THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable

Case No: 37/2016

In the matter between:

CHRISTIAAN JOHANNES BASSON
FIRST APPELLANT

PAUL DREYER
SECOND APPELLANT

PLOT 31 VAALBANK CC
THIRD APPELLANT

and

TYRONE PAUL HANNA
RESPONDENT

Neutral Citation: Basson v Hanna (37/2016) [2016] ZASCA 198 (6
December 2016)

Coram:
Shongwe, Willis, Zondi, Dambuza and Mathopo JJA
Heard:
18 November 2016
Delivered:
6 December 2016
Summary:
Contract: parties‟ failure to agree on interest rate in a
contract does not render the contract invalid: claim for damages in lieu of
specific performance where subject matter of the contract has been alienated,
is competent in law.

______________________________________________________________

ORDER
______________________________________________________________

On appeal from Gauteng Local Division of the High Court, Johannesburg (P
G Cilliers AJ sitting as court of first instance):
The appeal is dismissed with costs.
Paragraphs 1 and 2 of the court below‟s order are set aside and
replaced with the following:
„1
The first defendant is ordered to pay to the plaintiff the amount of
R1 212 994.80.
The first defendant is ordered to pay to the plaintiff interest on the
amount of R1 212 994.80 at the rate of 9,5 per cent per annum, calculated
from 14 September 2014 to date of final payment.‟
______________________________________________________________

JUDGMENT
______________________________________________________________

Zondi JA (Shongwe, Willis, Dambuza and Mathopo JJA concurring):

[1] This is an appeal against the judgment of the Gauteng Local Division of
the High Court, Johannesburg (P G Cilliers AJ) awarding damages in lieu of
specific performance in favour of the respondent and ordering the first
appellant to pay the respondent the amount of R1 762 626.46 and interest on
that amount at the rate of 15,5 per cent per annum from 20 May 2008 to date
of final payment. The appeal against the judgment, which has since been
reported sub nom Hanna v Basson & others [2016] 1 All SA 201 (GJ),  is with
the leave of that court.

[2] One of the issues that were before the court below and which still
remains an issue in this Court, is whether the parties‟ failure to reach
consensus on the applicable rate of interest, rendered the agreement null and
void. The second issue that was raised by the court a quo at the hearing of
the application for leave to appeal, was whether a claim for damages as a

surrogate for specific performance is competent in law. This point was raised
because of the remarks by Smallberger ADCJ in Mostert NO v Old Mutual Life
Assurance Co (SA) Ltd 2001 (4) SA 159 (SCA) at 186B-H regarding the
correctness of the majority decision in ISEP Structural Engineering and
Plating (Pty) Ltd v Inland Exploration Co (Pty) Ltd 1981 (4) SA 1 (A) holding
that a claim for damages in lieu of specific performance is not competent in
law.

[3] At the hearing the parties informed the court, firstly, that the amount of
R1 762 626.46 granted by the court below as damages is incorrect. It is not
what the respondent had sought; secondly, that the court below in calculating
the amount of R1 762 626.46 ignored the calculations of the appellants‟
actuary, on which both parties had relied at the trial; and thirdly, that the mora
interest rate determined by the court below is incorrect. The mora interest
should have been granted at a rate of 9,5 per cent from the date of service of
the amended particulars of claim not summons.

[4] Flowing from this, the appellants informed the court that in the
alternative to dismissal of the respondent‟s claim or absolution from the
instance, it would request that it be ordered to pay R1 212 994.80, together
with interest on that amount at the rate of 9,5 per cent per annum from 14
September 2014 to date of payment and costs. On the other hand the
respondent indicated that it would request that the judgment be maintained
except that the capital amount granted by the court below should be replaced
with the amount of R1 212 994.80, together with interest at the rate of 9,5 per
cent per annum calculated from 14 September 2014 to date of payment.

[5] The respondent, Mr Tyrone Paul Hanna, instituted an action against
the appellants seeking an order compelling the first appellant (Basson) to
transfer one third of the member‟s interest in the third appellant (the CC) to
the respondent against payment of the outstanding balance, alternatively
payment of the sum of R2 650 824.72 as damages in lieu of specific
performance. Mr Paul Dreyer (Dreyer), the second appellant was the second
defendant in the court below and he plays no role in this appeal.

