Culverwell and Another v Brown

• Jurisdiction: South Africa
• Court: Appellate Division
• Judge: Corbett CJ, Hefer JA, Vivier JA, Eksteen JA and Nicholas AJA
• Judgment Date: 07 September 1989
• Citation: 1990 (1) SA 7 (A)
• Hearing Date: 11 May 1989

Nicholas AJA:

On 31 March 1984 a deed of sale was concluded between Mr Claudius Henry Brown and Mr Allan Culverwell in terms of which Brown C sold to Culverwell erf 3489, Knysna. The purchase price was R210 000, which was payable as to R110 000 on 1 May 1984, and as to the balance by way of a first mortgage bond over the property to be granted by Brown. In terms of a later addendum, it was recorded that Culverwell was purchasing the property as trustee for a company to be formed and D Culverwell bound himself as surety and co-principal debtor for the due performance by such company of its obligations. In pursuance of the addendum Culverwell Knysna Properties (Pty) Ltd later became substituted as the purchaser.

The deposit was not paid by 1 May 1984, and it was agreed on 4 May E 1984 that the full deposit would be paid by 15 May 1984, or by two instalments of R55 000 each on 15 May and 30 May 1984 respectively. No payment was made either on 15 or 30 May 1984. On 25 May 1984 the parties agreed that the deposit was to be paid as to R10 000 forthwith, R25 000 on or before 30 May 1984, and the balance of R75 000 on or before 18 June 1984: interest was payable by the purchaser on the balance of F R100000 outstanding from time to time. The R10 000 was not paid forthwith: two cheques for R5 000 each furnished by Culverwell were dishonoured. On 7 June and 21 June 1984, respectively, however, Culverwell made payments of R15 000 and R20 000. No further payments were made and on 5 September 1984 Brown issued out of the Cape Provincial Division a summons against Culverwell as first defendant and the company as second G defendant claiming the balance of the deposit (R75000), interest and costs.

In their plea which was dated 5 December 1984 Culverwell and the company averred that Brown had committed a breach of a material term of the agreement of sale. The company purported to cancel the agreement, H and the defendants pleaded that they were not indebted to the plaintiff in the sum of R75 000 or at all. They accordingly prayed that the plaintiff's claims be dismissed with costs. At the same time the company filed a claim in reconvention in which, after repeating the relevant allegations in the plea, it claimed judgment in the sum of R35 000 and other relief.

I Brown did not replicate to the plea, but in his plea to the claim in reconvention, dated 14 June 1985, he denied that there were any grounds justifying the cancellation of the agreement by the company; and averred that the purported cancellation amounted to a repudiation of the agreement, which repudiation Brown had accepted. On the same date Brown gave notice of an amendment of his particulars of claim, the effect of J which was to set up as the cause of action the alleged repudiation and

Nicholas AJA

A the acceptance thereof, and to substitute for the existing prayers a claim for damages amounting to R21 674,94, interest thereon and costs.

On these pleadings the matter went to trial before Fagan J on 29 May 1986. The learned Judge upheld Brown's claim, and dismissed the company's claim in reconvention. Leave having been granted, Culverwell and the company appealed to the Full Court of the Cape Provincial B Division. That Court (Friedman J, with Munnik JP and De Kock J concurring) dismissed the appeal with costs (save for a correction of the amount of the damages). The judgment of the Full Court is reported (Culverwell and Another v Brown 1988 (2) SA 468 (C)). Leave having been granted, Culverwell now appeals to this Court.

C In what follows, I shall refer to Brown either as 'Brown' or 'the plaintiff'; to Culverwell either as 'Culverwell' or 'the first defendant'; and to Culverwell Knysna Properties (Pty) Ltd either as 'the company' or 'the second defendant'.

In view of the way in which the pleadings developed, it is convenient to deal first with the defendants' plea and the claim in reconvention.

D In the plea, the defendants admitted the plaintiff's allegations in regard to the agreement of sale and the amendments thereto, and then proceeded to set up their defence in para 6. This reads:

'Ad para 8:

6.1

The defendants admit that the first defendant paid the sum of E R15 000 to the plaintiff on 7 June 1984 and R20 000 to the plaintiff on 21 June 1984.

6.2

The defendants admit that the balance of the initial deposit of R75 000 has not been paid by either defendant but deny, for the reasons stated below, that any portion of the said amount is due F or payable.

