FORM A
FILING SHEET FOR EASTERN CAPE JUDGMENT
							
								ECJ NO: 76
									
PARTIES:			

•	Registrar CASE NO: 2743/06
•	Magistrate:
•	Supreme Court of Appeal/Constitutional Court: SELD OF THE HIGH COURT

DATE HEARD: 03 August 2006
DATE DELIVERED: 12 September 2006 	

JUDGE(S): DAMBUZA J

LEGAL REPRESENTATIVES -
Appearances:
•	for the State/Plaintiff(s)/Applicant(s)/Appellant(s): Adv Eksteen SC and Adv Rocke 	
•	for the accused/defendant(s)/respondent(s):Adv Van Blerk SC and Adv Scott 

Instructing attorneys:
Plaintiff(s)/Applicant(s)/Appellant(s): Goldberg & De Villiers Inc
•	 
Respondent(s)/Defendant(s): Brian Kahn Inc
•	 

CASE INFORMATION -
•	Nature of proceedings	:  INTERIM RELIEF
•	Topic:	

IN THE HIGH COURT OF SOUTH AFRICA
(SOUTH EASTERN CAPE LOCAL DIVISION)
                 CASE NO: 2743/06

In the matter between:

WORTHY HOMES CC                                     FIRST APPLICANT
TRIPLE R DEVELOPERS CC                          SECOND APPLICANT

and

FIRSTRAND BANK LIMITED                          	FIRST RESPONDENT 
COLD CREEK INVESTMENTS 
43 (PTY) LTD 					SECOND RESPONDENTS
IMMOBILI RETAIL INVESTMENTS
(PTY) LTD                        				THIRD RESPONDENT
______________________________________________________________

JUDGMENT 
______________________________________________________________

DAMBUZA J:

1.         This is an application for interim relief to have funds currently held by the first respondent on second respondent’s behalf held in trust, pending registration of transfer of a property in second respondent’s name, alternatively, cancellation of an agreement of sale between applicants and second respondent and outcome of a claim which applicants may institute against the second respondent for damages.  

2.         The second respondent has brought a counter application for an order that the applicants refund to the second respondent the sum of R100 000.00 held by their attorneys as deposit together with such interest as may have accrued in respect thereof. 

3.         The applicants, as owners of property, the remainder of Erf 6892 Walmer in the Nelson Mandela Metropolitan Municipality (the property) sold the property to the second respondent for R17 million plus Value Added Tax of R2 380 000.00.  In terms of the agreement of sale between the parties, the second respondent caused Imperial Bank Limited to furnish a guarantee for the sum of R10 125 300.64 and the first respondent to furnish a guarantee for the sum of R9 154 699.36 to cover the purchase price of the property.  These guarantees were furnished by the Banks to attorneys Goldberg & De Villiers Incorporated of Port Elizabeth who were nominated by the applicants as the conveyancers responsible for transfer of the property in the name of the second respondent.  

3.         The background to the conclusion of the sale is the following:

3.1       On 26 March 2006 the second respondent submitted to the applicants an offer to purchase the property;

3.2       On 27 March 2006 the applicants signed a revised agreement of sale and the revised agreement was submitted to the second respondent as a counter offer;

3.3       The second respondent inserted a clause in the counter offer (Clause 21), appended certain annexures thereto (Annexures A and B) and signed the amended counter offer on 29 March 2006;

3.4       On 30 March 2006 the applicants accepted the amended counter offer by signing it.

4.         Regarding payment of the purchase price, 

            4.1       Clause 1.1 of the agreement states that:

“A deposit of R100 000.00 (ONE THOUSAND RAND) within 2 (two) days of the last signature hereof will be payable to the Conveyancer.  The purchaser hereby authorises the Conveyancer to invest the deposit on its behalf in terms of Section 78 (2) (A) of the Attorneys Act, in an interest bearing Account, interest accruing for the benefit of the Purchaser.  The Deposit, plus accrued interest, shall be refundable to the Purchaser, should the sale fail.”  

