THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Not Reportable

Case No:  297/12

In the matter between:

EUGENE BERNHARD DE KLERK

FIRST APPELLANT

TANYA DE KLERK

SECOND APPELLANT

And

STEVEN-LEE PROPERTIES (PTY) LTD

FIRST RESPONDENT

THE REGISTRAR OF DEEDS                                      SECOND RESPONDENT

Neutral citation: De Klerk v Steven-Lee Properties (297/12) [2013] ZASCA 54

(04 April 2013)

Coram:

Mthiyane DP, Brand, Lewis JJA, Van der Merwe, Saldulker AJJA

Heard:

15 March 2013

Delivered:

04 April 2013

Summary:  Whether clause in an agreement for the sale of immovable property
creates a suspensive condition- Tacit term- proper formulation- Local authority.

__________________________________________________________________
ORDER
_______________________________________________________________________________________

On appeal from: Appeal from South Gauteng High Court, Johannesburg (Maluleke
J):
The appeal is dismissed with costs.

JUDGMENT

SALDULKER AJA (Mthiyane DP, Brand, Lewis JJA, Van der Merwe AJA
concurring):

[1] At the heart of this dispute is the interpretation to be placed on clause 15.1 of
two identical sale agreements entered into by the appellants and the first respondent
in respect of two properties,  situated within a development (the development) in the
municipal jurisdiction of Vanderbijlpark which in turn forms part of the Emfuleni
Local Municipality (the municipality).  The development is within the Vaal River
Barrage area as defined in the Vaal River Guide Plan.

[2] This appeal, with the leave of the court below, is against the judgment by
Maluleke J in the South Gauteng High Court.  In the court below the appellants
sought an order declaring that clause 15.1 of the sale agreements created a true
suspensive condition and that the non-fulfilment thereof had rendered the sale
agreements unenforceable.  In the alternative they claimed that the appellants were
as a result of the non-performance entitled to, and in fact had lawfully cancelled the
two sale agreements. The relief sought was the re-transfer of the properties to the
first respondent against payment or refund of the purchase prices and interest thereon
to the appellants. Maluleke J dismissed the application with costs.

[3] I turn to consider the facts giving rise to this appeal. During March 2007, the
appellants and the first respondent entered into two sale agreements for the purchase
of the two properties. Pursuant to the obligations arising from the sale agreements,
the immovable properties were registered in the names of the appellants on 31 May
2007 and 8 June 2007. The purchase prices of the two properties were respectively
R261 000 and R271 000.

[4] The relevant clause 15.1 reads as follows:
‘Clause 15 – Special Conditions
15.1 The DEVELOPER shall make the arrangements to the satisfaction of the appropriate local
authority for the provision of essential services to the street border of the property.
15.5 The construction of the dwelling and outbuildings is to be completed prior to occupation and
within 24 months from date of registration.’(My emphasis)

[5] Prior to the sale of the immovable properties the first respondent applied for
approval of the proposed township from both the municipality and Rand Water
Board (Rand Water). Both the municipality and Rand Water would have to be
satisfied with the proposed sanitation system of the proposed township.  Rand Water,
which is responsible for ensuring that proper sanitation systems are in place for any
new developments to protect the ecosystem of the Vaal River, approved the plans for
the proposed sanitation system, subject to the proposed upgrading of existing pump
stations and service lines by the municipality. On 16 February 2006, the municipality
granted such consent as set out in Annexure C1, and the township was proclaimed
on 22 March 2006. Annexure C1 reads as follows:
‘We would hereby like to confirm that all criteria set with regard to the water and sanitation
services to the abovementioned development have been met and the clearance for registration can
now be issued.’

[6] However, after the establishment of the township, towards the end of 2009, a
dispute arose between the municipality and Rand Water, as a result of failures that
occurred at the municipality’s pump stations eight and ten. These pumps deal with

the effluent waste of the development, and the responsibility for their proper
functioning falls under the sphere of the municipality.  Rand Water was of the
opinion that the upgrade had not been adequate, and formed the opinion that the
municipality would not be able to deal with the effluent waste of the development
and refused to approve further building until the municipality had upgraded their
pump stations.

