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IN THE KWAZULU-NATAL HIGH COURT

HELD AT PIETERMARITZBURG.

APPEAL NUMBER : AR312/08

In the appeal of:-

VISHNU VIRABADHRAN NAIDOO First Appellant

MOGARANI NAIDOO Second Appellant

and

POOVENDHEREN MOODLEY N.O. First Respondent

POOVENDHEREN MOODLEY Second Respondent

GONASEELAN MOODLEY Third Respondent

PARMASIVEN MANIKUM MOODLEY Fourth Respondent

THOLSIAMMA MOODLEY Fifth Respondent

______________________________________________________________________________

JUDGMENT

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VAN ZÿL, J:

1. This appeal is against an order for absolution from the instance, granted by the Magistrate, Kwadukuza (Stanger) on 31 March 2008. Appellants were plaintiffs and respondents, the defendants before the Magistrate. For convenience they will be referred to as such herein.

2. The present claim has its origins in a written agreement of sale admittedly concluded between the parties at Stanger on 26 March 2008 and a copy of which is annexure “A” to the Plaintiffs’ summons. In terms thereof defendants sold an immovable property described as Erf 169 Tinley Manor Beach, 1012 square metres in extent (“the property”) to the plaintiffs, a couple married to each other in community of property, for a purchase price of R360 000-00. The sale agreement reflects second defendant, acting in his capacity as executor in the estate of the late VEERAMMA MOODLEY (the deceased), together with second to fifth defendants, contracting in their capacities as the heirs of the deceased in the estate, as the sellers. It is also in these capacities that they were cited as the defendants in the present action.

3. In the action plaintiffs’ claim from defendants compensation, by way of damages for breach of contract, the costs allegedly incurred by plaintiffs in complying with the requirements of the Kwadukuza Municipality, in order to obtain the issue of a clearance certificate in terms of section 118(1)(b) of the Local Government: Municipal Systems Act 32 of 2000. Without such a certificate, which is one of the prerequisites for registration, registration of transfer is not legally possible.

4. It is convenient first to deal with the background to the present action, in order to understand the claim in context. The deceased was the late mother of the second to fifth defendants. She died on 29 October 2000. Unbeknown to the parties at the time of concluding the agreement of sale, no certificate of occupancy for the buildings comprising the dwelling on the property had ever been issued by the Kwadukuza Municipality in terms of s14 of the National Building Regulations and Building Standards Act 103 of 1977. Following the sale, various delays occurred, inter alia, as a result of the nominated conveyancer ceasing practice.

5. Eventually, however, a clearance certificate was requested from the Kwadukuza Municipality, within whose area of jurisdiction the property is situated. In response thereto and following upon a site inspection of the property, the municipality by notification, dated 25 May 2005, listed its requirements for the issue of a certificate of occupancy, pointed out that occupation without the sanction of such a certificate was a criminal offence and declined to issue the required clearance certificate until its requirements had been satisfied and an occupation certificate issued in respect of the property.

6. Without an occupation certificate, no clearance certificate could be obtained and without a clearance certificate, the registration of transfer of the property into the names of the plaintiffs, as purchasers thereof, was rendered impossible by virtue of the prohibitive provisions of s118(1)(b) of Act 32 of 2000.

7. In the light thereof plaintiffs adopted the attitude that defendants were liable to satisfy the requirements of the municipality for the issue of the required occupancy certificate. In response the defendants claimed that they had insufficient financial means to do so. An initial offer by plaintiffs to pay for the work required by the municipality and to deduct the total amount involved from the purchase price was unacceptable to defendants, who obtained informal information to the effect that “remedial work” to the property would cost in the region of R450 000-00. Subsequently they obtained formal quotations for construction work relevant to the property. These comprised a quotation dated 17 July 2005 from Anlo Construction for R475 000-00 and a quotation of 19 July 2005 from Multipro Construction (Pty) Limited for R492 000-00, both excluding value added tax.

8. By reason of these developments the defendants claimed to have held a meeting where it was decided that the projected cost of remedial work to the property would render such a course of action uneconomical. They accordingly resolved to resile from the agreement of sale. Through their attorneys and by letter dated 13 June 2005 plaintiffs were advised that the “...heirs of the Estate have elected to withdraw from the sale ...” while the “.. Estate cannot become involved in such dispute”.

9. Defendants’ repudiation of their obligations arising out of the agreement of sale was unacceptable to plaintiffs, who thereupon and by notice of motion dated 1 August 2005 initiated application proceedings under case number 10751/2005 in the Durban and Coast Local Division of the High Court. On 4 November 2005 and despite opposition by the defendants, the Court declared the sale binding upon them and directed defendants to perform their obligations arising out of the agreement in order to facilitate registration of transfer of the property into the names of plaintiffs.

10. In his answering affidavit filed in such application second defendant claimed, inter alia, that had the defendants realized, at the time of concluding the contract, the extent of the costs involved in satisfying the requirements of the municipality for the issue of a clearance certificate, they would not have concluded the sale of the property at the price as agreed upon. It followed, so he asserted, that defendants could never perform their obligations arising out of the agreement of sale and as a result were entitled to its cancellation. First plaintiff, in reply, inter alia, stated that “In any event, applicants have undertaken to pay the costs and accordingly it plays no role.”

