Johnston v Leal

• Jurisdiction: South Africa
• Judge: Jansen JA, Corbett JA, Miller JA, Van Winsen AJA and Botha AJA
• Judgment Date: 30 May 1980
• Citation: 1980 (3) SA 927 (A)
• Hearing Date: 22 February 1980
• Court: Appellate Division

A Corbett, JA.:

This is an appeal from a judgment of HART AJ, sitting in the Witwatersrand Local Division. Since the judgment has been reported (see Leal v Johnston 1978 (4) SA 706 (W)) and deals fully with the facts of the case, it is not necessary for me to recapitulate them in any great detail. The issue which the Judge a quo was called upon to decide was an exception B taken by plaintiff (Mrs Leal) to portion of an amended plea filed by defendant (Mrs Johnston). The learned Judge upheld the exception with costs and ordered that the offending portion of the defendant's plea be struck out. Defendant now appeals to this Court against the judgment and order of the Court a quo. It will be convenient to continue to refer to the parties as "plaintiff" and "defendant".

C The pleadings which gave rise to the exception disclose that on 15 January 1976 the parties signed a document entitled "Offer to Purchase" and purporting to be a written contract of sale (annexure "A" to the plaintiff's combined summons being a photocopy thereof), in terms of which the plaintiff sold and the defendant purchased certain immovable property D in Sandton, Transvaal, for the sum of R42 000. It is alleged by plaintiff in her particulars of claim that subsequently defendant breached certain material terms of the contract and that plaintiff cancelled the contract. The property was resold by plaintiff at a loss and this loss, together with certain other claims, forms the basis of plaintiff's action against the defendant. In her amended plea defendant averred (in para 2 (b) E thereof), as one of her defences, that the alleged contract (to which I shall refer as annexure "A") was, by reason of s 1 (1) of the Formalities in Respect of Contracts of Sale of Land Act 71 of 1969 ("the Act") void and of no force or effect. Plaintiff took exception to this portion of the plea on the ground that annexure "A" did in fact comply with the F provisions of s 1 (1) of the Act and that para 2 (b) of the amended plea accordingly did not disclose a defence. The crisp issue, therefore, is whether or not annexure "A" was rendered void and of no force or effect by s 1 (1) of the Act. HART AJ held that it was not and his judgment is G supported on appeal by plaintiff (respondent). Defendant (appellant) contends that it was.

In order to consider this issue it is necessary to take a closer look at annexure "A". The transaction was evidently negotiated and clinched through a firm of estate agents known as Allstate Real Estate (Pty) Ltd. Annexure "A" consists of a printed form at the head of which appears the name of the estate agents in bold print. Below that appear the words H "Offer to Purchase" and then follows a form of contract of sale of landed property, with blanks left in which the particulars of the specific contract can be inserted. The document commences with provision for the names of seller and purchaser and a description of the property and takes the form of an offer made by the purchaser to the seller. Then follow a number of terms, 18 in all (with space for a 19th one as well), subject to which the offer is made. Finally there is provision for signature of the offer by the intending purchaser and for acceptance of the offer and signature by the seller.

Corbett JA

In this instance the names of the parties and the description of the property have been duly filled in. The document shows, too, that the offer A was signed by defendant at Johannesburg on 15 January 1976 and accepted at the same place and on the same date by plaintiff as seller, this acceptance being evidenced by the insertion of the appropriate particulars and the signature of the plaintiff. Where the printed terms of the contract contain blanks, these have, for the most part, been filled in. In addition there are deletions and amendments of printed provisions B apparently regarded by the parties as not being applicable or appropriate. All such alterations to the printed form have been initialled, presumably by the parties and the witnesses to their signatures.

It is common cause on the pleadings that annexure "A" is a true copy of the original document and that the parties did enter into an agreement in this form. Section 1 (1) of the Act provides as follows:

C "No contract of sale of land or any interest in land (other than a lease, mynpacht or mining claim or stand) shall be of any force or effect if concluded after the commencement of this Act unless it is reduced to writing and signed by the parties thereto or by their agents acting on their written authority."