6.3

The following were material, express, alternatively implied, further alternatively tacit, terms of the agreement between the parties:

6.3.1

the second defendant was to be given occupation of erf 3489 Knysna on the date of transfer, by which date the plaintiff or other occupiers of the said property would be obliged to G vacate the said property; and/or

6.3.2

the second defendant knew and understood that the property was let and that the agreement between the parties was subject to the rights of any tenants under any agreement of tenancy, the provisions of which had been brought to the H notice of the second defendant by the plaintiff prior to the parties entering into the said agreement;

6.3.3

the plaintiff would not enter into any new leases or amend the period of any existing leases between the date of signature of the said agreement between the parties and the date of transfer of ownership to the second defendant without I the knowledge and consent of the second defendant.

6.4

In breach of the said agreement and on 1 May 1984, without the knowledge or consent of the second defendant, the plaintiff entered into a written agreement of lease in respect of a portion of erf 3489 Knysna with one Pieter Jacobus Prinsloo in J terms of

Nicholas AJA

A which, inter alia, the said Prinsloo was to be entitled to occupation of a shop which is situated on the said erf for three years from 1 May 1984 to 30 April 1987.

6.4A

The aforesaid conduct of the plaintiff constituted a material breach of the aforesaid agreement and further constituted a repudiation by the plaintiff of the aforesaid agreement, and in B the premises the second defendant became entitled to cancel the aforesaid agreement on both such grounds.

6.5

The second defendant hereby cancels the agreement between the parties and tenders to return to the plaintiff any benefit which it may have received pursuant to the said agreement against repayment of such moneys as it has already paid to the plaintiff C pursuant thereto.

6.6

The first defendant accordingly pleads that he is not indebted to the plaintiff in the sum of R75 000 or any lesser amount by reason of the fact that he is a surety and the second defendant being the principal debtor has a defence to the plaintiff's claim.'

D Paragraphs 6.3.1 and 6.3.2 are a paraphrase of clause 8 of the agreement of sale which reads as follows:

'8 (a)

occupation of the property shall be given to the purchaser on date of transfer, by which date the seller or other occupier shall be obliged to vacate the property; and/or

(b)

E the purchaser knows and understands that the property is let and that this offer is made subject to any tenant's rights under any agreement of tenancy and/or under any law or regulations now in force, the provisions of which have been duly brought to the notice of the purchaser.'

It was contended at the trial that the term alleged in para 6.3.3 was a F tacit term of the agreement of sale. Fagan J rejected the contention and it was not raised in argument before us.

There were on erf 3489 three buildings: a many-roomed typical 'onderdorp' house; a shop called 'The Paint Pot' which sold paint, and a so-called café called 'The Fruit Basket', which had a flat above it. The breach of contract alleged by the defendants concerned only 'The Fruit G Basket'.

A Mr Harmse carried on the business of 'The Fruit Basket' under a written lease from Brown. In February 1984 Harmse sold the business to a Mr Prinsloo. In the ordinary course Harmse would presumably have sublet the leased premises to Prinsloo. On 7 March 1984, however, Brown's H attorney, a Mr Rose-Innes, wrote a letter to Prinsloo which was headed 're: Sale Harmse to You'. It stated inter alia:

'We have had discussions with Mr Brown regarding the transfer of the lease contract. Mr Brown suggests that it would be better if the whole new contract was to be entered into valid for a period of three years. This gives you a longer period.'

Effect appears to have been given to this suggestion because a lease I of 'The Fruit Basket' premises was signed by Brown on 25 April 1984 and by Prinsloo on 1 May 1984. It was for a period of three years from 1 May 1984 to 30 April 1987, and the rental was R400 per month escalating to R484.

At the time of the conclusion of the agreement of sale, Culverwell was not aware of the negotiations for this lease. He first learned of the lease on 11 October 1984 (that is after the issue of the plaintiff's J summons in

Nicholas AJA

A September 1984) when, in the course of a telephone discussion with Rose-Innes, Culverwell stated that he understood that the tenancies were monthly and Rose-Innes informed him that there were long leases, especially over the café. On 19 October 1984 Culverwell visited Rose-Innes and asked to see the Prinsloo lease. He was then told the B date on which the lease was concluded. According to Rose-Innes in his evidence, Culverwell 'then seemed to get very fussed about this and he said, 'This gives me a reason to cancel'. I had - it had slipped my mind that in fact the lease had been arranged and agreed to before he bought.'

(On the evidence of Rose-Innes it is possible that an oral agreement of lease between Brown and Prinsloo had been concluded before the date C of the deed of sale and that it was later reduced to...