Porteous v Strydom NO

• Jurisdiction: South Africa
• Judge: Galgut AJ
• Judgment Date: 02 December 1983
• Citation: 1984 (2) SA 489 (D)
• Hearing Date: 04 November 1983
• Court: Durban and Coast Local Division

Galgut AJ:

On 26 March 1981 the applicant concluded a written contract with one Jacobs in terms whereof Jacobs purchased a certain fixed property from the applicant for R70 000. The purchase price was

Galgut AJ

payable as to a deposit of R8 000, which was duly paid, and the balance, being R62 000, was to be secured by a bank or building society guarantee. Clause 8 provided for payment of interest on the unpaid balance, which interest was payable monthly. Jacobs did not pay the balance of the purchase price and the property A remains registered in the applicant's name.

By 28 February 1983 Jacobs was in arrears with the interest payments. The applicant alleges that, on a proper construction of clause 8, compound interest was payable and that upon a proper calculation the arrears amounted to R16 109,99, but B there is a dispute on the papers in regard to these matters. Be that as it may a letter was delivered to Jacobs personally on 28 February 1983 in which he was called upon to pay this sum within 30 days failing which the applicant would cancel the contract. Clause 12 of the contract in fact provided for a seven-day period, but the applicant gave Jacobs 30 days in order to cater for the possibility that the agreement was C governed by s 19 of the Alienation of Land Act 68 of 1981 or s 13 of the Sale of Land on Instalments Act 72 of 1971. During argument it was conceded by the applicant that these provisions did apply to the contract.

Jacobs paid nothing further. The period of notice which had to expire before the applicant could cancel the contract ended on D 30 March 1983. However on 11 March 1983 Jacobs' estate was provisionally sequestrated, the order being made final on 15 April 1983. The respondent was appointed as provisional trustee in Jacobs' estate on 15 March 1983.

By letter dated 11 April 1983, written to the respondent by the applicant's attorneys on the applicant's behalf, notice was given that the applicant thereby cancelled the agreement. The E respondent disputed the validity of the cancellation.

The respondent asked in this application for authority in terms of s 18 (3) of the Insolvency Act 24 of 1936 to oppose this application. This was not opposed by the applicant and, because it is a proper case in which to do so, I granted such authority F at the hearing.

The relief which the applicant seeks in this matter is the following:

"(a)

an order declaring the applicant's cancellation of the sale agreement concluded between the applicant and Cornelius Johannes Jacobs dated 26 March 1981 in respect of the immovable property described as lot G 678, Scottburgh, to be valid and effective;

(b)

an order declaring the applicant to be entitled to retain as roukoop the sum of R8 000 paid by the said Jacobs as the deposit on the purchase price of the said property in terms of clause 12 read with clause 2 (a) of the said sale agreement;

(c)

an order for the ejectment of the respondent and/or H the said Jacobs (and all persons claiming title through him) from the said immovable property;

(d)

an order directing the respondent to pay the costs of this application, alternatively, that the costs of this application be paid out of the insolvent estate of the said Cornelius Johannes Jacobs;

(c)

further or alternative relief."

Galgut AJ

In regard to prayer (d) the applicant accepts that the relevant provision in the contract is a penalty stipulation within the meaning of the Conventional Penalties Act 15 of 1962. The respondent says that the property can now be sold for more than A R70 000 and that the applicant has a claim for the unpaid interest against Jacob's estate, but that the dividend is not yet ascertainable. Therefore, says the respondent, it is not yet possible to ascertain the prejudice suffered by the applicant and respondent asks that the relief in this connection stand over until the extent of the prejudice, if any, can be established. The applicant agrees with this B approach and the parties also agree that they should each have leave to supplement their papers in this connection.

Respondent opposes the other relief on the ground, firstly, that the cancellation was not valid in law by virtue of the effect of the concursus creditorum and/or s 35 of the Insolvency Act 24 of 1936, and on the ground, secondly, that the notice itself was not valid.

The validity of the cancellation

It can be seen from what has been set out above that the relevant facts are that the notice was given on 28 February 1983; that such notice period would in the normal course have expired on 30 March 1983; that Jacobs' estate was sequestrated on 11 March 1983; that neither Jacobs nor the respondent as D provisional trustee ever responded to the notice by making any payment; and that on 11 April 1983 the applicant notified the respondent of his election to cancel.

Mr Meskin, who appeared for the respondent, argued in the first place that by virtue of the effect of the concursus creditorum the cancellation was invalid. He submitted that the effect of E the concursus was such that the applicant could not rely, after sequestration, on the notice given before the sequestration, the 30-day period not having expired before the date of sequestration. He argued that, because the right to cancel did not therefore accrue prior to the concursus, as happened in Smith and Another v Parton NO 1980 (3) SA 724 (D), the applicant had no right to cancel thereafter. Mr Meskin F argued in the second place that both under the common law and also in terms of s 35 of the Insolvency Act the respondent as trustee became entitled to elect whether or not to abide by the contract, which is of course perfectly true. But he then submitted that only if and when the trustee elects to abide by G the contract would he have to perform all the unperformed obligations of the insolvent, including those breached prior to sequestration. For this proposition he relied on Bryant & Flanagan (Pty) Ltd v Muller and Another NNO 1977 (1) SA 800 (N) at 804 - 805, and on appeal 1978 (2) SA 807 (A) at 812 - 813.

The effect of a concursus is dealt with in Ward v Barrett NO and Another 1963 (2) SA 546...