The would-be buyer of a Cape Town property, disappointed by the collapse of the sale agreement with the seller, has asked the court to step in and find that he had not breached the sale agreement and that the seller was still obliged to let him purchase the property. Unfortunately for the buyer, however, the court found that he had not honoured the terms of the contract by sticking to the strict time-frame laid down, and the judge therefore refused to order the seller to reinstate the original sale agreement.
If ever there was a lesson to be learned about what it means to be bound by a contract of sale, and the crucial importance of understanding and acting within the terms of that agreement, it’s the case of Felix v Wiesmann, recently decided in the high court, Western Cape.
Clifton Felix wanted to buy a property in Milnerton from Maria Wiesmann and agreed to the terms of the written agreement of sale. When Wiesmann decided that Felix had not met the terms of that agreement and began negotiations to sell the property to someone else, Felix hurried to court.
He asked for an interim order that would prevent Wiesmann from transferring the property to anyone else while he (Felix) obtained a ‘final adjudication’ of the issue he was disputing, and which had left him without ownership of the property he had wanted to buy.
Temporarily barred from transferring the property
Following what Wiesmann said was the collapse of the sale contract between herself and Felix, she had sold the property to another buyer. But as a result of the legal action that Felix brought, she was temporarily barred from transferring the property to the new buyer, pending the outcome of his application.
Everything revolved around the sale agreement and its terms – and whether Felix was in breach of them or not. If he was in breach, then Wiesmann was within her rights to cancel the agreement and sell to someone else. If not, then Wiesmann could be obliged to sell to Felix after all.
Concluded on 18 October 2021, the written agreement of sale was for R5.2m. The court found that there were five clauses relevant to the dispute brought by Felix, but it was the second of these that would prove crucial.
Reasonable quotation for a mortgage bond
This clause spelled out that the agreement was ‘suspensively conditional’ on Felix obtaining a ‘reasonable quotation’ for a bond of R5.2m within 21 working days. It was noted that this clause was for the ‘benefit of the purchaser’. He could ‘waive it in part or entirely’, however, but the waiver had to be in writing, and be received by the seller or the seller’s agent, before the end of the 21 days.
Since the agreement was concluded on 18 October 2021, Felix had until 16 November 2021, at the latest, to waive the suspensive condition, in part or in whole, by a written communication to Wiesmann or her agent. On 16 November 2021 Wiesmann advised Felix in writing that she would not be extending the period beyond 17 November 2021.
On 9 November 2021, Standard Bank issued Felix with a quotation and a pre-agreement statement for a loan of R4 160 000 – in other words, an 80% bond on the purchase price. Felix accepted the quotation, and a firm of attorneys was appointed to deal with the bond registration on transfer.
Balance of purchase price
On 12 November 2021, Felix forwarded confirmation of the appointment of this firm of attorneys to Remax, the seller’s agents. He also later claimed that on 17 November – the crucial, cut-off date – he ‘sent the bond approval … to the seller’s conveyancers, the bond attorney and Remax’ as an annexure.
However, as the court noted, Felix could not have sent this message with its annexure, since the sender is reflected as Remax, with Felix himself shown as one of the recipients.
On the same date, 17 November, Remax sent an email to the appointed conveyancer drawing attention to an attached copy of the bond approval, and adding, ‘The balance of the bond 20% will be paid on lodgement as requested by Mr Felix.’
Twelve days later, on 29 November, well outside the time-frame of the agreement between Felix and Wiesmann, Remax’s Ricardo Green (whom Felix maintained was exclusively his agent, a view apparently shared by Green himself) wrote another email referring to a request by Felix that he should draw an addendum that would be ‘favourable to all parties after the negotiation’.
The court pointed out that, whether Green was Felix’s agent or not, this is evidence that Felix himself acknowledged, 12 days after the November 17 deadline, that ‘fresh negotiations’ were needed to bring about a binding sale agreement.
The conveyancer immediately picked up on the problem posed by the email of 29 November which referred to further negotiations being needed, but that was sent outside the timeline of the agreement.
Lapsed agreement of sale
He therefore wrote directly to Felix on 30 November pointing out that the agreement had lapsed because the period for bond approval ‘for the amount stipulated’ had expired on 17 November.
He said that bond approval of a lesser amount did not meet the terms of the agreement and that Felix’s only way out, given that he had obtained only 80% of the bond, would have been a completely new offer, as the original agreement had lapsed on November 17.
When Felix then tried to waive the original clause related to obtaining a bond, the conveyancer said that this waiver ought to have been communicated by 17 November.
But these full background details were not disclosed by Felix in his founding affidavit to the court.
The judge hearing the matter, Judy Cloete, considered the communications between all the parties and the dates on which they were made. Her conclusion was that Felix had not communicated a waiver to the seller by the stipulated date, and that the email of 17 November, saying that the 20% balance of the bond would be paid ‘on lodgement’, amounted to an ‘impermissible attempt to amend [the agreement]’.
Felix had realised the problem, said the judge, but his efforts to deal with it were made 13 days after the stipulated period expired.
The judge quoted from earlier decisions in which the courts have held that waivers could only be exercised ‘as set out in the … agreements’ and her final conclusion was that Felix had not made out a case for an interim interdict preventing Wiesmann from selling the property to someone else. She therefore dismissed Felix’s application, with costs.
Buyers beware: Agreement of Sale compliance is rigid
Herold Gie Attorneys warn that the deadlines contained in an Agreement of Sale for compliance with suspensive conditions are rigid and final. Such deadlines cannot be unilaterally extended. When such a deadline is not met, the agreement lapses retrospectively as if it was never concluded. An agreement cannot be revived after it had lapsed.
If a party realises that he will not be able meet a deadline in time, he must attempt to negotiate an extension with the seller in good time before the deadline occurs; he cannot do so after the agreement had lapsed.
Please contact Herold Gie Attorneys to advise you on the deadlines contained in your Agreement of Sale and to assist you to negotiate a reasonable extension of such deadline, should this become necessary.
Judgment link: http://www.saflii.org/za/cases/ZAWCHC/2022/103.html