South Africa: Kwazulu-Natal High Court, Durban

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Mohanlall v Chetty and Others (D10294/2019) [2020] ZAKZDHC 63 (20 November 2020)

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SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

IN THE HIGH COURT OF SOUTH AFRICA

KWAZULU-NATAL LOCAL DIVISION, DURBAN

Case No: D10294/2019

In the matter between:

ISHWARLALL MANESH MOHANLALL APPLICANT

and

ALVAN CHETTY FIRST RESPONDENT

ANISHA CHETTY SECOND RESPONDENT

KEVIN CHETTY THIRD RESPONDENT

TRACY CHETTY FOURTH RESPONDENT

LANGENHOVEN PISTORIUS

MODIHAPULA ATTORNEYS FIFTH RESPONDENT

SHERIFF, INANDA AREA ONE SIXTH RESPONDENT

REGISTRAR OF DEEDS SEVENTH RESPONDENT

ORDER

It is ordered:

The rule nisi is confirmed in the following terms:

a) The First, Second, Third and Fourth Respondents are interdicted and restrained from selling, pledging, alienating and hypothecating the immovable property described as:

ERF […] REDFERN

REGISTRATION DIVISION FU

PROVINCE OF KWAZULU-NATAL

IN EXTENT 191 (ONE HUNDRED AND NINETY

ONE) SQUARE METRES

with physical address: […], Redfern, Phoenix, KwaZulu-Natal.

b) The Seventh Respondent is interdicted from transferring the property onto any third parties’ names, save for allowing for the transfer of the property from the names of the First, Second, Third and Fourth Respondents onto the names of the Applicant.

c) The conveyancers shall be the Applicant’s attorneys of record.

d) The First, Second, Third and Fourth Respondents are ordered to forthwith sign all transfer documents, once called upon to do so by the Applicant’s attorneys of record, to give effect to the transfer of the immovable property described above.

e) If the First, Second, Third and Fourth Respondents fail to sign all transfer documents, when called upon to do so by the Applicant’s attorneys of record, then the Sixth Respondent or his lawful deputy is duly authorised to sign all documents on behalf of the First, Second, Third and Fourth Respondents, to give effect to the transfer of the immovable property to the Applicant.

f) The First, Second, Third and Fourth Respondents are ordered to pay the costs of this application on a scale as between attorney and own client, jointly and severally, the one paying the others to be absolved.

g) There is no order for costs against the Fifth, Sixth and Seventh Respondents.

h) The Applicant’s attorneys of record shall, after discharging all payments and expenses incidental to this transfer, retain the proceeds of the purchase price in trust, up and until the Applicant’s costs have been paid, such costs being either taxed or agreed between the parties, and only thereafter release the balance of the proceeds of the purchase price to the First, Second, Third and Fourth Respondents.

JUDGMENT

D. Pillay J

Introduction

[1] The first to fourth respondents (‘the respondents’) offered to sell their property at […], Redfern, Phoenix (‘the property’) to the applicant for R600 000. The applicant counter offered R550 000. The respondents drafted the agreement of purchase and sale of the property for R550 000, which was concluded on 10 September 2019. This is an urgent application to enforce that agreement.

[2] On 16 September 2019 Langenhoven Pistorius Modihapaula Attorneys (LPM Attorneys) wrote to the applicant informing him that they had been instructed to attend to the transfer of the property into his name, advised him of their requirements and acknowledged that a bond might also be registered. On receipt of that email the applicant alleged that he telephoned the first respondent to inform him that he had already applied for a bond with Nedbank and that the bond would be granted for the full purchase price, which would be paid on registration of transfer of the property. The first respondent was adamant that he wanted R550 000 in cash.

[3] The applicant telephoned Christine van Zyl of LPM Attorneys to inform her that the agreement was not a cash sale. By email dated 1 October 2019, Kevin Chetty, the third respondent, enquired from Ms van Zyl whether the applicant had signed the documents. After speaking to the applicant, Ms van Zyl responded by email on the same day to the third respondent, copying in the applicant, to confirm that the applicant was in the process of applying for a bond and that as soon as they received confirmation that his bond had been granted, they would arrange for the signing of the documents.