[7] Before us, the appellants contended that the sale agreements contained a
suspensive condition in clause 15.1 that the first respondent had to make
arrangements to the satisfaction of the appropriate local authority for the provision of
essential services to the street border of the properties, and this condition had not
been met, alternatively not met timeously. Additionally they contended that the term
‘appropriate local authority’ meant Rand Water. Alternatively, the appellants
contended that there was a tacit term of the agreement ‘that the applicants would be
entitled to construct dwellings and outbuildings on the properties within a reasonable
time from date of registration of the properties into the names of the applicants,
alternatively within 24 months from date of registration as envisaged in clause 15.5
of the sale agreement’.

[8] The following issues arise in interpreting clause 15.1.  Does clause 15.1 create
a suspensive condition? Who is the local authority? Does an interpretation of this
clause require more from the developer than what it can do?

Was clause 15.1 a suspensive condition?
[9] The most important characteristic of a condition is that it relates to a future
uncertain event.  In Design and Planning Service v Kruger,1  Botha J stated as
follows:

1 Design and Planning Service v Kruger 1974 (1) SA 689 (T) at 695; Tuckers Land and Development Corporation (Pty)
Ltd v Strydom 1984 (1) SA 1 (A) at 10B-G.

‘[I]n the case of a suspensive condition, the operation of the obligations flowing from the contract is
suspended, in whole or in part, pending the occurrence or non-occurrence of a particular specified
event . . . . A term of the contract, on the other hand, imposes a contractual obligation on a party to
act, or to refrain from acting, in a particular manner. A contractual obligation flowing from a term
of a contract can be enforced, but no action will lie to compel the performance of a condition.’

[10] The sale agreements were concluded in 2007 and the township was
proclaimed in 2006. Whatever conditions there might have been no longer existed at
the time of the transfer of the properties into the appellant’s names in 2007. It was a
past event. There is also nothing conditional about the formulation of the provisions
of clause 15.1. It is simply a term of the agreement which requires the developer to
do whatever it can to get the approval from the local authority. There is nothing
uncertain about this term, nor is it dependent on the happening of any uncertain
future event. It does not say that the seller must comply with the local authority’s
obligations, only that it must ‘make arrangements to the satisfaction of the
appropriate local authority’.

[11] Significantly,  in their letter  of demand to the first respondent to comply with
clause 15.1, the  appellants  referred to the first respondent as not having complied
with two conditions of the  sale agreements  and that  the first respondent  had failed
‘to secure the permission of Rand Water to approve residential developments of
several stands’. The appellants did not refer to the non-fulfilment of any suspensive
condition in the sale agreements.

Non-performance
[12]   The appellants contend that the first respondent failed to make arrangements to
the satisfaction of the appropriate local authority (on their version Rand Water) for
the provision of essential services to the street border of the property as per clause
15.1. The question is whether the first respondent did in fact do so. In my view, it
did. This much is clear from Annexure C1, which the first respondent has provided

as proof of its compliance with the obligations set out in clause 15.1. Annexure C1 is
a letter from Metsi-a-Lekoa, the Water Services Unit of the municipality confirming
that all criteria in regard to the water and sanitation services have been met. The
developer clearly made arrangements which satisfied the municipality. The response
of the appellants to these averments is to merely deny that the terms of clause 15.1
had been complied with.

[13] It makes no difference to suggest, as the appellants do, that Annexure C1,
which is dated 16 February 2006, was sent prior to them entering into the
agreements for the sale of the properties. Clearly, standard agreements for the
conclusion of the sale of the properties were used, at a time when certain conditions
of the sale had already been met. Transfer and registration of both properties in the
names of the appellants were effected. The contract was performed. Upon transfer of
the properties to the appellants the risk in the properties was transferred to the
appellants.  The registration of the properties into the names of the appellants could
not have taken place without the first respondent having made the arrangements as
per clause 15.1.

[14] In fact, at the time of the registration, the appellants did not complain that
clause 15.1 had not been complied with. Furthermore, any interpretation of the word
‘arrangements’ in my view, could never have included a guarantee that the seller
would make some ‘future plan’ to provide the services to the appellants. No further
contractual obligation rested on the first respondent to ensure that the local
municipality complied with its undertakings to upgrade their existing infrastructure.