[6] The basis of the respondent‟s claim is that he, Basson and Dreyer
concluded an agreement during 2002 in terms of which Basson agreed to sell
to each of them one third of his member‟s interest in the CC for R624 953
payable in monthly instalments of R8 229.32 over a period of 20 years.
According to the respondent the agreed rate of interest was prime plus 1 per
cent per annum, fluctuating. In addition thereto the respondent agreed to pay
a third of the CC‟s monthly maintenance and operating costs. Basson
conducted his banking activities with ABSA Bank, which at the time of the
conclusion of the agreement had a prevailing prime interest rate of 17 per
cent.

[7] Basson and the CC defended the action and denied that the
respondent was entitled to an order for specific performance or damages as a
surrogate for performance. They contended among others, that the
respondent, by failing to pay all amounts due by him in terms of the
agreement timeously and in full, repudiated the agreement as a result of
which Basson cancelled the agreement; alternatively that no agreement came
into being as there was no consensus between the parties regarding the rate
of interest which would apply in respect of the agreement. Basson and the CC
though admitting that the interest rate was prime plus 1 per cent denied that it
was a variable one. They contended that the rate was fixed.

Factual background
[8] It is common cause that during 2002 the respondent, Basson and
Dreyer concluded an oral agreement relating to the development of the Farm
Vaalbank IR, Farm No 476, Unit 31, situated on the banks of the Vaal River
(the property) and a sale by Basson to the respondent and Dreyer of one third
of his member‟s interest in the CC. At the time of the agreement Basson was
the sole member of the CC which owned the property concerned. Basson
undertook to develop the property by building three separate houses each
with a cottage on the property. He financed the development.

[9] Building operations on the property commenced in August 2002 and
were finalised at the end of November 2002. The parties took occupation of

each of the three residential units on the property on 1 December 2002.
During January 2003 Basson issued to the respondent a tax invoice dated 11
December 2002 confirming the purchase price of R624 953 (the capital
amount) for the sale of a 33 and a third per cent share of the member‟s
interest in the CC, payable in monthly instalments of R8229.32. In addition to
paying the monthly instalments the respondent also had to pay a third of the
CC‟s monthly operating expenses and maintenance costs. The respondent‟s
evidence was that in compliance with his contractual obligations, he regularly
paid the monthly instalment of R8 229.32, together with his portion of the CC‟s
expenses. That went on until 2007 when the relationship between the
respondent, on the one hand, and Basson and Dreyer on the other, turned
sour.

[10] It is important to mention that during the trial Basson alienated a third
of his member‟s interest in the CC, the subject matter of the contract, to his
brothers. Hence the respondent amended his claim so as to introduce an
alternative claim for damages as a surrogate for specific performance.

Agreement on the interest rate
[11] The terms of the agreement regarding the interest rate are in dispute.
Basson‟s evidence was that the fixed interest rate was agreed upon. Basson‟s
words were:
„Die rentekoers kon enige kant toe gegaan het. Dit was „n vaste betaling, daar was
nie, in my tyd was daar nooit gepraat oor „n wisselende rentekoers nie.
Wat was die, kan u onthou, Mnr Basson, wat gebeur het met die rentekoerse op
daardie stadium? Was die rentekoers oppad op, of wat die rentekoers oppad af? ---
Jy weet ek is nie „n bankier nie, so ek hou nie rentekoerse dop nie, of ek het nie…
Nee, ek het nie geweet wat die rentekoerse doen, of dit op of af gaan nie.‟

[12] Dreyer‟s evidence was that the purchase price for his one third of the
member‟s interest in the CC, similar to that of the respondent, was R624 995
from which he deducted R130 000 which he spent on the property. His
evidence was that the interest rate was 18 per cent per annum and was fixed.
He stated that he was aware that in 2003 the respondent had expressed a

concern to him that he was paying the interest at a fixed rate when the trend
was that the interest rates were on the decline. Dreyer explained to the
respondent that there was nothing he could do about it, because this was
what they had agreed to pay.

