Palm Fifteen (Pty) Ltd v Cotton Tail Homes (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Wessels ACJ, Muller JA, Hofmeyr JA, Miller JA and Van Winsen AJA
• Judgment Date: 28 March 1978
• Citation: 1978 (2) SA 872 (A)
• Hearing Date: 02 March 1978
• Court: Appellate Division

Miller JA:

This is an appeal against orders made in the Witwatersrand Local Division by FRANKLIN J declaring that certain written agreements H concluded by the parties were null and void and directing the appellant (defendant in the Court below) to pay the costs in respect of the stated case submitted to that Court. The judgment appealed against is fully reported in 1977 (1) SA at 264 - 274 under the heading Cotton Tail Homes (Pty) Ltd v Palm Fifteen (Pty) Ltd. That judgment contains a full exposition of the facts (which were common cause) and of the question submitted to the Court a quo for decision; it also reproduces the relevant terms of the agreements in question and of the conditions imposed by the Administrator of the Cape Province when approving the establishment of the

Miller JA

township to which the agreements related. Full reproduction of the details in this judgment would therefore be superfluous. I shall reproduce only such details as will facilitate the writing (and the reading) of this judgment.

The "typical agreement" (hereinafter referred to simply as "the A agreement") considered by the Court a quo is described as an "Agreement of sale" which is expressly said to have been concluded "in anticipation of the proclamation" of a certain township intended to be laid out by the seller. The subject of the sale is a numbered lot or stand "as shown on the... plan of the said township". After making provision, inter alia, B for payment by the purchaser (the respondent) of part of the purchase price upon signing of the agreement and for payment of the balance of the price in monthly instalments commencing on 2 February 1970, the agreement provides, in clauses 6 and 7 thereof:

"6.

That the purchaser agrees to accept transfer of the said property subject to the conditions of the establishment and to such conditions of title of the township as may be laid down by the Administrator of C the Cape Province in approving of such establishment and to the conditions contained or referred to in the title deeds under which the seller holds the land.

7.

That the sale hereby made is suspensive and subject to the due proclamation of the said township. Should for any reason whatsoever, and whether attributable to the fault of the seller or not, the township be not so proclaimed this sale shall be regarded as null and D void ab initio and the seller shall refund to the purchaser all amounts paid by the latter, free of interest, and neither party shall have any further claim against the other."

The agreement was concluded on 11 December 1969 and the payments stipulated therein were apparently made by the purchaser. On 19 February 1970 the Administrator granted the application for establishment of the E township, subject to certain conditions, one of which (para 5 (1)) reads:

"No erf other than reserved erven shall be sold, transferred or built upon prior to transfer until the local authority has issued a certificate that..."

and then follows a list of requirements relating to the condition, grading, surfacing and draining of streets in the township, access to erven, sign-posting, etc. In due course, on 25 August 1972, the township, F according to the general plan and subject to the conditions set forth in the grant of the application on 19 February 1970, was proclaimed by the Administrator in terms of s 20 (6) (b) of Ord 33 of 1934 (C).

The essence of the respondent's case that the agreement was null and void, both at first instance and on appeal, was (i) that the agreement was one G of sale subject to a suspensive condition as described in the first sentence of clause 7 thereof; (ii) that that condition was fulfilled upon the happening of the event postulated (viz, proclamation of the township); (iii) that the agreement thereupon became a completed contract of purchase and sale; but, (iv) because the agreement was not one in respect of a H reserved erf, para 5 (1) of the conditions of establishment of the township was applicable and, simultaneously with the issue of the proclamation, had the effect of rendering the agreement null and void for want of compliance with the requirements of para 5 (1) of the conditions of establishment, which in terms provides that no erf "shall be sold..." until the prescribed certificate has been issued by the local authority. The learned Judge a quo epitomized (iv) above as a contention that

"it was the very fulfilment of the suspensive condition which at the same time both created and 'killed' the sales".

Miller JA

(1977 (1) SA at 269B - C). That contention was, in effect, upheld by the Court a quo.

A The first question that arises is whether clause 7 of the agreement is creative of a suspensive condition, as was contended on behalf of respondent and found by the Court a quo, or whether, as Mr Osborn for the appellant contended, that clause, properly construed, constitutes a resolutive condition in the sense that upon fulfilment of the condition (ie failure of proclamation), the contract of sale falls away as if it had never been entered into. If the first sentence of clause 7 were B disregarded, or given scant weight as indicating merely what the parties chose to call their agreement, I agree that the remaining part of the clause would tend to indicate that what the parties really intended was that the condition should have resolutive effect. The words "should... the township be not proclaimed" prima facie indicate that the condition is C "failure of the proclamation", not "due proclamation", and what follows thereupon is the provision that upon failure of proclamation, the sale "shall be regarded as null and void ab initio ". It was contended by Mr Osborn that the first sentence of the clause should indeed be given scant weight and reference was made in that connection to the dictum by J DE VILLIERS JP in Provident Land Trust Ltd v Union Government 1911 AD 615 at 628 that

D "... if there were all the elements of a present sale, the mere fact that the parties purported to postpone the coming into operation of this contract to some future date would not prevent the Court from declaring the prior date to be the actual date of sale."

It may readily be accepted that the Court will not feet itself bound to E accept the designation given by the parties to their contract, but will have regard to the contract as a whole and give effect to what it regards as the true import thereof. In the context of the agreement now under consideration, there is nothing whatever to indicate that the parties, when they inserted the first sentence of clause 7, attempted thereby to disguise their true intention. It appears to me that the very opposite is F true. Such first sentence appears to have been purposefully and definitively stated in order to make very clear what their intention was. Leaving aside for the moment the use of the word "suspensive" in that sentence, the words "... the sale is subject to the due proclamation of the said township" are apposite to the creation of "a true suspensive G condition". (Cf per WATERMEYER CJ in Corondimas v Badat 1946 AD 548 at 551 where the words used in the agreement were "subject to permission under the...