Woodvale Farms (Pty) Ltd v Raymond Bojanic Inc and Others (2949/2011) [2012] ZAECGHC 13 (29 March 2012)

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE, GRAHAMSTOWN)

CASE NO: 2949/2011

Date Heard: 16 February 2012

Date Delivered: 29 March 2012

NOT REPORTABLE

In the matter between:

WOODVALE FARMS (PTY) LTD ….................................................................Applicant

and

RAYMOND BOJANIC INC …...............................................................First Respondent

WSM THOMPSON HOLDINGS CC …...........................................Second Respondent

RAYMOND BOJANIC …....................................................................Third Respondent

___________________________________________________________________

JUDGMENT

GOOSEN, J:

This is an application for specific performance in terms of an agreement of sale concluded in respect of an immoveable property. In terms of the notice of motion the applicant seeks an order:

Declaring that the first respondent is bound by the terms of the agreement of sale; and

Directing, within 7 days of the issue of the order that:

The first respondent effect payment to the applicant’s conveyancer of the sum of R530,000.00;

The first respondent effect payment of the costs of registration of transfer of the property; the costs of registration of a mortgage bond over the property; and the costs of registration of a surety mortgage bond over the property;

The third respondent be directed to sign all documents necessary to give effect to the registration of transfer and the registration of the said bonds.

In addition the applicant seeks certain ancillary orders in the event that the first respondent does not sign the necessary documents.

The applicant is a registered company and is the owner of Erf 1455, North End, Port Elizabeth (the property). On 20 September 2010 the applicant and the first respondent, represented by the third respondent, entered into a deed of sale in respect of the property. In terms of this agreement the first respondent undertook to pay to the applicant the sum of R2,650,000.00 against registration of transfer of the property. It was further agreed that the purchase price would be payable by the first respondent making payment of a deposit in the sum of R530,000.00. The balance of the purchase price would be payable from the proceeds of a loan granted by the applicant to the first respondent. The loan would be secured by way of a mortgage bond registered over the property. As additional security it was agreed that the second respondent would execute a deed of suretyship binding itself as surety and co-principal debtor with the first and third respondent as security for the payment of the loan.

At the time of the conclusion of the deed of sale the applicant and the first respondent concluded a written loan agreement in terms whereof the applicant agreed to loan and advance to the first respondent, upon the date of transfer of the immoveable property, the sum of R2,120,000.00 being the balance of the purchase price, said loan was to be secured by registration of a mortgage bond over the property in favour of the applicant. The loan would bear interest and was to be repaid in monthly instalments within a period of 20 years.

It is these agreements, the terms whereof are not in dispute, that the applicant seeks to enforce. It is common cause between the parties that the applicant, on 28 September 2010 caused its conveyancers to forward to the respondents the required documents to give effect to the agreements concluded between the parties. It is further common cause that on 4 October 2010 the first respondent addressed a letter to the applicant’s attorneys in which the first respondent attempted to resile from the agreements, citing as the reason therefore the health of the third respondent’s father as necessitating a change in circumstances. In response to this letter the applicant’s attorneys wrote to the first respondent on 8 October 2010 insisting on the due performance by the first respondent of its obligations. On 19 October 2010 a further letter was received from the first respondent. In that letter the first respondent alleged that the first respondent was induced by fraudulent, alternatively, negligent misrepresentations to enter into the agreements. The alleged misrepresentations related to the state of the roof of the building, more particularly that it was represented that the roof had leaked but that the leaks had been repaired. This, it was alleged, was false. The letter of 19 October concludes with the following passage:

“In the result, and on the basis of the aforesaid misrepresentation, our client does not intend proceeding to take transfer of the property, we are instructed to hereby cancel the agreement of sale entered into between the parties.”

On 26 October 2010 the applicant’s attorneys responded in detail to the said letter denying any misrepresentation. No response was received to this letter. The first respondent thereafter did not meet any of its obligations in terms of the agreement. No further correspondence was exchanged between the parties. On or about 21 March 2011 the applicant launched the present application.

Although it is not germane to the present application it is to be noted that the applicant obtained judgment by default against the respondents. That judgment was subsequently rescinded and on 26 November 2011 the respondents filed an answering affidavit setting out their defences to the application. No replying affidavit was filed by the applicant.

In the answering affidavit the respondents raise two points in limine. The first of these concerns the existence of material disputes of fact regarding the alleged misrepresentations. In this regard the respondents contend that the disputes of fact ought reasonably to have been anticipated and that on this basis the application ought to be dismissed. The second point in limine concerns the alleged non-compliance with the provisions of the National Credit Act 34 of 2005 (the NCA). The respondents allege that the agreements concluded between the parties constitute credit agreements to which the provisions of the NCA apply. Since the applicant is not a registered credit provider, so it is contended, the agreements are void in terms of section 89(2)(d) of the NCA and accordingly not enforceable. The respondents also challenged the authority of the deponent to the founding affidavit. As indicated no replying affidavit was filed by the applicant.

