Thompson v Scholtz

• Jurisdiction: South Africa

Thompson v Scholtz
1999 (1) SA 232 (SCA)

1999 (1) SA p232

Citation	1999 (1) SA 232 (SCA)
Case No	167/96
Court	Supreme Court of Appeal
Judge	van Heerden DCJ, Smalberger JA, Nienaber JA, Zulman JA, Melunksy AJA
Heard	August 21, 1998
Judgment	September 28, 1998
Counsel	RS Van Riet (with him LM Olivier) for the appellant; O Rogers for the respondent

Flynote : Sleutelwoorde

Contract — Remedies on breach — Defences — Exceptio non adimpleti contractus — Exceptio available as defence to F party from whom performance is demanded by other contracting party whose reciprocal performance is not rendered precisely or in full even if defect in plaintiff's performance not so serious as to justify rejection or cancellation of contract by defendant — Plaintiff precluded from recovering any remuneration if his performance falls G short of perfection even when defendant accepts and utilises it — Such not applicable without qualification that, where shortcoming in plaintiff's performance is capable of being cured, Court has discretion to allow plaintiff his contractual remuneration, minus cost of restoring defective work to required contractual standard — Plaintiff's claim one ex contractu for contract price less cost of cure and not one based on enrichment — Defendant not required to H formulate claim for damages — Plaintiff must show that circumstances of case justify departure from exceptio and must prove cost of cure — Plaintiff's performance must be capable of being fully restored to contractual standard and cost of doing so must be capable of being quantified — Once plaintiff remedies defective performance either by substitution or by adjustment to contract price, position viewed as if plaintiff has performed in full — This qualification I may operate less than satisfactorily when it is sought to apply it strictly to defective performance of obligation of continuing nature — In these situations Court has discretion to deviate from formula contained in qualification to ensure fairness to both parties.

Contract — Remedies on breach — Defences — Exceptio non adimpleti contractus J

1999 (1) SA p233

— Seller failing to give purchaser complete possession of property purchased but claiming full occupational interest — A Seller's breach a continuous one — Breach of this nature cannot be retroactively restored or cured — Seller can never reach juncture where, by means of substituted performance or supplementary payment, he can claim agreed counter-performance — Qualification to exceptio that where shortcoming in plaintiff's performance is capable of being B cured Court has discretion to allow plaintiff his contractual remuneration, minus cost of restoring defective work to required contractual standard — Qualification incapable of literal application in present case — Solution can be found in analogous case of remission of rent in lease of land where amount of remission calculated without reference to C any claim for damages but with reference to what is fair in circumstances of case — Where no obvious standard of comparison exists pro rata reduction of rental of necessity implies robust approach — Necessary to take broad view of matter — Court reducing seller's claim for occupational interest by 25%.

Headnote : Kopnota

There are two major propositions in the judgment in BK Tooling (Edms) Bpk v Scope Precision Engineering D (Edms) Bpk 1979 (1) SA 391 (A) (BK Tooling). The first is that the exceptio is available as a defence to a party from whom performance is demanded by the other contracting party whose reciprocal performance has not been rendered precisely or in full; the exceptio non adempleti contractus accordingly applies even if the defect in the E plaintiff's performance (short of being de minimis) is not so serious as to justify its rejection or the cancellation of the contract by the defendant. Implicit in this proposition is the notion that a plaintiff is precluded from recovering any remuneration if his performance falls short of perfection, even when the defendant, notwithstanding its shortcomings, accepts and utilises it. The second proposition takes account of that eventuality. F The second proposition is that the first proposition cannot be applied without qualification; the qualification is that there is a corrective; and the corrective is that where the shortcoming in the plaintiff's performance is capable of being cured the Court has discretion, if fairness so dictates, of allowing the plaintiff his contractual remuneration - but minus the cost of restoring his defective work to the required contractual standard. The plaintiff's claim is one G ex contractu for the contract price less the cost of the cure and not one based on enrichment. By contrast to the approach based on substantial performance the defendant is not required to formulate a claim for damages. It is for the plaintiff, when suing for payment, to show, firstly, that the circumstances of the case justify a departure from the first proposition and, secondly, to prove the cost of the cure. (At 240I/J—241B and 241C/D—G.) H