[13] The court below found that although the parties agreed that the interest
rate would be prime plus 1 per cent they did not reach an agreement on
whether the interest rate would be fixed or variable. It found it unnecessary to
make a definite finding on the disputed issue. This was so, the court below
reasoned, because it was not necessary to make a finding on whether the
respondent was in arrears with his repayments when Basson purported to
cancel the agreement on 20 February 2008 or 27 February 2008. Basson had
already taken the position before 7 June 2007 that the agreement was invalid
and unenforceable and persisted in that position until 25 February 2009.

[14] The appellants attack this finding. They contend that its implication is
that the parties did not have consensus on a material term of the agreement,
that no agreement came into being between the parties and that the
respondent could therefore not claim specific performance or damages in lieu
of specific performance on a non-existing agreement. The appellants maintain
that the onus was on the respondent to prove the terms of the agreement,
which he failed to do.

[15] Without a finding, contend the appellants, on what the parties agreed
upon as far as the interest rate is concerned, it was impossible to determine
the quantum, which was crucial as the determination of the balance
outstanding was dependent on the nature of the interest; that is to say
whether fixed or fluctuating, which is an element which the respondent had to
allege and prove in order to succeed in his claim. The appellants accordingly
submit that absolution should have been granted.

[16] I disagree. In general, the parties‟ failure to agree on the rate at which
the amount payable under the agreement is to be calculated, does not render
the agreement invalid. If no rate has been agreed on, expressly or impliedly,

and the rate is not governed by any other law, the rate of interest is that
prescribed from time to time by notice in the gazette by the relevant Minister
in terms of the Prescribed Rate of Interest Act 55 of 1975.

Repudiation
[17] In the particulars of claim the respondent alleged that Basson
repudiated the agreement and that, at his election he was entitled to claim
performance in forma specifica entailing an order compelling Basson to
transfer a third of the member‟s interest in the CC to him, against payment of
the outstanding amount to Basson alternatively damages as a surrogate for
performance. The respondent led evidence, both oral and documentary to
demonstrate that Basson had repudiated the agreement.

[18] The court below accepted the respondent‟s version that Basson
repudiated the agreement on or before 7 June 2007 and that he did not repent
his repudiation of the agreement before the attempted cancellation of the
agreement on 27 February 2008. I agree with the court below‟s conclusion
and reasoning underlying it. There is no appeal against this finding and it must
therefore stand.

[19] Objectively viewed, Basson‟s actions after 7 June 2007 constituted
conduct from which the only reasonable inference that could be drawn was
that he did not regard himself bound by the agreement and that he was not
prepared to perform its terms.1 This is apparent from the correspondence
which exchanged between the parties. In a letter dated 6 August 2007
Basson‟s attorneys informed the respondent‟s attorneys that there was no
valid agreement between the parties. In a further letter dated 20 February
2008 the respondent‟s attorneys were informed by Basson‟s attorneys that the
agreement was null and void, because of its non-compliance with the Property
Time-Sharing Act and the Share Blocks Control Act.

1 Nash v Golden Dumps (Pty) Ltd 1985 (3) SA 1 (A) at 22D-F. This dictum was referred to
with approval by this Court in Datacolor International (Pty) Ltd v Intamarket (Pty) Ltd 2001 (2)
SA 284 (SCA) para 16.

[20] The respondent himself viewed Basson‟s conduct as a repudiation of
the agreement. Hence the respondent issued summons against Basson
originally seeking an order for specific performance.

[21] Subsequent to the repudiation of the agreement by Basson in April
2007, the respondent elected to hold Basson to the terms of the agreement.
The respondent repeatedly asked Basson to furnish him with the total
outstanding amount so as to settle his indebtedness to Basson. When Basson
threatened to cancel the agreement because the respondent was allegedly in
arrears with his monthly instalments and contributions towards the expenses
of the CC, the respondent made payment of the amount that was alleged to
be owing. The court below‟s conclusion that Basson repudiated the
agreement, was therefore, correct.

