Republic of South Africa

REPORTABLE

IN THE HIGH COURT OF SOUTH AFRICA

(CAPE OF GOOD HOPE PROVINCIAL DIVISION)

							CASE No:  12069/1999
                                                                    
In the matter between:

SAMSON BUILDINGS (PTY) LTD              			Plaintiff

and

ROBERT ANDREW BEAUMONT N O				First Defendant
HANS JURIE ZIETSMAN N O					Second Defendant 
ZIETSMAN ATTORNEYS						Third Defendant 

_____________________________________________________________________

JUDGMENT  DELIVERED  :  15  AUGUST  2007
________________________________________________________________________

MOOSA, J:
Introduction
1.	This matter came before me for adjudication between plaintiff and third defendant only.  Plaintiff withdrew the action against first and second defendants on an earlier occasion and tendered their party and party costs.  For the sake of convenience, I will address the third defendant in this judgment as defendant and the other parties as plaintiff and first and second defendant.  The plaintiff and defendant agreed that the matter be adjudicated on the basis of a stated case.  In support thereof they  prepared a “Statement of Agreed Issues”.  In addition thereto, plaintiff tendered oral evidence in support of its case while defendant did not tender any oral evidence in support of its case.

The agreed facts
2.	The agreed facts can be summarised as follows:  defendant prepared an offer to purchase which was signed by the Trust after certain amendments were effected;  the offer was submitted to plaintiff for consideration and acceptance;  plaintiff, after amending the offer in five respects, initialled the alterations, signed the offer and sent the document to defendant;  defendant, on receiving the document, contacted Mr Beaumont, acting for the Trust, and informed him telephonically of the amendments;  Mr Beaumont nor the Trust objected to the amendments;  defendant did not cause the Trust to initial the amendments;  plaintiff instructed defendant to attend to the registration of transfer, which instructions defendant accepted;  the Trust performed in terms of the amendments until registration of transfer (the issues of clause 14.1 did not arise prior to the transfer of the property in question);  after registration of transfer, the Trust refused to pay the occupational interest provided for in clause 14.1 of the Offer to Purchase, having been requested to do so by defendant and the occupational interest and the interest thereon to 13 March 2007 is in the amount of R240 000.

Amendment to offer of purchase
3.	The amendments to the Offer to Purchase made by plaintiff are as follows: clause 2 was  amended by increasing the purchase price from R2 000 000 to R2 050 000;  clause 2.1 was amended by increasing the deposit from R700 000 to R750 000;  clause 9 was amended by changing the agent’s commission from 5% of the purchase price to R100 000; and clause 14.1 was amended by changing the interest rate from 10% to 15%, but the original rate of 10% was reinstated and by substituting the word “registration” for “occupation”. These amendments were initialled by the plaintiff but not by the Trust.  The Trust performed in terms of all the amendments save and accept the payment of occupational interest in terms of clause 14.1.  The crux of the dispute between plaintiff and defendant is the payment of the occupational interest.

Issues
4.	In terms of the stated case there are essentially two issues that have been identified by the parties.  The first issue is whether the agreement which is annexure “A” to the Particulars of Claim, is invalid for want of compliance with the formalities provided for in S 2(1) of the Alienation of Land Act, 68 of 1981 (the “Act”).  The second issue is, if the agreement is invalid, whether the Trust would have concluded the agreement in question on the basis of clause 14.1 as amended by plaintiff and the consequences flowing there from.

Plaintiff’s and Defendant’s case
5.	Plaintiff’s case is that annexure “A” is invalid for want of compliance with the Act whereas defendant’s case is that annexure “A” is valid and binding in that it is in writing and has been signed by both parties and accordingly complies with the provisions of S 2(1) of the Act.  The relevant portion of S 2(1) states:
“No alienation of land … shall … be of any force or effect unless it is contained in a deed of alienation signed by the parties thereto…”
	   Section 2(1) and its predecessors required that the whole of the contract of sale and purchase or, at least the material terms thereof, be reduced to writing.  Corbett, JA  (as he then was) in Johnstone v Leal 1980 (3) SA 927 (A) at 937 said:
“The material terms of the contract are not confined to those prescribing the essentialia of a contract of sale, viz the parties to the contract, the merx and the pretium but include, in addition, all other material terms…”   