[4] In a dramatic about turn, on 3 October 2019 LPM Attorneys wrote to the applicant confirming that they acted for the respondents who instructed them as follows:

‘It is our instructions that the parties agreed that the sale would not be subject to the provision of a bond and that the sale would in fact be a “cash deal”.

However, when recording the transaction, the parties made use of a so-called “standard” agreement provided by Lipco. In the process, one of the standard terms making the transaction subject to a bond being obtained, was inadvertently left in. This clause does not reflect the true intentions of the parties and the agreement will have to be rectified.

Additionally, we confirm that while the agreement was already signed on 10^th of September 2019, you have not yet provided any guarantees for the payment of the purchase price, which is a critical requirement for the transfer process to proceed.

Kindly then provide us with the necessary guarantees within 7 (seven) days from the date hereof to enable us to proceed with the transaction. Alternatively you can pay the full purchase price to our offices to be held in trust pending registration.

Unfortunately, at least one of the above should occur for you to be deemed to comply with your obligations in terms of this agreement.’

[5] On 25 October 2019 the applicant consulted his attorney who wrote to LPM Attorneys on the same day, pointing out that although the agreement did not include a time frame for the approval of the bond, the applicant would be able to furnish such approval by 7 November 2019; but if the respondents intended to cancel the agreement before that date, the applicant would proceed against them.

[6] On 5 November 2011, Nedbank issued a ‘quotation for a home loan’ congratulating and offering a loan to the applicant. On 7 November 2019 the applicant’s attorney notified LPM Attorneys of the applicant’s intention to enforce the agreement. In view of the respondents having received a cash offer allegedly for R675 000 for the property from another party, the applicant’s attorney requested an undertaking that the respondents would not sell the property to any third party, pending the finalisation of an application to compel the transfer.

[7] On 22 November 2019 LPM Attorneys received proof of the bond having been granted in favour of the applicant.

[8] The applicant’s attorney gave notice to the respondents personally of the applicant’s intention to compel the sale and called on them to remedy their breach. Not receiving any response from the respondents after the letter of 25 October 2019, the applicant’s attorneys telephoned LPM Attorneys on 3 December 2019. LPM Attorneys confirmed that the property was being sold to a third party. A Deeds Office search confirmed that the transfer to the third party had been lodged at the Deeds Office.

[9] The applicant launched this application on 4 December 2019 to secure a rule nisi, interdicting the respondents from selling the property to a third party, and ancillary relief against LPM Attorneys, the fifth respondent; the Sheriff, Inanda Area One, the sixth respondent; and the Registrar of Deeds, the seventh respondent.

[10] The respondents (excluding the fifth, sixth and seventh respondents) opposed the application, alleging that the applicant failed to satisfy the purchase price, that he was placed in breach, that he had failed to remedy the breach, and that the sale was cancelled. They had subsequently sold the property to Mr R Chetty on 21 October 2019.

[11] The third respondent insisted that the purchase price was a ‘cash deal’ meaning that the applicant had the monies readily available. As the property was vacant and the utilities had to be paid, the respondents had decided to sell the property urgently. The applicant was aware of these reasons for the respondents selling the property.

[12] Having failed to receive the purchase price or confirmation of the approval of the bond, LPM Attorneys despatched a letter dated 3 October 2019. It transpired that LPM Attorneys drafted two letters with the same date. The applicant received only one of these letters. LPM Attorneys subsequently confirmed that they had not sent the other letter. Notwithstanding, the unsent letter dated 3 October 2019 surfaced as annexure ‘B’ to the answering affidavit. It is similar to the sent and received letter of the same date, save that that the applicant’s alleged breach was described as a failure ‘to pay the deposit herein up to date’. No deposit was payable under the agreement.