It is fundamental to the second proposition that the shortfall in the plaintiff's performance, firstly, must be capable of being fully restored to the contractual standard and, secondly, that the cost of doing so must be capable of being quantified. Restoration can take place either by way of substituted performance or by way of a monetary award for the cost thereof. It is for the plaintiff to calculate and prove the cost of restoring the defective work. Once the I plaintiff has remedied the defective performance either by substitution or by an adjustment to the contract price the position is viewed as if the plaintiff had performed in full. The aggrieved party in effect would have received his full contractual due, partly in specie, partly in money, and consequently becomes liable in return to perform his side of the bargain. The second proposition may operate less than satisfactorily when it is J

1999 (1) SA p234

sought to apply it strictly to defective performance of an obligation of a continuing nature, as the breach, being A likewise of a continuing nature, cannot be cured after the event, either in kind or in money, and it will often be impossible to assess the cost of curing the defect in the plaintiff's continuing malperformance. In these situations the Court has the discretion to deviate from the formula contained in the second proposition to ensure fairness to both parties. (At 241G/H—I/J, 243G—I, 249D/E—E and 249H/I.) B

The appellant had sold a farm, on which there was a farmhouse, to the respondent. The appellant vacated the farm on the due date, but not the farmhouse. The respondent nevertheless took over the stock and all the farming operations for his own account and was compelled to reside at a nearby farm where he also farmed. The appellant C vacated the farmhouse after transfer of the farm into the respondent's name had been effected and the purchase price paid. In terms of the deed of sale the appellant had claimed from the respondent occupational interest for the period during which the respondent had been in occupation of the farm, although not the farmhouse. The respondent refused to pay, having raised the exceptio non adempleti contractus as a defence. D The appellant instituted action in a Provincial Division. The trial Court awarded the appellant his claim for occupational rental which was reduced by the amount which the respondent had spent on travelling from the nearby farm to the farm in question during the period while the appellant was still in occupation of the farmhouse. On appeal by the respondent to a Full Bench of the Provincial Division this award had been set aside as the Court E found that the appellant had not proved the amount by which his claim should be reduced due to his breach of the contract. The appellant appealed against this finding.

Held, that the present case was different from the one in BK Tooling in that the obligation of the seller to allow the purchaser to occupy the property pending payment pari passu with registration of transfer had been a continuing one. Its breach, by the seller not vacating the farmhouse, had likewise been a continuing one. The F breach in this instance, unlike the breach in BK Tooling, could not be retroactively restored or cured. A monetary payment could have functioned as compensation for the purchaser's consequential loss, but could never serve as a substitute for the loss of occupation suffered by the defendant during the period he had been deprived of the occupation of the farmhouse. On a literal application of the second proposition in BK Tooling the appellant could G therefore never have reached the juncture where, by means of substituted performance or a supplementary payment, he could claim the agreed counter-performance. (At 241J—242D and 247D—G/H.)

Held, further, that what the appellant had to provide was the farm, including the farmhouse. That performance had H been indivisible, as the use of the farmhouse could not be separated from the use of the farm as a whole in order to accord it a separate commercial value, as it was not a separate entity. Nor could its value be determined by valuing the farm as a whole and comparing it to the value of the farm without a similar farmhouse. The value of the farmhouse as a fraction of the value of the farm was irrelevant because what was to be determined was not I the value of the farmhouse but the value of its use, expressed as a fraction of the agreed occupational interest and by which the occupational interest was then to be reduced. The occupational interest in turn was not related to the use of the property sold but to the purchase price, which related to the value of the property and not its temporary use. (At 244A/B—D/E.)

Hel...