Testimony
6.	Mr Koos van Tonder (“Mr van Tonder”), an estate agent from Mossel Bay, testified that he was approached by Mr Beaumont with whom he had dealt with in the past, to find him a suitable property.  Mr van Tonder identified plaintiff’s property as a suitable one and obtained a written mandate to sell from plaintiff.  Defendant was instructed to prepare an Offer to Purchase, which was initialled and signed by Mr Beaumont. The Offer to Purchase was then sent to Mr van Tonder who, in turn, sent it for signature to Mr Willem Klopper, acting on behalf of plaintiff.  On 10 September 1997, Mr Willem Klopper discussed the proposed amendments with Mr van Tonder:  

7.	Mr van Tonder testified further that he discussed the proposed amendments with Mr Beaumon who was amenable to all the amendments, save for the increase of the occupational interest from 10% to 15%.  Mr van Tonder reported back to plaintiff who was now represented by Mr Stephanus Klopper in the absence of Mr Willem Klopper.  He agreed to reduce the occupational interest from 15% to 10% as originally proposed.  The amended Offer to Purchase, duly initialled and signed by plaintiff, was sent to Mr van Tonder.  After discussing the final amendments with Mr Beaumont, he took the document to defendant who was appointed as the conveyancer by plaintiff.   Under cross-examination Mr van Tonder testified that his impression was that Mr Beaumon had no objection to the amendments and as far as his knowledge was concerned it included the amendments to clause 14.1. He also testified that in his dealings with Mr Beaumont, he found him to be honest, a man of integrity and honour, one who could be trusted and not one who would take a chance. 

8.	Stephanus Klopper, a director of plaintiff, testified that in the absence of his brother, Willem Klopper, he concluded the negotiations with Mr van Tonder for the sale of the property to the Trust.  He confirmed the testimony of Mr van Tonder with regard to the closing negotiations.

Evaluation
9.	With that backdrop, I turn to deal with the validity or invalidity of annexure “A” for want of compliance with the Act and the consequences that flow from such decision as set out in the stated case.  The plaintiff submits that the amended terms and conditions amounted firstly, to material terms of the contract and secondly, constituted a counter offer which was not accepted in writing as required by S 2(1) of the Act.  Plaintiff contends that the amended terms and conditions were accepted only orally and in part and in the circumstances the agreement is invalid.  The defendants’ submission, on the other hand, is that for the agreement to be valid, it has to comply with two formalities.  Firstly, the alienation of the property must be contained in a written document of alienation and secondly, the document must be signed by the parties.  Defendant contends that the offer to purchase complies with the two requirements.  

10.	It is common cause that the amendments to the offer of purchase were inserted by plaintiff after Mr Beaumont had signed the document.  Such amendments related to the purchase price, the deposit payable, the interest rate, the payment of occupational interest and the agent’s commission.  In my view these constituted material terms of the contract.  (Johnstone v Leal  (supra) at 937H.)  In order to comply with S 2(1) such amendments had to be reduced to writing and signed by the parties.  It is common cause that such amendments were reduced to writing and initialled by the seller.  It was not initialled or signed by the purchaser.  Defendant contends that the absence of its signature to the amendments does not detract from the validity of the document.

11.	Adv Kantor, on behalf of defendant, submitted that the amendments were in writing and the only issue is whether they should have been initialled by the purchaser.  He submitted that there is nothing in S 2(1) of the Act which requires an amendment to be initialled as pleaded by plaintiff.  It is sufficient if the alienation is contained in a written document and the document is signed by the parties.  The fallacy in the argument is that he loses sight of the fact that the amendments, although in writing, was inserted post ex facto and as such constitutes a counter offer and such counter offer must be signed in compliance with S 2(1). It is common cause that the purchaser did not sign such counter-offer.  The fact that the amendments were inserted in a document already signed by the purchaser, does not amount to the acceptance of the counter offer.  For there to be a formal ratification of the counter offer, the signature of the purchaser must be appended thereto.  In my view this is settled law.  