Status of Rand Water
[15]  According to the appellants the parties intended that the ‘appropriate local
authority’ was Rand Water and not the local municipality.   For this contention,
which they submit was common cause, the appellants sought to rely on two

documents: the Services Agreement entered into between the first respondent and the
local authority and Annexure C to the Guide Plan.  The Services Agreement is an
agreement between the first respondent and the municipality in regard to various
services, as set out in that agreement, to be rendered for the whole proposed
township for the mutual benefit of the relevant parties, which does not include the
appellants.  Not being a party to the Services Agreement, the appellants cannot in
such circumstances rely on the Services Agreement to determine the content of the
sale agreements in question. Furthermore, the relevant section 2.2 of the Guide Plan
which reads ‘[e]xcept with the written consent of the Rand Water Board no habitable
buildings. ..sewage pumping installations or sewage works shall be permitted below
the flood control line, as defined’, does not bolster their argument any further. It is
clear that the appellants are placing store on documents that they are not party to,
and may not have seen, and documents which state what Rand Water will or may not
allow in the development.

[16] In terms of Chapter 7, s 151 of the Constitution, the local sphere of
government consists of municipalities which have the right to govern the local
government affairs of their communities in accordance with national and provincial
legislation. Water and sanitation fall under local government matters. The
municipality is the appropriate local authority. The Rand Water is a statutory public
water authority which exercises its authority in terms of s 84 of the Water Services
Act 108 of 1997.2  It cannot be regarded as a municipal structure, and is therefore not
a local authority. The appellant’s reasoning is therefore flawed. It is clear from
Ehlers v Rand Water Board,3 that the function of Rand Water includes
environmental protection and the determination of floodlines in the Vaal Barrage
Area. It does not qualify as a municipality or a local authority.

2 Rand Water Board v Milner (2003) JOL 10841 (SCA)  para 2.
3 Ehlers v Rand Water Board 2006 (3) SA 299 (SCA) paras 7.4 and 7.9 ; Rand  Water Board v Rotek Industries (Pty) Ltd
2003 (4) SA 58 (SCA) para 2; See s 84 of the Water Services Act 108 of 1997.

[17] It has also been contended by the appellants that even if this court finds that the
‘appropriate local authority’ is the local municipality, there still has not been
compliance with clause 15.1 by the first respondent.  In this regard the appellants
submit that there is an essential difference between what is contained in Annexure
C1, the letter of approval from the municipality, and what the first respondent states
it has complied with. The first respondent states that it has made arrangements to
provide essential services to the street border of the properties. In contrast, the
appellants point out that in terms of Annexure C1 the municipality has provided bulk
services to the entire development, but has not done so to the individual erven. In my
view the appellants have not advanced such a case on these papers. When the first
respondent defended its stance that it had in fact made arrangements to the
satisfaction of the local authority, and attached Annexure C1, the appellants simply
denied this averment without any explanation of the kind now being raised in
argument.  In their papers, the appellants sought to blame the municipality for failing
to upgrade the entire reticulation system, and stated that Annexure C1 confirmed
only that water and sewage services were installed to the township.

Tacit Term
[18] A tacit term is not easily inferred by the courts. It has been contended by the
appellants, correlative to clause 15.5, that it was a tacit term of the sale agreements
that the appellants would be entitled to construct dwellings and outbuildings on the
properties within a reasonable time from date of registration of the properties into
the names of the appellants, alternatively within 24 months from date of registration.
The difficulty for the appellants is that this so-called ‘tacit term’ that they seek to
rely on in their alternative argument has not been formulated in precise or exact
terms4 in their founding affidavit.  In the absence of an obligation on the part of the
first respondent to ensure that Rand Water approves building plans, specifically after
registration, no such tacit term can be inferred in the sale agreements.

4 Desai v Greyridge Investments (Pty) Ltd 1974 (1) SA 509 (A) at 522H-523A; Consol Ltd t/a Consol Glass v Twee
Jonge Gezellen (Pty)Ltd 2005 (6) SA 1 (SCA) para 51.

[19] It is clear that the first respondent cannot be blamed for the municipality’s
shortcomings in regard to its sewage system. Rand Water adopted the stance that the
dwellings could be constructed only if proper sewage treatment works and a pump
station was constructed that would service the properties.  It is because of this
dispute between Rand Water and the local authority that the appellants who have
taken transfer of the properties now bear the risk, and must now deal with Rand
Water.