[13] The third respondent asserted that he ‘waited patiently’ for the applicant, and when, by Thursday 10 October 2019 the seven days’ notice referred to in the letter of 3 October 2019, had expired, he sold the property to Mr Chetty. However, the proforma account despatched to Mr Chetty with a note ‘will advise by Thursday if Manesh is buying or not’ bears the date 7 October 2019.

[14] On 11 and 21 October 2019 the third and the first respondents called the applicant to confirm that they had cancelled the sale and dispatched an email to that effect to him. On 3 December 2019 Ms Human of LPM Attorneys sent an email to the applicant reiterating that the agreement did not reflect the correct intentions of the parties which was that the sale would be a ‘cash’ deal; that they had not received the applicant’s attorneys’ letter of 25 October 2019; that the applicant had failed to secure the purchase price timeously and to deliver the guarantees they had requested within seven days; that the quotation for the bond was conditional on the verification process which had not been completed and, consequently, the respondents had cancelled the agreement. Furthermore, if it transpired that the agreement provided for a bond, then the respondents would argue that the date of the procurement of the bond was to coincide with the terms of their letter demanding the delivery of the guarantee. As the applicant had failed to procure a bond within the seven days, the suspensive condition was not met, and the agreement should be ‘deemed to have lapsed’. Lastly, with the cancellation of the sale, LPM Attorneys’ mandate from the respondents had been terminated.

Issues for Determination

[15] Two issues arise for determination:

a) What were the terms of the agreement?

b) Were the respondents entitled to cancel the agreement?

What were the terms of the agreement?

[16] The terms of this agreement material to this application are the following:

‘3.2. The agreement is subject to the approval of a bond by a financial institution, to the value of the agreed purchase price.

…

4. PURCAHSE PRICE

4.1 The agreed purchase price is R550 000.00

Five hundred and fifty thousand rand only (Cash Offer)

4.2 The purchase price must be paid upon registration transfer.

…

TRANSFER & ATTORNEYS COSTS

5.1Transfer must be effected by a Conveyancer nominated by the Buyer on the ___________ of _____________ 2020. Or as soon as reasonably possible.

5.2 The transfer will only proceed once the purchase price has been paid by the Buyer.

5.3 All costs associated with the transfer must be paid by the Buyer. This includes cost of transfer, transfer duty, legal fees, Deeds Office fees, and incidental expenses. These costs will be paid on demand of the Conveyancer.

…

8. CANCELLATION FOR BREACH

8.1 Should either the Seller or the Buyer breach the terms of this agreement, and fail to correct said breach within 7 (seven) days of receiving written notice to do so, the aggrieved party may cancel the agreement by giving written notice. The aggrieved party will be entitled to sue for specific performance and/or damages.

8.2 If there is delay in registration of transfer, and the delay is caused by either the Seller or the Buyer, the aggrieved party will be entitled to claim interest calculated on the purchase price at a rate of 16% per annum, calculated from the date on which the defaulting party receives notice to stop the delay, until the date that transfer takes place.

…

10. ENTIRE CONTRACT

10.1 This document contains all the terms and conditions agreed to by the Seller and the Buyer.

10.2 No undertaking, warranty or representation not included in this document will be valid or have any effect unless it is placed in writing, signed by both the Seller and the Buyer and attached to this document.

…’

[17] Section 2(1) of the Alienation of Land Act 68 of 1981 (‘the Act’) provides the following:

‘No alienation of land after the commencement of this section shall, subject to the provisions of section 28, be of any force or effect unless it is contained in a deed of alienation signed by the parties thereto or by their agents acting on their written authority.’

[18] In addition to s 2(1) of the Act, clause 10 of the agreement disavowed any other terms of the agreement unless they were reduced to writing. If the written agreement did not reflect the respondents’ intention, it had to be amended. It was not amended. Consequently, the only valid agreement between the parties is the written agreement signed by the parties, the material terms of which are quoted above. Applying the common law principles of pacta sunt servanda and caveat subscriptor, the respondents are bound by the written agreement.

