IN THE HIGH COURT OF SOUTH AFRICA
(CAPE OF GOODHOPE PROVINCIAL DIVISION)

CASE NO. 14028/2007
REPORTABLE

In the matter between:

GARY SHAFF						1ST APPLICANT
UNION SQUARE PROPERTIES 
67 (PTY) LTD						2ND APPLICANT

and

TREVOR DYKMAN PROPERTIES CC			1ST RESPONDENT
THE REGISTRAR OF DEEDS				2ND RESPONDENT

JUDGMENT DELIVERED ON 13 DECEMBER 2007 

DLODLO, J

INTRODUCTION

[1]	The Applicants have brought an application seeking an interim interdict preventing the First Respondent from re-selling and transferring the property known as Erf 149 Vredehoek situated in the Cape Province, until the Applicants’ action instituted under case number 13978/2007 against the First Respondent as the Defendant shall have been finally determined. The property concerned comprises a commercial property on the corner of Wesley and Upper Canterbury Streets, Gardens, Cape Town. On it is an ageing warehouse type building including office space. The area is one that has become the subject of considerable redevelopment. It lies between the City Centre on the one side, and the City Bowl residential areas on the other. The property is a prime candidate for redevelopment resulting in prices of the properties in the area having risen dramatically. The First Respondent is the owner of this immovable property. The First Applicant or his nominee made an offer to purchase the property. The First Respondent accepted the offer to purchase. The First Applicant nominated the Second Applicant as purchaser of the property.

[2]	Disputes have subsequently arisen between the Applicants and the First Respondent regarding whether the offer to purchase constitutes a Deed of Sale that is valid and binding as between the Second Applicant and the First Respondent. Those disputes are not entirely resolved. They are the subject of the Applicant’s action under a different case number. What is at issue for the purpose of this application is whether the Applicants may interdict the sale and transfer of the property by the first Respondent, pending the final adjudication of the Applicants’ action.

[3]	The First Respondent opposes the Applicants’ application. The First Respondent has filed an Answering Affidavit in which the Applicants’ allegations are denied. But, principally its opposition is confined to a narrow issue. It is whether the Applicants enjoy any prima facie right entitling them to the interim relief sought. The First Respondent alleges that the Applicants do not enjoy any prima facie right because it has cancelled the Deed of Sale. Mr. Sholto-Douglas SC assisted by Mr. Patrick and Mr. Berg appeared on behalf of the Applicants and Respondents respectively.

EVENTS LEADING TO THIS APPLICATION
[4]	On 23 February 2007 the First Respondent accepted the offer to purchase. It was drafted by the first Respondent’s attorney at that time, Paul Griffiths. The offer to purchase is expressed to be made by the First Applicant “representing a company to be formed.”  On 9 May 2007 the First Applicant nominated the Second Applicant as purchaser in terms of the Deed of Sale, by addressing an e-mail to Mr. Griffiths. The latter accepted the nomination. On 12 June 2007 Delport Ward and Pienaar attorney, acting for the First Respondent, addressed a letter to the First Applicant. The letter alleged that the suspensive conditions to which the Deed of Sale was subject had not been fulfilled, and that the First Applicant had failed to form a company to act as purchaser. On 13 June 2007 the First Respondent performed a volte face. Delport Ward and Pienaar addressed a letter confirming that all was in order. On 14 June 2007 Delport Ward and Pienaar confirmed in a further letter that First Respondent would refrain from marketing the property.

[5]	In the course of July 2007 and on 13 August 2007 the First Respondent endeavoured to raise further funds from third parties or the Applicants. On 13 August 2007 the First Respondent, represented by its sole member Trevor Dykman, addressed a fax to the Second Applicant. In it the First Respondent requested the Second Applicant to provide a payment guarantee. On 14 August 2007 the parties to the Deed of Sale concluded a variation agreement. It varied the Deed of Sale by extending the date by which the purchaser was required to obtain a mortgage bond approval. The Deed of Sale was subject to a suspensive condition. The condition pertained to planning permission. It was required to be fulfilled by 1 September 2007. The condition was inserted for the benefit of the purchaser. When, by 31 August 2007, the condition was not able to be fulfilled, the Second Applicant waived the rights conferred upon it in terms of the condition.  