4.2       The balance of the purchase price was payable by the second respondent by furnishing the applicants’ attorneys with a bank guarantee for the purchase price and Value Added Tax.  More than one guarantee might be required;

5.         Registration of the property would be effected by the applicants’ attorneys Goldberg & De Villiers Inc, as soon as reasonably possible after compliance with conditions contained in Clauses 14.1 and 14.2 of the agreement of sale;

6.         Clause 14.1 of the agreement of sale states that:

“CONDITIONS PRECIDENT

14.1      MORTGAGE BOND
                        
This sale is subject to the condition that the PURCHASER is granted a loan in the sum of R17 000 000.00 (SEVENTEEN MILLION RAND) within 30 (THIRTY) business days of signature of this agreement by both parties, by a bank or other Financial Institution upon its normal terms and conditions, such loan to be secured by a first mortgage bond to be registered over the property simultaneously with transfer.  The PURCHASER shall take all necessary steps to secure the granting of the loan without delay.  This condition shall be deemed to have been fulfilled upon notification by the Financial Institution to the PURCHASER or his agent that the loan in question has been approved regardless of any condition attaching to such approval or attaching to any loan agreement between the PURCHASER and the Financial Institution provided that in the event of the loan being approved and subsequently withdrawn and the PURCHASER being able to prove that such withdrawal resulted through no fault of his own and he did not conspire to have such loan withdrawn, the PURCHASER shall be entitled to rezile from this agreement.  The onus shall be on the PURCHASER to prove the conditions detailed in this proviso.

Should the above suspensive condition contained in clause 14.1 not be fulfilled on or before the date referred to above, this agreement shall automatically be cancelled and become of no force and effect.  The parties shall have no claim against each other and all the parties will be re-instated in their status quo ante this agreement.  

Notwithstanding the aforesaid, the suspensive provisions contained in clause 14.1 are inserted for the benefit of the PURCHASER and may be waived by the PURCHASER on or before the said date.”

7.         Clause 14.2 entitles the purchaser to conduct due diligence investigation into the property and obliges the applicants to co-operate with and/or provide the second respondent with such assistance as it may need for the purposes thereof.   

8.         On 3 April 2006 Mark Connett (Connett) of Bowman Olivier Estate Agents (Bowman Olivier), the Estate Agents who facilitated the agreement of sale, addressed a letter to Goldberg & De Villiers Inc (the conveyancers) confirming that a deposit of R100 000.00 had been paid directly to the conveyancers as was required in terms of clause 1.1 of the Deed of Sale.   

 9.        On 6 April 2006 Connett addressed a further letter to the conveyancers recording that the 30 day period within which the second respondent had to secure a mortgage loan (or waive the benefit provided for in clause 14.1) would expire on 17 May 2006.

10.       On 17 May 2006 the third respondent, acting as an agent of the second respondent wrote to Bowman Olivier waiving the benefit provided for in clause 14.1.  The contents of the letter from the third respondent are:
“Please can you kindly waiver the bond as the guarantees will be in place within 14 days being 31 May 2006.  If you have any queries please do not hesitate to contact me.” 
11.       On 5 June 2006 the first respondent furnished the conveyancers with a Letter of Undertaking (Number G657/340879/GLO) for an amount of R9 154 699.36.  This amount would be paid to the Conveyancers on receipt of notification (from the Conveyancers) that the property had been transferred into the name of the second respondent and that all bonds which had been registered by the applicants in favour of the Standard Bank of South Africa Limited had been cancelled.    

12.       In terms of the Letter of Undertaking the first respondent reserved the right to withdraw from the undertaking provided that it gave the conveyancers written notice, prior to registration, of its intention to do so.

13.       On 25 July 2006 attorneys Brian Kahn Inc forwarded a fax to the conveyancers, advising that the second respondent was not bound by the agreement of sale for the following reasons:

13.1.   The “business days” referred to in clause 14.1 meant calendar days, other than Sundays or public holidays, but including Saturdays;

13.2.   As the agreement of sale was concluded on 29 March 2006, the period stipulated for the second respondent to obtain a guarantee or waive its right to do so had expired by 17 May 2006 (having expired on 16 May 2006) and the agreement had therefore lapsed. 

The letter ordered the conveyancers not to proceed with registration of 
the transfer.

By this time registration of transfer of the property was due to be effected on 26 July 2006.   

