to provide proof of building loan approval within 7 days from 07 February 2014; sign a document for the extension and pay an amount of R50 000.00 to the applicant as penalty.[7] The respondents did not provide proof of the building loan within the prescribed time period, but paid the penalty. There is a dispute as to whether they signed the extension document. The applicant contends in this regard that the respondents did not sign[8] and the respondents submit to the contrary.[9]

[7] The applicant submits that the only issue to be determined is whether the parties agreed on an extension of the building period after service of the applicant's papers in January 2014.

 

Respondents' case

[8] As indicated above, the respondents do not dispute the fact that there is a building time limit or make any issues regarding the fact that by the time they bought the property the building time limit had already expired.[10] They admit that they were unable to erect a building within the first 12 months' extension, hence they requested more time from the applicant.

[9] They originate their submissions from the notice sent by the applicant after the expiry of the 12 months period putting them on terms.[11] They submit that they did not receive the notice as it was mailed to a wrong street address and electronic mail address.[12] However, they do not say what they would have done differently if they received the letter. They also dispute service of the application and say they were alerted to this by an employee of the fourth respondent.[13] This is when they started the discussions with the applicant to have the building time limit extended, they submit.

[10] Regarding the applicant's offer in terms of the letter of 07 February 2014, they submit that they complied with two of the three conditions. They paid the amount of R50 000. 00 on 26 February 2014 and signed the extension document. They argue that the applicant is to blame for them not getting a building loan. They say that, as long as this matter is pending, they would not be able to get a loan. In other words the current proceedings should be halted for them to meet the third condition [provide proof of a loan] for an extension of the building time limit. They say that there is a caveat or note of a third party attachment against title of the property in the records of the third respondent.[14] They argue that this constitutes an impossibility of performance and the applicant is not blameless in this regard.[15]

[11] The respondents extend their argument on impossibility of performance and submit that they should be considered to have complied with the conditions or requirements of the latest extension. They even further expand this submission, somewhat rather bizarrely in my view, to include that the impossibility does not excuse the applicant from fulfilling some obligations in terms of the offer made for a further extension so that the respondents can get a loan.[16] I am not aware of any performance expected or due by the applicant in this regard, unless this refers to the removal of the caveat.[17] Placed in proper context, the respondents are seeking this court to direct the applicant to take steps for the removal of the caveat. This clearly amounts to a counterapplication and should have been properly made.[18] I will deal with this later.

 

Legal principles and facts of this matter

[12] I expressed my concerns regarding the fact that, whilst transfer or registration of title in the names of the respondents only took place on 10 July 2010, the respondents were already bound to erect a building from as far back as 27 March 2006. I mentioned the fact that the agreement or the particular condition may, as a result, be unenforceable due to impossibility of performance. Mr Stone for the applicant submitted, without necessarily conceding that this was so, that, if there was any impossibility of performance, the initial extension of the building time limit for 12 months from 19 April 2010 constituted a new enforceable agreement in this regard. As stated above, Ms Maite for the respondents argued an impossibility of performance of a different nature: the existence of a caveat in the Deeds Registry due to these legal proceedings. She did not argue that the imposition of the initial building time limit was impossible to be met by the respondents by way of performance. I briefly deal next with the concept of impossibility of performance in contracts from a common law perspective. There are other perspectives, but I will avoid a longer detention on the subject.

[13] In The Law of Contract in South Africa[19] the concepts of illegality and unenforceability from a common law point of view is discussed from mainly two cases. Firstly, the judgment of Sasfin (Pty) Ltd v Beukes 1989 1 SA 1 (A) (Sasfin) and secondly, the matter of Botha (now Griessel) v Finanscredit (Pty) Ltd 1989 3 SA 773 (A) (Botha (now Griessel)). In consideration by the courts was whether judges were to be bold or cautious in making declarations involving unenforceability. In Sasfin the court quoted from Eastwood v Shepstone 1902 TS 294 (302) and sought to strike a balance between boldness and caution by adding:

“No court should therefore shrink from the duty of declaring a contract contrary to public policy when the occasion so demands. The power to declare contracts contrary to public policy should, however, be exercised sparingly and only in the clearest of cases, lest uncertainty as to the validity of contracts result from an arbitrary and indiscriminate use of the power. One must be careful not to conclude that a contract is contrary to public policy merely because its terms (or some of them) offend one's individual sense of propriety and fairness.”[20]

[14] The court had an opportunity to deal with the above words in Botha (now Griessel) and Hoexter JA said the following regarding the principles from Sasfin:

“In such an investigation … there must be borne in mind: (a) that, while public policy generally favours the utmost freedom of contract, it nevertheless properly takes into account the necessity for doing simple justice between man and man; and (b) that a court's power to declare contracts contrary to public policy should be exercised sparingly and only in cases in which the impropriety of the transaction and the element of public harm are manifest.”[21]

[15] The statements from the two decisions are very informative regarding unenforceability due to, among others, impossibility of performance. I also had an opportunity to consider two unreported decisions of this division. Both of them appear to deal with the same property developer as herein and perhaps even the same development. One is by Fabricius AJ (as he then was) in Bondev Developments (Pty) Ltd v Plenty Properties 60 (Pty) and Others (North Gauteng Case NO.: 43602/08 (Plenty Properties) and the other is by Du Plessis J in Bondev Developments (Pty) Ltd v Mosikare and Others (North Gauteng Case NO.: 50391/08 (Mosikare). Both matters dealt with building time limit similar to the one in contention in this matter.