[6]	A meeting between the Applicants and the Respondents was convened on Wednesday 5 September 2007. The Second Respondent was represented by its current Attorneys, Louis Herbert Attorneys. At the meeting the issue was raised whether the offer to purchase required compliance with section 35 of the Companies Act. The Second Respondent requested an advance on the purchase price due in terms of the agreement of Five hundred thousand rands (R500 000). On 6 September 2007 Mr. Griffiths confirmed to the Second Applicant’s conveyancer, Lindsay Goldberg of Mallinicks Inc, both that he had accepted the First Applicant’s nomination of the Second Applicant, and that in so doing he had represented the First Respondent. On 7 September 2007 Schlesinger Attorneys of Bonza Bay, East London advised that they had been appointed as Attorneys and Conveyancers to the First Respondent, and the mandate of Louis Herbert Attorneys terminated. Schlesinger Attorneys addressed an e-mail repeating the request for an advance on the purchase price of Five hundred thousand rands (R500 000).

[7]	On Monday 10 September 2007 Schlesinger Attorneys pointed out that on 13 August 2007 the First Respondent had requested the Second Applicant to furnish a guarantee. The Variation Agreement, however, stipulated that the First Respondent could only call for a guarantee after 14 September 2007. This Mr. Goldberg pointed out to Schlesinger Attorneys on 12 September 2007. On 17 September 2007 Louis Herbert Attorneys addressed a fax to Mallinicks. The main contentions of the First Respondent (at that stage) are set out in paragraph 11 of the letter. It advised that the First Applicant did not have a right of nomination and that the Second Applicant did not “have locus standi in the Deed of Sale”, that the Second Applicant could not have waived the suspensive condition as it purported to have done, and that the Deed of Sale as varied had therefore lapsed. It also advised that since bond approval had been given to the Second Applicant and not a section 35 company, the suspensive condition to which the Deed of Sale was subject pertaining to bond approval had not been fulfilled.

[8]	The alternative contentions of the First Respondent are set out in paragraph 12 of the letter. They are expressly premised upon a court finding that the suspensive conditions to which the Deed of Sale was subject were fulfilled, and accordingly that the Deed of Sale was valid and binding. The alternative contentions and the demand made upon the basis of them are expressed as follows: 
“The Seller therefore, (without prejudice or waiver of the right acquired as stipulated in clause 11 supra) in the alternative, herewith demand from the Purchaser pursuant to clause 15.2 of the Deed of Sale within a period of 14 (fourteen) days after receipt of this written notice from the Seller:
13.1	to incorporate “a Section 35 Company” by virtue of the provisions of Section 35 of the Companies Act;
13.2	to issue and deliver to the Seller by hand a bank guarantee acceptable to the Seller in the sum of R13 150 000.00 (Thirteen Million One Hundred Thousand Rand (sic)) payable pari passu against registration of transfer of the property into the name of the Section 35 Company as contemplated in clause 6.3 of the Deed of Sale;
13.3	To pay VAT in the sum of R19 600 000.00 (One Million Nine Hundred and Sixty Thousand Rand (sic)) in cash to the Purchaser as contemplated in clause 10.1 and 11.1 of the Deed of Sale;
13.4	To pay all expenses of and incidental to the registration of transfer of the property into the name of the Section 35 Company and the costs of registration of the bond or bonds to be registered in cash (as appears from the pro-forma invoice) as contemplated in clause 10.1 of the Deed of Sale;
14.	Should the Purchaser fail to comply timeously or at all with the aforesaid demand and remedy the said within a period of 14 (fourteen) days after receipt of this written notice from the Seller, calling upon the Purchaser as defaulting party to remedy the breach complained of, the Seller as the aggrieved party shall be entitled to at its sole discretion and without prejudice to its other rights in law to cancel this agreement forthwith and without further notice and retain the non-refundable deposit of R850 000.00 (Eight Hundred and Fifty Thousand Rand) as pre-estimated liquidated damages.” 