Were the respondents entitled to cancel the agreement?

[19] The words ‘cash offer’ means that the sale was for nothing other than cash, not anything in kind or by way of set-off and the like. That the applicant would secure the cash by way of a bond from a financial institution is self-evident from clause 3.1 of the agreement. If the intention of the respondents was to receive payment in cash by some means other than by raising a bond, then the written agreement does not reflect that intention. The respondents could not reasonably and in good faith assume, without more, that the applicant who lived in the low income, working class township of Redfern in Phoenix would readily have disposable cash of R550 000.

[20] The respondents claim that the agreement does not reflect the parties’ true intention, is also false. They procured the standard term agreement. They completed it themselves before securing the applicant’s signature. If time was of such essence to the respondents, then they would have said so in the agreement. The agreement stipulates no time by which the bond had to be secured, or payment must be made. Remarkably, their opposing affidavit offers no explanation for clause 3.2 of the agreement which permits the applicant to secure a mortgage bond. In itemising the material terms of the agreement, the respondents disingenuously ignore any reference to clause 3.2.

[21] The explanation for clause 3.2, which is that that the reference to the bond was ‘inadvertently left in’ the standard term agreement, emerges only in LPM Attorney’s letter dated 3 October 2019 (annexure ‘I’) to the founding affidavit. By the time they concluded the agreement with Mr Chetty, they had to be aware that clause 3.2 did not accord with their intention of selling the property for cash without having to wait for the registration of a bond. Yet, inexplicably, the respondents used the same standard term agreement, leaving intact the provision for a bond in clause 3.2.

[22] It was common cause that the parties had telephonic discussions in September 2019. The third respondent had to be aware, if not from such conversations, then from the agreement, that payment was dependent on a bond being granted. Pretentiously, he was ‘shocked’ when he was advised in mid-September 2019 that the purchase price and proforma invoice had not been paid. Neither was payable until the bond had been granted and LPM Attorneys had issued their guarantee requirements. This is evident from LPM Attorneys’ initial letter enclosing the proforma account which read as follows:

‘Attached hereto please find our Proforma Statement of account for your kind attention. Please arrange for this amount to be available on date of signing of your documents. Note that this amount does not include the bond costs which would be due to the bond attorneys, should you apply for a loan to cover the purchase price.

3. In terms of the deed of sale we wish to draw your attention to the following:

3.1 The full purchase price in the amount of R550 000.00 is due and payable by the Purchaser in cash [o]n registration in the name of the Purchaser to the transferring attorneys who shall deliver acceptable Bank guarantee(s) in a form and manner as prescribed by the transferring attorneys. …

5. We shall contact you in due course to attend to the signing of the documents.…’ (sic)

[23] The respondents’ assertion that the applicant applied for the bond as late as 5 November 2019 is also false. The third respondent claimed to be have been advised that annexure ‘L’ to the founding affidavit was an online application for a bond by the applicant. Contrary to such advice, the quotation manifestly offers the applicant congratulations and a loan. The third respondent does not disclose who his adviser was. However, his attorneys ought to have known the processes and time taken to apply for a bond. They should have pointed out to him that annexure ‘L’ was a positive indication that the bond would be approved once the applicant accepted its terms. Disappointingly, those representing the respondents in the preparation of his answering affidavit appear not to have taken any measures to mitigate the obvious misrepresentation by the respondent in suggesting that annexure ‘L’ was a bond application, and that the applicant had deliberately delayed in applying for a bond. And if they had advised him of the Act and the common law principles cited above, he clearly did not heed such advice.

