This blog was co-authored with: Jason Hudson, Candidate Attorney
The Western Cape High Court heard an application for an interdict and specific performance relating to the sale and transfer of immovable property. The purchaser and seller concluded a sale agreement where the purchaser would pay the purchase price of R860 000 for a vacant piece of land. Although the purchase price was duly paid, the seller refused to sign the transfer documents and further stated that she was cancelling the agreement with immediate effect. The seller was informed that the purchaser did not accept this cancellation and was further advised to not sign any other offer to purchase. The purchaser later discovered that the seller had indeed sold the immovable property to another buyer. This alleged sale agreement with a third party was the basis for the purchaser’s urgent application to interdict the transfer of the property.
One of the main issues before the court was whether the purchaser had repudiated the agreement when it insisted that the transfer process be paused pending the finalisation of the application, and whether the seller had validly cancelled the sale agreement based on this alleged repudiation.
The court reiterated the legal principles relating to repudiation. Where a party to a contract, without any lawful grounds, indicates through words or positive conduct their deliberate and unequivocal intention to no longer be bound by the contract, they are said to have repudiated the contract. Where this happens, the other party may rescind the contract. The contract ends upon communication of this decision. The test is whether the conduct exhibits a deliberate and unequivocal intention no longer to be bound by the contract.
The breach clause in the sale agreement makes it clear that in order to cancel the sale agreement, either one of the parties must be in breach of any of the terms of the sale agreement. In this regard, it cannot be stated that there was an unequivocal intention by the purchaser to not be bound, as the purchaser did indeed intend to perform once the matter in the court was finalised. The court stated that it was instead the seller who repudiated the sale agreement when she unequivocally expressed her intention to resile from the contract.
The test for repudiation is objective, namely whether a reasonable person would conclude that proper performance will not be forthcoming.
The court found that:
- It could not be stated that the purchaser’s instructions to defer the transfer pending a determination on the issue of costs by the court amounted to repudiation of the contract nor did it constitute a breach in terms of the sale agreement.
- The purchaser did not, by words or conduct, indicate that it would not perform in terms of the agreement.
- The correspondence between the purchaser and the seller’s attorneys indicated that the purchaser considered itself bound by the agreement.
Accordingly, the court confirmed that the purchaser did not repudiate the contract and ordered that the immovable property be transferred into the purchaser’s name in accordance with the sale agreement.