[9]	On 18 September 2007 Schlesinger Attorneys addressed a fax advising that they were attending to the transfer. Mallinicks called upon Delport Ward and Pienaar, Schlesinger Attorneys and Louis Herbert Attorneys to provide proof of their mandate to represent the First Respondent. Although not conveyancers, Louis Herbert Attorneys provided a written power of Attorney from the First Respondent authorising them to deal with the sale and transfer of the property. (Annexures GS31 and GS34). Louis Herbert Attorneys also conveyed the undertaking of the First Respondent not to sell or transfer for fourteen (14) business days (expiring at midnight on 8 October 2007) (annexure GS34).

[10]	On Monday 1 October 2007 Mallinicks demanded rectification of the Deed of Sale to reflect that the First Applicant “or nominee” acted as purchaser. On Wednesday 3 October 2007 the First Respondent’s Attorney addressed a letter to the Applicants’ Attorney. It responds to the Applicants’ demand for rectification. It sets out that the First Respondent would not assent to the rectification of the Deed of Sale. It stated that:
“the sudden reliance by the [applicants] on rectification to validate an inchoate Deed of Sale between the [first respondent] and [the second applicant] can only be seen as a merely legal afterthought and a submission without merit.”
The First Respondent accordingly “reiterated” its stance that the Deed of Sale was “null and void and of no force and effect”. It continued, in the alternative, to refer to the demand for a guarantee made on 17 September 2007. It stated that a two (2) week period had elapsed since the guarantee was demanded, and none had been posted. It stated that in the result that the first respondent therefore “…cancels the Deed of Sale and the Variation Agreement and retains the non-refundable deposit of Eight Hundred and Fifty Thousand Rand (R850 000) as pre-estimated liquidated damages.”
It is abundantly clear from the correspondence exchanged between the parties that there is quite a number of issues that remain unresolved and which somewhat complicate the dispute that has emerged in this matter.

[11]	Importantly, on Wednesday 3 October 2007 the Applicants (as plaintiffs) issued their summons against the First Respondent (as defendant). In their action the plaintiffs claimed:
(i)	an order rectifying the Deed of Sale by the deletion of the words “representing a company to be formed” alongside the name of the First Applicant, and their substitution with the words “or nominee”;
(ii)	an order declaring the Second Applicant as the purchaser duly nominated in terms of the Deed of Sale;
(iii)	an order declaring that the offer to purchase comprises a valid and binding Deed of Sale  as between the Second Applicant and the First Respondent;
(iv)	an order directing the defendant to give transfer of the property to the Second Applicant, or, in the event of its failure to do so, authorising the sheriff to do so.

[12]	On the same day the Applicants issued their Notice of Motion. The Applicants set their application down on Friday 5 October 2007 for procedural relief only, in the event that it was opposed. On Friday 5 October 2007 the First Respondent opposed the Applicants’ application. The First Respondent was ordered to file its Answering Affidavit on 31 October 2007. The Applicants were ordered to file their Replying Affidavit on 23 November 2007. The latter is a Court order made by my brother Erasmus J. On Monday 8 October 2007 the First Respondent filed a consent to judgment in the Applicants’ action. It consented to the following orders claimed by the Applicants (as plaintiffs) in the action: 
(i)	an order rectifying the Deed of Sale by the deletion of the words “representing a company to be formed” alongside the name of the First Applicant, and their substitution with the words “or nominee”;
(ii)	the order declaring the Second Applicant as the purchaser duly nominated in terms of the Deed of Sale;
(iii)	an order declaring that the offer to purchase comprises a valid and binding Deed of Sale  as between the Second Applicant and the First Respondent;

