Westmore v Crestanello and Others

• Jurisdiction: South Africa
• Judge: Marais J
• Judgment Date: 05 September 1994
• Docket Number: 174/95
• Court: Witwatersrand Local Division
• Hearing Date: 05 September 1994
• Citation: 1995 (2) SA 733 (W)

Marais J:

The applicant seeks an order interdicting the first to third C respondents from disposing of their members' interest in the fourth respondent, otherwise than to the applicant in terms of an agreement, annexure A to the applicant's founding affidavit. The applicant further seeks an order preventing the fourth respondent from disposing of the property owned by the fourth respondent.

D The following facts are common cause.

At all material times the fourth respondent was, and still is, the registered owner of certain immovable property (to which I refer as 'the property'). The first to third respondents hold the members' interest in the fourth respondent. On 1 June 1994 the applicant and the first to third respondents (to whom I refer as 'the respondents') orally concluded E an agreement in terms of which the applicant purchased the respondents' interest in the fourth respondent for R1,96 million. This agreement was reduced to writing and signed by the parties during June or July 1994. The agreement provides inter alia:

'The purchase price . . . is . . . payable as follows: F By way of an approved bank or building society guarantee.'

The agreement provides that the guarantee is to be delivered by 31 August 1994, failing which

'this agreement shall automatically lapse and be of no further force and effect whatsoever'.

G The agreement goes on to provide:

'This entire agreement is subject to the purchaser obtaining a first mortgage bond over the property for the sum of R1 960 000 in the name of the Corporation for which the purchaser shall stand surety and guarantor, such bond to be granted by no later than 15 July 1994, failing which this sale shall be automatically cancelled and of no further force and effect.' (Clause 4.2).

H On 14 July 1994 the applicant's husband, acting on behalf of the applicant, telephoned the first respondent (who had at all material times represented the respondents) and advised him that a bond had been obtained for an amount of R1,66 million. On 15 July 1994 the applicant's attorney addressed a letter to the respondents' attorneys (annexure B to the I founding affidavit) to which I refer in more detail later.

The respondents contend that the agreement lapsed as a result of the non-fulfilment of the suspensive condition contained in clause 4.2 of the agreement, and accordingly refused to give effect to the provisions of the agreement. On 16 July 1994 the fourth respondent sold the property to a J third party for an amount of R2,07 million.

Marais J

A Mr Subel contended that there had been substantial performance of the suspensive condition, which makes the agreement subject to the obtaining of a first mortgage bond. That condition means, of course, that the agreement is subject to the obtaining of a loan against the security of a mortgage bond. (I refer to it as the 'bond clause'.) Miss Fisher, for the B respondents, cogently and persuasively argued that there was not only not substantial performance but effectively no performance of the suspensive clause.

In view of the conclusion to which I have come on other issues, it is unnecessary to go into this question.

The applicant contended that the bond clause was inserted purely for the C benefit of the applicant/purchaser, and could therefore be waived by the applicant; and was so waived before the time for performance had arrived. Therefore the applicant contends that the agreement became unconditional and enforceable. Miss Fisher contended that the clause contained a cut-off date (15 July); the respondents (sellers) had an interest in that D date in the sense that they wanted certainty by that date as to whether they were to be bound by the sale, or not; consequently the clause was for the benefit of both parties; and accordingly could not be waived by the applicant.

The affidavits of both parties contained evidence as to exchanges between the parties during the negotiations prior to conclusion of the contract. E But the rule of interpretation of contracts is clear. The Court may (in certain narrow circumstances) look at the surrounding circumstances or setting of the contract, but may not look at negotiations to interpret a contract. As to this see Delmas Milling Co Ltd v Du Plessis 1955 (3) SA 447 (A) at 454.

F The respondent placed evidence of other circumstances before me (such as that there were other interested purchasers at the time of the conclusion of the contract). It is unnecessary to consider to what extent it is permissible to interpret the contract against this background, which was designed to show that the insertion of the cut-off date was important to, and for the benefit of, the respondents, or what weight to afford it. It G is not necessary because I will assume in favour of the respondents that the cut-off date was inserted at least partially for the benefit of the respondents. It would make no difference to my conclusion if I assumed that the date was inserted purely for the benefit of respondents.

Clauses of the nature in question...