11. At the trial before the Magistrate extensive reference was made on behalf of defendants to the plaintiffs’ undertaking aforementioned. Only second plaintiff was called as a witness for the plaintiffs before their case was closed. The Magistrate then appears to have taken the view that plaintiffs, prior to the registration of transfer, had agreed to accept responsibility for the costs and expenses involved in satisfying the requirements of the municipality for the issue of a certificate of occupation and had duly obtained such a certificate. In so doing they had waived their rights. Accordingly and upon registration the property was lawfully capable of occupation by the purchasers, so that no breach of the defendants’ obligations as sellers had occurred.

12. The agreement also contains a "voetstoots" clause (clause4) in terms of which the purchaser "…accepts the said property and any improvements thereon in its present order and condition." The Magistrate in addition appears to have adopted the view that even if the absence of an occupation certificate did not amount to a latent defect, then the municipal requirements relevant thereto did and that the voetstoots clause accordingly non-suited plaintiffs.

13. Mr Pillemer, who appeared for the plaintiffs in the appeal, drew attention to the provisions of clause 5.1 of the agreement of sale, which reads as follows:-

"5.1 Possession and occupation shall be given to the Purchaser on the date of registration of transfer, whereupon all risk and benefit relating thereto shall pass to the Purchaser."

14. In the light thereof Mr Pillemer submitted that the defendants were contractually obliged not only to give possession, but also occupation of the property upon registration of transfer. This he argued imported an implied term into the agreement that such occupation would also be lawful. For this submission he found support in the judgment of Goldblatt J in 1Van Nieuwkerk vs McCrae 2007 (5) SA 21 (W) where the learned Judge expressed himself as follows at page 28 D-E

" In my view when a residential property within the area of jurisdiction of a local authority is sold with a building on it the purchaser is entitled to assume that the building has been erected in compliance with all statutory requirements and that it can be used to its full extent. In my view this assumption is so obvious and self- evident that it is not necessary for it to be specifically set out in an agreement of sale and is implied as a matter of law in any agreement of sale relating to such property."

15. Accordingly, so the argument ran, the defendants were under obligation, at their cost, to satisfy the requirements of the municipality for the issue of an occupation certificate. In any event, pursuant to the agreement of sale the defendants as sellers were obliged to give registration of transfer of the property. In order to do so they had to obtain a clearance certificate in terms of section 118(1)(b) of Act 32 of 2000, without which registration of transfer was not legally possible. Since the municipality required also the issue of an occupancy certificate before it would issue the clearance certificate, it became the duty of defendants to attend thereto.

16. Mr Pillemer further submitted that defendants unlawfully sought to repudiate their duty to obtain these certificates and thereby breached their obligations arising from the agreement of sale. Plaintiffs, having rejected defendants' repudiation of the agreement, sought to hold defendants to their bargain. However, they faced the difficulty of defendants professed inability, either then or in the future, to be able to pay for the work required by the municipality before an occupation certificate would be issued. An order against defendants to compel transfer would also remain ineffective if defendants were financially unable to obtain a clearance certificate and no agreement could be reached for plaintiffs to finance the work required by the municipality and thereafter to deduct the expense incurred from the proceeds of the purchase price upon registration of transfer. Short of unilaterally commissioning and paying for the work required by the municipality and thereby securing the issue of the certificate of occupancy of the property, plaintiffs faced an indefinite stand-off. In order to obtain registration of transfer, plaintiffs then elected to mitigate their damages and pay for the work required by the municipality. The occupancy and clearance certificates were issued, transfer was duly registered and plaintiffs thereafter instituted the present action to recover, as damages for defendants' breach of their contractual duty, the costs incurred in satisfying the requirements of the municipality.

17. Waiver of rights is not presumed and the party alleging waiver bears the onus of proof in this regard. Clear proof is required to establish an intention to waive and if such intention is to be inferred from conduct, then the conduct needs to be unequivocal (See : Road Accident Fund v Mothupi 2000 (4) SA 39 (SCA), Nienaber JA at page 50, paragraph 19). In the present matter the passage from first plaintiff's replying affidavit referred to in paragraph 10 above and relied upon by the Magistrate, is equivocal - it merely records plaintiffs' undertaking to pay for the work required to satisfy the municipality. Whilst it does not indicate an intention to recoup such expenditure in the future from defendants, it also does not suggest any intention to abandon plaintiffs' claims to recovery. Second plaintiff, questioned by the Court, as follows "…You always believed that you would be in a position to recover it? " replied "That's correct, because it was the sellers' duty to have done that and it was for them to give us occupation.". In my view no waiver of plaintiffs' rights was established and the Magistrate erred insofar as he found otherwise.