The heads of argument filed on behalf of the respondents follow the contentions advanced in the opposing affidavit. The applicant’s heads of argument, while taking issue with the legal submissions advanced by the respondents, concede that material disputes of fact are disclosed in the papers, but since these could not have been anticipated, the matter should be referred to trial.

Where an applicant should have realised when launching an application that a serious or material dispute of fact, which is not capable of being resolved on the papers, was likely to develop, a court hearing the application will dismiss the application. (Room Hire Company (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949(3) SA 1155 (T); Govender v Top Spec Investments (Pty) Ltd 2008(5) SA 151 (SCA)).

In Tamarillo (Pty) Ltd v BN Aitken (Pty) Ltd 1982(1) SA 398 (A) the court (at 430 G – H) said that:

“A litigant is entitled to seek relief by way of notice of motion. If he has reason to believe that facts essential to the success of his claim will probably be disputed he chooses that procedural form at his peril, for the court in the exercise of its discretion might decide neither to refer the matter for trial nor to direct that oral evidence on the disputed facts be placed before it, but to dismiss the application.”

Motion proceedings are not, given their very nature, proceedings which allow for the dispute of facts. They are in the main proceedings which are suitable for the resolution of legal disputes between parties where the facts are either common cause or are readily ascertainable (see National Director of Public Prosecutions v Zuma 2009(2) SA 277 (SCA) para 26).

In this instance it is clear from the correspondence that the applicant was well aware of the fact that the first respondent alleged a fraudulent, alternatively negligent, misrepresentation which induced it to enter into the agreement. The first respondent clearly stated that it did not, for this reason, consider itself bound by the agreement and went further to purport to cancel the agreement. Whilst the applicant responded to this correspondence denying the misrepresentation, the terms of the letter addressed by the

applicant to the first respondent evidence a clear understanding of factual disputes relating to the alleged misrepresentation. On the applicant’s version the respondent did not, following its letter indicating an intention to cancel the agreement, thereafter take any further steps to honour its obligations incurred in terms of the agreement. The deposit was not paid; the documents giving effect to the registration of the mortgage bond were not signed and returned to the applicant’s conveyancing attorneys. This conduct is entirely consistent with an intention to cancel and with a stance that reflected the first respondent’s cancellation of the agreement. All of these facts were known to the applicant at the time that it instituted these proceedings. The founding affidavit specifically deals with the fact that the first respondent had purported to cancel. The applicant then seeks to adduce evidence in the form of an affidavit deposed to by the estate agent involved in order proactively to address the factual dispute which to its knowledge is germane to the proceedings.

In my view the applicant clearly foresaw that a material dispute of fact would arise between the parties. The disputed misrepresentation strikes at the very heart of the relief that the applicant seeks by way of specific performance. By proceeding by way of motion proceedings the applicant placed itself at risk and, it must be accepted knowingly did so. Notwithstanding the assertions made by the applicant, the dispute as to the misrepresentation is not in my view one capable of resolution on the papers nor is it one, given the common cause facts, which is so far-fetched as to enable the court to reject the allegations on the papers alone. To the contrary, as I understand the stance adopted by the applicant in its heads of argument, it acknowledges that the dispute is not capable of resolution on the papers. It is for this reason that it seeks a referral to trial.

Where a party seeks a referral as a consequence of disputes of fact arising in application proceedings, such referral is ordinarily a referral for the hearing of evidence in relation to specific and defined issues. In this instance the papers disclose that a number of additional issues, both legal and factual unrelated to the misrepresentation have arisen between the parties. Presumably it is for this reason that the respondent contends for a referral to trial rather than a referral to evidence. I am however disinclined to grant such relief. In my view this is a proper instance where, in the exercise of my discretion, the application ought to be dismissed by reason of the fact that the applicant clearly contemplated at the point at which it launched these proceedings that a material dispute of fact was likely to arise.

In the light of this conclusion it is not necessary to deal with the further issues raised by the respondent regarding inter alia the application of the National Credit Act and the proper interpretation of section 6 thereof. Nor is it necessary to deal with the further aspects raised by way of argument in limine.

In the result I accordingly make the following order:

The application is dismissed with costs.

__________________________

G GOOSEN

JUDGE OF THE HIGH COURT

APPEARANCES:

FOR THE APPLICANT: Mr D de la Harpe, instructed by

Netteltons Attorneys

FOR THE RESPONDENTS: Mr P Scott SC, instructed by

Wheeldon Rushmere & Cole