14.       On 26 July 2006 the Conveyancers, responded to the fax of 25 July 2006 from attorneys Brian Kahn Inc advising that:

            14.1    The agreement was concluded on 30 March 2006;

14.2    The term “business days” on the agreement of sale was understood by both parties to mean calendar days excluding Saturdays, Sundays and public holidays;

14.3    The last day for fulfilment of the suspensive condition was 17 May 2006 at 24H00.

15.       On 28 July 2006 the first respondent addressed a letter to the conveyancers giving them seven (7) days notice of its intention to withdraw from the bank guarantee (Letter of Undertaking G657/340879/GLO).  The seven-day period was to expire on 4 August 2006.  

16.       The guarantee which had been received by the conveyancer from Imperial Bank was withdrawn.

17.       It would appear from the affidavit of Soterys Christos Theodosiou (Theodosiou), filed on behalf of the second and third respondents, that the respondents accept that “business day” is a day other than a Saturday, Sunday or a public holiday.  My view is that this is indeed the correct position.  I return to this issue later in this judgment.  

            The respondents maintain, however, that the period for the grant of the bond (or the waiver) expired at midnight on 16 May 2006.

18.       The respondents further take issue with the communication of the waiver to the conveyancers on 17 May 2006.  In his affidavit Theodosiou says:

“I do not know whether the purported waiver embodied in the letter addressed on behalf of the second respondent on 17 May 2006 was conveyed to the applicants’ attorneys on the 17th as Connett claims.  I challenge that this is so in the light of the content of Connett’s letter of 18 May 2006 which does not refer to any discussion either of the previous day or at all.”  

BRENDA HELEN BOTHA, a managing member of the first applicant states in the founding affidavit that the contents of the letter(s) of the 17 May 2006 from the third respondent were conveyed to the conveyancers. In my view this statement accords with the probabilities. The fact that the letter from Bowman Olivier to the conveyancers on 18 May 2006 does not refer to a conversation of the previous day does not detract from Helen’s undisputed assertion.

19.       Theodosiou, states further that the second respondent is in urgent need of the R9 154 699.36 in respect of which the first respondent issued the guarantee in issue.  These funds, according to Theodosiou, have been earmarked for payment of various contractors and other parties engaged by the second respondent in respect of residential and retail building projects.  The payments were due by the close of business on 4 August 2006.  

20.       The main issue for determination when the 30-day period stipulated in the clause 14.1 of the agreement of sale expired.

21.       Mr Eksteen, who appeared on behalf of the applicants submitted that the first step in the resolution of this issue is to look at the words used in the agreement.  He submitted that the words used in the agreement (“within 30 business days of the signing of the agreement”) clearly indicate the parties’ intention that the relevant period be computed with the exclusion of the date on which the agreement was signed by both parties. 

He submitted that the parties intended that the 30 day period should    start from 31 March 2006.

22.       The submission on Respondents’ behalf was that the civil computation method should be applied in determining whether waiver was exercised within 30 business days.  In this regard Mr Van Blerk who appeared on behalf of the second and third respondents, relied on Joubert v Enslin 1910 AD 6 at 37 in which plaintiff had a right to purchase a farm “within 14 days from the date of the signing of the agreement”.  The court held that the right expired on 4 October 1909. The period was calculated by using the civil method of computation and thus including the day of the signing agreement i.e. 21 September 1909 and excluding the last day of the 14 days.

23.       I agree with Mr Eksteen’s submission and it is trite that the intention of the parties to an agreement is paramount in determining how a period stipulated in the agreement, should be computed.  

“When the contract fixes a time for performance it will often be necessary to carry out a computation of time in order to ascertain when the fixed time expires.  What does “seven days after Tuesday” mean?  The first rule, before turning to the recognized methods of computation of time, is to seek the common intention of the parties from the wording of the contract and such evidence as may be admissible…. A fixed time “after” a particular event indicates an intention to exclude the day on which the event occurs, but is not necessarily decisive; “within seven days of” a particular event was intended to exclude the day or event.”  See: Christie; Law of Contract in South Africa, 4th Edition at 570, National Bank of South Africa Ltd v Leon Leison Studios Ltd 1913 AD 213 at 218, Nell v Mulbarton Garden (Pty) Ltd 1971

24.       Mr Van Blerk’s submission seems to ignore this basic principle.

The question is whether, in this case, the intention of the parties is clear from the words “within 30 (thirty) business days of signature of this agreement by both parties”. If the intention is clear, the matter ends there; if not, recourse has to be had to the recognised methods of computation.  