Specific performance as remedy for breach
[22] Christie‟s Law of Contract in South Africa 7 ed2 at 616 states:
„The remedies available for a breach or, in some cases, a threatened breach of
contract are five in number. Specific performance, interdict, declaration of rights,
cancellation, damages. The first three may be regarded as methods of enforcement
and the last two as recompenses for non-performance. The choice among these
remedies rests primarily with the injured party, the plaintiff, who may choose more
than one of them, either in the alternative or together, subject to the overriding
principles that the plaintiff must not claim inconsistent remedies and must not be
overcompensated.‟ (Footnote omitted.)

[23] There are many cases in which it was held that if one party to the
agreement repudiates the agreement, the other party at his election, may
claim specific performance of the agreement or damages in lieu of specific
performance and that his claim will in general be granted, subject to the
court‟s discretion.3

2 G B Bradfield Christie’s Law of Contract in South Africa 7 ed (2016) at 616.
3 Farmers’ Co-operative Society (Reg) v Berry 1912 AD 343; Victoria Falls & Transvaal Power
Co Ltd v Consolidated Langlaagte Mines Ltd 1915 AD 1; Woods v Walters 1921 AD 303; Shill
v Milner 1937 AD 101; Haynes v Kingwilliamstown Municipality 1951 (2) SA 371 (A); Rens v
Coltman 1996 (1) SA 452 (A).

[24] Farmers’ Co-operative Society4 concerned a claim for the delivery of
certain movables, alternatively for damages. The question was whether
specific performance should be decreed.5 Innes JA answered that question as
follows at 350:
„Prima facie every party to a binding agreement who is ready to carry out his own
obligation under it has a right to demand from the other party, so far as it is possible,
a performance of his undertaking in terms of the contract. As remarked by KOTZE,
C.J., in Thompson vs. Pullinger (1 O. R., at p. 301), “the right of a plaintiff to the
specific performance of a contract where the defendant is in a position to do so is
beyond all doubt.” It is true that Courts will exercise a discretion in determining
whether or not decrees of specific performance should be made. They will not, of
course, be issued where it is impossible for the defendant to comply with them. And
there are many cases in which justice between the parties can be fully and
conveniently done by an award of damages. . .‟

[25] In Woods6 the court was concerned with the action to enforce the
execution and performance of a contract for the lease of certain land with a
furnished house and other buildings thereon. The question related to the basis
of assessment of damages when an alternative prayer for damages is
granted. Innes CJ stated at 310:
„It is a common practice, in South Africa to add to a prayer for specific performance,
an alternative prayer for damages. That course has been followed in the present
case. Damages so claimed must, of course, be proved and ascertained in the
ordinary way. The authorities do not warrant a punitive assessment.‟

[26] Victoria Falls & Transvaal Power Co Ltd7 also concerned the question
of an assessment of compensation. Innes CJ stated at 22:
„The sufferer by such a breach should be placed in the position he would have
occupied had the contract been performed, so far as that can be done by the
payment of money, and without undue hardship to the defaulting party. The
reinstatement cannot invariably be complete, for it would be inequitable and unfair to
make the defaulter liable for special consequences which could not have been in his

4 Ibid.
5 At 349.
6 Supra fn 3.
7 Supra fn 3.

contemplation when he entered into the contract. The laws of Holland and England
are in substantial agreement on this point. Such damages only are awarded as flow
naturally from the breach, or as may reasonably be supposed to have been in the
contemplation of the contracting parties as likely to result therefrom (see Voet 45, 1,
9, Pothier, Oblig sec. 160; Hadly v Baxendale, 9 Exch. p. 341; Elmslie v African
Merchants Ltd., 1908, E.D.C., p. 8-9, etc.).‟

[27] From the above analysis it seems that the principle, that a party who is,
prima facie entitled to specific performance may claim in the alternative
damages as surrogate for specific performance, has been consistently
followed by the courts until the majority in ISEP Structural Engineering &
Plating Ltd v Inland Exploration brought doubt as to the correct position.

Competency of respondent’s claim
[28] It was submitted by the appellants that the respondent‟s claim for
damages as a surrogate for specific performance should fail because that
claim is not competent in law. ISEP was cited as authority in support of that
proposition. In response the respondent submitted that his claim for damages
in lieu of specific performance is competent in law and that the principle stated
in ISEP should not be followed as it is against weighty authority and besides
criticism, its correctness was doubted by this Court in Mostert NO v Old
Mutual Life Assurance Co (SA) Ltd referred to above.