[16] In Plenty Properties the building time limit was for a period of 12 months from 14 November 2005. The respondent had purchased the property on 14 November 2008 from the first purchaser. The respondent had also on-sold the property to a third party, who appears to be still awaiting transfer. Fabricius AJ (as he then was) held that:

“It is clear that no date for the expected performance in terms of this condition is fixed an d such performance could obviously not occur within one year after 14 November 2005”[22]

The learned judge then concluded that:

“ ... the term was not and could not be complied with by either the first purchaser or the first respondent. On its literal interpretation it cannot be enforced and was not sought to be enforced.”[23]

[17] In Mosikare Du Plessis J considered the views expressed in Plenty Properties. He held that, the fact that the second purchaser took transfer after the building time limit had expired does not mean that there is no longer a building time limit, but meant that when the purchaser took transfer he was already in mora in respect of the obligation to build.[24] The learned judge pointed out that, obligations are extinguished when they are performed, other than through waiver or prescription. He added the following before declining to follow the views expressed in Plenty Properties:

“A time for performance had been stipulated in the condition. On expiry of the stipulated time, the obligation had to be fulfilled immediately and had to be completed within a reasonable time.”[25]

[18] It is clear that both matters dealt with a situation involving a second or third purchaser and therefore, in a way, are distinguishable from this matter. In this matter, the respondents appear to be original purchasers, but it may well be that the applicant, as the developer was the original purchaser. However, in my view, this does not justify derogation from the principles shared and conclusion reached by Du Plessis J in Mosikare. I agree with the decision in Mosikare that the obligation remains despite the lapse in the building time limit and therefore the requirement to erect a dwelling will - in the absence of stipulated time period – have to be within a reasonable time. However, as stated above, all these appear to be superfluous because the parties have decided to locate their arguments elsewhere, despite my views at first blush about impossibility of performance relating to the building time limit.

[19] In conclusion on the issue of impossibility of performance, I return to the respondents' submissions of impossibility of performance due to the caveat. I expressed a concern that this appears to be an application for relief by the respondents which should have been properly couched in terms of law and rules of this court. However, matters of form aside, there is - with respect - no substance in these submissions. The applicant issued this application in January 2014 and the respondents have not sought to argue that this was an improper step in terms of the agreement or any sort of arrangement between the parties. Therefore, an arrangement initiated later cannot invalidate a preceding valid step taken by a party in order to enforce its contractual rights. Besides, the applicant is not to blame for existence of the caveat, as this appears to be a normal consequence in matters relating to deeds registry, once proceedings of this nature are initiated. There is no evidence suggesting that the applicant took steps to ensure that the caveat or note is reflected in respect of the property in the records of the third respondent.

 

Conclusion

[20] Once I have decided against that the existence of the caveat [against the property in the deeds records] does not avail the respondents, it follows that the

respondents did not fulfil the third condition in the February 2014 arrangement to extend the building time limit. Therefore, there is breach in this regard, and the applicant is entitled to exercise the option for a re-transfer of the property back from the respondents. The ancillary orders sought are in terms of the contract or in case the respondents do not cooperate with the ordered process.

 

Order

[21] In the result, the following order is made:

1. the first and second respondents are ordered to take the necessary steps reasonably required for the re-transfer of Erf 1746  Midstream Estate Extension 20 Township, Registration Division J.R., Province Gauteng, measuring 600 (six hundred) Square Metres and held by Deed of Transfer T47238/2010 (the property) to the applicant.

2. the first and second respondents are to bear the costs associated with the order in 1 hereof.

3. the applicant is to pay to the first and second respondents the amount of R440 000.00 (four hundred and forty thousand rand) against transfer of the property in terms of the order in 1 hereof.

4. the first and second respondents are directed to sign all documents and take all steps reasonably required to give effect to the order in 1 hereof, within a period of 7 days from date of such request by the applicant and/or on the applicant's behalf.

5. should the first and second respondents refuse and/or fail and/or neglect to sign the relevant documents to give effect to the order in 1 and 4 hereof, then the Sheriff or Deputy Sheriff of this court is authorised and directed to sign all necessary documents on their behalf for the transfer of the property against payment of the amount of R440 000.00 (four hundred and forty thousand rand) less costs payable to the Sheriff; transfer fees; clearance fees at the local authority and the relevant homeowners association in respect of the transfer or the fourth respondent. to discharge any indebtedness in respect of the bond secured over the property.

6. the applicant is entitled to have this order registered by the third respondent.

7. the orders in 1 to 6 hereof are without prejudice to the rights of the fourth respondent as bondholder over the property.

8. the first and second respondents are ordered to pay costs of this application.

 

_________________

K.LA.M MANAMELA

Acting Judge of the High Court

 

APPEARANCES

 

For the Applicant:                Adv. JS Stone

Instructed by:                      Tim du Toit & Company Inc.

                                                 Pretoria

 

For the Respondent:           Adv. L Maile

Instructed by:                      Ntabeni Attorneys

                                                 Pretoria

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