The Shorter Oxford English Dictionary describes the word “of” as indicating “a point of time from which something begins” (my emphasis).  In this case that point of time would be when the signing of the agreement by both parties is complete (i.e. after both parties have signed the agreement).  However, the parties were not dealing with fractions of days.  The last signature on the agreement was appended on 30 March 2006. That day would be excluded when computing the 30 day period.    

Innes J, in Nation Bank of South Africa v Leon Levsin Studios Ltd (supra) at 218 said: 

”The parties knew that payment made at any time on the 1st was due payment; they were not dealing with factions of days, and they clearly intended to allow the lessee fifteen days after the date when he became bound to pay, in order that he might avoid forfeiture.  That being so, the computation should exclude the first day and include fifteen full days thereafter, so that the stipulated period would end with the sixteenth day of each month.”

I consider these remarks equally relevant in this case.

25.       In Nell v Mulbarton Garden Pty Ltd 1971 SA 294 where clause 10 of a deed of sale provided that:

“In the event of the purchaser failing to pay any instalment on the due date thereof, or committing a breach of this agreement, and failing to make such payment(s) or to remedy such breach/breaches within seven days of the posting of a written notice sent to the purchaser by registered requiring the purchaser to do so . . . then the seller shall be entitled without further notice, to declare the deed of sale cancelled and of no further force and effect.” 
            
Human J held that the words “within seven days of the posting of a written notice” meant and were intended to mean “within seven days after the posting of a written notice” and that the day of the posting of the letter should be excluded.  (My emphasis).

26.       In Nell’s case (supra) the court held that the words used in the contract clearly revealed the intention of the parties and further that it is only when the contract affords no guide as to the meaning of the contracting parties that the strict legal method of computing the period fixed comes into operation.  See also: Holmes v North Western Motors Ltd 1968 (4) SA 198.  In  Azisa (Pty) Ltd v Azisa Media CC & Another 2002 [2] All SA 488 where no clear and definite intention regarding computation of the period in question could be deduced from the language of the bond the court held that the civilian method of computation applied.

27.       I return briefly to the issue of Saturdays, Sundays and Public Holidays. It was correctly submitted on behalf of the applicants that as the waiver of the benefit had to be communicated to conveyancers, the parties must have intended that such waiver be communicated when the offices of the attorneys in question were open for business. It was common cause during argument that the established practice in Port Elizabeth was that attorneys’ offices do not open for business on Saturdays, Sundays and Public Holidays. I am therefore not satisfied that the parties could not have intended that Saturdays be included in the computation of the 30 business days.

28.       The submission on behalf of the respondents that the waiver occurred after the expiry of the period stipulated for the fulfilment of the suspensive condition is based on the erroneous premise that the first step in computing the period in question is to apply the civil method of computation.  Innes J, in the case of Joubert Enslin (supra) at 37 clearly stated that:  

“But it must always be born in mind that methods of legal computation will only be resorted to where the parties have left the matter open.  The golden rule applicable to the interpretation of all contracts is to ascertain and to follow the intention of the parties, and, if the contract itself, or any evidence admissible under the circumstances, affords a definite indication of the meaning of the contracting parties, then it seems to me that a Court should always give effect to the meaning.  It is only when the contract affords no guide that the strict legal method of computing the period fixed comes into operation.”

The reason that the court in Joubert v Enslin (supra) resorted to the civil method of computation was that the intention of the parties to the agreement was not clear from the agreement itself and/or their conduct pursuant to the conclusion thereof.           

29.       Even if it were to be argued that in this case the parties’ intention is not clear from the words used in the contract, the conduct of the parties after the conclusion of the agreement indicates or confirms that their intention was that the day of the signature of the agreement be excluded when computing the 30 day period. For example, the R100 000.00 deposit payable ”within 2(two) days of the last signature” was paid on Monday, 3 April 2006; the agreement having been concluded on Thursday, 30 March 2006. The two day period was computed from 31 March 2006 to 3 March 2006 (thus excluding the day of the last signature the agreement and excluding Saturdays, Sundays and Public Holidays.) 