Defendant's contention that the agreement does not comply with the provisions of s 1 (1) is based on the fact that clause 11 of annexure "A" D was left incomplete, in the sense that the spaces therein for the insertion of appropriate particulars were left blank. Clause 11, as it appears in the completed annexure "A", reads as follows:

"11. The agreement of sale concluded between the seller and the purchaser in the event of the acceptance hereof by the seller shall be subject to the suspensive condition that the purchaser (or the seller or the agent on the purchaser's behalf) is able to raise a loan upon the security of a E first mortgage bond to be passed over the property for a sum of not less than R _____________at prevailing Building Society rates and conditions for the type of property described herein, and the purchaser undertakes and agrees to take all steps and sign all documents reasonably necessary to give effect to this clause. Should such loan not be procured by _____________this sale shall be automatically cancelled and of no force nor effect, and any monies paid by the purchaser shall be refunded in full."

Together with clause 11 it is relevant to have regard to clause 1 F (providing for the purchase price and the payment thereof) and clause 3 (providing for the payment of agent's commission). These clauses, as filled in and altered by the parties, appear in annexure "A" in the following form (all insertions being underlined and deletions being shown as made):

"1. The purchase price is the sum of R42 000 (forty two thousand rand) payable as follows:

(a)

G In cash on advice of acceptance of this offer the sum of R1000 (one thousand rand) free of exchange, which amount shall be deposited with the seller and an amount of R4 000 (four thousand) to be paid to the seller on 30.6.1976 or occupation by purchaser whichever the sooner

(b)

H For the sum of R37 000 (thirty seven thousand) the purchaser shall on or before the 28th February 1977 furnish a banker's, building society's or other approved form of guarantee/s made payable to the seller and/or the seller's nominee/s free of bank exchange, at______________________ and payable upon registration of transfer into the name of the purchaser.

2. ............

3. The seller shall pay the agent's commission in terms of the tariff of the Institute of Estate Agents of South Africa (Southern Transvaal Branch),

Corbett JA

which commission shall be deemed to have been earned upon the signature of this offer to purchase by both parties and the A subsequent fulfilment of clause 11 and shall be payable not later than the date of occupation by the purchaser.

The parties hereto furthermore agree that, if a deposit in terms of clause 1 (a) hereof has been made, then upon registration of transfer into the name of the purchaser, or upon cancellation under clause 7 below, the agent shall be entitled to receive payment of commission based on the full purchase price."

B Here it is pertinent to note that prior to the cancellation of the agreement the defendant had deposited with or paid to the seller the amounts of R1 000 and R4 000 referred to in clause 1 and plaintiff had paid the agent's commission, which amounted to R1 300.

Having regard to the blanks left in clause 11 defendant argues as follows: C (i) s 1 (1) of the Act requires that not only the essential terms of a contract for the sale of land but also all the material terms thereof be reduced to writing; (ii) clause 11 of annexure "A" was intended to be a material term of the contract; (iii) the blanks left in clause 11 indicate, on the face of it, that the parties had still to agree on the minimum amount of the loan and the date by which it had to be procured; D (iv) consequently all the material terms of the agreement have not been reduced to writing and there has been a failure to comply with s 1 (1).

In order to deal with this argument and the counter-arguments advanced on behalf of the plaintiff it is necessary to consider what it is that s 1 (1) requires in regard to the reduction of a contract for the sale of land to writing, the policy under the Act and what the position is where E parties have left blanks in a printed form of contract relating to the sale of land.

Section 1 (1) of the Act replaced s 1 (1) of the General Law Amendment Act 68 of 1957, which, as regards contracts for the sale of land, was substantially in the same terms as the present s 1 (1). Section 1 of Act 68 of 1957 in turn replaced a number of pre-Union statutes, viz Law 12 of F 1884 (N), Proc 8 of 1902 (T) and Ord 12 of 1906 (OFS). Two of these, the Transvaal and OFS statutes, were similar in terms and general import to the present legislation. Consequently judicial decisions concerning the interpretation and effect of this earlier legislation are for the most part relevant in the determination of the meaning and effect of s 1 (1) of the Act.

It has been held - and in my opinion correctly so - that what s 1 (1), or G its predecessors, require is that the whole contract of sale, or at any rate all the material terms thereof, be reduced to writing (see Joubert v Steenkamp 1909 TS 169 at 171; Coronel v Kaufman 1920 TPD 207 at 209, 210; Veenstra v Collins 1938 TPD 458 at 460; King v Potgieter 1950 (3) SA 7 (T) at 10 and 14...