[13]	The First Respondent precipitated the application by its insistence that the First Applicant could not nominate the Second Applicant, but was required to incorporate a section 35 company. As appears from its consent to judgment, it abandoned this stance immediately upon receipt of the application. Notwithstanding its consent to the first three orders sought by the Applicants in the action, the Respondent withheld its consent to an order that it give transfer of the property to the Applicants. The reason for this appears from a letter (annexure TD14) addressed by the First Respondent’s Attorneys on 8 October 2007. Relying upon the letters addressed by the First Respondent’s Attorneys on 17 September 2007 and 3 October 2007, the First Respondent (even as it consented to an order – framed in the present tense – that the Deed of Sale was then valid and binding) adopted the position that it had duly cancelled the Deed of Sale on 3 October 2007. The First Respondent filed its Answering Affidavit and a counter-application on 16 November 2007. The counter-application merely seeks an order confirming the cancellation. It raises no additional issues. No explanation is offered as such for the First Respondent’s failure to file its Answering Affidavit timeously.

NO PRIMA FACIE RIGHT
[14]	The defence of the First Respondent is confined only to whether the Applicants enjoy a prima facie right. The First Respondent (as foreshadowed in its Attorney’s letter of 8 October 2007) adopts the position that the Applicant enjoy no prima facie right since the Deed of Sale was lawfully cancelled on 3 October 2007. In order to establish its prima facie right, the Applicants must demonstrate that the right of the Second Applicant to transfer the property is not open to serious doubt. The Applicants need not show that right on a balance of probabilities. The facts alleged by the Applicants, together only with those alleged by the Respondent that the Applicants cannot dispute must be considered. Then the enquiry is whether, having regard to the inherent probabilities, the Applicants should obtain relief at the trial in due course. See: Spur Steak Ranches Ltd v Saddles Steak Ranch 1996 (3) SA 706 (C) at 714E-F). In that enquiry the Court will not enter upon difficult questions of law that require “detailed argument and mature consideration”. (See: Ward v Cape Peninsula Ice Skating Club 1998 (2) SA 487 (C) at 498C, 498G-H).

NO RIGHT OF CANCELLATION IN THE ABSENCE OF INITIAL DEMAND
[15]	The First Respondent’s purported cancellation is premised upon the failure of the purchaser to provide a guarantee for payment of the purchase price. The provisions of the Deed of Sale as varied by the Variation Agreement regarding the provision of a guarantee and breach are plain. Clause 6.3 provides that a guarantee may be called for at any time after 14 September 2007. I need to emphasise that it must, however, be called for. The purchaser party is afforded fourteen (14) days to perform (“the compliance period’). If the obligation to provide a guarantee is breached, the aggrieved party may issue a notice of breach to the defaulting party – in terms of clause 15.2 of the Deed of Sale. Clause 15.2 affords the defaulting party a period of a further fourteen (14) days to remedy its breach (“the mora period”). It is only thereafter that the aggrieved party may cancel the Deed of Sale. The compliance period and the mora period are clearly sequential. The call for a guarantee and a notice of breach fundamentally differ. Only after expiry of the compliance period, notice of breach, and the expiry of the mora period does the First Respondent enjoy a right to cancel. Such an interpretation of the Deed of Sale is consistent with conveyancing practice. See: Wehr v Botha 1965 (3) SA 46 (A) at 59C-D, 59G-H.

[16]	The First Respondent relies upon its Attorney’s letter of 17 September 2007 as the basis for its cancellation. In it, the First Respondent, however, failed to distinguish between the compliance period and the mora period, and call for a guarantee and a notice of breach. Paragraph 13 of the letter of 17 September 2007 is expressly addressed in terms of the breach clause of the Deed of Sale. It calls for “the Purchaser pursuant to clause 15.2 of the Deed of Sale within a period of 14 (fourteen) days…to incorporate “a section 35 Company”…to issue and deliver to the Seller by hand a bank  guarantee acceptable to the Seller in the sum of R13 150 000.00 (Thirteen Million One Hundred Thousand Rand (sic)) payable to parri pasu against registration of transfer of the property into the name of the Section 35 Company as contemplated in clause 6.3 of the Deed of Sale.”  

