Lombard and Another v Okhionks (46878/2012) [2013] ZAGPPHC 384 (18 December 2013)

IN THE GAUTENG HIGH COURT. PRETORIA

(REPUBLIC OF SOUTH AFRICA)

CASE NO: 46878/2012

DATE: 18 DECEMBER 2013

NOT REPORTABLE

NOT OF INTEREST TO OTHER JUDGES

IN THE MATTER BETWEEN

STEPHANUS GERHARDUS LOMBARD.......................................................FIRST APPLICANT

WILNA LOMBARD.................................................................................SECOND APPLICANT

AND

KEVIN OSARO OKHIONKS................................................................................RESPONDENT

JUDGMENT

KOLLAPEN J:

INTRODUCTION

1. The applicants have launched these proceedings in terms of which they seek the following relief:

i. That the written agreement of sale entered into between them and the respondent in respect of the property known as Stand Number 3100, Brooklands, Kosmosdal be declared to have been validly cancelled;

ii. That all amounts paid to the applicants by the respondent be declared forfeited by the respondent in terms of the ‘roukoop ’ clause and that the applicants be entitled to retain all amounts paid to them by the respondent; and

ii;. Costs of the application.

2. The respondent opposes the grant of the relief sought.

BACKGROUND

3. It is common cause that on the 24th of March 2010. the applicants sold to the respondent the property' known as Stand 3100. Brooklands.

Kosmosdal, a vacant erf for a purchase consideration of R350 000-00 (three hundred and fifty thousand Rand).

4. It was an express term of the agreement that the purchase price would be paid as follows:

i. R250 000-00 (two hundred and fifty thousand Rand) as a deposit upon acceptance of the offer by the seller (the applicants); and

ii. The balance of R100 000-00 (one hundred thousand Rand) would be payable by the purchaser (the respondent) 10 (ten) days prior to the registration of transfer of the property into the name of the purchaser.

5. The respondent paid the deposit of R250 000-00 in two instalments and made a further payment of R40 000-00 (fourty thousand Rand) towards the purchase price leaving a balance of R60 000-00 (sixty thousand Rand). This amount had become due and payable in terms of the agreement but the respondent failed to make payment as required.

6. On the 14th of September 2010 the applicants, as they were required to in terms of the written agreement, gave the respondent notice to remedy the breach within seven days, which the respondent failed to do. The applicants were as a result thereof entitled to either cancel the agreement and retain all monies paid as 'roukoop' or enforce performance in terms of the agreement.

7. The applicants elected to enforce performance of the agreement and on the 4th of October 2011, launched proceedings out of this Court requesting an order for specific performance against the respondent.

8. The parties were able to reach a settlement of those proceedings which culminated in the settlement agreement being made an order of Court on the 4lh of October 2011. The settlement provided that the respondent w'ould make payment to the applicants in the sum of R90 000-00 (ninety thousand Rand) at the rate of R12 857-15 (twelve thousand eight hundred and fifty seven Rand and fifteen cents) for seven months, commencing on the 7th of October 2011. It would appear that the sum of R90 000-00 comprised the outstanding purchase price of R60 000-00 (sixty thousand Rand) and a further amount of R30 000-00 (thirty thousand Rand) being in respect of damages represented by levies, rates and interest.

9. The respondent made three payments following the settlement agreement in the total sum of R30 000-00 (thirty thousand Rand), being R10 000-00 on the 21st of November 2011. a further R10 000-00 on the 5th of December 2011 and another payment of R10 000-00 on the 24th of February 2012. There was some exchange of correspondence between the attorneys representing the parties, which related to the interpretation of the settlement agreement and the amount that the applicants allege became due in terms of that agreement - this in the main related to the liability for rates, levies, legal costs and interest.

10. On the 8th of June 2012, attorneys for the applicants advised the respondent that due to the breach of the agreement on the part of the respondent, the applicants now "irrevocably cancel the Agreement of Sale and any and all other agreements reached afterwards in an attempt to settle the matter'.

11. On the 15th day of August 2012. the applicants launched these proceedings which the respondent opposes.

12. On the 10th of April 2013, the respondent made a further payment in the sum of R30 000-00 (thirty thousand Rand) tow ards the payment of the purchase price. The applicants accepted this payment as being a payment towards the purchase price and indeed at the hearing of this matter, it wras common cause that the original purchase price of R350 000-00 had been paid in full, the last payment towards it having being made on the 10th of April 2013.