[20] The requirement by Rand Water, a statutory body, that the municipality
upgrade its infrastructure, and any failure to do so by the municipality, cannot vest a
claim for cancellation of the agreement against the first respondent. There is nothing
more that the first respondent could do in terms of its obligations as per clause 15.1
of the sale agreements. The first respondent has no authority over the municipality
nor over Rand Water.  There was no contractual obligation on the first respondent to
ensure that consent be granted by Rand Water for the approval of building plans.
The first respondent was not in breach of any of its contractual obligations, and
therefore no valid cancellations of the sale agreements could follow.

[21] In regard to the question of costs of the appeal, the first respondent seeks the
costs of two counsel.   In the court below, the matter was argued by junior counsel on
its behalf.  The issues involved were not complicated, nor were   any complex legal
issues traversed, requiring the services of two counsel. Accordingly costs of two
counsel are not warranted.

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

_____________________
H SALDULKER

ACTING JUDGE OF APPEAL

APPEARANCES

For Appellants :             HP Nieuwenhuizen

Instructed by:                 Scholtz & Scholtz

Correspondents :            Schoeman Maree

For First Respondent:     M C Erasmus SC with Advocate N C Hartman

Instructed by :                F Van Wyk Inc

Correspondents :            TLI INC (Matus Michael Garber)
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:
4 April 2013
Status:
Immediate

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.
EUGENE BERNHARD DE KLERK V STEVEN-LEE PROPERTIES (PTY) LTD
The Supreme Court of Appeal (SCA) today held, that clause 15.1 in  two  identical sale
agreements concluded between the appellants and  the first respondent in 2007,  in respect
of two properties situated within a development in the municipal jurisdiction of
Vanderbijlpark, which in turn forms part of the Emfuleni Local Municipality,  did not
create a suspensive condition. At the heart of the dispute between the parties was the
interpretation to be placed on  clause 15.1 which read as follows: ‘The developer (the first
respondent) shall make the arrangements to the satisfaction of the appropriate local
authority for the provision of essential services to the street border of the property.
Prior to the sale of the properties, the first respondent applied for the approval of the
proposed township  from both the municipality and Rand Water Board.  Rand Water,
approved the plans for the proposed sanitation system , subject to the proposed upgrading
of existing pump stations and service lines by the municipality. On 16 February 2006, the
municipality granted  such consent, stating that all criteria with regard to the water and
sanitation services to the development had been met. The township was proclaimed in
March 2006. During March 2007, pursuant to the obligations arising from the sale

agreements, the immovable properties were registered in the names of the appellants.
However, towards the end of 2009, a dispute arose between the municipality and Rand
Water as a result of the municipality’s pump stations, eight and ten, which dealt with the
effluent waste of the development. Rand Water was of the opinion that the upgrade had not
been adequate, and refused to approve further buildings until the municipality had upgraded
their pump stations.
The Supreme Court of Appeal(SCA) held that whatever conditions there might have been
no longer existed at the time of the transfer of the properties into the appellants’ names.
Clause 15.1 was not dependant on the happening of any uncertain future event, nor  was
there  anything conditional in its formulation. It was simply a term which required the
developer to do whatever it could to get the approval from the local authority, which was
the local municipality, and not Rand Water which was a statutory public water authority.
The  first respondent had  provided  a  letter from  the local municipality that all criteria had
been met in regards to water and sanitation services, and thus  complied with its obligations
as set out in clause 15.1.
The Supreme Court of Appeal further  held that the tacit term that the appellants sought to
rely on had not been formulated in precise or exact terms, and  in the absence of an
obligation on the part of the first respondent to ensure that Rand Water approve building
plans , no such tacit term can be inferred in the sale agreements.  The requirement by Rand
Water , a statutory body, that the municipality upgrade its infrastructure, and any failure to
do so by the municipality, cannot vest a claim for cancellation of the agreements. There
was nothing more that the first respondent could do in terms of its obligations as per clause
15.1 of the sale agreements. The appeal against the order of the South Gauteng High Court
was dismissed with costs.