12.	In Johnstone v Leal (supra) at 939G-H, in dealing with an incomplete or inchoate contract, Corbett, JA says:
“Where, on the other hand, the parties have reached a subsequent agreement in regard to the term in question, but have done so orally only, then the contract is no longer incomplete or inchoate, but then of course there is non-compliance with S 1(1) in that the whole contract is not in writing.  The consequence of this is that the contract of sale is null and void.”  (Section 1(1) is the predecessor to S 2(1).)  
             The dictum of Corbett, JA has been reinforced by the Supreme Court of Appeal in the matter of Pretoria East Builders CC (supra) at 20F-H (para 9).

Object of S 2(1) of the Alienation of Land Act, 68 of 1981
13.	The object of the Act is, as far as possible to prevent uncertainty, disputes and malpractices.  The rationale underlying S 2(1) and its predecessors was postulated by Steyn, CJ in Neethling v Klopper en Andere 1967 (4) SA 459 (A) at 464 when commenting on similar provisions as contained in S 1(1) of Act 68 of 1957, as follows:
“Dit kan aangeneem word, meen ek, dat die oogmerk van hierdie artikel is om sover doenlik altans, onsekerheid en geskille omtrent die inhoud van sulke kontrakte te voorkom en moontlike wanpraktyke teen te werk (vgl Wilken v Kohler 1913 AD 135 te 142 en 149;  Estate Du Toit v Coronation Syndicate Ltd and Others 1929 AD 219 te 224;  Van Wyk v Rottcher’s Saw Mills (pty) Ltd 1948 (1) SA 983 (A).)”

14.	It is precisely the type of dispute that has arisen in this matter that the legislature, by introducing Sec 2 (1) of the Act and its predecessors, tried to avoid.  Innes, CJ in Van Staden 1902 TS 128 at 139, held that an incomplete written contract could not be completed by oral statements or inferences drawn from conduct as it would be “admitting the very mischief which the law was passed to exclude”.  In the present instance, the offeror orally accepted part of the amendments and rejected another. The rejection of the latter led to the present “mischief”.  The interpretation Adv Kantor seeks this court to place on S 2(1) would defeat the very purpose for which it was enacted.

Can initialling be equated to signing?
15.	A further issue raised by defendant is the complaint by plaintiff in the pleadings that the amendments made to Annexure “A” were not initialled.  Adv Kantor contended that a perusal of S 2(1) reveals that there is no such requirement.  It is common legal practice that amendments to a document are usually initialled rather than signed.  Whether such initialling complies with S 2(1) is an open question.  We are not called upon to make a finding in respect thereof.  In this matter it is common cause that the purchaser neither signed nor initialled the amendments.  The matter therefore does not arise for determination.  However, it deserves mentioning that in some instances the form of a person’s “initials” and “signature” is identical.   

16.	In Pretoria East Builders CC and Another v Basson 2004 (6) SA SA 15 (SCA) at 20 (par 9) a written offer for the purchase of a property was made by the respondent.  Such offer contained a clause headed “Other Conditions” which was left blank.  The following was inserted in the blank space:  “This offer is subject to the presentation of a specification list and the signing of the building contract with (P) CC”.  The offeree initialled the addition and signed at the end of the document.  When the document was returned to the offeror he noted the addition, but did not initial or sign the amendment.  It was argued that ex facie the document, the offeror’s signature at the end of the document should be taken as an acceptance of everything contained in the document.  Similar argument was advanced by Adv Kantor.  The court held that such argument was entirely artificial in the light of the known and accepted fact that the addition was inserted after he had signed the offer to purchase.  The court found that no enforceable contract had come into being as the material amended terms, although reduced to writing, were not signed by the offeror.

17.	Adv Kantor submitted that the facts in that case were somewhat unique and the considerations do not apply in the instant case.  I disagree.  What was sought to be amended in the case of Pretoria East Builders CC (supra) may be different from the amendment sought to be introduced in the instant case, save for such difference, the other facts are substantially similar.  The legal principles espoused in that case were of equal application in the instant case.  They were firstly, that a material amendment to an offer to purchase by the offeree amounted to a counter offer as such amendment was brought about after the offeror had signed the offer.  Secondly, such counter offer had to be accepted by the offeror in writing in pursuance to S 2(1) of the Act.  Thirdly, the failure to comply with S 2(1) rendered the contract invalid and unenforceable.