18. The Magistrate's reliance upon the voetstoots clause contained in paragraph 4 of the agreement of sale also requires consideration. Mr Pillemer submitted that the lack of an occupation certificate and the expenditure required to obtain the belated issue thereof were not defects in the property itself, but instead constituted outstanding requirements for occupation. In this regard he relied upon another passage from the judgment of Goldblatt J in Van Nieuwkerk vs McCrae (supra) where the learned Judge sated at page 29 A - C ;

" It was further submitted by the defendant that the fact that the alterations had not been approved was a latent defect and that his liability in respect thereof was excluded by the fact that the property had been sold 'voetstoots'.

I do not agree with this submission. The term 'voetstoots' only excludes liabilities for latent defects of a physical nature in the merx but does not apply to the lack of certain qualities or characteristics which the parties have agreed the merx should have. (See Ornelas v Andrew's Café and Another 1980 (1) SA 378 (W) at 388G - 390C and the authorities cited therein.). "

19. In my view the lack of an occupation certificate and the work required by the municipality before it would issue one, are not defects of a physical nature relevant to the property and the defendants could find no protection under the voetstoots provisions of clause 4 of the agreement of sale. The Magistrate's apparent finding to the contrary is misplaced.

20. Mr Naidoo who appeared for the defendants in the appeal, also found himself in difficulty on another score. He was constrained to concede that, but for plaintiffs' undertaking as referred to in paragraph 10 above, defendants would have been contractually liable to procure the outstanding occupation certificate and pay for the work required by the municipality before it would issue the certificate. If such undertaking did not in law amount to a waiver of plaintiffs' rights to recover the expenditure involved from defendants, then it would be an offer by plaintiffs to discharge defendants' obligations in this regard, which offer defendants accepted, thereby varying or amending the terms of the agreement of sale. The difficulty to which this submission gave rise was that clause 8.1 of the agreement provides that -

"8.1 This Agreement constitutes the entire Agreement between the parties and no Agreement which is in conflict with the provisions hereof shall bind the parties unless it be in writing and signed by the parties."

21. So-called non-variation or entrenchment clauses are accepted as binding upon contractual parties in our law. Thus in 1De Villiers and Another NNO v BOE Bank Ltd 2004 (3) SA 1 (SCA), Navsa JA stated at page 17, paragraph 76 that -

" 1[76] The validity and binding nature of an entrenchment clause in a written contract, providing that amendments to an agreement have to comply with specified formalities, were reaffirmed by this Court in Brisley v Drotsky 2002 (4) SA 1 (SCA). Dealing with the motivations for such clauses this Court said the following at 11C - F:

'Partye doen dit deur vooraf ooreen te kom dat 'n kontrak alleen dan tot stand kom wanneer aan sekere formaliteite voldoen is. Die oogmerk is om geskille te beperk of uit te skakel. Natuurlik staan dit partye vry om die formaliteite te ignoreer en te handel asof 'n bepaalde Wet nie bestaan nie. Ontstaan 'n dispuut, is enigeen geregtig - en die Hof verplig - om die strikte reg toe te pas. En hoekom moet dit anders wees in vrye kontraksverband? Daar is ook 'n algemeen heersende mite dat hierdie tipe bepaling slegs ten bate van die ekonomies magtige bestaan en dat dit tot ongelykheid in kontraksverband aanleiding gee. Dit is waarskynlik waarom daar 'n beroep op die grondwetlike gelykheidsbeginsel gemaak word. Hierdie bepaling dien ter beskerming van beide partye. . . .'

A few lines further down (at 11F - G) the following appears:

'Die Shifren-beginsel is ''trite'' en die vraag ontstaan waarom dit, na bykans 40 jaar, omvergewerp moet word? Mens kan jou beswaarlik die handelsgevolge, regsonsekerheid en bewysprobleme wat gaan ontstaan, indink. . . .'

(Emphasis added.) "

22. In my view the further agreement, or consensus, between the parties relied upon by the defendants, the effect of which would be to relieve defendants of the obligation to pay for the work required by the municipality before it would issue an occupation certificate, offends against the entrenchment provisions of cause 8.1 of the sale agreement and is accordingly rendered ineffective.

23. The Magistrate granted absolution from the instance at the end of plaintiffs' case. It is against that order that the plaintiffs seek to appeal. In my view a Court, applying its mind reasonably to the evidence certainly could or might have found for plaintiffs, so that absolution should not have been granted and the appeal must succeed. I see no reason why costs should not follow the result.

24. In the circumstances I would propose that the following order be granted upon appeal, namely:-

a. The appeal is upheld, with costs.

b. The order of absolution from the instance made by the Magistrate on 31 March 2008 is set aside and is replaced with an order dismissing Defendants' application for absolution, with costs.

c. The matter is referred back to the Court a quo to determine the remaining issues between the parties.

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I agree and it is so ordered.

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McLAREN, J.

Counsel:

For Appellants: Adv R. Pillemer, instructed by Goodrickes, Durban c/o J Leslie Smith Inc, Pietermatitzburg.

For Respondents: Adv D D Naidoo, instructed by Pranil Rajcoomar & Associates, Durban.

Matter argued on : 28 November 2008.

Delivered on : 12 December 2008.

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