[17]	Paragraph 14 of the letter of 17 September 2007 indeed purports to be a notice of breach. It states that in the event of “the Purchaser’s” failure to comply with the demand framed in paragraph 13 within fourteen (14) days, the First Respondent would become entitled to cancel the Deed of Sale. There is, however, no call for a guarantee prior to the letter of 17 September 2007. However, in my view, the letter of 17 September 2007 cannot serve as both a call for a guarantee and a notice of breach. The compliance period and the mora period cannot run concurrently. Accordingly, in my view, there has been no due demand upon the Second Applicant to provide the guarantee, nor has the First Respondent issued a valid notice of breach.

[18]	The demand made in the letter of the First Respondent’s Attorneys of 17 September 2007 was expressly made on the premise that the First Applicant was required to incorporate a section 35 company. That premise was abandoned upon the First Defendant consenting to judgment in respect of the rectification on 8 October 2007. The demand clearly cannot survive the consent to judgment.

[19]	The letter of 14 September 2007 is also not a demand addressed to the Second Applicant. At that stage the First Respondent adopted the position that the Second Applicant could not have been nominated as purchaser in terms of the Deed of Sale. The letter of 14 September 2007 is a demand addressed to the First Applicant to incorporate a section 35 company and procure that it discharges the obligations of the purchaser in terms of the Deed of Sale.

[20]	The First Respondent’s demand that the purchaser in terms of the Deed of Sale (whomever it might be) provide a guarantee in respect of its obligation to pay the purchase price is framed in the alternative. The main contention of the First Respondent at that stage was that the Deed of Sale was null and void by reason of the non-fulfilment/failure to waive the suspensive conditions to which it was subject.  A party is not entitled to enforce a contract unless it is ready to perform its own obligations (See: Hauman v Nortje 1914 AD 293 at 300; Wolpert v Steenkamp 1917 AD 493 at 499; Rich v Lagerwey 1974 (4) SA 748 (A) at 761E-762A; National Screenprint v The Campbell-Scott Company 1979 (4) SA 393 (C) at 396H-397D; in the context of a conveyancing transaction, See: Wehr v Botha 1965 (3) SA 46 (A) at 60H, 62A; Holtzhauzen v Gore NO 2002 (2) SA 141 (C) at 155D-E). The First Respondent’s main contention as at the time that it called for a guarantee was that the Deed of Sale was null and void and it was not bound thereby. There can be no question of it being entitled in such circumstances to call upon the purchaser in terms of the Deed of Sale to perform.

[21]	The First Respondent has not duly called upon the Second Applicant to perform its obligations in terms of the Deed of sale. Accordingly it has not in my view, duly cancelled the Deed of Sale. It is, in any event, not open to the First Respondent to have called upon the purchaser in terms of the Deed of Sale to perform, when it contended that it was not bound thereby. The Applicants, in my Judgment, have established that they enjoy prima facie right to require of the First Respondent that it abide by the Deed of Sale, such as they are required to establish as a requisite for interim relief.

[22]	The above are my reasons for an order I made on 10 December 2007. For the sake of completeness I repeat the order given in Court on 10 December 2007 hereunder:
(a)	The First Respondent is hereby interdicted from selling or transferring Erf 149 Vredehoek to any person pending the final determination of the Applicants’ action instituted by them under case number 13978/2007 against the First Respondent as Defendant.

(b)	The Second Respondent is hereby authorised and directed to endorse and/or bring about an endorsement in his records kept in respect of Erf 149 Vredehoek, Cape Province, in the City of Cape Town, Cape Division, Western Cape to reflect the order of this Court contained in (a) above. 

(c)	The First Respondent is hereby ordered to pay costs of this application and that includes costs of two (2) counsel.

______________
DLODLO, J