[29] In ISEP Structural Engineering & Plating (Pty) Ltd the city council sold
certain property „voetstoots, absolutely as it stands‟ to the respondent, Inland
Exploration Company. The purchase price was agreed upon after some
negotiations which involved the refusal by the seller to warrant that the
property would be reinstated to its original condition. The lessee of the
property, ISEP, had constructed certain concrete ramps on the property. In
terms of a lease between the seller and ISEP, it was obliged, on termination
of the lease to reinstate the premises to their original condition. The lease
terminated before the sale to the respondent. Subsequent to the sale the
seller ceded to the respondent its right against ISEP to have the property
restored. The respondent instituted an action against ISEP claiming the sum

of R15 000 alleged to be the costs of restoring the leased premises to the
same condition in which it was received by ISEP in terms of the lease
between the city council and ISEP. The respondent‟s claim was a claim for
damages in lieu of specific performance.

[30] The three main judgments that were delivered were those of Jansen
JA, Van Winsen AJA and Hoexter AJA. Kotze JA concurred in the judgment of
Van Winsen AJA and Viljoen JA concurred in the judgment of Hoexter AJA.
Hoexter AJA agreed with Jansen JA‟s conclusion that our law does not
recognise a claim for the objective value of the performance as an alternative
remedy to specific performance.

[31] Jansen JA stated at 6G-H:
„That a plaintiff may claim either specific performance or damages for the breach (in
the sense of id quod interest, ascertained in the ordinary way) is, on the authorities
cited, beyond question. And it would seem that fundamentally these are the only
alternatives recognized in our practice (leaving aside the possibility of a combination
of the two), particularly in respect of an obligation ad factum praestandum. Certainly
no cogent authority has been cited to us to show that there is any other. However, it
has been suggested that there is the possibility of a plaintiff claiming "damages" in
the sense of the objective value of the performance in lieu of the performance itself.
This would not be damages in the ordinary sense at all, but amount to specific
performance in another form.‟

[32] He went on to say at 7E:
„A case which seems more in point is National Butchery Co v African Merchants Ltd
1907 EDC 57 where damages were granted "in lieu of specific performance", but this
seems but slender authority for this Court, in effect, to recognize a remedy akin to
specific performance in the shape of a claim for the objective value of the
performance.
It may be pointed out, if there were justification for recognizing such a remedy, it
would entail the introduction of a number of ancillary rules. Has the plaintiff an
election of claiming either performance or its objective value? If he claims the latter,
may the debtor tender actual performance? (Cf D Joubert "Skadevergoeding as
Surrogaat van Prestasie" 1975 De Jure 32; "Some Alternative Remedies in Contract"

1973 SALJ 37 at 44 - 47.) If specific performance were to be refused because it
would operate "unreasonably hardly" on the defendant, would the plaintiff still be
entitled to the objective value of the performance itself? It would seem not - otherwise
the very hardship leading to refusal of the specific performance could still be inflicted
upon the debtor by granting the objective value of the performance, as would be
illustrated by the case of an obligation to reinstate in respect of a building destined for
immediate demolition. In a case such as the present, the award of the objective value
(reasonable costs of reinstatement) would be as unreasonable as an order for
specific performance.‟

[33] There has been severe criticism of the majority decision in ISEP8 and
Smallberger ADCJ in Mostert NO v Old Mutual Life Assurance Co (SA) Ltd
2001 (4) SA 159 (SCA) para 74 doubted its correctness and said that a
reconsideration of the majority decision is called for.

[34] In Mostert NO, Mostert, a curator of a certain pension fund, instituted
action against Old Mutual for damages. Mostert‟s claim arose from two
payments made by Old Mutual to a third party. The payments were made
pursuant to an insurance policy in terms of which Old Mutual held the pension
fund‟s investment. Mostert‟s main claim was based on an alleged breach by
Old Mutual, when making the payments, of its contractual obligations to the
pension fund under the policy.

[35] In his particulars of claim Mostert had alleged that the pension fund
had suffered damages as a result of such breach. Mostert did not seek to
claim damages as a surrogate for performance. He disavowed reliance on
that claim.