Findings on validity of annexure “A” to Summons
18.	On the basis of the facts which are common cause, the stated case and the legal principles, I conclude that the original offer of Mr Beaumont was significantly modified to constitute a counter-offer and in the absence of a counter signature by  Beaufort, the acceptance of the counter-offer was defective and accordingly did not comply with the provisions of S 2(1) of the Act.  I am strengthened in this conclusion by defendant’s admission in terms of clause 4.1.of his plea, that the amendment was effected on behalf of plaintiff as a counter-offer and neither Beaumont nor any person representing the trust to be formed accepted the counter-offer by endorsing the offer to purchase.  I accordingly hold that the offer to purchase is invalid for want of compliance with the formalities provided for in S  2(1) of the Alienation of Land Act No. 68 of 1981.

Causation
19.	In terms of the “Stated Case” should the court find that the offer to purchase was invalid, then it is agreed between the parties that the defendant was deemed to be negligent.  It was further agreed that should plaintiff succeed in establishing causality, then the pre-estimated damages suffered by plaintiff amounts to R120 000 and interest in terms of the in duplum rule amounts to a further sum of R120 000, making a total of R240 000.  The issue to be determined is whether the Trust  would have concluded the agreement in question on the basis of clause 14.1 of the offer to purchase as amended by plaintiff.  Clause 14.1 dealt with the payment of occupational interest.  The original offer to purchase provided for occupational interest to be paid “from date of registration to date of final payment”.  The plaintiff amended the clause by substituting the word “registration” with “possession” and initialled the amendment.  The amendment  was not signed or initialled by the Trust.  This formed the subject matter of the dispute between the parties.

20.	It is also common cause that the Trust complied with all the terms of the counter-offer save and except the payment of occupational interest from date of occupation to date of payment.  The defendant acted as attorney and conveyancer for plaintiff and was also a trustee of the Trust.  These dual roles created a conflict of interest.  A prudent attorney and conveyancer would not have effected registration of transfer without first having obtained payment of the occupational interest or, failing payment thereof, to have clarified the issue with plaintiff and defendant.  The matter appears to have been left hanging in limbo until the sellers called for payment thereof.

21.	Defendant pleaded that he discussed the amendments covered in the counter offer, including the question of occupational interest with Mr Beaumont who did not object thereto.  Mr van Tonder testified that he discussed the proposed amendments with Mr Beaumont who was amenable to the proposed amendments save and except that he was not prepared to agree to the rate of 15% in respect of occupational interest. The rate of 10% as originally stipulated was reinstated.  Neither the allegation in defendant’s plea nor the testimony of Mr van Tonder was rebutted in evidence by defendant.  There is no indication or suggestion that Mr Beaumont was not available to testify.  It was common knowledge that defendant was in attendance at court during the trial but was not called to testify.   The reasons given by defendant for not calling such witness is, in my view, unconvincing.

22.	Defendant sought to rely on a letter from Mr Beaumont’s attorney, after registration of transfer was affected, in which Mr Beaumont claims that the amendment to clause 14.1 was introduced without his knowledge and after he had signed the agreement.  The allegation that the amendment was introduced without his knowledge and without him having agreed thereto is not only contrary to the evidence but also inconsistent with the probabilities.  His further allegation in the letter is that he would not have agreed thereto as the interest on the deposit was already being paid to the seller. This allegation loses sight of the fact he had the benefit of the immovable and movable property to the value of R2 050 000 on signing of the agreement, while the seller only had the benefit of a deposit of R750 000.  Furthermore, the mortgage bond given by the seller provided for interest to be paid on the balance of the purchase price from registration of transfer.  Who was to be liable for payment of the interest during the intervening period?  It only makes good business sense that the purchaser be liable for occupational interest on the balance of purchase price from date of possession to date of transfer.   This is common practice in transactions of this nature in the absence of a special agreement to the contrary.  It is highly unlikely that the purchaser would not have agreed to pay occupational interest if it was called upon to pay such consideration on pain of withholding registration of transfer.  

Conclusion
23.	I am satisfied that on the evidence placed before me that the purchaser in fact concluded and would have concluded the agreement in question on the basis of clause 14.1 as amended by the seller.  I conclude therefore that there is a causal relationship between defendant’s negligence and the damages of R240 000 suffered by plaintiff.  Judgment is accordingly granted against third defendant in the sum of R240 000 with costs of suit.  

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										         E  MOOSA