[24] Disingenuously, the respondents denied knowing that the applicant was in the process of obtaining a bond. They cannot and do not deny that LPM Attorneys confirmed in writing to both sides that the applicant was in the process of obtaining a bond. He secured the bond in less than two months after signing the agreement. This is not an unusual or unreasonable time. Putting the applicant on terms to provide the guarantees in a shorter period – seven days – was unreasonable and unfair. It shifted the goal post beyond the latitude granted in the agreement, upon which the applicant was entitled to rely. Furthermore, to remedy delays in the transfer, clause 8.2 of the agreement entitled the aggrieved party to claim interest, not cancellation.

[25] The respondents wanted to extricate themselves from the agreement with the applicant by any means. Hence, by invoking the breach clause they contrived to put the applicant on terms to provide guarantees. The difficulty this created for the respondents is that the applicant was not in breach of the agreement. Clause 8.1 could only be invoked when the buyer was in breach of the agreement. The applicant was performing precisely in terms of the agreement and the respondents were aware of this at least by 1 October 2019. Consequently, invoking cancellation clause 8.1 when the applicant was not in breach, was precipitous and mala fide.

[26] Furthermore, the letter dated 16 September 2019 had informed the applicant that the transferring attorneys to whom the bank guarantees were to be delivered would inform him of the ‘form and manner’ of the bank guarantees that would be acceptable to the transferring attorneys. The applicant had received no request for a bank guarantee in any form or manner. Instead, LPM Attorneys had advised him that they would contact him in due course to attend to the signing of the document which they also had not done. The purchase price was payable upon registration of transfer. The documents had not even been drafted let alone lodged for transfer.

[27] Contriving to place the applicant in breach by demanding the guarantees also compounded the mala fides of the respondents. They disputed saying to the applicant that they had made the biggest mistake of their lives by selling the property for less than its true worth of R675 000. However, this allegation by the applicant rings true. Although the purchase price appears to be the same, for some reason, the respondents preferred to sell to Mr Chetty. Whatever that reason was, it would explain the respondents’ machinations and the unseemly haste in concluding the agreement with Mr Chetty. If they had allowed the sale to the applicant, transfer could have been registered about the same time in December as the transfer to Mr Chetty. Ironically, the conduct of the respondents precipitated this application, which has thwarted their plans to sell the property urgently.

[28] The general rule applicable to an application in which a final interdict is sought is the Plascon-Evans test for, in this instance, rejecting the respondents’ version in favour of the applicant. The respondents failed ‘to raise a real, genuine or bona fide dispute of fact . . . and the Court is satisfied as to the inherent credibility of the applicant's factual averment, . . . the allegations or denials of the respondent[s] are so far-fetched or clearly untenable that the Court is justified in rejecting them merely on the papers . . .’.[1]

The respondents’ opposition is rejected. The applicant succeeds.

Order

[29] The rule nisi is confirmed in the following terms:

a) The First, Second, Third and Fourth Respondents are interdicted and restrained from selling, pledging, alienating and hypothecating the immovable property described as:

ERF […] REDFERN

REGISTRATION DIVISION FU

PROVINCE OF KWAZULU-NATAL

IN EXTENT 191 (ONE HUNDRED AND NINETY

ONE) SQUARE METRES

with physical address: […], Redfern, Phoenix, KwaZulu-Natal.

c) The conveyancers shall be the Applicant’s attorneys of record.

g) There is no order for costs against the Fifth, Sixth and Seventh Respondents.

____________________________________

D. PILLAY J

Judge of the High Court of KwaZulu-Natal

APPEARANCES

Date of Hearing : 13 November 2020

Date of Judgment : 20 November 2020

Counsel for the Applicant : Advocate P. Haasbroek

Applicant’s Attorneys : Rajesh Hiralall Attorneys

Ref: Mr Hiralall/JM

Tel: (031) 507 5699

Email:hiralallattorneys@telkomsa.net

Counsel for the Respondents : Advocate C. Gajoo

1^st, 2^nd, 3^rd, 4^th Respondents’ Attorneys : Bianca Seekola & Associates

Tel: (081) 306 9513

Email: bee@legalbee.co.za

[1] Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (A) at 634I-635C.