[36] Smallberger ADCJ remarked that Mostert‟s claim for damages as a
surrogate for performance was competent unless the majority decision in
ISEP precluded that claim, which he doubted it did. He stated, however at
para 75 that:

8 See for instance Oelofse (1982) TSAR at 63 et seq and those that are cited in para 74 of
Mostert NO v Old Mutual.

„From a practical point of view, it would have made no difference in the present
matter had Mostert claimed damages as a surrogate for performance, and the claim
had been recognised on the basis that Isep’s case was wrongly decided . . . The
approach to the quantification of the fund‟s loss would therefore have basically been
the same had the claim been one for damages as a surrogate for performance rather
than damages for breach.‟

[37] The question is whether this is an appropriate matter in which to
reconsider the correctness of the majority decision in ISEP. In my view, this is
not. ISEP is distinguishable from the facts of the present matter. There, the
court dealt with a lease and the case concerned the obligation of
reinstatement under a lease. What was said there is no more than a ratio in
regard to the limited class of contracts of reinstatement under a lease and
does not constitute a ratio of general application in the law of contract.

[38] Furthermore, the practical difficulties expressed by Jansen JA in ISEP
at 7F of the judgment as justification for not recognising a claim for damages
in lieu of specific performance, do not arise in the present matter. For
instance, Jansen JA pointed out that recognising such a remedy would entail
the introduction of a number of ancillary rules to deal with the possibility of a
contest between the specific performance and the economic value for specific
performance. There is no such contest in this matter and the award of the
objective value of performance would not cause Basson any hardship. The
respondent does not have to choose between the two remedies. He is
restricted to a claim for the economic value for specific performance following
alienation by Basson of the property forming the subject matter of the
contract. Thus specific performance has become impossible. Where specific
performance is not possible, the parties have no choice.9

[39] To the extent that what was said by Jansen JA in ISEP at 6G-H and 7E
may be construed as constituting the ratio of general application in the law of
contract, I have a difficulty with it. Justice cries out aloud for damages in lieu
of specific performance in this particular case, precisely because specific

9 „Some Alternative Remedies in Contract‟ 1973 SALJ 37 at 46.

performance by the appellants is not possible. This is the case in which
„justice between the parties can be fully and conveniently done by an award of
damages‟. (Farmers’ Co-operative Society at 350)

[40] The respondent is ready to carry out his own obligation under the
agreement and has a right to demand either literal performance, or monetary
value of the performance, from Basson. The respondent‟s claim for damages,
to the extent that he seeks the monetary value of the performance, is akin to a
claim for the replacement value of the lost property.

[41] A creditor‟s right to demand performance from the debtor cannot be at
the debtor‟s mercy. The exercise of that right cannot depend on what the
debtor chooses to do with the asset to which the creditor‟s right relates. To
say that a claim for damages as a surrogate for specific performance is not
recognised in law, would deprive the creditor of the right, where it has elected
to enforce the contract, to be put as much as possible, in the position that it
would have been in if the performance was made in forma specifica.

[42] The respondent is entitled to the relief that he seeks. He has
established that he concluded a valid agreement with Basson; that Basson
repudiated the agreement; that he was willing to carry out his obligation under
the agreement; and that he had elected to hold Basson to the terms of the
agreement. Because of Basson‟s conduct, which rendered specific
performance impossible the respondent amended his particulars of claim so
as to introduce a claim for damages in lieu of specific performance. The
parties have agreed on the quantum and the mora interest rate to be awarded
should the appeal fail. This means that the judgment of the court below should
be corrected to the extent proposed by the parties. As regards the question of
costs, there is no reason to deprive the respondent of his costs.

The Order
[43] In the result the following order is made:
The appeal is dismissed with costs.