13. The applicants’ attorneys wrote to the respondent's attorneys following the payment of R30 000-00 on the 10th of April 2013 and took the following positions:

13.1 That the agreement had been validly cancelled;

13.2 That the payment of R 30 000-00 did not re-instate or revive the agreement;

13.3 That upon payment of a further sum of R123 645-26 representing property and legal costs being made by the 31st of May 2013. the applicants will revive the agreement and transfer the property.

14. It is common cause that no further payments have been made.

THE ISSUES IN DISPUTE

is. The following are the issues in dispute, namely:

15.1 Was the agreement validly cancelled or did the applicants, in seeking specific performance, bind themselves to that election and did the payment of R30 000-00 in April 2013 have the effect of reviving the agreement?; and

15.2 If the agreement was validly cancelled, is the amount the applicant seeks as 'roukoop\ out of proportion to the prejudice suffered by it as contemplated in Section 3 of the Conventional Penalties Act 15 of 1962?

ANALYSIS

16. On the facts before me it is evident that when the respondent breached the original agreement by failing to pay the balance of the purchase consideration of R60 000-00, the applicants were entitled, as they did, to seek specific performance. Of course they could have elected to cancel the agreement but at the time they chose not to cancel it and thereafter they were bound by the election they had made.

17. The settlement agreement concluded after the launch of the action for specific performance resulted in the variation of the original agreement of sale and when that varied agreement was breached, the applicant w7as once again entitled to make an election with regard to whether it would cancel or seek specific performance. It could hardly be contended’ as the respondent has sought to do. that the election by the applicants to seek specific performance in October 2011 wrould be binding in perpetuity on the applicants.

is. Under those circumstances I am satisfied that when the applicants elected to cancel the agreement on the 8th of June 2012, they were both entitled to do so and justified in doing so. with the respondent clearly being in breach of the sale agreement as varied by the settlement agreement.

19. It is what transpired thereafter and in particular during April 2013 that is a matter of concern. On the applicants' version, the agreement was cancelled as long ago as June 2012 and wrhat falls to be determined is the effect of the payment of R30 000-00 in April 2013. The following is relevant in this regard:

19.1 The payment made by the respondent was made towards the purchase price and the applicants accepted it as payment towards the purchase price. In fact at the hearing of the matter Mr Keet for the applicants accepted this and agreed that the purchase consideration of R350 000-00 as reflected in the original agreement had been paid in full;

19.2 The payment made on the 10th of April 2013 w?as made after the applicants had elected to cancel the agreement and had notified the respondent of this election on the 18th of June 2012;

19.3 As at the 10th of April 2013 there w as. from the applicants' perspective, no valid agreement in existence.

20. Out of this arises the question as to whether a party who has elected to cancel may thereafter accept performance in terms of a contract that has been cancelled, and if it does accept performance, does doing so revive the contract?

21. While the applicants' attorneys in their letter of the 26th of April 2013, took the stance that the agreement was not revived, what they proceeded to do however was to accept the payment made and allocate it towards payment of the purchase consideration in an agreement they contend had been validly cancelled. If the agreement was validly cancelled, what was the basis upon which the payment of R30 000-00 was accepted?

22. It is trite that a part}' may not approbate and reprobate at the same time. In FAULKNER v FREEMAN 1985 (3) SA 555 CPD the following was said in this context:

‘It is trite law that, where a party to a contract alleges material non¬disclosure, he may not approbate and reprobate, but must

elect which course he intends to follow - he must exercise an election whether to abide by or cancel the contract and he is bound

by his election. The fact that the contract has been incorporated in a Court order cannot improve his position as far as this principle is concerned. ’

23. The decision by the applicants as evidenced in their attorney's letter of the 8th of June 2012 represents such a clear and unequivocal election and it must accordingly follow that they were bound by this election.