Further, the letter dated 6 April 2006 from Connett addressed to the conveyancers recording that the period within which the second responded was to obtain a mortgage loan would expire on 17 May 2006 is another indication that the intention of the parties was that the period start running on 31 March 2006.  The contention on behalf of the second respondent that Connett was not acting on behalf of the second respondent is, in my view, irrelevant. The letter (or waiver) dated 17 May 2006 by the third respondent on behalf of the second respondent confirms that this is how the second respondent intended the period to be computed.  

30.       It was submitted on behalf of the respondents that “the date of signing of this agreement by both parties” was the 29 March 2006, when the second respondent signed the counter offer. I do not agree with this submission.  It is trite that there can be no agreement unless both parties accede to the terms thereof. In this case the consensus on the terms of the agreement was reached on 30 March 2006. The date of signature of the agreement can only be the 30 March 2006 when the seller accepted the amended counter proposal by signing it.

31.       Mr Eksteen submitted that the balance of convenience favours the applicants in this case. I agreed with this submission. The funds in question had been earmarked for payment of the purchase price or part thereof. If they are released and the applicants succeed in the anticipated claim for either specific performance or cancellation of the agreement and a claim for damages, the applicants may suffer irreparable harm. The second respondent had indicated that it needs the funds to pay its sub-contractors in respect of certain contracts.  This indicates that the second respondent intends to use the funds. The applicants’ allegation that second respondent has no other assets on which they may satisfy judgment that they might obtain is undisputed. I find no indication to the contrary on the evidence before me. On the other hand the funds will remain available to the second respondent should the applicants’ anticipated claim fail. I am satisfied therefore that the balance of convenience favours the granting of the relief sought by the applicants.           

32.       Mr Scott, who appeared with Mr Van Blerk, submitted that applicants had to prove that the relief sought fell within one the following types:

32.1    an Anti- dissipation interdict; or

32.2    an Interdict against funds earmarked for a specific purpose. 

He contended that the applicants had failed to prove entitlement to the relief on any of these grounds. 

33.       Mr Scott argued that as the second guarantee had been withdrawn and only half of the purchase price was guaranteed, the applicants were most likely to sue for cancellation of the agreement and claim damages, rather than specific performance. The funds held by the first respondent, so the argument went, had been earmarked for payment of the purchase price, not damages. 
34.       For the reasons I have stated above above, I am satisfied that the applicants have made out a good case for the relief they seek. For the same reasons the counter application cannot succeed.  The submissions made by Mr Scott are already part of the considerations taken into account in reaching this conclusion. The funds were set aside for a specific purpose, i.e. payment of the purchase price. The purchase price was to be paid in satisfaction a contract of sale. I am satisfied that a claim for damages arising from the same contract of sale in the circumstances of this case is a sufficiently related purpose to the original one to justify the granting of the relief sought. In any event the applicants remain equally entitled to sue for either specific performance or cancellation of the contract and claim for damages.   

Consequently the following order will issue:

(a)       That the First Respondent pay into the Trust account of Messrs Goldberg & De Villiers Inc, being Trust account number 712743638 held at ABSA Bank, by 15 September 2006, the sum of R9 154 699,36 presently held by the First Respondent in terms of Letter of Undertaking number G657/340879/GLO, dated 5 June 2006;

(b)       That the aforesaid sum, together with a further sum of R100 000,00 already paid by the Second Respondent to attorneys Goldberg & De Villiers Inc as a deposit, shall be held in an interest bearing Trust account by attorneys Goldberg & De Villiers Inc, Port Elizabeth, pending registration of transfer of the property, alternatively, the outcome of an action to be instituted by the Applicants against the Second Respondent for specific performance by the Second Respondent of its obligations in terms of the agreement of sale concluded between the Applicants and the Second Respondent on 30 March 2006 and as evidenced by annexures “BHB3”, “BHB4” and “BHB5” to the founding affidavit annexed hereto, alternatively, for cancellation of the agreement and damages flowing from such cancellation, which the Applicants may elect;  
(c)        That, failing Second Respondent remedying its breach of contract, the Applicants institute the action contemplated by paragraph 2.2 hereof within 60 days of the granting of this order;

(d)       That the Second and Third Respondents pay the costs of this application jointly and severally, such costs to include costs of two Counsel and to be on attorney and own client scale as per the Deed of Sale. 

_________________________
N DAMBUZA
JUDGE OF THE HIGH COURT                            30 August 2006