Paragraphs 1 and 2 of the court below‟s order are set aside and
replaced with the following:
„1
The first defendant is ordered to pay to the plaintiff the amount of
R1 212 994.80.
The first defendant is ordered to pay to the plaintiff interest on the
amount of R1 212 994.80 at the rate of 9,5 per cent per annum, calculated
from 14 September 2014 to date of final payment.‟

________________
D H Zondi
Judge of Appeal

Willis JA (partially dissenting):
[44] I agree with the order proposed by Zondi JA. I have, however, two
qualifications to his reasoning, which I think need to be mentioned. The first is
that, to the extent that Isep Structural Engineering and Plating (Pty) Ltd v
Inland Exploration Co (Pty) Ltd 1981 (4) SA 1 (A) does not allow any
exceptions to the principle that, in the law of contract, there are only two
alternative remedies for an aggrieved party: specific performance or damages
for breach, this case illustrates that such a principle cannot be sustained – at
least not without qualification.  There has been clear authority, in this court
previously, that a claim for damages in lieu of specific performance could, in
certain circumstances, succeed. See, for example Farmers’ Co-op Society
(Reg) v Berry 1912 AD 343 at 350 and Victoria Falls and Transvaal Power
Company Limited v Consolidated Langlaagte Mines Limited 1915 AD 1 at 22.
Mostert No v Mutual Life Assurance Co (SA) Ltd 2001 (4) SA 159 (SCA), to
which Zondi JA has referred, also seems to be consonant with this line of
reasoning on the matter.

[45] My second qualification relates to the question of the rate of interest. In
my opinion, the probabilities in this case make it much more likely that a rate
of interest had been agreed upon than not. Furthermore, it is more probable,
in the circumstances, that the interest rate would have been calculated by

reference to the prime rate than the appellants‟ contention is that there was a
flat rate (18%), especially as this was a long term venture. The question of the
rate of interest to be applied in this case is largely irrelevant because, if I
understood counsel for both sides correctly during the course of argument,
they agreed that, if damages were to be awarded, the most practical and
efficacious way of dealing with the issue would be to apply the prescribed rate
of interest, as gazetted by the Minister in terms of the Prescribed Rate of
Interest Act 55 of 1975. For this reason, I have no difficulty with Zondi JA‟s
proposed order.

______________
NP Willis
Judge of Appeal

APPEARANCES:
For appellants:
D T v R Du Plessis SC

Instructed by:

Olivier & Malan Attorneys, Randburg

c/o Phatsoane Henney Inc, Bloemfontein

For respondent:

G M Young

Instructed by:
Goërtz Attorneys Inc,
c/o DM Bakker Attorneys,
c/o Craig Baillie Attorneys, Johannesburg

c/o Symington and de Kok, Bloemfontein
SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM
The Registrar, Supreme Court of Appeal
DATE
6 December 2016
STATUS
Immediate

Basson v Hanna (37/16) [2016] ZASCA 198 (6 December 2016)

Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal.

Today the SCA dismissed an appeal by Mr Christiaan Basson and Plot 31 Vaalbank
CC against the judgment of the Gauteng Local Division of the High Court,
Johannesburg (P C Cilliers AJ) awarding damages in lieu of specific performance in
favour of Mr Tyrone Hanna.

The evidence revealed that Mr Basson sold a third of his member’s interest in Plot
31 Vaalbank CC (the CC), in which he was a sole member, to Mr Hanna for
R624 953 payable in monthly instalments of R8 229.32 over a period of 20 years.
The assets of the CC included the immovable property. Mr Hanna complied with his
obligations under the agreement including contributing a third of the CC’s monthly
expenses and operating costs.

Basson in breach of his contractual obligations told Mr Hanna that he was selling the
property and that he considered the agreement he and Hanna concluded to be
invalid and subsequently sold the subject matter of the contract to his brothers.

Mr Hanna regarded Mr Basson’s conduct as constituting a repudiation of the
agreement and he sued Mr Basson and the CC in the Gauteng Local Division for
damages in lieu of specific performance. Mr Basson defended the action and asked
for the dismissal of Mr Hanna’s claim on the ground that the contract on which Mr
Hanna sued was invalid, alternatively had been cancelled because of its repudiation
by Mr Hanna, alternatively that our law does not recognise a claim for damages in
lieu of specific performance. All of Mr Basson’s defences were dismissed and
damages were awarded in favour of Mr Hanna.

The SCA held that to say that a claim for damages as a surrogate for specific
performance is not recognised in law, would deprive the creditor of the right, where it
has elected to enforce the contract, to be put as much as possible, in the position
that it would have been in, if the performance was made in forma specifica.

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