24. Was the subsequent conduct of the applicants in receiving and retaining further payment after the election to cancel was made,

consistent with this election? In BEKAZAKU PROPERTIES (PTY) LTD v PAM GOLDING PROPERTIES 1996 (2) SA 537 CPD. the Court beyond affirming the above principle pointed out that where a material breach occurs, 'the remedies available to the innocent party are inconsistent. The choice of one necessarily excludes the other, or. as it is said, he cannot both approbate and reprobate/ (at 542E)

The Court went on deal with the test and approach to be taken and in this regard remarked as follows:

7/7 determining whether an election has taken place, the current state of authorities favours regard being had to objective manifestations of an election only, rather than taking subjective factors into account. If the innocent party with full knowledge of his rights performs an unequivocal act from which a reasonable person would necessarily infer that he elected to affirm the contract, he would be bound thereby, whatever subjective reservation he might have had.'

The Court also referred with approval to the dicta of TINDA-TT JA in VAN SCHALKWYK v GRJESEL 1948 (1) SA 460 AD at 473 in the following terms:

Whether a plaintiffs conduct disentitling him to claim rescission is called a waiver of his right or an election after repudiation not to enforce that right, or whether the correct terminology is that the plaintiff ‘cannot both approbate and reprobate as was said in Bowditch v. Peel and Magill (1921, A.D. 561, at p. 573), is not important. Whether a plaintiffs conduct must be held to so disentitle him is a matter of inference depending on the facts of the case and the nature of the particular contract.'

25. Applying those principles and the objective test to the actions of the applicants, the following emerges:

25.1 If no agreement existed because it had been cancelled, then there was no basis upon which they could have received, accepted and retained the payment of R30 000-00 other than through reviving the agreement:

25.2 In their letter of the 26th of April 2013. they took the stance that the agreement had not been revived but they did not offer an explanation nor did they provide a basis by which they would retain the payment and allocate it towards the purchase consideration:

25.3 What is important is not what the}' say but objectively speaking, the conclusions that may be reasonably drawn from their actions. The letter of the 26th of April 2013 expressly states that the agreement will be revived upon payment of the sum of R123 645-26. If that is the case it could hardly be contended that the agreement was not in fact revived when the applicants elected to accept the payment of R30 000-00;

25.4 In the circumstances there simply is no other way to explain the acceptance of the payment of the sum of R30 00-00 other than to conclude that objectively speaking, the agreement was revived;

25.5 If the applicants at the time the payment of R30 000-00 was received, remained steadfast in their intention to persist with the cancellation of the agreement, they had the choice of returning that payment of R30 000-00 to the respondent. There was conceivably no basis to retain it as damages or as a penalty, bearing in mind that up to that stage they had received the sum of R320 000-00 which they contended they were entitled to retain as a penalty. In any event there was simply no suggestion to the respondent that the money was being received as anything other than payment of the purchase consideration;

25.6 Viewed from the perspective of a reasonable person, the performance by the respondent in making a payment in terms of the agreement and the unconditional acceptance of that payment as part of the contractual consideration, can only lead to one inference, namely that the actions of the applicants demonstrated an election to affirm the contract.

26. The stance of the respondent in these proceedings is that he continued to perform even after the cancellation of the agreement.

That performance was accepted by the applicants and under such circumstances it was not open to the applicants to. as it were,

approbate and reprobate. The election they made in full knowledge of their rights, to accept the performance, is binding on them and they must accept the consequences that go with it.

27. In the circumstances I am not satisfied that the applicants are entitled to the declaratory relief they seek confirming the

cancellation of the agreement.

COSTS

28. When the proceedings were launched in August 2012. the applicants were well w ithin their rights to bring this action and certainly at that stage were entitled to the relief they sought. The changed circumstances that subsequently came about and to which reference has been made, have had the effect of disentitling them from the relief they seek.

29. The Court has a wide discretion with regard to the awarding of costs which discretion, of course, must be judicially exercised. My view is that even though the applicants have not been successful, the circumstances of the matter do not justify the ordinary approach that costs should follow the result. It would be just and equitable that no order as to costs be made.

ORDER

30. In the circumstances I make the following order;-

i. The application is dismissed:

ii. No order is made with regard to the costs of the application.

N KOLLAPEN

JUDGE OT THE GAUTENG HIGH COURT. PRETORIA

46878 '2012

HEARD ON: 12 NOVEMBER 2013

FOR THE APPLICANTS: ADV F de W KEET

INSTRUCTED BY: STEYN KINNEAR INC (ref: Venter/Bester/L441)

FOR THE RESPONDENT: MR T PILLAY

INSTRUCTED BY: PILLAY THESIGAN ATTORNEYS (ref: OHI/LIT/0027/13)