Design and Planning Service v Kruger

• Jurisdiction: South Africa
• Judge: Eloff J and Botha J
• Judgment Date: 30 November 1973
• Court: Transvaal Provincial Division
• Hearing Date: 22 November 1973
• Citation: 1974 (1) SA 689 (T)

Botha, J.:

The respondent sued the appellant in a magistrate's court for payment of a sum of R1 000, and the appellant counterclaimed for payment of a sum of R695. The magistrate granted judgment in favour of the respondent in the amount claimed, with costs, and dismissed the counterclaim, with E costs. The appellant now appeals against the whole of the magistrate's judgment.

The issues between the parties arose out of a written contract entered into and signed by them on 17th July, 1970, and the events which followed thereafter. It will be convenient to refer at once to the provisions of the contract which are relevant to the issues in the appeal. In the preamble of the F contract, the appellant ("the contractor") undertook to erect a dwelling house and outbuildings for the respondent ("the employer"), in accordance with certain plans and specifications, on stand 333, Ferndale, Randburg, on the "terms and conditions" contained in the various clauses comprising the body of the contract. Of these, I quote the following:

"1.

G The contract price shall be the sum of R16 950... which the employer shall pay to the contractor in the following manner:

(a)

as to the sum of R1 000... such amount to be deposited with the contractor on the signing of this agreement;

(b)

as to the balance of R15 950... to be provided for by means of a building loan referred to in clause 7 hereof."

(I pause here to observe that clause 7 of the contract does not H refer to any loan at all; it deals with matters which have no bearing upon the issues).

"2.

The contractor shall be entitled to receive payment from the proceeds of the loan from time to time according to the value of works as assessed by the building society inspectors, or such other party acting for the mortgagor.

3.

The employer will cede the contract sum over to the contractor or his nominees and will not have the right to withhold any part of the contract sum or stop payment after occupation has been given to the employer.

Botha J

9.

The employer shall, immediately on completion of this agreement, give to the contractor or any persons or company acting on its behalf complete possession of the said lot and shall not require the contractor to give up such possession so long as the employer is indebted to the contractor or any person or company acting on its behalf, in any amount, from whatever cause arising...

11.

A The employer irrevocably cedes the sum of R15 950... from the proceeds of the aforementioned bond to the contractor, who is hereby authorised to receive interim draws from the building society or other financial institution and the employer agrees to sign the authority for such payment, as and when required by the contractor. The final payment made by the building society shall be a complete discharge to the contractor of its obligations under this contract...

13.

Final inspection. The house must be finally inspected B by the employer and the building society, and all matters attended to, to the satisfaction of the employer and the building society, before occupation can be taken by the employer...

14.

Signing of documents. Once the building bond has been granted the employer must arrange to sign all the necessary documents and pay all the fees with the attorney doing the registration of the bond...

Usually the contractor does not commence building C operations before the bond is registered, and delays in registrations upset the building programme of the contractor and might cause delay in completion of the contract.

20.

Provided that the necessary building society loan has been obtained, or other finances arranged, the employer shall not be entitled to withdraw from this agreement. In the event of the employer so withdrawing, the employer shall be liable to compensate the contractor for the profits which the contractor has lost by reason of such withdrawal, D which loss the parties hereby agree shall be equal to 10 per cent of the contract price, such amount being regarded as the loss of profits and/or as liquidated damages and as a genuine pre-estimate of losses which the contractor will suffer by reason of the employer's failure to fulfil the employer's obligations.

21.

Should this agreement for any reason whatsoever become null and void whether in terms of para. 20 above, or E otherwise, or should the contractor for any reason beyond its control, or through any fault or action on the part of the employer be unable to commence the erection of the dwelling in terms of this agreement, the employer shall nevertheless, be liable for a sum of R678 being 4 per cent of the amount detailed in para. 2 above, which amount shall be payable in respect of the cost of preparing plans, drawings, specification this agreement and in respect of all other preparations with regard to the erection of the dwelling in terms of this agreement."

F In the court below, the respondent gave evidence on the events which transpired after the conclusion of the contract, and his evidence was confirmed in a number of respects by the evidence of other witnesses called on his behalf, including his wife.

On behalf of the appellant, evidence was given by one Ridler, G who was the person acting on behalf of the appellant at all relevant times in its dealings with the respondent. Ridler's evidence was in conflict with that of the respondent and his witnesses, in a number of respects. The magistrate found that the respondent and his wife were impressive and truthful witnesses, and that Ridler was an unsatisfactory and untruthful witness; accordingly he rejected the latter's evidence in so H far as it was in conflict with the evidence of the respondent and his witnesses. These findings by the magistrate were not challenged by the appellant's counsel in argument before us, and, in my view, correctly so, because the record by itself proclaims the validity of the magistrate's views in regard to the credibility of the witnesss.

This appeal accordingly falls to be decided upon the footing of the facts testified to by the respondent, which I proceed to summarise.

Botha J

Shortly before or after the conclusion of the contract between the parties, the respondent completed a form of application for a building loan, addressed to the United Building Society. This application was handed by the respondent to Ridler, who A undertook to lodge it with the building society. About three weeks later (according to the respondent's recollection, still in July, 1970), Ridler informed the respondent that an incorrect application form had been filled in, and that a fresh form had to be completed. The respondent immediately went to Ridler's offices, where he completed a fresh application form, which was handed to Ridler on the express understanding that B the latter would lodge it with the United Building Society. Apart from the sum of R1 000 provided for in clause 1 (a) of the contract, which it was common cause was paid by the respondent to Ridler during August, 1970, the respondent paid a further sum of R60 to Ridler in respect of the costs of obtaining the local authority's approval of the plans of the C buildings to be erected, which approval was to be applied for by Ridler, and in addition, the respondent paid R188 to the appellant's architect in respect of the drawings and plans of the buildings.

After the respondent had handed the second application form for a building loan to Ridler, he heard nothing from the latter D until January, 1971. In the meantime the respondent was being pressed for the payment of the balance of the purchase price of the vacant stand, a sum of R4 000, which it was contemplated would become available out of the proceeds of the loan from the building society. The respondent tried to get into touch with Ridler, but experienced difficulty in doing so. Ridler had E moved his offices and the respondent found that the new offices were closed most of the time; despite repeated attempts, the respondent failed to make contact with Ridler until some time in January, 1971, when at last he found him at his offices. At that stage the seller of the stand was threatening to cancel the sale because of the respondent's failure to pay the balance F of the purchase price, and this was explained by the respondent to Ridler. Ridler then told the respondent that he had been to the United Building Society, where he had been informed that the respondent's application for a loan had been lost and that the society could find no trace of it. On Ridler's suggestion, he and the respondent immediately went to the building society, where they interviewed the manager, with G the object of obtaining a loan of R4 000 as a matter of urgency, in order to enable the respondent to pay the balance of the purchase price of the stand. This they succeeded in achieving; the money (i.e. R4 000) was obtained within a matter of days and the seller of the stand was duly paid. The interview with the building society manager took place on 23rd H January, 1971. About a week after the loan of R4 000 had been obtained, Ridler telephoned the respondent and made an appointment to see the respondent at the latter's house that night, so that a third application for a building loan could be prepared. Ridler failed to keep the appointment, and the respondent did not see him again. The respondent then made enquiries and ascertained that no application had been lodged with the local authority for its approval of the building plans...